<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 1, 1997
---------------
COMMODORE MEDIA, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-92732 13-3034720
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
500 FIFTH AVENUE
SUITE 3000 10110
NEW YORK, NEW YORK (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (212) 302-2727
NOT APPLICABLE
(former address if changed since last report)
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<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY STANDARD
STATE OR OTHER INDUSTRIAL I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION 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
Atlantic Star Communications, Inc.
(formerly named Commodore Holdings, Inc.) Delaware 4832 13-3858506
Capstar Acquisition Company, Inc. Delaware 4832 74-2819327
Danbury Broadcasting, Inc. Connecticut 4832 13-3653113
Southern Star Communications, Inc.
(formerly named Osborn Communications Delaware 4832 06-1142367
Corporation)
Asheville Broadcasting Corp. Delaware 4832 56-1859801
Atlantic City Broadcasting Corp. Delaware 4832 22-3274908
Beatrice Broadcasting Corp. Delaware 4832 06-1142368
Breadbasket Broadcasting Corporation Delaware 4832 06-1443379
Corkscrew Broadcasting Corporation Delaware 4832 65-0466131
Currey Broadcasting Corporation Delaware 4832 13-3358952
Daytona Beach Broadcasting Corp. Delaware 4832 59-3223390
Great American East, Inc. North Carolina 4832 56-1580032
Houndstooth Broadcasting Corporation Delaware 4832 06-1469230
Jamboree in the Hills, Inc. Delaware 4832 55-0709712
Ladner Communications Holding Corp. Delaware 4832 13-3465060
Mountain Radio Corporation Delaware 4832 13-3401043
Music Hall Club, Inc. West Virginia 4832 55-0699199
Nelson Broadcasting Corporation Delaware 4832 13-3358975
O.C.C., Inc. Delaware 4832 13-3449243
Orange Communications, Inc. Delaware 4832 13-3387461
Osborn Entertainment Enterprises Corporation Delaware 4832 13-3465115
Osborn Sound & Communications Corp. Delaware 4832 34-1501274
RKZ Television, Inc. Delaware 4832 58-1740585
Rainbow Broadcasting Corporation Delaware 4832 63-1110166
Short Broadcasting Corporation Delaware 4832 31-1255866
SNG Holdings, Inc. Delaware 4832 13-3702089
Southeast Radio Holding Corp. Delaware 4832 06-1422492
Waite Broadcasting Corp. Delaware 4832 06-1142386
Yellow Brick Radio Corporation Delaware 4832 13-3401042
Ameron Broadcasting Corporation Delaware 4832 74-2818962
WNOK Acquisition Company, Inc. Delaware 4832 74-2818961
Dixie Broadcasting, Inc. Alabama 4832 63-0583623
Radio WBHP, Inc. Alabama 4832 63-0386919
Mountain Lakes Broadcasting, L.L.C. Alabama 4832 63-1104409
</TABLE>
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 1, 1997, Commodore Media, Inc. (the "Company"), through its
indirectly wholly-owned subsidiary Southern Star Communications, Inc. (formerly
named Osborn Communications Corporation ("Osborn")), completed the acquisition
of all of the outstanding capital stock of Dixie Broadcasting, Inc. ("Dixie")
and Radio WBHP, Inc. ("Radio WBHP"), each an Alabama corporation, for an
aggregate purchase price (the "Purchase Price") of approximately $24.5 million
comprised of (i) $22.0 million paid in cash and (ii) two three-year consulting
agreements valued at $2.5 million, pursuant to the Stock Purchase Agreement
dated as of November 20, 1996, by and among Osborn and J. Mack Bramlett ("Mr.
Bramlett"), Wilton H. Pollard, Jr. ("Mr. Pollard"), and Mr. Pollard and Frank
K. Noojin, Jr, as Trustees of Trust "B" under the Will of Wilton H. Pollard,
Sr., deceased (the holders of the outstanding capital stock of Dixie and Radio
WBHP).
Dixie and Radio WBHP are the sole members of Mountain Lakes
Broadcasting, L.L.C., an Alabama limited liability company ("Mountain Lakes"),
which is the licensee of radio stations WBHP-AM, WHOS-AM and WDRM-FM
(collectively, the "Stations") in the Huntsville, Alabama market. The assets
of Mountain Lakes consist of, among other things, broadcasting licenses granted
by the Federal Communications Commission, transmitting antennae, transmitters
and other broadcasting and technical equipment, technical information and data
and certain real property. The Company currently intends to continue the
broadcasting operations of Mountain Lakes and to utilize the assets of Mountain
Lakes in such operations.
The Purchase Price was determined through arm's length negotiations
between Osborn and the shareholders of Dixie and Radio WBHP. The Company
funded the Purchase Price from borrowings under the senior secured credit
facility of the Company, made available by Bankers Trust Company, as
administrative agent, and other institutions party thereto, which provides for
loans of up to $50 million in the form of a revolving credit facility.
Concurrently with completion of the acquisition, Osborn entered into
two three-year consulting agreements with two companies (each a "Consultant")
owned by Mr. Bramlett and Mr. Pollard, respectively, pursuant to which each
Consultant will provide consulting services to Osborn in regard to Osborn's
broadcasting operations in Alabama. In addition to consulting fees of $2.5
million in the aggregate payable to the Consultants during the term of the
consulting agreements, each Consultant will become entitled to receive an
additional $750,000 payment if the broadcast cash flow of the Stations equals
or exceeds targeted broadcast cash flow for the Stations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable to provide the required financial statements for
Dixie and Radio WBHP at the time of this Report. The required financial
statements will be filed as an amendment to this
2
<PAGE> 4
Report as soon as practicable, but no later than 60 days after the date this
Report is required to be filed.
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable to provide the required pro forma financial
information for Dixie and Radio WBHP at the time of this Report. The required
pro forma financial information will be filed as an amendment to this Report as
soon as practicable, but no later than 60 days after the date this Report is
required to be filed.
(c) EXHIBITS.
10.1 Stock Purchase Agreement, dated as of November 20, 1996, by
and among Osborn, and the holders listed therein of all of the
issued and outstanding capital stock of Dixie and Radio WBHP.
3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMODORE MEDIA, INC.
(Registrant)
By: /s/ WILLIAM S. BANOWSKY, JR.
------------------------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 15, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
the additional registrants have duly caused this report to be signed on their
behalf by the undersigned hereunto duly authorized.
Commodore Media of Delaware, Inc.
Commodore Media of Kentucky, Inc.
Commodore Media of Pennsylvania, Inc.
Commodore Media of Norwalk, Inc.
Commodore Media of Florida, Inc.
Commodore Media of Westchester, Inc.
Atlantic Star Communications, Inc.
Danbury Broadcasting, Inc.
Capstar Acquisition Company, Inc.
Southern Star Communications, Inc.
Asheville Broadcasting Corp.
Atlantic City Broadcasting Corp.
Beatrice Broadcasting Corp.
Breadbasket Broadcasting Corporation
Corkscrew Broadcasting Corporation
Currey Broadcasting Corporation
Daytona Beach Broadcasting Corp.
Great American East, Inc.
Houndstooth Broadcasting Corporation
Jamboree in the Hills, Inc.
Ladner Communications Holding Corp.
Mountain Radio Corporation
Nelson Broadcasting Corporation
<PAGE> 6
O.C.C., Inc.
Orange Communications, Inc.
Osborn Entertainment Enterprises Corporation
Osborn Sound & Communications Corp.
RKZ Television, Inc.
Rainbow Broadcasting Corporation
Short Broadcasting Corporation
SNG Holdings, Inc.
Southeast Radio Holding Corp.
Waite Broadcasting Corp.
Yellow Brick Radio Corporation
Ameron Broadcasting Corporation
WNOK Acquisition Company, Inc.
Dixie Broadcasting, Inc.
Radio WBHP, Inc.
By: /s/ WILLIAM S. BANOWSKY, JR.
------------------------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 15, 1997
Music Hall Club, Inc.
By: /s/ LARRY ANDERSON
------------------------------------------
Name: Larry Anderson
Title: President
Date: May 15, 1997
<PAGE> 7
MOUNTAIN LAKES BROADCASTING, L.L.C.
By: Dixie Broadcasting, Inc.
its Member
By: /s/ WILLIAM S. BANOWSKY, JR.
------------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 15, 1997
By: Radio WBHP, Inc.,
its Member
By: /s/ WILLIAM S. BANOWSKY, JR.
------------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 15, 1997
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
- ------- ------------- ----
<S> <C> <C>
10.1 Stock Purchase Agreement, dated as of November 20, 1996, by and
among Osborn, and the holders listed therein of all of the
issued and outstanding capital stock of Dixie Broadcasting,
Inc., an Alabama corporation, and Radio WBHP, Inc., an Alabama
corporation.
</TABLE>
<PAGE> 1
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STOCK PURCHASE AGREEMENT
by and among
OSBORN COMMUNICATIONS CORPORATION
and
THE SHAREHOLDER OF
DIXIE BROADCASTING, INC.
and
THE SHAREHOLDERS OF
RADIO WBHP, INC.
_______________________________
as of November 20, 1996
________________________________
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<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
1. Sale and Purchase of Shares; Other Closing Transactions . . . . . . . . . . . . . . . . 2
1.1 Sale and Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Delivery of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Other Closing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Closing; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3A. Representations and Warranties of the WBHP Sellers . . . . . . . . . . . . . . . . . . . 5
3A.1 Due Incorporation Organization and Authority . . . . . . . . . . . . . . . . . . 5
3A.2 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3A.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3A.4 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3A.5 Outstanding Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3A.6 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3A.7 Charter Documents and Corporate Records . . . . . . . . . . . . . . . . . . . . . 7
3A.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3A.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3A.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3A.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3A.12 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3A.13 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3A.14 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3A.15 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3A.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3A.17 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3A.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3A.19 Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3A.20 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3A.21 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3A.22 Officers, Directors and Key Employees . . . . . . . . . . . . . . . . . . . . . . 20
3A.23 Operations of WBHP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3A.24 Potential Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 23
3A.25 Banks, Brokers and Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3B. Representations and Warranties of the Dixie Seller . . . . . . . . . . . . . . . . . . . 24
3B.1 Due Incorporation Organization and Authority . . . . . . . . . . . . . . . . . . 24
3B.2 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
i
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
3B.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3B.4 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3B.5 Outstanding Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3B.6 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3B.7 Charter Documents and Corporate Records . . . . . . . . . . . . . . . . . . . . . 25
3B.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3B.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3B.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3B.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3B.12 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3B.13 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3B.14 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3B.15 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3B.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3B.17 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3B.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3B.19 Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3B.20 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3B.21 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3B.22 Officers, Directors and Key Employees . . . . . . . . . . . . . . . . . . . . . . 36
3B.23 Operations of Dixie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3B.24 Potential Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 39
3B.25 Banks, Brokers and Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3C. Representations and Warranties of all Sellers . . . . . . . . . . . . . . . . . . . . . 40
3C.1 Due Incorporation Organization and Authority . . . . . . . . . . . . . . . . . . 40
3C.2 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3C.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3C.4 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3C.5 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3C.6 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3C.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3C.8 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3C.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3C.10 Government Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3C.11 Compliance with Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3C.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3C.13 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3C.14 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3C.15 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3C.16 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3C.17 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
3C.18 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3C.19 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3C.20 Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3C.21 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3C.22 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3C.23 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3C.24 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3C.25 Personnel Information; Labor Contracts . . . . . . . . . . . . . . . . . . . . . 59
3C.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3C.27 Officers, Directors and Key Employees . . . . . . . . . . . . . . . . . . . . . . 60
3C.28 Operations of the Licensee . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3C.29 Potential Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 63
3C.30 Banks, Brokers and Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4. Representations and Warranties of Each Seller . . . . . . . . . . . . . . . . . . . . . 64
4.1 Title to the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.2 Authority to Execute and Perform Agreement . . . . . . . . . . . . . . . . . . . 64
5. Representations and Warranties of the Buyer . . . . . . . . . . . . . . . . . . . . . . 65
5.1 Due Incorporation and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.2 Authority to Execute and Perform Agreement . . . . . . . . . . . . . . . . . . . 65
5.3 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.4 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
5.5 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
5.6 Transfer Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6. Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.1 Trust Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.3 Transfer Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.4 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.5 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.8 Indemnification of Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.9 Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.10 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.11 Cooperation Regarding Accounts Receivable . . . . . . . . . . . . . . . . . . . . 73
6.12 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.13 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
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7. Conditions Precedent to the Obligation of the Buyer to Close . . . . . . . . . . . . . . 80
7.1 Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.2 Commission and Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . 81
7.3 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.4 Delivery of Stock Certificates; Transfer Taxes . . . . . . . . . . . . . . . . . 82
7.5 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.6 Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.7 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.8 Landlord Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.9 Net Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.10 Net Barter Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.11 Closing Date Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.12 No Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
7.13 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
7.14 Consulting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8. Conditions Precedent to the Obligation of the Sellers to Close . . . . . . . . . . . . . 87
8.1 Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.2 Opinion of Counsel to the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.3 No Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.4 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.5 Commission and Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . 88
8.6 Consulting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9. Survival of Representations and Warranties of the Sellers After Closing . . . . . . . . 89
10. General Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.1 Obligation of the Sellers to Indemnify . . . . . . . . . . . . . . . . . . . . . 90
10.2 Obligation of the Buyer to Indemnify . . . . . . . . . . . . . . . . . . . . . . 92
10.3 Notice and Opportunity to Defend . . . . . . . . . . . . . . . . . . . . . . . . 92
11. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
11.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.2 Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
12.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
12.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
12.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
12.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
12.8 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
12.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 103
12.10 Variations in Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
12.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
12.12 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
12.13 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
</TABLE>
EXHIBITS
A-1 WBHP Sellers
A-2 Dixie Sellers
B Form of Opinion of Lange, Simpson, Robinson & Somerville
C Form of Opinion of Wiley, Rein & Fielding
D Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
E Form of Consulting Agreement
6.2A Forecasted WBHP Closing Date Balance Sheet
6.2B Forecasted Dixie Closing Date Balance Sheet
6.2C Forecasted Licensee Closing Date Balance Sheet
v
<PAGE> 7
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement"), dated as of November
20, 1996, by and among OSBORN COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Buyer"), and the holders, listed on Exhibits A-1 and A-2
hereto (each a "Seller" and collectively the "Sellers"), of all of the issued
and outstanding shares of capital stock of DIXIE BROADCASTING, INC., an Alabama
corporation ("Dixie"), and RADIO WBHP, INC., an Alabama corporation ("WBHP";
Dixie and WBHP are sometimes herein referred to collectively as the "Companies"
and individually as a "Company").
RECITALS
The Seller identified on Exhibit A-2 (the "Dixie Seller") is
the beneficial and record owner of all of the issued and outstanding shares of
common stock, $1.00 par value (the "Dixie Stock"), of Dixie and the Sellers
listed on Exhibit A-1 (the "WBHP Sellers") are the beneficial and record owners
of all of the issued and outstanding shares of common stock, $10.00 par value
(the "WBHP Stock"), of WBHP (all such outstanding shares of Dixie Stock and
WBHP Stock currently outstanding being collectively referred to herein as the
"Shares").
The Companies are the sole members of Mountain Lakes
Broadcasting, L.L.C., an Alabama limited liability company (the "Licensee"),
which is the licensee of radio stations WBHP-AM, WHOS-AM and WDRM-FM,
Huntsville, Alabama (the
<PAGE> 8
2
"Stations"), pursuant to licenses issued by the Federal Communications
Commission (the "Commission").
The Sellers wish to sell all of the Shares and thereby to
assign to Buyer the licenses, permits and other authorizations issued to the
Licensee by the Commission for the purpose of operating the Stations (the
"Station Licenses") and the assets utilized in connection with the operation of
the Stations (the "Station Assets") and the Buyer wishes to purchase all, but
not less than all, of the Shares and thereby to acquire the Station Licenses
and the Station Assets upon the terms and subject to the conditions of this
Agreement.
Certain terms used in this Agreement are defined in Section
12.
Accordingly, the parties agree as follows:
1. Sale and Purchase of Shares; Other Closing
Transactions.
1.1 Sale and Purchase of Shares. At the closing
provided for in Section 2 (the "Closing") and upon the terms and subject to the
conditions of this Agreement, each Seller shall sell to the Buyer all of the
Shares owned by such Seller, and the Buyer shall purchase all of the Shares
owned by each Seller. The Buyer shall purchase the WBHP Shares for an
aggregate purchase price (the "WBHP Purchase Price") of Eleven Million, Five
Hundred Thousand Dollars ($11,500,000) and the Dixie Shares for a purchase
price (the "Dixie Purchase Price") of Eleven Million, Five Hundred Thousand
Dollars ($11,500,000). The WBHP Purchase Price and the Dixie Purchase Price
are together referred to as the "Purchase Price."
<PAGE> 9
3
1.2 Payment of Purchase Price. At the Closing, the
Buyer shall cause Purchase Price to be paid to the Sellers in cash, by wire
transfer of immediately available funds, in dollars to the bank account
designated by the Sellers at least two business days prior to the Closing. If
requested in writing by Sellers at least two business days prior to the
Closing, a portion of the Purchase Price shall be paid to one or more third
parties designated by Sellers; provided, however, that any such payment or
payments shall be made on behalf of the Sellers and shall not be deemed to be
an adjustment in, of or to the Purchase Price, all of which will be deemed to
have been paid by Buyer to Sellers.
1.3 Delivery of Shares. At the Closing, each Seller
shall deliver or cause to be delivered to the Buyer stock certificates
representing the number of Shares set forth opposite such Seller's name on
Exhibits A-1 and A-2, duly endorsed in blank or accompanied by stock powers
duly executed in blank, in proper form for transfer, and with all appropriate
stock transfer tax stamps, if any, affixed.
1.4 Escrow Deposit. As security for Buyer's failure
to Close and as an inducement for Sellers to perform their obligations
hereunder Buyer shall deposit with Regions Bank, Huntsville Office (the "Escrow
Agent") in a separate account maintained for such purpose, an amount equal to
Five Hundred Thousand Dollars (US$500,000.00) (the "Escrow Deposit"), which
Escrow Deposit shall be held and disbursed by the Escrow Agent, in the event of
a termination of this Agreement, pursuant to Sections 11.1 (c), (d), (e) and
(f) herein and, upon Closing, disbursed to Sellers in partial satisfaction of
the Purchase Price. Buyer and Sellers agree that the
<PAGE> 10
4
Escrow Deposit shall be held by the Escrow Agent in an interest bearing
account, and further agree that such interest shall accrue, and be payable, to
Buyer.
1.5 Other Closing Transactions. At the Closing, the
WBHP Sellers shall contribute in cash to the capital of WBHP, the Dixie Seller
shall contribute in cash to the capital of Dixie, and the Sellers shall cause
WBHP and Dixie to contribute in cash to the Licensee, such amounts as may be
necessary to (i) permit the Companies and the Licensee to prepay on the Closing
Date all of their obligations under those certain contracts and agreements
which, as set forth on the Schedules hereto, are to be terminated at the
Closing (such contracts and agreements being the "Noncontinuing Contracts"),
and (ii) cause the WBHP Closing Date Balance Sheet, the Dixie Closing Date
Balance Sheet and the Licensee Closing Date Balance Sheet (as each such term is
defined in Section 7.11 hereof), after giving effect to the capital
contributions and prepayments described above, to be in all material respects
identical to the WBHP Forecasted Closing Date Balance Sheet, the Dixie
Forecasted Closing Date Balance Sheet and the Licensee Forecasted Closing Date
Balance Sheet (as such terms are defined in Section 6.2 hereof). At the
Closing the Sellers shall cause the Companies and the Licensee to prepay and/or
otherwise terminate all of their respective obligations and liabilities under
each of the Noncontinuing Contracts.
2. Closing; Closing Date. The purchase and sale of the
Shares contemplated by this Agreement, together with the consummation of the
other transactions described in Section 1.5 hereof (the "Other Closing
Transactions"), shall take place at a closing (the "Closing") to be held at
10:00 a.m. at the offices of Lange,
<PAGE> 11
5
Simpson, Robinson & Sumerville, 100 Jefferson Street, South, Huntsville,
Alabama, or such other place as the parties may agree, on a mutually agreed
upon date within five (5) days after the Commission's approval of the Transfer
Application, as defined in Section 6.3 below, becomes a Final Order, or such
other time and place as shall be mutually agreed upon by the parties (the
"Closing Date"); provided, however, that the Closing shall not occur prior to
January 10, 1997. For purposes of this Agreement, a "Final Order" shall mean
any action of the Commission which has not been reversed, stayed, enjoined, set
aside, annulled or suspended and with respect to which no requests are pending
for administrative or judicial review, reconsideration, appeal or stay, and the
time for filing any such requests and the time for the Commission to set aside
the action on its own motion shall have expired. Buyer may, at its sole
election, waive the requirement that the Commission's approval of the Transfer
Application shall have become a Final Order.
3A. Representations and Warranties of the WBHP Sellers. The
WBHP Sellers, jointly and severally, represent and warrant to the Buyer as
follows:
3A.1 Due Incorporation Organization and Authority.
WBHP is a corporation duly organized, validly existing and in good standing
under the laws of the State of Alabama and has all requisite corporate power
and lawful authority to own, lease and operate its properties and to carry on
its business as now being and heretofore conducted.
3A.2 Ownership. WBHP owns and has, and will have on
the Closing Date, good and marketable title to an undivided one-half membership
interest
<PAGE> 12
6
in the Licensee free and clear of any liens, pledges, attachments, claims,
charges or encumbrances of any kind whatsoever.
3A.3 Investments. Except as set forth on Schedule
3A.3, WBHP does not own, directly or indirectly, any interest in or any
securities or indebtedness of any other person.
3A.4 Qualification. WBHP is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction set forth on Schedule 3A.4, which are the
only jurisdictions in which such qualification or authorization is required by
law and in which the failure so to qualify or be authorized could have a
material adverse effect on the properties, business, prospects, results of
operations or condition (financial or otherwise) of WBHP or the Licensee (the
"Condition of WBHP").
3A.5 Outstanding Capital Stock. WBHP is authorized
to issue 400 shares of common stock, par value $10.00 per share, of which 210
shares are issued and outstanding. All of the outstanding shares of WBHP Stock
are owned by the WBHP Sellers in the respective amounts set forth on Exhibit
A-1. All of the outstanding shares of capital stock of WBHP are duly
authorized, validly issued, fully paid and nonassessable. No other class of
capital stock or other ownership interests of WBHP is authorized or
outstanding.
3A.6 Options or Other Rights. Except as set forth
on Schedule 3A.6, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from
<PAGE> 13
7
either WBHP or any WBHP Seller any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
or interest in either WBHP or the Licensee (collectively, "WBHP Rights"), and
there is no outstanding security of any kind convertible into or exchangeable
for any such capital stock or WBHP Rights.
3A.7 Charter Documents and Corporate Records. The
WBHP Sellers have heretofore delivered to the Buyer true and complete copies of
the Certificates of Incorporation of WBHP (certified by the Secretary of State
of Alabama) and By-laws of WBHP (certified by the corporation's secretary or an
assistant secretary), as in effect on the date hereof. The stock books of WBHP
which have been made available to the Buyer for its inspection are true and
complete.
3A.8 Financial Statements. The unaudited balance
sheet of WBHP as at December 31, 1993, December 31, 1994 and December 31, 1995
and the related statements of income, shareholders' equity and changes in
financial position for the years then ended, including the footnotes thereto,
which have been delivered to the Buyer, fairly present the financial position
of WBHP as at such dates and the results of operations of WBHP for such
respective periods, in each case in accordance with generally accepted
accounting principles consistently applied for the periods covered thereby.
The foregoing financial statements of WBHP as at December 31, 1993, December
31, 1994 and December 31, 1995 and for the years then ended are sometimes
herein called the "Annual WBHP Financials." The unaudited balance sheet of
WBHP as at September 1, 1996 and the related statements of income, including
the
<PAGE> 14
8
footnotes thereto, which have been delivered to the Buyer, fairly present the
financial position of WBHP as at such date and the results of operations of
WBHP for the eight months then ended, in each case in conformity with generally
accepted accounting principles applied on a basis consistent with that of the
Annual WBHP Financials (subject to the normal year-end adjustments described in
Schedule 3A.8) and with all interim financial statements of WBHP heretofore
delivered to the Buyer on behalf of the WBHP Sellers. (The foregoing balance
sheet of WBHP as at September 1, 1996 and the related statements of income,
shareholders' equity and changes in financial position for the eight months
then ended are sometimes herein called the "Interim WBHP Financials," the
balance sheets included in the Interim WBHP Financials is sometimes herein
called the "WBHP Balance Sheet" and September 1, 1996 is sometimes herein
called the "WBHP Balance Sheet Date.")
3A.9 No Material Adverse Change. Except for changes
made prior to the Closing Date in order to cause the WBHP Closing Date Balance
Sheet (as defined in Section 7.11 hereof) to accurately reflect the Forecasted
WBHP Closing Date Balance Sheet (as defined in Section 6.2(i) hereof) since the
WBHP Balance Sheet Date, there has been no material adverse change in the
Condition of WBHP, and neither the WBHP Sellers nor WBHP knows of any condition
or state of facts or any change which is threatened, nor has there been any
damage, destruction or loss which could have a material adverse effect on the
Condition of WBHP, whether or not covered by insurance.
<PAGE> 15
9
3A.10 Tax Matters.
(i) WBHP has (A) paid all federal,
state, county, local, foreign and other taxes (including, without limitation,
income, profits, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll related and
property taxes, import duties, other governmental charges and assessments and
any payments under any tax sharing agreement), whether or not measured in whole
or in part by net income, and including deficiencies, interest, additions to
tax or interest, and penalties with respect thereto, and including expenses
associated with contesting any proposed adjustment related to any of the
foregoing (hereinafter "Taxes" or, individually, a "Tax") required to be paid
by it through the date hereof; (B) provided in the Interim WBHP Financials
adequate reserves for all Taxes incurred for taxable periods or portions of
taxable periods through the WBHP Balance Sheet Date; and (C) shall timely pay
any Taxes required to be paid by it on or before the Closing Date. WBHP has
made all payments of estimated Taxes required to be made under section 6655 of
the Code and any comparable provisions of state, local, or foreign tax law.
(ii) WBHP has timely filed all Tax
Returns (as defined below) required to be filed through the date hereof, and
shall prepare and timely file, in a manner consistent with prior years and
applicable laws and regulations, all tax returns required to be filed on or
before the Closing Date.
<PAGE> 16
10
(iii) Complete copies of federal, state,
local, and foreign Tax Returns of WBHP for the years ended December 31, 1994
and December 31, 1995 have previously been delivered to the Buyer. Prior to
the date hereof, the WBHP Sellers have provided to the Buyer copies of all
revenue agents' reports and other written assertions of deficiencies or other
liabilities for Taxes of WBHP with respect to past periods for which the
applicable statute of limitations has not expired.
(iv) WBHP has been a "small business
corporation" (within the meaning of section 1361(b) of the Code (as defined
below) for all taxable years beginning on or after September 1, 1993, and has
duly elected (and will continue through the Closing Date to qualify for such
election) under section 1362(a) of the Code to be taxed as an "S corporation"
for federal income tax purposes for each of such taxable years; as a result of
such election, WBHP has no liability for federal income tax for any of its
taxable years beginning on or after September 1, 1993.
(v) WBHP has complied with all
applicable laws, rules and regulations relating to the withholding of Taxes and
have timely collected or withheld and paid over to the proper governmental or
regulatory body all amounts required to be so collected or withheld and paid
over for all periods up to (but not including) the Closing Date under all
applicable laws to the extent such amounts are required to be paid before such
date.
<PAGE> 17
11
(vi) No penalties or other charges are or
will become due with respect to the late filing of any Tax return of WBHP for
Taxes required to be filed on or before the Closing Date.
(vii) With respect to all tax returns of
WBHP, no audit is in progress and no extension of time is in force with
respect to any date on which any return for Taxes was or is to be filed and no
waiver or agreement is in force for the extension of time for the assessment or
payment of any Tax.
(viii) Each return filed by WBHP for which
the federal income tax audit has not been completed accurately reflects the
amount of liability for Taxes thereunder and makes all disclosures required by
the Code or any predecessor thereof and regulations thereunder and other
applicable provisions of law.
(ix) Each state and local income tax
return filed by WBHP for which the tax audit has not been completed accurately
reflects the amount of its liability for Taxes thereunder and makes all
disclosures required by applicable provisions of law.
(x) Schedule 3A.10(x) sets forth the
states in which WBHP files Tax Returns.
(xi) WBHP has not received a Tax Ruling
(as defined below) or entered into a Tax Closing Agreement (as defined below)
with any taxing authority that would have a continuing effect after the Closing
Date.
(xii) To the knowledge of the WBHP Sellers
and WBHP, except as set forth in Schedule 3A.10(viii), no action, suit,
proceeding,
<PAGE> 18
12
investigation, audit, claim or assessment is presently pending or proposed with
regard to any Taxes that relate to WBHP for which any of them would be liable.
Except as set forth in Schedule 3A.10(xii), no issue has arisen in any
examination of WBHP by any taxing authority that if raised with respect to any
other period not so examined would result in a material deficiency for any
other period not so examined, if upheld. There is no unresolved claim by a
taxing authority in any jurisdiction where WBHP does not file Tax Returns that
it is or may be subject to taxation by such jurisdiction. Any adjustment of
income Taxes of WBHP made by the Internal Revenue Service in any examination
that is required to be reported to the appropriate state, local, or foreign
taxing authorities has been so reported.
(xiii) (A) WBHP is not required to make
any adjustment pursuant to section 481 of the Code (or similar provision of
other laws or Treasury Regulations) by reason of a change in accounting method
or otherwise, (B) to the knowledge of the WBHP Sellers, neither the Internal
Revenue Service nor any other taxing authority has proposed any such adjustment
or change in accounting method, which proposal is currently pending and (C)
WBHP does not have an application pending with any taxing authority requesting
permission for any change in accounting methods that relates to its business
and operations.
(xiv) The Buyer will not be required to
deduct and withhold any amount pursuant to section 1445 of the Code, upon the
consummation of the transactions contemplated hereby, and the WBHP Sellers will
cause the necessary documents to be provided to the Buyer at the Closing to
support such non-deduction
<PAGE> 19
13
and non-withholding, including appropriate affidavits referred to in section
1445(b)(3) of the Code.
(xv) There are no liens for Taxes (other
than for Taxes not yet due and payable) upon the assets of WBHP.
(xvi) WBHP has not filed a consent under
section 341(f)(1) of the Code or agreed under section 341(f)(3) of the Code to
have the provisions of section 341(f)(2) of the Code applied to the sale of its
capital stock.
(xvii) WBHP has not disposed of any
property in a transaction being accounted for under the installment method
pursuant to section 453 of the Code.
(xviii) No payment will, or may, be made by
WBHP to any employee, former employee, officer, director or agent thereof which
payment will be characterized as an "excess parachute payment" within the
meaning of section 280G(b)(1) of the Code.
(xix) As used herein, the following terms
shall have the following meanings:
(1) "Code" means the Internal Revenue
Code of 1986, as amended, and the applicable Treasury Regulations promulgated
thereunder, or corresponding provisions of future laws.
(2) "Tax Closing Agreement" means a
written and legally binding agreement with a taxing authority relating to
Taxes.
<PAGE> 20
14
(3) "Tax Returns" means all returns,
declarations, reports, forms, estimates, information returns and statements
required to be filed in respect of any Taxes to be supplied to a taxing
authority in connection with any Taxes.
(4) "Treasury Regulations" means the
Regulations promulgated under the Internal Revenue Code of 1986, as amended (or
corresponding future law), or corresponding future regulations.
(5) "Tax Ruling" means written rulings
of a taxing authority relating to Taxes.
3A.11 Compliance with Laws. WBHP is not in
violation of any applicable order, judgment, injunction, award, decree or writ
(collectively, "Orders"), or any applicable law, statute, code, ordinance,
regulation or other requirement (collectively, "Laws") of any government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency, regulatory authority or instrumentality of any such government or
political subdivision, or any court or arbitrator (collectively, "Governmental
Bodies") including, without limitation, regulations and requirements of the
Occupational Safety and Health Administration.
3A.12 Environmental. As of the date hereof, WBHP
has not disposed of any Hazardous Waste, including any Polychlorinated
Biphenyls ("PCBs"), in a manner which has caused, or could cause, Buyer, either
of the Companies or the Licensee to incur a material liability under applicable
law in connection therewith; and WBHP Sellers warrant that the technical
equipment included in the WBHP Tangible Property does not contain any Hazardous
Waste that is required by law to be removed,
<PAGE> 21
15
and, if any such equipment does contain Hazardous Waste, that such Hazardous
Waste is stored and maintained in compliance with applicable law. As of the
date hereof, WBHP has complied in all material respects with all federal,
state, local or foreign laws, rules and regulations concerning human health or
pollution or protection of the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
applicable to either Company and the Licensee or the Stations' operations,
including but not limited to the Commission's guidelines regarding RF radiation
(collectively, "Environmental Laws"). As used herein, the term "Hazardous
Waste" shall mean all materials regulated by any Environmental Laws. If either
WBHP Seller or WBHP learns between the date of this Agreement and the Closing
Date that the WBHP Sellers are in breach of the representation and warranty set
forth in this Section 3A.12 and such breach is attributable in whole or in part
to either WBHP Seller's or WBHP's action or failure to act prior to the Closing
Date, the WBHP Sellers shall cause WBHP to promptly begin investigation,
remedial action or any other action, if such is required by Environmental Laws,
and shall use reasonable best efforts to cause such action to be completed to
the satisfaction of Buyer and in compliance with Environmental Laws before the
Closing Date.
3A.13 Permits. WBHP has all licenses, permits,
orders or approvals of, and has made all required registrations with, any
Governmental Body necessary or required for the conduct of its business
(collectively, "WBHP Permits"), except for such WBHP Permits which,
individually or in the aggregate, are not material to the business of WBHP.
All material WBHP Permits are listed on Schedule
<PAGE> 22
16
3A.13 and are in full force and effect; no material violations are or have been
recorded in respect of any material WBHP Permit; and no proceeding is pending
or, to the knowledge of either WBHP Seller or WBHP, threatened to revoke or
limit any material WBHP Permit.
3A.14 No Breach. The execution, delivery and
performance of this Agreement by the WBHP Sellers and the consummation of the
transactions contemplated hereby (the "Contemplated Transactions") will not (i)
violate any provision of the Certificate of Incorporation or By-laws (or
comparable instruments) of WBHP; (ii) require WBHP to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
Governmental Body or any other person, except as set forth on Schedule 3A.14
(the "Required WBHP Consents"); (iii) if the Required WBHP Consents are
obtained, violate, conflict with or result in the breach of any of the terms
of, result in a material modification of the effect of, otherwise cause the
termination of or give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both constitute) a default (by
way of substitution, novation or otherwise) under, any contract, agreement,
indenture, note, bond, loan, instrument, lease, conditional sale contract,
mortgage, license, franchise, commitment or other binding arrangement
(collectively, the "Contracts") to which WBHP is a party or by or to which WBHP
or any of its properties may be bound or subject, or result in the creation of
any lien, pledge, mortgage, security interest, claim, lease, charge, option,
right of first refusal, easement, servitude, transfer restriction under any
shareholder or similar agreement, encumbrance or any other restriction or
limitation
<PAGE> 23
17
whatsoever (collectively, "Liens") upon the properties of WBHP pursuant to the
terms of any such Contract; (iv) if the Required WBHP Consents are obtained,
violate any Order against, or binding upon, WBHP or upon its securities,
properties or business; (v) if the Required WBHP Consents are obtained, violate
any Law; or (vi) if the Required WBHP Consents are obtained, violate or result
in, or permit, the revocation or suspension of any material Permit.
3A.15 Claims and Proceedings. There are no
outstanding Orders against or involving WBHP. Except as set forth on Schedule
3A.15 there are no actions, suits, claims or legal, administrative or arbitral
proceedings or investigations (collectively, "Claims") (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending, or to the knowledge of either WBHP Seller or WBHP, threatened, against
or involving WBHP or any of its properties which, individually or in the
aggregate, could have a material adverse effect upon the Contemplated
Transactions or upon the Condition of WBHP.
3A.16 Contracts.
(a) Schedule 3A.16 contains a true and
complete list of all contracts other than customer advertising contracts made
in the ordinary course of business, to which WBHP is a party as of the date
hereof or to which it or its properties may be bound as of the date hereof
(other than those specifically set forth on any other Schedule). All such
contracts together with any contract entered into by WBHP after the date hereof
(collectively the "WBHP Contracts") are valid, binding and enforceable by WBHP
in accordance with their respective terms, except as limited
<PAGE> 24
18
by laws affecting creditors' rights or equitable principles generally. WBHP
has complied in all material respects with all WBHP Contracts, WBHP is not in
default beyond any applicable grace periods under any of same, and to the
knowledge of the WBHP Sellers no other contracting party is in material default
under any of same. The execution of this Agreement and the transfer of the
Shares to be transferred by the WBHP Sellers pursuant hereto will not
materially affect the validity, enforceability and continuity of any such WBHP
Contracts.
(b) There have been delivered to the Buyer
true and complete copies of all of the WBHP Contracts (including all
modifications, amendments and supplements) set forth on Schedule 3A.16 or on
any other Schedule, other than those contracts that will not survive the
Closing and as to which neither the Companies nor the Licensee will have any
obligations or liabilities following the Closing.
3A.17 Real Estate. WBHP neither leases nor owns any
real property. All of the land, buildings, structures and other improvements
used by WBHP in the conduct of its business is included in the Licensee Real
Property, as defined in Section 3C.18. The use by WBHP of the Licensee Real
Property in the conduct of its business as conducted on the date hereof is
permitted under, and does not violate the terms of any of the Licensee Real
Property Contracts, as defined in Section 3C.18, or the terms of any Real
Property Permits, as defined in Section 3C.18, applicable to the Licensee Real
Property. WBHP does not own or hold, and is not
<PAGE> 25
19
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of any real property.
3A.18 Receivables. All accounts and notes
receivable which will be reflected on the WBHP Closing Date Balance Sheet, (i)
will have arisen in the ordinary course of business of WBHP and (ii) will be
collectible in the ordinary course of business of WBHP in the aggregate
recorded amounts thereof in accordance with their terms.
3A.19 Tangible Property. All the facilities,
machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, any related capitalized items and other tangible property used to
conduct the business of a WBHP (the "WBHP Tangible Property") are in good
operating condition and repair, subject to continued repair and replacement in
accordance with past practice, and are suitable for their intended use, except
for such items of WBHP Tangible Property which, individually or in the
aggregate, are not material to the conduct of the business of either WBHP or
the Licensee.
3A.20 Title to Properties. Except for real
property, WBHP owns outright and has good and marketable title to all of its
properties, including, without limitation, all of the assets reflected on the
WBHP Balance Sheet and the properties described in Sections 3A.18 and Schedule
3A.16, in each case free and clear of any Lien, except for (i) Liens
specifically described in the notes to the Annual WBHP Financials or Interim
WBHP Financials; (ii) Liens securing taxes, assessments, governmental charges
or levies, or the claims of materialmen, carriers, landlords and
<PAGE> 26
20
like persons, all of which are not yet due and payable or are being contested
in good faith and appropriate amounts have been reserved therefor on the
Balance Sheet in a manner consistent with generally accepted accounting
principles; or (iii) assets held or used pursuant to any lease listed on a
Schedule.
3A.21 Liabilities. As at the Balance Sheet Date,
WBHP had no direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise ("Liabilities") that were not fully and
adequately reflected or reserved against on the WBHP Balance Sheet or described
on any Schedule or in the notes to the Annual WBHP Financials or Interim WBHP
Financials. Except as set forth on Schedule 3A.21, WBHP has not, except in the
ordinary course of business, incurred any Liabilities since the Balance Sheet
Date.
3A.22 Officers, Directors and Key Employees.
Schedule 3A.22 sets forth (i) the name and total compensation of each officer
and director of WBHP (other than any Seller or any spouse or child of any
Seller), (ii) the name and total compensation of each other employee,
consultant, agent or other representative of WBHP (other than any Seller or any
spouse or child of any Seller) whose current or committed annual rate of
compensation (including bonuses and commissions) exceeds $20,000, (iii) all
wage and salary increases, bonuses and increases in any other direct or
indirect compensation received by such persons since January 1, 1996, (iv) any
payments or commitments to pay any severance or termination pay to any such
<PAGE> 27
21
persons, and (v) any accrual for, or any commitment or agreement by WBHP to
pay, such increases, bonuses or pay.
3A.23 Operations of WBHP. Except as set forth on
Schedule 3A.23 or as undertaken in order to cause the WBHP Closing Date Balance
Sheet to accurately reflect the Forecasted WBHP Closing Date Balance Sheet,
since the Balance Sheet Date WBHP has not:
(i) declared or paid any dividends or
declared or made any other distributions of any kind to its shareholders, or
made any direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock, WBHP Rights or securities
convertible into or exchangeable for its capital stock or WBHP Rights;
(ii) except for short-term bank
borrowings in the ordinary course of business, incurred any indebtedness for
borrowed money;
(iii) reduced its cash or short-term
investments or their equivalent, other than to meet cash needs arising in the
ordinary course of business, consistent with past practices;
(iv) waived any material right under any
contract or other agreement of the type required to be set forth on any
Schedule;
(v) made any change in its accounting
methods or practices or made any change in depreciation or amortization
policies or rates adopted by it;
(vi) materially changed any of its
business policies;
<PAGE> 28
22
(vii) made any loan or advance to any of
its shareholders, officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary course of
business), or made any other loan or advance other than in the ordinary course
of business;
(viii) sold, abandoned or made any other
disposition of any of its properties or made any acquisition of all or any part
of the properties, capital stock or business of any other person;
(ix) paid, directly or indirectly, any of
its material Liabilities before the same became due in accordance with its
terms or otherwise than in the ordinary course of business;
(x) terminated or failed to renew, or
received any written threat (that was not subsequently withdrawn) to terminate
or fail to renew, any Contract set forth on Schedule 3A.16;
(xi) amended its Certificate of
Incorporation or By-laws (or comparable instruments) or merged with or into or
consolidated with any other person, subdivided or in any way reclassified any
shares of its capital stock or changed or agreed to change in any manner the
rights of its outstanding capital stock or the character of its business; or
(xii) engaged in any other material
transaction other than in the ordinary course of business.
<PAGE> 29
23
3A.24 Potential Conflicts of Interest. No officer,
director or Affiliate of WBHP, no WBHP Seller and no Affiliate or Associate of
any of the foregoing:
(i) owns, directly or indirectly, in
whole or in part, any property that WBHP uses in the conduct of its business,
except that the WBHP Sellers are the owners of the real property (including the
buildings, structures and other improvements located thereon) which is being
leased to the Licensee under the Licensee Real Property Contract identified in
Paragraph 4 of Schedule 3C.18(b)(i) (the "WBHP Seller Owned Real Property"); or
(ii) has any cause of action or other
claim whatsoever against, or owes any amount to, WBHP, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements existing on
the date hereof and other claims or causes of action which will be satisfied or
released at or prior to the Closing in connection with the WBHP Seller causing
the WBHP Closing Date Balance Sheet to accurately reflect the Forecasted WBHP
Closing Date Balance Sheet.
3A.25 Banks, Brokers and Proxies. Schedule 3A.25
sets forth (i) the name of each bank, trust company, securities or other broker
or other financial institution with which WBHP has an account, credit line or
safe deposit box or vault, or otherwise maintains relations; (ii) the name of
each person authorized by WBHP to draw thereon or to have access to any safe
deposit box or vault; (iii) the purpose of each such account, safe deposit box
or vault; and (iv) the names of all persons
<PAGE> 30
24
authorized by proxies, powers of attorney or other instruments to act on behalf
of WBHP in matters concerning its business or affairs.
3B. Representations and Warranties of the Dixie Seller.
The Dixie Seller represents and warrants to the Buyer as follows:
3B.1 Due Incorporation Organization and Authority.
Dixie is a corporation duly organized, validly existing and in good standing
under the laws of the State of Alabama and has all requisite corporate power
and lawful authority to own, lease and operate its properties and to carry on
its business as now being and heretofore conducted.
3B.2 Ownership. Dixie owns and has, and will have
on the Closing Date, good and marketable title to an undivided one-half
membership interest in the Licensee free and clear of any liens, pledges,
attachments, claims, charges or encumbrances of any kind whatsoever.
3B.3 Investments. Except as set forth on Schedule
3B.3, Dixie does not own, directly or indirectly, any interest in or any
securities or indebtedness of any other person.
3B.4 Qualification. Dixie is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction set forth on Schedule 3B.4, which are the
only jurisdictions in which such qualification or authorization is required by
law and in which the failure so to qualify or be authorized could have a
material adverse effect on the properties, business,
<PAGE> 31
25
prospects, results of operations or condition (financial or otherwise) of Dixie
or the Licensee (the "Condition of Dixie").
3B.5 Outstanding Capital Stock. Dixie is authorized
to issue 20,000 shares of common stock, par value $1.00 per share, of which
5,000 shares are issued and outstanding. All of the outstanding shares of
Dixie Stock are owned by the Dixie Seller. All of the outstanding shares of
capital stock of Dixie are duly authorized, validly issued, fully paid and
nonassessable. No other class of capital stock or other ownership interests of
Dixie is authorized or outstanding.
3B.6 Options or Other Rights. Except as set forth
on Schedule 3B.6, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from either Dixie or the Dixie Seller any of the
outstanding, authorized but unissued, unauthorized or treasury shares of the
capital stock or any other security of or interest in either Dixie or the
Licensee (collectively, "Dixie Rights"), and there is no outstanding security
of any kind convertible into or exchangeable for any such capital stock or
Dixie Rights.
3B.7 Charter Documents and Corporate Records. The
Dixie Seller has heretofore delivered to the Buyer true and complete copies of
the Certificates of Incorporation of Dixie (certified by the Secretary of State
of Alabama) and By-laws of Dixie (certified by the corporation's secretary or
an assistant secretary), as in effect on the date hereof. The stock books of
Dixie which have been made available to the Buyer for its inspection are true
and complete.
<PAGE> 32
26
3B.8 Financial Statements. The unaudited balance
sheet of Dixie as at December 31, 1993, December 31, 1994 and December 31, 1995
and the related statements of income, shareholders' equity and changes in
financial position for the years then ended, including the footnotes thereto,
which have been delivered to the Buyer, fairly present the financial position
of Dixie as at such dates and the results of operations of Dixie for such
respective periods, in each case in accordance with generally accepted
accounting principles consistently applied for the periods covered thereby.
The foregoing financial statements of Dixie as at December 31, 1993, December
31, 1994 and December 31, 1995 and for the years then ended are sometimes
herein called the "Annual Dixie Financials." The unaudited balance sheet of
Dixie as at June 30, 1996 and the related statements of income, including the
footnotes thereto, which have been delivered to the Buyer, fairly present the
financial position of Dixie as at such date and the results of operations of
Dixie for the six months then ended, in each case in conformity with generally
accepted accounting principles applied on a basis consistent with that of the
Annual Dixie Financials (subject to the normal year-end adjustments described
in Schedule 3B.8) and with all interim financial statements of Dixie heretofore
delivered to the Buyer on behalf of the Dixie Seller. (The foregoing balance
sheet of Dixie as at June 30, 1996 and the related statements of income,
shareholders' equity and changes in financial position for the six months then
ended are sometimes herein called the "Interim Dixie Financials," the balance
sheets included in the Interim Dixie Financials is sometimes herein called the
"Dixie Balance Sheet" and June 30, 1996 is sometimes herein called the "Dixie
Balance Sheet Date.")
<PAGE> 33
27
3B.9 No Material Adverse Change. Except for changes
made prior to the Closing Date in order to cause the Dixie Closing Date Balance
Sheet (as defined in Section 7.11) to accurately reflect the Forecasted Dixie
Closing Date Balance Sheet (as defined in Section 6.2(i) hereof), since the
Dixie Balance Sheet Date, there has been no material adverse change in the
Condition of Dixie, and neither the Dixie Seller nor Dixie knows of any
condition or state of facts or any change which is threatened, nor has there
been any damage, destruction or loss which could have a material adverse effect
on the Condition of Dixie, whether or not covered by insurance.
3B.10 Tax Matters.
(i) Dixie has (A) paid all Taxes
required to be paid by it through the date hereof; (B) provided in the Interim
Dixie Financials adequate reserves for all Taxes incurred for taxable periods
or portions of taxable periods through the Dixie Balance Sheet Date; and (C)
shall timely pay any Taxes required to be paid by it on or before the Closing
Date. Dixie has made all payments of estimated Taxes required to be made under
section 6655 of the Code and any comparable provisions of state, local, or
foreign tax law.
(ii) Dixie has timely filed all Tax
Returns required to be filed through the date hereof, and shall prepare and
timely file, in a manner consistent with prior years and applicable laws and
regulations, all tax returns required to be filed on or before the Closing
Date.
<PAGE> 34
28
(iii) Complete copies of federal, state,
local and foreign Tax Returns of Dixie for the years ended December 31, 1994
and December 31, 1995 have previously been delivered to the Buyer. Prior to
the date hereof, the Dixie Seller has provided to the Buyer copies of all
revenue agents' reports and other written assertions of deficiencies or other
liabilities for Taxes of Dixie with respect to past periods for which the
applicable statute of limitations has not expired.
(iv) Dixie has been a "small business
corporation" (within the meaning of section 1361(b) of the Code for all taxable
years beginning on or after January 1, 1994, and has duly elected (and will
continue through the Closing Date to qualify for such election) under section
1362(a) of the Code to be taxed as an "S corporation" for federal income tax
purposes for each of such taxable years; as a result of such election, Dixie
has no liability for federal income tax for any of its taxable years beginning
on or after January 1, 1994.
(v) Dixie has complied with all
applicable laws, rules and regulations relating to the withholding of Taxes and
have timely collected or withheld and paid over to the proper governmental or
regulatory body all amounts required to be so collected or withheld and paid
over for all periods up to (but not including) the Closing Date under all
applicable laws to the extent such amounts are required to be paid before such
date.
<PAGE> 35
29
(vi) No penalties or other charges are or
will become due with respect to the late filing of any Tax return of Dixie for
Taxes required to be filed on or before the Closing Date.
(vii) With respect to all tax returns of
Dixie, no audit is in progress and no extension of time is in force with
respect to any date on which any return for Taxes was or is to be filed and no
waiver or agreement is in force for the extension of time for the assessment or
payment of any Tax.
(viii) Each return filed by Dixie for which
the federal income tax audit has not been completed accurately reflects the
amount of liability for Taxes thereunder and makes all disclosures required by
the Code or any predecessor thereof and regulations thereunder and other
applicable provisions of law.
(ix) Each state and local income tax
return filed by Dixie for which the tax audit has not been completed accurately
reflects the amount of its liability for Taxes thereunder and makes all
disclosures required by applicable provisions of law.
(x) Schedule 3B.10(x) sets forth the
states in which Dixie files Tax Returns.
(xi) Dixie has not received a Tax Ruling
or entered into a Tax Closing Agreement with any taxing authority that would
have a continuing effect after the Closing Date.
(xii) To the knowledge of the Dixie Seller
and Dixie , except as set forth in Schedule 3B.10(viii), no action, suit,
proceeding, investigation,
<PAGE> 36
30
audit, claim or assessment is presently pending or proposed with regard to any
Taxes that relate to Dixie for which any of them would be liable. Except as
set forth in Schedule 3B.10(xii), no issue has arisen in any examination of
Dixie by any taxing authority that if raised with respect to any other period
not so examined would result in a material deficiency for any other period not
so examined, if upheld. There is no unresolved claim by a taxing authority in
any jurisdiction where Dixie does not file Tax Returns that it is or may be
subject to taxation by such jurisdiction. Any adjustment of income Taxes of
Dixie made by the Internal Revenue Service in any examination that is required
to be reported to the appropriate state, local, or foreign taxing authorities
has been so reported.
(xiii) (A) Dixie is not required to make
any adjustment pursuant to section 481 of the Code (or similar provision of
other laws or Treasury Regulations) by reason of a change in accounting method
or otherwise, (B) to the knowledge of the Dixie Seller, neither the Internal
Revenue Service nor any other taxing authority has proposed any such adjustment
or change in accounting method, which proposal is currently pending and (C)
Dixie does not have an application pending with any taxing authority
requesting permission for any change in accounting methods that relates to its
business and operations.
(xiv) The Buyer will not be required to
deduct and withhold any amount pursuant to section 1445 of the Code, upon the
consummation of the transactions contemplated hereby, and the Dixie Seller will
cause the necessary documents to be provided to the Buyer at the Closing to
support such non-deduction and non-withholding, including appropriate
affidavits referred to in section 1445(b)(3) of the Code.
<PAGE> 37
31
(xv) There are no liens for Taxes (other
than for Taxes not yet due and payable) upon the assets of Dixie .
(xvi) Dixie has not filed a consent under
section 341(f)(1) of the Code or agreed under section 341(f)(3) of the Code to
have the provisions of section 341(f)(2) of the Code applied to the sale of its
capital stock
(xvii) Dixie has not disposed of any
property in a transaction being accounted for under the installment method
pursuant to section 453 of the Code.
(xviii) No payment will, or may, be made by
Dixie to any employee, former employee, officer, director or agent thereof
which payment will be characterized as an "excess parachute payment" within the
meaning of section 280G(b)(1) of the Code.
3B.11 Compliance with Laws. Dixie is not in
violation of any applicable Orders or Laws of any Governmental Bodies,
including, without limitation, regulations and requirements of the Occupational
Safety and Health Administration.
3B.12 Environmental. As of the date hereof, Dixie
has not disposed of any Hazardous Waste, including any PCBs, in a manner which
has caused, or could cause, Buyer, either of the Companies or the Licensee to
incur a material liability under applicable law in connection therewith; and
Dixie Seller warrants that the technical equipment included in the Dixie
Tangible Property does not contain any
<PAGE> 38
32
Hazardous Waste that is required by law to be removed, and, if any such
equipment does contain Hazardous Waste, that such Hazardous Waste is stored and
maintained in compliance with applicable law. As of the date hereof, Dixie has
complied in all material respects with all Environmental Laws applicable to
either Company and the Licensee or the Stations' operations. If the Dixie
Seller or Dixie learns between the date of this Agreement and the Closing Date
that the Dixie Seller is in breach of the representation and warranty set forth
in this Section 3B.12 and such breach is attributable in whole or in part to
the Dixie Seller's or Dixie's action or failure to act prior to the Closing
Date, the Dixie Seller shall cause Dixie to promptly begin investigation,
remedial action or any other action, if such is required by Environmental Laws,
and shall use reasonable best efforts to cause such action to be completed to
the satisfaction of Buyer and in compliance with Environmental Laws before the
Closing Date.
3B.13 Permits. Dixie has all licenses, permits,
orders or approvals of, and has made all required registrations with, any
Governmental Body necessary or required for the conduct of its business
(collectively, "Dixie Permits"), except for such Dixie Permits which,
individually or in the aggregate, are not material to the business of Dixie.
All material Dixie Permits are listed on Schedule 3B.13 and are in full force
and effect; no material violations are or have been recorded in respect of any
material Dixie Permit; and no proceeding is pending or, to the knowledge of the
Dixie Seller or Dixie, threatened to revoke or limit any material Dixie Permit.
<PAGE> 39
33
3B.14 No Breach. The execution, delivery and
performance of this Agreement by the Dixie Seller and the consummation of the
Contemplated Transactions will not (i) violate any provision of the Certificate
of Incorporation or By-laws (or comparable instruments) of Dixie; (ii) require
Dixie to obtain any consent, approval or action of, or make any filing with or
give any notice to, any Governmental Body or any other person, except as set
forth on Schedule 3B.14 (the "Required Dixie Consents"); (iii) if the Required
Dixie Consents are obtained, violate, conflict with or result in the breach of
any of the terms of, result in a material modification of the effect of,
otherwise cause the termination of or give any other contracting party the
right to terminate, or constitute (or with notice or lapse of time or both
constitute) a default (by way of substitution, novation or otherwise) under,
any Contract to which Dixie is a party or by or to which Dixie or any of its
properties may be bound or subject, or result in the creation of any Lien upon
the properties of Dixie pursuant to the terms of any such Contract; (iv) if the
Required Dixie Consents are obtained, violate any Order against, or binding
upon, Dixie or upon its securities, properties or business; (v) if the Required
Dixie Consents are obtained, violate any Law; or (vi) if the Required Dixie
Consents are obtained, violate or result in, or permit, the revocation or
suspension of any material Permit.
3B.15 Claims and Proceedings. There are no
outstanding Orders against or involving Dixie. Except as set forth on Schedule
3B.15 there are no Claims (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) pending, or to the knowledge of the
Dixie Seller or Dixie, threatened,
<PAGE> 40
34
against or involving Dixie or any of its properties which, individually or in
the aggregate, could have a material adverse effect upon the Contemplated
Transactions or upon the Condition of Dixie.
3B.16 Contracts.
(a) Schedule 3B.16 contains a true and
complete list of all contracts other than customer advertising contracts made
in the ordinary course of business to which Dixie is a party as of the date
hereof or to which it or its properties may be bound as of the date hereof
(other than those specifically set forth on any other Schedule). All such
contracts together with any contract entered into by Dixie after the date
hereof (collectively the "Dixie Contracts") are valid, binding and enforceable
by Dixie in accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally. Dixie has
complied in all material respects with all Dixie Contracts, Dixie is not in
default beyond any applicable grace periods under any of same, and to the
knowledge of the Dixie Seller no other contracting party is in material default
under any of same. The execution of this Agreement and the transfer of the
Shares to be transferred by the Dixie Seller pursuant hereto will not
materially affect the validity, enforceability and continuity of any such Dixie
Contracts.
(b) There have been delivered to the Buyer
true and complete copies of all of the Dixie Contracts (including all
modifications, amendments and supplements) set forth on Schedule 3B.16 or on
any other Schedule, other than
<PAGE> 41
35
those contracts that will not survive the Closing and as to which neither the
Companies nor the Licensee will have any obligations or liabilities following
the Closing.
3B.17 Real Estate. Dixie neither leases nor owns
any real property. All of the land, buildings, structures and other
improvements used by Dixie in the conduct of its business is included in the
Licensee Real Property. The use by Dixie of the Licensee Real Property in the
conduct of its business as conducted on the date hereof is permitted under, and
does not violate the terms of any of the Licensee Real Property Contracts or
the terms of any Real Property Permits applicable to the Licensee Real
Property. Dixie does not own or hold, and is not obligated under or a party
to, any option, right of first refusal or other contractual right to purchase,
acquire, sell or dispose of any real property.
3B.18 Receivables. All accounts and notes
receivable which will be reflected on the Dixie Closing Date Balance Sheet, (i)
will have arisen in the ordinary course of business of Dixie and (ii) will be
collectible in the ordinary course of business of Dixie in the aggregate
recorded amounts thereof in accordance with their terms.
3B.19 Tangible Property. All the facilities,
machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, any related capitalized items and other tangible property used to
conduct the business of a Dixie (the "Dixie Tangible Property") are in good
operating condition and repair, subject to continued repair and replacement in
accordance with past practice, and are suitable for their intended use, except
for such items of Dixie Tangible Property which, individually or in the
aggregate, are not material to the conduct of the business of either Dixie or
the Licensee.
<PAGE> 42
36
3B.20 Title to Properties. Except for real
property, Dixie owns outright and has good and marketable title to all of its
properties, including, without limitation, all of the assets reflected on the
Dixie Balance Sheet and the properties described in Section 3B.19 and Schedule
3B.16, in each case free and clear of any Lien, except for (i) Liens
specifically described in the notes to the Annual Dixie Financials or Interim
Dixie Financials; (ii) Liens securing taxes, assessments, governmental charges
or levies, or the claims of materialmen, carriers, landlords and like persons,
all of which are not yet due and payable or are being contested in good faith
and appropriate amounts have been reserved therefor on the Balance Sheet in a
manner consistent with generally accepted accounting principles; or (iii)
assets held or used pursuant to any lease listed on a Schedule.
3B.21 Liabilities. As at the Balance Sheet Date,
Dixie had no direct or indirect indebtedness, Liabilities that were not fully
and adequately reflected or reserved against on the Dixie Balance Sheet or
described on any Schedule or in the notes to the Annual Dixie Financials or
Interim Dixie Financials. Except as set forth on Schedule 3B.21, Dixie has
not, except in the ordinary course of business, incurred any Liabilities since
the Balance Sheet Date.
3B.22 Officers, Directors and Key Employees.
Schedule 3B.22 sets forth (i) the name and total compensation of each officer
and director of Dixie, (ii) the name and total compensation of each other
employee, consultant, agent or other
<PAGE> 43
37
representative of Dixie (other than any Seller or any spouse or child of any
Seller) whose current or committed annual rate of compensation (including
bonuses and commissions) exceeds $20,000, (iii) all wage and salary increases,
bonuses and increases in any other direct or indirect compensation received by
such persons since January 1, 1996, (iv) any payments or commitments to pay any
severance or termination pay to any such persons, and (v) any accrual for, or
any commitment or agreement by Dixie to pay, such increases, bonuses or pay.
3B.23 Operations of Dixie. Except as set forth on
Schedule 3B.23 or undertaken in order to cause the Dixie Closing Date Balance
Sheet to accurately reflect the Forecasted Dixie Closing Date Balance Sheet,
since the Balance Sheet Date Dixie has not:
(i) declared or paid any dividends or
declared or made any other distributions of any kind to its shareholders, or
made any direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock, Dixie Rights or securities
convertible into or exchangeable for its capital stock or Dixie Rights;
(ii) except for short-term bank
borrowings in the ordinary course of business, incurred any indebtedness for
borrowed money;
(iii) reduced its cash or short-term
investments or their equivalent, other than to meet cash needs arising in the
ordinary course of business, consistent with past practices;
<PAGE> 44
38
(iv) waived any material right under any
contract or other agreement of the type required to be set forth on any
Schedule;
(v) made any change in its accounting
methods or practices or made any change in depreciation or amortization
policies or rates adopted by it;
(vi) materially changed any of its
business policies;
(vii) made any loan or advance to any of
its shareholders, officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary course of
business), or made any other loan or advance other than in the ordinary course
of business;
(viii) sold, abandoned or made any other
disposition of any of its properties or made any acquisition of all or any part
of the properties, capital stock or business of any other person;
(ix) paid, directly or indirectly, any of
its material Liabilities before the same became due in accordance with its
terms or otherwise than in the ordinary course of business;
(x) terminated or failed to renew, or
received any written threat (that was not subsequently withdrawn) to terminate
or fail to renew, any Contract set forth on Schedule 3B.16;
(xi) amended its Certificate of
Incorporation or By-laws (or comparable instruments) or merged with or into or
consolidated with any other person, subdivided or in any way reclassified any
shares of its capital stock or changed
<PAGE> 45
39
or agreed to change in any manner the rights of its outstanding capital stock
or the character of its business; or
(xii) engaged in any other material
transaction other than in the ordinary course of business.
3B.24 Potential Conflicts of Interest. No officer,
director or Affiliate of Dixie, the Dixie Seller and no Affiliate or Associate
of any of the foregoing:
(i) owns, directly or indirectly, in
whole or in part, any property that Dixie uses in the conduct of its business;
or
(ii) has any cause of action or other
claim whatsoever against, or owes any amount to, Dixie, except for claims in
the ordinary course of business such as for accrued vacation pay, accrued
benefits under employee benefit plans, and similar matters and agreements
existing on the date hereof and other claims or causes of action which will be
satisfied or released at or prior to the Closing in connection with the Dixie
Seller causing the Dixie Closing Date Balance Sheet to accurately reflect the
Forecasted Dixie Closing Date Balance Sheet.
3B.25 Banks, Brokers and Proxies. Schedule 3B.25
sets forth (i) the name of each bank, trust company, securities or other broker
or other financial institution with which Dixie has an account, credit line or
safe deposit box or vault, or otherwise maintains relations; (ii) the name of
each person authorized by Dixie to draw thereon or to have access to any safe
deposit box or vault; (iii) the purpose of each such account, safe deposit box
or vault; and (iv) the names of all persons authorized by
<PAGE> 46
40
proxies, powers of attorney or other instruments to act on behalf of Dixie in
matters concerning its business or affairs.
3C. Representations and Warranties of all Sellers. The
Sellers, jointly and severally, represent and warrant to the Buyer as follows:
3C.1 Due Incorporation Organization and Authority.
The Licensee is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Alabama, and has all
requisite power and lawful authority to own, lease and operate its properties
and to carry on its business as now being and heretofore conducted.
3C.2 Ownership. Other than Dixie and WBHP, no other
person owns or has any rights to or interest in the Licensee. The Licensee is
the authorized legal holder of the Station Licenses and owns and has, and will
have on the Closing Date, good and marketable title to the Station Assets, in
each case free and clear of any liens, pledges, attachments, claims, charges or
encumbrances of any kind whatsoever.
3C.3 Investments. Except as set forth on Schedule
3C.3, the Licensee does not own, directly or indirectly, any interest in or any
securities or indebtedness of any other person.
3C.4 Qualification. The Licensee is duly qualified
or otherwise authorized as a foreign limited liability company to transact
business and is in good standing in each jurisdiction set forth on Schedule
3C.4, which are the only jurisdictions in which such qualification or
authorization is required by law and in which the failure so to qualify or be
authorized could have a material adverse effect on the
<PAGE> 47
41
properties, business, prospects, results of operations or condition (financial
or otherwise) of any of the Companies and the Licensee (the "Condition of the
Companies and the Licensee").
3C.5 Options or Other Rights. Except as set forth
on Schedule 3C.5, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from the Licensee any security of or interest in
Licensee (collectively, "Licensee Rights"), and there is no outstanding
security of any kind convertible into or exchangeable for any such Licensee
Rights.
3C.6 Charter Documents. The Sellers have heretofore
delivered to the Buyer true and complete copies of the Limited Liability
Company Agreement and Certificate of Formation (certified by the Secretary of
State of Alabama) of the Licensee, or comparable instruments, as in effect on
the date hereof.
3C.7 Financial Statements. The unaudited balance
sheets of the Licensee as at December 31, 1993, December 31, 1994 and December
31, 1995 and the related statements of income, total capital and changes in
financial position for the years then ended, including the footnotes thereto,
which have been delivered to the Buyer, fairly present the financial position
of the Licensee as at such dates and the results of operations of the Licensee
for such respective periods, in each case in accordance with generally accepted
accounting principles consistently applied for the periods covered thereby.
The foregoing financial statements of the Licensee as at December 31, 1993,
December 31, 1994 and December 31, 1995 and for the years
<PAGE> 48
42
then ended are sometimes herein called the "Annual Licensee Financials." The
unaudited balance sheets of the Licensee as at August 31, 1996 and the related
statements of income, including the footnotes thereto, which have been
delivered to the Buyer, fairly present the financial position of the Licensee
as at such date and the results of operations of the Licensee for the eight
months then ended, in each case in conformity with generally accepted
accounting principles applied on a basis consistent with that of the Annual
Licensee Financials (subject to the normal year-end adjustments described in
Schedule 3C.7) and with all interim financial statements of the Licensee
heretofore delivered to the Buyer on behalf of the Sellers. The foregoing
balance sheet of the Licensee as at August 31, 1996 and the related statements
of income, shareholders' equity and changes in financial position for the eight
months then ended are sometimes herein called the "Interim Licensee
Financials," the balance sheets included in the Interim Licensee Financials is
sometimes herein called the "Licensee Balance Sheet" and August 31, 1996 is
sometimes herein called the "Licensee Balance Sheet Date.")
3C.8 No Material Adverse Change. Except for changes
made prior to the Closing Date in order to cause the Licensee Closing Date
Balance Sheet (as defined in Section 7.11 hereof) to accurately reflect the
Forecasted Licensee Closing Date Balance Sheet (as defined in Section 6.2(i)
hereof), since the Licensee Balance Sheet Date, there has been no material
adverse change in the Condition of the Companies and the Licensee, and neither
the Sellers nor either of the Companies or the Licensee knows of any condition
or state of facts or any change which is threatened,
<PAGE> 49
43
nor has there been any damage, destruction or loss which could have a material
adverse effect on the Condition of the Companies and the Licensee, whether or
not covered by insurance.
3C.9 Tax Matters.
(i) The Licensee has (A) paid all Taxes
required to be paid by it through the date hereof; (B) provided in the Interim
Licensee Financials adequate reserves for all Taxes incurred for taxable
periods or portions of taxable periods through the Balance Sheet Date; and (C)
shall timely pay any Taxes required to be paid by it on or before the Closing
Date. Licensee has made all payments of estimated Taxes required to be made
under section 6655 of the Code and any comparable provisions of state, local,
or foreign tax law.
(ii) The Licensee has timely filed all
Tax Returns required to be filed through the date hereof, and shall prepare and
timely file, in a manner consistent with prior years and applicable laws and
regulations, all tax returns required to be filed on or before the Closing
Date.
(iii) Complete copies of federal, state,
local, and foreign Tax Returns of Licensee for the years ended December 31,
1994 and December 31, 1995 have previously been delivered to the Buyer. Prior
to the date hereof, the Sellers have provided to the Buyer copies of all
revenue agents' reports and other written assertions of deficiencies or other
liabilities for Taxes of Licensee with respect to past periods for which the
applicable statute of limitations has not expired.
<PAGE> 50
44
(iv) Licensee has complied with all
applicable laws, rules and regulations relating to the withholding of Taxes and
have timely collected or withheld and paid over to the proper governmental or
regulatory body all amounts required to be so collected or withheld and paid
over for all periods up to (but not including) the Closing Date under all
applicable laws to the extent such amounts are required to be paid before such
date.
(v) No penalties or other charges are or
will become due with respect to the late filing of any Tax return of the
Licensee for Taxes required to be filed on or before the Closing Date.
(vi) With respect to all tax returns of
the Licensee, no audit is in progress and no extension of time is in force with
respect to any date on which any return for Taxes was or is to be filed and no
waiver or agreement is in force for the extension of time for the assessment or
payment of any Tax.
(vii) Each return filed by the Licensee
for which the federal income tax audit has not been completed accurately
reflects the amount of liability for Taxes thereunder and makes all disclosures
required by the Code or any predecessor thereof and regulations thereunder and
other applicable provisions of law.
(viii) Each state and local income tax
return filed by the Licensee for which the tax audit has not been completed
accurately reflects the amount of its liability for Taxes thereunder and makes
all disclosures required by applicable provisions of law.
<PAGE> 51
45
(ix) Schedule 3C.9(x) sets forth
the states in which Licensee files Tax Returns.
(x) Licensee has not received a Tax
Ruling or entered into a Tax Closing Agreement with any taxing authority that
would have a continuing effect after the Closing Date.
(xi) To the knowledge of the Sellers and
Licensee, except as set forth in Schedule 3C.9(viii), no action, suit,
proceeding, investigation, audit, claim or assessment is presently pending or
proposed with regard to any Taxes that relate to Licensee for which any of
them would be liable. Except as set forth in Schedule 3C.9(xii), no issue has
arisen in any examination of Licensee by any taxing authority that if raised
with respect to any other period not so examined would result in a material
deficiency for any other period not so examined, if upheld. There is no
unresolved claim by a taxing authority in any jurisdiction where Licensee does
not file Tax Returns that it is or may be subject to taxation by such
jurisdiction. Any adjustment of income Taxes of Licensee made by the Internal
Revenue Service in any examination that is required to be reported to the
appropriate state, local, or foreign taxing authorities has been so reported.
(xii) (A) Licensee is not required to
make any adjustment pursuant to section 481 of the Code (or similar provision
of other laws or Treasury Regulations) by reason of a change in accounting
method or otherwise, (B) to the knowledge of the Sellers, neither the Internal
Revenue Service nor any other taxing authority has proposed any such adjustment
or change in accounting method, which
<PAGE> 52
46
proposal is currently pending and (C) Licensee does not have an application
pending with any taxing authority requesting permission for any change in
accounting methods that relates to its business and operations.
(xiii) The Buyer will not be required to
deduct and withhold any amount pursuant to section 1445 of the Code, upon the
consummation of the transactions contemplated hereby, and the Sellers will
cause the necessary documents to be provided to the Buyer at the Closing to
support such non-deduction and non-withholding, including appropriate
affidavits referred to in section 1445(b)(3) of the Code.
(xiv) There are no liens for Taxes (other
than for Taxes not yet due and payable) upon the assets of Licensee.
(xv) Licensee has not disposed of any
property in a transaction being accounted for under the installment method
pursuant to section 453 of the Code.
(xvi) No payment will, or may, be made by
Licensee to any employee, former employee, officer, director or agent thereof
which payment will be characterized as an "excess parachute payment" within the
meaning of section 280G(b)(1) of the Code.
3C.10 Government Authorizations. Schedule 3C.10
contains a true and complete list of all the Station Licenses, which Station
Licenses are sufficient for the lawful conduct of the business and operation of
the Stations in the manner and to the full extent that they are currently
conducted. None of the Station Licenses is
<PAGE> 53
47
subject to any restriction or condition which would limit in any material
respect the full operation of the Stations as now operated. There are no
applications, complaints or proceedings pending or, to the best of the Seller's
knowledge, threatened as of the date hereof before the Commission or any other
governmental authority relating to the business or operations of the Stations,
other than applications, complaints or proceedings which generally affect the
broadcasting industry as a whole, and other than reports and forms filed in the
ordinary course of each Station's business. Sellers have delivered to Buyer
true and complete copies of the Station Licenses, including any and all
additions, amendments and other modifications thereto. The Station Licenses
are in good standing, are in full force and effect and are unimpaired by any
act or omission of Sellers or their officers, directors or employees; and the
operation of each Station is in accordance with the Station Licenses and the
underlying construction permits. No proceedings are pending or, to the
knowledge of Sellers are threatened which may result in the revocation,
modification, non-renewal or suspension of any of the Station Licenses, the
denial of any pending applications, the issuance of any cease and desist order,
the imposition of any administrative actions by the Commission with respect to
the Station Licenses or which may affect Buyer's ability to continue to operate
each Station as it is currently operated. Neither the Companies, the Licensee
nor the Sellers have taken any action which, to their knowledge, could lead to
revocation or non-renewal of the Station Licenses, nor omitted to take any
action which, by reason of their omission, could lead to revocation of the
Station Licenses. All material reports, forms and statements required to be
filed with the Commission with respect to each
<PAGE> 54
48
Station since the grant of the last renewal of the Station Licenses have been
filed and are complete and accurate. To the knowledge of Sellers, there are no
facts which, under the Communications Act of 1934, as amended, or the existing
rules and regulations of the Commission, would disqualify Sellers, as
transferors, in connection with the Transfer Application.
3C.11 Compliance with Regulations. The operation of
each Station is in compliance in all material respects with (i) all applicable
engineering standards required to be met under Commission rules, and (ii) all
other applicable rules, regulations, requirements and policies of the
Commission and all other applicable governmental authorities, including, but
not limited to, ANSI Radiation Standards, to the extent required to be met
under applicable Commission rules and regulations; and there are no existing
claims known to Seller to the contrary.
3C.12 Compliance with Laws. The Licensee is not in
violation of any applicable Orders or Laws of any Governmental Bodies,
including, without limitation, regulations and requirements of the Occupational
Safety and Health Administration.
3C.13 Environmental. As of the date hereof, the
Licensee has not disposed of any Hazardous Waste, including any PCBs, in a
manner which has caused, or could cause, Buyer, either of the Companies or the
Licensee to incur a material liability under applicable law in connection
therewith; and Sellers warrant that the technical equipment included in the
Licensee Tangible Property does not contain any Hazardous Waste that is
required by law to be removed, and, if any such
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49
equipment does contain Hazardous Waste, that such Hazardous Waste is stored and
maintained in compliance with applicable law. As of the date hereof, the
Licensee has complied in all material respects with all Environmental Laws
applicable to the Licensee or the Stations' operations. No Hazardous Waste has
been disposed of on the Licensee Real Property in a condition or concentration
which requires investigation or remediation pursuant to Environmental Laws. If
any Seller, either Company or the Licensee learns between the date of this
Agreement and the Closing Date that any Sellers are in breach of the
representation and warranty set forth in this Section 3C.13 and such breach is
attributable in whole or in part to any Seller's, either Company's or the
Licensee's action or failure to act prior to the Closing Date, the Sellers
shall, or shall cause each such Company or the Licensee (as the case may be)
to, promptly begin investigation, remedial action or any other action, if such
is required by Environmental Laws, and shall use reasonable best efforts to
cause such action to be completed to the satisfaction of Buyer and in
compliance with Environmental Laws before the Closing Date.
3C.14 Permits. The Licensee has all licenses,
permits, orders or approvals of, and has made all required registrations with,
any Governmental Body necessary or required for the conduct of the business of
the Licensee (collectively, "Licensee Permits"), except for such Licensee
Permits which, individually or in the aggregate, are not material to the
business of the Licensee. All material Licensee Permits are listed on Schedule
3C.14 and are in full force and effect; no material violations are or have been
recorded in respect of any material Licensee Permit; and no
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50
proceeding is pending or, to the knowledge of any Seller, either Company or the
Licensee, threatened to revoke or limit any material Licensee Permit.
3C.15 No Breach. The execution, delivery and
performance of this Agreement by the Sellers and the consummation of the
Contemplated Transactions will not (i) violate any provision of the Limited
Liability Company Agreement (or comparable instrument) of the Licensee; (ii)
require Licensee to obtain any consent, approval or action of, or make any
filing with or give any notice to, any Governmental Body or any other person,
except as set forth on Schedule 3C.15 (the "Required Licensee Consents"); (iii)
if the Required Licensee Consents are obtained, violate, conflict with or
result in the breach of any of the terms of, result in a material modification
of the effect of, otherwise cause the termination of or give any other
contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default (by way of substitution, novation
or otherwise) under, any Contract to which the Licensee is a party or by or to
which the Licensee or any of its properties may be bound or subject, or result
in the creation of any Lien upon the properties of the Licensee pursuant to the
terms of any such Contract; (iv) if the Required Licensee Consents are
obtained, violate any Order against, or binding upon, the Licensee or upon its
securities, properties or business; (v) if the Required Licensee Consents are
obtained, violate any Law; or (vi) if the Required Licensee Consents are
obtained, violate or result in, or permit, the revocation or suspension of any
material Licensee Permit.
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3C.16 Claims and Proceedings. There are no
outstanding Orders against or involving the Licensee. Except as set forth on
Schedule 3C.16 there are no Claims (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending, or to the
knowledge of any Seller, either Company or the Licensee, threatened, against or
involving the Licensee or any of its properties which, individually or in the
aggregate, could have a material adverse effect upon the Contemplated
Transactions or upon the Condition of the Companies and the Licensee.
3C.17 Contracts.
(a) Schedule 3C.17 contains a true and
complete list of all Contracts other than customer advertising contracts made
in the ordinary course of business to which the Licensee is a party as of the
date hereof or to which it or its properties may be bound as of the date hereof
(other than those specifically set forth on any other Schedule). All such
Contracts together with any Contract entered into by the Licensee after the
date hereof (collectively the "Licensee Contracts") are valid, binding and
enforceable by the Licensee in accordance with their respective terms, except
as limited by laws affecting creditors' rights or equitable principles
generally. The Licensee has complied in all material respects with all
Licensee Contracts, the Licensee is not in default beyond any applicable grace
periods under any of same, and to the knowledge of Sellers no other contracting
party is in material default under any of same. The execution of this
Agreement and the transfer of the Shares will not materially affect the
validity, enforceability and continuity of any such Licensee Contracts.
<PAGE> 58
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(b) There have been delivered to the Buyer
true and complete copies of all of the Licensee Contracts (including all
modifications, amendments and supplements) set forth on Schedule 3C.17 or on
any other Schedule, other than those contracts that will not survive the
Closing and as to which neither the Companies nor the Licensee will have any
obligations or liabilities following the Closing.
3C.18 Real Estate.
(a) Owned Real Property. The Licensee
is the owner of good, marketable and insurable fee title to the real property
described on Schedule 3C.18(a)(i) and to all of the buildings, structures and
other improvements located thereon (collectively, the "Licensee Owned Real
Property") free and clear of all Title Defects (as hereinafter defined) except
for the matters listed on Schedule 3C.18(a)(ii) and encumbrances of a minor
nature that do not, in the reasonable opinion of Buyer's counsel, individually
or in the aggregate (i) interfere in any material respect with the use,
occupancy or operation of the Licensee Owned Real Property or (ii) materially
reduce the fair market value of the Licensee Owned Real Property below the fair
market value the Licensee Owned Real Property would have had but for such
encumbrances (collectively, the "Permitted Owned Real Property Exceptions").
Other than the WBHP Seller Owned Real Property, the Licensee Owned Real
Property constitutes all of the real property owned by any of the Sellers, the
Companies or the Licensee on the date hereof in connection with the operation
of the Companies, the Licensee or the Stations. Except as accurately described
on Schedule 3C.18(a)(iii),
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53
there are no leases/subleases or other agreements granting to any person other
than the Licensee any right to the possession, use or occupancy of the Licensee
Owned Real Property. As used in this Agreement, "Title Defects" shall mean and
include any mortgage, deed of trust, lien, pledge, security interest, claim,
lease, charge, option, right of first refusal, easement, restrictive covenant,
encroachment or other survey defect, encumbrance or other restriction or
limitation whatsoever.
(b) Leased Real Property. Schedule
3C.18(b)(i) contains a true, correct and complete list and summary of all the
leases, subleases, licenses and other agreements (collectively, the "Licensee
Real Property Contracts") which the Licensee is a party to under which the
Companies or the Licensee use or occupy or have the right to use or occupy, now
or in the future, any real property (the land, buildings and other improvements
covered by the Licensee Real Property Contract being herein called the
"Licensee Leased Real Property"), which Schedule 3C.18(b)(i) sets forth (i) the
date of and parties to each Licensee Real Property Contract, (ii) the date of
and parties to each amendment, modification and supplement thereto, (iii) the
term and renewal terms (whether or not exercised) thereof, (iv) the annual rent
payable thereunder and (v) a brief description of the Licensee Leased Real
Property covered thereby. The Licensee holds the leasehold interest under each
Licensee Real Property Contract free and clear of all Title Defects. The
Licensee Real Property Contracts constitute valid and binding obligations of
Licensee and, to the best of the Sellers, knowledge, of all other persons
purported to be parties thereto, and are in full force and effect as of the
date hereof, and will on the Closing Date constitute
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54
valid and binding obligations of the Licensee and, to the best of the Sellers'
knowledge, of all other persons purported to be parties thereto. As of the
date hereof, the Licensee is not in default under any of the Licensee Real
Property Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto and will not have
received any such notice at or prior to the Closing Date. The Sellers shall
use reasonable efforts to obtain valid and binding third-party consents, if any
are necessary, to the continued use and operation of the Licensee Leased Real
Property by the Licensee under the current terms of the Licensee Real Property
Contracts after giving effect to the transactions contemplated hereby
(including, without limitation, the transactions described in Section 12.2
hereof). Except as accurately described on Schedule 3C.18(b)(ii), there are no
leases/subleases or other agreements granting to any person other than the
Licensee any right to the possession, use or occupancy of the Licensee Leased
Real Property.
(c) Entire Premises. Except for the
Licensee Owned Real Property and the Licensee Leased Real Property (which are
collectively referred to as the "Licensee Real Property"), the Licensee
neither owns nor leases any real property. All of the land, buildings,
structures and other improvements used by the Licensee in the conduct of its
business is included in the Licensee Real Property.
(d) No Options. Neither the Sellers,
the Companies nor the Licensee owns or holds, or is obligated under or a party
to, any option, right of first refusal or other contractual right to purchase,
acquire, sell or dispose of (i) the Licensee Real Property or any portion
thereof or interest therein or (ii) any other real property.
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(e) Condition and Operation of
Improvements. All Improvements included within the Licensee Real Property are
in good working order and repair. All water, gas, electrical, steam,
compressed air, telecommunication, sanitary and storm sewage lines and systems
and other similar systems serving the Licensee Real Property are installed and
operating and are sufficient to enable the Licensee Real Property to continue
to be used and operated in the manner currently being used and operated, and
any so-called hook-up fees or other associated charges have been fully paid.
(f) Real Property Permits and Insurance.
All Real Property Permits of all governmental authorities having jurisdiction
over the Licensee Real Property, required or appropriate to have been issued to
the Sellers, the Companies or the Licensee (as the case may be) to enable the
Licensee Real Property to be lawfully occupied and used for all of the purposes
for which it is currently occupied and used have been lawfully issued and are,
as of the date hereof, in full force and effect.
(g) Condemnation. Neither the Sellers,
the Companies nor the Licensee has received notice or has knowledge of any
pending, threatened or contemplated condemnation proceeding affecting the
Licensee Real Property or any part thereof or of any sale or other disposition
of the Licensee Real Property or any part thereof in lieu of condemnation.
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(h) Casualty. No portion of the
Licensee Real Property has suffered any material damage by fire or other
casualty which has not heretofore been completely repaired and restored to its
original condition. No portion of the Licensee Real Property is located in a
special flood hazard area as designated by Federal governmental authorities,
except that the WBHP Sellers Owned Property which is leased by the Licensee
pursuant to a Licensee Real Property Contract is located in a flood plain,
although such fact does not materially interfere with the current use thereof
by the Licensee.
(i) Encroachments. No portion of any
Improvement encroaches upon any property not included within the Licensee Owned
Real Property or upon the area of any easement affecting the Licensee Owned
Real Property.
3C.19 Receivables. All accounts and notes
receivable which will be reflected on the Licensee Closing Date Balance Sheet
(i) will have arisen in the ordinary course of business of the Licensee and
(ii) will be collectible in the ordinary course of business of the Licensee in
the aggregate recorded amounts thereof in accordance with their terms.
3C.20 Tangible Property. Schedule 3C.20 sets forth
all the facilities, machinery, equipment, furniture, leasehold improvements,
fixtures, vehicles, structures, any related capitalized items and other
material tangible property used to conduct the business of the Licensee (the
"Licensee Tangible Property"), all of which are in good operating condition and
repair, subject to continued repair and replacement in accordance with past
practice, and are suitable for their intended use, except for such
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57
items of Licensee Tangible Property which, individually or in the aggregate,
are not material to the conduct of the business of the Licensee.
3C.21 Intangible Property. Schedule 3C.21 sets
forth all patents, trademarks, copyrights, service marks, franchises and trade
names ("Intangible Property"), all applications for any of the foregoing, and
all permits, grants and licenses or other rights running to or from either
Company or the Licensee relating to any of the foregoing. Except as set forth
on Schedule 3C.21, neither Company nor the Licensee has notice of any adversely
held Intangible Property of any other person or notice of any claim of any
other person relating to any of the Intangible Property set forth on Schedule
3C.21 and neither Company nor the Licensee knows of any basis for any such
charge or claim. The Intangible Property has been duly registered in, filed
with, or issued by, the appropriate offices within all jurisdictions where such
registration, filing or issuance is necessarily to protect such Intangible
Property from infringement, including, without limitation, the United States
Copyright Office and the United States Patent and Trademark Office. Sellers
have not granted any license or other rights with respect to the Intangible
Property.
3C.22 Title to Properties. Except for real
property, the Licensee owns outright and has good and marketable title to all
of its properties, including, without limitation, all of the assets reflected
on the Licensee Balance Sheet and the properties described in Sections 3C.18,
3C.19, 3C.20 and 3C.21 and Schedule 3C.17, in each case free and clear of any
Lien, except for (i) Liens specifically described in the notes to the Annual
Licensee Financials or Interim
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Licensee Financials; (ii) Liens securing taxes, assessments, governmental
charges or levies, or the claims of materialmen, carriers, landlords and like
persons, all of which are not yet due and payable or are being contested in
good faith and appropriate amounts have been reserved therefor on the Licensee
Balance Sheet in a manner consistent with generally accepted accounting
principles; or (iii) assets held or used pursuant to any lease listed on a
Schedule.
3C.23 Liabilities. As at the Balance Sheet Date,
the Licensee had no direct or indirect Liabilities that were not fully and
adequately reflected or reserved against on the Licensee Balance Sheet or
described on any Schedule or in the notes to the Annual Licensee Financials or
Interim Licensee Financials. Except as set forth on Schedule 3C.23, the
Licensee has not, except in the ordinary course of business, incurred any
Liabilities since the Balance Sheet Date.
3C.24 Employee Benefit Plans. Schedule 3C.24
contains a true and complete list and summary, as of the date of this
Agreement, of all employee benefit plans (as that term is defined in Section
3(3) of ERISA (as hereinafter defined)) applicable to the employees of Sellers,
each Company and the Licensee. Sellers maintain no other employee benefit
plan. Each of Sellers', each Company's and the Licensee's employee benefit
plans have been operated and administered in all material respects in
accordance with its terms and applicable law, including, without limitation,
ERISA and the Code.
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3C.25 Personnel Information; Labor Contracts.
(a) Schedule 3C.25 contains a true and
complete list of all persons (other than any Seller or any spouse or child of
any Seller) employed by Sellers, each Company and the Licensee, including the
date of hire, a description of material compensation arrangements (other than
employee benefit plans set forth in Schedule 3C.24) and a list of other terms
of any and all material agreements affecting such persons.
(b) Neither Sellers nor the Companies
nor the Licensee is a party to any contract with any labor organization, nor
has any Seller any Company or the Licensee agreed to recognize any union or
other collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of their employees. Neither
Sellers nor any Company nor the Licensee has any knowledge of any
organizational effort currently being made or threatened by or on behalf of any
labor union with respect to its employees. During the past two years, neither
Sellers nor any Company nor the Licensee has experienced any strikes, work
stoppages, grievance proceedings, claims of unfair labor practices filed, or
other significant labor difficulties of any nature.
(c) Each Seller, each Company and the
Licensee has complied in all material respects with all laws relating to the
employment of labor, including, without limitation, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and those laws relating to
wages, hours, collective bargaining,
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unemployment insurance, workers' compensation, equal employment opportunity and
the payment and withholding of taxes.
3C.26 Insurance. Schedule 3C.26 sets forth a list
of all policies or binders of fire, liability, workmen's compensation,
vehicular and other insurance held by or on behalf of either Company or the
Licensee (specifying the insurer, describing each pending claim thereunder of
more than $1,000 and setting forth the aggregate amounts paid out under each
such policy through the date hereof and the aggregate limit, if any, of the
insurer's liability thereunder). Such policies and binders are valid and
binding in accordance with their terms and are in full force and effect.
Neither Company nor the Licensee is in default with respect to any provision
contained in any such policy or binder or has failed to give any notice or
present any claim under any such policy or binder in due and timely fashion.
Except for claims set forth on Schedule 3C.26, there are no outstanding unpaid
claims under any such policy or binder, and neither Company nor the Licensee
has received any notice of cancellation or non-renewal of any such policy or
binder.
3C.27 Officers, Directors and Key Employees.
Schedule 3C.27 sets forth (i) the name and total compensation of each officer
and director of the Licensee (other than any Seller or any spouse or child of
any Seller), (ii) the name and total compensation of each other employee,
consultant, agent or other representative of the Licensee (other than any
Seller or any spouse or child of any Seller) whose current or committed annual
rate of compensation (including bonuses and commissions) exceeds $20,000, (iii)
all wage and salary increases, bonuses and increases in any other
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direct or indirect compensation received by such persons since January 1, 1996,
(iv) any payments or commitments to pay any severance or termination pay to any
such persons, and (v) any accrual for, or any commitment or agreement by either
Company or the Licensee to pay, such increases, bonuses or pay.
3C.28 Operations of the Licensee. Except as set
forth on Schedule 3C.28 undertaken in order to cause the Licensee Closing Date
Balance Sheet to accurately reflect the Forecasted Licensee Closing Date
Balance Sheet, since the Balance Sheet Date the Licensee has not:
(i) declared or paid any dividends or
declared or made any other distributions of any kind to its shareholders, or
made any direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock, Licensee Rights or securities
convertible into or exchangeable for its capital stock or Licensee Rights;
(ii) except for short-term bank
borrowings in the ordinary course of business, incurred any indebtedness for
borrowed money;
(iii) reduced its cash or short-term
investments or their equivalent, other than to meet cash needs arising in the
ordinary course of business, consistent with past practices;
(iv) waived any material right under any
contract or other agreement of the type required to be set forth on any
Schedule;
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(v) made any change in its accounting
methods or practices or made any change in depreciation or amortization
policies or rates adopted by it;
(vi) materially changed any of its
business policies;
(vii) made any loan or advance to any of
its shareholders, officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary course of
business), or made any other loan or advance other than in the ordinary course
of business;
(viii) sold, abandoned or made any other
disposition of any of its properties or made any acquisition of all or any part
of the properties, capital stock or business of any other person;
(ix) paid, directly or indirectly, any of
its material Liabilities before the same became due in accordance with its
terms or otherwise than in the ordinary course of business;
(x) terminated or failed to renew, or
received any written threat (that was not subsequently withdrawn) to terminate
or fail to renew, any Contract set forth on Schedule 3.15;
(xi) amended its Limited Liability
Company Agreement or Certificate of Formation (or comparable instruments) or
merged with or into or consolidated with any other person, subdivided or in any
way reclassified any equity interests or changed or agreed to change in any
manner the rights of its outstanding capital stock or the character of its
business; or
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(xii) engaged in any other material
transaction other than in the ordinary course of business.
3C.29 Potential Conflicts of Interest. No officer,
director or Affiliate of either Company or the Licensee, no Seller and no
Affiliate or Associate of any of the foregoing:
(i) owns, directly or indirectly, in
whole or in part, any property that the Licensee uses in the conduct of its
business, other than the WBHP Sellers Owned Real Property; or
(ii) has any cause of action or other
claim whatsoever against, or owes any amount to, the Licensee, except for
claims in the ordinary course of business such as for accrued vacation pay,
accrued benefits under employee benefit plans, and similar matters and
agreements existing on the date hereof and other claims or causes of action
which will be satisfied or released at or prior to the Closing in connection
with the Sellers causing the Licensee Closing Date Balance Sheet to accurately
reflect the Forecasted Licensee Closing Date Balance Sheet.
3C.30 Banks, Brokers and Proxies. Schedule 3C.30
sets forth (i) the name of each bank, trust company, securities or other broker
or other financial institution with which the Licensee has an account, credit
line or safe deposit box or vault, or otherwise maintains relations; (ii) the
name of each person authorized by the Licensee to draw thereon or to have
access to any safe deposit box or vault; (iii) the purpose of each such
account, safe deposit box or vault; and (iv) the names of all
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persons authorized by proxies, powers of attorney or other instruments to act
on behalf of the Licensee in matters concerning its business or affairs.
4. Representations and Warranties of Each Seller. Each
Seller, severally and not jointly, represents and warrants to the Buyer as
follows:
4.1 Title to the Shares. As of the Closing Date,
such Seller shall own beneficially and of record, free and clear of any Lien,
or shall own of record and have full power and authority to convey free and
clear of any Lien, the Shares set forth opposite such Seller's name on Exhibits
A-1 or A-2, as the case may be, and, upon delivery of and payment for such
Shares as herein provided, such Seller will convey to the Buyer good and valid
title thereto, free and clear of any Lien.
4.2 Authority to Execute and Perform Agreement.
Such Seller has the full legal right and power and all authority and approvals
required to execute and deliver this Agreement and to perform fully such
Seller's obligations hereunder. This Agreement has been duly executed and
delivered by such Seller and (assuming the due authorization, execution and
delivery hereof by the Buyer) is a valid and binding obligation of such Seller
enforceable in accordance with its terms. The execution and delivery by such
Seller of this Agreement, the consummation of the transactions contemplated
hereby and the performance by such Seller of this Agreement in accordance with
its terms (subject to the expiration or early termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), if applicable, and the grant of the Transfer
Application (as defined in Section 6.3 hereof) will not (i) require the
approval or
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consent of any Governmental Body or the approval or consent of any other
person; (ii) violate, conflict with or result in any breach of any of the terms
and conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, any Law or Order of any Governmental Body
applicable to such Seller or to the Shares held by such Seller, or any Contract
to which such Seller is a party or by or to which such Seller is or the Shares
held by such Seller are bound or subject; or (iii) result in the creation of
any Lien on the Shares held by such Seller.
5. Representations and Warranties of the Buyer. The
Buyer represents and warrants to the Sellers as follows:
5.1 Due Incorporation and Authority. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being and as heretofore conducted.
5.2 Authority to Execute and Perform Agreement. The
Buyer has the full legal right and power and all authority and approvals
required to execute and deliver this Agreement and to perform fully its
obligations hereunder and thereunder. This Agreement has been duly executed
and delivered by the Buyer and (assuming, in the case of this Agreement, the
due authorization, execution and delivery hereof by the Sellers) are valid and
binding obligations of the Buyer enforceable in accordance with its respective
terms. Except as set forth in Schedule 5.2. The execution and delivery by the
Buyer of this Agreement, the consummation of the
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transactions contemplated hereby and the performance by the Buyer of its
obligations under this Agreement in accordance with its terms (subject to the
expiration or early termination of the applicable waiting period under the HSR
Act, if applicable, and the grant of the Transfer Application) will not (i)
require the consent or approval of any Governmental Body or any other person;
(ii) conflict with or result in any breach or violation of any of the terms and
conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, the Certificate of Incorporation or By-laws of the
Buyer, any Law or Order of any Governmental Body applicable to the Buyer, or
any Contract to which the Buyer is a party or by or to which the Buyer or any
of its properties is bound or subject; or (iii) result in the creation of any
Lien on any of the properties of the Buyer.
5.3 Securities Laws. Buyer hereby acknowledges that
the Shares have not been registered under the Securities Act of 1933 (the
"Act") or any State Blue Sky laws and, accordingly, may not be offered, sold,
or otherwise transferred, unless such offer, sale or transfer is either
registered pursuant to or is exempt from registration under the Act and any
applicable State Blue Sky law. Buyer represents and warrants that the Shares
are being acquired for Purchaser's own account and for investment only, without
a view to distribution, as that phrase has meaning under the Act, and the rules
and regulations of the Securities and Exchange Commission; and the Buyer's
acquisition of the Shares and the Buyer's continued holding thereof are
consistent wit the Buyer's financial position. Buyer represents that it has
such knowledge and experience in business and financial matters that Buyer has
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been able to understand and evaluate the risks and merits of acquiring and
holding the Shares. Buyer hereby covenants that it will not, directly or
indirectly, offer or sell, pledge, hypothecate or otherwise transfer or dispose
of any of the Shares except pursuant to an effective registration under the Act
and any applicable State Blue Sky laws or pursuant to a transfer that is exempt
from the registration requirements of the Act or any such State Blue Sky laws.
Buyer acknowledges and agrees that the certificates representing the Shares to
be delivered to Buyer of the Closing shall have the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR UNDER THE SECURITIES LAWS OF ANY STATE, AND NO SALE
OR TRANSFER OF THESE SHARES SHALL BE MADE UNLESS REGISTRATION STATEMENTS UNDER
SUCH ACT AND UNDER THE APPLICABLE LAWS OF ANY STATE ARE THEN IN EFFECT WITH
RESPECT TO THESE SHARES OR UNLESS AN EXEMPTION FROM REGISTRATION IS IN FACT
APPLICABLE."
5.4 Compliance with Laws. The Buyer is not in
violation of any applicable Order or Law.
5.5 Claims and Proceedings. Except as set forth on
Schedule 5.5, there are no Claims (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending, or to the
knowledge of the Buyer, threatened, against or involving Buyer or any of its
properties which, individually or in the aggregate, could have a material
adverse effect upon the ability of the Buyer to consummate the Contemplated
Transactions.
5.6 Transfer Application. To the knowledge of
Buyer, there are no facts which, under the Communications Act of 1934, as
amended, or the existing rules and regulations of the Commission, would
disqualify Buyer, as transferee, in connection with the Transfer Application.
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6. Covenants and Agreements.
6.1 Trust Matters. The Buyer agrees that the
trustees of Trust "B" Under Will Of Wilton H. Pollard, Sr., Deceased (the
"Trust") (acting in their capacity as trustees) shall not be personally liable
for any breach by the Trust of any of the Trust's covenants and agreements set
forth in this Agreement or for any breach of the Trust's representations and
warranties set forth in this Agreement. Nothing set forth herein shall be
deemed to limit the joint and several liability of (i) the Trust and Wilton H.
Pollard, Jr. for liabilities of the WBHP Sellers and (ii) the Trust, Wilton H.
Pollard, Jr. and J. Mack Bramlett for liabilities of the Sellers.
6.2 Conduct of Business. From the date hereof
through the Closing Date, the WBHP Sellers, jointly and severally, covenant and
agree with respect to WBHP, the Dixie Seller covenants and agrees with respect
to Dixie and the Sellers, jointly and severally, covenant and agree with
respect to the Licensee (and the Buyer agrees that the Sellers shall have the
right to and may):
(i) take any and all such actions as shall be
necessary to pay out, adjust, receive, dispose of, transfer, sell, give away,
or change the assets, liabilities, capital expenses and income of the
Companies, to cause the balance sheets of each of WBHP, Dixie and the Licensee
on the Closing Date to be as set forth in Exhibits 6.2A (the "Forecasted WBHP
Closing Date Balance Sheet"), 6.2B (the "Forecasted Dixie Closing Date Balance
Sheet") and 6.2C (the "Forecasted Licensee
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Closing Date Balance Sheet"), respectively, including, without limitation, such
actions as may be necessary to cause the Net Working Capital of the Licensee
(as defined in Section 7.9) on the Closing Date to be not less than $1 million
(herein collectively referred to as the "Adjustments");
(ii) except to the extent required to make
the Adjustments allowed in Section 6.2(i) above, to comply with Sections 1.1,
1.3 and 2 of this Agreement and to satisfy the conditions to Closing set forth
in Section 7.11, cause each Company and the Licensee to conduct its business in
the ordinary course and, without the prior written consent of the Buyer, shall
not undertake any of the actions prevented in Sections 3A.23, in the case of
WBHP, 3B.23, in the case of Dixie, and 3C.28, in the case of the Licensee;
(iii) cause the Licensee to conduct its
business in such a manner so that as of the Closing Date the Net Barter
Liability (as defined in Section 7.10) of the Licensee shall not exceed
$50,000;
(iv) cause each Company and the Licensee to
refrain from entering into any lease, contract or agreement between the date
hereof and the Closing Date except in the ordinary course of business and the
duration and value of which shall not exceed two months or $5,000.00,
respectively, without the prior consent of Buyer; and
(v) cause the Licensee to refrain from
entering into any barter agreement as of the date hereof without the prior
consent of Buyer.
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From the date hereof through the Closing Date, each
Seller, severally and not jointly, covenants and agrees to conduct such
Seller's affairs in such a manner so that the representations and warranties of
such Seller contained in Article 4 shall continue to be true and correct on and
as of the Closing Date as if made on and as of the Closing Date. The Sellers
shall give the Buyer prompt notice of any event, condition or circumstance
occurring from the date hereof through the Closing Date that would constitute a
violation or breach of any representation or warranty, whether made as of the
date hereof or as of the Closing Date, or that would constitute a violation or
breach of any covenant or agreement of any Seller contained in this Agreement.
6.3 Transfer Application. As promptly as
practicable after the date of this Agreement, and in no event later than ten
(10) days after execution of this Agreement, Sellers and Buyer shall join in
and file an application on Commission Form 315 with the Commission requesting
its consent to the transfer of control of the Licensee from Sellers to Buyer
(the "Transfer Application"). Sellers and Buyer agree to prosecute the
Transfer Application with all reasonable diligence and to use their best
efforts to obtain prompt Commission grant of the Transfer Application filed at
the Commission.
6.4 Performance. Buyer and Sellers shall perform
all acts required of them under this Agreement and refrain from taking or
omitting to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing Date.
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6.5 Conditions. If any event should occur, either
within or without the control of any party hereto, which would prevent
fulfillment of the conditions placed upon the obligations of any party hereto
to consummate the transactions contemplated by this Agreement, the parties
hereto shall use their best efforts to cure the event as expeditiously as
possible.
6.6 Cooperation. Buyer and Sellers shall cooperate
fully and with each other in taking any actions to obtain the required consent
of any governmental instrumentality or any third party necessary or helpful to
accomplish the transactions contemplated by this Agreement; provided, however,
that no party shall be required to take any action which would have a material
adverse effect upon it or any entity affiliated with it.
6.7 Expenses. The parties to this Agreement shall,
except as otherwise specifically provided herein, bear their respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel and
accountants.
6.8 Indemnification of Brokerage. Buyer represents
and warrants to Sellers that, except for Stan Raymond & Associates ("Raymond"),
no broker, finder, agent or similar intermediary has acted on behalf of the
Buyer in connection with this Agreement and that, except for fees owed to
Raymond (the "Buyer Broker Fee"), there are no brokerage commissions, finder's
fees or similar fees or commissions payable in connection therewith based on
any agreement, arrangement or
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understanding with the Buyer, or any action taken by the Buyer. The Buyer
shall retain, or following the Closing may cause any or all of the Companies
and the Licensee to assume, all liability with respect to payment of the Buyer
Broker Fee to Raymond. The Buyer agrees to indemnify and save the Sellers
harmless from any claim or demand for any commission or other compensation by
any other broker, finder, agent or similar intermediary claiming to have been
employed by or on behalf of the Buyer, and to bear the cost of legal expenses
incurred in defending against any such claim. The Sellers, jointly and
severally, represent and warrant to the Buyer, that no broker, finder, agent or
similar intermediary has acted on behalf of any or all of the Sellers, the
Companies or the Licensee in connection with the Contemplated Transactions.
The Sellers, jointly and severally, agree to indemnify and save the Buyer
harmless from any claim or demand for commissions or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed by
or on behalf of any or all of the Sellers, the Companies and the Licensee and
to bear the cost of legal expenses incurred in defending against any such
claim.
6.9 Related Parties. At or prior to the Closing,
Sellers shall cause any amounts owed to any one of them or to any Affiliate or
Associate of any Seller to be paid or otherwise satisfied; as of the effective
time of Closing, any debts of either Company and/or the Licensee, as the case
may be, then owed to any of the Sellers or to any Affiliate or Associate of any
of the Sellers shall be canceled, except as reflected on any of the Closing
Date Balance Sheets delivered pursuant to Section 7.11 hereof.
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6.10 Hart-Scott-Rodino. If required, the Sellers
and the Buyer shall use their best efforts to cause the Notification and Report
Form required to be filed under the HSR Act to be filed in a timely manner, and
to obtain early termination of the waiting period thereunder.
6.11 Cooperation Regarding Accounts Receivable.
During the period of 180 days following the Closing Date (the "Collection
Period"), Buyer shall use reasonable efforts, as Sellers' agent, to collect and
receive all sums payable on account of any indebtedness arising out of the
operation of the Stations prior to the Closing Date which is not recorded as an
asset of the Companies or the Licensee on the WBHP Closing Date Balance Sheet,
the Dixie Closing Date Balance Sheet or the Licensee Closing Date Balance Sheet
(the "Non-Transferred Accounts Receivable"). Buyer shall not be required to
institute any legal proceedings to enforce the collection of any
non-Transferred Accounts Receivable, nor incur any other expenses in connection
therewith. Buyer shall not adjust any Non-Transferred Accounts Receivable or
grant credit with respect thereto without Sellers' written consent. Such
Non-Transferred Accounts Receivable shall be remitted by Buyer to Sellers
promptly following (and in any event within 10 days following) collection
thereof. At the end of the Collection Period, Buyer shall transfer to Sellers
the uncollected Non- Transferred Accounts Receivable and Buyer's responsibility
for the collection of Non-Transferred Accounts Receivable shall cease and
Sellers shall be solely responsible for the collection of the balance of the
Non-Transferred Accounts Receivable. During the Collection Period, payments
received from advertisers which are not otherwise
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specifically designated by the advertisers shall be allocated so that the
oldest accounts receivable shall be paid first and the most recent last.
Notwithstanding the foregoing, no payments shall be applied to obligations
disputed by any account debtor; in any such event, the disputed Non-Transferred
Accounts Receivable, to the extent disputed, shall be turned back to Sellers
for resolution promptly on receipt of notification of such dispute.
At any time during or after the Collection Period, if Buyer or
Sellers receive any third party payment to which another party hereto is
entitled, such receiving party shall promptly (and in any event within 10 days
following receipt thereof) deliver such payment to the party hereto entitled to
receipt thereof.
6.12 Tax Matters.
(a) The WBHP Sellers, with respect to
WBHP, the Dixie Seller, with respect to Dixie, and the Sellers, with respect to
the Licensee, shall prepare and file, or cause to be prepared and filed, all
WBHP, Dixie and Licensee Tax Returns for taxable periods ending on or before
the Closing Date required to be filed before, on, or after the Closing Date as
promptly as possible, but in no event later than the due dates thereof, as such
dates may be extended, and, without limiting the Buyer's obligations set forth
in Section 6.12(c), shall pay, or cause to be paid, all Taxes shown as due on
such Tax Returns.
(b) Subject to the provisions of Section
6.12(d), the WBHP Sellers, with respect to WBHP, the Dixie Seller, with respect
to Dixie, and the Sellers, with respect to the Licensee, shall be liable to the
Buyer for any and all Taxes
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due or payable by WBHP, Dixie or Licensee, as the case may be, for any taxable
year or tax period ending on or before the Closing Date. Taxes for which the
WBHP Sellers, with respect to WBHP, the Dixie Seller, with respect to Dixie,
and the Sellers, with respect to the Licensee, liable shall include, without
limitation, Taxes with respect to any such taxable year or tax period that are
due or payable by WBHP, Dixie or Licensee, as the case may be, and result from
or arise out of the sale of the Shares on the Closing Date as contemplated by
this Agreement.
(c) Subject to the provisions of Section
6.12(b), the Buyer and WBHP, Dixie or Licensee, as the case may be, shall be
liable for any and all Taxes due or payable by WBHP, Dixie or Licensee for any
taxable year or tax period beginning on or after the Closing Date.
(d) Any Taxes for a tax period beginning
before the Closing Date and ending after the Closing Date shall be apportioned
between the WBHP Sellers, with respect to WBHP, the Dixie Seller, with respect
to Dixie, and the Sellers, with respect to Licensee, and the Buyer, in the case
of real and personal property taxes and franchise taxes not based on gross or
net income, on a per diem basis and, in the case of other Taxes, shall be
determined based on the actual operations of the WBHP, Dixie or Licensee, as
the case may be, during the portion of such period ending on the Closing Date
and the portion of such period beginning on the day following the Closing Date.
Each such portion of such period shall be deemed to be a tax period subject to
the provisions of Sections 6.12(b) and 6.12(c) above.
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(e) Except as set forth in Section
5.7(a), the Buyer shall cause the Companies and the Licensee to file any
federal, state, local or foreign Tax Return required to be filed after the
Closing Date with respect to the business, activities or assets of WBHP, Dixie
or Licensee, as the case may be, and, without limiting the Sellers' obligations
set forth in Sections 6.12(b) and 10.1, the Buyer shall pay or cause its
subsidiaries or affiliates to pay all Taxes shown as due on any such return.
(f) Any refunds or credits of Taxes that
were paid in respect of a taxable year or tax period (including a period deemed
to be a tax period under Section 6.12(d)) of WBHP, Dixie or Licensee, as the
case may be, ending on or before the Closing Date shall be for the account of
the WBHP Sellers, with respect to WBHP, the Dixie Seller, with respect to
Dixie, and the Sellers, with respect to the Licensee, and any refund or credits
of Taxes that were paid in respect of a taxable year or tax period (including a
period deemed to be a tax period under Section 6.12(d)) of WBHP, Dixie or
Licensee, as the case may be, beginning on or after the Closing Date shall be
for the account of the Buyer. The Buyer or the WBHP Sellers, with respect to
WBHP, the Dixie Seller, with respect to Dixie, and the Sellers, with respect to
the Licensee, as the case may be, shall pay the amount of any such refunds or
credits to the other party within fifteen (15) days after receipt thereof. The
preceding sentences shall not apply to any refunds or credits to the extent
such refunds or credits relate to a net operating loss generated during a tax
period beginning after the Closing Date which, at
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the election of the Buyer, is carried back to a taxable year or tax period
ending prior to the Closing Date, all of which refunds or credits shall be for
the account of the Buyer.
(g) If the Buyer, or WBHP, Dixie or
Licensee, as the case may be, becomes aware of any assessment, official
inquiry, examination or proceeding that could result in an official
determination with respect to any Tax for which the Sellers, or any of them,
could be liable pursuant to Sections 6.12(b) and 10.1, the Buyer shall promptly
so notify such Sellers in writing. If any Sellers, or any of them, becomes
aware of any official inquiry, examination or proceeding that could result in
an official determination with respect to Taxes related to the business,
activities or assets of the Companies or the Licensee, such Seller shall
promptly so notify the Buyer in writing.
(h) Subject to the next to the last
sentence of this Section 6.12(h), the WBHP Sellers, with respect to WBHP, the
Dixie Seller, with respect to Dixie, and the Sellers, with respect to the
Licensee, shall have the right to exercise control over the contest and/or
settlement of any issue raised in any official inquiry, examination or
proceeding with respect to any return for federal income taxes or any inquiry,
examination or proceeding that relates only to Taxes for which such Seller is
or Sellers are liable to the Buyer under Sections 6.12(b) and 10.1, and such
Seller or Sellers shall pay any expenses incurred in connection therewith;
provided, however, that such Seller or Sellers may not settle or compromise any
issue that could affect the liability of any Company or the Licensee for any
tax period beginning on or after the Closing Date without the consent of the
Buyer, which consent shall not be
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unreasonably withheld. The Buyer shall cooperate with such Seller or Sellers,
as such Seller or Sellers may reasonably request, in any such inquiry,
examination or proceeding. If the Seller or Sellers do not notify the Buyer in
writing within 30 days after receipt of notice as provided in Section 6.12(g)
of any such inquiry, examination or proceeding, that they elect to exercise
control over the contest and/or settlement thereof (and acknowledge their
obligation to indemnify the Buyer with respect thereto pursuant to Section
10.1(ii)), the Buyer shall exercise such control, and the WBHP Sellers with
respect to WBHP, the Dixie Seller, with respect to Dixie, and the Sellers, with
respect to the Licensee, shall pay any reasonable expenses connected therewith.
No settlement of any inquiry, examination or proceeding over which the Buyer
shall exercise control and with respect to which the Sellers or any of them
have acknowledged their obligation to indemnify the Buyer pursuant to Section
10.1 shall be made without the consent of such Seller or Sellers (which consent
shall not be unreasonably withheld).
i) Except as provided in Section
6.12(h), the Buyer shall have the right to exercise control over the contest
and/or settlement of any issue raised in any official inquiry, examination or
proceeding with respect to Taxes related to the business, activities or assets
of any Company or the Licensee; provided that the Buyer shall keep the WBHP
Sellers, with respect to WBHP, the Dixie Seller, with respect to Dixie, and the
Sellers, with respect to the Licensee, informed of all material developments
with respect to such inquiry, examination or proceeding if it relates to any
Tax for which the WBHP Sellers could be liable under Section 6.12(b) and 10.1
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the Buyer shall not settle or compromise any such inquiry, examination or
proceeding that relates to any Tax for which the WBHP Sellers, with respect to
WBHP, the Dixie Seller, with respect to Dixie, and the Sellers, with respect to
the Licensee, could be liable under Sections 6.12(b) and 10.1, except after
good faith consultation with the WBHP Sellers, with respect to WBHP, the Dixie
Seller, with respect to Dixie, and the Sellers, with respect to the Licensee,
concerning such settlement or compromise. Any reasonable expenses incurred in
connection therewith shall (a) be paid by the WBHP Sellers, with respect to
WBHP, the Dixie Seller, with respect to Dixie, and the Sellers, with respect to
the Licensee, to the extent that they relate to any Tax for which such Seller
or Sellers could be liable under Sections 6.12(b) and 10.1 (including any Tax
for a period deemed to be a tax period under Sections 6.12(d)) and (b) shall be
paid by the Buyer to the extent that such expenses relate to a Tax for which
the Buyer could be liable pursuant to Section 6.12(c) and 10.2 (including any
Tax for a period deemed to be a tax period under Section 6.12(d)). The Sellers
shall cooperate with the Buyer, as the Buyer may reasonably request, in any
such inquiry, examination or proceeding.
6.13 Real Property. Prior to the Closing Date, the
Sellers shall have obtained the written consent of the lessor to the assignment
by Dixie to the Licensee of Dixie's right and interest in and under the
Licensee Real Property Contract identified in paragraph 1 of Schedule
3C.18(b)(i).
6.14 Further Assurances. Each of the parties shall
execute such Documents and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such
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party shall use its best commercially reasonable efforts to fulfill or obtain
the fulfillment of the conditions to the Closing set forth in Articles 7 and 8.
7. Conditions Precedent to the Obligation of the Buyer
to Close. The obligation of the Buyer to enter into and complete the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by it (except for the
condition set forth in Section 6.9):
7.1 Representations and Covenants. Except as
contemplated by Section 6.13 hereof, the representations and warranties of
Sellers (including the representations and warranties of the WBHP Sellers and
of the Dixie Seller) contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date (it being understood, with respect to the
representations and warranties set forth in Section 3A.8, 3B.8 and 3C.7, that
the Closing Date representation being made is that such financial statements
fairly present the financial position of the Company or the Licensee covered
thereby as of the dates of the balance sheets referenced in such Sections and
the results of operations of the Company or Licensee covered thereby for the
respective periods covered by such financial statements, in each case in
accordance with generally accepted account principles consistently applied for
the periods covered thereby). Sellers shall have performed and complied with
all the terms, conditions, covenants and agreements required by this Agreement
to be performed or complied with by Sellers on or prior to the Closing Date.
Sellers shall have delivered to Buyer a
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certificate, dated the Closing Date and signed by each Seller, to the foregoing
effect and stating that all conditions to Buyer's obligations hereunder have
been satisfied.
7.2 Commission and Governmental Approvals.
Notwithstanding anything herein to the contrary, the consummation of this
Agreement is conditioned upon (a) a grant by the Commission of the Transfer
Application, and (b) compliance by the parties with the conditions, if any,
imposed by the Commission in connection with the grant of the Transfer
Application (provided that neither party shall be required to accept or comply
with any condition which would be unreasonably burdensome or which would have a
materially adverse effect upon it). All required governmental filings shall
have been made, and all requisite governmental approvals for the consummation
of the transactions contemplated hereby shall have been granted. Each
Station's Commission licenses shall be in unconditional full force and effect,
shall be valid, as of the Closing Date, for the license term applicable
generally to radio stations licensed to communities located in the State of
Alabama, and shall be unimpaired by any acts or omissions of Sellers' employees
or agents, or Sellers.
7.3 Third Party Consents. All consents, permits and
approvals from parties to contracts or other agreements with each Company, the
Licensee or with Sellers that may be required in connection with the
performance by Sellers of their obligations under this Agreement or the
continuance of such contracts or other agreements with each Company, the
Licensee or Sellers after the Closing shall have been obtained.
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7.4 Delivery of Stock Certificates; Transfer Taxes.
Sellers shall have delivered to Buyer at the Closing stock certificates
representing all of the Shares duly endorsed in blank or accompanied by stock
powers duly executed in blank, in proper form for transfer. Sellers shall have
paid, or caused to be paid, all stock transfer and other taxes, if any,
required to be paid in connection with the sale and delivery to Buyer of the
Shares, and shall have caused all appropriate stock transfer tax stamps, if
any, to be affixed to the certificate or certificates representing the Shares.
7.5 Opinions of Counsel. Sellers shall have
delivered to Buyer opinions of Lange, Simpson, Robinson & Somerville, counsel
to Sellers, and Wiley, Rein & Fielding, counsel to Sellers for Commission
matters, each dated the date of the Closing, addressed to the Buyer,
substantially in the forms attached hereto as Exhibit B and Exhibit C,
respectively.
7.6 Title Commitment. Sellers shall have obtained a
title policy issued on the Closing Date for an ALTA 92 Owner's Policy of title
insurance in favor of Buyer with respect to each parcel of the Licensee Owned
Real Property issued by a title insurer reasonably acceptable to both Buyer and
Seller in the amount of the reasonably estimated fair market value of the
Licensee Owned Real Property, which title policy may be subject only to the
Title Defects listed on Schedule 3C.18(a)(ii) (the "Title Commitment"). The
reasonable cost of the Title Commitment shall be paid by Buyer.
7.7 Survey. Sellers shall at its own expense order
a current survey reasonably acceptable to Buyer in insurable form and prepared
in accordance
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with standards applicable to registered and licensed land surveyors making
surveys in the states in which such parcels are located and in accordance with
the further provisions of this Section 7.7 of each parcel of the Licensee Owned
Real Property prepared by a surveyor licensed by the State of Alabama, which
survey shall include (a) any encroachments from adjoining parcels onto the
Licensee Owned Real Property; (b) the distances and bearings of all boundaries
of the Licensee Owned Real Property and whether any improvements of Sellers
encroach on any real property not part of the Licensee Owned Real Property; and
(c) any special flood hazard area as designated by any governmental body
affecting the Licensee Owned Real Property (the "Survey"). Each such Survey
shall be certified to (i) the Buyer, (ii) the Licensee and (iii) the Title
Company and shall show (A) the courses and distances of all boundary lines of
such parcel (including appurtenant easements); (B) the location of all
Improvements situated on or above such parcel and on or above any easements or
rights of way affecting such parcel; (C) all encroachments of adjoining
properties or improvements onto such parcel; (D) all encroachments of
Improvements onto any adjoining property; (E) the location of all easements and
other rights burdening such parcel and all encroachments of Improvements onto
the areas of such easements; (F) the location of all roadways, alleys, rights
of way and the like affecting such parcel; (G) all accessways from such parcel
to public streets; and (H) such other facts and conditions affecting such
parcel as are appropriate, or as may have been reasonably requested by the
Buyer, to be shown on such survey. Each such Survey shall otherwise be in form
satisfactory to the Buyer. In addition to causing such Survey or Surveys to be
delivered to the Buyer, the Sellers
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shall certify to the Buyer that no encroachments or other facts or conditions
affecting any parcel of Licensee Owned Real Property revealed by any such
Survey, individually or in the aggregate, (i) interfere in any material respect
with, or materially increase the cost of, the use, occupancy or operation
thereof as currently used, occupied and operated or (ii) materially reduce the
fair market value thereof below the fair market value such parcel would have
had but for such encroachment or other fact or condition.
7.8 Landlord Estoppel Certificate. The Buyer shall
have received, at the Sellers' expense, a current estoppel certificate from the
landlord under each Licensee Real Property Contract (each, a "Real Property
Contract") stating (i) that the Licensee is the Lessee thereunder, (ii) that
such Real Property Contract is in full force and effect and has not been
amended, modified or supplemented other than as set forth on Schedule
3C.18(b)(i); (iii) that all rent and other sums and charges payable under such
Real Property Contract are current, and setting forth the date through which
such payments have been made; (iv) the amount of any tenant security or other
similar deposit held by or on behalf of such landlord under such Real Property
Contract; (v) that no notice of default on the part of any Company or the
Licensee, as the case may be, or termination notice has been served under such
Real Property Contract which remains outstanding; (vi) that, to the knowledge
of such landlord, no uncured default or termination event or condition exists
under such Real Property Contract, and that no event has occurred or condition
exists which, with the giving of notice or the lapse of time or both, would
constitute such a default or termination event or condition; and (vii) that the
consummation of the Contemplated Transactions will not constitute a
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default under such Real Property Contract or grounds for the termination
thereof or for the exercise of any other right or remedy adverse to the
interests of the tenant thereunder.
7.9 Net Working Capital. The net working capital of
the Licensee, consisting of cash, accounts receivable, accounts payable and
accrued expenses exclusive of barter agreements, if any (the "Net Working
Capital"), at the Closing Date shall equal $1,000,000.
7.10 Net Barter Liability. The difference, if
negative, between the value of time owed under barter agreements to which the
Stations are a party or by which it is bound and the value of goods and
services to be received under such agreements (the "Net Barter Liability") on
the Closing Date shall not have exceeded $50,000.
7.11 Closing Date Balance Sheets. The WBHP Sellers
shall have delivered to Buyer a certificate of such Sellers, dated the Closing
Date, to the effect that (i) attached thereto is a true, correct and complete
copy of the balance sheet of WBHP immediately following the Closing (the "WBHP
Closing Date Balance Sheet"), (ii) such WBHP Closing Date Balance Sheet
accurately reflects the financial condition of WBHP immediately following the
Closing (but without giving effect to any change which may result from Buyer's
actions at or following the Closing) and (iii) such WBHP Closing Date Balance
Sheet is in all material respects identical to the Forecasted WBHP Balance
Sheet. The Dixie Sellers shall have delivered to Buyer a certificate of such
Seller, dated the Closing Date, to the effect that (i) attached thereto
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is a true, correct and complete copy of the balance sheet of Dixie immediately
following the Closing (the "Dixie Closing Date Balance Sheet"), (ii) such Dixie
Closing Date Balance Sheet accurately reflects the financial condition of Dixie
immediately following the Closing (but without giving effect to any change
which may result from Buyer's actions at or following the Closing Date) and
(iii) such Dixie Closing Date Balance Sheet is in all material respects
identical to the Forecasted Dixie Balance Sheet. The Sellers shall have
delivered to Buyer a certificate of such Sellers, dated the Closing Date, to
the effect that (i) the conditions set forth in Sections 7.9 and 7.10 have been
satisfied, (ii) attached thereto is a true, complete and correct copy of the
balance sheet of the Licensee immediately following the Closing (the "Licensee
Closing Date Balance Sheet"), (iii) such Licensee Closing Date Balance Sheet
accurately reflects the financial condition of the Licensee immediately
following the Closing (but without giving effect to any change which may result
from Buyer's actions at or following the Closing Date), and (iv) such Licensee
Closing Date Balance Sheet is in all material respects identical to the
Forecasted Licensee Closing Date Balance Sheet.
7.12 No Claims. No Order by any Governmental Body
shall have been issued enjoining or restraining, and no Claims shall be pending
before any Governmental Body to restrain or prohibit, the consummation of the
Contemplated Transactions.
7.13 Hart-Scott-Rodino. If applicable, any
applicable waiting period under the HSR Act shall have expired or been
terminated.
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7.14 Consulting Agreements. Each of Bramlett
Broadcast Consulting Company, Inc. and Pollard Broadcasting, Inc. shall have
executed and delivered to Buyer a Consulting Agreement substantially in the
form of Exhibit E (each a "Consulting Agreement").
8. Conditions Precedent to the Obligation of the Sellers
to Close. The obligation of the Sellers to enter into and complete the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by the Sellers (except for
the condition set forth in Section 8.4):
8.1 Representations and Covenants. The
representations and warranties of the Buyer contained in this Agreement shall
be true on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. The Buyer shall have performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. The Buyer
shall have delivered to the Sellers a certificate, dated the date of the
Closing and signed by an officer of the Buyer, to the foregoing effect.
8.2 Opinion of Counsel to the Buyer. The Sellers
shall have received the opinion of Paul, Weiss, Rifkind, Wharton & Garrison,
counsel to the Buyer, dated the date of the Closing, addressed to the Sellers,
substantially in the form of Exhibit D.
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8.3 No Claims. No Order by any Governmental Body
shall have been issued enjoining or restraining, and no Claims shall be pending
before any Governmental Body to restrain or prohibit, the consummation of the
Contemplated Transactions.
8.4 Hart-Scott-Rodino. Any applicable waiting
period, if applicable, under the HSR Act shall have expired or been terminated.
8.5 Commission and Governmental Approvals.
Notwithstanding anything herein to the contrary, the consummation of this
Agreement is conditioned upon (a) a grant by the Commission of the Transfer
Application, and (b) compliance by the parties with the conditions, if any,
imposed by the Commission in connection with the grant of the Transfer
Application (provided that neither party shall be required to accept or comply
with any condition which would be unreasonably burdensome or which would have a
materially adverse effect upon it). All required governmental filings shall
have been made, and all requisite governmental approvals for the consummation
of the transactions contemplated hereby shall have been granted
8.6 Consulting Agreements. Buyer shall have
executed and delivered to each of Bramlett Broadcast Consulting Company, Inc.
and Pollard Broadcasting, Inc. a Consulting Agreement substantially in the form
of Exhibit E.
9. Survival of Representations and Warranties of the
Sellers After Closing. Notwithstanding any right of the Buyer fully to
investigate the affairs of each Company and the Licensee and notwithstanding
any knowledge of facts determined or determinable by the Buyer pursuant to such
investigation or right of investigation, the
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Buyer has the right to rely fully upon the representations, warranties,
covenants and agreements of the Sellers contained in this Agreement or in any
documents delivered pursuant to this Agreement. All such representations,
warranties, covenants and agreements shall survive the execution and delivery
of this Agreement and the Closing hereunder. Except as otherwise specifically
provided in this Agreement and except for all representations and warranties in
Article 4 and the representations and warranties contained in Sections 3A.4,
3A.5, 3A.22, 3B.4, 3B.5, 3B.22, 3C.4, and 3C.28, all representations and
warranties of the Sellers contained in this Agreement or in any Documents
delivered pursuant to this Agreement shall thereafter terminate and expire (i)
on March 31, 1999, with respect to any General Claim (as defined below) as to
which the Buyer shall not have given a Claims Notice (as defined in Section
10.3.1) on or prior to such date, and (ii) with respect to any Tax Claim (as
defined below) on the later of (a) the date upon which the liability to which
any such Tax Claim may relate is barred by all applicable statutes of
limitations or (b) the date upon which any claim for refund or credit related
to such Tax Claim is barred by all applicable statutes of limitations. As used
in this Agreement, the following terms have the following meanings:
(x) "General Claim" means any claim
(other than a Tax Claim) based upon, arising out of or otherwise in respect of
any inaccuracy in or any breach of any representation or warranty of the
Sellers or of any Seller contained in this Agreement or in any documents
delivered pursuant to this Agreement.
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(y) "Tax Claim" means any claim based
upon, arising out of or otherwise in respect of any inaccuracy in or any breach
of any representation or warranty of the Sellers contained in this Agreement or
in any Documents delivered pursuant to this Agreement related to Taxes.
10. General Indemnification.
10.1 Obligation of the Sellers to Indemnify.
i) Subject to the limitations contained
in Article 9, the Sellers jointly and severally agree to indemnify, defend and
hold harmless the Buyer (and its directors, officers, employees, Affiliates,
successors and assigns) from and against any and all losses, liabilities,
damages, deficiencies, demands, claims, actions, judgments or causes of action,
assessments, costs or expenses (including, without limitation, interest,
penalties and attorneys' fees and disbursements) ("Losses") based upon, arising
out of or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Sellers contained in
this Agreement or in any documents delivered pursuant to this Agreement, with
the exception of Sections 3A, 3B and 4 and with the further exception of
Section 6.12, but only to the extent that the breach of such Section is not of
a covenant applicable to all Sellers.
ii) Subject to the limitations contained
in Article 9, the WBHP Sellers jointly and severally agree to indemnify, defend
and hold harmless the Buyer (and its directors, employees, officers,
Affiliates, successors and assigns) from and against all Losses based upon,
arising out of or otherwise in respect of
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(1) any inaccuracy in or any breach of any representation or warranty of the
WBHP Sellers contained in Section 3A or in any documents delivered pursuant to
Section 3A and (2) any breach by the WBHP Sellers of the covenants applicable
to the WDRM Sellers set forth in Section 6.12.
iii) Subject to the limitations contained
in Article 9, the Dixie Seller agrees to indemnify, defend and hold harmless
the Buyer (and its directors, employees, officers, Affiliates, successors and
assigns) from and against all Losses based upon, arising out of or otherwise in
respect of (1) any inaccuracy in or any breach of any representation or
warranty of the Dixie Seller contained in Section 3B or in any documents
delivered pursuant to Section 3B and (2) any breach by the Dixie Seller of the
covenants applicable to the Dixie Seller set forth in Section 6.12.
iv) Each Seller agrees to indemnify,
defend and hold harmless the Buyer (and its directors, employees, officers,
Affiliates, successors and assigns) from and against all Losses based upon,
arising out of or otherwise in respect of any inaccuracy in or any breach of
any representation or warranty of such Seller contained in Article 4 or in any
documents delivered pursuant to Article 4.
10.2 Obligation of the Buyer to Indemnify. The Buyer
agrees to indemnify, defend and hold harmless the Sellers from and against all
Losses based upon, arising out of or otherwise in respect of any inaccuracy in
or any breach of any representation, warranty, covenant or agreement of the
Buyer contained in this Agreement or in any Documents delivered pursuant to
this Agreement.
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10.3 Notice and Opportunity to Defend.
10.3.1 Notice of Asserted Liability.
Promptly after receipt by any party hereto (the "Indemnitee") of notice of any
demand, claim or circumstances which, or which with the lapse of time, would or
might give rise to a claim or the commencement (or threatened commencement) of
any action, proceeding or investigation (an "Asserted Liability") that may
result in a Loss, the Indemnitee shall give notice thereof (the "Claims
Notice") to any other party (or parties) obligated to provide indemnification
pursuant to Section 10.1 or 10.2 (the "Indemnifying Party"). The Claims Notice
shall describe the Asserted Liability in reasonable detail, and shall indicate
the amount (estimated, if necessary and to the extent feasible) of the Loss
that has been or may be suffered by the Indemnitee.
10.3.2 Opportunity to Defend. The
Indemnifying Party may elect to compromise or defend, at its own expense and by
its own counsel (which shall be reasonably satisfactory to the Indemnitee), any
Asserted Liability, unless in the reasonable judgment of the Indemnitee, there
may be one or more legal defenses available to it that are different from or in
addition to those available to the Indemnifying Party and, therefore, it is
advisable for the Indemnitee to be represented by separate counsel. Then, in
such event, the Indemnitee shall have the right to employ separate counsel to
represent it (which shall be reasonably satisfactory to the Indemnifying
Party), in which event the fees and disbursements of such counsel shall be
subject to indemnification hereunder but in no event shall the Indemnifying
Party be liable for the fees and disbursements of more than one separate
counsel for all
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Indemnitees. If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within 30 days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnitee of its intent to do so,
and the Indemnitee shall cooperate, at the expense of the Indemnifying Party,
in the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend any claim, the Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control that are necessary or
appropriate for such defense.
11. Termination of Agreement.
11.1 Termination.
(a) Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may be terminated at any
time by:
i) the mutual written consent of
the parties hereto;
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ii) either Buyer or Sellers if the
Closing does not occur before June 30, 1997; provided, however, that the party
seeking termination under this Section 11.1(a)(ii) shall not have prevented the
Closing from occurring;
iii) either Buyer or Sellers if the
Transfer Application is not granted within nine (9) months from the date the
Commission Form 315 is placed on Commission public notice (through no fault of
the terminating party) or is denied by the Commission by a Final Order or is
designated for hearing by the Commission; provided, however, that, in the event
the Transfer Application is designated for hearing by the Commission, the
provisions of Section 11.1(e) shall apply;
iv) Buyer, if any of the conditions
set forth in Section 7 shall have become incapable of fulfillment, and shall
not have been waived by Buyer, or if Sellers or the Company shall have breached
in any material respect any of their representations, warranties or obligations
hereunder and such breach shall not have been cured in all material respects or
waived prior to the Closing; or
v) Sellers, if any of the
conditions set forth in Section 8 shall have become incapable of fulfillment,
and shall not have been waived by Sellers, or if Buyer shall have breached in
any material respect any of its representations, warranties or obligations
hereunder and such breach shall not have been cured in all material respects or
waived prior to the Closing.
(b) In the event of the termination of this
Agreement by Buyer or Sellers pursuant to this Section 11.1, written notice
thereof shall promptly be
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given to the other party and, except as otherwise provided herein, the
transactions contemplated by this Agreement shall be terminated, without
further action by any party.
(c) In the event Sellers terminates this
Agreement under Section 11.1(a)(ii), (iii) or (v) Buyer shall forfeit the
Escrow Deposit to Seller, except in the event Buyer also has the right to
terminate under Section 11.1(a)(ii) or (iii) in which case the Escrow Deposit
shall be returned to Buyer.
(d) In the event Buyer terminates this
Agreement under Section 11.1(a)(ii), (iii) or (iv) the Escrow Deposit shall be
returned to Buyer.
(e) The time for Commission approval
provided in Section 11.1(a)(iii) notwithstanding, either party may terminate
this Agreement upon written notice to the other, if, for any reason, the
Transfer Application is designated for hearing by the Commission; provided,
however, that written notice of termination must be given within twenty (20)
days after release of the Hearing Designation Order and that the party giving
such notice is not in default and has otherwise complied with its obligations
under this Agreement. Upon termination pursuant to this Section, the parties
shall be released and discharged from any further obligation hereunder and the
Escrow Deposit shall be returned to Buyer.
(f) It is further provided, however, that no
party may terminate this Agreement if such party is in default hereunder, or if
a delay in any decision or determination by the Commission respecting the
Transfer Application has been caused or materially contributed to (i) by any
failure of such party to furnish, file
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or make available to the Commission information within its control; (ii) by the
willful furnishing by such party of incorrect, inaccurate or incomplete
information to the Commission; and (iii) by any other action taken by such
party for the purpose of delaying the Commission's decision or determination
respecting the Transfer Application. Upon such termination for failure of the
Commission to act, the parties shall be released and discharged from any
further obligation hereunder.
(g) A party shall be deemed to be in default
under this Agreement only if such party has materially breached or failed to
perform its obligations hereunder, and non-material breaches or failures shall
not be grounds for declaring a party to be in default, postponing the Closing,
or terminating this Agreement.
(h) Neither the rights nor the remedies of
either Buyer or Sellers under Section 11.1(c), (d) or (e) shall prejudice any
other rights or remedies either Buyer or Seller may have under this Agreement.
(i) If the Closing occurs, the Escrow
Deposit shall be applied to the Purchase Price at Closing.
If this Agreement so terminates, it shall become null and void and have no
further force or effect, except as provided in Section 11.2.
11.2 Survival. In the event this Agreement is
terminated and the transactions contemplated hereby are not consummated as
described herein, this Agreement shall become void and of no further force and
effect, except to the extent that the provisions of Sections 11.1(c), (d) or
(e) apply.
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97
12. Miscellaneous.
12.1 Certain Definitions. (a) As used in this
Agreement, the following terms have the following meanings:
i) "Affiliate" means, with respect to any
person, any other person controlling, controlled by or under common control
with such person.
ii) "Associate" means, with respect to any
person, the parents, spouse, lineal descendants or beneficiaries of such
person.
iii) "knowledge" with respect to the Company
means the knowledge of the Sellers or any of the officers or directors of a
Company or any of its Subsidiaries; and "knows" has a correlative meaning.
iv) "person" means any individual,
corporation, partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or other entity.
v) "property" or "properties" means real,
personal or mixed property, tangible or intangible.
12.2 Merger Agreement. Sellers acknowledge that
Buyer has entered into an Agreement and Plan of Merger, dated as of July 23,
1996 (the "Merger Agreement"), among Buyer, OCC Acquisition Company, Inc., a
Delaware corporation ("OCC Acquisition"), and, with respect to certain
specified provisions of the Merger Agreement, OCC Holding Corporation, a
Delaware corporation and the owner of all of the issued and outstanding shares
of OCC Acquisition ("OCC Holding"), pursuant to which OCC Acquisition will be
merged with and into Buyer (the "Merger") and each
<PAGE> 104
98
of the outstanding shares of capital stock of Buyer at the time of the Merger
(other than shares held by shareholder exercising statutory dissenter's rights
under Delaware law) will be converted into the right to receive cash. As a
result of the Merger, Buyer will become a direct wholly owned subsidiary of OCC
Holding, a corporation organized by Hick, Muse, Tate & Furst Incorporated
("Hicks Muse"). The closing of the Merger is subject to satisfaction of a
number of conditions, including approval of the transaction by shareholders of
Buyer. The Buyer and Sellers acknowledge that their respective obligations
under this Agreement and the consummation of the transactions contemplated by
this Agreement are not conditioned upon either the closing or abandonment of
the transactions contemplated by the Merger Agreement.
Sellers hereby acknowledge and agree that the closing of the
Merger shall not affect the Buyer's rights hereunder regardless of whether the
consummation of the Merger occurs prior to or after the Closing of the
transactions contemplated by this Agreement. The Parties further agree that
for purposes of this Agreement and each Consulting Agreement, the consummation
of the Merger or any transaction involving a sale of substantially all of
Osborn Communications Corporation, its business or assets, which shall not be
deemed a change in ownership or control of the Buyer or, if such Merger occurs
following the Closing Date, the Companies or the Licensee.
12.3 Assignment.
(a) This Agreement shall not be assigned or
conveyed by either party hereto to any other person or entity without the prior
written consent of the other parties hereto; provided, however, that Buyer may
assign this Agreement without
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99
the Sellers' prior consent to one or more corporations or other entities
controlled by Buyer. Subject to the foregoing, this Agreement shall be binding
and shall inure to the benefit of the parties hereto, their successors and
assigns.
(b) Notwithstanding anything to the
contrary set forth herein, Buyer may assign and transfer to any entity
providing financing for the transactions contemplated by this Agreement (or any
refinancing of such financing) as security for such financing all of the
interest, rights and remedies of Buyer with respect to this Agreement, and
Sellers shall expressly consent to such assignment. Any such assignment will
be made for collateral security purposes only and will not release or discharge
Buyer from any obligations it may have pursuant to this Agreement.
Notwithstanding anything to the contrary set forth herein, Buyer may (i)
authorize and empower such financing sources to assert, either directly or on
behalf of Buyer, any claims Buyer may have against Sellers under this Agreement
and (ii) make, constitute and appoint one agent bank in respect of such
financing (and all officers, employees and agents designated by such agent) as
the true and lawful attorney and agent-in-fact of Buyer for the purpose of
enabling the financing sources to assert and collect any such claims.
(c) Notwithstanding any assignment
by Osborn Communications Corporation of its rights under this Agreement pursuant
to this Section 12.3, Osborn Communications Corporation shall nonetheless
remain liable to Sellers as the primary obligor for the satisfaction of all
obligations of Buyer set forth in this Agreement.
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100
12.4 Entire Agreement. This Agreement, together
with any related Schedules or Exhibits, contains all the terms agreed upon by
the parties with respect to the subject matter herein, and supersedes all prior
agreements and understandings among the parties and may not be changed or
terminated orally. No attempted change, termination or waiver of any of the
provisions hereof shall be binding unless in writing and signed by the party
against whom the same is sought to be enforced.
12.5 Headings. The headings set forth in this
Agreement have been inserted for reference only and shall not be deemed to
limit or otherwise affect, in any manner, or be deemed to interpret in whole or
in part, any of the terms or provisions of this Agreement. Unless otherwise
specified herein, the section references contained herein refer to sections of
this Agreement.
12.6 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ALABAMA.
12.7 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or sent by certified, registered
mail or overnight delivery, postage prepaid. Any such notice shall be deemed
given when so delivered personally or sent by facsimile transmission, the next
day if sent by overnight delivery or, if
<PAGE> 107
101
mailed, two days after the date of deposit in the mails, as follows:
(i) if to Buyer, to:
Osborn Communications Corporation
130 Mason Street
Greenwich, CT 06830
Attn: Thomas S. Douglas
Fax: (203) 629-1749
Phone: (203) 629-0905
with a copy to:
Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attn: Robert M. Hirsh, Esq.
Fax: (212) 759-3990
Phone: (212) 373-3108
(ii) if to the Sellers, to:
J. Mack Bramlett
2505 Walter Road, S.E.
Decatur, AL 35604
and
Wilton H. Pollard, Jr.
P.O. Box 36
Mooresville, AL 35649
with a copy to:
Lange, Simpson, Robinson & Somerville
100 Jefferson Street, South
Post Office Box 287
Huntsville, AL 35804
Attn: Frank K. Noojin, Jr.
Fax: (205) 533-4100
Phone: (205) 533-3500
Any party may by notice given in accordance with this Section to the other
party designate another address or person for receipt of notices hereunder.
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102
12.8 Public Announcements. No public
announcement (including an announcement to employees) or press release
concerning this Agreement or the transactions provided for herein shall be made
by either party without the prior approval of the other party, except as
required by law.
12.9 No Third Party Beneficiaries. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon or give to any person other than the parties and their successors or
permitted assigns any rights to remedies under or by reason of this Agreement.
12.10 Variations in Pronouns. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
12.11 Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all of the parties hereto.
12.12 Exhibits and Schedules. The Exhibits and
Schedules are a part of this Agreement as if fully set forth herein. All
references herein to Sections, subsections, clauses, Exhibits and Schedules
shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require.
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103
12.13 Severability of Provisions. If any provision
or any portion of any provision of this Agreement, or the application of any
such provision or any portion hereof to any person or circumstance, shall be
held invalid or unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, and the application of such provision
or portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby.
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104
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
BUYER:
OSBORN COMMUNICATIONS CORPORATION
By: /s/ Frank D. Osborn
-----------------------------------
Name: Frank D. Osborn
Title: President & Chief
Executive Officer
SELLERS:
/s/ J. Mack Bramlett
-------------------------------------
J. Mack Bramlett
/s/ Wilton H. Pollard, Jr.
-------------------------------------
Wilton H. Pollard, Jr.
TRUST "B" UNDER WILL OF
WILTON H. POLLARD, SR., DECEASED
By: /s/ Wilton H. Pollard, Jr.
----------------------------------
Wilton H. Pollard, Jr., Co-Trustee
By: /s/ Frank K. Noojin, Jr.
----------------------------------
Frank K. Noojin, Jr., Co-Trustee
