1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of May 8, 2000,
by and among ▇▇▇▇▇▇▇▇▇ COMMUNICATIONS, INC., a Delaware corporation (the
"COMPANY"), each of the stockholders of the Company identified on ANNEX I (each
a "SELLER" and, collectively, "SELLERS") and SPANISH BROADCASTING SYSTEM, INC.,
a Delaware corporation ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Sellers own in the aggregate all the outstanding shares of
Common Stock, par value $0.01 per share, of the Company (the "SHARES"); and
WHEREAS, the Company has entered into a Management Agreement, dated as
of November 1, 1999 (the "MANAGEMENT AGREEMENT"), with Viva Broadcasting, LLC, a
California corporation, and its owners (collectively, "VIVA"); and
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, the Shares, subject to the approval of the Federal
Communications Commission (the "COMMISSION" or "FCC"); and
WHEREAS, the Company desires to join in the execution of this Agreement
for the purpose of evidencing its consent to the consummation of the foregoing
transaction and for the purpose of making certain representations and warranties
to and covenants and agreements with Purchaser; and
WHEREAS, the Company has entered into the contracts described below to
acquire the following radio stations:
KFOX-FM (Redondo Beach, California)
KREA-FM (Ontario, California)
KXJO-FM (Alameda, California)
▇▇▇▇-▇▇ (▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇)
(collectively, the "STATIONS") and associated assets and liabilities, including
without limitation, certain contracts and leases and, subject to the approval of
the FCC, to accept assignments from the sellers of the Stations certain licenses
and other authorizations issued by the Commission to such sellers; and
WHEREAS, the Company has entered into an Asset Purchase Agreement with
Chagal Communications, Inc. ("CHAGAL"), dated as of November 2, 1999, as
amended, relating to the acquisition by the Company of KFOX-FM and KREA-FM (the
"LA AGREEMENT"); and
1
2
WHEREAS, the Company has entered into an Asset Purchase Agreement with
Citicasters Co. ("CITICASTERS"), dated as of March 7, 2000, as amended, relating
to the acquisition by the Company of KXJO-FM (the "SF AGREEMENT"); and
WHEREAS, the Company has entered into an Asset Purchase Agreement with
Ganadores Corporation, dated as of December 14, 1999, as amended, relating to
the acquisition by the Company of KSAH-AM (the "SA AGREEMENT"); and
WHEREAS, New World Broadcasters Corp., a Texas corporation ("NEW
WORLD"), has entered into (a) an Asset Purchase Agreement, dated as of the date
hereof, with respect to the assets relating to radio station KTCY-FM and (b) a
Stock Purchase Agreement, dated as of the date hereof, with respect to the stock
of 910 Broadcasters Corp., a Texas corporation and a wholly owned subsidiary of
New World and the owner of radio station KXEB-AM ((a) and (b) together, the "NEW
WORLD AGREEMENTS"), whereby Purchaser will acquire from New World KTCY-FM and
certain related assets and liabilities and the capital stock of 910 Broadcasters
Corp.; and
WHEREAS, the LA Agreement, the SF Agreement and the SA Agreement
(collectively, the "INITIAL PURCHASE AGREEMENTS") have not been consummated as
of the date of this Agreement; and
WHEREAS, PURCHASER has agreed to lend funds to the Company and New
World for the Company to use to, among other things, consummate the Initial
Purchase Agreements and for New World to use to repay certain indebtedness and
to operate and maintain KTCY-FM and KXEB-AM, and Purchaser has agreed to lend an
additional amount of funds (the "KEPT ASSETS DEBT") to New World and the
Company, a portion of which the Company will utilize to acquire assets not
related to the Stations; and
WHEREAS, Sellers desire to sell the Shares to Purchaser and Purchaser
desires to acquire the Shares as soon as practicable following the acquisition
by the Company of the Stations and such related assets;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows;
ARTICLE I
DEFINED TERMS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACTION" shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by any Governmental Authority or other third party.
"AFFILIATES" of a party shall mean persons or entities that directly,
or indirectly through one or more intermediaries, control or are controlled by,
or are under common control with, such party.
2
3
"ASSETS" shall mean all of the assets, properties and rights acquired
by the Company upon consummation of the Initial Purchase Agreements.
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended.
"ENCUMBRANCES" shall mean liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on voting,
sale, transfer, disposition or otherwise), easements and other encumbrances of
every type and description, whether imposed by Law, agreement, understanding or
otherwise.
"ENVIRONMENTAL LAW" shall mean any law, ordinance, or regulation,
whether national, Federal, state, local or other, pertaining to the protection
of human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 11001, et seq., and the Resource Conversation and Recovery Act, 42
U.S.C. Sections 6901, et seq.
"GOVERNMENTAL AUTHORITY" shall mean any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any claim, action, suit, arbitration,
order, writ, judgment, injunction, decree, stipulation, determination or award
entered into by or with any Governmental Authority.
"HAZARDOUS MATERIALS" shall mean any waste or substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"IRS" shall mean the United States Internal Revenue Service.
"KEPT ASSETS" shall mean the assets of the Company and its Subsidiaries
other than the Assets.
"LAW" shall mean any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, Governmental Order, permit, franchise, grant,
authorization, easement, consent, certificate or requirement or rule of common
law of any Governmental Authority.
"LIABILITIES" shall mean any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured, or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any environmental law),
Action or Governmental Order and those arising under any contract agreement,
arrangement, commitment or undertaking.
3
4
"MATERIAL ADVERSE EFFECT" shall mean a single event, occurrence or fact
that (together with all other events, occurrences and facts that could
reasonably be expected to result in a loss) would have, or might reasonably be
expected to have, a material adverse effect on a Person's assets, business,
operations or financial condition, or that might reasonably be expected to
prevent such Person from consummating the transactions contemplated by this
Agreement.
"PERMITTED ENCUMBRANCES" shall mean any and all of the following
Encumbrances:
(a) Liens for taxes and assessments which are not yet due and payable
or, if due and payable, the validity of which is being contested in good faith
by appropriate legal proceedings;
(b) Rights existing under applicable laws or operating agreements or
similar contracts to assert liens against the relevant assets or properties, but
not including liens and other rights which have actually been asserted, unless
the relevant Person disputes the validity of any such lien or the amount claimed
to be owed in connection therewith, or such lien or other right is not
enforceable against the interest of such Person;
(c) Any obligations or duties affecting any property to any
municipality or public authority with respect to any franchise, grant, license
or permit and all applicable laws, rules and orders of any Governmental
Authority;
(d) Any other Encumbrance that is not substantial in character, amount
or extent and does not materially detract from the value of the property subject
thereto;
(e) Any Encumbrance created by or in favor of Purchaser or any of its
Affiliates; and
(f) Such Encumbrances or impairments to the quality of title arising as
a result of the sale to Purchaser of the Shares pursuant to this Agreement.
"PERSON" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Authority.
"SUBSIDIARY" shall mean any corporation or other Person of which
securities or other interests having the power to elect a majority of that
corporation's or other person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred) are
held on the date in question by such Person or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary on the date in question of the Company.
"TAX" shall mean any federal, state, local or foreign tax (including,
without limitation, any income tax, franchise tax, doing business tax, branch
profits tax, capital gains tax, value-added tax, ad valorem tax, excise tax,
4
5
transfer tax, employment tax, social security tax, sales tax, use tax, property
tax, or any other kind of tax or payment in lieu of tax no matter how
denominated), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or collected by or
under the authority of any Governmental Authority or payable pursuant to any
tax-sharing agreement or any other contract relating to the sharing or payment
of any such tax, levy, assessment, tariff, duty, deficiency or fee.
"TAX RETURN" shall mean any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to or required to be filed with or submitted to, any
Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any legal requirement
relating to any Tax.
Section 1.02. OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections of this Agreement set forth
below:
-------------------------------------------------------------------------------
TERM SECTION
-------------------------------------------------------------------------------
Agreement Preamble
Ancillary Documents Section 4.02
Assignment Application Section 2.03
Balance Sheet Date Section 4.14
Basket Amount Section 7.04
Bridge Loan Agreement Section 3.02
Capital Lease Section 2.02
Cash Amount Section 2.02
Chagal Preamble
Citicasters Preamble
Cleanup Section 7.02
Closing Section 3.01
Closing Date Section 3.01
Commission Preamble
Communications Act Section 2.03
Company Preamble
Company Agreements Section 4.24
FCC Preamble
FCC Licenses Section 2.03
FCC Orders Section 2.03
Final Orders Section 2.03
Financial Statements Section 4.14
GAAP Section 4.14
HSR Act Section 2.03
Indebtedness Section 2.02
Initial Purchase Agreements Preamble
-------------------------------------------------------------------------------
5
6
-------------------------------------------------------------------------------
KXJO Adjustment Section 6.14
KXJO Note Section 6.14
KXJO Sub Section 6.14
KXJO Sub Agreement Section 6.14
Kept Assets Debt Preamble
LA Agreement Preamble
LMA Section 3.02
Liquid Amount Section 2.02
Liquidated Damages Section 6.14
Losses Section 7.02
Management Agreement Preamble
Management Personnel Section 6.07
New World Preamble
New World Agreements Preamble
Newco Note Section 2.02
Newco Subs Section 4.08
Purchase Price Section 2.02
Purchaser Preamble
Purchaser Common Stock Section 2.02
Purchaser Shares Section 2.02
Purchaser's Brokers Section 5.05
SA Agreement Preamble
SF Agreement Preamble
Sellers Preamble
Sellers' Brokers Section 4.27
Securities Act Section 4.10
Shares Preamble
Stations Preamble
Straddle Period Section 7.05
Transfer Taxes Section 6.03
Viva Preamble
Viva Agreement Section 3.02
Viva Shares Section 3.04
-------------------------------------------------------------------------------
ARTICLE II
PURCHASE AND SALE
Section 2.01. PURCHASE AND SALE OF SHARES. At the Closing, and on the
terms and subject to the conditions set forth in this Agreement, each Seller
shall sell and deliver to Purchaser, and Purchaser shall purchase and accept
from each Seller, the number of Shares owned by such Seller and set forth
opposite such Seller's name on ANNEX I. Notwithstanding the foregoing, if any
Seller shall fail or refuse to deliver any of the Shares as provided in this
Section 2.01, or if any Seller shall fail or refuse to consummate the
transactions described in this Agreement prior to or on the Closing Date, such
failure or refusal shall not relieve the other Sellers of any obligations under
this Agreement, and Purchaser, at its option and without prejudice to its rights
against any such defaulting Seller, may either (i) acquire the remaining Shares
which it is entitled to acquire hereunder or (ii) refuse to make such
acquisition and terminate this Agreement pursuant to Section 8.01.
6
7
Section 2.02. PURCHASE PRICE AND PAYMENT. In consideration of the sale
of the Shares to Purchaser, Purchaser shall pay to Sellers at the Closing the
aggregate purchase price of $25,250,000 minus the sum of (i) any indebtedness
for borrowed money of the Company and its Subsidiaries outstanding at the
Closing, and any accrued interest on and any redemption or prepayment premiums
or penalties, breakage costs and fees thereon and other expenses or amounts
(including amounts due pursuant to indemnification rights of lenders or holders
of indebtedness) ("INDEBTEDNESS"), but excluding any Indebtedness under the
Bridge Loan Agreements, (ii) any lease of any of the Company and its
Subsidiaries required so to be capitalized in accordance with GAAP (each, a
"CAPITAL LEASE"), (iii) the redemption or repurchase price of (A) any options,
warrants or convertible notes exercisable or convertible for equity securities
of the Company or any of its Subsidiaries, or (B) any preferred stock, common
stock or other capital stock, including all liquidation payments and accrued
dividends, (iv) any liability for legal, accounting or any other professional
and brokerage/investment banking fees and expenses incurred by the Company, its
Subsidiaries or its shareholders in connection with the transactions
contemplated hereby, but only to the extent that they are not reimburseable to
the Company or any of its Subsidiaries pursuant to the LMA, and (v) accrued but
unpaid salary and bonuses to employees of the Company and its Subsidiaries, but
only to the extent that they are not reimburseable to the Company or any of its
Subsidiaries pursuant to the LMA (such amount being referred to herein as the
"PURCHASE PRICE"). The Purchase Price shall be paid as follows:
(i) At the Closing, Purchaser shall assign to Sellers all of
Purchaser's rights with respect to the then outstanding Kept Asset Bridge Loans
made pursuant to the Bridge Loan Agreement and shall deliver to Seller a
promissory note of Newco Sub, dated the Closing Date, representing the joint and
several obligation of Newco Sub to repay the Kept Asset Bridge Loans made
pursuant to the Bridge Loan Agreement (the "NEWCO NOTE"). The principal amount
of the Newco Note shall equal the then aggregate unpaid principal amount of the
Kept Asset Bridge Loans made pursuant to the Bridge Loan Agreement. The
principal amount of the Newco Note shall be payable upon demand and shall bear
interest at a rate equal to the applicable federal rate, and interest accruing
on the Newco Note shall be due and payable upon presentment of the Newco Note
for payment. Notwithstanding the provisions of the Bridge Loan Agreement and
related documents, the Newco Note and the obligations of each Newco Sub
evidenced thereby shall, upon such assignment to Sellers, represent an
unsecured, general obligation of Newco Sub. The assignment by Purchaser to
Sellers of Purchaser's rights with respect to the Kept Asset Bridge Loans made
pursuant to the Bridge Loan Agreement and the Newco Note shall be made by
Purchaser without any representation, warranty or recourse, except that
Purchaser hereby warrants that such rights and the Newco Note shall be assigned
free and clear of any lien, claim or encumbrance resulting from the action or
inaction of Purchaser or any of its Affiliates. Purchaser and Sellers agree, and
Sellers agree to cause Newco Sub and all other parties to the Bridge Loan
Agreement and related documents (other than Purchaser) to execute and deliver
such amendment, assignment and other agreements and instruments as are
reasonably required in order to effect the foregoing assignment.
(ii) Purchaser shall deliver to Sellers at the Closing cash in
an aggregate amount equal to (1) the lesser of the Purchase Price and
$24,700,000, minus (2) the principal amount of the Newco Note (the "CASH
AMOUNT").
7
8
(iii) A number of shares (the "PURCHASER SHARES") of Class A
Common Stock, par value $.0001 per share, of Purchaser ("PURCHASER COMMON
STOCK") shall be issued to Sellers at Closing. The number of shares constituting
the Purchaser Shares shall be the quotient of (i) the Purchase Price minus the
principal amount of the Newco Note minus the Cash Amount, divided by (ii) the
average last trade price per share of Purchaser Common Stock for the 30-day
period ending on the day immediately preceding the Closing Date, as reported
under Nasdaq National Market Issues in THE WALL STREET JOURNAL.
The Newco Note, the Cash Amount and the Purchaser Shares shall be
allocated among Sellers as set forth on ANNEX I. The allocable portion of the
Cash Amount payable to each Seller shall be paid to such Seller by wire transfer
of immediately available funds made to a bank account to be designated by such
Seller (such designation to occur no later than the third business day prior to
the Closing Date).
The Shares shall be delivered without any representation or warranty by
Sellers or the Company except as expressly set forth in this Agreement, and
Purchaser acknowledges that it has not relied on or been induced to enter into
this Agreement by any representation or warranty other than those expressly set
forth in Article IV hereof.
Section 2.03. ASSIGNMENT OF FCC LICENSES.
(a) In order to consummate the sale of the Shares, Purchaser and the
Company and Sellers will file within 10 business days after consummation of each
of the Initial Purchase Agreements assignments of license applications (the
"ASSIGNMENT APPLICATIONS") requesting FCC consent to the transfer of control of
the Company to Purchaser with regard to the licenses, permits and other
authorizations that are issued by the FCC to the Company relating to the
operation of the Station or Stations acquired by Seller ("FCC LICENSES") as a
result of such consummation. The parties agree to prosecute the Assignment
Applications in good faith and with due diligence. Each party will be solely
responsible for the expenses incurred by it in the preparation, filing and
prosecution of the Assignment Applications (it being agreed that each of the
Sellers, as a group, and Purchaser will pay one-half of the FCC filing fee). As
used herein, the term "FCC ORDERS" shall mean that the FCC has granted or given
its consent, without any condition materially adverse to Purchaser, to each of
the Assignment Applications; the term "FINAL ORDERS" shall mean that the FCC
Orders shall have become final that none of such FCC Orders are reversed,
stayed, enjoined or set aside, and with respect to each of such FCC Orders, no
timely request for stay, reconsideration, review, rehearing or notice of appeal
is pending, and as to each of which FCC Orders the time set forth in the FCC
rules or the Communications Act of 1934, as amended (the "COMMUNICATIONS ACT"),
for filing any such request, petition or notice of appeal or for review by the
FCC staff on its own motion has expired.
(b) Within 20 days after the date hereof, Purchaser and Sellers shall
make or cause to be made any and all necessary filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
with respect to the transactions contemplated by this Agreement and the New
World Agreements. Purchaser shall pay any notification filing fee associated
with the filing under the HSR Act.
8
9
ARTICLE III
CLOSING
Section 3.01. CLOSING. Subject to the terms of this Agreement, the sale
and purchase of the Shares shall take place at a closing of the transactions
contemplated hereby (the "CLOSING") to be held at the offices of ▇▇▇▇▇▇▇▇ &
Knight L.L.P., in Dallas, Texas, at 10:00 a.m., local time, on the date which is
the later of (i) the fifth day after the issuance of the FCC Orders, (ii) the
date on which all closing conditions set forth in this Article III have been
satisfied or, to the extent permitted under applicable Law, waived, and (iii)
November 8, 2000, or at such other place or at such other time or on such other
date as Seller and Purchaser may mutually agree upon in writing (the day on
which the Closing takes place being the "CLOSING DATE"). Notwithstanding the
foregoing, if the Final Order with respect to radio station KXJO-FM has not been
obtained prior to November 3, 2000, then, unless Seller and Purchaser mutually
agree to a later Closing Date, the Closing Date shall be November 8, 2000, and
shall be conducted in accordance with this Article III, subject to Section 6.14.
Section 3.02. CONDITIONS TO THE CLOSING.
(a) The obligations of Sellers and Purchaser hereunder shall be subject
to the satisfaction or written waiver on or prior to the Closing Date of the
following conditions:
(i) The waiting period (and any extension thereof), if any,
applicable to the transactions contemplated by this Agreement under the HSR Act,
shall have been terminated or shall have expired, and no restrictive order or
other requirements pursuant to the HSR Act shall have been placed on the
parties.
(ii) Subject to Section 6.14, the FCC shall have approved the
Assignment Applications (and such other applications as may be required by
applicable law, rule or regulation to be filed with respect to the transactions
contemplated by this Agreement in order to permit the transfer of control of the
Company to Purchaser).
(iii) 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, nor shall any proceeding by or with any
Governmental Authority or third party seeking any of the foregoing be pending
(excluding, in each case, any such matter initiated by any Seller, the Company,
Purchaser or any of their Affiliates). There shall not be any Action taken, or
any Law enacted, entered, enforced or deemed applicable to the transactions
contemplated hereby, which makes the consummation of such transactions illegal
(excluding, in each case, any such matter initiated by any Seller, the Company,
Purchaser or any of their Affiliates).
(iv) Purchaser and the Company shall have entered into a local
marketing agreement in substantially the form of EXHIBIT 3.02(A)(V) with respect
to each Station concurrently with entering into this Agreement (the "LMA").
9
10
(b) The obligations of any Seller to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(i) Purchaser shall have entered into a loan agreement with
the Company and New World in substantially the same form as EXHIBIT 3.02(B)(I)
(the "BRIDGE LOAN AGREEMENT") and Purchaser shall have advanced all funds
required to be advanced under the Bridge Loan Agreement in accordance with the
terms thereof.
(ii) All the representations and warranties of Purchaser
contained in this Agreement, and in any agreement, instrument, or document
delivered pursuant hereto or in connection herewith on or prior to the Closing
Date that are not qualified by materiality, Material Adverse Effect or a dollar
threshold shall be true and correct in all material respects, and all other
representations and warranties of Purchaser shall be true and correct, as of the
date made and (having been deemed to have been made again on and as of the
Closing Date) shall be true and correct in all material respects on and as of
the Closing Date, except to the extent that any such representation or warranty
is made as of a specified date, in which case such representation or warranty
shall have been true and correct as of such specified date.
(iii) Purchaser shall have performed and complied with in all
material respects all covenants and agreements required by this Agreement, and
any agreement, instrument, or document delivered pursuant hereto or in
connection herewith on or prior to the Closing Date, to be performed or complied
with by it on or prior to the Closing Date.
(iv) Purchaser shall not be in default under any LMA, which
default has resulted in a Material Adverse Effect on the Company or any Seller.
(v) Viva shall have entered into an agreement with the Company
and Purchaser in substantially the form of Exhibit 3.02(b)(v) (the "VIVA
AGREEMENT"), pursuant to which Viva agrees to release any and all claims it has
against the Company and Purchaser under the Management Agreement upon receipt by
Viva of the Viva Shares, and Purchaser shall have delivered to Viva the Viva
Shares, at or prior to the Closing.
(c) The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(i) All the representations and warranties of the Company and
Sellers contained in this Agreement, and in any agreement, instrument, or
document delivered pursuant hereto or in connection herewith on or prior to the
Closing Date, that are not qualified by materiality, Material Adverse Effect or
a dollar threshold, shall be true and correct in all material respects, and all
other representations and warranties of the Company and each Seller shall be
true and correct, as of the date made and (having been deemed to have been made
again on and as of the Closing Date) shall be true and correct in all material
10
11
respects on and as of the Closing Date, except as affected by actions taken or
omitted to be taken by Purchaser pursuant to the LMA, and except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct as
of such specified date.
(ii) The Company and each Seller shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement, and any agreement, instrument, or document delivered pursuant
hereto or in connection herewith on or prior to the Closing Date, to be
performed or complied with by it on or prior to the Closing Date.
(iii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have entered into an employment
agreement with Purchaser substantially in the form of EXHIBIT 3.02(C)(III)
hereto.
(iv) Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇ shall have entered into Non-Competition Agreements substantially in
the form of EXHIBIT 3.02(C)(IV) hereto.
(v) The Company shall have applied any amounts advanced under
the Bridge Loan Agreement in accordance with the terms thereof.
(vi) The Company shall have transferred the Kept Assets to
Newco Sub and the shares of Newco Sub shall have been distributed to the
stockholders of the Company.
(vii) The Company and Viva shall have entered into the Viva
Agreement with Purchaser and the Company and Viva shall not be in material
breach of such agreement.
(viii) The Company shall have ceased employing all employees
servicing the Kept Assets and shall have terminated all other employees of the
Company unless requested to do otherwise by Purchaser prior to the Closing.
(ix) Chagal shall have entered into a lease with respect to
KFOX-FM, which lease shall be for a period of at least 10 years, commencing
prior to the Closing Date, and shall provide for an annual lease rate of no more
than $24,000, and such lease shall have been validly assigned to the Company.
(x) The Company shall have entered into a lease agreement with
The ▇▇▇▇▇▇ Family Trust substantially in the form of Exhibit 8.13 of the LA
Agreement pursuant to which the Company shall lease the KREA transmitter site
from The ▇▇▇▇▇▇ Family Trust for a period of 10 years at a monthly rental rate,
triple net, of $2,250 (with annual CPI (Southern California) increases). Such
lease shall contain such other terms and conditions as the Company and The
▇▇▇▇▇▇ Family Trust shall agree, and to which Purchaser shall consent in writing
prior to execution, which consent shall not unreasonably be withheld, which
terms shall include (i) rights to the Company to sublease the premises, (ii) an
option in favor of the Company to purchase the premises during the first five
years of the lease for $250,000 and (iii) two five-year renewal options in favor
of the Company at a monthly rental rate commensurate with the original rental
rate, as adjusted.
11
12
(xi) Each of Sellers and Viva shall have executed and
delivered Lock-Up Letters in the form of EXHIBIT 3.02(C)(XI)-1 and -2,
respectively.
(xii) The Company shall have paid off or terminated all
Indebtedness of the Company and shall have provided evidence thereof to
Purchaser in a form that is reasonably acceptable to Purchaser.
(xiii) The Company or Sellers shall have assigned to Newco or
terminated each of the agreements identified on SCHEDULE 3.02(C)(XIII) requested
by the Purchaser to be terminated prior to the Closing without incurring any
liability to the Company.
Section 3.03. CLOSING DELIVERIES BY SELLERS. At the Closing, each
Seller shall execute, acknowledge (where appropriate) and deliver, or cause to
be executed, acknowledged (where appropriate) and delivered, to Purchaser the
following:
(a) Certificates evidencing the Shares, duly endorsed in blank or
accompanied by appropriate stock powers.
(b) A certificate, executed by an officer of the Company and each
Seller, dated as of the Closing Date, certifying that (i) the representations
and warranties that are not qualified by materiality, Material Adverse Effect or
a dollar threshold of the Company and each Seller in this Agreement are true and
correct in all material respects, and all other representations and warranties
of the Company and each Seller are true and correct, in each case, as of the
Closing Date, with the same effect as though made as of such date (or, in the
case of representations and warranties which address matters only as of a
particular date, as of such particular date), (ii) each covenant or agreement of
the Company and each Seller in this Agreement to be complied with at or prior to
Closing shall have been complied with in all material respects and (iii) no
Action (excluding any such matter initiated by Purchaser or any of its
Affiliates) is pending or, to the Company's or any Seller's knowledge,
threatened before, and no injunction has been issued by, any Governmental
Authority seeking to enjoin or restrain or prohibit, delay, or restrain the
performance of or to obtain damages or other relief in connection with this
Agreement, or the consummation of the transactions contemplated hereby.
(c) A certificate of such Seller certifying that such Seller is not a
"foreign person" within the meaning of Section 1445 of the Code in substantially
the form of EXHIBIT 3.03(C).
Section 3.04. CLOSING DELIVERIES BY PURCHASER. At the Closing,
Purchaser shall execute, acknowledge (where appropriate) and deliver, or cause
to be executed, acknowledged (where appropriate) and delivered, the following:
(a) To Sellers, the Newco Note.
(b) To Sellers, the Cash Amount.
(c) To Sellers, certificates evidencing each Seller's allocable share
of the Purchaser Shares, duly issued and registered in the name of each such
Seller.
12
13
(d) To Sellers, a certificate, executed by the duly authorized officer
of Purchaser, dated as of the Closing Date, certifying that (i) the
representations and warranties of Purchaser in this Agreement are true and
correct in all material respects, and all other representations and warranties
of Purchaser are true and correct, in each case, as of the Closing Date, with
the same effect as though made as of such date (or, in the case of
representations and warranties which address matters only as of a particular
date, as of such particular date), (ii) each covenant or agreement of Purchaser
in this Agreement to be complied with at or prior to Closing shall have been
complied with in all material respects and (iii) no Action (excluding any such
matter initiated by Seller or any of its Affiliates) is pending or, to
Purchaser's knowledge, threatened before, and no injunction has been issued by,
any Governmental Authority seeking to enjoin or restrain or prohibit, delay, or
restrain the performance of or to obtain damages or other relief in connection
with this Agreement, or the consummation of the transactions contemplated
hereby.
(e) To Viva, a certificate evidencing $8,500,000 worth of shares of
Purchaser Common Stock (the "VIVA SHARES"), with each such share to be valued in
the manner agreed to in the Viva Agreement. The Viva Shares shall be duly issued
and registered in the name of Viva.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
AND THE COMPANY
Sellers and the Company jointly and severally (except with respect to
the representations and warranties set forth in Sections 4.05(b), 4.06(b), 4.09,
4.10, 4.11, 4.12 and 4.13, which are made by each Seller (i) severally and not
jointly and (ii) only as to such Seller and not any other Seller) represent and
warrant to Purchaser that:
Section 4.01. ORGANIZATION; GOOD STANDING. The Company is a
corporation, and each Subsidiary of the Company is a corporation or other
entity, duly formed and validly existing under the laws of the jurisdiction of
its formation and has all requisite power and authority to own and lease its
properties and assets and to carry on its business as currently conducted. The
Subsidiaries of the Company as of the date of this Agreement are set forth on
SCHEDULE 4.01.
Section 4.02. QUALIFICATION. The Company and each of the Subsidiaries
is duly qualified or licensed to do business as a foreign corporation or other
entity in each of the jurisdictions set forth opposite its name on SCHEDULE
4.01, and each of the Company and the Subsidiaries is in good standing in each
of such jurisdictions, which are all the jurisdictions in which such
qualification or licensing is required for the conduct of its business and the
ownership and leasing of its properties, except jurisdictions in which the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and the Subsidiaries
considered as a whole.
Section 4.03. CHARTER AND BYLAWS. The Company has made available to
Purchaser accurate and complete copies of (i) the charter and bylaws of each of
the Company and the Subsidiaries as currently in effect, (ii) the stock records
of each of the Company and the Subsidiaries, and (iii) the minutes of all
13
14
meetings of the respective Boards of Directors of the Company and the
Subsidiaries, any committees of such Boards, and the stockholders of the Company
and the Subsidiaries (and all consents in lieu of such meetings).
Section 4.04. CAPITALIZATION OF THE COMPANY. The authorized capital
stock of the Company consists of 10,000 shares of Common Stock, par value $0.01
per share, of which, as of the date hereof, 1,000 shares are outstanding and no
shares are held in the Company's treasury. All outstanding shares of capital
stock of the Company have been validly issued and are fully paid and
nonassessable, and no shares of capital stock of the Company are subject to, nor
have any been issued in violation of, preemptive or similar rights. The Shares
constitute (and at the Closing will constitute) all the outstanding shares of
capital stock of the Company. Except as set forth above in this Section, or in
SCHEDULE 4.04, there are (and as of the Closing Date there will be) outstanding
(i) no shares of capital stock or other voting securities of the Company, (ii)
no securities of the Company convertible into or exchangeable for shares of
capital stock or other voting securities of the Company, (iii) no options or
other rights to acquire from the Company, and no obligation of the Company to
issue or sell, any shares of capital stock or other voting securities of the
Company or any securities of the Company convertible into or exchangeable for
such capital stock or voting securities, and (iv) no equity equivalents,
interests in the ownership or earnings, or other similar rights of or with
respect to the Company. There are (and as of the Closing Date there will be) no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem,
or otherwise acquire any of the foregoing shares, securities, options, equity
equivalents, interests, or rights. The Company is not a party to, and is not
aware of, any voting agreement, voting trust, or similar agreement or
arrangement relating to any class or series of its capital stock.
Section 4.05. DUE AUTHORIZATION; EXECUTION AND DELIVERY.
(a) Subject to the issuance of the Final Orders and any required
compliance with the HSR Act, the Company has full corporate power and authority
to enter into and perform this Agreement and any documents or instruments to be
entered into as contemplated or required by this Agreement (collectively, the
"ANCILLARY DOCUMENTS") and to which the Company is a party, and to carry out the
transactions contemplated hereby and thereby. Prior to the Closing, the Company
will have taken all requisite action to approve the execution and delivery of
this Agreement and the Ancillary Documents to which it is a party and the
transactions contemplated hereby and thereby. This Agreement and each of the
Ancillary Documents to which the Company is a party constitute the legal, valid
and binding obligation of the Company, enforceable against it in accordance with
its terms, except as may be limited by the availability of equitable remedies or
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally (whether such rights are considered at law
or in equity).
(b) Subject to the issuance of the Final Orders and any required
compliance with the HSR Act, each Seller has full power and authority to enter
into and perform this Agreement and any Ancillary Documents to which it is a
party, and to carry out the transactions contemplated hereby and thereby. Prior
to the Closing, each Seller will have taken all requisite action to approve the
execution and delivery of this Agreement and the Ancillary Documents to which it
is a party and the transactions contemplated hereby and thereby. This Agreement
14
15
and each of the Ancillary Documents to which each Seller is a party constitutes
the legal, valid and binding obligation of such Seller, enforceable against it
in accordance with its terms, except as may be limited by the availability of
equitable remedies or by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally (whether such
rights are considered at law or in equity).
Section 4.06. NONCONTRAVENTION.
(a) The execution, delivery and performance by the Company and Sellers
of this Agreement and the Ancillary Documents to which each is a party, and the
consummation by the Company and Sellers of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or result in a violation of
any provision of the charter or bylaws of the Company or any Subsidiary, (ii)
conflict with or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation or acceleration under, or
require any consent, approval, authorization or waiver of, or notice to, any
party to, any bond, debenture, note, mortgage or indenture, or any material
Company Agreement (as defined in Section 4.24) or other material instrument or
obligation, to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary, or the respective assets of any of them, may be bound
or any FCC Licenses held by the Company or any Subsidiary, (iii) result in the
creation or imposition of any Encumbrance upon any of the Assets, except for
Encumbrances in favor of Purchaser, or (iv) assuming compliance with the matters
referred to in Section 4.07, violate any material Law binding upon the Company
or any Subsidiary or any of the Assets, except for (A) such consents, approvals,
authorizations and waivers that have been obtained and are unconditional and in
full force and effect and such notices that have been duly given and (B) such
consents, approvals, authorizations, waivers and notices that are disclosed on
SCHEDULE 4.06(A).
(b) The execution, delivery and performance by each Seller of this
Agreement and the Ancillary Documents to which such Seller is a party, and the
consummation by such Seller of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or result in a violation of any provision
of, or constitute (with or without the giving of notice or the passage of time
or both) a default under, or give rise (with or without the giving of notice or
the passage of time or both) to any right of termination, cancellation or
acceleration under, or require any consent, approval, authorization or waiver
of, or notice to, any party to, any bond, debenture, note, mortgage or
indenture, or any material lease, contract, agreement or other instrument or
obligation, to which such Seller is a party or by which such Seller or any of
the assets of such Seller may be bound, (ii) result in the creation or
imposition of any Encumbrance upon any of the assets of such Seller, except for
Permitted Encumbrances, or (iii) assuming compliance with the matters referred
to in Section 4.07, violate any Law binding upon such Seller of the assets of
such Seller, except, in the case of clause (i) above, for (A) such consents,
approvals, authorizations and waivers that have been obtained and are
unconditional and in full force and effect and such notices that have been duly
given and (B) such consents, approvals, authorizations, waivers and notices that
are disclosed on SCHEDULE 4.06(B).
Section 4.07. GOVERNMENTAL APPROVALS. No material approval,
authorization, consent, order or other action of, or filing with, any
governmental authority or administrative agency is required in connection with
the execution and delivery by the Company and Sellers of this Agreement or the
consummation of the transactions contemplated hereby, other than those of the
15
16
FCC or those under the HSR Act, and other than (i) filings with or approvals by
other Governmental Authorities to occur in the ordinary course following the
consummation of the transaction contemplated by this Agreement, and (ii) filings
with, or approvals of, Governmental Authorities which may be necessary due to
the status of Purchaser or any Affiliate of Purchaser. Each of the filings and
approvals included in clauses (i) and (ii) above is described on SCHEDULE 4.07.
Section 4.08. SUBSIDIARIES.
(a) The Company does not own, directly or indirectly, any capital stock
or other securities of any corporation or have any direct or indirect equity or
ownership interest in any other Person, other than the Subsidiaries. SCHEDULE
4.01 lists each Subsidiary, the jurisdiction of incorporation or formation of
each Subsidiary, and the authorized (in the case of capital stock) and
outstanding capital stock or other equity interests of each Subsidiary. Prior to
the Closing, the Company will form one or more new, wholly owned subsidiaries
("NEWCO SUBS"), to which the Company will, prior to Closing, transfer all of the
Kept Assets, subject to the Kept Assets Debt, in accordance with the terms and
provisions of the Bridge Loan Agreement.
(b) Except as otherwise indicated on SCHEDULE 4.01, all the outstanding
capital stock or other equity interests of each Subsidiary are owned directly or
indirectly by the Company, free and clear of all Encumbrances other than
Encumbrances in favor of Purchaser or Encumbrances on the Kept Assets that are
specifically permitted under the Bridge Loan Agreement or the security agreement
relating thereto. All outstanding shares of capital stock of each Subsidiary
that is a corporation have been validly issued and are fully paid and
nonassessable. All membership interests of each limited liability company
Subsidiary have been validly issued and are fully paid (to the extent required
at such time). No shares of capital stock or other equity interests of any
Subsidiary are subject to, nor have any been issued in violation of, preemptive
or similar rights.
(c) Except as set forth on SCHEDULE 4.01, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or other
securities of any Subsidiary, (ii) no securities of the Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or other
securities of any Subsidiary, (iii) no options or other rights to acquire from
the Company or any Subsidiary, and no obligation of the Company or any
Subsidiary to issue or sell, any shares of capital stock or other securities of
any Subsidiary or any securities convertible into or exchangeable for such
capital stock or securities, and (iv) no equity equivalents, interests in the
ownership or earnings, or other similar rights of or with respect to any
Subsidiary. There are (and as of the Closing Date there will be) no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem, or otherwise
acquire any of the foregoing shares, securities, options, equity equivalents,
interests, or rights.
Section 4.09. SHARES. Each Seller is (and at the Closing will be) the
sole record and beneficial owner of, and upon consummation of the transactions
contemplated hereby Purchaser will acquire valid title to, the number of Shares
16
17
set forth opposite the name of such Seller on ANNEX I, free and clear of all
Encumbrances, other than Encumbrances in favor of Purchaser, or restrictions on
transfer that may be imposed by federal or state securities laws.
Section 4.10. INVESTMENT INTENT. Each Seller is acquiring the Purchaser
Shares allocable to it for its own account for investment and not with a view
to, or for sale or other disposition in connection with, any distribution of all
or any part thereof. Each Seller understands that it must bear the economic risk
of this investment indefinitely unless it sells the Purchase Shares (i) in an
offering covered by a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"SECURITIES ACT") covering such Purchaser Shares or (ii) pursuant to an
applicable exemption under the Securities Act. In acquiring such Purchaser
Shares, such Seller is not offering or selling, and will not offer or sell, for
Purchaser in connection with any distribution of the Purchaser Shares, and such
Seller does not have a participation and will not participate in any such
undertaking or in any underwriting of such an undertaking except in compliance
with applicable federal and state securities laws.
Section 4.11. DISCLOSURE OF INFORMATION. Each Seller acknowledges that
it or its representatives have been furnished with substantially the same kind
of information regarding Purchaser and its business, assets, results of
operation, and financial condition as would be contained in a registration
statement prepared in connection with a public sale of the Purchaser Shares.
Each Seller further represents that it has had an opportunity to ask questions
of and receive answers from Purchaser regarding Purchaser and its business,
assets, results of operation and financial condition and the terms and
conditions of the issuance of the Purchaser Shares. The foregoing, however,
shall not limit or modify the representations and warranties of Purchaser in
Article V and shall not limit the disclosure requirements of applicable federal
and state securities laws.
Section 4.12. RESTRICTED SECURITIES. Each Seller understands that the
Purchaser Shares will not have been registered pursuant to the Securities Act or
any applicable state securities laws, that the Purchaser Shares will be
characterized as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Purchaser Shares cannot be sold
or otherwise disposed of without registration under the Securities Act or an
exemption therefrom. In this connection, each Seller represents that it is
familiar with Rule 144 promulgated under the Securities Act, as currently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to the transfer agent
for securities of Purchaser (or a notation may be made in the appropriate
records of Purchaser) in connection with the Purchaser Shares.
Section 4.13. LEGEND. It is agreed and understood by each Seller that
the certificates representing the Purchaser Shares shall each conspicuously set
forth on the face or back thereof, in addition to any legends required by Law or
other agreement, a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSITITUTIONAL BUYER"
17
18
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE SECURITY IN AN OFFSHORE TRANSACTION,
OR (D) HAS RECEIVED SUCH SHARES PURSUANT TO A VALID PRIVATE PLACEMENT
UNDER SECTION 4 OF THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRANSFER AGENT), (D) OUTSIDE THE UNITED
STATES TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS
MEETING THE REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITIY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Section 4.14. FINANCIAL STATEMENTS. The Company has delivered to
Purchaser copies of (i) the Company's December 31, 1999 unaudited balance sheet
and (ii) the Company's March 31, 2000 (the "BALANCE SHEET DATE") unaudited
balance sheet (the "REFERENCE BALANCE SHEET"), copies of which are included in
SCHEDULE 4.14 (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements have been prepared from the books and records of the Company and its
consolidated subsidiaries in conformity with generally accepted accounting
principles ("GAAP") applied on a basis consistent with preceding periods
throughout the periods involved, except that the unaudited Financial Statements
are not accompanied by notes or other textual disclosure required by GAAP. No
financial statements of any other Person other than the Company are required
under GAAP to be included in the consolidated Financial Statements.
Section 4.15. ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company
nor any Subsidiary has any liability or obligation (whether accrued, absolute,
contingent, unliquidated, or otherwise, whether or not known to the Company or
any Subsidiary, and whether due or to become due), except (i) Liabilities
reflected on the Reference Balance Sheet, (ii) Liabilities which have arisen as
a result of Purchaser's actions or inactions pursuant to the LMA, (iii)
Liabilities specifically set forth on SCHEDULE 4.15, (iv) Liabilities assumed by
the Company or any of the Subsidiaries pursuant to the terms of the Initial
18
19
Purchase Agreements, (v) Liabilities with respect to the Kept Assets that are
specifically permitted under the Bridge Loan Agreement, (vi) Liabilities created
or incurred as a result of the action or inaction of Purchaser under the LMA,
(vii) Liabilities created or incurred under the Bridge Loan Agreement and (viii)
other Liabilities which, in the aggregate, are not material to the Company and
the Subsidiaries considered as a whole.
Section 4.16. ABSENCE OF CERTAIN CHANGES. Except as disclosed on
SCHEDULE 4.16, since the Balance Sheet Date (i) there has not been any event or
condition that might reasonably be expected to result in a Material Adverse
Effect on the Company and the Subsidiaries considered as a whole, (ii) the
Company has not taken any of the actions set forth in Section 6.01 or in
Articles VI or VII of the Bridge Loan Agreement, except as permitted thereunder
and (iii) no negative change with respect to the FCC Licenses (other than any
such changes which have resulted from Purchaser's actions or inaction pursuant
to the LMA) or the Initial Purchase Agreements has occurred.
Section 4.17. TAX MATTERS. The Company is, and at all times since its
formation has been, an "S corporation," as defined in Section 1361(a)(1) of the
Code, for federal and all relevant state and local income tax purposes, and the
Company and Sellers have timely and properly made all necessary elections, and
taken all other necessary action, under applicable federal, state and local
income tax laws to qualify the Company as, and preserve its status as, an S
corporation in every jurisdiction in which it is subject to Tax. The Company
will continue to qualify and be treated as an S corporation for federal and all
relevant state and local income tax purposes until the Closing Date. Except as
disclosed on SCHEDULE 4.17, the Company and each Subsidiary has (i) duly filed
all Tax Returns required to be filed by or with respect to it with the IRS or
other applicable taxing authority (other than Tax Returns where a failure to
file would not be, in the aggregate, material), (ii) paid all Taxes due, or
claimed by any taxing authority to be due, from or with respect to it (other
than Taxes where a failure to pay would not, in the aggregate, be material),
except Taxes that are being contested in good faith and for which adequate
reserves have been set aside as disclosed on SCHEDULE 4.17, and (iii) made all
material deposits required with respect to Taxes. All Tax Returns referred to in
the preceding sentence were, and in the case of Tax Returns not yet filed, will
be, true, correct and complete when filed in all material respects. All material
Taxes that the Company or any Subsidiary is or was required to withhold or
collect have been duly withheld or collected, including, without limitation, all
employment related Taxes and withholdings, and, to the extent required, have
been or will be timely paid to the proper Governmental Authority. To the
knowledge of the Company and Sellers, there has been no issue raised or
adjustment proposed (and none is pending) by the IRS or any other taxing
authority in connection with any Tax Returns of the Company or any Subsidiary.
No waiver or extension of any statute of limitations as to any federal, state,
local or foreign tax matter has been given by or requested from the Company or
any Subsidiary. The Company has not filed a consent under Section 341(f) of the
Code. There are no tax liens upon any of the properties or assets of the Company
or any Subsidiary, other than liens for Taxes not yet due and payable. None of
the property of the Company or any Subsidiary (i) is "tax- exempt use property"
within the meaning of Section 168(h) of the Code, (ii) is subject to a tax
benefit transfer lease subject to the provisions of former Section 168(f)(8) of
the Internal Revenue Code of 1954, or (iii) secures any debt the interest on
19
20
which is exempt from income Tax under Section 103 of the Code. The charges,
accruals and reserves with respect to Taxes on the respective books of the
Company and each Subsidiary (excluding any provision for deferred income Taxes
established to reflect timing differences between book and tax income) for all
tax periods (or portions thereof) ending on or before the Closing Date
(including any period for which no Tax Return has yet been filed) are adequate
in all material respects. There is no tax sharing agreement that will require
any payment by the Company or any Subsidiary to any party other than the Company
or one of the Subsidiaries after the date of this Agreement. Except as set forth
on SCHEDULE 4.17, neither the Company nor any Subsidiary has (i) applied for any
tax ruling, (ii) entered into a closing agreement with any taxing authority,
(iii) filed an election under Section 338(g) or Section 338(h)(10) of the Code
or (iv) been a party to any agreement or arrangement that would result in the
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code, or the payment of any compensation that is not deductible under
Section 162(m) of the Code. Neither the Company nor any Subsidiary is, or has
been, a "United States real property holding corporation" within the meaning of
Section 897 of the Code. Neither the Company nor any Subsidiary has (i) agreed
to or is required to make any adjustment pursuant to Section 481(a) of the Code;
(ii) knowledge that the IRS has proposed any such adjustment or change in
accounting method with respect to any such corporation or (iii) an application
pending with any Taxing authority requesting permission for any change in
accounting method. Neither the Company nor any Subsidiary owns an interest in
any (i) domestic international sales corporation, (ii) foreign sales
corporation, (iii) controlled foreign corporation or (iv) passive foreign
investment company. Except as set forth on SCHEDULE 4.17, during the previous
two years, neither the Company nor any Subsidiary has engaged in any exchange
under which the gain realized on such exchange was not recognized due to Section
1031 of the Code. Except as set forth on SCHEDULE 4.17, neither the Company nor
any Subsidiary has in effect any election for federal income tax purposes under
Sections 108, 1017, 1033 or 4977 of the Code. Neither the Company nor any
Subsidiary has been informed or notified that any of its income, business,
assets, operations or activities is subject to Tax by a Governmental Authority
where the required Tax Return(s) have not been filed by the Company or the
appropriate Subsidiary. The Company and each Subsidiary have disclosed on their
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of the Code
Section 6662. Neither the Company nor any Subsidiary has any liability for the
Taxes of any other party under Reg. Section 1.1502-6 (or any similar provision
of state, local or foreign law).
Section 4.18. COMPLIANCE WITH LAWS. The Company has complied with all
material Laws (including without limitation the rules, regulations and practices
of the Commission), and neither the Company nor any Seller has received any
written notice of any claim, which has not been dismissed or otherwise disposed
of, that the Company has not so complied.
Section 4.19. TITLE TO ASSETS. As of the date hereof, the Company and
its Subsidiaries do not own or lease any material tangible property or real
property. As of the Closing Date, the Company or a Subsidiary will have such
title to the Assets (as the same may be consumed, retired or replaced in the
ordinary course of business or pursuant to the action or inaction of Purchaser
pursuant to the LMA) as is conveyed to the Company or any Subsidiary pursuant to
the Initial Purchase Agreements, free and clear of all Encumbrances other than
Permitted Encumbrances and such Encumbrances permitted to encumber the Assets
following the respective closings of the Initial Purchase Agreements.
20
21
Section 4.20. FCC LICENSES.
(a) The FCC Licenses identified on SCHEDULE 4.20(A) comprise all of the
FCC licenses, permits and other authorizations, including any temporary waiver
or special temporary authorization, to be acquired by the Company pursuant to
the Initial Purchase Agreements.
(b) No action or proceeding is pending or threatened before the
Commission or other Governmental Authority for the cancellation or material
adverse modification of the FCC Licenses. The Company and the Subsidiaries are
current with all reports, filings and other matters relating to the Stations
that the Company or any Subsidiary is required to file with the Commission and
neither the Company nor any Subsidiary is delinquent in the payment of any fees
and charges relating to the Stations that are due to the Commission.
(c) As of the Closing Date, either the Company or a Subsidiary will be
the authorized legal holder of each of the FCC Licenses and the FCC Licenses
will be in full force and effect and no action or proceeding will be pending or
threatened before the Commission for the cancellation of the FCC Licenses.
Section 4.21. LITIGATION. There are no Governmental Orders and no
Actions pending or, to the Company's and Sellers' knowledge, threatened against
or affecting the Company, any Subsidiary, Sellers or the Assets which challenge
the validity or propriety of any of the transactions contemplated by this
Agreement.
Section 4.22. ENVIRONMENTAL. Neither the Company, its Subsidiaries nor,
to their knowledge, the sellers under the Initial Purchase Agreements has
received any written notice of any investigation or inquiry by any Governmental
Authority under any Environmental Laws relating to the ownership or operation of
the Assets or the Stations. Neither the Company, its Subsidiaries nor, to their
knowledge, the sellers under the Initial Purchase Agreements has disposed of any
Hazardous Material on any of the Assets in violation of Environmental Laws and,
to the Company's knowledge, no condition exists on any of the Assets which would
subject the Assets to any remedial obligations under any Environmental Laws.
Section 4.23. INITIAL PURCHASE AGREEMENTS. The Company has delivered to
Purchaser accurate and complete copies of the Initial Purchase Agreements. Each
of such agreements is a valid and binding agreement of the Company and (to the
knowledge of the Company) the other party or parties thereto, enforceable
against the Company and (to the knowledge of the Company and Sellers) such other
party or parties in accordance with its terms. Except as set forth on SCHEDULE
4.23, the Company is not in breach of or in default under, nor has any event
occurred which (with or without the giving of notice or the passage of time or
both) would constitute a default by the Company under, any provision of any of
such agreements, and the Company has not received any notice from, or given any
notice to, any other party indicating that the Company is in breach of or in
default under any of such agreements. To the knowledge of the Company and
Sellers, no other party to any of such agreements is in breach of or in default
under such agreements, nor has any assertion been made by the Company of any
such breach or default.
21
22
Section 4.24. CERTAIN OTHER AGREEMENTS. Set forth on SCHEDULE 4.24 is
an accurate and complete list of all contracts, agreements, leases, licenses,
plans, arrangements or commitments, written or oral (collectively, excluding the
Initial Purchase Agreements, "COMPANY AGREEMENTS") (i) relating to the borrowing
of money by the Company or any Subsidiary or to the guarantee or assumption by
the Company or any Subsidiary of any obligations of others, or (ii) pursuant to
which the Company or any Subsidiary is obligated to expend or has the right to
receive more than $50,000 in any 12-month period and which is not subject to
cancellation by the Company or any Subsidiary upon less than 60 days' notice
without penalty. Each of the Company Agreements is a valid and binding agreement
of the Company or a Subsidiary, as the case may be, and (to the knowledge of the
Company) the other party or parties thereto, enforceable against the Company or
such Subsidiary and (to the knowledge of the Company) such other party or
parties in accordance with its terms. Neither the Company nor any Subsidiary is
in breach of or in default under, nor has any event occurred which (with or
without the giving of notice or the passage of time or both) would constitute a
default by the Company or any Subsidiary under, any material provision of any of
the Company Agreements other than any breach or default resulting from the
action or inaction of Purchaser under the LMA, and neither the Company nor any
Subsidiary has received any notice from, or given any notice to, any other party
indicating that the Company or any Subsidiary is in breach of or in default
under any of the Company Agreements, other than any breach or default resulting
from the action or inaction of Purchaser under the LMA. To the knowledge of the
Company and Sellers, no other party to any of the Company Agreements is in
breach of or in default under such agreements, and no assertion has been made by
the Company or any Subsidiary of any such breach or default.
Section 4.25. ERISA. Neither the Company nor any of its affiliates
sponsor, maintain, contribute to (other than indirectly through the Administaff
Client Service Agreement referred to below) or administer any employee benefit
plan within the meaning of Section 3(3) of ERISA, including a multiemployer plan
(within the meaning of Section 4001(a) of ERISA). All fees required to be paid
by the Company to Administaff Companies, Inc. pursuant to the Client Service
Agreement between the Company and Administaff Companies, Inc. are current as of
the date of this Agreement. For purposes of this Section and Section 7.02(e)
only, an "affiliate" of any person means any other person which, together with
such person, would be treated as a single employer under Section 414 of the
Code.
Section 4.26. INSURANCE. The Company maintains the policies of
insurance described on SCHEDULE 4.26. All such policies are in full force and
effect and all premiums have been paid in full to the extent payment was due.
Section 4.27. BROKERAGE FEES. Neither Sellers nor any of their
respective Affiliates have retained any financial advisor, broker, agent, or
finder or paid or agreed to pay any financial advisor, broker, agent, or finder
on account of this Agreement or any transaction contemplated hereby, other than
Bluestone Capital Partners, L.P. and Americom Radio Brokers, Inc. (the "SELLERS'
BROKERS"). Sellers shall pay all costs and expenses of Sellers' Brokers in
accordance with agreements therewith and jointly and severally indemnify and
hold harmless Purchaser from and against any and all losses, claims, damages and
22
23
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission or similar payment in connection with
any transaction contemplated hereby asserted by any person on the basis of any
act or statement made or alleged to have been made by any Seller.
Section 4.28. CERTAIN PAYMENTS. Since the inception of the Company,
none of the Company or its Subsidiaries, or any director, officer, employee, or,
to the knowledge of the Company, any agent (or employee thereof) of the Company
or any Subsidiary or any other Person associated with or acting for or on behalf
of the Company or any Subsidiary, other than Purchaser or any Affiliate of
Purchaser, has directly or indirectly (a) made any illegal contribution, gift,
bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Company or
any of its Subsidiaries.
Section 4.29. EMPLOYEES. Except as set forth on SCHEDULE 4.29, the
Company has no employees as of the date of this Agreement, and, as of the
Closing Date, it shall have no employees or obligations or liabilities with
respect to former employees, other than those hired pursuant to the transactions
contemplated hereby or as may be required under applicable Law.
Section 4.30. LABOR AGREEMENTS AND ACTIONS. The Company and its
Subsidiaries are not bound by or subject to (and none of the Company or its
Subsidiaries' assets or properties is bound by or subject to) any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the Company or
its Subsidiaries, has sought to represent any of the employees, representatives
or agents of the Company or its Subsidiaries. There is no strike or other labor
dispute involving the Company or its Subsidiaries pending, or, to the knowledge
of the Company or its Subsidiaries, threatened, nor is the Company or its
Subsidiaries aware of any labor organization activity involving employees of the
Company or its Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and Sellers as
follows:
Section 5.01. ORGANIZATION AND GOOD STANDING. Purchaser 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 and lease its properties and carry on its business as currently conducted.
Section 5.02. DUE AUTHORIZATION; EXECUTION AND DELIVERY. Subject to the
issuance of the Final Orders and any required compliance with the HSR Act,
Purchaser has full power and authority to enter into this Agreement and the
Ancillary Documents to which it is a party and to carry out its obligations
hereunder. The execution and delivery by Purchaser of this Agreement and the
Ancillary Documents to which it is a party and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement and the Ancillary
23
24
Documents to which Purchaser is a party have been duly executed and delivered by
Purchaser and constitute the legal, valid and binding obligations of Purchaser,
enforceable against it in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally or general equitable
principles. Neither the execution and delivery by Purchaser of this Agreement or
the Ancillary Documents to which it is a party, nor the consummation of the
transactions contemplated hereby and thereby will: (i) conflict with or result
in a breach of the organizational documents of Purchaser; (ii) subject to the
issuance of the Final Orders, violate any law, statute, rule or regulation or
any order, writ, injunction or decree of any court or governmental authority; or
(iii) violate or conflict with or constitute a default under (or give rise to
any right of termination, cancellation or acceleration under) any indenture,
mortgage, lease, contract or other instrument to which Purchaser or any of its
Affiliates is a party or by which it or any of its Affiliates is bound or
affected.
Section 5.03. GOVERNMENTAL CONSENTS. No consent, approval,
authorization, license, exemption of, filing or registration with any court,
governmental authority or administrative agency is required by Purchaser in
connection with the execution and delivery of this Agreement or the consummation
by it of any transaction contemplated hereby, other than the consent of the FCC
or under the HSR Act.
Section 5.04. LITIGATION. There is no order of any court, governmental
agency or authority and no action, suit, proceeding or investigation, judicial,
administrative or otherwise that is pending or, to Purchaser's knowledge,
threatened against or affecting Purchaser which challenges the validity or
propriety of any of the transactions contemplated by this Agreement.
Section 5.05. BROKERAGE FEES. No broker, finder, financial advisor or
investment banker is entitled to any brokerage, finder's or other fee,
commission or expense reimbursement in connection with the transactions
contemplated by this Agreement as a result of any agreement or action of
Purchaser, other than ▇▇▇▇▇▇ Brothers, Inc. (the "PURCHASER'S BROKER").
Purchaser shall pay all costs and expenses of the Purchaser's Broker in
accordance with agreements therewith, and indemnify and hold harmless Seller and
its Affiliates from and against any and all losses, claims, damages and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission or similar payment in connection with
any transaction contemplated hereby asserted by any person on the basis of any
act or statement made or alleged to have been made by Purchaser or any of its
Affiliates.
Section 5.06. QUALIFICATION. Purchaser is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act and the rules, regulations and policies of the FCC.
There are no facts that would, under existing law and the existing rules,
regulations, policies and procedures of the FCC, disqualify Purchaser as an
assignee of the FCC Licenses or as the owner and operator of the Station. No
waiver of any FCC rule or policy is necessary for the FCC Consents to be
obtained. There is no action, suit or proceeding pending or, to the knowledge of
Purchaser, threatened against Purchaser which questions the legality or
24
25
propriety of the transactions contemplated by this Agreement or could materially
adversely affect Purchaser's ability to perform its obligations hereunder.
Purchaser has and will have available on the Closing Date sufficient funds to
enable it to consummate the transactions contemplated hereby.
Section 5.07. PURCHASER SHARES. The Purchaser Shares have been duly
authorized for issuance and, if and when delivered by Purchaser in accordance
with the provisions of this Agreement, will be validly issued fully paid and
nonassessable. The issuance of the Purchaser Shares pursuant to this Agreement
is not subject to any preemptive or similar rights.
ARTICLE VI
CERTAIN COVENANTS AND OTHER AGREEMENTS
Section 6.01. CONDUCT AND PRESERVATION OF BUSINESS.
(a) Except actions or inactions of Purchaser pursuant to the LMA, or as
expressly provided in this Agreement, during the period from the date hereof to
the Closing, the Company shall not, without the prior written consent of
Purchaser:
(i) incur, guarantee or assume any indebtedness for borrowed
money in respect of the Stations, other than indebtedness to Purchaser,
or in accordance with the Bridge Loan Agreement;
(ii) mortgage or pledge any of the Assets to any person other
than Purchaser, and other than in accordance with the Bridge Loan
Agreement, or create or suffer to exist any Encumbrance thereupon,
other than the Permitted Encumbrances and Encumbrances in favor of
Purchaser, or in accordance with the Bridge Loan Agreement;
(iii) sell, lease, transfer or otherwise dispose of, directly
or indirectly, any material part of the Assets, other than in
accordance with the Bridge Loan Agreement;
(iv) amend, modify or change any existing lease, contract, FCC
License or agreement relating to the Assets;
(v) amend, modify or change in any way the terms of the
Initial Purchase Agreements;
(vi) take any action which would or might make any of the
representations or warranties of the Company or Sellers contained in
this Agreement untrue or inaccurate as of any time from the date of
this Agreement to the Closing or would or might result in any of the
conditions set forth in this Agreement not being satisfied;
(vii) issue or sell any of the capital stock of the Company,
or grant or commit grant any options, warrants or other rights to
subscribe for, or purchase, or otherwise acquire, any shares of
capital stock of the Company, or issue or commit to issue any
securities convertible into or exchangeable for shares of capital
stock of the Company;
25
26
(viii) change or amend the Certificate of Incorporation or
Bylaws of the Company; or
(ix) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
Section 6.02. ACCESS TO RECORDS AND PROPERTIES. Subject to requirements
of confidentiality imposed by contract or by law, the Company will (a) make
available to Purchaser and its accountants, counsel and other representatives,
access during normal business hours to the properties, books and records of the
Company, and will allow the Company's officers and representatives to be
available to Purchaser for consultation, and (b) furnish Purchaser with copies
of all such contracts, books and records, and other existing documents and data
relating to the Company, any Subsidiary or the Assets as Purchaser may
reasonably request, and (c) furnish Purchaser with such additional financial,
operating, and other data and information relating to the Company, any
Subsidiary or the Assets as Purchaser may reasonably request.
Section 6.03. TAXES; OTHER CHARGES. All sales, use, value added,
transfer, registration, stamp, deed and similar Taxes ("TRANSFER TAXES"), other
than any Transfer Taxes relating to the Kept Assets, resulting from the
consummation of the transactions contemplated hereby shall be borne by Sellers
and Purchaser equally. The parties shall cooperate in obtaining all exemptions
from such Transfer Taxes. Sellers shall file all necessary documentation with
respect to, and make all payments of, such Transfer Taxes on a timely basis.
Section 6.04. BEST EFFORTS. The Company, Sellers and Purchaser shall
take all reasonable action necessary to consummate the transactions contemplated
by this Agreement and will use all necessary and reasonable means at its
disposal to obtain all necessary consents and approvals of other persons and
Governmental Authorities required to enable it to consummate the transactions
contemplated by this Agreement, including the consent of the FCC and any
necessary filings and consents under the HSR Act. Without limiting the
generality of the foregoing, the Company and Sellers shall take all reasonable
action necessary to consummate the transactions contemplated by the Initial
Purchase Agreements and will use all necessary and reasonable means at its
disposal to obtain all necessary consents and approvals of other persons and
Governmental Authorities required to enable it to consummate the transactions
contemplated by the Initial Purchase Agreements, including the consent of the
FCC. Except as otherwise provided herein, each of the Company, Sellers and
Purchaser acknowledges and agrees that it shall pay all costs, fees and expenses
incurred by it in obtaining such necessary consents and approvals (it being
understood that Purchaser shall pay all filing fees in connection with
notification filings under the HSR Act). Each party shall promptly make all
filings, applications, statements and reports to all governmental agencies or
entities which are required to be made prior to the Closing Date by or on its
behalf pursuant to any statute, rule or regulation in connection with the
transactions contemplated by this Agreement, and copies of all such filings,
applications, statements and reports shall be provided to the other. If the FCC
determines that the transactions contemplated hereby or a portion thereof are
inconsistent or violative of FCC rules or regulations, the parties agree that
they will, to the extent practicable, negotiate in good faith to amend, modify
or restructure the transactions contemplated hereby so as to be consistent with
FCC rules and regulations.
26
27
Section 6.05. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all
notices to third parties and other publicity relating to the transactions
contemplated by this Agreement shall be jointly planned by Sellers and
Purchaser; it being understood by the Company and Sellers that Purchaser is a
public company subject to disclosure requirements, and this covenant shall be
subject to Purchaser's requirements thereunder.
Section 6.06. NEWCO SUBS. Prior to Closing, the Company shall transfer
all of the Kept Assets to one or more Newco Subs. Each Newco Sub shall continue
to be subject to the Bridge Loan Agreement as provided therein. Immediately
prior to (but no sooner than immediately prior to) the Closing, the Company
shall distribute or otherwise transfer all of the equity securities of Newco Sub
to the stockholders of the Company. Sellers shall take all actions necessary to
provide for such transfer in a manner that will not delay or otherwise impede
the Closing.
Section 6.07. EMPLOYMENT MATTERS. Set forth on SCHEDULE 6.07 is an
accurate and complete list of the names, positions and salaries of the local
management personnel of the Company (the "MANAGEMENT PERSONNEL"). Between the
date hereof and the Closing, the Company shall deliver to the purchaser a
revised SCHEDULE 6.07 updating the information as to the Management Personnel.
Section 6.08. REGISTRATION RIGHTS. Upon Closing, Purchaser and Sellers
shall enter into a registration rights agreement in substantially the same form
as the Form of Registration Rights Agreement attached hereto as EXHIBIT 6.08.
Section 6.09. COMPLIANCE WITH COVENANTS. Between the date hereof and
the Closing, the Company and Sellers will comply in all material respects with
all covenants set forth in Articles VI and VII of the Bridge Loan Agreement and
Purchaser shall comply, and shall cause its Affiliates to comply, in all
material respects with all covenants of Purchaser and its Affiliates set forth
in the LMA.
Section 6.10. NOTIFICATION. Between the date hereof and the Closing,
the Company and Sellers will promptly notify Purchaser in writing if the Company
or Sellers become aware of any fact or condition that causes or constitutes a
breach of any of the Company's or Sellers' representations and warranties as of
the date hereof, or if the Company or Sellers become aware of the occurrence
after the date hereof of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, the Company and Sellers will promptly notify Purchaser of the occurrence
of any breach of any covenant of the Company or Sellers in this Section 6 or
Article VI or VII of the Bridge Loan Agreement or of the occurrence of any event
that may make the satisfaction of the conditions in Section 3 impossible or
unlikely. During the same period, Purchaser will promptly notify the Company and
Sellers of the occurrence of any breach of any covenant of the Purchaser in this
Section 6 or the LMA or of the occurrence of any event that may make the
satisfaction of the conditions in Section 3 impossible or unlikely.
27
28
Section 6.11. NO NEGOTIATION. Until such time, if any, as this
Agreement is terminated pursuant to Article VIII, the Company and Sellers will
not directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, or provide any non-public information
to, any person (other than Purchaser) relating to any transaction involving the
sale of the Assets, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
Company.
Section 6.12. TAX COVENANTS.
(a) Without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, neither the Company nor any of the Subsidiaries
shall make or change any material Tax election (other than an election to treat
a wholly-owned subsidiary as a qualified Subchapter S subsidiary pursuant to
Section 1361 of the Code), change any annual Tax accounting period, adopt or
change any method of Tax accounting, file any material amended Tax Return, enter
into any closing agreement, settle any Tax claim or assessment, surrender any
right to claim a Tax refund, consent to the extension or waiver of the
limitations period applicable to any Tax claim or assessment, surrender any
right to claim a Tax refund or take or omit to take any other action outside the
ordinary course of business if such action or omission would have the effect of
materially increasing the Tax liability of the Company or any of its
Subsidiaries (including any such increase that would occur in Tax periods after
the Closing Date).
(b) All Tax Returns not required to be filed on or before the date of
this Agreement (i) will, to the extent required to be filed on or before the
Closing Date, be filed in accordance with applicable Laws, and (ii) as of the
time of filing, will correctly reflect the income, business, assets, operations,
activities and status of the Company, its Subsidiaries and any other information
required to be shown therein in all material respects.
Section 6.13. POST-CLOSING TAX MATTERS.
(a) Sellers shall file or cause to be filed when due all Tax Returns
due to be filed on or prior to the Closing Date and all U.S. federal, state and
local income and franchise Tax Returns with respect to the Company or its
Subsidiaries with respect to the taxable periods ending on or before the Closing
Date.
(b) Purchaser shall file or cause to file when due all other Tax
Returns with respect to the Company or its Subsidiaries due to be filed after
the Closing Date.
(c) After the Closing Date, each of Sellers and Purchaser shall:
(i) assist (and cause their respective affiliates to assist)
the other party in preparing any Tax Returns which such other party is
responsible for preparing and filing in accordance with this Agreement;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns and
payments in respect thereof;
28
29
(iii) make available to the other and to any taxing authority
as reasonably requested all relevant information, records, and
documents relating to Taxes;
(iv) provide timely notice to the other in writing of any
pending or proposed audits or assessments with respect to Taxes for
which the other may have a liability under this Agreement;
(v) furnish the other with copies of all relevant
correspondence received from any taxing authority in connection with
any audit or information request with respect to any Taxes referred to
in subsection (iv) above; and
(vi) bear the other party's reasonable out-of-pocket expenses
in complying with a request by a party for the other party's assistance
or cooperation to the extent that those expenses are attributable to
fees and other costs of unaffiliated third- party service providers.
(d) Sellers agree to pay all Taxes relating to the Kept Assets,
including, without limitation, all income Taxes and Transfer Taxes resulting
from their transfer and the spin off of any Newco Sub to Sellers.
Section 6.14. KXJO. As soon as practicable after the date hereof, the
Company shall assign its rights and obligations under the SF Agreement to a
wholly owned subsidiary of the Company ("KXJO SUB"), and shall obtain all
necessary authorizations from Citicasters and the FCC to permit such assignment.
As consideration for such assignment and in connection with the distribution of
the capital stock of KXJO Sub to Sellers as described below, KXJO Sub shall
issue its promissory note (the "KXJO NOTE") to the Company in the principal
amount of $4,500,000 to cover the $4,500,000 previously paid into escrow by the
Company pursuant to the SF Agreement toward the purchase price of radio station
KXJO-FM. The KXJO Note shall be in form and substance reasonably satisfactory to
counsel for Purchaser. Interest shall accrue on the outstanding principal
balance of the KXJO Note at the rate per annum equal to the applicable federal
rate. The unpaid principal and interest of the KXJO Note shall be due and
payable in full on the earlier to occur of the termination of the KXJO Sub
Agreement and January 1, 2002. In the event that the FCC has not issued the FCC
Order with respect to radio station KXJO-FM on or before the business day
immediately preceding the Closing Date, then immediately prior to Closing (i)
KXJO Sub shall issue the KXJO Note to the Company, (ii) KXJO Sub and Newco Sub
shall be jointly and severally liable for all borrowings under the Bridge Loan
Agreement and shall be bound as a "Borrower" thereunder and KXJO Sub and Newco
Sub shall grant a general security interest to Purchaser thereunder, and Sellers
shall pledge all of their equity securities of KXJO Sub and Newco Sub and the
certificates evidencing the Purchaser Shares to Purchaser, (iii) the Company
shall distribute all of the shares of stock of KXJO Sub to Sellers, (iv) Sellers
shall provide to Purchaser a limited recourse guaranty of the repayment of the
KXJO Note, which guaranty shall be in form and substance reasonably satisfactory
to counsel for Purchaser and which shall terminate upon the sale of the shares
of capital stock of KXJO Sub to Purchaser, and shall pledge to Purchaser,
pursuant to a pledge and security agreement substantially in the form of the
pledge agreement attached as Exhibits B and E, as applicable, to the Bridge Loan
29
30
Agreement, all of the Purchaser Shares, and all of the equity securities of KXJO
Sub and Newco Sub as collateral for such guaranty and the payment of the
Liquidated Damages (as defined below), (v) the Purchase Price shall be reduced
by $5,000 (the "KXJO ADJUSTMENT"), (vi) Closing shall occur with respect to the
Shares in accordance with Article III, (vii) the representations and warranties
of the Company and Sellers set forth herein shall be deemed to have been made
without regard to such Station and (viii) Sellers and Purchaser shall enter into
a Stock Purchase Agreement with respect to all of the shares of capital stock of
KXJO Sub, which Stock Purchase Agreement (the "KXJO SUB AGREEMENT") shall (A)
provide for a purchase price for the capital stock of KXJO Sub of $5,000, (B)
provide for a closing of the transactions contemplated thereby to occur on the
third business day following the date on which the FCC issues the FCC Order with
respect to such Station, (C) provide for liquidated damages equal to the
repayment of the KXJO Note (including interest, fees and expenses) plus the
Purchaser Shares to be paid to Purchaser in the event that the KXJO Sub
Agreement is not consummated for any reason (other than a material breach by
Purchaser) prior to January 1, 2002, and (D) otherwise contain such terms,
conditions and indemnities as are as substantially similar as practicable under
the circumstances to those set forth herein.
ARTICLE VII
INDEMNIFICATION
Section 7.01. SURVIVAL. All representations, warranties, covenants and
agreements made by any party to this Agreement or pursuant hereto shall be
deemed to be material and to have been relied upon by the parties hereto and
shall survive the Closing for twelve months after the Closing Date, except for
(i) the representations and warranties provided in Sections 4.01, 4.04, 4.05,
4.06(a)(i), 4.20(c), 4.25, 4.27, 5.01, 5.02, 5.05, 5.06 and 5.07, which shall
survive indefinitely, and (ii) the representations and warranties provided in
Section 4.17, which shall not survive the Closing.
Section 7.02. INDEMNIFICATION BY SELLERS. Subject to the limitations
set forth in Sections 7.01 and 7.04, each of Sellers, jointly and severally,
shall indemnify and hold harmless Purchaser and its officers, directors,
employees, agents, permitted assigns, Affiliates and successors thereof from,
against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances (collectively,
"LOSSES") suffered, sustained, incurred or required to be paid by Purchaser and
arising from the breach of any written representation, warranty, agreement or
covenant of the Company or such Seller contained in this Agreement, except to
the extent that the same has resulted in a reduction of the Purchase Price
pursuant to Section 2.02;
(b) any and all Losses relating to Liabilities arising from the Kept
Assets; except to the extent that the same has resulted in a reduction of the
Purchase Price pursuant to Section 2.02;
(c) all customary costs and expenses (including, without limitation,
customary attorneys' fees, interest and penalties) incurred by Purchaser in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 7.02; and
30
31
(d) any Losses arising from any cleanup or other remediation of or
arising from any cleanup, removal, containment or other remediation
(collectively, "CLEANUP") required by applicable law or regulation of, or any
other damage arising from, any Hazardous Substance, Cleanup or breach of
Environmental Law, but only to the extent that Company or Sellers have caused
such Losses, or in the case that they have not caused such Losses, only to the
extent that Sellers may receive indemnification or contribution for such Losses
pursuant to the Initial Purchase Agreements.
(e) any Losses arising from or in connection with the maintenance by
Sellers, the Company or any affiliate of the Company of any employee benefit
plan (as defined in Section 3(3) of ERISA), or by reason of the Company's
contractual arrangement with the Administaff Companies, Inc. (the "CLIENT
SERVICE AGREEMENT") including, without limitation, any liability to the Pension
Benefit Guaranty Corporation, the IRS, a Multiemployer Plan or employees or
former employees (or their beneficiaries) of Sellers, the Company or any
affiliate of the Company arising out of or relating to the Client Service
Agreement and/or the maintenance, administration, termination or any other
reason of any such plans, the trusts related to such plans, or employment with
the Sellers, the Company or any affiliate of the Company on or prior to the
Closing Date.
THE PROVISIONS OF THIS INDEMNITY SHALL NOT BE THE SOLE REMEDY IN THE
CASE OF INTENTIONAL MISREPRESENTATIONS, FRAUD, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.
Section 7.03. INDEMNIFICATION BY PURCHASER. Subject to the limitations
set forth in Sections 7.01 and 7.04, Purchaser shall indemnify and hold the
Company and each Seller and the officers, directors, employees, trustees,
agents, permitted assigns, Affiliates and successors thereof harmless from,
against, for and in respect of:
(a) any and all Losses suffered, sustained, incurred or required to be
paid by Seller and arising from the breach of any written representation,
warranty, agreement or covenant of Purchaser contained in this Agreement, or the
ownership and operation by Purchaser of the Assets after the Closing;
(b) any and all Losses relating to Liabilities of the Company or any
Subsidiary arising from and after the Closing Date; and
(c) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by the Company or any Seller
in connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 7.03.
THE PROVISIONS OF THIS INDEMNITY SHALL NOT BE THE SOLE REMEDY IN THE
CASE OF INTENTIONAL MISREPRESENTATIONS, FRAUD, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.
Section 7.04. INDEMNIFICATION PROCEDURES. The obligations and
liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by the other party or indemnified
31
32
third parties shall be subject to the following terms and conditions:
(a) The indemnified party shall give prompt written notice (which in no
event shall exceed 30 days from the date on which the indemnified party first
became aware of such claim or assertion) to the indemnifying party of any claim
which might give rise to a claim by the indemnified party against the
indemnifying party based on the indemnity agreements contained in Article VII
hereof, stating the nature and basis of said claims and the amounts thereof, to
the extent known. The failure to so notify, or any delay in so notifying, the
indemnifying party will not relieve the indemnifying party of its obligations
under Article VII, except solely to the extent that the indemnifying party can
demonstrate that such failure actually and materially prejudices the defense of
the Action by the indemnifying party. Within 10 days of delivery of such notice,
the indemnifying party shall advise the indemnified party (i) whether it
disputes the claim for indemnification and (ii) whether the indemnifying party
desires at its sole cost and expense to defend such Action.
(b) In the event that the indemnifying party notifies the indemnified
party within the notice period specified in clause (a) of this Section 7.04 that
the indemnifying party does not dispute the indemnifying party's obligation to
indemnify hereunder and desires to defend the indemnified party against such
claim and, except as hereunder provided, the indemnifying party shall have the
right to defend by appropriate proceedings, which proceedings shall be promptly
settled or prosecuted by the indemnifying party to final conclusion; provided
that, unless the indemnified party otherwise agrees, the indemnifying party may
not compromise or settle any matter (in whole or in part) (i) without obtaining
a complete and unconditional release of the indemnified party, (ii) unless the
sole relief provided is monetary damages that are paid in full by the
indemnifying party, and (iii) unless there is no finding or admission of any
violation of law or any violation of the rights of any other Person and no
effect on any claims that may be made against the indemnified party. If the
indemnifying party elects not to defend the indemnified party against such
claim, whether by failure of the indemnifying party to give the indemnified
party timely notice as provided above or otherwise, then the indemnified party
may assume the defense thereof, shall have the right to undertake the defense
of, compromise or settle such proceedings and the indemnifying party shall, upon
request of the indemnified party, pay to such indemnified party, in accordance
with the terms of this Article VII, the amount of Losses resulting from such
proceeding; provided, however, that such proceeding shall not be compromised or
settled without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, the
indemnifying party's right to object to any proposed compromise or settlement
shall be conditioned upon such indemnifying party acknowledging to the
indemnified party that such indemnifying party shall be solely responsible (as
between the indemnifying party and the indemnified party) for all liabilities
and obligations arising from the matter proposed to be compromised or settled.
If any Action, suit or proceeding is brought against the indemnified party with
respect to which the indemnifying party may have liability under the indemnity
agreements contained in Article VII hereof, the Action, suit or proceeding
shall, upon the written acknowledgment by the indemnifying party that it is
obligated to indemnify under such indemnity agreement, be defended (including
all proceedings on appeal or for review which counsel for the indemnified party
shall deem appropriate) by the indemnifying party. The indemnified party shall
have the right to employ its own counsel in any such case, but the fees and
32
33
expenses of such counsel shall be at the indemnified party's own expense unless
(i) the employment of such counsel and the payment of such fees and expenses
both shall have been specifically authorized in writing by the indemnifying
party in connection with the defense of such Action, suit or proceeding, or (ii)
counsel to such indemnified party shall have reasonably concluded and
specifically notified the indemnifying party that there may be specific defenses
available to it which are different from or additional to those available to the
indemnifying party or that such Action, suit or proceeding involves or could
have an effect upon matters beyond the scope of the indemnity agreements
contained in Article VII hereof, in any of which events the indemnifying party,
to the extent made necessary by such defenses, shall not have the right to
direct the defense of such Action, suit or proceeding on behalf of the
indemnified party. In the latter such case only that portion of such fees and
expenses of the indemnified party's separate counsel reasonably related to
matters covered by the indemnity agreements contained in Article VII hereof
shall be borne by the indemnifying party. The indemnified party shall be kept
fully informed of such action, suit or proceeding at all stages thereof whether
or not it is represented by separate counsel.
(c) The defending party shall make available to the non-defending party
and its attorneys and accountants all books and records of the non-defending
party relating to such proceedings or litigation and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such Action,
suit or proceeding.
(d) There shall be no indemnification recoverable against a party
otherwise obligated to provide indemnification therefor under this Article VII
until the Losses by the party seeking such indemnification exceed $150,000 in
the aggregate (the "BASKET AMOUNT") (other than the payment of Taxes relating to
the Straddle Period and Taxes related to the Kept Assets), and once all such
Losses exceed the Basket Amount, such party shall only be obligated to the other
party for Losses in excess of the Basket Amount (other than the payment of Taxes
relating to the Straddle Period and Taxes related to the Kept Assets).
(e) No Seller shall be required to pay any amount in satisfaction of
the indemnification obligations of such Seller pursuant to this Article VII in
excess of the portion of the Purchase Price received by such Seller.
(f) A waiver of a condition to Closing hereunder shall not preclude the
waiving party from being indemnified hereunder.
Section 7.05 TAX INDEMNIFICATION BY SELLER.
(a) Sellers shall pay, indemnify and hold harmless (jointly and
severally) Purchaser, the Company and each of its Subsidiaries and their
successors, from and against all liabilities for Taxes of the Company and each
of its Subsidiaries for taxable periods ending on or before the Closing Date.
For purposes of the preceding sentence, the Closing Date shall be treated as the
last day of a taxable period whether or not the taxable period in fact ends on
the Closing Date. For purposes of this Section, in the case of any Taxes that
are imposed on a periodic basis and are payable for a taxable period that
includes (but does not end on) the Closing Date (the "STRADDLE PERIOD"), the
portion of such Tax which relates to the portion of such a taxable period ending
on the Closing Date shall, (i) in the case of any Taxes other than Taxes based
upon or related to income or receipts, be deemed to be the amount of such Tax
for the entire taxable period multiplied by a fraction the numerator of which is
33
34
the number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable period, and
(ii) in the case of any Tax based upon or related to income or receipts deemed
equal to the amount which would be payable if the relevant taxable period ended
on the Closing Date, except that exemptions, allowances and deductions that are
calculated on an annual basis (such as depreciation) shall be apportioned on a
per diem basis. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company and its Subsidiaries. Sellers and Purchaser shall each bear their own
costs in determining the amount due under this Section 7.05. For purposes of
this Section 7.05 (and the calculation of any indemnity), any interest,
penalties or additions to tax accruing after the Closing Date with respect to a
liability for Taxes for which Sellers indemnify Purchaser, the Company or any of
its Subsidiaries shall be deemed to be attributable to a taxable period ending
on or before the Closing Date.
(b) (i) Purchaser, the Company and its Subsidiaries shall include in
their notice of any claim for indemnification pursuant to this Section
7.05 a calculation of the amount of the requested indemnity payment. If
Sellers disagree with the calculation of the indemnity payment, Sellers
and Purchaser shall attempt to resolve such disagreement within a
period of 45 days from the date Sellers receive the notice of claim for
indemnification. If the parties fail to reach an agreement at the end
of such period, such disagreement shall be submitted to a
nationally-recognized firm of independent certified public accountants
mutually selected by Sellers and Purchaser, whose determination shall
be final and binding on all parties. The cost of such
nationally-recognized firm of independent certified public accounts
shall be borne equally by Sellers and Purchaser.
(ii) Within ten days after the indemnity calculation has been
resolved or determined, Sellers shall pay to Purchaser, the Company and
its Subsidiaries (and their successors) such amounts as have been
determined to be due Purchaser, the Company and its Subsidiaries (and
their successors) as a result of the indemnification provided in
Section 7.05; provided, however, that Sellers' indemnification
obligations under this Section 7.05 shall be subject to the limitations
on indemnification set forth in this Article VII.
(c) (i) Each of Purchaser, the Company and its Subsidiaries and Sellers
will provide the other parties with such assistance as may reasonably
be requested by any of them in connection with the preparation of any
Tax Return, any audit or other examination by any Governmental
Authority, any judicial or administrative proceedings relating to
liability for Taxes, or any other claim arising under this Agreement,
and each will retain and provide the others with any records or
information that may be relevant to any such Tax Return, audit or
examination, proceeding or claim. The party requesting assistance
hereunder shall reimburse the other parties for reasonable ,
out-of-pocket expenses incurred in providing such assistance.
34
35
Notwithstanding any other provision of this Section 7.05(c), each party
hereby agrees that it will retain, until all appropriate statutes of
limitations (including any extensions) expire, copies of all Tax
Returns, supporting work schedules and other records or information
which may be relevant to such Tax Returns, except for such Tax Returns,
supporting work schedules and other records which another party shall
acquire as a consequence of this Agreement, and that it will not
destroy or otherwise dispose of such materials without first providing
the other relevant party with a reasonable opportunity to review and
copy such materials.
(ii) If Sellers or Purchaser, as the case may be, fail to
provide any information requested by another party within a reasonable
period, or otherwise fail to do any act required of them under Section
7.05, then such party shall be obligated, notwithstanding any other
provision of this Agreement, to indemnify such other party and shall so
indemnify such other party and hold such other party harmless from and
against any and all costs, claims, or damages, including, without
limitation, all Taxes or deficiencies thereof, payable as a result of
such failure, subject, however, to the limitations on indemnification
set forth in this Article VII.
Section 7.06. TAX INDEMNIFICATION BY PURCHASER.
(a) Purchaser shall be solely liable for Taxes of the Company for all
Taxable Years and periods commencing after the Closing Date. Purchaser shall
cause to be prepared and duly file all Tax Returns of the Company for Taxable
Periods commencing after the Closing Date. Purchaser shall pay all Taxes whether
or not shown to be due on such Tax Returns for all periods covered by such Tax
Returns. Notwithstanding the foregoing, except to the extent provided in Section
7.06(b), Purchaser shall be liable for, and shall indemnify and hold harmless
Sellers against, any and all Taxes for any Taxable Year or Taxable Period
commencing after the Closing Date due or payable by the Company.
(b) Purchaser shall cause the Company to pay all Taxes due for any
Taxable year or Taxable period relating to the Straddle Period (subject to
Purchaser's right to indemnification under Section 7.05(a)). To the extent that
the Taxes that would have been due if the Straddle Period had ended on the
Closing Date are less than the Taxes for the Straddle Period paid by the Company
or Sellers prior to the Closing Date, such shortfall shall be paid by Purchaser
to Sellers at the time that any payment for such Taxes is due. Purchaser shall
be liable for, and shall indemnify and hold harmless Sellers against, all Taxes
for the Straddle Period for which Sellers are not responsible under Section
7.05(a).
(c) Except as otherwise set forth in this Agreement, to the extent any
refunds or credits with respect to the Taxes paid by the Company are
attributable to Taxable periods commencing before and ending before the Closing
Date, such refunds or credits shall belong to Sellers. Except as provided in the
immediately succeeding sentence, to the extent that any refunds or credits with
respect to Taxes paid by the Company are attributable to Taxable periods
commencing on or after the Closing Date, such refunds or credits shall belong to
Purchaser. To the extent that any refunds or credits with respect to Taxes paid
by the Company are attributable to the Straddle Period, such refunds and credits
shall belong to the party who bears responsibility for such Taxes pursuant to
Sections 7.05 and 7.06. Purchaser shall cause the Company to forward to Sellers
or to reimburse Sellers for any refunds or credit belonging to Sellers within
two business days from receipt thereof by any of Purchaser or the Company.
35
36
Sellers shall forward to Purchaser or reimburse Purchaser for any refunds or
credits belonging to Purchaser within two business days from receipt thereof by
Sellers. Any refunds or reimbursements not made within the two-business day
period specified above shall bear interest from the date received by the
refunding or reimbursing party at the rate for Tax deficiencies under Section
6621 of the Code.
(d) In addition to the provisions in this Section 7.06, it is intended
that the provisions in Section 7.05 will apply to Purchaser to the extent
appropriate.
ARTICLE VIII
TERMINATION
Section 8.01. TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing in
the following manner:
(a) by mutual written consent of the Company, Sellers and Purchaser; or
(b) by either Sellers on the one hand (following repayment of all
amounts due to Purchaser by any party under the Bridge Loan Agreement in
accordance with the terms thereof) or Purchaser on the other hand if the Closing
shall not have occurred on or before [June 1, 2001], unless such failure to
close shall be due to a breach of this Agreement by the party seeking to
terminate this Agreement pursuant to this clause (b); or
(c) by either Sellers on the one hand (following repayment of all
amounts due to Purchaser by any party under the Bridge Loan Agreement in
accordance with the terms thereof) or Purchaser on the other hand if there shall
be any Law that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby, and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by Sellers (following repayment of all amounts due to Purchaser by
any party under the Bridge Loan Agreement in accordance with the terms thereof),
if (i) any of the material representations and warranties of Purchaser contained
in this Agreement shall not be true and correct in any material respect, when
made or at any time prior to the Closing as if made at and as of such time
(except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct in all material respects as of such specified date), in any
respect which is material to Purchaser or the ability of Purchaser to consummate
the transactions contemplated hereby, or (ii) Purchaser shall have failed to
fulfill in any material respect any of its material obligations under this
Agreement, which failure is material to the obligations of Purchaser under this
Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within 30 days after written notice thereof from Sellers to
Purchaser; provided that Purchaser shall have no opportunity to cure its failure
to timely pay the Purchase Price; or
36
37
(e) by Purchaser, if (i) any of the material representations and
warranties of the Company or Sellers contained in this Agreement shall not be
true and correct in any material respect, when made or at any time prior to the
Closing as if made at and as of such time (except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all material
respects as of such specified date), in any respect which is material to Sellers
or the ability of any Seller to consummate the transactions contemplated hereby,
or (ii) any of Sellers or the Company shall have failed to fulfill in any
material respect any of its material obligations under this Agreement, which
failure is material to the obligations of the Company or such Seller under this
Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within 30 days after written notice thereof from Purchaser to the
Company and Sellers.
Section 8.02. CERTAIN REMEDIES NOT EXCLUSIVE. Except as specifically
set forth herein, the rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law. The rights and
remedies of any party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
Section 8.03. SPECIFIC PERFORMANCE. It is understood and agreed that
money damages would not be sufficient remedy for Sellers' or Purchaser's failure
to perform under this Agreement, the Bridge Loan Agreement and the Ancillary
Documents, including Sellers' failure to transfer the Shares to Purchaser and
Purchaser's payment of the Purchase Price and advancement of funds under the
Bridge Loan Agreement in accordance with the terms thereof, that Purchaser or
Sellers, as the case may be, would be irreparably harmed by such a breach and
that Purchaser and Sellers shall be entitled to specific performance and
injunctive relief as remedies for any such breach.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. EXPENSES. Except as otherwise expressly provided herein,
each party shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. If any action is brought for breach
of this Agreement or to enforce any provision of this Agreement, the prevailing
party shall be entitled to recover court costs, arbitration expenses and
reasonable attorneys' fees.
Section 9.02. AMENDMENT. This Agreement may be amended at any time but
only by an instrument in writing signed by the parties hereto.
Section 9.03. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) mailed by certified mail,
return receipt requested, or delivered by nationally recognized "next-day"
delivery service, to the parties at the addresses set forth below (or at such
other address for a party as shall be specified by like notice), or (ii) sent by
37
38
facsimile to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder), or (iii) sent by email to the
email address set forth below (or such other email address for a party as shall
be specified by proper notice hereunder):
If to Purchaser, to: Spanish Broadcasting System, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: 202-682-3580
Email:
If to Sellers, to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Section 9.04. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs and permitted assigns. This Agreement may not be assigned by either party
without the prior written consent of the other, except that Purchaser may assign
to any wholly owned subsidiary of Purchaser or to Purchaser's lender that will
lend to Purchaser the funds that Purchaser will in turn lend pursuant to the
Bridge Loan Agreement any of Purchaser's rights, interests or obligations
hereunder, upon notice to the Company and Sellers; provided that no such
assignment shall relieve Purchaser of its obligations hereunder or delay
Closing.
38
39
Section 9.05. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 9.06. HEADINGS. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part hereof.
Section 9.07. ENTIRE AGREEMENT. This Agreement and the documents
referred to herein contain the entire understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties, conveyances or undertakings other than those expressly set
forth herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
Section 9.08. WAIVER. No attempted waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement, will be
effective unless evidenced by an instrument in writing by the party against whom
the enforcement of any such waiver or consent is sought.
Section 9.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 9.10. SEVERABILITY. If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced under any rule
or law, 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 hereby is not affected in a materially adverse
manner with respect to either 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 an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
Section 9.11. INTENDED BENEFICIARIES. The rights and obligations
contained in this Agreement are hereby declared by the parties hereto to have
been provided expressly for the exclusive benefit of such entities as set forth
herein and shall not benefit, and do not benefit, any unrelated third parties.
Section 9.12. CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the federal courts of the United States
of America located in Delaware, and appropriate appellate courts therefrom, over
any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or proceeding may be heard and determined
in such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by Law, any objection which they may now or hereafter have to the
39
40
laying of venue of any dispute arising out of or relating to this Agreement or
any of the transactions contemplated hereby brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
This consent to jurisdiction is being given solely for purposes of this
Agreement and is not intended to, and shall not, confer consent to jurisdiction
with respect to any other dispute in which a party to this Agreement may become
involved.
(b) Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action, or proceeding of the nature
specified in subsection (a) above by the mailing of a copy thereof in the manner
specified by the provisions of Section 9.03.
Section 9.13. MUTUAL CONTRIBUTION. The parties to this Agreement and
their counsel have mutually contributed to its drafting. Consequently, no
provision of this Agreement shall be construed against any party on the ground
that such party drafted the provision or caused it to be drafted or the
provision contains a covenant of such party.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
40
41
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written by their respective
officers thereunto duly authorized.
THE "COMPANY"
▇▇▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chairman of the Board
"SELLERS"
The Marcos and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Family Trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
Carpe Vita Foundation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
"PURCHASER"
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.,
Chairman of the Board, Chief Executive
Officer and President
41
42
ANNEX I
SELLER SHARES RATIO
------ ------ -----
The Marcos and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Family Trust 620 62%
Carpe Vita Foundation 130 13%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 100 10%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 100 10%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 50 5%
43
SCHEDULE 4.01
SUBSIDIARIES; QUALIFICATIONS
RCI (ALAMEDA) ACQUISITION, INC.
Jurisdiction of Incorporation: Delaware
Authorized Capital: 10,000 Shares of Common Stock, $.01 par value
Outstanding Capital: 1,000 Shares of Common Stock
Jurisdictions of Qualification: Texas and California
THE COMPANY
Jurisdiction of Incorporation: Delaware
Jurisdictions of Qualification: Texas and California
44
SCHEDULE 4.04
CAPITALIZATION
None
45
SCHEDULE 4.06(A)
NONCONTRAVENTION - THE COMPANY
None
46
SCHEDULE 4.06(B)
NONCONTRAVENTION - SELLERS
None
47
SCHEDULE 4.07
GOVERNMENTAL APPROVALS
None
48
SCHEDULE 4.14
FINANCIAL STATEMENTS
(i) December 31, 1999 - See Attached
(ii) March 31, 2000 - See Attached
49
▇▇▇▇▇▇▇▇▇ COMMUNICATIONS, LLC
BALANCE SHEET (PRELIMINARY)
AT DECEMBER 31, 1999
ASSETS
CURRENT ASSETS
Cash or Equivalents 0.00
Escrow Deposits 4,730,000.00
Prepaid Expenses 7,595.50
------------
TOTAL CURRENT ASSETS 4,737,595.50
OTHER ASSETS
Organizational Cost 5,000.00
Other 0.00
------------
TOTAL OTHER ASSETS 5,000.00
------------
TOTAL ASSETS 4,742,595.50
============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Intercompany-LegacyMaker 5,273,221.05
Intercompany - ▇▇▇▇▇▇▇▇▇ Capital Holdings 437,413.64
------------
TOTAL CURRENT LIABILITIES 5,710,634.69
EQUITY
Members' Equity 0.00
Retained Earnings 0.00
Current Year Retained Earnings -968,039.19
------------
TOTAL EQUITY -968,039.19
------------
TOTAL LIABILITIES AND EQUITY 4,742,595.50
============
2
50
▇▇▇▇▇▇▇▇▇ COMMUNICATIONS, LLC
INCOME STATEMENT (PRELIMINARY)
YEAR ENDED DECEMBER 31, 1999
Revenues 0.00
Expenses
Engineering 4,005.00
Gen & Adm 661,873.95
-----------
Total Operating Expenses 665,878.85
-----------
BROADCAST CASH FLOW -665,878.85
Other Income/(Expenses)
Start-up Promotions -7,000.00
Interest Expense -48,077.00
Management and Corp Fees -247,083.34
-----------
-302,160.34
Net Income -968,039.19
===========
3
51
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000
RCI-DE (formerly RCL)
---------------------------------------------------- ------------------------
ACCOUNT DESCRIPTION ▇▇▇▇▇▇▇▇▇
COMMUNICATIONS,
INC.-DELAWARE
---------------------------------------------------- ------------------------
ASSETS
CURRENT ASSETS
Cash 63,542.54
Accounts Receivable 0.00
Allowance for Doubtful Accts 0.00
TBA Receivable (LM) 0.00
Employee Advances 24,999.96
Deposits 10,367,500.00
Prepaid Expenses 537,195.07
------------------------
TOTAL CURRENT ASSETS 10,993,237.57
FIXED ASSETS
Automobiles 0.00
Buildings, Homes, and Land 0.00
Computer Equipment 0.00
Furniture & Fixtures 0.00
Leasehold Improvements 0.00
Construction in Progress 0.00
Machinery & Equipment 0.00
Studio Equipment 5,983.84
Tower 0.00
Transmitter Equipment 0.00
FCC License 0.00
Other 0.00
Accum Deprec/Amort 0.00
------------------------
TOTAL FIXED ASSETS 5,983.84
4
52
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000
RCI-DE (formerly RCL)
---------------------------------------------------- ------------------------
ACCOUNT DESCRIPTION ▇▇▇▇▇▇▇▇▇
COMMUNICATIONS,
INC.-DELAWARE
---------------------------------------------------- ------------------------
OTHER ASSETS
Intercompany Receivables
910 Broadcasters 0.00
CCI 0.00
CCI Distribution ▇.▇▇
▇▇ #▇ ▇.▇▇
▇▇ #▇ 0.00
CVS 0.00
EM 0.00
GC Trust 0.00
KC 0.00
LM 0.00
MR 0.00
MRI 0.00
NWB 0.00
PCM 0.00
RCI 0.00
RCI-Delaware (formerly RCL) 0.00
RCH 0.00
RFT 0.00
ROG 0.00
RRI 0.00
Stations 0.00
TKP 0.00
Interest Receivables
All Notes 0.00
CCI 0.00
CT#1 0.00
LM 0.00
MR 0.00
MRI 0.00
5
53
NWB 0.00
RFT 0.00
ROG 0.00
RRI 0.00
Stations 0.00
TKP 0.00
Notes Receivable
Cafe Odyssey, Inc. 0.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.00
Radio Plano 0.00
Access Developers 0.00
Assorted Personal Loans 0.00
Stock or Other Investments
American View Stock 0.00
Artimedes LLC Stock 0.00
▇▇▇▇▇▇ ▇▇▇▇ 0.00
NSAT Money Market Fund 0.00
EM Stock 0.00
CCI Stock 0.00
Interest in Miami property 0.00
MRI Stock 0.00
New World Broadcaters Stock 0.00
Popmail Stock 0.00
▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.00
Unrealized G/(L) on Investments 0.00
Investment in 910 Broadcasting 0.00
Assorted 0.00
Amortization of FCC Option 0.00
Goodwill 0.00
Intangible Assets 0.00
Accum Amort - Intangibles 0.00
6
54
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000
RCI-DE (formerly RCL)
---------------------------------------------------- ------------------------
ACCOUNT DESCRIPTION ▇▇▇▇▇▇▇▇▇
COMMUNICATIONS,
INC.-DELAWARE
---------------------------------------------------- ------------------------
Organizational Costs 100,000.00
Stock Purchase Options 0.00
------------------------
TOTAL OTHER ASSETS 100,000.00
========================
TOTAL ASSETS 11,099,221.41
========================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable 0.00
Accrued Internet Services 0.00
Accrued TBA 0.00
Comprise Settlement Agreement 0.00
Accrued Expenses 1,000.00
------------------------
TOTAL CURRENT LIABILITIES 1,000.00
OTHER LIABILITIES
Intercompany Payables
CCI 0.00
EM 0.00
GC Trust 0.00
LM 11,954,435.77
MR 0.00
MR Interest 0.00
NW 138,145.77
PM 0.00
RCH 0.00
7
55
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000
RCI-DE (formerly RCL)
---------------------------------------------------- ------------------------
ACCOUNT DESCRIPTION ▇▇▇▇▇▇▇▇▇
COMMUNICATIONS,
INC.-DELAWARE
---------------------------------------------------- ------------------------
Notes Payable
Hillcrest Church 0.00
Dallas Arboretum 0.00
Hillcrest Church Foundation 0.00
▇. ▇▇▇▇▇▇ KWNS 0.00
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.00
Deferred Income - CCI stock sale 0.00
Deferred Loss - MRI stock sale 0.00
------------------------
TOTAL OTHER LIABILITIES 12,092,581.54
------------------------
Total Liabilities 12,093,581.54
EQUITY
Preferred Stock 0.00
Common Stock 0.00
Additional Paid in Capital 0.00
CCI/NW Merger 0.00
Distribution to Shareholders 0.00
Unrealized Gain/(Loss) on Investments 0.00
Retained Earnings -628,956.13
Current Year Retained Earnings -365,404.00
------------------------
TOTAL EQUITY -994,360.13
========================
TOTAL LIABILITIES AND EQUITY 11,099,221.41
========================
RFT-620 cmm
RF-130 cmm
JA-100 cmm
CB-100 cmm
JG-50 cmm
0.00
8
56
SCHEDULE 4.15
LIABILITIES
None
57
SCHEDULE 4.16
ABSENCE OF CERTAIN CHANGES
None
58
SCHEDULE 4.20(A)
FCC LICENSES
(a) FCC FM Broadcast Station License to Chagal Communications for KREA-FM
Ontario, California
FCC AM Broadcast Station License to Chagal Communications for KFOX-FM
Redondo Beach, California
FCC FM Broadcast Station License to Citicasters Co. for KXJO-FM Alameda,
California
FCC AM Broadcast Station License to Ganadores Corporation for KSAH-AM
Universal City, Texas
(b) None
(c) The Company has entered into an agreement with Citicasters Co. to acquire
the licenses to KXJO-FM. The closing of such agreement may not have
occurred prior to the Closing under the Agreement. The Company will not be
the authorized legal holder of the licenses relating to KXJO-FM at the
Closing unless the closing under the agreement with Citicasters Co. has
closed prior to the Closing.
59
SCHEDULE 4.23
BREACH OR DEFAULT UNDER INITIAL PURCHASE AGREEMENTS
The Company has been notified in a letter from Chagal Communications, Inc.
("Chagal") that Chagal considered the Company to have breached its obligations
to expeditiously respond to an FCC staff inquiry under Section 6.6(b)(i) of the
LA Agreement (as defined in the Preamble to this Agreement.) The assertions made
in this letter are now moot since the FCC has approved the transfer of the
Station.
60
SCHEDULE 4.24
COMPANY AGREEMENTS
(i) The Company has a debt obligation payable to LegacyMaker, L.P. as set forth
on the March 31, 2000 Balance Sheet contained in Schedule 4.14.
The Company has a debt obligation payable to ▇▇▇▇▇▇▇▇▇ Capital Holdings,
Inc. as set forth on the March 31, 2000 Balance Sheet contained in
Schedule 4.14.
(ii) In addition to the Initial Purchase Agreements as set forth in the Preamble
of this Agreement, the Company has entered into the following agreements
(the "Additional Purchase Agreements"):
Agreement with LBJ Holding Company to purchase KGRW/KQFX (Amarillo, Texas)
dated March 13, 2000.
Agreement with Munbilla Broadcasting Corp. to purchase KBAE (▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇) dated February 18, 2000.
Agreement with Coastal Digital Broadcasting, LLP to purchase KLHB (Odem,
Texas) dated November 23, 1999.
Agreement with ▇▇▇▇▇▇ Enterprises, LLC to purchase KCCX50 LPTV and ▇▇▇▇▇
▇▇▇▇ (▇▇▇▇▇▇, ▇▇▇▇▇) dated November 23, 1999.
Agreement with Clear Channel Communications, Inc. to purchase KVOD (Denver,
Colorado) dated March 13, 2000.
Agreement with Rio Grande Media, Inc. to purchase KNEX and KLNT (Laredo,
Texas) dated December 14, 1999.
Agreement with Wagenvoord Advertising, Inc. to purchase KIEZ (Carmel
Valley, California) dated December 14, 1999.
Agreement with ▇▇▇▇▇▇ Communications License Company, LLC to purchase KVPX
▇▇ ▇▇▇▇ (▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇) dated January 31, 2000.
Agreement with ▇▇▇▇▇▇▇ Broadcasting, Inc. to purchase WFUN LPTV (Miami,
Florida) dated January 26, 2000.
The Company also has the following contracts:
Employment Contract with ▇▇▇▇ ▇▇▇▇▇▇▇▇ with the Company and Administaff
Companies, Inc. as co-employers.*
61
Investment Consulting Services-Retainer and Fees Agreement with BlueStone
Capital, LLP.
Brokerage Services Agreement with Americom.
Program Consultant Agreement with ▇▇▇▇▇ Media dated March 1, 2000.*
Tapscan Worldwide Agreement for software license and service dated February
24, 2000.*
Station License Agreement to receive and use Arbitron Radio Listening
Estimate dated February 24, 2000.*
License Agreement to receive and use Scarborough Report dated February 24,
2000.*
Contract for Direct Mail Advertising Services with SmartTarget dated
February 16, 2000.*
Client Service Agreement with Administaff Companies, Inc. dated July 7,
1999.*
Time Brokerage Agreement for KFLZ-AM (Bishop, Texas) with ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇. dated March 8, 2000.
Time Brokerage Agreement for KZIP-AM (Amarillo, Texas) with Del Norte
Communications, Inc.
Purchase Order with ▇▇▇▇▇▇ Specialty Advertising dated February 1, 2000.*
Contract for Outdoor Poster Advertising with ▇▇▇▇▇ Media Company dated
February 10, 2000.*
Purchase Contract with La Michacana dated April 5, 2000.*
Purchase Contract with Jerry's Supermarkets dated April 12, 2000.*
Purchase Contract with Jerry's Supermarkets dated March 23, 2000.*
Purchase Contract with Saver's Cost Plus dated April 12, 2000.*
Purchase Contract with ▇▇▇▇▇▇'▇ Cost Plus dated March 31, 2000.*
Agreement with Crown Imports dated March 15, 2000.*
-----------
* These contracts represent operating expenses for the stations that are to
be under LMAs.
2
62
SCHEDULE 4.26
INSURANCE
See Attached
63
▇▇▇▇▇▇▇▇▇ Communications, Inc.
DESCRIPTION OF OPERATIONS
Radio & TV broadcasting
NARRATIVE OUTLINE
SCHEDULE OF NAMED INSUREDS:
1. ▇▇▇▇▇▇▇▇▇ Communications, LLC
2. ▇▇▇▇▇▇▇▇▇ Capital Holdings, Inc.
3. Agility, Inc. (part of trust that controls operations-personal estate
planning)
4. Legacy Maker, Inc. (dormant)
5. Marcos & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Individually
6. Marcos & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. Ins Trust
7. Marcos & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Family Trust
8. Marcos & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Children's Trust #1
9. Marcos & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Children's Trust #2
10. ▇▇▇▇▇ ▇▇▇▇▇ Trust
11. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc. DBA KDMM Radio 1150 AM (Highland Park, TX)
12. New World Broadcasters, Corp. (KTCY 104.9 FM; Channel 25 T.V.)
13. ▇▇▇▇▇▇▇▇▇ Foundation
14. ▇▇▇▇▇▇▇▇▇ Oil & Gas, Inc.
15. Turnkey Promotions, Inc. DBA International Interiors (now dormant-used
to buy furnishings for his home)
16. KZIP AM, Inc. - Amarillo, TX
17. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (investigative "think tank" ISP company)
18. PC Media, Inc. (dormant ISP Co.)
19. KeepConnected, Inc. (dormant ISP Co.)
20. 910 Broadcasting Corp. (KXEB - 910 AM)
SCHEDULE OF RISK LOCATIONS:
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $600,000 BPP
2. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 5,000 BPP
64
Schedule 4.29
Employees
The following individuals are co-employed by the Company and Administaff
Companies, Inc.:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
A management fee is paid to ▇▇▇▇▇▇▇▇▇ Capital Holdings, Inc. for the services
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who are both employees of ▇▇▇▇▇▇▇▇▇
Capital Holdings, Inc.
See attached for a list of other employees of the Company (all of whom are
co-employed by the Company and Administaff Companies, Inc.)
65
▇▇▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
EMPLOYEE ROSTER
AS OF MAY 1, 2000
KZIP-AMARILLO, TX
LAST FIRST PER. HR. SEMI-MO. DEPT. TITLE
---- ----- -------- -------- ----- -----
AGUILERA H $6.00 PROGRAM BOARD OPERATOR/KZIP
▇▇▇▇▇ V $6.00 PROGRAM DISC JOCKEY/KZIP
DEL ▇▇▇▇▇▇ B $6.00 PROGRAM DISC JOCKEY/KZIP
DIMAS F $500.00 PROGRAM PROG DIRECTOR/KZIP
▇▇▇▇▇▇ L $8.00 SALES TRAFFIC/KZIP
▇▇▇▇▇▇ M $6.00 PROGRAM D J - KZIP
▇▇▇▇▇▇ R $6.00 PROGRAM BOARD OPERATOR/KZIP
LAST LAST RAISE LENGTH OF EMPLOYMENT BENEFITS
---- ---------- -------------------- --------
AGUILERA LESS THAN 12 MONTHS
▇▇▇▇▇ LESS THAN 12 MONTHS
DEL ▇▇▇▇▇▇ LESS THAN 12 MONTHS
DIMAS LESS THAN 12 MONTHS
▇▇▇▇▇▇ FRM $6.00/HR TO $8.00/HR LESS THAN 12 MONTHS PPO
▇▇▇▇▇▇ LESS THAN 12 MONTHS
▇▇▇▇▇▇ LESS THAN 12 MONTHS
KQFX/KGRW - AMARILLO, TX
COMPENSATION
LAST FIRST PER. HR. SEMI-MO. DEPT. TITLE
---- ----- -------- -------- ----- -----
ALVARADO C $7.00 PROGRAM DISK JOCKEY
▇▇▇▇▇▇▇▇▇ A $ 1,250.00 GEN & ADMIN MANAGER
▇▇▇▇▇▇▇▇▇ R $ 1,250.00 GEN & ADMIN MANAGER
▇▇▇▇▇▇▇▇▇▇ H $ 1,750.00 SALES ACCOUNT EXECUTIVE
DOVERVICH J $ 1,250.00 SALES ACCOUNT EXECUTIVE
▇▇▇▇▇▇▇▇ A $ 800.00 SALES ACCOUNT EXECUTIVE
▇▇▇▇▇▇▇ G $7.00 PROGRAM DISK JOCKEY
MEDELLIN C $7.00 PROGRAM DISK JOCKEY
▇▇▇▇▇▇▇ C $7.00 PROGRAM DISK JOCKEY
▇▇▇▇▇▇▇ J $7.00 PROGRAM DISK JOCKEY
▇▇▇▇▇▇▇▇ S $7.00 PROGRAM DISK JOCKEY
▇▇▇▇▇ C $7.00 PROGRAM DISK JOCKEY
▇▇▇▇▇▇▇▇▇ J $9.00 GEN & ADMIN ASST. MANAGER
▇▇▇▇▇▇▇▇▇ M $ 446.35 SALES ACCOUNT EXECUTIVE
▇▇▇▇▇▇ A $ 900.00 SALES ACOCUNT EXECUTIVE
LAST LAST RAISE LENGTH OF EMPLOYMENT BENEFITS
---- ---------- -------------------- --------
▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS PPO
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS PPO
▇▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS LIFE
DOVERVICH LESS THAN 12 MONTHS PPO
▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS PPO & LIFE
▇▇▇▇▇▇▇ LESS THAN 12 MONTHS
MEDELLIN LESS THAN 12 MONTHS
▇▇▇▇▇▇▇ LESS THAN 12 MONTHS LIFE
▇▇▇▇▇▇▇ LESS THAN 12 MONTHS LIFE
▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS
▇▇▇▇▇ LESS THAN 12 MONTHS
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS PPO
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS PPO & LIFE
▇▇▇▇▇▇ LESS THAN 12 MONTHS
KLHB - CORPUS CHRISTI, TX
COMPENSATION
LAST FIRST PER. HR. SEMI-MO. DEPT. TITLE
---- ----- -------- -------- ----- -----
▇▇▇▇▇▇▇▇▇ B $6.00 GEN & ADMIN MANAGER
▇▇▇▇▇▇▇▇▇ G $6.00 GEN & ADMIN MANAGER
▇▇▇▇▇▇ M $6.00 GEN & ADMIN OFFICE MGR.
▇▇▇▇▇▇▇▇ D $600.00 PROGRAM BOARD OPERATOR
▇▇▇▇▇▇▇▇▇ J $6.00 SALES SALES MGR.
▇▇▇▇▇▇▇ G $6.00 SALES ACCOUNT EXECUTIVE
LAST LAST RAISE LENGTH OF EMPLOYMENT BENEFITS
---- ---------- -------------------- --------
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS HMO
▇▇▇▇▇▇ LESS THAN 12 MONTHS HMO
▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS HMO
▇▇▇▇▇▇▇▇▇ LESS THAN 12 MONTHS HMO
▇▇▇▇▇▇▇ LESS THAN 12 MONTHS
3
66
▇▇▇▇▇▇▇▇▇ COMMUNICATIONS INC.
EMPLOYEE ROSTER
AS OF MAY 1, 2000
COMPENSATION
LAST FIRST PER. HR. SEMI-MO. DEPT. TITLE
---- ----- -------- -------- ----- -----
▇▇▇▇▇▇ C $8,333.34 CORPORATE PRESIDENT
▇▇▇▇▇▇ J $12,500.00 CORPORATE SENIOR VP
SALVADOR R $6,666.67 CORPORATE EXEC. VP/CFO
▇▇▇▇▇▇ R $1,458.34 CORPORATE ADM. ASSIST
LAST LAST RAISE LENGTH OF EMPLOYMENT BENEFITS
---- ---------- -------------------- --------
▇▇▇▇▇▇ START DATE 9/1/96 PPO FAMILY
▇▇▇▇▇▇ LESS THAN 12 MONTHS NONE
SALVADOR LESS THAN 12 MONTHS HMO
▇▇▇▇▇▇ LESS THAN 12 MONTHS HMO FAMILY
4
67
SCHEDULE 6.07
MANAGEMENT PERSONNEL
The following Management Personnel are co-employed by the Company and
Administaff Companies, Inc.:
▇▇▇▇▇ ▇▇▇▇▇▇
In Addition to the above management personnel, a aanagement fee is paid to
▇▇▇▇▇▇▇▇▇ Capital Holdings, Inc. for the services of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, who are both employees of ▇▇▇▇▇▇▇▇▇ Capital Holdings, Inc.
68
▇▇▇▇▇▇▇▇▇ Communications, Inc.
Schedules
69
SCHEDULE 3.02(C)(XIII)
CONTRACTS TO BE TERMINATED
Investment Consulting Services - Retainer and Fees Agreement with Blue
Stone Capital, LLP.
Employment Contract among ▇▇▇▇ ▇▇▇▇▇▇▇▇, the Company and Administaff
Companies, Inc. as co-employees.
Brokerage Services Agreement with Americom.
Marketing Services Agreement with Smart Target.
70
SCHEDULE 4.17
TAX MATTERS
None
71
Burdensome and immaterial schedules omitted.
The omitted schedules are available from the Company upon request.
72
SCHEDULE 4.29
EMPLOYEES
The following individuals are co-employed by the Company and Administaff
Companies, Inc.:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
A management fee is paid to ▇▇▇▇▇▇▇▇▇ Capital Holdings, Inc. for the services of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who are both employees of ▇▇▇▇▇▇▇▇▇ Capital
Holdings, Inc.
See attached for a list of other employees of the Company (all of whom are
co-employed by the Company and Administaff Companies, Inc.)
73
New World Broadcaster Corp.
Schedules
74
SCHEDULE 2.01(B)
TANGIBLE PERSONAL PROPERTY
See Attached
75
910 Broadcasting, Inc.
Schedules
76
SCHEDULE 4.02
FOREIGN QUALIFICATIONS
ENTITY JURISDICTION
------ ------------
Seller None
The Company None
77
Schedule 4.27
Employees
None