<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the period ended
June 30, 1996
-------------
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to
---------- ----------
Commission file number: 33-92732
Commodore Media, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
See Table of Additional Registrants
Delaware 13-3034720
------------------------------ -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
500 Fifth Avenue, Ste. 3000, New York, NY 10110
----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(212) 302-2727
--------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Shares Outstanding at
Class June 30, 1996
----- -------------
<S> <C>
Class A Common Stock, $.01 par value 61,002
Class B Common Stock, $.01 par value 486,373
</TABLE>
As of June 30, 1996, there was no public market for the Company's common
stock.
Page 1 of Pages
--
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER PRIMARY STANDARD I.R.S. EMPLOYER
NAME JURISDICTION OF INDUSTRIAL IDENTIFICATION
INCORPORATION CERTIFICATION NUMBER
NUMBER
<S> <C> <C> <C>
Commodore Media of Delaware, Inc. Delaware 4832 51-0286804
Commodore Media of Kentucky, Inc. Delaware 4832 61-0997863
Commodore Media of Pennsylvania, Inc. Delaware 4832 23-2207457
Commodore Media of Norwalk, Inc. Delaware 4832 06-1277523
Commodore Media of Florida, Inc. Delaware 4832 59-2813110
Commodore Media of Westchester, Inc. Delaware 4832 13-3356485
Commodore Holdings, Inc. Delaware 4832 13-3858506
Danbury Broadcasting, Inc. Connecticut 4832 13-3653113
</TABLE>
- 2 -
<PAGE> 3
COMMODORE MEDIA, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
NUMBER
------
<S> <C>
Item 1 Financial Statements (unaudited)
Consolidated Balance Sheets ................................. 4
Consolidated Statements of Operations ....................... 5
Condensed Consolidated Statements of Cash Flows ............. 6
Consolidated Statement of Stockholders' Deficit ............. 7
Notes to Consolidated Financial Statements .................. 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations ............... 13
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security-Holders ......... 21
Item 5 Other Information ........................................... 21
Item 6 Exhibits and Reports on Form 8 - K .......................... 22
Signatures .................................................. 24
</TABLE>
- 3 -
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and short term cash investments $ 10,891,489 $ 4,623,982
Accounts receivable, net 6,131,447 7,093,191
Prepaid expenses and other current assets 285,412 446,988
------------ ------------
Total current assets 17,308,348 12,164,161
Property, plant and equipment, net 8,080,043 11,935,661
FCC licenses, net 18,769,172 41,682,652
Goodwill, net 1,998,453 8,668,882
Other intangible assets 1,761,306 2,647,641
Deferred charges, net 3,910,582 4,912,805
Deposits and other assets 982,876 1,201,480
------------ ------------
Total assets $ 52,810,780 $ 83,213,282
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 1,774,256 $ 2,596,939
Accrued compensation 815,162 302,964
Accrued interest 960,368 1,144,094
Accrued income taxes 16,840 14,712
Current maturities of long-term debt 11,977 11,977
------------ ------------
Total current liabilities 3,578,603 4,070,686
Long-term debt 65,142,763 85,517,498
Non-current compensation 1,482,275 1,445,174
Note payable - officer 1,161,706 1,188,851
Deferred income taxes -- 1,700,000
Senior Exchangeable Redeemable Preferred Stock, Series A, $0.01
par value, 75,000 shares authorized, 10,000 shares issued -- 9,003,052
Stockholders' deficit:
Class A Common Stock, $0.01 par value; 3,000,000
shares authorized, 146,526 issued 1,465 1,465
Class B Common Stock, convertible into Class A Common Stock
$0.01 par value; 486,373 shares authorized and issued 4,864 4,864
Additional paid-in capital 23,580,184 24,455,064
Accumulated deficit (42,115,080) (44,147,372)
------------ ------------
(18,528,567) (19,685,979)
Less treasury stock, at cost 26,000 26,000
------------ ------------
Total stockholders' deficit (18,554,567) (19,711,979)
------------ ------------
Total liabilities and stockholders' deficit $ 52,810,780 $ 83,213,282
============ ============
</TABLE>
See accompanying notes. - 4 -
<PAGE> 5
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended: For the Six Months Ended:
--------------------------- -------------------------
June 25, June 30, June 25, June 30,
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenue $ 8,823,501 $11,921,347 $15,331,159 $19,968,915
Less: agency commissions (789,456) (1,011,046) (1,329,727) (1,642,933)
----------- ----------- ----------- -----------
Net revenue 8,034,045 10,910,301 14,001,432 18,325,982
Operating expenses:
Programming, technical and news 1,267,004 1,898,792 2,357,885 3,412,260
Sales and promotion 2,276,443 2,969,307 4,144,127 5,390,460
General and administrative 1,125,596 2,020,491 2,335,802 3,461,103
Corporate expenses 533,808 609,804 994,546 1,075,488
Depreciation and amortization 436,013 665,503 873,004 1,145,713
Long-term incentive compensation 1,421,615 -- 2,006,550 --
----------- ----------- ----------- -----------
Operating income 973,566 2,746,404 1,289,518 3,840,958
Interest expense 1,838,557 2,699,830 2,668,347 5,151,468
Interest income 130,149 52,513 130,259 167,765
Other expenses, net 101,122 669,953 157,788 837,547
----------- ----------- ----------- -----------
Income (loss) before provision for income
taxes (835,964) (570,866) (1,406,358) (1,980,292)
Provision for income taxes 45,000 25,000 60,000 52,000
----------- ----------- ----------- -----------
Income (loss) before extraordinary item (880,964) (595,866) (1,466,358) (2,032,292)
Extraordinary loss on extinguishment of debt 443,521 -- 443,521 --
----------- ----------- ----------- -----------
Net income (loss) $(1,324,485) $ (595,866) $(1,909,879) $(2,032,292)
=========== =========== =========== ===========
</TABLE>
See accompanying notes. - 5 -
<PAGE> 6
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended:
-------------------------
June 25 June 30
1995 1996
---- ----
<S> <C> <C>
Net cash provided (used) by operating activities $ (675,533) $ 253,064
Cash flows from investing activities
Purchase of property, plant and equipment (164,055) (250,512)
Deferred acquisition and intangible costs (208,661) (1,166,574)
Repayment on stockholder loan 117,500 --
Loans to stockholders and employees (250,375) --
Deposit on acquisitions (150,000) (1,530,000)
Acquisitions of stations -- (31,000,000)
Other investing activities, net -- (160,670)
------------ ------------
Net cash (used in) investing activities (655,591) (34,107,756)
Cash flows from financing activities
Gross proceeds from issuance of debt securities 64,956,422 18,700,000
Net proceeds from issuance of preferred stock -- 9,877,932
Payment of deferred debt issuance costs (2,904,553) (772,634)
Payment of merger and aborted IPO costs -- (211,570)
Repayment of amounts borrowed (39,014,833) --
Redemption of preferred stock (8,665,835) --
Principal payments on capital leases (4,342) (6,543)
Purchase of redeemable warrant (1,000,000) --
Exercise of warrants 100 --
Repurchase of common stock (25,000) --
------------ ------------
Net cash provided by financing activities 13,341,959 27,587,185
------------ ------------
Net (decrease) increase in cash and short term cash investments 12,010,835 (6,267,507)
Cash and short term cash investments beginning of period 2,042,249 10,891,489
------------ ------------
Cash and short term cash investments end of period $ 14,053,084 $ 4,623,982
============ ============
Interest paid $ 1,411,805 $ 3,105,053
Taxes paid 295,741 78,658
</TABLE>
See accompanying notes. - 6 -
<PAGE> 7
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------ PAID-IN ACCUMULATED TREASURY STOCKHOLDERS'
CLASS A CLASS B CAPITAL DEFICIT STOCK DEFICIT
------- ------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $1,465 $4,864 $23,580,184 $(42,115,080) $(26,000) $(18,554,567)
Warrants issued with preferred stock facility 981,500 981,500
Dividends on preferred stock (106,620) (106,620)
Net loss for the period (2,032,292) (2,032,292)
------ ------ ----------- ------------ -------- ------------
Balance at June 30, 1996 $1,465 $4,864 $24,455,064 $(44,147,372) $(26,000) $(19,711,979)
====== ====== =========== ============ ======== ============
</TABLE>
See accompanying notes. - 7 -
<PAGE> 8
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Form 10-K
for the year ended December 31, 1995. The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
2. MERGER AGREEMENT
On June 21, 1996 the Company, the Estate of Carter Burden, Bruce A.
Friedman, James T. Shea, Jr., William A. M. Burden & Co., L. P. and James J.
Sullivan entered into an Agreement and Plan of Merger (the "Merger Agreement")
with CMI Acquisition Company, Inc. ("Mergeco"), a subsidiary of Hicks, Muse,
Tate & Furst Equity Fund III, L.P. ("Fund III"), pursuant to which Mergeco will
be merged with and into the Company and as a result the Company will become a
wholly-owned subsidiary of Capstar Broadcasting Partners, Inc., which is an
indirect subsidiary of Fund III (the "Merger"). Pursuant to the Merger
Agreement, the holders of Class A Common Stock and Class B Common Stock
(collectively, the "Common Stock"), the holders of employee stock options at the
effective time of the Merger (the "Effective Time") and the holders of warrants
will receive approximately $140 per share as consideration for the Merger (the
"Merger Consideration") less, in the case of option and warrant holders, the
exercise price per share. In addition, Mergeco has agreed to separately provide
the funds necessary to redeem the Senior Exchangeable Redeemable Preferred
Stock, Series A, $.01 par value per share (the "Series A Preferred Stock") at
the Effective Time. As a result, all shares of Common Stock and Series A
Preferred Stock exchanged for the Merger Consideration shall cease to be
outstanding at the Effective Time.
In addition, Fund III has agreed, subject to certain conditions, to
purchase on or after September 3, 1996 at the request of the Company up to 5,000
shares of Senior Exchangeable Redeemable Preferred Stock, Series B, $.01 par
value per share (the "Series B Preferred Stock") at a purchase price of $1,000
per share and up to an additional 15,000 shares of Series B Preferred Stock if
the Merger Agreement is terminated for reasons other than a breach by the
Company. In connection with the purchase of Series B Preferred Stock, the
Company has agreed to issue to Fund III warrants to purchase shares of Class A
Common Stock equal to one percent
- 8 -
<PAGE> 9
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
2. MERGER AGREEMENT, CONTINUED
of the Company's fully diluted Common Stock for each $2,500,000 of Series B
Preferred Stock purchased by Fund III.
As a result of the Merger and the change of control effected thereby,
the Company (as the surviving corporation) will be required to make within 20
days of the Effective Time an offer to purchase the outstanding 13 1/4% Senior
Subordinated Notes due 2003 at a purchase price equal to 101% of their accreted
value, plus any accrued and unpaid interest. The consummation of the Merger is
conditioned upon (i) the consent of the Federal Communications Commission which
consent shall have become a final order, (ii) receipt of all necessary approvals
of the Federal Trade Commission and the Antitrust Division of the Department of
Justice with respect to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and (iii) satisfaction of various representations, warranties
and covenants as set forth in the Merger Agreement.
In the event that the Merger is terminated by either party or by mutual
consent, there shall be no liability on the part of either the Company or
Mergeco, except in the event of a breach of the agreement by Mergeco, in which
case the Company will be entitled to liquidated damages in the sum of $7.5
million. Fund III has established a $20 million letter of credit as security for
its agreement to purchase the Series B Preferred Shares from the Company and for
the liquidated damages that may be payable to the Company in the event of a
breach of the agreement by Mergeco under certain circumstances.
As a result of the Merger Agreement, the Company does not intend to
proceed with its previously announced intentions to undertake an initial public
equity offering and has therefore, withdrawn its registration statement filed on
Form S-1 on May 17, 1996 with the Securities and Exchange Commission. Included
in other expenses are approximately $507,000 in various fees and expenses
incurred in connection with this filing.
3. ACQUISITIONS AND JOINT OPERATING AGREEMENTS
On March 27, 1996 the Company purchased (i) certain defined assets of
radio stations WZZN-FM in Mount Kisco, New York, WAXB-FM in Patterson, New York
and WPUT-AM in Brewster, New York from Hudson Valley Growth, L.P. for $4,950,000
and (ii) all of the issued and outstanding common stock of Danbury Broadcasting,
Inc. owner of WRKI-FM and WINE-AM in Brookfield, Connecticut, plus certain real
property for $9,950,000. The
- 9 -
<PAGE> 10
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
3. ACQUISITIONS AND JOINT OPERATING AGREEMENTS, (CONTINUED)
transaction was financed with the Company's existing cash and borrowings under
its senior credit facility with AT&T (Note 4).
On May 30, 1996, the Company purchased certain defined assets of radio
stations WKHL-FM and WSTC-AM in Stamford Connecticut from Q Broadcasting, Inc.
for $9,500,000 (the "Stamford Acquisition"). The transaction was financed with
borrowings from the AT&T Senior Credit Facility (Note 4) and funds from the
Preferred Stock Facility (Note 5).
On May 31, 1996, the Company purchased certain defined assets of radio
stations WBBE-FM (formerly WKQS-FM), WAVW-FM and WAXE-AM in the Fort
Pierce-Stuart-Vero Beach, Florida Market from Media VI for $8,000,000 (the
"Florida Acquisition"). The transaction was funded with borrowings from the AT&T
Senior Credit Facility (Note 4) and funds from the Preferred Stock Facility
(Note 5). The Company terminated its Joint Sales Agreement with Media VI at
closing.
Unaudited proforma results of the Company for the aforementioned
acquisitions and the acquisition of WQOL-FM, which were accounted for under the
purchase method of accounting, as if they were purchased on January 1, 1995 are
as follows:
<TABLE>
<CAPTION>
(dollars in thousands)
Three Months Ended Six Months Ended
------------------ ----------------
June 25 June 30 June 25 June 30
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenue $10,498 $11,610 $18,667 $20,215
Loss before
Extraordinary Item $ 1,152 $ 809 $ 2,187 $ 2,554
Net Loss $ 1,595 $ 809 $ 2,631 $ 2,554
</TABLE>
- 10 -
<PAGE> 11
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
3. ACQUISITIONS AND JOINT OPERATING AGREEMENTS, (CONTINUED)
On April 8, 1996 the Company entered into (i) an Asset Purchase
Agreement to purchase from Adventure Communications, Inc., radio stations
WKEE-FM and WKEE-AM in Huntington, West Virginia, WZZW-AM in Milton, West
Virginia, WBVB-FM in Coal Grove, Ohio and WIRO-AM in Ironton, Ohio for an
aggregate purchase price of approximately $7,765,000 and (ii) an Asset Purchase
Agreement with Simmons Broadcasting Company and an Option Agreement with Michael
R. Shott to acquire radio stations WHRD-AM in Huntington, West Virginia, WFXN-FM
in Milton, West Virginia and WMLV-FM in Ironton, Ohio for an aggregate purchase
price of approximately $4,235,000 (collectively, the "Huntington Acquisitions").
In addition, the Company entered into Local Marketing Agreements with each of
Adventure Communications, Inc. and Simmons Broadcasting Company to provide, on a
cooperative basis, the programming, sales, marketing and certain other services
to the stations pending the closing of these acquisitions. The Company expects
to close on the aforementioned acquisitions in the latter part of 1996 and will
fund the transaction with borrowings from the AT&T Senior Credit Facility (Note
4) and funds from the Preferred Stock Facility (Note 5).
4. DEBT
On March 13, 1996, the Company entered into a Loan and Security
Agreement with AT&T Commercial Finance Corporation ("AT&T") pursuant to which
AT&T will make available to the Company senior secured (i) revolving loans in an
amount up to $30 million and (ii) accounts receivable loans in an amount which
shall be the lessor of (A) $5 million or (B) 85% of the net book value of the
accounts receivable of the Company (the "Senior Credit Facility"). The Company's
subsidiaries agreed to guarantee the indebtedness to AT&T. Interest is payable
monthly at a rate of 3.5% over LIBOR and principal amortization of the revolving
loans and accounts receivable loans begins June 1, 1998 and November 30, 1997,
respectively.
- 11 -
<PAGE> 12
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
5. PREFERRED STOCK FACILITY
On May 1, 1996, the Company entered into a Securities Purchase
Agreement with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"),
pursuant to which the CIBC Merchant Fund agreed to purchase from the Company, if
and when requested by the Company, up to an aggregate liquidation value of
$12,500,000 of Senior Exchangeable Redeemable Preferred Stock, Series A, $.01
par value per share, of the Company in such amounts as the Company may request
(the "Preferred Stock Facility"), provided that such request be for an aggregate
liquidation value of at least $2,500,000 and be made no later than October 31,
1996. The Preferred Stock accrues cash dividends at the rate of 8% per annum, or
10% per annum if paid in additional shares of Preferred Stock, through April 30,
1999. The Company has the option to purchase the Preferred Stock at any time for
a price equal to its liquidation value plus accrued dividends. However, if the
Company does not purchase the Preferred Stock in the case of a change in
control, an initial public offering, certain asset sales or under certain
circumstances, the dividend rate increases by four hundred basis points. In
connection with the Preferred Stock Facility, the Company issued to the CIBC
Merchant Fund a warrant to purchase 7,550 shares of the Company's Class A Common
Stock, at an exercise price of $.01 per warrant, which is immediately
exercisable and expires May 1, 2000. Should the Preferred Stock not be redeemed
by the earliest of 60 days following the termination of the Merger Agreement, or
by August 20, 1997, the Company is obligated to issue additional warrants for 1%
of the Company's fully-diluted common equity for each $2,500,000 of Preferred
Stock liquidation value outstanding.
In connection with the Stamford Acquisition on May 30, 1996 and the
Florida Acquisition on May 31, 1996, the Company issued 5,700 shares and 4,300
shares, respectively, of Preferred Stock for an aggregate purchase price of
$10,000,000.
- 12 -
<PAGE> 13
COMMODORE MEDIA, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth certain consolidated summary data of the Company:
<TABLE>
<CAPTION>
(dollars in thousands)
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
June 25, June 30, June 25, June 30,
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Non barter revenue .................. $8,027 $10,954 $13,779 $18,087
Barter revenue ...................... 797 967 1,552 1,882
------ ------- ------- -------
Total revenue (a) ............... 8,824 11,921 15,331 19,969
Variable expenses (b) (c) ........... 2,055 2,809 3,734 4,899
Other operating expenses (c) (d) .... 2,613 4,168 4,902 7,215
Barter expense (c) .................. 790 922 1,531 1,792
Corporate expenses .................. 534 610 994 1,076
Depreciation and amortization ....... 436 666 873 1,146
Long-term incentive compensation .... 1,422 0 2,007 0
------ ------- ------- -------
Operating income ................ $ 974 $ 2,746 $ 1,290 $ 3,841
====== ======= ======= =======
Other data:
Broadcast cash flow (e) ............. $3,366 $ 4,022 $ 5,164 $ 6,063
EBITDA (e) .......................... 2,832 3,412 4,170 4,987
Variable expenses as a percent of
non barter revenue ................ 25.6% 25.6% 27.1% 27.1%
Other operating expenses as a
percent of non barter revenue ..... 32.6% 38.1% 35.6% 39.9%
</TABLE>
(a) Net revenue, as detailed in the Company's unaudited financial statements,
equals total revenue less agency commissions.
(b) Variable expenses consist of all commissions (including agency, salesperson,
national representative and tower representative), music licensing fees and
bad debts, and excludes barter expense.
(c) Station operating expenses consists of variable expenses plus other
operating expenses plus barter expense less agency commissions.
(d) Other operating expenses consist primarily of employee salaries, programming
and similar expenses, advertising and promotional expenses and lease costs
for office, studio space and transmission sites, and excludes barter
expense.
(e) EBITDA is defined as net income (loss) before (i) interest expense, net,
(ii) income taxes, (iii) depreciation and amortization, (iv) extraordinary
gain (loss), (v) other expenses (income) and (vi) long-term incentive
compensation expense. Broadcast cash flow means EBITDA before corporate
expenses.
- 13 -
<PAGE> 14
RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 25, 1995
Total Revenue. Total revenue increased 35.1% to $11.9 million in the
second quarter of 1996 from $8.8 million during the same period in 1995 due
primarily to the additional revenues from various acquisitions and joint
operating agreements which include: the acquisition of WQOL-FM in the Fort
Pierce-Stuart-Vero Beach, Florida Market on June 27, 1995 (the "WQOL
Acquisition"); the JSA agreements with WPAW-FM in the Fort Pierce-Stuart-Vero
Beach, Florida Market entered into in August 1995 and WKAP-AM in Allentown,
Pennsylvania entered into in March 1995; the JSA agreement entered into on
February 19, 1996 and subsequent acquisition on May 31, 1996 of WAVW-FM,
WBBE-FM and WAXE-AM in the Fort Pierce-Stuart-Vero Beach, Florida Market (the
"Florida Acquisition"); the LMA agreements entered into on October 30, 1995 and
subsequent acquisition on March 27, 1996 of WRKI-FM and WINE-AM in Fairfield
County, Connecticut (the "Danbury Acquisition") and WAXB-FM, WZZN-FM and
WPUT-AM in Westchester County and Putnam County, New York (the "Westchester
Acquisition"); the LMA agreement effective April 1, 1996 with WKEE-FM, WKEE-AM
and WHRD-AM in Huntington, West Virginia, WZZW-AM and WFXN-FM in Milton, West
Virginia, WBVB-FM in Coal Grove, Ohio, and WIRO-AM and WMLV-FM in Ironton, Ohio
(the "Huntington LMA"); and the acquisition of WKHL-FM and WSTC-AM in Stamford,
Connecticut on May 30, 1996 (the "Stamford Acquisition"). On a same station
basis, total revenue decreased 1.9% to $8.7 million in the second quarter of
1996 from $8.8 million in the second quarter of 1995.
Station Operating Expenses. Station operating expenses increased 47.5%
to $6.9 million in the second quarter of 1996 from $4.7 million during the same
period in 1995. The increase was due primarily to the additional operating
expenses from the WQOL Acquisition, the Florida Acquisition, the Danbury
Acquisition, the Westchester Acquisition, the Huntington LMA, the Stamford
Acquisition and the JSA agreements with WPAW-FM and WKAP-AM. On a same station
basis, station operating expenses decreased 7.2% to $4.3 million in the second
quarter of 1996 from $4.7 million in the same period in 1995. The variable
expense component of station operating expenses increased to $2.8 million or
25.6% of non barter revenue in the second quarter of 1996 from $2.1 million or
25.7% of non barter revenue in the second quarter of 1995. On a same station
basis, the variable expense component of station operating expenses decreased to
$2.0 million or 25.7% of non barter revenue in the second quarter of 1996 from
$2.1 million or 25.5% of non barter revenue in the second quarter of 1995. The
other operating expense component of station operating expenses increased 59.7%
to $4.2 million in the second quarter of 1996 from $2.6 million during the same
period in 1995 primarily due to the additional operating expenses from the
aforementioned acquisitions and operating agreements. Other operating expenses
were 38.0% of non barter revenue in the second quarter of 1996 increasing from
32.5% of non barter revenue in the second quarter of 1995 primarily due to the
fees related to the JSA and LMA agreements in effect during the quarter. On a
same station basis, other operating expenses decreased 8.6% to $2.4 million or
30.2% of non barter revenue in the second quarter of 1996 from $2.6 million or
32.5% of non barter revenue during the same period in 1995 primarily as a result
of maximizing barter arrangements for advertising and promotion expenses during
1996.
- 14 -
<PAGE> 15
Corporate Expenses. Corporate expenses increased 14.2% in the second
quarter of 1996 to approximately $610,000 from approximately $534,000 during
the same period in 1995 as a result of higher salary expense for additional
staffing, which was partially offset by lower incentive accruals. Corporate
expenses as a percentage of non barter revenue were 5.6% in the second
quarter of 1996 compared to 6.7% in the second quarter of 1995.
Other Expenses. Depreciation and amortization increased 52.6% to
approximately $666,000 in the second quarter of 1996 from approximately $436,000
during the same period in 1995 primarily due to the WQOL Acquisition, the
Florida Acquisition, the Stamford Acquisition, the Danbury Acquisition and the
Westchester Acquisition. Long-term incentive compensation expense of $1.4
million in the second quarter of 1995 consisted of compensation expense
incurred by the Company pursuant to Mr. Friedman's and Mr. Shea's (the
Company's Chief Executive Officer and President and its Chief Operating
Officer, respectively) prior employment agreements; currently, Mr. Friedman's
and Mr. Shea's employment agreements do not contain any provisions for long
term incentive compensation, and therefore no expense has been recognized
during the current period. Interest expense increased 46.8% to $2.7 million in
the second quarter of 1996 from $1.8 million during the same period in 1995
primarily due to the interest expense associated with the Company's 13 1/4%
Senior Subordinated Notes and $18.7 million in acquisition and working capital
funding from the AT&T facility. Interest income of approximately $53,000
was earned on the Company's temporary cash investments. Other expenses
increased to approximately $670,000 in the second quarter of 1996 from
approximately $101,000 during the same period in 1995. The increase was
primarily due to approximately $507,000 in expenses associated with the filing
of the Company's Registration Statement on Form S-1 with the Securities and
Exchange Commission on May 17, 1996, which was subsequently withdrawn.
Operating Income. Operating income in the second quarter of 1996
increased to $2.7 million from approximately $974,000 in the second quarter of
1995. The increase was due to additional operating income from the various
acquisitions and operating agreements, and a reduction in long-term incentive
compensation expense, which were partially offset by increased depreciation and
amortization realized on the completed acquisitions. On a same station basis,
operating income for the second quarter of 1996 increased to $2.5 million from
approximately $974,000 in the second quarter of 1995 primarily due to the
decrease in long-term incentive compensation.
Net Loss. Net loss before extraordinary items for the second quarter of
1996 was approximately $596,000 compared to a net loss of approximately $881,000
during the same period in 1995. The decrease in the net loss over the prior
period was primarily due to a $1.4 million reduction in long-term incentive
compensation and increased operating income provided by the various acquisitions
and operating agreements, which were partially offset by increased interest
expense of approximately $861,000 along with approximately $507,000 in other
expenses recognized during the second quarter of 1996 in connection with the
aborted S-1 filing. Upon issuance of the Company's 13 1/4% Senior Subordinated
Notes on April 21, 1995, the Company wrote-off approximately $444,000 of
deferred financing fees associated with its prior credit agreement and recorded
it as an extraordinary loss during the second quarter of 1995.
- 15 -
<PAGE> 16
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 25, 1995
Total Revenue. Total revenue increased 30.3% to $20.0 million for the
six months ended June 30, 1996 from $15.3 million during the six months ended
June 25, 1995 due primarily to the additional revenues from various acquisitions
and joint operating agreements. On a same station basis, total revenue decreased
0.8% to $15.2 million for the six months ended June 30, 1996 from $15.3 million
for the six months ended June 25, 1995.
Station Operating Expenses. Station operating expenses increased 38.8%
to $12.3 million in the first six months of 1996 from $8.8 million during the
same period in 1995. The increase was due primarily to the additional operating
expenses from the WQOL Acquisition, the Florida Acquisition, the Danbury
Acquisition, the Westchester Acquisition, the Huntington LMA, the Stamford
Acquisition and the JSA agreements with WPAW-FM and WKAP-AM. On a same station
basis, station operating expenses decreased 3.9% to $8.5 million in the first
six months of 1996 from $8.8 million in the same period in 1995. The variable
expense component of station operating expenses was $4.9 million or 27.1% of non
barter revenue in the first six months of 1996 compared to $3.7 million or 27.1%
of non barter revenue in the same period in 1995. On a same station basis, the
variable expense component of station operating expenses remained
unchanged at $3.7 million or 27.5% of non barter revenue in the first six months
of 1996. The other operating expense component of station operating expenses
increased 47.3% to $7.2 million in the first six months of 1996 from $4.9
million during the same period in 1995 primarily due to the additional operating
expenses from the aforementioned acquisitions and agreements. Other operating
expenses were 39.9% of non barter revenue in the first six months of 1996
increasing from 35.6% of non barter revenue in the first six months of 1995
primarily due to the fees related to the JSA and LMA agreements in effect during
the current period. On a same station basis, other operating expenses decreased
6.6% to $4.6 million or 33.5% of non barter revenue in the first six months of
1996 from $4.9 million or 35.6% of non barter revenue during the same period in
1995 primarily as a result of maximizing barter arrangements for advertising and
promotion expenses during 1996.
Corporate Expenses. Corporate expenses increased 8.1% in the six months
ended June 30, 1996 to $1.1 million from approximately $994,000 in the six
months ended June 25, 1995 as a result of higher salary expense for additional
staffing, which was partially offset by lower incentive accruals. Corporate
expenses as a percentage of non barter revenue were 5.9% in the first six
months of 1996 compared to 7.2% in the same period in 1995.
Other Expenses. Depreciation and amortization increased 31.2% to $1.1
million in 1996 from approximately $873,000 during the same period in 1995
primarily due to the WQOL Acquisition, the Florida Acquisition, the Stamford
Acquisition, the Danbury Acquisition and the Westchester Acquisition. Long-term
incentive compensation expense of $2.0 million in 1995 consisted of
compensation expense incurred by the Company pursuant to Mr. Friedman's and Mr.
Shea's (the Company's Chief Executive Officer and President and its Chief
Operating Officer, respectively) prior employment agreements; currently, Mr.
Friedman's and Mr. Shea's
- 16 -
<PAGE> 17
employment agreements do not contain any provisions for long term incentive
compensation, and therefore no expense has been recognized during the current
period. Interest expense increased 93.1% to $5.2 million in 1996 from $2.7
million during the same period in 1995 primarily due to the interest expense
associated with the Company's 13 1/4% Senior Subordinated Notes and $18.7
million in acquisition and working capital funding from the AT&T facility.
Interest income of approximately $168,000 was earned on the Company's temporary
cash investments. Other expenses increased to approximately $838,000 for the six
months ended June 30, 1996 from approximately $158,000 for the six months ended
June 25, 1995. The increase was primarily due to approximately $507,000 in
expenses associated with the filing of the Company's Registration Statement on
Form S-1 with the Securities and Exchange Commission on May 17, 1996, which was
subsequently withdrawn, as well as an increase in amortization of deferred
financing costs.
Operating Income. Operating income for the six months ended June 30,
1996 increased to $3.8 million from $1.3 million for the six months ended June
25, 1995. The increase was primarily due to additional operating income from the
various acquisitions and operating agreements and a reduction in long-term
incentive compensation expense, which were partially offset by increased
depreciation and amortization on the completed acquisitions. On a same station
basis, operating income increased to $3.5 million in 1996 from $1.3 million in
1995 primarily due to the decrease in long-term incentive compensation.
Net Loss. Net loss before extraordinary items for the six months ended
June 30, 1996 was $2.0 million compared to a net loss of $1.5 million during the
same period in 1995. The increase in the net loss over the prior period was
primarily due to an increase in interest expense of $2.4 million and
approximately $507,000 in other expenses recognized during the second quarter of
1996 in connection with the aborted S-1 filing, which were partially offset by a
$2.0 million reduction in long-term incentive compensation and increased
operating income provided from the various acquisitions and operating
agreements. Upon issuance of the Company's 13-1/4% Senior Subordinated Notes in
April 1995, the Company wrote-off approximately $444,000 of deferred financing
fees associated with its prior credit agreement and recorded it as an
extraordinary loss.
- 17 -
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES:
The Company's liquidity needs arise primarily from its debt service
obligations, funding of its working capital needs, acquisitions and capital
expenditures. Net cash provided by operations was approximately $253,000 for the
six months ended June 30, 1996 compared to net cash used by operating activities
of approximately $676,000 for the six months ended June 25, 1995. Changes in the
Company's net cash flows from operating activities are primarily the result of
improvement in its broadcast cash flow and a reduction in long term incentive
payments, which were partially offset by an increase in the amount of interest
paid.
During the first six months of 1996, net cash flow used in investing
activities increased to $34.1 million from approximately $656,000 for the first
six months of 1995. These investing activities in the first six months of 1996
included approximately $251,000 of capital expenditures, $1.2 million in
deferred acquisition and intangible costs, and $32.5 million for station
acquisitions and deposits which includes a $600,000 deposit towards the
contemplated purchase of the Huntington LMA stations, $14.4 million for the
Danbury and Westchester Acquisitions (net of a $500,000 deposit paid in the
fourth quarter of 1995), $9.5 million for the Stamford Acquisition, and $8.0
million for the Florida Acquisition. Investing activities for the first six
months of 1995 included approximately $209,000 of deferred acquisition and
intangible costs, approximately $164,000 of capital purchases, approximately
$133,000 net of loans to employees and a $150,000 deposit on the WQOL
Acquisition.
Net cash flow provided by financing activities for the six months ended
June 30, 1996 totaled $27.6 million as compared to $13.3 million for the six
months ended June 25, 1995. Financing activities for the first six months of
1996 include $15.0 million of senior debt issued by AT&T under the Senior Credit
Facility as partial funding for the Danbury, Westchester, Stamford and Florida
Acquisitions, as well as a drawdown of $3.7 million under the accounts
receivable credit facility. In addition, the Company paid approximately $773,000
of deferred debt issuance costs in connection with the Company's Senior Credit
Facility and approximately $212,000 of various costs related to the Merger
Agreement and abandoned IPO. During the second quarter of 1996, the Company
issued a total of 10,000 shares of Series A Preferred Stock in order to finance
a portion of the Stamford and Florida acquisitions resulting in net proceeds of
$9.9 million. Net cash flow provided by financing activities for the first six
months of 1995 included $65.0 million of gross proceeds from the issuance of the
Company's Senior Subordinated Notes and $2.9 million paid in deferred debt
issuance costs, repayment of $39.0 million of amounts borrowed from The Bank of
New York, Radio Financial Partners and Michael Hanson, the redemption of $8.7
million of the Company's preferred stock and a $1.0 million payment for the
purchase of a common stock warrant held by The Bank of New York.
- 18 -
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES (CONT'D)
The Senior Credit Facility allows the Company to borrow up to $30
million in revolving loans and up to $5 million in accounts receivable loans.
Interest is payable monthly at a rate of 3.5% over LIBOR. Principal amortization
commences on November 30, 1997 for the receivable loan.
On June 21, 1996 the Company, the Estate of Carter Burden, Bruce A.
Friedman, James T. Shea, Jr., William A. M. Burden & Co., L. P. and James J.
Sullivan entered into an Agreement and Plan of Merger (the "Merger Agreement")
with CMI Acquisition Company, Inc. ("Mergeco"), a subsidiary of Hicks, Muse,
Tate & Furst Equity Fund III, L.P. ("Fund III"), pursuant to which Mergeco will
be merged with and into the Company and as a result the Company will become a
wholly-owned subsidiary of Capstar Broadcasting Partners, Inc., which is an
indirect subsidiary of Fund III (the "Merger"). Pursuant to the Merger
Agreement, the holders of Class A Common Stock and Class B Common Stock
(collectively, the "Common Stock"), the holders of employee stock options at the
effective time of the Merger (the "Effective Time") and the holders of warrants
will receive approximately $140 per share as consideration for the Merger (the
"Merger Consideration"), less, in the case of option and warrant holders, the
exercise price per share. In addition, Mergeco has agreed to separately provide
the funds necessary to redeem the Senior Exchangeable Redeemable Preferred
Stock, Series A, $.01 par value per share (the "Series A Preferred Stock") at
the Effective Time. As a result, all shares of Common Stock and Series A
Preferred Stock exchanged for the Merger Consideration shall cease to be
outstanding at the Effective Time.
In addition, Fund III has agreed, subject to certain conditions, to
purchase on or after September 3, 1996 at the request of the Company up to 5,000
shares of Senior Exchangeable Redeemable Preferred Stock, Series B, $.01 par
value per share (the "Series B Preferred Stock") at a purchase price of $1,000
per share and up to an additional 15,000 shares of Series B Preferred Stock if
the Merger Agreement is terminated for reasons other than a breach by the
Company. In connection with the purchase of Series B Preferred Stock, the
Company has agreed to issue to Fund III warrants to purchase shares of Class A
Common Stock equal to one percent of the Company's fully diluted Common Stock
for each $2,500,000 of Series B Preferred Stock purchased by Fund III.
As a result of the Merger and the change of control effected thereby,
the Company (as the surviving corporation) will be required to make within 20
days of the Effective Date an offer to purchase the outstanding 13 1/4% Senior
Subordinated Notes due 2003 at a purchase price equal to 101% of their accreted
value, plus any accrued and unpaid interest. The consummation of the Merger is
conditioned upon (i) the consent of the Federal Communications Commission which
consent shall have become a final order, (ii) receipt of all necessary
approvals of the Federal Trade Commission and the Antitrust Division of the
Department of Justice with respect to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended and (iii) satisfaction of various
representations, warranties and covenants as set forth in the Merger Agreement.
- 19 -
<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES (CONT'D)
On May 1, 1996, the Company entered into a Securities Purchase
Agreement with CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Merchant Fund"),
pursuant to which the CIBC Merchant Fund agreed to purchase from the Company, if
and when requested by the Company, up to an aggregate liquidation value of
$12,500,000 of Senior Exchangeable Redeemable Preferred Stock, Series A, $.01
par value per share, of the Company in such amounts as the Company may request
(the "Preferred Stock Facility"), provided that such request be for an aggregate
liquidation value of at least $2,500,000 and be made no later than October 31,
1996. The Preferred Stock accrues cash dividends at the rate of 8% per annum, or
10% per annum if paid in additional shares of Preferred Stock, through April 30,
1999. The Company has the option to purchase the Preferred Stock at any time for
a price equal to its liquidation value plus accrued dividends. However, if the
Company does not purchase the Preferred Stock in the case of a change in
control, an initial public offering, certain asset sales or under certain
circumstances, the dividend rate increases by four hundred basis points. In
connection with the Preferred Stock Facility, the Company issued to the CIBC
Merchant Fund a warrant to purchase 7,550 shares of the Company's Class A Common
Stock, at an exercise price of $.01 per warrant, which is immediately
exercisable and expires April 30, 2000. Should the Preferred Stock not be
redeemed by the earliest of 60 days following the termination of the Merger
Agreement, or by August 20, 1997, the Company is obligated to issue additional
warrants for 1% of the Company's fully-diluted common equity for each $2,500,000
of Preferred Stock liquidation value outstanding.
In connection with the Stamford Acquisition on May 30, 1996 and the
Florida Acquisition on May 31, 1996, the Company issued 5,700 shares and 4,300
shares, respectively, of Preferred Stock for an aggregate purchase price of
$10,000,000.
The Company anticipates closing on its planned acquisition of the
Huntington LMA stations in the latter part of 1996 and will fund the $12.0
million purchase price with available revolving credit borrowings under the AT&T
Credit Agreement and the Preferred Stock Facility.
Management believes that cash from operating activities together with
available revolving credit borrowings under the AT&T Credit Agreement and the
Preferred Stock Facility should be sufficient to permit the Company to meet its
financial obligations, fund its operations for the foreseeable future and
consummate its planned acquisitions, should the merger not be consummated. The
Company's long-term debt is comprised of the Senior Subordinated Notes and the
Senior Credit Facility. The Company may require additional financing for future
acquisitions and there can be no assurance that it will be able to obtain such
financing on terms considered by management to be favorable.
- 20 -
<PAGE> 21
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Pursuant to a unanimous written consent of the Stockholders of the
Company dated June 18, 1996, the stockholders of the common stock of the
Company voted to approve the Merger Agreement and the transactions
contemplated thereby.
ITEM 5. OTHER INFORMATION
In April 1996, Susan Burden was appointed Chairman of the Company's
Board of Directors.
- 21 -
<PAGE> 22
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
Number Exhibit Title
------ -------------
10.63 Asset Purchase Agreement dated as of April 8, 1996
between Commodore Media of Kentucky, Inc.
("Commodore-Kentucky") and Simmons Broadcasting
Company
10.64 Local Marketing Agreement dated as of April 8, 1996
between Commodore-Kentucky and Simmons Broadcasting
Company
10.65 Asset Purchase Agreement dated as of April 8, 1996
between Commodore-Kentucky and Adventure
Communications, Inc.
10.66 Local Marketing Agreement dated as of April 8, 1996
between Commodore-Kentucky and Adventure
Communications, Inc.
10.67 Contingent Sale and Assignment of Options Agreement
dated as of April 8, 1996 between Commodore-Kentucky
and Michael R. Shott.
10.68 Securities Purchase Agreement dated as of May 1, 1996
among the Company, the Guarantors and CIBC WG Argosy
Merchant Fund 2, L.L.C. (the "CIBC Merchant Fund")
10.69 Common Stock Registration Rights and Stockholders
Agreement dated as of May 1, 1996 among the Company,
Certain Control Stockholders and the CIBC Merchant
Fund.
10.70 Registration Rights Agreement dated as of May 1, 1996
among the Company, the Guarantors and the CIBC
Merchant Fund.
10.71 Warrant Agreement dated as of May 1, 1996 between the
Company and IBJ Schroder Bank & Trust Company, as
warrant agent.
10.72* Unwind Agreement dated as of May 30, 1996 between
Commodore Media of Norwalk, Inc. and Odyssey
Communications, Inc.
* Previously filed on Form 8-K dated May 30, 1996
- 22 -
<PAGE> 23
PART II - OTHER INFORMATION
6(a) EXHIBITS (CONTINUED):
10.73 Agreement and Plan of Merger by and among CMI
Acquisition Company, Inc. ("CMI Acquisition"),
the Company and the stockholders and other
signatories thereto dated as of June 21, 1996
10.74 Letter of Credit Escrow Agreement dated June 21, 1996
by and among CMI Acquisition, Hicks, Muse, Tate &
Furst Equity Fund III, L.P., the Company and
Citibank, N.A.
(b) REPORTS ON FORM 8-K:
During the quarter ended June 30, 1996 the following reports on
Form 8-K were filed:
(i) A Form 8-K dated March 27, 1996 was filed reporting the
consummation of the Danbury Acquisition and Westchester
Acquisition, and the execution of definitive agreements with
respect to the Huntington Acquisitions.
(ii) A Form 8-K dated May 30, 1996 was filed reporting the
consummation of the Stamford Acquisition and the Florida
Acquisition.
(iii) A Form 8-K/A dated March 27, 1996 was filed reporting the
financial statements of the Danbury Acquisition and proforma
financial information with respect to the Danbury and
Westchester Acquisition.
(iv) A Form 8-K dated June 21, 1996 was filed reporting the
execution of the Merger Agreement.
- 23 -
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Commodore Media, Inc.
---------------------
(Registrant)
Date: August 13, 1996 /s/ Bruce A. Friedman
---------------------------------
Bruce A. Friedman
Chief Executive Officer and President
(principal executive officer)
Date: August 13, 1996 /s/ James J. Sullivan
---------------------------------
James J. Sullivan
Chief Financial Officer
(principal financial and accounting officer)
- 24 -
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Commodore Media of Delaware, Inc.
a Delaware Corporation
Commodore Media of Kentucky, Inc.
a Delaware Corporation
Commodore Media of Pennsylvania, Inc.
a Delaware Corporation
Commodore Media of Norwalk, Inc.
a Delaware Corporation
Commodore Media of Florida, Inc.
a Delaware Corporation
Commodore Media of Westchester, Inc.
a Delaware Corporation
Commodore Holdings, Inc.
a Delaware Corporation
Danbury Broadcasting, Inc.
a Connecticut Corporation
Date: August 13, 1996 By: /s/ Bruce A. Friedman
---------------------------
Bruce A. Friedman
Chief Executive Officer and
President
(principal executive officer)
Date: August 13, 1996 By: /s/ James J. Sullivan
---------------------------
James J. Sullivan
Chief Financial Officer
(principal financial and
accounting officer)
- 25 -
<PAGE> 26
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.63 Asset Purchase Agreement dated as of April 8, 1996
beween Commodore Media of Kentucky, Inc.
("Commodore-Kentucky") and Simmons Broadcasting
Company
10.64 Local Marketing Agreement dated as of April 8, 1996
between Commodore-Kentucky and Simmons Broadcasting
Company
10.65 Asset Purchase Agreement dated as of April 8, 1996
between Commodore-Kentucky and Adventure
Communications, Inc.
10.66 Local Marketing Agreement dated as of April 8, 1996
between Commodore-Kentucky and Adventure
Communications, Inc.
10.67 Contingent Sale and Assignment of Options Agreement
dated as of April 8, 1996 between Commodore-Kentucky
and Michael R. Shott.
10.68 Securities Purchase Agreement dated as of May 1, 1996
among the Company, the Guarantors and CIBC WG Argosy
Merchant Fund 2, L.L.C. (the "CIBC Merchant Fund")
10.69 Common Stock Registration Rights and Stockholders
Agreement dated as of May 1, 1996 among the Company,
Certain Control Stockholders and the CIBC Merchant
Fund.
10.70 Registration Rights Agreement dated as of May 1, 1996
among the Company, the Guarantors and the CIBC
Merchant Fund.
10.71 Warrant Agreement dated as of May 1, 1996 between the
Company and IBJ Schroder Bank & Trust Company, as
warrant agent.
10.72* Unwind Agreement dated as of May 30, 1996 between
Commodore Media of Norwalk, Inc. and Odyssey
Communications, Inc.
* Previously filed on Form 8-K dated May 30, 1996
- 26 -
<PAGE> 27
EXHIBIT INDEX (CONTINUED)
EXHIBIT NO. DESCRIPTION
10.73 Agreement and Plan of Merger by and among CMI
Acquisition Company, Inc. ("CMI Acquisition"),
the Company and the stockholders and other
signatories thereto dated as of June 21, 1996
10.74 Letter of Credit Escrow Agreement dated June 21, 1996
by and among CMI Acquisition, Hicks, Muse, Tate &
Furst Equity Fund III, L.P., the Company and
Citibank, N.A.
- 27 -
<PAGE> 1
Exhibit 10.63
===============================================================================
ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 8, 1996
BETWEEN
COMMODORE MEDIA OF KENTUCKY, INC.
AND
SIMMONS BROADCASTING COMPANY
===============================================================================
<PAGE> 2
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - Defined Terms
1.1 Defined Terms...................................... 2
ARTICLE II - Sale and Purchase of Assets
2.1 Agreement to Sell and Buy.......................... 7
2.2 Excluded Assets.................................... 8
2.3 Purchase Price..................................... 9
2.4 Adjustments and Prorations......................... 11
2.5 Assumption of Liabilities and Obligations.......... 12
2.6 Allocation......................................... 13
ARTICLE III - Representations and Warranties of Simmons
3.1 Organization, Standing and Authority............... 16
3.2 Authorization and Binding Obligation............... 16
3.3 Absence of Conflicting Agreements or Consents...... 17
3.4 Licenses........................................... 18
3.5 Real Property...................................... 18
3.6 Title to and Condition of Personal Property........ 20
3.7 Contracts.......................................... 21
3.8 Consents........................................... 22
3.9 Trademarks, Trade Names and Copyrights............. 22
3.10 Financial Statements............................... 23
3.11 Insurance.......................................... 24
3.12 Reports............................................ 24
3.13 Employee Benefit Plans............................. 24
3.14 Labor Relations.................................... 26
3.15 Taxes.............................................. 26
3.16 Claims; Legal Actions.............................. 27
3.17 Laws............................................... 27
3.18 Undisclosed Liabilities............................ 28
3.19 Books and Records.................................. 28
3.20 Assets............................................. 29
3.21 No Adverse Developments............................ 29
3.22 Environment, Health and Safety..................... 29
3.23 No Adverse Change.................................. 30
3.24 Full Disclosure.................................... 30
</TABLE>
- i -
<PAGE> 3
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV - Representations and Warranties of Buyer
4.1 Organization, Standing and Authority............... 30
4.2 Authorization and Binding Obligation............... 31
4.3 Absence of Conflicting Agreements or Consents...... 31
4.4 Qualification...................................... 32
4.5 Full Disclosure.................................... 32
ARTICLE V - Covenants of Simmons
5.1 Pre-Closing Covenants.............................. 33
5.2 Post-Closing Covenants............................. 37
ARTICLE VI - Covenants of Buyer
6.1 Inconsistent Action................................ 37
6.2 Qualification...................................... 37
6.3 Adventure Local Marketing Agreement................ 38
ARTICLE VII - Special Covenants and Agreements
7.1 FCC Consent........................................ 38
7.2 Control of the Station............................. 39
7.3 Taxes, Fees and Expenses........................... 39
7.4 Brokers............................................ 39
7.5 Bulk Sales Law..................................... 40
7.6 Confidentiality.................................... 40
7.7 Cooperation........................................ 41
7.8 Risk of Loss....................................... 41
7.9 Local Marketing Agreement.......................... 43
ARTICLE VIII - Conditions to Obligations of Buyer
and Simmons
8.1 Conditions to Obligations of Buyer................. 43
8.2 Conditions to Obligations of Simmons............... 48
</TABLE>
- ii -
<PAGE> 4
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IX - Closing and Closing Deliveries
9.1 Closing............................................ 49
9.2 Deliveries by Simmons.............................. 50
9.3 Deliveries by Buyer................................ 51
ARTICLE X - Rights of Buyer and Simmons Upon
Termination or Breach
10.1 Termination........................................ 52
10.2 Specific Performance............................... 53
10.3 Liquidated Damages................................. 54
ARTICLE XI - Survival of Representations and
Warranties and Indemnification
11.1 Representations and Warranties..................... 54
11.2 Indemnification by Simmons......................... 54
11.3 Indemnification by Buyer........................... 55
11.4 Procedure for Indemnification...................... 56
ARTICLE XII - Miscellaneous
12.1 Notices............................................ 59
12.2 Benefit and Binding Effect......................... 60
12.3 Headings........................................... 61
12.4 Gender and Number.................................. 61
12.5 Counterparts....................................... 61
12.6 Attorneys' Fees.................................... 61
12.7 Entire Agreement................................... 61
12.8 Choice of Law...................................... 62
</TABLE>
- iii -
<PAGE> 5
EXHIBITS
--------
Exhibit A - Escrow Deposit Agreement
Exhibit B - Escrow Indemnification Agreement
Exhibit C - Local Marketing Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Simmons' Certificate
Exhibit F - Opinion of Simmons' Counsel
Exhibit G - Opinion of Simmons' FCC Counsel
Exhibit H - Buyer's Certificate
Exhibit I - Opinion of Buyer's Counsel
SCHEDULES
---------
SELLER SCHEDULES
Schedule 2.4(b) - Description of Trade Deals
Schedule 3.4 - Licenses
Schedule 3.5 - Description of Real Property and Leasehold
Interests (also title insurance policies
should be attached)
Schedule 3.6 - Description of Personal Property
Schedule 3.7 - Description of all Contracts plus list of
balances on program license agreements and
advertising agreements
Schedule 3.8 - Seller Required Consents
Schedule 3.9 - List of all copyrights, trademarks, trade
names, etc.
Schedule 3.10 - Financial Statements
Schedule 3.11 - List of Insurance Policies
Schedule 3.13 - List of all Employment Agreements, benefit
plans or arrangements
Schedule 3.14 - Employee disputes
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Schedule 3.16 - List of Claims and Legal Actions
Schedule 3.18 - Undisclosed Liabilities
Schedule 3.22 - Environmental, Health and Safety Issues
BUYER SCHEDULES
Schedule 4.3 - Buyer Required Consents
Schedule 4.4 - Qualification Exceptions
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<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of April 8, 1996, is by and
between SIMMONS BROADCASTING COMPANY, a South Carolina corporation ("Simmons"),
and COMMODORE MEDIA OF KENTUCKY, INC., a Delaware corporation ("Buyer").
P R E M I S E S:
A. Simmons owns and operates radio stations WHRD (AM),
Huntington, West Virginia, ("WHRD"); WFXN (FM), Milton, West Virginia ("WFXN")
and WMLV (FM), Ironton, Ohio ("WMLV"); all of the enumerated radio stations
being hereinafter referred to as the "Stations", pursuant to licenses issued by
the Federal Communications Commission (the "FCC"). The stations are subject to
Joint Operating and Lease Agreements entered into with Adventure Communications,
Inc. ("Adventure").
B. Simmons desires to sell and Buyer desires to buy sub
stantially all the assets used or useful in the operation of the Stations and by
so doing to acquire the radio broadcast business presently conducted by the
Stations, upon the terms and conditions hereinafter set forth.
<PAGE> 8
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 Simmons agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Defined Terms. The following terms shall have the following
meanings in this Agreement:
"Agreement" means this Asset Purchase Agreement between Buyer
and Simmons for the assets of the Stations.
"Assets" means all the tangible and intangible assets owned,
leased or licensed by Simmons for the Stations, as the case may be, whether or
not reflected on the balance sheet of Simmons, 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 hereto, (ii) all Contracts entered into by Simmons on or
after the date of this Agreement and before the Closing in accordance with the
applicable provisions of Section 5.1(a), and (iii) Trade Deals described in
Section 2.5(b) hereto.
"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
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<PAGE> 9
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, and the consents of third
parties to Simmons necessary to transfer the Assets to Buyer or otherwise to
consummate the transactions contemplated hereby, which are necessary for Buyer
to consummate the trans actions contemplated hereby.
"Contracts" means all agreements, written or oral (including
any amendments and other modifications thereto), to which Simmons is a party and
which affect or relate to the Assets or the business or operations of the
Stations.
"Environmental Laws" means the rules and regulations of the
FCC, the Environmental Protection Agency and any other federal, state or local
government authority pertaining to human exposure to RF radiation, and all
applicable Federal, state and local laws, rules and regulations, as amended,
relating to the discharge or removal of air pollutants, water pollutants or
process waste water or Hazardous Material.
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<PAGE> 10
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" means Media Venture Partners, Ltd.
"Escrow Deposit" means the sum of Twenty-Five Thousand Dollars
($25,000) 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 Simmons, Buyer and the Escrow Agent substantially in the form attached
hereto as Exhibit A.
"Excluded Assets" means those assets specified in Section 2.2.
"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 Stations to Buyer as contemplated by
this Agreement.
"FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Simmons and applica tions to the FCC
relating to or used in the business or opera tions of the Stations, 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
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<PAGE> 11
administrative or judicial review, reconsideration, appeal or stay, and the time
for filing any such requests and for the FCC to set aside the action on its own
motion has expired or (ii) in the event of review, reconsideration or appeal,
such review, reconsideration or appeal has been denied and the time for seeking
further review, reconsideration or appeal and for the FCC to review such action
has expired.
"Financial Statements" means the financial statements of
Simmons as described in Section 3.10 hereof and as attached to Schedule 3.10
hereto.
"Hazardous Material" shall mean any substance or waste
containing any hazardous substance, pollutant or contaminant, or toxic
substance, as those terms are defined, in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, and any other
substance similarly defined or identified in any applicable Environmental Laws.
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Simmons, Buyer and the Indemnification Escrow Agent,
substantially in the form attached hereto as Exhibit B.
"Indemnification Escrow Agent" means such institution whom the
parties agree upon, and, in the absence of an agreement, a bank or other similar
institution with assets over $100,000,000.
"Intellectual Property" has the meaning assigned to such term
in Section 2.1.
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<PAGE> 12
"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 Simmons used in the business and operations of the
Stations, including those listed on Schedule 3.4 hereto with any additions
thereto between the date hereof and the Closing Date.
"Local Marketing Agreement" means the Local Marketing
Agreement between Buyer and Simmons, substantially in the form attached hereto
as Exhibit C.
"Non-Competition Agreement" means the agreement among Buyer,
Seller and W. Lee Simmons substantially in the form attached hereto as Exhibit
D.
"Personal Property" means all of the machinery, equip ment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, leasehold improvements, office
equipment, supplies, plant, spare parts and other tangible or intangible
personal property which is used in the business and operations of the Stations
including the personal property which is listed on Schedule 3.6 hereto together
with any additions or permitted deletions thereto between the date hereof and
the Closing Date.
"Purchase Price" means the consideration payable by Buyer to
Simmons for the Assets as provided in Section 2.3 hereof.
"Real Property" means all of Simmons' real property, leasehold
interests, easements, licenses, rights to access, and
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<PAGE> 13
rights-of-way which are used in the business and operations of the Station,
including those interests which are identified and described in Schedule 3.5
hereto together with any addition or permitted deletion thereto between the date
hereof and the Closing Date, and the parcel of real property owned by Adventure
Technology, Inc.
"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.1.
"Title Company" means Fidelity National Title Insurance
Company or such other title insurance company acceptable to Buyer.
"Trade Deals" means the exchanges by the Stations of their
advertising time for goods, services or other consideration, other than in
connection with the licensing of programs and programming material.
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, Simmons shall transfer and deliver to Buyer on the
Closing Date, and Buyer shall purchase on the Closing Date all of the Assets for
the Stations, free and clear of any liabilities, mortgages, liens, pledges,
conditions or encumbrances of any nature whatsoever (except for
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<PAGE> 14
those permitted in accordance with Sections 2.5 or 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 Simmons or in which Simmons has an interest, patents
and applications therefor and all other similar intangible assets
relating to the Stations, including, but not limited to the call
letters WHRD, WFXN and WMLV and the goodwill related to the foregoing
(the "Intellectual Property");
(6) All of the Stations' 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 Stations, if any, including filings with the
FCC which relate to the Stations, and goodwill relating to the
foregoing;
(7) All books and records relating to the business and
operations of the Stations, including, without limitation, (a) executed
copies of the Assumed Contracts or, if no executed agreement exists,
summaries of such Assumed Contracts transferred pursuant to Section
2.1(4) hereof and (b) all records required by the FCC to be kept by
Stations;
(8) To the extent assignable, all computer programs and
software, and all rights and interests in and to computer programs and
software used in connection with the business and operations of the
Stations; and
(9) All intangible assets of Simmons relating to the
Stations not specifically described above, including, without
limitation, goodwill.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(1) Simmons' cash on hand as of the Closing Date and all
other cash in any of Simmons' bank or savings accounts; notes
receivable, letters of credit or other similar items and any cash
surrender value in regard thereto; and any
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<PAGE> 15
stocks, bonds, certificates of deposit and similar
investments;
(2) Sellers' corporate minute books and other books and
1records relating to internal corporate matters and any other books and
records not related to the Stations or their business or operations;
(3) Any claims, rights and interest in and to any refunds
of federal, state or local franchise, income or other taxes, utility
security deposits, or fees of any nature whatsoever which relate solely
to the period prior to the Closing Date;
(4) All insurance contracts (except as provided in
Section 7.9);
(5) All contracts listed on Schedule 3.13 (except those
which are designated as Assumed Contracts) and all assets or funds held
in trust, or otherwise, associated with or used in connection with
Simmons' employee benefit plans, programs or arrangements;
(6) All Choses in Action of Simmons which relate entirely
to the period before the Closing Date; and
(7) Accounts Receivable.
2.3 Purchase Price.
(a) The Purchase Price for the Assets is Five Hundred
Thirty-Five Thousand Dollars ($535,000), which amount is to paid by Buyer to
Simmons if all Stations close as follows:
(i) the Escrow Deposit, which shall be deposited
by Buyer with Escrow Agent on the execution of this Agreement
shall be transferred to Simmons by wire transfer at Closing
and credited to the Purchase Price;
(ii) Four Hundred Eighty-Five Thousand Dollars
($485,000) of the Purchase Price shall be paid to Simmons or
its designee(s) at Closing by wire transfer; and
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<PAGE> 16
(iii) the remaining Twenty-Five Thousand Dollars
($25,000) shall be deposited with the Indemnification Escrow
Agent.
(b) If there is a Closing for Stations WHRD and WFXN,
then the amount of the Purchase Price of Three Hundred Thirty- Five Thousand
Dollars ($335,000) shall be paid for the Assets of these two Stations which
amount is to be paid by Buyer to Seller as follows:
(i) Sixteen Thousand Dollars ($16,000) from the
Escrow Deposit;
(ii) Three Hundred and Three Thousand Dollars
($303,000) of the Purchase Price shall be paid to Seller or
its designee(s) at Closing by wire transfer; and
(iii) the remaining Sixteen Thousand Dollars
($16,000) shall be deposited with the Indemnification Escrow
Agent; and
(c) If there is a Closing for Station WMLV, then the
amount of the Purchase Price of Two Hundred Thousand Dollars ($200,000) shall be
paid for the Assets of these Stations which amount is to be paid by Buyer to
Seller as follows:
(i) Nine Thousand Dollars ($9,000) from the
Escrow Deposit;
(ii) One Hundred Eighty-Two Thousand Dollars
($182,000) of the Purchase Price shall be paid to Seller or
its designee(s) at Closing by wire transfer; and
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<PAGE> 17
(iii) the remaining Nine Thousand Dollars ($9,000)
shall be deposited with the Indemnification Escrow Agent.
The payments under Section 2.3 (a), (b) and (c) above shall be made by
Buyer to no more than two (2) accounts of which Buyer is notified of by Simmons
pursuant to an irrevocable pay proceeds letter deliver by Simmons to Buyer at
least three (3) business days prior to the Closing Date.
2.4 Assumption of Liabilities and Obligations.
(a) Subject to the Local Marketing Agreement, as of the
Closing Date, Buyer shall assume and undertake to pay, discharge and perform all
the obligations and liabilities of Simmons relating to the Stations under the
Licenses and the Assumed Contracts assigned to Buyer relating to the time period
beginning on or arising out of events occurring on or after the Closing Date.
All other obligations and liabilities of Simmons, includ ing, without
limitation, (i) obligations or liabilities under any 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 unless the benefits from the contract is received by Buyer without the
Consent and without additional consideration being paid by Buyer, (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 Simmons
prior
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to Closing), (iv) any forfeiture, claim or pending litigation or proceeding
relating to the business or operations of the Stations, prior to the Closing
Date, and (v) claims of any employees of Simmons prior to the Closing Date,
shall remain and be the obligation and liability solely of Simmons. The Buyer is
not the successor employer of Simmons' employees for any purpose and is not
required to employ any of the employees of the Simmons at the Stations. Other
than as specified herein, Buyer shall assume no liabilities or obligations of
Simmons for the business or operations of the Stations or Simmons.
(b) Schedule 2.4(b), captioned "Air Time Due Client",
contains a description of all of the Trade Deals on the date hereof and
correctly sets forth the balance of Simmons' obligations under the caption "Air
Time Due Client" under each such Trade Deal. On the Closing Date, Buyer shall
assume the Trade Deals listed on Schedule 2.4(b); provided, however, if the
Simmons' obligations for "Air Time Due Client" exceeds $100 then the balance of
the "Air Time Due Client" in excess of $100 shall be considered an operating
expense of Simmons to be pro-rated in accordance with Section 2.6. The Trade
Deals assumed by Buyer pursuant to the terms of this Section 2.4(b) shall be
considered Assumed Contracts.
2.5 Allocation. The Purchase Price shall be allocated to the
Assets of the Stations in a manner which complies with Section 1060 of the Code
with respect to the allocation of the Purchase Price (as well as any liabilities
assumed by Buyer)
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<PAGE> 19
among the Assets. The allocation shall be consistently reported by Buyer and
Simmons in compliance with Section 1060 based upon an asset valuation supplied
by an independent firm selected by Buyer which is knowledgeable in the valuation
of assets of radio stations. The appraisal shall be provided to Simmons by no
later than January 31, 1997 for those stations for which a Closing is held on or
before December 10, 1996; and, within 60 days after Closing for those stations
which close on or after December 11, 1996.
2.6 Adjustments and Prorations.
(a) Subject to the provisions of the Local Marketing
Agreement, all revenues arising from the operation of the Stations earned or
accrued up until midnight on the day prior to the Closing Date, and all
expenses, costs and liabilities, arising therefrom incurred, accrued or payable
up until such time including, without limitation, business, license, utility
charges, real and personal property taxes and assessments levied 121 against the
Assets, FCC regulatory fees, 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 Simmons in accordance
with the principle that (i) Simmons shall receive all revenues, refunds and
deposits of Simmons 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 opera tions of the Stations for the period prior to the Closing
Date
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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 Stations for the
period commencing on and continuing after the Closing Date. Simmons will be
liable for all of the costs of employee compensation, including, but not limited
to (i) all taxes and related contributions, vacations, sick pay and severance
pay properly attributable to or accrued on account of service with Simmons
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 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. Except
as provided in Section 2.4(b), Trade Deals shall not be adjusted or pro rated.
(b) Adjustments or prorations pursuant to this Section
2.7 will, insofar as feasible, be determined and paid on the Closing Date based
upon Simmons' calculation delivered to Buyer five (5) business days prior to the
Closing Date and approved by Buyer, with final settlement and payment by the
appropriate party occurring no later than sixty (60) days after the Closing
Date. The determination of the amount of adjustment under Section 2.6 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
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<PAGE> 21
shall submit such determination to Simmons for approval. If Simmons disagrees
with the determination made by Buyer of the adjustment, Simmons 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 Simmons shall have a 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 determination within
thirty (30) days. The accounting firm's determination shall be binding on Buyer
and Simmons. 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 five (5) business days following notice of 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 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Simmons represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Simmons is a
corporation duly organized, validly existing and in good standing
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under the laws of the State of South Carolina. Simmons has the requisite
corporate power and authority (i) to own, lease, and use the Assets as presently
owned, leased, and used, (ii) to conduct the business and operations of the
Stations as presently conducted and (iii) subject to obtaining applicable
Consents, to execute and deliver this Agreement and the documents and
instruments contemplated hereby, and to perform and comply with all of the
terms, covenants and conditions to be performed and complied with by Simmons
hereunder and thereunder. Except for the Joint Operating and Lease agreements
with Adventure with respect to radio stations WHRD (AM), WFXN (FM) and WMLV (FM)
and except for option agreements with Michael R. Shott, Simmons is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Stations' operations or any of the Assets.
3.2 Authorization and Binding Obligation. Simmons 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
Simmons 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 Simmons. This Agreement has been duly executed and
delivered by Simmons and constitutes the legal, valid and binding obligation of
Simmons enforceable against it in accordance with its terms.
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3.3 Absence of Conflicting Agreements or Consents. Subject to
obtaining the Consents, 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 Simmons is a
party is required for the execution, delivery, and performance of this Agreement
or any of the agreements or instruments contem plated hereby other than those
agreements contemplated by Section 2.4 hereof. 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
provision of the Certificate of Incorporation or Bylaws of Simmons; (ii) except
for the necessity of obtaining applicable Consents, conflicts with, results in a
breach of, or constitutes a default under any applicable law, judgment, order,
ordinance, decree, rule, regulation or ruling of any court or governmental
instrumentality; (iii) except for the necessity of obtaining applicable
Consents, 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, instrument of indebted ness or
other obligations to which Simmons is a party or by which Simmons may be bound;
or (iv) except for the necessity of obtain ing applicable Consents, creates any
liability, mortgage, lien,
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<PAGE> 24
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 Stations in the manner and to the full extent they are now being conducted,
and none of the Licenses is subject to any restriction or condition which would
limit the full operation of the Stations as presently operated. The Licenses are
in full force and effect, and the conduct of the business and operations of the
Stations is in accordance therewith. The Stations are operating in all material
respects 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.
3.5 Real Property. Schedule 3.5 hereto contains descriptions of
the real property and leasehold interests (including all improvements thereon)
which comprise all real property and leasehold interests used in connection with
or necessary to conduct the business and operations of the Stations as now
conducted. Simmons represents and warrants that Adventure Technology, Inc.
("ATI") has good, marketable and insurable fee simple absolute interest in and
to the real property owned by it. Attached to Schedule 3.5 are all policies of
title insurance currently existing in favor of ATI with respect to the real
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property. The title insurance policies attached to Schedule 3.5 and any
additional items disclosed in Schedule 3.5 correctly reflect (i) the status of
title of the real property as of the effective dates of such title policies and
(ii) the current status of title to the real property, except with regard to any
liens relating to taxes not yet due and payable. The imperfections of title and
encumbrances (other than those securing any obligations or indebtedness) or
restrictions, if any, shown on Schedule 3.5 or attached thereto, do not,
individually or in the aggregate, interfere in any material respect with
Simmons' use of the real property or the operation of the Stations or materially
affect the value of the real property. There is no pending condemnation or
similar proceeding affecting the real property or any portion thereof, and no
such action is presently contemplated or threatened. Except as set forth on
Schedule 3.5, there are no parties in possession of any portion of the real
property other than Simmons, whether as lessees, tenants at will, trespassers or
otherwise. To the best knowledge of Simmons, 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. To the
best knowledge of Simmons all necessary licenses, permits and
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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, Simmons is not, and to
Simmons' knowledge, no other party is in material default under any lease or
other instrument of conveyance. Subject to obtaining applicable Consents,
Simmons has the full legal power and authority to assign its rights under the
leases listed in 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 Stations.
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 owned by Simmons and used in connection with the business
and operations of the Stations or which permits the operation of the Stations as
now conducted (having a replacement value of not less than $100 for each item).
Except as set forth on Schedule 3.6 hereto, Simmons has title to all Personal
Property and none of the Personal Property is subject to any security interest,
mortgage, pledge, lease, license 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 Simmons prior to or at Closing. Simmons is
not,
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and to Simmons' 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), is
available for immediate use in the business and operation of the Stations as
currently conducted and will permit the Stations to operate in all material
respects in accordance with the terms of their FCC Licenses, 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 hereto contain descriptions of all the
Contracts in effect on the date hereof relating to the Stations other than
Contracts for (i) the sale of advertising time on the Stations. In all material
respects, 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
material default or breach by Simmons, or to Simmons' 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
in all material respects the balance of Simmons' rights and obligations under
each agreement listed thereon as of December 31, 1995 or, if later, the date
specified thereon.
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3.8 Consents. Schedule 3.8 sets forth those Assumed Contracts
which require Consent for assignment to Buyer and all Consents required. Except
for the FCC Consent and the agreements contemplated by Section 2.4 hereof and
the other Consents described in Schedule 3.8 hereto, no consent, approval,
permit or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Simmons
to assign or transfer the Assets to Buyer or (iii) to enable Buyer to conduct
the business or operations of the Stations 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 in connection with the business and operations of the
Stations. The Intellec tual Property includes all copyrights, trademarks, trade
names, patents and applications, if any, and all licenses, patents, permits,
jingles, privileges, logos, computer software, data and documentation,
confidential business information and other similar intangible property rights
and interests used by, issued to or owned by Simmons, or under which Simmons is
licensed or franchised relating to the conduct of the business and operations of
the Stations. Schedule 3.9 describes all Intellectual Property, if any, which
are licensed to third parties. Neither Simmons nor any of its affiliates or
their respective officers,
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directors or employees has received any notices of infringement,
misappropriation, or conflict from any third party with respect to the
Intellectual Property; and to Simmons' knowledge, Simmons has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of (i) the financial statements of Simmons pertaining to the
Stations, which financial statements contain balance sheets and profit and loss
statements as at and for Simmons' fiscal year ended December 31, 1995 (the "1995
Financials") and (ii) an unaudited balance sheet and profit and loss statement
of the Stations as at and for the two month(s) ended February 29, 1996 (the
"Stub Financials") (the 1995 Financials and the Stub Financials are collectively
referred to herein as the "Financial Statements"). The 1995 Financials
Statements are unaudited. The Financial Statements were prepared in accordance
with generally accepted accounting principles, consistently applied, subject,
with respect to the 1995 Financials and the Stub Financials, to year-end
adjustments which will not have a material adverse effect on such financial
statements. The Financial Statements are correct in all material respects and
present fairly the operating income and financial condition of the Stations as
at their respective dates and the results of operations for the periods then
ended, subject, with respect to the Stub Financials, to year-end adjustments
which will not have a material adverse effect on such financial statements.
Except
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as otherwise indicated in the Financial Statements, the accounting practices
used by Simmons in preparing the Financial Statements were the same for each of
the Financial Statements and were consistently followed throughout the periods
reflected in each of the Financial Statements.
3.11 Insurance. Schedule 3.11 hereto comprises a true and complete
list of all insurance policies of Simmons covering any of the Assets, employees
or business and operations of the Stations. All policies of insurance listed in
Schedule 3.11 hereto are in full force and effect. All premiums have been paid
in full and Simmons is not in default with respect to its obligations
thereunder.
3.12 Reports. All returns, reports and statements which the
Stations are required to file with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction thereof have been complied with in
all material respects.
3.13 Employee Benefit Plans. A complete list of all employees of
each Station, date of hire, job description and payroll information, as at
December 31, 1995 has been delivered to Buyer. Since December 31, 1995, there
has been no increase in compensation or bonuses payable to employees except as
otherwise disclosed to Buyer in writing prior to the date hereof. Schedule 3.13
contains a true and complete list as of the date of this Agreement of all
employment agreements, employee benefit plans or
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arrangements currently applicable to the employees of Simmons employed at the
Stations and of all fixed or contingent liabilities or obligations of Simmons
with respect to any person now employed at the Stations, including pension or
thrift plans, individual or supplemental pension or accrued compensation
arrangements, contributions to hospitalization or other health or life insurance
programs, incentive plans, bonus arrangements and vacation, sick leave,
disability and termination arrangements or policies. Simmons 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 hereto relating to the Stations, and with descriptions, in
writing, of the unwritten plans and arrangements listed in Schedule 3.13 hereto
relating to the Stations. All employee benefits and welfare plans or arrange
ments listed in Schedule 3.13 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 plans or arrangements, nor to the best
knowledge of Simmons any facts which could give rise to any such action, suit or
claim.
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3.14 Labor Relations. As of the date hereof, Simmons is not a party
to any collective bargaining agreement with respect to the Stations and Simmons
does not have any written or oral contracts of employment with any employee of
the Stations, other than those listed in Schedule 3.13 hereto. As of the date
hereof, Simmons, 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; 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 Simmons has not received any notice alleging
that it has failed to comply with any such laws, rules or regulations. No
controversies, disputes or proceedings are pending or, to the best knowledge of
Simmons threatened, between Simmons and its employees (singly or collectively)
of the Stations except as disclosed in Schedule 3.14 hereto.
3.15 Taxes. Simmons has filed or caused to be filed all federal
income tax returns and all other federal, state, county, local or city tax
returns affecting the Stations or the Assets which are required to be filed by
Simmons, and all taxes assessments and other governmental charges which are due
and payable have been timely paid. There are no tax liens upon the Stations or
the Assets. All tax reports filed by Simmons fairly reflect the taxes of Simmons
for the periods covered thereby and the
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Simmons has received no notice of any tax deficiency or delinquency. No Internal
Revenue Service audit of Simmons is pending or, to the knowledge of Simmons,
threatened, and the results of any completed audits are properly reflected in
the Financial Statements. All monies required to be withheld by Simmons 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 Simmons 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 the
best of Simmons' knowledge, threatened against or relating to the Stations, the
Assets, or the business and operations of the Stations.
3.17 Laws. Simmons has complied in all material respects with (i)
the Licenses and (ii) all applicable federal, state and local laws, rules,
regulations, ordinances, judgments, orders and decrees. Neither the ownership or
use of the properties of Simmons relating to the Stations nor the conduct of the
business
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and operations of the Stations conflict in any material way with the rights of
any other person, firm or corporation.
3.18 Undisclosed Liabilities. With respect to the Stations or the
Assets, except as set forth in Schedule 3.18 hereto or otherwise disclosed in
this Agreement, (a) Simmons has no material liability, secured or unsecured
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) of a nature required by generally accepted accounting principles to be
reflected in a balance sheet or disclosed in the notes thereto except (i) as
such liabilities and obligations are reflected in the Stations' balance sheets
as at December 31, 1995, or (ii) for liabilities and obligations incurred after
December 31, 1995, in the ordinary course of business, none of which
individually or in the aggregate are materially adverse to the Assets or
operations of the Stations and (b) to the best of Simmons' knowledge, Simmons
has no contingent liabilities or other liabilities outside the ordinary course
of business and of a nature not required to be reflected in Financial Statements
which, individually or in the aggregate, which are materially adverse to the
Assets or operations of the Stations.
3.19 Books and Records. The books of account of the Stations and
other records of Simmons relating to the Stations are complete and correct in
all material respects. At the Closing, all such books and records shall be
located at the business office of the Stations, except for the excluded books
and records.
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3.20 Assets.
The Assets include all assets, except for Excluded Assets,
used in connection with the business of the Stations as currently conducted and
all assets which permit the operation of the Stations as currently conducted
(having a replacement value in excess of $100). Simmons does not own, lease or
license any assets used in the current operation of the Stations other than the
Assets.
3.21 No Adverse Developments. Since December 31, 1995, there has
not occurred:
(a) any sale, lease, transfer, assignment, abandonment or
other disposition of any of the assets of the Stations; 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 set forth in Sections 5.1(a) or Sections 5.1(b) of this
Agreement. 3.22 Environment, Health and Safety.
3.22 Environment, Health and Safety
(a) Except as expressly set forth on Schedule 3.22,
Simmons has obtained all permits and licenses required under applicable law with
respect to the Stations, 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
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protection of the environment (collectively, "Health, Safety and Environmental
Requirements").
(b) Except as expressly set forth on Schedule 3.22, no
facts, events or conditions relating to the present facilities or operations
of the Stations or, to Simmons' knowledge, their predecessors 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
Environmental Requirement.
3.23 No Adverse Condition. Since December 31, 1995 to the date of
this Agreement, there has not been any material adverse change in the Assets,
operations or financial conditions of the Stations.
3.24 Full Disclosure. No representation or warranty made by Simmons
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 Simmons as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation
duly organized, validly existing, and in good
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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 Kentucky.
4.2 Authorization and Binding Obligation. 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 corporate 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, 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 the transactions
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contemplated hereby (i) conflicts with the Certificate of Incorporation or
By-Laws of Buyer; (ii) except for the necessity of obtaining applicable Consents
and as set forth on Schedule 4.3, 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, 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. Except as set forth on Schedule 4.4, Buyer is
legally and technically qualified to become the licensee of the Stations in
accordance with the provisions of the Communications Act of 1934, as amended
without condition or waiver. Buyer is financially qualified to purchase the
Stations and Buyer's obligations hereunder are not contingent on Buyer obtaining
financing.
4.5 Full Disclosure. No representation and warranty made by Buyer
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 such representations and warranties omit any statement
necessary
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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 by this
Agreement, commencing on the date hereof until the Closing Date, Simmons shall
cause the Stations to be operated in the ordinary course of business in
accordance with past practices, provided, however:
(a) Negative Covenants. Simmons shall not do any of the
following:
(1) Compensation. (a) Except as otherwise
disclosed to Buyer in writing prior to the date of this Agreement and,
thereafter, as otherwise approved by Buyer in writing, increase the compensation
of any person employed in connection with the conduct of the business or
operations of the Stations, (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 Stations except in accordance with normal past
practices, or (c) enter into any employment, severance or similar agreement with
any employee of the Stations which does not by its terms terminate, or cannot be
terminated or satisfied by Simmons without premium or penalty, prior to or at
the Closing;
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(2) Contracts. Without the prior written consent
of Buyer: (a) modify, amend or terminate any of the Assumed Contracts other than
by expiration of the term of the Assumed Contract or (b) enter into other
non-advertising Contracts (other than Contracts relating to Trade Deals which
are treated in Section 5.1(a)(8) below) obligating Simmons to provide payments
or benefits in excess of $1,000 each over the life of the Contract or $5,000 in
the aggregate. Schedule 3.7 will be supplemented prior to the Closing Date 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, except in connection with
the acquisition of replacement property of equivalent kind and value or obsolete
equipment;
(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 whatsoever, upon the Assets, except for those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and 3.6
hereto, and (ii) those which individually or in the aggregate do not exceed
$10,000, all of which shall be released or removed prior to Closing;
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(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 negotiations or
otherwise, make any commitment or incur any liability to any labor organization
with respect to the employees of the Stations;
(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 contemplated by this Agreement; or
(8) Trade Deals. Enter into any new Trade Deals,
unless otherwise agreed to in writing by Buyer, after the date set forth on
Schedule 2.5(b).
(b) Affirmative Covenants. Simmons shall do the
following:
(1) Access to Information. Upon prior notice to
Simmons allow Buyer and its authorized representatives reasonable access at
Buyer's expense during normal business hours to the Assets, the personnel of the
Stations and to all other properties, equipment, books, records, contracts and
documents relating to the Stations for the purpose of audit, inspection and
copying, 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
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request and make its independent accountants and key employees reasonably
available; provided, however, the rights of Buyer shall not be exercised in such
a manner as to interfere unreason ably with the operation or the business of the
Stations;
(2) Maintenance of Assets. Maintain all of the
Assets or replacements thereof and improvements thereon in good operating
condition 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 Stations in the usual and customary
manner;
(3) Insurance. Maintain all existing insurance
policies, or comparable coverage, for the Stations and the Assets, as listed in
Schedule 3.11 hereto;
(4) Consents. Use its best efforts to obtain the
Consents;
(5) Preservation of Business. Subject to the
terms of the Local Marketing Agreement, use its best efforts to maintain and
preserve the business and operations of the Stations 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 Stations;
(6) Books and Records. Maintain the books and
records of Simmons relating to the Stations in accordance with past practices;
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(7) Notification. Promptly notify Buyer in writ-
ing of any unusual or material developments or changes adversely relating to or
affecting the business and operation of the Stations or the Assets; and by no
later than the first day of the month immediately preceding the Closing, 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 laws, rules and regulations to which the Stations or the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Simmons 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
Buyer, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
ARTICLE VI
COVENANTS OF BUYER
6.1 Inconsistent Action. Buyer will not intentionally take or omit
to take any action that will cause the FCC to deny, materially delay, or fail to
consent to the application(s) for assignment or cause the consents to assignment
from becoming a Final Order.
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6.2 Qualification. Prior to the Closing Date or the effective date
of the Local Marketing Agreement, whichever occurs first, Buyer shall take all
actions necessary to be qualified to do business in West Virginia and Ohio.
6.3 Adventure Local Marketing Agreement. Buyer shall enter into a
Local Marketing Agreement with Adventure for the Adventure Stations effective on
the same date as the Local Marketing Agreement with Simmons' Stations.
ARTICLE VII
SPECIAL COVENANTS AND AGREEMENTS
7.1 FCC Consent.
(a) Within five (5) business days after the execution of
this Agreement, Buyer and Simmons will file with the FCC appropriate
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 government agencies reasonably
required to effect the transactions contemplated hereby including, but not
limited to, seeking waivers of any rules and regulations of the FCC that may be
violated.
(b) The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any
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materially adverse conditions on Buyer attributable to Simmons or arising out of
Simmons' operation of the Stations; (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. Subject to the terms of the Local
Marketing Agreement, 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. Subject to the terms
of the Local Marketing Agreement, the control and supervision of all of the
Stations' operations shall be the sole responsibility of Simmons until the
Closing.
7.3 Taxes, Fees and Expenses. All sales, use, transfer, purchase,
recordation and documentary taxes and fees, if any, arising out of the transfer
of the Assets pursuant to this Agreement shall be paid in accordance with the
normal and customary practices for similar transactions in Huntington, West
Virginia. All filing fees required by the FCC shall be shared equally by Simmons
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.
7.4 Brokers. Buyer and Simmons each represent and warrant to the
other that neither it nor any of its affiliates, any
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person or entity acting on its behalf or its affiliates has incurred any
liability for any finder's, or broker's, fees or com missions in connection with
the transaction contemplated by this Agreement.
7.5 Bulk Sales Law. Any loss, liability, obligation or cost
suffered by Simmons or Buyer as the result of the failure of Simmons to comply
with the provisions of any bulk sales law applicable to the transfer of the
Assets and related to protecting trade creditors of Simmons as contemplated by
this Agreement shall be borne by Simmons.
7.6 Confidentiality. Except as necessary for the consummation 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; 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 Simmons or are required to be disclosed in public filings or by law. 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 and shall not use any confidential information obtained from
the other party to the detriment of such party. On and after January 5,
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1996, Simmons, 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 7.6 shall survive the termination or cancellation
of this Agreement for a period of one (1) year from the date of termination or
cancellation.
7.7 Cooperation. Buyer and Simmons 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 Simmons 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.
7.8 Risk of Loss.
(a) The risk of any loss, damage or impairment,
confiscation or condemnation of any of the Assets from any cause whatsoever
shall be borne by Simmons at all times prior to the Closing and by Buyer at all
times after the Closing. In the event of any such loss, damage or impairment,
confiscation or condemnation, whether or not covered by insurance, Simmons shall
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promptly notify Buyer of such loss, damage, impairment or condemnation.
(b) If Simmons, at its expense, repairs, replaces or
restores such Assets to their prior condition before the Closing, Simmons shall
be entitled to all insurance proceeds and condemna tion awards, if any, by
reason of such award or loss.
(c) If Simmons does not or cannot restore or replace the
damaged Assets or informs the Buyer 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; provided, however that Buyer
shall not have this option if Simmons in its notice of damages to
Assets has agreed to assign and does validly assign all of Simmons'
rights under applicable insurance policies and condemnation awards, and
reimburse Buyer for all costs and expenses for repair or replacement of
the damaged Assets in excess of amounts received under insurance
policies and condemnation awards; or
(ii) proceed to the Closing of this Agreement
without Simmons completing the restoration and replacement of such
damaged Assets, provided that Simmons shall assign all rights under
applicable insurance policies and condemnation awards, if any, to
Buyer; and in such event, Simmons shall have no further liability with
respect to the condition of the Assets directly attributable to the
damage or destruction.
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(d) Buyer will notify Simmons of a decision under the
options described in Section 7.8(c) above within ten (10) business days after
Simmons' notice to Buyer of the damage or destruction of Assets and the estimate
of the costs of repair.
(e) Notwithstanding any of the foregoing, Buyer may
terminate this Agreement forthwith without any further obligation hereunder by
written notice to Simmons if any event occurs which prevents signal
transmissions by a Station as it is currently operating for a period which is
expected to be in excess of ninety (90) days.
7.9 Local Marketing Agreement. Concurrently with the execution of
this Agreement, Simmons will enter into the Local Marketing Agreement with Buyer
substantially in the form of Exhibit C.
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 (any of which may be waived by
Buyer in its sole discretion):
(a) Representations and Warranties. All representations
and warranties of Simmons in this Agreement shall be true and complete in all
material respects at and as of the Closing
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Date as though such representations and warranties were made at and as of such
time.
(b) Covenants and Conditions. Simmons shall have in all
material respects performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Consents and FCC Licenses. The FCC Consent, the
Consents listed on Schedule 3.8 hereto, and any other Consents which are
designated by Buyer as of the date of this Agreement as material to the business
and operations of the Stations shall have been duly obtained and delivered to
Buyer except as hereinafter set forth. The FCC Consent shall have become a Final
Order unless waived by Buyer. The obligation of Buyer to close on the purchase
of WMLV shall require as a condition that the FCC Licenses for that station
shall have been issued by the FCC for a full term commencing in 1996 without any
material adverse conditions imposed on the licensee; provided, however, that the
Buyer shall not require as a condition of Closing for WFXN and WHRD that there
be a license renewal commencing in 1996 for WMLV.
(d) Licenses; FCC Compliance. Simmons shall be the holder
of the Licenses, and there shall not have been any modification of any of such
Licenses which has a material adverse effect on the Stations or the conduct of
the business or operations of the Stations arising out of Simmons' operation of
the Stations or because of the duopoly nature of the transaction. No proceeding
shall be pending or threatened, the effect of which
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would be to revoke, cancel, fail to renew, suspend, modify or have a materially
adverse affect on any of the Licenses. The Stations shall be operating in
compliance with all applicable FCC rules, regulations and policies in all
material respects.
(e) Deliveries. Simmons 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) Good and Marketable Title to Assets. At Closing, the
title of Simmons to the Assets will be in the form described in Sections 3.5 and
3.6, free and clear of all liens, encumbrances, charges, claims, agreements or
other imperfections of title except as otherwise provided in Sections 3.5 and
3.6.
(g) 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 adversely affect, as of Closing, the validity of the FCC
Licenses or would adversely affect the Assets or operation (other than
financial) of the Stations. Consistent with Section 8.1(c), the pendency of a
renewal application for station WMLV at the Closing on the purchase of WFXN and
WHRD shall not constitute a violation of this Section 8.1(g).
(h) Real Estate Title Commitment. Buyer, at its cost and
expense, shall have obtained a preliminary report on title to
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the Real Property covering a date subsequent to the date of this Agreement,
issued by the Title Company, which preliminary report shall contain a commitment
(the "Title Commitment") of the Title Company to issue an owner's title
insurance policy as Buyer may reasonably require (the "Title Policy") insuring
the fee simple absolute interest of Simmons in the real property. The Title
Commitment shall be in such amount as Buyer may reasonably determine to be the
fair market value of the Real Property (including all improvements located
thereon) and shall be subject only to: (i) liens of current state and local
property taxes which are not delinquent or subject to penalty; (ii) unviolated
zoning regulations and restrictive covenants and easements of record which do
not detract from the value of the Real Property and do not materially and
adversely affect, impair or interfere with the use of any property affected
thereby as heretofore used by Simmons or the Stations; and (iii) public utility
easements of record, in customary form, to serve the Real Property.
(i) Survey. Buyer, at its cost and expense, shall have
obtained a survey of the ATI Real Property within forty-five (45) days of the
date of this Agreement which shall: (i) be prepared by a registered land
surveyor; (ii) be certified to the Title Company and to Buyer; and (iii) show
with respect to the Real Property: (A) the legal description of the real
property (which shall be the same as the Title Policy pertaining thereto); (B)
all buildings, structures and improvements thereon and all restrictions of
record and other restrictions that have been
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established by an applicable zoning or building code or ordinance and all
easements or rights of way across or serving the Real Property (including any
off-site easements affecting or appurtenant thereto); (C) no encroachments upon
the Real Property or adjoining parcels by buildings, structures or improvements
and no other survey defects; (D) access to such parcel from a public street; and
(E) the location of the ATI Real Property in relation to any known flood hazard
area. Buyer shall promptly deliver a copy of the survey to Simmons upon its
receipt by Buyer.
(j) Environmental Reports. Within ten (10) days after the
date hereof Buyer shall have ordered, and shall have received within sixty (60)
days after the date hereof, at its expense, an environmental report or reports
with respect to the Stations and the Assets (including, without limitation, the
Real Property) from an environmental engineering firm selected by Buyer which
shall confirm, in a manner acceptable to Buyer, the nonexistence of any
Hazardous Materials on or about the Stations and the Assets (including, without
limitation the Real Property) and the accuracy of Simmons' representations and
warranties contained in Section 3.22. The environmental reports shall be
delivered to Simmons promptly after receipt of same by Buyer.
(k) Non-Competition Agreement. Simmons and W. Lee Simmons
shall have executed and delivered the Non-Competition Agreement.
(l) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WKEE (AM), WKEE (FM) and WZZW
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(AM) when there is a Closing on radio stations WHRD and WFXN; and for the
Closing on WMLV, there shall be a simultaneous Closing for radio stations WBVB
(FM) and WIRO (AM) in accordance with the terms and conditions of an agreement
dated the same date as this Agreement between Buyer and Adventure then being
closed.
8.2 Conditions to Obligations of Simmons. All obligations of
Simmons 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 Simmons in its sole discretion):
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though 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 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 9.3 hereof.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Simmons of any conditions that require additional
compliance by Simmons or that are materially adverse to Simmons.
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(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 validity of the FCC
Licenses or would adversely affect the Assets or operations of the Stations.
(f) Qualification. The Buyer shall be qualified to do
business in West Virginia and Ohio.
(g) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WKEE (AM), WKEE (FM) and WZZW (AM) when there is a
Closing on radio stations WHRD and WFXN; and for the Closing on WMLV, there
shall be a simultaneous Closing for radio stations WBVB (FM) and WIRO (AM) in
accordance with the terms and conditions of an agreement dated the same date as
this Agreement between Buyer and Adventure then being closed.
(h) Option Assignments. Effective as of the Closing(s) on
the Stations, Michael R. Shott shall have assigned to Buyer all his rights under
certain option agreements between Shott and Simmons for the Stations.
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ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 Closing. The Closing(s) shall take place at 10:00 a.m. on a
date selected by Buyer on five (5) written days notice to Simmons which date
shall be within ten (10) days after the FCC Consent has become a Final Order.
The Closing(s) shall be held at the offices of Buyer's attorney or such other
place as shall be mutually agreed upon by Buyer and Simmons. If any of the
conditions to Buyer's performance pursuant to Section 8.1(c) hereof shall not
have been fulfilled by the above contemplated Closing Date for a Closing, then
the Buyer and Simmons shall cooperate with each other to cause the FCC to extend
the time for Closing(s) under the FCC Consents for no less than thirty (30)
days, or such longer period as mutually agreed to by Buyer and Seller.
9.2 Deliveries by Simmons. Prior to or on the Closing Date,
Simmons shall deliver or cause to be delivered 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 in form and substance reasonably
satisfactory to Buyer's counsel;
(b) Consents; Acknowledgments. The original of each
Consent;
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(c) Estoppel Certificates. An estoppel certificate, if
applicable, from the lessor(s) under the lease(s) covering the tower,
transmitter and studio for the Stations;
(d) Secretary's Certificate. A certificate, dated as of
the Closing Date, executed by Simmons' Secretary certifying that the
resolutions, as attached to such certificate, were duly adopted by Simmons'
Board of Directors and shareholders, 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;
(e) Licenses, Contracts, Business Records, Etc. To the
extent they are in the possession of Simmons, copies of all Licenses, Assumed
Contracts, blueprints, schematics, working drawings, plans, projections,
statistics, engineering records, and all files and records used by Simmons in
connection with the Stations' business and operations, which copies shall be
available at the Closing or at the Stations' principal business office; (f)
Simmons' Certificate. A Certificate, dated as of the Closing Date, executed by
the President or a Vice-President of Simmons on behalf of Simmons, in the form
attached hereto as Exhibit E (the "Closing Certificate");
(g) Opinions of Counsel. Opinion of Simmons' counsel and
Simmons' FCC counsel, dated as of the Closing Date, substantially in the forms
attached hereto as Exhibit F and Exhibit G, respectively; and
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(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 Simmons the following, in form and substance reasonably
satisfactory to Simmons 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
Simmons' 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 H ("Buyer's Closing Certificate");
(d) Buyer's Authorization. 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 transactions contemplated hereby and that such resolutions remain in full
force and effect; and
(e) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date substantially in the form attached hereto as
Exhibit I.
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ARTICLE X
RIGHTS OF BUYER AND SELLER
UPON TERMINATION OR BREACH
10.1 Termination. This Agreement may be terminated by either
Simmons 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 Simmons, as the case may be, if the other
shall be in material breach of any of the provisions applicable to it hereunder;
(c) By mutual agreement of Buyer and Simmons, at any
time, set forth in a writing executed by both parties; or
(d) By Buyer or Simmons, if any of the conditions to
their respective performance obligations under Sections 8.1 and 8.2 is not
satisfied on or before March 4, 1997, unless the failure to obtain the FCC
Consent(s) or otherwise comply with Sections 8.1 and 8.2 is because of the
party's default.
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 obligation of any nature to the other.
10.2 Specific Performance. The parties recognize that in the event
Simmons should refuse to perform under the provisions
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of this Agreement, monetary damages alone will not be adequate. Buyer shall
therefore be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
Simmons hereby waives the defense that there is an adequate remedy at law.
10.3 Liquidated Damages. In the event this Agreement is terminated
by Simmons as a result of Buyer's breach of a material obligation under this
Agreement, then the Escrow Deposit shall be paid by the Escrow Agent to Simmons
as liquidated damages, it being agreed that the Escrow Deposit shall constitute
full payment for any and all damages suffered by Simmons by reason of Buyer's
failure to close this Agreement for the reasons described in Section 10.1 and
shall be the exclusive remedy of Simmons.
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 representations, warranties and pre-closing covenants contained in this
Agreement and the Closing Certificate shall be deemed continuing
representations, warranties and pre-closing covenants, and shall
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survive the Closing Date for a period of two (2) years.
11.2 Indemnification by Simmons. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Simmons 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 Simmons within a period of two (2) years from the
Closing Date, relating to:
(a) Any and all losses, liabilities or damages resulting
from any untrue representation, breach of warranty or nonfulfillment of any
covenant by Simmons contained herein or in any certificate, document or
instrument delivered to Buyer hereunder;
(b) Any and all obligations or liabilities of Simmons
relating to the Stations not expressly assumed by Buyer pursuant to the terms
hereof, including without limitation, any such obligation or liability imposed
on Buyer by process of law as a successor to the business of Simmons;
(c) Any and all losses, liabilities or damages resulting
from Simmons' operation or control 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, costs and expenses, including
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reasonable legal fees and expenses, incident to any of the foregoing 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 Simmons or
any information Simmons may have, Buyer shall indemnify and hold Simmons
harmless against and with respect to, and shall reimburse Simmons 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 resulting
from any untrue representation, breach of warranty or nonfulfillment of any
covenant by Buyer contained herein or in any certificate, document or instrument
delivered to Simmons hereunder;
(b) Any and all losses, liabilities or damages resulting
from Buyer's operation or control of the Stations 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.
11.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
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(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 and amount of such claim, the Indemnifying Party shall immedi-
ately pay to the Claimant the full amount of the claim and in the case of a
breach by the Simmons the Buyer shall be entitled to be indemnified pursuant to
the terms of the Indemnification Escrow Agreement. If the Claimant and the
Indemnifying Party do not
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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);
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, Simmons' liability under this Section 11 shall be
limited to the amount of the settlement or entry of judgment, plus costs
(including attorney fees).
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(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.
(f) If the Buyer is entitled to indemnification from
Simmons pursuant to this Article XI, the Buyer shall be entitled to receive such
indemnification from the Indemnification Escrow Agent pursuant to the terms of
the Indemnification Escrow Agreement; provided, if the amounts sought by Buyer
exceed the amount held by the Indemnification Escrow Agent the Buyer shall be
entitled to such additional indemnification and Buyer's recovery shall not be
limited in any manner by the terms of the Indemnification Escrow Agreement.
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
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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 Simmons:
W. Lee Simmons
President
Simmons Broadcasting Company
44 Bow Circle, Suite B
Hilton Head Island, South Carolina 29928
Telecopier: (803) 842-3371
With a copy to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
Telecopier: (202) 728-0354
If to Buyer:
Commodore Media of Kentucky, Inc.
500 Fifth Avenue
New York, NY 10110
Attention: Bruce Friedman
Telecopier: (212) 302-6457
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
Telecopier: (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.
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
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this Agreement upon notice to Simmons at the time of assignment to an affiliated
entity controlled by Buyer or Buyer's principal only if such assignment does not
violate the Communications Act of 1934, as amended, delay Consent of the FCC, or
violates the rules, regulations and policies of the FCC and Buyer guarantees the
performance of its assignee. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and is not intended to be for the benefit, directly or indirectly, of
any other person or entity.
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.
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
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certificates delivered or to be delivered by the parties pursuant hereto
collectively represent the sole and entire understanding and agreement between
Buyer and Simmons 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 Simmons 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 West Virginia (without
regard to conflicts of law principles).
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This Agreement has been executed by Buyer and Simmons as of the date
first above written.
SIMMONS BROADCASTING COMPANY
By:/s/W. Lee Simmons
----------------------------
W. Lee Simmons
President
COMMODORE MEDIA OF KENTUCKY, INC.
By:
----------------------------
Bruce A. Friedman
President
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<PAGE> 70
This Agreement has been executed by Buyer and Simmons as of the date
first above written.
SIMMONS BROADCASTING COMPANY
By:
----------------------------
W. Lee Simmons
President
COMMODORE MEDIA OF KENTUCKY, INC.
By:/s/Bruce A. Friedman
----------------------------
Bruce A. Friedman
President
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<PAGE> 1
Exhibit 10.64
LOCAL MARKETING AGREEMENT
This LOCAL MARKETING AGREEMENT (the "Agreement") dated as of April 8,
1996, is made and entered into by and between COMMODORE MEDIA OF KENTUCKY, INC.,
a Delaware corporation ("Time Broker"), and SIMMONS BROADCASTING COMPANY, a
South Carolina corporation ("Licensee"), the owner and operator of radio
stations WHRD (AM), Huntington, West Virginia, WFXN (FM), Milton, West Virginia
(WHRD and WFXN, the "WV Stations") and WMLV (FM), Ironton, Ohio (the "Ohio
Station"; the WV Stations and the Ohio Station collec tively, the "Stations").
W I T N E S S E T H:
WHEREAS, Time Broker and Licensee, are parties to an Asset Purchase
Agreement dated as of the date hereof (the "Asset Purchase Agreement"), pursuant
to which Licensee has agreed to sell to Time Broker, and Time Broker has agreed
to purchase substantially all of the Assets (as defined in the Asset Purchase
Agreement) of the Licensee and the Assignment of Options pursuant to the Option
Assignment Agreement dated the date hereof between Time Broker and Michael R.
Shott ("Option Agreement"); and
WHEREAS, Licensee desires to make available to Time Broker substantial
broadcasting time on the Stations until the closing of the transactions
contemplated by the Asset Purchase Agreement (the "Closing"); and
<PAGE> 2
WHEREAS, Time Broker is engaged in the business of radio broadcasting
and desires to avail itself of the Stations' available broadcast time through
the date of Closing.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereto have agreed and do agree as
follows:
Section 1. Effective Date and Facilities. Commencing at 12:01 a.m. on
April 9, 1996 (the "Effective Date"), Licensee shall broadcast or cause to be
broadcast on the Stations programs which are presented to it by Time Broker.
These programs shall be in compliance with the provisions of Section 4 of this
Agreement. Time Broker shall maintain the ability to deliver its programming to
Licensee's transmitter site by means acceptable to Licensee. To facilitate
delivery of programming by Time Broker to Licensee hereunder, Licensee hereby
grants to Time Broker the non-exclusive right for the term of this Agreement to
use substantially all of the equipment located in the studio for the Stations
and currently used by Licensee for broadcasting programs on the Stations
pursuant to this Agreement, which equipment is described in greater detail on a
Schedule to the Asset Purchase Agreement (the "Broadcast Equipment"). In
addition, Time Broker shall have, and Licensee hereby grants to Time Broker, a
non-exclusive license to enter on the premises currently occupied by the
Stations for purposes of producing its programming hereunder. Time Broker shall
maintain the Broadcast Equipment free and clear
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<PAGE> 3
of liens, claims or encumbrances of any third party claiming by, through or
under Time Broker.
Section 2. Payments by Time Broker. Time Broker hereby agrees to pay
Licensee for broadcast of the programs and use of the Broadcast Equipment and
the Station's studio hereunder the sum of $8,300 each month in advance ("Fee")
plus the sum of the actual expenses each month for documented and agreed upon
items of operating expenses to be incurred consistent with past practices of the
Stations set forth on Attachment IV hereto ("Monthly Expenses"); provided,
however, if there is a closing (i) of the WV Stations (the "WV Closing") prior
to a closing of the Ohio Station then the Fee from and after the WV Closing
shall be $2,700, or (ii) of the Ohio Station (the "Ohio Closing") prior to the
WV Closing then the Fee from and after the Ohio Closing shall be $5,600. The
Monthly Expenses shall be payable in arrears on or before the fifteenth day of
each calendar month commencing May 15, 1996 (the "Monthly Payment Date"), for
the period commencing on the Effective Date and on the fifteenth day of each
calendar month thereafter during the remainder of the term of this Agreement;
provided, however, that the revenue and expenses of the stations shall be
adjusted for April as if the Effective Date of this Agreement was April 1, 1996.
Amounts payable pursuant to this Section 2 for any partial calendar month other
than April, 1996 shall be prorated on a per diem basis. During this Agreement,
Time Broker shall be entitled to all advertising and other revenues (including
all profits and cash
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<PAGE> 4
flow) of the Stations and all accounts receivable which arise on and after the
Effective Date. If on the Closing Date or the date this Agreement is terminated,
the aggregate amount of payments received by Licensee from Time Broker for
Monthly Expenses under this Section exceeds the actual amount of Licensee's
expenses for the items (which expenses shall be incurred in accordance with the
usual and customary past practices of the Stations for the items of Monthly
Expenses prior to the Effective Date) incurred by Time Broker in performing its
obligations hereunder, from the Effective Date to the Closing Date or the date
this Agreement is terminated, then Licensee shall pay to Time Broker the excess
Monthly Expenses on the Closing Date or within ten (10) days after this
Agreement is terminated. Similarly, if Licensee has aggregate Monthly Expenses
from the Effective Date to the Closing Date or termination date in excess of its
submitted operating expenses, then the Time Broker shall pay Licensee such
excess on the Closing Date or within ten (10) days after this Agreement is
terminated. If a dispute arises between Licensee and Time Broker regarding the
determination of the Licensee's or Time Broker's excess Monthly Expenses, if
any, the disagreement shall be referred to Price Waterhouse, whose determination
shall be final and binding, and whose fees shall be paid one-half each by
Licensee and the Time Broker. Notwithstanding any other provision of this
Agreement or the Asset Purchase Agreement, in the event the parties fail to
close on the sale of the Stations to Time Broker, Licensee shall not be
obligated to repay Time
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<PAGE> 5
Broker any Fee amounts advanced by Time Broker pursuant to this Section 2,
except for appropriate pro rata portions of such Fee if this Agreement is
terminated during a month. The previous sentence shall in no way limit or effect
either Licensee or Time Broker's rights under the Asset Purchase Agreement in
the event the failure to close is due to a breach or termination of the Asset
Purchase Agreement.
Section 3. Term. The term of this Agreement shall commence on the
Effective Date and shall end on the earlier of (i) the date of Closing, or (ii)
the date of termination of the Asset Purchase Agreement, unless sooner cancelled
or terminated as hereinafter provided.
Section 4. Program.
(a) Time Broker shall furnish or cause to be furnished
the artistic personnel and material in broadcasting form for programs to be
broadcast on the Stations pursuant to this Agreement at all times other than
times of the Licensee program broadcasts referred to in Section 4(b) below, and
all such Time Broker programs, including all advertising messages and
promotional material or announcements, shall be in good taste and in accordance
with the Communications Act of 1934, as amended (the "Act"), all other
applicable statutes and Federal Communications Commission ("FCC") and other
governmental entities rules, regulations, policies and requirements ("Rules and
Regulations"), and Licensee's programming standards. Time Broker also agrees to
broadcast a reasonable number of public service
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<PAGE> 6
announcements suggested from time to time by Licensee. All programs shall be
prepared and presented in conformity with the standards set forth in Attachment
I. Time Broker further agrees that if, in the reasonable judgment of Licensee,
Time Broker does not comply with these standards, Licensee may suspend or cancel
any specific program not in compliance; if possible, Licensee is to provide Time
Broker with seventy-two (72) hours prior notice of such suspension or
cancellation. Time Broker shall not change the programming format or make any
other material or substantial programming changes without the prior written
consent of Licensee, which will not be unreasonably withheld or delayed.
Licensee shall make each Station available to Time Broker for operation for at
least one hundred and sixty-four (164) hours per week, Sunday through Saturday,
except for downtime occasioned by routine maintenance. Any routine maintenance
work affecting the operation of the Stations at full power shall be scheduled at
a time that is least disruptive to the Stations' operations.
(b) Licensee shall have the right during the Term of this
Agreement to furnish or cause to be furnished programming in broadcast-ready
form for four (4) hours per week of programs to be broadcast on each Station
("Licensee's Renewal Time"). Licensee's public affairs programs shall respond to
the needs and interests of each Station's service area and shall be presented at
times deemed by Licensee to best meet the needs of the applicable service area.
Licensee initially reserves the periods reserved prior to the Effective Date on
the Stations for
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<PAGE> 7
public affairs programming to present its public affairs programming.
Section 5. Handling of Mail and Public File. To the extent either party
hereto receives or handles mail, cables, telegraphs, telecopies, or telephone
calls in connection with any programs broadcast on the Stations, each party
shall promptly advise the other of any public or FCC complaint or inquiry
concerning such programming and shall give the other party copies of any letters
from the public or the FCC, including complaints, concerning such programming.
The Licensee in consultation with Time Broker will handle listener complaints
and inquiries with respect to the operation of the Stations. Time Broker shall
also give Licensee copies of all operating and programming information,
including, without limitation, the Stations' operating logs, necessary to
maintain the public file and other records required to be kept by FCC
regulations, rules or policies. During the term of this Agreement, Time Broker
shall also maintain and deliver to the Stations and Licensee such records and
information required by the FCC to be placed in the public inspection file of
each Station pertaining (i) to the broadcast of political programming and
advertisements, in accordance with the provisions of Sections 73.1940 and
73.3526 of the FCC's rules, and (ii) to the broadcast of sponsored programming
addressing political issues or controversial subjects of public importance, in
accordance with the provisions of Section 73.1212(d) of the FCC's rules. Time
Broker shall also consult with the Licensee and comply with the Act and
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<PAGE> 8
all other applicable statutes and the rules, regulations and policies of the
FCC, as announced from time to time, with respect to the carriage of political
advertisements and programming (including, without limitation, the rights of
candidates and, as appropriate, others to "equal opportunities" and the carriage
of contrasting points of view as mandated by any "fairness" rules with respect
to such "issue-oriented" advertising or programming as may be broadcast) and the
charges permitted therefor. Time Broker shall provide to each Station such
documentation relating to such programming as Licensee shall reasonably request.
Licensee shall be responsible for providing the personnel necessary to maintain
a complete public file (as required by the FCC) and compile and file all
required quarterly issues/programs lists.
Section 6. Maintenance of Equipment.
6.1. The transmitter equipment and antennas
currently used for the Stations' broadcasts (the "Transmission Equipment") shall
be maintained by Licensee in a condition consistent with good engineering
practices, in compliance in all material respects with the Act and all other
applicable rules, regulations and technical standards of the FCC and in
accordance with the Asset Purchase Agreement. Licensee does not currently know
of any material defects in the Transmission Equipment used by each Station.
Licensee shall maintain power and modulation of the Stations' broadcasts in a
manner consistent with Licensee's past practices. All capital expenditures
reasonably required to
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<PAGE> 9
maintain the technical quality of the Stations' Transmission Equipment and its
compliance with applicable laws and regulations shall be made at the sole
expense and in the discretion of Licensee in a timely fashion.
6.2 All Broadcast Equipment and other equipment
necessary for the transmission of programming to the Stations' Transmission
Equipment shall be maintained by Time Broker in good repair and condition,
reasonable wear and tear excepted. All capital expenditures reasonably required
to maintain the technical quality of the Broadcast Equipment and its compliance
with applicable laws and regulations shall be made at the sole expense and in
the sole discretion of Licensee in a timely fashion. Licensee shall, at all
times during the term of this Agreement, at Licensee's sole expense, maintain
insurance with respect to the Broadcast Equipment covering such risks as are
customarily covered with respect to damage thereto, and such policies of
insurance shall name Time Broker and such other parties as Licensee may
designate as loss payee(s) and additional insured(s), as their respective
interests may appear.
Section 7. (a) Collection of Time Broker's Accounts Receivable. For a
period of one hundred and eighty (180) days (the "Collection Period") following
the termination of this Agreement without a closing on the Purchase Agreement,
Licensee shall collect as agent for Time Broker the accounts receivable of the
Stations and the stations licensed to Simmons Broadcasting Company in existence
as of the termination date. On the
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<PAGE> 10
termination date, Time Broker shall provide Licensee with a list of all accounts
receivable to be collected by Licensee. In collecting such accounts receivable,
Licensee shall use reasonable diligence, but shall not be required to institute
legal proceedings to collect any account receivable, or to defend any claim or
counterclaim by any account debtor. Unless directed otherwise by the account
debtor, all amounts received from an account debtor which also becomes an
account debtor of Licensee after the termination date shall be applied first to
the payment of the accounts receivable of Time Broker. Within fifteen (15) days
of the end of each calendar month of the Collection Period, Licensee shall
deliver to Time Broker the net amount, after deducting any sales commissions,
agency fees and similar direct expenses attributable to such accounts
receivable, of all amounts collected and credited to the accounts receivable of
Time Broker during the period calendar month in accordance with this Section
7(a). Within ten (10) days of the end of the Collection Period, Licensee shall
deliver to Time Broker all records of uncollected accounts receivable of Time
Broker and any amounts not previously remitted to Time Broker at which time
Licensee's obligation for the collection of Time Broker's accounts receivable
shall cease. During the Collection Period, Time Broker shall not attempt to
collect any of the accounts receivable assigned to Licensee for collection.
(b) Collection of Licensee's Accounts Receivable. During
the Term of this Agreement (the "Term Collection Period"),
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<PAGE> 11
Time Broker, acting as agent for the Licensee, shall have the exclusive right to
collect the accounts receivable of License outstanding as of the Effective Date.
On the Effective Date, Licensee shall provide Time Broker with a list of all
accounts receivable to be collected by Time Broker. In collecting such accounts
receivable, Time Broker shall use reasonable diligence, but shall not be
required to institute legal proceedings to collect any account receivable, or to
defend any claim or counterclaim by any account debtor. Unless directed
otherwise by the account debtor, all amounts received from an account debtor
which also becomes an account debtor of Time Broker during the Term of this
Agreement, shall be applied first to the payment of the oldest accounts
receivable of Licensee. With fifteen (15) business days of the end of each
calendar month of the Term Collection Period, Time Broker shall deliver to
Licensee all amounts collected and credited to the accounts receivable of
Licensee in accordance with this Section 7(b). At the termination of this
Agreement either by the closing on the Purchase Agreement or the earlier
termination in accordance with Section 17 hereof, Time Broker shall deliver to
Licensee all records of uncollected accounts receivable of Licensee and any
accounts not previously remitted to Licensee shall be delivered to Licensee, at
which Time Broker's obligation for the collection of Licensee's accounts
receivable shall cease. During the Term Collection Period, Licensee shall not
attempt to collect any of the accounts receivable assigned to Time Broker for
collection.
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<PAGE> 12
Notwithstanding the foregoing, nothing shall prohibit Licensee from prosecuting
any legal proceeding that was commenced prior to the Effective Date.
Section 8. Responsibility for Employees and Expenses.
(a) Time Broker shall employ and be responsible for the
salaries, taxes, insurance and related costs for all personnel used in the
production of its programming or necessary to fulfill Time Broker's other
obligations hereunder. Licensee shall employ and be responsible for the
salaries, taxes, insurance and related costs for all personnel used in the
production of its programming or necessary to fulfill Licensee's other
obligations hereunder. Time Broker shall pay for all costs associated with its
program production, all fees to ASCAP, BMI and SESAC attributable to its
programs and any other copyright fees attributable to its programming broadcast
on the Stations. Without limiting the generality of Time Broker's obligations
under Section 26 hereof, Time Broker shall also pay for all costs associated
with Arbitron or any other rating service to which it or the Stations subscribe.
(b) If Time Broker should employ Licensee's employees
under this Agreement and there is a termination of this Agreement without a
Closing then Time Broker will terminate such employees hired if Licensee is
desirous of rehiring them and the employees desire to return to Licensee's
employ.
Section 9. Control of Stations. During the period of this Agreement,
Licensee shall maintain ultimate control over the
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<PAGE> 13
facilities of each Station, including, specifically, control over Station
finances, personnel and programming, and Time Broker agrees that it will permit
Licensee to take any and all steps necessary to faithfully and continuously do
so throughout the term of this Agreement. Licensee and Time Broker acknowledge
and agree that this responsibility to retain control is an essential element of
the continuing validity and legality of this Agreement. Licensee shall provide
and pay for: (a) its General Manager for the Stations, who shall report solely
to, and be accountable solely to, Licensee and who shall direct the day-to-day
operations of the Stations; and (b) such other programming personnel as are
necessary to fulfill its obligations under this Agreement. Licensee shall retain
control, said control to be reasonably exercised, over the policies, programming
and operations of the Stations, including, without limitation, the right to
decide whether to accept or reject any programming or advertisements, the right
to preempt any programs in order to broadcast a program deemed by Licensee to be
of greater national, regional or local interest, and the right to take any other
actions necessary to comply with the Rules and Regulations. Licensee shall be
responsible for meeting all of its requirements with respect to its local
service obligations including, but not limited to, compliance with each
Station's identification requirements, maintaining its main studio within the
Stations' principal community contour and broadcasting its own issue responsive
programming, and Time Broker shall take such actions
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<PAGE> 14
as Licensee may reasonably request to ensure such requirements are met. Time
Broker shall not represent, warrant or hold itself out as the Stations' licensee
and shall sell all its advertising time and enter into all agreements in its own
name. Licensee reserves the right to refuse to broadcast any program or programs
containing matter which is, or in the reasonable opinion of Licensee may be,
violative of any Rules and Regulations, or the policies of the Licensee.
Section 10. Special Events. Licensee has the right, in its sole
discretion and without liability, to preempt any Time Broker programs, and to
use part or all of the time contracted for by Time Broker to broadcast events of
special importance. In all such cases Licensee will use its best efforts to give
Time Broker reasonable notice of its intention to preempt such broadcast or
broadcasts, and, in the event of such preemption, Time Broker shall receive a
payment credit in an amount to be negotiated in good faith by Time Broker and
Licensee for the Time Broker broadcast(s) that were preempted.
Section 11. Force Majeure. Any failure or impairment (i.e., failure to
broadcast at Stations' full authorized power) of facilities or any delay or
interruption in broadcast programs, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, because of any acts of God,
strikes or threats thereof or force majeure or due to any other causes beyond
the reasonable control of Licensee shall not constitute a
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<PAGE> 15
breach of this Agreement and Licensee will not be liable to Time Broker
therefor.
Section 12. Right to Use Station IDs. Licensee hereby grants to Time
Broker a non-exclusive license to use such slogans, call letters and other
identifiers as are currently used by each Station (the "Station Licensed
Identifiers") in connection with the broadcast of Time Broker's programs on each
Station, but for no other purpose. The license granted herein shall expire on
the expiration or earlier termination or cancellation of this Agreement. Time
Broker shall use the Station Licensed Identifiers in Time Broker's programming
in a manner consistent with the use thereof by Licensee in broadcasts of the
Stations immediately prior to the Effective Date of this Agreement during the
entire term of this Agreement and as may be required by the Act or the rules,
regulations and policies of the FCC. During the term of this Agreement, Licensee
shall not assign any of its rights to use the current call sign of any Station
or the other Station Licensed Identifiers to any third party. Time Broker
expressly agrees that, except with respect to Station Licensed Identifiers
referred to herein, the use of which is licensed by Licensee to Time Broker
pursuant hereto, the right to use Licensee's programs and to authorize their use
in any manner and in any media whatsoever shall be and remain vested solely in
Licensee.
Section 13. Payola. Time Broker shall provide Licensee with Payola
Affidavits, substantially in the form attached hereto
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<PAGE> 16
as Attachment II, signed by such of Time Broker's employees and at such times as
Licensee may reasonably request, and shall notify Licensee promptly of any
violations it learns of relating to the Act, including Sections 317 and 508
thereof.
Section 14. Compliance with Law. Time Broker and Licensee shall,
throughout the term of this Agreement, comply with the Rules and Regulations
applicable to the conduct of its business.
Section 15. Indemnification; Warranty. Each party (as the case may be,
the "Indemnitor") shall indemnify and hold harmless the other party (as the case
may be, the "Indemnitee"), its directors, officers, employees, agents and
affiliates, from and against any and all liability, including without limitation
all consequential damages and attorneys fees, arising out of or incident to the
programming furnished by the Indemnitor, any breach of this Agreement by the
Indemnitor or the conduct of the Indemnitor, its directors, officers, employees,
contractors, agents or affiliates. Without limiting the generality of the
foregoing, Indemnitor shall indemnify and hold and save the Indemnitee, its
directors, officers, employees, agents and affiliates, harmless against
liability for libel, slander, infringement of trademarks, trade names, or
program titles, violation of rights of privacy, and infringement of copyrights
and proprietary rights resulting from the programming furnished by the Indemni
tor. Time Broker will maintain customary amounts of libel and slander insurance,
name Licensee as an additional insured party, and provide evidence of such
insurance to Licensee. Each party's
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<PAGE> 17
obligation to hold the other harmless against the liabilities specified above
shall survive any termination of this Agreement.
Section 16. Events of Default. Each of the following shall constitute
an "Event of Default" under this Agreement:
(a) Non-Payment. Time Broker's failure to pay the
consideration provided for in Section 2 hereof when the same is due and payable
hereunder; provided, Time Broker shall have four (4) business days from the date
such payment is due to make payment if oral telephonic or written notice is
received by Time Broker from Licensee that such payment was not received on the
due date; or
(b) Default in Covenants. Time Broker's or Licensee's
default in the observance or performance of any material covenant, warranty,
condition or agreement contained herein; provided, however, any such default
shall not constitute an Event of Default hereunder if such default is cured
within twenty (20) days after notice thereof by the non-breaching party; or
(c) Breach of Representation. Time Broker's or Licensee's
material breach of any representation or warranty herein, or in any certificate
or document furnished pursuant to the provisions hereof, which shall prove to
have been false or misleading in any material respect as of the time made or
furnished; or
(d) Insolvency. The voluntary filing by Time Broker or
Licensee (or involuntary filing with respect to Time Broker or Licensee not
vacated within sixty (60) days after such filing) of
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<PAGE> 18
a petition for reorganization or dissolution under federal bankruptcy laws or
under substantially equivalent state laws.
(e) Licensee Preemption. If the Licensee shall preempt or
substitute other programming for that supplied by the Time Broker during fifteen
percent (15%) or more of the total hours of Time Broker programming on the
Stations for any one calendar week during the term of this Agreement, then Time
Broker within ten (10) days from the end of such week can terminate this
Agreement by notice to Licensee.
Section 17. Remedies Upon Default. In addition to, and not in
limitation of, all other rights and remedies available under this Agreement, in
equity or under applicable law, all of which rights and remedies are expressly
reserved, the parties shall have the following rights and remedies upon the
occurrence of an Event of Default:
(a) Termination Upon Default. If there is an Event of
Default by Time Broker, Licensee may, at its sole option, by written notice to
Time Broker, terminate this Agreement, and upon such termination Licensee shall
be under no further obligation to make available to Time Broker any further
broadcast time or broadcast transmission facilities and all amounts accrued or
payable to Licensee up to the date of termination which have not been paid
shall immediately become due and payable by Time Broker to Licensee. If there is
an Event of Default by Licensee, Time Broker may, at its sole option, by written
notice to Licensee, terminate this Agreement, and upon such termination Time
Broker
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<PAGE> 19
shall be under no further obligation to provide any further programs to be
broadcast on the Stations and all amounts due to Licensee with respect to the
period subsequent to such termination which have been prepaid by Time Broker
shall immediately become due and payable by Licensee to Time Broker.
(b) Liabilities Upon Termination. Time Broker shall be
responsible for debts and obligations of Time Broker resulting from the use of
air time and transmission facilities including, without limitation, accounts
payable and net barter balances. If this Agreement is canceled or terminated for
any reason, Licensee agrees that it will assume, perform in good faith and be
responsible for all obligations of Time Broker relating to the period after the
date of such cancellation or termination under unfulfilled advertising contracts
cancelable within thirty (30) days of the type entered into in the ordinary
course of the business of the Stations and at usual and customary rates and with
respect to which the receivables or prepayments relating thereto have been
assigned or paid to Licensee ("Ordinary Course Contracts"), as well as all
obligations of Time Broker relating to the period after the date of such
cancellation or termination under any unfulfilled advertising contracts other
than Ordinary Course Contracts which Licensee has approved in writing during the
course of this Agreement and with respect to which the receivables or
prepayments relating thereto have been assigned or paid to Licensee. In this
connection, Time Broker warrants to Licensee that it shall, and hereby does,
assign to Licensee all
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<PAGE> 20
amounts due under unfulfilled advertising contracts assumed by Licensee upon
cancellation or termination of this Agreement, and Time Broker shall pay over to
Licensee all amounts received by Time Broker for advertising run or to be run by
Licensee subsequent to such cancellation or termination. Except for obligations
under the unfulfilled advertising contracts specified in this Section 17(b),
Licensee shall not assume or otherwise be responsible for any other obligations,
expenses, contracts or other liabilities entered into or incurred by Time
Broker, regardless of whether such obligations, contracts, expenses and
liabilities relate to the Stations or the broadcast of programming thereon.
Section 18. Representations.
(a) Both Licensee and Time Broker represent that they are
legally qualified, empowered, and able to enter into this Agreement, and that it
has been reviewed and approved by their respective counsel, including counsel
specializing in FCC matters. Time Broker further represents and certifies that
this Agreement complies with Sections 73.3555(a) (1) and (e)(1) of the FCC's
rules. Licensee represents and certifies that it will maintain ultimate control
over the Stations' facilities, including control over the finances, personnel
and programming of the Stations.
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<PAGE> 21
(b) Licensee further represents to Time Broker that, as
of the date hereof, except as disclosed in the Asset Purchase Agreement:
(i) The FCC licenses and authorizations relating
to each Station (the "Station Licenses") are free and clear of legal
disqualifications or other restrictions of such a nature as would
materially limit the full operation of the Station as presently
authorized and conducted;
(ii) The Station Licenses are in good standing
and have been regularly renewed with the normal expiration dates;
(iii) The operation of each Station is in
compliance in all material respects with the Station Licenses;
(iv) Licensee has no knowledge of any matter that
might result in the suspension or revocation of the Station Licenses;
(v) There are no FCC citations outstanding with
respect to any Station or its operation; and
(vi) There are no petitions to deny, material
complaints or proceedings known by Seller to be pending before the FCC
and relating to the business and operation of any Station.
Section 19. Modification and Waiver. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such
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<PAGE> 22
waiver and consent shall be effective only in the specific instance and for the
purpose for which given.
Section 20. Delay in Exercise of Remedies; Remedies Cumulative. Except
in the case of actions that must be taken within a specific time period in
accordance with this Agreement, no failure or delay on the part of Licensee or
Time Broker in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of Licensee and Time Broker herein
provided are cumulative and are not exclusive of any right or remedies which
they may otherwise have.
Section 21. Construction. This Agreement shall be construed in
accordance with the internal substantive (that is, without reference to conflict
of) laws of the State of West Virginia and the obligations of the parties hereto
are subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations and policies of the FCC and all other
governmental bodies or authorities presently or hereafter duly constituted. The
parties believe that the terms of this Agreement meet all of the requirements of
current FCC policy for brokerage agreements and agree that they shall negotiate
in good faith to meet any FCC concern with respect to this Agreement if they are
incorrectly interpreting current FCC
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<PAGE> 23
policy or if FCC policy as hereafter modified so requires. If the parties cannot
agree to a modification or modifications deemed necessary by either party to
meet FCC requirements, the termination provisions of Section 21 below shall
apply. The parties further agree that they will make all required filings with
the FCC with respect to this Agreement.
Section 22. Termination. Either party may terminate this Agreement
effective immediately if it has been ordered by the FCC to terminate this
Agreement or to suspend (either permanently or temporarily) the rights and
obligations of the parties hereunder in order to comply with (or while a
determination is being made with respect to compliance with) the Act or FCC
rules or policies, and such termination shall be the parties' sole remedy for
any such finding by the FCC. Upon termination or cancellation of this Agreement
for any reason Licensee shall, in addition to its other legal and equitable
rights and remedies under this Agreement or under applicable law, be entitled
immediately to cease making available to Time Broker any further broadcast time
or broadcast transmission facilities, and all amounts accrued or payable to
Licensee up to the date of termination, cancellation or expiration which have
not been paid shall be immediately due and payable. Except as provided in
Section 17(b), Licensee shall not be required to assume any obligations,
contracts, expenses or other liabilities of Time Broker in connection with such
termination, cancellation or expiration.
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<PAGE> 24
Section 23. Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
Section 24. Successors and Assigns. Subject to Section 29, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective permitted successors and assigns, including, without
limitation, any permitted transferees or assignees of any kind of the FCC
licenses for the Station.
Section 25. Counterpart Signatures. This Agreement may be signed in one
or more counterparts, each of which shall be deemed a duplicate original,
binding on the parties hereto notwithstanding that the parties are not
signatory to the same original or the same counterpart.
Section 26. Performance of Contracts. On or after the Effective Date,
Time Broker shall perform and discharge or cause to be performed and discharged,
all of Licensee's obligations and duties under those contracts and commitments
identified on Attachment III hereto, including, without limitation, commitments
for promotional appearances and remote broadcasts (collectively, the "Special
Contracts"). Time Broker shall indemnify and hold harmless Licensee from and
against any and all losses, expenses, obligations and liabilities of whatsoever
nature arising out of or under the Special Contracts relating to the period
subsequent to the Effective Date, and Licensee shall indemnify and hold harmless
Time Broker from and against any and all loss, expenses, obligations and
liabilities of whatsoever nature arising out of
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<PAGE> 25
or under the Special Contracts relating to the period prior to the Effective
Date. To the extent either party hereto at any time receives from any third
party any amount that properly belongs to the other party hereto, the party
receiving such amount shall promptly pay such amount over to the party to which
such amount properly belongs.
Section 27. Notices. Any notice required hereunder (other than pursuant
to Section 16(a) hereof) shall be in writing and any payment, notice or other
communications shall be deemed given (i) upon delivery when delivered personally
or by facsimile with a copy by mail, (ii) three (3) days after mailing if mailed
by certified mail, postage prepaid, with return receipt requested, or, (iii) one
(1) day after delivery to Federal Express or another recognized overnight
carrier for overnight delivery, and addressed as follows:
To Licensee:
W. Lee Simmons, President
Simmons Broadcasting Company
44 Bow Circle, Suite B
Hilton Head Island, South Carolina 29928
Telecopier: 803-842-3371
With a copy to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
To Time Broker:
Bruce A. Friedman, President
Commodore Media of Kentucky, Inc.
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<PAGE> 26
500 Fifth Avenue, Suite 3000
New York, New York 10110
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Section 28. Entire Agreement. This Agreement (together with the
Attachments hereto) and any other agreements between the parties relating to the
Stations embody the entire agreement between the parties and there are no other
agreements, representations, warranties, or understandings, oral or written,
between them with respect to the subject matter hereof. No alteration,
modification or change of this Agreement shall be valid unless it is embodied in
a written instrument signed by the parties.
Section 29. Severability and Assignment. Except as set forth in
Sections 21 and 22 hereof, if any provision or provisions contained in this
Agreement is held to be invalid, illegal or unenforceable, this shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had not been contained
herein. Time Broker may not assign this Agreement without the prior written
consent of Licensee and any purported assignment without such consent shall be
null and void and of no legal force or effect.
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<PAGE> 27
Section 30. No Joint Venture. The parties agree that nothing herein
shall constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other intellectual property shall at all times remain
the property of the respective parties and that neither party shall obtain any
ownership interest in the other party's intellectual property by virtue of this
Agreement.
Section 31. Access to Records. Time Broker shall permit Licensee and
its agents and representatives access to all books and records relating to the
Stations.
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<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMMODORE MEDIA OF KENTUCKY, INC.
By:/s/ Bruce A. Friedman
------------------------------
Bruce A. Friedman
President
SIMMONS BROADCASTING COMPANY
By:/s/ W. Lee Simmons
------------------------------
W. Lee Simmons
President
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<PAGE> 1
Exhibit 10.65
================================================================================
ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 8, 1996
BETWEEN
COMMODORE MEDIA OF KENTUCKY, INC.
AND
ADVENTURE COMMUNICATIONS, INC.
================================================================================
<PAGE> 2
INDEX
Page
ARTICLE I - Defined Terms
1.1 Defined Terms...................................... 2
ARTICLE II - Sale and Purchase of Assets
2.1 Agreement to Sell and Buy.......................... 8
2.2 Excluded Assets.................................... 9
2.3 Purchase Price..................................... 9
2.4 Adjustments and Prorations......................... 11
2.5 Assumption of Liabilities and Obligations.......... 13
2.6 Allocation......................................... 13
ARTICLE III - Representations and Warranties of Seller
3.1 Organization, Standing and Authority............... 16
3.2 Authorization and Binding Obligation............... 17
3.3 Absence of Conflicting Agreements or Consents...... 17
3.4 Licenses........................................... 18
3.5 Real Property...................................... 19
3.6 Title to and Condition of Personal Property........ 20
3.7 Contracts.......................................... 21
3.8 Consents........................................... 22
3.9 Trademarks, Trade Names and Copyrights............. 23
3.10 Financial Statements............................... 24
3.11 Insurance.......................................... 25
3.12 Reports............................................ 25
3.13 Employee Benefit Plans............................. 25
3.14 Labor Relations.................................... 26
3.15 Taxes.............................................. 27
3.16 Claims; Legal Actions.............................. 28
3.17 Laws............................................... 28
3.18 Undisclosed Liabilities............................ 28
3.19 Books and Records.................................. 29
3.20 Assets; Accounts Receivable........................ 29
3.21 No Adverse Developments............................ 30
3.22 Environment, Health and Safety..................... 30
3.23 No Adverse Condition............................... 31
3.24 Full Disclosure.................................... 31
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<PAGE> 3
INDEX
Page
ARTICLE IV - Representations and Warranties of Buyer
4.1 Organization, Standing and Authority............... 31
4.2 Authorization and Binding Obligation............... 32
4.3 Absence of Conflicting Agreements or Consents...... 32
4.4 Qualification...................................... 33
4.5 Full Disclosure.................................... 33
ARTICLE V - Covenants of Seller
5.1 Pre-Closing Covenants.............................. 34
5.2 Post-Closing Covenants............................. 38
ARTICLE VI - Covenants of Buyer
6.1 Inconsistent Action................................ 38
6.2 Qualification...................................... 39
6.3 Simmons Local Marketing Agreement.................. 39
ARTICLE VII - Special Covenants and Agreements
7.1 FCC Consent........................................ 39
7.2 Control of the Station............................. 40
7.3 Accounts Receivable................................ 40
7.4 Taxes, Fees and Expenses........................... 42
7.5 Brokers............................................ 42
7.6 Bulk Sales Law..................................... 43
7.7 Confidentiality.................................... 43
7.8 Cooperation........................................ 44
7.9 Risk of Loss....................................... 44
7.10 Local Marketing Agreement.......................... 46
ARTICLE VIII - Conditions to Obligations of Buyer
and Seller
8.1 Conditions to Obligations of Buyer................. 46
8.2 Conditions to Obligations of Seller................ 51
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<PAGE> 4
INDEX
Page
ARTICLE IX - Closing and Closing Deliveries
9.1 Closing............................................ 53
9.2 Deliveries by Seller............................... 53
9.3 Deliveries by Buyer................................ 55
ARTICLE X - Rights of Buyer and Seller Upon
Termination or Breach
10.1 Termination........................................ 56
10.2 Specific Performance............................... 56
10.3 Liquidated Damages................................. 57
ARTICLE XI - Survival of Representations and
Warranties and Indemnification
11.1 Representations and Warranties..................... 57
11.2 Indemnification by Seller.......................... 58
11.3 Indemnification by Buyer........................... 59
11.4 Procedure for Indemnification...................... 60
ARTICLE XII - Miscellaneous
12.1 Notices............................................ 62
12.2 Benefit and Binding Effect......................... 64
12.3 Headings........................................... 64
12.4 Gender and Number.................................. 64
12.5 Counterparts....................................... 64
12.6 Attorneys' Fees.................................... 65
12.7 Entire Agreement................................... 65
12.8 Choice of Law...................................... 65
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<PAGE> 5
EXHIBITS
Exhibit A - Escrow Deposit Agreement
Exhibit B - Escrow Indemnification Agreement
Exhibit C - Local Marketing Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Seller's Certificate
Exhibit F - Opinion of Seller's Counsel
Exhibit G - Opinion of Seller's FCC Counsel
Exhibit H - Buyer's Certificate
Exhibit I - Opinion of Buyer's Counsel
SCHEDULES
SELLER SCHEDULES
Schedule 2.4(b) - Description of Trade Deals
Schedule 3.4 - Licenses
Schedule 3.5 - Description of Real Property and Leasehold
Interests (also title insurance policies
should be attached)
Schedule 3.6 - Description of Personal Property
Schedule 3.7 - Description of all Contracts plus list of
balances on program license agreements and
advertising agreements
Schedule 3.8 - Seller Required Consents
Schedule 3.9 - List of all copyrights, trademarks, trade
names, etc.
Schedule 3.10 - Financial Statements
Schedule 3.11 - List of Insurance Policies
Schedule 3.13 - List of all Employment Agreements, benefit
plans or arrangements
Schedule 3.14 - Employee disputes
Schedule 3.16 - List of Claims and Legal Actions
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<PAGE> 6
Schedule 3.18 - Undisclosed Liabilities
Schedule 3.22 - Environmental, Health and Safety Issues
BUYER SCHEDULES
Schedule 4.3 - Buyer Required Consents
Schedule 4.4 - Qualification Exceptions
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<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of April 8, 1996, is by and
between ADVENTURE COMMUNICATIONS, INC., a West Virginia corporation ("Seller"),
and COMMODORE MEDIA OF KENTUCKY, INC., a Delaware corporation ("Buyer").
P R E M I S E S:
A. Seller owns and operates radio stations WKEE (FM) and WKEE (AM),
Huntington, West Virginia, (collectively "WKEE"); WZZW (AM), Milton, West
Virginia ("WZZW"), WBVB (FM), Coal Grove, Ohio ("WBVB") and WIRO (AM), Ironton,
Ohio ("WIRO"); all of the enumerated radio stations being hereinafter referred
to as "Stations", pursuant to licenses issued by the Federal Communications
Commission (the "FCC").
B. Seller desires to sell and Buyer desires to buy substantially all
the assets used or useful in the operation of the Stations and by so doing to
acquire the radio broadcast business presently conducted by the Stations, upon
the terms and conditions hereinafter set forth.
<PAGE> 8
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:
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 the Stations prior to the Closing Date.
"Agreement" means this Asset Purchase Agreement between Buyer
and Seller for the assets of the Stations.
"Assets" means all the tangible and intangible assets owned,
leased or licensed by Seller for the Stations, as the case may be, whether or
not reflected on the balance sheet of Seller, 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 hereto, (ii) all advertising Contracts for cash
consideration entered into by Seller for the Stations and cancelable on not more
than thirty (30) days notice, (iii) all advertising Contracts for cash
consideration and cancelable on not more than thirty days (30) days notice
entered into by Seller for the sale of advertising on radio
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<PAGE> 9
stations WFXN(FM), Milton, West Virginia, WHRD(AM), Huntington, West Virginia
and WMLV(FM), Ironton, Ohio (the "Simmons Stations"), which are licensed to
Simmons Broadcasting Company ("SBC"), pursuant to that certain Joint Operating
and Lease Agreements by and between Seller and SBC, (iv) all Contracts entered
into by Seller on or after the date of this Agreement and before the Closing in
accordance with the applicable provisions of Section 5.1(a), and (v) Trade Deals
described in Section 2.5(b) hereto.
"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, and the consents of third
parties to Seller necessary to transfer the Assets to Buyer or otherwise to
consummate the transactions contemplated hereby, which are necessary for Buyer
to consummate the transactions contemplated hereby.
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<PAGE> 10
"Contracts" means all agreements, written or oral (including
any amendments and other modifications thereto), to which Seller is a party and
which affect or relate to the Assets or the business or operations of the
Stations, or the sale of advertising on the Simmons Stations for cash and in
accordance with provisions of the definition of Assumed Contracts.
"Environmental Laws" means the rules and regulations of the
FCC, the Environmental Protection Agency and any other federal, state or local
government authority pertaining to human exposure to RF radiation, and all
applicable Federal, state and local laws, rules and regulations, as amended,
relating to the discharge or removal of air pollutants, water pollutants or
process waste water or Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" means Media Venture Partners, Ltd.
"Escrow Deposit" means the sum of Five Hundred Seventy- Five
Thousand Dollars ($575,000) 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 attached
hereto as Exhibit A.
"Excluded Assets" means those assets specified in Section 2.2.
"FCC" means the Federal Communications Commission.
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<PAGE> 11
"FCC Consent" means actions by the FCC granting its consent to
the assignment of the FCC Licenses of the Stations 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 relating
to or used in the business or operations of the Stations, 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 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, reconsideration or appeal has been
denied and the time for seeking further review, reconsideration or appeal and
for the FCC to review such action has expired.
"Financial Statements" means the financial statements of the
Seller as described in Section 3.10 hereof and as attached to Schedule 3.10
hereto.
"Hazardous Material" shall mean any substance or waste
containing any hazardous substance, pollutant or contaminant, or toxic
substance, as those terms are defined, in the Comprehensive
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<PAGE> 12
Environmental Response, Compensation, and Liability Act of 1980, as amended, and
any other substance similarly defined or identified in any applicable
Environmental Laws.
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Seller, Buyer and the Indemnification Escrow Agent,
substantially in the form attached hereto as Exhibit B.
"Indemnification Escrow Agent" means such institution whom the
parties agree upon, and, in the absence of an agreement, a bank or other similar
institution with assets over $100,000,000.
"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
Stations, including those listed on Schedule 3.4 hereto with any additions
thereto between the date hereof and the Closing Date.
"Local Marketing Agreement" means the Local Marketing
Agreement between Buyer and Seller, substantially in the form attached hereto as
Exhibit C.
"Non-Competition Agreement" means the agreement among Buyer,
Seller and Michael R. Shott substantially in the form attached hereto as Exhibit
D.
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<PAGE> 13
"Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, leasehold improvements, office
equipment, supplies, plant, spare parts and other tangible or intangible
personal property which is used in the business and operations of the Stations
including the personal property which is listed on Schedule 3.6 hereto together
with any additions or permitted deletions thereto between the date hereof and
the Closing Date.
"Purchase Price" means the consideration payable by Buyer to
Seller for the Assets as provided in Section 2.3 hereof.
"Real Property" means all of Seller's real property, leasehold
interests, easements, licenses, rights to access, and rights-of-way which are
used in the business and operations of the Stations, including those interests
which are identified and described in Schedule 3.5 hereto together with any
addition or permitted deletion thereto between the date hereof and the Closing
Date.
"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.1.
"Title Company" means Fidelity National Title Insurance
Company or such other title insurance company acceptable to Buyer.
"Trade Deals" means the exchanges by the Stations or by the
Simmons Stations of their advertising time for goods, services or other
consideration, other than in connection with the licensing of programs and
programming material.
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<PAGE> 14
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 shall transfer and deliver to Buyer on the
Closing Date, and Buyer shall purchase on the Closing Date all of the Assets for
the Stations, free and clear of any liabilities, mortgages, liens, pledges,
conditions or encumbrances of any nature whatsoever (except for those permitted
in accordance with Sections 2.5 or 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, copyrights
owned or used by Seller or in which Seller has an interest, patents and
applications therefor and all other similar intangible assets relating
to the Stations, including, but not limited to the call letters WKEE
(AM), WKEE (FM), WBVB, WIRO and WZZW and the goodwill related to the
foregoing (the "Intellectual Property");
(6) All of the Stations' 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 Stations, if any, including filings with the
FCC which relate to the Stations, and goodwill relating to the
foregoing;
(7) All books and records relating to the business and
operations of the Stations, including, without limitation, (a) executed
copies of the Assumed Contracts or, if no executed agreement exists,
summaries of such Assumed Contracts transferred pursuant to Section
2.1(4) hereof and (b) all records required by the FCC to be kept by
Stations;
(8) To the extent assignable, all computer programs and
software, and all rights and interests in and to computer
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<PAGE> 15
programs and software used in connection with the business
and operations of the Stations; and
(9) All intangible assets of Seller relating to the Stations
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 cash surrender value
in regard thereto; and any stocks, bonds, certificates of deposit and
similar investments;
(2) 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 Stations or their business or operations;
(3) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes, utility
security deposits or fees of any nature whatsoever which relate solely
to the period prior to the Closing Date;
(4) All insurance contracts (except as provided in Section
7.9);
(5) All contracts listed on Schedule 3.13 (except those which
are designated as Assumed Contracts) 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;
(6) All Choses in Action of Seller which relate entirely to
the period before the Closing Date; and
(7) Accounts Receivable.
2.3 Purchase Price.
(a) The Purchase Price for the Assets is Seven Million Seven
Hundred Sixty-Five Thousand Dollars ($7,765,000), which amount is to
paid by Buyer to Seller, if all Stations close, as follows:
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<PAGE> 16
(i) the Escrow Deposit, which shall be deposited by
Buyer with Escrow Agent on the execution of this Agreement
shall be transferred to Seller by wire transfer at Closing and
credited to the Purchase Price;
(ii) Six Million Seven Hundred Fifteen Thousand
Dollars ($6,715,000) of the Purchase Price shall be paid to
Seller or its designee(s) at Closing by wire transfer; and
(iii) the remaining Four Hundred Seventy-Five
Thousand Dollars ($475,000) shall be deposited with the
Indemnification Escrow Agent.
(b) If there is a Closing for Stations WKEE and WZZW, then the
amount of the Purchase Price of Six Million Two Hundred and Seven
Thousand Dollars ($6,207,000) shall be paid for the Assets of these
three Stations which amount is to be paid by Buyer to Seller as
follows:
(i) Three Hundred Eighty Thousand Dollars ($380,000)
from the Escrow Deposit;
(ii) Five Million Four Hundred and Two Thousand
Dollars ($5,402,000) of the Purchase Price shall be paid to
Seller or its designee(s) at Closing by wire transfer; and
(iii) the remaining Four Hundred Twenty-Five Thousand
Dollars ($425,000) shall be deposited with the Indemnification
Escrow Agent.
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<PAGE> 17
(c) If there is a Closing for Stations WBVB and WIRO then the
amount of the Purchase Price of One Million Five Hundred and
Fifty-Eight Thousand Dollars ($1,558,000) shall be paid for the Assets
of these two Stations which amount is to be paid by Buyer to Seller as
follows:
(i) One Hundred and Ninety-Five Thousand Dollars
($195,000) from the Escrow Deposit;
(ii) One Million Three Hundred and Thirteen Thousand
Dollars ($1,313,000) of the Purchase Price shall be paid to
Seller or its designee(s) at Closing by wire transfer; and
(iii) the remaining Fifty Thousand Dollars ($50,000)
shall be deposited with the Indemnification Escrow Agent.
The payments to Seller under Section 2.3(a), (b) or (c) above
shall be made by Buyer to no more than two (2) accounts of which Buyer
is notified of by Seller pursuant to an irrevocable pay proceeds letter
delivered by Seller to Buyer at least three (3) business days prior to
the Closing Date.
2.4 Assumption of Liabilities and Obligations.
(a) Subject to the Local Marketing Agreement, as of the
Closing Date, Buyer shall assume and undertake to pay, discharge and
perform all the obligations and liabilities of Seller relating to the
Stations under the Licenses and the Assumed Contracts assigned to Buyer
relating to the time period beginning on or arising out of events
occurring on or after the Closing
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<PAGE> 18
Date. All other obligations and liabilities of Seller, including, without
limitation, (i) obligations or liabilities under any 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 unless the benefits from the contract is received by Buyer without the
Consent and without additional consideration being paid by Buyer, (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), (iv) any forfeiture, claim or pending litigation or
proceeding relating to the business or operations of the Stations, prior to the
Closing Date, and (v) claims of any employees of Seller prior to the Closing
Date, shall remain and be the obligation and liability solely of Seller. The
Buyer is not the successor employer of Seller's employees for any purpose and is
not required to employ any of the employees of the Seller at the Stations. Other
than as specified herein, Buyer shall assume no liabilities or obligations of
Seller for the business or operations of the Stations or Seller.
(b) Schedule 2.4(b), captioned "Air Time Due Client", contains
a description of all of the Trade Deals on the date hereof involving the
Stations and the Simmons Stations and correctly sets forth the balance of
Seller's obligations under the caption "Air Time Due Client" under each such
Trade Deal. On
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<PAGE> 19
the Closing Date, Buyer shall assume the Trade Deals listed on Schedule 2.4(b);
provided, however, if the Seller's obligations for "Air Time Due Client" exceeds
$10,000 then the balance of the "Air Time Due Client" in excess of $10,000 shall
be considered an operating expense of Seller to be pro-rated in accordance with
Section 2.6. The Trade Deals assumed by Buyer pursuant to the terms of this
Section 2.4(b) shall be considered Assumed Contracts.
2.5 Allocation. The Purchase Price shall be allocated to the Assets of
the Stations in a manner which complies with Section 1060 of the Code with
respect to the allocation of the Purchase Price (as well as any liabilities
assumed by Buyer) among the Assets. The allocation shall be consistently
reported by Buyer and Seller in compliance with Section 1060 based upon an asset
valuation supplied by an independent firm selected by Buyer which is
knowledgeable in the valuation of assets of radio stations. The appraisal shall
be provided to Seller by no later than January 31, 1997 for those stations for
which a Closing is held on or before December 10, 1996; and, within 60 days
after Closing for those stations which close on or after December 11, 1996.
2.6 Adjustments and Prorations.
(a) Subject to the provisions of the Local Marketing
Agreement, all revenues arising from the operation of the Stations or the sale
of advertising on the Simmons Stations earned or accrued up until midnight on
the day prior to the
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<PAGE> 20
Closing Date, and all expenses, costs and liabilities, arising therefrom
incurred, accrued or payable up until such time including, without limitation,
business, license, utility charges, real and personal property taxes and
assessments levied against the Assets, FCC regulatory fees, 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 Stations 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 Stations for the period commencing on and continuing after the
Closing Date. Seller will be liable for all of the costs of employee compen-
sation, including, but not limited to (i) all taxes and related contributions,
vacations, sick pay and severance pay properly attributable to or accrued on
account of service 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 Closing Date, or death or disability occurring on or prior to
midnight on the date prior
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<PAGE> 21
to the Closing Date, whether reported by the Closing Date or thereafter. Except
as provided in Section 2.4(b), Trade Deals shall not be adjusted or pro rated.
(b) Adjustments or prorations pursuant to this Section 2.7
will, insofar as feasible, be determined and paid on the Closing Date based upon
Seller's calculation delivered to Buyer five (5) business days prior to the
Closing Date and approved by Buyer, with final settlement and payment by the
appropriate party occurring no later than sixty (60) days after the Closing
Date. The determination of the amount of adjustment under Section 2.6 shall be
made by Buyer in accordance with generally accepted accounting principles,
consistently applied. Upon such determination, 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 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 determination
within thirty (30) days. The accounting firm's determination shall be binding on
Buyer and Seller. Each party
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<PAGE> 22
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
five (5) business days following notice of 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 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of West Virginia. The Seller has the requisite corporate power and
authority (i) to own, lease, and use the Assets as presently owned, leased, and
used, (ii) to conduct the business and operations of the Stations as presently
conducted and (iii) subject to obtaining applicable Consents, to execute and
deliver this Agreement and the documents and instruments 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. Except for the
joint sales and marketing agreements with respect to the Simmons Stations,
Seller is not a participant in any joint venture or partnership with any other
person or entity with respect to any part of the Stations operations or any of
the Assets.
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<PAGE> 23
3.2 Authorization and Binding Obligation. 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 or Consents. Subject to obtaining
the Consents, 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 Seller is a party is
required for the execution, delivery, and performance of this Agreement or any
of the agreements or instruments contem plated hereby other than those
agreements contemplated by Section 2.4 hereof. 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
provision of the Certificate of Incorporation or Bylaws of Seller; (ii) except
for the necessity of obtaining
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<PAGE> 24
applicable Consents, conflicts with, results in a breach of, or constitutes a
default under any applicable law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality; (iii) except
for the necessity of obtaining applicable Consents, 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, instrument of indebtedness or other obligations to which Seller
is a party or by which Seller may be bound; or (iv) except for the necessity of
obtaining applicable Consents, 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 Stations in the manner and to the full extent they are now being conducted,
and none of the Licenses is subject to any restriction or condition which would
limit the full operation of the Stations as presently operated. The Licenses are
in full force and effect, and the conduct of the business and operations of the
Stations is in accordance therewith. The Stations are operating in all material
respects in accordance with the Licenses and in compliance with the
Communications Act of 1934, as amended and the rules,
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<PAGE> 25
regulations and policies of the FCC and all other applicable
laws.
3.5 Real Property. Schedule 3.5 hereto contains descriptions of the
real property and leasehold interests (including all improvements thereon) which
comprise all real property and leasehold interests used in connection with or
necessary to conduct the business and operations of the Stations as now
conducted. Seller has good, marketable and insurable fee simple absolute
interest in and to the real property owned by it. Attached to Schedule 3.5 are
all policies of title insurance currently existing in favor of Seller with
respect to the real property. The title insurance policies attached to Schedule
3.5 and any additional items disclosed in Schedule 3.5 correctly reflect (i) the
status of title of the real property as of the effective dates of such title
policies and (ii) the current status of title to the real property, except with
regard to any liens relating to taxes not yet due and payable. The imperfections
of title and encumbrances (other than those securing any obligations or
indebtedness) or restrictions, if any, shown on Schedule 3.5 or attached
thereto, do not, individually or in the aggregate, interfere in any material
respect with Seller's use of the real property or the operation of the Stations
or materially affect the value of the real property. There is no pending
condemnation or similar proceeding affecting the real property or any portion
thereof, and no such action is presently contemplated or threatened. Except as
set
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forth on Schedule 3.5, there are no parties in possession of 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. To the
best knowledge of Seller 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 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 Stations.
3.6 Title to and Condition of Personal Property. Schedule 3.6 hereto
contains a description of the items of Personal Prop erty which comprise all
personal property used in connection with the business and operations of the
Stations or which permits the
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operation of the Stations as now conducted (having a replacement value of not
less than approximately $100 for each item). Except as set forth on Schedule 3.6
hereto, Seller has title to all Personal Property and none of the Personal
Property is subject to any security interest, mortgage, pledge, lease, license
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), is available for immediate use in the
business and operation of the Stations as currently conducted and will permit
the Stations to operate in all material respects in accordance with the terms of
their FCC Licenses, 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 hereto contain descriptions of all the
Contracts in effect on the date hereof relating to the Stations other than
Contracts for (i) the sale of advertising time on the Stations or on the Simmons
Stations for cash
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consideration which can be cancelled on not more than thirty (30) days notice
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 Stations or the Simmons Stations of less than
$10,000. Although not required to be listed on Schedule 3.7, all contracts for
the sale of advertising time on Seller's Stations or the Simmons Stations
consistent with clause (i) of this Section shall be assumed by Buyer at Closing.
In all material respects, 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 material 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 in all material respects the balance of Seller's rights and obligations
under each agreement listed thereon as of December 31, 1995 or, if later, the
date specified thereon.
3.8 Consents. Schedule 3.8 sets forth those Assumed Contracts which
require Consent for assignment to Buyer and all Consents required. Except for
the FCC Consent and the agreements contemplated by Section 2.4 hereof and the
other Consents described in Schedule 3.8 hereto, no consent, approval, permit or
authorization of, or declaration to or filing with any
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governmental or regulatory authority, or any other third party is required (i)
to consummate this Agreement and the transactions contemplated hereby, (ii) to
permit Seller to assign or transfer the Assets to Buyer or (iii) to enable Buyer
to conduct the business or operations of the Stations in 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 in connection with the business and operations of the
Stations. The Intellectual Property includes all copyrights, trademarks, trade
names, patents and applications, if any, and all licenses, patents, permits,
jingles, privileges, logos, computer software, data and documentation,
confidential business information and other similar intangible property rights
and interests used by, issued to or owned by Seller, or under which Seller is
licensed or franchised relating to the conduct of the business and operations of
the Stations. Schedule 3.9 describes all Intellectual 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 knowledge, Seller has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties.
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3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of (i) the financial statements of Seller pertaining to the
Stations, which financial statements contain balance sheets and profit and loss
statements as at and for Seller's fiscal years ended December 31, 1993, (the
"1993 Financials"), December 31, 1994 (the "1994 Financials") and December 31,
1995 (the "1995 Financials") and (ii) an unaudited balance sheet and profit and
loss statement of the Station as at and for the two month(s) ended February 29,
1996 (the "Stub Financials") (the 1993 Financials, the 1994 Financials, the 1995
Financials and the Stub Financials are collectively referred to herein as the
"Financial Statements"). The 1993 Financials, 1994 Financials and 1995
Financials are unaudited. The Financial Statements were prepared in accordance
with generally accepted accounting principles, consistently applied, subject,
with respect to the 1995 Financials and the Stub Financials, to year-end
adjustments which will not have a material adverse effect on such financial
statements. The Financial Statements are correct in all material respects and
present fairly the operating income and financial condition of the Stations as
at their respective dates and the results of operations for the periods then
ended, subject, with respect to the Stub Financials, to year-end adjustments
which will not have a material adverse effect on such financial statements.
Except as otherwise indicated in the Financial Statements, the accounting
practices used by the Seller in preparing the Seller's Financial Statements
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were the same for each of the Financial Statements and were consistently
followed throughout the periods reflected in each of the Financial Statements.
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 Stations. All policies of insurance 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. All returns, reports and statements which the Stations
are required to file with the FCC or with any other governmental agency have
been filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with in all material
respects.
3.13 Employee Benefit Plans. A complete list of all employees of each
Station, date of hire, job description and payroll information, as at December
31, 1995 has been delivered to Buyer. Since December 31, 1995, there has been no
increase in compensation or bonuses payable to employees except as otherwise
disclosed to Buyer in writing prior to the date hereof. Schedule 3.13 contains a
true and complete list as of the date of this Agreement of all employment
agreements, employee benefit plans or arrangements currently applicable to the
employees of Seller employed at the Stations and of all fixed or contingent
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liabilities or obligations of Seller with respect to any person now employed at
the Stations, including pension or thrift plans, individual or supplemental
pension or accrued compensation arrangements, contributions to hospitalization
or other health or life insurance programs, incentive plans, bonus arrangements
and vacation, sick leave, disability and termination arrangements or policies.
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 hereto relating to the Stations, and
with descriptions, in writing, of the unwritten plans and arrangements listed in
Schedule 3.13 hereto relating to the Stations. All employee benefits and welfare
plans or arrangements listed in Schedule 3.13 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 plans or arrangements, nor to the best
knowledge of Seller 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
any collective bargaining agreement with respect to the Stations and Seller does
not have any written or oral
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contracts of employment with any employee of the Stations, other than those
listed in Schedule 3.13 hereto. As of the date hereof, 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; 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. 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 Stations except as disclosed in
Schedule 3.14 hereto.
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
affecting the Stations 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 Stations 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. No Internal Revenue Service audit of Seller is
pending or, to the knowledge of Seller, threatened, and the
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results of any completed audits are properly reflected in the Financial
Statements. 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 the
best of Seller's knowledge, threatened against or relating to the Stations, the
Assets, or the business and operations of the Stations.
3.17 Laws. Seller has complied in all material respects with (i) the
Licenses and (ii) all applicable federal, state and local laws, rules,
regulations, ordinances, judgments, orders and decrees. Neither the ownership or
use of the properties of Seller relating to the Stations nor the conduct of the
business and operations of the Stations conflict in any material way with the
rights of any other person, firm or corporation.
3.18 Undisclosed Liabilities. With respect to the Stations or the
Assets, except as set forth in Schedule 3.18 hereto or
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otherwise disclosed in this Agreement, (a) Seller has no material liability,
secured or unsecured (whether absolute, accrued, contingent or otherwise and
whether due or to become due) of a nature required by generally accepted
accounting principles to be reflected in a balance sheet or disclosed in the
notes thereto except (i) as such liabilities and obligations are reflected in
the Stations' balance sheets as at December 31, 1995, or (ii) for liabilities
and obligations incurred after December 31, 1995, in the ordinary course of
business, none of which individually or in the aggregate are materially adverse
to the Assets or operations of the Stations and (b) to the best knowledge of
Seller, Seller has no contingent liabilities or other liabilities outside the
ordinary course of business and of a nature not required to be reflected in the
Financial Statements which, individually or in the aggregate, which are
materially adverse to the Assets or operations of the Stations.
3.19 Books and Records. The books of account of the Stations and other
records of the Seller relating to the Stations are complete and correct in all
material respects. At the Closing, all such books and records shall be located
at the business office of the Stations, except for the excluded books and
records.
3.20 Assets; Accounts Receivable.
(a) The Assets include all assets, except for Excluded Assets,
used in connection with the business of the Stations as currently conducted and
all assets which permit the operation of
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the Stations as currently conducted (having a replacement value in excess of
$100). The Seller does not own, lease or license any assets used in the current
operation of the Stations other than the Assets.
(b) All Accounts Receivable represent assets (a) which arose
from bona fide sales of time or other sales in the ordinary course of business
of the Seller and (b) represent credit extended in a manner consistent with past
trade and credit practices of Seller.
3.21 No Adverse Developments. Since December 31, 1995, there has not
occurred:
(a) any sale, lease, transfer, assignment, abandonment or
other disposition of any of the assets of the Stations; 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 set forth in Sections 5.1(a) or Sections 5.1(b) of 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 applicable law with respect to
the Stations, 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
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protection of the environment (collectively, "Health, Safety and
Environmental Requirements").
(b) Except as expressly set forth on Schedule 3.22, no facts,
events or conditions relating to the present facilities or operations of the
Stations or, to Seller's knowledge, their predecessors 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
Environmental Requirement.
3.23 No Adverse Condition. Since December 31, 1995 to the date of this
Agreement, there has not been any material adverse change in the Assets,
operations or financial conditions of the Stations.
3.24 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. Buyer is a corporation duly
organized, validly existing, and in good
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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 Kentucky.
4.2 Authorization and Binding Obligation. 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 corporate 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, 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 the transactions
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contemplated hereby (i) conflicts with the Certificate of Incorporation or
By-Laws of Buyer; (ii) except for the necessity of obtaining applicable Consents
and as set forth on Schedule 4.3, 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, 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. Except as set forth on Schedule 4.4, Buyer is
legally and technically qualified to become the licensee of the Stations in
accordance with the provisions of the Communications Act of 1934, as amended
without condition or waiver. Buyer is financially qualified to purchase the
Stations and Buyer's obligations hereunder are not contingent on Buyer obtaining
financing.
4.5 Full Disclosure. No representation and warranty made by Buyer
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 such representations and warranties omit any statement
necessary
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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 by this Agreement,
commencing on the date hereof until the Closing Date, Seller shall cause the
Stations 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:
(1) Compensation. (a) Except as otherwise disclosed
to Buyer in writing prior to the date of this Agreement and, thereafter, as
otherwise approved by Buyer in writing, increase the compensation of any person
employed in connection with the conduct of the business or operations of the
Stations, (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 Stations except in accordance with normal past practices, or (c) enter
into any employment, severance or similar agreement with any employee of the
Stations 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;
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(2) Contracts. Without the prior written consent of
Buyer: (a) modify, amend or terminate any of the Assumed Contracts other than
by expiration of the term of the Assumed Contract or (b) enter into other
non-advertising Contracts (other than Contracts relating to Trade Deals which
are treated in Section 5.1(a)(8) below) obligating Seller to provide payments or
benefits in excess of $1,000 each over the life of the Contract or $10,000 in
the aggregate. Schedule 3.7 will be supplemented prior to the Closing Date 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, except in connection with the
acquisition of replacement property of equivalent kind and value or obsolete
equipment;
(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 whatsoever, upon the Assets, except for those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and 3.6
hereto, and (ii) those which individually or in the aggregate do not exceed
$10,000, all of which shall be released or removed prior to Closing;
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(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 negotiations or otherwise,
make any commitment or incur any liability to any labor organization with
respect to the employees of the Stations;
(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 contemplated by this Agreement; or
(8) Trade Deals. Enter into any new Trade Deals,
unless otherwise agreed to in writing by Buyer, after the date set forth on
Schedule 2.5(b).
(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
Stations and to all other properties, equipment, books, records, contracts and
documents relating to the Stations for the purpose of audit, inspection and
copying, 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
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request and make its independent accountants and key employees reasonably
available; provided, however, the rights of Buyer shall not be exercised in such
a manner as to interfere unreasonably with the operation or the business of the
Stations;
(2) Maintenance of Assets. Maintain all of the Assets
or replacements thereof and improvements thereon in good operating condition 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 Stations in the usual and customary manner;
(3) Insurance. Maintain all existing insurance
policies, or comparable coverage, for the Stations and the Assets, as listed in
Schedule 3.11 hereto;
(4) Consents. Use its best efforts to obtain the
Consents;
(5) Preservation of Business. Subject to the terms of
the Local Marketing Agreement, use its best efforts to maintain and preserve the
business and operations of the Stations 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
Stations;
(6) Books and Records. Maintain the books and records
of Seller relating to the Stations in accordance with past practices;
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(7) Notification. Promptly notify Buyer in writing
of any unusual or material developments or changes adversely relating to or
affecting the business and operation of the Stations or the Assets; and by no
later than the first day of the month immediately preceding the Closing, 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
laws, rules and regulations to which the Stations 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
Buyer, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
ARTICLE VI
COVENANTS OF BUYER
6.1 Inconsistent Action. Buyer will not intentionally take or omit to
take any action that will cause the FCC to deny, materially delay, or fail to
consent to the application(s) for assignment or cause the consents to assignment
from becoming a Final Order.
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6.2 Qualification. Prior to the Closing Date or the effective date of
the Local Marketing Agreement, whichever occurs first, Buyer shall take all
actions necessary to be qualified to do business in West Virginia and Ohio.
6.3 Simmons Local Marketing Agreement. Buyer will enter into the Local
Marketing Agreement with SBC for the Simmons Stations effective on the same date
as the Local Marketing Agreement with Seller's Stations.
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 appropriate 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 government agencies reasonably
required to effect the transactions contemplated hereby including, but not
limited to, seeking waivers of any rules and regulations of the FCC that may be
violated.
(b) The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any
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materially adverse conditions on Buyer attributable to Seller or arising out of
Seller's operation of the Stations; (ii) com pliance 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. Subject to the terms of the Local Marketing
Agreement, 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. Subject to the terms of the Local
Marketing Agreement, the control and supervision of all of the Stations'
operations shall be the sole responsibility of Seller until the Closing.
7.3 Accounts Receivable. Subject to the terms of the Local Marketing
Agreement, all Accounts Receivable of Seller arising out of the operations of
the Stations, including the sale of time on the Simmons Stations, and
outstanding on the earlier of the Closing Date or the effective date of the
Local Marketing Agreement, 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 180 days after the earlier of
the effective date of the Local Marketing Agreement or 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 collection
practices for its own accounts receivable, without
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compensation, to collect each such account receivable during said 180 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 the 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, until the
expiration of the said 180 day period. Following the expiration of the 180 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 Accounts 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 earlier of the effective date of the Local Marketing Agreement or
Closing Date and then paying the Account Receivable arising on or after the
earlier of the effective date of the Local Marketing Agreement or 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
payments received from such account debtor to the undisputed portion of such
account debtor's Accounts Receivable,
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including Buyer's accounts receivable of such debtor, if Buyer notifies Seller
of such disputed Account Receivable.
7.4 Taxes, Fees and Expenses. All sales, use, transfer, purchase,
recordation and documentary taxes and fees, if any, arising out of the transfer
of the Assets pursuant to this Agreement shall be paid in accordance with the
normal and customary practices for similar transactions in Huntington, West
Virginia. 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 the brokerage fee shall be one-half of one percent (.5%) of
the Purchase Price paid at Closing by Buyer for the Stations plus $2,675 to each
of Media Venture Partners and Blackburn & Co at the last Closing hereunder. All
payments to Media Venture Partners and Blackburn
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& Co. as a result of this transaction shall be paid one-half by
Buyer and Seller.
7.6 Bulk Sales Law. Any loss, liability, obligation or cost suffered by
Seller or Buyer as the result of the failure of Seller to comply with the
provisions of any bulk sales law applicable to the transfer of the Assets and
related to protecting trade creditors of Seller as contemplated by this
Agreement shall be borne by Seller.
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; 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
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 and shall not use any confidential information obtained from
the other party to the detriment of such party. On and after January 5, 1996,
Seller, Buyer and their respective affiliates shall not make any public
announcement or press release concerning the
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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.
(a) The risk of any 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 Closing and by Buyer at all times after the
Closing. 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.
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(b) If Seller, at its expense, repairs, replaces or restores
such Assets to their prior condition before 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 or informs the Buyer 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; provided, however that Buyer
shall not have this option if Seller in its notice of damages to Assets
has agreed to assign and does validly assign all of Seller's rights
under applicable insurance policies and condemnation awards and
reimburse Buyer for all costs and expenses for repair or replacement of
the damaged Assets in excess of amounts received under insurance
policies and condemnation awards; or
(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; and in
such event, Seller shall have no further liability with respect to the
condition of the Assets directly attributable to the damage or
destruction.
(d) Buyer will notify Seller of a decision under the options
described in Section 7.9(c) above within ten (10)
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business days after Seller's notice to Buyer of the damage or destruction of
Assets and the estimate of the costs of repair.
(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 a
Station as it is currently operating for a period which is expected to be in
excess of ninety (90) days.
7.10 Local Marketing Account. Concurrently with the execution of this
Agreement, Seller will enter into the Local Marketing Agreement with Buyer
substantially in the form of Exhibit C.
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 (any of which may be waived by Buyer in
its sole discretion):
(a) Representations and Warranties. All representations 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.
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(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 performed or complied with by it
prior to or on the Closing Date.
(c) Consents and FCC Licenses. The FCC Consent, the Consents
listed on Schedule 3.8 hereto, and any other Consents which are designated by
Buyer as of the date of this Agreement as material to the business and
operations of the Stations shall have been duly obtained and delivered to Buyer
except as hereinafter set forth. The FCC Consent shall have become a Final Order
unless waived by Buyer. The obligation of Buyer to close on the purchase of
Stations WBVB and WIRO shall require as a condition that the FCC Licenses for
those stations shall have been issued by the FCC for a full term commencing in
1996 without any material adverse conditions imposed on the licensee; provided,
however, that the Buyer shall not require as a condition of Closing for Stations
WKEE and WZZW that there be a license renewal commencing in 1996 for Stations
WBVB and WIRO.
(d) Licenses; FCC Compliance. Seller shall be the holder of
the Licenses, and there shall not have been any modification of any of such
Licenses which has a material adverse effect on the Stations or the conduct of
the business or operations of the Stations arising out of Seller's operation of
the Stations or because of the duopoly nature of the transaction. No proceeding
shall be pending or threatened, the effect of which would be to revoke, cancel,
fail to renew, suspend, modify or
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have a materially adverse affect on any of the Licenses. The Stations shall be
operating in compliance with all applicable FCC rules, regulations and policies
in all material respects.
(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) 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, encumbrances, charges, claims, agreements or other
imperfections of title except as otherwise provided in Sections 3.5 and 3.6.
(g) 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 adversely affect, as of Closing, the validity of the FCC
Licenses or would adversely affect the Assets or operation (other than
financial) of the Stations. Consistent with Section 8.1(c), the pendancy of
renewal applications for Stations WBVB and WIRO at the Closing on the purchase
of WKEE and WZZW shall not constitute a violation of this Section 8.1(g).
(h) Real Estate Title Commitment. Buyer, at its cost and
expense, shall have obtained a preliminary report on title to the Real Property
covering a date subsequent to the date of this
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Agreement, issued by the Title Company, which preliminary report shall contain a
commitment (the "Title Commitment") of the Title Company to issue an owner's
title insurance policy as Buyer may reasonably require (the "Title Policy")
insuring the fee simple absolute interest of Seller in the real property. The
Title Commitment shall be in such amount as Buyer may reasonably determine to be
the fair market value of the Real Property (including all improvements located
thereon) and shall be subject only to: (i) liens of current state and local
property taxes which are not delinquent or subject to penalty; (ii) unviolated
zoning regulations and restrictive covenants and easements of record which do
not detract from the value of the Real Property and do not materially and
adversely affect, impair or interfere with the use of any property affected
thereby as heretofore used by Seller or the Stations; and (iii) public utility
easements of record, in customary form, to serve the Real Property.
(i) Survey. Buyer, at its cost and expense, shall have
obtained a survey of the Real Property within forty-five (45) days of the date
of this Agreement which shall: (i) be prepared by a registered land surveyor;
(ii) be certified to the Title Company and to Buyer; and (iii) show with respect
to the Real Property: (A) the legal description of the real property (which
shall be the same as the Title Policy pertaining thereto); (B) all buildings,
structures and improvements thereon and all restrictions of record and other
restrictions that have been established by an applicable zoning or building code
or ordinance
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and all easements or rights of way across or serving the Real Property
(including any off-site easements affecting or appurtenant thereto); (C) no
encroachments upon the Real Property or adjoining parcels by buildings,
structures or improvements and no other survey defects; (D) access to such
parcel from a public street; and (E) the location of the Real Property in
relation to any known flood hazard area. Buyer shall promptly deliver a copy of
the Survey to Seller upon its receipt by Buyer.
(j) Environmental Reports. Within ten (10) days after the date
hereof Buyer shall have ordered, and shall have received within sixty (60) days
after the date hereof, at its expense, an environmental report or reports with
respect to the Stations and the Assets (including, without limitation, the Real
Property) from an environmental engineering firm selected by Buyer which shall
confirm, in a manner acceptable to Buyer, the nonexistence of any Hazardous
Materials on or about the Stations and the Assets (including, without limitation
the Real Property) and the accuracy of Seller's representations and warranties
contained in Section 3.22. The environmental reports shall be delivered to
Seller promptly after their receipt by Buyer.
(k) Non-Competition Agreement. The Seller and Michael R. Shott
shall have executed and delivered the Non-Competition Agreement.
(l) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WFXN (FM) and WHRD (AM) when there is a Closing for
WKEE and WZZW; and, for the Closing on
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WBVB and WIRO, there shall be a simultaneous Closing for radio station WMLV
(FM), in accordance with the terms and conditions of an agreement dated the same
date as this Agreement between Buyer and Simmons Broadcasting Company and there
shall be a simultaneous closing between Buyer and Michael R. Shott ("Shott") for
the assignment by Shott to Buyer of options to acquire the Simmons Stations then
being closed.
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 (any of which may be waived by Seller
in its sole discretion):
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though 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
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require additional compliance by Seller or that are materially
adverse to 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 validity of the FCC
Licenses or would adversely affect the Assets or operations of the Stations.
(f) Qualification. The Buyer shall be qualified to do business
in West Virginia and Ohio.
(g) Simultaneous Closing. There shall be a simultaneous
Closing for radio stations WFXN (FM) and WHRD (AM) when there is a Closing for
WKEE and WZZW; and, for the Closing on WBVB and WIRO, there shall be a
simultaneous Closing for radio station WMLV (FM), in accordance with the terms
and conditions of an agreement dated the same date as this Agreement between
Buyer and Simmons Broadcasting Company and there shall be a simultaneous closing
between Buyer and Shott for the assignment by Shott to Buyer of options to
acquire the Simmons Stations then being closed.
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ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 Closing. The Closing(s) shall take place at 10:00 a.m. on a date
selected by Buyer on five (5) days written notice to Seller which date shall be
within ten (10) days after the FCC Consent has become a Final Order. The
Closing(s) shall be held at the offices of Buyer's attorney or such other place
as shall be mutually agreed upon by Buyer and Seller. If any of the conditions
to Buyer's performance pursuant to Section 8.1(c) hereof shall not have been
fulfilled by the above contemplated Closing Date for a Closing, then the Buyer
and Seller shall cooperate with each other to cause the FCC to extend the time
for Closing(s) under the FCC Consents for no less than thirty (30) days, or such
longer period as mutually agreed to by Buyer and Seller.
9.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver or cause to be delivered 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 in form and substance reasonably
satisfactory to Buyer's counsel;
(b) Consents; Acknowledgments. The original of each Consent;
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(c) Estoppel Certificates. An estoppel certificate, if
applicable, from the lessor(s) under the lease(s) covering the tower,
transmitter and studio for the Stations;
(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, 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;
(e) Licenses, Contracts, Business Records, Etc. To the extent
they are in the 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 Stations' business and operations, which copies shall be available at the
Closing or at the Stations' 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 E (the "Closing Certificate");
(g) Opinions of Counsel. Opinion of Seller's counsel and
Seller's FCC counsel, dated as of the Closing Date, substantially in the forms
attached hereto as Exhibit F and Exhibit G, respectively; and
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(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 substance 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 H ("Buyer's Closing Certificate");
(d) Buyer's Authorization. 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 transactions contemplated hereby and that such resolutions remain in full
force and effect; and
(e) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date substantially in the form attached hereto as Exhibit I.
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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
be in 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
on or before March 4, 1997, unless the failure to obtain the FCC Consent(s) or
otherwise comply with Sections 8.1 and 8.2 is because of the party's default.
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 obligation 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
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this Agreement, monetary damages alone will not be adequate. Buyer shall
therefore be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
Seller hereby waives the defense that there is an adequate remedy at law.
10.3 Liquidated Damages. In the event this Agreement is terminated by
Seller as a result of Buyer's breach of a material obligation under this
Agreement, then the Escrow Deposit shall be paid by the Escrow Agent 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 for the reasons described in Section 10.1 and
shall be the exclusive remedy of Seller.
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 representations, warranties and pre-closing covenants contained in this
Agreement and the Closing Certificate shall be deemed continuing
representations, warranties and pre-closing covenants, and shall
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survive the Closing Date for a period of two (2) years.
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, relating to:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any covenant
by Seller contained herein or in any certificate, document or instrument
delivered to Buyer hereunder;
(b) Any and all obligations or liabilities of Seller relating
to the Stations not expressly assumed by Buyer pursuant to the terms hereof,
including without limitation, any such obligation or liability imposed on Buyer
by process of law as a successor to the business of Seller;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or control 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, costs and expenses, including
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reasonable legal fees and expenses, incident to any of the
foregoing or in enforcing this indemnity.
(e) Notwithstanding anything to the contrary set forth herein,
Seller's obligation to indemnify Buyer shall only be applicable if the aggregate
of all claims equals or exceeds $10,000 and then the Seller's obligation shall
be from the first dollar of claims.
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 resulting from
any untrue representation, breach of warranty or nonfulfillment of any covenant
by Buyer contained herein or in any certificate, document or instrument
delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or control of the Stations 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
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reasonable legal fees and expenses, incident to any of the foregoing or in
enforcing this indemnity.
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
and amount of such claim, the Indemnifying Party shall immediately pay to the
Claimant the full amount of the claim and in the
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case of a breach by the Seller the Buyer shall be entitled to be indemnified
pursuant to the terms of the Indemnification Escrow Agreement. 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);
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
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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.
(f) If the Buyer is entitled to indemnification from Seller
pursuant to this Article XI, the Buyer shall be entitled to receive such
indemnification from the Indemnification Escrow Agent pursuant to the terms of
the Indemnification Escrow Agreement; provided, if the amounts sought by Buyer
exceed the amount held by the Indemnification Escrow Agent the Buyer shall be
entitled to such additional indemnification and Buyer's recovery shall not be
limited in any manner by the terms of the Indemnification Escrow Agreement.
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
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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 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:
Michael R. Shott
President and Chief Executive Officer
Adventure Communications, Inc.
100 Bluefield Avenue, Suite 3
Bluefield, West Virginia 24701-2744
Telecopier: (304) 324-0584
With a copy to:
Alan C. Campbell
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
Telecopier: (202) 728-0354
If to Buyer:
Commodore Media of Kentucky, Inc.
500 Fifth Avenue
New York, NY 10110
Attention: Bruce A. Friedman
Telecopier: (212) 302-6457
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
Telecopier: (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.
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<PAGE> 70
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 this Agreement upon notice to Seller at the time
of assignment to an affiliated entity controlled by Buyer or Buyer's principal
only if such assignment does not violate the Communications Act of 1934, as
amended, delay Consent of the FCC, or violate the rules, regulations and
policies of the FCC and Buyer guarantees the performance of its assignee. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns and is not intended to be
for the benefit, directly or indirectly, of any other person or entity.
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.
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<PAGE> 71
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 under standing 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 under standings. 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 West Virginia (without regard to
conflicts of law principles).
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<PAGE> 72
This Agreement has been executed by Buyer and Seller as of the date
first above written.
ADVENTURE COMMUNICATIONS, INC.
By: /s/ Michael R. Shott
------------------------
Michael R. Shott
President
COMMODORE MEDIA OF KENTUCKY, INC.
By:
------------------------
Bruce A. Friedman
President
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<PAGE> 73
This Agreement has been executed by Buyer and Seller as of the date
first above written.
ADVENTURE COMMUNICATIONS, INC.
By:
------------------------
Michael R. Shott
President
COMMODORE MEDIA OF KENTUCKY, INC.
By: /s/ Bruce A. Friedman
------------------------
Bruce A. Friedman
President
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<PAGE> 1
Exhibit 10.66
LOCAL MARKETING AGREEMENT
This LOCAL MARKETING AGREEMENT (the "Agreement") dated as of April 8,
1996, is made and entered into by and between COMMODORE MEDIA OF KENTUCKY, INC.,
a Delaware corporation ("Time Broker"), and ADVENTURE COMMUNICATIONS, INC., a
West Virginia corporation ("Licensee"), the owner and operator of radio stations
WKEE (FM) and WKEE (AM), Huntington, West Virginia, WZZW (AM), Milton, West
Virginia, (WKEE (FM), WKEE (AM) and WZZW, the "WV Stations"), WBVB (FM) Coal
Grove, Ohio and WIRO (AM), Ironton, Ohio (WBVB and WIRO, the "Ohio Stations";
the WV Stations and the Ohio Stations collectively, the "Stations").
W I T N E S S E T H:
WHEREAS, Time Broker and Licensee, are parties to an Asset Purchase
Agreement dated as of the date hereof (the "Asset Purchase Agreement"), pursuant
to which Licensee has agreed to sell to Time Broker, and Time Broker has agreed
to purchase substantially all of the Assets (as defined in the Asset Purchase
Agreement) of the Licensee; and
WHEREAS, Licensee desires to make available to Time Broker substantial
broadcasting time on the Stations until the closing of the transactions
contemplated by the Asset Purchase Agreement (the "Closing"); and
WHEREAS, Time Broker is engaged in the business of radio broadcasting
and desires to avail itself of the Stations' available broadcast time through
the date of Closing.
<PAGE> 2
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereto have agreed and do agree as
follows:
Section 1. Effective Date and Facilities. Commencing at 12:01 a.m. on
April 9, 1996 (the "Effective Date"), Licensee shall broadcast or cause to be
broadcast on the Stations programs which are presented to it by Time Broker.
These programs shall be in compliance with the provisions of Section 4 of this
Agreement. Time Broker shall maintain the ability to deliver its programming to
Licensee's transmitter site by means acceptable to Licensee. To facilitate
delivery of programming by Time Broker to Licensee hereunder, Licensee hereby
grants to Time Broker the non-exclusive right for the term of this Agreement to
use substantially all of the equipment located in the studio for the Stations
and currently used by Licensee for broadcasting programs on the Stations
pursuant to this Agreement, which equipment is described in greater detail on a
Schedule to the Asset Purchase Agreement (the "Broadcast Equipment"). In
addition, Time Broker shall have, and Licensee hereby grants to Time Broker, a
non-exclusive license to enter on the premises currently occupied by the
Stations for purposes of producing its programming hereunder. Time Broker shall
maintain the Broadcast Equipment free and clear of liens, claims or encumbrances
of any third party claiming by, through or under Time Broker.
Section 2. Payments by Time Broker. Time Broker hereby agrees to pay
Licensee for broadcast of the programs and use of
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<PAGE> 3
the Broadcast Equipment and the Station's studio hereunder the sum of $76,700
each month in advance ("Fee") plus the sum of the actual expenses each month for
documented and agreed upon items of operating expenses to be incurred consistent
with past practices of the Stations set forth on Attachment IV hereto ("Monthly
Expenses"); provided, however, if there is a closing (i) of the WV Stations (the
"WV Closing") prior to a closing of the Ohio Stations then the Fee from and
after the WV Closing shall be $15,008, and (ii) of the Ohio Stations (the "Ohio
Closing") prior to the WV Closing then the Fee from and after the Ohio Closing
shall be $61,692. The Monthly Expenses shall be payable in arrears on or before
the fifteenth day of each calendar month commencing May 15, 1996 (the "Monthly
Payment Date"), for the period commencing on the Effective Date and on the
fifteenth day of each calendar month thereafter during the remainder of the term
of this Agreement; provided, however, that the revenue and expenses of the
stations shall be adjusted for April as if the Effective Date of this Agreement
was April 1, 1996. Amounts payable pursuant to this Section 2 for any partial
calendar month other than April, 1996 shall be prorated on a per diem basis.
During this Agreement, Time Broker shall be entitled to all advertising and
other revenues (including all profits and cash flow) of the Stations and all
accounts receivable which arise on and after the Effective Date. If on the
Closing Date or the date this Agreement is terminated, the aggregate amount of
payments received by Licensee from Time Broker for Monthly
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<PAGE> 4
Expenses under this Section exceeds the actual amount of Licensee's expenses for
the items (which expenses shall be incurred in accordance with the usual and
customary past practices of the Stations for the items of Monthly Expenses prior
to the Effective Date) incurred by Time Broker in performing its obligations
hereunder, from the Effective Date to the Closing Date or the date this
Agreement is terminated, then Licensee shall pay to Time Broker the excess
Monthly Expenses on the Closing Date or within ten (10) days after this
Agreement is terminated. Similarly, if Licensee has aggregate Monthly Expenses
from the Effective Date to the Closing Date or termination date in excess of its
submitted operating expenses, then Time Broker shall pay Licensee such excess on
the Closing Date or within ten (10) days after this Agreement is terminated. If
a dispute arises between Licensee and Time Broker regarding the determination of
the Licensee's or Time Broker's excess Monthly Expenses, if any, the
disagreement shall be referred to Price Waterhouse, whose determination shall be
final and binding, and whose fees shall be paid one-half each by Licensee and
the Time Broker. Notwithstanding any other provision of this Agreement or the
Asset Purchase Agreement, in the event the parties fail to close on the sale of
the Stations to Time Broker, Licensee shall not be obligated to repay Time
Broker any Fee amounts advanced by Time Broker pursuant to this Section 2,
except for appropriate pro rata portions of such Fee if this Agreement is
terminated during a month. The previous sentence
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<PAGE> 5
shall in no way limit or effect either Licensee or Time Broker's rights under
the Asset Purchase Agreement in the event the failure to close is due to a
breach or termination of the Asset Purchase Agreement.
Section 3. Term. The term of this Agreement shall commence on the
Effective Date and shall end on the earlier of (i) the date of Closing, or (ii)
the date of termination of the Asset Purchase Agreement, unless sooner cancelled
or terminated as hereinafter provided.
Section 4. Program.
(a) Time Broker shall furnish or cause to be furnished the
artistic personnel and material in broadcasting form for programs to be
broadcast on the Stations pursuant to this Agreement at all times other than
times of the Licensee program broadcasts referred to in Section 4(b) below, and
all such Time Broker programs, including all advertising messages and
promotional material or announcements, shall be in good taste and in accordance
with the Communications Act of 1934, as amended (the "Act"), all other
applicable statutes and Federal Communications Commission ("FCC") and other
governmental entities rules, regulations, policies and requirements ("Rules and
Regulations"), and Licensee's programming standards. Time Broker also agrees to
broadcast a reasonable number of public service announcements suggested from
time to time by Licensee. All programs shall be prepared and presented in
conformity with the standards set forth in Attachment I. Time Broker further
agrees
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<PAGE> 6
that if, in the reasonable judgment of Licensee, Time Broker does not comply
with these standards, Licensee may suspend or cancel any specific program not in
compliance; if possible, Licensee is to provide Time Broker with seventy-two
(72) hours prior notice of such suspension or cancellation. Time Broker shall
not change the programming format or make any other material and substantial
programming changes without the prior written consent of Licensee, which will
not be unreasonably withheld or delayed. Licensee shall make each Station
available to Time Broker for operation for at least one hundred and sixty-four
(164) hours per week, Sunday through Saturday, except for downtime occasioned by
routine maintenance. Any routine maintenance work affecting the operation of the
Stations at full power shall be scheduled at a time that is least disruptive to
the Stations' operation.
(b) Licensee shall have the right during the term of this
Agreement to furnish or cause to be furnished programming in broadcast-ready
form for four (4) hours per week of programs to be broadcast on each Station
("Licensee's Reserved Time"). Licensee's public affairs programs shall respond
to the needs and interests of each Station's service area and shall be presented
at times deemed by Licensee to best meet the needs of the applicable service
area. Licensee initially reserves the periods reserved prior to the Effective
Date on the Stations for public affairs programming to present its public
affairs programming.
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<PAGE> 7
Section 5. Handling of Mail and Public File. To the extent either party
hereto receives or handles mail, cables, telegraphs, telecopies, or telephone
calls in connection with any programs broadcast on the Stations, each party
shall promptly advise the other of any public or FCC complaint or inquiry
concerning such programming and shall give the other party copies of any letters
from the public or the FCC, including complaints, concerning such programming.
The Licensee in consultation with Time Broker will handle listener complaints
and inquiries with respect to the operation of the Stations. Time Broker shall
also give Licensee copies of all operating and programming information,
including, without limitation, the Stations' operating logs, necessary to
maintain the public file and other records required to be kept by FCC
regulations, rules or policies. During the term of this Agreement, Time Broker
shall also maintain and deliver to the Stations and Licensee such records and
information required by the FCC to be placed in the public inspection file of
each Station pertaining (i) to the broadcast of political programming and
advertisements, in accordance with the provisions of Sections 73.1940 and
73.3526 of the FCC's rules, and (ii) to the broadcast of sponsored programming
addressing political issues or controversial subjects of public importance, in
accordance with the provisions of Section 73.1212(d) of the FCC's rules. Time
Broker shall also consult with the Licensee and comply with the Act and all
other applicable statutes and the rules, regulations and policies of the FCC, as
announced from time to time, with respect
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<PAGE> 8
to the carriage of political advertisements and programming (including, without
limitation, the rights of candidates and, as appropriate, others to "equal
opportunities" and the carriage of contrasting points of view as mandated by any
"fairness" rules with respect to such "issue-oriented" advertising or
programming as may be broadcast) and the charges permitted therefor. Time Broker
shall provide to each Station such documentation relating to such programming as
Licensee shall reasonably request. Licensee shall be responsible for providing
the personnel necessary to maintain a complete public file (as required by the
FCC) and compile and file all required quarterly issues/programs lists.
Section 6. Maintenance of Equipment.
6.1. The transmitter equipment and antennas currently used for the
Stations' broadcasts (the "Transmission Equipment") shall be maintained by
Licensee in a condition consistent with good engineering practices, in
compliance in all material respects with the Act and all other applicable rules,
regulations and technical standards of the FCC and in accordance with the Asset
Purchase Agreement. Licensee does not currently know of any material defects in
the Transmission Equipment used by each Station. Licensee shall maintain power
and modulation of the Stations' broadcasts in a manner consistent with
Licensee's past practices. All capital expenditures reasonably required to
maintain the technical quality of the Stations' Transmission Equipment and its
compliance with applicable laws and regulations
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<PAGE> 9
shall be made at the sole expense and in the discretion of
Licensee in a timely fashion.
6.2 All Broadcast Equipment and other equipment necessary for the
transmission of programming to the Stations' Transmission Equipment shall be
maintained by Time Broker in good repair and condition, reasonable wear and tear
excepted. All capital expenditures reasonably required to maintain the tech-
nical quality of the Broadcast Equipment and its compliance with applicable laws
and regulations shall be made at the sole expense and in the sole discretion of
Licensee in a timely fashion. Licensee shall, at all times during the term of
this Agreement, at Licensee's sole expense, maintain insurance with respect to
the Broadcast Equipment covering such risks as are customarily covered with
respect to damage thereto, and such policies of insurance shall name Time Broker
and such other parties as Licensee may designate as loss payee(s) and additional
insured(s), as their respective interests may appear.
Section 7. (a) Collection of Time Broker's Accounts Receivable. For a
period of one hundred eighty (180) days (the "Collection Period") following the
termination of this Agreement without a closing on the Purchase Agreement,
Licensee shall collect as agent for Time Broker the accounts receivable of the
Stations and the stations licensed to Simmons Broadcasting Company in existence
as of the termination date. On the termination date, Time Broker shall provide
Licensee with a list of all accounts receivable to be collected by Licensee. In
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<PAGE> 10
collecting such accounts receivable, Licensee shall use reasonable diligence,
but shall not be required to institute legal proceedings to collect any account
receivable, or to defend any claim or counterclaim by any account debtor. Unless
directed otherwise by the account debtor, all amounts received from an account
debtor which also becomes an account debtor of Licensee after the termination
date shall be applied first to the payment of the accounts receivable of Time
Broker. Within fifteen (15) days of the end of each calendar month of the
Collection Period, Licensee shall deliver to Time Broker the net amount, after
deducting any sales commissions, agency fees and similar direct expenses
attributable to such accounts receivable, of all amounts collected and credited
to the accounts receivable of Time Broker during the prior calendar month in
accordance with this Section 7(a). Within ten (10) days of the end of the
Collection Period, Licensee shall deliver to Time Broker all records of
uncollected accounts receivable of Time Broker and any amounts not previously
remitted to Time Broker at which time Licensee's obligation for the collection
of Time Broker's accounts receivable shall cease. During the Collection Period,
Time Broker shall not attempt to collect any of the accounts receivable assigned
to Licensee for collection.
(b) Collection of Licensee's Accounts Receivable. During the
Term of this Agreement (the "Term Collection Period"), Time Broker, acting as
agent for the Licensee, shall have the exclusive right to collect the accounts
receivable of Licensee
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<PAGE> 11
outstanding as of the Effective Date. On the Effective Date, Licensee shall
provide Time Broker with a list of all accounts receivable to be collected by
Time Broker. In collecting such accounts receivable, Time Broker shall use
reasonable diligence, but shall not be required to institute legal proceedings
to collect any account receivable, or to defend any claim or counterclaim by any
account debtor. Unless directed otherwise by the account debtor, all amounts
received from an account debtor which also becomes an account debtor of Time
Broker during the Term of this Agreement, shall be applied first to the payment
of the oldest accounts receivable of Licensee. Within fifteen (15) business days
at the end of each calendar month of the Term Collection Period, Time Broker
shall deliver to Licensee all amounts collected and credited to the accounts
receivable of Licensee in accordance with this Section 7(b). At the termination
of this Agreement either by the Closing on the Purchase Agreement or the earlier
termination in accordance with Section 16 hereof, Time Broker shall deliver to
Licensee all records of uncollected accounts receivable of Licensee and any
accounts not previously remitted to Licensee shall be delivered to Licensee, at
which time Time Broker's obligation for the collection of Licensee's accounts
receivable shall cease. During the Term Collection Period, Licensee shall not
attempt to collect any of the accounts receivable assigned to Time Broker for
collection. Notwithstanding the foregoing, nothing shall
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<PAGE> 12
prohibit Licensee from prosecuting any legal proceeding that was commenced prior
to the Effective Date.
Section 8. (a) Responsibility for Employees and Expenses. Time Broker
shall employ and be responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming or necessary
to fulfill Time Broker's other obligations hereunder. Licensee shall employ and
be responsible for the salaries, taxes, insurance and related costs for all
personnel used in the production of its programming or necessary to fulfill
Licensee's other obligations hereunder. Time Broker shall pay for all costs
associated with its program production, all fees to ASCAP, BMI and SESAC
attributable to its programs and any other copyright fees attributable to its
programming broadcast on the Stations. Without limiting the generality of Time
Broker's obligations under Section 25 hereof, Time Broker shall also pay for all
costs associated with Arbitron or any other rating service to which it or the
Stations subscribe.
(b) Employment of Employees. If Time Broker should employ
Licensee's employees under this Agreement and there is a termination of this
Agreement without a Closing then Time Broker will terminate such employees hired
if Licensee is desirous of rehiring them and the employees desire to return to
Licensee's employ.
Section 9. Control of Stations. During the period of this Agreement,
Licensee shall maintain ultimate control over the
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<PAGE> 13
facilities of each Station, including, specifically, control over Station
finances, personnel and programming, and Time Broker agrees that it will permit
Licensee to take any and all steps necessary to faithfully and continuously do
so throughout the term of this Agreement. Licensee and Time Broker acknowledge
and agree that this responsibility to retain control is an essential element of
the continuing validity and legality of this Agreement. Licensee shall provide
and pay for: (a) its General Manager for the Stations, who shall report solely
to, and be accountable solely to, Licensee and who shall direct the day-to-day
operations of the Stations; and (b) such other personnel as are necessary to
fulfill its obligations under this Agreement. Licensee shall retain control,
said control to be reasonably exercised, over the policies, programming and
operations of the Stations, including, without limitation, the right to decide
whether to accept or reject any programming or advertisements, the right to
preempt any programs in order to broadcast a program deemed by Licensee to be of
greater national, regional or local interest, and the right to take any other
actions necessary to comply with the Rules and Regulations. Licensee shall be
responsible for meeting all of its requirements with respect to its local
service obligations including, but not limited to, compliance with each
Station's identification requirements, maintaining its main studio within the
Stations' principal community contour and broadcasting its own issue responsive
programming, and Time Broker shall take such actions as Licensee
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<PAGE> 14
may reasonably request to ensure such requirements are met. Time Broker shall
not represent, warrant or hold itself out as the Stations' licensee and shall
sell all its advertising time and enter into all agreements in its own name.
Licensee reserves the right to refuse to broadcast any program or programs
containing matter which is, or in the reasonable opinion of Licensee may be,
violative of any Rules and Regulations, or the policies of the Licensee.
Section 10. Special Events. Licensee has the right, in its sole
discretion and without liability, to preempt any Time Broker programs, and to
use part or all of the time contracted for by Time Broker to broadcast events of
special importance. In all such cases Licensee will use its best efforts to give
Time Broker reasonable notice of its intention to preempt such broadcast or
broadcasts, and, in the event of such preemption, Time Broker shall receive a
payment credit in an amount to be negotiated in good faith by Time Broker and
Licensee for the time Time Broker broadcast(s) that were preempted.
Section 11. Force Majeure. Any failure or impairment (i.e., failure to
broadcast at Stations' full authorized power) of facilities or any delay or
interruption in broadcast programs, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, because of any acts of God,
strikes or threats thereof or force majeure or due to any other causes beyond
the reasonable control of Licensee shall not constitute a
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<PAGE> 15
breach of this Agreement and Licensee will not be liable to Time Broker
therefor.
Section 12. Right to Use Station IDs. Licensee hereby grants to Time
Broker a non-exclusive license to use such slo gans, call letters and other
identifiers as are currently used by each Station (the "Station Licensed
Identifiers") in connection with the broadcast of Time Broker's programs on each
Station, but for no other purpose. The license granted herein shall expire on
the expiration or earlier termination or cancellation of this Agreement. Time
Broker shall use the Station Licensed Identifiers in Time Broker's programming
in a manner consistent with the use thereof by Licensee in broadcasts of the
Stations immediately prior to the Effective Date of this Agreement during the
entire term of this Agreement and as may be required by the Act or the rules,
regulations and policies of the FCC. During the term of this Agreement, Licensee
shall not assign any of its rights to use the current call sign of any Station
or the other Station Licensed Identifiers to any third party. Time Broker
expressly agrees that, except with respect to Station Licensed Identifiers
referred to herein, the use of which is licensed by Licensee to Time Broker
pursuant hereto, the right to use Licensee's programs and to authorize their use
in any manner and in any media whatsoever shall be and remain vested solely in
Licensee.
Section 13. Payola. Time Broker shall provide Licensee with Payola
Affidavits, substantially in the form attached hereto
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<PAGE> 16
as Attachment II, signed by such of Time Broker's employees and at such times as
Licensee may reasonably request, and shall notify Licensee promptly of any
violations it learns of relating to the Act, including Sections 317 and 508
thereof.
Section 14. Compliance with Law. Time Broker and Licensee shall,
throughout the term of this Agreement, comply with the Rules and Regulations
applicable to the conduct of its business.
Section 15. Indemnification; Warranty. Each party (as the case may be,
the "Indemnitor") shall indemnify and hold harmless the other party (as the case
may be, the "Indemnitee"), its directors, officers, employees, agents and
affiliates, from and against any and all liability, including without limitation
all consequential damages and attorneys fees, arising out of or incident to the
programming furnished by the Indemnitor, any breach of this Agreement by the
Indemnitor or the conduct of the Indemnitor, its directors, officers, employees,
contractors, agents or affiliates. Without limiting the generality of the
foregoing, Indemnitor shall indemnify and hold and save the Indemnitee, its
directors, officers, employees, agents and affiliates, harmless against
liability for libel, slander, infringement of trademarks, trade names, or
program titles, violation of rights of privacy, and infringement of copyrights
and proprietary rights resulting from the programming furnished by the Indemni-
tor. Time Broker will maintain customary amounts of libel and slander insurance,
name Licensee as an additional insured party, and provide evidence of such
insurance to Licensee. Each party's
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<PAGE> 17
obligation to hold the other harmless against the liabilities specified above
shall survive any termination of this Agreement.
Section 16. Events of Default. Each of the following shall constitute
an "Event of Default" under this Agreement:
(a) Non-Payment. Time Broker's failure to pay the
consideration provided for in Section 2 hereof when the same is due and payable
hereunder; provided, Time Broker shall have four (4) business days from the date
such payment is due to make payment if oral telephonic or written notice is
received by Time Broker from Licensee that such payment was not received on the
due date; or
(b) Default in Covenants. Time Broker's or Licensee's default
in the observance or performance of any material covenant, warranty, condition
or agreement contained herein; provided, however, any such default shall not
constitute an Event of Default hereunder if such default is cured within twenty
(20) days after notice thereof by the non-breaching party; or
(c) Breach of Representation. Time Broker's or Licensee's
material breach of any representation or warranty herein, or in any certificate
or document furnished pursuant to the provisions hereof, which shall prove to
have been false or misleading in any material respect as of the time made or
furnished; or
(d) Insolvency. The voluntary filing by Time Broker or
Licensee (or involuntary filing with respect to Time Broker or Licensee not
vacated within sixty (60) days after such filing) of
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<PAGE> 18
a petition for reorganization or dissolution under federal bankruptcy laws or
under substantially equivalent state laws.
(e) Licensee Preemption. If the Licensee shall preempt or
substitute other programming for that supplied by the Time Broker during fifteen
percent (15%) or more of the total hours of Time Broker programming on the
Stations for any one calendar week during the term of this Agreement, then Time
Broker within ten (10) days from the end of such week can terminate this
Agreement by notice to Licensee.
Section 17. Remedies Upon Default. In addition to, and not in
limitation of, all other rights and remedies available under this Agreement, in
equity or under applicable law, all of which rights and remedies are expressly
reserved, the parties shall have the following rights and remedies upon the
occurrence of an Event of Default:
(a) Termination Upon Default. If there is an Event of Default
by Time Broker, Licensee may, at its sole option, by written notice to Time
Broker, terminate this Agreement, and upon such termination Licensee shall be
under no further obligation to make available to Time Broker any further
broadcast time or broadcast transmission facilities and all amounts accrued or
payable to Licensee up to the date of termination which have not been paid
shall immediately become due and payable by Time Broker to Licensee. If there is
an Event of Default by Licensee, Time Broker may, at its sole option, by written
notice to Licensee, terminate this Agreement, and upon such termination Time
Broker
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<PAGE> 19
shall be under no further obligation to provide any further programs to be
broadcast on the Stations and all amounts due to Licensee with respect to the
period subsequent to such termination which have been prepaid by Time Broker
shall immediately become due and payable by Licensee to Time Broker.
(b) Liabilities Upon Termination. Time Broker shall be
responsible for debts and obligations of Time Broker resulting from the use of
air time and transmission facilities including, without limitation, accounts
payable and net barter balances. If this Agreement is canceled or terminated for
any reason, Licensee agrees that it will assume, perform in good faith and be
responsible for all obligations of Time Broker relating to the period after the
date of such cancellation or termination under unfulfilled advertising
contracts cancelable within thirty (30) days of the type entered into in the
ordinary course of the business of the Stations and at usual and customary rates
and with respect to which the receivables or prepayments relating thereto have
been assigned or paid to Licensee ("Ordinary Course Contracts"), as well as all
obligations of Time Broker relating to the period after the date of such
cancellation or termination under any unfulfilled advertising contracts other
than Ordinary Course Contracts which Licensee has approved in writing during the
course of this Agreement and with respect to which the receivables or
prepayments relating thereto have been assigned or paid to Licensee. In this
connection, Time Broker warrants to Licensee that it shall, and hereby does,
assign to Licensee all
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<PAGE> 20
amounts due under unfulfilled advertising contracts assumed by Licensee upon
cancellation or termination of this Agreement, and Time Broker shall pay over to
Licensee all amounts received by Time Broker for advertising run or to be run by
Licensee subsequent to such cancellation or termination. Except for obliga-
tions under the unfulfilled advertising contracts specified in this Section
17(b), Licensee shall not assume or otherwise be responsible for any other
obligations, expenses, contracts or other liabilities entered into or incurred
by Time Broker, regardless of whether such obligations, contracts, expenses and
liabilities relate to the Stations or the broadcast of programming thereon.
Section 18. Representations.
(a) Both Licensee and Time Broker represent that they are
legally qualified, empowered, and able to enter into this Agreement, and that it
has been reviewed and approved by their respective counsel, including counsel
specializing in FCC matters. Time Broker further represents and certifies that
this Agreement complies with Sections 73.3555(a) (1) and (e)(1) of the FCC's
rules. Licensee represents and certifies that it will maintain ultimate control
over the Stations' facilities, including control over the finances, personnel
and programming of the Stations.
(b) Licensee further represents to Time Broker that, as of the
date hereof, except as disclosed in the Asset Purchase Agreement:
- 20 -
<PAGE> 21
(i) The FCC licenses and authorizations relating to each
Station (the "Station Licenses") are free and clear of legal
disqualifications or other restrictions of such a nature as would
materially limit the full operation of the Station as presently
authorized and conducted;
(ii) The Station Licenses are in good standing and have been
regularly renewed with the normal expiration dates;
(iii) The operation of each Station is in compliance in all
material respects with the Station Licenses;
(iv) Licensee has no knowledge of any matter that might result
in the suspension or revocation of the Station Licenses;
(v) There are no FCC citations outstanding with respect to any
Station or its operation; and
(vi) There are no petitions to deny, material complaints or
proceedings known by Seller to be pending before the FCC and relating
to the business and operation of any Station.
Section 19. Modification and Waiver. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
- 21 -
<PAGE> 22
Section 20. Delay in Exercise of Remedies; Remedies Cumulative. Except
in the case of actions that must be taken within a specific time period in
accordance with this Agreement, no failure or delay on the part of Licensee or
Time Broker in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of Licensee and Time Broker herein
provided are cumulative and are not exclusive of any right or remedies which
they may otherwise have.
Section 21. Construction. This Agreement shall be construed in
accordance with the internal substantive (that is, without reference to conflict
of) laws of the State of West Virginia and the obligations of the parties hereto
are subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations and policies of the FCC and all other
governmental bodies or authorities presently or hereafter duly constituted. The
parties believe that the terms of this Agreement meet all of the requirements of
current FCC policy for brokerage agreements and agree that they shall negotiate
in good faith to meet any FCC concern with respect to this Agreement if they are
incorrectly interpreting current FCC policy or if FCC policy as hereafter
modified so requires. If the parties cannot agree to a modification or
modifications
- 22 -
<PAGE> 23
deemed necessary by either party to meet FCC requirements, the termination
provisions of Section 22 below shall apply. The parties further agree that they
will make all required filings with the FCC with respect to this Agreement.
Section 22. Termination. Either party may terminate this Agreement
effective immediately if it has been ordered by the FCC to terminate this
Agreement or to suspend (either permanently or temporarily) the rights and
obligations of the parties hereunder in order to comply with (or while a
determination is being made with respect to compliance with) the Act or FCC
rules or policies, and such termination shall be the parties' sole remedy for
any such finding by the FCC. Upon termination or cancellation of this Agreement
for any reason Licensee shall, in addition to its other legal and equitable
rights and remedies under this Agreement or under applicable law, be entitled
immediately to cease making available to Time Broker any further broadcast time
or broadcast transmission facilities, and all amounts accrued or payable to
Licensee up to the date of termination, cancellation or expiration which have
not been paid shall be immediately due and payable. Except as provided in
Section 17(b), Licensee shall not be required to assume any obligations,
contracts, expenses or other liabilities of Time Broker in connection with such
termination, cancellation or expiration.
Section 23. Headings. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
- 23 -
<PAGE> 24
Section 24. Successors and Assigns. Subject to Section 29, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective permitted successors and assigns, including, without
limitation, any permitted transferees or assignees of any kind of the FCC
licenses for the Stations.
Section 25. Counterpart Signatures. This Agreement may be signed in one
or more counterparts, each of which shall be deemed a duplicate original,
binding on the parties hereto notwithstanding that the parties are not
signatory to the same original or the same counterpart.
Section 26. Performance of Contracts. On or after the Effective Date,
Time Broker shall perform and discharge or cause to be performed and discharged,
all of Licensee's obligations and duties under those contracts and commitments
identified on Attachment III hereto, including, without limitation, commitments
for promotional appearances and remote broadcasts (collectively, the "Special
Contracts"). Time Broker shall indemnify and hold harmless Licensee from and
against any and all losses, expenses, obligations and liabilities of whatsoever
nature arising out of or under the Special Contracts relating to the period
subsequent to the Effective Date, and Licensee shall indemnify and hold harmless
Time Broker from and against any and all loss, expenses, obligations and
liabilities of whatsoever nature arising out of or under the Special Contracts
relating to the period prior to the Effective Date. Time Broker shall be
responsible for and shall collect and remit to Licensee all Accounts Receivable
as
- 24 -
<PAGE> 25
provided in Section 7.3 of the Asset Purchase Agreement. To the extent either
party hereto at any time receives from any third party any amount that properly
belongs to the other party hereto, the party receiving such amount shall
promptly pay such amount over to the party to which such amount properly
belongs.
Section 27. Notices. Any notice required hereunder (other than pursuant
to Section 16(a) hereof) shall be in writing and any payment, notice or other
communications shall be deemed given (i) upon delivery when delivered personally
or by facsimile with a copy by mail, (ii) three (3) days after mailing if mailed
by certified mail, postage prepaid, with return receipt requested, or, (iii) one
(1) day after delivery to Federal Express or another recognized overnight
carrier for overnight delivery, and addressed as follows:
To Licensee:
Michael R. Shott, President
Adventure Communications, Inc.
100 Bluefield Avenue
Suite 3
Bluefield, West Virginia 24701-2744
Telecopier: 304-324-0584
With a copy to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
To Time Broker:
Bruce A. Friedman, President
Commodore Media of Kentucky, Inc.
500 Fifth Avenue, Suite 3000
New York, New York 10110
- 25 -
<PAGE> 26
With a copy to:
Ira J. Goldstein, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Section 28. Entire Agreement. This Agreement (together with the
Attachments hereto) and any other agreements between the parties relating to the
Stations embody the entire agreement between the parties and there are no other
agreements, representations, warranties, or understandings, oral or written,
between them with respect to the subject matter hereof. No alteration,
modification or change of this Agreement shall be valid unless it is embodied in
a written instrument signed by the parties.
Section 29. Severability and Assignment. Except as set forth in
Sections 21 and 22 hereof, if any provision or provisions contained in this
Agreement is held to be invalid, illegal or unenforceable, this shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had not been contained
herein. Time Broker may not assign this Agreement without the prior written
consent of Licensee and any purported assignment without such consent shall be
null and void and of no legal force or effect.
Section 30. No Joint Venture. The parties agree that nothing herein
shall constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other
- 26 -
<PAGE> 27
intellectual property shall at all times remain the property of the respective
parties and that neither party shall obtain any ownership interest in the other
party's intellectual property by virtue of this Agreement.
Section 31. Access to Records. Time Broker shall permit Licensee and
its agents and representatives access to all books and records relating to the
Stations.
- 27 -
<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMMODORE MEDIA OF KENTUCKY, INC.
By: /s/ Bruce A. Friedman
------------------------------
Bruce A. Friedman
President
ADVENTURE COMMUNICATIONS, INC.
By:
------------------------------
Michael R. Shott
President
- 28 -
<PAGE> 29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMMODORE MEDIA OF KENTUCKY, INC.
By:
------------------------------
Bruce A. Friedman
President
ADVENTURE COMMUNICATIONS, INC.
By: /s/ Michael R. Shott
------------------------------
Michael R. Shott
President
- 28 -
<PAGE> 1
Exhibit 10.67
CONTINGENT SALE AND ASSIGNMENT OF OPTIONS
This Agreement is dated as of April 8, 1996, by and between Michael R.
Shott ("Shott") and Commodore Media of Kentucky, Inc. ("Commodore").
WHEREAS, Commodore has entered into an agreement to purchase from
Adventure Communications, Inc. ("Adventure") substantially all of the assets of
Radio Stations WKEE-AM/FM, Huntington, West Virginia, WZZW(AM), Milton, West
Virginia (collectively the "Adventure West Virginia Stations") and WBVB(FM),
Coal Grove, Ohio and WIRO(AM), Ironton, Ohio (collectively the "Adventure Ohio
Stations"), which stations are owned by and licensed to Adventure; and
WHEREAS, Commodore has simultaneously entered into an agreement to
purchase from Simmons Broadcasting Company ("SEC") substantially all of the
assets of Radio Stations WHRD(AM), Huntington West Virginia and WFXN(FM),
Milton, West Virginia (collectively the "SBC West Virginia Stations") and
WMLV(FM), Ironton, Ohio (the "SBC Ohio Station"), which stations are owned by
and licensed to SBC; and
WHEREAS, in order to permit the acquisition of the SBC West Virginia and
Ohio Stations by Commodore, Shott has agreed to convey to Commodore certain
rights secured by Shott by (i) an option dated February 6, 1995, between Shott
and SBC relating to station WHRD(AM) (the "WHRD Option"), (ii) an option dated
August 1, 1994, between Shott and SBC relating to station WFXN(FM) (the "WFXN
Option, and (iii) an option dated December 27, 1994, between Shott and SBC
relating to station WMLV(FM) (the "WMLV Option" and collectively the
"Options"), such as conveyance to be contingent upon and subject to the
closings described in Section 2, hereof.
<PAGE> 2
NOW, THEREFORE, in consideration of the above premises and the
agreements and covenants set forth below, the parties, intending to be legally
bound, agree as follows:
1. Assignment and Exercise. Shott hereby conveys and assigns the Options
to Commodore. The Options shall be deemed to be effectively exercised by
Commodore when (i) Commodore enters into an Asset Purchase Agreement with SBC
for the purchase and sale of the SBC West Virginia and Ohio Stations (the "SBC
Purchase Agreement") and (ii) Commodore simultaneously enters into an Asset
Purchase Agreement with Adventure for the purchase and sale of the Adventure
West Virginia and Ohio Stations (the "Adventure Purchase Agreement"). Commodore
represents and covenants that it is now, and will be at the time it executes the
SBC Purchase Agreement, qualified to become the licensee of the SBC Stations
listed herein.
2. Conditions to Assignments. The assignment by Shott of the Options for
the acquisition of the SBC West Virginia Stations is conditioned upon and
subject to (i) the simultaneous closings on the acquisition by Commodore of the
SBC West Virginia Stations and the Adventure West Virginia Stations in
accordance with the terms of the respective Purchase Agreements and (ii) the
delivery to Shott by Commodore at such closings of the consideration set forth
in Section 3 below. The assignment by Shott of the Option for the acquisition of
the SBC Ohio Stations is conditioned upon and subject to (iii) the simultaneous
closings on the acquisition by Commodore of the SBC Ohio Station and the
Adventure Ohio Stations in accordance with the terms of the respective Purchase
Agreements and (iv) the delivery to Shott by Commodore at such closings of the
consideration set forth in Section 3 below.
3. Consideration. At the closings on the acquisition of the SBC West
Virginia Stations and the Adventure West Virginia Stations by Commodore,
Commodore shall deliver to
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<PAGE> 3
Shott by wire transfer of immediately available federal funds the sum of Two
Million, Nine Hundred Fifty Eight Thousand Dollars ($2,958,000.00) for the sale
of the WFXN Option and the WHRD Option. At the closings on the acquisition of
the SBC Ohio Station and the Adventure Ohio Stations by Commodore, Commodore
shall deliver to Shott by wire transfer of immediately available federal funds
the sum of Seven Hundred Forty Two Thousand Dollars ($742,000.00) for the sale
of the WMLV Option.
4. Brokerage Commission. At the closings on the sale of the Options to
Commodore, the parties shall be obligated to deliver to each of Media Venture
Partners and Blackburn & Co. the sum of $14,790.090 (($29,580.00) as brokerage
commissions for the sale of the WFXN and WHRD Options, and the sum of $3,710.00
($7,420.00 total) for the sale of the WMLV Option. Shott and Commodore shall
each be responsible for one-half of the brokerage commissions.
5. Failure to Close. In the event there is a termination of the SBC
Purchase Agreement without a closing on the purchase of the SBC West Virginia
Stations, Shott shall retain all his right, title and interest in the WFXN
Option and the WHRD Option, and the conditional conveyance thereof to Commodore
shall be null and void and of no further effect. In the event there is a
termination of the SBC Purchase Agreement without a closing on the purchase of
the SBC Ohio Station, Shott shall retain all his right, title and interest in
the WMLV Option, and the conditional conveyance thereof to Commodore shall be
null and void and of no further effect.
6. Representations and Warranties. Shott hereby represents and
warrants:
(a) He has all right, title and interest in and to the Options and
has not sold,
- 3 -
<PAGE> 4
granted, conveyed or assigned any of his right, title or interest in or to the
Options to any third person, firm or corporation;
(b) There are no liens or encumbrances on the Options and no claims,
proceedings or litigation exist or are pending with respect to the Options;
(c) He has the right to enter into and perform this Agreement; and
(d) All amounts payable to SBC prior to the date hereof pursuant to
the Options have been paid.
7. Indemnification. Shott shall indemnify Commodore, its successors and
assigns and hold them harmless from and against any and all claims, liabilities,
losses, damages, costs and expenses, including but not limited to attorneys'
fees and disbursements, arising out of, or resulting from, the breach by Shott
of any representations made by Shott herein.
8. Assignment. This Agreement and the rights granted hereunder may be
assigned by Commodore to any entity that acquires Commodore's rights under SBC
Purchase Agreement.
9. Governing Law. The law governing this transaction shall be the law
of the State of West Virginia without regard to conflicts of internal law.
10. Notices. All notices permitted to be given under the provisions of
this Agreement shall be (i) in writing, (ii) delivered by personal delivery, or
sent by commercia 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 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:
Given to Shott: Michael R. Shott, President
Adventure Communications, Inc.
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<PAGE> 5
100 Bluefield Avenue, Suite 3,
Bluefield, West Virginia 24701-2744
Telecopier: (304) 324-0584.
Given to Commodore: Commodore Media, Kentucky Inc.
500 Fifth Avenue,
New York, New York 10110
Attn: Bruce A. Friedman, President
Telecopier: (212) 302-6457
11. Counterparts. This Agreement may be signed into any number of
counterparts with the same effect as the signature on each counterpart were upon
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
/s/ Michael R.Shott
------------------------------------
Michael R. Shott
Commodore Media of Kentucky, Inc.
By: /s/ Bruce Friedman
--------------------------------
Bruce Friedman, President
The assignment of the options to and the exercise of the options by Commodore
are hereby acknowledged and agreed to:
Simmons Broadcasting Company
By: /s/ W. Lee Simmons
--------------------------------
W. Lee Simmons, President
- 5 -
<PAGE> 1
EXHIBIT 10.68
----------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
COMMODORE MEDIA, INC.,
THE GUARANTORS
named herein
and
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
---------------------------------
Dated as of May 1, 1996
-------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.1. Definitions................................................. 1
Section 1.2. Accounting Terms; Financial Statements ..................... 6
<CAPTION>
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES
<S> <C>
Section 2.1. Issue of Securities ........................................ 6
Section 2.2. Purchase and Sale of Securities............................. 7
Section 2.3. Rights of Holders of Securities ............................ 8
<CAPTION>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
<S> <C>
Section 3.1. Representations and Warranties of the
Company................................................. 9
Section 3.2. Representations and Warranties of the
Purchaser............................................... 20
<CAPTION>
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
<S> <C>
Section 4.1. Conditions Precedent to Obligations
of the Purchaser........................................ 22
Section 4.2. Conditions Precedent to Obligations
of the Company and the Guarantors ...................... 25
<CAPTION>
ARTICLE V
COVENANTS
<S> <C>
Section 5.1. Furnishing of Information................................... 26
Section 5.2. Use of Proceeds ............................................ 26
Section 5.3. Treatment of Dividends for Income
Tax Purposes............................................ 26
Section 5.4. Exchange Indenture ......................................... 27
Section 5.5. Original Issue Discount .................................... 27
Section 5.6. Purchase Representative .................................... 28
Section 5.7 Issuance of Additional Warrants............................. 28
Section 5.8 Preferred Stock ............................................ 28
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.9 Tax Matters ................................................ 28
<CAPTION>
ARTICLE VI
FEES
<S> <C>
Section 6.1. Delay Fees.................................................. 29
<CAPTION>
ARTICLE VII
INDEMNITY
<S> <C>
Section 7.1. Indemnity .................................................. 30
Section 7.2. Contribution ............................................... 33
Section 7.3. Registration Rights Agreements.............................. 33
<CAPTION>
ARTICLE VIII
MISCELLANEOUS
<S> <C>
Section 8.1. Home Office Payment ........................................ 34
Section 8.2. Survival of Provisions ..................................... 34
Section 8.3. Termination ................................................ 34
Section 8.4. No Waiver; Modifications in Writing ........................ 35
Section 8.5. Role of Special Counsel .................................... 35
Section 8.6. Communications ............................................. 35
Section 8.7. Costs, Expenses and Taxes .................................. 36
Section 8.8. Determinations ............................................. 36
Section 8.9. Execution in Counterparts................................... 36
Section 8.10. Binding Effect; Assignment.................................. 37
Section 8.11. GOVERNING LAW .............................................. 37
Section 8.12. Severability of Provisions.................................. 37
Section 8.13. Headings ................................................... 37
Signature Page ........................................................... 38
</TABLE>
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<PAGE> 4
Exhibit 1 Certificate of Designation
Exhibit 2 Indenture (as amended to date)
Exhibit 3 Form of Preferred Stock Registration Rights
Agreement
Exhibit 4 Form of Warrant Agreement
Exhibit 5 Form of Common Stock Registration Rights and Stockholders Agreement
Exhibit 6 Form of Opinion of Company Counsel
Exhibit 7 Form of Opinion of Special FCC Counsel
Exhibit 8 Form of Opinion of Purchaser's Counsel
-iii-
<PAGE> 5
SECURITIES PURCHASE AGREEMENT, dated as of May 1, 1996 (this
"Agreement"), among Commodore Media, Inc., a Delaware corporation (the
"Company"), Commodore Holdings, Inc., a Delaware corporation, Commodore Media of
Delaware, Inc., a Delaware corporation, Commodore Media of Pennsylvania, Inc., a
Delaware corporation, Commodore Media of Florida, Inc., a Delaware corporation,
Commodore Media of Kentucky, Inc., a Delaware corporation, Commodore Media of
Norwalk, Inc., a Delaware corporation, Commodore Media of Westchester, Inc., a
Delaware corporation, and Danbury Broadcasting, Inc., a Connecticut corporation
(collectively, the "Guarantors"), and CIBC WG Argosy Merchant Fund 2, L.L.C.
(the "Purchaser").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Additional Closing" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Additional Time of Purchase" has the meaning provided
therefor in Section 2.2 of this Agreement.
"Additional Warrant Shares" has the meaning provided therefor
in Section 2.1 of this Agreement.
"Additional Warrants" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that
<PAGE> 6
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beneficial ownership of at least 10% of the voting securities of a Person shall
be deemed to be control.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"Basic Documents" means, collectively, the Certificate of
Designation, the Preferred Stock, the Preferred Stock Registration Rights
Agreement, the Common Stock Registration Rights Agreement, the Warrant
Agreement, the Warrants and this Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law to close.
"Certificate of Designation" means the Certificate of
Designation duly adopted by the Board of Directors of the Company setting forth
the rights, preferences and priorities of the Preferred Stock and filed with,
and accepted for filing, so as to be effective, by the Secretary of State of the
State of Delaware prior to the Closing hereunder and which is in the form of
Exhibit 1 hereto.
"Class A Common Stock" means the Class A Common Stock of the
Company, $.01 par value per share.
"Class B Common Stock" means the Class B Common Stock of the
Company, $.01 par value per share.
"Closing" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Act.
"Common Stock" means the Class A Common Stock and the Class B
Common Stock.
"Common Stock Registration Rights Agreement" means the Common
Stock Registration Rights and Stockholders Agreement substantially in the form
of Exhibit 5 hereto.
<PAGE> 7
-3-
"Company" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Default" means any event, act or condition which, with notice
or lapse of time or both, would constitute an Event of Default.
"ERISA" has the meaning provided therefor in Section 3.1 of
this Agreement.
"Event of Default" means any event defined as an Event of
Default in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Act Filings" means the Company's filings on Form
10-K for the year ended December 31, 1995 and the Form 10-Q for the quarter
ended March 31, 1996 in each case filed under the Exchange Act.
"Exchange Documents" means, collectively, the Exchange
Indenture, the Exchange Notes and the Guarantees.
"Exchange Indenture" means the indenture under which the
Exchange Notes may be issued which will be substantially identical to the
Indenture.
"Exchange Notes" means the notes issued pursuant to the
Exchange Indenture which will be substantially identical to the Notes.
"FCC" means the United States Federal Communications
Commission or any similar agency having jurisdiction over the purchase, sale and
operation of broadcast licenses and related assets.
"Guarantee" has the meaning provided therefor in Section 2.1
of this Agreement.
"Guarantors" means all the direct and indirect Subsidiaries of
the Company as defined in the introductory paragraph to this Agreement.
"Indemnified Parties" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
<PAGE> 8
-4-
"Indemnifying Parties" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
"Indenture" means the indenture under which the Notes were
issued, attached as Exhibit 2 hereto.
"Information" shall have the meaning set forth in Section 2.1
of this Agreement.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation (as defined in
the Indenture), conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" means, with respect to the Company
and its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise), results of operations or prospects of the Company and
its Subsidiaries, taken as a whole; provided that, with respect to the Company,
"Material Adverse Effect" shall also mean a material adverse effect on the
ability of the Company to perform its obligations under this Agreement, the
Basic Documents or the Exchange Documents.
"Notes" means the 13-1/4% Senior Subordinated Notes Due 2003
of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
other legal entity.
"Preferred Stock" means the Senior Exchangeable Redeemable
Preferred Stock, Series A, of the Company, $.01 par value.
"Preferred Stock Registration Rights Agreement" means the
Registration Rights Agreement relating to the Preferred Stock and the Exchange
Notes, substantially in the form of Exhibit 3 hereto.
<PAGE> 9
-5-
"Proceeding" has the meaning provided therefor in Section 7.1
of this Agreement.
"Purchaser" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Securities" has the meaning provided therefor in Section 2.1
of this Agreement.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"Subsidiaries" means of any specified Person, any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the capital stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the direction
of the management and policies of such entity by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement purposes.
"Taxes" has the meaning provided therefor in Section 3.1(x) of
this Agreement.
"Time of Purchase" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder.
"Trustee" has the meaning provided therefor in the Exchange
Indenture.
"Warrant Agent" has the meaning provided therefor in the
Warrant Agreement.
<PAGE> 10
-6-
"Warrant Agreement" means the Warrant Agreement under which
the Warrants will be issued, substantially in the form of Exhibit 4 hereto.
"Warrant Shares" has the meaning provided therefor in Section
2.1 of this Agreement.
"Warrants" means the warrants to purchase shares of Class A
Common Stock of the Company.
Section 1.2. Accounting Terms; Financial Statements. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with sound accounting
practice. The term "sound accounting practice" shall mean such accounting
practice as, in the opinion of the independent accountants regularly retained by
the Company, conforms at the time to generally accepted accounting principles in
the United States applied on a consistent basis except for changes with which
such accountants concur. All determinations to which accounting principles apply
shall be made in accordance with sound accounting practice.
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES
Section 2.1. Issue of Securities. The Company has authorized
the issuance of up to $12,500,000 aggregate liquidation value of the Preferred
Stock together with Warrants to purchase shares of Class A Common Stock
constituting up to 5.99% of the Company's fully diluted Common Stock (the shares
of Class A Common Stock issuable upon exercise of the Warrants are referred to
herein as the "Warrant Shares"). The Preferred Stock will have the rights and
preferences set forth in the Certificate of Designation. The liquidation value
of the Preferred Stock will increase to the extent of accrued dividends paid in
additional shares of Preferred Stock. If the Preferred Stock remains outstanding
on and after April 30, 1999, the Preferred Stock will be exchangeable, at the
option of the Company, into an equal principal amount of the Exchange Notes
which will be issued pursuant to the Exchange Indenture. The Exchange Notes will
be unconditionally guaranteed by the Guarantors pursuant to the terms of the
Exchange Indenture (the "Guarantee"). At the Closing (as defined below) the
Company will issue to the Purchaser 7,550 Warrants. Each Warrant will be
substantially in the form as set out as Exhibit A to the
<PAGE> 11
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Warrant Agreement. Additional Warrants ("Additional Warrants") may be issued and
exercisable for additional Warrant Shares ("Additional Warrant Shares") if the
Preferred Stock is outstanding on November 1, 1996 on the terms and conditions
set forth in Section 5.7 hereof. The Preferred Stock, the Exchange Notes, the
Warrants and the Warrant Shares are referred to herein collectively as the
"Securities".
For purposes of the Code and the related Treasury regulations,
the Purchaser of the Preferred Stock agrees with the Company that the issue
price will be allocated to the Preferred Stock to the extent of $870 and to the
Warrants to the extent of $130 per $1,000 aggregate liquidation value of the
Preferred Stock and that this is a reasonable basis for such allocation.
The Securities, the Additional Warrants and the Additional
Warrant Shares will be offered without being registered under the Act, in
reliance on exemptions therefrom, including the exemption provided by Section
4(2) of the Act.
In connection with the sale of the Securities, the Company has
provided the Purchaser with certain information including the Exchange Act
Filings and a summary of the terms of the Preferred Stock (the "Information").
Section 2.2. Purchase and Sale of Securities. Subject to the
terms and conditions herein set forth, the Company agrees that it will sell to
the Purchaser, and the Purchaser agrees that it will purchase from the Company
at the Time of Purchase 7,550 Warrants and at each Additional Time of Purchase,
the number of shares of Preferred Stock as requested by the Company; provided,
however, that no request by the Company to the Purchaser to acquire additional
Series A Preferred Stock (i) shall be for an aggregate liquidation value of less
than $2,500,000 and shall be in multiples of $100,000 and (ii) shall occur after
October 31, 1996, and all such issuances of shares of Preferred Stock shall not
result in issued Preferred Stock with an aggregate liquidation value of more
than $12,500,000. In addition, if the Preferred Stock has been exchanged for
Exchange Notes, no additional requests may be made by the Company to the
Purchaser hereunder.
The Securities shall have the terms set forth herein, in the
Certificate of Designation and the Warrant Agreement, respectively.
<PAGE> 12
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The purchase and sale of 7,550 Warrants pursuant to this
Agreement will take place at a closing (the "Closing") at the offices of Pryor,
Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York, at 10:00 A.M.,
New York time, on May 2, 1996. Additional Closings (each an "Additional
Closing") shall occur upon three Business Days prior written irrevocable notice
to the Purchaser setting forth the number of shares of Preferred Stock to be
purchased and the time and place of delivery. Such notice must be received by
the Purchaser prior to 10:00 A.M. New York time on the third Business Day prior
to the issuance of the Preferred Stock. The time at which the initial Closing is
concluded is herein called the "Time of Purchase." The time at which each
Additional Closing is concluded is herein called the "Additional Time of
Purchase."
Delivery of the Securities to be purchased by the Purchaser
pursuant to this Agreement shall be made at the Closing or at each Additional
Closing, as the case may be, by the Company (i) delivering global certificates
representing the Securities to The Depository Trust Company ("DTC") or its agent
and (ii) causing the DTC participant account designated by the Purchaser to be
credited with the Securities purchased by such Purchaser against payment
therefor in immediately available same day funds through the facilities of DTC
for the account of the Company. The Company agrees that in connection with the
placement of the Securities, the Purchaser may, in its discretion, deduct from
the purchase price of the Securities to be remitted to the Company at the
Closing the amount of the fees and expenses of Cahill Gordon & Reindel, special
counsel to the Purchaser.
The Company will bear all expenses of shipping the Securities
(including, without limitation, insurance expenses) from New York City to such
other places within the United States of America or Canada as the Purchaser
shall specify. Any tax on the issuance of the Securities will be paid by the
Company at the Time of Purchase or at any Additional Time of Purchase, as
applicable, pursuant to Section 8.7.
Section 2.3. Rights of Holders of Securities. The holders of
the Securities shall have such rights with respect to the registration thereof
under the Act and qualification of the Exchange Indenture under the Trust
Indenture Act as are set forth in the Preferred Stock Registration Rights
Agreement and the Common Stock Registration Rights Agreement.
<PAGE> 13
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company.
The Company and the Guarantors, jointly and severally, represent and warrant to
the Purchaser as follows:
(a) The Information provided to the Purchaser at the Time of
Purchase and at each Additional Time of Purchase, as of its respective
date, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(b) The audited consolidated financial statements of the
Company and its Subsidiaries, together with related notes and schedules
thereto, included in the Exchange Act Filings fairly present in all
material respects the financial condition of the Company and its
Subsidiaries as of the dates indicated and the results of operations
and cash flows for the periods therein specified in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein);
and any pro forma financial statements and the related notes thereto
included in the Exchange Act Filings have been prepared using
reasonable assumptions and in accordance with the applicable
requirements of the Act and include all adjustments necessary to
present fairly in all material respects the pro forma financial
information included in the Exchange Act Filings as at the respective
dates and for the respective periods indicated. Ernst & Young LLP and
Weeks DeGraw & Company, P.A., which are reporting upon the audited
financial statements and schedules included in the Exchange Act
Filings, are independent public accounting firms as required by the Act
and the rules and regulations thereunder.
(c) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Each of the Company's Subsidiaries is a corporation duly incorporated
or organized, validly existing and in good standing under the laws of
the state of Delaware. Each of the Company and its Subsidiaries is duly
qualified and in good standing as a foreign corporation, and is
authorized to do business, in each jurisdiction in which the ownership
or leasing of any property or the nature of its business makes such
<PAGE> 14
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qualification necessary and in which the failure so to qualify would
have a Material Adverse Effect.
(d) All of the issued and outstanding shares of capital stock
of the Company and its Subsidiaries are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. The Company has no Subsidiaries other than the
Guarantors. All of the capital stock of the Guarantors is owned by the
Company, free and clear of any Liens. Except as described in the
Exchange Act Filings, there are no outstanding subscriptions, options,
warrants, rights, convertible securities or other binding agreements or
commitments of any character obligating the Company or its Subsidiaries
to issue any securities other than the Warrants and the Additional
Warrants. Except as described in the Exchange Act Filings, no Person
other than the Purchaser has any rights to the registration of capital
stock or other securities of the Company, under the Act or otherwise.
Except as disclosed in the Exchange Act Filings, in the employment
agreements summarized therein and in the separate purchase agreements
and registration rights agreements referred to therein, there is no
agreement, understanding or arrangement among the Company or its
Subsidiaries and its respective stockholders or any other person
relating to the ownership or disposition of any capital stock in the
Company or any of its Subsidiaries, the election of directors of the
Company or any of its Subsidiaries or the governance of the Company's
or any such Subsidiary's affairs; and no such agreements, arrangements
or understandings will be breached or violated as a result of the
execution and delivery of, or the consummation of the transactions
contemplated by, this Agreement, the Basic Documents or the Exchange
Documents. The Company has reserved for issuance upon exercise of the
Warrants and the Additional Warrants, as the case may be, shares of
Class A Common Stock sufficient in number for exercise of all of the
Warrants and the Additional Warrants, as the case may be, at the
initial exercise price, and the Warrant Shares and Additional Warrant
Shares will, upon issuance, be fully paid, nonassessable and free of
preemptive rights and will not be subject to any restrictions on the
transfer thereof except for such restrictions set forth herein and in
the Warrant Agreement and under the Act.
(e) The Certificate of Designation has been duly authorized by
the Company, its board of directors and all
<PAGE> 15
-11-
required stockholder action and when executed and delivered by the
Company and filed with the Secretary of State of the State of Delaware
will constitute a valid and legally binding agreement of the Company,
enforceable against it in accordance with its terms except that the
enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
generally and general principles of equity and the discretion of the
court before which any proceeding therefor may be brought. The Restated
Certificate of Incorporation of the Company, by virtue of the
Certificate of Designation, sets forth the rights, preferences and
priorities of the Preferred Stock.
(f) The form and terms of the Exchange Indenture has been duly
authorized by the Company and the Guarantors and, if executed and
delivered by the Company and the Guarantors as may be required by the
terms of this Agreement (assuming the due authorization, execution and
delivery by the Trustee (as defined in the Exchange Indenture)), will
constitute a valid and legally binding agreement of the Company and the
Guarantors, enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
and remedies generally and (ii) general equitable principles, whether
asserted in an action at law or in equity, and that such enforceability
may be subject to the discretion of the court before which any
proceedings therefor may be brought.
(g) The Warrant Agreement has been duly authorized by the
Company and, when executed and delivered by the Company (assuming the
due authorization, execution and delivery by the Warrant Agent (as
defined in the Warrant Agreement)), will constitute a valid and legally
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general equitable
principles, whether asserted in an action at law or in equity, and that
such enforceability may be subject to the
<PAGE> 16
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discretion of the court before which any proceedings therefor may be
brought.
(h) Each of this Agreement and the Preferred Stock
Registration Rights Agreement has been duly authorized by the Company
and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Purchaser), will
constitute a valid and legally binding agreement of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws now or hereafter
in effect relating to creditors' rights and remedies generally and (ii)
general equitable principles, whether asserted in an action at law or
in equity, and that such enforceability may be subject to the
discretion of the court before which any proceedings therefor may be
brought.
(i) The Common Stock Registration Rights Agreement has been
duly authorized by the Company and, when executed and delivered by the
Company and certain stockholders who are parties thereto (assuming the
due authorization, execution and delivery by the Purchaser), will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
generally and (ii) general equitable principles, whether asserted in an
action at law or in equity, and that such enforceability may be subject
to the discretion of the court before which any proceedings therefor
may be brought.
(j) The form and terms of the Exchange Notes have been duly
authorized by the Company and, if the Exchange Notes are executed by
the Company and authenticated by the Trustee in accordance with the
provisions of the Exchange Indenture as may be required by the terms of
this Agreement, and issued by the Company to the Purchaser in
accordance with the terms of this Agreement, the Exchange Notes will be
entitled to the benefits of the Exchange Indenture and will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance,
<PAGE> 17
-13-
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought.
(k) The Guarantee endorsed on the Exchange Notes have each
been duly authorized by the Guarantors and, if the Exchange Notes are
executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Exchange Indenture as may be required by the
terms of this Agreement and issued by the Company to the Purchaser in
accordance with the terms of this Agreement, the Guarantee will be
entitled to the benefits of the Exchange Indenture and will constitute
valid and legally binding obligations of the Guarantors enforceable in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought.
(l) The Warrants and the Additional Warrants, as the case may
be, have each been duly authorized by the Company and, when the
Warrants and the Additional Warrants, as the case may be, are executed
by the Company and countersigned by the Warrant Agent in accordance
with the provisions of the Warrant Agreement and issued by the Company
to the Purchaser in accordance with the terms of this Agreement, the
Warrants and the Additional Warrants, as the case may be, will be
entitled to the benefits of the Warrant Agreement and will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought.
<PAGE> 18
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(m) Each of the Company and the Guarantors (to the extent a
party thereto) has all requisite corporate power and authority to (i)
execute, deliver and perform its obligations under this Agreement, each
of the Basic Documents and each of the Exchange Documents, (ii)
execute, deliver and perform its obligations under all other agreements
and instruments executed and delivered by the Company pursuant to or in
connection with this Agreement, each of the Basic Documents and each of
the Exchange Documents and (iii) issue the Securities, the Additional
Warrants and the Additional Warrant Shares pursuant hereto in the
manner and for the purpose contemplated by this Agreement. The
execution and delivery by the Company and the Guarantors (to the extent
a party thereto) of this Agreement, each of the Basic Documents and
each of the Exchange Documents, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Company and the Guarantors (to the extent a party
thereto).
(n) Subsequent to the date as of which information is given in
the Exchange Act Filings and immediately prior to the Time of Purchase
and each Additional Time of Purchase there has not been or in the case
of the Additional Time of Purchase, will not have been (i) any event or
condition that has had or that would reasonably be expected to have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole, (ii) any transaction entered into by the Company or any
Subsidiary, other than in the ordinary course of business, that is
material to the Company and its Subsidiaries, taken as a whole, or
(iii) any dividend or distribution of any kind declared, paid or made
by the Company on its Common Stock that has not been approved by the
Purchaser in writing.
(o) There is no action, suit, investigation or proceeding,
governmental or otherwise, pending or, to the best knowledge of the
Company, threatened to which the Company or any of its Subsidiaries is
or would be a party or of which the properties of the Company or its
Subsidiaries are or may be subject, that (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance and
sale of the Securities by the Company or any of the other transactions
contemplated hereby, (ii) questions the legality or validity of any
such transactions or seeks to recover damages or obtain
<PAGE> 19
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other relief in connection with any such transactions or (iii) would
have a Material Adverse Effect.
(p) The execution, delivery and performance by the Company and
the Guarantors (to the extent a party thereto) of this Agreement, the
Basic Documents and the Exchange Documents, and the issuance and sale
by the Company of the Securities, the Additional Warrants and the
Additional Warrant Shares, the making of the Guarantees by the
Guarantors, and the execution, delivery and performance by the Company
and each of the Guarantors (to the extent each is a party thereto) of
all other agreements and instruments to be executed and delivered by
the Company and the Guarantors pursuant hereto or thereto or in
connection herewith or therewith, and compliance by the Company and the
Guarantors (to the extent a party thereto) with the terms and
provisions hereof and thereof, do not and will not (i) violate any
provision of any law, rule or regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, decree, determination
or award presently in effect or in effect at the Time of Purchase or
any Additional Time of Purchase, as the case may be, having
applicability to the Company or any of its Subsidiaries, (ii) conflict
with or result in a breach of or constitute a default under the
certificate of incorporation or by-laws of the Company or any of the
Subsidiaries, or, as of the Time of Purchase or any Additional Time of
Purchase, as the case may be, any indenture or loan or credit
agreement, or any other agreement or instrument, to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their respective properties may be bound or
affected, or (iii) except as contemplated by this Agreement, the Basic
Documents and the Exchange Documents, result in, or require the
creation or imposition of, any Lien upon or with respect to any of the
properties now owned or hereafter acquired by the Company or any of the
Subsidiaries, except, in the case of (i), (ii) or (iii), where such
violation, conflict, default or creation or imposition of any Lien
would not (individually or in the aggregate) have a Material Adverse
Effect.
(q) Each agreement or instrument executed and delivered by the
Company or the Guarantors (to the extent a party thereto) in connection
with this Agreement (other than the Securities, the Basic Documents and
the Exchange Documents) has been duly and validly authorized, executed
<PAGE> 20
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and delivered by the Company and the Guarantors (to the extent a party
thereto) and constitutes or will constitute a legal, valid and binding
obligation of the Company and the Guarantors (to the extent a party
thereto), enforceable against the Company and the Guarantors in
accordance with its terms, except as such enforceability may be limited
by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general equitable
principles, whether asserted in an action at law or in equity, and that
such enforceability may be subject to the discretion of the court
before which any proceedings therefor may be brought.
(r) Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement (including the potential
issuance of the Exchange Notes), neither the Company nor any of its
Subsidiaries (i) will be in violation of its respective certificate of
incorporation or by-laws, (ii) will be in default (nor will an event
occur which with notice or passage of time or both would constitute
such a default) under or in violation of any indenture or loan or
credit agreement or any other material agreement or instrument to which
it is a party or by which it or any of its properties may be bound or
affected, (iii) will be in violation of any order of any court,
arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters or
(iv) will have violated or be in violation of any such statute, rule or
regulation of any governmental authority, which default or violation
(individually or in the aggregate) would (x) affect the legality,
validity or enforceability of this Agreement or any of the Basic
Documents or Exchange Documents or (y) have a Material Adverse Effect.
(s) No authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory
authority or any securities exchange is required (other than any filing
seeking consent which may be, under certain circumstances, required
upon the exercise of the Warrants) in connection with the execution,
delivery or performance by the Company or any
<PAGE> 21
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of its Subsidiaries (to the extent they are a party thereto) of this
Agreement, any of the Basic Documents or Exchange Documents, except (i)
as may be required under state securities or "blue sky" laws or the
laws of any foreign jurisdiction in connection with the offer and sale
of the Securities, the Additional Warrants or the Additional Warrant
Shares or (ii) as would not (individually or in the aggregate) have a
Material Adverse Effect. All such authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and
registrations which are required to have been obtained or made as of
the Time of Purchase have been (or in the case of any Additional Time
of Purchase and the issuance of the Exchange Notes pursuant to the
Exchange Indenture, will have been) obtained or made, as the case may
be, and are (or in the case of any Additional Time of Purchase and the
issuance of the Exchange Notes pursuant to the Exchange Indenture, will
be) in full force and effect and not the subject of any pending or, to
the knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(t) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the Company will not be
immediately after the Time of Purchase or any Additional Time of
Purchase, as the case may be, an "investment company" within the
meaning of such Act.
(u) The execution and delivery of this Agreement, the other
Basic Documents, the Exchange Documents and the sale of the Securities,
the Additional Warrants and the Additional Warrant Shares to the
Purchaser will not involve any non-exempt prohibited transaction within
the meaning of Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code on the
part of the Company or any of its Subsidiaries. The preceding
representation is made in reliance upon, and subject to the accuracy
of, the representation made in Section 3.2(b) as to the Purchaser. The
Company does not and, at and as of the Time of Purchase or any
Additional Time of Purchase, as the case may be, the Company will not
reasonably expect to have any liability for any prohibited transaction
or funding deficiency or any complete or partial withdrawal liability
with respect to any pension, profit sharing or other plan which is
subject to ERISA and which is required to be
<PAGE> 22
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funded, to which the Company makes or ever has made a contribution and
in which any employee of the Company is or has ever been a participant.
With respect to such plans, the Company is and, at and as of the Time
of Purchase or any Additional Time of Purchase, as the case may be, the
Company will be in compliance in all material respects with all
applicable provisions of ERISA.
(v) The Company and each of its Subsidiaries have good and
valid title to, or valid and enforceable leasehold interests in, all
properties and assets identified in the Exchange Act Filings as owned
by each of them which are material to the business of the Company and
its Subsidiaries, taken as a whole, free and clear of all Liens, except
(i) such Liens as are described in the Exchange Act Filings or (ii)
Liens created in the ordinary course of business which are Permitted
Liens (as defined in the Indenture). All of the leases material to the
business of the Company and the Subsidiaries, taken as a whole, and
under which the Company or any Subsidiary holds properties described in
the Exchange Act Filings, are valid and binding as leased by them, with
such exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such properties by the
Company and its Subsidiaries.
(w) All tax returns required to be filed by the Company or any
of its Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been so filed and all taxes, assessments, fees and
other charges including, without limitation, withholding taxes,
penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and those
Taxes for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where
the failure to file such returns or to pay such Taxes is not reasonably
likely to have, singly or in the aggregate, a Material Adverse Effect.
The Company knows of no actual or proposed additional tax assessments
for any fiscal period against the Company or any of its Subsidiaries
that, individually or in the aggregate, would have a Material Adverse
Effect.
(x) The Company and its Subsidiaries are the sole and
exclusive owners or licensees of all trade names, unregistered
trademarks and service marks, brand names, patents, registered and
unregistered copyrights,
<PAGE> 23
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registered trademarks and service marks, and all applications for any
of the foregoing, and all permits, grants and licenses or other rights
with respect thereto, the absence of which would not have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has
been charged with any material infringement of any intangible property
of the character described above or been notified or advised of any
material claim of any other Person relating to any of the intangible
property which infringements or claims (individually or in the
aggregate) would have a Material Adverse Effect.
(y) Except as set forth in the Exchange Act Filings, the
Company and its Subsidiaries comply with all laws, rules and
regulations applicable to the Company and each such Subsidiary, and the
Company and its Subsidiaries own or possess and are operating in
compliance in all material respects with the terms, provisions,
conditions, restrictions and limitations contained in all licenses,
franchises, approvals, certificates and permits from all Federal,
state, territorial, foreign and local governmental and regulatory
authorities which are necessary to own or lease their respective
properties and assets and to the conduct of their respective businesses
(other than such laws, rules, regulations, licenses, franchises,
approvals, certificates or permits that are immaterial in scope or
application to the Company and its Subsidiaries, taken as a whole),
including, without limitation, licenses, franchises and approvals from
the FCC, except where the failure to comply with any of the foregoing
would not have a Material Adverse Effect. Except as otherwise set forth
in the Exchange Act Filings, there are no citations or notices of
forfeiture or other proceedings pending or, to the best knowledge of
the Company, threatened or any basis therefor, which would lead to the
revocation, termination, suspension or non-renewal of any such license,
franchise, approval, certificate or permit the result of which have a
Material Adverse Effect. Except as otherwise set forth in the Exchange
Act Filings, there are no restrictions or limitations contained in any
applicable license, franchise, approval, certificate or permit, or, to
the best knowledge of the Company, threatened or proposed in any
pending or contemplated hearing, proceeding or procedure, that would
have a Material Adverse Effect.
(z) Neither the Company nor any of its affiliates (as defined
in Rule 501(b) of Regulation D under the Act)
<PAGE> 24
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has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Act) which is or will be integrated with
the sale of the Securities in a manner that would require the
registration under the Act of the Securities or (ii) engaged in any
form of general solicitation or general advertising in connection with
the offering of the Preferred Stock or the Warrants (as those terms are
used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(aa) Assuming the accuracy of the Purchaser's representations
and warranties set forth in Section 3.2 hereof and the due performance
by the Purchaser of the covenants and agreements set forth in Section
3.2 hereof, the sale of the Securities to the Purchaser in the manner
contemplated by this Agreement does not require registration under the
Act.
(ab) The Company and its Subsidiaries have complied with all
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida Statutes, and all regulations promulgated thereunder relating
to issuers doing business with the Government of Cuba or with any
Person or any Affiliate located in Cuba.
Section 3.2. Representations and Warranties of the Purchaser.
(a) The Purchaser represents and warrants to, and covenants and agrees with, the
Company and the Guarantors that: (1) the Securities, any Additional Warrants and
any Additional Warrant Shares to be acquired by it hereunder are being acquired
for its own account or an account with respect to which it exercises sole
investment discretion and it or any such account is a "qualified institutional
buyer" as defined in Rule 144A of the Act ("QIB") and has no intention of
distributing or reselling such Securities, Additional Warrants or Additional
Warrant Shares or any part thereof in any transaction which would be in
violation of the securities laws of the United States of America or any state;
(2) it acknowledges that the Securities, Additional Warrants and Additional
Warrant Shares have not been or will not be registered under the Act and that
none of the Securities, Additional Warrants or Additional Warrant Shares may be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as set forth below; (3) it shall not resell or otherwise
transfer any of such Securities, Additional Warrants or Additional Warrant
Shares within three
<PAGE> 25
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years after the original issuance of the Securities, Additional Warrants or
Additional Warrant Shares except (A) to the Company or any of its Subsidiaries,
(B) inside the United States to a QIB in compliance with Rule 144A, (C) inside
the United States to an "Accredited Investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) of the Act) that, prior to such transfer, furnishes (or has
furnished on its behalf by U.S. broker-dealer) to the Company and/or the Warrant
Agent a signed letter containing certain representations and agreements relating
to the restrictions on transfer of the Securities, (D) outside the United States
in compliance with Rule 904 under the Act, (E) pursuant to any other exemption
from registration provided under the Act (if available) including Rule 144
thereunder or (F) pursuant to an effective registration statement under the Act;
and (4) it will give to each person to whom it transfers the Securities,
Additional Warrants or Additional Warrant Shares, as the case may be, notice of
any restrictions on transfer of such Securities, Additional Warrants or
Additional Warrant Shares, as the case may be; and subject, nevertheless, to the
disposition of the Purchaser's property being at all times within its control.
If the Purchaser should in the future decide to dispose of any of the
Securities, Additional Warrants or Additional Warrant Shares, as the case may
be, the Purchaser understands and agrees that it may do so only in compliance
with the Act, as then in effect, and that stop-transfer instructions to that
effect will be in effect with respect to the Securities, Additional Warrants and
the Additional Warrant Shares. If the Purchaser should decide to transfer or
otherwise dispose of the Securities, Additional Warrants or Additional Warrant
Shares, as the case may be, the Purchaser shall comply with the requirements set
forth in the Exchange Indenture and the Warrant Agreement. The Purchaser agrees
to the imprinting, so long as required by the terms of the relevant Basic
Document or Exchange Document, as the case may be, of the applicable legends
contained in the Exchange Indenture on each Exchange Note and of the applicable
legends contained in the Warrant Agreement on each certificate representing
Warrants, Warrant Shares, Additional Warrants or Additional Warrant Shares.
(b) If the Purchaser is an insurance company it also
represents that no part of the funds to be used to purchase the Securities to be
purchased by it constitutes or is deemed to constitute assets from an employee
benefit plan (as such term is defined below). If the Purchaser is not an
insurance company it also represents that no part of the funds to be used to
purchase the Securities to be purchased by the Purchaser constitutes assets of
any employee benefit plan, except as
<PAGE> 26
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otherwise disclosed in writing to the Company on or prior to the Closing Date.
As used in this Section 3.2(b), the term "employee benefit plan" shall have the
meaning assigned to such term in Section 3 of ERISA.
(c) The Purchaser also represents and warrants to the Company
that (i) it has received and reviewed the Information; (ii) it has authorized
the purchase of the Securities; and (iii) the purchase of Securities does not
violate its charter, by-laws, other organizational documents or any law or
regulation to which it is subject.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Purchaser. The obligation of the Purchaser to purchase the Securities to be
purchased by it hereunder is subject, at the Time of Purchase and at each
Additional Time of Purchase, as the case may be, to the satisfaction of the
following conditions:
(a) The Purchaser shall have received an opinion, addressed to
it in form and substance reasonably satisfactory to the Purchaser and
dated the Time of Purchase and at each Additional Time of Purchase, as
the case may be, of Pryor, Cashman, Sherman & Flynn, counsel to the
Company and the Guarantors, substantially in the form of Exhibit 6
hereto.
(b) The Purchaser shall have received an opinion, addressed to
it in form and substance reasonably satisfactory to the Purchaser and
dated the Time of Purchase and at each Additional Time of Purchase, as
the case may be, of Haley, Bader & Potts, special communications
counsel to the Company and the Guarantors, substantially in the form of
Exhibit 7 hereto.
(c) The Purchaser shall have received an opinion, addressed to
it in form and substance reasonably satisfactory to the Purchaser and
dated the Time of Purchase and at each Additional Time of Purchase, as
the case may be, of Cahill Gordon & Reindel, special counsel to the
Purchaser (the "Special Counsel"), substantially in the form of Exhibit
8 hereto.
<PAGE> 27
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In rendering such opinions in accordance with Sections 4.1(a),
(b) and (c), each such counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of
the Company and representations of the Purchaser and by government
officials, and upon such other documents as such counsel deem
appropriate as a basis for their opinion. Each such counsel may specify
the jurisdictions in which it is admitted to practice and that it is
not admitted to practice in any other jurisdiction and is not an expert
in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction such counsel may rely
upon the opinion of counsel (reasonably satisfactory to the Purchaser)
admitted to practice in such jurisdiction. Any opinion relied upon by
such counsel as aforesaid shall be delivered to the Purchaser together
with the opinion of such counsel, which opinion shall state that such
counsel believes that it and the Purchaser's reliance thereon is
justified.
(d) The representations and warranties made by the Company or
any Guarantor herein shall be true and correct in all material respects
(except for changes expressly provided for in this Agreement) on and as
of the Time of Purchase and each Additional Time of Purchase, as the
case may be, with the same effect as though such representations and
warranties had been made on and as of the Time of Purchase or such
Additional Time of Purchase, as the case may be, the Company and the
Guarantors shall have complied in all material respects with all
agreements as set forth in or contemplated hereunder and in the Basic
Documents and Exchange Documents, as the case may be, required to be
performed by it at or prior to the Time of Purchase and at each
Additional Time of Purchase, as the case may be.
(e) Subsequent to the date of the Exchange Act Filings, (i)
there shall not have been any change, or any development involving a
prospective change, which has affected or may affect materially and
adversely the businesses, properties or prospects or the financial
condition or the results of operations of the Company and the
Subsidiaries, taken as a whole; and (ii) the Company and the
Subsidiaries shall have conducted their respective businesses only in
the ordinary course.
(f) At the Time of Purchase and at each Additional Time of
Purchase, as the case may be, and after giving
<PAGE> 28
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effect to the consummation of the transactions contemplated by this
Agreement and the Basic Documents, there shall exist no Default or
Event of Default.
(g) As to the Purchaser, the purchase of and payment for the
Securities, the Additional Warrants and the Additional Warrant Shares
by the Purchaser hereunder or under the Warrant Agreement (i) shall not
be prohibited or enjoined (temporarily or permanently) by any
applicable law or governmental regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System), (ii) shall not subject the Purchaser to any
penalty, or in its reasonable judgment, other onerous condition under
or pursuant to any applicable law or governmental regulation (provided,
however, that such regulation, law or onerous condition was not in
effect at the date of this Agreement), and (iii) shall be permitted by
the laws and regulations of the jurisdictions to which it is subject.
(h) At the Time of Purchase and at each Additional Time of
Purchase, the Purchaser shall have received a certificate, dated the
Time of Purchase or such Additional Time of Purchase, as the case may
be, from the Company stating that the conditions specified in Sections
4.1(d), (e) and (f) have been satisfied or duly waived at the Time of
Purchase or Additional Time of Purchase, as the case may be.
(i) Each of the Basic Documents and Exchange Documents shall
be substantially in the form attached hereto and the Basic Documents
(and if appropriate, the Exchange Documents) shall have been executed
and delivered by all the respective parties thereto and shall be in
full force and effect.
(j) The Time of Purchase shall not be later than 5:00 P.M.,
New York City time, on May 2, 1996, subject to extension if the
Purchaser agrees to extend the Time of Purchase upon request to do so
by the Company.
(k) All proceedings taken in connection with the issuance of
the Securities, the Additional Warrants and the Additional Warrant
Shares and the transactions contemplated by this Agreement, the Basic
Documents, the Exchange Documents and all documents and papers relating
thereto shall be reasonably satisfactory to the Purchaser and Special
Counsel. The Purchaser and Special Counsel
<PAGE> 29
-25-
shall have received copies of such papers and documents as they may
reasonably request in connection therewith, all in form and substance
reasonably satisfactory to them.
(l) All costs and any delay fees due and owing and expenses
(including, without limitation, legal fees and expenses) required to be
paid to or on behalf of the Purchaser on or prior to the Time of
Purchase or the Additional Time of Purchase, as the case may be,
pursuant to this Agreement and all fees and expenses payable to the
Special Counsel shall have been paid.
(m) The Certificate of Designation shall have been duly filed
with the Secretary of State of the State of Delaware.
(n) On or before the Time of Purchase or the Additional Time
of Purchase, as the case may be, the Purchaser and Special Counsel
shall have received such further documents, opinions, certificates and
schedules or other instruments relating to the business, corporate,
legal and financial affairs of the Company and its Subsidiaries as they
may reasonably request.
Section 4.2. Conditions Precedent to Obligations of the
Company and the Guarantors. The obligations of the Company and the Guarantors to
issue and sell the Securities, the Additional Warrants and the Additional
Warrant Shares pursuant to this Agreement and to guarantee the Exchange Notes,
respectively, are subject, at the Time of Purchase and at each Additional Time
of Purchase, as the case may be, to the satisfaction of the following
conditions:
(a) The representations and warranties made by the Purchaser
herein shall be true and correct in all material respects at and as of
the Time of Purchase and at each Additional Time of Purchase, as the
case may be, with the same effect as though such representations and
warranties had been made on and as of the Time of Purchase or each
Additional Time of Purchase, as the case may be.
(b) The issuance or sale of the Securities, the Additional
Warrants and the Additional Warrant Shares by the Company shall not be
enjoined under the laws of any jurisdiction to which the Company is
subject (temporarily or permanently) at the Time of Purchase and at
each Additional Time of Purchase, as the case may be.
<PAGE> 30
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(c) Each of the Basic Documents and the Exchange Documents
shall be satisfactory in form and substance to the Company and shall
have been executed and delivered by all respective parties thereto and
shall be in full force and effect and counsel to the Company shall have
received a copy of each of such documents duly executed by such
parties.
ARTICLE V
COVENANTS
Section 5.1. Furnishing of Information. The Company will
furnish to the Purchaser, as long as the Purchaser owns any Preferred Stock,
Exchange Notes or Warrants, the information required by the Certificate of
Designation, the Exchange Indenture or the Warrant Agreement, as the case may
be.
Section 5.2. Use of Proceeds. The Company will use the
proceeds from the issuance and sale of the Securities substantially to acquire
radio broadcast assets and to pay fees and expenses related thereto and to the
issuance of the Securities.
Section 5.3. Treatment of Dividends for Income Tax Purposes.
The Company covenants and agrees for the benefit of the Purchaser of Preferred
Stock and for the benefit of each subsequent holder of Preferred Stock that the
Company (i) will not claim as an expense reducing taxable income any dividends
paid on the Preferred Stock in any Federal income tax return, claim for refund,
or other statement, report or submission, except to the extent that there may be
no reasonable basis in law to do otherwise; and (ii) will make any election (or
take any other action) which may become necessary to comply with clause (i). At
the reasonable request of the Purchaser or subsequent holder of Preferred Stock
(and at the expense of such Purchaser or subsequent holder), the Company will
join in the submission to the Internal Revenue Service of a request for a ruling
that the dividends paid on the Preferred Stock will be eligible for the
dividends received deduction under Section 242(a)(1) of the Code. In addition,
the Company will cooperate with the Purchaser or subsequent holder of Preferred
Stock in any litigation, appeal, or other proceeding relating to the eligibility
for the dividends received deduction under Section 243(a)(1) of the Code of any
dividends (within the meaning of Section 316(a) of the Code) paid on the
Preferred Stock, provided that the Purchaser or subsequent holder shall
<PAGE> 31
-27-
reimburse the Company for its reasonable out-of-pocket expenses in connection
with such proceeding. To the extent possible, the principles of this Section 5.3
shall also apply with respect to state and local taxes. The Company will use its
best efforts to ensure that distributions made with respect to the Preferred
Stock are treated as dividends within the meaning of Section 316(a) of the Code
consistent with the operations of its business in the ordinary course and with
the accounting method and principles then in use. The obligations of the Company
hereunder shall survive the payment, redemption or exchange of the Preferred
Stock, the transfer of the Preferred Stock, and the termination of this
Agreement, the Basic Documents or any of the Exchange Documents.
Section 5.4. Exchange Indenture. The Company covenants that,
if required by the terms of the Exchange Notes and Preferred Stock Registration
Rights Agreement, it shall cause the Exchange Indenture (with such changes as
are permitted by such Exchange Indenture or as have been consented to by the
holders of a majority in principal amount of the Exchange Notes then
outstanding) to be qualified under the Trust Indenture Act. The Trustee under
the Exchange Indenture shall be selected by the Company and reasonably
satisfactory to a majority in principal amount of the Securities outstanding at
the time of such approval. The Company shall deliver copies of the Exchange
Indenture as qualified under the Trust Indenture Act, in the form duly executed
by the Company and the Trustee thereunder, to each holder of the Securities no
later than the time of such qualification.
Section 5.5. Original Issue Discount. The Company agrees and
covenants for the benefit of the Purchaser and each subsequent holder of
Securities that no deduction for original issue discount of the Exchange Notes
in excess of the amount calculated in accordance with the second paragraph of
Section 2.1 will be claimed on any Federal income tax return or claim for refund
of Federal income tax or other submission to the Internal Revenue Service;
provided that the Company may assert a deduction for additional original issue
discount if (i) in the opinion of Counsel (as defined below) proposed or final
Treasury regulations under the Code or any amendment to the Code provides, or
the holding in any Revenue Ruling or other official announcement from the
Department of Treasury including the Internal Revenue Service or in any case
decided by a Federal court including the Tax Court and the Claims Court, fairly
implies, that holders of the Securities are required to include in income
additional original issue discount on the Securities, or (ii) the Internal
Revenue Service asserts in
<PAGE> 32
-28-
connection with an audit involving the Company, the Purchaser (or any subsequent
holder) or any other issuer or holder which in the opinion of Counsel is
similarly situated, that the Securities or similar securities have additional
original issue discount within the meaning of Section 1273 of the Code, or any
successor provision. For purposes of this Section 5.5, the term "Counsel" shall
mean such counsel of national standing as may be approved by the Company and
which counsel has no conflict of interest with either the Company or the
Purchaser.
Section 5.6. Purchaser Representative. If the Preferred Stock
continues to be outstanding on and after November 1, 1996, the Purchaser shall
be entitled to appoint a representative to the Board of Directors who shall be
permitted to attend all meetings of the Board of Directors, but who shall have
no voting power. Such representative shall be given the same notice of any
meeting of the Board of Directors as is required to be provided to a member of
the Board of Directors and shall be entitled to participate in discussions and
consult with the Board of Directors. In addition, such representative shall
receive copies of all documents and shall have the same access to information
provided to members of the Board of Directors, in each case, at the same time as
such members of the Board of Directors.
Section 5.7. Issuance of Additional Warrants. If the Preferred
Stock continues to be outstanding on and after November 1, 1996, the Company
will issue Additional Warrants (identical to the Warrants) under the Warrant
Agreement exercisable for Additional Warrant Shares equal to 1% of the Company's
fully diluted Common Stock for each $2,500,000 aggregate liquidation value of
the Preferred Stock outstanding on November 1, 1996. All Additional Warrants
will be issued on a pro rata basis to the holders of outstanding Warrants based
on the number of Warrants held by each such holder. In no event shall Additional
Warrants be issued which will be exercisable for Warrant Shares constituting
more than 5.99% of the Company's fully diluted Common Stock (including the 7,550
Warrants to be issued to the Purchaser at the Time of Purchase).
Section 5.8. Preferred Stock. To the extent reasonably
permitted by applicable law the Company will treat the Preferred Stock as
"stock" for the purposes of the Code.
Section 5.9. Tax Matters. (a) The Company will make applicable
information return filings with respect to the Securities with the Internal
Revenue Service and other
<PAGE> 33
-29-
governmental authorities, and will provide relevant taxpayer copies to the
holders of such Securities.
(b) The Company will for federal income tax purposes withhold
31% (or such other rate as appropriate under applicable law) for payments and
other distributions to holders of the Securities who are or appear to be United
States persons (as defined in Section 7701(a)(30) of the Code), in respect of
payments or distributions treated as dividends or interest, unless the Company
receives a properly completed Form W-9 or other applicable form, certificate or
document prescribed by the Internal Revenue Service prior to a given payment or
distribution, certifying as to such holder's entitlement to an exemption from
any such withholding requirements.
(c) The Company will for federal income tax purposes withhold
from payments or other distributions to holders of Securities who are not or
appear not to be United States persons 30% (or such other rate as generally
appropriate under applicable law) in respect of payments or other distributions
treated as dividends or interest, unless the holder provides the Company with
Form W-8, Form 4224, Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service (which has not expired or become
obsolete without the furnishing of an appropriate current replacement) properly
completed and certifying as to such holder's entitlement under an applicable
income tax treaty, to an exemption from any such withholding requirements or to
a reduced note of withholding.
(d) Neither Section 5.9(b) nor Section 5.9(c) hereof shall
require the Company to apply an exemption or reduced rate of withholding during
any period when it shall have received notice or has knowledge that the
residence or other information previously provided on any applicable form,
certificate or document is incorrect and no corrected form, certificate or
document as applicable has been provided to the Company.
ARTICLE VI
FEES
Section 6.1. Delay Fees. If the Closing or any Additional
Closing, as the case may be, shall not actually occur on any date on which the
Closing or such Additional Closing, as the case may be, is scheduled to occur,
and the Company shall have failed to notify the Purchaser prior to 1:00 P.M.,
New York time, on the date of such scheduled Closing or
<PAGE> 34
-30-
Additional Closing, as the case may be, that such Closing or Additional Closing,
as the case may be, has been postponed, the Company shall pay to the Purchaser
(as compensation for the Purchaser's loss of funds and administrative costs) an
amount of immediately available funds equal to interest on the purchase price
for the Securities to have been purchased by the Purchaser on such scheduled
date at such Closing or Additional Closing, as the case may be, at the rate per
annum on the Securities which the Purchaser has agreed to purchase as if the
Securities had been issued on the scheduled date of Closing or Additional
Closing, as the case may be, for each day from and including such scheduled date
of Closing or Additional Closing, as the case may be, to but not including the
earlier of the date on which such Closing or Additional Closing, as the case may
be, actually occurs or the date on which the amount to be paid by the Purchaser
as said purchase price is available to such Purchaser for reinvestment, but in
any case not less than one day's interest; provided, however, that the Company
shall not owe the Purchaser anything under this Section 6.1 if the Company has
fulfilled all of its obligations under this Agreement and the Purchaser is not
willing or able to fulfill its obligations on the scheduled date of Closing or
Additional Closing, as the case may be.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity. (a) Indemnification by the Company.
The Company and the Guarantors, jointly and severally, agree and covenant to
hold harmless and indemnify the Purchaser and each Person, if any, who controls
the Purchaser within the meaning of Section 20 of the Exchange Act from and
against any losses, claims, damages, liabilities and expenses (including
expenses of investigation) to which the Purchaser or such controlling person may
become subject (i) arising out of or based upon any untrue statement or alleged
untrue statement of any material fact contained in the Information and any
amendments or supplements thereto or any documents filed with the Commission or
any State Commission or arising out of or based upon the omission or alleged
omission to state in the Information a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii)
arising out of, based upon or in any way related or attributed to claims,
actions or proceedings relating to this Agreement or the subject matter of this
Agreement or (iii) arising in any manner out of or in connection with such
Person being a Purchaser of the Securities
<PAGE> 35
-31-
and relating to any action taken or omitted to be taken by the Company or any of
the Guarantors; provided, however, that the Company and the Guarantors shall not
be liable under this paragraph (a) for any amounts paid in settlement of claims
without its written consent, which consent shall not be unreasonably withheld,
or to the extent that it is finally judicially determined that such losses,
claims, damages or liabilities arose primarily out of the gross negligence,
willful misconduct or bad faith of the Purchaser. The Company and the Guarantors
further agree to reimburse the Purchaser for any reasonable legal and other
expenses as they are incurred by it in connection with investigating, preparing
to defend or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with such Person
being a Purchaser; provided that if the Company or the Guarantors reimburse the
Purchaser hereunder for any expenses incurred in connection with a lawsuit,
claim or other proceeding for which indemnification is sought, the Purchaser
hereby agrees to refund such reimbursement of expenses to the extent it is
finally judicially determined that the losses, claims, damages or liabilities
arising out of or in connection with such lawsuit, claim or other proceedings
arose primarily out of the gross negligence, willful misconduct or bad faith of
the Purchaser or from a violation by the Purchaser of legal requirements
applicable to the Purchaser solely because of its character as a particular type
of regulated institution (except that the Company shall not be entitled to
reimbursement under this Section 7.1 if its representation in Section 3.1(v)
hereof applies to the legal requirements violated by the Purchaser). The Company
and the Guarantors further agree that the indemnification, contribution and
reimbursement commitments set forth in this Article VII shall apply whether or
not the Purchaser is a formal party to any such lawsuits, claims or other
proceedings. Notwithstanding the foregoing, the Company and the Guarantors shall
not be liable to a party seeking indemnification under the foregoing provisions
of this paragraph (a) to the extent that any such losses, claims, damages,
liabilities or expenses arise out of or are based upon an untrue statement or
omission made in any of the documents referred to in this paragraph (a) in
reliance upon and in conformity with the information relating to the party
seeking indemnification furnished in writing by such party for inclusion
therein. The indemnity, contribution and expense reimbursement obligations of
the Company and the Guarantors under this Article VII shall be in addition to
any liability the Company may otherwise have.
<PAGE> 36
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(b) Procedure. If any Person shall be entitled to indemnity
hereunder (the "Indemnified Parties"), such Indemnified Party shall give prompt
notice confirmed in writing to the party or parties from which such indemnity is
sought (the "Indemnifying Parties") of the commencement of any proceeding (a
"Proceeding") with respect to which such Indemnified Party seeks indemnification
or contribution pursuant hereto; provided, however, that the failure so to
notify the Indemnifying Parties shall not relieve the Indemnifying Parties from
any obligation or liability except to the extent that the Indemnifying Parties
have been prejudiced materially by such failure. The Indemnifying Parties shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of such
Proceeding, to assume, at the Indemnifying Parties' expense, the defense of any
such Proceeding, with counsel reasonably satisfactory to such Indemnified Party;
provided, however, that an Indemnified Party or parties (if more than one such
Indemnified Party is named in any Proceeding) shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or parties unless: (1) the Indemnifying Parties agree to
pay such fees and expenses; or (2) the Indemnifying Parties fail promptly to
assume the defense of such Proceeding or fail to employ counsel reasonably
satisfactory to such Indemnified Party or parties; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such
Indemnified Party or Parties and the Indemnifying Party or an Affiliate of the
Indemnifying Party and such Indemnified Parties, and the Indemnifying Parties
shall have been advised in writing by counsel that there may be one or more
material defenses available to such Indemnified Party or parties that are
different from or additional to those available to the Indemnifying Parties, in
which case, if such Indemnified Party or parties notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense of
the Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Parties, it being understood, however, that, unless there exists a
conflict among Indemnified Parties, the Indemnifying Parties shall not, in
connection with any one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel, if any)
at any time for such Indemnified Party or
<PAGE> 37
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parties, or for fees and expenses that are not reasonable. No Indemnified Party
or parties will settle any Proceedings without the written consent of the
Indemnifying Party or parties (but such consent will not be unreasonably
withheld).
Section 7.2. Contribution. If for any reason the
indemnification provided for in Section 7.1 of this Agreement is unavailable to
an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying and Indemnified Parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Indemnifying or
Indemnified Parties and each such party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any reasonable
legal or other fees or expenses incurred by such party in connection with
investigating or defending any such claim.
The Company and the Purchaser agree that it would not be just
and equitable if contribution pursuant to the immediately preceding paragraph
were determined by any method of allocation which does not take into account the
equitable considerations referred to in such paragraph. No person guilty of
fraudulent misrepresentation shall be entitled to contribution from any Person.
Section 7.3. Registration Rights Agreements. Notwithstanding
anything to the contrary in this Article VII, the indemnification and
contribution provisions of the Preferred Stock Registration Rights Agreement or
the Common Stock Registration Rights Agreement shall govern any claim with
respect thereto.
<PAGE> 38
-34-
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Home Office Payment. Subject to the provisions of
the Basic Documents, the Company agrees that, so long as the original Purchaser
hereunder shall own Securities purchased by it hereunder, the Company will make
any payments to the Purchaser of principal, premium or interest due on any
Security not represented by a Global Certificate (and any liquidated damages
payments relating thereto pursuant to the Preferred Stock Registration Rights
Agreement) by wire transfer in immediately available funds by 2:00 p.m., local
time at the location in the United States of the Purchaser's account, on the
date of payment to such account as shall have been specified by separate written
notice to the Company by the Purchaser (providing sufficient information with
such wire transfer to identify the source and application of the funds and
requesting the bank to send a credit advice thereof to the Purchaser), or to
such other account or in such other similar manner as the Purchaser may
designate to the Company in writing.
Section 8.2. Survival of Provisions. The representations,
warranties and covenants of the Company and the Purchaser made herein, the
indemnity and contribution agreements contained herein and each of the
provisions of Articles V, VII and VIII shall remain operative and in full force
and effect regardless of (a) any investigation made by or on behalf of the
Company, the Purchaser or any Indemnified Party, (b) acceptance of any of the
Securities and payment therefor or (c) disposition of the Securities by the
Purchaser whether by redemption, exchange, sale or otherwise. The respective
agreements, covenants, indemnities and other statements set forth in Article VII
and Section 8.8 shall remain in full force and effect regardless of any
termination or cancellation of this Agreement.
Section 8.3. Termination. This Agreement may be terminated (as
to the party electing to so terminate it) at any time prior to the Time of
Purchase or Additional Time of Purchase, as the case may be:
(a) by the Company if any of the conditions specified in
Section 4.2 of this Agreement have not been met or waived by the
Company pursuant to the terms of this Agreement;
<PAGE> 39
-35-
(b) by the Purchaser if any of the conditions specified in
Section 4.1 of this Agreement have not been met or waived pursuant to
the terms of this Agreement.
Section 8.4. No Waiver; Modifications in Writing. (a) No
failure or delay on the part of the Company or the Purchaser in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to the Company or the Purchaser at law or in
equity or otherwise. No waiver of or consent to any departure by the Company
from any provision of this Agreement shall be effective unless signed in writing
by the party entitled to the benefit thereof, provided that notice of any such
waiver shall be given to each party hereto as set forth below. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or on
behalf of the Purchaser. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.
(b) Except pursuant to Article VI hereof, the Company has not
paid or shall not pay, or has not caused or shall not cause to be paid, directly
or indirectly, any remuneration, whether by way of interest, fee or otherwise,
to any holder of any Securities as consideration for or as an inducement to the
purchase by any holder of the Securities.
Section 8.5. Role of Special Counsel. The role of Cahill
Gordon & Reindel, special counsel to the Purchaser, has been limited to
functioning on this Agreement and such firm has not performed a due diligence
investigation with respect to the Company or any of its Subsidiaries or their
respective affairs.
Section 8.6. Communications. All notices, demands and other
communications provided for hereunder shall be in writing and, (a) if to the
Purchaser, shall be given by
<PAGE> 40
-36-
registered or certified mail, return receipt requested, telex, telegram,
telecopy, courier service or personal delivery, addressed to CIBC WG Argosy
Merchant Fund 2, L.L.C. c/o CIBC Wood Gundy Securities Corp., 1325 Avenue of the
Americas, 22nd Floor, New York, New York 10019 or to such other address as the
Purchaser may designate to the Company in writing, (b) if to the Company, shall
be given by similar means to Commodore Media, Inc., 500 Fifth Avenue, Suite
3000, New York, New York 10110 or at such other address as the Company may
designate in writing. In each case notices, demands and other communications
shall be deemed given when received.
Section 8.7. Costs, Expenses and Taxes. The Company agrees to
pay all costs and expenses in connection with the negotiation, preparation,
printing, typing, reproduction, execution and delivery of this Agreement and
each of the Basic Documents, the Exchange Documents, any amendment or supplement
to or modification of any of the foregoing and any and all other documents
furnished pursuant hereto or thereto or in connection herewith or therewith,
and, except as limited by Article VII, all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses of Company counsel),
if any, in connection with the enforcement of this Agreement, the Securities,
the Additional Warrants or the Additional Warrant Shares or any other agreement
furnished pursuant hereto or thereto or in connection herewith or therewith. In
addition, the Company shall pay any and all stamp, transfer and other similar
taxes payable or determined to be payable in connection with the execution and
delivery of this Agreement, any Basic Document, any Exchange Document or the
issuance of the Securities, the Additional Warrants or the Additional Warrant
Shares, and shall save and hold the Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes.
Section 8.8. Determinations. All determinations to be made by
the Company or the Purchaser hereunder in its opinion or judgment or with its
approval or otherwise shall be made by it in its sole discretion.
Section 8.9. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
<PAGE> 41
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Section 8.10. Binding Effect; Assignment. The rights and
obligations of the Purchaser under this Agreement may not be assigned to any
other Person except with the prior consent of the Company. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement, and their respective successors and assigns. This Agreement shall be
binding upon the Company and the Purchaser, and their successors and assigns.
Section 8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.12. Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.13. Headings. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE> 42
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
COMMODORE MEDIA, INC.
By:
-------------------------------------
Name:
Title:
COMMODORE HOLDINGS, INC.
(a Delaware corporation)
COMMODORE MEDIA OF DELAWARE, INC.
(a Delaware corporation)
COMMODORE MEDIA OF PENNSYLVANIA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF FLORIDA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF KENTUCKY, INC.
(a Delaware corporation)
COMMODORE MEDIA OF NORWALK, INC.
(a Delaware corporation)
COMMODORE MEDIA OF WESTCHESTER, INC.
(a Delaware corporation)
DANBURY BROADCASTING, INC.
(a Connecticut corporation)
By:
-------------------------------------
Name:
Title:
<PAGE> 43
-39-
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By:
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.69
- --------------------------------------------------------------------------------
COMMON STOCK REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT
DATED AS OF MAY 1, 1996
AMONG
COMMODORE MEDIA, INC.,
CERTAIN CONTROL STOCKHOLDERS
AND
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions ........................................................ 1
2. Registration Rights ................................................ 7
3. Transfers of Warrant Shares ........................................ 14
4. Registration Procedures ............................................ 26
5. Indemnification and Contribution ................................... 30
6. Miscellaneous ...................................................... 33
a. No Inconsistent Agreements .................................... 33
b. Amendments and Waivers ........................................ 34
c. Notices ....................................................... 34
d. Successors and Assigns ........................................ 35
e. Rules 144 and 144A ............................................ 35
f. Counterparts .................................................. 35
g. Headings ...................................................... 36
h. Governing Law ................................................. 36
i. Severability .................................................. 36
j. Entire Agreement .............................................. 36
Exhibit A
</TABLE>
-i-
<PAGE> 3
THIS COMMON STOCK REGISTRATION RIGHTS AND STOCKHOLDERS
AGREEMENT (this "Agreement") is made and entered into as of May 1, 1996, among
Commodore Media, Inc., a Delaware corporation (the "Company"), the Control
Stockholders (as defined herein) and CIBC WG Argosy Merchant Fund 2, L.L.C., a
Delaware limited liability company (the "Purchaser").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of May 1, 1996, among the Company, the Guarantors named
therein and the Purchaser (the "Purchase Agreement"), relating to the sale by
the Company to the Purchaser of up to $12,500,000 in aggregate liquidation value
of its Senior Exchangeable Redeemable Preferred Stock, Series A, par value $.01
per share (the "Preferred Stock"), along with warrants (the "Warrants") for the
purchase of shares of its Class A Common Stock, par value $0.01 per share
("Class A Common Stock") constituting up to 5.99% of the Company's fully diluted
Common Stock. In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide to the Purchaser and its direct and
indirect transferees (the "Holders"), among other things, the registration
rights for the Class A Common Stock set forth in this Agreement and the Control
Stockholders have agreed to provide the Holders, among other things, the
tag-along rights for the Class A Common Stock set forth herein. The execution of
this Agreement is a condition to the obligations of the Purchaser to purchase
the Preferred Stock and Warrants under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling,"
"controlled by," and "under common control with"), as used with respect
to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, however, that beneficial ownership
<PAGE> 4
-2-
of at least 10% of the voting securities of a Person shall be deemed to
be control. Neither the Purchaser nor any of its Affiliates shall be
deemed to be an Affiliate of the Company or of any of its Subsidiaries
or Affiliates.
"Business Day" shall mean a day that is not a Legal Holiday.
"Capital Stock" shall mean, with respect to any Person, any
and all shares or other equivalents (however designated) of capital
stock, partnership interests or any other participation, right or other
interest in the nature of an equity interest in such Person or any
option, warrant or other security convertible into any of the
foregoing.
"Change of Control" has the meaning provided such term in the
Indenture dated as of April 21, 1995, by and among the Company, the
Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee, as amended, restated or supplemented from time to time.
"Class A Common Stock" shall mean the Class A Common Stock,
par value $.01 per share, of the Company.
"Class B Common Stock" shall mean the Class B Common Stock,
par value $.01 per share, of the Company.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Common Stock" shall mean the Class A Common Stock and Class B
Common Stock.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Control Stockholder" shall mean (i) Susan Burden, (ii) the
heirs, executors, administrators, testamentary trustees, legatees or
beneficiaries of Carter Burden to the extent such Persons beneficially
own shares of Common Stock as a result of a Transfer from Carter Burden
after the date hereof and (iii) a trust the beneficiaries of which
include only Susan Burden and lineal descendants of Carter Burden.
<PAGE> 5
-3-
"Definitive Certificate" shall mean a certificate representing
Warrant Shares in definitive registered form, other than a Global
Certificate.
"Demand Registration" shall have the meaning set forth in
Section 2.1.
"Depositary" shall mean, with respect to Shares represented by
one or more Global Certificates, The Depository Trust Company or
another person designated as Depositary by the Company, which must be a
clearing agency registered under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Exempt Transfer" shall mean a transfer by a Control
Stockholder to another Control Stockholder.
"Existing Common Stock Agreement" shall mean the Common Stock
Registration Rights and Stockholders Agreement, dated as of April 21,
1995, among the Company, the Control Stockholders and the purchasers
referred to therein.
"Fair Market Value" shall mean the value of any securities as
determined (without any discount for lack of liquidity, the amount of
Class A Common Stock proposed to be sold or the fact that the shares of
Class A Common Stock held by any Holder of such security may represent
a minority interest in a private company) by a nationally recognized
investment banking firm selected by the Company for the determination
of such value.
"Global Certificate" shall mean a certificate representing all
or part of the Warrant Shares issued to the Depositary and bearing the
legend set forth in Section 3.4(g)(iii).
"Holder" shall mean the Purchaser, for so long as the
Purchaser owns any Class A Common Stock, and each of its successors,
assigns and direct and indirect transferees who become registered
owners of Class A Common Stock.
"Included Shares" shall have the meaning set forth in Section
2.1(a).
<PAGE> 6
-4-
"indemnified party" shall have the meaning set forth in
Section 5(c).
"indemnifying party" shall have the meaning set forth in
Section 5(c).
"Legal Holiday" shall mean a Saturday, a Sunday or a day on
which banking institutions in New York, New York are required by law,
regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday.
"Non-Selling Stockholders" shall have the meaning set forth in
Section 3.3(a).
"Participating Stockholders" shall have the meaning set forth
in Section 3.3(a).
"Person" shall mean an individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, or other legal entity.
"Piggy-Back Registration" shall have the meaning set forth in
Section 2.2.
"Preferred Stock" shall have the meaning set forth in the
preamble.
"proposed purchaser" shall have the meaning set forth in
Section 3.3(a).
"Prospectus" means a prospectus which meets the requirements
of Section 10 of the Securities Act.
"Public Equity Offering" shall mean a public offering by the
Company of shares of its common stock on a registration statement filed
under the Securities Act (however designated and whether voting or
non-voting) (other than a registration statement filed on Form S-4 or
S-8 or similar form).
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Purchase Election" shall have the meaning set forth in
Section 2.1(b).
<PAGE> 7
-5-
"Purchase Offer" shall have the meaning set forth in Section
2.1(b).
"Purchase Offer Payment Date" shall have the meaning set forth
in Section 2.1(b).
"Purchased Shares" shall have the meaning set forth in Section
3.3(a).
"Purchaser" shall have the meaning set forth in the preamble.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Registrable Securities" shall mean the shares of Class A
Common Stock issuable upon exercise of the Warrants. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect
to such securities shall have been declared effective under the
Securities Act and such securities shall have been disposed of pursuant
to such Registration Statement, (ii) such securities have been sold to
the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act, (iii) such
securities shall have been otherwise transferred by such Holder and new
certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company or its
transfer agent and subsequent disposition of such securities shall not
require registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have
ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with this Agreement,
including, without limitation, all SEC and stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees
and expenses, fees and expenses of compliance with securities or blue
sky laws (including, without limitation, reasonable fees and
disbursements of
<PAGE> 8
-6-
counsel for the underwriters in connection with blue sky qualifications
of the Registrable Securities), rating agency fees, printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public
accountants (but not including any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of
Registrable Securities by Holders of such Registrable Securities).
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Warrant Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference or
deemed to be incorporated by reference in such Registration Statement.
"Regulation S" shall mean Regulation S under the Securities
Act.
"Requisite Shares" shall mean a number of Registrable
Securities equal to not less than 25% of the Registrable Securities
held in the aggregate by all Holders.
"Restricted Security" shall have the meaning set forth in Rule
144(a)(3) under the Securities Act.
"Rule 144" shall mean Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the SEC providing
for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not
affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities
Act.
"Rule 144A" shall mean Rule 144A under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting
in offers and sales by subsequent holders that are not affiliates of an
issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
<PAGE> 9
-7-
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Holder" shall mean a Holder who is selling Warrant
Shares in accordance with the provisions of Section 2.1, 2.2, 3.3 or
3.4 hereof.
"Stockholder" means, collectively, each Holder and each
Control Stockholder.
"Tag-Along Notice" shall have the meaning set forth in Section
3.3(a).
"Tag-Along Right" shall have the meaning set forth in Section
3.3.
"Transfer" shall have the meaning set forth in Section 3.2.
"Transfer Agent" means any transfer agent or registrar
appointed by the Company for the Class A Common Stock.
"Triggering Event" shall have the meaning set forth in Section
2.1.
"Warrant Shares" means the shares of Class A Common Stock
issued and issuable upon exercise of the Warrants.
"Withdrawal Election" shall have the meaning set forth in
Section 2.3.
2. Registration Rights.
2.1 Demand Registration.
(a) Request for Registration. At any time and from time to
time on or after the earliest of (i) a Change of Control shall have occurred,
(ii) seven days prior to the date on which the Company files a registration
statement with respect to a Public Equity Offering, (iii) the date on which any
class of equity securities of the Company is listed on a national securities
exchange or authorized for quotation on the National Association of Securities
Dealers Automated Quotation System or (iv) May 1, 1999 (each a "Triggering
Event"), Holders owning, individually or in the aggregate, at least the
Requisite Shares may make a written request for registration under the
<PAGE> 10
-8-
Securities Act of their Registrable Securities (a "Demand Registration"). Any
such request will specify the number of Registrable Securities proposed to be
sold and will also specify the intended method of disposition thereof. Upon a
demand, the Company will prepare, file and use its best efforts to cause to be
effective within 180 days of such demand a Registration Statement in respect of
all the Registrable Securities. The Company shall give written notice of such
registration request within 10 days after the receipt thereof to all other
Holders. Within 20 days after receipt of such notice by any Holder, such Holder
may request in writing that Registrable Securities be included in such
registration and the Company shall include in the Demand Registration the
Registrable Securities of any such Selling Holder requested to be so included
(the "Included Shares"). Each such request by such other Selling Holders shall
specify the number of Included Shares proposed to be sold and the intended
method of disposition thereof. Subject to Section 2.1(c), in no event shall the
Company be required to register Registrable Securities pursuant to this Section
2.1 more than a maximum of two separate occasions.
(b) Repurchase Election. (i) Notwithstanding the foregoing
provisions of Section 2.1(a), the Company shall not be obligated to effect a
Demand Registration if the Company elects to make an offer to repurchase (a
"Purchase Offer") all of the Registrable Securities (a "Purchase Election") by
mailing notice of such Purchase Offer to all Holders of Registrable Securities
on a date (the "Purchase Election Date") not more than 30 days after the receipt
of any request for a Demand Registration and indicating in such Purchase Offer
that the Purchase Election will be consummated on a Business Day (the "Purchase
Offer Payment Date") not more than 60 days after the Purchase Election Date at a
price per Warrant equal to the Fair Market Value of each share of Class A Common
Stock issuable upon exercise of such Warrant less that portion of the Exercise
Price allocable to such Warrant.
(ii) Notice of a Purchase Offer shall be mailed by the Company
(or caused to be mailed by the Company), not less than 30 days nor more than 40
days before the Purchase Offer Payment Date to each Holder of Registrable
Securities at its last registered address. The Purchase Offer shall remain open
from the time of mailing for at least 20 Business Days and until 5:00 p.m., New
York City time, on the Business Day next preceding the Purchase Offer Payment
Date. The notice, which shall govern the terms of the Purchase Offer, shall
include such disclosures as are required by law and shall state:
<PAGE> 11
-9-
(1) that the Purchase Offer is being made pursuant to this
Section 2.1(b) and that all Registrable Securities tendered for
repurchase will be accepted for payment;
(2) the purchase price per Warrant calculated as set forth
above and the Purchase Offer Payment Date;
(3) that any Registrable Securities accepted for payment
pursuant to the Purchase Offer shall cease to be outstanding after the
Purchase Offer Payment Date unless the Company defaults in making
payment therefor of the purchase price;
(4) that Holders electing to have Registrable Securities
purchased pursuant to a Purchase Offer will be required to surrender
such Warrant Shares, together with a completed letter of transmittal,
to the Company (or its agent as designated by the Company in such
notice) at the address specified in the notice no later than 5:00 p.m.
New York City time on the Business Day prior to the Purchase Offer
Payment Date;
(5) that Holders will be entitled to withdraw their election
if the Company (or such designated agent) receives, not later than 5:00
p.m. New York City time on the Business Day prior to the Purchase Offer
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the number of Warrant Shares
delivered for purchase and a statement that such Holder is withdrawing
its election to have such Warrant Shares purchased and promptly
thereafter the Company (or such designated agent) shall redeliver the
withdrawn Warrant Shares to the Holder;
(6) that a Holder electing not to tender such Holder's
Registrable Securities for purchase pursuant to such Purchase Offer by
5:00 p.m. New York City time on the Business Day prior to the Purchase
Offer Payment Date will have no continuing right to require the Company
to repurchase such Holder's Registrable Securities; and
(7) that Holders whose Warrant Shares are tendered for
purchase in part only will be issued new certificates representing the
number of the unpurchased Warrant Shares surrendered.
<PAGE> 12
-10-
On the Purchase Offer Payment Date, the Company shall (i)
accept for payment Registrable Securities or portions thereof tendered pursuant
to the Purchase Offer, (ii) promptly deliver to Holders of Warrant Shares so
accepted payment of the purchase price therefor and (iii) issue and mail or
deliver to such Holders new certificates representing a number of shares of
Class A Common Stock equal to the unpurchased portion of the Warrant Shares
surrendered. Upon payment for all Registrable Securities tendered pursuant to a
Purchase Offer the Company shall be deemed to have effected the Demand
Registration.
The Company shall comply, to the extent applicable, with the
requirements of Sections 13 and 14 of the Exchange Act, and any other securities
laws or regulations in connection with the repurchase of Registrable Securities
pursuant to a Purchase Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
2.1(b), the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 2.1(b) by virtue thereof.
(c) Effective Registration. A registration will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in all material respects with
its obligations under this Agreement with respect thereto; provided that if,
after it has become effective, the offering of Registrable Securities pursuant
to such registration is or becomes the subject of any stop order, injunction or
other order or requirement of the SEC or any other governmental or
administrative agency, or if any court prevents or otherwise limits the sale of
Registrable Securities pursuant to the registration (for any reason other than
the act or omissions of the Selling Holders), such registration will be deemed
not to have been effected. If (i) a registration requested pursuant to this
Section 2.1 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2.1 does not remain effective for a period of
at least 90 days beyond the effective date thereof or until the consummation of
the distribution by the Selling Holders of the Included Shares, then the Company
shall continue to be obligated to effect an additional registration pursuant to
this Section 2.1. The Selling Holders of Registrable Securities shall be
permitted to withdraw all or any part of the Included Shares from a Demand
Registration at any time prior to the effective date of such Demand
Registration. If at any time a Registration Statement is filed pursuant to a
Demand
<PAGE> 13
-11-
Registration, and subsequently a sufficient number of Included Shares are
withdrawn from the Demand Registration so that such Registration Statement does
not cover at least 25% of the Registrable Securities held by all Holders, the
Selling Holders who have not withdrawn their Included Shares shall have the
opportunity to include an additional number of Registrable Securities in the
Demand Registration so that such Registration Statement covers at least 25% of
the Registrable Securities held by all Holders. If an additional number of
Registrable Securities is not so included so that such Registration Statement
does not cover at least 25% of the Registrable Securities held by all Holders,
the Company may withdraw the Registration Statement. In the event that a
Registration Statement has been filed and the Company withdraws the Registration
Statement solely due to the occurrence of the events specified in the prior two
sentences, such withdrawn Registration Statement will count as a Demand
Registration; otherwise such withdrawn Registration Statement will not count as
a Demand Registration and the Company shall continue to be obligated to effect a
registration pursuant to this Section 2.1.
(d) Priority in Demand Registrations Pursuant to Section 2.1.
If a Demand Registration pursuant to this Section 2.1 involves an underwritten
offering and the managing underwriter advises the Company in writing that, in
its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering, the Company
will include in such registration only the Registrable Securities requested by
the managing underwriter(s) to be included in such registration. In the event
that the number of Registrable Securities requested to be included in such
registration exceeds the number which, in the opinion of such managing
underwriter, can be sold, the number of such Registrable Securities to be
included in such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares thereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, can be sold,
the Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of the managing
underwriter, can be sold.
<PAGE> 14
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(e) Selection of Underwriter. If the Selling Holders so elect,
the offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. The Selling Holders making
such Demand Registration shall select one or more nationally recognized firms of
investment bankers, who shall be reasonably acceptable to the Company, to act as
the managing underwriter or underwriters in connection with such offering and
shall select any additional investment banker(s) and manager(s) to be used in
connection with the offering.
(f) Expenses. The Company will pay all Registration Expenses
in connection with the registrations requested pursuant to Section 2.1(a). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to a registration statement requested pursuant to this
Section 2.1.
2.2 Piggy-Back Registration. If at any time the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its respective securityholders of any class of its common equity securities
(other than (i) a Registration Statement on Form S-4 or S-8 (or any substitute
form that may be adopted by the SEC) or (ii) a Registration Statement filed in
connection with an offer or offering of securities solely to the Company's
existing securityholders), then the Company shall give written notice of such
proposed filing to the Holders of Registrable Securities as soon as practicable
(but in no event less than 20 Business Days before the anticipated filing date),
and such notice shall offer such Holders the opportunity to register such number
of shares of Registrable Securities as each such Holder may request (which
request shall specify the Registrable Securities intended to be disposed of by
such Selling Holder and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use its best efforts to cause the
managing underwriter or underwriters of such proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company or any other securityholder included therein and to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof except as otherwise
provided in Section 2.3. Any Selling Holder shall have the right to withdraw its
request for
<PAGE> 15
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inclusion of its Registrable Securities in any Registration Statement pursuant
to this Section 2.2 by giving written notice to the Company of its request to
withdraw no later than 5 Business Days before such Registration Statement
becomes effective. The Company may withdraw a Piggy-Back Registration at any
time prior to the time it becomes effective; provided that the Company shall
give prompt notice thereof to participating Selling Holders. The Company will
pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 2.2, and each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to a registration statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no
failure to effect a registration under this Section 2.2, shall relieve the
Company of its obligation to effect a registration upon the request of Holders
pursuant to Section 2.1, and no failure to effect a registration under this
Section 2.2 and to complete the sale of shares of Class A Common Stock in
connection therewith shall relieve the Company of any other obligation under
this Agreement.
2.3 Reduction of Offering.
(a) Piggy-Back Registration. (i) If the managing
underwriter(s) of any underwritten offering described in Section 2.2 have
informed, in writing, the Selling Holders of the Registrable Securities
requesting inclusion in such offering that it is their opinion that the total
number of shares which the Company, the Selling Holders and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to adversely affect the success of such offering, including the price
at which such securities can be sold, then the number of shares to be offered
for the
<PAGE> 16
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account of the Selling Holders and all such other Persons (other than the
Company) participating in such registration shall be reduced or limited pro rata
in proportion to the respective number of shares requested to be registered to
the extent necessary to reduce the total number of shares requested to be
included in such offering to the number of shares, if any, recommended by such
managing underwriters; provided, however, that if such offering is effected for
the account of any securityholder of the Company other than the Selling Holders,
pursuant to the demand registration rights of any such securityholder, then the
number of shares to be offered for the account of the Selling Holders and all
other Persons (other than the Company) participating in such registration (but
not such securityholders who have exercised their demand registration rights)
shall be reduced or limited pro rata in proportion to the respective number of
shares requested to be registered to the extent necessary to reduce the total
number of shares requested to be included in such offering to the number of
shares, if any, recommended by such managing underwriters.
(ii) If the managing underwriter or underwriters of any
underwritten offering described in Section 2.2 notify the Selling Holders
requesting inclusion of Registrable Securities in such offering, that the kind
of securities that the Selling Holders, the Company and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to adversely affect the success of such offering, (x) the Registrable
Securities to be included in such offering shall be reduced as described in
clause (i) above or (y) if a reduction in the Registrable Securities pursuant to
clause (i) above would, in the judgment of the managing underwriter(s) or
underwriters, be insufficient to substantially eliminate such adverse effect
that inclusion of the Registrable Securities requested to be included would have
on such offering, such Registrable Securities will be excluded from such
offering.
(b) If, as a result of the proration provisions of this
Section 2.3, any Selling Holder shall not be entitled to include all Registrable
Securities in a Piggy-Back Registration that such Selling Holder has requested
to be included, such Selling Holder may elect to withdraw his request to include
Registrable Securities in such registration (a "Withdrawal Election"); provided,
however, that a Withdrawal Election shall be irrevocable and, after making a
Withdrawal Election, a Selling Holder shall no longer have any right to include
Registrable Securities in the registration as to which such Withdrawal Election
was made.
3. Transfers of Warrant Shares.
3.1 Generally. All Warrant Shares at any time and from time to
time outstanding that are Registrable Securities shall be held subject to the
conditions and restrictions set forth in this Section 3. All shares of Common
Stock now or hereafter held by a Control Stockholder shall be held subject to
the conditions and restrictions set forth in this Section 3. Each Holder of
Warrant Shares and each Control Stockholder by executing this Agreement or by
accepting a certificate
<PAGE> 17
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representing Common Stock or other indicia of ownership therefor from the
Company agrees with the Company and with each other Control Stockholder to such
conditions and restrictions.
3.2 Restrictions on Transfer. (a) So long as all rights and
obligations under Section 3.3 have not been terminated pursuant to Section
3.3(f), a Control Stockholder shall only sell, assign, give, transfer, exchange,
devise, bequeath, pledge or otherwise dispose of (collectively, "Transfer") any
Common Stock or any interest therein (i) in an Exempt Transfer or (ii) in a
transaction in which such Control Stockholder first complies with its
obligations, if any, under Section 3.3. As used in Sections 3.2 and 3.3, the
term "Transfer" shall be deemed to include all transactions or series of
transactions pursuant to which beneficial ownership of Common Stock is
transferred, directly or indirectly, to a proposed purchaser. Each certificate
representing Warrants and/or Warrant Shares shall contain conspicuous notation
on such certificate indicating that the transfer of such Warrant Shares is
subject to the terms and restrictions of this Agreement, and each Control
Stockholder consents to the placement of such legend on the certificate or
certificates representing the Warrant Shares owned by such Stockholder;
provided, however, with respect to the certificates owned by a Control
Stockholder, the legend shall be removed (x) from such certificates which are
Transferred to a Person (other than a Control Stockholder) in a transaction
which complies with Section 3.3 hereof, (y) from such certificates Transferred
to a Person (other than a Control Stockholder) in a transaction that does not
give rise to a Tag-Along Right or (z) from all such certificates upon the
termination of the Tag-Along Rights in accordance with Section 3.3 hereof.
(b) Each Holder of Registrable Securities agrees that it will
not Transfer any Warrant Shares or any interest therein except in compliance
with Sections 3.4 and 3.5 hereof.
3.3 Tag-Along Rights. (a) In the event of any proposed
Transfer of Common Stock by any of the Control Stockholder(s) (other than in a
bona fide public distribution pursuant to an effective Registration Statement
under the Securities Act) in a single transaction or a series of related
transactions involving shares of Common Stock aggregating at least 15% of the
shares of Common Stock then owned by the Control Stockholder(s) to a person
(such other person being hereinafter referred to as the "proposed purchaser"),
other than pursuant to an Exempt Transfer, the Holders of Warrants and
<PAGE> 18
-16-
Warrant Shares (the "Non-Selling Stockholders") each shall have the irrevocable
and exclusive right, but not the obligation (the "Tag-Along Right"), to require
the proposed purchaser to purchase from each of them up to such number of
Warrants and/or Warrant Shares (the "Purchased Shares") determined in accordance
with Section 3.3(c) hereof; provided that the price to be paid to Non-Selling
Stockholders who elect to exercise their Tag-Along Right (i) for each Warrant
shall be the product of the number of Warrant Shares issuable upon exercise of
such Warrant multiplied by the consideration to be paid by the proposed
purchaser for each share of Common Stock, less the exercise price of such
Warrant and (ii) for each Warrant Share shall be the consideration to be paid by
the proposed purchaser for each share of Common Stock. The Company shall give
written notice (the "Company Notice") at least 20 days prior to the date of the
proposed Transfer to the Non-Selling Stockholders stating (i) the name and
address of the proposed purchaser, (ii) the proposed amount of consideration and
terms and conditions of payment offered by such proposed purchaser (if the
proposed consideration is not cash, the notice shall describe the terms of the
proposed consideration) and the proposed closing date, (iii) the number of
shares of Common Stock proposed to be transferred and the total number of shares
of Common Stock then owned by the Control Stockholder and (iv) that either the
proposed purchaser has been informed of the Tag-Along Right and has agreed to
purchase Warrants and/or Warrant Shares in accordance with the terms hereof or
that the selling Control Stockholders will make such purchase. The Tag-Along
Right shall be exercised by any or all of the Non-Selling Stockholders by giving
written notice to the Company ("Tag-Along Notice") proposing to make such
transfer, within 10 business days of receipt of the notice specified in the
preceding sentence, indicating its election to exercise the Tag-Along Right (the
"Participating Stockholders"). The Tag-Along Notice shall state the amount of
Warrants and/or Warrant Shares that such Holder proposes to include in such
transfer to the proposed purchaser. Failure by any Non-Selling Stockholder to
give such notice within the 10 business day period shall be deemed an election
by such Non-Selling Stockholder not to sell its Warrants and/or Warrant Shares
pursuant to that Tag-Along Notice. The closing with respect to any sale to a
proposed purchaser pursuant to this Section 3.3(a) shall be held at the time and
place specified in the Company Notice but in any event within 40 days of the
date the Company Notice is given; provided that if through the exercise of
reasonable efforts the Control Stockholders are unable to cause such transaction
to close within 30 days because of the need to obtain FCC consent
<PAGE> 19
-17-
or otherwise, such period may be extended for such reasonable period of time as
may be necessary to close such transaction. Consummation of the sale of Warrants
and/or Warrant Shares by any Control Stockholder to a proposed purchaser shall
be conditioned upon consummation of the sale by each Participating Stockholder
to such proposed purchaser of the Included Shares, if any. In connection with
any such sale, the Participating Stockholders agree that they shall transfer
their shares of Common Stock pursuant to the terms of this Section 3.3 upon the
same terms, in the same manner and for the same consideration as the Control
Stockholder.
(b) In the event that the proposed purchaser does not purchase
Included Shares from the Holders on the same terms and conditions as purchased
from the Control Stockholders, then the Control Stockholders making such
Transfer shall purchase such Included Shares if the Transfer occurs.
(c) The number of Warrants and/or Warrant Shares purchased
from each Participating Stockholder shall be determined by multiplying the
aggregate number of Warrants and/or Warrant Shares owned by each Participating
Stockholder by a fraction, the numerator of which is the total number of shares
of Common Stock the Control Stockholder(s) proposes to Transfer to the proposed
purchaser and the denominator of which is the total number of shares of Common
Stock owned by such Control Stockholder(s). In the event that any Participating
Stockholder shall elect to sell less than the maximum number of Warrants and/or
Warrant Shares such Participating Stockholder is entitled to sell pursuant to
the provisions of this Section 3.3(c) then each other Participating Stockholder
shall have the right to sell additional Warrant Shares, pro rata according to
the respective number of Warrant Shares offered for sale by the Participating
Stockholders.
(d) The Control Stockholder(s) who are parties to a Transfer
to a proposed purchaser shall arrange for payment directly by the proposed
purchaser to each Participating Stockholder, upon delivery of the certificate or
certificates representing the Warrants and/or Warrant Shares duly endorsed for
transfer, together with such other documents as the proposed purchaser may
reasonably request. The reasonable costs and expenses incurred by the Control
Stockholders and Participating Stockholders in connection with a sale of
Warrants and/or Warrant Shares subject to this Section 3.3 shall be allocated
pro rata based upon the number of Warrant Shares sold by each Stockholder to a
proposed purchaser; provided that the costs
<PAGE> 20
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and expenses shall not include the fees and expenses of more than one law firm,
which firm shall be selected by the Control Stockholder(s), unless
representation of the Control Stockholder(s) and the Participating Stockholders
by the same counsel, due to actual or potential differing interests between
them, shall create a conflict of interest, in which case the costs and expenses
shall include the reasonable fees and expenses of one additional law firm
designated by Participating Stockholders proposing to sell a majority of the
Warrants and/or Warrant Shares proposed to be sold by all Participating
Stockholders.
(e) If at the end of 30 days following the date on which a
Tag-Along Notice was given, or as otherwise extended pursuant to the provisions
of Section 3.3(a), the sale of Warrants and/or Warrant Shares by the Control
Stockholders and the sale of the Purchased Shares have not been completed in
accordance with the terms of the proposed purchaser's offer, all certificates
representing the Purchased Shares shall be returned to the Participating
Stockholders, and all the restrictions on sale, transfer or assignment contained
in this Agreement with respect to Warrants and/or Warrant Shares owned by the
Control Stockholder(s) shall again be in effect.
(f) Tag-Along Rights and all rights and obligations under
Section 3.2 hereof and this Section 3.3 shall immediately terminate upon the
effectiveness of any Registration Statement filed with the Commission with
respect to shares of Common Stock in an initial public offering or subsequent
public offering(s) if, after giving effect to such offering or offerings at
least 25% of the Company's Common Stock on a fully-diluted basis is at any time
held by Persons other than Control Stockholders or Mr. Friedman.
3.4 Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Certificates. The
Company and the Transfer Agent shall not be obligated to register the transfer
or exchange of any Definitive Certificate that is a Restricted Security unless
such Warrants or Warrant Shares are delivered to the Transfer Agent duly
endorsed or accompanied by written instruments of transfer and are accompanied
by the following additional information and documents, as applicable:
(A) if such Restricted Security is being delivered to the
Transfer Agent by a Holder for
<PAGE> 21
-19-
registration in the name of such Holder, without transfer,
a certification from such Holder to that effect (in
substantially the form of Exhibit A hereto); or
(B) if such Restricted Security is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A
or pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S or pursuant to an
effective registration statement under the Securities Act,
a certification to that effect (in substantially the form
of Exhibit A hereto) and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of
counsel reasonably acceptable to the Company and the
Transfer Agent to the effect that such transfer does not
require registration under the Securities Act; or
(C) if such Restricted Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (in substantially the form of Exhibit A
hereto) and an opinion of counsel reasonably acceptable to
the Company and to the Transfer Agent to the effect that
such transfer does not require registration under the
Securities Act.
(b) Restrictions on Transfer of a Definitive Certificate for a
Beneficial Interest in a Global Certificate. A Definitive Certificate may not be
exchanged for a beneficial interest in a Global Certificate except upon
satisfaction of the requirements set forth below. Upon receipt by the Transfer
Agent of a Definitive Certificate, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Transfer Agent, together
with:
(A) if such Definitive Certificate represents Restricted
Securities, certification, substantially in the form of
Exhibit A hereto, that such Definitive Certificate is
being transferred to a Qualified Institutional Buyer (as
defined in Rule 144A) in accordance with Rule 144A; and
(B) whether or not such Definitive Certificate represents
Restricted Securities, written
<PAGE> 22
-20-
instructions directing the Transfer Agent to make, or to
direct the Depositary to make, an endorsement on the
Global Certificate to reflect an increase in the aggregate
number of shares of Class A Common Stock represented by
the Global Certificate,
then the Transfer Agent shall cancel such Definitive Certificate and cause, or
direct the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Transfer Agent, the number of
shares of Class A Common Stock represented by the Global Certificate to be
increased accordingly. If no Global Certificate is then outstanding, the Company
shall issue and the Transfer Agent shall authenticate a new Global Certificate
in the appropriate amount.
(c) Transfer and Exchange of Global Certificate. The transfer
and exchange of a Global Certificate or beneficial interests therein shall be
effected through the Depositary, in accordance with this Agreement (including
the restrictions on transfer set forth herein) and the procedures of the
Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Certificate
for a Definitive Certificate.
(i) Any person having a beneficial interest in a Global
Certificate may upon request exchange such beneficial
interest for a Definitive Certificate. Upon receipt by
the Transfer Agent of written instructions or such other
form of instructions as is customary for the Depositary
from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global
Certificate and upon receipt by the Transfer Agent of a
written order or such other form of instructions as is
customary for the Depositary or the person designated by the
Depositary as having such a beneficial interest containing
registration instructions and, in the case of a beneficial
interest in shares that are Restricted Securities only, the
following additional information and documents:
(A) If such beneficial interest is being transferred to the
person designated by the Depositary as being the
beneficial owner, a certification from
<PAGE> 23
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such person to that effect (in substantially the form of
Exhibit A hereto); or
(B) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A
or pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S or pursuant to an
effective registration statement under the Securities Act,
a certification to that effect from the transferee or
transferor (in substantially the form of Exhibit A hereto)
and, with respect to transfers pursuant to Rule 144 or
Regulation S, an opinion of counsel reasonably acceptable
to the Company and the Transfer Agent to the effect that
such transfer does not require registration under the
Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in
substantially the form of Exhibit A hereto) and an opinion
of counsel from the transferee or transferor reasonably
acceptable to the Company and to the Transfer Agent to the
effect that such transfer does not require registration
under the Securities Act,
then the Transfer Agent will cause, in accordance with the
standing instructions and procedures existing between the
Depositary and the Transfer Agent, the aggregate amount of the
Global Certificate to be reduced and, following such
reduction, the Company will execute and, upon receipt of an
authentication order in the form of an officers' certificate
signed by the Chief Executive Officer, the President, any Vice
President and the Chief Financial Officer, the Treasurer, the
Secretary or any Assistant Secretary of the Company (an
"Officers' Certificate"), the Transfer Agent will authenticate
and deliver to the transferee a Definitive Certificate.
(ii) Definitive Certificates issued in exchange for a
beneficial interest in a Global Certificate pursuant to
this Section 3.4(d) shall be registered in such names and
in such authorized denominations as the
<PAGE> 24
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Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the
Transfer Agent in writing. The Transfer Agent shall deliver
such Definitive Certificates to the persons in whose names
such Definitive Certificates are registered.
(e) Restrictions on Transfer and Exchange of Global
Certificates. Notwithstanding any other provisions of this Agreement (other than
the provisions set forth in subsection (f) of this Section 3.4), a Global
Certificate may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Issuance of Definitive Certificates in Absence of
Depositary. If at any time:
(i) the Depositary for the Global Certificates notifies the
Company that the Depositary is unwilling or unable to continue
as Depositary for the Global Certificates and a successor
Depositary for the Global Certificates is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Transfer
Agent in writing that it elects to cause the issuance of
Definitive Certificates under this Agreement and such action
would not cause the Class A Common Stock to be ineligible for
trading in the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market,
then the Company will execute, and the Transfer Agent, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Definitive
Certificates, will authenticate and deliver Definitive Certificates, in an
aggregate number equal to the aggregate number of shares represented by the
Global Certificate, in exchange for such Global Certificate.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each
Definitive Certificate (and all shares of Class A Common Stock
issued in exchange therefor or
<PAGE> 25
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substitution thereof) shall bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) or (7) UNDER THE ACT (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF
ITS SUBSIDIARIES, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRANSFER AGENT A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRANSFER AGENT FOR THIS SECURITY), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR SUCH TRANSFER IS MADE IN
ACCORDANCE WITH CLAUSES (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRANSFER AGENT AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL
<PAGE> 26
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OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION
S UNDER THE ACT.
(ii) Upon any sale or transfer of any share of Class A Common Stock
that is a Restricted Security (including any Restricted
Security represented by a Global Certificate) pursuant to Rule
144 under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Restricted Security represented by a
Definitive Certificate, the Transfer Agent shall permit
the holder thereof to exchange such Restricted Security
for a Definitive Certificate that does not bear the legend
set forth above and rescind any related restriction on the
transfer of such Restricted Security; and
(B) any Restricted Security represented by a Global
Certificate shall not be subject to the provisions set
forth in (i) above (such sales or transfers being subject
only to the provisions of Section 3.4(c) through (f);
provided, however, that with respect to any request for an
exchange of a Restricted Security that is represented by a
Global Certificate for a Definitive Certificate that does
not bear the legend set forth above, which request is made
in reliance upon Rule 144, the holder thereof shall
certify in writing to the Transfer Agent that such request
is being made pursuant to Rule 144 (such certification to
be substantially in the form of Exhibit A hereto) and
shall provide an opinion of counsel reasonably acceptable
to the Company to the effect that such transfer does not
require registration under the Securities Act.
(iii) Any Global Certificate shall bear a legend (which would be in
addition to any other legends required in
<PAGE> 27
-25-
the case of a Restricted Security) in substantially the
following form:
THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR
DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE COMMON STOCK REGISTRATION
RIGHTS AND STOCKHOLDERS AGREEMENT DATED AS OF MAY 1, 1996 AMONG THE
COMPANY, AND THE STOCKHOLDERS PARTY THERETO, (THE "SHAREHOLDERS
AGREEMENT") AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE SHAREHOLDERS AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
(h) Cancellation and/or Adjustment of a Global Certificate. At
such time as all beneficial interests in a Global Certificate have either been
exchanged for Definitive Certificates, redeemed, repurchased or cancelled, such
Global Certificate shall be returned to or retained and cancelled by the
Transfer Agent. At any time prior to such cancellation, if any beneficial
interest in a Global Certificate is exchanged for Definitive Certificates,
redeemed, repurchased or cancelled, the number of shares of Common Stock
represented by such Global Certificate shall be reduced and an endorsement shall
be made
<PAGE> 28
-26-
on such Global Certificate, by the Transfer Agent to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Definitive Certificates.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Transfer Agent's request, and
the Transfer Agent shall countersign and register Definitive
Certificates and Global Certificates.
(ii) All Definitive Certificates and Global Certificates issued
upon any registration, transfer or exchange of Definitive
Certificates or Global Certificates shall be validly issued,
fully paid and nonassessable.
4. Registration Procedures. In connection with the obligations
of the Company with respect to any Registration Statement pursuant to Sections
2.1 and 2.2 hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the Securities Act, which form (i) shall be
selected by the Company and (ii) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period, cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the Securities Act;
(c) furnish to each Holder of Registrable Securities and to
each underwriter of an underwritten offering of Registrable Securities,
if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto
and such other documents as such Holder or underwriter may
<PAGE> 29
-27-
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder thereof covered by a
Registration Statement shall reasonably request in writing by the time
the applicable Registration Statement is declared effective by the SEC,
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified, (ii) take any action that would
subject it to general service of process in any jurisdiction in which
it is not then so subject or (iii) subject itself to taxation in excess
of a nominal dollar amount in any such jurisdiction;
(e) notify each Holder of Registrable Securities promptly and,
if requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation
of any proceeding for such purpose and (v) of the happening of any
event during the period a Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material
<PAGE> 30
-28-
respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements
therein not misleading;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment;
(g) furnish to each Holder of Registrable Securities and to
the Purchasers, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (with
documents incorporated therein by reference or exhibits thereto);
(h) cooperate with the Selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and registered in such names as the
Selling Holders may reasonably request at least two business days prior
to the closing of any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Section
4(e)(v) hereof, use reasonable efforts to prepare a supplement or
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company shall not be required to amend or supplement
a Registration Statement, any related Prospectus or any document
incorporated therein by reference in the event that, and for so long
as, an event occurs and is continuing as a result of which the
Registration Statement, any related Prospectus or any document
incorporated therein by reference as then amended or supplemented
would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Company agrees to notify
each Holder to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and each Holder hereby agrees to
<PAGE> 31
-29-
suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission.
At such time as such public disclosure is otherwise made or the Company
determines in good faith that such disclosure is not necessary, the
Company agrees promptly to notify each Holder of such determination, to
amend or supplement the Prospectus if necessary to correct any untrue
statement or omission therein and to furnish each Holder such numbers
of copies of the Prospectus as so amended or supplemented as each
Holder may reasonably request;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of
such document to the Holders and make available for discussion of such
document the representatives of the Company as shall be reasonably
requested by the Holders of Registrable Securities;
(k) obtain a CUSIP number for the Common Stock;
(l) (i) make reasonably available for inspection by a
representative of, and counsel for, any managing underwriter
participating in any disposition pursuant to a Registration Statement,
all relevant financial and other records, pertinent corporate documents
and properties of the Company and (ii) cause the Company's officers,
directors and employees to supply all relevant information reasonably
requested by such representative, counsel or any such managing
underwriter in connection with any such Registration Statement;
(m) take all action necessary so that the Warrant Shares will
be listed on the principal securities exchanges and markets within the
United States of America (including the NASDAQ National Market System),
if any, on which other shares of Common Stock are then listed; and
(n) if requested by the Holders in connection with any
Registration Statement, shall use its best efforts to cause (w) counsel
for the Company to deliver an opinion relating to the Registration
Statement and the Common Stock, in customary form, (x) its officers to
execute and
<PAGE> 32
-30-
deliver all customary documents and certificates requested by a
representative of the Holders or any managing underwriter, as
applicable and (y) its independent public accountants to provide a
comfort letter in customary form.
The Company may, as a condition to such Holder's participation
in any Registration Statement, require each Holder of Registrable Securities to
(i) furnish to the Company such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing and (ii) agree in
writing to be bound by this Agreement.
5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder and each person, if any, who controls
such Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against all losses, claims, damages and
liabilities (including, without limitation, any reasonable legal fees or other
expenses actually incurred by any Holder or any such controlling or affiliated
person in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) pursuant to
which Registrable Securities were registered under the Securities Act, or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or caused by any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Holder furnished to the Company in
writing by such Holder expressly for use in any such Registration Statement or
Prospectus; provided that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Holder (or to the
benefit of any person controlling such Holder) from whom the person asserting
any such losses, claims, damages or liabilities purchased Registrable Securities
if such untrue statement or omission or alleged untrue statement or
<PAGE> 33
-31-
omission made in such preliminary prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Holder at or prior to the sale of such Registrable Securities, as the case may
be, to such person; and provided, further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) such Holder failed to send or deliver a copy of the Prospectus with or prior
to the delivery of written confirmation of the sale of Registrable Securities
and (ii) the Prospectus would have completely corrected such untrue statement or
omission.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Holder, but only with reference
to information relating to such Holder furnished to the Company in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto), any Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus. The liability of any Holder under this paragraph (b)
shall in no event exceed the proceeds received by such Holder from sales of
Registrable Securities giving rise to such obligations.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against which
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel relating to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the
<PAGE> 34
-32-
indemnifying party and the indemnified party shall have mutually agreed in
writing to the retention of such counsel or (ii) the indemnifying party fails
promptly to assume the defense of such proceeding or fails to employ counsel
reasonably satisfactory to such indemnified party or parties or (iii) the named
parties to any such proceeding (including any impleaded parties) include both
such indemnified party or parties and the indemnifying parties or an affiliate
of the indemnifying parties or such indemnified parties, and there may be one or
more defenses available to such indemnified party or parties that are different
from or additional to those available to the indemnifying parties, in which
case, if such indemnified party or parties notifies the indemnifying parties in
writing that it elects to employ separate counsel of its choice at the expense
of the indemnifying parties, the indemnifying parties shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the
indemnifying parties, it being understood, however, that unless there exists a
conflict among indemnified parties, the indemnifying parties shall not, in
connection with any one such proceeding or separate but substantially similar or
related proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such indemnified party or parties. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but, if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is a party, and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 5 is unavailable to an indemnified party in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or
<PAGE> 35
-33-
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Holders on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Holders on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company and each Holder agrees that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred (and not otherwise reimbursed) by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5, in no event shall a
Selling Holder be required to contribute any amount in excess of the amount by
which proceeds received by such Selling Holder from sales of Registrable
Securities exceeds the amount of damages that such Selling Holder has otherwise
been required to pay by reason of such untrue or allegedly untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
6. Miscellaneous.
(a) No Inconsistent Agreements. (i) Subject to clause (ii)
below, the Company has not entered into nor will the Company on or after the
date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
<PAGE> 36
-34-
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities, if any, under any such agreements.
(ii) The rights of Holders to require the Company to effect a
Demand Registration pursuant to Section 2.1 of this Agreement shall be subject
to the prior rights and obligations of the parties to the Existing Common Stock
Agreement, but only to the extent that such prior rights and/or obligations
actually conflict with the Demand Registration rights provided for herein.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate number of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
consent; provided, however, a waiver or consent to departure from the provisions
hereof that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by the Holders of a majority of the
Registrable Securities proposed to be sold.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Purchaser, the
address set forth in the Purchase Agreement, with a copy to: Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, Attention: Roger Meltzer,
Esq.; and (ii) if to the Company, initially at the Company's address set forth
in the Purchase Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 6(c), with a copy to:
Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York 10022,
Attention: Ira J. Goldstein, Esq.
<PAGE> 37
-35-
All such notices and communications shall be deemed to have
been duly given: (i) at the time delivered by hand, if personally delivered,
five business days after being deposited in the mail, postage prepaid, if
mailed; (ii) when answered back, if telexed; (iii) when receipt is acknowledged,
if telecopied; and (iv) on the next business day, if timely delivered to an air
courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of this Agreement or the
Purchase Agreement. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(e) Rules 144 and 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Securities, make
publicly available other information of a like nature so long as necessary to
permit sales pursuant to Rule 144 or Rule 144A under the Securities Act. The
Company further covenants that so long as any Registrable Securities remain
outstanding to make available to any Holder of Registrable Securities in
connection with any sale thereof, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Registrable
Securities pursuant to (a) such Rule 144A, or (b) any similar rule or regulation
hereafter adopted by the SEC.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE> 38
-36-
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement, together with the
Purchase Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
<PAGE> 39
-37-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMMODORE MEDIA, INC.
By: /S/ BRUCE A. FRIEDMAN
--------------------------------
Name: Bruce A. Friedman
Title: President
THE CONTROL STOCKHOLDERS
The undersigned Control Stockholders are
executing this Agreement solely for
purposes of agreeing to be bound by the
provisions of Sections 3.2 and 3.3
hereof to the extent such provisions
obligate such Control Stockholders to
take certain actions or refrain from
taking certain actions.
By: EXECUTORS OF THE ESTATE OF
CARTER BURDEN
/s/ Susan L. Burden
---------------------------------
Susan L. Burden, Executor
/s/ S. Carter Burden III
---------------------------------
S. Carter Burden III, Executor
/s/ Flobelle F. Burden
---------------------------------
Flobelle F. Burden, Executor
<PAGE> 40
-38-
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By: /s/__________________________
Name:
Title: Director
<PAGE> 41
EXHIBIT A
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF RESTRICTED SECURITIES
Re: Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of
Commodore Media, Inc.
This Certificate relates to shares of Class A Common Stock held in
*___ book-entry or* _______ definitive form by ______ (the "Transferor").
The Transferor:*
/ / has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Global Certificate held by the
Depositary shares of Class A Common Stock in definitive, registered form equal
to its beneficial interest in the shares of Class A Common Stock represented by
such Global Certificate (or the portion thereof indicated above); or
/ / has requested the Transfer Agent by written order to exchange or
register the transfer of shares of Class A Common Stock.
In connection with such request, the Transferor does hereby certify
that Transferor is familiar with the Common Stock Registration Rights and
Stockholders Agreement (the "Agreement") relating to the shares of Class A
Common Stock and the restrictions on transfers thereof as provided in Sections
3.4 and 3.5 of such Agreement, and that the transfer of shares of Class A Common
Stock requested hereby does not require registration under the Securities Act
(as defined below) because:
/ / Such shares of Class A Common Stock are being acquired for the
Transferor's own account, without transfer (in satisfaction of Section 3.4(a)(A)
or Section 3.4(d)(i)(A) of the Agreement).
/ / Such shares of Class A Common Stock are being transferred to a
qualified institutional buyer (as defined in Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act")), in reliance on Rule 144A or in
accordance with Regulation S under the Securities Act. If such transfer is
<PAGE> 42
-2-
in accordance with Regulation S, an opinion of counsel to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate.
/ / Such shares of Class A Common Stock are being transferred in
accordance with Rule 144 under the Securities Act. An opinion of counsel to the
effect that such transfer does not require registration under the Securities Act
accompanies this Certificate.
/ / Such shares of Class A Common Stock are being transferred pursuant to
an effective registration statement under the Securities Act.
/ / Such shares of Class A Common Stock are being transferred in reliance
on and in compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A or Rule 144 or Regulation S under the
Securities Act. An opinion of counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this Certificate.
------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------
Date:
--------------
- --------------------------------
* Check applicable box.
<PAGE> 1
EXHIBIT 10.70
REGISTRATION RIGHTS AGREEMENT
Dated as of May 1, 1996
by and among
COMMODORE MEDIA, INC.,
THE GUARANTORS named herein
and
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions ........................................................ 1
2. Exchange Offer ..................................................... 5
3. Shelf Registration ................................................. 8
4. Additional Dividends ............................................... 9
5. Registration Procedures ............................................ 11
6. Registration Expenses .............................................. 22
7. Indemnification .................................................... 23
8. Rules 144 and 144A ................................................. 27
9. Underwritten Registrations ......................................... 27
10. Requirements of Exchange ........................................... 28
11. Miscellaneous ...................................................... 28
(a) Remedies ...................................................... 28
(b) No Inconsistent Agreements .................................... 28
(c) Adjustments Affecting Registrable
Shares ...................................................... 29
(d) Amendments and Waivers ........................................ 29
(e) Notices ....................................................... 29
(f) Successors and Assigns ........................................ 30
(g) Counterparts .................................................. 30
(h) Headings ...................................................... 30
(i) Governing Law ................................................. 30
(j) Severability .................................................. 30
(k) Entire Agreement .............................................. 31
(l) Shares Held by the Company or Its
Affiliates .................................................. 31
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated
as of May 1, 1996, by and among Commodore Media, Inc., a Delaware corporation
(the "Company"), Commodore Holdings, Inc., a Delaware corporation, Commodore
Media of Delaware, Inc., a Delaware corporation, Commodore Media of
Pennsylvania, Inc., a Delaware corporation, Commodore Media of Florida, Inc., a
Delaware corporation, Commodore Media of Kentucky, Inc., a Delaware corporation,
Commodore Media of Norwalk, Inc., a Delaware corporation, Commodore Media of
Westchester, Inc., a Delaware corporation, and Danbury Broadcasting, Inc., a
Connecticut corporation (collectively, the "Guarantors"), and CIBC WG Argosy
Merchant Fund 2, L.L.C., a Delaware limited liability company (the "Purchaser").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of May 1, 1996, among the Company, the
Guarantors and the Purchaser (the "Purchase Agreement") relating to the sale by
the Company to the Purchaser of up to $12,500,000 aggregate liquidation value of
the Company's Senior Exchangeable Redeemable Preferred Stock, Series A, par
value $.01 per share (the "Preferred Shares"), along with warrants ("Warrants")
for the purchase of shares of the Class A Common Stock, par value $.01 per
share, of the Company ("Class A Common Stock") constituting up to 5.99% of the
Company's fully diluted common stock. In order to induce the Purchaser to enter
into the Purchase Agreement, the Company and the Guarantors have agreed to
provide the registration rights set forth in this Agreement for the benefit of
the Purchaser. The execution and delivery of this Agreement is a condition to
the Purchaser's obligation to purchase the Preferred Shares and the Warrants
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Dividends: See Section 4.
Advice: See Section 5.
Applicable Period: See Section 2.
Certificate of Designation: The Certificate of Designation
duly adopted by the Board of Directors of the Company setting forth the rights,
preferences and priorities of
<PAGE> 4
-2-
the Preferred Shares and filed with, and accepted for filing, so as to be
effective, by the Secretary of State of the State of Delaware prior to the
Closing hereunder and which is substantially in the form of Exhibit 1 to the
Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Trigger Date.
Effectiveness Period: See Section 3.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Indenture: See Section 10.
Exchange Notes: See Section 10.
Exchange Offer: See Section 2.
Exchange Registration Statement: See Section 2.
Exchange Shares: See Section 2.
Filing Date: The 45th day after the Trigger Date.
Guarantors: See the introductory paragraphs to this Agreement.
Holder: Any holder of a Registrable Share or Registrable
Shares.
Indemnified Person: See Section 7.
Indemnifying Person: See Section 7.
Indenture: The Indenture dated as of April 21, 1995, among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as
Trustee, as amended, restated or supplemented from time to time.
Initial Shelf Registration: See Section 3.
<PAGE> 5
-3-
Inspectors: See Section 5.
NASD: See Section 5.
Participant: See Section 7.
Participating Broker-Dealer: See Section 2.
Person: An individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
other legal entity.
Preferred Shares: See the introductory paragraphs to this
Agreement.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
Agreement.
Purchaser: See the introductory paragraphs to this Agreement.
Records: See Section 5.
Registrable Shares: The Preferred Shares upon original
issuance of the Preferred Shares and at all times subsequent thereto and until
(i) a Registration Statement covering such Preferred Shares has been declared
effective by the SEC and such Preferred Shares have been disposed of in
accordance with such effective Registration Statement, (ii) such Preferred
Shares are sold in compliance with Rule 144, (iii) in the case of any Preferred
Share, such Preferred Share has been exchanged for an Exchange Share or Exchange
Shares pursuant to an Exchange Offer or (iv) such Preferred Shares cease to be
outstanding.
<PAGE> 6
-4-
Registration Default: See Section 4.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Registration Statement,
which covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2.
Shelf Registration: See Section 3.
Subsequent Shelf Registration: See Section 3.
Trigger Date: April 30, 1998.
<PAGE> 7
-5-
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter(s)
for reoffering to the public.
2. Exchange Offer
(a) The Company agrees to use its best efforts to file with
the SEC as soon as practicable after the Trigger Date, but in no event later
than the Filing Date, an offer to exchange (the "Exchange Offer") any and all of
the Registrable Shares for a like aggregate liquidation value of preferred
equity securities of the Company which are substantially identical to the
Preferred Shares (the "Exchange Shares") (and which are entitled to the benefits
of the Certificate of Designation), except that the Exchange Shares shall have
been registered pursuant to an effective Registration Statement under the
Securities Act. The Exchange Offer will be registered under the Securities Act
on the appropriate form (the "Exchange Registration Statement") and will comply
with all applicable tender offer rules and regulations under the Exchange Act.
The Company agrees to use its best efforts to (x) cause the Exchange
Registration Statement to become effective under the Securities Act on or before
the Effectiveness Date; (y) keep the Exchange Offer open for at least 30 days
(or longer if required by applicable law) after the date that notice of the
Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer on or
prior to the 60th day following the date on which the Exchange Registration
Statement is declared effective. Each Holder who participates in the Exchange
Offer will be required to represent that any Exchange Shares received by it will
be acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Shares, and that such Holder is not an affiliate of the Company within the
meaning of Rule 405 under the Securities Act or if it is an affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable. Upon consummation of the Exchange
Offer in accordance with this Section 2, the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to Exchange Shares held
by Participating Broker-Dealers (as defined below), and the Company shall have
no further obligation to register Registrable Shares pursuant to Section 3 of
this Agreement.
(b) The Company shall include within the Prospectus contained
in the Exchange Registration Statement a section
<PAGE> 8
-6-
entitled "Plan of Distribution," reasonably acceptable to the Purchaser, which
shall contain a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Shares received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies have
been publicly disseminated by the Staff of the SEC or such positions or
policies, in the reasonable judgment of the Purchaser, represent the prevailing
views of the Staff of the SEC. Such "Plan of Distribution" section shall also
allow the use of the prospectus by all persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Shares.
The Company shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Shares, provided that such period shall not
exceed 180 days (or such longer period if extended pursuant to the last
paragraph of Section 5) (the "Applicable Period").
Dividends on the Exchange Shares will accrue from the last
dividend payment date on which dividends were paid on the Preferred Shares
surrendered in exchange therefor or, if no dividends have been paid on the
Preferred Shares, from the date of original issue.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
<PAGE> 9
-7-
(iii) permit Holders to withdraw tendered Preferred Shares at
any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer
the Company shall:
(i) accept for exchange all Preferred Shares tendered and
not validly withdrawn pursuant to the Exchange Offer; and
(ii) issue and deliver promptly to each Holder of Preferred
Shares, Exchange Shares equal in principal amount to the Preferred
Shares of such Holder so accepted for exchange.
The Exchange Shares shall be issued pursuant to the
Certificate of Designation, will vote and consent together on all matters with
the Preferred Shares as one class to the extent the Preferred Shares have voting
rights pursuant to the Certificate of Designation or as provided by applicable
law, and will not have the right to vote or consent as a class separate from the
Preferred Shares on any matter.
(c) If (1) prior to the consummation of the Exchange Offer,
the Company or Holders of at least a majority in aggregate liquidation value of
the Registrable Shares reasonably determine in good faith that (i) the Exchange
Shares would not, upon receipt, be tradeable by such Holders which are not
affiliates (within the meaning of the Securities Act) of the Company without
restriction under the Securities Act and without restrictions under applicable
state securities laws, (ii) the interests of the Holders under this Agreement
would be adversely affected by the consummation of the Exchange Offer or (iii)
after conferring with counsel, the SEC is unlikely to permit the consummation of
the Exchange Offer prior to the Effectiveness Date or (2) the Exchange Offer is
commenced and not consummated within 180 days of the Trigger Date, then the
Company shall promptly deliver to the Holders written notice thereof (the "Shelf
Notice") and shall file an Initial Shelf Registration pursuant to Section 3.
Following the delivery of a Shelf Notice to the Holders of Registrable Shares,
the Company shall not have any further obligation to conduct the Exchange Offer
under this Section 2.
<PAGE> 10
-8-
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section
2(c), then:
(a) Initial Shelf Registration. The Company shall prepare and
file with the SEC a Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415 covering all of the
Registrable Shares (the "Initial Shelf Registration"). If the Company
shall have not yet filed an Exchange Registration Statement, the
Company shall use its best efforts to file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. In any other
instance, the Company shall use its best efforts to file with the SEC
the Initial Shelf Registration within 30 days of the delivery of the
Shelf Notice. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable
Shares for resale by such Holders in the manner or manners designated
by them (including, without limitation, one or more underwritten
offerings). The Company shall not permit any securities other than the
Registrable Shares to be included in the Initial Shelf Registration or
any Subsequent Shelf Registration (as defined below). The Company shall
use its best efforts to cause the Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the
Effectiveness Date and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is
36 months from the date on which such Initial Shelf Registration is
declared effective (subject to extension pursuant to the last paragraph
of Section 5 hereof) (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Shares covered by the Initial
Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration covering all of the Registrable Shares has been
declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period
(other than because of the sale of all of the securities regis-
<PAGE> 11
-9-
tered thereunder), the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 45 days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably
expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable Shares
(a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration
is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration or any Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any Subsequent
Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used
for such Shelf Registration, if required by the Securities Act, or if
requested by the Holders of a majority in aggregate liquidation value
of the Registrable Shares covered by such Registration Statement or by
any underwriter(s) of such Registrable Shares.
4. Additional Dividends
(a) The Company and the Purchaser agree that the Holders of
Registrable Shares will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay additional dividends on the Preferred Shares
("Additional Dividends") under the circumstances set forth below:
(i) if the Exchange Offer Registration Statement or the
Initial Shelf Registration has not been filed on or prior to the Filing
Date;
<PAGE> 12
-10-
(ii) if the Exchange Offer Registration Statement or the
Initial Shelf Registration has not been declared effective on or prior
to April 30, 1999; and
(iii) if either (A) the Company has not exchanged the Exchange
Shares for all Preferred Shares validly tendered in accordance with the
terms of the Exchange Offer on or prior to 60 days after the date on
which the Exchange Offer Registration Statement was declared effective
or (B) the Exchange Offer Registration Statement ceases to be effective
at any time prior to the time that the Exchange Offer is consummated or
(C) if applicable, the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective
at any time during the Effectiveness Period.
(each such event referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to holders of the Preferred
Shares will be the immediate accrual of Additional Dividends as follows: the per
annum dividend rate on the Preferred Shares will increase by 100 basis points;
and the per annum dividend rate will increase by an additional 25 basis points
for each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional dividend rate of 150 basis points per annum,
provided, however, that (1) upon the filing of the Exchange Registration
Statement or the Initial Shelf Registration (in the case of (i) above), (2) upon
the effectiveness of the Exchange Registration Statement or a Shelf Registration
(in the case of (ii) above) or (3) upon the exchange of Exchange Shares for all
Preferred Shares tendered (in the case of (iii)(A) above), or upon the
effectiveness of the Exchange Registration Statement which had ceased to remain
effective (in the case of (iii)(B) above), or upon the effectiveness of the
Shelf Registration which had ceased to remain effective (in the case of (iii)(C)
above), any Additional Dividends on the Preferred Shares as a result of such
clause (i), (ii) or (iii) (or the relevant subclause thereof), as the case may
be, shall cease to accrue and the dividend rate on the Preferred Shares will
revert to the dividend rate originally borne by the Preferred Shares.
(b) The Company shall notify the Holders within one business
day after each and every date on which an event occurs in respect of which any
Additional Dividend is required to be paid (an "Event Date"). Any amounts of
Additional Dividends due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash or in additional Preferred Shares as
<PAGE> 13
-11-
contemplated by the Certificate of Designation quarterly on each February 1, May
1, August 1 and November 1 to the Holders of record on the fifteenth day
immediately preceding such dates), commencing with the first such date occurring
after any such Additional Dividend commences to accrue. The amount of an
Additional Dividend will be determined by multiplying the applicable Additional
Dividend rate by the principal amount of the Registrable Shares, multiplied by a
fraction, the numerator of which is the number of days such Additional Dividend
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
5. Registration Procedures
In connection with the registration of any Registrable Shares
pursuant to Section 2 or 3 hereof, the Company shall effect such registrations
to permit the sale of such Registrable Shares in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company
shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and to use their respective best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein, provided that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the
Holders of the Registrable Shares and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriter(s), if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 5
business days prior to such filing). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity
to review prior to the filing
<PAGE> 14
-12-
of such document, if the Holders of a majority in aggregate liquidation
value of the Registrable Shares covered by such Registration Statement,
or such Participating Broker-Dealer, as the case may be, their counsel,
or the managing underwriter(s), if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to them with respect to the
disposition of all securities covered by such Registration Statement as
so amended or in such Prospectus as so supplemented and with respect to
the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Company shall be
deemed not to have used its best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily
takes any action that would result in selling Holders of the
Registrable Shares covered thereby or Participating Broker-Dealers
seeking to sell Exchange Shares not being able to sell such Registrable
Shares or such Exchange Shares during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of clause
5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, notify the selling
Holders of Registrable Shares, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
<PAGE> 15
-13-
underwriter(s), if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment thereto has been
filed, and, with respect to a Registration Statement or any
post-effective amendment thereto, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment thereto including
financial statements and schedules, documents incorporated or deemed to
be incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the
Registrable Shares the representations and warranties of the Company
contained in any agreement (including any underwriting agreement)
contemplated by Section 5(n) below cease to be true and correct, (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Shares or the Exchange
Shares to be sold by any Participating Broker-Dealer for offer or sale
in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose, (v) of the happening of any event or any information
becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in, or amendments or
supplements to, such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
<PAGE> 16
-14-
under which they were made, not misleading, and (vi) of the Company's
reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, use its best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Shares or the Exchange Shares
to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter(s), if any, or the Holders of
a majority in aggregate liquidation value of the Registrable Shares
being sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment
thereto such information as the managing underwriter(s), if any, or
such Holders or counsel reasonably request to be included therein, (ii)
make all required filings of such Prospectus supplement or such
post-effective amendment thereto as soon as practicable after the
Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment thereto and
(iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, furnish to each selling
Holder of Registrable Shares and to each such Participating
Broker-Dealer
<PAGE> 17
-15-
who so requests and to counsel and the managing underwriter(s), if any,
without charge, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all
documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, deliver to each selling
Holder of Registrable Shares, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the managing underwriter or
underwriters, if any, without charge, as many copies of the Prospectus
or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders of Registrable Shares or each such
Participating Broker-Dealer, as the case may be, and the managing
underwriter or underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Shares covered
by or the sale by Participating Broker-Dealers of the Exchange Shares
pursuant to such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Shares or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Shares during the Applicable Period, to use its best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Shares or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Shares for offer and sale under the state securities
<PAGE> 18
-16-
or "blue sky" laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters, if any, reasonably request in writing,
provided that where Exchange Shares held by Participating
Broker-Dealers or Registrable Shares are offered other than through an
underwritten offering, the Company agrees to cause its counsel to
perform "blue sky" investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Shares held by Participating Broker-Dealers or the
Registrable Shares covered by the applicable Registration Statement;
provided that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in
any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Shares and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Shares to be sold, which certificates shall not bear any restrictive
legends and, if requested by the selling Holders, shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Shares to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders
may reasonably request.
(j) Use its best efforts to cause the Registrable Shares
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Shares, except as
<PAGE> 19
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may be required solely as a consequence of the nature of such selling
Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, upon the occurrence of
any event contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as
promptly as reasonably practicable prepare and (subject to Section 5(a)
above) file with the SEC, at the expense of the Company, a supplement
or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Shares being sold thereunder or to the purchasers of
the Exchange Shares to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Shares, (i) provide the Holders
with printed certificates for the Registrable Shares in a form eligible
for deposit with The Depository Trust Company if the Holders so request
and (ii) provide a CUSIP number for the Registrable Shares.
(m) In connection with an underwritten offering of Registrable
Shares pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of preferred equity
securities similar to the Preferred Shares and take all such other
actions as are reasonably requested by the managing underwriter(s), if
any, in order to expedite or facilitate the registration or the
disposition of such Registrable Shares and, in
<PAGE> 20
-18-
such connection, (i) make such representations and warranties to the
managing underwriter or underwriters on behalf of any underwriters,
with respect to the business of the Company and its subsidiaries and
the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in
underwritten offerings of preferred equity securities, and confirm the
same if and when requested; (ii) obtain opinions of counsel to the
Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to
the managing underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
preferred equity securities and such other matters as may be reasonably
requested by underwriters; (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to the managing underwriter or
underwriters on behalf of any underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of
preferred equity securities and such other matters as reasonably
requested by the managing underwriter or underwriters; and (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those
set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate liquidation value of
Registrable Shares covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
<PAGE> 21
-19-
(n) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Shares being sold,
or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters participating in any such
disposition of Registrable Shares, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information in each case reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public. Each
selling Holder of such Registrable Shares and each such Participating
Broker-Dealer or underwriter will be required to agree that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its subsidiaries
unless and until such is made generally available to the public. Each
selling Holder of such Registrable Shares and each such Participating
Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of
<PAGE> 22
-20-
competent jurisdiction, give notice to the Company and allow the
Company to undertake appropriate action to prevent disclosure of the
Records deemed confidential at its expense.
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Shares are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(p) Upon consummation of an Exchange Offer, obtain an opinion
of counsel to the Company in a form customary for underwritten
offerings of preferred equity securities similar to the Preferred
Shares, addressed to the Holders of Registrable Shares participating in
the Exchange Offer and which includes an opinion that (i) the Company
has duly authorized, executed and delivered the Exchange Shares and
(ii) each of the Exchange Shares constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms (with customary exceptions).
(q) If an Exchange Offer is to be consummated, upon delivery
of the Registrable Shares by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the Exchange Shares,
the Company shall mark, or cause to be marked, on such Registrable
Shares that such Registrable Shares are being cancelled in exchange for
the Exchange Shares; in no event shall such Registrable Shares be
marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Shares covered
by any Registration Statement and the managing underwriter(s), if any,
participating in the
<PAGE> 23
-21-
disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(s) Use its best efforts to take all other steps necessary to
effect the registration of the Registrable Shares covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Shares or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Shares or Exchange Shares
to be sold by such Participating Broker-Dealer, as the case may be, as the
Company may, from time to time, reasonably request. The Company may exclude from
such registration the Registrable Shares of any seller or Participating
Broker-Dealer who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
Each Holder of Registrable Shares and each Participating
Broker-Dealer agrees by acquisition of such Registrable Shares or Exchange
Shares to be sold by such Participating Broker-Dealer, as the case may be, that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi), such Holder
will forthwith discontinue disposition of such Registrable Shares covered by
such Registration Statement or Prospectus or Exchange Shares to be sold by such
Holder or Participating Broker-Dealer, as the case may be, until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(k), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event the Company shall
give any such notice, each of the Effectiveness Period and the Applicable Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Shares covered by such Registration Statement or Exchange Shares
to be sold by such Holder or Participating Broker-Dealer, as the case may be,
shall have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) or (y) the Advice.
<PAGE> 24
-22-
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company,
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or "blue sky" laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with "blue sky" qualifications of the Registrable Shares or Exchange Shares and
determination of the eligibility of the Registrable Shares or Exchange Shares
for investment under the laws of such jurisdictions (x) where the holders of
Registrable Shares are located, in the case of the Exchange Shares, or (y) as
provided in Section 5(h), in the case of Registrable Shares or Exchange Shares
to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Shares or Exchange Shares in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses if the
printing of prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Shares or Exchange Shares to
be sold by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate liquidation value of the Registrable Shares
included in any Registration Statement or of such Exchange Shares, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and fees and disbursements of special
counsel for the sellers of Registrable Shares (subject to the provisions of
Section 6(b)), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(m)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) Securities Act liability insurance, if the Company
desires such insurance, (vii) fees and expenses of all other Persons retained by
the Company, (viii) internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the Company
performing legal or accounting duties), (ix) the expense of any annual or
special audit, (x) the fees and expenses incurred in connection with the listing
of the securities to be registered on any securities exchange, (xi) the fees and
disbursements of underwriters, if any, customarily paid by
<PAGE> 25
-23-
issuers or sellers of securities, and (xii) the expenses relating to printing,
word processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements and any other documents necessary in
order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Company shall reimburse the Holders of the Registrable Shares being registered
in such registration for the fees and disbursements, not to exceed $25,000, of
not more than one counsel (in addition to appropriate local counsel) chosen by
the Holders of a majority in aggregate liquidation value of the Registrable
Shares to be included in such Registration Statement and other reasonable
out-of-pocket expenses of the Holders of Registrable Shares incurred in
connection with the registration of the Registrable Shares.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each
Holder of Registrable Shares and each Participating Broker-Dealer selling
Exchange Shares during the Applicable Period, the officers and directors of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Participant furnished to the Company in writing by
such Participant expressly for use therein; provided that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Participant (or to the benefit of any Person controlling such
Participant) from whom the person asserting
<PAGE> 26
-24-
any such losses, claims, damages or liabilities purchased Registrable Shares or
Exchange Shares if such untrue statement or omission or alleged untrue statement
or omission made in such preliminary prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Participant at or prior to the sale of such Registrable or Exchange Shares, as
the case may be, to such person; and provided, further, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus included in the Shelf Registration Statement if (i) such Holder
failed to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale of Registrable Shares and (ii) the
Prospectus would have completely corrected such untrue statement or omission.
(b) Each Participant will be required to agree, severally and
not jointly, to indemnify and hold harmless the Company, its directors and
officers and each person who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph (b) shall in
no event exceed the proceeds received by such Participant from sales of
Registrable Shares giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnity may be sought pursuant
to either paragraph (a) or (b) of this Section 7, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon
request of the Indemnified Person, shall retain one counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such proceeding
and shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding.
<PAGE> 27
-25-
In any such proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed in writing to the contrary, (ii)
the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representations of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate law
firm (in addition to any local counsel) for all Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Participants and such control persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Shares sold by all such Participants and any such separate firm
for the Company, its directors, officers and such control persons of the Company
shall be designated in writing by the Company. The Indemnifying Person shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for reasonable fees and expenses actually incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying Party
is contesting, in good faith, the request for reimbursement. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or
<PAGE> 28
-26-
could have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in paragraphs (a) and (b)
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Participants on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Participants on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Participants and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties shall agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Shares or
Exchange Shares exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
<PAGE> 29
-27-
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Company is not required to file such reports, it will, upon the request
of any Holder of Registrable Shares, make publicly available other information
of a like nature so long as necessary to permit sales pursuant to Rule 144 or
Rule 144A under the Securities Act. The Company further covenants that so long
as any Registrable Shares remain outstanding to make available to any Holder of
Registrable Shares in connection with any sale thereof, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Shares pursuant to (a) such Rule 144A, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Registrable Shares covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate liquidation value of such
Registrable Shares included in such offering and reasonably acceptable to the
Company.
No Holder of Registrable Shares may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
<PAGE> 30
-28-
10. Requirements of Exchange
The Certificate of Designation governing the Preferred Shares
shall provide that the Company may, on any date occurring on or after April 30,
1999, at its option, elect to exchange, in whole or in part, the Preferred
Shares or Exchange Shares then held by Holders for an equal principal amount of
the Company's 13.25% Senior Subordinated Notes due 2003 (the "Exchange Notes")
to be issued pursuant to an indenture (the "Exchange Indenture") as provided for
in the Purchase Agreement; provided that on the date of exchange, (i) the
Exchange Notes shall have been registered pursuant to an effective registration
statement under the Securities Act, (ii) the Exchange Indenture shall have been
qualified under the Trust Indenture Act of 1939, as amended, (iii) there shall
be no dividend arrearage on the Preferred Shares or Exchange Shares and (iv) no
event of default (as defined in the Indenture) under the Indenture shall have
occurred and be continuing or caused by the issuance of the Exchange Notes. In
the event that any such Exchange Notes received by a Holder have not been
registered as provided in clause (i) of the immediately preceding sentence, the
provisions of this Agreement shall apply mutatis mutandis with respect to any
such Exchange Notes except that, for purposes of this Section 10, (i) the term
Trigger Date shall be defined to mean the later of April 30, 1999 and the date
on which the Holders elect to exercise the exchange rights described above and
(ii) unless the context otherwise requires, the term Company shall also be
interpreted to include the Guarantors.
11. Miscellaneous
(a) Remedies. In the event of a breach by the Company of any
of its obligations under this Agreement, other than the occurrence of an event
which requires payment of Additional Dividends, each Holder of Registrable
Shares, in addition to being entitled to exercise all rights provided herein or,
in the case of the Purchaser, in the Purchase Agreement or granted by law,
including recovery of damages, will be entitled to a specific performance of its
rights under this Agreement.
(b) No Inconsistent Agreements. The Company has not, as of the
date hereof, and the Company shall not, after the date of this Agreement, enter
into any agreement with respect to any of its securities that is inconsistent in
all material respects with the rights granted to the Holders of Registrable
Shares in this Agreement or otherwise conflicts
<PAGE> 31
-29-
with the provisions hereof in all material respects. The Company has not entered
and will not enter into any agreement with respect to any of its securities
which will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Shares. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Shares as a class that would adversely affect, in any material
respect, the ability of the Holders of Registrable Shares to include such
Registrable Shares in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate liquidation value of
Registrable Shares. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders of Registrable Shares whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Shares may be given by Holders of at least a majority in aggregate liquidation
value of the Registrable Shares being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Shares, CIBC WG Argosy
Merchant Fund 2, L.L.C., c/o CIBC Wood Gundy Securities Corp., 1325
Avenue of the Americas, 22nd Floor, New York, New York 10019, with a
copy to Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005, Attention: Roger Meltzer, Esq.; and
(ii) if to the Company, Commodore Media, Inc., 500 Fifth
Avenue, Suite 3000, New York, New York 10110, Attention: Chief
Executive Officer, with a
<PAGE> 32
-30-
copy to Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New
York 10022, Attention: Ira J. Goldstein, Esq.
All such notices and communications shall be deemed to have
been duly given: (i) when delivered by hand, if personally delivered; (ii) five
business days after being deposited in the mail, postage prepaid, if mailed;
(iii) one business day after being timely delivered to a next-day air courier;
and (iv) when receipt is acknowledged by the addressee, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Shares.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.
<PAGE> 33
-31-
(k) Entire Agreement. This Agreement, together with the
Purchase Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(l) Shares Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Shares
is required hereunder, Registrable Shares held by the Company or its affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE> 34
-32-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMMODORE MEDIA, INC.
By:
-----------------------------------------
Name:
Title:
COMMODORE HOLDINGS, INC.
(a Delaware corporation)
COMMODORE MEDIA OF DELAWARE, INC.
(a Delaware corporation)
COMMODORE MEDIA OF PENNSYLVANIA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF FLORIDA, INC.
(a Delaware corporation)
COMMODORE MEDIA OF KENTUCKY, INC.
(a Delaware corporation)
COMMODORE MEDIA OF NORWALK, INC.
(a Delaware corporation)
COMMODORE MEDIA OF WESTCHESTER, INC.
(a Delaware corporation)
DANBURY BROADCASTING, INC.
(a Connecticut corporation)
By:
-----------------------------------------
Name:
Title:
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By:
-----------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.71
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
BETWEEN
COMMODORE MEDIA, INC.
AND
IBJ SCHRODER BANK & TRUST COMPANY
AS
WARRANT AGENT
-------------------------
DATED AS OF MAY 1, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Appointment of Warrant Agent ....................................... 1
2. Warrant Certificates ............................................... 1
3. Execution of Warrant Certificates .................................. 2
4. Registration and Countersignature .................................. 3
5. Transfer and Exchange of Warrants .................................. 3
6. Registration of Transfers and Exchanges ............................ 4
7. Terms of Warrants; Exercise of Warrants ............................ 10
8. Payment of Taxes ................................................... 13
9. Mutilated or Missing Warrant Certificates .......................... 13
10. Reservation of Warrant Shares ...................................... 13
11. Public Equity Offering of Class A
Common Stock; Obtaining Stock
Exchange Listings ............................................... 14
12. Adjustment of Number of Warrant Shares Issuable .................... 15
13. Fractional Interests ............................................... 24
14. Notices to Warrant Holders ......................................... 24
15. Notices to the Company and Warrant Agent ........................... 26
16. Supplements and Amendments ......................................... 27
17. Concerning the Warrant Agent ....................................... 27
18. Change of Warrant Agent ............................................ 30
19. Identity of Transfer Agent ......................................... 31
20. Registration Rights ................................................ 31
21. Successors ......................................................... 31
22. Termination ........................................................ 31
23. GOVERNING LAW ...................................................... 32
24. Benefits of This Agreement ......................................... 32
25. Counterparts ....................................................... 32
26. Headings ........................................................... 32
Exhibit A. Form of Warrant Certificate ................................. A-1
Exhibit B. Certificate ................................................. B-1
Exhibit C. Legends ..................................................... C-1
Exhibit D. Transferee Letter ........................................... D-1
</TABLE>
-i-
<PAGE> 3
WARRANT AGREEMENT (the "Agreement"), dated as of May 1, 1996,
between Commodore Media, Inc., a Delaware corporation (together with any
successors and assigns, the "Company"), and IBJ Schroder Bank & Trust Company
("IBJ"), a New York banking corporation, as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell pursuant to a
Securities Purchase Agreement (the "Purchase Agreement"), dated as of May 1,
1996, among the Company, the Guarantors named therein and CIBC WG Argosy
Merchant Fund 2, L.L.C., a Delaware limited liability company (the "Purchaser"),
up to $12,500,000 in aggregate liquidation value of its Senior Exchangeable
Redeemable Preferred Stock, Series A, par value $.01 per share (the "Preferred
Stock"), along with Warrants (each a "Warrant," and collectively, the
"Warrants"), for the purchase of shares of its Class A Common Stock, par value
$.01 per share (the "Class A Common Stock," and the shares of Class A Common
Stock issuable upon exercise of the Warrants being referred to herein as the
"Warrant Shares") constituting up to 5.99% of the Company's fully diluted Common
Stock;
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company and the Warrant Agent is willing to act in connection with
the issuance, transfer, exchange and exercise of Warrants as provided herein;
and
WHEREAS, the holders of Warrants and Warrant Shares shall,
from time to time, have certain rights and obligations with respect thereto as
set forth in the Common Stock Registration Rights and Stockholders Agreement,
dated as of May 1, 1996, between the Company and the Purchaser;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will initially
be issued either in global form (the "Global Warrants"), substantially in the
form of Exhibit A hereto (including the footnote thereto), or in registered form
as definitive Warrant certificates (the "Definitive Warrants"). Any certificates
(the "Warrant Certificates") evidencing the Global Warrants or the Definitive
Warrants to be delivered pursuant to this Agreement shall be substantially in
the form set forth in
<PAGE> 4
-2-
Exhibit A hereto. Such Global Warrants shall represent such of the outstanding
Warrants as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Warrants from time to time
endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the amount of outstanding Warrants represented thereby
shall be made by the Warrant Agent and Depositary (as defined below) in
accordance with instructions given by the holder thereof. The Depository Trust
Company shall act as the Depositary with respect to the Global Warrants until a
successor shall be appointed by the Company. Upon written request, a Warrant
holder may receive from the Depositary and Warrant Agent Definitive Warrants as
set forth in Section 6 below.
SECTION 3. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, a Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be countersigned and delivered or
disposed of such person shall have ceased to hold such office. The seal of the
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign
<PAGE> 5
-3-
such Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrants
shall be numbered and shall be registered on the books of the Company maintained
at the principal office of the Warrant Agent in the Borough of Manhattan, city
of New York (the "Warrant Register") as they are issued.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the Board,
the President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, a Vice President, the Secretary or an Assistant Secretary of the
Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares referred to above
in the first recital hereof and shall thereafter countersign and deliver
Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the absolute
owners thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. Transfer and Exchange of Warrants. The Warrant
Agent shall from time to time, subject to the limitations of Section 6, register
the transfer of any outstanding Warrants upon the records to be maintained by it
for that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Warrant Certificates
shall make such request in writing delivered to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a
<PAGE> 6
-4-
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, the Warrant Certificate or Warrant Certificates to be so
exchanged.
Upon registration of transfer, the Warrant Agent shall
countersign and deliver by certified or first class mail a new Warrant
Certificate or Warrant Certificates to the persons entitled thereto. The Warrant
Certificates may be exchanged at the option of the Holder thereof, when
surrendered at the office or agency of the Company maintained for such purpose,
which initially will be the corporate trust office of the Warrant Agent in New
York, New York for another Warrant Certificate, or other Warrant Certificates of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Warrant Shares.
No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is imposed in connection with any such exchange or
registration of transfer.
SECTION 6. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Warrants. When
Definitive Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements under this Agreement are met; provided, however, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by
the Holder thereof or by such Holder's attorney, duly authorized in
writing; and
<PAGE> 7
-5-
(y) in the case of Warrants (the "Restricted Warrants") which constitute
Restricted Securities (as such term is defined in Rule 144(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act")), such
Warrants shall be accompanied, in the reasonable discretion of the
Company, by the following additional information and documents, as
applicable, however, it being understood that the Warrant Agent need
not determine which clause (A) through (C) below is applicable:
(A) if such Restricted Warrant is being delivered to the Warrant
Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such holder to that effect
(in substantially the form of Exhibit B hereto); or
(B) if such Restricted Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Act, a
"QIB") in accordance with Rule 144A under the Act or pursuant to
an exemption from registration in accordance with Rule 144 under
the Securities Act or Regulation S under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of counsel
reasonably acceptable to the Company and the Warrant Agent to the
effect that such transfer does not require registration under the
Securities Act; or
(C) if such Restricted Warrant is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of counsel
reasonably acceptable to the Company and to the Warrant Agent to
the effect that such transfer does not require registration under
the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. A Definitive Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set
<PAGE> 8
-6-
forth below. Upon receipt by the Warrant Agent of a Definitive Warrant, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Warrant Agent, together with:
(A) if such Definitive Warrant constitutes a Restricted Warrant,
certification, substantially in the form of Exhibit B hereto, that
such Definitive Warrant is being transferred to a QIB in accordance
with Rule 144A under the Securities Act; and
(B) written instructions directing the Warrant Agent to make, or to direct
the Depositary to make, an endorsement on the Global Warrant to
reflect an increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrant Shares represented by the Global Warrant to be increased accordingly. If
no Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall countersign a new Global Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any person having a beneficial interest in a Global Warrant may
upon request exchange such beneficial interest for a Definitive
Warrant. Upon receipt by the Warrant Agent of written instructions
or such other form of instructions as is customary for the
Depositary from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global Warrant and upon
receipt by the Warrant Agent of a written order or such other form
of instructions as is customary for the Depositary or the person
designated by the Depositary as having such a beneficial interest
containing registration instructions and, in the case of a
beneficial in-
<PAGE> 9
-7-
terest in Restricted Warrants, the following additional information
and documents, however, it being understood that the Warrant Agent
need not determine which clause (A) through (C) below is
applicable:
(A) If such beneficial interest is being transferred to the
person designated by the Depositary as being the
beneficial owner, a certification from such person to that
effect (in substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of
Exhibit B hereto) and, with respect to transfers pursuant
to Rule 144 or Regulation S, an opinion of counsel
reasonably acceptable to the Company and the Warrant Agent
to the effect that such transfer does not require
registration under the Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in
substantially the form of Exhibit B hereto) and an opinion
of counsel from the transferee or transferor reasonably
acceptable to the Company and to the Warrant Agent to the
effect that such transfer does not require registration
under the Securities Act,
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Warrant Agent, the aggregate amount of the Global Warrant to be
reduced and, following such reduction, the Company will execute
and, upon receipt of an authentication order in the form of an
officers' certificate signed by the Chief Executive Officer,
<PAGE> 10
-8-
the President or any Vice President and the Chief Financial
Officer, the Treasurer, the Secretary or any Assistant Secretary of
the Company (an "Officers' Certificate"), the Warrant Agent will
countersign and deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in
a Global Warrant pursuant to this Section 6(d) shall be registered
in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent in
writing, provided such designation is in accordance with this
Section 6(d). The Warrant Agent shall deliver such Definitive
Warrants to the persons in whose names such Definitive Warrants are
registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 6), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of Depositary. If
at any time:
(i) the Depositary for the Global Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for
the Global Warrant and a successor Depositary for the Global
Warrant is not appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
Officers' Certificate requesting the countersignature and delivery of Definitive
Warrants, will countersign and deliver Definitive Warrants, in an aggregate
number equal
<PAGE> 11
-9-
to the aggregate number of Warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each Warrant
Certificate evidencing the Global Warrants and the Definitive
Warrants (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially as set
forth in Exhibit C.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under
the Securities Act or an effective registration statement under the
Securities Act:
(A) in the case of any Warrant that is a Definitive Warrant,
the Warrant Agent shall permit the Holder thereof to
exchange such Restricted Warrant for a Definitive Warrant
that does not bear the legend set forth in Exhibit C and
rescind any related restriction on the transfer of such
Warrant; and
(B) any such Warrant represented by a Global Warrant shall not
be subject to the provisions set forth in (i) above (such
sales or transfers being subject only to the provisions of
Section 6(c) hereof); provided, however, that with respect
to any request for an exchange of a Warrant that is
represented by a Global Warrant for a Definitive Warrant
that does not bear the legend set forth in Exhibit C,
which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Warrant
Agent that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of
Exhibit B hereto) and shall obtain an opinion of counsel,
reasonably acceptable to the Company and the Warrant
Agent, to the effect that such transfer does not require
registration under the Securities Act.
(h) Cancellation and/or Adjustment of a Global Warrant. At such time
as all beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to or retained and cancelled by the Warrant Agent.
<PAGE> 12
-10-
At any time prior to such cancellation, if any beneficial interest in a Global
Warrant is exchanged for Definitive Warrants, redeemed, repurchased or
cancelled, the number of Warrants represented by such Global Warrant shall be
reduced and an endorsement shall be made on such Global Warrant by the Warrant
Agent to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of Definitive
Warrants.
(i) To permit registrations of transfers and exchanges in accordance
with the terms of this Agreement, the Company shall execute, and
the Warrant Agent shall countersign, Definitive Warrants and Global
Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute
owner of such Warrant, and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
SECTION 7. Terms of Warrants; Exercise of Warrants. Subject to
the terms of this Agreement, each Warrant Holder shall have the right,
which may be exercised commencing on or after the Exercisability Date (as
defined below) and until 5:00 p.m., New York City time, on May 1, 2000 (the
"Expiration Date"), to receive from the Company the number of fully paid
and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the
Exercise Price (as defined below) then in effect for such Warrant Shares;
provided that, if in the opinion of counsel to the Company approval of the
Federal Communications Commission (the "FCC") is required before the
Company may issue Warrant Shares upon the exercise of any Warrant, the
Company may defer the issuance of such Warrant Shares until such time as
approval of the FCC is obtained or is
<PAGE> 13
-11-
no longer required. The Company shall promptly notify in writing the
Warrant Agent of any event which requires it to suspend exercise of
Warrants pursuant to the proviso of the preceding sentence and of the
termination of any such suspension. Subject to the next paragraph of this
Section 7, each Warrant not exercised prior to the Expiration Date shall
become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time. No adjustments as to
dividends will be made upon exercise of the Warrants.
The Company agrees to promptly commence any proceeding before the
FCC required to permit the exercise of the outstanding Warrants and to use
its reasonable best efforts to obtain any order of the FCC or similar
approval necessary to permit such exercise and maintain such approval in
full force and effect. In the event that at the Expiration Date, the
exercise of Warrants has been suspended such that the Warrants have not
been exercised for a period of one full year, the Expiration Date shall be
extended to such date as is necessary so that the Warrant will have been
exercisable for one full year prior to the Expiration Date.
"Exercisability Date" shall mean May 1, 1996.
The initial price per share at which Warrant Shares shall be
purchasable upon exercise of Warrants (the "Exercise Price") shall be $.01,
subject to adjustment. A Warrant may be exercised upon surrender at the
office or agency of the Company maintained for such purpose, which
initially will be the corporate trust office of the Warrant Agent in New
York, New York, of the certificate or certificates evidencing the Warrants
to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
participant in a recognized Signature Guarantee Medallion Program, and upon
payment to the Warrant Agent for the account of the Company of the Exercise
Price, as adjusted as herein provided, for the number of Warrant Shares in
respect of which such Warrants are then exercised. Payment of the aggregate
Exercise Price shall be made in cash or by certified or official bank check
to the order of the Company in New York Clearing House Funds.
Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall
issue and cause to be deliv-
<PAGE> 14
-12-
ered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Warrant Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable
upon the exercise of such Warrants together with cash as provided in
Section 12; provided, however, that if any consolidation, merger or lease
or sale of assets is proposed to be effected by the Company as described in
subsection (j) of Section 12 hereof, or a tender offer or an exchange offer
for shares of Common Stock of the Company shall be made, upon such
surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall, as soon as possible, but in any event not later than three
days, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are not open for business ("Business
Day") thereafter, issue and cause to be delivered the full number of
Warrant Shares issuable upon the exercise of such Warrants in the manner
described in this sentence together with cash as provided in Section 13.
Such certificate or certificates shall be deemed to have been issued and
any person so named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part and, in the event that
a certificate evidencing Warrants is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required
new Warrant Certificate or Warrant Certificates pursuant to the provisions
of this Section 7 and of Section 3 hereof, and the Company, whenever
required by the Warrant Agent, will promptly supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such
purpose.
All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure for such disposal
and in a manner reasonably satisfactory to the Company. The Warrant Agent
shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the
<PAGE> 15
-13-
Company all monies received by the Warrant Agent for the purchase of the
Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available
for inspection by the Holders during normal business hours at its office.
The Company shall supply the Warrant Agent from time to time with such
numbers of copies of this Agreement as the Warrant Agent may request.
SECTION 8. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
Holder of a Warrant Certificate surrendered upon the exercise of a Warrant,
and the Company shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may in its discretion issue and the Warrant Agent may
countersign, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction of such Warrant Certificate and indemnity,
if requested, also satisfactory to them. Applicants for such substitute
Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the
Warrant Agent may prescribe.
SECTION 10. Reservation of Warrant Shares. The Company will at
all times reserve and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose
<PAGE> 16
-14-
of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common
Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of
the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the Warrants. The
Warrant Agent is hereby irrevocably authorized to requisition from time to
time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply such Transfer Agent with duly
executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 13. The
Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to each Holder
pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon payment of the Exercise Price therefor
and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issuance thereof. The Company will
take no action to increase the par value of the Class A Common Stock to an
amount in excess of the Exercise Price, and the Company will not enter into
any agreements inconsistent in any material respect with the rights of
Holders hereunder. The Company will use its reasonable best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Agreement.
SECTION 11. Public Equity Offering of Class A Common Stock;
Obtaining Stock Exchange Listings. The Company covenants and agrees with
the Warrant Agent, for
<PAGE> 17
-15-
the benefit of each Warrant Holder, that at any time while the Warrants are
outstanding, the Company will not make a Public Equity Offering (as defined
below) of any class of its common stock other than the Class A Common
Stock. In the event that, at any time during the period in which the
Warrants are exercisable, the Class A Common Stock is not listed on any
principal securities exchanges or markets within the United States of
America, the Company will use its best efforts to permit the Warrant Shares
to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the Private Offerings, Resales and Trading through
Automated Linkages market.
"Public Equity Offering" means a public offering by the Company
of shares of its common stock pursuant to an effective registration
statement filed with the Securities and Exchange Commission (other than a
public offering on a registration statement on Form S-4 or S-8 or similar
form).
SECTION 12. Adjustment of Number of Warrant Shares Issuable. The
number of shares of Class A Common Stock issuable upon the exercise of each
Warrant (the "Exercise Rate") is subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 12.
(a) Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock or other capital stock of the Company;
or
(2) subdivides, combines or reclassifies its out- standing shares of
Common Stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such Holder would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution
<PAGE> 18
-16-
(the "Time of Determination") and immediately after the effective date in the
case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the Company,
the board of directors of the Company shall determine the allocation of the
adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 12.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) Adjustment for Certain Issuances of Common Stock. If the
Company issues or sells shares of its Common Stock or distributes any rights,
options or warrants to any Person entitling them to purchase shares of Common
Stock, or securities convertible into or exchangeable for Common Stock, at a
price per share less than the Current Market Value at the Time of Determination,
the Exercise Rate shall be adjusted in accordance with the formula:
E' = E x O + N
---------
O + N x P
-----
M
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination for any such issuance, sale or distribution.
O = the number of Fully Diluted Shares (as defined below)
outstanding immediately prior to the Time of Determination
for any such issuance, sale or distribution.
N = the number of additional shares of Common Stock issued,
sold or issuable upon exercise of such rights, options or
warrants.
P = the price received in the case of any issuance or sale of
Common Stock or rights, options or
<PAGE> 19
-17-
warrants inclusive of the exercise price per share of
Common Stock upon exercise of such rights, options or
warrants.
M = the Current Market Value per share of Common Stock on the
Time of Determination for any such issuance, sale or
distribution.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. Notwithstanding the foregoing, the Exercise
Rate shall not be subject to adjustment in connection with (i) the issuance of
any shares of Common Stock upon exercise of any such rights, options or warrants
which have previously been the subject of an adjustment under this Agreement for
which the required adjustment has been made and (ii)(a) the exercise of the
Warrants, (b) any options, warrants or rights to acquire Common Stock currently
outstanding or subsequently granted or issued pursuant to the Company's 1995
Stock Option Plan exercisable for Common Stock in an aggregate amount not to
exceed 132,125 shares (subject to adjustments for stock splits, stock dividends,
stock combinations, reorganizations, recapitalizations and reclassifications and
other changes in the shares of Common Stock) and all such shares of Common Stock
issued upon exercise of such options, warrants or rights. If at the end of the
period during which any such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Warrant shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
(c) Adjustment for Other Distribution. If the Company distributes
to all holders of its Common Stock (i) any evidences of indebtedness of the
Company or any of its subsidiaries, (ii) any assets of the Company or any of its
subsidiaries (other than cash dividends or other cash distributions or
distributions from current or retained earnings other than any Extraordinary
Cash Dividend), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Exercise Rate
shall be adjusted in accordance with the formula:
E' = E x M
-----
M - F
where:
<PAGE> 20
-18-
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date mentioned
below.
M = the Current Market Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date mentioned below of
the indebtedness, assets, rights, options or warrants
distributable in respect of one share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this subsection (c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 12.
(d) Current Market Value. "Current Market Value" per share of
Common Stock or of any other security (herein collectively referred to as a
"Security") at any date shall be:
(1) if the Security is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (i) the value of the
Security determined in good faith by the board of directors of the Company
and certified in a board resolution, based on the most recently completed
arm's length transaction between the Company and a person other than an
Affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six months preceding such date or (ii) if no
such transaction shall have occurred on such date or within such six-month
period, the value of the Security most recently determined as of a date
within the six months preceding such date by the board of directors of the
Company if the transaction is for less than
<PAGE> 21
-19-
$500,000 and is not with an Affiliate and by an Independent Financial
Expert in all other instances, or
(2) if the Security is registered under the Exchange Act, the
average of the daily closing bid prices (as defined below) for each
Business Day during the period commencing 15 Business Days before such date
and ending on the date one day prior to such date or, if the Security has
been registered under the Exchange Act for less than 15 consecutive
Business Days before such date, then the average of the daily closing bid
prices for all of the Business Days before such date for which daily
closing bid prices are available. If the closing bid price is not
determinable for at least 10 Business Days in such period, the Current
Market Value of the Security shall be determined as if the Security was not
registered under the Exchange Act.
The "closing bid price" for any Security on each Business Day
means: (A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security is
not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale price
on such day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company or (C) if
neither clause (A) nor (B) is applicable, the average of the reported high bid
and low asked prices on such day, as reported by a reputable quotation service,
or a newspaper of general circulation in the Borough of Manhattan, City of New
York, customarily published on each Business Day, designated by the Company. If
there are no such prices on a Business Day, then the market price shall not be
determinable for such Business Day.
"Independent Financial Expert" shall mean (a) CIBC Wood Gundy
Securities Corp. (or any successor) or (b) another nationally recognized
investment banking firm reasonably acceptable to the Warrant Agent (i) that does
not (and whose directors, officers, employees and Affiliates do not) have a
direct or indirect material financial interest in the Company, (ii) that has not
been, and, at the time it is called upon to serve as an Independent Financial
Expert under this Agreement is not (and none of whose directors, officers,
employees or Affiliates is) a promoter, director or officer of the Company,
(iii) that has not been retained by the Company for any pur-
<PAGE> 22
-20-
pose, other than to perform an equity valuation, within the preceding twelve
months and (iv) that, in the reasonable judgment of the board of directors of
the Company (certified by a board resolution), is otherwise qualified to serve
as an independent financial advisor. Any such person may receive customary
compensation and indemnification by the Company for opinions or services it
provides as an Independent Financial Expert.
"Affiliate" of any specified person means any other person
which directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified person. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") as used
with respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
voting securities of a person shall be deemed to be control and that for so long
as Susan Burden is a director and/or a Burden Entity controls, directly or
indirectly, capital stock of the Company with the right to 10% of the vote of
the Common Stock then outstanding, Susan Burden and/or such Burden Entity and
any person (including affiliated trusts) controlled by any of them shall be
Affiliates of the Company.
"Burden Entity" shall mean Susan Burden, any lineal
descendants of Carter Burden, any trust or estate the beneficiary of which is
Susan Burden or any lineal descendants of Carter Burden or any entity owned or
controlled by any of the foregoing.
"Extraordinary Cash Dividend" means any cash dividends with
respect to the Common Stock the aggregate amount of which prior to the
Exercisability Date in any fiscal year exceeds the greater of (i) 20% of the net
income of the Company and its subsidiaries for the fiscal year immediately
preceding the payment of such dividend or (ii) $250,000.
(e) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Rate. Notwithstanding the
foregoing, any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
shall be deferred beyond the date on which a Warrant is exercised.
<PAGE> 23
-21-
All calculations under this Section 12 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required. If an adjustment is made upon
the establishment of a record date for a distribution subject to subsections
(a), (b) or (c) hereof and such distribution is subsequently cancelled, the
Exercise Rate then in effect shall be readjusted, effective as of the date when
the board of directors determines to cancel such distribution, to that which
would have been in effect if such record date had not been fixed. If an
adjustment would be required under two or more of paragraphs (a), (b) and (c),
such adjustments will be determined without duplication.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(g) Notice of Adjustment. Whenever the Exercise Rate is
adjusted, the Company shall provide the notices required by Section 14 hereof.
(h) Voluntary Reduction. The Company from time to time may
increase the Exercise Rate by any amount for any period of time (including,
without limitation, permanently) if the period is at least 20 Business Days.
An increase of the Exercise Rate under this Subsection (h)
(other than a permanent increase) does not change or adjust the Exercise Rate
otherwise in effect for purposes of subsections (a), (b) or (c) of this Section
12.
(i) When Issuance or Payment May Be Deferred. In any case in
which this Section 12 shall require that an adjustment in the Exercise Rate be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Rate prior to such adjustment, and
(ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 13; provided, however, that the Company shall deliver to the
Warrant Agent and shall cause the Warrant Agent, on behalf of and at the expense
of the Company, to deliver to such Holder a due bill or other appro-
<PAGE> 24
-22-
priate instrument evidencing such Holder's right to receive such additional
Warrant Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
(j) Reorganizations. In case of any capital reorganization,
other than in the cases referred to in Sections 12(a), (b) or (c) hereof, or the
consolidation or merger of the Company with or into another corporation (other
than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the board of directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any such shares
or other securities or property thereafter deliverable upon exercise of
Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall (i) expressly assume, by a supplemental warrant
agreement or other acknowledgment executed and delivered to the Warrant Agent
the obligation to deliver to the Warrant Agent and to cause the Warrant Agent to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and the due and punctual performance and observance of each and every
covenant, condition, obligation and liability under this Agreement to be
performed and observed by the Company in the manner prescribed herein and (ii)
enter into an agreement providing to the Holders rights and benefits substan-
<PAGE> 25
-23-
tially similar to those enjoyed by the Holders under the Common Stock
Registration Rights and Stockholders Agreement of even date herewith.
The foregoing provisions of this Section 12(j) shall apply to
successive Reorganization transactions.
(k) Form of Warrants. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(l) Warrant Agent's Disclaimer. The Warrant Agent has no duty
to determine when an adjustment under this Section 12 should be made, how it
should be made or what it should be. The Warrant Agent has no duty to determine
whether any provisions of a supplemental warrant agreement under subsection (j)
of this Section 12 are correct. The Warrant Agent makes no representation as to
the validity or value of any securities or assets issued upon exercise of
Warrants. The Warrant Agent shall not be responsible for the Company's failure
to comply with this Section 12.
(m) Miscellaneous. For purpose of this Section 12 the term
"shares of Common Stock" shall mean (i) shares of the classes of stock
designated as the Class A Common Stock and Class B Common Stock, par value $.01
per share of the Company (the "Class B Common Stock") as of the date of this
Agreement, and (ii) shares of any other class of stock resulting from successive
changes or reclassification of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. For
purposes of this Section 12 the term "Fully Diluted Shares" shall mean (i) the
shares of Common Stock outstanding as of a specified date, and (ii) the shares
of Common Stock into or for which rights, options, warrants or other securities
outstanding as of such date are exercisable or convertible (other than the
Warrants). In the event that at any time, as a result of an adjustment made
pursuant to this Section 12, the Holders of Warrants shall become entitled to
purchase any securities of the Company other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in subsections (a)
through (m) of this Section 12, inclusive, and the provisions of Sections 7, 8,
10 and
<PAGE> 26
-24-
13 with respect to the Warrant Shares or the Common Stock shall apply on like
terms to any such other securities.
SECTION 13. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the excess of the value (as
determined by the Board of Directors in good faith) of a Warrant Share over the
Exercise Price on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment
pursuant to Section 12 hereof, the Company shall give prompt written notice of
such adjustment to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, within 10 days after notification
is received by the Warrant Agent of such adjustment, to mail by first class
mail, postage prepaid, to each Holder a notice of such adjustment(s) and shall
deliver to the Warrant Agent a certificate of the Chief Financial Officer of the
Company, accompanied by the report thereon by a firm of independent public
accountants selected by the board of directors of the Company (who may be the
regular accountants for the Company), setting forth in reasonable detail (i) the
number of Warrant Shares purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant after such adjustment(s), (ii) a brief statement
of the facts requiring such adjustment(s) and (iii) the computation by which
such adjustment(s) was made. Where appropriate, such notice may be given in
advance and included as a part of the notice required under the other provisions
of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
<PAGE> 27
-25-
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets; or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Exercise Rate pursuant to Section 12;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his or its
address appearing on the Warrant Register, at least 30 days (or 20 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company or
the Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer,
<PAGE> 28
-26-
dissolution, liquidation or winding up, or the vote upon any action.
The Company shall give prompt written notice to the Warrant
Agent and shall cause the Warrant Agent, on behalf of and at the expense of the
Company to give to each Holder written notice of any determination to make a
distribution or dividend to the holders of its Common Stock of any assets
(including cash), debt securities, preferred stock, or any rights or warrants to
purchase debt securities, preferred stock, assets or other securities (other
than Common Stock, or rights, options, or warrants to purchase Common Stock) of
the Company, which notice shall state the nature and amount of such planned
dividend or distribution and the record date therefor, and shall be received by
the Holders at least 30 days prior to such record date therefor.
Nothing contained in this Agreement or in any Warrant
Certificate shall be construed as conferring upon the Holders the right to vote
or to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company.
SECTION 15. Notices to the Company and Warrant Agent. Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by any Holder to or on the Company shall be sufficiently given or made
when received at the office of the Company expressly designated by the Company
as its office for purposes of this Agreement (until the Warrant Agent is
otherwise notified in accordance with this Section 15 by the Company), as
follows:
Commodore Media, Inc.
500 Fifth Avenue
Suite 3000
New York, New York 10110
Attention: President
with a copy to:
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attention: Ira J. Goldstein, Esq.
Any notice pursuant to this Agreement to be given by the
Company or by any Holder(s) to the Warrant Agent shall be sufficiently given
when received by the Warrant Agent at the
<PAGE> 29
-27-
address appearing below (until the Company is otherwise notified in accordance
with this Section by the Warrant Agent).
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Fax Number: (212) 858-2952
SECTION 16. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Warrants in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of any holder of Warrants. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of holders shall require the written consent of registered holders of a majority
of the then outstanding Warrants. The consent of each holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (not including adjustments contemplated
hereunder). The Warrant Agent shall be entitled to receive and shall be fully
protected in relying upon an officers' certificate and opinion of counsel as
conclusive evidence that any such amendment or supplement is authorized or
permitted hereunder, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company in accordance with its terms.
SECTION 17. Concerning the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or any action taken
by it. The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrants except as herein otherwise provided.
<PAGE> 30
-28-
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with the covenants contained in this Agreement
or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself (through its employees) or by or through its attorneys or
agents (which shall not include its employees) and shall not be
responsible for the misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and
the Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the
opinion or the advice of such counsel.
(e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
such evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, Chief Financial
Officer, one of the Vice Presidents, the Treasurer or the Secretary of
the Company and delivered to the Warrant Agent; and such certificate
shall be full authorization to the Warrant Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate. Without limiting the foregoing, the
Company shall notify the Warrant Agent of the occurrence of the
Exercisability Date on the date it occurs, and until receipt of such
notice the Warrant Agent may be entitled to assume that any such date
has not occurred.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Warrant Agent
(including reasonable fees and expenses of the Warrant Agent's counsel
and agents) in the performance of its duties under this Agreement, and
to indemnify the Warrant Agent and
<PAGE> 31
-29-
save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant
Agent in the performance of its duties under this Agreement, except as
a result of the Warrant Agent's negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity satisfactory to the Warrant Agent for any costs and expenses
which may be incurred, but this provision shall not affect the power of
the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by
the Warrant Agent shall be brought in its name as Warrant Agent, and
any recovery of judgment shall be for the ratable benefit of the
Holders, as their respective rights or interests may appear.
(h) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily
interested in any transactions in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully
and freely as though it were not Warrant Agent under this Agreement or
such director, officer or employee. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for
any other legal entity including, without limitation, acting as
Transfer Agent or as a lender to the Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as agent, and
its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or
refrain from doing in connection with this Agreement except for its own
negligence or bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiv-
<PAGE> 32
-30-
er, consent, order, certificate, or other paper, document or instrument
reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(k) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant (except its
counter-signature thereof); nor shall the Warrant Agent by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Warrant Shares (or other stock) to
be issued pursuant to this Agreement or any Warrant, or as to whether
any Warrant Shares (or other stock) will, when issued, be validly
issued, fully paid and nonassessable, or as to the Exercise Price or
the number or amount of Warrant Shares or other securities or other
property issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it
in good faith and without negligence in accordance with instructions of
any such officer or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may
resign at any time and be discharged from its duties under this Agreement by
giving to the Company 30 days' notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent from the Company. If the Warrant
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by any Holder (who shall with such
notice submit his Warrant for inspection by the Company), then any Holder may
apply to any court of competent jurisdiction for the appointment of a successor
to the Warrant Agent. Pending appointment of a successor warrant agent, either
by the Company or by such court, the duties of the Warrant Agent shall be
carried out by the Company. Any successor warrant agent, whether appointed by
the Company or
<PAGE> 33
-31-
such a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any State thereof or the
District of Columbia and having at the time of its appointment as warrant agent
a combined capital and surplus of at least $10,000,000. After appointment, the
successor warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor warrant agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Failure to file any notice provided for in this Section 18,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be. In the event of such resignation or removal,
the Company or the successor warrant agent shall mail by first class mail,
postage prepaid, to each Holder, written notice of such removal or resignation
and the name and address of such successor warrant agent.
SECTION 19. Identity of Transfer Agent. Forthwith upon the
appointment of any Transfer Agent for the Common Stock, or any other shares of
the Company's capital stock issuable upon the exercise of the Warrants, the
Company shall promptly file with the Warrant Agent a statement setting forth the
name and address of such Transfer Agent.
SECTION 20. Registration Rights. The Holders shall be entitled
to all of the benefits of that certain Common Stock Registration Rights and
Stockholders Agreement among the Company and the Purchaser dated as of May 1,
1996, in connection with the Common Stock to be issued in connection with the
exercise of the Warrants.
SECTION 21. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrant Agent, the
Purchaser or any holder of Warrants shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 22. Termination. This Agreement shall terminate at
5:00 p.m. New York City time on May 1, 2000. Notwithstanding the foregoing, this
Agreement will terminate on any earlier date if all Warrants have been exercised
or redeemed pursuant to this Agreement.
<PAGE> 34
-32-
SECTION 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.
SECTION 24. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered Holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered Holders of the Warrant Certificates.
SECTION 25. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 26. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
COMMODORE MEDIA, INC.
By:
-----------------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
By:
-----------------------------------------
Name:
Title:
<PAGE> 36
EXHIBIT A
[Form of Warrant Certificate]
[Face]
[THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT DATED AS OF MAY 1, 1996 BETWEEN
THE COMPANY AND THE WARRANT AGENT (THE "WARRANT AGREEMENT"), AND NO TRANSFER OF
THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.](1)
- ----------
(1) This paragraph is to be included only if the Warrant is in global form.
A-1
<PAGE> 37
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE
AND ON OR BEFORE MAY 1, 2000
No. _______ _______ Warrants
Warrant Certificate
COMMODORE MEDIA, INC.
This Warrant Certificate certifies that ______, or registered
assigns, is the registered holder of Warrants expiring May 1, 2000 (the
"Warrants") to purchase shares of Class A Common Stock (the "Common Stock") of
Commodore Media, Inc., a Delaware corporation (the "Company"). Each Warrant
entitles the holder upon exercise to receive from the Company on or after the
Exercisability Date and on or before 5:00 p.m. New York City Time on May 1,
2000, one fully paid and nonassessable share of Class A Common Stock (a "Warrant
Share") at the initial exercise price (the "Exercise Price") of $.01 payable in
lawful money of the United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office or agency of the
Warrant Agent, subject only to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events as set forth in the Warrant
Agreement.
No Warrant may be exercised before the Exercisability Date or
after 5:00 p.m., New York City Time, on May 1, 2000 and to the extent not
exercised by such time such Warrants shall become void.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
A-2
<PAGE> 38
IN WITNESS WHEREOF, Commodore Media, Inc. has caused this
Warrant Certificate to be signed by its President and by its Secretary, each by
a facsimile of his signature, and has caused a facsimile of its corporate seal
to be affixed hereunto or imprinted hereon.
Dated:
COMMODORE MEDIA, INC.
By: ___________________________
President
By: ___________________________
Secretary
Countersigned:
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
By: _________________________
Authorized Signature
A-3
<PAGE> 39
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring May 1, 2000, entitling the holder
on exercise to receive shares of Class A Common Stock, of the Company (the
"Class A Common Stock"), $.01 par value, and are issued or to be issued pursuant
to a Warrant Agreement dated as of May 1, 1996 (the "Warrant Agreement"), duly
executed and delivered by the Company to IBJ SCHRODER BANK & TRUST COMPANY, a
New York banking corporation, as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or after the
"Exercisability Date" and on or before May 1, 2000, subject to extension as
provided in the Warrant Agreement. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price in cash at the office of
the Warrant Agent. In the event that upon any exercise of Warrants evidenced
hereby the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued to the holder hereof or his
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised. No adjustment shall be made for any dividends on any Class A Common
Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the number of Warrants set forth on the face hereof may, subject
to certain conditions, be adjusted. No fractions of a share of Class A Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain
registration rights with respect to the Class A Common Stock purchasable upon
exercise thereof. Such registration rights are set forth in the Common Stock
Registration Rights and
A-4
<PAGE> 40
Stockholders Agreement, dated as of May 1, 1996, among the Company and the
parties named therein.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
<PAGE> 41
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive _____ shares of Class
A Common Stock and herewith tenders payment for such shares to the order of
Commodore Media, Inc. in the amount of $_____ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of ______________, whose address is __________ and that
such shares be delivered to _________ whose address is ______________. If said
number of shares is less than all of the shares of Class A Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_____________, whose address is ________, and that such Warrant Certificate be
delivered to ___________, whose address is ________________.
Signature:
Date:
Signature Guaranteed:
A-6
<PAGE> 42
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(2)
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
<TABLE>
<CAPTION>
Number of
Warrants of
Amount of Amount of this Global
decrease in increase in Warrant Signature of
number of number of following authorized
Date of Warrants of this Warrants of this such decrease officer of
Exchange Global Warrant Global Warrant (or increase) Warrant Agent
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This is to be included only if the Warrant is in global form.
A-7
<PAGE> 43
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Class A Common Stock (the "Warrants") of Commodore
Media, Inc.
This Certificate relates to ____ Warrants held in* book-entry or*_____
certificated form by ______ (the "Transferor").
The Transferor*:
/ / has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive registered form equal to its
beneficial interest in Warrants represented by such Global Warrant (or the
portion thereof indicated above); or
/ / has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request, the Transferor does hereby certify
that Transferor is familiar with the Warrant Agreement (the "Agreement")
relating to the Warrants and the restrictions on transfers thereof as provided
in Section 6 of such Agreement, and that the transfer of this Warrant requested
hereby does not require registration under the Securities Act (as defined below)
because:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(A) of the Agreement).
- -----------------------
* Check applicable box.
B-1
<PAGE> 44
/ / Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")), in reliance on Rule 144A or in accordance with Regulation S
under the 1933 Act. If such transfer is in accordance with Regulation S, an
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
/ / Such Warrant is being transferred in accordance with Rule 144 under
the Securities Act. An opinion of counsel to the effect that such transfer does
not require registration under the Securities Act accompanies this Certificate.
/ / Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A or Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
-------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------
Date:
--------------
B-2
<PAGE> 45
EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION,
(2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF
THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE OR TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT FOR THIS SECURITY),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND, IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR OR SUCH TRANSFER IS MADE IN ACCORDANCE
WITH CLAUSES (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE WARRANT AGENT AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
C-1
<PAGE> 46
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.
C-2
<PAGE> 47
EXHIBIT D
Transferee Letter of Representation
Commodore Media, Inc.
500 Fifth Avenue
Suite 3000
New York, New York 10110
Ladies and Gentlemen:
In connection with our proposed purchase of Warrants to
purchase Class A Common Stock (the "Securities") of Commodore Media, Inc. (the
"Company"), we confirm that:
1. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and conditions set forth
in the Warrant Agreement dated as of May 1, 1996 relating to the
Securities and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Securities except in
compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
2. We understand that the Securities have not been registered
under the Securities Act, and that the Securities may not be offered or
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities within three
years after the original issuance of the Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) inside the United
States to a "qualified institutional buyer" in compliance with Rule
144A under the Securities Act, (C) inside the United States to an
"institutional accredited investor" (as defined below) that, prior to
such transfer, furnishes to you a signed letter substantially in the
form of this letter, (D) outside the United States to a foreign person
in compliance with Rule 904 of Regulation S under the Securities Act,
(E) pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the Securities
from us a notice
D-1
<PAGE> 48
advising such purchaser that resales of the Securities are restricted
as stated herein.
3. We understand that, on any proposed resale of any
Securities, we will be required to furnish to the Company such
certifications, legal opinions and other information as the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
The Company is entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
-------------------------------
(Name of Purchaser)
By:
---------------------------
Date:
-------------------------
D-2
<PAGE> 49
Upon transfer the Securities would be registered in the name
of the new beneficial owner as follows:
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
D-3
<PAGE> 1
Exhibit 10.73
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CMI ACQUISITION COMPANY, INC.,
COMMODORE MEDIA, INC.,
AND
THE STOCKHOLDERS AND OTHER
SIGNATORIES NAMED HEREIN
DATED AS OF
JUNE 21, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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ARTICLE I
THE MERGER
<S> <C> <C>
1.1. The Merger .................................................................................. 1
1.2. Effective Time .............................................................................. 2
1.3. Effect of the Merger ........................................................................ 2
1.4. Certificate of Incorporation; Bylaws ........................................................ 2
1.5. Directors and Officers ...................................................................... 2
1.6. Merger Consideration; Conversion and Cancellation of Securities ............................. 2
1.7. Employee Stock Options ...................................................................... 4
1.8. Warrants .................................................................................... 5
1.9. Payment; Surrender of Certificates .......................................................... 5
1.10. Stock Transfer Books ........................................................................ 7
1.11. Appointment of Indemnitor Representative .................................................... 7
1.12. Indemnification Escrow ...................................................................... 8
1.13. Approval of Merger .......................................................................... 8
ARTICLE II
SERIES B PREFERRED STOCK
2.1. Purchase of Preferred Stock ................................................................. 9
2.2. Conditions to Fund III's Obligation ......................................................... 11
2.3. Conditions to Commodore's Obligations ....................................................... 12
2.4. Closing ..................................................................................... 13
2.5. Letter of Credit ............................................................................ 13
2.6. Release of Letter of Credit from Escrow ..................................................... 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding Commodore .......................................... 15
3.2. Representations and Warranties of Indemnitors who are Stockholders .......................... 29
3.3. Representations and Warranties of Mergeco ................................................... 30
3.4. Representations and Warranties of Indemnitors who are Not Stockholders ...................... 32
</TABLE>
(i)
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<TABLE>
<CAPTION>
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
<S> <C> <C>
4.1. Covenants of Commodore ..................................................................... 33
4.2. Negative Trade Balance ..................................................................... 36
4.3. Environmental Site Assessments ............................................................. 36
ARTICLE V
ADDITIONAL AGREEMENTS OF COMMODORE
5.1. No Other Bids .............................................................................. 36
5.2. Access and Information ..................................................................... 37
5.3. Assistance ................................................................................. 38
5.4. Compliance With Station Licenses ........................................................... 38
5.5. Notification of Certain Matters ............................................................ 39
5.6. Third Party Consents ....................................................................... 39
5.7. Post Signing Arrangements and Elections. ................................................... 39
5.8. Use of Proceeds. ........................................................................... 40
5.9. Waiver of Appraisal Rights ................................................................. 41
5.10. Signed Acknowledgments ..................................................................... 41
5.11. Treatment of Dividends for Income Tax Purposes ............................................. 41
5.12. Exchange Indenture ......................................................................... 41
5.13. Home Office Payment ........................................................................ 42
ARTICLE VI
COVENANTS OF MERGECO
6.1. Notification of Certain Matters ............................................................ 42
6.2. Commitment Letter .......................................................................... 43
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for Commission Consent ......................................................... 43
7.2. Control of Stations ........................................................................ 43
7.3. Other Governmental Consents ................................................................ 43
7.4. Brokers or Finders ......................................................................... 44
7.5. Additional Agreement ....................................................................... 44
7.6. Other Agreements ........................................................................... 44
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
7.7. Remediation Costs .......................................................................... 44
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation ...................................................... 45
8.2. Conditions to Obligation of Mergeco ........................................................ 45
8.3. Conditions to Obligations of Commodore ..................................................... 47
ARTICLE IX
CLOSING
9.1. Closing .................................................................................... 47
9.2. Actions to Occur at Closing ................................................................ 48
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination ................................................................................ 49
10.2. Effect of Termination ...................................................................... 51
ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Representations, Warranties and Covenants ...................................... 52
11.2. Exclusive Remedy ........................................................................... 52
11.3. Specific Performance ....................................................................... 52
11.4. Knowledge .................................................................................. 53
11.5. Amendment and Modification ................................................................. 53
11.6. Waiver of Compliance; Consents ............................................................. 53
11.7. Validity ................................................................................... 53
11.8. Expenses and Obligations ................................................................... 53
11.9. Parties in Interest ........................................................................ 53
11.10. Notices .................................................................................... 53
11.11. Interpretation ............................................................................. 55
11.12. Counterparts ............................................................................... 55
11.13. Entire Agreement ........................................................................... 55
11.14. Governing Law ..................................................................... 55
11.15. Publicity ......................................................................... 55
</TABLE>
3
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<TABLE>
<CAPTION>
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<S> <C> <C>
11.16. Assignment ........................................................................ 55
11.17. Further Assurances ................................................................ 56
11.18. Director, Officer and Stockholder Liability 56
<CAPTION>
EXHIBITS:
<S> <C> <C>
Exhibit A -- Form of Indemnification Escrow Agreement
Exhibit B -- Form of Letter of Credit Escrow Agreement
Exhibit C -- Form of Certificate of Designations, Preferences and
Rights of Series B Preferred Stock
Exhibit D -- Form of Series B Registration Rights Agreement
Exhibit E -- Form of Warrant Agreement
Exhibit F -- Form of Warrant Registration Rights Agreement
Exhibit G -- Form of Opinion of Pryor, Cashman, Sherman & Flynn
Exhibit H -- Form of Opinion of Haley, Bader & Potts
Exhibit I -- Form of Opinion of Pryor, Cashman, Sherman & Flynn
Exhibit J -- Form of Opinion of Haley, Bader & Potts
Exhibit K -- Form of Opinion of Vinson & Elkins L.L.P.
Exhibit L -- Form of Opinion of Fisher, Wayland, Cooper & Leader
Exhibit M -- Form of Letter of Credit
Exhibit N -- Form of Release
Exhibit O -- Schedule 5.16(b) to the AT&T Agreement
SCHEDULES:
Schedule 1.12 -- List of Indemnitors
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(b) -- Subsidiaries
Schedule 3.1(c) -- List of Stockholders and Ownership
Schedule 3.1(d) -- Absence of Conflicts
Schedule 3.1(e) -- Unrecorded Liabilities and Conduct of Business
Schedule 3.1(f) -- Licenses and Permits
Schedule 3.1(g) -- Litigation
Schedule 3.1(h) -- Insurance
Schedule 3.1(i) -- Real Estate
Schedule 3.1(l) -- Environmental Site Assessment Reports
Schedule 3.1(m) -- Taxes
Schedule 3.1(n) -- Certain Agreements
Schedule 3.1(o) -- Employee Benefit Plans
Schedule 3.1(p) -- Patents, Trademarks; Etc.
Schedule 3.1(q) -- Affiliate Relationships
Schedule 3.2 -- Ownership
</TABLE>
(iv)
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June
21, 1996, is entered into by and among CMI Acquisition Company, Inc., a Delaware
corporation ("Mergeco"), Commodore Media, Inc., a Delaware corporation
("Commodore"), each of the persons identified on Schedule 3.1(c) hereto who are
all of the holders of the issued and outstanding Common Stock (as defined in
Section 1.6(b)) of Commodore (the "Stockholders"), and certain other signatories
hereto for the limited purposes stated herein.
RECITALS:
WHEREAS, Mergeco, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), will merge with and into Commodore (the "Merger");
WHEREAS, the Board of Directors of Mergeco, a wholly-owned subsidiary
of Hicks, Muse, Tate & Furst Equity Fund III, L.P., a Delaware limited
partnership (referred to herein as either the "Parent" or "Fund III"), has
determined that the Merger is in the best interests of Mergeco and the Parent,
has approved and adopted this Agreement and the transactions contemplated hereby
and has recommended to the Parent that it authorize, approve and adopt this
Agreement and the transactions contemplated hereby;
WHEREAS, the Board of Directors of Commodore has determined that the
Merger is in the best interests of Commodore and all holders of capital stock of
Commodore, has approved and adopted resolutions approving this Agreement and the
transactions contemplated hereby and has recommended to the Stockholders that
they authorize, approve and adopt this Agreement and the transactions
contemplated hereby;
WHEREAS, the Parent, by its execution of this Agreement, has consented
to, and has authorized, approved and adopted, this Agreement and the
transactions contemplated hereby; and
WHEREAS, the Stockholders, by their execution of this Agreement, have
consented to, and have authorized, approved and adopted, this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto covenant and agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with Delaware Law, at the Effective Time
(as defined in Section 1.2),
<PAGE> 7
Mergeco shall be merged with and into Commodore. As a result of the Merger, the
separate corporate existence of Mergeco shall cease and Commodore shall continue
as the surviving corporation of the Merger (the "Surviving Corporation"). The
name of the Surviving Corporation shall be "Commodore Media, Inc."
1.2. Effective Time. The Merger shall be consummated, as and when
provided in Section 9.1 hereof, by filing a Certificate of Merger with the
Secretary of State of the State of Delaware, in such form as is required by, and
executed in accordance with the relevant provisions of, Delaware Law (the date
and time of the completion of such filing being the "Effective Time").
1.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject to the applicable
provisions of Delaware Law, at the Effective Time, all the property, rights,
privileges, powers and franchises of Mergeco and Commodore shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Mergeco and
Commodore shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4. Certificate of Incorporation; Bylaws. At the Effective Time, the
Certificate of Incorporation and the Bylaws of Commodore, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation.
1.5. Directors and Officers. The directors of Mergeco immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
at the Effective Time, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Commodore immediately prior to the Effective Time shall be the officers of the
Surviving Corporation at the Effective Time, except that the chief executive
officer of Mergeco immediately prior to the Effective Time shall be the chief
executive officer of the Surviving Corporation at the Effective Time, in each
case until their respective successors are duly elected or appointed and
qualified.
1.6. Merger Consideration; Conversion and Cancellation of Securities.
At the Effective Time, by virtue of the Merger and without any action on the
part of Mergeco, Commodore or the holders of Commodore's securities:
(a) Subject to the other provisions of this Section 1.6, each
share of Class A common stock, par value $0.01 per share, of Commodore ("Class A
Common Stock") issued and outstanding immediately prior to the Effective Time
(excluding any Class A Common Stock described in subsection 1.6(f) of this
Agreement) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive cash in the amount of
the Purchase Price (as defined in subsection 1.6(h)) (the "Class A
Consideration"), without any interest thereon, payable to the holder thereof
upon surrender of the certificate formerly representing such share.
2
<PAGE> 8
(b) Subject to the other provisions of this Section 1.6, each
share of Class B common stock, par value $0.01 per share, of Commodore ("Class B
Common Stock" and, together with the Class A Common Stock, the "Common Stock")
issued and outstanding immediately prior to the Effective Time (excluding any
Class B Common Stock described in subsection 1.6(f) of this Agreement) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive cash in the amount of the Purchase Price
(the "Class B Consideration"), without any interest thereon, payable to the
holder thereof upon surrender of the certificate formerly representing such
share.
(c) Subject to the other provisions of this Section 1.6, each
share of Series A Preferred Stock, par value $0.01 per share, of Commodore
("Series A Preferred Stock") issued and outstanding immediately prior to the
Effective Time (excluding any Series A Preferred Stock described in subsection
1.6(f) of this Agreement) shall, by virtue of the Merger and without any action
on the part of holder thereof, be converted into the right to receive cash in
the amount of $1,000 per share plus all accrued and unpaid dividends on such
share through and excluding the Closing Date (as defined in Section 9.1) (the
"Series A Preferred Stock Consideration" and, together with the Class A
Consideration and the Class B Consideration, the "Merger Consideration"),
without any interest thereon payable to the holder thereof upon surrender of the
certificate formerly representing such share. Mergeco agrees to provide the cash
to be used to pay the Series A Preferred Stock Consideration, which cash shall
be from sources that would not cause a "Default" pursuant to the Indenture dated
as of April 21, 1995, as amended, among Commodore, certain of Commodore's
subsidiaries and IBJ Schroder Bank & Trust Company (the "Indenture").
(d) Subject to the other provisions of this Section 1.6, each
share of Series B Preferred Stock, par value $0.01 per share, of Commodore
("Series B Preferred Stock") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of holder thereof, be converted into the right to receive a number of shares of
the Surviving Corporation Class A Common Stock (as defined in subsection 1.6(g))
determined by dividing $1,000 by the Purchase Price, plus, at the option of Fund
III, cash equal to all accrued and unpaid dividends on such share through and
excluding the Closing Date or an additional number of shares of Surviving
Corporation Class A Common Stock determined by dividing the amount of all
accrued and unpaid dividends on such share of Series B Preferred Stock through
and excluding the Closing Date by the Purchase Price, upon surrender of the
certificate formerly representing such shares. Fractional shares of Surviving
Corporation Class A Common Stock shall be aggregated and rounded to the nearest
whole share.
(e) As a result of their conversion pursuant to subsections
1.6(a), (b), (c) and (d), all converted shares of Class A Common Stock, Class B
Common Stock, and Series A Preferred Stock (collectively, the "Converted
Shares") and Series B Preferred Stock shall cease to be outstanding and shall
automatically be canceled and retired. Until surrendered to the Surviving
Corporation, each certificate previously evidencing the Converted Shares and the
Series B Preferred Stock outstanding immediately prior to the Effective Time
shall be deemed for all purposes to evidence solely the right to receive the
consideration described in subsections 1.6(a), (b), (c) and (d).
3
<PAGE> 9
(f) Notwithstanding any provision of this Agreement to the
contrary, each share of Class A Common Stock, Class B Common Stock or Series A
Preferred Stock held in the treasury of Commodore immediately prior to the
Effective Time shall be canceled and extinguished without any conversion thereof
and no payment shall be made with respect thereto.
(g) Each share of common stock, par value $0.01 per share
("Mergeco Common Stock"), of Mergeco issued and outstanding immediately prior to
the Effective Time shall be converted into one share of Class A common stock,
par value $0.01 per share, of the Surviving Corporation ("Surviving Corporation
Class A Common Stock"). Immediately prior to the Merger, the issued and
outstanding shares of Mergeco Common Stock shall have been issued for an average
price equal to the Purchase Price per share.
(h) The term "Purchase Price" shall mean the amount equal to
$106,757,000 divided by the sum of the number of (A) shares of Common Stock
issued and outstanding immediately prior to the Effective Time, (B) shares of
Class A Common Stock issuable upon exercise of the Options (as defined in
Section 1.7) outstanding immediately prior to the Effective Time and (C) shares
of Class A Common Stock issuable upon exercise of the Warrants (as defined in
Section 1.8) outstanding immediately prior to the Effective Time. The "Purchase
Price" calculation assumes that Commodore shall issue or grant options for the
remaining 35,685 shares of Class A Common Stock authorized for issuance pursuant
to the Option Plan (as defined in Section 1.7) at an exercise price of $45.00
per share. Notwithstanding the first sentence of this subsection 1.6(h) and for
purposes of calculating the Purchase Price, the $106,757,000 amount used to
determine the Purchase Price shall be reduced by the product of $140.00
multiplied times a number determined by subtracting from 35,685 the number of
Options issued pursuant to the Option Plan after the date of this Agreement and
prior to the Effective Time. Furthermore, the $106,757,000 amount used to
determine the Purchase Price may be reduced, and shall be reduced, if so elected
by the Stockholders under Section 10.1(c)(iv), by the excess of the estimated
cost of remediation pursuant to Section 10.1(c)(iv) over $500,000 (subject to
adjustment when the actual cost of remediation is finally determined).
1.7. Employee Stock Options. At the Effective Time, each holder of then
outstanding options ("Options") to purchase shares (the "Option Shares") of
Class A Common Stock granted by Commodore pursuant to its 1995 Stock Option Plan
(the "Option Plan") (whether or not then presently exercisable), except for each
holder of Options who in connection with Section 5.7(a) agrees with the Board of
Directors of Commodore or any committee thereof (the "Committee") administering
the Option Plan that the Options held by such holder shall not be settled
pursuant to this Section 1.7, shall be entitled to receive, and shall receive,
in settlement of each option, a cash payment (the "Option Consideration") from
the Surviving Corporation in an amount equal to the product of (a) the Purchase
Price minus the exercise price per Option Share and (b) the number of Option
Shares (including any fractional Option Shares) covered by such Option, less any
applicable withholding taxes. Each agreement previously evidencing the Options
immediately prior to the Effective Time that are settled pursuant to this
Section 1.7 (the "Settled Options") shall be deemed for all purposes to evidence
solely the right to receive the Option Consideration. The Committee
iv
<PAGE> 10
shall have the right at any time or from time to time following the execution
hereof to accelerate and vest, in full or in part, any and all Settled Options
not currently exercisable in full. The Committee shall take all necessary
actions to make the Option Plan consistent with this treatment of the Options.
1.8. Warrants. Immediately prior to the Effective Time, each holder of
then outstanding warrants (the "Warrants") to purchase shares of Class A Common
Stock granted by Commodore (whether or not then presently exercisable) shall be
entitled to receive, and shall receive, in settlement of each Warrant, where the
amount set forth in clause (i) below is positive, a cash payment (the "Warrant
Consideration") from Commodore in an amount equal to the product of (i) the
Purchase Price minus the exercise price per share of the Warrant and (ii) the
number of shares of Class A Common Stock (including any fractional shares)
covered by such Warrant, less any applicable withholding taxes. Each agreement
or certificate previously evidencing such Warrants (the "Settled Warrants")
immediately prior to the Effective Time shall be deemed for all purposes to
evidence solely the right to receive the Warrant Consideration. Commodore,
acting through its Board of Directors or any committee thereof, shall have the
right at any time or from time to time following the execution hereof to
accelerate and vest, in full or in part, any and all Settled Warrants not
currently exercisable in full.
1.9. Payment; Surrender of Certificates.
(a) Exchange Fund. At or prior to the Effective Time, Mergeco
shall deposit, or cause to be deposited, with a bank or trust company designated
by Mergeco or, at Mergeco's election, with the Surviving Corporation (such bank
or trust company or the Surviving Corporation being referred to as the "Exchange
Agent"), for the benefit of the former holders of Converted Shares, Settled
Options or Settled Warrants, for exchange in accordance with Section 1.9 hereof,
through the Exchange Agent, cash in an amount equal to the difference between
(i) the sum of (A) the product of the Class A Consideration multiplied by the
number of converted shares of Class A Common Stock, (B) the product of the Class
B Consideration multiplied by the number of converted shares of Class B Common
Stock, (C) the product of the Series A Preferred Stock Consideration multiplied
by the number of converted shares of Series A Preferred Stock, (D) the sum of
the Option Consideration applicable to all Settled Options and (E) the sum of
the Warrant Consideration applicable to all Settled Warrants, and (ii) the sum
of (A) $4,000,000 (the "Escrowed Consideration") which shall be deposited with
the Escrow Agent (as defined in Section 1.12 hereof) by the Surviving
Corporation in accordance with the terms of the Indemnification Escrow Agreement
(herein so called) substantially in the form of Exhibit A attached hereto, as
set forth in Section 1.12 hereof and (B) any Merger Consideration, Option
Consideration or Warrant Consideration paid pursuant to Section 1.9(d). The cash
deposited with the Exchange Agent in accordance with this subsection 1.9(a) is
hereinafter referred to as the "Exchange Fund." The Exchange Agent shall,
pursuant to irrevocable instructions, deliver cash or by wire transfer of
immediately available funds, as described above, in exchange for surrendered
certificates or agreements pursuant to the terms of this Agreement out of the
Exchange Fund.
5
<PAGE> 11
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to send
to each record holder of Class A Common Stock, Class B Common Stock, Series A
Preferred Stock, Settled Options or Settled Warrants at the Effective Time other
than those record holders who surrender their Certificates (as defined herein)
pursuant to Section 1.9(d), (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to certificates
theretofore representing Class A Common Stock, Class B Common Stock, and Series
A Preferred Stock and certificates or agreements representing Settled Options or
Settled Warrants (collectively, the"Certificates") shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
contain such other provisions as the Surviving Corporation shall determine) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for cash. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
cash in the amount such holder has the right to receive pursuant to the
provisions of this Article I (less the Escrowed Consideration allocable to such
holder as set forth in Schedule 1.12), and the Certificate so surrendered shall
forthwith be canceled. Until surrendered for exchange in accordance with the
provisions of this Section 1.9, each Certificate theretofore representing
Converted Shares, Settled Options or Settled Warrants shall from and after the
Effective Time represent for all purposes only the right to receive the Merger
Consideration, Option Consideration or Warrant Consideration, as applicable, as
set forth in this Agreement. If any holder of Converted Shares, Settled Options
or Settled Warrants shall be unable to surrender such holder's Certificates
because such Certificates have been lost or destroyed, such holder may deliver
in lieu thereof an affidavit and indemnity bond in form and substance and with
surety reasonably satisfactory to the Surviving Corporation. If payment is to be
made to a person other than the person in whose name the Certificate surrendered
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the Certificate surrendered or shall establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. No
interest shall be paid on any Merger Consideration, Option Consideration or
Warrant Consideration payable to former holders of Converted Shares, Settled
Options or Settled Warrants.
(c) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains unclaimed by the former holders of Converted Shares, Settled
Options or Settled Warrants on the 6-month anniversary of the Closing Date shall
be delivered to the Surviving Corporation, upon demand, and any former holders
of Converted Shares, Settled Options or Settled Warrants who have not
theretofore complied with this Section 1.9 shall thereafter look only to the
Surviving Corporation for the Merger Consideration, Option Consideration or
Warrant Consideration to which they are entitled, without any interest thereon.
(d) Exchange at Closing. Notwithstanding the foregoing
provisions of this Section 1.9, each record holder of a Certificate who
surrenders such Certificate for cancellation to the Surviving Corporation at the
Closing, together with a duly executed letter of transmittal (which
6
<PAGE> 12
shall be available at the Closing), shall be entitled to receive in exchange
therefor in the amount such holder has the right to receive pursuant to the
provisions of this Article I (less the Escrowed Consideration allocable to such
holder as set forth in Schedule 1.12 hereto) payable in cash or by wire transfer
of immediately available funds on the Closing Date, and the Certificate so
surrendered shall forthwith be canceled.
1.10. Stock Transfer Books. At the Effective Time, the stock transfer
books of Commodore shall be closed and there shall be no further registration of
transfers of shares of Class A Common Stock, Class B Common Stock, Series A
Preferred Stock or Series B Preferred Stock on the records of Commodore. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration,
deliverable in respect thereof pursuant to this Agreement in accordance with the
procedures set forth in this Article I.
1.11. Appointment of Indemnitor Representative. By the execution and
delivery of this Agreement, each Indemnitor (as defined in Section 1.12) hereby
irrevocably constitutes and appoints Bruce A. Friedman as the true and lawful
agent and attorney-in-fact (the "Indemnitor Representative") of such Indemnitor
with full power of substitution to act in the name, place and stead of such
Indemnitor with respect to (a) the power to execute any amendment to this
Agreement as the Indemnitor Representative shall deem necessary or appropriate
in his sole discretion and (b) the performance of the obligations and rights of
such Indemnitor under the Indemnification Escrow Agreement, including, without
limitation, the power to execute the Indemnification Escrow Agreement and any
amendments thereto on behalf of such Indemnitor, to do or refrain from doing all
such further acts and things, and to execute, deliver and receive all such
documents, waivers, extensions and amendments as such Indemnitor Representative
shall deem necessary or appropriate in its sole discretion in connection with
the administration of the Indemnification Escrow Agreement (and any such actions
shall be binding on such Indemnitor).
Mergeco and any other person may conclusively and absolutely rely,
without inquiry, upon any action of the Indemnitor Representative as the action
of each Indemnitor in all matters referred to herein, and each Indemnitor
confirms all that said Indemnitor Representative shall do or cause to be done by
virtue of his appointment as Indemnitor Representative. All actions by the
Indemnitor Representative are acknowledged by the parties hereto to be taken by
it solely as agent and attorney-in-fact for each Indemnitor. By the execution of
this Agreement, Bruce A. Friedman has accepted his appointment as Indemnitor
Representative. Each Indemnitor covenants and agrees that he or it will not
voluntarily revoke the power of attorney conferred in this Section 1.11. If any
Indemnitor dies or becomes incapacitated, disabled or incompetent (such
deceased, incapacitated, disabled or incompetent Indemnitor being a "Former
Indemnitor") and, as a result, the power of attorney conferred by this Section
1.11 is revoked by operation of law, it shall not be a breach under this
Agreement if the heirs, beneficiaries, estate, administrator, executor,
guardian, conservator or other legal representative of such Former Indemnitor
(each a "Successor Indemnitor") confirms the appointment of the Indemnitor
Representative as agent and attorney-in-fact for such Successor Indemnitor. If
the power of attorney conferred by this Section 1.11 is revoked by operation of
law
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and thereafter not reconfirmed by the Successor Indemnitor prior to the Closing,
such revocation shall not be deemed a breach of any of the provisions of this
Agreement provided that such Successor Indemnitor executes and delivers such
other certificates, documents or instruments (including, without limitation, any
amendments hereto and the Indemnification Escrow Agreement) that would have been
delivered on its behalf by the Indemnitor Representative had such Successor
Indemnitor reconfirmed the agency and power of attorney conferred by this
Section 1.11.
1.12. Indemnification Escrow. Subject to Sections 11.1 and 11.2
hereof, the Stockholders and each other person listed on Schedule 1.12
(collectively, with the Stockholders, the "Indemnitors") have agreed to
indemnify the Surviving Corporation from and against any claims by the Surviving
Corporation (and certain other indemnified parties) for losses pursuant to the
terms of the Indemnification Escrow Agreement. On or prior to the Closing, the
Surviving Corporation, the Indemnitor Representative, on behalf of the
Indemnitors, and Citibank, N.A. (or such other entity or person as Mergeco and
the Indemnitor Representative shall mutually select) (the "Escrow Agent") shall
enter into an Indemnification Escrow Agreement in the form of Exhibit A attached
hereto, subject only to the last sentence of this Section 1.12 and the comments,
if any, of the Escrow Agent as to its rights and obligations thereunder, whereby
the Indemnitors shall agree that the Escrowed Consideration attributable to each
Indemnitor, as specified beside his or its name on Schedule 1.12, shall be
deposited into and held in escrow under and pursuant to the terms of the
Indemnification Escrow Agreement. The Surviving Corporation is directed by each
Indemnitor to deposit the amount shown beside his or its name on Schedule 1.12
with the Escrow Agent immediately after the Effective Time and the Surviving
Corporation shall make such deposit as directed and each Indemnitor shall be
released from any further obligation with respect to the deposit. Subsequent to
the date of this Agreement, but prior to the Closing, other persons may be (a)
substituted for the Indemnitors initially listed on Schedule 1.12 or (b) added
to Schedule 1.12, and the amount of the Escrowed Consideration attributable to
each Indemnitor listed on such schedule may be changed, provided that the total
amount listed on Schedule 1.12 shall at all times be equal to the Escrowed
Consideration. Notice of any such changes to Schedule 1.12 shall be provided to
Mergeco by prompt delivery of a revised Schedule 1.12 to Mergeco. The parties
hereto agree that the Indemnification Deductible (as defined in the
Indemnification Escrow Agreement) shall equal $600,000 less any reduction
thereto as contemplated by Sections 7.7 and 10.1(c)(iv).
1.13. Approval of Merger.
(a) The Stockholders, in their capacity as stockholders of
Commodore, by their execution hereof, consent to, and authorize, approve and
adopt, this Agreement and the transactions contemplated hereby.
(b) Parent, in its capacity as the sole stockholder of
Mergeco, by its execution hereof, consents to, and authorizes, approves and
adopts, this Agreement and the transactions contemplated hereby.
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ARTICLE II
SERIES B PREFERRED STOCK
2.1. Purchase of Preferred Stock. (a) On or before the First Purchase
Date (as defined in Section 2.1(c)), the Board of Directors of Commodore shall,
and has agreed to, fix the designation of 120,000 or more shares of preferred
stock as "Series B Preferred Stock" with the powers, preferences, and relative
participating, optional, or other special rights and qualifications,
limitations, or restrictions thereof as set forth on the Certificate of
Designations, Preferences and Rights of Series B Preferred Stock attached as
Exhibit C hereto (the "Series B Certificate of Designations"), which the Board
of Directors of Commodore shall, and hereby agrees to, file with the Secretary
of State of the State of Delaware on or before the First Purchase Date. Upon
filing the Series B Certificate of Designations, the Board of Directors of
Commodore shall authorize the issuance of up to, subject to satisfaction of the
terms and conditions of this Article II, and shall reserve, 20,000 shares of
Series B Preferred Stock for issuance to Fund III, in exchange for consideration
equal to $1,000 per share, payable in cash. The parties hereto who are parties
to the following agreements have, contemporaneously with the execution hereof,
executed and delivered such agreements to Bankers Trust Company ("Bankers
Trust"), 130 Liberty Street, New York, New York 10006, Attention: Mary Kay
Coyle: (i) the Registration Rights Agreement to be effective as of the First
Purchase Date, by and among Commodore and Fund III substantially in the form
attached as Exhibit D hereto (the "Series B Registration Rights Agreement"),
(ii) the Warrant Agreement to be effective as of the date of termination of this
Agreement, between Commodore and Fund III substantially in the form attached as
Exhibit E hereto (the "Warrant Agreement"), and (iii) the Common Stock
Registration Rights Agreement to be effective as of the date of termination of
this Agreement, among Commodore, the stockholders of Commodore named therein and
Fund III substantially in the form attached as Exhibit F hereto (the "Warrant
Registration Rights Agreement" and together with the Warrant Agreement, the
"Warrant Documents"). If (A) this Agreement is terminated, and the Preferred
Shares (as defined in Section 2.1(b)), if any, are redeemed by Commodore within
60 calendar days after the Final Purchase Date or (B) the Merger is consummated,
the Warrant Documents and the Series B Warrants (as defined in Section 2.1(c))
issued to Fund III shall terminate and become null and void without further
force or effect.
(b) Subject to the conditions set forth in Section 2.2, Fund
III hereby covenants and agrees that (i) if requested by Commodore on or after
August 20, 1996 and prior to the termination of this Agreement, Fund III, upon
10 business days prior written notice from Commodore, shall purchase (the "First
Purchase") up to 5,000 shares of Series B Preferred Stock from Commodore in a
single transaction at a purchase price of $1,000 per share, or up to $5,000,000
in the aggregate (and only in increments of $500,000), payable in cash and (ii)
if this Agreement is terminated pursuant to any subsection of Section 10.1 other
than pursuant to subsection 10.1(b)(i) as a result of a breach by Commodore or
any of the Indemnitors or subsection 10.1(c)(iii), and if requested in writing
by Commodore within 10 business days after such termination, Fund III shall
purchase (the "Final Purchase") up to 20,000 shares of Series B Preferred Stock
from Commodore at a purchase price of $1,000 per share, or up to $20,000,000 in
the aggregate (and only in
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<PAGE> 15
increments of $500,000), less the amount of any Series B Preferred Stock
previously purchased from Commodore pursuant to clause (i) above, payable in
cash (collectively with the shares purchased in subsection 2.1(b)(i), the
"Preferred Shares"). Notwithstanding clause (b)(ii) in the immediately preceding
sentence, if Commodore terminates this Agreement pursuant to subsection
10.1(b)(i) or 10.1(d)(i) and Commodore seeks liquidated damages pursuant to
Section 10.2, subject to the conditions set forth in Section 2.2, Fund III shall
only be obligated to purchase up to 12,500 shares of Series B Preferred Stock
from Commodore at a purchase price of $1,000 per share, or up to $12,500,000 in
the aggregate (and only in increments of $500,000), less the amount of any
Series B Preferred Stock previously purchased pursuant to clause (b)(i) of the
immediately preceding sentence. If Commodore requests Fund III to purchase the
Preferred Shares, Commodore hereby agrees to issue the Preferred Shares to Fund
III in exchange for the consideration set forth in the immediately preceding
sentence and subject to the conditions set forth in Section 2.3.
(c) On the date of the First Purchase (the "First Purchase
Date"), if any, Fund III shall be entitled to receive a certificate or
certificates in the name of Fund III evidencing warrants to purchase shares of
Class A Common Stock (the "Series B Warrants"), which Series B Warrants shall be
issued pursuant to the terms of the Warrant Agreement and be exercisable for
shares of Class A Common Stock equal to 1% of Commodore's fully diluted Common
Stock for each $2,500,000 of the purchase price paid for the Preferred Shares
acquired on the First Purchase Date, with proportionate adjustments to the 1%
for amounts invested of less than $2,500,000. The Series B Warrants to which
Fund III becomes entitled on the First Purchase Date shall be delivered by
Commodore to Bankers Trust, at the address specified in Section 2.1(a), on the
earlier to occur of (i) the date of the Final Purchase (the "Final Purchase
Date," and together with the First Purchase Date, the "Purchase Date") or (ii)
the 11th business day after termination of this Agreement pursuant to any
subsection of Section 10.1 in the event that Commodore does not make a request
of Fund III to purchase shares of Series B Preferred Stock as contemplated by
Section 2.1(b)(ii). If this Agreement is terminated pursuant to Section 10.1, on
the Final Purchase Date, if any, Fund III shall be entitled to receive a
certificate or certificates in the name of Fund III evidencing Series B
Warrants, which Series B Warrants shall be issued pursuant to the terms of the
Warrant Agreement and be exercisable for shares of Class A Common Stock equal to
1% of Commodore's fully diluted Common Stock for each $2,500,000 of the purchase
price paid for the Preferred Shares acquired on the Final Purchase Date, with
proportionate adjustments to the 1% for amounts invested of less than
$2,500,000. The Series B Warrants to which Fund III becomes entitled on the
Final Purchase Date, if any, shall be delivered by Commodore to Bankers Trust,
at the address specified in Section 2.1(a), on the Final Purchase Date. For
purposes of the Warrant Agreement, the term "fully diluted Common Stock" means,
as of each Purchase Date, the sum of all shares of Common Stock issued and
outstanding plus the number of shares of Common Stock issuable upon the exercise
of all options (assuming all Options that may be granted under the Option Plan
have been granted), warrants (including any warrants that may be issuable
pursuant to the letter agreement dated June 21, 1996, between CIBC WG Argosy
Merchant Fund 2, L.L.C. and Commodore), calls, rights, conversion rights,
commitments or agreements of any character to which Commodore is a party or by
which it is bound obligating Commodore to issue, deliver or sell additional
shares of Common Stock, or obligating Commodore to grant, extend or enter into
any such option, warrant, call, right, conversion right, commitment or
agreement.
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2.2. Conditions to Fund III's Obligation. (a) The obligation of Fund
III to purchase the Preferred Shares on the First Purchase Date is subject to
the satisfaction of the following conditions on the First Purchase Date unless
waived by Fund III:
(i) the conditions set forth in Sections 8.1(a), (b)
and (c) (to the extent applicable to the sale of the Preferred Shares)
shall be satisfied as of the First Purchase Date (as though the
Purchase Date were the Closing Date);
(ii) the representations and warranties of Commodore
set forth in Sections 3.1(e) and (f) (with respect to FCC matters only)
of this Agreement shall be true and correct in all material respects
for any representation or warranty not already qualified for
materiality as of the date of this Agreement and as of the First
Purchase Date as though made on and as of the First Purchase Date, and
Fund III shall have received a certificate signed on behalf of
Commodore by the chief executive officer or by the chief financial
officer to such effect;
(iii) Commodore shall have performed in all material
respects the obligations required to be performed by Commodore pursuant
to all covenants of Commodore (including Article II), except Section
4.2, prior to the First Purchase Date, and Mergeco shall have received
a certificate signed on behalf of Commodore by the chief executive
officer or by the chief financial officer to such effect;
(iv) the consummation of the sale of the Preferred
Shares on the First Purchase Date shall not have caused or shall not
cause a default under the AT&T Agreement (as defined in Section 4.1(i))
or the Indenture, and Mergeco shall have received a certificate signed
on behalf of Commodore by the chief executive officer or by the chief
financial officer to such effect; and
(v) Fund III shall have received from (A) Pryor,
Cashman, Sherman & Flynn, counsel to Commodore, and (B) Haley, Bader &
Potts, special FCC counsel to Commodore, one or more opinions dated the
First Purchase Date, in substantially the forms attached as Exhibits G
and H hereto, which opinions shall expressly provide that they may be
relied upon by Fund III's lenders or other sources of financing with
respect to the transactions contemplated hereby.
(b) The obligation of Fund III to purchase the Preferred
Shares on the Final Purchase Date is subject to the satisfaction of the
following conditions on the Final Purchase Date (notwithstanding the fact that
this Agreement, but not Article II or Sections 5.11, 5.12 and 5.13, has been
terminated to the extent set forth in Article X) unless waived by Fund III:
(i) the conditions set forth in Sections 8.1(a), (b)
and (c) (to the extent applicable to the sale of Preferred Shares)
shall be satisfied as of the Final Purchase Date (as though the Final
Purchase Date were the Closing Date);
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<PAGE> 17
(ii) the representations and warranties of Commodore
set forth in Sections 3.1(e) and (f) (with respect to FCC matters only)
of this Agreement shall be true and correct in all material respects
for any representation or warranty not already qualified for
materiality as of the date of this Agreement and as of the Final
Purchase Date as though made on and as of the Final Purchase Date, and
Fund III shall have received a certificate signed on behalf of
Commodore by the chief executive officer or by the chief financial
officer to such effect;
(iii) Commodore shall have performed in all material
respects the obligations required to be performed by Commodore pursuant
to this Article II and Sections 4.1, 5.4, 5.8, 5.10, 5.11, 5.12, 5.13
and 7.6 (only with respect to the Letter of Credit Escrow Agreement),
and Fund III shall have received a certificate signed on behalf of
Commodore by the chief executive officer or by the chief financial
officer to such effect;
(iv) the consummation of the sale of the Preferred
Shares on the Final Purchase Date shall not have caused or shall not
cause a default under the AT&T Agreement (as defined in Section 4.1(i))
or the Indenture, and Mergeco shall have received a certificate signed
on behalf of Commodore by the chief executive officer or by the chief
financial officer to such effect;
(v) if Fund III is requested to purchase more than
12,500 shares of Series B Preferred Stock (less the amount of Preferred
Shares previously purchased from Commodore pursuant to Section
2.1(b)(i)) on the Final Purchase Date, Fund III shall have received a
Release (herein so called) from Commodore in the form attached as
Exhibit N hereto;
(vi) if Fund III satisfied its payment obligations on
the First Purchase Date, if any, Commodore shall have complied with
Section 2.5(d); and
(vii) Fund III shall have received from (A) Pryor,
Cashman, Sherman & Flynn, counsel to Commodore, and (B) Haley, Bader &
Potts, special FCC counsel to Commodore, one or more opinions dated the
Final Purchase Date, in substantially the forms attached as Exhibits G
and H hereto, which opinions shall expressly provide that they may be
relied upon by Fund III's lenders or other sources of financing with
respect to the transactions contemplated hereby.
2.3. Conditions to Commodore's Obligations. The obligation of Commodore
to sell the Preferred Shares is subject to the satisfaction of the following
conditions unless waived by Commodore:
(a) The conditions set forth in Sections 8.1(a), (b) and (c)
(to the extent applicable to the sale of the Preferred Shares) shall be
satisfied as of the Purchase Date (as though each Purchase Date were the Closing
Date).
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2.4. Closing. (a) The closing on each Purchase Date will take place at
the offices of Pryor, Cashman, Sherman & Flynn, New York, New York, at 10:00
a.m., local time, or at such other place and time as Fund III and Commodore may
agree. Subject to the satisfaction or waiver of the conditions set forth in
Sections 2.2 and 2.3, the closing on each Purchase Date shall occur 10 business
days after Fund III has received written notice from Commodore as required by
subsection 2.1(b) (which notice with respect to the First Purchase may not be
delivered prior to August 20, 1996).
(b) At each closing, Fund III shall deliver to Commodore the
purchase price of the Preferred Shares in immediately available funds via wire
transfer or other means acceptable to Commodore.
(c) At each closing, Commodore shall deliver to Fund III
(Bankers Trust, in the case of clauses (c)(iii), (c)(iv) and (c)(v), at the
address specified in Section 2.1(a)) the following:
(i) in the case of the First Purchase, the
certificates described in Sections 2.2(a)(ii), (a)(iii) and (a)(iv),
and, in the case of the Final Purchase, the certificates described in
Sections 2.2(b)(ii), (b)(iii) and (b)(iv);
(ii) in the case of the First Purchase, the opinions
of counsel in Section 2.2(a)(v) and, in the case of the Final Purchase,
the opinions of counsel in Section 2.2(b)(vi);
(iii) the certificate(s) evidencing ownership by Fund
III of the Preferred Shares acquired at the closing;
(iv) in the case of a purchase of more than 12,500
shares of Series B Preferred Stock (less the amount of Series B
Preferred Stock purchased from Commodore pursuant to Section 2.1(b)(i))
on the Final Purchase Date, the Release;
(v) in the case of the Final Purchase Date, the
certificate(s) evidencing ownership by Fund III of the Series B
Warrants to which Fund III is entitled pursuant to Section 2.1(c) in
regard to Preferred Shares acquired on the First Purchase Date and the
Final Purchase Date; and
(vi) in the case of the First Purchase, a certified
copy of the Series B Certificate of Designations and any amendment to
the Certificate of Incorporation of Commodore to increase the number of
authorized shares of preferred stock.
2.5. Letter of Credit. (a) Concurrently with the execution of this
Agreement and as security for (i) Fund III's agreement to purchase the Preferred
Shares from Commodore and (ii) liquidated damages that may be payable by Mergeco
to Commodore pursuant to Section 10.2, Fund III shall deliver to Commodore an
original, irrevocable letter of credit, in substantially the form of
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Exhibit M attached hereto, issued by Bankers Trust in favor of Commodore and the
Escrow Agent as joint beneficiaries (the "Letter of Credit") for the sum of
$20,000,000. If the Letter of Credit is close to expiration, Fund III, at its
option, may substitute a similar letter of credit therefor, and Commodore and
Fund III hereby agree to take any action required by the terms of the Letter of
Credit Escrow Agreement to effect such substitution.
(b) If Fund III is required to purchase Preferred Shares on a
Purchase Date pursuant to this Article II and has not complied with its payment
obligations pursuant to Section 2.4(b), then on or after such Purchase Date,
Commodore shall be entitled and is hereby authorized to draw as a beneficiary
under the Letter of Credit the amount of the purchase price for the Preferred
Shares payable by Fund III pursuant to this Article II, and Commodore agrees
that it will draw as a beneficiary under the Letter of Credit, only if the
following conditions have been satisfied:
(i) all conditions to the obligation of Fund III
pursuant to Section 2.2 to purchase the Preferred Shares pursuant to
this Article II have been satisfied;
(ii) this Agreement has not been terminated pursuant
to (A) Section 10.1(b)(i) as a result of the breach of Commodore or any
Stockholder or (B) 10.1(c)(iii);
(iii) Commodore has delivered to Bankers Trust, a
certificate or certificates evidencing ownership by Fund III of the
number of Preferred Shares then being purchased determined by dividing
the amount of the draw on the Letter of Credit by $1,000;
(iv) in the case of the Final Purchase, Commodore has
delivered a certificate or certificates evidencing Series B Warrants to
purchase the number of shares of Class A Common Stock required by the
Warrant Agreement to Bankers Trust at the address stated in Section
2.1(a); and
(v) if more than 12,500 shares of Series B Preferred
Stock are being, or have been, issued to Fund III, Commodore has
delivered the Release to Mergeco and Bankers Trust.
(c) Commodore hereby agrees and understands that if it seeks
liquidated damages pursuant to Section 10.2 and becomes entitled thereto, the
Escrow Agent, and not Commodore, may draw on the Letter of Credit for liquidated
damages and only in accordance with the terms of the Letter of Credit Escrow
Agreement.
(d) If Fund III satisfied its payment obligations on the First
Purchase Date, Commodore hereby covenants and agrees to deliver a Reduction
Certificate to Bankers Trust and Fund III on the First Purchase Date whereby the
amount of the Letter of Credit shall be reduced by the purchase price of the
Preferred Shares purchased by Fund III on such date.
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(e) Upon satisfaction and performance in full of Fund III's
obligations pursuant to this Article II and, Mergeco's obligations, if any,
pursuant to Section 10.2, Commodore hereby covenants and agrees, not to
thereafter draw as a beneficiary under the Letter of Credit and also to return
the Letter of Credit to Fund III for cancellation. Commodore agrees to deliver
the Letter of Credit to Fund III on the Closing Date for cancellation.
2.6. Release of Letter of Credit from Escrow. If Commodore seeks
liquidated damages pursuant to Section 10.2 and delivers the Letter of Credit to
the Escrow Agent to be held in escrow pursuant to the terms of the Letter of
Credit Escrow Agreement, then (a) if (i) Commodore is otherwise paid liquidated
damages due under Section 10.2, or (ii) Commodore and Mergeco agree that
Commodore is not entitled to the $7,500,000 as liquidated damages, Commodore and
Mergeco shall deliver joint written instructions to the Escrow Agent authorizing
the release of the Letter of Credit to Fund III for cancellation; (b) if
Commodore and Mergeco agree that Commodore is entitled to the $7,500,000 as
liquidated damages, Commodore and Mergeco shall deliver joint written
instructions to the Escrow Agent authorizing the Escrow Agent to draw $7,500,000
on the Letter of Credit as liquidated damages and release such funds to
Commodore; (c) if a final non-appealable judgment of a court of competent
jurisdiction (a "Final Determination") establishes Commodore's right to
liquidated damages pursuant to Section 10.2, Commodore shall deliver a copy of
the Final Determination to the Escrow Agent authorizing the Escrow Agent to draw
$7,500,000 on the Letter of Credit as liquidated damages and release such funds
to Commodore; or (d) if a Final Determination establishes Fund III's right to
the Letter of Credit, Mergeco shall deliver a copy of the Final Determination to
the Escrow Agent authorizing the release of the Letter of Credit to Fund III for
cancellation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding Commodore. Commodore
represents and warrants to Mergeco and Parent as follows (with the understanding
that Mergeco is relying on such representations and warranties in entering into
and performing this Agreement).
(a) Organization, Good Standing, Etc. Each of Commodore and
its subsidiaries (as defined below) is a corporation or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (or organization), has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to do
business in each state listed on Schedule 3.1(a), which states represent every
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except where the failure to
so qualify or be in good standing could not have a material adverse effect on
the business, operations, properties, condition (financial or otherwise),
results of operations, assets or liabilities of Commodore and its subsidiaries,
taken as a whole (a "Material Adverse Effect"). Commodore
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<PAGE> 21
has delivered to Mergeco true and complete copies of the Certificates or
Articles of Incorporation and Bylaws (or other organizational documents) of
Commodore and each of its subsidiaries, as in effect at the date of this
Agreement.
(b) Subsidiaries of Commodore. Except as disclosed on
Schedule 3.1(b), Commodore does not own, directly or indirectly, any
subsidiaries or have the right, pursuant to a contract or otherwise, to acquire
any capital stock, equity interest or other similar investment in any
corporation, partnership, joint venture association, limited liability company,
trust or other entity. Each subsidiary listed on Schedule 3.1(b), which schedule
also discloses the state of incorporation of each subsidiary listed thereon, is
a directly or indirectly wholly-owned subsidiary of Commodore. For purposes of
this Agreement, a "subsidiary" of any person means any corporation or other
entity of which the referenced person owns, directly or indirectly, 50% or more
of the capital stock or other equity interests ordinarily entitled to vote for
the election of directors or persons performing comparable duties of such
corporation or entity. For purposes of this Agreement, "person" means any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other
legal entity.
(c) Capital Structure. The authorized capital stock of
Commodore consists of 3,000,000 shares of Class A Common Stock, 486,373 shares
of Class B Common Stock, and 100,000 shares of preferred stock, par value $0.01
per share, of which Commodore has designated 75,000 shares as Series A Preferred
Stock and the balance of which are undesignated. As of the date hereof, 61,002
shares of Class A Common Stock are issued and outstanding, 85,524 shares of
Class A Common Stock are held by Commodore in its treasury, and 215, 175 shares
of Class A Common Stock are reserved for issuance as follows: (x) 83,050 shares
are reserved for issuance upon exercise of all of the issued and outstanding
warrants, (y) 96,440 shares are reserved for issuance upon exercise of Options
outstanding under the Option Plan, and (z) 35,685 shares are reserved for
issuance and available for grant pursuant to the Option Plan. As of the date
hereof, all of the authorized shares of Class B Common Stock are issued and
outstanding. As of the date hereof, 10,000 shares of the Series A Preferred
Stock and no shares of Series B Preferred Stock are issued and outstanding.
There are no bonds, debentures, notes or other indebtedness issued or
outstanding having the right to vote ("Voting Debt") on any matters on which
holders of Common Stock may vote. All the issued and outstanding shares of
capital stock of Commodore are duly authorized, validly issued, fully paid and
nonassessable and have not been, and as to shares issued in the future, will not
be, issued in violation of any preemptive or similar rights. The Preferred
Shares, when issued, will be duly authorized, validly issued, fully paid and
nonassessable and will not be issued in violation of any preemptive or similar
rights. The Series B Warrants, if and when issued, will be duly authorized and
validly issued and the requisite number of shares of Class A Common Stock shall
be reserved for issuance upon exercise of the Series B Warrants. The shares of
Class A Common Stock issuable upon exercise of the Series B Warrants, if any,
will, upon exercise of the Series B Warrants, be duly authorized, validly
issued, fully paid and nonassessable and will not be issued in violation of any
preemptive or similar rights. All shares of capital stock issued pursuant to the
Merger will be duly authorized, validly issued, fully paid and nonassessable and
will not be issued in violation of any preemptive or similar rights. All the
issued and outstanding shares of
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capital stock of each subsidiary of Commodore are duly authorized, validly
issued, fully paid and nonassessable and have not been issued in violation of
any preemptive or similar rights. Except for the Options and the Warrants and
pursuant to the terms of this Agreement, there are no options, warrants, calls,
rights, commitments or agreements of any character to which Commodore or any of
its subsidiaries is a party or by which any of them is bound obligating
Commodore or any of its subsidiaries to issue, deliver or sell, or cause to be,
delivered or sold, additional shares of capital stock or any Voting Debt of
Commodore or any of its subsidiaries, or obligating Commodore or any of its
subsidiaries to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement. To the extent that the treatment of the Options
in Section 1.7 is not consistent with the terms of the Option Plan, the Option
Plan has been amended to permit such treatment. Schedule 3.1(c) to this
Agreement identifies as of the date hereof the record and beneficial owner, if
different, of (i) the issued and outstanding shares of Class A Common Stock,
(ii) the issued and outstanding shares of Class B Common Stock, and (iii) the
issued and outstanding shares of Series A Preferred Stock in each case
identifying the number of shares of Class A Common Stock, Class B Common Stock,
and Series A Preferred Stock owned by each such record and beneficial owner as
of the date hereof. Schedule 3.1(c) to this Agreement also sets forth a complete
and correct list as of the date hereof of (i) to the extent known by Commodore,
the holder of each Warrant, including in the case of each Warrant, the number of
shares of Class A Common Stock attributable to such Warrant and the number of
Warrants then exercisable, and (ii) the holder of each Option, including in the
case of each Option, the number of Option Shares attributable to such Option and
the number of Option Shares then exercisable. Schedule 3.1(c) to this Agreement
also sets forth the capitalization of each subsidiary of Commodore, including
the number of authorized shares of each class of capital stock and the par value
(if any) thereof, the number of shares of each class of capital stock held in
the treasury of the subsidiary, and the number of issued and outstanding shares
of each class of capital stock and the names of (and number of shares held by)
the record owners thereof.
(d) Authority. Commodore has all requisite corporate power
and authority to enter into this Agreement, the Indemnification Escrow
Agreement, the Letter of Credit Escrow Agreement, the Series B Registration
Rights Agreement and the Warrant Documents (collectively, the "Transaction
Documents") and to consummate the transactions contemplated hereby. The
execution and delivery of the Transaction Documents by Commodore and the
consummation by it of the transactions contemplated hereby or thereby have been
duly authorized by all necessary corporate action on the part of Commodore
(including the authorization, approval and adoption of this Agreement and the
transactions contemplated hereby by the holders of capital stock entitled to
vote hereon). The Transaction Documents have been duly executed and delivered
or, when executed and delivered in accordance herewith, will be duly executed
and delivered by Commodore and constitute or, when executed and delivered, will
constitute the valid and binding obligations of Commodore, enforceable against
it in accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). Neither the execution and delivery of the
Transaction Documents nor, except as described on Schedule 3.1(d), the
consummation of the
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<PAGE> 23
transactions contemplated hereby or thereby will (i) violate, conflict with or
result in any breach of any provision of the Certificates or Articles of
Incorporation or Bylaws of Commodore or any of its subsidiaries, (ii) violate,
conflict with or result in a violation or breach of, or constitute a default
(with or without due notice or lapse of time or both) under, or permit the
termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of Commodore or
otherwise) any obligation, or result in the loss of any benefit, or give any
person the right to require any security to be repurchased, or give rise to the
creation of any lien, charge, security interest or encumbrance upon any of the
properties or assets of Commodore or any of its subsidiaries under any of the
terms, conditions or provisions of any loan or credit agreement, note, bond,
mortgage, indenture or deed of trust, or any license, lease, agreement or other
material instrument or obligation to which any of them is a party or by which
they or any of their properties or assets may be bound or affected, or (iii)
violate any order, writ, judgment, injunction, decree, statute, rule or
regulation, of any court or any federal, state or local administrative agency or
commission or other governmental authority or instrumentality (a "Governmental
Entity") applicable to Commodore or any of its subsidiaries or any of their
respective properties or assets. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Commodore or any of its subsidiaries in
connection with the execution and delivery of this Agreement by Commodore or the
consummation of the transactions contemplated hereby, except for (i) the filing
of a premerger notification report under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the consents of the
Federal Communications Commission (the "FCC") to the transfers of control of the
Station Licenses (as defined in Section 3.l(f)(ii) below) as contemplated by
Section 7.1 hereof, and (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware.
(e) Reports; Financial Statements.
(i) Commodore and its subsidiaries have filed (A) all
forms, reports, statements and other documents required to be filed
with (1) the Securities and Exchange Commission (the "SEC"), including
without limitation (w) all Annual Reports on Form 10-K, (x) all
Quarterly Reports on Form 10-Q, (y) all Current Reports on Form 8-K and
(z) all other reports, schedules, registration statements or other
documents (collectively referred to as the "Company SEC Reports"), and
(2) any applicable state securities authorities and (B) all material
forms, reports, statements and other documents required to be filed
with any other Governmental Entities, including the FCC (all such
forms, reports, statements and other documents in clauses (A) and (B)
of this subsection 3.1(e)(i) being referred to herein, collectively, as
the "Company Reports"). The Company Reports were prepared in all
material respects in accordance with the requirements of applicable law
(including, with respect to the Company SEC Reports, the Securities Act
of 1933 (the "Securities Act") or the Securities Exchange Act of 1934
(the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Company SEC
Reports) and the Company SEC Reports did not at the time they were
filed contain any untrue statement of a material fact or omit to state
a material fact required to be
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<PAGE> 24
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(ii) Commodore has delivered to Mergeco copies of the
audited consolidated balance sheets as of December 31, 1995 and
December 31, 1994, together with the related audited consolidated
statements of income, cash flows and changes in stockholders' equity of
Commodore for the years ended December 31, 1995, 1994 and 1993, and the
notes thereto, accompanied by the reports thereon of Ernst & Young LLP,
and Weeks DeGraw & Company, P.A. independent public accountants (such
audited financial statements collectively being referred to as the
"Financial Statements"). The Financial Statements, including the notes
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis ("GAAP") throughout the
periods covered thereby and present fairly, in all material respects,
the consolidated financial position, results of operations and changes
in cash flows of Commodore as of such dates and for the periods then
ended. The consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports (A)
have been prepared in accordance with the published rules and
regulations of the SEC and GAAP applied on a consistent basis
throughout the periods involved (except (1) to the extent disclosed
therein or required by changes in GAAP, (2) with respect to Company SEC
Reports filed prior to the date of this Agreement, as may be indicated
in the notes thereto, and (3) in the case of the unaudited financial
statements, as permitted by the rules and regulations of the SEC) and
(B) fairly present the consolidated financial position of Commodore and
its subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods
indicated (subject, in the case of unaudited consolidated financial
statements for interim periods, to adjustments, consisting only of
normal, recurring accruals, necessary to present fairly such results of
operations and cash flows), except that any pro forma financial
statements contained in such consolidated financial statements are not
necessarily indicative of the consolidated financial position of
Commodore and its subsidiaries as of the respective dates thereof and
the consolidated results of operations and cash flows for the periods
indicated. The calculation of EBITDA (as defined in Section 8.2(f)),
when delivered to Mergeco pursuant to Section 8.2(f), will fairly
reflect the books and records of Commodore, its subsidiaries and
entities or assets to be acquired as contemplated herein on a pro forma
basis.
(iii) Except as disclosed in Schedule 3.1(e), there
is no liability or obligation of any kind, whether accrued, absolute,
fixed or contingent, of Commodore or its subsidiaries that is not
reflected or reserved against in the balance sheet contained in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the
"Balance Sheet"), other than (A) liabilities incurred in the ordinary
course of business in a manner consistent with past practice since
March 31, 1996 (the "Balance Sheet Date"), or (B) any such liability or
obligation which would not be required to be presented in financial
statements or the notes thereto prepared in conformity with the GAAP
applied, in a manner consistent with past
19
<PAGE> 25
practice, in the preparation of the Financial Statements and the
consolidated financial statements contained in Company SEC Reports.
(iv) Except as disclosed in Schedule 3.1(e), since
the Balance Sheet Date, Commodore and its subsidiaries have conducted
their respective businesses only in the ordinary course consistent with
past practice and nothing has occurred that would have been prevented
by Section 4.1 if the terms of such section had been in effect as of
and after the Balance Sheet Date. Except as disclosed in Schedule
3.1(e), since the Balance Sheet Date and through (and including) the
date of this Agreement, there has not occurred, and Commodore and its
subsidiaries have not incurred or suffered, any Material Adverse Effect
or any event, circumstance, or fact that could have a Material Adverse
Effect.
(f) Compliance with Applicable Laws: FCC Matters.
(i) Except as permitted or contemplated hereby, the
businesses of Commodore and its subsidiaries have been conducted in
material compliance with each applicable law, ordinance, regulation,
judgment, decree, injunction, rule or order of the FCC or any other
Governmental Entity binding on Commodore or any of its subsidiaries or
their respective properties or assets. No investigation or review by
any Governmental Entity with respect to Commodore or any of its
subsidiaries is pending or, to Commodore's knowledge, threatened.
Without limiting the generality of the foregoing, Commodore and its
subsidiaries have complied in all material respects with the
Communications Act of 1934, as amended (the "Communications Act"), all
rules, regulations and written policies of the FCC thereunder, all
obligations with respect to equal opportunity under applicable law, and
all rules and regulations of the Federal Aviation Administration
applicable to the towers used by the radio broadcast stations operated
by Commodore and its subsidiaries (the "Stations"). In addition,
Commodore and its subsidiaries have duly and timely filed, or caused to
be so filed, with the FCC all material reports, statements, documents,
registrations, filings or submissions with respect to the operation of
the Stations and the ownership thereof, including, without limitation,
applications for renewal of authority required by applicable law to be
filed. All such FCC filings complied in all material respects with
applicable laws when made and no material deficiencies have been
asserted with respect to any such filings. Substantially all the
material required by 47 C.F.R. Section 73.3526 to be kept in the public
inspection files of the Stations is in such files.
(ii) Schedule 3.1(f) lists (A) all licenses, permits
and other authorizations, including the expiration dates thereof,
issued to Commodore or any of its subsidiaries by the FCC relating to
the Stations and held by them as of the date of this Agreement and (B)
all licenses, permits or authorizations issued to Commodore or any of
its subsidiaries by any other Governmental Entities which are material
to the operations of the Stations and held by them as of the date of
this Agreement, the loss of which could have a Material Adverse Effect.
Such licenses, permits and authorizations, and all applications for
modification, extension or renewal thereof or for new licenses,
permits, permissions or authorizations that
20
<PAGE> 26
would be material to the operations of the Stations, are collectively
referred to herein as the "Station Licenses." Schedule 3.1(f) lists the
legally authorized holder(s) of the Station Licenses, each of which is
in full force and effect. The Stations have been operated in all
material respects in accordance with the terms of the Station Licenses.
Except for proceedings affecting the radio broadcast industry generally
and a petition to deny filed in connection with the Huntington
Acquisition (as defined in Section 4.1) and an opposition filed with
respect to the application of Commodore Media of Pennsylvania, Inc. to
increase the nighttime operation power of WAEB(AM), there are no
proceedings pending or, to Commodore's knowledge, threatened with
respect to Commodore's or any of its subsidiaries ownership or
operation of the Stations which reasonably may be expected to result in
the revocation, material adverse modification, non-renewal or
suspension of any of the Station Licenses, the denial of any pending
applications for Station Licenses, the issuance against Commodore or
any of its subsidiaries of any cease and desist order, or the
imposition of any administrative actions by the FCC or any other
Governmental Entity with respect to the Station Licenses, or which
reasonably may be expected to adversely affect the Stations' ability to
operate as currently operated or the Surviving Corporation's ability to
obtain control of the Station Licenses. To Commodore's knowledge, no
other broadcast station or radio communications facility is causing
interference to the Stations' transmissions beyond that which is
allowed by FCC rules and regulations. Commodore has no reason to
believe that the FCC will not renew the Station Licenses issued by the
FCC in the ordinary course of business. Commodore knows of no facts
relating to Commodore under the Communications Act or the rules,
regulations or written policies of the FCC in effect on the date of
this Agreement that reasonably may be expected to disqualify Commodore
from transferring control of the Station Licenses to Mergeco or that
would prevent the consummation by them of the transactions contemplated
by this Agreement.
(g) Litigation. Except as set forth on Schedule 3.1(g), there
is no material action, suit, inquiry, judicial or administrative proceeding,
grievance or arbitration pending or, to the knowledge of Commodore, threatened
against Commodore or any of its subsidiaries or any of their respective
properties or assets by or before any arbitrator or Governmental Entity, nor to
Commodore's knowledge are there any investigations relating to Commodore or any
of its subsidiaries or any of their respective properties or assets pending or
threatened by or before any arbitrator or Governmental Entity. Except as set
forth in Schedule 3.1(g), there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator outstanding against Commodore or any of its subsidiaries or
any of their respective properties or assets. There is no material action, suit,
inquiry, judicial or administrative proceeding pending or, to the knowledge of
Commodore, threatened against Commodore or any of its subsidiaries relating to
the transactions contemplated by this Agreement.
(h) Insurance. Schedule 3.1(h) sets forth a summary of all
fire, liability and other forms of insurance and all fidelity bonds held by or
applicable to Commodore or any of its subsidiaries. No event has occurred,
including, without limitation, the failure by Commodore or any of its
subsidiaries to give any notice or information or the delivery of any inaccurate
or erroneous
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<PAGE> 27
notice or information, which limits or impairs the rights of Commodore or any of
its subsidiaries under any such insurance policies in such a manner as could
have a Material Adverse Effect. Excluding insurance policies that have expired
and been replaced in the ordinary course of business, no insurance policy has
been canceled within the last two years prior to the date hereof.
(i) Real Estate. Each of Commodore and its subsidiaries has
good and marketable title in fee simple to all real properties owned by it and
valid leaseholds in all real estate leased by it, except to the extent
marketability may be affected by the existence of Permitted Liens (as defined in
Section 3. 1(k) below). Schedule 3.1(i) lists (i) the street address of each
parcel of real property owned by Commodore or any of its subsidiaries and (ii)
the street address for each parcel of real property leased by Commodore or any
of its subsidiaries under leases with a term other than month-to-month.
(j) Personal Property. Except for property held under capital
leases, Commodore has good title to all the material items of machinery,
equipment, furniture, fixtures, inventory, receivables and other tangible or
intangible personal property reflected on the Balance Sheet and all such
property acquired since the Balance Sheet Date, except for any such property or
assets sold or otherwise disposed of in the ordinary course of business and
consistent with past practices since such date. The tangible personal property
and fixtures owned or used by Commodore or any of its subsidiaries that are
necessary for the operation of the Stations, including all broadcasting
equipment and broadcast towers, are in good operating condition and repair
(subject to normal wear and tear) and permit the conduct of the business of the
Stations in compliance in all material respects with FCC rules and regulations.
Commodore or any of its subsidiaries owns or holds under valid leases all of the
tangible personal property and fixtures necessary to conduct the business of the
Stations as presently conducted.
(k) Liens and Encumbrances. All properties and assets,
including leases, owned by Commodore and its subsidiaries are free and clear of
all liens, pledges, claims, security interests, restrictions, mortgages,
tenancies and other possessory interests, conditional sale or other title
retention agreements, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments and other
burdens, options or encumbrances of any kind (collectively, "Liens") except (a)
statutory Liens securing payments not yet delinquent or the validity of which
are being contested in good faith by appropriate actions, (b) purchase money
Liens arising in the ordinary course, (c) Liens for taxes not yet delinquent,
(d) Liens reflected in the Balance Sheet (which have not been discharged), (e)
Liens which in the aggregate do not materially detract from the value for use
for broadcasting purposes or materially impair the present and continued use of
the properties or assets subject thereto in the usual and normal conduct of the
business of the Stations, (f) Liens on leases arising from the provisions of
such leases, and (g) Liens granted or to be granted under the AT&T Agreement (as
defined in Section 4.1(i)) (the Liens referred to in clauses (a) through (g)
being "Permitted Liens").
(l) Environmental Matters.
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(i) All costs and expenses to comply with the
requirements of Schedule 5.16(b) to the AT&T Agreement and the schedule
amendment thereto, which schedule and amendment are attached hereto as
Exhibit O, shall not exceed $100,000.
(ii) Except as disclosed in the Phase I (and Phase
II) Environmental Site Assessment Reports provided by Commodore to
Mergeco prior to the date of this Agreement and listed on Schedule
3.1(l):
(A) The real property and facilities owned,
operated and leased by Commodore or its subsidiaries and the
operations of Commodore or its subsidiaries thereon comply in
all material respects and have at all times complied in all
material respects with all applicable federal, state and local
laws, statutes, codes, rules, regulations, ordinances, orders,
determinations or rules of common law pertaining to the
environment, natural resources and public or employee health
and safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Clean
Air Act, as amended, the Federal Water Pollution Control Act,
as amended, The Oil Pollution Act of 1990, as amended, the
Safe Drinking Water Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Toxic Substances Control
Act, as amended, and other environmental conservation or
protection laws ("Environmental Laws");
(B) No judicial proceedings are pending or,
to Commodore's knowledge, threatened against Commodore or its
subsidiaries alleging the violation of any Environmental Laws,
and there are no administrative proceedings pending or, to
Commodore's knowledge, threatened against Commodore or its
subsidiaries, alleging the violation of any Environmental Laws
and no notice from any Governmental Entity or any private or
public person has been received by Commodore or its
subsidiaries claiming any violation of any Environmental Laws
in connection with any real property or facility owned,
operated or leased by Commodore or its subsidiaries, or
requiring any remediation, clean-up, modification, repairs,
work, construction, alterations or installations on or in
connection with any real property or facility owned, operated
or leased by Commodore or its subsidiaries that are necessary
to comply with any Environmental Laws and that have not been
complied with or otherwise resolved to the satisfaction of the
party giving notice;
(C) All material permits, registrations,
licenses, authorizations, and the like ("Permits") required to
be obtained or filed by each of Commodore and its subsidiaries
under any Environmental Laws in connection with Commodore's
and its subsidiaries' operations, including, without
limitation, those activities relating to the generation, use,
storage, treatment, disposal, release, or remediation of
Hazardous
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Substances (as such term is defined in Section 3.1(l)(D)
hereof), have been duly obtained or filed, and each of the
Company and its subsidiaries are and have at all times been in
full compliance with the terms and conditions of all such
Permits;
(D) All Hazardous Substances used or
generated by Commodore or its subsidiaries or, to Commodore's
knowledge, any of their predecessors, on, in, or under any of
the owned, operated, or leased real property or facilities are
and have at all times been generated, stored, used, treated,
disposed of, and released by such persons or on their behalf
in such manner as not to result in any Environmental Costs or
Liabilities. "Hazardous Substances" means (i) any hazardous
materials, hazardous wastes, hazardous substances, toxic
wastes, and toxic substances as those or similar terms are
defined under any Environmental Laws; (ii) any asbestos or any
material which contains any hydrated mineral silicate,
including chrysolite, amosite, crocidolite, tremolite,
anthophylite and/or actinolite, whether friable or
non-friable; (iii) PCBs, or PCB-containing materials, or
fluids; (iv) radon; (v) any other hazardous, radioactive,
toxic or noxious substance, material, pollutant, contaminant,
constituent, or solid, liquid or gaseous waste; (vi) any
petroleum, petroleum hydrocarbons, petroleum products, crude
oil and any fractions or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas,
synthetic gas and any mixtures thereof; (vii) any substance
that, whether by its nature or its use, is subject to
regulation under any Environmental Laws or with respect to
which any Environmental Laws or Governmental Entity requires
environmental investigation, monitoring or remediation; and
(viii) any underground storage tanks, dikes, or impoundments
as defined under any Environmental Laws. "Environmental Costs
or Liabilities" means any losses, liabilities, obligations,
damages, fines, penalties, judgments, settlements, actions,
claims, costs and expenses (including, without limitation,
reasonable fees, disbursements and expenses of legal counsel,
experts, engineers and consultants, and the costs of
investigation or feasibility studies and performance of
remedial or removal actions and cleanup activities) arising
from or under any Environmental Laws, order of, or contract of
Commodore or its subsidiaries with, any Governmental Entity or
any private or public persons, which exceed, or reasonably
likely may exceed, $150,000 individually or in the aggregate;
(E) There are not now, nor have there been
in the past, on, in or under any property or facilities when
owned, leased or operated by Commodore or its subsidiaries or,
to Commodore's knowledge, when owned, leased or operated by
any of their predecessors, any Hazardous Substances that are
in a condition that violates any Environmental Law in any
material respect or that reasonably could be expected to
require remediation under any Environmental Laws;
(F) Commodore and its Subsidiaries have not
received, and to the knowledge of Commodore do not expect to
receive, any notification from any source advising Commodore
or such subsidiaries that: (i) it is a potentially responsible
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party under CERCLA or any other Environmental Laws; (ii) any
real property or facility currently or previously owned,
operated, or leased by it is identified or proposed for
listing as a federal National Priorities List ("NPL") (or
state-equivalent) site or a Comprehensive Environmental
Response, Compensation and Liability Information System
("CERCLIS") list (or state-equivalent) site; and (iii) any
facility to which it has ever transported or otherwise
arranged for the disposal of Hazardous Substances is
identified or proposed for listing as an NPL (or
state-equivalent) site or CERCLIS (or state-equivalent) site;
and
(G) The Stations' operations do not have a
significant environmental impact, as defined by 47 C.F.R.
Section 1.1307.
(m) Taxes. Each of Commodore and its subsidiaries has filed,
or has timely applied for extensions of time to file, all tax returns, reports,
statements and other documents ("Tax Returns"') required to be filed, and all
such Tax Returns which have been filed are accurate and complete in all material
respects. Each of Commodore and its subsidiaries has paid (or there has been
paid on its behalf), or has set up an adequate reserve for the payment of, all
taxes required to be paid, withheld, or deducted, or for which any of Commodore
or its subsidiaries are liable, in respect of the periods covered by such Tax
Returns, and with respect to each tax, from the end of the period covered by the
most recently filed Tax Return to the date hereof, and the Balance Sheet
reflects an adequate reserve for all taxes payable, or required to be withheld
and remitted, by Commodore or any of its subsidiaries, or for which Commodore or
any of its subsidiaries are liable, accrued through the Balance Sheet Date. No
deficiencies for any taxes have been proposed, asserted or assessed against
Commodore or any of its subsidiaries and are pending, and no requests for
waivers of the time to assess any such taxes are pending. The federal income tax
returns of Commodore and its subsidiaries have not been examined by the Internal
Revenue Service. Except for payments which may be made pursuant to plans and
agreements set forth on Schedule 3.1(m), none of Commodore or its subsidiaries
(i) has filed a consent under section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"), (ii) has made, or is obligated or may become
obligated to make, any material payments that will not be deductible by reason
of section 280G of the Code, or (iii) has been a member of an affiliated group
of corporations which has filed a consolidated federal income tax return (other
than the group of which Commodore is the common parent) or otherwise has any
liability for the taxes of any person (other than Commodore and its
subsidiaries) under Treas. Reg. Section 1.1502-6, any similar provision of
state, local or foreign law, or by reason of its status as a transferee,
successor, indemnitor or otherwise. For the purposes of this Agreement, the term
"taxes" shall include all federal, state, local and foreign income, property,
sales, excise, withholding, unemployment compensation, social security, and
other taxes and charges of any nature whatsoever (including interest, penalties
and additions to tax relating to any of the specified items).
(n) Certain Agreements. Except as set forth in Schedule
3.1(n), neither Commodore nor any of its subsidiaries is a party to any oral or
written agreement, plan or arrangement with any officer, director, employee or
other station or broadcast personnel (whether
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<PAGE> 31
an employee or an independent contractor) of Commodore or its subsidiaries (i)
the benefits of which are contingent, or the terms of which are materially
altered, upon, or result from, the occurrence of a transaction involving
Commodore of the nature of any of the transactions contemplated by this
Agreement, (ii) providing severance benefits or other benefits after the
termination of employment or other contractual relationship regardless of the
reason for such termination and regardless of whether such termination is before
or after a change of control, (iii) under which any person may receive payments
subject to the tax imposed by Section 4999 of the Code or (iv) except as
contemplated by Section 1.6(h) and 1.7, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Schedule 3.1(n) hereto lists
each oral or written (i) agreement, contract, indenture or other instrument
relating to the borrowing of money or the guarantee of any obligation for the
borrowing of money, (ii) Employee Benefit Plan, as defined in Section 3.1(o),
(iii) employment or consulting contract which is not terminable without
liability or penalty to Commodore or any of its subsidiaries on 30 days or less
notice, or (iv) contract, agreement or commitment (except for trade or barter
agreements) under which any party thereto remains obligated to provide goods or
services having a value, or to make payments aggregating, in excess of $50,000
per year, in any such case to which Commodore or any of its subsidiaries is a
party or bound. Each such agreement, contract or obligation described in
Schedule 3.1(n) or required to be so described is a valid and binding obligation
of Commodore or one of its subsidiaries, as the case may be, and is in full
force and effect without amendment, except where not being a valid and binding
obligation or in full force and effect without amendment would not have a
Material Adverse Effect. Commodore or one of its subsidiaries, as the case may
be, and, to the knowledge of Commodore, each other party to such contracts, has
performed in all material respects the obligations required to be performed by
it under the agreements so described and is not (with or without lapse of time
or the giving of notice, or both) in material breach or default thereunder.
Schedule 3.1(n) identifies, as to each agreement, contract or obligation listed
thereon, whether the consent of the other party thereto is required in order for
such agreement, contract or obligation to continue in full force and effect upon
the consummation of the transactions contemplated hereby or whether such
agreement, contract or obligation can be canceled by the other party without
liability to such other party due to the consummation of the transactions
contemplated hereby. A copy of each written agreement, contract, obligation,
plan or arrangement and a description of each oral agreement, contract,
obligation, plan or arrangement set forth in Schedule 3.1(n) has been provided
to Mergeco.
(o) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested
and unvested) under all the "employee pension benefit plans" as such
term is defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which Commodore or any
other trades or businesses under common control within the meaning of
Section 4001(b)(1) of ERISA with Commodore (collectively, the "ERISA
Group") maintains, or to which Commodore or any member of the ERISA
Group is obligated to
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contribute (the "Pension Plans"), did not, as of the respective last
annual valuation dates for such Pension Plans, exceed the value of the
assets of such Pension Plan allocable to such benefits. None of the
Pension Plans subject to Section 302 of ERISA has incurred any
"accumulated funding deficiency," as such term is defined in Section
302 of ERISA (whether or not waived) since the effective date of such
Section 302. Neither Commodore or any member of the ERISA Group, nor
any officer of Commodore or any member of the ERISA Group or any of the
employee benefit plans of Commodore or any member of the ERISA Group
which are subject to ERISA, including the Pension Plans, or any trusts
created thereunder, or any trustee or administrator thereof, has
engaged in a "prohibited transaction," as such term is described in
Section 4975 of the Code, which has subjected or which could subject
Commodore or any member of the ERISA Group, any officer of Commodore or
any of its subsidiaries or any of such plans or any trust to any
material tax or penalty on prohibited transactions imposed by such
Section 4975. None of such Pension Plans subject to Title IV of ERISA
or any of their related trusts has been terminated or partially
terminated, nor has there been any "reportable event," as that term is
defined in Section 4043 of ERISA, with respect thereto since the
effective date of such Section 4043. Neither Commodore or any member of
the ERISA Group has contributed or been obligated to contribute to any
"multiemployer plan" as such term is defined in Section 3(37) or
Section 4001(a)(3) of ERISA. Except as set forth on Schedule 3.1(o),
there are no "employee benefit plans" within the meaning of Section
3(3) of ERISA or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, insurance or other plan or
arrangement or understanding providing benefits to any present or
former employee or contractor of Commodore or any member of the ERISA
Group maintained by Commodore or any member of the ERISA Group or as to
which Commodore or any member of the ERISA Group has any liability or
obligation (collectively, "Employee Benefit Plans").
(ii) True, correct and complete copies of each of the
Employee Benefit Plans, and related trusts, if applicable, have been
furnished to Mergeco, along with the most recent report filed on Form
5500 and summary plan description with respect to each Employee Benefit
Plan required to file Form 5500. All reports and disclosures relating
to the Employee Benefit Plans required to be filed with or furnished to
governmental agencies or plan participants or beneficiaries have been
furnished in accordance with applicable law in a timely manner. Each
Employee Benefit Plan has been maintained in material compliance with
ERISA and the Code, and each Employee Benefit Plan intended to be
qualified under Section 401 of the Code satisfies the requirements of
such section and has received a favorable determination letter from the
Internal Revenue Service regarding the qualified status and has not,
since receipt of the most recent favorable determination letter, been
amended or, to the knowledge of Commodore, operated in a manner which
would adversely affect such qualified status. There are no actions,
suits or claims pending (other than routine claims for benefits) or, to
the knowledge of Commodore, threatened against, or with respect to any
of the Employee Benefit Plans. All contributions required to be made
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to the Employee Benefit Plans pursuant to their terms have been timely
made. To the knowledge of Commodore, there is no matter pending with
respect to any of the Employee Benefit Plans before the Internal
Revenue Service, Department of Labor or the Pension Benefit Guaranty
Corporation. Except as required by applicable law, none of the Employee
Benefit Plans provides medical insurance coverage following retirement.
Each Employee Benefit Plan which is an "employee welfare benefit plan,"
as defined in Section 3(1) of ERISA, may be unilaterally amended or
terminated in its entirety without liability except as to benefits
accrued prior to such amendment or termination.
(iii) Schedule 3.1(o) lists each collective
bargaining agreement to which Commodore or any of its subsidiaries is a
party. Except for those unions which are parties to one or more of the
listed collective bargaining agreements or as otherwise listed on
Schedule 3.1(o), neither Commodore nor any of its subsidiaries has
agreed to recognize any union or other collective bargaining
representative, nor has any union or other collective bargaining
representative been certified as the exclusive bargaining
representative of any of their employees. Each of Commodore and its
subsidiaries (a) is, and has been since January 1, 1995, in substantial
compliance with all applicable laws regarding labor, employment and
employment practices, terms and conditions of employment, affirmative
action, wages and hours, plant closing and mass layoff, occupational
safety and health, immigration, and workers' compensation, (b) is not
engaged, nor has it since January 1, 1995, engaged, in any unfair labor
practices, and has no, and has not had since January 1, 1995, any,
unfair labor practice charges or complaints before the National Labor
Relations Board pending or, to Commodore's knowledge, threatened
against it, (c) has no, and has not had since January 1, 1995, any,
grievances, arbitrations or other proceedings arising or asserted to
arise under any collective bargaining agreement, pending or, to
Commodore's knowledge, threatened against it and (d) has no, and has
not had since January 1, 1995, any, charges, complaints or proceedings
before the Equal Employment Opportunity Commission, Department of Labor
or any other federal, state or local agency responsible for regulating
employment practices, pending, or, to Commodore's knowledge, threatened
against it. There is no labor strike, slowdown, work stoppage or
lockout pending or, to the knowledge of Commodore, threatened against
or affecting Commodore or its subsidiaries, and Commodore or its
subsidiaries has not experienced any labor strike, slowdown, work
stoppage or lockout since January 1, 1995. Except as set forth on
Schedule 3.1(o), to Commodore's knowledge, no union organizational
campaign or representation petition is currently pending with respect
to the employees of Commodore or its subsidiaries.
(p) Patents, Trademarks, Etc. Schedule 3.1(p) sets forth each
material patent, patent application, trademark, trade name, trade name and
trademark registration, service mark, trade secret, copyright, copyright
registration and any other proprietary intellectual property rights
(collectively, "Intellectual Rights") owned by or registered in the name of
Commodore or any of its subsidiaries, or in which Commodore or any of its
subsidiaries has any right, license or interest. Commodore or its subsidiaries
owns or has the unencumbered right to use pursuant to a valid, binding and
enforceable license agreement or other contract or arrangement all such
Intellectual
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Rights. To the knowledge of Commodore, neither Commodore nor any of its
subsidiaries is infringing any such Intellectual Rights, and Commodore is not
aware of any infringement by others of any such rights owned by Commodore or any
of its subsidiaries.
(q) Affiliate Relationships. Schedule 3.1(q) sets forth a
complete list of all contracts or other arrangements involving Commodore or any
of its subsidiaries in which any officer, director, stockholder or any of their
affiliates has a material financial interest, including indebtedness to
Commodore or its subsidiaries.
3.2. Representations and Warranties of Indemnitors who are
Stockholders. Each Indemnitor who is a Stockholder, severally as to him or it
and not jointly, represents and warrants to Mergeco as follows (with the
understanding that Mergeco is relying on such representations and warranties in
entering into and performing this Agreement):
(a) Owners of Shares. As of the date hereof, such Stockholder
other than the Estate of Carter Burden (the "Estate") is the holder of record
and owns beneficially that number of shares of Class A Common Stock or Class B
Common Stock and, as of the Closing Date, will be the holder of record and will
own beneficially that number of shares of capital stock set forth opposite his
or its name on Schedule 3.1(c) hereto. With respect to the shares of Class B
Common Stock owned by the Estate and set forth opposite the name of the Estate
on Schedule 3.1(c) (both as of the date of this Agreement and as of the Closing
Date), the executors (the "Executors") of the Estate , in their fiduciary
capacity, beneficially own the Class B Common Stock and the ultimate beneficial
ownership of such Class B Common Stock lies in the beneficiaries of the Estate,
which include its three Executors, Susan L. Burden, Flobelle F. Burden and S.
Carter Burden III, as individuals, and the trustees and beneficiaries of trusts
established for the benefit of such persons and their issue under Carter
Burden's will. The Executors of the Estate and Commodore will cause the record
ownership of the shares of Class B Common Stock now held of record in the name
of Carter Burden to be transferred so that record ownership shall be in the name
of the Estate or its Executors as of the Closing Date (other than as described
in the notes to Schedule 3.1(c)). As used herein, with respect to the Executors
of the Estate, "beneficially own" means the sole or shared power to vote or
direct the voting of a security, or the sole or shared investment power with
respect to a security (i.e., the power to dispose, or direct the disposition, of
a security).
(b) Authority. (i) If such Stockholder is an entity (i.e.,
not a natural person), such Stockholder has been duly organized and is validly
existing under the laws of the jurisdiction of its organization; such
Stockholder has all requisite power and authority to execute and deliver the
Transaction Documents to which such Stockholder is a party and to perform its
obligations hereunder; and the execution, delivery and performance by such
Stockholder of such Transaction Documents and the consummation by such
Stockholder of the transactions contemplated hereby or thereby have been duly
authorized by all necessary action on the part of such Stockholder.
(ii) Such Stockholder has (or, in the case of the
Estate, the Executors, who have been duly appointed and are acting pursuant to
valid letters testamentary, collectively have) full
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legal capacity to execute and deliver the Transaction Documents to which such
Stockholder is a party and to perform the obligations of such Stockholder
hereunder or thereunder. The Transaction Documents to which such Stockholder is
a party have been duly and validly executed and delivered or, when executed and
delivered in accordance herewith, will be duly executed and delivered by such
Stockholder and, assuming such Transaction Documents constitute the valid and
binding obligations of Mergeco and Commodore, constitute or, upon execution and
delivery, will constitute valid and binding obligations of such Stockholder,
enforceable against it in accordance with their terms, except to the extent that
such enforcement may be subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). Each consent, authorization, order or approval
of, or filing or registration with, any Governmental Entity required by
applicable law on or before the Closing for or in connection with the execution
and delivery by such Stockholder of the Transaction Documents to which such
Stockholder is a party, or the performance by such Stockholder of his or its
obligations hereunder or thereunder, will have been obtained or made on or
before the Closing, except where the failure to obtain any such consent,
authorization, order, approval, filing or registration would not materially
affect such Stockholder's ability to perform his or its obligations under such
Transaction Documents.
(c) No Conflicts. Except as set forth on Schedule 3.2, the
execution, delivery and performance by such Stockholder of the Transaction
Documents to which such Stockholder is a party do not (i) violate or breach any
provision of any law or statute applicable to such Stockholder (and, if such
Stockholder is a legal entity, any provision of its organizational or
constituent documents), except where such violation or breach would not
materially affect such Stockholder's ability to perform his or its obligations
under such Transaction Documents or (ii) violate, breach, cause a default under,
or result in the creation of a Lien pursuant to, any agreement or instrument to
which such Stockholder is a party or to which he or it or any of his or its
properties may be subject, except where the violation, breach, default or
creation of a Lien would not be material to such Stockholder's ability to
perform his or its obligations under such Transaction Documents, provided that
the parties (A) recognize that the Class B Common Stock to be transferred by the
Estate under this Agreement remains subject, by operation of law, to federal and
state estate tax liens and (B) agrees that such federal and state estate tax
liens are Permitted Liens, the existence of which would not materially and
adversely affect the Estate's ability to execute, deliver or perform its
obligations under such Transaction Documents.
3.3. Representations and Warranties of Mergeco. Mergeco represents and
warrants to Commodore as follows (with the understanding that Commodore and each
Indemnitor is relying on such representations and warranties in entering into
and performing this Agreement):
(a) Organization Standing and Power. Mergeco is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all
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requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
(b) Authority. Mergeco has all requisite corporate power and
authority to enter into the Transaction Documents to which Mergeco is a party
and to consummate the transactions contemplated hereby or thereby. The execution
and delivery of the Transaction Documents to which Mergeco is a party by Mergeco
and the consummation by it of the transactions contemplated hereby or thereby
have been duly authorized by all necessary corporate action on the part of
Mergeco (including the authorization, approval and adoption of this Agreement
and the transactions contemplated hereby by the Parent). The Transaction
Documents to which Mergeco is a party have been duly executed and delivered or,
when executed and delivered in accordance herewith, will be duly executed and
delivered by Mergeco and constitute or, when executed and delivered, will
constitute the valid and binding obligations of Mergeco, enforceable against it
in accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). The execution and delivery of the Transaction
Documents to which Mergeco is a party do not, and the consummation of the
transactions contemplated hereby or thereby and compliance with the provisions
hereof or thereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to a loss of a material benefit under, any provision of the
Certificate of Incorporation or By-laws of Mergeco or any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Mergeco or its
properties or assets, except for any such conflicts, violations or defaults or
terminations, cancellations or accelerations which individually or in the
aggregate do not have a material adverse effect on Mergeco's ability to
consummate its obligations hereunder or thereunder. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Mergeco in connection with
the execution and delivery of the Transaction Documents to which Mergeco is a
party by Mergeco or the consummation by it of the transactions contemplated
hereby or thereby, except for (i) the filing of a premerger notification report
under the HSR Act, (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and (iii) the consent of the FCC to
the transfer of control of the Station Licenses to Mergeco (as contemplated by
Section 7.1). Mergeco is acquiring the shares of Surviving Corporation Class A
Common Stock for investment purposes and without a view to the distribution
thereof in violation of the Securities Act.
(c) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to the
knowledge of Mergeco, threatened against it relating to the transactions
contemplated by this Agreement.
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(d) FCC Matters. Mergeco knows of no facts relating to it
under the Communications Act or the rules, regulations or written policies of
the FCC in effect on the date of this Agreement that reasonably may be expected
to disqualify it from obtaining control of the Station Licenses or that would
prevent it from consummating the transactions contemplated by this Agreement.
Mergeco is able to certify on an FCC Form 315 that it is financially qualified.
3.4. Representations and Warranties of Indemnitors who are Not
Stockholders. Each Indemnitor who is not a Stockholder (which as of the date
hereof includes James J. Sullivan), severally as to him or it and not jointly,
represents and warrants to Mergeco as follows (with the understanding that
Mergeco is relying on such representations and warranties in entering into and
performing this Agreement):
(a) Authority. (i) If such Indemnitor is an entity (i.e., not
a natural person), such Indemnitor has been duly organized and is validly
existing under the laws of the jurisdiction of its organization; such Indemnitor
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder; and the execution, delivery and
performance by such Indemnitor of this Agreement and the consummation by such
Indemnitor of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of such Indemnitor.
(ii) Such Indemnitor has full legal capacity to
execute and deliver this Agreement and to perform the obligations of such
Indemnitor hereunder. This Agreement has been duly and validly executed and
delivered by such Indemnitor and, assuming this Agreement constitutes a valid
and binding obligation of Mergeco and Commodore, constitutes a valid and binding
obligation of such Indemnitor, enforceable against it in accordance with its
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). Each consent,
authorization, order or approval of, or filing or registration with, any
Governmental Authority required by applicable law on or before the Closing for
or in connection with the execution and delivery by such Indemnitor of this
Agreement, or the performance by such Indemnitor of his or its obligations
hereunder, will have been obtained or made on or before the Closing, except
where the failure to obtain any such consent, authorization, order, approval,
filing or registration would not materially affect such Indemnitor's ability to
perform his or its obligations under this Agreement.
(b) No Conflicts. Except as set forth on Schedule 3.2, the
execution, delivery and performance by such Indemnitor of this Agreement does
not (i) violate or breach any provision of any law or statute applicable to such
Indemnitor (and, if such Indemnitor is a legal entity, any provision of its
organizational or constituent documents), except where such violation or breach
would not materially affect such Indemnitor's ability to perform his or its
obligations under this Agreement or (ii) violate, breach, cause a default under,
or result in the creation of a Lien pursuant
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to, any agreement or instrument to which such Indemnitor is a party or to which
he or it or any of his or its properties may be subject, except where the
violation, breach, default or creation of a Lien would not be material to such
Indemnitor's ability to perform his or its obligations under this Agreement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of Commodore. Except as contemplated by this Agreement
or to the extent that Mergeco shall otherwise consent in writing, from the date
of this Agreement until the Effective Time, Commodore covenants and agrees that
it shall not, and shall not permit any of its subsidiaries to:
(a) conduct its business in any manner except in the ordinary
course consistent with past practice; or
(b) fail to use its commercially reasonable efforts to
preserve intact Commodore's present business organization and to keep available
the services of its present officers, station managerial personnel (including
the General Manager, Station Manager, General Sales Manager, Local Sales
Manager, National Sales Manager, Programming Director and Business Manager, or
persons performing comparable duties, of each Station (collectively, the
"Station Management")) and over-the-air employees or independent contractors and
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing business shall not be
materially impaired at the Closing Date; or
(c) other than as previously disclosed in writing, fail to use
its commercially reasonable efforts to maintain the present format of the
Stations and with programming consistent with past practices; or
(d) split, combine, divide, distribute or reclassify any
shares of its capital stock, declare, pay or set aside for payment any dividend
or other distribution in respect of its capital stock, or directly or
indirectly, redeem, purchase or otherwise acquire any shares of its capital
stock or other securities; provided that nothing herein shall prevent any of its
subsidiaries from paying dividends or making other distributions to Commodore or
Commodore from redeeming Series A Preferred Stock; or
(e) issue, sell, pledge, dispose of, encumber or deliver
(whether through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
securities convertible into or exercisable or exchangeable for shares of stock
of any class (other than the issuance of certificates in replacement of lost
certificates, the issuance of up to $2.5 million of Series A Preferred Stock to
CIBC Wood Gundy
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Securities Corporation at a purchase price of $1,000 per share pursuant to the
terms of the Securities Purchase Agreement dated as of May 1, 1996, by and among
Commodore, certain of Commodore's subsidiaries and CIBC WG Argosy Merchant Fund
2, L.L.C., (the "Securities Purchase Agreement"), the issuance of warrants to
holders of the Series A Preferred Stock pursuant to the terms of the Securities
Purchase Agreement or the issuance or grant of options, exercisable at $45.00
per share, for the remaining 35,685 shares of Class A Common Stock for which
options are authorized for issuance pursuant to the Option Plan); or
(f) change or amend its charter documents or by-laws, except
as otherwise contemplated herein; or
(g) except for amendments, terminations (without payment of
penalty or damages), renewals or failures to renew (without payment of penalty
or damages) of employment agreements with over-the-air personnel in the ordinary
course of business and consistent with past practice (subject to prior
consultation with Mergeco reasonably in advance thereof), for actions
contemplated by Sections 1.6(h) and 1.7, and with respect to studio leased
properties in Connecticut, enter into, materially amend, terminate, or fail to
use its commercially reasonable efforts to renew any material contract (i.e., a
contract or agreement of the type required to be described in Schedule 3.1(n)
(provided that neither Commodore nor its subsidiaries shall be required to renew
any material contract on terms that are less favorable to Commodore or its
subsidiaries) or default in any material respect (or take or omit to take any
action that, with or without the giving notice or passage of time, would
constitute a material default) under any material contract or enter into any new
material contract; or
(h) merge or consolidate with or into any other legal entity,
dissolve or liquidate; or
(i) except for (i) indebtedness incurred or assumed in
connection with the Asset Purchase Agreement dated as of April 8, 1996, between
Commodore Media of Kentucky, Inc. and Simmons Broadcasting, Inc. (the "Simmons
Acquisition"), the Asset Purchase Agreement dated as of April 8, 1996, between
Commodore Media of Kentucky, Inc. and Adventure Communications, Inc.
(collectively with the Simmons Acquisition, the "Huntington Acquisition") and
the acquisition contemplated by the Option Purchase Agreement dated as of March
17, 1995, between Treasure Coast Media, Inc. and Commodore Media of Florida,
Inc. (collectively with the Huntington Acquisition, the "Permitted
Acquisitions"), and (ii) amounts drawn on the Loan and Security Agreement dated
as of March 13, 1996, and as supplemented prior to the date hereof (the "AT&T
Agreement"), among Commodore, certain of its subsidiaries, as guarantors, and
AT&T Commercial Finance Corporation ("AT&T") to finance Permitted Acquisitions
and to provide working capital, incur or assume any long-term debt (including
obligations in respect of capital leases in excess of $25,000), assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person (other than
endorsements of checks in the ordinary course) or make any loans, advances or
capital contributions to, or investments in, any person (other than advances to
employees in the ordinary course of business); or
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(j) except as contemplated by Sections 1.6(h) and 1.7, adopt
or amend any Employee Benefit Plan or collective bargaining agreement, or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or other station and broadcast personnel (whether employees
or independent contractors) or pay any benefit not by any existing agreement,
except in the ordinary course of business and consistent with past practices and
as required by law, provided that, before entering into any employment agreement
or increasing or agreeing to increase the compensation, bonuses or other
benefits of any Station Management or over-the-air talent in the ordinary course
of business and as required by law, Commodore shall first have consulted in good
faith with Mergeco with respect to the terms of any such employment agreement or
increase or change in compensation, bonuses or other benefits; or
(k) except for Permitted Acquisitions, acquire (whether by
merger, consolidation or the acquisition of stock or assets) or sell (whether by
merger, consolidation or the sale of stock or assets), lease or dispose of any
assets except in the ordinary course of business and consistent with past
practice or, even if in the ordinary course of business and consistent with past
practices (other than sales of surplus or obsolete equipment), whether in one or
more transactions, in no event having a fair market value in excess of $150,000;
or
(l) except as required under the AT&T Agreement and for
Statutory Liens, mortgage, pledge or subject to any material Lien any of its
properties or assets, tangible or intangible, other than in the ordinary course
of business consistent with past practice; or
(m) except as required by GAAP, applicable law or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(n) make any settlement of or compromise any tax liability,
change any tax election or tax method of accounting or make any new tax election
or adopt any new tax method of accounting which settlement, compromise, method
or election is material to Commodore and its subsidiaries, taken as a whole; or
(o) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business consistent with past
practice, or fail to pay or otherwise satisfy (except if being contested in good
faith) any material accounts payable, claims, liabilities or obligations on a
basis, and within the time, consistent with past practice; or
(p) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of the Stations
and, except with respect to good faith attempts consistent with past practice to
obtain payment of a past due receivable, or except in accordance with existing
practices, a contested receivable, offer to discount the amount of any
outstanding receivable or extend any other incentive (whether to the account
debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof, or
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change any Station's advertising rates or policies, procedures or methods in
connection with the sale of advertising time in a manner expected to accelerate
the receipt of cash payments or fail to incur annual advertising and promotional
department expenses in cash and trade below 90% of that budgeted for 1996 (as
such budget previously has been delivered to Mergeco); or
(q) except in connection with the Huntington Acquisition,
enter into, or enter into negotiations or discussions with any person other than
Mergeco with respect to, any local marketing agreement, time brokerage
agreement, joint sales agreement or any other similar agreement; or
(r) agree to or make any commitment to take any actions
prohibited by this Agreement.
4.2. Negative Trade Balance. Commodore shall use commercially
reasonable efforts to ensure that the Commodore Negative Trade Balance, as
defined below, of the Stations, taken as a whole, does not exceed $75,000 in the
aggregate at the Closing Date. "Commodore Negative Trade Balance" means the
difference, if negative, between the value of time owed under barter agreements
to which any of the Stations is a party or by which any of them is bound and the
value of the goods and services to be received under such agreements.
4.3. Environmental Site Assessments. Commodore has delivered to
Mergeco a copy of the Phase I Environmental Site Assessment Reports and the
Phase II Environmental Site Assessment Report listed on Schedule 3.1(l). If
Mergeco or its lenders or other financing sources require additional or updated
Phase I or Phase II environmental site assessments ("ESAs"), Commodore covenants
and agrees that, upon written notice from Mergeco to Commodore identifying the
locations at which such additional or updated ESAs are required, it shall at its
sole cost and expense cause to be performed by a nationally recognized and duly
qualified environmental consultant reasonably acceptable to Mergeco and
Commodore, an ESA at each identified transmission site owned, operated, or
leased by Commodore or its subsidiaries and at such other identified real
properties and facilities owned, operated, or leased by Commodore or its
subsidiaries (provided that Phase II ESA's shall only be required if a Phase I
ESA recommends obtaining a Phase II ESA). The ESAs which are to be conducted for
the benefit of Mergeco shall be performed in a manner that at a minimum
satisfies the requirements of ASTM Practice E 1527-94. Commodore covenants and
agrees that, upon receipt of the notice referred to above, it shall diligently
pursue the performance of the requisite ESAs to their completion, with final
copies of the Phase I environmental site assessment reports (and, if applicable,
Phase II Environmental Site Assessment reports) made available to Mergeco by no
later than 45 days following the date on which Commodore receives the notice
referred to above.
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ARTICLE V
ADDITIONAL AGREEMENTS OF COMMODORE
5.1. No Other Bids. From and after the date hereof, Commodore shall
not, nor shall it permit its subsidiaries to, nor shall it authorize or
knowingly permit any stockholder, officer, director or employee of, or any
investment banker, attorney, accountant or other representative retained by
Commodore, its subsidiaries or its stockholders to, and each Indemnitor agrees
not to, solicit, initiate or encourage submission of or engage in any
negotiations relating to any proposal or offer (including by way of furnishing
information) from any person which constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal (as defined herein). Commodore shall promptly
communicate to Mergeco the terms of any proposal or offer received by it (no
matter how preliminary), and the identity of the party making such proposal, in
respect of any actual or potential Acquisition Proposal. "Acquisition Proposal"
shall mean any proposal for a merger or other business combination involving
Commodore or its subsidiaries, or any proposal or offer to acquire in any manner
a substantial equity interest in Commodore or its subsidiaries or a substantial
portion of the assets of Commodore or its subsidiaries.
5.2. Access and Information. (a) Until the Closing, subject only to
applicable rules and regulations of the FCC, Commodore shall afford to Mergeco
and its representatives (including accountants and counsel) full access, during
normal business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the business of Commodore or its
subsidiaries, to all properties, books, records and returns of Commodore and its
subsidiaries and all other information with respect to its business, together
with the opportunity to make copies of such books, records and other documents
and to discuss the business of Commodore and its subsidiaries with such
corporate officers, station managerial personnel (including the General Manager,
Station Manager, General Sales Manager, Programming Director, Business Manager
and Traffic Manager, or persons performing comparable duties, of each Station),
accountants, consultants and counsel for Commodore as Mergeco deems reasonably
necessary or appropriate for the purposes of familiarizing itself with Commodore
and the Stations, including, without limitation, the right to visit each Station
at least monthly; provided that such Station visits shall be scheduled at least
five business days in advance and shall be conducted in a manner intended to
minimize the disruption to the operations of the Stations. In furtherance of the
foregoing, Commodore shall authorize and instruct Ernst & Young LLP to meet with
Mergeco and its representatives, including its independent public accountants,
to discuss the business and accounts of Commodore and to make available (with
the opportunity to make copies) to Mergeco and its representatives, including
its independent public accountants, all the work papers of Ernst & Young LLP
related to their audit of the consolidated financial statements and tax returns
of Commodore, except that in accordance with the policies of Ernst & Young LLP,
work papers regarding the planning of its audit of Commodore, including its
assessment of Commodore's system of internal controls will not be made
available. All information provided pursuant to this Agreement shall remain
subject in all respects to the Confidentiality Agreement dated May 9, 1996
between Hicks, Muse, Tate & Furst and Commodore until such time as the
transactions contemplated by this Agreement have been consummated.
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(b) Within 30 days after the end of each calendar month (other
than in the case of December 1996, and then within 90 days after the end of such
month), Commodore shall deliver to Mergeco, for each of the Stations, and for
Commodore as a whole, monthly operating statements (in a form consistent with
the monthly operating statements previously supplied to Mergeco) prepared in the
ordinary course of business for internal purposes, including comparisons to
comparable prior year periods and current year budget. Further, within 45 days
after the end of each calendar quarter, Commodore shall deliver to Mergeco, for
each of the Stations, quarterly statements prepared in the ordinary course for
internal purposes containing a detailed listing of all trade and barter
agreements of each Station showing the status of all such agreements as of the
end of the quarter. Commodore shall deliver to Mergeco the rating books and such
other ratings information subscribed to by Commodore including, without
limitation, Arbitrends, Accuratings or any other written information reflective
of the quantitative or qualitative nature of the audiences of the Stations for
each of the Stations upon receipt of the same by the corporate officers of
Commodore. Commodore shall instruct the Station Management of each Station to
provide such information and reports to Commodore's corporate officers promptly
upon receipt by such Station Management. In addition, as soon as the same are
distributed to Commodore's corporate officers by each Station, Commodore will
provide Mergeco with copies of each Station's weekly sales pacing reports, with
comparisons to sales pacing in the corresponding period of the prior year.
(c) Without duplication of Section 5.2(b), Commodore shall
provide Mergeco, not later than 45 days after the end of each calendar quarter
(other than the fourth quarter), commencing with the quarter ending June 30,
1996, with Commodore's Quarterly Report on Form 10-Q.
(d) Without duplication of Sections 5.2(b) and (c), at such
time as Commodore provides the same to its lenders, Commodore shall provide
Mergeco with copies of the financial statements and other information delivered
by Commodore to such lenders.
5.3. Assistance. If Mergeco requests, Commodore will cooperate, and
will cause Ernst & Young LLP to cooperate, in all reasonable respects with the
efforts of Mergeco to finance the transactions contemplated by this Agreement,
including without limitation, providing assistance in the preparation of one or
more registration statements or other offering documents relating to debt and/or
equity financing and any other filings that may be made by Mergeco with the SEC,
all at the sole expense of Mergeco. Commodore (i) shall furnish to Ernst & Young
LLP, as independent accountants to Commodore, such customary management
representation letters as Ernst & Young LLP may require of Commodore as a
condition to its execution of any required accountants' consents necessary in
connection with any filing by Mergeco with the SEC or in connection with the
delivery of any "comfort" letters requested by Mergeco's financing sources and
(ii) shall furnish to Mergeco all financial statements (audited and unaudited)
and other information in the possession of Commodore or its representatives or
agents as Mergeco shall reasonably determine is necessary or appropriate for the
preparation of such offering documents, registration statements or filings.
Mergeco will indemnify and hold harmless Commodore and its officers, directors
and controlling persons against any and all claims, losses, liabilities,
damages, costs or expenses (including
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reasonable attorneys' fees and expenses) that may arise out of or with respect
to the efforts by Mergeco to finance the transactions contemplated hereby,
including, without limitation, any registration statement, prospectus, offering
documents and other filings related thereto; provided, however, that subject to
the limitations and provisions of this Agreement, nothing herein shall prevent
Mergeco from asserting any claim for breach of representation or warranty under
this Agreement.
5.4. Compliance With Station Licenses. Commodore shall cause the
Stations to be operated in all material respects in accordance with the Station
Licenses and all applicable rules and regulations of the FCC and in compliance
with all other applicable material laws, regulations, rules and orders.
Commodore shall use its commercially reasonable efforts not to cause or permit
any of the Station Licenses to expire or be surrendered, adversely modified or
terminated. Commodore shall file or cause to be filed with the FCC all
applications (including license renewals) or other documents required to be
filed in connection with the operation of the Stations. In addition, if
requested by Mergeco and at Mergeco's expense, Commodore shall file or cause to
be filed with the FCC applications for new, specifically identified frequencies
that may be useful in connection with the operation of the Stations. Should the
FCC institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses, Commodore will use its commercially
reasonable efforts to promptly contest such proceedings and to seek to have such
proceedings terminated in a manner that is favorable to the Stations. Commodore
will use its commercially reasonable efforts to maintain the FCC construction
permits (if any) listed in Schedule 3.1(f) in effect until the applicable
construction projects are complete and to diligently prosecute all pending FCC
applications listed in Schedule 3.1(f). If Commodore (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any other Governmental Entity, that could affect Commodore's ability to
consummate the transactions contemplated hereby, or should Commodore (or its FCC
counsel) become aware of any fact relating to the qualifications of Commodore
that reasonably could be expected to cause the FCC to withhold its consent to
the transfer of control of the Station Licenses, Commodore shall promptly notify
Mergeco in writing and use its commercially reasonable efforts to take such
steps as may be necessary to remove any such impediment to the transactions
contemplated by this Agreement.
5.5. Notification of Certain Matters. Commodore shall give prompt
written notice to Mergeco of (i) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to cause
any representation or warranty of Commodore or an Indemnitor contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing Date, (ii) the failure of Commodore, or any officer, director, employee
or agent thereof, to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) the occurrence of a Station Event (as defined in Section 9.1)
and (iv) the occurrence of any threat by any officer of Commodore or any of its
subsidiaries or any General Manager, Station Manager, General Sales Manager or
Programming Director of a Station to resign or otherwise terminate their
employment or independent contractor relationship with Commodore or its
subsidiaries. No such notification shall affect the
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representations or warranties of the parties or the conditions to their
respective obligations hereunder.
5.6. Third Party Consents. After the date hereof and prior to the
Closing, Commodore shall use its commercially reasonable efforts to obtain
(without cost or expense to Commodore) a written waiver from AT&T of defaults,
if any, of the AT&T Agreement caused by the signing of this Agreement and/or the
consummation of the transactions contemplated hereby.
5.7. Post Signing Arrangements and Elections. (a) As soon as
practicable after the date of this Agreement, but no later than August 15, 1996,
Commodore hereby covenants and agrees to present to Mergeco for its approval
(which approval shall not be unreasonably withheld) a plan or arrangement
whereby James T. Shea, Jr., James J. Sullivan, Scott Bacherman, Jay Sterin,
Charles Di Toro and certain other members of management, collectively, shall
invest at least $3.25 million in the Surviving Corporation at the Closing,
whether by retention of Options, by purchase of shares of the Surviving
Corporation Class A Common Stock at a price per share equal to the Purchase
Price, or a combination thereof. If the terms and conditions of the plan or
arrangement described in this subsection 5.7(a) are not reasonably acceptable to
Mergeco and the parties are unable to agree on the terms and conditions of the
plan or arrangement, Bruce A. Friedman ("Friedman") hereby covenants and agrees
that, at the request of Mergeco at least ten (10) business days prior to the
Closing, he will not resign from his position as chief executive officer and
will serve in such capacity for the Surviving Corporation in accordance with the
terms and conditions of the Amended and Restated Employment Agreement dated as
of April 21, 1995, between Commodore and Friedman. Otherwise, Friedman's
employment shall be considered terminated on the Closing Date pursuant to the
terms of Section 6.1 of such Employment Agreement.
(b) As soon as practicable after the date of this Agreement,
but no later than August 15, 1996, Commodore hereby covenants and agrees to
present to Mergeco for its approval (which approval shall not be unreasonably
withheld) a plan for the issuance to certain members of management of the
Surviving Corporation options to purchase up to 5% of the fully diluted
Surviving Corporation Class A Common Stock, including shares issuable pursuant
to such plan (with dilution to be determined immediately after the Effective
Time) at an exercise price equal to the Purchase Price. The term "fully diluted
Surviving Corporation Class A Common Stock" means the sum of all shares of
Surviving Corporation Class A Common Stock issued and outstanding plus the
number of shares of Surviving Corporation Class A Common Stock issuable upon the
exercise of all options, warrants, calls, rights, conversion rights, commitments
or agreements of any character to which the Surviving Corporation is a party or
by which it is bound obligating the Surviving Corporation to issue, deliver or
sell additional shares of the Surviving Corporation Class A Common Stock, or
obligating the Surviving Corporation to grant, extend to enter into any such
option, warrant, call, right, conversion right, commitment or agreement.
(c) Fund III shall cause the Estate to have the right, but not
obligation, to acquire, at the Closing and on mutually acceptable terms and
conditions, up to $5 million of equity of the entity (the "New Parent") into
which the Parent shall contribute the capital stock of Mergeco (or, if
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the Parent contribution is after the Merger, the Surviving Corporation Class A
Common Stock), provided that the Estate must elect to make such investment by no
later than September 15, 1996. If the Estate makes a timely election to make
such investment, the Estate and the New Parent shall thereafter enter into a
mutually acceptable agreement memorializing the terms of such acquisition. The
Estate's right to make such investment in the Parent shall terminate at the
close of business on September 15, 1996, if a timely election has not been made.
5.8. Use of Proceeds. Commodore shall use the proceeds from the sale of
the Preferred Shares to Fund III for working capital to be used for general
corporate purposes, to pay down Commodore's indebtedness to AT&T, or to hold
such proceeds in reserve to finance Permitted Acquisitions.
5.9. Waiver of Appraisal Rights. Commodore shall use commercially
reasonable efforts to obtain a written waiver from each holder of Series A
Preferred Stock waiving such holder's appraisal rights under Section 262 of
Delaware Law.
5.10. Signed Acknowledgments. Commodore shall cause CIBC Wood Gundy
Securities Corp., the holder of the Series A Preferred Stock as of the date
hereof, to (a) deliver to transferees of shares of Series A Preferred Stock a
copy of the Series B Certificate of Designations and the letter agreement dated
as of the date hereof between Commodore and CIBC Wood Gundy Securities Corp. and
(b) obtain a signed acknowledgment from each transferee as to the receipt
thereof, which acknowledgment shall be delivered to Commodore and Mergeco.
5.11. Treatment of Dividends for Income Tax Purposes. Commodore
covenants and agrees for the benefit of Fund III as the purchaser of the Series
B Preferred Stock pursuant to Article II and for the benefit of each subsequent
holder of Series B Preferred Stock that Commodore (a) will not claim as an
expense (reducing taxable income) any dividends paid on the Series B Preferred
Stock in any federal income tax return, claim for refund, or other statement,
report or submission, except to the extent that there may be no reasonable basis
in law to do otherwise; and (b) will make any election (or take any other
action) which may become necessary to comply with clause (a). At the reasonable
request of Fund III or subsequent holder of Series B Preferred Stock (and at the
expense of Fund III or subsequent holder), Commodore will join in the submission
to the Internal Revenue Service of a request for a ruling that the dividends
paid on the Series B Preferred Stock will be eligible for the dividends received
deduction under Section 243(a)(1) of the Code. In addition, Commodore will
cooperate with Fund III or any subsequent holder of Series B Preferred Stock in
any litigation, appeal, or other proceeding relating to the eligibility for the
dividends received deduction under Section 243(a)(1) of the Code of any
dividends (within the meaning of Section 316(a) of the Code), paid on the Series
B Preferred Stock, provided that Fund III or any subsequent holder shall
reimburse Commodore for its reasonable out-of-pocket expenses in connection with
such proceeding. To the extent possible, the principles of this Section 5.11
shall also apply with respect to state and local taxes. Commodore will use its
commercially reasonable efforts to ensure that distributions made with respect
to the Series B Preferred Stock are treated as dividends within the meaning of
Section 316(a) of the Code consistent with the operations of its
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business in the ordinary course and with the accounting method and principles
then in use. The obligations of Commodore hereunder shall survive the payment,
redemption or exchange of the Series B Preferred Stock, the transfer of the
Series B Preferred Stock, and the termination of this Agreement.
5.12. Exchange Indenture. Commodore covenants that, as required by the
terms of the Series B Certificate of Designations and Series B Registration
Rights Agreement, it shall cause the Exchange Indenture (as defined in the
Series B Certificate of Designations) (with such changes as are permitted by
such Exchange Indenture or as have been consented to by the holders of a
majority in principal amount of the Exchange Notes (as defined in the Series B
Certificate of Designations) then outstanding) to be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The trustee under
the Exchange Indenture shall be selected by Commodore and reasonably
satisfactory to a majority in liquidation preference and/or principal amount, as
applicable, of the Series B Preferred Stock and Exchange Notes (the
"Securities") outstanding at the time of such approval. Commodore shall deliver
copies of the Exchange Indenture as qualified under the Trust Indenture Act, in
the form duly executed by Commodore and the trustee thereunder, to each holder
of the Securities no later than the time of such qualification.
5.13. Home Office Payment. Subject to the provisions of the Series B
Certificate of Designations, the Series B Preferred Stock, the Series B
Registration Rights Agreement, the Warrant Registration Rights Agreement, the
Warrant Agreement, the Series B Warrants and this Agreement, Commodore agrees
that, so long as Fund III shall own Securities purchased by it hereunder,
Commodore will make any payments to Fund III of principal, premium or interest
due on any Security (and any liquidated damages payments relating thereto
pursuant to the Series B Registration Rights Agreement) by wire transfer in
immediately available funds by 2:00 p.m., local time at the location in the
United States of Fund III's account, on the date of payment to such account as
shall have been specified by separate written notice to Commodore by Fund III
(providing sufficient information with such wire transfer to identify the source
and application of the funds and requesting the bank to send a credit advice
thereof to Fund III), or to such other account or in such other similar manner
as Fund III may designate to Commodore in writing.
ARTICLE VI
COVENANTS OF MERGECO
6.1. Notification of Certain Matters. If Mergeco (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any Governmental Entity, that could affect Mergeco's ability to consummate the
transactions contemplated hereby, or should Mergeco (or its FCC counsel) become
aware of any fact relating to the qualifications of Mergeco that reasonably
could be expected to cause the FCC to withhold its consent to the transfer of
control of the Station Licenses, Mergeco shall promptly notify Commodore thereof
and shall use its commercially reasonable efforts to take such steps as may be
necessary to remove any such impediment to the transactions contemplated by this
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Agreement. In addition, Mergeco shall give to Commodore prompt written notice of
(i) the occurrence, or failure to occur, of any event of which it becomes aware
that has caused or that would be likely to cause any representation or warranty
of Mergeco contained in this Agreement to be untrue or inaccurate at any time
from the date hereof to the Closing Date, and (ii) the failure of Mergeco, or
any officer, director, employee or agent thereof, to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder. No such notification shall affect the representations
or warranties of the parties or the conditions to their respective obligations
hereunder.
6.2. Commitment Letter. On or before September 3, 1996, Mergeco shall
deliver to Commodore a binding commitment letter or binding commitment letters
from Fund III and/or one or more other financing sources to provide financing in
an amount of $110 million to provide Mergeco a portion of the funds necessary to
enable Mergeco to consummate the transactions contemplated hereby. Fund III
shall at such time have subscription commitments for unallocated capital equal
to at least its committed amount and there shall be no restrictions on Fund
III's ability to call such capital.
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for Commission Consent. By the fifth business day
after the date hereof, Commodore and Mergeco will join in one or more
applications filed with the FCC requesting the FCC's written consent to the
transfer of control of the Station Licenses to the Surviving Corporation (the
"Applications"). The parties will take all proper steps reasonably necessary (i)
to diligently prosecute the Applications and (ii) to obtain the Commission's
determination that the grant of each Application will serve the public interest,
convenience and necessity (the "Commission Consent"). The failure by either
party to timely file or diligently prosecute its portion of any Application
shall be a material breach of this Agreement.
7.2. Control of Stations. This Agreement will not be consummated until
after the Commission Consents with respect to the Applications referred to in
Section 7.1 are granted without any material adverse conditions not customarily
imposed on the grant of such applications and have become Final Orders. "Final
Order" means an order, action or decision of the FCC (without the inclusion of
any material adverse conditions not customarily imposed with respect to such
consents) that has not been reversed, stayed, enjoined, annulled or suspended
and as to which (i) no timely request for stay, appeal, petition for
reconsideration, application for review, or reconsideration by the FCC on its
own motion is pending and (ii) the time for filing any such request, appeal,
petition or application, or for reconsideration by the FCC on its own motion,
has expired. Between the date of this Agreement and the Closing Date, Mergeco
will not directly or indirectly control, supervise or direct the operation of
the Stations. Further, between the date of this Agreement and the Closing
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Date, Commodore shall, directly or indirectly, supervise or control the
operation of the Stations. Such operation shall be the sole responsibility of
Commodore.
7.3. Other Governmental Consents. Promptly following the execution of
this Agreement, the parties shall proceed to prepare and file with the
appropriate governmental authorities (other than the FCC) such requests, reports
or notifications as may be required in connection with this Agreement, and shall
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such matters. Without limiting the foregoing, the
parties shall file promptly with the Federal Trade Commission and the Antitrust
Division of the Department of Justice the notifications and other information
(if any) required to be filed under the HSR Act with respect to the transactions
contemplated hereby and shall use their commercially reasonable efforts to cause
all applicable waiting periods under the HSR Act to expire or be terminated as
of the earliest possible date.
7.4. Brokers or Finders. Other than fees to be paid to Bankers Trust
Company, Mergeco represents and warrants to Commodore, and other than Media
Venture Partners (the procuring partner of which is Randall E. Jeffery) and CIBC
Wood Gundy Securities Corp., Commodore and the Indemnitors, jointly and
severally, represent and warrant to Mergeco, that no agent, broker, investment
banker or other or person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement.
7.5. Additional Agreement. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its commercially reasonable
efforts (including voting or acting by written consent in a party's capacity as
a stockholder of Commodore) to do, or cause to be taken all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) amending
Section 1.5 if Friedman is to remain as the chief executive officer of the
Surviving Corporation pursuant to Section 5.7, and (ii) if Mergeco has preferred
stock issued and outstanding prior to the Closing, at the request of Mergeco,
amending Sections 1.4 and 1.6 to provide that such preferred stock shall be
converted into preferred stock of the Surviving Corporation and amending the
Certificate of Incorporation of Commodore to the extent necessary to allow such
preferred stock to become preferred stock of the Surviving Corporation, and
taking such other actions as may be necessary or appropriate to cause all
conditions precedent to the obligations of the other parties hereto to be
satisfied.
7.6. Other Agreements. The parties hereto who are to be the respective
parties to the Indemnification Escrow Agreement and the Letter of Credit Escrow
Agreement hereby covenant and agree to execute and deliver the Indemnification
Escrow Agreement on or before the Closing Date and the Letter of Credit Escrow
Agreement on or before the date of this Agreement. The parties hereto who are to
be parties to the Series B Registration Rights Agreement, the Warrant Agreement
and the Warrant Registration Rights Agreement hereby covenant and agree to
execute such agreements and deliver them to Bankers Trust at the address
specified in Section 2.1(a).
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7.7. Remediation Costs. The parties hereto hereby covenant and agree
that if the financing sources used by Mergeco to finance the transactions
contemplated by this Agreement require, as a condition to providing financing,
remediation (other than as required by AT&T as provided in Exhibit O hereto) of
any real property owned by Commodore and the cost of such remediation shall
exceed $100,000, but not $500,000, as estimated by a nationally recognized and
duly qualified environmental consultant reasonably acceptable to Mergeco and
Commodore, the Indemnification Deductible shall be reduced by such excess over
$100,000 (not to exceed $400,000) (subject to adjustment when the actual cost of
remediation is finally determined).
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation. The respective obligation
of each party to effect the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement shall have been filed, occurred or
been obtained. The Commission Consents shall have become Final Orders.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any
statute, rule or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2. Conditions to Obligation of Mergeco. The obligation of Mergeco to
effect the Merger and the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived by Mergeco:
(a) Representations and Warranties. The representations and
warranties of Commodore and the Indemnitors set forth in this Agreement shall be
true and correct in all material respects for any representation or warranty not
already qualified for materiality as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (unless otherwise
limited to the date of this Agreement), and Mergeco shall have received a
certificate signed on behalf of Commodore by the chief executive officer or by
the chief financial officer to such effect with respect to Commodore.
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(b) Performance of Obligations. Each of Commodore and the
Indemnitors shall have performed in all material respects all obligations
required to be performed by it or him under this Agreement prior to the Closing
Date, and Mergeco shall have received a certificate signed on behalf of
Commodore by the chief executive officer or by the chief financial officer to
such effect with respect to Commodore.
(c) Consents Under Agreements. Mergeco shall have been
furnished with evidence reasonably satisfactory to it of the consent or approval
of each person that is a party to a contract or agreement identified in Schedule
3.1(n) whose consent or approval shall be required in order to permit the
consummation of the transactions contemplated hereby, provided that no consent
by AT&T in regard to the AT&T Agreement shall be required as a condition to
Mergeco's obligation hereunder.
(d) Legal Opinions. Mergeco shall have received from (i)
Pryor, Cashman, Sherman & Flynn, counsel to Commodore, and (ii) Haley, Bader &
Potts, special FCC counsel to Commodore, one or more opinions dated the Closing
Date, in substantially the forms attached as Exhibits I and J hereto, which
opinions shall expressly provide that they may be relied upon by Mergeco's
lenders, underwriters or other sources of financing with respect to the
transactions contemplated hereby.
(e) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Commodore pursuant to
Section 9.2 shall have been delivered.
(f) Minimum Pro Forma EBITDA . EBITDA (as defined in the
Indenture), on a pro forma basis, for the EBITDA Period (hereinafter defined)
shall have been at least the Minimum Pro Forma EBITDA (hereinafter defined), and
Mergeco shall have received a certificate (accompanied by the calculation of
EBITDA) signed on behalf of Commodore by the chief executive officer or chief
financial officer certifying as to the accuracy of the calculation of EBITDA for
the EBITDA Period. For purposes hereof, the "EBITDA Period" means as follows:
(i) if the Closing occurs during the period from October 1, 1996 through
December 31, 1996, the "EBITDA Period" means the 12 broadcast month period ended
on September 29, 1996; (ii) if the Closing occurs during the period from January
1, 1997 through March 31, 1997, the "EBITDA Period" means the 12 calendar month
period ended on December 31, 1996; (iii) if the Closing occurs during the period
from April 1, 1997 through June 30, 1997, the "EBITDA Period" means the 12
broadcast month period ended on March 30, 1997; and (iv) if the Closing occurs
during the period from July 1, 1997 through September 30, 1997, the "EBITDA
Period" means the 12 broadcast month period ended on June 29, 1997. For purposes
hereof, the "Minimum Pro Forma EBITDA" means as follows: (i) if the Closing
occurs during the period from October 1, 1996 through December 31, 1996, the
"Minimum Pro Forma EBITDA" shall equal $12,150,000; (ii) if the Closing occurs
during the period January 1, 1997 through March 31, 1997, the "Minimum Pro Forma
EBITDA" shall equal $14,040,000; (iii) if the Closing occurs during the period
from April 1, 1997 through June 30, 1997, the "Minimum Pro Forma EBITDA" shall
equal $14,400,000; and (iv) if the Closing occurs during the period from July 1,
1997 through September 30, 1997, the "Minimum Pro Forma EBITDA" shall
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equal $15,120,000. For purposes of calculating EBITDA, on a pro forma basis, for
this Section 8.2(f), (i) the EBITDA of any Station sold or otherwise disposed of
during the EBITDA Period shall be eliminated from the calculation of EBITDA for
the EBITDA Period as if the Station were sold prior to the EBITDA Period; (ii)
the EBITDA of any radio broadcast station or other business acquired during the
EBITDA Period shall be included in the calculation of EBITDA for the full EBITDA
Period; (iii) the EBITDA of the radio broadcast stations proposed to be acquired
in the Huntington Acquisition shall be deemed to have been acquired prior to the
EBITDA Period and included in the calculation of EBITDA for the full EBITDA
Period whether or not the Huntington Acquisition is actually consummated during
such period; and (iv) in regard to all radio broadcast stations of Commodore or
other businesses of Commodore, any permanent cost reductions effectuated by
Commodore shall be taken into account in calculating EBITDA for the EBITDA
Period as though such cost reductions of a long-term nature, which are not
temporary, were effectuated as of the beginning of the EBITDA Period.
8.3. Conditions to Obligations of Commodore. The obligation of
Commodore to effect the Merger and the transactions contemplated hereby is
subject to the satisfaction of the following conditions unless waived by
Commodore:
(a) Representations and Warranties. The representations and
warranties of Mergeco set forth in this Agreement shall be true and correct in
all material respects for any representation or warranty not already qualified
for materiality as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, and Commodore shall have received a
certificate signed on behalf of Mergeco by the chief executive officer or by the
chief financial officer of Mergeco to such effect.
(b) Performance of Obligations of Mergeco. Each of Mergeco and
Fund III shall have performed in all material respects the obligations required
to be performed by it under this Agreement prior to the Closing Date, and
Commodore shall have received a certificate signed on behalf of Mergeco by the
chief executive officer or by the chief financial officer of Mergeco to such
effect with respect to Mergeco and Fund III.
(c) Legal Opinions. Commodore shall have received from Vinson
& Elkins L.L.P., counsel to Mergeco, and Fisher, Wayland, Cooper & Leader,
special FCC counsel to Mergeco, opinions dated the Closing Date, in
substantially the forms attached hereto as Exhibits K and L.
(d) Closing, Deliveries. All documents and instruments
required to be delivered by Mergeco pursuant to Section 9.2 shall have been
delivered.
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<PAGE> 53
ARTICLE IX
CLOSING
9.1. Closing. The closing of the Merger (the "Closing") will take place
at the offices of Pryor, Cashman, Sherman & Flynn, New York, New York, at 10:00
a.m., local time, or at such other place and time as Mergeco and Commodore may
agree, subject to the satisfaction or waiver of the conditions set forth in
Article VIII, on or before the 10th business day after the Commission Consent
has become a Final Order, upon five business days' prior written notice, given
within the first 5 business days after the Commission Consent has become a Final
Order, from Mergeco to Commodore of the date on which the Closing shall occur
(the "Closing Date"); provided, however, that in no event shall the Closing
occur prior to October 15, 1996. Notwithstanding the foregoing, (a) in the case
of a Trading Event, a Banking Event or a Station Event (in each case as defined
below), (i) if the Cessation Date (as defined below) is less than 60 days after
the Event Date (as defined below), Mergeco, in its discretion, may extend the
Closing Date to a date not later than the 30th day after the Cessation Date,
(ii) if the Cessation Date is more than 60, but less than 90, days after the
Event Date, Mergeco, in its discretion, shall elect on the first to occur of the
10th business day after the Cessation Date or the 90th day (or, if a Saturday,
Sunday or a banking holiday, the next business day) after the Event Date (the
"Election Date") to either (A) close the Merger on the later to occur of the 5th
business day after the Election Date or the 90th day (or, if a Saturday, Sunday
or a banking holiday, the next business day) after the Event Date or (B)
terminate this Agreement, or (iii) if the Cessation Date has not occurred by the
90th day after the Event Date, then on the 90th day (or, if a Saturday, Sunday
or banking holiday, the next business day) after the Event Date Mergeco, in its
discretion, shall elect to close the Merger on the 5th business day thereafter
or terminate this Agreement, (b) in the case of a Conflict Event, Mergeco, in
its discretion, may only extend the Closing Date to a date not to exceed the
90th day after the Event Date, (c) if a Cure Period (as defined in Section
10.1(b)(i)) has not ended on or before the Closing Date, the Closing Date shall
be extended to the end of the Cure Period, (d) if the Closing does not occur
within 20 days after the date of the Final Order, the parties hereby agree to
request approval from the FCC to extend the Closing so that the Closing
contemplated hereunder will not violate any FCC rules or regulations, and (e) if
the Closing is to occur within the 30-day period immediately after an EBITDA
Period and Commodore is unable to complete its calculation of EBITDA prior to
the Closing, Commodore may extend the Closing Date to a date not to exceed the
30th day (or, if a Saturday, Sunday or banking holiday, the next business day)
immediately after the EBITDA Period. For purposes of this Agreement, a "Trading
Event" shall mean that trading generally in securities on the New York Stock
Exchange shall have been suspended or materially limited; a "Banking Event"
shall mean that a general moratorium on commercial banking activities in New
York, New York shall have been declared by any federal or state authority; a
"Conflict Event" shall mean the occurrence of any major armed conflict involving
a substantial participation by the armed forces of the United States of America;
a "Station Event" shall mean any act of nature, calamity or casualty (including
but not limited to fires, floods, earthquakes and storms) that has caused one or
more Stations representing an aggregate of 3% of the consolidated gross revenues
of Commodore for the last full 12 calendar months not to be operating in
compliance with its or their respective Station License(s); an "Event
48
<PAGE> 54
Date" shall mean the date on which a Trading Event, Banking Event, Conflict
Event or a Station Event occurs; and a "Cessation Date" shall mean the date on
which a Trading Event, Banking Event, Conflict Event or a Station Event ends.
Pro forma adjustments shall be made for purposes of calculating gross revenues
for the 12-month period specified in the definition of "Station Event" to (i)
eliminate the gross revenues of any Station sold during such 12-month period and
(ii) with respect to any radio broadcast station acquired during such 12-month
period, to assume that such station was acquired at the beginning of such
12-month period and include the gross revenues of such station for the full
12-month period.
9.2. Actions to Occur at Closing.
(a) At the Closing, Mergeco shall deliver to Commodore (or the
Stockholders, as the case may be) the following:
(i) the c]ertificates in Section 8.3(a) and (b);
(ii) the opinions of counsel in Section 8.3(c); and
(iii) the Merger Consideration, the Option
Consideration and the Warrant Consideration.
(b) At the Closing, Commodore shall deliver to Mergeco (or
Fund III in the case of clause (iii)) the following:
(i) the certificates described in Section 8.2(a), (b)
and (f);
(ii) the opinions of counsel in Section 8.2(d); and
(iii) the Letter of Credit as it then exists.
(c) At the Closing, Mergeco shall receive from Commodore an
affidavit described in section 1445(b)(3) of the Code.
(d) At the Closing, the Certificate of Merger shall be signed
by the parties and filed with the Secretary of State of the State of Delaware.
49
<PAGE> 55
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Mergeco and Commodore;
(b) by either Mergeco or Commodore:
(i) if there shall have been any breach of any
representation, warranty, or any material breach of any covenant or agreement on
the part of Mergeco, on the one hand, or Commodore or any of the Indemnitors, on
the other hand, set forth in this Agreement which breach shall not have been
cured within twenty (20) days (the "Cure Period") following receipt by the
breaching party of written notice of such breach, provided that there shall be
no Cure Period for a breach of Section 6.2;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and nonappealable;
(iii) if, for any reason, the FCC denies or dismisses
any of the Applications and the time for reconsideration or court review under
the Communications Act with respect to such denial or dismissal has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review;
(iv) if, for any reason, any of the Applications is
designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the
later of May 28, 1997, or the date to which the Closing Date is extended
pursuant to the second sentence of Section 9.1; provided, however, that the
right to terminate this Agreement under this clause (v) shall not be available
to any party whose breach of this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by Mergeco:
(i) with respect to a Trading Event, Banking Event,
or a Station Event, at its option, as provided in the second sentence of
Section 9.1;
50
<PAGE> 56
(ii) if the FCC grants any of the Applications with any
material adverse conditions not generally imposed on grants of such applications
and the time for reconsideration or court review under the Communications Act
with respect to such material adverse conditions has expired and there is not
pending with respect thereto a timely filed petition for reconsideration or
request for review;
(iii) if Commodore shall fail to perform its obligations under
Section 9.2; or
(iv) if the financing sources used by Mergeco to finance the
transactions contemplated by this Agreement require, as a condition to providing
financing, remediation (other than as required by AT&T as provided in Exhibit O
hereto) of any real property owned by Commodore and the cost of such remediation
shall exceed $500,000 as estimated by a nationally recognized and duly qualified
environmental consultant reasonably acceptable to Mergeco and Commodore;
provided, however, that Mergeco shall not have the right to terminate this
Agreement pursuant to this clause (iv) if, within 5 business days after receipt
of the estimated cost of remediation, the Indemnitors elect (by giving written
notice to Mergeco) to reduce the Purchase Price as provided in Section 1.6(h),
in which case, the parties hereto agree that the Indemnification Deductible (as
defined in the Indemnification Escrow Agreement) shall be reduced by $400,000
(subject to adjustment when the actual cost of remediation is finally
determined); or
(d) by Commodore:
(i) if Mergeco shall fail to perform any of its obligations
under Section 9.2.
Notwithstanding anything in the foregoing to the contrary, no
party that is in material breach of this Agreement shall be entitled to
terminate this Agreement except with the consent of the other parties hereto.
Termination of this Agreement shall not terminate or affect the parties'
obligations pursuant to Article II and Sections 5.11, 5.12 and 5.13.
10.2. Effect of Termination. In the event of termination of this
Agreement by either Commodore or Mergeco as provided in Section 10.1, there
shall be no liability on the part of either the Indemnitors, Commodore or
Mergeco of any kind whatsoever, except for liability arising out of a breach of
this Agreement. In the event that Mergeco breaches its obligations under
Section 10.1(b)(i) or 10.1(d)(i), and, as a consequence, Commodore terminates
this Agreement, the parties agree and acknowledge that Commodore will suffer
damages that are not practicable to ascertain at the time of execution of this
Agreement. Accordingly, Commodore and Mergeco agree that, in such event,
Commodore shall be entitled to the sum of $7,500,000 as liquidated damages. The
parties agree that the foregoing liquidated damages are reasonable considering
all the circumstances existing as of the date hereof and constitute the parties'
good faith estimate of the actual damages reasonably expected to result from the
termination of this Agreement by Commodore pursuant to Section 10.1(b)(i) or
10.1(d)(i). Commodore and the Indemnitors agree that, to the fullest extent
permitted
51
<PAGE> 57
by law, the right to payment of the $7,500,000 as liquidated damages
under this Section 10.2 shall be their sole and exclusive remedy if the Closing
does not occur with respect to any damages whatsoever that Commodore and the
Indemnitors may suffer or allege to suffer as a result of any claim or cause of
action asserted by Commodore or the Indemnitors relating to or arising from
breaches of the representations, warranties or covenants of Mergeco contained in
this Agreement and to be made or performed at or prior to the Closing; provided
that, if Commodore, at its election, requests Fund III to purchase more than
12,500 shares of Series B Preferred Stock (less any shares of Series B Preferred
Stock purchased by Fund III on the First Purchase Date), Commodore and the
Indemnitors (a) agree that they shall not be entitled, and waive any rights, to
the $7,500,000 as liquidated damages, (b) hereby irrevocably and unconditionally
release, acquit, and forever discharge Mergeco and Fund III (and each of them)
and each of their respective successors, assigns, employees, agents,
stockholders, partners, subsidiaries, parent companies and other affiliates
(corporate or otherwise) (the "Released Parties") of and from any and all
claims, demands, causes of action, or liabilities of any kind whatsoever,
whether known or unknown, matured or unmatured, suspected or unsuspected,
liquidated or unliquidated, absolute or contingent, direct or derivative,
against the Released Parties, including, without limitation, any claim, demand,
cause of action, or liability arising out of, based upon, resulting from or
relating to the negotiation, execution, performance, breach or otherwise related
to or arising out of this Agreement or any agreement entered into in connection
herewith or related hereto, and (c) agree to deliver the Release to either
Mergeco or Bankers Trust as provided in Article II and an opinion of counsel as
to the enforceability thereof in the form attached as Exhibit G hereto.
ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement (other than those contained in
Section 3.2, which shall survive until the expiration of the applicable statute
of limitation period) shall survive the Closing until the close of business on
the last day of the fifteenth full calendar month after the Closing (the
"Termination Date"). From the date hereof until the Termination Date, the
Indemnitors shall have no liability in respect of breaches of representations,
warranties or covenants that survive only until the Termination Date, except to
the extent provided in the Indemnification Escrow Agreement. With respect to
claims made in respect of breaches of the representations and warranties
contained in Section 3.2, the Surviving Corporation and its successors and
assigns may seek reimbursement from the Indemnitors for Damages (as defined in
the form of Indemnification Escrow Agreement attached as Exhibit A) either
pursuant to the Indemnification Escrow Agreement or against any Stockholder with
respect to breaches of Section 3.2 and any Indemnitor who is not a Stockholder
with respect to breaches of Section 3.4. Covenants to be performed after the
Closing shall survive the Closing.
11.2. Exclusive Remedy. Mergeco, Commodore and the Indemnitors agree
that, to the fullest extent permitted by law, the Surviving Corporation's sole
and exclusive remedy after the
52
<PAGE> 58
Closing with respect to any claim or cause of action asserted by it relating to
or arising from breaches of the representations, warranties or covenants of the
Indemnitors or Commodore (other than the representations and warranties set
forth in Section 3.2 and covenants to be performed after the Closing contained
in this Agreement (including but not limited to any document, list, certificate
or other instrument furnished or to be furnished to Mergeco or any of their
representatives in connection with the transactions contemplated by this
Agreement) shall be solely limited to the Surviving Corporation's rights under,
and be subject to the terms and conditions of, the Indemnification Escrow
Agreement. Notwithstanding the foregoing, this Section 11.2 shall not (i)
prevent any party from seeking the remedies of specific performance or
injunctive relief with respect to any covenants or agreements that extend beyond
the Closing or (ii) be deemed to constitute a waiver of any rights or remedies
any party may have, whether at law or in equity, against any other party for
fraud or fraudulent inducement, including under the anti-fraud provisions of the
federal securities laws, in connection with a breach of a covenant or agreement
of another party contained in this Agreement.
11.3. Specific Performance. Mergeco, on the one hand, and Commodore and
the Indemnitors, on the other hand, hereby acknowledge and agree that the
failure of any party to this Agreement to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to consummate the Merger, will cause irreparable injury to the other
parties to this Agreement for which damages, even if available, will not be an
adequate remedy. Accordingly, each of the parties hereto hereby consents to the
issuance of injunctive relief by any court of competent jurisdiction to compel
performance of any party's obligations and to the granting by any such court of
the remedy of specific performance of such party's obligations hereunder. If any
action is brought by a party to enforce this Agreement, the other party shall
waive the defense that there is an adequate remedy at law.
11.4. Knowledge. Wherever reference is made in this Agreement to a
particular statement being "to the knowledge of Commodore" (or any correlative
phrase), such phrase shall be deemed to include the actual knowledge of any
officer of Commodore or its subsidiaries, and the General Managers and/or
Station Managers of each of the Stations.
11.5. Amendment and Modification. Subject to the provisions of
applicable law, at any time prior to the Effective Time, this Agreement may be
amended by a written instrument signed by Mergeco, Commodore and the Indemnitor
Representative, on behalf of the Indemnitors, at any time.
11.6. Waiver of Compliance; Consents. Any failure of Mergeco on the one
hand, or any of the Indemnitors or Commodore, on the other hand, to comply with
any obligation, covenant, agreement or condition contained herein may be waived
in writing by Commodore or Mergeco, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
other failure.
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<PAGE> 59
11.7. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
11.8. Expenses and Obligations. Except as otherwise expressly provided
in this Agreement or as provided by law, all costs and expenses incurred by the
parties hereto in connection with the consummation of the transactions
contemplated hereby shall be borne solely and entirely by the party which has
incurred such expenses. Notwithstanding the foregoing sentence, up to $50,000 in
the aggregate of the costs and expenses incurred by the Indemnitors in
connection with the consummation of the transactions contemplated hereby may be
borne by Commodore (and, after the Closing, the Surviving Corporation). In the
event of a dispute between the parties in connection with this Agreement and the
transactions contemplated hereby, each of the parties hereto hereby agrees that
the prevailing party shall be entitled to reimbursement by the other party of
reasonable legal fees and expenses incurred in connection with any action or
proceeding.
11.9. Parties in Interest. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set forth
below, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
11.10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Mergeco or Fund III, to
CMI Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart
with a copy to
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attn: Michael D. Wortley
54
<PAGE> 60
(b) If to Commodore,
Commodore Media, Inc.
500 Fifth Avenue, Suite 3000
New York, New York 10110
Attn: Bruce A. Friedman
President and Chief Executive Officer
with copies to
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attn: Ira J. Goldstein
(c) If to the Indemnitors, to the addresses set forth on
the signature page
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Henry Christensen, III
11.11. Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The table of contents, if any, and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes," or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
11.12. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
11.13. Entire Agreement. This Agreement (which term shall be deemed to
include the Confidentiality Agreement referred to in Section 5.2(a), the
exhibits and schedules hereto and the other certificates, documents and
instruments delivered hereunder) constitutes the entire agreement of the parties
hereto and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. There are no
representations or
<PAGE> 61
warranties, agreements or covenants other than those expressly set forth in this
Agreement (as so defined).
11.14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. ANY SUIT OR PROCEEDING
BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
LOCATED IN DELAWARE.
11.15. Publicity. Except as otherwise required by law, so long as this
Agreement is in effect, neither Mergeco, the Indemnitors nor Commodore shall
issue or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of Mergeco, on the one hand, and of Commodore, on the other hand, which
consent shall not be unreasonably withheld.
11.16. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Commodore and without releasing Mergeco from any of its
obligations or liabilities hereunder, Mergeco may assign or delegate any or all
of its rights or obligations under this Agreement to any affiliate thereof,
provided that such assignment does not delay obtaining the Commission Consent,
and (b) nothing in this Agreement shall limit Mergeco's ability to make a
collateral assignment of its rights under this Agreement to any institutional
lender that provides funds to Mergeco without the consent of Commodore.
Commodore shall execute an acknowledgment of such assignment(s) and collateral
assignments in such forms as Mergeco or its institutional lenders may from time
to time reasonably request; provided, however, that unless written notice is
given to Commodore that any such collateral assignment has been foreclosed upon,
Commodore shall be entitled to deal exclusively with Mergeco as to any matters
arising under this Agreement or any of the other agreements delivered pursuant
hereto. In the event of such an assignment, the provisions of this Agreement
shall inure to the benefit of and be binding on Mergeco's assigns. For purposes
hereof "affiliate" shall mean, with respect to Mergeco, any person which
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, Mergeco. Nothing in this
Agreement shall prevent Parent from assigning its interest in Mergeco to an
affiliate of Parent, provided that such assignment does not delay obtaining the
Commission Consent.
11.17. Further Assurances. At the Closing or from time to time
thereafter, the Surviving Corporation and the Indemnitors shall execute and
deliver such other instruments of assignment, transfer and delivery and shall
take such other actions as the other reasonably may request in order to
consummate, complete and carry out the transactions contemplated by this
Agreement.
11.18. Director, Officer and Stockholder Liability. The directors,
officers and stockholders of Mergeco and the partners of Fund III or any
officer, director or stockholder of any entity directly or indirectly owning a
partner in Fund III shall not have any personal liability for any liabilities
56
<PAGE> 62
arising under this Agreement. The directors and officers of Commodore and its
subsidiaries shall not have any personal liability for any liabilities arising
under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 63
IN WITNESS WHEREOF, Mergeco, Commodore, the Parent, the Stockholders
and the Indemnitors have caused this Agreement to be signed, all as of the date
first written above.
MERGECO:
CMI ACQUISITION COMPANY, INC.
-------------------------------------
By: Eric C. Neuman
Its: President
COMMODORE:
COMMODORE MEDIA, INC.
-------------------------------------
By: Bruce A. Friedman
Its: President and Chief Executive
Officer
PARENT:
HICKS, MUSE, TATE & FURST EQUITY FUND
III, L.P.
By: HM3/GP PARTNERS, L.P.,
its General Partner
By: Hicks, Muse GP Partners III, L.P.,
its General Partner
By: Hicks, Muse Fund
III, Incorporated,
its General Partner
-------------------------------
By: Lawrence D. Stuart, Jr.
Its: Executive Vice President
<PAGE> 64
STOCKHOLDERS AND INDEMNITORS:
- -------------------------- William A. M. Burden & Co., L.P.,
Bruce A. Friedman, as Stockholder and Indemnitor
as Stockholder, Indemnitor and Indemnitor
Representative By:
--------------------------
its General Partner
Address:
----------------------
----------------------
---------------------- ----------------------
By:
----------------------
Its:
----------------------
Address:
----------------------
----------------------
----------------------
- -----------------------------
James T. Shea, Jr.,
as Stockholder and Indemnitor
Address:
----------------------
----------------------
----------------------
<PAGE> 65
Estate of Carter Burden,
as Stockholder and Indemnitor
By:
---------------------------- ----------------------
Susan L. Burden, as Executor James J. Sullivan, as Indemnitor
By: Address:
---------------------------- ------------------------
S. Carter Burden III, as Executor
------------------------
By: ------------------------
----------------------------
Flobelle F. Burden, as Executor ------------------------
Address:
----------------------
----------------------
----------------------
<PAGE> 1
EXHIBIT 10.74
LETTER OF CREDIT
ESCROW AGREEMENT
LETTER OF CREDIT ESCROW AGREEMENT (this "Escrow Agreement") dated June
21, 1996, by and among CMI Acquisition Company, Inc., a Delaware corporation
("Mergeco"), Hicks, Muse, Tate & Furst Equity Fund III, L.P., a Delaware limited
partnership ("Fund III"), Commodore Media, Inc., a Delaware corporation
("Commodore" and, together with Mergeco and Fund III, the "Undersigned"), and
Citibank N.A., a national banking association with its headquarters in New York
City, New York (the "Escrow Agent").
RECITALS:
A. Pursuant to the Agreement and Plan of Merger dated as of this date,
by and among the Undersigned, the Indemnitors (as defined therein) and certain
other signatories thereto for the limited purposes stated therein (the "Merger
Agreement"), Mergeco will be merged with and into Commodore (the "Merger").
B. Pursuant to the Merger Agreement, Mergeco has agreed to pay
liquidated damages to Commodore if the Merger Agreement is terminated by
Commodore due to a breach thereunder by Mergeco.
C. Pursuant to the terms of that certain Letter of Credit Agreement
between Fund III and Bankers Trust Company (the "LC Agent"), the Escrow Agent is
named as a joint beneficiary under the letter of credit (the "Letter of Credit")
of even date herewith issued to secure Mergeco's obligations with respect to any
liquidated damages that may become payable under the terms of the Merger
Agreement.
D. As a condition to the execution of the Merger Agreement, the parties
hereto (other than the Escrow Agent) have agreed to execute and deliver this
Escrow Agreement.
E. Unless otherwise defined herein, capitalized terms used herein shall
have the meanings assigned to them in the Merger Agreement.
AGREEMENTS:
Accordingly, in consideration of the foregoing and of the respective
agreements and covenants contained herein and in the Merger Agreement, and
intending to be legally bound hereby, the parties agree as follows:
Section 1. Establishment of Escrow Account.
Commodore may at any time during the 15 business days following the
termination, if any, of the Merger Agreement deposit the Letter of Credit with
the Escrow Agent. The Letter of Credit,
<PAGE> 2
if held by the Escrow Agent, and any proceeds from the Letter of Credit payable
by its terms to the Escrow Agent (the "Funds") are referred to herein as the
"Escrowed Property". The Escrowed Property and any interest or income accrued
thereon shall be held, administered and disposed of by the Escrow Agent in
accordance with the terms and conditions hereinafter set forth.
Section 2. Release of the Escrowed Property.
(a) Drawing of Letter of Credit by Escrow Agent, Delivery of Funds to
Commodore. Not more than three business days after (i) the delivery to the
Escrow Agent of written instructions signed by Mergeco and Commodore authorizing
the Escrow Agent to draw $7.5 million against the Letter of Credit in respect of
Mergeco's obligations with respect to liquidated damages as provided in the
Merger Agreement or (ii) the delivery to the Escrow Agent of a copy of a Final
Determination (as defined below) establishing the Escrow Agent's authorization
to draw $7.5 million against the Letter of Credit in respect of Mergeco's
obligations with respect to liquidated damages as provided in the Merger
Agreement, the Escrow Agent shall draw against the Letter of Credit as provided
in such instructions or Final Determination by delivery to the LC Agent of a
drawing certificate in the form of Exhibit A hereto and shall deliver the
proceeds thereof to the order of Commodore. A "Final Determination" shall mean a
final non-appealable judgment of a court of competent jurisdiction, accompanied
by an opinion of counsel for the presenting party reasonably satisfactory to the
Escrow Agent to the effect that such judgment is a Final Determination.
(b) Delivery of Letter of Credit to Fund III. Except as otherwise
provided in the last sentence of this Section 2(b), not more than three business
days after (i) the delivery to the Escrow Agent of written instructions signed
by Mergeco and Commodore authorizing the Escrow Agent to deliver the Letter of
Credit to Fund III or (ii) the delivery to the Escrow Agent of a copy of a Final
Determination establishing Fund III's right to the Letter of Credit, the Escrow
Agent shall deliver the Letter of Credit to Fund III. At the Closing, subject to
satisfaction of the conditions set forth in Article VIII of the Merger Agreement
and the Closing having occurred, Mergeco and Commodore shall deliver to the
Escrow Agent written instructions signed by Mergeco and Commodore authorizing
the Escrow Agent to deliver the Letter of Credit to Fund III or its
representative in which case the Escrow Agent shall deliver the Letter of Credit
to Fund III or its representative simultaneously with receipt of such notice if
so requested by Mergeco or Commodore.
Section 3. Replacement of Letter of Credit. If the Letter of Credit
will expire while it is held by the Escrow Agent under this Escrow Agreement,
Mergeco or Fund III may provide to Commodore for its approval at least 45
calendar days before the expiration of the Letter of Credit a form of substitute
letter of credit in a form identical to Exhibit B (with an expiration date of
not less than 90 days after the issuance thereof) issued by the issuer of the
original Letter of Credit or by a United States bank having assets and a net
worth (as established by the most recent public financial information of such
bank, copies of which shall be provided by Mergeco or Fund III to the Escrow
Agent and Commodore) equal to or greater than the bank which issued the Letter
of Credit together with a statement signed by an officer of Mergeco or Fund III
certifying that such substitute letter of credit will comply with the foregoing
requirements. If Commodore approves such form of
2
<PAGE> 3
substitute letter of credit in writing (such approval not to be unreasonably
withheld or delayed, provided that such substitute letter of credit is identical
to Exhibit B other than the expiration date) and Mergeco or Fund III delivers to
the Escrow Agent an original of such substitute letter of credit (duly executed
by the issuing bank) and Commodore's written approval, at least 30 calendar days
before the expiration of the Letter of Credit, such substitute letter of credit
shall thereafter be deemed the "Letter of Credit" for all purposes hereunder and
the Escrow Agent shall simultaneously exchange the prior Letter of Credit for
the substituted Letter of Credit and give receipts, if requested by Mergeco or
Fund III, for the same. If Commodore does not approve the form of substitute
letter of credit, or if Mergeco or Fund III does not deliver the original
substitute letter of credit to the Escrow Agent at least 30 calendar days before
the expiration of the Letter of Credit or such shorter period (but in no event
shorter than five calendar days) if the Letter of Credit shall not have been
deposited with the Escrow Agent by Commodore 30 calendar days before the
expiration of the Letter of Credit; provided that the Letter of Credit shall be
deposited with the Escrow Agent at least five calendar days prior to the
expiration of the Letter of Credit, neither Mergeco nor Fund III may replace the
Letter of Credit, and the Escrow Agent, notwithstanding any actual or alleged
default hereunder by Commodore or any instruction to the contrary by Mergeco,
Fund III or any other person, and notwithstanding any other state of facts,
shall draw the Letter of Credit in accordance with written instructions signed
by Commodore, without further action or written instructions by Mergeco or Fund
III and hold the funds in accordance with Section 4.
Section 4. Investment of Proceeds of Letter of Credit.
(a) The Escrow Agent shall from time to time invest and reinvest the
Funds, if any, in the Pacific Horizon Treasury Only Fund, or in such other of
the following investments as Commodore and Mergeco may from time to time elect
by joint notice in writing ("Permitted Investments") from each of the following
persons to the Escrow Agent: Eric C. Neuman and Bruce A. Friedman.
(1) Any U.S. Government of U.S. Government Agency
security;
(2) Any commercial paper rated A1/P1 or better;
(3) Any certificate of deposit or time deposit in any
bank with a long-term debt rating of A or better from
Moody's or Standard & Poor's;
(4) The Citibank Insured Money Market Deposit Account; or
(5) The following institutional money market funds:
a) Dreyfuss Treasury Cash Management Fund
b) Provident T-Fund Dollar Account
c) Federated Treasury Obligations Fund
d) AIM Treasury Portfolio
3
<PAGE> 4
(b) Any interest or other income received on such investment and
reinvestment of the Funds shall be set aside and distributed as provided in
Section 4(e).
(c) If the Letter of Credit is drawn by the Escrow Agent pursuant to
and in accordance with Section 3, upon receipt of the funds of such drawing
pursuant to the terms of the Letter of Credit, the Escrow Agent shall hold the
Funds in escrow in lieu of the Letter of Credit, and shall invest the Funds in
Permitted Investments (all references to the Letter of Credit being deemed to be
references to the Funds for such purpose; provided, however, that in the event
of a delivery pursuant to Section 2(b), the Funds shall be delivered to the LC
Agent and not to Fund III).
(d) The Escrow Agent will act upon investment instructions the day that
such instructions are received, provided the requests are communicated within a
sufficient amount of time to allow the Escrow Agent to make the specified
investment. Instructions received after an applicable investment cutoff deadline
will be treated as being received by the Escrow Agent on the next business day,
and the Escrow Agent shall not be liable for any loss arising directly or
indirectly, in whole or in part, from the inability to invest funds on the day
the instructions are received. The Escrow Agent shall not be liable for any loss
incurred by the actions of third parties or by any loss arising by error,
failure or delay in making of an investment or reinvestment, unless such error,
failure or delay results from the Escrow Agent's gross negligence or willful
misconduct, and the Escrow Agent shall not be liable for any loss of principal
or income in connection therewith. As and when the Funds are to be released
under this Agreement, the Escrow Agent shall cause the Permitted Investments to
be converted into cash, and the Escrow Agent shall not be liable for any loss of
principal or income in connection therewith. None of the Undersigned or the
Escrow Agent shall be liable for any loss of principal or income due to the
choice of Permitted Investments in which the Funds are invested or the choice of
Permitted Investments converted into cash pursuant to this Section 4(d).
(e) Subject to the provisions of Section 5(l), all interest or other
income on the Funds shall be the property of Fund III and shall be distributed
by the Escrow Agent to Fund III by check on a monthly basis less the amount
payable by the Escrow Agent to Commodore under Section 4(f), if any. The parties
acknowledge that payment of any interest earned on the funds invested in this
escrow will be subject to backup withholding penalties unless a properly
completed Internal Revenue Service form W-8 or W-9 certification is submitted to
the Escrow Agent.
(f) For tax purposes, the Funds shall be property of Fund III and all
interest and other income earned on the Funds shall be the income of Fund III.
The Undersigned shall file Tax Returns and the Escrow Agent shall file a Form
1099 consistent with such treatment. In the event that the Internal Revenue
Service or any other governmental authority successfully claims that the
interest and other income earned on the Funds is taxable to Commodore for any
taxable period, Fund III shall promptly pay to Commodore cash equal to the
product of the Effective Tax Rate times all amounts paid by the Escrow Agent to
Fund III pursuant to Section 4(e) for such taxable period, plus interest on such
amount at the rate specified by section 6621(a)(2) of the Code and corresponding
provisions of applicable state and local laws, and the Escrow Agent shall
thereafter make monthly
4
<PAGE> 5
distributions to Commodore of cash equal to the product of the Effective Tax
Rate times the income distributable pursuant to Section 4(e) for such period.
The term "Effective Tax Rate" shall mean the highest marginal effective combined
federal, state and local income tax rate applicable with respect to Commodore as
reasonably computed and provided to the Escrow Agent by Commodore
Section 5. Language Concerning the Escrow Agent. To induce the Escrow
Agent to act hereunder, it is further agreed by the Undersigned that:
(a) The Escrow Agent shall not be under any duty to give the Escrowed
Property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this agreement against the Escrow
Agent. The Escrow Agent shall not be bound by the provisions of any agreement
among the other parties hereto except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the Undersigned shall jointly and severally indemnify
and hold harmless the Escrow Agent (and any successor Escrow Agent) from and
against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys' fees and disbursements, arising out of and in
connection with this Escrow Agreement. Without limiting the foregoing, the
Escrow Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including without limitation, any liability for any delays
(not resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Funds or any loss of interest incident to any
such delays.
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted in accordance with such advice.
5
<PAGE> 6
(f) The Escrow Agent does not have any interest in the Escrowed
Property deposited hereunder but is serving as escrow holder only and having
only possession thereof. Fund III shall pay or reimburse the Escrow Agent upon
request for any transfer taxes or other taxes relating to the Escrowed Property
incurred in connection herewith and shall indemnify and hold harmless the Escrow
Agent from any amounts that it is obligated to pay in the way of such taxes. Any
payments of income from this Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The parties
hereto will promptly provide the Escrow Agent with appropriate W-9 forms for Tax
I.D. number certifications, or W-8 forms for non-resident alien certifications.
It is understood that the Escrow Agent shall be responsible for income reporting
only with respect to income earned on investment of the Funds and is not
responsible for any other reporting. This paragraph and Section 5(c) shall
survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
(g) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Escrowed Property to any successor Escrow Agent
jointly designated by the other parties hereto in writing or to any court of
competent jurisdiction, whereupon the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Escrow
Agreement. The resignation of the Escrow Agent will take effect on the earlier
of (i) the appointment of a successor (including a court of competent
jurisdiction) or (ii) the day which is 30 days after the date of delivery of its
written notice of resignation to the other parties hereto. If at that time the
Escrow Agent has not received a designation of a successor Escrow Agent, the
Escrow Agent's sole responsibility after that time shall be to safekeep the
Escrowed Property until receipt of a designation of successor Escrow Agent or a
joint written disposition instruction by the other parties hereto or a Final
order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the contents of
any writing of the arbitrators or any third party contemplated herein as a means
to resolve disputes and may rely without any liability upon the contents
thereof.
(k) In the event of any disagreement between the Undersigned resulting
in adverse claims or demands being made in connection with the Escrowed
Property, or in the event that the Escrow Agent in good faith is in doubt as to
what action it should take hereunder, the Escrow Agent shall be entitled to
retain the Escrowed Property until the Escrow Agent shall have received (i) a
Final Determination directing delivery of the Escrowed Property or (ii) a
written agreement executed by Mergeco and Commodore directing delivery of the
Escrowed Property, in which event the Escrow Agent shall disburse the Escrowed
Property in accordance with such order or agreement. The Escrow
6
<PAGE> 7
Agent, at its option, shall be entitled to seek and, if obtained, rely
conclusively upon an opinion of independent counsel to the effect that any court
order delivered to Escrow Agent is a Final Determination. The Escrow Agent shall
act on such court order and legal opinion without further question.
(l) The compensation of the Escrow Agent (as payment in full) for the
services to be rendered by the Escrow Agent hereunder shall be the amount of
$8,000 paid by Commodore at the time of execution of this Escrow Agreement and
$7,000 annually thereafter, together with reimbursement for all reasonable
expenses, disbursements and advances incurred or made by the Escrow Agent in
performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel). All fees and expenses of the Escrow Agent
hereunder, other than initial fee paid upon the execution hereof, shall be paid
first out of interest, dividends, and other income earned on the Funds, if any,
and then , to the extent of any shortfall, by Commodore. Any fees or expenses of
the Escrow Agent or its counsel which are not paid as provided for herein may be
taken from any property held by the Escrow Agent hereunder. It is understood
that the Escrow Agent's fees may be adjusted from time to time to conform to its
then current guidelines.
(m) The Undersigned hereby irrevocably submit to the jurisdiction of
any New York State or federal court sitting in the Borough of Manhattan in New
York City in any action or proceeding arising out of or relating to this Escrow
Agreement, and the parties hereby irrevocably agree that all claims in respect
of such action or proceeding, shall be heard and determined in such a New York
State or federal court. The other parties hereby consent to and grant to any
such court jurisdiction over the persons of such parties and over the subject
matter of any such dispute and agree that delivery or mailing of any process or
other papers in the manner provided herein above, or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
(n) No printed or other matter in any language (including without
limitation prospectuses, notices, reports and promotional material) which
mentions the Escrow Agent's name or the rights, powers, or duties of the Escrow
Agent shall be issued by the other parties hereto or on such parties' behalf
unless the Bank shall first have given its specific written consent thereto.
(o) This Escrow Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their respective successors and assigns,
heirs, administrators and representatives and shall not be enforceable by or
inure to the benefit of any third party, except as provided in Section 5(i) with
respect to a resignation by the Escrow Agent. No party may assign any of its
rights or obligations under this Escrow Agreement without the written consent of
the other parties. THIS ESCROW AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
ITS RULE AS TO CONFLICTS OF LAW).
(p) The Escrow Agreement may only be modified by a writing signed by
all of the parties hereto, and no waiver hereunder shall be effective unless in
a writing signed by the party to be charged.
7
<PAGE> 8
(q) The other parties hereto authorize the Escrow Agent, for any
securities held hereunder, to use the services of any United States central
securities depository it deems appropriate, including, but not limited to, the
Depositary Trust Company and the Federal Reserve Book Entry System.
Section 6. Notices. All notices, requests, consents or other
communications required or permitted under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given or delivered by any party
(1) when received by such party if delivered by hand, (2) upon confirmation when
delivered by telecopy (any communication delivered by telecopy shall be followed
promptly with an original thereof), (3) within one day after being sent by
recognized overnight delivery service, or (4) within three business days after
being mailed by first-class mail, postage prepaid, and in each case addressed as
follows:
if to Mergeco: CMI Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telephone No.: (214) 740-7300
Telecopy No.: (214) 740-7313
if to Fund III: Hick, Muse, Tate & Furst Equity Fund III, L.P.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Michael D. Salim
Telephone No.: (214) 740-7300
Telecopy No.: (214) 740-7313
in each case, with a
copy to: Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
Telephone No.: (214) 220-7732
Telecopy No.: (214) 220-7716
if to Commodore, to: Commodore Media, Inc.
500 Fifth Avenue, Suite 3000
New York, New York 10110
Attn: Bruce A. Friedman
Telephone No.: (212) 302-5245
Telecopy No.: (212) 302-6457
8
<PAGE> 9
with a copy to: Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attn: Ira J. Goldstein
Telephone No.: (212) 326-0804
Telecopy No.: (212) 326-0806
if to the Escrow
Agent, to:
Citibank N.A.
Corporate Trust/Escrow Administration
120 Wall Street, 13th Floor
New York, NY 10043
Telephone No.: (212) 412-6257
Telecopy No.: (212) 480-1614
Telex Numbers:
Foreign - 420392 FNC UI
Domestic - 127001 Citibank NYKB
Reference in Telex "Citiswitch - NYCTA"
Federal Reserve Fund Transfers:
Citibank, N.A.
111 Wall Street
New York, NY 10043
For credit to A/C 36855852
Escrow Administration Concentration Account
for further credit (enter Account Number assigned)
Attn: Jeff Zeiler
ABA Number: 0210-0008-9
Any party by written notice to the other parties pursuant to this Section 6 may
change the address or the persons to whom notices or copies thereof are to be
sent by giving written notice of a change of address in the manner provided in
this Agreement for giving notice.
Section 7. Waivers. Any waiver by any party hereto of any breach of or
failure to comply with any provision of this Agreement by any other party hereto
shall be in writing and shall not be construed as, or constitute, a continuing
waiver of such provision, or a waiver of any other breach of, or failure to
comply with, any other provision of this Escrow Agreement.
Section 8. Construction. The headings in this Escrow Agreement are
solely for convenience of reference and shall not be given any effect in the
construction or interpretation of this
9
<PAGE> 10
Escrow Agreement. Unless otherwise stated, references to Sections and Exhibits
are references to Sections and Exhibits of this Escrow Agreement.
Section 9. Third Parties. Nothing expressed or implied in this Escrow
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than Mergeco, Fund III, Commodore and the Escrow Agent any
rights or remedies under, or by reason of, this Escrow Agreement.
Section 10. Termination. This Escrow Agreement shall terminate at the
time of the delivery by the Escrow Agent of the Escrowed Property, including the
Funds, if any, to Commodore, Mergeco or Fund III, as the case may be, in
accordance with the provisions of this Agreement.
Section 11. Counterparts. This Escrow Agreement may be executed in one
or more counterparts, each of which shall be deemed any original and all of
which together shall constitute a single instrument.
Section 12. Waiver of Offset Rights. The Escrow Agent hereby waives any
and all rights to offset that it may have against the Letter of Credit
including, without limitation, claims arising as a result of any claims,
amounts, liabilities, costs, expenses, damages or other losses (collectively
"Claims") that Agent may be otherwise entitled to collect from any party to this
Escrow Agreement, other than Claims arising under this Escrow Agreement.
10
<PAGE> 11
IN WITNESS WHEREOF, Mergeco, Fund III, Commodore and the Escrow Agent
have caused this Escrow Agreement to be signed as of the date first written
above.
CMI ACQUISITION COMPANY, INC.
--------------------------------------------------
By: Eric C. Neuman
Its: President
COMMODORE MEDIA, INC.
--------------------------------------------------
By: Bruce A. Friedman
Its: President and Chief Executive Officer
HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P.
By: HM3/GP PARTNERS, L.P.,
its General Partner
By: Hicks, Muse GP Partners III, L.P.,
its General Partner
By: Hicks, Muse Fund III, Incorporated,
its General Partner
-----------------------------------
By: Michael D. Salim
Its: Chief Financial and
Administrative Officer
11
<PAGE> 12
Agreed and Accepted:
Date:
CITIBANK, N.A.
ESCROW AGENT
- ------------------------------------
(Name and Title)
12
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<ARTICLE> 5
<CIK> 0000945821
<NAME> COMMODORE MEDIA, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4623982
<SECURITIES> 0
<RECEIVABLES> 7914863
<ALLOWANCES> 821672
<INVENTORY> 0
<CURRENT-ASSETS> 12164161
<PP&E> 21965952
<DEPRECIATION> 10030291
<TOTAL-ASSETS> 83213282
<CURRENT-LIABILITIES> 4070686
<BONDS> 86706349
9003052
0
<COMMON> 6329
<OTHER-SE> (19692308)
<TOTAL-LIABILITY-AND-EQUITY> 83213282
<SALES> 0
<TOTAL-REVENUES> 19968915
<CGS> 0
<TOTAL-COSTS> 1642933
<OTHER-EXPENSES> 14866959
<LOSS-PROVISION> 287847
<INTEREST-EXPENSE> 5151468
<INCOME-PRETAX> (1980292)
<INCOME-TAX> 52000
<INCOME-CONTINUING> 52000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2032292)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
