<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 33-92732
COMMODORE MEDIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3034720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 FIFTH AVENUE
SUITE 3000
NEW YORK, NEW YORK 10110
(Address of principal executive offices) (Zip Code)
(212) 302-2727
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
AT MARCH 31, 1997, 249,847,909 SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE, OF THE REGISTRANT WERE OUTSTANDING.
<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>
2
<PAGE> 3
COMMODORE MEDIA, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets........................... 4
Consolidated Statements of Operations................. 5
Condensed Consolidated Statements of Cash Flows....... 6
Consolidated Statement of Stockholders' Deficit....... 7
Notes to Consolidated Financial Statements............ 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 12
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders... 17
Item 6. Exhibits and Reports on Form 8-K...................... 17
</TABLE>
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and short term cash investments . . . . . . . . . . . . $ 4,367,847 $ 11,188,085
Accounts receivable, net . . . . . . . . . . . . . . . . . . 8,912,965 12,257,900
Note receivable . . . . . . . . . . . . . . . . . . . . . . -- 13,513,179
Prepaid expenses and other current assets . . . . . . . . . 443,900 3,409,828
------------- -------------
Total current assets . . . . . . . . . . . . . . . . . . 13,724,712 40,368,992
Property, plant and equipment, net . . . . . . . . . . . . . . . 14,263,055 40,690,071
FCC licenses and goodwill, net . . . . . . . . . . . . . . . . . 59,172,868 181,407,798
Other intangible assets . . . . . . . . . . . . . . . . . . . . . 2,964,621 2,773,029
Deferred charges, net . . . . . . . . . . . . . . . . . . . . . . 4,186,451 4,449,333
Deposits and other assets . . . . . . . . . . . . . . . . . . . . 753,340 1,710,556
------------- -------------
Total assets . . . . . . . . . . . . . . . . . . . . . . $ 95,065,047 $ 271,399,779
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . . $ 2,260,066 $ 7,857,541
Other accrued liabilities . . . . . . . . . . . . . . . . . -- 535,935
Accrued compensation . . . . . . . . . . . . . . . . . . . . 422,062 378,269
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 960,084 2,400,228
Accrued income taxes . . . . . . . . . . . . . . . . . . . . -- 1,268,418
Current maturities of capital lease obligations . . . . . . . 16,056 124,056
Current maturities of long-term debt. . . . . . . . . . . . . 3,750,000 --
------------- -------------
Total current liabilities . . . . . . . . . . . . . . . . 7,408,268 12,564,447
Long term capital lease obligations . . . . . . . . . . . . . . . 49,629 262,025
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 90,737,274 70,736,960
Non-current compensation . . . . . . . . . . . . . . . . . . . . . -- 1,022,655
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 1,700,000 35,537,798
Stockholders' equity (deficit)
Common Stock, $.01 par value, 350,000,000 shares authorized,
106,757,000, and 249,847,909 shares issued and outstanding
in 1996 and 1997, respectively . . . . . . . . . . . . . . 1,067,570 2,498,479
Additional paid-in capital . . . . . . . . . . . . . . . . . 54,125,332 211,894,423
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (60,023,026) (63,117,008)
------------- -------------
Total stockholders' equity (deficit) . . . . . . . . . . (4,830,124) 151,275,894
------------- -------------
Total liabilities and stockholders' equity (deficit) . . $ 95,065,047 $ 271,399,779
============= =============
</TABLE>
See Accompanying Notes.
4
<PAGE> 5
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED:
----------------------------
MARCH 31, MARCH 31,
1996 1997
------------ ------------
<S> <C> <C>
Gross broadcast revenue . . . . . . . . . . . . . . . . . $ 8,047,568 $ 14,208,071
Less: agency commissions . . . . . . . . . . . . . . . . (631,887) (953,956)
------------ ------------
Net broadcast revenue . . . . . . . . . . . . . . . . . . 7,415,681 13,254,115
Operating expenses:
Programming, technical and news . . . . . . . . . . 1,513,468 2,360,679
Sales and promotion . . . . . . . . . . . . . . . . 2,421,153 3,677,407
General and administrative . . . . . . . . . . . . . 1,440,612 2,612,057
Direct programmed music and entertainment. . . . . . -- 1,039,250
Corporate expenses . . . . . . . . . . . . . . . . . . . 465,684 652,680
Depreciation and amortization . . . . . . . . . . . . . . 480,210 1,721,430
------------ ------------
Operating income . . . . . . . . . . . . . . . . . . . . 1,094,554 1,190,612
Interest expense . . . . . . . . . . . . . . . . . . . . 2,451,638 2,892,083
Interest income . . . . . . . . . . . . . . . . . . . . . 115,252 127,621
Other expenses, net . . . . . . . . . . . . . . . . . . . 167,594 100,562
------------ ------------
Income (loss) before provision for income
taxes and extraordinary item . . . . . . . . . . . . (1,409,426) (1,674,412)
Provision for income taxes . . . . . . . . . . . . . . . 27,000 46,345
------------ ------------
Net income (loss) before extraordinary item . . . . . . . (1,436,426) (1,720,757)
Extraordinary item, loss on early extinguishment of
debt . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,373,225
------------ ------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (1,436,426) $ (3,093,982)
============ ============
</TABLE>
See Accompanying Notes.
5
<PAGE> 6
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended :
-------------------------------
March 31, March 31,
1996 1997
------------- -------------
<S> <C> <C>
Net cash provided by operating activities . . . . . . . . . . . . . . . $ 1,890,560 $ 1,929,870
Cash flows from investing activities
Purchase of property, plant and equipment . . . . . . . . . . . . (124,192) (886,886)
Payments for intangible assets . . . . . . . . . . . . . . . . . . (290,766) (149,975)
Loan to Affiliate . . . . . . . . . . . . . . . . . . . . . . . . -- (13,475,000)
Deposits on acquisitions . . . . . . . . . . . . . . . . . . . . . (915,000) (90,000)
Acquisitions of stations and companies (14,400,000) (111,401,140)
Other investing activities, net . . . . . . . . . . . . . . . . . (68,177) --
------------ -------------
Net cash used in investing activities . . . . . . . . . . . . . . (15,798,135) (124,073,131)
Cash flows from financing activities . . . . . . . . . . . . . . . . .
Proceeds from common stock . . . . . . . . . . . . . . . . . . . . -- 157,400,000
Proceeds from debt . . . . . . . . . . . . . . . . . . . . . . . 8,500,000 --
Payment of deferred debt issuance costs . . . . . . . . . . . . . (393,734) (1,801,263)
Repayment of amounts borrowed . . . . . . . . . . . . . . . . . . -- (24,700,000)
Principal payments on capital leases . . . . . . . . . . . . . . . (3,455) (5,368)
------------ -------------
Net cash provided by (used in) financing activities . . . . . . . 8,102,811 130,893,369
------------ -------------
Net increase (decrease) in cash and short term cash investments . . . . (5,804,764) 6,820,238
Cash and short term cash investments, beginning of period . . . . . . . 10,891,489 4,367,847
------------ -------------
Cash and short term cash investments, end of period . . . . . . . . . . $ 5,086,725 $ 11,188,085
============ =============
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . $ 46,738 $ 337,097
Taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . 58,908 164,386
</TABLE>
See Accompanying Notes.
6
<PAGE> 7
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
PAID-IN ACCUMULATED STOCKHOLDERS'
COMMON STOCK CAPITAL DEFICIT DEFICIT
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 - restated . . . $ 1,067,570 $ 54,125,332 $ (60,023,026) $ (4,830,124)
Proceeds from issuance of common stock. . . . 1,430,909 155,969,091 157,400,000
Equity contribution from parent . . . . . . . 1,800,000 1,800,000
Net loss for the period . . . . . . . . . . . (3,093,982) (3,093,982)
----------- ------------- ------------- -------------
Balance at March 31, 1997 . . . . . . . . . . $ 2,498,479 $ 211,894,423 $ (63,117,008) $ 151,275,894
=========== ============= ============= =============
</TABLE>
See Accompanying Notes.
7
<PAGE> 8
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997 or for any other interim period. For further
information, refer to the consolidated financial statements and footnotes
thereto included in Form 10-K for the year ended December 31, 1996 of Commodore
Media, Inc. and its subsidiaries (the "Company"). The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries.
Certain amounts have been reclassified in the March 31, 1996 financial
statements to conform to the current period classifications.
2. CONSUMMATED ACQUISITIONS AND DISPOSITION
On February 20, 1997, the Company acquired (the "Osborn Acquisition")
Southern Star Communications, Inc. (formerly named Osborn Communications
Corporation ("Osborn")). The purchase price of the Osborn Acquisition was
$118.8 million payable in cash and common stock of Capstar Broadcasting
Partners, Inc., the Company's sole stockholder ("Capstar"). In connection with
the purchase of Osborn, the Company agreed to pay the President of Osborn a
guaranteed monthly bonus over the next five years; accordingly, the Company has
recorded a liability equal to the net present value of these payments of $1.2
million at the date of purchase. Osborn owned and operated or provided services
to 18 stations upon consummation of the Osborn Acquisition and had pending (i)
the acquisitions of five stations (two FM and three AM) in the Huntsville and
Tuscaloosa, Alabama markets and (ii) the disposition of three stations (two FM
and one AM) in the Ft. Myers, Florida market. Each of the pending transactions
of Osborn has been completed as more fully described hereinafter.
In April 1997, the Company acquired substantially all of the assets of
Taylor Communications Corporation's two radio stations (one FM and one AM) in
the Tuscaloosa, Alabama market (the "Tuscaloosa Acquisition"). The purchase
price of the acquisition was approximately $1.0 million. Such stations were
managed by Osborn pursuant to an LMA (as defined) since December 1996.
In April 1997, the Company acquired substantially all of the assets of City
Broadcasting Co., Inc. used or useful in the operations of two radio stations
(one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market (the
"City Acquisition"). The purchase price of the acquisition was approximately
$3.0 million. In April 1997, the Company acquired substantially all of the
assets of EZY Com, Inc. used or useful in the operations of two radio stations
(one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market (the
"EZY Acquisition"). The purchase price of the acquisition was approximately
$5.0 million. In April 1997, the Company acquired substantially all of the
assets of Roper Broadcasting, Inc. used or useful in the operations of one FM
radio station in the Melbourne-Titusville-Cocoa, Florida market (the "Roper
Acquisition" and, collectively with the City Acquisition and the EZY
Acquisition, the "Space Coast Acquisitions"). The purchase price of the
acquisition was approximately $4.0 million.
In April 1997, the Company sold substantially all of the assets of its radio
stations (two FM and one AM) in the Ft. Myers, Florida Market (the "Osborn Ft.
Myers Disposition"). The sale price was $11.0 million.
In May 1997, the Company acquired all of the outstanding capital stock of
Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners of three radio
stations (one FM and two AM) in the Huntsville, Alabama market (the "Huntsville
Acquisition"). The purchase price of the acquisition was $24.5 million.
8
<PAGE> 9
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1997
(UNAUDITED)
2. CONSUMMATED ACQUISITIONS AND DISPOSITION (CONTINUED)
Unaudited proforma results of the Company for the aforementioned acquisitions
which were completed during the three months ended March 31, 1997, which were
accounted for using the purchase method of accounting, and the aforementioned
disposition as if they were purchased or sold on January 1, 1996 are as follows:
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
March 31, March 31,
1996 1997
--------------- -----------------
(dollars in thousands)
<S> <C> <C>
Net revenue $ 16,949 $ 17,868
=============== =================
Loss before extraordinary item $ 3,688 $ 2,506
=============== =================
Net loss $ 5,061 $ 2,506
=============== =================
</TABLE>
3. PENDING ACQUISITIONS
Under the terms of several acquisition agreements, each dated December
1996, Benchmark Communications Radio Limited Partnership, L.P. ("Benchmark")
will become an indirect wholly-owned subsidiary of the Company through a series
of mergers and stock purchases (the "Benchmark Acquisition"). The purchase
price of the Benchmark Acquisition will equal approximately $173.4 million.
Benchmark owns and operates 31 radio stations (21 FM and 10 AM). Those stations
are located in 11 markets primarily in the Southeastern United States, including
Dover, Delaware; Salisbury-Ocean City, Maryland; Montgomery, Alabama;
Shreveport, Louisiana; Jackson, Mississippi; Statesville, North Carolina;
Columbia, South Carolina; Greenville, South Carolina; Roanoke, Lynchburg and
Winchester, Virginia. The Company anticipates that the Benchmark Acquisition
will be consummated in July 1997. The obligation of Benchmark to consummate the
Benchmark Acquisition is subject to Federal Communication Commission (" FCC")
approval.
In December 1996, a subsidiary of Capstar ("Pacific Star") agreed to acquire
substantially all of the assets of Community Pacific Broadcasting Company L.P.
("Community Pacific") (the "Community Pacific Acquisition"). The purchase
price of the Community Pacific Acquisition will equal approximately $35.0
million payable in cash. Community Pacific owns and operates 11 radio stations
(six FM and five AM) in four markets located in Anchorage, Alaska, Modesto and
Stockton, California and Des Moines, Iowa. The Company anticipates that the
Community Pacific Acquisition will be consummated in November 1997, prior to
which time the acquisition agreement will be assigned or otherwise transferred
to the Company.
In January 1997, a subsidiary of Capstar ("Madison Acquisition Co.") agreed
to acquire substantially all of the assets of The Madison Radio Group
("Madison") (the "Madison Acquisition"). The purchase price of the Madison
Acquisition will equal approximately $38.8 million payable in cash. Madison
owns and operates six radio stations (four FM and two AM) in Madison,
Wisconsin. The Company anticipates that the Madison Acquisition will be
consummated in October 1997, prior to which time the acquisition agreement will
be assigned or otherwise transferred to the Company.
In January 1997, Pacific Star agreed to acquire substantially all of the
assets of Commonwealth Broadcasting of Arizona, L.L.C. ("Commonwealth") (the
"Commonwealth Acquisition"). The purchase price of the Commonwealth
Acquisition will equal approximately $5.3 million payable in cash.
Commonwealth owns and operates three radio stations (two FM and one AM) in
Yuma, Arizona. The Company anticipates that the Commonwealth Acquisition will
be consummated in October 1997, prior to which time the acquisition agreement
will be assigned or otherwise transferred to the Company.
In January 1997, Madison Acquisition Co. agreed to acquire substantially
all of the assets of Cavalier Communications, L.P. ("Cavalier") (the "Cavalier
Acquisition"). The purchase price of the Cavalier Acquisition will equal
approximately $8.3 million payable in cash. Cavalier owns and operates five
radio stations (four FM and one AM) in the Roanoke and Lynchburg, Virginia
markets. FCC approval is pending. The Company anticipates
9
<PAGE> 10
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1997
(UNAUDITED)
3. PENDING ACQUISITIONS (CONTINUED)
that the Cavalier Acquisition will be consummated in October 1997, prior to
which time the acquisition agreement will be assigned or otherwise transferred
to the Company.
In February 1997, Pacific Star agreed to acquire substantially all of the
assets of COMCO Broadcasting, Inc. ("COMCO") (the "COMCO Acquisition"). The
purchase price of the COMCO Acquisition will equal approximately $6.7 million
payable in cash. COMCO owns and operates six radio stations (four FM and two
AM) in the Anchorage and Fairbanks, Alaska markets. FCC approval is pending.
The Company anticipates that the COMCO Acquisition will be consummated in
October 1997, prior to which time the acquisition agreement will be assigned or
otherwise transferred to the Company.
Upon consummation of the Community Pacific Acquisition and the COMCO
Acquisition, the Company will own and operate seven radio stations (four FM and
three AM) in the Anchorage, Alaska market, which number exceeds the multiple
station ownership limitations under the Communications Act of 1934, as amended
(the "Communications Act"). Accordingly, the Company has sought permission from
the FCC to consummate both the Community Pacific Acquisition and the COMCO
Acquisition provided that the Company agrees to sell radio station KASH-AM in
Anchorage, Alaska within 18 months of the date on which the Community Pacific
Acquisition is consummated. The Company would be in compliance with the
ownership limitations of the Communications Act in the Anchorage, Alaska market
once it disposes of KASH-AM. In May 1997, the Company entered into a nonbinding
letter of intent to sell substantially all of the assets used or useful in the
operations of radio station KASH-AM to Alaska Broadcast Television, Inc. No
assurances can be given that the FCC will grant permission to the Company to
consummate both the Community Pacific Acquisition and the COMCO Acquisition and
dispose of KASH-AM, or if the FCC grants such permission, that the Company will
be able to sell KASH-AM.
In March 1997, WNOK Acquisition Company, Inc., a subsidiary of the Company
("WNOK Acquisition Co."), agreed to acquire substantially all of the assets of
Emerald City Radio Partners, L.P. ("Emerald City") (the "Emerald City
Acquisition"). The Company has agreed to assign WNOK Acquisition Co.'s right to
acquire two of Emerald City's radio stations (WOIC-AM and WMFX-FM) to Clear
Channel Radio Licensing, Inc. on or before the date on which the Company
acquires Emerald City's third radio station (WNOK-FM). The purchase price of the
Emerald City Acquisition will equal approximately $14.9 million payable in cash,
of which approximately $9.5 million has been allocated to radio station WNOK-FM
and will be payable by the Company. Emerald City owns and operates three radio
stations (two FM and one AM) in the Columbia, South Carolina market. FCC
approval is pending. The Company anticipates that the Emerald City Acquisition
will be consummated in July 1997.
In April 1997, Capstar Acquisition Company, Inc. ("Capstar Acquisition
Co."), a subsidiary of the Company, agreed to acquire substantially all of the
assets of WRIS, Inc. used or held for use in the operations of radio station
WJLM-FM in the Salem, Virginia market (the "WRIS Acquisition"). The purchase
price of the WRIS Acquisition will equal approximately $3.1 million payable in
cash. FCC approval is pending. The Company anticipates that the WRIS
Acquisition will be consummated in August 1997.
In April 1997, Capstar Acquisition Co. agreed to acquire substantially all
of the assets of Ameron Broadcasting, Inc. used or held for use in the
operation of three radio stations (two FM and one AM) in the Birmingham, Alabama
market (the "Ameron Acquisition"). The purchase price of the Ameron
Acquisition will equal approximately $31.5 million payable in cash. FCC
approval is pending. The Company anticipates that the Ameron Acquisition will
be consummated in October 1997.
The Company has entered into nine separate nonbinding letters of intent to
acquire and/or exchange substantially all of the assets of the respective
potential sellers used or useful in the operations of each seller's radio
stations, each of which is subject to various conditions, including the ability
of the Company to enter into a definitive agreement to acquire such assets. No
assurances can be given that definitive agreements will be entered into to
acquire such assets or that such acquisitions will be consummated. As part of
the Company's ongoing acquisition strategy, the Company is continually
evaluating certain other potential acquisition opportunities.
4. STOCKHOLDERS' EQUITY
On February 20, 1997, the Company amended its Certificate of Incorporation
to reflect a new capital structure consisting of 350,000,000 authorized shares
of common stock, par value $.01 per share ("Common Stock"). Immediately
10
<PAGE> 11
COMMODORE MEDIA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1997
(UNAUDITED)
4. STOCKHOLDERS' EQUITY (CONTINUED)
upon the filing of the amendment, each previously issued share of Class A
common stock, par value $.01 per share, and Class B common stock, par value
$.01 per share, of the Company was converted into 106,757 shares of Common
Stock. The financial statements have been adjusted retroactively to reflect
this conversion.
On February 20, 1997, the Company issued 143,090,909 shares of Common Stock
to Capstar, its sole stockholder, at a purchase price of $1.10 per share. The
net proceeds were used in part to fund the Osborn Acquisition and retire
existing indebtedness of the Company and Osborn. In addition, on February 20,
1997 Capstar exchanged shares of common stock of Capstar having a deemed value
of $1.8 million for shares of common stock of Osborn also having a deemed value
of $1.8 million as part of the purchase price of the Osborn Acquisition and
contributed its interest in Osborn to the Company. The Company has reflected the
contribution as additional paid-in capital.
5. EXTRAORDINARY ITEM
On February 20, 1997, in connection with the financing of the Osborn
Acquisition, the Company repaid its outstanding loan balance (including
principal and interest) under the Company's senior credit facility (the "AT&T
Credit Facility") with AT&T Commercial Finance Corporation and recognized an
extraordinary loss of $1.4 million as a result of the write off of unamortized
deferred financing costs plus a prepayment penalty.
6. NEW CREDIT FACILITY
On February 20, 1997, the Company entered into a credit facility (the "New
Credit Facility") with various banks and Bankers Trust Company, as
administrative agent, which consists of a $50.0 million revolving loan
facility. The indebtedness under the New Credit Facility is secured by a first
priority perfected pledge of substantially all of Capstar's assets, including,
without limitation, the capital stock of the subsidiaries of Capstar, and is
guaranteed by Capstar and all of the direct and indirect subsidiaries of
Capstar (other than the Company). Borrowings under the New Credit Facility
bear interest at floating rates and require interest payments on varying dates
depending on the interest rate option selected by the Company. All loans
outstanding under the New Credit Facility will mature in 2002. As of May 13,
1997, a principal balance of $24.9 million was outstanding under the New
Credit Facility.
7. CREDIT AGREEMENT
In March 1997, the Company entered into a $13.5 million Credit Agreement
with Emerald City (the "Credit Agreement"). In accordance with the Credit
Agreement, the Company loaned Emerald City $13.5 million (the "Loan") which is
to be repaid in two installments. The first installment is to be a payment of
principal of the Loan equal to the purchase price under the asset purchase
agreement for the radio station WNOK-FM, together with any accrued and unpaid
interest thereon, with the second installment to consist of the remaining
principal balance of the Loan, together with any accrued and unpaid interest
thereon, due and payable on the Maturity Date (as defined in the Credit
Agreement).
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE COMPANY
As of March 31, 1997, the Company owned and operated or provided
services to 53 radio stations in 12 mid-sized markets. The following table sets
forth the growth in number of radio stations by market since January 1, 1996:
<TABLE>
<CAPTION>
NUMBER OF
MARKET STATIONS DATE ACQUIRED
- ------------------------------------------------------------------------------
<S> <C> <C>
Huntington WV-
Ashland, KY 7 October 1996(1)
1 LMA
Fairfield, CT
Acquisition 1 2 March 1996(1)
Acquisition 2 2 May 1996
Ft. Pierce-Stuart-
Vero Beach, FLA 3 May 1996(1)
Westchester-Putnam
Counties, NY 3 March 1996(1)
OSBORN ACQUISITION:
Asheville, NC 2 February 1997
Wheeling, WV 6 February 1997
Wheeling, WV 1 JSA
Jackson, TN 3 February 1997
Tuscaloosa, AL 1 February 1997
Tuscaloosa, AL 2 April 1997(1)
Gadsden, AL 2 February 1997
Huntsville, AL 3 April 1997
</TABLE>
- -------------
(1) The Company provided services to these stations pursuant to an LMA or a
JSA (as defined) prior to the date acquired. "JSA" refers to a joint sales
agreement, whereby a station licensee obtains, for a fee, the right to sell
substantially all of the commercial advertising on a separately-owned and
licensed station. JSAs take varying forms. A JSA, unlike an LMA, normally
does not involve programming. "LMA" refers to a local marketing agreement,
whereby a radio station outsources the management of certain limited
functions of its operations. LMAs take varying forms; however, the FCC
requires that, in all cases, the licensee maintain independent control over
the programming and operations of the station.
On February 20, 1997, the Company acquired Osborn. The purchase price
of the Osborn Acquisition was $118.8 million payable in cash and common stock
of Capstar. Osborn owned and operated or provided services to 18 stations upon
consummation of the Osborn Acquisition and had pending (i) the acquisitions of
five stations (two FM and three AM) in the Huntsville and Tuscaloosa, Alabama
markets and (ii) the disposition of three stations (two FM and one AM) in the
Ft. Myers, Florida market. Each of the pending transactions of Osborn has been
completed as more fully described hereinafter.
In April 1997, the Company acquired substantially all of the assets of
Taylor Communications Corporation's two radio stations (one FM and one AM) in
the Tuscaloosa, Alabama market The purchase price of the acquisition
was approximately $1.0 million. Such stations were managed by Osborn pursuant
to an LMA since December 1996.
In April 1997, the Company acquired substantially all of the assets of
City Broadcasting Co., Inc. used or useful in the operations of two radio
stations (one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market.
The purchase price of the acquisition was approximately $3.0 million. In April
1997, the Company acquired substantially all of the assets of EZY Com, Inc.
used or useful in the operations of two radio stations (one FM and one AM) in
the Melbourne-Titusville-Cocoa, Florida market. The purchase price of the
acquisition was approximately $5.0 million. In April 1997, the Company acquired
substantially all of the assets of Roper Broadcasting, Inc used or useful in
the operations of one FM radio station in the Melbourne-Titusville-Cocoa,
Florida market. The purchase price of the acquisition was approximately
$4.0 million.
In April 1997, the Company sold substantially all of the assets of its
radio stations (two FM and one AM) in the Ft. Myers, Florida Market. The sale
price was $11.0 million.
In May 1997, the Company acquired all of the outstanding capital stock
of Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners of three radio
stations (one FM and two AM) in the Huntsville, Alabama market. The purchase
price of the acquisition was $24.5 million.
12
<PAGE> 13
RESULTS OF OPERATIONS
The following table sets forth certain consolidated summary data of the
Company:
<TABLE>
<CAPTION>
(dollars in thousands)
For the Three Months Ended
--------------------------
March 31, March 31,
1996 1997
----------- ----------
<S> <C> <C>
OPERATING DATA:
Net revenue . . . . . . . . . . . . . . . . . . . $ 7,416 $13,254
Station operating expenses . . . . . . . . . . . 5,375 9,689
Depreciation and amortization . . . . . . . . . . 480 1,721
Corporate expenses . . . . . . . . . . . . . . . 466 653
---------- ---------
Operating income (loss) . . . . . . . . . . . . . 1,095 1,191
Interest expense . . . . . . . . . . . . . . . . 2,452 2,892
Other (income)expense . . . . . . . . . . . . . . 79 20
Extraordinary loss on early extinguishment
of debt . . . . . . . . . . . . . . . . . . . . . 1,373
---------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . $(1,436) $(3,094)
========== =========
OTHER DATA:
Broadcast cash flow (1) . . . . . . . . . . . . . $ 2,041 $ 3,565
Broadcast cash flow margin . . . . . . . . . . . 27.5% 26.9%
EBITDA (2) . . . . . . . . . . . . . . . . . . $ 1,575 $ 2,912
</TABLE>
- ----------------
(1) Broadcast cash flow consists of operating income before depreciation,
amortization, corporate expense and other expense.
(2) EBITDA consists of operating income before depreciation, amortization
and other expense.
13
<PAGE> 14
RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Net Revenue. Net revenue increased $5.8 million or 78.7% to $13.3
million for the three months ended March 31, 1997 from $7.4 million for the
three months ended March 31, 1996. Net revenue included from the operations
purchased in connection with the Osborn Acquisition for the period February 21,
1997 through March 31, 1997 comprised $3.7 million of the increase. The
inclusion of revenue from the acquisitions of radio stations and revenue
generated from LMAs and JSAs provided $1.9 million of the increase. For
stations owned or operated for a comparable period in 1997 and 1996, net revenue
increased approximately $232,000 or 3.2% to $7.4 million for the three months
ended March 31, 1997 from $7.2 million for the same period in 1996.
Station Operating Expenses. Station operating expenses increased
$4.3 million or 80.3% to $9.7 million for the three months ended March 31,
1997 from $5.3 million for the three months ended March 31, 1996. The
increase is primarily attributable to (i) additional operating expenses of the
operations purchased in connection with the Osborn Acquisition of $2.9
million, and (ii) station operating expenses of the radio station acquisitions
and the JSAs and LMAs which contributed $1.5 million of the increase. For
stations owned or operated for a comparable period in 1997 and 1996, station
operating expenses declined approximately $86,000 or 1.7% to $5.1 million in
1997 from $5.2 million in 1996 as a result of efficiencies realized from market
consolidation.
Broadcast Cash Flow. As a result of the factors described above,
broadcast cash flow increased approximately $1.5 million or 74.7% to $3.6
million for the three months ended March 31, 1997 from $2.0 million for the same
period in 1996. The broadcast cash flow margin was 26.9% for the three months
ended March 31, 1997 compared to 27.5% for the same period in 1996. The
broadcast cash flow provided from the Osborn Acquisition accounted for
approximately $861,000 of the increase; the broadcast cash flow margin from
these operations is 23.0%. The inclusion of broadcast cash flows from the
remaining acquisitions and LMAs accounts for approximately $345,000 of the
increase. Excluding the effects of the acquisitions and LMAs, broadcast cash
flow increased approximately $319,000, or 15.7% to $2.3 million for the three
months ended March 31, 1997 from $2.0 million for the same period in 1996 and
the broadcast cash flow margin on a same station basis increased to 31.4% from
28.0%.
Corporate Expenses. Corporate expenses increased approximately
$187,000 or 40.1% to approximately $653,000 for the three months ended March
31, 1997 from approximately $466,000 for the same period in 1996. This
increase was primarily due to the additional corporate expense associated with
the Osborn operations.
EBITDA. As a result of the factors described above, EBITDA increased
approximately $1.3 million or 84.9% to $2.9 million for the three months ended
March 31, 1997 from $1.6 million for the three months ended March 31, 1996.
The EBITDA margin for the three months ended March 31, 1997 was 22.0% compared
to 21.2% for the same period in 1996.
14
<PAGE> 15
RESULTS OF OPERATIONS (CONTINUED)
Other Operating Expenses. Depreciation and amortization increased
$1.2 million to $1.7 million for the three months ended March 31, 1997 from
approximately $480,000 for the three months ended March 31, 1996 primarily due
to the various acquisitions consummated during 1996 and 1997.
Operating Income. As a result of the factors described above,
operating income increased to $1.2 million or 8.8% for the three months ended
March 31, 1997 from $1.1 million for the same period in 1996.
Other (Income) Expenses. Interest expense increased approximately
$440,000 or 18.0% to $2.9 million for the three months ended March 31, 1997 from
$2.5 million for the three months ended March 31, 1996 due to interest expense
on $24.7 million of the principal balance of the AT&T Credit Facility. The
AT&T Credit Facility was repaid upon consummation of the Osborn Acquisition
on February 20, 1997. Interest income increased 10.7% to $128,000 as a result of
the interest accrual on the Loan to Emerald City. Other expenses, net decreased
approximately $67,000 for the three months ended March 31, 1997 compared to the
same period in 1996. The Company realized an extraordinary loss on early
retirement of the AT&T Credit Facility during the three months ended March 31,
1997 of approximately $1.4 million which is comprised of the write off of
unamortized deferred loan costs of approximately $775,000 and prepayment
penalties and fees of approximately $595,000.
Net Loss. As a result of the factors described above, net loss
increased approximately $1.7 million to $3.1 million for the three months ended
March 31, 1997 from $1.4 million for the three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company funded the $118.8 million purchase price for the Osborn
Acquisition with an equity investment made by Capstar. The Company funded the
purchase price of the Huntsville Acquisition, the Tuscaloosa Acquisition and the
Space Coast Acquisitions through borrowings under the New Credit Facility in the
aggregate principal amount of $35.9 million.
The Company's 13 1/4% Senior Subordinated Notes due 2003 (the "Notes")
accrue interest at a stated rate of 13 1/4% per annum of their face value of
$76.8 million. The Notes require semi-annual cash interest payments on each
May 1 and November 1 of $2.9 million through May 1, 1998 and $5.2 million from
November 1, 1998 until maturity. Borrowings under the New Credit Facility bear
interest at floating rates and require interest payments on varying dates
depending on the interest rate option selected by the Company. The New Credit
Facility consists of the $50.0 million revolver. All loans outstanding under
the New Credit Facility will mature in 2002. As of May 13, 1997, a
principal balance of $24.9 million was outstanding under the New Credit
Facility.
In addition to debt service, the Company's principal liquidity requirements
will be for working capital and general corporate purposes, including capital
expenditures, which are not expected to be material in amount, and, as
appropriate opportunities arise, to acquire additional radio stations. The
Company used the $11.0 million in net proceeds of the Osborn Ft. Myers
Disposition to repay indebtedness under the New Credit Facility. The
Company intends to fund the aggregate purchase price for the pending
acquisitions through a combination of borrowings under the New Credit Facility
(as it may be amended to increase the borrowing limit thereunder) and a
combination of indebtedness of the Company and/or Capstar (which proceeds will
be invested in the Company) and/or capital stock of Capstar or its
subsidiaries. The Company has not determined the terms of any such
indebtedness or capital stock. The Company's ability to make such borrowings
and issue such indebtedness and capital stock will depend upon many factors,
including, but not limited to, the Company's success in operating and
integrating its radio stations and the condition of the capital markets at the
times of consummation of the pending acquisitions. No assurances can be given
that such financings can be consummated on terms considered to be favorable by
management or at all.
15
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Management believes that cash from operating activities, together with
available revolving credit borrowings under the New Credit Facility and equity
investments by Capstar, should be sufficient to permit the Company to fund its
operations and meet its obligations under the agreements governing the existing
indebtedness. The Company may require financing for additional future
acquisitions, if any, and there can be no assurance that it would be able to
obtain such financing on terms considered to be favorable by management.
Management evaluates potential acquisition opportunities on an on-going basis
and has had, and continues to have, preliminary discussions concerning the
purchase of additional stations. The Company expects that in connection with
the financing of future acquisitions, it may consider disposing of stations in
its markets. The Company has no current plans or arrangements to dispose of any
of its stations other than the disposition of station KASH-AM in Anchorage,
Alaska at or after consummation of the Community Pacific Acquisition and the
possible exchange of three stations to be acquired in the Benchmark
Acquisition for three stations owned by SFX Broadcasting, Inc.
EXTRAORDINARY ITEM
In connection with the Osborn Acquisition, the Company repaid the AT&T
Credit Facility. The repayment of the AT&T Credit Facility resulted in the
write off of unamortized deferred financing costs and prepayment penalties in
the amount of $1.4 million, which was reported as an extraordinary item. In
connection with the Benchmark Acquisition, Capstar will issue $750,000 of
capital stock of Capstar for the benefit of the Company to an affiliate of
Hicks, Muse, Tate & Furst Incorporated in consideration for its agreement, upon
the occurrence of certain events, to purchase the outstanding indebtedness
incurred by such affiliate's subsidiary in connection with the Benchmark
Acquisition. The issuance of capital stock of Capstar for the benefit of the
Company will be reported as an extraordinary item in the period in which the
Company consummates the Benchmark Acquisition. Had the Benchmark Acquisition
been consummated at December 31, 1996, the Company would have recorded an
extraordinary charge of approximately $750,000.
16
<PAGE> 17
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to the written consent of Capstar, the sole stockholder of the
Company, dated as of February 10, 1997, Capstar consented to an amendment to
the Company's Certificate of Incorporation pursuant to which 350,000,000 shares
of Common Stock were authorized and a 106,757:1 stock split was effected.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
4.1 Amendment No. 6 to Indenture dated as of April 21, 1995, among the
Company, IBJ Schroder Bank & Trust Company, as Trustee, and the
Guarantors named therein, governing the Company's 13 1/4% Senior
Subordinated Notes due 2003.(1)
4.2 Amendment No. 7 to Indenture dated as of May 9, 1997, among the
Company, IBJ Schroder Bank & Trust Company, as Trustee, and the
Guarantors named therein, governing the Company's 13 1/4% Senior
Subordinated Notes due 2003.*
10.1.1 Asset Purchase Agreement, dated March 10, 1997, by and between
Emerald City Radio Partners, L.P. and WNOK Acquisition Company,
Inc.(1)
10.1.2 First Amendment to Asset Purchase Agreement, dated as of March 14,
1997, between Emerald City Radio Partners, L.P. and WNOK
Acquisition Company, Inc.(1)
10.2.1 Asset Purchase Agreement dated as of April 24, 1997, between
Ameron Broadcasting, Inc. and Capstar Acquisition Company, Inc., a
wholly-owned subsidiary of the Company.*
10.2.2 Letter Agreement, dated as of April 25, 1997, between Ameron
Broadcasting, Inc. and Capstar Acquisition Company, Inc.*
27.1 Financial Data Schedule.*
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to Capstar's Registration Statement on Form S-1
(File No. 333-25263), dated April 16, 1997.
(b) Reports on Form 8-K
During the quarter ended March 31, 1997, the following report on Form 8-K
was filed:
Current Report on Form 8-K dated February 20, 1997, relating to the
Company's acquisition of Osborn. Items 2 and 7 were reported.
17
<PAGE> 18
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.
By: /s/ William S. Banowsky, Jr.
--------------------------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 14, 1997
By: /s/ Paul D. Stone
--------------------------------------------
Name: Paul D. Stone
Title: Vice President and Treasurer
(principal financial officer)
Date: May 14, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
each of the additional registrants has duly caused this report to be signed on
its behalf by the undersigned thereunto 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.
By: /s/ William S. Banowsky, Jr.
--------------------------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 14, 1997
By: /s/ Paul D. Stone
--------------------------------------------
Name: Paul D. Stone
Title: Vice President and Treasurer
(principal financial officer)
Date: May 14, 1997
<PAGE> 19
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
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/ Paul D. Stone
----------------------------------------------
Name: Paul D. Stone
Title: Vice President
Date: May 14, 1997
By: /s/ Thomas S. Douglas
----------------------------------------------
Name: Thomas S. Douglas
Title: Vice President, Chief Financial Officer
and Treasurer (chief accounting officer)
Date: May 14, 1997
Music Hall Club, Inc.
By: /s/ Larry Anderson
----------------------------------------------
Name: Larry Anderson
Title: President
(duly authorized and principal financial
officer)
Date: May 14, 1997
<PAGE> 20
MOUNTAIN LAKES BROADCASTING, L.L.C.
By: Dixie Broadcasting, Inc.,
its Member
By: /s/ Paul D. Stone
---------------------------------------
Paul D. Stone
Vice President
Date: May 14, 1997
By: Radio WBHP, Inc.,
its Member
By: /s/ Paul D. Stone
---------------------------------------
Paul D. Stone
Vice President
Date: May 14, 1997
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title Page
------- ------------- ----
<S> <C> <C>
4.1 Amendment No. 6 to Indenture dated as of April 21, 1995, among
Commodore Media, Inc. ("Commodore"), IBJ Schroder Bank & Trust
Company, as Trustee, and the Guarantors named therein, governing
Commodore's 13 1/4 Senior Subordinated Notes due 2003. (1)
4.2 Amendment No. 7 to Indenture dated as of May 9, 1997, among
Commodore, IBJ Schroder Bank & Trust Company, as Trustee, and the
Guarantors named therein, governing Commodore's 13 1/4% Senior
Subordinated Notes due 2003.*
10.1.1 Asset Purchase Agreement, dated March 10, 1997, by and between
Emerald City Radio Partners, L.P. and WNOK Acquisition Company,
Inc.*
10.1.2 First Amendment to Asset Purchase Agreement, dated as of March 14,
1997, between Emerald City Radio Partners, L.P. and WNOK
Acquisition Company, Inc.*
10.2.1 Asset Purchase Agreement dated as of April 24, 1997, between Ameron
Broadcasting, Inc. and Capstar Acquisition Company, Inc., a
wholly-owned subsidiary of Commodore.*
10.2.2 Letter Agreement, dated as of April 25, 1997, between Ameron
Broadcasting, Inc. and Capstar Acquisition Company, Inc.*
27.1 Financial Data Schedule.*
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to Capstar Broadcasting Partners, Inc.'s
Registration Statement on Form S-1 (File No. 333-25263), dated April
16, 1997.
<PAGE> 1
EXHIBIT 4.2
================================================================================
COMMODORE MEDIA, INC., AS ISSUER,
THE PARTIES LISTED
ON THE SIGNATURE PAGES
HERETO AS GUARANTORS,
AS GUARANTORS,
AND
IBJ SCHRODER BANK & TRUST COMPANY, AS TRUSTEE
-------------------------
AMENDMENT NO. 7
DATED AS OF MAY 9, 1997
TO THE
INDENTURE
DATED AS OF APRIL 21, 1995
-------------------------
$76,808,000
13 1/4% SENIOR SUBORDINATED NOTES DUE 2003
================================================================================
<PAGE> 2
AMENDMENT NO. 7, dated as of May 9, 1997 ("Amendment No. 7"), to the
INDENTURE, dated as of April 21, 1995, as amended (the "Indenture"), among
COMMODORE MEDIA, INC., a Delaware corporation, as Issuer (the "Company"), the
parties listed on the signature pages hereto as Guarantors (each individually,
a "Guarantor" and collectively, the "Guarantors"), and IBJ SCHRODER BANK &
TRUST COMPANY, a New York banking corporation, as Trustee (the "Trustee").
Each party agrees for the benefit of the other parties and for the
equal and ratable benefit of the Holders of the Company's 13 1/4% Senior
Subordinated Notes due 2003 (the "Notes") to amend, pursuant to Section 8.01(4)
of the Indenture, the Indenture as follows:
I. Each of Dixie Broadcasting, Inc., an Alabama corporation
("Dixie"), and Radio WBHP, Inc., an Alabama corporation ("Radio WBHP"), is a
wholly-owned subsidiary of Southern Star Communications, Inc., which is a
Delaware corporation and wholly-owned subsidiary of the Company, and is a
Restricted Subsidiary acquired or created pursuant to Section 4.14(ii) of the
Indenture. Each of Dixie and Radio WBHP delivers herewith the Guarantee
attached as Exhibit A to this Amendment No. 7 pursuant to the provisions set
forth in Sections 4.14 and 10.04 of the Indenture guaranteeing the obligations
of the Company under the Indenture. For all purposes of the Indenture, each of
Dixie and Radio WBHP shall be deemed a party to the Indenture by virtue of its
execution of this Amendment No. 7 and the defined term the "Guarantor"
contained in Article 1.01 of the Indenture shall be deemed to include each of
Dixie and Radio WBHP.
II. Mountain Lakes Broadcasting, L.L.C., an Alabama limited
liability company ("Mountain Lakes"), is a wholly-owned subsidiary of Dixie and
Radio WBHP and is a Restricted Subsidiary acquired or created pursuant to
Section 4.14(ii) of the Indenture. Mountain Lake delivers herewith the
Guarantee attached as Exhibit A to this Amendment No. 7 pursuant to the
provisions set forth in Sections 4.14 and 10.04 of the Indenture guaranteeing
the obligations of the Company under the Indenture. For all purposes of the
Indenture, Mountain Lakes shall be deemed a party to the Indenture by virtue of
its execution of this Amendment No. 7 and the defined term the "Guarantor"
contained in Article 1.01 of the Indenture shall be deemed to include Mountain
Lakes.
III. This Amendment No. 7 supplements the Indenture and shall be a
part and subject to all the terms thereof. Except as supplemented hereby, the
Indenture and the Securities issued thereunder shall continue in full force and
effect.
IV. This Amendment No. 7 may be executed in counterparts, each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
V. THIS AMENDMENT NO. 7 SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF).
VI. The Trustee shall not be responsible for any recital herein as
such recitals shall be taken as statements of the Company, or the validity of
the execution by the Guarantors of this Amendment No. 7. The Trustee makes no
representation as to the validity or sufficiency of this Amendment No. 7.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Amendment No. 7 to
the Indenture to be duly executed and attested as of the date and year first
written above.
COMMODORE MEDIA, INC.
By: /s/ Paul D. Stone
----------------------------------
Paul D. Stone
Vice President
ATTEST:
/s/ Kathy Archer
- ----------------------------------
Kathy Archer
Assistant Secretary
GUARANTORS:
----------
ATLANTIC STAR COMMUNICATIONS, INC.
COMMODORE MEDIA OF DELAWARE, INC
COMMODORE MEDIA OF PENNSYLVANIA, INC.
COMMODORE MEDIA FLORIDA, INC.
COMMODORE MEDIA OF KENTUCKY, INC.
COMMODORE MEDIA OF NORWALK, INC.
COMMODORE MEDIA OF WESTCHESTER, INC.
DANBURY BROADCASTING, INC.
By: /s/ Paul D. Stone
----------------------------------
Paul D. Stone
Vice President
ATTEST:
/s/ Kathy Archer
- ----------------------------------
Kathy Archer
Assistant Secretary
<PAGE> 4
SOUTHERN STAR COMMUNICATIONS, INC.
ATLANTIC CITY BROADCASTING CORP.
O.C.C., INC.
BREADBASKET BROADCASTING CORPORATION
SOUTHEAST RADIO HOLDING CORP.
HOUNDSTOOTH BROADCASTING CORPORATION
SNG HOLDINGS, INC.
OSBORN ENTERTAINMENT ENTERPRISES
CORPORATION
ORANGE COMMUNICATIONS, INC.
MOUNTAIN RADIO CORPORATION
LADNER COMMUNICATIONS HOLDING CORP.
RKZ TELEVISION, INC.
YELLOW BRICK RADIO CORPORATION
ASHEVILLE BROADCASTING CORP.
CORKSCREW BROADCASTING CORPORATION
DAYTONA BEACH BROADCASTING CORP.
RAINBOW BROADCASTING CORPORATION
GREAT AMERICAN EAST, INC.
NELSON BROADCASTING CORPORATION
SHORT BROADCASTING CORPORATION
JAMBOREE IN THE HILLS, INC
BEATRICE BROADCASTING CORP.
CURREY BROADCASTING CORPORATION
OSBORN SOUND AND COMMUNICATIONS CORP.
WAITE BROADCASTING CORP.
AMERON BROADCASTING CORPORATION
WNOK ACQUISITION COMPANY, INC.
DIXIE BROADCASTING, INC.
RADIO WBHP, INC.
By: /s/ Paul D. Stone
--------------------------------------
Paul D. Stone
Vice President
ATTEST:
/s/ Kathy Archer
- ---------------------------------
Kathy Archer
Assistant Secretary
<PAGE> 5
MOUNTAIN LAKES BROADCASTING, L.L.C.
By: Dixie Broadcasting, Inc.,
its Member
By:/s/ Paul D. Stone
----------------------------------
Paul D. Stone
Vice President
ATTEST:
/s/ Kathy Archer
- ---------------------------------
Kathy Archer
Assistant Secretary
By: Radio WBHP, Inc.,
its Member
By:/s/ Paul D. Stone
----------------------------------
Paul D. Stone
Vice President
ATTEST:
/s/ Kathy Archer
- ---------------------------------
Kathy Archer
Assistant Secretary
<PAGE> 6
MUSIC HALL CLUB, INC.
By: /s/ Larry S. Anderson
----------------------------------
Larry Anderson
President
ATTEST:
/s/ Nancy Anderson
- --------------------------------
Nancy Anderson
Secretary and Treasurer
CAPSTAR ACQUISITION COMPANY, INC.
By: /s/ Paul D. Stone
----------------------------------
Paul D. Stone
Vice President
ATTEST:
/s/ Kathy Archer
- --------------------------------
Kathy Archer
Assistant Secretary
<PAGE> 7
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:/s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ATTEST:
/s/
- --------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 1
EXHIBIT 10.1.1
ASSET PURCHASE AGREEMENT
between
EMERALD CITY RADIO PARTNERS, L.P.
and
WNOK ACQUISITION COMPANY, INC.
dated as of
March 10, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINED TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 1
-
1.2. References and Titles . . . . . . . . . . . . . . . . . . . 10
--
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy . . . . . . . . . . . . . . . . . 10
--
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 11
--
2.3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 12
--
2.4. Adjustments and Prorations . . . . . . . . . . . . . . . . . 12
--
2.5. Assumption of Liabilities and Obligations . . . . . . . . . 13
--
2.6. Allocation . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.7. Earnest Money . . . . . . . . . . . . . . . . . . . . . . . 14
--
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding Seller. . . . . . . 15
--
3.2. Representations and Warranties of Buyer . . . . . . . . . . 24
--
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of Seller . . . . . . . . . . . . . . . . . . . . 26
--
4.2. Negative Trade Balance . . . . . . . . . . . . . . . . . . . 27
--
4.3. Environmental Site Assessments . . . . . . . . . . . . . . . 28
--
ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
5.1. No Solicitation of Transactions . . . . . . . . . . . . . . 28
--
5.2. Access and Information . . . . . . . . . . . . . . . . . . . 28
--
5.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 29
--
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.4. Compliance With Station Licenses . . . . . . . . . . . . . . 30
--
5.5. Notification of Certain Matters . . . . . . . . . . . . . . 30
--
5.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . 31
--
5.7. Loan Condition . . . . . . . . . . . . . . . . . . . . . . . 31
--
ARTICLE VI
COVENANT OF BUYER
6.1. Notification of Certain Matters . . . . . . . . . . . . . . 31
--
6.2. Employee Matters . . . . . . . . . . . . . . . . . . . . . . 31
--
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for FCC Consents . . . . . . . . . . . . . . . . 32
--
7.2. Control of Stations . . . . . . . . . . . . . . . . . . . . 32
--
7.3. Other Governmental Consents . . . . . . . . . . . . . . . . 32
--
7.4. Accounts Receivable . . . . . . . . . . . . . . . . . . . . 32
--
7.5. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . 33
--
7.6. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . 33
--
7.7. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 33
--
7.8. Additional Agreements . . . . . . . . . . . . . . . . . . . 34
--
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation . . . . . . . . . . . 34
--
8.2. Conditions to Obligation of Buyer . . . . . . . . . . . . . 35
--
8.3. Conditions to Obligations of the Seller . . . . . . . . . . 36
--
ARTICLE IX
CLOSING
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
9.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . 38
--
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 40
--
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 42
--
ARTICLE XII
INDEMNIFICATION
11.1. Indemnification of Buyer . . . . . . . . . . . . . . . . . . 43
--
11.2. Indemnification of Seller . . . . . . . . . . . . . . . . . 43
--
11.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . 43
--
11.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . 44
--
11.5. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
11.6. Limitations . . . . . . . . . . . . . . . . . . . . . . . . 44
--
11.7. Instructions to Escrow Agent . . . . . . . . . . . . . . . . 45
--
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants . . . 45
--
12.2. Further Actions . . . . . . . . . . . . . . . . . . . . . . 46
--
12.3. Amendment and Modification . . . . . . . . . . . . . . . . . 46
--
12.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . 46
--
12.5. Specific Performance . . . . . . . . . . . . . . . . . . . . 46
--
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . 46
--
12.7. Expenses and Obligations . . . . . . . . . . . . . . . . . . 46
--
12.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . 47
--
12.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 47
--
12.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 48
--
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 48
--
12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 48
--
12.13. Public Announcements . . . . . . . . . . . . . . . . . . . . 48
--
12.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 48
--
12.15. Director and Officer Liability . . . . . . . . . . . . . . . 49
--
12.16. No Reversionary Interest . . . . . . . . . . . . . . . . . . 49
--
12.17. No Waiver Relating to Claims for Fraud . . . . . . . . . . . 49
--
</TABLE>
Annexes:
Annex A -- The Stations
(iii)
<PAGE> 5
Exhibits:
Exhibit A -- Form of Deposit Letter of Credit
Exhibit B -- Deposit Escrow Agreement
Exhibit C-1 -- Form of Seller Non-Competition Agreement
Exhibit C-2 -- Form of Robinson Non-Competition Agreement
Exhibit D -- Form of Bill of Sale and Assignment
Exhibit E -- Form of Assumption Agreement
Exhibit F -- Form of Indemnification Escrow Agreement
Exhibit G -- Form of Opinion of Hale and Dorr
Exhibit H -- Form of Release of Claims
Schedules:
Schedule 2.1(j) -- Choses in Action
Schedule 2.2(j) -- Excluded Personal Property
Schedule 2.5(b) -- Trade Deals
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(e) -- Unrecorded Liabilities and Conduct of Business
Schedule 3.1(f) -- Licenses and Permits
Schedule 3.1(g) -- Litigation
Schedule 3.1(h) -- Insurance
Schedule 3.1(i) -- Owned Real Estate
Schedule 3.1(j) -- Leased Real Property
Schedule 3.1(k) -- Personal Property
Schedule 3.1(l) -- Liens and Encumbrances
Schedule 3.1(o) -- Certain Agreements
Schedule 3.1(p) -- Employee Benefit Plans; Labor
Schedule 3.1(q) -- Patents, Trademarks; Etc.
Schedule 8.2(e) -- Real Estate Title Commitment
(iv)
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March __, 1997, between Emerald City Radio Partners, L.P., a limited
partnership ("Seller"), and WNOK Acquisition Company, Inc., a Delaware
corporation ("Buyer").
R E C I T A L S
A. Seller is the licensee of and owns and operates each of the
radio stations listed on Annex A hereto (each referred to individually as a
"Station" and collectively, the "Stations") pursuant to licenses issued by the
Federal Communications Commission ("FCC").
B. Seller desires to sell and Buyer desires to buy substantially
all the assets used or held for use in the operation of each of the Stations,
both tangible and intangible, excluding the Excluded Assets (as hereinafter
defined), and by so doing to acquire the radio broadcast business presently
conducted by each of the Stations, upon the terms and conditions hereinafter
set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of Seller to cash
payment for the sale of advertising time by the Stations prior to 11:59 p.m. on
the day prior to the Closing Date.
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person.
For purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a Person.
"Applicable Laws" means all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity having jurisdiction over the Assets or the business or
operations of each of the Stations, as may be in effect on or prior to the
Closing.
<PAGE> 7
"Applications" has the meaning set forth in Section 7.1.
"Assets" means all the tangible and intangible assets owned,
leased, or licensed by Seller that are used or held for use in connection with
the business or operations of any of the Stations, whether or not reflected on
the Financial Statements or Balance Sheet of Seller, but specifically excluding
therefrom the Excluded Assets.
"Assumed Contracts" means (a) those Contracts set forth on
Schedule 3.1(o) identified as being assumed by Buyer and all other contracts of
Seller entered into in the ordinary course of business prior to the date of
this Agreement that relate to the Assets or the business or operation of the
Assets or any part thereof, (b) all other non-trade advertising Contracts for
cash entered into by Seller for any of the Stations prior to the date of this
Agreement and which are terminable on not more than 30 days notice, (c) all
Contracts entered into by Seller on or after the date of this Agreement and
before the Closing in accordance with the applicable provisions of Section 4.1,
and (d) Trade Deals described in Section 2.5(b).
"Assumption Agreement" means the Assumption Agreement between
Buyer and Seller substantially in the form of Exhibit E.
"Balance Sheet" has the meaning set forth in Section 3.1(e).
"Balance Sheet Date" has the meaning set forth in Section
3.1(e).
"Banking Event" has the meaning set forth in Section 9.1.
"Bill of Sale and Assignment" means the Bill of Sale and
Assignment between Buyer and Seller substantially in the form of Exhibit D.
"Brokerage Fee" has the meaning set forth in Section 12.7.
"Business Day" means any other day than (i) a Saturday or
Sunday or (ii) a day on which commercial banks in New York, New York or Dallas,
Texas are authorized or required to be closed.
"Buyer" has the meaning set forth in the first paragraph of
this Agreement, and it includes its permitted successors and assigns.
"Buyer Indemnified Costs" means (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) that
any of the Buyer Indemnified Parties incurs and that arise out of any breach or
default by Seller of any of the representations or warranties under this
Agreement or any agreement or document executed in connection herewith
(collectively, "Buyer Indemnified Representation Costs"); (b) any
2
<PAGE> 8
and all losses, liabilities, or damages incurred by any of the Buyer
Indemnified Parties resulting from Seller's operation or control of any of the
Stations prior to the Closing Date, including any and all liabilities arising
under the Licenses or the Assumed Contracts which relate to events occurring
prior to the Closing Date; (c) any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of the
Buyer Indemnified Parties incurs and that arise out of any breach or default by
Seller of any covenant or agreement under this Agreement or any agreement or
document executed in connection herewith; (d) any and all obligations or
liabilities of Seller under any contract or agreement not expressly assumed by
Buyer pursuant to the terms hereof; (e) the items indemnified against pursuant
to Section 7.6; and (f) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing; provided, however,
that insofar as the items in this clause (f) relate to the items in clause (a)
above, such items, without duplication, shall constitute Buyer Indemnified
Representation Costs.
"Buyer Indemnified Parties" means Buyer and each officer,
director, employee, consultant, stockholder, and Affiliate of Buyer.
"CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Section 1.1.
"Choses in Action" means a right to receive or recover
property, debt, or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The term shall include rights
to indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX.
"Closing Date" means the date of the Closing specified in
Article IX.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Commitment Letter" means that certain Commitment Letter of
even date herewith between Commodore Media, Inc. and Seller pursuant to which
Commodore Media, Inc. may lend and Buyer may borrow the Commodore Loan.
"Commodore Loan" means that certain loan from an Affiliate of
Buyer to Seller in the principal amount of $13,050,000 as such may be funded
pursuant to the Commitment Letter.
3
<PAGE> 9
"Communications Act" has the meaning set forth in Section
3.1(f).
"Company Reports" has the meaning set forth in Section 3.1(e).
"Conflict Event" has the meaning set forth in Section 9.1.
"Consents" means all governmental consents and approvals,
including the FCC Consents, and all consents and approvals of third parties, in
each case that are necessary in order to transfer the Assets to Buyer and
otherwise to consummate the transactions contemplated hereby.
"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and
other modifications thereto), to which Seller is a party or is otherwise bound
and which affect or relate to the Assets or the business or operations of each
of the Stations.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement
among Seller, Buyer and Escrow Agent, a copy of which is attached hereto as
Exhibit B.
"Earnest Money" means the sum of $500,000 in cash held in
accordance with the provisions of the Deposit Escrow Agreement.
"Employee Benefit Plans" means any "employee benefit plan"
within the meaning of Section 3(3) of ERISA and any bonus, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, vacation, severance, disability, death benefit,
hospitalization or insurance plan providing benefits to any present or former
employee or contractor of Seller or any member of the ERISA Group maintained by
any such entity or as to which any such entity has any liability or obligation.
"Employee Pension Benefit Plan" has the meaning set forth in
Section 3.(2) of ERISA.
"Environmental Costs or Liabilities" has the meaning set forth
in Section 3.1(n)(iv).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Emergency Planning and Community Right to Know Act and the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean
Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil
Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations and decisional law of any
Governmental Authority, as each of the foregoing may be amended and in effect
on or prior to the Closing.
4
<PAGE> 10
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Group" has the meaning set forth in Section 3.1(p).
"ESA" means Phase I or Phase II environmental site
assessments.
"Escrow Agent" means (a) as to the Deposit Escrow Agreement,
the Person identified as the "Escrow Agent" therein, and (b) as to the
Indemnification Escrow Agreement, the Person identified as the "Escrow Agent"
therein, and in each case includes their respective successors and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Existing ESAs" means the Preliminary Environmental Evaluation
WOIC-AM and WNOK-FM Radio Transmitter Sites, Columbia, South Carolina dated
December 18, 1989, prepared by Westinghouse Environmental and Geotechnical
Services, Inc.
"FCC" has the meaning set forth in the second recital hereto.
"FCC Consents" means actions by the FCC granting its consent
to the assignment of the FCC Licenses for each of the Stations to Buyer as
contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to Seller and applications of Seller, if any,
to the FCC relating to or used in the business or operations of each of the
Stations, including those listed on Schedule 3.1(f) and any additions thereto
between the date hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC
setting forth the FCC Consents (without the inclusion of any adverse conditions
affecting Buyer's operation or ownership of any Station) and (a) which has not
been reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal, or stay, and the time for filing any such
requests and for the FCC to set aside the action on its own motion has expired
or (ii) in the event of review, reconsideration, or appeal, such review,
reconsideration, or appeal has been denied and the time for further review,
reconsideration, or appeal has expired.
"Financial Statements"has the meaning set forth in Section
3.1(e).
"GAAP" means generally accepted accounting principles in the
United States.
5
<PAGE> 11
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
"Hazardous Substances" has the meaning set forth in Section
3.1(m).
"Holdback Amount" has the meaning set forth in Section 11.5.
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Seller, Buyer, and Escrow Agent substantially in the
form attached hereto as Exhibit F.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indemnified Costs" means the Buyer Indemnified Costs or the
Seller Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or
the Seller Indemnified Parties, as the case may be.
"Indemnification Representation Costs" means the Buyer
Indemnified Representation Costs or the Seller Indemnified Representation
Costs, as the case may be.
"Indemnifying Party" means any Person who is obligated to
provide indemnification hereunder.
"Intellectual Property" means all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration, Patents
and all other intellectual property rights whether registered or not, licenses
to or owned by Seller relating to the business or operations of any Station,
including the call letters of each of the Stations and the goodwill related to
the foregoing.
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information and all other confidential or proprietary technical and
business information.
"Knowledge" means, with respect to a specified party hereto,
the actual knowledge of such party, together with such additional knowledge as
would be acquired by a reasonable Person upon conducting reasonable and
diligent inquiry concerning the subject matter in question; provided that in
the case of the Seller, the knowledge of the Seller shall refer to the actual
knowledge of Paul W. Robinson and Robert Fifield.
"Leased Real Property" means all of the Seller's leasehold
interests, easements, licenses, rights to access and rights-of-way which are
used or held for use in the business and
6
<PAGE> 12
operations of any Station, including those interests which are identified and
described in Schedule 3.1(j), as modified by any addition or permitted deletion
thereto between the date hereof and the Closing Date.
"Licenses" means the FCC Licenses and all Permits issued by
any Governmental Entity to Seller relating to or used or held for use in the
business and operations of any Station, including those listed on Schedule
3.1(f), with any additions thereto between the date hereof and the Closing
Date.
"Liens" has the meaning set forth in Section 3.1(l).
"Material Adverse Effect" means a material adverse effect on
the business, operations, properties (taken as a whole), condition (financial
or otherwise), results of operations, assets (taken as a whole), liabilities,
or prospects of Seller.
"Multiemployer Plan" has the meaning set forth in Section
3(37) or Section 4001(a)(3) of ERISA.
"Non-Competition Agreement" means, as to Seller, the Non-
Competition Agreement between Buyer and Seller substantially in the form of
Exhibit C-1 and, as to Paul Robinson, the Non-Competition Agreement between
Buyer and Paul Robinson substantially in the form of Exhibit C-2.
"Owned Real Property" means those parcels of real property
owned in fee and used or held for use by Seller as described in Schedule
3.1(i), and all buildings, structures, improvements, and fixtures thereon,
together with all rights of way, easements, privileges, and appurtenances
pertaining or belonging thereto, including any right, title, and interest of
Seller in and to any street or other property adjoining any portion of such
property.
"Patents" means all patent and patent applications (including
all reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by Seller.
"Pension Plans" has the meaning set forth in Schedule 3.1(p).
"Permits" has the meaning set forth in Section 3.1(m).
"Permitted Encumbrances" means (a) statutory Liens for current
Taxes not yet due and payable, (b) mechanics', carriers', workers', repairers',
and other similar liens imposed by law arising or incurred in the ordinary
course of business for obligations not yet due, (c) in the case of leases of
vehicles, rolling stock, and other personal property, encumbrances, which do
not, individually or in the aggregate, materially impair the operation of the
business at the facility at which such leased equipment or other personal
property is located, (d) other liens, charges or encumbrances incidental to the
operation of the Stations or the ownership of the Assets which were
7
<PAGE> 13
not incurred in connection with the borrowing of money or the advance of credit
and which, in the aggregate, do not materially detract from the value of the
Assets or materially interfere with the use thereof or the operation of the
Stations, (e) Liens on leases of real property arising from the provisions of
such leases, including, in relation to leased real property, any agreements
and/or conditions imposed on the issuance of land use permits, zoning, business
licenses, use permits, or other entitlements of various types issued by any
Governmental Entity, necessary or beneficial to the continued use and occupancy
of the Assets or the continuation of the operation of any Station and (f) Liens
securing the Commodore Loan.
"Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization, or
other entity.
"Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, furnishings, leasehold
improvements, office equipment, inventories, supplies, plant, spare parts, and
other tangible or intangible personal property which are owned or leased by
Seller for any Station and which are used or held for use in the business or
operations of any Station, including the personal property which is listed on
Schedule 3.1(k) hereto, together with any additions thereto between the date
hereof and the Closing Date less any dispositions made in accordance with
Section 4.1. The term Personal Property shall not include any of the Excluded
Assets.
"Purchase Price" means the consideration payable by Buyer to
Seller as provided in Section 2.3 hereof.
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Release" means the Release of Claims between Buyer and Seller
substantially in the form of Exhibit H.
"Released Claims" has the meaning set forth in Section
10.2(b).
"Released Parties" has the meaning set forth in Section
10.2(b).
"Schedules" means the Schedules attached hereto.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of
this Agreement.
"Seller Indemnified Costs" means (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding)
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that any of the Seller Indemnified Parties incurs and that arise out of any
breach or default by Buyer of any of the representations, or warranties under
this Agreement or any agreement or document executed in connection herewith
(collectively, "Seller Indemnified Representation Costs"); (b) any and all
losses, liabilities, or damages incurred by any of the Seller Indemnified
Parties resulting from Buyer's operation or control of any of the Stations on
and after the Closing Date, including any and all liabilities arising under the
Licenses or the Assumed Contracts which relate to events occurring after the
Closing Date; (c) any and all damages, losses, claims, liabilities, demands,
charges, suits, penalties, costs, and expenses (including court costs and
reasonable attorneys' fees and expenses incurred in investigating and preparing
for any litigation or proceeding) that any of the Seller Indemnified Parties
incurs and that arise out of any breach or default by Buyer of any covenant or
agreement under this Agreement or any agreement or document executed in
connection herewith; (d) the items indemnified against pursuant to Section 5.3;
and (e) any and all actions, suits, proceedings claims, demands, assessments,
judgments, costs, and expenses, including reasonable legal fees and expenses,
incident to any of the foregoing; provided, however, that insofar as the items
in this clause (e) relate to the items in clause (a) above, such items, without
duplication, shall constitute Seller Indemnified Representation Costs.
"Seller Indemnified Parties" means Seller and each officer,
director, employee, consultant, stockholder, and Affiliate of Seller.
"Seller Negative Trade Balance" has the meaning set forth in
Section 4.2.
"Station Event" has the meaning set forth in Section 9.1.
"Station Licenses" has the meaning set forth in Section
3.1(f).
"Station Management" has the meaning set forth in Section
4.1(b).
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.2(e).
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"Title Company" means Chicago Title Insurance Company or such
other title insurance company reasonably acceptable to Buyer and Seller.
"Trade Deals" means the exchanges by a Station of its
advertising time for goods or services, other than in connection with the
licensing of programs and programming material.
"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of the business of any Station, whether or
not registered, and any applications or registrations therefor and (b) any
associated goodwill incident thereto owned by Seller.
"Trading Event" has the meaning set forth in Section 9.1.
"Transaction Documents" has the meaning set forth in Section
3.1(c).
"Warranty Deed" means a South Carolina general warranty deed
in form and substance reasonably acceptable to the Buyer and the Title Company
pursuant to which Seller conveys to Buyer the Owned Real Property at the
Closing.
1.2. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language contained
therein. The words "this Agreement," "herein," "hereby," "hereunder," " and
"hereof," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section," "this subsection," and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. AGREEMENT TO SELL AND BUY. Subject to the terms and
conditions set forth in this Agreement and except for the Excluded Assets,
Seller shall sell, assign, transfer and deliver to Buyer on the Closing Date,
and Buyer shall purchase on the Closing Date, all of the Assets, free and clear
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of any Liens or liabilities (except for Permitted Encumbrances and liabilities
assumed by Buyer in accordance with Section 2.5). The Assets to be assigned,
transferred and delivered by Seller hereunder shall include the following:
(a) All Personal Property;
(b) All Leased Real Property;
(c) All Owned Real Property;
(d) All Licenses and Permits;
(e) All Assumed Contracts;
(f) All Intellectual Property;
(g) Each of the Station's technical information and data,
machinery and equipment warranties (to the extent such warranties are
assignable), if any, maps, plans, diagrams, blueprints and schematics
relating to such Station, if any, including filings with the FCC which
relate to such Station, and goodwill relating to the foregoing;
(h) All books and records relating to the business and
operation of any of the Stations (excluding those described in, or
relating to the assets described in, Section 2.2), including (i)
executed copies of the Assumed Contracts, or if no executed agreement
exists, summaries of each Assumed Contract transferred pursuant to
clause (e) above and (ii) all records required by the FCC to be kept
by each Station, subject to the right of Seller to copy and have such
books and records made reasonably available to Seller for tax and
other legitimate organization purposes for a period of six years after
the Closing;
(i) To the extent assignable, all computer programs and
software, and all rights and interests of Seller in and to computer
programs and software used in connection with the business or
operations of any Station;
(j) Except for claims relating to Taxes, all Choses in
Action of Seller; and
(k) All intangible assets of Seller relating to any
Station or the business or operation of any Station not specifically
described above, including goodwill, and all other assets, other than
the Excluded Assets, used or held for use in connection with any
Station or the business of the Seller.
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2.2. EXCLUDED ASSETS. The Excluded Assets shall consist
of the following:
(a) In each case determined as of 11:59 p.m. on the day
prior to the Closing Date, Seller's cash on hand as of the Closing
Date and all other cash in any of Seller's bank or savings accounts;
notes receivable, letters of credit or other similar items of Seller;
any stocks, bonds, certificates of deposit and similar investments of
Seller; and any other cash equivalents of Seller;
(b) Seller's books and records relating solely to
internal corporate matters and any other books and records not related
to any Station or the business or operations of any Station;
(c) Any claims, rights and interest of Seller in and to
any (i) refunds of Taxes or fees of any nature whatsoever or (ii)
deposits or utility deposits, which, in each case, relate solely to
the period prior to the Closing Date;
(d) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by Seller
relating to property or equipment repaired, replaced or restored by
Seller prior to the Closing Date;
(e) All Employee Benefit Plans and all assets or funds
held in trust, or otherwise, associated with or used in connection
with the Employee Benefit Plans;
(f) All Choses in Action, if any, of Seller excluded from
Section 2.1(j);
(g) All Accounts Receivable;
(h) All tangible and intangible personal property
disposed of or consumed in the ordinary course of business between the
date of this Agreement and the Closing Date, or as otherwise permitted
under the terms hereof; and
(i) Any collective bargaining agreement, any other
Contract not included in the Assumed Contracts, and all Contracts that
have terminated or expired prior to the Closing Date in the ordinary
course of business and as permitted hereunder; and
(j) The personal effects and other personal property, if
any, identified on Schedule 2.2(j).
2.3. PURCHASE PRICE. Subject to the adjustments set forth in
Section 2.4 and 2.5(b), the Purchase Price for the Assets is Fourteen Million
Nine Hundred Seventy-Five Thousand Dollars ($14,975,000).
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2.4. ADJUSTMENTS AND PRORATIONS.
(a) All revenues arising from the operation of the
Stations earned or accrued up until 11:59 p.m. on the day prior to the Closing
Date, and all expenses, costs and liabilities, arising therefrom incurred,
accrued or payable up until such time, including expenses arising under the
Assumed Contracts, tower rentals, business and license fees, utility charges,
real and personal property Taxes levied against the Assets, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, other Taxes, wages, salaries, vacation, sick and employee compensation
pay shall be prorated between Buyer and Seller in accordance with the principle
that (i) Seller shall receive all revenues, refunds and deposits of Seller held
by third parties, and shall be responsible for all expenses, costs and
liabilities incurred, payable or allocable to the conduct of the business and
operations of each Station for the period ending at 11:59 p.m. on the day prior
to the Closing Date and (ii) Buyer shall receive all revenues earned or accrued
and shall be responsible for all expenses, costs and liabilities incurred,
payable or allocable to the conduct of the business and operations of each
Station for the period commencing on and continuing after the Closing Date. An
adjustment of the Purchase Price and proration shall be made in favor of Buyer
to the extent that Buyer assumes any liability under any Assumed Contract to
refund (or to credit against payments otherwise due) any security deposit or
similar prepayment paid to Seller by any lessee or other third party which is
not otherwise credited to Buyer. Subject to Buyer's receipt of appropriate
estoppel certificates, an adjustment of the Purchase Price and proration shall
be made in favor of Seller to the extent that Seller has made (A) any security
deposit under any Assumed Contract whether or not there is a proration under
such Assumed Contract or (B) other prepayment under any Assumed Contracts for
which there is a proration. Seller shall be liable for all of the costs of
employee compensation relating to each of the Stations properly attributable to
or accruable on account of service with the Seller through 11:59 p.m. on the
date prior to the Closing Date, including (1) all Taxes and related
contributions, vacations and sick pay and (2) all group medical, dental or
death benefits for expenses incurred, related to or arising from, events
occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, or
death or disability occurring on or prior to 11:59 p.m. on the date prior to
the Closing Date, whether reported by the Closing Date or thereafter; Buyer
will be liable for all of the costs of employee compensation relating to each
of the Stations, properly attributable or accruable thereafter on account of
service with Buyer. Except as provided in Section 2.5(b), Trade Deals shall
not be adjusted or prorated. Notwithstanding the foregoing, no adjustments or
prorations under this Agreement shall result in a decrease or increase in the
aggregate Purchase Price of greater than $24,000.
(b) Adjustments or prorations pursuant to this Section
2.4 will, insofar as feasible be determined and paid on the Closing Date based
upon Seller's good faith calculation delivered to Buyer five days prior to the
Closing Date and reasonably approved by Buyer, with final settlement and
payment by the appropriate party occurring no later than 60 days after the
Closing Date. Within 60 days after the Closing Date, Buyer shall submit to
Seller its good faith determination of the adjustments or prorations required
by this Section 2.4. Buyer's determination of the amount of adjustment under
this Section 2.4 shall be made in accordance with GAAP, consistently applied.
If Seller disagrees with the determination made by Buyer of the adjustment,
Seller shall give prompt
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written notice thereof, but in no event later than 20 days after notice of
Buyer's determination, specifying in reasonable detail the nature and extent of
the disagreement, and Buyer and Seller shall have a period of 30 days in which
to resolve the disagreement. If the parties are unable to resolve the
disagreement within the 30-day period, the matter shall be submitted to Coopers
& Lybrand L.L.P., an independent certified public accounting firm, which
accounting firm shall be directed to submit a final resolution within 30 days.
The accounting firm's determination shall be binding on Buyer and Seller. Each
party shall bear the fees and expenses of its own representatives, including
its independent accountants, if any, and shall share equally the fees and
expenses of Coopers & Lybrand, L.L.P., if engaged, to resolve any disagreement
between the parties. Within five Business Days following a final determination
hereunder, the party obligated to make payment will make the payments
determined to be due and owing in accordance with this Section 2.4.
2.5. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. (a) As of the
Closing Date, Buyer shall assume and undertake to pay, discharge and perform
all the obligations and liabilities of Seller relating to each Station under
the Licenses and the Assumed Contracts assumed by Buyer relating to the time
period beginning on or arising out of events occurring on or after the Closing
Date. All other obligations and liabilities of Seller, including (i)
obligations or liabilities under any contract not included in the Assumed
Contracts, (ii) obligations or liabilities under any Assumed Contract for which
a Consent, if required, has not been obtained as of the Closing, (iii) any
obligations and liabilities arising under the Assumed Contracts that relate to
the time period prior to the Closing Date or arise out of events occurring
prior to the Closing Date and (iv) any forfeiture, claim or pending litigation
or proceeding relating to the business or operations of any Station prior to
the Closing Date, shall remain and be the obligation and liability solely of
Seller. Other than as specified in the first sentence of this Section 2.5,
Buyer, directly or indirectly, shall assume no liabilities or obligations of
Seller and shall not be liable therefor.
(b) Schedule 2.5(b) contains a list of all of the Trade
Deals in effect as of the date of this Agreement and correctly sets forth the
balance, in dollar value, of either (i) Seller's obligations to the other party
under such Trade Deals (denoted by a minus on Schedule 2.5(b)) or (ii) the
amount due Seller under such Trade Deals (reflected as a positive on Schedule
2.5(b)). On the Closing Date, Buyer shall assume Seller's obligations under
(i) the Trade Deals listed on Schedule 2.5(b) to the extent that the goods or
services to be provided by the advertisers pursuant to such Trade Deals are
solely used or useful in connection with the business or operations of any
Station and (ii) all Trade Deals entered into by Seller between the date hereof
and the Closing Date with the consent of Buyer; provided, however, if, as of
the Closing Date, the obligation of Seller for air time due another party
pursuant to all Trade Deals to be assumed by Buyer exceeds $50,000 in the
aggregate, then the amount of such excess shall be considered a pre-Closing
Date operating expense of Seller that shall serve as a reduction of the
Purchase Price in accordance with Section 2.4(a). The Trade Deals assumed by
Buyer pursuant to the terms of this Section 2.5(b) shall be considered Assumed
Contracts.
2.6. ALLOCATION. Within 30 days after the Closing Date, Seller and
Buyer shall negotiate in good faith an allocation of the Purchase Price among
the Assets (as well as any liabilities assumed
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by Buyer) that complies with Section 1060 of the Code with respect to the
allocation of the Purchase Price. If the allocation is not agreed upon within
30 days after the Closing, then Buyer and Seller agree that the allocation
shall be made and consistently reported by Buyer and Seller in compliance with
Section 1060 based upon an asset valuation supplied by KPMG Peat Marwick. The
cost of such appraisal shall be shared equally by Buyer and Seller. Buyer will
order such appraisal from KPMG Peat Marwick on or after such date as the FCC
Consents have been placed on public notice. The appraisal, if required, shall
be provided to Seller within 45 days after the Closing Date.
2.7. EARNEST MONEY. (a) On or before the fourth Business Day after
the date of this Agreement, Buyer shall deposit the Earnest Money with the
Escrow Agent to be held in escrow in accordance with the Deposit Escrow
Agreement.
(b) Subject to satisfaction of the conditions to the
obligations set forth in Article VIII, at the Closing, Seller shall instruct
the Escrow Agent to pay the Earnest Money to Buyer.
(c) If this Agreement is terminated as provided in
Section 10.1, Buyer and Seller shall instruct the Escrow Agent to pay the
Earnest Money to Buyer or to Seller, all as provided in Section 10.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying on such representations and warranties in entering into and
performing this Agreement).
(a) Organization, Good Standing, Etc. Seller is a
limited partnership, validly existing under the laws of the State of Delaware,
has all requisite partnership power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and is duly
qualified to do business in each state listed on Schedule 3.1(a), which states
represent every jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
Seller has delivered to Buyer true and complete copies of its Limited
Partnership Agreement, as in effect at the date of this Agreement. Seller is
not in violation of any provisions of its Limited Partnership Agreement.
(b) Subsidiaries of Seller. Seller does not own,
directly or indirectly, any equity interest in, any other corporation,
partnership, or other Person or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other similar
investment in any corporation, partnership, or other Person.
(c) Authority. Seller has all requisite partnership
power and authority to enter into this Agreement, the Deposit Escrow Agreement,
the Bill of Sale and Assignment, the
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Assumption Agreement, the Indemnification Escrow Agreement, the Non-Competition
Agreement and each other agreement, document, and instrument required to be
executed by Seller in accordance herewith (collectively, the "Transaction
Documents") and to consummate the transactions contemplated hereby or thereby.
The execution and delivery of the Transaction Documents by Seller and the
consummation by Seller of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of Seller, including,
without limitation, the requisite approval of the holders of the outstanding
equity interest of Seller entitled to vote thereon. The Transaction Documents
have been, or upon execution and delivery will be, duly executed and delivered
and constitute the valid and binding obligations of Seller enforceable against
it in accordance with their terms, subject as to enforceability to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(d) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents by Seller do not and the
performance by Seller of the transactions contemplated hereby or thereby will
not, subject to obtaining the consents, approvals, authorizations, and permits
and making the filings described in this Section 3.1(d), (A) violate, conflict
with, or result in any breach of any provision of Seller's Limited Partnership
Agreement, (B) violate, conflict with, or result in a violation or breach of,
or constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of control of
Seller or otherwise) any obligation, or result in the loss of any benefit, or
give any Person the right to require any security to be repurchased, or give
rise to the creation of any lien, charge, security interest, or encumbrance
upon any of the Assets under any of the terms, conditions, or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or
any license, lease, agreement, or other instrument or obligation to which
Seller is a party or by which it or any of the Assets may be bound or
subjected, or (C) violate any order, writ, judgment, injunction, decree,
statute, law, rule, or regulation, of any Governmental Entity applicable to
Seller or by which or to which any of the Assets is bound or subject. No
consent, approval, order, or authorization of, or registration, declaration, or
filing with, any Governmental Entity is required by or with respect to Seller
in connection with the execution and delivery of the Transaction Documents by
Seller or the consummation of the transactions contemplated hereby or thereby,
except for the FCC Consents as contemplated by Section 7.1 hereof and any that
may be required under the HSR Act.
(e) Reports; Financial Statements; Absence of Certain
Changes or Events.
(i) Seller has filed all forms, reports,
statements, and other documents required to be filed with the FCC.
Seller has filed all forms, reports, statements, and other documents
required to be filed with any and all other Governmental Entities.
All such forms, reports, statements and other documents required to be
filed with the FCC or any other Governmental Entity are referred to
herein, collectively, as the "Company Reports"). The
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Company Reports were prepared in all material respects in accordance
with the requirements of applicable law.
(ii) Seller has delivered to Buyer copies of (A)
the audited balance sheets of Seller as of December 31, 1994 and
December 31, 1995, together with the audited statements of income and
cash flows of Seller for the periods then ended, and the notes
thereto, accompanied by the reports thereon of BDO Seidman, L.L.P.,
independent public accountants, and (B) the unaudited balance sheet of
Seller as of December 31, 1996, together with the related unaudited
statements of income for the periods then ended (such audited and
unaudited financial statements collectively being referred to as the
"Financial Statements"). The Financial Statements, including the
notes thereto, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except to the
extent disclosed therein or required by changes in GAAP) and present
accurately the information purported to be presented therein as of
such dates and for the periods then ended.
(iii) Except as disclosed in Schedule 3.1(e), there
is no liability or obligation of any kind, whether accrued, absolute,
fixed, contingent, or otherwise, of Seller that is not reflected or
reserved against in the balance sheet for the year ended December 31,
1996 (the "Balance Sheet"), other than (A) liabilities incurred in the
ordinary course of business in a manner consistent with past practice
since December 31, 1996 (the "Balance Sheet Date"), or (B) any such
liability or obligation which would not be required to be presented in
financial statements or the notes thereto prepared in conformity with
GAAP applied, in a manner consistent with past practice, in the
preparation of the Financial Statements.
(iv) Except as disclosed in Schedule 3.1(e), since
the Balance Sheet Date, Seller has conducted its business only in the
ordinary course consistent with past practice and nothing has occurred
that would have been prohibited by Section 4.1 if the terms of such
section had been in effect as of and after the Balance Sheet Date.
Since the Balance Sheet Date, there has not occurred, and Seller has
not incurred or suffered, any event, circumstance, or fact that could
result in a Material Adverse Effect. Additionally, since the Balance
Sheet Date, there has not occurred, and Seller has not incurred or
suffered, any event, circumstance, or fact that materially impairs the
physical assets of any of the Stations.
(f) Compliance with Applicable Laws: FCC Matters.
(i) The business of Seller has been conducted in
compliance in all material respects with each Applicable Law. No
investigation or review by any Governmental Entity with respect to
Seller is pending or, to the Knowledge of Seller, threatened. Without
limiting the generality of the foregoing, Seller has complied with the
Communications Act of 1934, as amended, and all material rules,
regulations and written policies of the FCC thereunder (collectively,
the "Communications Act"), all obligations with respect to equal
employment opportunity under Applicable Law, and all material rules
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and regulations of the Federal Aviation Administration applicable to
each of the towers used or held for use by a Station. In addition,
Seller has duly and timely filed, or caused to be so filed, with the
FCC and other appropriate Governmental Entities all reports,
statements, documents, registrations, filings, or submissions with
respect to the operation of each Station and the ownership thereof,
including, applications for renewal of authority required by
Applicable Law to be filed. All such FCC filings complied in all
material respects with Applicable Laws when made, and no deficiencies
have been asserted with respect to any such filings. The material
required by 47 C.F.R. Section 73.3526 to be kept in the public
inspection files of each Station is in such files.
(ii) Schedule 3.1(f) is a true and complete list
of (A) all of the FCC Licenses, including the expiration dates
thereof, as of the date of this Agreement and (B) all other material
licenses, permits, or authorizations issued to Seller by any other
Governmental Entities and held by it as of the date of this Agreement.
Such FCC Licenses, licenses, permits, and authorizations, and all
pending applications for modification, extension, or renewal thereof
or for new licenses, permits, permissions, or authorizations, are
collectively referred to herein as the "Station Licenses." Schedule
3.1(f) accurately lists the legally authorized holder(s) of the
Station Licenses. The Station Licenses constitute all the licenses,
permits and authorizations required for the operation of each of the
Stations and the business of Seller, and each of the Station Licenses
is in full force and effect. Each of the Stations has been operated
in all material respects in accordance with the terms of its Station
Licenses and the Seller is otherwise in compliance with, and has
conducted its business so as to comply with, the terms of such Station
Licenses. There are no proceedings pending or, to the Knowledge of
Seller, threatened with respect to Seller's ownership or operation of
any Station which reasonably may be expected to result in the
revocation, material adverse modification, non-renewal, or suspension
of any of the Station Licenses, the denial of any pending applications
for any Station Licenses, the issuance against Seller of any cease and
desist order, or the imposition of any administrative actions by the
FCC or any other Governmental Entity with respect to any Station
Licenses, or which reasonably may be expected to adversely affect any
Station's ability to operate as currently operated or Buyer's ability
to obtain control of any Station Licenses or to operate any Station.
To the Knowledge of Seller, no other broadcast station or radio
communications facility is causing interference to any Station's
transmissions beyond that which is allowed by FCC rules and
regulations and no Station is causing interference to any other
broadcast station or radio communications facilities' transmissions
beyond that which is allowed by the FCC rules and regulations. To the
knowledge of Seller, there is no reason to believe that the FCC will
not renew any of the Station Licenses issued by the FCC in the
ordinary course of business. To the Knowledge of Seller, there are no
facts relating to Seller under the Communications Act that reasonably
may be expected to disqualify Seller from transferring control of any
of the Station Licenses pursuant to the terms of this Agreement or
that would prevent the consummation by Seller of the transactions
contemplated by this Agreement.
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(g) Absence of Litigation. Except as set forth on
Schedule 3.1(g), there is no claim, action, suit, inquiry, judicial, or
administrative proceeding, grievance, or arbitration pending or, to the
Knowledge of Seller, threatened against Seller or any of the Assets by or
before any arbitrator or Governmental Entity, nor are there any investigations
relating to Seller or any of the Assets pending or, to the Knowledge of Seller,
threatened by or before any arbitrator or Governmental Entity. Except as set
forth in Schedule 3.1(g), there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator outstanding against Seller or any of the Assets. There is
no action, suit, inquiry, judicial, or administrative proceeding pending or, to
the Knowledge of Seller, threatened against Seller relating to the transactions
contemplated by this Agreement.
(h) Insurance. Since March 16, 1994, Seller has been
insured against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. Schedule
3.1(h) sets forth an accurate summary of all fire, general liability,
malpractice liability, theft, and other forms of insurance and all fidelity
bonds held by or applicable to Seller. Except as set forth on Schedule 3.1(h),
the policies of general liability, malpractice liability, fire, theft, and
other insurance maintained with respect to the operations, assets, or business
of Seller provide adequate coverage against loss. To the Knowledge of Seller,
no event has occurred, including the failure by Seller to give any notice or
information or the delivery of any inaccurate or erroneous notice or
information, which limits or impairs the rights of Seller under any such
insurance policies in such a manner as could have a Material Adverse Effect.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled within the
last two years prior to the date hereof.
(i) Owned Real Property. Schedule 3.1(i) contains an
accurate description of all the Owned Real Property. Seller has good and
marketable, fee simple, absolute title in and to the Owned Real Property.
Seller has sufficient title to such easements, rights of way and other rights
appurtenant to each of the Owned Real Properties as are necessary to permit
ingress and egress to and from the Owned Real Property to a public way, and the
improvements on the Owned Real Property have access to such sewer, water, gas,
electric, telephone and other utilities as are necessary to allow the business
of the Seller operated thereon to be operated in the ordinary course. There is
no pending condemnation or similar proceeding affecting the Owned Real Property
or any portion thereof, and to the Knowledge of Seller, no such action is
threatened. Except as set forth on Schedule 3.1(i), the improvements located
on the Owned Real Property are in sufficiently good condition (except for
ordinary wear and tear) to allow the business of the Seller to be operated in
the ordinary course and there has been no damage to such improvements that
affects the conduct of such business in any material respect that has not been
repaired or remedied. Except as set forth on Schedule 3.1(i), there are no
lessees or tenants at will in possession of any portion of any of the Owned
Real Property other than Seller, whether as lessees, tenants at will,
trespassers or otherwise. Except as set forth on Schedule 3.1(i), no zoning,
building or other federal, state or municipal law, ordinance, regulation or
restriction is violated in any material respect by the continued maintenance,
operation or use of the Owned Real Property or any tract or portion thereof or
interest therein in its present manner. The current use of the Owned Real
Property and all parts thereof does not violate
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any restrictive covenants of record affecting any of the Owned Real Property.
All necessary Licenses by any Governmental Entity with respect to the Owned
Real Property have been obtained, have been validly issued and are in full
force and effect.
(j) Leased Real Property. Schedule 3.1(j) contains an
accurate description of all the leasehold interests relating to the business
and operations of each of the Stations as now conducted. Each lease described
in Schedule 3.1(j) is a valid and binding obligation of Seller and is in full
force and effect without amendment other than as described in Schedule 3.1(j).
Except as otherwise disclosed on Schedule 3.1(j), Seller is not, and to the
Knowledge of the Seller, no other party is, in default under any lease
described in Schedule 3.1(j). Subject to obtaining the Consents disclosed in
Schedule 3.1(j), Seller has the full legal power and authority to assign its
rights under the leases listed in Schedule 3.1(j) to Buyer. All leasehold
interests listed in Schedule 3.1(j) (including the improvements thereon) are
available for immediate use in the conduct of the business and operations of
each of the Stations as currently conducted.
(k) Personal Property. Schedule 3.1(k) contains a
description of the items of Personal Property (having a replacement cost of not
less than $10,000 for each item) which comprise all Personal Property used or
held for use in connection with the business and operations of each Station or
which permit the operation of each Station as now conducted. Except as set
forth on Schedule 3.1(k), Seller has good title to, or a valid leasehold or
license interest in, all Personal Property and none of the Personal Property is
subject to any Lien or other encumbrances, except for Permitted Encumbrances.
Seller is not, and to the Knowledge of the Seller, no other party is, in
default under any of the leases, licenses and other Contracts relating to the
Personal Property. Except as otherwise disclosed in Schedule 3.1(k), the
Personal Property (i) is in good operating condition and repair (ordinary wear
and tear excepted), (ii) is available for immediate use in the business and
operation of each of the Stations as currently conducted and (iii) permits each
of the Stations to operate in accordance with the terms of their respective FCC
Licenses, and the rules and regulations of the FCC, and with all other
applicable federal, state and local statutes, ordinances, rules and
regulations.
(l) Liens and Encumbrances. All of the Assets, including
leases, are free and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, tenancies, and other possessory interests, conditional
sale or other title retention agreements, assessments, easements, rights of
way, covenants, restrictions, rights of first refusal, defects in title,
encroachments, and other burdens, options or encumbrances of any kind
(collectively, "Liens") except (i) Permitted Encumbrances and (ii) Liens set
forth on Schedule 3.1(l) (the Liens referred to in clauses (i) and (ii) being
"Permitted Liens"). At the Closing, all of the Assets shall be free and clear
of all Liens other than Permitted Encumbrances.
(m) Environmental Matters. Except as expressly disclosed
in the Existing ESAs,
(i) The real property and facilities owned,
operated, and leased by Seller and the operations of Seller thereon
comply and have at all times complied in all material
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<PAGE> 26
respects with all Applicable Laws and rules of common law pertaining
to the environment, natural resources, and public or employee health
and safety, including all Environmental Laws;
(ii) No judicial proceedings are pending or, to
the Knowledge of Seller, threatened against Seller alleging the
violation of any Environmental Laws, and there are no administrative
proceedings pending or, to the Knowledge of Seller, threatened against
Seller, alleging the violation of any Environmental Laws and no notice
from any Governmental Entity or any private or public Person has been
received by Seller claiming any violation of any Environmental Laws in
connection with any real property or facility owned, operated or
leased by Seller, or requiring any remediation, clean-up,
modification, repairs, work, construction, alterations, or
installations on or in connection with any real property or facility
owned, operated or leased by Seller that are necessary to comply with
any Environmental Laws and that have not been complied with or
otherwise resolved to the satisfaction of the party giving notice;
(iii) All permits, registrations, licenses,
authorizations, and the like ("Permits") required to be obtained or
filed by Seller under any Environmental Laws in connection with
Seller's operations, including those activities relating to the
generation, use, storage, treatment, disposal, release, or remediation
of Hazardous Substances (as such term is defined in Section 3.1(n)(iv)
hereof), have been duly obtained or filed, and Seller is and has at
all times been in full compliance in all material respects with the
terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Seller or any of its predecessors on, in, or under any of the owned,
operated, or leased real property or facilities are and have at all
times been generated, stored, used, treated, disposed of, and released
by such Persons or on their behalf in such manner as not to result in
any Environmental Costs or Liabilities. "Hazardous Substances" means
(A) any hazardous materials, hazardous wastes, hazardous substances,
toxic wastes, and toxic substances as those or similar terms are
defined under any Environmental Laws; (B) any asbestos or any material
which contains any hydrated mineral silicate, including chrysolite,
amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable; (C) PCBs, or PCB-containing materials,
or fluids; (D) radon; (E) any other hazardous, radioactive, toxic or
noxious substance, material, pollutant, contaminant, constituent, or
solid, liquid or gaseous waste; (F) any petroleum, petroleum
hydrocarbons, petroleum products, crude oil and any fractions or
derivatives thereof, any oil or gas exploration or production waste,
and any natural gas, synthetic gas and any mixtures thereof; (G) any
substance that, whether by its nature or its use, is subject to
regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Entity requires environmental
investigation, monitoring or remediation; and (H) any underground
storage tanks, dikes, or impoundments as defined under any
Environmental Laws. "Environmental Costs or Liabilities" means any
losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions,
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claims, costs and expenses (including, without limitation, reasonable
fees, disbursements and expenses of legal counsel, experts, engineers
and consultants, and the costs of investigation or feasibility studies
and performance of remedial or removal actions and cleanup activities)
in connection with (1) any Environmental Laws, (2) order of, or
contract of Seller with, any Governmental Entity or any private or
public Persons or (3) any exposure of any Person or property to
Hazardous Substances;
(v) There are not now, nor have there been in the
past, on, in or under any property or facilities when owned, leased,
or operated by Seller or when owned, leased, or operated by any of its
predecessors, any Hazardous Substances that are in a condition or
location that violates any Environmental Law or that reasonably could
be expected to require remediation under any Environmental Laws or
give rise to a claim for damages or compensation by any affected
Person or to any Environmental Costs or Liabilities; and
(vi) Seller has not received, and to the Knowledge
of Seller, does not expect to receive, any notification from any
source advising Seller that: (A) it is a potentially responsible
party under CERCLA or any other Environmental Laws; (B) any real
property or facility currently or previously owned, operated, or
leased by it is identified or proposed for listing as a federal
National Priorities List ("NPL") (or state-equivalent) site or a
Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") list (or state-equivalent) site; and
(C) any facility to which it has ever transported or otherwise
arranged for the disposal of Hazardous Substances is identified or
proposed for listing as an NPL (or state-equivalent) site or CERCLIS
(or state-equivalent) site.
(n) Taxes. Seller has filed or caused to be filed all
Tax Returns affecting the Stations or the Assets which are required to be filed
by Seller, all such Tax Returns which have been filed are accurate and
complete, and Seller has timely paid all Taxes shown on such returns or on any
Tax assessment received by Seller to the extent that such Taxes have become
due. There are no Liens for Taxes upon the Stations or the Assets except for
the Permitted Encumbrances. Seller has not received notice of any Tax
deficiency or delinquency. No Internal Revenue Service audit of Seller is
pending or, to the Knowledge of Seller, threatened, and the results of any
completed audits are properly reflected in the Financial Statements. All
monies required to be withheld by Seller from employees or collected from
customers for Taxes and the portion of any Taxes to be paid by Seller to
governmental agencies or set aside in accounts for such purposes have been so
paid or set aside, or such monies have been reserved against and entered upon
the books and are reflected in the Balance Sheet. There are no legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the business of the Stations.
(o) Certain Agreements.
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(i) Schedule 3.1(o) hereto lists each (A)
employment or consulting Contract which is not terminable without
liability or penalty on 30 days or less notice, (B) Contract under
which any party thereto remains obligated to provide goods or services
having a value, or to make payments aggregating, in excess of $50,000
per year, and (C) other Contract that is material to the operation of
the Stations or to the Seller's business, in any such case to which
Seller is a party or Seller or the Assets is bound. Each such
Contract described in Schedule 3.1(o) or required to be so described
is a valid and binding obligation of Seller and is in full force and
effect without amendment. Seller and, to the Knowledge of Seller,
each other party to such Contracts, has performed in all material
respects the obligations required to be performed by it under such
Contracts and is not (with or without lapse of time or the giving of
notice, or both) in breach or default thereunder. Schedule 3.1(o)
identifies, as to each such Contract listed thereon, whether the
consent of the other party thereto is required in order for such
Contract to continue in full force and effect upon the consummation of
the transactions contemplated hereby or whether such Contract can be
canceled by the other party without liability to such other party due
to the consummation of the transactions contemplated hereby. A
complete copy of each written Contract and a description of each oral
Contract set forth in Schedule 3.1(o) has been provided to Buyer prior
to the date of this Agreement.
(ii) Seller is not a party to any oral or written
agreement, plan or arrangement with any employee or other station or
broadcast Personnel (whether an employee, consultant or an independent
contractor) of Seller (A) the benefits of which are contingent, or the
terms of which are materially altered, upon, or result from, the
occurrence of a transaction involving Seller of the nature of any of
the transactions contemplated by this Agreement, (B) providing
severance benefits longer than forty-five days or other benefits after
the termination of employment or other contractual relationship
regardless of the reason for such termination and regardless of
whether such termination is before or after a change of control, (C)
under which any Person may receive payments subject to the tax imposed
by Section 4999 of the Code or (D) any of the benefits of which will
be increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement.
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits
(vested and unvested) under all the Employee Pension Benefit Plans,
which Seller or any other trades or businesses under common control
within the meaning of Section 4001(b)(1) of ERISA with Seller
(collectively, the "ERISA Group") maintains, or to which Seller or any
member of the ERISA Group is or has been obligated to contribute (the
"Pension Plans"), did not, as of the respective last annual valuation
dates for such Pension Plans, exceed the value of the assets of such
Pension Plan allocable to such benefits. None of such Pension Plans
subject to Title IV of ERISA or any of their related trusts has been
terminated or partially terminated.
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Neither Seller or any member of the ERISA Group has contributed or
been obligated to contribute to any Multiemployer Plan. Except as set
forth on Schedule 3.1(p), neither Seller nor any member of the ERISA
Group has any Employee Benefit Plans.
(ii) True, correct, and complete copies of each of
the Employee Benefit Plans, and related trusts, if applicable, have
been furnished to Buyer, along with the most recent report filed on
Form 5500 and summary plan description with respect to each Employee
Benefit Plan required to file Form 5500.
(iii) Seller is not a party to any collective
bargaining agreement. Seller has not agreed to recognize any union or
other collective bargaining representative, nor has any union or other
collective bargaining representative been certified as the exclusive
bargaining representative of any of its employees. Seller (A) is, and
has always been since January 1, 1995, in substantial compliance with
all applicable laws regarding labor, employment and employment
practices, terms and conditions of employment, equal employment
opportunity, employee benefits, affirmative action, wages and hours,
plant closing and mass layoff, occupational safety and health,
immigration, and workers' compensation, (B) is not engaged, nor has it
since January 1, 1995, engaged, in any unfair labor practices, and has
no, and has not had since January 1, 1995, any, unfair labor practice
charges or complaints before the National Labor Relations Board
pending or, to the Knowledge of Seller threatened against it, (C) has
no, and has not had since January 1, 1995, any, grievances,
arbitrations, or other proceedings arising or asserted to arise under
any collective bargaining agreement, pending or, to the Knowledge of
Seller threatened, against it and (D) has no, and has not had since
January 1, 1995, any, charges, complaints, or proceedings before the
Equal Employment Opportunity Commission, Department of Labor or any
other Governmental Entity responsible for regulating employment
practices, pending, or, to Seller's Knowledge, threatened against it.
There is no labor strike, slowdown, work stoppage or lockout pending
or, to the Knowledge of Seller, threatened against or affecting
Seller, and Seller has not experienced any labor strike, slowdown,
work stoppage or lockout since January 1, 1995. To the Knowledge of
Seller no union organizational campaign or representation petition is
currently pending with respect to any of the employees of Seller.
(q) Patents, Trademarks, Etc. Schedule 3.1(q) is a true
and complete list of all of the Intellectual Property. Except as set forth on
Schedule 3.1(q), Seller owns or has the unencumbered right to use pursuant to a
valid, binding, and enforceable license agreement or other contract or
arrangement all such Intellectual Property. To the Knowledge of Seller, Seller
is not infringing any such Intellectual Property, and Seller is not aware of
any infringement by others of any of the Intellectual Property owned by Seller.
(r) Affiliate Relationships. There are no contracts or
other arrangements involving Seller in which any member, manager, officer,
director, or Affiliate of Seller has a financial interest, including
indebtedness to Seller.
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(s) Assets. The Assets and the Excluded Assets include
all assets used or held for use in connection with the business and operations
of the Stations as currently conducted.
(t) No Dispositions. Since the Balance Sheet Date, there
has not occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of the assets of any Station other than any disposition of
(i) obsolete property,(ii) property in connection with the acquisition of
replacement property of equal value, or (iii) assets having, in the aggregate,
a value of less than $5,000 disposed of in the ordinary course of business and
consistent with past practices.
3.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows (with the understanding that Seller is relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization Standing and Power. 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 conducted.
(b) Authority. Buyer has all requisite corporate power
and authority to enter into the Transaction Documents to which it will be a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of such Transaction Documents by Buyer and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Buyer.
The Transaction Documents to which Buyer will be a party have been executed and
delivered, or upon execution and delivery will be executed and delivered and,
upon execution and delivery, will constitute the valid and binding obligation
of Buyer, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents to which Buyer will be a
party do not and the performance by Buyer of the transactions contemplated
hereby or thereby will not, subject to obtaining the consents, approvals,
authorizations, and permits and making the filings described in this Section
3.2(c), (A) violate, conflict with, or result in any breach of any provisions
of Buyer's Articles of Incorporation and Bylaws, (B) violate, conflict with, or
result in a violation or breach of, or constitute a default (with or without
due notice or lapse of time or both) under, or permit the termination of, or
result in the acceleration of, or entitle any party to accelerate (whether as a
result of a change of control of Buyer or otherwise) any obligation, or result
in the loss of any benefit, or give any Person the right to require any
security to be repurchased, or give rise to the creation of any lien, charge,
security interest, or encumbrance upon any of the Assets under any of the
terms, conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which Buyer is a party or by which it or any
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<PAGE> 31
of the Assets may be bound or subjected, or (C) except as described in the
following sentence, violate any order, writ, judgment, injunction, decree,
statute, law, rule or regulation, of any Governmental Entity applicable to
Buyer or by which or to which any of the Assets is bound or subject. No
consent, approval, order, or authorization of, or registration, declaration, or
filing with, any Governmental Entity is required by or with respect to Buyer in
connection with the execution and delivery of the Transaction Documents by
Buyer or the consummation of the transactions contemplated thereby, except for
the FCC Consents as contemplated by Section 7.1 hereof and any that may be
required under the HSR Act.
(d) Litigation. As of the date hereof, there is no
action, suit, inquiry, judicial or administrative proceeding pending or, to the
Knowledge of Buyer, threatened against it relating to the transactions
contemplated by this Agreement.
(e) FCC Matters. To the knowledge of Buyer, no facts
relating to Buyer under the Communications Act will exist upon Closing that
reasonably may be expected to disqualify it from qualifying as an assignee of
the Station Licenses or that would prevent it from consummating the
transactions contemplated by this Agreement. Buyer is able to certify on an
FCC Form 314 that it is financially qualified.
(f) Disclosure. No representation or warranty made by
Buyer contained in this Agreement or in any certificate furnished by Buyer
pursuant to this Agreement contains or will contain an untrue statement of
material fact, or omits or will omit to state a material fact necessary, in the
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. COVENANTS OF SELLER. Except as contemplated by this Agreement
or to the extent that Buyer shall otherwise consent in writing, from the date
of this Agreement until the Closing, Seller covenants and agrees that Seller
shall not:
(a) conduct its business in any manner except in the
ordinary course consistent with past practice; or
(b) fail to use all commercially reasonable efforts to
preserve intact Seller's present business organization and to keep available
the services of its present officers, station managerial personnel (including
the General Manager, Station Manager, General Sales Manager, Local Sales
Manager, Programming Director, and Business Manager, or Persons performing
comparable duties, of each Station (collectively, the "Station Management"))
and over-the-air employees or independent contractors and preserve its
relationships with customers, suppliers and others having business dealings
with it; or
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(c) fail to use commercially reasonable efforts to
maintain the Assets in their current condition, except for ordinary wear and
tear and damage by casualty governed by Section 7.7; or
(d) fail to use all commercially reasonable efforts to
maintain the present format of the Stations and with programming consistent
with past practices; or
(e) except for amendments, terminations (without payment
of penalty or damages), renewals, or failures to renew (without payment of
penalty or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with Buyer reasonably in advance thereof), materially amend,
terminate, or fail to use all commercially reasonable efforts to renew any
material Contract (i.e., a contract or agreement of the type required to be
described in Schedule 3.1(o)) (provided that Seller shall not be required to
renew any material Contract on terms that are less favorable to Seller), or
default in any material respect (or take or omit to take any action that, with
or without the giving notice or passage of time, would constitute a material
default) under any material Contract or enter into any new material Contract or
amend the Limited Liability Company Agreement; or
(f) merge or consolidate with or into any other legal
entity, dissolve, or liquidate; or
(g) except as required by the terms and provisions of
written contracts between Seller and an employee thereof as in existence on
December 31, 1996, adopt or amend any Employee Benefit Plan or collective
bargaining agreement, or increase in any manner the compensation or fringe
benefits of any Station Manager, officer, director, or employee or other
station and broadcast personnel (whether employees or independent contractors),
except as required by law; or
(h) terminate any employee of any of the Stations without
prior consent of Buyer, such consent not to be unreasonably withheld; or
(i) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or
assets), lease, or dispose of any Assets except in the ordinary course of
business and consistent with past practice or, even if in the ordinary course
of business and consistent with past practices (other than sales of surplus or
obsolete equipment), whether in one or more transactions, in no event involving
an Asset or Assets having an aggregate fair market value in excess of $50,000;
or
(j) mortgage, pledge, or subject to any material Lien,
other than Permitted Encumbrances, any of the Assets; or
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(k) except as required by GAAP, applicable law, or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(l) change in any material respect its existing practices
and procedures with respect to the collection of accounts receivable of the
Stations and, except with respect to good faith attempts consistent with past
practice to obtain payment of a past due receivable, or except in accordance
with existing practices, a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether to the
account debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(m) change any Station's advertising rates or policies,
procedures or methods in connection with the sale of advertising time in a
manner expected to accelerate the receipt of cash payments or fail to incur
annual advertising and promotional department expenses in cash and trade other
than as budgeted for 1997 (as such budget previously has been delivered to
Buyer); or
(n) enter into, or enter into negotiations or discussions
with any Person other than Buyer with respect to any local marketing agreement,
time brokerage agreement, joint sales agreement, or any other similar
agreement; or
(o) agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement.
4.2. NEGATIVE TRADE BALANCE. Seller shall use commercially
reasonable efforts to ensure that the Seller Negative Trade Balance, as defined
below, of the Stations, taken as a whole, does not exceed $50,000 in the
aggregate at the Closing Date, provided that such excess will be an adjustment
to the Purchase Price as provided in Section 2.5(b). "Seller Negative Trade
Balance" means the difference, if negative, between the value of time owed
under barter agreements to which any of the Stations is a party or by which any
of them is bound and the value of the goods and services to be received under
such agreements.
4.3. ENVIRONMENTAL SITE ASSESSMENTS. If Buyer or its lenders or
other financing sources require Phase I or Phase II ESAs, Seller covenants and
agrees that, upon written notice from Buyer to Seller identifying the locations
at which such ESAs are required, Seller shall cause to be performed by a
nationally recognized and duly qualified environmental consultant reasonably
acceptable to Buyer and Seller an ESA at each identified transmission site
owned, operated, or leased by Seller and at such other identified real
properties and facilities owned, operated, or leased by Seller. The ESAs which
are to be conducted for the benefit of Buyer shall be performed in a manner
that at a minimum satisfies the requirements of ASTM Practice E 1527-94.
Seller covenants and agrees that, upon receipt of the notice referred to above,
it shall diligently pursue the performance of the requisite ESAs to their
completion, with final copies of the Phase I ESA reports (and, if applicable,
Phase II ESA reports) made available to Buyer by no later than 45 days
following the
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date on which Seller receives the notice referred to above. The cost of any
Phase I or Phase II ESA shall be borne by Buyer.
ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
5.1. NO SOLICITATION OF TRANSACTIONS. Seller shall not, directly
or indirectly, through any officer, director, stockholder, employee, agent,
financial advisor, banker or other representative, or otherwise, solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to any acquisition or purchase of all or any material portion of the
Assets or any equity interest in Seller or any merger, consolidation, share
exchange, business combination, or other similar transaction with Seller or
participate in any negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate, or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. Seller shall immediately
communicate to Buyer the material terms of any such proposal (and the identity
of the party making such proposal) which it may receive and, if such proposal
is in writing, the Seller shall promptly deliver a copy of such proposal to
Buyer. Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which Seller is a
party. Seller immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2. ACCESS AND INFORMATION. (a) Until the Closing, subject only
to applicable rules and regulations of the FCC, Seller shall afford to Buyer
and its representatives (including accountants and counsel) full access, during
normal business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the business of Seller, to all
properties, books, records, and Tax Returns of Seller and all other information
with respect to its business, together with the opportunity to make copies of
such books, records, and other documents and to discuss the business of Seller
with such officers, directors, station managerial personnel (including the
Station Management of each Station), accountants, consultants, and counsel for
Seller as Buyer deems reasonably necessary or appropriate for the purposes of
familiarizing itself with Seller and the Stations, including the right to visit
the Stations. In furtherance of the foregoing, Seller shall authorize and
instruct its independent public accountants to meet with Buyer and its
representatives, including Buyer's independent public accountants, to discuss
the business and accounts of Seller and to make available (with the opportunity
to make copies) to Buyer and its representatives, including its independent
public accountants, all the work papers of its accountants related to their
audit of the consolidated financial statements and Tax Returns of Seller.
(b) Within 30 days after the end of each calendar month,
Seller shall deliver to Buyer, for each of the Stations, and for Seller as a
whole, monthly operating statements (in a form consistent with the monthly
operating statements previously supplied to Buyer) prepared in the ordinary
course of business for internal purposes. In addition, within 45 days after
the end of each
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calendar quarter, Seller shall deliver to Buyer, for each of the Stations,
quarterly statements prepared in the ordinary course for internal purposes
containing a detailed listing of all trade and barter agreements of each
Station showing the status of all such agreements as of the end of the quarter.
Seller shall deliver to Buyer the rating books and such other ratings
information subscribed to by Seller including, without limitation, Arbitrends,
Accuratings or any other written information reflective of the quantitative or
qualitative nature of the audiences of the Stations for each of the Stations
upon receipt of the same by any officer or director of Seller. Seller shall
instruct the Station Management of each Station to provide such information and
reports to Buyer's corporate officers promptly upon receipt by such Station
Management. In addition, as soon as the same are distributed to Seller's
officers or directors by each Station, Seller will provide Buyer with copies of
each Station's weekly sales pacing reports.
(c) Without duplication of Section 5.2(b), at such time
as Seller provides the same to its lenders, Seller shall provide Buyer with
copies of the financial statements and other information delivered by Seller to
such lenders.
5.3. ASSISTANCE. If Buyer requests, Seller will cooperate, and
will cause its accountants to cooperate, in all reasonable respects with any
financing efforts of Buyer or its Affiliates (including providing assistance in
the preparation of one or more registration statements or other offering
documents relating to public or private debt and/or equity financing) and any
other filings that may be made by Buyer or its Affiliates with the SEC, all at
the sole expense of Buyer. Seller (a) shall furnish to its independent
accountants (or, if requested by Buyer to Buyer's independent public
accountants), such customary management representation letters as its
accountants may require of Seller as a condition to its execution of any
required accountants' consents necessary in connection with the delivery of any
"comfort" letters requested by financing sources of Buyer or its Affiliates and
(b) shall furnish to Buyer all financial statements (audited and unaudited) and
other information in the possession of Seller or its representatives or agents
as Buyer shall reasonably determine is necessary or appropriate in connection
with such financing. Buyer will indemnify and hold harmless Seller and its,
officers, directors, and controlling Persons against any and all claims,
losses, liabilities, damages, costs, or expenses (including reasonable
attorneys' fees and expenses) that may arise out of or with respect to the
financing efforts by Buyer or its Affiliates, including any registration
statement, prospectus, offering documents, and other filings related thereto;
provided, however, that subject to the limitations and provisions of this
Agreement, nothing herein shall prevent Buyer from asserting any claim for
breach of representation or warranty under this Agreement.
5.4. COMPLIANCE WITH STATION LICENSES. Seller shall cause the
Stations to be operated in all material respects in accordance with the Station
Licenses and all applicable rules and regulations of the FCC and in compliance
with all other applicable laws, regulations, rules, and orders. Seller shall
use all commercially reasonable efforts not to cause or permit any of the
Station Licenses to expire or be surrendered, adversely modified, or
terminated. Seller shall file or cause to be filed with the FCC all
applications (including license renewals) or other documents required to be
filed in connection with the operation of the Stations. In addition, if
requested by Buyer and
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at Buyer's sole expense, Seller shall file or cause to be filed with the FCC
applications for new, specifically identified frequencies that may be useful in
connection with the operation of the Stations. Should the FCC institute any
proceedings for the suspension, revocation or adverse modification of any of
the Station Licenses, Seller will use all commercially reasonable efforts to
promptly contest such proceedings and to seek to have such proceedings
terminated in a manner that is favorable to the Stations. Seller will use all
commercially reasonable efforts to maintain the FCC construction permits (if
any) listed in Schedule 3.1(f) in effect until the applicable construction
projects are complete and to diligently prosecute all pending FCC applications
listed in Schedule 3.1(f). If Seller (or its FCC counsel) receives an
administrative or other order or notification relating to any violation or
claimed violation of the rules and regulations of the FCC, or of any other
Governmental Entity, that could affect Seller's ability to consummate the
transactions contemplated hereby, or should Seller (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, Seller shall promptly notify Buyer in writing and use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
5.5. NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt
written notice to Buyer of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of Seller contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date, (b) the failure of Seller, or any officer,
director, employee, or agent of Seller, to comply with or satisfy in any
material respect any covenant, condition, or agreement to be complied with or
satisfied by it hereunder, (c) the occurrence of a Station Event (as defined in
Section 9.1), (d) the occurrence of any threat made to Seller by any of Seller
or any General Manager, Station Manager, General Sales Manager or Programming
Director of a Station to resign or otherwise terminate their employment or
independent contractor relationship with Seller, and (e) any material
development concerning the Applications (as defined in Section 7.1). No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
5.6. THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, Seller shall use all commercially reasonable efforts to obtain the
written consent from any party to an agreement or instrument identified in
Schedule 3.1(o) or any other Assumed Contract which is required to permit the
consummation of the transactions contemplated hereby.
5.7. LOAN CONDITION. Seller shall use all commercially reasonable
efforts to fulfill the condition set forth in Section 10.1(c) of the Commitment
Letter on or before March 19, 1997 and if not fulfilled by such date, to
fulfill such condition thereafter as soon as is commercially feasible.
ARTICLE VI
COVENANT OF BUYER
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6.1. NOTIFICATION OF CERTAIN MATTERS. If Buyer (or its FCC
counsel) receives an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any Governmental Entity, that could affect Buyer's ability to consummate the
transactions contemplated hereby, or should Buyer (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, Buyer shall promptly notify Seller thereof and shall use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
In addition, Buyer shall give to Seller prompt written notice of (a) the
occurrence, or failure to occur, of any event of which it becomes aware that
has caused or that would be likely to cause any representation or warranty of
Buyer contained in this Agreement to be untrue or inaccurate at any time from
the date hereof to the Closing Date, (b) the failure of Buyer, or any officer,
director, employee, or agent thereof, to comply with or satisfy in any material
respect any covenant, condition, or agreement to be complied with or satisfied
by it hereunder, and (c) any material development concerning the Applications
(as defined in Section 7.1). No such notification shall affect the
representations or warranties of the parties or the conditions to their
respective obligations hereunder.
6.2. EMPLOYEE MATTERS. Buyer will use its reasonable efforts to
determine at least ten days prior to the Closing Date those employees of Seller
whom it desires to extend offers of employment. Any offers so extended by
Buyer shall be on such terms and conditions that Buyer shall determine in its
sole discretion. Buyer will give Seller prompt notice of the names of any
employee of Seller who Buyer has determined not to extend an offer of
employment. Seller waives any claims against Buyer and any of Seller's
employees who are extended an offer of employment by Buyer arising from such
employment by Buyer including any claims arising under any employment agreement
or noncompete agreement between such Person and Seller.
ARTICLE VII
MUTUAL COVENANTS
7.1. APPLICATION FOR FCC CONSENTS. By the tenth Business Day after
the date hereof, Seller and Buyer will, and will cause all necessary Persons or
entities to join in one or more applications filed with the FCC requesting the
FCC's written consent to the assignment of the FCC Licenses pursuant to this
Agreement (the "Applications"). The parties will take all proper steps
reasonably necessary (a) to diligently prosecute the Applications and (b) to
obtain the FCC Consents. The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material breach
of this Agreement. Buyer will not voluntarily undertake any action that would
materially hinder, delay, or otherwise prejudice the approval of the
Applications. The failure by either party to timely file or diligently
prosecute its portion of any Application shall be a material breach of this
Agreement.
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7.2. CONTROL OF STATIONS. This Agreement shall not be consummated
until after the FCC Consents with respect to the Applications referred to in
Section 7.1 are granted and have become Final Orders. Between the date of this
Agreement and the Closing Date, Buyer will not directly or indirectly control,
supervise or direct the operation of the Stations. Further, between the date
of this Agreement and the Closing Date, Seller shall, directly or indirectly,
supervise or control the operation of the Stations. Such operation shall be
the sole responsibility of Seller.
7.3. OTHER GOVERNMENTAL CONSENTS. Except for filing under the HSR
Act, promptly following the execution of this Agreement, the parties shall
proceed to prepare and file with the appropriate Governmental Entities (other
than the FCC) such requests, reports, or notifications as may be required in
connection with the consummation of the transactions contemplated by this
Agreement, and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such matters.
7.4. ACCOUNTS RECEIVABLE. All Accounts Receivable shall remain the
property of Seller. Seller hereby authorizes Buyer, however, to collect such
receivables for a period of 180 days after the Closing. Seller shall deliver
to Buyer a complete and detailed statement of each account within three days
after Closing and Buyer shall use its reasonable efforts, consistent with its
customary collection practices for its own accounts receivable, without
compensation, to collect each Account Receivable during such 180 days. During
that period Buyer shall provide to Seller a detailed bi-monthly statement of
the Accounts Receivable showing amounts collected to the date, and amounts
outstanding as of the same date, and, within 15 days of the end of the period
covered by such statement, deliver to Seller the Accounts Receivable report and
a check for the amounts collected during such period. All payments received by
Buyer during the 180-day period following the Closing Date from a Person
obligated with respect to an Account Receivable shall be applied first to
Seller's account and, only after full satisfaction thereof, to Buyer's account;
provided, however, that if such Person has, in the reasonable opinion of Buyer,
a legitimate dispute with respect to such Account Receivable and Buyer also has
an account receivable from such Person, all payments received by Buyer during
the 180-day period following the Closing Date from such Person shall be applied
first to Buyer's account and only after the earlier to occur of full
satisfaction of Buyer's account or resolution of such dispute, to Seller's
account. Buyer shall not be required to refer any Account Receivable to a
collection agency or an attorney for collection, nor shall it compromise,
settle, or adjust any Account Receivable having a value in excess of $5,000
without receiving the approval of Seller. Seller shall take no action with
respect to the Accounts Receivable, such as litigation, until the expiration of
such 180-day period. Following the expiration of said 180-day period, Seller
shall be free to take such action as Seller may in its sole discretion
determine to collect any Accounts Receivable then outstanding.
7.5. BROKERS OR FINDERS. Seller represents and warrants to Buyer,
that no agent, broker, investment banker, or other or Person engaged by Seller
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee payable by Buyer or Seller in connection with any of the
transactions contemplated by this Agreement. Except for the previously
disclosed fee payable to Media Venture Partners, which fee shall be paid in
accordance with the provisions of
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Section 12.7, Buyer represents and warrants to Seller that Buyer has not
engaged any broker, investment banker or other Person that will be entitled to
any broker's or finder's fee or any other commissions or fee from Seller in
connection with any of the transactions contemplated by this Agreement.
7.6. BULK SALES LAW. Buyer agrees to waive compliance by Seller
with the requirements of any bulk sales or fraudulent conveyance statute, and
Seller agrees to indemnify and hold Buyer harmless against any claim made
against Buyer by any creditor of Seller as a result of a failure to comply with
any such statute.
7.7. RISK OF LOSS.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing. In the event of
any such loss, damage, impairment, confiscation, or condemnation, whether or
not covered by insurance, Seller shall promptly notify Buyer of such loss,
damage, impairment, confiscation, or condemnation.
(b) If Seller, at its expense, repairs, replaces, or
restores such Assets to their prior condition to the satisfaction of Buyer
before the Closing, Seller shall be entitled to all insurance proceeds and
condemnation awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost,
damaged, impaired, confiscated or condemned Assets having a replacement cost in
excess of $250,000 in the aggregate and informs Buyer that it does not intend
to restore or replace such Assets, Buyer may at its option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement
without Seller completing the restoration and replacement of such
Assets, provided that Seller shall assign all rights under applicable
insurance policies and condemnation awards, if any, to Buyer; and in
such event, Seller shall have no further liability with respect to the
condition of the Assets directly attributable to the loss, damage,
impairment, confiscation, or condemnation.
(d) Buyer will notify Seller of a decision under the
options described in Section 7.7(c)(i) or (ii) above within ten Business Days
after Seller's notice to Buyer of the damage or destruction of Assets and the
estimate of the costs to repair or replace; provided, however, that if Seller
states that it intends to restore the damaged Assets and if Seller has not
restored such damaged Assets immediately prior to the Closing Date,
notwithstanding Buyer's prior delivery of a notice to proceed pursuant to this
Section 7.7(d), Buyer shall have the right to either postpone the Closing or
terminate this Agreement by notice forthwith.
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7.8. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
to this Agreement and their duly authorized representatives shall take all such
action. Without limiting the generality of the foregoing, if, after the
Closing Date, Buyer seeks indemnification or recovery from one or more other
parties to an Assumed Contract or otherwise seeks to enforce such Assumed
Contract and, in order to obtain such indemnification, recovery or enforcement,
it is necessary for Seller to initiate a suit, participate in any enforcement
proceeding or otherwise provide assistance to Buyer, then, at the request and
the sole expense of Buyer, Seller shall take such action as Buyer may
reasonably request in connection with Buyer's efforts to obtain such
indemnification, recovery or enforcement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Buyer and Seller to effect the transactions contemplated hereby
are subject to the satisfaction (or, in the case of the condition specified in
the last sentence of Section 8.l(a), the waiver by Buyer) on or prior to the
Closing Date of the following conditions:
(a) Consents and Approvals. All authorizations,
consents, orders, or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity (including
under the HSR Act) necessary for the consummation of the transactions
contemplated by this Agreement shall have been filed, occurred, or been
obtained. The FCC Consents shall have become Final Orders and shall be in form
and substance satisfactory to Buyer.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
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(a) Representations and Warranties. The representations
and warranties of Seller set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of
Seller contained herein that is qualified by a materiality standard shall not
be further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Buyer shall have
received a certificate to such effect signed on behalf of Seller by the chief
executive officer or by the chief financial officer of Seller.
(b) Performance of Obligations. Seller shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date, and Buyer shall have
received a certificate to such effect signed on behalf of Seller by the chief
executive officer or by the chief financial officer of Seller.
(c) Consents Under Agreements. Buyer shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each Person that is a party to a Contract identified in Schedule
3.1(o) whose consent or approval shall be required in order to permit the
consummation of the transactions contemplated hereby and such consent or
approval shall be in form and substance reasonably satisfactory to Buyer.
(d) Legal Opinions. Buyer shall have received from Hale
and Dorr, counsel to Seller, an opinion dated the Closing Date, in
substantially the forms attached as Exhibit G hereto, which opinion, if
requested by Buyer, shall expressly provide that they may be relied upon by
Buyer's lenders, underwriters, or other sources of financing with respect to
the transactions contemplated hereby.
(e) Real Estate Title Commitment. Within 30 days after
the date of this Agreement, Buyer, at its sole cost and expense, shall have
obtained a preliminary report on title to the Owned Real Property covering a
date subsequent to the date of this Agreement, issued by the Title Company,
which preliminary report shall contain a commitment (the "Title Commitment") of
the Title Company to issue an owner's title insurance policy at Seller's cost
as Buyer may reasonably require (the "Title Policy") insuring the fee simple
absolute interest of Seller in the Owned Real Property. The Title Commitment
shall be in the amount set forth in Schedule 8.2(e) shall be subject only to
the standard printed exceptions and: (i) liens of current state and local
property taxes which are not delinquent or subject to penalty; (ii) unviolated
zoning regulations and restrictive covenants and easements of record which do
not detract from the value of the Owned Real Property and do not materially and
adversely affect, impair or interfere with the use of any property affected
thereby as heretofore used by Seller or the Stations; (iii) public utility
easements of record, in customary form, to serve the Owned Real Property; and
(iv) Permitted Encumbrances. Such title policy shall be issued on the Closing
Date.
(f) Survey. Buyer, at its sole cost and expense, shall
have obtained a survey of the Owned Real Property as of a date subsequent to
the date hereof which shall: (i) be prepared by a registered land surveyor
reasonably acceptable to Buyer; (ii) be certified to the Title Company and to
Buyer; and (iii) show with respect to the Owned Real Property: (A) the legal
description of the
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Owned Real Property (which shall be the same as the Title Policy pertaining
thereto); (B) all buildings, structures and improvements thereon and all
restrictions of record and other restrictions that have been established by an
applicable zoning or building code or ordinance and all easements or rights of
way across or serving the Owned Real Property (including any off-site easements
affecting or appurtenant thereto); (C) no encroachments upon the Owned Real
Property or adjoining parcels by buildings, structures or improvements and no
other survey defects; (D) access to such parcel from a public street; and (E) a
flood certification reasonably satisfactory to Buyer to the effect that no
portion of the Owned Real Property is located within a flood hazard area.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Seller pursuant to
Section 9.2 shall have been delivered.
(h) Non-Competition Agreement. Buyer will have received
a counterpart of the Non-Competition Agreement between Buyer and Paul Robinson
executed by Paul Robinson.
8.3. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Seller.
(a) Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Seller shall
have received a certificate to such effect signed on behalf of Buyer by the
chief executive officer or by the chief financial officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall
have performed in all material respects the obligations required to be
performed by it under this Agreement prior to the Closing Date, and Seller
shall have received a certificate to such effect signed on behalf of Buyer by
the chief executive officer or by the chief financial officer of Buyer.
(c) Closing, Deliveries. All documents and instruments
required to be delivered by Buyer pursuant to Section 9.2 shall have been
delivered.
ARTICLE IX
CLOSING
9.1. CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, or at such other place and time as Buyer
and Seller may agree, the Closing will take place at the offices of Vinson &
Elkins L.L.P., Washington, D.C., at 10:00 a.m., local time, on a date selected
by Buyer on five Business Days notice to Seller, which date shall be on the
10th Business
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Day after the day on which the FCC Consents have been granted by Final Order
(the "Closing Date"); provided that (x) Buyer shall have the right by means of
notice to Seller to postpone the Closing Date to any date occurring on or
before October 31, 1997 and (y) if Buyer should exercise the right to extend
the Closing Date pursuant to clause (x), then Seller shall have the right by
means of notice to Seller to postpone the Closing Date to January 9, 1998;
provided further that if the condition set forth in Section 10.1(c) of the
Commitment Letter is not fulfilled on or before March 20, 1997 then the Closing
Date (subject to each party's right of extension provided above) shall be the
earlier of (1) 180 days after such condition has been fulfilled, or (2) June
12, 1998. Notwithstanding the foregoing:
(a) In the case of a Trading Event, a Banking Event or a
Station Event (in each case as defined below), (i) if the Cessation Date (as
defined below) is less than 60 days after the Event Date (as defined below),
Buyer, in its discretion, may extend the Closing Date to a date not later than
the 30th day after the Cessation Date, (ii) if the Cessation Date is more than
60, but less than 90, days after the Event Date, Buyer, in its discretion,
shall elect on the first to occur of the 10th Business Day after the Cessation
Date or the 90th day (or, if not a Business Day, the next Business Day) after
the Event Date (the "Election Date") to either (A) close the transactions
contemplated by this Agreement on the later to occur of the fifth Business Day
after the Election Date or the 90th day (or, if not a Business Day, the next
Business Day) after the Event Date or (B) terminate this Agreement, or (iii) if
the Cessation Date has not occurred by the 90th day after the Event Date, then
on the 90th day (or, if not a Business Day, the next Business Day) after the
Event Date Buyer, in its discretion, shall elect to close the transactions
contemplated by this Agreement on the fifth Business Day thereafter or
terminate this Agreement;
(b) In the case of a Conflict Event, Buyer, in its
discretion, may extend the Closing Date to a date not to exceed the 90th day
after the Event Date;
(c) If a Cure Period (as defined in Section 10.1(b)(i))
has not ended on or before the Closing Date, the Closing Date shall be extended
to the end of the Cure Period; and
(d) If the Closing does not occur within 20 days after
the date of the Final Order, the parties shall request approval from the FCC to
extend the Closing so that the Closing contemplated hereunder will not violate
any FCC rules or regulations.
For purposes of this Agreement, a "Trading Event" shall mean that
trading generally in securities on the New York Stock Exchange shall have been
suspended or materially limited; a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; a "Conflict Event" shall mean
the occurrence of any major armed conflict involving a substantial
participation by the armed forces of the United States of America; a "Station
Event" shall mean any act of nature (including fires, floods, earthquakes, and
storms), calamity, casualty or condemnation or the act or omission to act of
any state or federal regulatory agency having jurisdiction over the Stations
that has caused one or more Stations representing an aggregate of at least 3%
of the consolidated gross revenues of
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Seller for the last full 12 calendar months prior to the Station Event not to
be operating in a manner substantially consistent with the operations conducted
before such act, omission, calamity, casualty, condemnation or agency action
occurred or not in compliance with its or their respective Station License(s);
an "Event Date" shall mean the date on which a Trading Event, Banking Event,
Conflict Event, or a Station Event occurs; and a "Cessation Date" shall mean
the date on which a Trading Event, Banking Event, Conflict Event, or a Station
Event ends. Pro forma adjustments shall be made for purposes of calculating
gross revenues for the 12-month period specified in the definition of "Station
Event" with respect to any radio broadcast station acquired during such 12-
month period, to assume that such station was acquired at the beginning of such
12-month period and include the gross revenues of such station for the full 12-
month period.
9.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to Seller (or to
the Escrow Agent, as indicated) the following:
(i) Purchase Price. The Purchase Price (less the
Holdback Amount) by wire transfer of immediately available funds; provided that
at the option of the Buyer, such portion of the Purchase Price, as represented
by the outstanding principal and interest balance of the Commodore Loan
(determined as of the Closing Date) may be paid in the form of the cancellation
and forgiveness of such outstanding balance of the Commodore Loan;
(ii) Holdback Amount. The Holdback Amount to the
Escrow Agent by wire transfer of immediately available funds;
(iii) Certificates. The certificates referred to
in Section 8.3(a) and (b);
(iv) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Buyer;
(v) Indemnification Escrow Agreement. A
counterpart of the Indemnification Escrow Agreement executed by Buyer;
(vi) Non-Competition Agreement. A counterpart of
each Non-Competition Agreement executed by Buyer; and
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) Certificates. The certificates described in
Section 8.2(a) and (b);
(ii) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Seller;
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(iii) Indemnification Escrow Agreement. A
counterpart of the Indemnification Escrow Agreement executed by Seller;
(iv) Non-Competition Agreements. A counterpart of
the Non-Competition Agreement between Buyer and Seller executed by Seller and a
counterpart of the Non-Competition Agreement between Buyer and Paul Robinson
executed by Paul Robinson;
(v) Legal Opinions. The opinions of counsel
referred to in Section 8.2(d);
(vi) Transfer Documents. The duly executed Bill
of Sale and Assignment, together with any other assignments and other transfer
documents as requested by Buyer;
(vii) Consents; Acknowledgments. The original of
each Consent;
(viii) Estoppel Certificates. Estoppel certificates
from the lessor(s) of the Leased Real Property in a form and substance
reasonably satisfactory to Buyer and its lenders or other financing sources;
(ix) Licenses, Contracts, Business Records, Etc.
To the extent they are in the possession of Seller, copies of all Licenses,
Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, statistics, engineering records and all files and records used by
Seller in connection with a Station's business and operations, which copies
shall be available at the Closing or at a Station's principal business offices;
(x) Warranty Deed. A Warranty Deed executed by
Seller conveying fee simple title to the Owned Real Property to Buyer, subject
only to the Permitted Encumbrances, in proper statutory form for recording
together with documentary stamps affixed thereto;
(xi) No-Lien Affidavit. A standard No-Lien
Affidavit executed by Seller, which shall be in the recordable form and
otherwise satisfactory to the Title Company in order to delete the standard
printed exceptions relating to mechanics' liens and parties-in-possession;
(xii) GAP Affidavit. An affidavit, if requested by
the Title Company, as may be necessary to insure the gap between the effective
date of the Title Commitment to and through the date of the recordation of the
deed to the Owned Real Property; and
(xiii) Title Requirements. Such other documents as
shall be reasonably required by the Title Company as called for or required
under the terms of any title policy obtained or issued to Buyer.
(c) At the Closing, Seller and Buyer shall instruct the
Escrow Agent to pay, and it shall pay, the Earnest Money to Buyer.
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(d) At the Closing, Buyer shall receive from the chief
executive officer or chief financial officer of Seller a non-foreign affidavit
within the meaning of section 1445(b)(2) of the Code.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Seller or Buyer;
(i) if there shall have been any material breach
(provided that any representation or warranty of a party contained herein that
is qualified by a materiality standard or a Material Adverse Effect
qualification shall not be further qualified hereby) of any representation,
warranty, covenant, or agreement, on the part of Buyer, on the one hand, or
Seller, on the other hand, set forth in this Agreement, which breach shall not
have been cured within 30 days (the "Cure Period") following receipt by the
breaching party of written notice of such breach;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling, or other action shall have become final and
nonappealable;
(iii) if, for any reason, the FCC denies or
dismisses any of the Applications and the time for reconsideration or court
review under the Communications Act with respect to such denial or dismissal
has expired and there is not pending with respect thereto a timely filed
petition for reconsideration or request for review;
(iv) if, for any reason, any of the Applications
is designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the
later of February 28, 1998, the date provided for the Closing Date in the first
sentence of Section 9.1, or the date to which the Closing Date is extended
pursuant to the second sentence of Section 9.1; provided, however, that the
right to terminate this Agreement under this clause (v) shall not be available
to any party whose breach of this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by Buyer:
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(i) pursuant to the provisions of Section 7.7;
(ii) with respect to a Trading Event, a Banking
Event or a Station Event, at its option, as provided in the second sentence of
Section 9.1;
(iii) if the FCC grants any of the Applications
with any adverse conditions not generally imposed on grants of such
applications and the time for reconsideration or court review under the
Communications Act with respect to such adverse conditions has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review; or
(iv) if any suit, action or other proceedings
shall have been instituted against Buyer or its Affiliate before any court or
other Governmental Entity seeking to restrain, prohibit or to obtain damages or
other relief in connection with or as a consequence of this Agreement or the
consummation of the transactions contemplated herein.
(d) by Seller:
(i) if, Buyer breaches Section 2.7(a); or
(ii) if the condition set forth in Section 10.1(c)
of the Commitment Letter is not fulfilled on or before March 19, 1997,
provided, however, that the right to terminate this Agreement under this
subsection (ii) (x) must be exercised on or before 5:00 p.m. Dallas, Texas time
on March 21, 1997, and (y) may not be exercised if the Seller is in breach of
its obligations under Section 5.7.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers,
directors, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other party.
10.2. EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by
either Seller or Buyer as provided above, there shall be no liability on the
part of either Buyer or Seller, except for liability arising out of a breach of
this Agreement. If this Agreement is terminated by Seller pursuant to Section
10.1(b)(i), the parties agree and acknowledge that Seller will suffer damages
that are not practicable to ascertain. Accordingly, in such event and if
within 10 Business Days after termination of this Agreement by Seller pursuant
to Section 10.1(b)(i), Seller delivers to Buyer a written demand for liquidated
damages, subject to Buyer's receipt of a counterpart of the Release executed by
Seller,
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Seller shall be entitled to the Earnest Money, as liquidated damages, payable
by Buyer within 10 Business Days after receipt of Seller's written demand and
payable in accordance with the provisions of the Deposit Escrow Agreement. As
security for payment thereof, Buyer has, concurrently with the execution of
this Agreement, entered into the Deposit Escrow Agreement with Seller and the
Escrow Agent as provided in Section 2.7. The parties agree that the foregoing
liquidated damages are reasonable considering all the circumstances existing as
of the date hereof and constitute the parties' good faith estimate of the
actual damages reasonably expected to result from the termination of this
Agreement by Seller pursuant to Section 10.1(b)(i). Seller agrees that, to the
fullest extent permitted by law, Seller's right to payment of such liquidated
damages as provided in this Section 10.2 shall be its sole and exclusive remedy
if the Closing does not occur with respect to any damages whatsoever that
Seller may suffer or allege to suffer as a result of any claim or cause of
action asserted by Seller relating to or arising from breaches of the
representations, warranties or covenants of Buyer contained in this Agreement
and to be made or performed at or prior to the Closing. If this Agreement is
terminated by Seller pursuant to Section 10.1(b)(i), upon Buyer's receipt of a
counterpart of the Release executed by Seller, Buyer and Seller shall instruct
the Escrow Agent to pay the Earnest Money to Seller. If this Agreement is
terminated either by Buyer or Seller pursuant to any provision of Section 10.1
other than a termination by Seller pursuant to Section 10.1(b)(i), then Buyer
and Seller shall instruct the Escrow Agent to pay the Earnest Money to Buyer.
(b) As a condition of payment, and upon receipt of the
liquidated damages under this Section 10.2, Seller hereby irrevocably and
unconditionally releases, acquits, and forever discharges Buyer and its
successors, assigns, officers, directors, employees, agents, stockholders,
subsidiaries, parent companies and other affiliates (corporate or otherwise)
(the "Released Parties") of and from any and all Released Claims, including,
without limitation, all Released Claims arising out of, based upon, resulting
from or relating to the negotiation, execution, performance, breach or
otherwise related to or arising out of the Transaction Documents or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses
or expenses (including attorneys' and other professional fees and expenses)
held by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or contingent,
direct or derivative.
ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION OF BUYER. Subject to the provisions of this
Article XI, Seller agrees to indemnify and hold harmless the Buyer Indemnified
Parties from and against any and all Buyer Indemnified Costs.
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11.2. INDEMNIFICATION OF SELLER. Subject to the provisions of this
Article XI, Buyer agrees to indemnify and hold harmless the Seller Indemnified
Parties from and against any and all Seller Indemnified Costs.
11.3. DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall
give prompt written notice to any entity or Person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article XI
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Parties shall pay the attorneys' fees of the
Indemnified Party if (i) the employment of separate counsel shall have been
authorized in writing by any such Indemnifying Party in connection with the
defense of such third-party action, (ii) the Indemnifying Parties shall not
have employed counsel reasonably satisfactory to the Indemnified Party to have
charge of such third-party action, (iii) the Indemnified Party shall have
reasonably concluded that there may be defenses available to such Indemnified
Party that are different from or additional to those available to the
Indemnifying Party, or (iv) the Indemnified Party's counsel shall have advised
the Indemnified Party in writing, with a copy delivered to the Indemnifying
Party, that there is a conflict of interest that could make it inappropriate
under applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party or if,
in the opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgment could have an adverse effect on its business;
(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such third-
party action; and
(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of
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any third-party action (i) as to which the Indemnifying Party fails to assume
the defense within a reasonable length of time or (ii) to the extent the third-
party action seeks an order, injunction, or other equitable relief against the
Indemnified Party which, if successful, would materially adversely affect the
business, operations, assets, or financial condition of the Indemnified Party;
provided, however, that the Indemnified Party shall make no settlement,
compromise, admission, or acknowledgment that would give rise to liability on
the part of any Indemnifying Party without the prior written consent of such
Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article XI and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4. DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. Subject to
the limitations set forth in Section 11.6(c), the failure of the Indemnified
Party to exercise promptness in such notification shall not amount to a waiver
of such claim unless the resulting delay materially prejudices the position of
the Indemnifying Party with respect to such claim.
11.5. ESCROW. On the Closing Date, Buyer and Seller will enter into
the Indemnification Escrow Agreement in accordance with which Buyer shall, at
Closing, deposit an amount of the Purchase Price equal to $500,000 (the
"Holdback Amount") with the Escrow Agent.
11.6. LIMITATIONS. Subject to Section 11.7 and Section 12.17
hereof, the following provisions of this Section 11.6 shall be applicable after
the time of the Closing:
(a) Minimum Loss. No Indemnifying Party shall be
required to indemnify an Indemnified Party for Indemnified Representation Costs
unless and until the aggregate amount of such Indemnified Representation Costs
for which the Indemnified Party is otherwise entitled to indemnification
pursuant to this Article XI exceeds $50,000 (the "Minimum Loss"). After the
Minimum Loss is exceeded, the Indemnified Party shall be entitled to be paid
the entire amount of its Indemnified Representation Costs in excess of (but not
including) the Minimum Loss, subject to the limitations on recovery and
recourse set forth in this Section 11.6 and in Section 11.7 below and subject
to the exception contained in Section 12.17. For purposes of determining the
aggregate amount of Minimum Loss suffered by an Indemnified Party, each
representation and warranty contained in this Agreement for which
indemnification can be or is sought hereunder shall be read (including for
purposes of determining whether a breach of such representation or warranty has
occurred) without regard to materiality (including Material Adverse Effect)
qualifications that may be contained therein. In addition, in determining
whether an Indemnifying Party shall be required to indemnify an Indemnified
Party under this Article XI, once the Minimum Loss requirement set forth in
this clause (a) has been satisfied, each representation and warranty contained
in this
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Agreement for which indemnification can be or is sought hereunder shall be read
(including for purposes of determining whether a breach of such representation
or warranty has occurred) without regard to materiality (including Material
Adverse Effect) qualifications that may be contained therein.
(b) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Representation Costs pursuant to this Article XI
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the 450th day following the Closing Date, except that this
time limitation shall not apply to any claims contemplated by Section 12.17.
(c) Recourse against Escrowed Funds. Subject to Section
12.17 hereof, a Buyer Indemnified Party shall be entitled to payment only out
of the Holdback Amount pursuant to the terms of this Article XI and the
Indemnification Escrow Agreement for all amounts due to a Buyer Indemnified
Party with respect to any claim by a Buyer Indemnified Party against Seller for
Buyer Indemnified Representation Costs payable under this Article XI.
(d) Other Indemnified Costs. The provisions of this
Section 11.6 shall only be applicable to Indemnified Representation Costs and
shall not be applicable to any other Indemnified Costs.
11.7. INSTRUCTIONS TO ESCROW AGENT. Seller hereby covenants and
agrees that at any time Seller is or becomes obligated to indemnify a Buyer
Indemnified Party for Buyer Indemnified Costs under this Article XI, Seller
will execute and deliver to the Escrow Agent written instructions to release to
the Buyer Indemnified Party such portion of the Holdback Amount as is necessary
to indemnify the Buyer Indemnified Party for such Buyer Indemnified Costs.
ARTICLE XII
GENERAL PROVISIONS
12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations and
warranties set forth in this Agreement shall terminate on the 450th day
following the Closing Date. Following the date of termination of a
representation or warranty, no claim can be brought with respect to a breach of
such representation or warranty, but no such termination shall not affect any
claim for a breach of a representation or warranty that was asserted before the
date of termination. To the extent that such are performable after the
Closing, each of the covenants and agreements contained in each of the
Transaction documents shall survive the Closing indefinitely.
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12.2. FURTHER ACTIONS. After the Closing Date, Seller shall execute
and deliver such other certificates, agreements, conveyances, and other
documents, and take such other action, as may be reasonably requested by Buyer
in order to transfer and assign to, and vest in, Buyer the Assets pursuant to
the terms of this Agreement.
12.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
12.4. WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand,
or Seller, on the other hand, to comply with any obligation, covenant,
agreement, or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
12.5. SPECIFIC PERFORMANCE. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement specifically, Seller
hereby waives the defense that there is an adequate remedy at law.
12.6. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
12.7. EXPENSES AND OBLIGATIONS. Except as otherwise expressly
provided in this Agreement or as provided by law, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. Notwithstanding the foregoing, (a) the
fee payable to the Escrow Agent shall be borne as provided in the
Indemnification Escrow Agreement and the Deposit Escrow Agreement, (b) the
brokerage fees in the amount of $100,000 (the "Brokerage Fee") payable to Media
Venture Partners shall be borne by Buyer, (c) any consulting fees payable to
Anchor Financial shall be borne by Seller, and (d) all sales taxes arising out
of the transactions contemplated by this Agreement shall be paid by Seller. In
the event of a dispute between the parties in connection with this Agreement
and the transactions contemplated hereby, each of the parties hereto hereby
agrees that the prevailing party shall be entitled to reimbursement by the
other party of reasonable legal fees and expenses incurred in connection with
any action or proceeding.
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12.8. PARTIES IN INTEREST. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other Person
(other than the Indemnified Parties as provided in Article XI) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer, to
WNOK Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Facsimile: (214) 740-7313
with copies to
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attn: A. Winston Oxley
Facsimile: (214) 220-7716
Capstar Broadcasting Partners
600 Congress Avenue, Suite 1400
Austin, Texas 78701
Attn: William S. Banowsky, Jr.
Facsimile: (512) 404-6850
(b) If to Seller, to
Emerald City Radio Partners, L.P.
1090 Vermont Avenue, N.W., Suite 800
Washington, D.C. 20005
Attn: Paul W. Robinson
Facsimile: (202) 408-1590
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with a copy to
Hale & Dorr
1455 Pennsylvania Avenue, N.W., Suite 1000
Washington, D.C. 20004
Attn: Steven S. Snider
Facsimile: (202) 393-4497
12.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed
to include the exhibits and schedules hereto and the other certificates,
documents and instruments delivered hereunder) constitutes the entire agreement
of the parties hereto and supersedes all prior agreements, letters of intent
and understandings, both written and oral, among the parties with respect to
the subject matter hereof. There are no representations or warranties,
agreements, or covenants other than those expressly set forth in this
Agreement.
12.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. ANY SUIT OR
PROCEEDING BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF
THE COURTS LOCATED IN NEW YORK.
12.13. PUBLIC ANNOUNCEMENTS. Seller and Buyer shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation. Prior to the Closing, Seller will not
issue any other press release or otherwise make any public statements regarding
its business, except as may be required by applicable law.
12.14. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Seller and without releasing Buyer from any of its obligations
or liabilities hereunder, Buyer may assign or delegate any or all of its rights
or obligations under this Agreement to any Affiliate thereof, and (b) nothing
in this Agreement shall limit Buyer's ability to make a collateral assignment
of its rights under this Agreement to any institutional lender that provides
funds to Buyer without the consent of Seller. Seller shall execute an
acknowledgment of such assignment(s) and collateral assignments in such forms
as Buyer or its institutional lenders may from time to time reasonably request;
provided, however, that unless written notice is given to Seller that any such
collateral assignment has been foreclosed upon, Seller
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shall be entitled to deal exclusively with Buyer as to any matters arising
under this Agreement or any of the other agreements delivered pursuant hereto.
In the event of such an assignment, the provisions of this Agreement shall
inure to the benefit of and be binding on Buyer's assigns.
12.15. DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of Buyer and its Affiliates shall not have any personal liability
or obligation arising under this Agreement (including any claims that Seller
may assert) other than as an assignee of this Agreement. Subject to Section
12.17, the partners of Seller shall not have any personal liability or
obligation arising under this Agreement.
12.16. NO REVERSIONARY INTEREST. The parties expressly agree,
pursuant to Section 73.1150 of the FCC's rules, that Seller does not retain any
right to reassignment of any of the FCC Licenses in the future, or to operate
or use the facilities of the Stations for any period beyond the Closing Date.
12.17. NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article XI shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section
11.6(a) (relating to Minimum Loss), 11.6(b) (relating to limitations on the
period of time during which a claim for indemnification may be brought),
11.6(c) (relating to recourse against escrowed funds), or 12.15 shall be deemed
a waiver by any party to this Agreement of any right or remedy which such party
may have at law or equity based on any other party's fraudulent acts or
omissions, nor shall any such provisions limit, or be deemed to limit, (i) the
amounts of recovery sought or awarded in any such claim for fraud, (ii) the
time period during which a claim for fraud may be brought, or (iii) the
recourse which any such party may seek against another party with respect to a
claim for fraud; provided, that with respect to such rights and remedies at law
or equity, the parties further acknowledge and agree that none of the
provisions of this Section 12.17, nor any reference to this Section 12.17
throughout this Agreement, shall be deemed a waiver of any defenses which may
be available in respect of actions or claims for fraud, including but not
limited to, defenses of statutes of limitations or limitations of damages.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed, all as of the date first written above.
SELLER:
EMERALD CITY RADIO PARTNERS, L.P.
By:
Name: /s/
--------------------------------
Title:
-------------------------------
BUYER:
WNOK ACQUISITION COMPANY, INC.
By:
Name: /s/
--------------------------------
Title:
-------------------------------
<PAGE> 57
ANNEX A
THE STATIONS
WNOK-FM Columbia, South Carolina
WOIC-AM Columbia, South Carolina
WMFX-FM St. Andrews, South Carolina
<PAGE> 1
EXHIBIT 10.1.2
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment") is
made and entered into as of March 14, 1997, between Emerald City Radio
Partners, L.P., a limited partnership ("Seller"), and WNOK Acquisition Company,
Inc. ("Buyer"), a Delaware corporation ("Buyer"), and amends that certain Asset
Purchase Agreement between the Seller and the Buyer dated as of March 10, 1997
(the "Asset Purchase Agreement"). This Amendment is made pursuant to Section
12.3 of the Asset Purchase Agreement. Terms used herein and not otherwise
defined have the meanings ascribed to them in the Asset Purchase Agreement.
All references to sections, subsections, clauses, and page numbers are to the
respective sections, subsections, clauses, and pages of the Asset Purchase
Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Any and all references to Exhibit A, including the one contained
on page (iv) in the Table of Contents, are hereby deleted.
2. New Schedule 1.1, attached hereto as Exhibit I, is added to the
Asset Purchase Agreement, and the following reference is added to page (iv) in
the Table of Contents:
"Schedule 1.1 -- Acceptable Assignees"
3. The following definitions are added to Section 1.1:
"'Acceptable Assignee' means any Person listed on Schedule 1.1.
'Assignment Amendment' has the meaning set forth in Section
12.14.
'Consent Assignee' has the meaning set forth in Section 12.14.
'New Asset Purchase Agreement' has the meaning set forth in
Section 12.14."
4. The definition of "Earnest Money" contained in Section 1.1 is
hereby amended in its entirety to read as follows:
"'Earnest Money' means the sum of $75,000 in cash held in
accordance with the provisions of the Deposit Escrow Agreement."
5. Section 10.1(d) is hereby amended in its entirety to read as
follows:
"(d) by Seller, if Buyer breaches Section 2.7(a)."
<PAGE> 2
6. Notwithstanding anything contained in the Asset Purchase
Agreement or in any Transaction Document to the contrary, Seller will deliver
to Buyer concurrently with the execution of this Amendment one FCC Form 314
with respect to each of (a) WNOK and (b) WOIC and WMFX. Buyer agrees that it
will not file such Forms 314 with the FCC prior to April 7, 1997.
7. The following new Section 8.2(i) is hereby added to the Asset
Purchase Agreement:
"(i) If Buyer exercises its right to assign this Agreement, or
any part hereof, to an Acceptable Assignee or Consent Assignee pursuant
to Section 12.14(b), the closing contemplated by such assignment shall
have occurred prior to or contemporaneously with the Closing hereunder."
8. Section 12.14 is hereby amended in its entirety to read as
follows:
"12.14 ASSIGNMENT.
(a) Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any of the parties hereto,
whether by operation of law or otherwise; provided, however, that (i)
upon notice to Seller and without releasing Buyer from any of its
obligations or liabilities hereunder, Buyer may assign or delegate any
or all of its rights or obligations under this Agreement to any
Affiliate thereof, and (ii) nothing in this Agreement shall limit
Buyer's ability to make a collateral assignment of its rights under this
Agreement to any institutional lender that provides funds to Buyer
without the consent of Seller. Seller shall execute an acknowledgment
of such assignment(s) and collateral assignments in such forms as Buyer
or its institutional lenders may from time to time reasonably request;
provided, however, that unless written notice is given to Seller that
any such collateral assignment has been foreclosed upon, Seller shall be
entitled to deal exclusively with Buyer as to any matters arising under
this Agreement or any of the other agreements delivered pursuant hereto.
In the event of such an assignment, the provisions of this Agreement
shall inure to the benefit of and be binding on Buyer's assigns.
(b) Notwithstanding Section 12.14(a), Buyer may (i) at any
time, without consent of Seller, assign all or any part of its rights,
liabilities, and obligations hereunder with respect to any one or more
of the Stations to a designated Acceptable Assignee, and (ii) assign all
or any part of its rights, liabilities, and obligations hereunder with
respect to any one or more Stations to any Person (a "Consent Assignee")
with the prior consent of Seller, such consent not to be unreasonably
withheld. In the case of any assignment under this Section 12.14(b),
Buyer shall have the right to direct Seller to transfer, assign, or
convey any and all assets specified to such Acceptable Assignee or
Consent Assignee at the Closing, and Seller shall, without further
expense to Seller, transfer, assign and convey such assets to such
Acceptable Assignee or Consent Assignee, as applicable, at the Closing.
Finally, in the event of such assignment and upon Buyer's request to
Seller and without further expense to Seller, the
2
<PAGE> 3
parties hereto and the designated Acceptable Assignee or Consent
Assignee, as applicable, shall execute an amendment to this Agreement
(the "Assignment Amendment") and a new Asset Purchase Agreement (the
"New Asset Purchase Agreement"), respectively, each (w) reflecting the
occurrence of such assignment, (x) reflecting the existence of the other
agreement or amendment, (y) reflecting the respective assets to be
acquired thereunder, and (z) containing identical terms as are contained
herein; provided, however, that the dollar amounts to be contained in
Sections 2.5(b), 4.2, 7.7(c), 11.5, 11.6(a), and 12.7(b) of the
Assignment Amendment and the New Asset Purchase Agreement shall be
apportioned in the same ratio as the Purchase Price hereunder bears to
the purchase price payable under the Assignment Agreement and the New
Asset Purchase Agreement, respectively; provided, that the purchase
price to be paid under the Assignment Amendment and the New Asset
Purchase Agreement shall be determined by the Buyer and the Acceptable
Assignee or Consent Assignee, as applicable. In no event, however,
shall any amendment to this Agreement result in a change in the
aggregate purchase price payable to Seller hereunder.
(c) Upon any assignment hereunder, Seller will promptly make
any and all additional filings and obtain any and all Consents,
including the FCC Consents, as may be necessary to effectuate such
assignment and the transactions contemplated by the Assignment Amendment
and the New Asset Purchase Agreement."
9. Except as otherwise amended hereby, the Asset Purchase Agreement
shall continue to be in full force and effect in accordance with its terms.
3
<PAGE> 4
IN WITNESS WHEREOF, Seller and Buyer have caused this Amendment to be
signed, all as of the date first written above.
SELLER:
EMERALD CITY RADIO PARTNERS, L.P.
By: Cyclone Communications
Corporation, its General Partner
By: /s/
--------------------------------
Name:
------------------------------
Title:
-----------------------------
BUYER:
WNOK ACQUISITION COMPANY, INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 1
EXHIBIT 10.2.1
ASSET PURCHASE AGREEMENT
BETWEEN
AMERON BROADCASTING, INC.
AND
CAPSTAR ACQUISITION COMPANY, INC.
DATED AS OF
APRIL 24, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1
DEFINED TERMS
1.1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 REFERENCES AND TITLES . . . . . . . . . . . . . . . . . . . 11
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 AGREEMENT TO SELL AND BUY . . . . . . . . . . . . . . . . . 12
2.2 EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . . . 13
2.3 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 ADJUSTMENTS AND PRORATIONS . . . . . . . . . . . . . . . . . 14
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS . . . . . . . . . 17
2.6 ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.7 EARNEST MONEY . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES REGARDING SELLER . . . . . . 18
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . 30
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . . 32
4.2 NEGATIVE TRADE BALANCE . . . . . . . . . . . . . . . . . . . 34
4.3 ENVIRONMENTAL SITE ASSESSMENTS . . . . . . . . . . . . . . . 34
ARTICLE 5
ADDITIONAL AGREEMENTS OF SELLER
5.1 NO SOLICITATION OF TRANSACTIONS . . . . . . . . . . . . . . 35
5.2 ACCESS AND INFORMATION . . . . . . . . . . . . . . . . . . . 35
5.3 ASSISTANCE . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.4 COMPLIANCE WITH STATION LICENSES . . . . . . . . . . . . . . 37
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
5.5 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . 38
5.6 THIRD PARTY CONSENTS . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 6
COVENANTS OF BUYER
6.1 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . 38
6.2 BIRMINGHAM MARKET . . . . . . . . . . . . . . . . . . . . . 39
6.3 EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . 39
6.4 SEVERANCE PAY ARRANGEMENTS . . . . . . . . . . . . . . . . . 40
6.5 FCC APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . 40
6.6 APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.7 SHARING INFORMATION . . . . . . . . . . . . . . . . . . . . 41
6.8 FINANCIAL CAPABILITY . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 7
MUTUAL COVENANTS
7.1 APPLICATION FOR FCC CONSENTS . . . . . . . . . . . . . . . . 41
7.2 CONTROL OF STATIONS . . . . . . . . . . . . . . . . . . . . 42
7.3 OTHER GOVERNMENTAL CONSENTS . . . . . . . . . . . . . . . . 42
7.4 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . 42
7.5 BROKERS OR FINDERS . . . . . . . . . . . . . . . . . . . . . 43
7.6 BULK SALES LAW . . . . . . . . . . . . . . . . . . . . . . . 43
7.7 RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . 43
7.8 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 44
7.9 PROTECTED DOCUMENTS . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION . . . . . . . . . . . 45
8.2 CONDITIONS TO OBLIGATION OF BUYER . . . . . . . . . . . . . 45
8.3 CONDITIONS TO OBLIGATIONS OF THE SELLER . . . . . . . . . . 47
ARTICLE 9
CLOSING
9.1 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2 ACTIONS TO OCCUR AT CLOSING . . . . . . . . . . . . . . . . 49
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 51
10.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . 53
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION OF BUYER . . . . . . . . . . . . . . . . . . 55
11.2 INDEMNIFICATION OF SELLER . . . . . . . . . . . . . . . . . 55
11.3 DEFENSE OF THIRD PARTY CLAIMS . . . . . . . . . . . . . . . 55
11.4 DIRECT CLAIMS . . . . . . . . . . . . . . . . . . . . . . . 56
11.5 ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.6 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . 57
11.7 INSTRUCTIONS TO ESCROW AGENT . . . . . . . . . . . . . . . . 58
11.8 ATTORNEY FEES . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 12
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS . . . 58
12.2 FURTHER ACTIONS . . . . . . . . . . . . . . . . . . . . . . 59
12.3 AMENDMENT AND MODIFICATION . . . . . . . . . . . . . . . . . 59
12.4 WAIVER OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . 59
12.5 SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . 59
12.6 NO CONSEQUENTIAL DAMAGES . . . . . . . . . . . . . . . . . . 59
12.7 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 59
12.8 EXPENSES AND OBLIGATIONS . . . . . . . . . . . . . . . . . . 60
12.9 PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . 60
12.10 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.11 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . 62
12.12 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 62
12.13 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 62
12.14 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . 62
12.15 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . 62
12.16 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.17 DIRECTOR AND OFFICER LIABILITY . . . . . . . . . . . . . . . 63
12.18 NO REVERSIONARY INTEREST . . . . . . . . . . . . . . . . . . 63
12.19 NO WAIVER RELATING TO CLAIMS FOR FRAUD . . . . . . . . . . . 63
12.20 CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.21 ACCESS TO BOOKS AND RECORDS . . . . . . . . . . . . . . . . 64
</TABLE>
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<PAGE> 5
EXHIBITS:
Exhibit A -- Form of Opinion of Buyer's Counsel
Exhibit B -- Deposit Escrow Agreement
Exhibit C -- Form of Seller Non-Competition Agreement
Exhibit D -- Form of Bill of Sale and Assignment
Exhibit E -- Form of Assumption Agreement
Exhibit F -- Form of Indemnification Escrow Agreement
Exhibit G -- Form of Opinion of Seller's Counsel
Exhibit H -- Form of Release of Claims
SCHEDULES:
Schedule 2.1(j) -- Excluded Choses in Action
Schedule 2.1(l) -- Proposed Capital Expenditures
Schedule 2.2(a) -- Excluded Real Property
Schedule 2.2(k) -- Excluded Personal Property
Schedule 2.5(b) -- Trade Deals
Schedule 3.1(e) -- Documents Not Filed, Unrecorded Liabilities and
Conduct of Business
Schedule 3.1(f) -- Compliance with Applicable Laws; Licenses and
Permits
Schedule 3.1(g) -- Litigation
Schedule 3.1(h) -- Insurance
Schedule 3.1(i) -- Owned Real Property
Schedule 3.1(j) -- Leased Real Property
Schedule 3.1(k) -- Personal Property
Schedule 3.1(l) -- Liens and Encumbrances
Schedule 3.1(m) -- Environmental Matters
Schedule 3.1(n) -- Tax Matters
Schedule 3.1(o) -- Certain Agreements
Schedule 3.1(p) -- Employee Benefit Plans; Labor
Schedule 3.1(q) -- Patents, Trademarks; Etc.
Schedule 3.1(r) -- Affiliate Relationships
Schedule 3.1(t) -- Dispositions of Assets
Schedule 3.2(e) -- FCC Matters
Schedule 4.1(a) -- Certain Transactions Not in Ordinary Course of
Business
Schedule 4.1(g) -- Changes in Employee Benefits
Schedule 4.1(m) -- Changes in Advertising Rates or Policies
[THIS LINE HAS BEEN INTENTIONALLY LEFT BLANK]
Schedule 8.2(e) -- Real Estate Title Commitment
-4-
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of April 24, 1997, between Ameron Broadcasting, Inc., a Missouri
corporation ("Seller"), and Capstar Acquisition Company, Inc., a Delaware
corporation ("Buyer").
R E C I T A L S
A. Seller is the licensee of and owns and operates each of the radio
stations listed on Annex A hereto (each referred to individually as a "Station"
and collectively, the "Stations") which are licensed by the Federal
Communications Commission ("FCC").
B. Seller desires to sell and Buyer desires to buy substantially all
the assets used or held for use in the operation of each of the Stations, both
tangible and intangible, excluding the Excluded Assets (as hereinafter
defined), upon the terms and conditions hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accepted Employees" has the meaning set forth in Section 6.4.
"Accounts Receivable" means the rights of Seller to cash payment for the
sale by the Stations of advertising time (on the Stations) prior to 11:59 p.m.
on the day immediately prior to the Closing Date.
"Affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with such person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the right and power, whether by contract, equity
ownership or otherwise, to direct the policies or management of a person.
"Applicable Laws" means all laws, statutes, rules, regulations,
ordinances, judgments, orders, decrees, injunctions, and writs of any
Governmental Entity having jurisdiction over the
-1-
<PAGE> 7
Assets or the business or operations of each of the Stations, as may be in
effect on or prior to the Closing.
"Applications" has the meaning set forth in Section 7.1.
"Assets" means all the tangible and intangible assets owned, leased, or
licensed by Seller that are used or held for use in connection with the
business or operations of any of the Stations, whether or not reflected on the
Financial Statements or Balance Sheet of Seller, and which are to be sold,
assigned, transferred and delivered to Buyer pursuant to Section 2.1 of this
Agreement, but specifically excluding therefrom the Excluded Assets.
"Assumed Contracts" means (a) those Contracts set forth on Schedule
3.1(o) identified as being assumed by Buyer and all other contracts of Seller
entered into in the ordinary course of business prior to the date of this
Agreement that relate to the Assets or the business or operation of the Assets
or any part thereof, (b) all other non-trade advertising Contracts for cash
entered into by Seller for any of the Stations prior to the date of this
Agreement and which are terminable on not more than 30 days notice, (c) all
Contracts entered into by Seller on or after the date of this Agreement and
before the Closing in accordance with the applicable provisions of Section 4.1,
and (d) Trade Deals described in Section 2.5(b).
"Assumption Agreement" means the Assumption Agreement between Buyer and
Seller substantially in the form of Exhibit E.
"Balance Sheet" has the meaning set forth in Section 3.1(e)(iii).
"Balance Sheet Date" has the meaning set forth in Section 3.1(e)(iii).
"Banking Event" has the meaning set forth in Section 9.1.
"Big Six Accounting Firm" has the meaning set forth in Section
2.4(b)(i).
"Bill of Sale and Assignment" means the Bill of Sale and Assignment
between Buyer and Seller substantially in the form of Exhibit D.
"Brokerage Fee" has the meaning set forth in Section 12.8.
"Business Day" means any other day than (a) a Saturday or Sunday or (b)
a day on which commercial banks in New York, New York are authorized or
required by Applicable Laws to be closed.
"Buyer" has the meaning set forth in the first paragraph of this
Agreement, and, subject to the provisions of this Agreement, includes its
permitted successors and assigns.
-2-
<PAGE> 8
"Buyer Indemnified Costs" means (a) any and all actions, proceedings,
assessments, judgments, damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) that any of the Buyer Indemnified Parties incurs and
that arise out of any breach or default by Seller of any of the representations
or warranties set forth in this Agreement or any other Transaction Documents,
or of any covenant of Seller (which shall be deemed to exclude any covenant or
obligation of Buyer) set forth in Sections 2.3, 2.5(b), 4.1(a) through (e),
4.1(i) with respect to dispositions (but not acquisitions) of Assets, 4.3, 5.1
through 5.5, 5.6, 7.1 through 7.4, 7.8, 7.9, 9.1, 12.14 and 12.15
(collectively, "Buyer Indemnified Representation Costs"); (b) any and all
actions, proceedings, assessments, judgments, damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of the
Buyer Indemnified Parties incurs and that arise out of any breach or default by
Seller of any covenant or obligation (other than the covenants or obligations
described in Clause (a) above) of Seller set forth in this Agreement or in any
other Transaction Documents, provided, however, that insofar as any of the
items described in this clause (b) may also be interpreted or construed as
items described in clause (a) above (collectively "Overlap Items"), then such
Overlap Items shall be deemed to constitute "Buyer Indemnified Representation
Costs" covered by clause (a) above, and the Overlap Items shall not be deemed
part of the items described in clause (b); (c) any and all obligations or
liabilities of Seller under any contract or agreement not expressly assumed by
Buyer pursuant to the terms hereof; and (d) the items indemnified against
pursuant to Section 7.6. Notwithstanding any provision in this Agreement to
the contrary or apparently to the contrary, Buyer Indemnified Costs shall not
include damages, losses, claims, liabilities, expenses, penalties or other
amounts described in this paragraph if caused by Buyer's negligence or Buyer's
breach of any representations, warranties, agreements, covenants or obligations
in this Agreement or in any other Transaction Documents. In accordance with
Section 12.6 of this Agreement, in no event shall Buyer Indemnified Costs
include consequential damages.
"Buyer Indemnified Parties" means Buyer and each officer, director and
shareholder of Buyer, and any assignee of Buyer pursuant to the terms of this
Agreement and the officers, directors and shareholders of any such assignee.
"Buyer's Contact Persons" has the meaning set forth in Section 12.21.
"CERCLA" has the meaning set forth in the definition of Environmental
Laws contained in this Section 1.1.
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<PAGE> 9
"Choses in Action" means a right to receive or recover property, debt,
or damages on a cause of action, whether pending or not and whether arising in
contract, tort or otherwise. The term shall include rights to indemnification,
damages for breach of warranty or any other event or circumstance, judgments,
settlements, and proceeds from judgments or settlements. The term does not
include any warranty or representation regarding the merits or ability to
succeed in the enforcement thereof, and any such warranty or representation is
disclaimed.
"Closing" means the consummation of the transactions contemplated by
this Agreement, including compliance with the provisions of Article 9.
"Closing Date" means the date of the Closing specified in Article 9.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended. All references to the Code, U.S. Treasury regulations or other
governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Communications Act" has the meaning set forth in Section 3.1(f).
"Company Reports" has the meaning set forth in Section 3.1(e)(i).
"Consents" means all governmental consents and approvals, including the
FCC Consents, and all consents and approvals of third parties, in each case
that are required pursuant to this Agreement in order to transfer the Assets to
Buyer and otherwise to consummate the transactions contemplated hereby.
"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and
other modifications thereto), to which Seller is a party or is otherwise bound
and which affect or relate to the Assets or the business or operations of each
of the Stations.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement among
Seller, Buyer and Escrow Agent, a copy of which is attached hereto as Exhibit
B.
"Determination Date" has the meaning set forth in Section 2.4(b)(i).
"Earnest Money" means the sum of $1,000,000 to be deposited by Buyer
with the Escrow Agent and held in accordance with the provisions of the Deposit
Escrow Agreement.
"Employee Benefit Plans" means any "employee benefit plan" within the
meaning of Section 3(3) of ERISA and any bonus, deferred
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<PAGE> 10
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, vacation, severance, disability, death benefit,
hospitalization or insurance plan providing benefits to any present or former
employee or contractor of Seller or any member of the ERISA Group maintained by
any such entity or as to which any such entity has any liability or obligation.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Environmental Costs or Liabilities" has the meaning set forth in
Section 3.1(m)(iv).
"Environmental Laws" means all Applicable Laws pertaining to the
environment, natural resources, and public or employee health and safety as
affected by the environment, including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the
Emergency Planning and Community Right to Know Act and the Superfund Amendments
and Reauthorization Act of 1986, the Resource Conservation and Recovery Act,
the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the
Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act,
the Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990,
the Hazardous Materials Transportation Act;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" has the meaning set forth in Section 3.1(p).
"ESA" means Phase I or Phase II environmental site assessments.
"Escrow Agent" means Citibank, N.A. and includes its successors and
assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Existing ESAs" means the following environmental reports: (i) Phase I
Report on WMJJ-FM Radio Transmitter Site, dated August 15, 1990, by Law
Engineering, Inc.; (ii) Phase I Report on WZBQ Transmitter Facility, dated
November 3, 1994, by Law Engineering, Inc. (WZBQ is now known as WOWC); (iii)
Phase I Report on WERC-AM Radio Transmitter Facility, dated July 30, 1990, by
Law Engineering, Inc.; (iv) Survey for Asbestos-Containing Materials in WERC-AM
Transmitter Building, dated August 9, 1990, by Law Engineering, Inc.; (v)
Preliminary Subsurface Investigation of WERC-AM Transmitter Facility, dated
September 12, 1990, by ATEC Associates, Inc.; (vi) Underground Storage Tank
Closure Report
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concerning WERC-AM, dated January 31, 1992, by ATEC Associates, Inc.; and (vii)
Letter from ATEC Associates, Inc. concerning WERC-AM, dated February 28, 1992.
"FCC" has the meaning set forth in the first recital hereto.
"FCC Consents" means actions by the FCC granting its consent to the
assignment of the FCC Licenses for each of the Stations to Buyer as
contemplated by Section 7.1 of this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to Seller and applications of Seller, if any,
to the FCC relating to or used in the business or operations of each of the
Stations, including those listed on Schedule 3.1(f) and any additions thereto
between the date hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC setting
forth the FCC Consents (without the inclusion of any adverse conditions
materially affecting Buyer's operation or ownership of any Station other than
any adverse conditions generally imposed by the FCC) and (a) which has not been
reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal, or stay, and the time for filing any such
requests and for the FCC to set aside the action on its own motion has expired
or (ii) in the event of review, reconsideration, or appeal, such review,
reconsideration, or appeal has been denied and the time for further review,
reconsideration, or appeal has expired.
"Financial Statements" has the meaning set forth in Section 3.1(e)(ii).
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Entity" means any governmental department, commission,
board, bureau, agency, court or other instrumentality of the United States or
any state, county, parish or municipality, jurisdiction, or other political
subdivision thereof.
"Hazardous Substances" has the meaning set forth in Section 3.1(m)(iv).
"Holdback Amount" has the meaning set forth in Section 11.5.
"Indemnification Escrow Agreement" means the Indemnification Escrow
Agreement among Seller, Buyer and Escrow Agent substantially in the form
attached hereto as Exhibit F.
"Indemnified Costs" means the Buyer Indemnified Costs or the Seller
Indemnified Costs, as the case may be.
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"Indemnified Parties" means the Buyer Indemnified Parties or the Seller
Indemnified Parties, as the case may be.
"Indemnification Representation Costs or "Indemnified Representation
Costs" means the Buyer Indemnified Representation Costs or the Seller
Indemnified Representation Costs, as the case may be.
"Indemnifying Party" means any person who is obligated to provide
indemnification hereunder.
"Intellectual Property" means all Trademarks, Know-how, copyrights,
copyright registrations and applications for registration, Patents and all
other intellectual property rights whether registered or not, licenses to or
owned by Seller relating to the business or operations of any Station,
including the call letters of each of the Stations and the goodwill related to
the foregoing.
"Know-how" means all plans, ideas, concepts and data, research records,
all promotional literature, customer and supplier lists and similar data and
information and all other confidential or proprietary technical and business
information.
"Knowledge" means, with respect to a specified party hereto, the actual
knowledge of such party.
"Leased Real Property" means all of the Seller's leasehold interests,
easements, licenses, rights to access and rights-of-way which are used or held
for use in the business and operations of any Station, which are identified and
described in Schedule 3.1(j), as modified by any addition or permitted deletion
thereto between the date hereof and the Closing Date.
"Licenses" means the FCC Licenses and all Permits issued by any
Governmental Entity to Seller relating to or used or held for use in the
business and operations of any Station, including those listed on Schedule
3.1(f), with any additions thereto between the date hereof and the Closing
Date.
"Liens" has the meaning set forth in Section 3.1(l).
"Material Adverse Effect" means a material adverse effect on the
business, operations, assets, properties (taken as a whole), or liabilities of
the Stations.
"Multi-City Acquisition" has the meaning set forth in Section 6.2.
"Multiemployer Plan" has the meaning set forth in Section 3(37) or
Section 4001(a)(3) of ERISA.
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"Non-Competition Agreement" means the Non-Competition Agreement between
Buyer and Seller substantially in the form of Exhibit C.
"Owned Real Property" means those parcels of real property owned in fee
and used or held for use by Seller as described in Schedule 3.1(i), and all
buildings, structures, improvements, and fixtures thereon, together with all
rights of way, easements, privileges, and appurtenances pertaining or belonging
thereto, including any right, title, and interest of Seller in and to any
street or other property adjoining any portion of such property.
"Patents" means all patent and patent applications (including all
reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by Seller.
"Pension Plans" has the meaning set forth in Schedule 3.1(p).
"Permits" has the meaning set forth in Section 3.1(m).
"Permitted Encumbrances" means (a) statutory Liens for current Taxes not
yet due and payable, (b) mechanics', carriers', workers', repairers', and other
similar liens imposed by law arising or incurred in the ordinary course of
business for obligations not yet due, (c) in the case of leases of vehicles,
rolling stock, and other personal property, encumbrances, which do not,
individually or in the aggregate, materially impair the operation of the
business at the facility at which such leased equipment or other personal
property is located, (d) other liens, charges or encumbrances incidental to the
operation of the Stations or the ownership of the Assets which were not
incurred in connection with the borrowing of money or the advance of credit and
which, in the aggregate, do not materially detract from the value of the Assets
or materially interfere with the use thereof or the operation of the Stations,
and (e) Liens on leases of real property arising from the provisions of such
leases, including, in relation to leased real property, any agreements and/or
conditions imposed on the issuance of land use permits, zoning, business
licenses, use permits, or other entitlement of various types issued by any
Governmental Entity, necessary or beneficial to the continued use and occupancy
of the Assets or the continuation of the operation of any Station.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, or other
entity.
"Personal Property" means all of the machinery, equipment (including the
transmitter and studio equipment), computer programs, computer software, tools,
motor vehicles, furniture, furnishings, leasehold improvements, office
equipment, inventories, supplies, spare parts, and other tangible or intangible
personal property which are owned or leased by Seller for any Station, and
which are used or held for use in the business or operations of any
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Station, and which are located at the Stations or reflected in the books and
records of the Stations, including the personal property which is listed on
Schedule 3.1(k) hereto, together with any additions thereto between the date
hereof and the Closing Date less any dispositions made in accordance with
Section 4.1. The term Personal Property shall not include any of the Excluded
Assets.
"Protected Employees" has the meaning set forth in Section 6.4.
"Protection Pay" has the meaning set forth in Section 6.4.
"Purchase Price" means the consideration payable by Buyer to Seller as
provided in Section 2.3 hereof.
"Rejected Employees" has the meaning set forth in Section 6.4.
"Real Property" means the Leased Real Property and the Owned Real
Property.
"Release" means the Release of Claims between Buyer and Seller
substantially in the form of Exhibit H.
"Released Claims" has the meaning set forth in Section 10.2(b).
"Released Parties" has the meaning set forth in Section 10.2(b).
"Resolution Period" has the meaning set forth in Section 2.4(b)(i).
"Schedules" means the Schedules attached hereto.
"Second Resolution Period" has the meaning set forth in Section
2.4(b)(ii).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Seller Indemnified Costs" means (a) any and all actions, proceedings,
assessments, judgments, damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorneys fees and expenses incurred in investigating and preparing for any
litigation or proceeding) that any of the Seller Indemnified Parties incurs and
that arise out of any breach or default by Buyer of any of the representations
or warranties under this Agreement or any other Transaction Documents, or of
any covenant of Buyer (which shall be deemed to exclude any covenant or
obligation of Seller) set forth in Sections 4.3, 6.5, 6.7, 6.8, 7.1, 7.2 and
7.4, 7.8, 7.9, 9.1,
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12.14 and 12.15 (collectively, "Seller Indemnified Representation Costs"); (b)
any and all losses, liabilities, or damages incurred by any of the Seller
Indemnified Parties resulting from Buyer's operation or control of any of the
Stations on and after the Closing Date, including any and all liabilities
arising under the Licenses or the Assumed Contracts which relate to events
occurring after the Closing Date; (c) any and all actions, proceedings,
assessments, judgments, damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) that any of the Seller Indemnified Parties incurs and
that arise out of any breach or default by Buyer of any covenant or obligation
(other than the covenants or obligations described in Clause (a) above) of
Buyer set forth in this Agreement or in any other Transaction Documents,
provided, however, that insofar as any of the items described in this clause
(c) may also be interpreted or construed as items described in clause (a) above
(collectively, "Overlap Items"), then such Overlap Items shall be deemed to
constitute "Seller Indemnified Representation Costs" covered by clause (a)
above, and the Overlap Items shall not be deemed part of the items described in
clause (c); and (d) the items indemnified against pursuant to Section 5.3.
Notwithstanding any provision in this Agreement to the contrary or apparently
to the contrary, Seller Indemnified Costs shall not include damages, losses,
claims, liabilities, expenses, penalties or other amounts described in this
paragraph if caused by Seller's negligence or Seller's breach of any
representations, warranties, agreements, covenants or obligations in this
Agreement or in any other Transaction Documents. In accordance with Section
12.6 of this Agreement, in no event shall Seller Indemnified Costs include
consequential damages.
"Seller Indemnified Parties" means Seller and each officer, director and
shareholder of Seller.
"Seller's Contact Persons" has the meaning set forth in Section 5.2(a).
"Seller Negative Trade Balance" has the meaning set forth in Section
4.2.
"Severance Agreements" has the meaning set forth in Section 6.4.
"Station Event" has the meaning set forth in Section 9.1.
"Station Licenses" has the meaning set forth in Section 3.1(f)(ii).
"Station Management" has the meaning set forth in Section 4.1(b).
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"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
"Tax Returns" means any return, report, information return or other
document (including any related or supporting information) filed or required to
be filed with any Governmental Entity in connection with the determination,
assessment, collection or administration of any Taxes or the administration of
any laws, regulations or administrative requirements relating to any Taxes.
"Termination Date" has the meaning set forth in Section 10.1(b)(v).
"Title Commitment" means the commitment to issue an owner's title policy
as provided in Section 8.2(e).
"Title Company" means Chicago Title Insurance Company or such other
title insurance company reasonably acceptable to Buyer and Seller.
"Trade Deals" means the exchanges by a Station of its advertising time
for goods or services, other than in connection with the licensing of programs
and programming material.
"Trademarks" means (a) trademarks, service marks, trade names, trade
dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of the business of any Station, whether or
not registered, and any applications or registrations therefor and (b) any
associated goodwill incident thereto owned by Seller.
"Trading Event" has the meaning set forth in Section 9.1.
"Transaction Documents" has the meaning set forth in Section 3.1(c).
"Warranty Deed" means a special warranty deed in form and substance
reasonably acceptable to the Buyer and the Title Company pursuant to which
Seller conveys to Buyer the Owned Real Property at the Closing.
1.2 REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or
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other subdivisions, and shall be disregarded in construing the language
contained therein. The words "this Agreement," "herein," "hereby,"
"hereunder," and "hereof," and words of similar import, refer to this Agreement
as a whole and not to any particular subdivision unless expressly so limited.
The words "this Section," "this subsection," and words of similar import, refer
only to the Sections or subsections hereof in which such words occur. The word
"or" is not exclusive, and the word "including" (in its various forms) means
"including without limitation". Pronouns in masculine, feminine, or neuter
genders shall be construed to state and include any other gender and words,
terms, and titles (including terms defined herein) in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
expressly requires. Unless the context otherwise requires, all defined terms
contained herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 AGREEMENT TO SELL AND BUY. Subject to the terms and conditions
set forth in this Agreement and except for the Excluded Assets, Seller shall
sell, assign, transfer and deliver to Buyer on the Closing Date, and Buyer
shall purchase on the Closing Date, all of the following Assets, free and clear
of any Liens or liabilities (except for Permitted Encumbrances and liabilities
assumed by Buyer in accordance with Section 2.5):
(a) All Personal Property;
(b) All Leased Real Property;
(c) All Owned Real Property;
(d) All Licenses and Permits;
(e) All Assumed Contracts;
(f) All Intellectual Property;
(g) Each of the Station's technical information and data,
machinery and equipment warranties (to the extent such warranties are
assignable), if any, maps, plans, diagrams, blueprints and schematics relating
to such Station, if any, including filings with the FCC which relate to such
Station, and goodwill relating to the foregoing;
(h) All books and records relating to the business and
operation of any of the Stations (excluding those described in, or relating to
the assets described in, Section 2.2), including (i) executed copies of the
Assumed Contracts, or if no executed agreement exists, summaries of each
Assumed Contract transferred
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pursuant to clause (e) above and (ii) all records required by the FCC to be
kept by each Station, subject to the right of Seller or its representatives or
agents to copy and have such books and records made reasonably available to
Seller or its representatives or agents for tax and other legitimate
organization purposes for a period of six years after the Closing;
(i) To the extent assignable, all computer programs and
software, and all rights and interests of Seller in and to computer programs
and software used in connection with the business or operations of any Station;
(j) Except for claims relating to Taxes and all Choses in
Action described in Schedule 2.1(j), all Choses in Action of Seller; and
(k) All intangible assets of Seller relating to any Station or
the business or operation of any Station not specifically described above,
including goodwill, and all other assets, other than the Excluded Assets, used
or held for use in connection with any Station or the business of the Seller.
(l) The proceeds (less the amount thereof used for reasonable
capital expenditures and reasonable transaction fees and costs) received from
the Alabama Department of Transportation in consideration of the sale of
certain real property pursuant to the proposed transaction and the proposed
related capital expenditures described in Schedule 2.1(l).
2.2 EXCLUDED ASSETS. The Excluded Assets shall consist of the
following:
(a) The Real Property described in Schedule 2.2(a), subject to
the disclosures set forth therein with respect to the Real Property (including
part of the WERC transmitter site to be sold to the Alabama Department of
Transportation);
(b) In each case determined as of 11:59 p.m. on the day prior
to the Closing Date, Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; notes receivable, letters of
credit or other similar items of Seller; any stocks, bonds, certificates of
deposit and similar investments of Seller; and any other cash equivalents of
Seller;
(c) Seller's books and records relating solely to internal
corporate matters and any other books and records not related to any Station or
the business or operations of any Station;
(d) Any claims, rights and interest of Seller in and to any
(i) refunds of Taxes or fees of any nature whatsoever or (ii) deposits or
utility deposits, which, in each case, relate solely to the period prior to the
Closing Date;
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(e) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by Seller relating to
property or equipment repaired, replaced or restored by Seller prior to the
Closing Date;
(f) All Employee Benefit Plans and all assets or funds held in
trust, or otherwise, associated with or used in connection with the Employee
Benefit Plans;
(g) All Choses in Action, if any, of Seller excluded from
Section 2.1(j);
(h) All Accounts Receivable;
(i) All tangible and intangible personal property disposed of
or consumed in the ordinary course of business between the date of this
Agreement and the Closing Date, or as otherwise permitted under the terms
hereof; and
(j) Any collective bargaining agreement, any other Contract
not included in the Assumed Contracts, and all Contracts that have terminated
or expired prior to the Closing Date in the ordinary course of business and as
permitted hereunder; and
(k) The personal effects and other personal property, if any,
identified on Schedule 2.2(k).
(l) Notwithstanding any provision herein to the contrary, the
Assets being transferred to Buyer do not include any property located on the
premises of any Station that is not owned or leased by Seller, such as
equipment on loan that is being used on a temporary or trial basis.
2.3 PURCHASE PRICE. Subject to the adjustments set forth in Section
2.4 and 2.5(b), the Purchase Price for the Assets is Thirty One Million Five
Hundred Thousand Dollars ($31,500,000).
2.4 ADJUSTMENTS AND PRORATIONS.
(a) All revenues arising from the operation of the Stations
earned or accrued up until 11:59 p.m. on the day immediately preceding the
Closing Date, and all expenses, costs and liabilities, arising from the
operation of the Stations incurred, accrued or payable up until such time,
including expenses arising under the Assumed Contracts, tower rentals, business
and license fees, utility charges, real and personal property Taxes levied
against the Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, other Taxes, wages, salaries, vacation,
sick and employee compensation pay, shall be prorated between Buyer and Seller
in accordance with the principle that (i) Seller shall receive all revenues,
refunds and deposits of Seller held by third parties, and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of each
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Station for the period ending at 11:59 p.m. on the day prior to the Closing
Date and (ii) Buyer shall receive all revenues earned or accrued and shall be
responsible for all expenses, costs and liabilities incurred, payable or
allocable to the conduct of the business and operations of each Station for the
period commencing at 12:00 a.m. on the Closing Date and continuing after the
Closing Date. An adjustment of the Purchase Price and proration shall be made
in favor of Buyer to the extent that Buyer assumes any liability under any
Assumed Contract to refund (or to credit against payments otherwise due) any
security deposit or similar prepayment paid to Seller by any lessee or other
third party which is not otherwise credited to Buyer. Subject to Buyer's
receipt of estoppel certificates in a form reasonably satisfactory to Seller,
an adjustment of the Purchase Price and proration shall be made in favor of
Seller to the extent that Seller has made (A) any security deposit under any
Assumed Contract whether or not there is a proration under such Assumed
Contract or (B) other prepayment under any Assumed Contracts for which there is
a proration. Seller shall be liable for all of the costs of employee
compensation relating to each of the Stations properly attributable to or
accruable on account of service with Seller through 11:59 p.m. on the date
prior to the Closing Date, including (1) all Taxes and related contributions,
vacations and sick pay and (2) all group medical, dental or death benefits for
expenses incurred, related to or arising from, events occurring on or prior to
11:59 p.m. on the date prior to the Closing Date, or death or disability
occurring on or prior to 11:59 p.m. on the date prior to the Closing Date,
whether reported by the Closing Date or thereafter; Buyer will be liable for
all of the costs and expenses (including payroll taxes and all other Taxes,
benefits and contributions) of employee compensation relating to each of the
Stations, properly attributable or accruable thereafter on account of service
with Buyer. Except as provided in Section 2.5(b), Trade Deals shall not be
adjusted or prorated.
(b) Adjustments or prorations pursuant to this Section 2.4
will be determined in the following manner:
(i) Adjustments or prorations to be paid on the Closing
Date will be determined as of the close of business on a date agreed
upon by Buyer and Seller (the "Determination Date"); and in the absence
of any such agreement between Seller and Buyer, the Determination Date
shall be the 16th Business Day before the Closing Date. Within 5
Business Days after the Determination Date, Seller shall submit to Buyer
its good faith determination of the adjustments or prorations required
by this Section 2.4 as of the Determination Date. Seller's determination
of the amount of adjustment under this Section 2.4 shall be made in
accordance with GAAP, consistently applied. If Buyer disagrees with the
determination made by Seller of the adjustments or prorations, Buyer
shall give prompt written notice thereof, but in no event later than 5
Business Days after notice of Seller's determination, specifying in
reasonable detail the nature and
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extent of the disagreement as to each adjustment or proration; and Buyer
and Seller shall have a period of 5 Business Days (the "Resolution
Period") in which Seller may respond to Buyer's notice and Buyer and
Seller shall work to resolve the disagreement. If the parties are
unable to resolve the disagreement within the Resolution Period, the
matter shall be submitted to a "Big Six" independent certified public
accounting firm chosen by the mutual agreement of Seller's auditor and
Buyer's auditor ("Big Six Accounting Firm"). The Big Six Accounting
Firm shall review Seller's determination of the adjustments or
prorations, Buyer's notice of disagreement regarding the adjustments or
prorations, and Seller's response thereto, and shall submit to Seller
and Buyer a final resolution within 10 Business Days after the matter is
submitted to the Big Six Accounting Firm. The Closing Date and the
Termination Date will be extended until the submission of a final
resolution by the accounting firm. The Big Six Accounting Firm's
determination shall be binding on Buyer and Seller.
(ii) Within 30 Business Days after the Closing Date,
Seller shall submit to Buyer its good faith determination of the
adjustments or prorations required by this Section 2.4 for the period
from the day after the Determination Date until 11:59 p.m. on the day
prior to the Closing Date. Seller's determination of the amount of
adjustment under this Section 2.4 shall be made in accordance with GAAP,
consistently applied. If Buyer disagrees with the determination made by
Seller of the adjustment, Buyer shall give prompt written notice
thereof, but in no event later than 10 Business Days after notice of
Seller's determination, specifying in reasonable detail the nature and
extent of the disagreement with respect to each adjustment or proration,
and Buyer and Seller shall have a period of 10 Business Days in which to
resolve the disagreement (the "Second Resolution Period"). If the
parties are unable to resolve the disagreement within the Second
Resolution Period, the matter shall be submitted to the Big Six
Accounting Firm. The Big Six Accounting Firm shall review Seller's
determination of the adjustments or prorations, Buyer's notice of
disagreement regarding the adjustments or prorations, and Seller's
response thereto, and shall submit to Seller and Buyer a final
resolution within 15 Business Days after the matter is submitted to the
Big Six Accounting Firm. The Big Six Accounting Firm's determination
shall be binding on Buyer and Seller.
(iii) Each party shall bear the fees and expenses of its
own representatives, including its independent accountants, if any, and
shall share equally the fees and expenses of the Big Six Accounting
Firm, if engaged, to resolve any disagreement between the parties.
Within five Business Days following a final determination hereunder, the
party obligated to make payment will make the payments
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determined to be due and owing in accordance with this Section 2.4.
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. (a) As of the Closing
Date, Buyer shall assume and undertake to pay, discharge and perform all the
obligations and liabilities of Seller relating to each Station under the
Licenses and the Assumed Contracts assumed by Buyer relating to the time period
beginning on or arising out of events occurring on or after the Closing Date,
and thereafter. All other obligations and liabilities of Seller, including (i)
obligations or liabilities under any contract not included in the Assumed
Contracts, (ii) obligations or liabilities under any Assumed Contract for which
a Consent, if required, has not been obtained as of the Closing, (iii) any
obligations and liabilities arising under the Assumed Contracts that relate to
the time period prior to the Closing Date or arise out of events occurring
prior to the Closing Date and (iv) any forfeiture, claim or pending litigation
or proceeding relating to the business or operations of any Station prior to
the Closing Date, shall not be assumed by Buyer and shall remain and be the
obligation and liability solely of Seller. Other than as specified in the
first sentence of this Section 2.5, Buyer, directly or indirectly, shall assume
no liabilities or obligations of Seller and shall not be liable therefor.
(b) Schedule 2.5(b) contains a list of all of the Trade Deals
in effect as of March 31, 1997 hereof and correctly sets forth the balance, in
dollar value, of either (i) Seller's obligations to the other party under such
Trade Deals (denoted by a minus on Schedule 2.5(b)) or (ii) the amount due
Seller under such Trade Deals (reflected as a positive on Schedule 2.5(b)). On
the Closing Date, (i) Buyer shall assume Seller's obligations under (A) the
Trade Deals listed on Schedule 2.5(b) and (B) all Trade Deals entered into by
Seller between the date hereof and the Closing Date with the consent of Buyer
in accordance with the provisions of this Agreement; and (ii) (A) if, as of the
Closing Date, the obligation of Seller for air time due another party or
parties pursuant to all Trade Deals to be assumed by Buyer exceeds the balance,
in dollar value, of the amount due Seller under such Trade Deals, then the
amount of such excess shall be considered a pre-Closing Date operating expense
of Seller that shall serve as a reduction of the Purchase Price in accordance
with Section 2.4(a); and (B) if, as of the Closing Date, the balance of the
obligation of the other party or parties for goods or services due Seller
pursuant to all Trade Deals to be assumed by Buyer exceeds the obligation of
Seller for air time, then the value of such excess shall serve as an increase
to the Purchase Price in accordance with Section 2.4(a). The Trade Deals
assumed by Buyer pursuant to the terms of this Section 2.5(b) shall be
considered Assumed Contracts.
2.6 ALLOCATION. Within 30 days after the Closing Date, Seller and
Buyer shall negotiate in good faith an allocation of the Purchase Price among
the Assets (as well as any liabilities assumed by Buyer) that complies with
Section 1060 of the Code with respect
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to the allocation of the Purchase Price. If the allocation is not agreed upon
within 30 days after the Closing, then Buyer and Seller agree that the
allocation shall be made and consistently reported by Buyer and Seller in
compliance with Section 1060 based upon an asset valuation supplied by
Broadcast Investment Analysts. The cost of such appraisal shall be shared
equally by Buyer and Seller. Buyer will order such appraisal from Broadcast
Investment Analysts on or after such date as the FCC Consents have been placed
on public notice. The appraisal, if required, shall be provided to Seller
within 45 days after the Closing Date.
2.7 EARNEST MONEY. (a) Concurrently with the execution of this
Agreement, Buyer shall deposit the Earnest Money with the Escrow Agent to be
held in escrow in accordance with the Deposit Escrow Agreement.
(b) Subject to satisfaction of the conditions to the
obligations set forth in Article 8, at the Closing, Seller shall instruct the
Escrow Agent to release and return the Earnest Money to Buyer.
(c) If this Agreement is terminated as provided in Section
10.1, Buyer and Seller shall instruct the Escrow Agent to release the Earnest
Money to Buyer or to Seller, all as provided in Section 10.2.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying on such representations and warranties in entering into and
performing this Agreement).
(a) Organization, Good Standing, Etc. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Missouri, has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in the
State of Alabama. Seller has delivered to Buyer true and complete copies of
its Articles of Incorporation and Bylaws, as in effect at the date of this
Agreement. Seller is not in violation of any provisions of its Articles of
Incorporation or Bylaws.
(b) Subsidiaries of Seller. Seller does not own, directly or
indirectly, any equity interest in, any other corporation, partnership, or
other person or have the right, pursuant to a contract or otherwise, to acquire
any capital stock, equity interest or other similar investment in any
corporation, partnership, or other person.
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(c) Authority. Seller has all requisite corporate power and
authority to enter into this Agreement, the Deposit Escrow Agreement, the Bill
of Sale and Assignment, the Assumption Agreement, the Indemnification Escrow
Agreement, the Non-Competition Agreement and each other agreement, document,
and instrument required to be executed by Seller in accordance with this
Agreement (collectively, the "Transaction Documents," which term includes this
Agreement) and to consummate the transactions contemplated hereby or thereby.
The execution and delivery of the Transaction Documents by Seller and the
consummation by Seller of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of Seller, including,
without limitation, the requisite approval of the holders of the outstanding
capital stock of Seller entitled to vote thereon. The Transaction Documents
have been, or upon execution and delivery will be, duly executed by Seller and
delivered and constitute the valid and binding obligations of Seller
enforceable against it in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(d) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents by Seller do not and the performance
by Seller of the transactions contemplated hereby or thereby will not, subject
to obtaining the consents, approvals, authorizations, and permits and making
the filings described in this Section 3.1(d), (i) violate, conflict with, or
result in any breach of any provision of Seller's Articles of Incorporation and
Bylaws, (ii) violate, conflict with, or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of control of
Seller or otherwise) any obligation, or result in the loss of any benefit, or
give any person the right to require any security to be repurchased, or give
rise to the creation of any lien, charge, security interest, or encumbrance
upon any of the Assets under any of the terms, conditions, or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or
any license, lease, agreement, or other instrument or obligation to which
Seller is a party or by which it or any of the Assets may be bound or
subjected, or (iii) violate any order, writ, judgment, injunction, decree,
statute, law, rule or regulation, of any Governmental Entity applicable to
Seller or by which or to which any of the Assets is bound or subject. No
consent, approval, order, or authorization of, or registration, declaration, or
filing with, any Governmental Entity is required by or with respect to Seller
in connection with the execution and delivery of the Transaction Documents by
Seller or the consummation of the transactions contemplated hereby or thereby,
except for the FCC
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Consents as contemplated by Section 7.1 hereof, and such other consents as set
forth in this Agreement.
(e) Reports; Financial Statements; Absence of Certain Changes
or Events.
(i) Except as disclosed in Schedule 3.1(e), Seller has
filed all forms, reports, statements, and other documents required to be
filed with the FCC by Seller. Seller has filed all forms, reports,
statements, and other documents required to be filed with any and all
other Governmental Entities. All such forms, reports, statements and
other documents required to be filed with the FCC or any other
Governmental Entity are referred to herein, collectively, as the
"Company Reports"). The Company Reports were prepared in all material
respects in accordance with the requirements of applicable law.
(ii) Seller has delivered to Buyer copies of (A) the
audited balance sheets of Seller as of December 31, 1995 and December
31, 1996, together with the audited statements of income and cash flows
of Seller for the periods then ended, and the notes thereto, accompanied
by the reports thereon of Arthur Andersen LLP, independent public
accountants, and (B) the unaudited balance sheet of Seller as of March
31, 1997, together with the related unaudited statements of income for
the periods then ended (such audited and unaudited financial statements
collectively being referred to as the "Financial Statements"). The
Financial Statements, including the notes thereto, were prepared in
accordance with GAAP applied on a consistent basis throughout the
periods covered thereby (except to the extent disclosed therein or
required by changes in GAAP, and except to the extent that interim
statements do not comply with all requirements of GAAP) and present
accurately the information purported to be presented therein as of such
dates and for the periods then ended. None of the Excluded Assets
described in Section 2.2(l) are reflected in the financial statements of
Seller described in this subparagraph (ii).
(iii) Except as disclosed in Schedule 3.1(e), there is no
liability or obligation of any kind, whether accrued, absolute, fixed,
contingent, or otherwise, of Seller that is not reflected or reserved
against in the balance sheet as of the date March 31, 1997 (the "Balance
Sheet"), other than (A) liabilities incurred in the ordinary course of
business in a manner consistent with past practice since March 31, 1997
(the "Balance Sheet Date"), or (B) any such liability or obligation
which would not be required to be presented in financial statements or
the notes thereto prepared in conformity with GAAP applied, in a manner
consistent with past practice, in the preparation of the Financial
Statements.
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(iv) Except as disclosed in Schedule 3.1(e), since the
Balance Sheet Date, Seller has conducted its business only in the
ordinary course consistent with past practice and nothing has occurred
that would have been prohibited by Section 4.1 if the terms of such
section had been in effect as of and after the Balance Sheet Date.
Since the Balance Sheet Date, there has not occurred, and Seller has not
incurred or suffered, any event, circumstance, or fact that could result
in a Material Adverse Effect. Additionally, since the Balance Sheet
Date, there has not occurred, and Seller has not incurred or suffered,
any event, circumstance, or fact that materially impairs the physical
assets of any of the Stations.
(f) Compliance with Applicable Laws: FCC Matters.
(i) Except as disclosed in Schedule 3.1(f), the
business of Seller has been conducted in compliance in all material
respects with each Applicable Law. To the Knowledge of Seller, no
investigation or review by any Governmental Entity with respect to
Seller is pending or threatened. Without limiting the generality of the
foregoing, Seller has in all material respects complied with the
Communications Act of 1934, as amended, and all material rules,
regulations and written policies of the FCC thereunder (collectively,
the "Communications Act"), all obligations with respect to equal
employment opportunity under Applicable Law, and all material rules and
regulations of the Federal Aviation Administration applicable to each of
the towers used or held for use by a Station. In addition, Seller has
duly and timely filed, or caused to be so filed, with the FCC and other
appropriate Governmental Entities all reports, statements, documents,
registrations, filings, or submissions with respect to the operation of
each Station and the ownership thereof, including, applications for
renewal of authority required by Applicable Law to be filed. All such
FCC filings complied in all material respects with Applicable Laws when
made, and no deficiencies have been asserted by the FCC to Seller with
respect to any such filings. The material required by 47 C.F.R. Section
73.3526 to be kept in the public inspection files of each Station is in
such files.
(ii) Schedule 3.1(f) is a true and complete list of (A)
all of the FCC Licenses, including the expiration dates thereof, as of
the date of this Agreement and (B) all other material licenses, permits,
or authorizations issued to Seller by any other Governmental Entities
and held by it as of the date of this Agreement. Such FCC Licenses,
licenses, permits, and authorizations, and all pending applications for
modification, extension, or renewal thereof or for new licenses, permits
permissions, or authorizations, are collectively referred to herein as
the "Station Licenses." Schedule 3.1(f) accurately lists the legally
authorized holder(s) of the Station Licenses. The Station Licenses
constitute all the licenses, permits and authorizations
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required for the Seller's operation of each of the Stations and the
business of Seller, and each of the Station Licenses is in full force
and effect. Each of the Stations has been operated in all material
respects in accordance with the terms of its Station Licenses and the
Seller is otherwise in all material respects in compliance with, and has
conducted its business so as to comply with, the terms of such Station
Licenses. To the Knowledge of Seller, there are no proceedings pending
or threatened with respect to Seller's ownership or operation of any
Station which reasonably may be expected to result in the revocation,
material adverse modification, non-renewal, or suspension of any of the
Station Licenses, the denial of any pending applications for any Station
Licenses, the issuance against Seller of any cease and desist order, or
the imposition of any administrative actions by the FCC or any other
Governmental Entity with respect to any Station Licenses, or which
reasonably may be expected to adversely affect any Station's ability to
operate as currently operated or Buyer's ability to obtain control of
any Station Licenses or to operate any Station. To the Knowledge of
Seller, no other broadcast station or radio communications facility is
causing interference to any Station's transmissions beyond that which is
allowed by FCC rules and regulations and no Station is causing
interference to any other broadcast station or radio communications
facilities' transmissions beyond that which is allowed by the FCC rules
and regulations. To the Knowledge of Seller, there is no reason to
believe based on what is known as of the date this Agreement is signed
that the FCC will not renew any of the Station Licenses issued by the
FCC in the ordinary course of business. To the Knowledge of Seller,
there are no facts relating to Seller under the Communications Act that
reasonably may be expected to disqualify Seller from transferring
control of any of the Station Licenses pursuant to the terms of this
Agreement or that would prevent the consummation by Seller of the
transactions contemplated by this Agreement.
(g) Absence of Litigation. Except as set forth on Schedule
3.1(g), to the Knowledge of Seller, there is no claim, action, suit, inquiry,
judicial, or administrative proceeding, grievance, or arbitration pending or,
to the Knowledge of Seller, threatened against Seller or any of the Assets by
or before any arbitrator or Governmental Entity, nor, to the Knowledge of
Seller, are there any investigations relating to Seller or any of the Assets
pending or, to the Knowledge of Seller, threatened by or before any arbitrator
or Governmental Entity. Except as set forth in Schedule 3.1(g), there is no
judgment, decree, injunction, order, determination, award, finding, or letter
of deficiency of any Governmental Entity or arbitrator outstanding against
Seller or any of the Assets. There is no action, suit, inquiry, judicial, or
administrative proceeding pending or, to the Knowledge of Seller, threatened
against Seller relating to the transactions contemplated by this Agreement.
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(h) Insurance. Since December 31, 1992, Seller has been
insured against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. Schedule
3.1(h) sets forth an accurate summary of all fire, general liability,
malpractice liability, theft, and other forms of insurance and all fidelity
bonds held by or applicable to Seller. To the Knowledge of Seller, no event
has occurred, including the failure by Seller to give any notice or information
or the delivery of any inaccurate or erroneous notice or information, which
limits or impairs the rights of Seller under any such insurance policies in
such a manner as could have a Material Adverse Effect. Excluding insurance
policies that have expired and been replaced in the ordinary course of
business, no insurance policy has been cancelled within the last two years
prior to the date hereof.
(i) Owned Real Property. Schedule 3.1(i) contains an accurate
description of all the Owned Real Property. Seller has good and marketable,
fee simple, title in and to the Owned Real Property. Seller has sufficient
title to such easements, rights of way and other rights appurtenant to each of
the Owned Real Properties as are necessary to permit ingress and egress to and
from the Owned Real Property to a public way, and the improvements on the Owned
Real Property have access to such sewer, water, gas, electric, telephone and
other utilities as are necessary to allow the business of the Seller operated
thereon to be operated in the ordinary course. To the Knowledge of Seller,
there is no pending condemnation or similar proceeding affecting the Owned Real
Property or any portion thereof, and to the Knowledge of Seller, no such action
is threatened. Except as set forth on Schedule 3.1(i), the improvements
located on the Owned Real Property are in sufficiently good condition (except
for ordinary wear and tear) to allow the business of the Seller to be operated
in the ordinary course and there has been no damage to such improvements that
affects the conduct of such business in any material respect that has not been
repaired or remedied. Except as set forth on Schedule 3.1(i), there are no
lessees or tenants at will in possession of any portion of any of the Owned
Real Property other than Seller, whether as lessees, tenants at will,
trespassers or otherwise. Except as set forth on Schedule 3.1(i), no present
zoning, building or other federal, state or municipal law, ordinance,
regulation or restriction is violated in any material respect by the continued
maintenance, operation or use of the Owned Real Property or any tract or
portion thereof or interest therein in its present manner. To the Knowledge of
Seller, the current use of the Owned Real Property and all parts thereof does
not violate any restrictive covenants of record covering any of the Owned Real
Property. All necessary licenses by any Governmental Entity with respect to
the Owned Real Property have been obtained, have been validly issued and are in
full force and effect.
(j) Leased Real Property. Schedule 3.1(j) contains an
accurate description of all the leasehold interests relating to the business
and operations of each of the Stations as now conducted.
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Each lease described in Schedule 3.1(j) is a valid and binding obligation of
Seller and is in full force and effect without amendment other than as
described in Schedule 3.1(j). Except as otherwise disclosed on Schedule
3.1(j), Seller is not, and to the Knowledge of the Seller, no other party
thereto is, in default under any lease described in Schedule 3.1(j). Subject
to obtaining the Consents disclosed in Schedule 3.1(j) and except as disclosed
in Schedule 3.1(j), Seller has the full legal power and authority to assign its
rights under the leases listed in Schedule 3.1(j) to Buyer. All leasehold
interests listed in Schedule 3.1(j) (including the improvements thereon) are
available for immediate use in the conduct of the business and operations of
each of the Stations as currently conducted.
(k) Personal Property. Schedule 3.1(k) contains a description
of the items of Personal Property (having a replacement cost of not less than
$10,000 for each item) which comprise all Personal Property used or held for
use in connection with the business and operations of each Station or which
permit the operation of each Station as now conducted. Except as set forth on
Schedule 3.1(k), Seller has good title to, or a valid leasehold or license
interest in, all Personal Property and none of the Personal Property is subject
to any Lien or other encumbrances, except for Permitted Encumbrances. Seller
is not, and to the Knowledge of the Seller, no other party is, in default under
any of the leases, licenses and other Contracts relating to the Personal
Property. Except as otherwise disclosed in Schedule 3.1(k), the Personal
Property (i) is in good operating condition and repair (ordinary wear and tear
excepted), (ii) is available for use in the business and operation of each of
the Stations as currently conducted and (iii) enables each of the Stations to
operate in all material respects in accordance with the equipment related terms
of their respective FCC Licenses, and the rules and regulations of the FCC, and
with all other applicable federal, state and local statutes, ordinances, rules
and regulations.
(l) Liens and Encumbrances. All of the Assets, including
leases, are free and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, tenancies, and other possessory interests, conditional
sale or other title retention agreements, assessments, easements, rights of
way, covenants, rights of first refusal, defects in title, encroachments, and
other burdens, options or encumbrances of any kind (collectively, "Liens")
except (i) Permitted Encumbrances and (ii) Liens set forth on Schedule 3.1(l)
(the Liens referred to in clauses (i) and (ii) being "Permitted Liens"). At
the Closing, all of the Assets shall be free and clear of all Liens other than
Permitted Encumbrances and Liens or claims created by Buyer.
(m) Environmental Matters. Notwithstanding any provision in
this Agreement to the contrary, all representations made in or pursuant to this
Agreement by Seller are solely for the benefit of Buyer and may only be used or
enforced by Buyer and may not be used or enforced by any other person. Without
limiting the
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preceding sentence, the representations made by Seller in this Agreement or
pursuant to this Agreement shall not be deemed admissions by Seller in any
legal proceeding against Seller by any governmental agency or other third party
(except Buyer) and shall not be admissible in any proceeding brought against
Seller by any governmental agency or any other third party (except Buyer).
Except as expressly disclosed in the Existing ESAs or as expressly disclosed in
Schedule 3.1(m):
(i) The real property and facilities owned, operated,
and leased by Seller and the operations of Seller thereon comply and
have at all times complied in all material respects with all Applicable
Laws pertaining to the environment, natural resources, and public or
employee health and safety, including all Environmental Laws;
(ii) To the Knowledge of Seller, no judicial proceedings
are pending or threatened against Seller alleging the violation of any
Environmental Laws, and there are no administrative proceedings pending
or, to the Knowledge of Seller, threatened against Seller, alleging the
violation of any Environmental Laws and no notice from any Governmental
Entity or any private or public person has been received by Seller
claiming any violation of any Environmental Laws in connection with any
real property or facility owned, operated or leased by Seller, or
requiring any remediation, clean-up, modification, repairs, work,
construction, alterations, or installations on or in connection with any
real property or facility owned, operated or leased by Seller that are
necessary to comply with any Environmental Laws and with which Seller
has not complied;
(iii) All permits, registrations, licenses,
authorizations, and the like ("Permits") required pursuant to
Environmental Laws to be obtained or filed by Seller in connection with
Seller's operations, including those activities relating to the
generation, use, storage, treatment, disposal, release, or remediation
of Hazardous Substances (as such term is defined in Section 3.1(m)(iv)
hereof), have been duly obtained or filed, and Seller is and has at all
times been in full compliance in all material respects with the terms
and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Seller or any of its predecessors on, in, or under the Real Property are
and have at all times been generated, stored, used, treated, disposed
of, and released by such persons or on their behalf in such manner as
not to result in any Environmental Costs or Liabilities. "Hazardous
Substances" means (A) any hazardous materials, hazardous wastes,
hazardous substances, toxic wastes, and toxic substances as those or
similar terms are defined under any Environmental Laws; (B) any asbestos
or any material which contains any hydrated mineral silicate, including
chrysolite, amosite, crocidolite,
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tremolite, anthophylite and/or actinolite, whether friable or non-
friable; (C) PCBs, or PCB-containing materials, or fluids; (D) radon;
(E) any other hazardous, radioactive, toxic or noxious substance,
material, pollutant, contaminant, constituent, or solid, liquid or
gaseous waste; (F) any petroleum, petroleum hydrocarbons, petroleum
products, crude oil and any fractions or derivatives thereof, any oil or
gas exploration or production waste, and any natural gas, synthetic gas
and any mixtures thereof; and (G) any substance that, whether by its
nature or its use, is subject to regulation under any Environmental Laws
or with respect to which any Environmental Laws or Governmental Entity
requires environmental investigation, monitoring or remediation.
"Environmental Costs or Liabilities" means any liabilities, obligations,
damages, fines, penalties, judgments, settlements, actions, claims,
costs and expenses (including, without limitation, reasonable fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants, and the costs of investigation or feasibility studies and
performance of remedial or removal actions and cleanup activities) in
connection with (1) compliance required under any applicable
Environmental Laws, (2) order of, or contract of Seller with, any
Governmental Entity or any private or public persons or (3) the damages
or injuries suffered or incurred by reason of any exposure of any person
or property to Hazardous Substances;
(v) There are not now, nor have there been in the past,
on, in or under any property or facilities when owned, leased, or
operated by Seller, or when owned, leased, or operated by any of its
predecessors, any Hazardous Substances that are in a condition or
location that violates any Environmental Law or that reasonably could be
expected to require remediation under any Environmental Laws or give
rise to a claim for damages or compensation by any affected person or to
any Environmental Costs or Liabilities; and
(vi) Seller has not received, and to the Knowledge of
Seller, does not expect to receive, any notification from any source
advising Seller that: (A) it is a potentially responsible party under
CERCLA or any other Environmental Laws; (B) any real property or
facility currently or previously owned, operated, or leased by it is
identified or proposed for listing as a federal National Priorities List
("NPL") (or state-equivalent) site or a Comprehensive Environmental
Response, Compensation and Liability Information System ("CERCLIS") list
(or state-equivalent) site; and (C) any facility to which it has ever
transported or otherwise arranged for the disposal of Hazardous
Substances is identified or proposed for listing as an NPL (or state-
equivalent) site or CERCLIS (or state-equivalent) site.
To the extent that any of the above representations and warranties in
this Section 3.1(m) pertain to time periods before
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<PAGE> 32
the ownership of the Real Property of Seller, such representations and
warranties shall be deemed to have been made to the Knowledge of Seller.
(n) Taxes. Seller has filed or caused to be filed all Tax
Returns affecting the Stations or the Assets which are required to be filed by
Seller, all such Tax Returns which have been filed are accurate and complete,
and Seller has timely paid all Taxes shown on such returns or on any Tax
assessment received by Seller to the extent that such Taxes have become due.
There are no Liens for Taxes upon the Stations or the Assets except for the
Permitted Encumbrances. Except as disclosed in Schedule 3.1(n), Seller has not
received notice of any Tax deficiency or delinquency. Except as disclosed in
Schedule 3.1(n), no Internal Revenue Service audit of Seller is pending or, to
the Knowledge of Seller, threatened, and the results of any completed audits
are properly reflected in the Financial Statements. All monies required to be
withheld by Seller from employees or collected from customers for Taxes and the
portion of any Taxes to be paid by Seller to governmental agencies or set aside
in accounts for such purposes have been so paid or set aside, or such monies
have been reserved against and entered upon the books and are reflected in the
Balance Sheet. Except as disclosed in Schedule 3.1(n), there are no legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the business of the Stations.
(o) Certain Agreements.
(i) Schedule 3.1(o) hereto lists each (A) employment or
consulting Contract which is not terminable without liability or penalty
on 30 days or less notice, (B) Contract under which any party thereto
remains obligated to provide goods or services having a value, or to
make payments aggregating, in excess of $50,000 per year, and (C) other
Contract that is material to the operation of the Stations or to the
Seller's business, in any such case to which Seller is a party or Seller
or the Assets is bound. Each such Contract described in Schedule 3.1(o)
or required to be so described is a valid and binding obligation of
Seller and is in full force and effect without amendment. Seller and,
to the Knowledge of Seller, each other party to such Contracts, has
performed in all material respects the obligations required to be
performed under such Contracts and is not (with or without lapse of time
or the giving of notice, or both) in breach or default thereunder.
Schedule 3.1(o) identifies, as to each such Contract listed thereon,
whether the consent of the other party thereto is required in order for
such Contract to continue in full force and effect upon the consummation
of the transactions contemplated hereby or whether such Contract can be
cancelled by the other party without liability to such other party due
to the consummation of the transactions contemplated hereby. A complete
copy of each written Contract
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and a description of each oral Contract set forth in Schedule 3.1(o) has
been provided to Buyer prior to the date of this Agreement. Furthermore,
each Contract described in Schedule 3.1(o) shall be marked as "Material"
if Seller and Buyer agree that any such Contract must be assigned to
Buyer and assumed by Buyer in order for the Closing to occur, together
with the consent or approval from the other party to such Contract.
(ii) Except as disclosed in Schedule 3.1(o), Seller is
not a party to any oral or written agreement, plan or arrangement with
any employee or any other station or broadcast personnel (whether an
employee, consultant or an independent contractor) of Seller (A) the
benefits of which are contingent, or the terms of which are materially
altered, upon, or result from, the occurrence of a transaction involving
Seller of the nature of any of the transactions contemplated by this
Agreement, (B) providing severance benefits longer than forty-five days
or other benefits after the termination of employment regardless of the
reason for such termination and regardless of whether such termination
is before or after a change of control, (C) under which any person may
receive payments subject to the tax imposed by Section 4999 of the Code
or (D) any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested
and unvested) under all the Employee Pension Benefit Plans, which Seller
or any other trades or businesses under common control within the
meaning of Section 4001(b)(1) of ERISA with Seller (collectively, the
"ERISA Group") maintains, or to which Seller or any member of the ERISA
Group is or has been obligated to contribute (the "Pension Plans"), did
not, as of the respective last annual valuation dates for such Pension
Plans, exceed the value of the assets of such Pension Plan allocable to
such benefits. None of such Pension Plans subject to Title IV of ERISA
or any of their related trusts has been terminated or partially
terminated. Neither Seller or any member of the ERISA Group has
contributed or been obligated to contribute to any Multiemployer Plan.
Except as set forth on Schedule 3.1(p), neither Seller nor any member of
the ERISA Group has any Employee Benefit Plans.
(ii) True, correct, and complete copies of each of the
Employee Benefit Plans, and related trusts, if applicable, have been
furnished to Buyer, along with the most recent report filed on Form 5500
and summary plan description with respect to each Employee Benefit Plan
required to file Form 5500.
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(iii) Seller is not a party to any collective bargaining
agreement. Seller has not agreed to recognize any union or other
collective bargaining representative, nor has any union or other
collective bargaining representative been certified as the exclusive
bargaining representative of any of its employees. Seller (A) is, and
has always been since January 1, 1995, in substantial compliance with
all applicable laws regarding labor, employment and employment
practices, terms and conditions of employment, equal employment
opportunity, employee benefits, affirmative action, wages and hours,
plant closing and mass layoff, occupational safety and health,
immigration, and workers' compensation, (B) is not engaged, nor has it
since January 1, 1995, engaged, in any unfair labor practices, and has
no, and has not had since January 1, 1995, any, unfair labor practice
charges or complaints before the National Labor Relations Board pending
or, to the Knowledge of Seller threatened against it, (C) has no, and
has not had since January 1, 1995, any, grievances, arbitrations, or
other proceedings arising or asserted to arise under any collective
bargaining agreement, pending or, to the Knowledge of Seller threatened,
against it and (D) has no, and has not had since January 1, 1995, any
charges, complaints, or proceedings before the Equal Employment
Opportunity Commission, Department of Labor or any other Governmental
Entity responsible for regulating employment practices, pending, or, to
Seller's Knowledge, threatened against it. There is no labor strike,
slowdown, work stoppage or lockout pending or, to the Knowledge of
Seller, threatened against or affecting Seller, and Seller has not
experienced any labor strike, slowdown, work stoppage or lockout since
January 1, 1995. To the Knowledge of Seller no union organizational
campaign or representation petition is currently pending with respect to
any of the employees of Seller.
(q) Patents, Trademarks, Etc. Schedule 3.1(q) is a true and
complete list of all of the Intellectual Property. Except as set forth on
Schedule 3.1(q), Seller owns or has the unencumbered right to use pursuant to a
valid, binding, and enforceable license agreement or other contract or
arrangement all such Intellectual Property. To the Knowledge of Seller, Seller
is not infringing on any such Intellectual Property, and Seller has no
Knowledge of any infringement by others of any of the Intellectual Property
owned by Seller. Any Intellectual Property not specifically described in
Schedule 3.1(q) to this Agreement and which arises under common law is sold "AS
IS," and there are no express or implied warranties as to any matter concerning
such Intellectual Property, including but not limited to title thereto, absence
of claims or liens, merchantability and Buyer's right to use such Intellectual
Property.
(r) Affiliate Relationships. Except as disclosed in Schedule
3.1(r), there are no contracts or other arrangements
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involving Seller in which any officer, director, or Affiliate of Seller has a
financial interest, including indebtedness to Seller.
(s) Assets. The Assets and the Excluded Assets include all
assets used or held for use in connection with the business and operations of
the Stations as currently conducted. The description of the items comprising
the Assets in Section 2.1 constitute all of the assets owned and used by the
Stations as a going business, and which are necessary to operate the Stations.
(t) No Dispositions. Except as otherwise disclosed in this
Agreement or in Schedule 3.1(t), since the Balance Sheet Date, there has not
occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of the assets of any Station other than any disposition of
(i) obsolete property, (ii) property in connection with the acquisition of
replacement property of equal value, or (iii) assets having, in the aggregate,
a value of less than $5,000 disposed of in the ordinary course of business and
consistent with past practices.
(u) Disclosure. No representation or warranty by Seller
contained in this Agreement or in any certificate furnished pursuant to this
Agreement contains or will contain any untrue statement of a material fact by
Seller.
(v) Choses in Action. No representation or warranty is being
made by Seller under this Agreement with respect to Choses in Action, and said
Choses in Action are sold in "as-is" condition.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows (with the understanding that Seller is relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization Standing and Power. 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
conducted and is qualified or will be qualified prior to Closing to do business
in the State of Alabama.
(b) Authority. Buyer has all requisite corporate power and
authority to enter into the Transaction Documents to which it will be a party
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of such Transaction Documents by Buyer and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Buyer.
The Transaction Documents to which Buyer will be a party have been executed and
delivered, or upon execution and delivery will be executed and delivered and,
upon execution and delivery, will constitute the valid and binding obligation
of Buyer, enforceable against it in accordance with its terms, subject to
applicable bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents to which Buyer will be a party do not
and the performance by Buyer of the transactions contemplated hereby or thereby
will not, subject to obtaining the consents, approvals, authorizations, and
permits and making the filings described in this Section 3.2(c), (i) violate,
conflict with, or result in any breach of any provisions of Buyer's Articles of
Incorporation and Bylaws, (ii) violate, conflict with, or result in a violation
or breach of, or constitute a default (with or without due notice or lapse of
time or both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate (whether as a result of a
change of control of Buyer or otherwise) any obligation, or result in the loss
of any benefit, or give any person the right to require any security to be
repurchased, or give rise to the creation of any lien charge, security
interest, or encumbrance upon any of the Assets under any of the terms,
conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which Buyer is a party or by which it or any
of the Assets may be bound or subjected, or (iii) violate any order, writ,
judgment, injunction, decree, statute, law, rule or regulation, of any
Governmental Entity applicable to Buyer or by which or to which any of the
Assets is bound or subject. No consent, approval, order, or authorization of,
or registration, declaration, or filing with, any Governmental Entity is
required by or with respect to Buyer in connection with the execution and
delivery of the Transaction Documents by Buyer or the consummation of the
transactions contemplated thereby, except for the FCC Consents as contemplated
by Section 7.1 hereof.
(d) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to the
Knowledge of Buyer, threatened against it relating to the transactions
contemplated by this Agreement.
(e) FCC Matters. Except as described in Schedule 3.2(e), to
the Knowledge of Buyer, there are no facts relating to Buyer under the
Communications Act that reasonably may be expected to disqualify it from
qualifying as an assignee of the Station Licenses or that would prevent it from
consummating the transactions contemplated by this Agreement. Buyer is able to
certify on an FCC Form 314 that it is financially qualified.
(f) Disclosure. No representation or warranty made by Buyer
contained in this Agreement or in any certificate furnished by Buyer pursuant
to this Agreement contains or will contain an untrue statement of material
fact, or omits or will omit to state
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a material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF SELLER. Except as contemplated by this Agreement,
from the date of this Agreement until the Closing, Seller covenants and agrees
that Seller shall not:
(a) conduct its business in any manner except in a manner
which is substantially consistent with the ordinary course of the Stations
consistent with past practice, provided that Seller may engage in the
transactions described in Schedule 4.1(a); or
(b) fail to use commercially reasonable efforts to (i)
preserve intact Seller's present business organization, and (ii) keep available
the services of its present officers, station managerial personnel (including
the General Manager, Station Manager, General Sales Manager, Local Sales
Manager, Programming Director, and Business Manager, or persons performing
comparable duties, of each Station (collectively, the "Station Management"))
and over-the-air employees or independent contractors, and (iii) preserve its
relationships with customers, suppliers and others having business dealings
with Seller; or
(c) fail to use commercially reasonable efforts to maintain
the Assets in their current condition, except for ordinary wear and tear and
damage by casualty governed by Section 7.7; or
(d) fail to use commercially reasonable efforts to maintain
the present format of the Stations and with programming consistent with past
practices; or
(e) except for amendments, terminations (without payment of
penalty or damages), renewals, or failures to renew (without payment of penalty
or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with Buyer reasonably in advance thereof), materially amend,
terminate, or fail to use commercially reasonable efforts to renew any material
Contract (i.e., a contract or agreement of the type required to be described in
Schedule 3.1(o))(provided that Seller shall not be required to renew any
material Contract on terms that are less favorable to Seller), or default in
any material respect (or take or omit to take any action that, with or without
the giving notice or passage of time, would constitute a material default)
under any material Contract or enter into any new material Contract; or
(f) merge or consolidate with or into any other legal entity,
dissolve, or liquidate; or
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(g) except as disclosed in Schedule 4.1(g) and except as
required by the terms and provisions of written contracts between Seller and an
employee thereof as in existence on December 31, 1996, adopt or amend any
Employee Benefit Plan or collective bargaining agreement, or increase in any
manner the compensation or fringe benefits of any Station Manager, officer,
director, or employee or other station and broadcast personnel (whether
employees or independent contractors), except as required by law; or
(h) terminate any employee of any of the Stations without
prior consultation with Buyer regarding the basis for such termination,
provided, however, that notwithstanding anything to the contrary or apparently
to the contrary here, Seller shall have the right to terminate any employee
without prior consultation of Buyer if Seller reasonably and in good faith
determines that the circumstances surrounding such termination require prompt
or immediate action, or if Seller has not been able to contact Buyer and Seller
reasonably and in good faith determines that immediate action is required to be
taken under the circumstances; or
(i) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or
assets), lease, or dispose of any Assets except in the ordinary course of
business and consistent with past practice or, even if in the ordinary course
of business and consistent with past practices (other than sales of surplus or
obsolete equipment), whether in one or more transactions, in no event involving
an Asset or Assets having an aggregate fair market value in excess of $50,000;
or
(j) mortgage, pledge, or subject to any material Lien, other
than Permitted Encumbrances, any of the Assets; or
(k) except as required by GAAP, applicable law, or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(l) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of the
Stations and, except with respect to good faith attempts consistent with past
practice to obtain payment of a past due receivable, or except in accordance
with existing practices, a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether to the
account debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(m) except as disclosed in Schedule 4.1(m) or in accordance
with past practices consistent with the ordinary conduct of Seller's business,
change any Station's advertising rates or
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policies, procedures or methods in connection with the sale of advertising time
in a manner expected to accelerate the receipt of cash payments or fail to
incur annual advertising and promotional department expenses in cash and trade
other than as budgeted for 1997 (as such budget previously has been delivered
to Buyer); or
(n) enter into, or enter into negotiations or discussions with
any person other than Buyer with respect to any local marketing agreement, time
brokerage agreement, joint sales agreement, or any other similar agreement.
Seller shall notify Buyer if there are any actions that Seller desires
to take which are prohibited by Section 4.1. With respect to matters
concerning operation of the Stations which require Buyer's consent because of
the prohibitions of Section 4.1, Buyer shall be deemed to have consented to
Seller's request if Buyer does not give Seller written notice that Buyer is
refusing to consent within 3 Business Days after Buyer receives Seller's
request for consent.
4.2 NEGATIVE TRADE BALANCE. Seller shall use commercially reasonable
efforts to ensure that the Seller Negative Trade Balance, as defined below, of
the Stations, taken as a whole, does not exceed $50,000 in the aggregate at the
Closing Date, provided that such excess will be an adjustment to the Purchase
Price as provided in Section 2.5(b). "Seller Negative Trade Balance" means the
difference, if negative, between the value of time owed under barter agreements
to which any of the Stations is a party or by which any of them is bound and
the dollar amount of the goods and services to be received under such
agreements.
4.3 ENVIRONMENTAL SITE ASSESSMENTS. If Buyer or its lenders or other
financing sources require Phase I or Phase II ESAs, upon written notice from
Buyer to Seller identifying the locations at which such ESAs are required,
Buyer at Buyer's expense may cause to be performed by a nationally recognized
and duly qualified environmental consultant reasonably acceptable to Buyer and
Seller an ESA at each identified transmission site owned, operated, or leased
by Seller (but only to the extent the ESA is permitted by the lease) and at
such other identified real properties and facilities owned, operated, or leased
by Seller. The ESAs that are to be conducted for the benefit of Buyer shall be
performed in a manner that at a minimum satisfies the requirements of ASTM
Practice E 1527-94 and in accordance with sound engineering practices. Seller
shall cooperate with Buyer in the diligent pursuit of the performance of the
requisite ESAs to their completion (such as completing questionnaires,
providing access to Seller's real property and facilities, permitting
discussions with officers, etc.). Final copies of the Phase I ESA reports
(and, if applicable, Phase II ESA reports) will be made available to Seller at
no cost to Seller at the same time or promptly after they are received by
Buyer. The cost of any Phase I or Phase II ESA shall be borne by Buyer. Buyer
agrees to repair any damage caused by such ESAs and to indemnify Seller against
all expenses, damages and
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liabilities arising from any action or omission in connection with the
performance of such ESAs.
ARTICLE 5
ADDITIONAL AGREEMENTS OF SELLER
5.1 NO SOLICITATION OF TRANSACTIONS. Except for the discussions with
Buyer and other transactions contemplated in Section 2.1(l) of this Agreement,
Seller shall not, directly or indirectly, through any officer, director,
stockholder, employee, agent, financial advisor, banker or other
representative, or otherwise, solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the Assets or any equity interest in Seller
or any merger, consolidation, share exchange, business combination, or other
similar transaction with Seller or participate in any negotiations regarding,
or furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate, or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. Seller shall promptly communicate to Buyer the material terms of
any such proposal (and the identity of the party making such proposal) which it
may receive and, if such proposal is in writing, the Seller shall promptly
deliver a copy of such proposal to Buyer. Seller agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which Seller is a party. Seller promptly shall cease and cause to
be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
5.2 ACCESS AND INFORMATION. (a) Subject to Section 7.9, until the
Closing, subject to applicable rules and regulations of the FCC, and with the
prior written consent of Seller and under arrangements prescribed by Seller
(including such reasonable restrictions as Seller may require), Buyer and its
representatives (including accountants and counsel) will have reasonable
access, during normal business hours and in such manner as will not
unreasonably interfere with the conduct of the business of Seller, to all
properties, books, records, and Tax Returns of Seller and all other information
with respect to its business, together with the opportunity to make copies of
such books, records, and other documents. Seller will designate those persons
("Seller's Contact Persons") that Buyer is authorized to contact, and Buyer
shall not contact or discuss this transaction with any of Seller's officers,
directors, employees or agents that are not designated Seller's Contact Persons
unless the designated Seller's Contact Persons do not respond, within a
reasonable period of time, to Buyer's attempts to contact or communicate with
them. In furtherance of the foregoing, in connection with each proposed visit
to a Station, Buyer shall notify Seller of the purpose of the visit, the names
of the persons attending the visit, the person to be contacted and such other
information as Seller may request. Buyer will use
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reasonable efforts to cause minimal interference with the conduct of the
business of Seller. Seller agrees to consent to reasonable requests of Buyer
under this Section 5.2(a). Seller may be present during any visit by Buyer.
Seller shall authorize and instruct its independent public accountants to meet
with Buyer and its representatives, including Buyer's independent public
accountants, to discuss the business and accounts of Seller and to make
available (with the opportunity to make copies) to Buyer and its
representatives, including its independent public accountants, all the work
papers of its accountants related to their audit of the consolidated financial
statements and Tax Returns of Seller.
(b) Within 30 days after the end of each calendar month,
Seller shall deliver to Buyer, for each of the Stations, and for Seller as a
whole, monthly operating statements (in a form consistent with the monthly
operating statements previously supplied to Buyer) prepared in the ordinary
course of business for internal purposes. In addition, within 45 days after
the end of each calendar quarter, Seller shall deliver to Buyer, for each of
the Stations, quarterly statements prepared in the ordinary course for internal
purposes containing a detailed listing of all trade and barter agreements of
each Station showing the status of all such agreements as of the end of the
quarter. Subject to any applicable existing legal restrictions, Seller shall
deliver to Buyer the rating books and such other ratings information subscribed
to by Seller including, without limitation, Arbitrends, Accuratings or any
other written information reflective of the quantitative or qualitative nature
of the audiences of the Stations for each of the Stations upon receipt of the
same by any officer or director of Seller. Seller shall instruct the Station
Management of each Station to provide such information and reports to Buyer's
corporate officers promptly upon receipt by such Station Management. In
addition, Seller will use reasonable efforts to prepare hard copies of each
Station's weekly sales pacing reports and will deliver these copies to Buyer in
a timely manner; and Buyer acknowledges that Seller has disclosed to Buyer and
advised Buyer that Seller has experienced substantial difficulty in preparing
or generating these reports and Seller shall not be deemed to be in breach or
default of its obligation to provide these reports to Buyer if Seller is not
able, using commercially reasonable efforts, to prepare or generate these
reports.
(c) Subject to Section 7.9 and without duplication of Section
5.2(b), at such time as Seller provides the same to its lenders, Seller shall
provide Buyer with copies of the financial statements and other information
delivered by Seller to such lenders.
(d) Except as required by Section 5.3 and the last sentence of
Section 5.2(b) and notwithstanding any provision in this Agreement to the
contrary or apparently to the contrary, nothing in this Agreement shall
obligate Seller to generate any financial statements, reports or other
documents not presently being produced or generated by Seller.
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5.3 ASSISTANCE. If Buyer requests, Seller will cooperate, and will
cause its accountants to cooperate, in all reasonable respects with any lawful
financing efforts of Buyer or its Affiliates, including providing assistance in
the preparation of one or more registration statements or other offering
documents relating to debt and/or equity financing and any other filings that
may be made by Buyer or its Affiliates with the SEC, all at the sole expense of
Buyer. Seller (a) shall furnish to its independent accountants (or, if
requested by Buyer to Buyer's independent public accountants), such customary
management representation letters as its accountants may require of Seller as a
condition to its execution of any required accountants' consents necessary in
connection with the delivery of any "comfort" letters requested by financing
sources of Buyer or its Affiliates and (b) shall furnish to Buyer all financial
statements (audited and unaudited) and other information in the possession of
Seller or its representatives or agents as Buyer's independent public
accountants shall reasonably determine is necessary or appropriate in
connection with such financing. Buyer will indemnify and hold harmless Seller
and its officers, directors, controlling persons, agents and representatives
from and against any and all claims, losses, liabilities, damages, costs, or
expenses (including reasonable attorneys' fees and expenses) that may arise out
of or with respect to the financing efforts by Buyer or its Affiliates,
including any registration statement, prospectus, offering documents, and other
filings related thereto; provided, however, that subject to the limitations and
provisions of this Agreement, nothing herein shall prevent Buyer from asserting
any claim for breach of representation or warranty under this Agreement.
5.4 COMPLIANCE WITH STATION LICENSES. Seller shall cause the
Stations to be operated in all material respects in accordance with the Station
Licenses and all applicable rules and regulations of the FCC and in all
material respects in compliance with all other Applicable Laws. Seller shall
use all commercially reasonable efforts not to cause or permit any of the
Station Licenses to expire or be surrendered, adversely modified, or
terminated. Seller shall file or cause to be filed with the FCC all
applications (including license renewals) or other documents required by the
FCC to be filed in connection with the Seller's operation of the Stations. In
addition, if requested by Buyer and at Buyer's sole expense, Seller shall file
or cause to be filed with the FCC applications for new, specifically identified
frequencies that may be useful in connection with the operation of the
Stations. Should the FCC institute any proceedings for the suspension,
revocation or adverse modification of any of the Station Licenses, Seller will
use all commercially reasonable efforts to promptly contest such proceedings
and to seek to have such proceedings terminated in a manner that is favorable
to the Stations. Seller will use all commercially reasonable efforts to
maintain the FCC construction permits (if any) listed in Schedule 3.1(f) in
effect until the applicable construction projects are complete and to
diligently prosecute all pending FCC applications listed in Schedule 3.1(f).
If Seller (or its FCC counsel) receives
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an administrative or other order or notification relating to any violation or
claimed violation of the rules and regulations of the FCC, or of any other
Governmental Entity, that could affect Seller's ability to consummate the
transactions contemplated hereby, or should Seller (or its FCC counsel) become
aware of any fact relating to the qualifications of Seller that reasonably
could be expected to cause the FCC to withhold its consent to the assignment of
the Station Licenses, Seller shall promptly notify Buyer in writing and use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
5.5 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt written
notice to Buyer of (a) the occurrence, or failure to occur, of any event of
which it acquires Knowledge that has caused or that would be likely to cause
any representation or warranty of Seller contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof
to the Closing Date, (b) the failure of Seller, or any officer, director,
employee, or agent of Seller, to comply with or satisfy in any material respect
any covenant, condition, or agreement to be complied with or satisfied by it
hereunder, (c) the occurrence of a Station Event (as defined in Section 9.1),
and (d) the occurrence of any threat made to Seller by any General Manager,
Station Manager, General Sales Manager or Programming Director of a Station to
resign or otherwise terminate their employment or independent contractor
relationship with Seller. No such notification shall affect the
representations or warranties of the parties or the conditions to their
respective obligations hereunder.
5.6 THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, Seller shall use its commercially reasonable efforts to obtain the
written consent from any party to an agreement or instrument identified in
Schedule 3.1(o) or any other Assumed Contract which is required to permit the
consummation of the transactions contemplated hereby.
ARTICLE 6
COVENANTS OF BUYER
6.1 NOTIFICATION OF CERTAIN MATTERS. If Buyer (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any Governmental Entity, that could affect Buyer's ability to consummate the
transactions contemplated hereby, or should Buyer (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, Buyer shall promptly notify Seller thereof and shall use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement;
provided, however, except as set forth in Schedule 3.2(e) below, that Buyer
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shall not be required pursuant to this Section 6.1 to divest itself or cause
any Affiliate thereof to divest itself of any media business, broadcast
property or interest therein. Notwithstanding the foregoing, Buyer represents
and warrants that Buyer's Affiliate(s) is going to divest itself of the
broadcast property described in Schedule 3.2(e) and will file the appropriate
applications for the sale and transfer thereof within 30 days after the date of
this Agreement. In addition, Buyer shall give to Seller prompt written notice
of (a) the occurrence, or failure to occur, of any event of which it becomes
aware that has caused or that would be likely to cause any representation or
warranty of Buyer contained in this Agreement to be untrue or inaccurate at any
time from the date hereof to the Closing Date, (b) the failure of Buyer, or any
officer, director, employee, or agent thereof, to comply with or satisfy in any
material respect any covenant, condition, or agreement to be complied with or
satisfied by it hereunder, (c) any litigation, arbitration, or administrative
proceeding pending or, to its Knowledge, threatened against Buyer which
challenges or materially affects the transactions contemplated hereby. No such
notification shall affect the representations or warranties of the parties or
the conditions of their respective obligations hereunder.
6.2 BIRMINGHAM MARKET. Buyer warrants, represents and covenants
that, as of the date hereof, it does not own or operate any other radio
stations in the Birmingham market and has no plans to acquire any other radio
stations (or other media or broadcast properties) in the Birmingham market at
any time prior to the Closing hereunder. Except for a Multi-City Acquisition
(hereafter defined), Buyer agrees that it will not contract to buy or enter
into a letter of intent with any other radio stations, media businesses or
broadcast properties (or owners of any other radio stations, media businesses
or broadcast properties) in the Birmingham market until after the Closing. For
purposes of this Agreement, a "Multi-City Acquisition" is an acquisition of
more than one radio station, media business or broadcast property located in
several cities from a single seller or a group of affiliated sellers in a
single transaction or a series of related transactions. The obligations of
Buyer under this Section 6.2 do not prohibit Buyer from entering into any
acquisition that includes a station, media business or broadcast property in
the Birmingham market if (i) Buyer promptly takes whatever measures or actions
are necessary or required (including divestiture of the Birmingham station(s),
media businesses or broadcast properties) included as part of the Multi-City
Acquisition) to obtain prompt approval of the transaction described in this
Agreement by the FCC and all other governmental agencies having jurisdiction,
and (ii) Buyer reasonably believes (after consultation with its legal counsel)
that any such acquisition will not result in the FCC having any grounds or
reasons for delaying or rejecting the FCC Consents required under this
Agreement for the Closing.
6.3 EMPLOYEE MATTERS. Except as otherwise provided in Section 6.4,
Buyer will use its reasonable efforts to determine at
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least ten days prior to the Closing Date those employees of Seller to whom it
desires to extend offers of employment. Any offers so extended by Buyer shall
be on such terms and conditions that Buyer shall determine in its sole
discretion. Buyer will give Seller prompt notice of the names of any employee
of Seller to whom Buyer has determined not to extend an offer of employment.
If the Closing occurs, and provided that Buyer complies with the terms of this
Section 6.3, Seller waives any claims against Buyer and any of Seller's
employees who are extended an offer of employment by Buyer arising from such
employment by Buyer, including any claims arising under any employment
agreement or noncompete agreement between such person and Seller, provided that
if the Closing does not occur Seller may continue to enforce all employment and
noncompetition agreements. All offers of employment by Buyer to Seller's
employees shall be conditioned on the occurrence of the Closing, and such
employees shall not become employees of Buyer until the Closing Date.
6.4 SEVERANCE PAY ARRANGEMENTS. Seller has entered or will enter
into severance agreements (the "Severance Agreements") with Bill Thomas and
Carol Wells that provide for two years of salary ("Protection Pay") if they are
terminated and with John Jenkins, Scott Farkas and Craig Yancey that provide
for one year of Protection Pay if their employment is terminated (said five
employees are referred to as the "Protected Employees"). Within 10 Business
Days after the date hereof, Buyer shall interview the Protected Employees and
advise Seller in writing if Buyer will not hire any of the Protected Employees
(the "Rejected Employees") (the remainder of the Protected Employees [that are
not Rejected Employees] are referred to as the "Accepted Employees"). With
respect to the Accepted Employees, Buyer agrees to assume Seller's obligation
to pay the Protection Pay to these employees in accordance with the terms of
the Severance Agreements. With respect to the Rejected Employees, Seller will
terminate these employees on or before the Closing, and Buyer agrees to pay
Seller at Closing an amount equal to one half of the total amount of Protection
Pay (which payment is in addition to the Purchase Price) that these employees
would be entitled to receive, and Seller shall remain solely responsible for
paying all Protection Pay that is owed to the Rejected Employees.
6.5 FCC APPROVAL. Except as disclosed in Schedule 3.2(e) as of the
date hereof, Buyer does know of any reason or fact or circumstances with
respect itself that would cause or prompt the FCC to reject or refuse to grant
its consent t the transfer of the Licenses and Stations to Buyer ("Adverse
Facts"). Buyer represents and warrants that, as of the date hereof, Buyer
meets and satisfies the legal, financial and other qualifications and
requirements under the Communications Act and the rules, regulations and
policies related thereto necessary in order to be the holder of an FCC license
and necessary in order to own and operate the Stations. Buyer shall
immediately notify Seller if at any time after the date hereof Buyer becomes
aware of any (i) Adverse Fact, or (ii) any reason why Buyer may not or does not
meet or satisfy the legal,
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financial and other qualifications and requirements under the Communications
Act and the rules, regulations and policies related thereto necessary in order
to be the holder of an FCC license of the Stations and necessary in order to
own and operate the Stations. Buyer's FCC Application will accordingly state
Buyer's financial ability to consummate the purchase of the Assets at the
Closing and operate the Stations for three months.
6.6 APPROVALS. Buyer shall use reasonable efforts to cooperate with
Seller to obtain all consents and approvals of third parties, required to
permit transfer of the Assets, including, without limitation, the consents and
approvals described in Sections 7.1 and 7.3, and the consents and approvals of
third parties obligated under Asset warranties, third parties to the Assumed
Contracts and issuers of Licenses and estoppel and non-disturbance agreements
and attornment agreements from landlords of Seller all in such form as shall be
reasonably acceptable to Seller's and Buyer's counsel, all with a view to
obtaining all such consents and approvals as promptly and expeditiously as
possible. Notwithstanding this Section 6.6, Seller is solely responsible for
obtaining all such third party consents, but Buyer is obligated to cooperate
with Seller as provided herein.
6.7 SHARING INFORMATION. Subject to Section 7.9, Buyer agrees to
promptly provide to Seller at no cost to Seller a copy of all documents
generated as part of Buyer's due diligence and approval process, including but
not limited to title commitments, surveys, ESAs, FCC and HSR filings,
engineering reports and all responses to permit applications.
6.8 FINANCIAL CAPABILITY. Buyer warrants and represents that Buyer
has commitments for the funds necessary to consummate the purchase of the
Assets at the Closing pursuant to this Agreement. Buyer shall promptly notify
Seller in the event that there is any change or modification with respect to
Buyer's commitments for such funds.
ARTICLE 7
MUTUAL COVENANTS
7.1 APPLICATION FOR FCC CONSENTS. By the tenth business day after the
date hereof, Seller and Buyer will, and will cause all necessary persons or
entities to join in one or more applications filed with the FCC requesting the
FCC's written consent to the assignment of the FCC Licenses pursuant to this
Agreement (the "Applications"). The parties will take all proper steps
reasonably necessary (a) to diligently prosecute the Applications and (b) to
obtain the FCC Consents. The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material breach
of this Agreement; provided, however, that Buyer shall not be required pursuant
to this Section 7.1 to divest itself or cause any Affiliate thereof to divest
itself of any media business or interest therein, but Buyer may be required to
divest
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itself or cause any Affiliate thereof to divest itself of any radio station in
accordance with the provisions of Section 6.2 herein. The failure by either
party to timely file or diligently prosecute its portion of any Application
shall be a material breach of this Agreement.
7.2 CONTROL OF STATIONS. This Agreement shall not be consummated
until after the FCC Consents with respect to the Applications referred to in
Section 7.1 are granted and have become Final Orders. Between the date of this
Agreement and the Closing Date, Buyer will not directly or indirectly control,
supervise or direct the operation of the Stations. Further, between the date
of this Agreement of the Closing Date, Seller shall, directly or indirectly,
supervise or control the operation of the Stations. Such operation shall be the
sole responsibility of Seller.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with the consummation of the
transactions contemplated by this Agreement, and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such matters. Nothing in this Section 7.3 shall require Buyer
to divest itself or to cause any Affiliate thereof to divest itself of any
media business or interest therein, unless required in connection with the
provisions of Section 6.2 hereof.
7.4 ACCOUNTS RECEIVABLE. All Accounts Receivable shall remain the
property of Seller. Seller hereby authorizes Buyer, however, to collect such
receivables for a period of 180 days after the Closing. Seller shall deliver
to Buyer a complete and detailed statement of each account within three days
after Closing and Buyer shall use its reasonable efforts, consistent with its
customary collection practices for its own accounts receivable, without
compensation, to collect each Account Receivable during such 180 days. During
that period Buyer shall provide to Seller a detailed bi-monthly statement of
the Accounts Receivable showing amounts collected to the date, and amounts
outstanding as of the same date, and, within 15 days of the end of the period
covered by such statement, deliver to Seller the Accounts Receivable report and
a check for the amounts collected during such period. All payments received by
Buyer during the 180-day period following the Closing Date from a person
obligated with respect to an Account Receivable shall be applied first to
Seller's account and, only after full satisfaction thereof, to Buyer's account;
provided, however, that if such person has, in the reasonable opinion of Buyer,
a legitimate dispute with Seller (and not with Buyer) with respect to such
Account Receivable and Buyer also has an account receivable from such person,
all payments received by Buyer during the 180-day period following the Closing
Date from such person shall be applied first to Buyer's account and only after
the earlier to occur of full satisfaction of Buyer's account or resolution of
such dispute with Seller, to Seller's account. An Account Receivable shall not
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be deemed a disputed Account Receivable until after Buyer gives Seller written
notice that it is treating the Account Receivable as disputed, along with a
written explanation of why it is considered disputed. Such notice shall be
accompanied by any customer documents that Buyer has received related to the
dispute. Buyer shall not be required to refer any Account Receivable to a
collection agency or an attorney for collection, nor shall it compromise,
settle, or adjust any Account Receivable having a value in excess of $1,000
without receiving the approval of Seller. Seller shall take no action with
respect to the Accounts Receivable, such as litigation, until the expiration of
such 180-day period without Buyer's prior written consent. Following the
expiration of said 180-day period, Seller shall be free to take such action as
Seller may in its sole discretion determine to collect any Accounts Receivable
then outstanding.
7.5 BROKERS OR FINDERS. Seller represents and warrants to Buyer that
no agent, broker, investment banker, or other person engaged by Seller is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee through Seller or as a result of the actions of Seller in
connection with any of the transactions contemplated by this Agreement. Except
for the previously disclosed fee payable to Media Venture Partners, which fee
shall be paid in accordance with the provisions of Section 12.8(a), Buyer
represents and warrants to Seller that Buyer has not engaged any broker,
investment banker or other person that will be entitled to any broker's or
finder's fee or any other commissions or fee from Seller in connection with any
of the transactions contemplated by this Agreement.
7.6 BULK SALES LAW. Buyer agrees to waive compliance by Seller with
the requirements of any bulk sales or fraudulent conveyance statute, and Seller
agrees to indemnify and hold Buyer harmless against any claim made against
Buyer by any creditor of Seller as a result of a failure to comply with any
such statute.
7.7 RISK OF LOSS.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing. In the event of any such loss,
damage, impairment, confiscation, or condemnation that is material, whether or
not covered by insurance, Seller shall promptly notify Buyer of such loss,
damage, impairment, confiscation or condemnation.
(b) If Seller, at its expense, repairs, replaces, or restores
such Assets to their prior condition to the satisfaction of Buyer before the
Closing, Seller shall be entitled to all insurance proceeds and condemnation
awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost,
damaged, impaired, confiscated or condemned Assets having a
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replacement cost in excess of $500,000 in the aggregate or informs Buyer that
it does not intend to restore or replace such Assets, Buyer may at its option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement without
Seller completing the restoration and replacement of such Assets,
provided that Seller shall assign all rights under applicable insurance
policies and condemnation awards, if any, to Buyer; and in such event,
Seller shall have no further liability with respect to the condition of
the Assets directly attributable to the loss, damage, impairment
confiscation, or condemnation.
(d) Buyer will notify Seller of a decision under the options
described in Section 7.7(c)(i) or 7.7(c)(ii) above within ten business days
after Seller's notice to Buyer of the damage or destruction of Assets and the
estimate of the costs to repair or replace; provided, however, that if Seller
states that it intends to restore the damaged Assets and if Seller has not
restored such damaged Assets prior to the Closing Date, notwithstanding Buyer's
prior delivery of a notice to proceed pursuant to this Section 7.7(d), Buyer
shall have the right to either postpone the Closing or terminate this Agreement
by notice forthwith.
7.8 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
to this Agreement and their duly authorized representatives shall take all such
action. Without limiting the generality of the foregoing, if, after the
Closing Date, Buyer suffers a liability or expense, or Buyer is damaged, under
an Assumed Contract, and as a result Buyer seeks indemnification or recovery
from one or more other parties to an Assumed Contract or otherwise seeks to
enforce such Assumed Contract and, in order to obtain such indemnification,
recovery or enforcement, it is necessary for Seller to initiate a suit,
participate in any enforcement proceeding or otherwise provide assistance to
Buyer, then, at the request and the sole expense of Buyer, Seller shall take
such action as Buyer may reasonably request in connection with Buyer's efforts
to obtain such indemnification, recovery or enforcement, and Buyer agrees to
indemnify and hold Seller harmless with respect to all reasonable expense and
liability that Seller may incur as a result of any such assistance provided to
Buyer.
7.9 PROTECTED DOCUMENTS. Notwithstanding any provision in this
Agreement to the contrary, nothing in this Agreement shall be
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construed as requiring either Buyer or Seller to disclose documents protected
by an attorney-client privilege or documents related to the negotiation of the
terms of this transaction.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Buyer and Seller to effect the transactions contemplated hereby
are subject to the satisfaction (or, in the case of the condition specified in
the last sentence of Section 8.1(a), the waiver by Buyer) on or prior to the
Closing Date of the following conditions:
(a) Consents and Approvals. All authorizations, consents,
orders, or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred, or been obtained. The FCC Consents shall have become Final
Orders and shall be (i) in such form and substance so as to comply with the
provisions of this Agreement and (ii) without the inclusion of any adverse
conditions materially affecting Buyer's operation or ownership of any Station
other than any adverse conditions generally imposed by the FCC.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction, or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and correct in
all material respects (provided that any representation or warranty of Seller
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Buyer shall have
received a certificate to such effect signed on behalf of Seller by the chief
executive officer or by the chief financial officer of Seller.
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(b) Performance of Obligations. Seller shall have performed
in all material respects all obligations required to be performed by it under
this Agreement prior to the Closing Date, and Buyer shall have received a
certificate to such effect signed on behalf of Seller by the chief executive
officer or by the chief financial officer of Seller.
(c) Consent Under Agreements. Buyer shall have been furnished
with evidence reasonably satisfactory to it (using good faith) of the consent
or approval of each person that is a party to a Contract identified in Schedule
3.1(o) as "Material" whose consent or approval shall be required in order to
permit the consummation of the transactions contemplated hereby and such
consent or approval shall be in form and substance satisfactory to Buyer (using
good faith).
(d) Legal Opinion. Buyer shall have received from Riezman &
Blitz, P.C., counsel to Seller, an opinion dated the Closing Date, in
substantially the form attached as Exhibit G hereto, which opinion, if
requested by Buyer, shall expressly provide that it may be relied upon by
Buyer's lenders, underwriters, or other sources of financing with respect to
the transactions contemplated hereby.
(e) Real Estate Title Commitment. Within 45 days after the
date of this Agreement, Buyer, at its sole cost and expense, shall have ordered
and obtained a preliminary report on title to the Owned Real Property covering
a date subsequent to the date of this Agreement, issued by the Title Company,
which preliminary report shall contain a commitment (the "Title Commitment") of
the Title Company to issue an owner's title insurance policy at standard rates
at Seller's cost as Buyer may reasonably require (the "Title Policy") insuring
the fee simple interest of Seller in the Owned Real Property. If Buyer shall
fail to disapprove any of the matters contained in the Title Commitment by
written notice to Seller within ten Business Days of receipt of the Title
Commitment from the Title Company, Buyer shall be deemed to have approved all
title exceptions shown in the title commitment as to which Buyer has not made a
written objection. A copy of the Title Commitment is to be provided to Seller.
If Buyer fails to obtain a title commitment within 45 days after the date of
this Agreement, then Buyer is deemed to have approved all title exceptions that
would have been shown on a title commitment if Buyer had obtained it. The
Title Commitment shall be in the amount set forth in Schedule 8.2(e) and shall
be subject only to the standard printed exceptions and: (i) liens of current
state and local property taxes which are not delinquent or subject to penalty;
(ii) zoning regulations and restrictive covenants and easements of record which
do not detract from the value of the Owned Real Property and do not materially
and adversely affect, impair or interfere with the use of any Owned Real
Property affected thereby as heretofore used by Seller or the Stations (to the
extent that Buyer has not objected in the above notice to any such zoning
regulations, restrictive covenants and easements the same shall be deemed to
not materially and adversely
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affect, impair or interfere with the use of any Owned Real Property affected
thereby); (iii) public utility easements of record, in customary form, to serve
the Owned Real Property; (iv) Permitted Encumbrances; and (v) liens that Seller
will remove at Closing. Such title policy shall be issued on the Closing Date.
(f) Survey. Buyer, at its sole cost and expense, may obtain a
survey of the Owned Real Property as of a date subsequent to the date hereof
which shall: (i) be prepared by a registered land surveyor reasonably
acceptable to Buyer; (ii) be certified to the Title Company and to Buyer; and
(iii) show with respect to the Owned Real Property: (A) the legal description
of the Owned Real Property (which shall be the same as the Title Policy
pertaining thereto); (B) all buildings, structures and improvements thereon and
all restrictions of record and other restrictions that have been established by
an applicable zoning or building code or ordinance and all easements or rights
of way across or serving the Owned Real Property (including any off-site
easements affecting or appurtenant thereto); (C) no encroachments upon the
Owned Real Property or adjoining parcels by buildings, structures or
improvements and no other survey defects; (D) access to such parcel from a
public street; and (E) a flood certification reasonably satisfactory to Buyer
to the effect that no portion of the Owned Real Property is located within a
flood hazard area.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Seller pursuant to
Section 9.2 shall have been delivered , and Seller shall have waived (or
acknowledged as satisfied) all of the conditions to Seller's obligations to
consummate the Closing set forth in this Agreement, including those conditions
described in Sections 8.1 and 8.3 hereof; provided that in no event shall such
waiver prejudice Seller's rights under Article 11 of this Agreement.
8.3 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Seller.
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Seller shall
have received a certificate to such effect signed on behalf of Buyer by the
chief executive officer or by the chief financial officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects the obligations required to be performed by
it under this Agreement prior to the Closing Date,
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and Seller shall have received a certificate to such effect signed on behalf of
Buyer by the chief executive officer or by the chief financial officer of
Buyer.
(c) Closing, Deliveries. All documents and instruments
required to be delivered by Buyer pursuant to Section 9.2 shall have been
delivered, and Buyer shall have waived (or acknowledged as satisfied) all of
the conditions to Buyer's obligations to consummate the Closing set forth in
this Agreement, including those conditions described in Sections 8.1 and 8.2
hereof ; provided that in no event shall such waiver prejudice Buyer's rights
under Article 11 of this Agreement.
(d) Legal Opinion. Seller shall have received from Vinson &
Elkins, L.L.P., counsel to Buyer, an opinion dated the Closing Date, in
substantially the form attached as Exhibit A hereto.
ARTICLE 9
CLOSING
9.1 CLOSING. Subject to the satisfaction or waiver of the conditions
set forth in Article 8 and the provisions of Section 2.4(b), the Closing will
take place at the offices of Vinson & Elkins, L.L.P., at 10:00 a.m., local
time, on the 12th Business Day after the day on which the FCC Consents have
been granted by Final Order, or at such other place and time as Buyer and
Seller may agree in writing (the "Closing Date").
Notwithstanding the foregoing:
(a) In the case of a Trading Event, a Banking Event or a
Station Event (in each case as defined below), (i) if the Cessation Date (as
defined below) is less than 30 days after the Event Date (as defined below),
Buyer, in its discretion, may extend the Closing Date to a date not later than
the 15th day after the Cessation Date, (ii) if the Cessation Date is more than
30, but less than 45, days after the Event Date, Buyer, in its discretion,
shall elect on the first to occur of the 10th Business Day after the Cessation
Date or the 45th day (or, if not a Business Day, the next Business Day) after
the Event Date (the "Election Date") to either (A) close the transactions
contemplated by this Agreement on the later to occur of the fifth Business Day
after the Election Date or the 45th day (or, if not a Business Day, the next
Business Day) after the Event Date or (B) terminate this Agreement, or (iii) if
the Cessation Date has not occurred by the 45th day after the Event Date, then
on the 45th day (or, if not a Business Day, the next Business Day) after the
Event Date, Buyer, in its discretion, may elect to terminate this Agreement,
and if Buyer has not elected to so terminate this Agreement, then Buyer shall
close the transactions contemplated by this Agreement on the 50th day (or, if
not a Business Day, the next Business Day) after the Event Date. Any election
or termination rights described herein shall only be
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exercised through the giving of written notice of any such election or
termination in the manner provided for notices under this Agreement;
(b) If a Cure Period (as defined in Section 10.1(b)(i)) has
not ended on or before the Closing Date, the Closing Date shall be extended to
the end of the Cure Period; and
(c) If the Closing does not occur within 20 days after the
date of the Final Order, the parties shall request approval from the FCC to
extend the Closing so that the Closing contemplated hereunder will not violate
any FCC rules or regulations.
For purposes of this Agreement, a "Trading Event" shall mean that
trading generally in securities on the New York Stock Exchange shall have been
suspended or materially limited; a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; and a "Station Event" shall
mean any act of nature (including fires, floods, earthquakes, and storms),
calamity, casualty or condemnation that has caused one or more Stations
representing an aggregate of at least 3% of the consolidated gross revenues of
Seller for the last full 12 calendar months prior to the Station Event not to
be operating in a manner substantially consistent with the operations conducted
before such act, omission, calamity, casualty or condemnation; an "Event Date"
shall mean the date on which a Trading Event, Banking Event, or a Station Event
occurs; and a "Cessation Date" shall mean the date on which a Trading Event,
Banking Event, or a Station Event ends. Pro forma adjustments shall be made
for purposes of calculating gross revenues for the 12-month period specified in
the definition of "Station Event" with respect to any radio broadcast station
acquired during such 12-month period, to assume that such station was acquired
at the beginning of such 12-month period and include the gross revenues of such
station for the full 12-month period.
9.2 ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to Seller (or to the
Escrow Agent, as indicated) the following:
(i) Purchase Price. The Purchase Price (less the
Holdback Amount) by wire transfer of immediately available funds;
(ii) Holdback Amount. The Holdback Amount to the
Escrow Agent by wire transfer of immediately available funds;
(iii) Certificates. The certificates referred to in
Sections 8.3(a) and 8.3(b);
(iv) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Buyer;
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(v) Indemnification Escrow Agreement. A counterpart
of the Indemnification Escrow Agreement executed by Buyer; and
(vi) Non-Competition Agreement. A counterpart of the
Non-Competition Agreement executed by Buyer.
(vii) Opinion of Counsel. The opinion of counsel
referred to in Exhibit A.
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) Certificates. The certificates described in
Section 8.2(a) and 8.2(b);
(ii) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Seller;
(iii) Indemnification Escrow Agreement. A counterpart of
the Indemnification Escrow Agreement executed by Seller;
(iv) Non-Competition Agreements. A counterpart of the
Non-Competition Agreement between Buyer and Seller executed by Seller;
(v) Legal Opinions. The opinions of counsel referred
to in Section 8.2(d);
(vi) Transfer Documents. The duly executed Bill of Sale
and Assignment, together with any other assignments and other transfer
documents as requested by Buyer;
(vii) Consents; Acknowledgments. The original of each
Consent;
(viii) Estoppel Certificates. Estoppel certificates from
the lessor(s) of the Leased Real Property in a form and substance
satisfactory to Buyer and its lenders or other financing sources;
(ix) Licenses, Contracts, Business Records, Etc. To the
extent they are in the possession of Seller, copies of all Licenses,
Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, statistics, engineering records and all files and records
used by Seller in connection with a Stations' business and operations,
which copies shall be available at the Closing or at a Station's
principal business offices;
(x) Warranty Deed. A special Warranty Deed executed by
Seller conveying fee simple title to the Owned Real Property to Buyer,
subject only to the Permitted
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Encumbrances, in proper statutory form for recording together with
documentary stamps affixed thereto;
(xi) No-Lien Affidavit. A standard No-Lien Affidavit
executed by Seller, which shall be in the recordable form and otherwise
satisfactory to the Title Company in order to delete the standard
printed exceptions relating to mechanics' liens and parties-in-
possession;
(xii) GAP Affidavit. An affidavit, if requested by the
Title Company, as may be necessary to ensure the gap between the
effective date of the Title Commitment to and through the date of the
recordation of the deed to the Owned Real Property; and
(xiii) Title Requirements. Such other documents as shall
be reasonably required by the Title Company as called for or required
under the terms of any title policy obtained or issued to Buyer.
(c) At the Closing, Seller and Buyer shall instruct the Escrow
Agent to deliver, and it shall deliver, the Earnest Money to Buyer.
(d) At the Closing, Buyer shall receive from the chief
executive officer or chief financial officer of Seller a non-foreign affidavit
within the meaning of section 1445(b)(2) of the Code.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Seller or Buyer;
(i) if there shall have been any material breach
(provided that any representation or warranty of a party contained
herein that is qualified by a materiality standard or a Material Adverse
Effect qualification shall not be further qualified hereby) of any
representation, warranty, covenant, or agreement, on the part of Buyer,
on the one hand, or Seller, on the other hand, set forth in this
Agreement, which breach shall not have been cured within 20 days (the
"Cure Period") following receipt by the breaching party of written
notice of such breach.
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or
taken any other action (which order, decree or
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ruling the parties hereto shall use their best efforts to lift), in each
case permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling, or other action shall have become final and nonappealable;
(iii) if, for any reason, the FCC denies or dismisses any
of the Applications and the time for reconsideration or court review
under the Communications Act with respect to such denial or dismissal
has expired and there is not pending with respect thereto a timely filed
petition for reconsideration or request for review;
(iv) if, for any reason, any of the Applications is
designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the later
of December 31, 1997 (the "Termination Date"), or the date to which the
Closing Date is extended pursuant to Section 2.4; provided, however,
that the right to terminate this Agreement under this clause (v) shall
not be available to any party whose breach of this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or
before such date; or
(c) by Buyer:
(i) pursuant to the provisions of Section 7.7;
(ii) with respect to a Trading Event, a Banking Event or
Station Event, at its option, as provided in Section 9.1; or
(iii) if the FCC grants any of the Applications with any
materially adverse conditions not generally imposed on grants of such
applications and the time for reconsideration or court review under the
Communications Act with respect to such adverse conditions has expired
and there is not pending with respect thereto a timely filed petition
for reconsideration or request for review.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that
is in breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other party.
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10.2 EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by either
Seller or Buyer as provided above, there shall be no liability on the part of
either Buyer or Seller, except for liability arising out of a breach of this
Agreement. If this Agreement is terminated by Seller pursuant to Section
10.1(b)(i), the parties agree and acknowledge that Seller will suffer damages
that are not practicable to ascertain. Accordingly, in such event and if
within 10 Business Days after termination of this Agreement by Seller pursuant
to Section 10.1(b)(i), Seller delivers to Buyer a written demand for liquidated
damages, subject to Buyer's receipt of a counterpart of the Release executed by
Seller, Seller shall be entitled to the sum of $1,000,000 as liquidated damages
payable by Buyer within 10 Business Days after receipt of Seller's written
demand and payable in accordance with the provisions of the Deposit Escrow
Agreement. As security for payment thereof, Buyer has, concurrently with the
execution of this Agreement, entered into the Deposit Escrow Agreement with
Seller and the Escrow Agent as provided in Section 2.7. The parties agree that
the foregoing liquidated damages, plus the additional liquidated damages
described below, are reasonable considering all the circumstances existing as
of the date hereof and constitute the parties' good faith estimate of the
actual damages reasonably expected to be incurred by Seller resulting from the
termination of this Agreement because of a default by Buyer. Seller agrees
that, to the fullest extent permitted by law, Seller's right to payment of such
liquidated damages as provided in this Section 10.2 shall be its sole and
exclusive remedy if the Closing does not occur with respect to any damages
whatsoever that Seller may suffer or allege to suffer as a result of any claim
or cause of action asserted by Seller relating to or arising from breaches of
the representations, warranties, or covenants of Buyer contained in this
Agreement and to be made or performed at or prior to the Closing. If this
Agreement is terminated by Seller pursuant to Section 10.1(b)(i), upon Buyer's
receipt of a counterpart of the Release executed by Seller, Buyer and Seller
shall instruct the Escrow Agent to release the Earnest Money to Seller. If
this Agreement is terminated either by Buyer or Seller pursuant to any
provision of Section 10.1 other than a termination by Seller pursuant to
Section 10.1(b)(i), then Buyer and Seller shall instruct the Escrow Agent to
release the Earnest Money to Buyer. Notwithstanding anything to the contrary
or apparently to the contrary in this Agreement, (i) in the event Seller is
entitled to receive the sum of $1,000,000 as liquidated damages under this
Agreement and Buyer does not cooperate in facilitating the receipt and delivery
of said Earnest Money to Seller (including, but not limited to, failure of
Buyer to instruct the Escrow Agent to release the Earnest Money to Seller if
this Agreement is terminated by Seller pursuant to Section 10.1(b)(i)), and
Seller commences legal proceedings to collect said Earnest Money and Seller
obtains a judicial determination by a court of record, which is final and non-
appealable, that Seller is entitled to collect said Earnest Money, Buyer agrees
that Seller shall be also entitled to received from
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Buyer an additional sum of $500,000 as additional liquidated damages (thereby
resulting in the total amount of $1,500,000 as liquidated damages) to
compensate Seller for any such lack of cooperation on the part of Buyer, and
(ii) in the event Seller asserts that it is entitled to receive the sum of
$1,000,000 as liquidated damages under this Agreement and a judicial
determination is made by a court of record, which is a final and non-appealable
judgement, that Seller is not entitled to receive said $1,000,000 pursuant to
this Agreement, then in addition to the return to Buyer of the $1,000,000, the
Seller shall pay Buyer the sum of $500,000 as liquidated damages to compensate
Buyer for any delay in the return of the Earnest Money to Buyer.
(b) As a condition of payment, and upon receipt of the
liquidated damages under this Section 10.2, Seller irrevocably and
unconditionally releases, acquits, and forever discharges Buyer and its
successors, assigns, officers, directors, employees, agents, stockholders,
subsidiaries, parent companies and other affiliates (corporate or otherwise)
(the "Released Parties") of and from any and all Released Claims, including,
without limitation, all Released Claims arising out of, based upon, resulting
from or relating to the negotiation, execution, performance, breach or
otherwise related to or arising out of the Transaction Documents or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses
or expenses (including attorneys' and other professional fees and expenses)
held by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or contingent,
direct or derivative, provided that Released Claims do not include: (i) a
release of Buyer from any obligation to maintain the confidentiality of
information provided by Seller, (ii) Buyer's obligation to pay those
transaction expenses which are allocated to Buyer under this Agreement (such as
title, survey and ESA charges), (iii) Buyer's obligations under this Agreement
to indemnify Seller against liabilities caused by the actions of Buyer (such as
the indemnity against broker claims), and (iv) any claims that Seller has
against Buyer that do not arise under this Agreement (for example, a claim for
damages if Buyer negligently caused a fire during an inspection that destroyed
Seller's property). If Seller commences legal proceedings (i) to enforce the
provisions of Section 10.2 or (ii) to collect the Earnest Money (and a judicial
determination is made in favor of Seller as described in Section 10.2(a)), then
Seller shall also be entitled to recover reasonable attorney fees and costs and
expenses incurred in connection therewith. If Seller commences legal
proceedings (i) to enforce the provisions of Section 10.2 or (ii) to collect
the Earnest Money (and a judicial determination is made in favor of Buyer as
described in Section 10.2(a)), then Buyer shall also be
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entitled to recover reasonable attorney's fees and costs and expenses incurred
in connection therewith.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION OF BUYER. Subject to the provisions of this
Agreement, Seller agrees to indemnify and hold harmless the Buyer Indemnified
Parties from and against any and all Buyer Indemnified Costs.
11.2 INDEMNIFICATION OF SELLER.
(a) Subject to the provisions of this Agreement, Buyer agrees
to indemnify and hold harmless the Seller Indemnified Parties from and against
any and all Seller Indemnified Costs.
11.3 DEFENSE OF THIRD PARTY CLAIMS.
(a) An Indemnified Party shall give written notice to any
entity or person who is obligated to provide indemnification hereunder (an
"Indemnifying Party") of the commencement or assertion of any action,
proceeding, demand, or claim by a third party (collectively, a "third-party
action") in respect of which such Indemnified Party shall seek indemnification
hereunder. Such notice shall be accompanied by all documents the Indemnified
Party has received or obtained with respect to the third-party action. Any
failure so to notify an Indemnifying Party shall not relieve such Indemnifying
Party from any liability that it, he, or she may have to such Indemnified Party
under this Article 11 unless the failure to give such notice prejudices such
Indemnifying Party's ability to defend such third-party action. The
Indemnifying Party shall have the right to assume control of the defense of,
settle, or otherwise dispose of such third-party action on such terms as they
deem appropriate; provided, however, that:
(b) The Indemnified Party shall be entitled, at its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Parties shall pay the reasonable attorneys' fees
of the Indemnified Party if (i) the employment of separate counsel shall have
been authorized in writing by any such Indemnifying Party in connection with
the defense of such third-party action, (ii) the Indemnifying Parties shall not
have employed counsel reasonably satisfactory (using good faith and
commercially reasonable standards) to the Indemnified Party to have charge of
such third-party action, (iii) the Indemnified Party shall have reasonably
concluded that there may be defenses available to such Indemnified Party that
are different from or additional to those available to the Indemnifying Party
and which prejudice the rights of the Indemnified Party, or (iv) there is a
conflict of interest on the part of Indemnifying Party's counsel that makes it
inappropriate under applicable standards of professional conduct to have common
counsel);
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(c) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party or if,
in the opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgment could have an adverse effect on its business. The
Indemnifying Party may enter into a settlement without the consent of the
Indemnified Party if the settlement (i) includes a release of the Indemnified
Party as described in paragraph (d) below and (ii) the settlement does not
include any injunctive or equitable relief that would adversely affect the
business of the Indemnified Party;
(d) No Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each Indemnified Party
of a release from all liability in respect of such third-party action; and
(e) The Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at its own expense in the defense of),
and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any third-
party action (i) as to which the Indemnifying Party fails to assume the defense
within a reasonable length of time or (ii) to the extent the third-party action
seeks an order, injunction, or other equitable relief against the Indemnified
Party which, if successful, would materially and adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection
with the defense of any third-party action pursuant to this Article 11 and, in
connection therewith, subject to Section 7.9, shall furnish such records,
information, and testimony and attend such conferences, discovery proceedings,
hearings, trials, and appeals as may be reasonably requested.
11.4 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved ("Direct Claim"), the Indemnified Party shall
promptly notify the Indemnifying Party in writing of any Indemnified Costs
which such Indemnified Party claims are subject to indemnification under the
terms hereof. Such notice shall be accompanied by all information the
Indemnified Party has concerning the claim. The Indemnified Party and
Indemnifying Party shall cooperate with each other so as to provide
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the Indemnifying Party with the reasonable opportunity to cure the underlying
matter which is the subject of the Direct Claim provided that this does not
prejudice the rights of the Indemnified Party under this Section 11.4. Subject
to the limitations set forth in Section 11.6(b), the failure of the Indemnified
Party to exercise promptness in such notification shall not amount to a waiver
of such claim unless such failure or the delay resulting from such failure
materially prejudices the Indemnifying Party's ability to defend such claim.
11.5 ESCROW. On the Closing Date, Buyer and Seller will enter into
the Indemnification Escrow Agreement in accordance with which Buyer shall, at
Closing, deposit an amount of the Purchase Price equal to $1,000,000 (the
"Holdback Amount") with the Escrow Agent.
11.6 LIMITATIONS. The following provisions of this Section 11.6 shall
be applicable from, after and including the day of the Closing:
(a) Minimum Loss. No Indemnifying Party shall be required to
indemnify an Indemnified Party for Indemnified Representation Costs unless and
until the aggregate amount of such Indemnified Representation Costs for which
the Indemnified Party is otherwise entitled to indemnification pursuant to this
Article 11 exceeds $100,000 (the "Minimum Loss"). After the Minimum Loss is
exceeded, the Indemnified Party shall be entitled to be paid the entire amount
of its Indemnified Representation Costs in excess of (but not including) the
Minimum Loss, subject to the limitations on recovery and recourse set forth in
this Section 11.6 and in Section 11.7 below.
(b) Limitation as to Time. No Indemnifying Party shall be
liable for any Indemnified Representation Costs pursuant to this Article 11
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the first anniversary of the Closing Date, and any claim
given by the Indemnified Party after the first anniversary of the Closing Date
is null and void and shall be disregarded by the Indemnifying Party, except
that this time limitation shall not apply to any claims contemplated by Section
12.19.
(c) Recourse against Escrowed Funds. Notwithstanding anything
to the contrary or apparently to the contrary in this Agreement except as
provided in Sections 11.6(d) and (e), the Indemnification Escrow Agreement, or
the Transaction Documents or any of them, a Buyer Indemnified Party shall be
entitled to payment only out of the Holdback Amount for all amounts due to a
Buyer Indemnified Party with respect to any and all claims by a Buyer
Indemnified Party against Seller for Buyer Indemnified Representation Costs
payable under this Article 11 or payable under any other provision of this
Agreement. In the event of a conflict between the terms of this Section
11.6(c) and the terms of the Indemnification Escrow Agreement, the Transaction
Documents and any
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other provision of this Agreement, the provisions of this Section 11.6(c) shall
govern and control. With respect to any claim asserted after the Closing,
Buyer covenants not to sue Seller, and Buyer agrees to not levy against or make
any other claims against Seller's assets (other than a claim directly against
the Holdback Amount) with respect to any claims that constitute Buyer
Indemnified Representation Costs.
(d) Other Indemnified Costs. The provisions of this Section
11.6 shall only be applicable to Indemnified Representation Costs and shall not
be applicable to any other Indemnified Costs except to the extent that
Indemnified Costs are deemed to be included within the definition of
Indemnified Representation Costs pursuant to the provisions of this Agreement.
(e) Claims for Fraud. Notwithstanding any provisions of this
Section 11.6 to the contrary, the limitations contained paragraphs (a), (b) and
(c) of this Section 11.6 shall not apply to any claims under Section 12.19.
11.7 INSTRUCTIONS TO ESCROW AGENT. Seller hereby covenants and agrees
that at any time Seller is or becomes obligated to indemnify a Buyer
Indemnified Party for Buyer Indemnified Costs under this Article 11, Seller
will execute and deliver to the Escrow Agent written instructions to release to
the Buyer Indemnified Party such portion of the Holdback Amount as is necessary
to indemnify the Buyer Indemnified Party for such Buyer Indemnified Costs.
11.8 ATTORNEY FEES. In the event that any Buyer Indemnified Party or
Seller Indemnified Party, as the case may be, seeks indemnity pursuant to this
Article 11 and a judicial determination is made by a court of record, which is
final and non-appealable, that the party seeking indemnification is not
entitled to be indemnified pursuant to this Agreement, such party seeking
indemnification shall reimburse the other party (the Indemnifying Party) for
all costs and expenses, including reasonable attorney fees, incurred in
connection with such matter.
ARTICLE 12
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations and
warranties set forth in this Agreement shall terminate on the first anniversary
of the Closing Date. Following the date of termination of a representation or
warranty, no claim can be brought with
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respect to a breach of such representation or warranty, but any such
termination shall not affect any claim for a breach of a representation or
warranty that was asserted before the date of termination, subject to the
applicable statute of limitations. To the extent that such are performable
after the Closing, each of the covenants and agreements contained in each of
the Transaction Documents shall survive the Closing, subject to the applicable
statute of limitations.
12.2 FURTHER ACTIONS. After the Closing Date, Seller and Buyer shall
execute and deliver to each other such other certificates, agreements,
conveyances, and other documents, and take such other action, as may be
reasonably requested by the other party in order to implement and effectuate
the transactions contemplated pursuant to the terms of this Agreement (i.e. the
transfer and assignment to, and vesting in, Buyer the Assets pursuant to the
terms of this Agreement).
12.3 AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto which
specifically refers to this Section 12.3 and states that such instrument is
intended to be a written amendment to this Agreement pursuant to this Section
12.3.
12.4 WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand, or
Seller, on the other hand, to comply with any obligation, covenant, agreement,
or condition contained herein may be waived only if set forth in an instrument
in writing signed by the party or parties to be bound thereby, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any other failure.
12.5 SPECIFIC PERFORMANCE. The parties recognize that in the event
that Seller should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement specifically, Seller
hereby waives the defense that there is an adequate remedy at law.
12.6 NO CONSEQUENTIAL DAMAGES. Neither party is liable to the other
for consequential damages.
12.7 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of applicable
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to
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modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
12.8 EXPENSES AND OBLIGATIONS.
(a) Except as otherwise expressly provided in this Agreement
or as provided by law, all costs and expenses incurred by the parties hereto in
connection with the consummation of the transactions contemplated hereby shall
be borne solely and entirely by the party which has incurred such expenses.
Notwithstanding the foregoing, (i) the fee payable to the Escrow Agent shall be
borne as provided in the Indemnification Escrow Agreement and the Deposit
Escrow Agreement, (ii) the brokerage fees in the amount of $490,000 (the
"Brokerage Fee") payable to Media Venture Partners shall be borne by Buyer, and
(iii) all sales taxes arising out of the transactions contemplated by this
Agreement shall be paid by Seller. In the event of a dispute between the
parties in connection with this Agreement and the transactions contemplated
hereby and legal proceedings are commenced to enforce the provisions of this
Agreement, each of the parties hereto hereby agrees that the prevailing party
shall be entitled to reimbursement by the other party of reasonable legal fees
and expenses incurred in connection with any such legal proceeding.
(b) Buyer will be responsible for the initial filing fee for
the filing required pursuant to the Hart-Scott-Rodino Anti-Trust Improvements
Act of 1976, and Buyer shall pay the Seller's reasonable costs and expenses
incurred in responding to a "Second Request" by the Department of Justice in
connection with such filing.
12.9 PARTIES IN INTEREST. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
(other than the Indemnified Parties as provided in Article 11) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.10 NOTICES. Any notices or other communications required to be
given pursuant to this Agreement shall be in writing and shall be deemed given:
(a) upon delivery, if by hand; (b) three (3) Business Days after mailing, if
sent by registered or certified mail, postage fully prepaid, return receipt
requested; (c) one (1) Business Day after mailing, if sent via overnight
courier; or (d) upon transmission, if sent by telex or facsimile except that if
such notice or other communication is received by telex or facsimile after 5:00
p.m., local time of the recipient of the facsimile or telex on a Business Day
at the place of receipt, or on any day that is not a Business Day at the place
of receipt, then said notice shall be effective as of the following Business
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Day, provided, that any notice sent by telex or facsimile pursuant to this
clause (d) shall also be sent (on the Business Day that such notice is
effective) by overnight courier pursuant to clause (c) above in order to be
valid or effective. All notices and other communications hereunder shall be
given as follows:
(i) If to Buyer, to
Capstar Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Facsimile: (214) 740-7313
with copies to
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attn: A. Winston Oxley
Facsimile: (214) 220-7716
Capstar Broadcasting Partners, Inc.
600 Congress Avenue, Suite 1400
Austin, Texas 78701
Attn: William S. Banowsky, Jr.
Facsimile: (512) 404-6850
(ii) If to Seller, to
Ameron Broadcasting, Inc.
c/o Public Safety/Code 3
10986 North Warson Road
St. Louis, Missouri 63114
Attention: Ronald W. Recker
Telephone No.: (314) 426-2700, ext. 1150
Telecopier No.: (314) 426-3820
with a copy to
Riezman & Blitz, P.C.
120 South Central
St. Louis, MO 63105
Attention: Richard M. Riezman, Esq.
Frederick J. Berger, Esq.
Telephone No.: (314) 727-0101
Telecopier No.: (314) 727-6458
Any party may change its address for receiving notice by written notice
given to the other names above in the manner provided above, provided that any
such change of address shall not be effective until seven (7) days after such
notice was given in accordance with this Section 12.10. Notice given by the
legal
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counsel of a party is deemed to be notice given by that party pursuant to this
Section 12.10.
12.11 COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.12 ENTIRE AGREEMENT. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.
12.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI ANY SUIT OR PROCEEDING
BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
LOCATED IN MISSOURI.
12.14 PUBLIC ANNOUNCEMENTS. Except as required by applicable law,
until the Closing, neither Seller nor Buyer shall give notice to third parties
or otherwise make any public statement or releases concerning this Agreement or
the transactions contemplated hereby except for such written information as
shall have been approved in writing as to form and content by Buyer and Seller,
which approval shall not be unreasonably withheld or delayed; provided,
however, that Seller and Buyer may disclose such information to their
accountants, attorneys, and other advisors in connection with such
transactions.
12.15 CONFIDENTIALITY. In the event that the Closing does not occur,
the parties hereto shall return all documents furnished hereunder and shall
hold all information received pursuant hereto in the same degree of confidence
with which it maintains its own like information until such information becomes
a matter of public knowledge.
12.16 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon prior notice to Seller and without releasing Buyer from any of its
obligations or liabilities hereunder, Buyer may assign or delegate any or all
of its rights or obligations under this Agreement to any Affiliate thereof, and
(b) nothing in this Agreement shall limit Buyer's ability to make a collateral
assignment of its rights under this Agreement to any institutional lender that
provides funds to Buyer
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without the consent of Seller, but Buyer shall give Seller prior notice of any
such collateral assignment. Seller shall execute an acknowledgment of such
assignment(s) and collateral assignments in such forms as Buyer or its
institutional lenders may from time to time reasonably request; provided,
however, that unless written notice is given to Seller that any such collateral
assignment has been foreclosed upon, Seller shall be entitled to deal
exclusively with Buyer as to any matters arising under this Agreement or any of
the other agreements delivered pursuant hereto. In the event of such an
assignment, the provisions of this Agreement shall inure to the benefit of and
be binding on Buyer's assigns.
12.17 DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of Buyer and Seller and their respective Affiliates shall not have
any personal liability or obligation under this Agreement, other than as an
assignee of this Agreement.
12.18 NO REVERSIONARY INTEREST. The parties expressly agree, pursuant
to Section 73.1150 of the FCC's rules, that Seller does not retain any right to
reassignment of any of the FCC Licenses in the future, or to operate or use the
facilities of the Stations for any period beyond the Closing Date.
12.19 NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article 11 shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity arising from such party's
fraudulent acts. None of the provisions set forth in this Agreement, including
but not limited to the provisions set forth in Section 11.6(a) (relating to
Minimum Loss), 11.6(b)(relating to limitations on the period of time during
which a claim for indemnification may be brought), or 11.6(c) (relating to
recourse against escrowed funds), shall be deemed a waiver by any party to this
Agreement of any right or remedy which such party may have at law or equity
based on any other party's fraudulent acts, nor shall any such provisions
limit, or be deemed to limit, (a) the amounts of recovery sought or awarded in
any such claim for fraud, (b) the time period during which a claim for fraud
may be brought, or (c) the recourse which any such party may seek against
another party with respect to a claim for fraud; provided, that with respect to
such rights and remedies at law or equity, the parties further acknowledge and
agree that none of the provisions of this Section 12.19, nor any reference to
this Section 12.19 throughout this Agreement, shall be deemed a waiver of any
defenses which may be available in respect of actions or claims for fraud,
including but not limited to, defenses of statutes of limitations or
limitations of damages.
12.20 CONSENTS.
(a) Whenever a party's consent is required by this Agreement,
such party shall not unreasonably withhold or unreasonably delay giving its
consent.
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(b) With respect to matters concerning operation of the
Stations which require Buyer's consent, Buyer shall be deemed to have consented
to Seller's request if Buyer does not give Seller written notice that Buyer is
refusing to consent within 3 Business Days after Buyer receives Seller's
request for consent.
12.21 ACCESS TO BOOKS AND RECORDS. Buyer shall keep all books and
records received from Seller safe and secure for 5 years after the Closing and
shall not dispose of or destroy such books and records. Buyer shall give
thirty (30) days prior notice to Seller of any books and records that Buyer
desires to dispose of, and Seller shall have the right to require Buyer to
deliver such books and records to Seller in lieu of such disposal. Subject to
the provisions of Section 12.15 and Section 7.9, with the prior written consent
of Buyer and under arrangements prescribed by Buyer (including such reasonable
restrictions as Buyer may require), Seller and its representatives shall have
reasonable access, during normal business hours and in such manner as will not
unreasonably interfere with the conduct of the business of Buyer, to all books
and records regarding the Purchased Assets, together with the opportunity to
make copies of such books and records. Buyer will designate those persons
("Buyer's Contact Persons") that Seller is authorized to contact, and Seller
shall not contact or discuss this transaction with any of Buyer's officers,
directors, employees or agents that are not designated Buyer's Contact Persons
unless the designated Buyer's Contact Persons do not respond to Seller's
attempts to contact or communicate with them. In furtherance of the foregoing,
in connection with each proposed visit to a Station, Seller shall notify Buyer
of the purpose of the visit, the names of the persons attending the visit, the
person to be contacted and such other information as Buyer may request. Buyer
agrees to consent to reasonable requests of Seller under this Section 12.21.
Seller will use reasonable efforts to cause minimal interference with the
conduct of the business of Buyer. Buyer may be present during any visit by
Seller.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-64-
<PAGE> 70
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed, all as of the date first written above.
SELLER:
AMERON BROADCASTING, INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BUYER:
CAPSTAR ACQUISITION COMPANY, INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-65-
<PAGE> 71
ANNEX A
THE STATIONS
1. Radio Station WMJJ (FM) in Birmingham.
2. Radio Station WERC (AM) in Birmingham.
3. Radio Station WOWC (FM) in Jasper, Alabama.
-66-
<PAGE> 1
EXHIBIT 10.2.2
Reference is made to the Asset Purchase Agreement (the "Purchase
Agreement") between Ameron Broadcasting, Inc. ("Ameron") and Capstar
Acquisition Company, Inc. ("Capstar") dated as of April 24, 1997, including
without limitation Section 12.3 of the Purchase Agreement, and to the Agreement
to Assign Construction Permit (the "Permit Agreement") between Sharepoint
Management Group, Inc. ("Sharepoint") and Capstar also dated as of April 24,
1997. Since Sharepoint is controlled personally by the President of Ameron who
will receive all of the Construction Permit proceeds personally, Ameron and
Capstar hereby agree that the Purchase Price (as defined in the Purchase
Agreement) to be paid under the Purchase Agreement shall be reduced on a
dollar-for-dollar basis by the amount of the purchase price to be paid under
the Permit Agreement. This letter is intended to comply with the terms of
Section 12.3 of the Purchase Agreement.
IN WITNESS WHEREOF, Ameron and Capstar have caused this letter to be
signed as of this 25th day of April, 1997.
AMERON BROADCASTING, INC.
By: /s/
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CAPSTAR ACQUISITION COMPANY, INC.
By: /s/
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,188,085
<SECURITIES> 0
<RECEIVABLES> 13,475,418
<ALLOWANCES> 1,217,518
<INVENTORY> 0
<CURRENT-ASSETS> 40,368,992
<PP&E> 52,057,580
<DEPRECIATION> 11,367,510
<TOTAL-ASSETS> 271,399,779
<CURRENT-LIABILITIES> 12,564,447
<BONDS> 70,736,960
0
0
<COMMON> 2,498,479
<OTHER-SE> 148,777,415
<TOTAL-LIABILITY-AND-EQUITY> 271,399,779
<SALES> 0
<TOTAL-REVENUES> 14,208,071
<CGS> 0
<TOTAL-COSTS> 953,956
<OTHER-EXPENSES> 11,890,056
<LOSS-PROVISION> 173,447
<INTEREST-EXPENSE> 2,892,083
<INCOME-PRETAX> (1,674,412)
<INCOME-TAX> 46,345
<INCOME-CONTINUING> (1,720,757)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,373,225
<CHANGES> 0
<NET-INCOME> (3,093,982)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
