STOCK PURCHASE AGREEMENT
BY AND AMONG
ML MEDIA PARTNERS L.P.,
WINCOM BROADCASTING CORPORATION,
WIN COMMUNICATIONS, INC.,
AND
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
AS OF AUGUST 11, 1998
TABLE OF CONTENTS
PAGE
STOCK PURCHASE AGREEMENT......................................................1
ARTICLE 1 TERMS OF THE TRANSACTION....................................2
1.1 Sale of Shares..............................................2
1.2 Purchase Price..............................................2
1.3 Adjustments.................................................2
1.4 Closing.....................................................3
ARTICLE 2 GOVERNMENTAL CONSENTS.......................................4
2.1 FCC Consent.................................................4
2.2 FCC Applications............................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
AND THE COMPANIES...........................................4
3.1 Representations and Warranties of Seller and the Companies..4
3.1.1 Title to Shares..........................4
3.1.2 Subsidiaries.............................4
3.1.3 Capital Stock............................5
3.1.4 Organization, Good Standing, Etc.........5
3.1.5 Authority................................6
3.1.6 Financial Statements.....................6
3.1.7 Absence of Undisclosed Liabilities.......7
3.1.8 Compliance with Applicable Laws,
FCC Matters..............................7
3.1.9 Litigation...............................8
3.1.10 Insurance................................8
3.1.11 Real Estate..............................9
3.1.12 Personal Property.......................10
3.1.13 Liens and Encumbrances..................10
3.1.14 Environmental Matters...................10
3.1.15 Taxes...................................11
3.1.16 Personnel...............................13
3.1.17 Certain Agreements......................14
3.1.18 ERISA Compliance........................14
3.1.19 Labor...................................16
3.1.20 Patents, Trademarks, Etc................16
3.1.21 Absence of Certain Changes or Events....16
3.1.22 Commission or Finder's Fees.............17
3.1.23 Full Disclosure.........................17
3.1.24 The Companies' Financial Condition......17
3.1.25 Books and Records.......................17
3.1.26 Accounts Receivable.....................17
3.1.27 Availability of Documents...............18
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3.1.28 Interest in Competitors, Suppliers and
Customers...............................18
3.1.29 Controlled Group Liability..............18
3.1.30 Barter Arrangements.....................18
3.1.31 Settlement Agreement....................18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER....................19
4.1 Representations and Warranties of Buyer....................19
4.1.1 Organization and Standing...............19
4.1.2 Authorization and Binding Obligation....19
4.1.3 Qualification...........................19
4.1.4 Absence of Conflicting Agreements or
Required Consents.......................19
4.1.5 Litigation..............................20
4.1.6 Commission or Finder's Fees.............20
4.1.7 Full Disclosure.........................20
4.1.8 Investment Intent; Sophisticated Buyer..20
ARTICLE 5 COVENANTS OF SELLER AND THE COMPANIES......................21
5.1 ...........................................................21
5.1.1 Conduct Prior to the Closing Date.......21
5.1.2 Access..................................23
5.1.3 Satisfaction of Conditions; Closing.....23
5.1.4 Sale of Acquired Assets; Negotiations...23
5.1.5 No Inconsistent Action..................24
5.1.6 Notification............................24
5.1.7 FCC Reports.............................24
5.1.8 Updating of Information.................24
5.1.9 Response to Certain Actions.............24
5.1.10 Barter and Trade........................25
5.1.11 Interim Financial Statements............25
5.1.12 Estoppel Certificates...................25
5.1.13 Termination of RP Radio Agreement.......25
5.1.14 1997 Audited Financial Statements.......25
ARTICLE 6 COVENANTS OF BUYER.........................................26
6.1 ...........................................................26
6.1.1 Notification............................26
6.1.2 No Inconsistent Action..................26
6.1.3 Post-Closing Access.....................26
6.1.4 Satisfaction of Conditions; Closing.....26
6.1.5 Response to Certain Actions.............26
ARTICLE 7 JOINT COVENANTS............................................27
7.1 FCC Applications...........................................27
7.2 Confidentiality............................................27
7.3 Cooperation................................................28
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7.4 Public Announcements.......................................28
7.5 Xxxx-Xxxxx-Xxxxxx..........................................28
7.6 Condition of Real Estate...................................28
7.7 Employee Benefits Matters..................................29
ARTICLE 8 CONDITIONS OF CLOSING BY BUYER.............................30
8.1 Representations, Warranties and Covenants..................30
8.2 Compliance with Agreement..................................30
8.3 Third Party Consents and Approvals.........................30
8.4 Closing Certificates.......................................30
8.5 Governmental Consents......................................31
8.6 Adverse Proceedings........................................31
8.7 The Shares.................................................31
8.8 Indemnification and Escrow Agreement.......................31
8.9 Release of Encumbrances....................................31
8.10 Legal Opinions.............................................31
8.11 Xxxxxxx Money Letter of Credit.............................31
8.12 No Material Adverse Change.................................31
8.13 Resignation of Directors...................................31
8.14 [Intentionally Omitted]....................................32
8.15 1445 Certificate...........................................32
8.16 Credit Facility............................................32
8.17 RP Radio Agreement.........................................32
8.18 Management Fees............................................32
ARTICLE 9 CONDITIONS OF CLOSING BY SELLER............................32
9.1 Representations, Warranties and Covenants..................32
9.2 Compliance with Agreement..................................32
9.3 Certifications, etc........................................32
9.4 Governmental Approval......................................33
9.5 Adverse Proceedings........................................33
9.6 Opinions...................................................33
9.7 Indemnification and Escrow Agreement.......................33
ARTICLE 10 TRANSFER TAXES; FEES AND EXPENSES..........................33
10.1 Expenses...................................................33
10.2 Sales and Transfer Taxes...................................33
10.3 Governmental Filing or Grant Fees..........................33
ARTICLE 11 LIQUIDATED DAMAGES, SPECIFIC PERFORMANCE,
LETTER OF CREDIT...........................................33
11.1 Liquidated Damages.........................................33
11.2 Specific Performance.......................................34
11.3 Letter of Credit...........................................34
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ARTICLE 12 TERMINATION RIGHTS.........................................35
12.1 Termination................................................35
ARTICLE 13 RISK OF LOSS...............................................36
13.1 Risk of Loss...............................................36
ARTICLE 14 MISCELLANEOUS PROVISIONS...................................37
14.1 Survival of Representations and Warranties.................37
14.2 Certain Interpretive Matters and Definitions...............37
14.3 Further Assurances.........................................38
14.4 Financial Statements.......................................38
14.5 Assignment.................................................38
14.6 Amendments.................................................39
14.7 Headings...................................................39
14.8 Governing Law..............................................39
14.9 Notices....................................................39
14.10 Schedules..................................................40
14.11 Entire Agreement...........................................40
14.12 Severability...............................................40
14.13 Counterparts...............................................40
14.14 No Third-Party Rights......................................41
14.15 Arbitration................................................41
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SCHEDULES
Schedule 2.1 Licenses
Schedule 3.1.1 Shares
Schedule 3.1.2 Subsidiaries
Schedule 3.1.3 Capital Stock
Schedule 3.1.6 Financial Statements
Schedule 3.1.8 Noncompliance with the Communications Act and the FCC
Schedule 3.1.9 Litigation
Schedule 3.1.10 Insurance
Schedule 3.1.11 Real Estate
Schedule 3.1.12 Personal Property
Schedule 3.1.13 Permitted Liens
Schedule 3.1.14 Environmental Matters
Schedule 3.1.15 Taxes
Schedule 3.1.16 Personnel
Schedule 3.1.17 Contracts
Schedule 3.1.18 ERISA Matters
Schedule 3.1.19 Labor Matters
Schedule 3.1.20 Intellectual Property
Schedule 3.1.21 Absence of Certain Changes of Events
Schedule 3.1.26 Accounts Receivable
Schedule 3.1.28 Interest in Competitors, Suppliers and Customers
Schedule 3.1.30 Barter Arrangements
Schedule 4.1.4 Consents
Schedule 5.1.7 FCC Reports
Schedule 6.1.5 Certain Actions
EXHIBITS
Exhibit A Indemnification and Escrow Agreement
Exhibit B-1 Opinion of Proskauer Rose LLP
Exhibit B-2 Opinion of Wiley, Rein & Fielding
Exhibit C Opinion of Weil, Gotshal & Xxxxxx LLP
Exhibit D Earnest Money Escrow Agreement
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DEFINED TERMS
DEFINED TERMS SECTION
Affiliate.................................... Section 14.2
Agreement.................................... Preamble
Buyer........................................ Preamble
Buyer's 401(k) Plan.......................... Section 7.7(a)
Closing...................................... Section 1.4
Closing Date................................. Section 1.4
Cobra Coverage............................... Section 7.7(b)
Code......................................... Section 3.1.15
Communications Act........................... Section 3.1.8
Companies.................................... Preamble
Companies' Financial Statements.............. Section 3.1.6
Contracts.................................... Section 3.1.17
Credit Agreement............................. Section 8.16
Xxxxxxx Money Escrow Agent................... Section 11.3
Xxxxxxx Money Escrow Agreement............... Section 11.3
Xxxxxxx Money Letter of Credit............... Section 11.3
Effective Time............................... Section 1.3
Employee Benefit Plans....................... Section 3.1.18
Environmental Costs and Liabilities.......... Section 3.1.14
Environmental Laws........................... Section 3.1.14
ERISA........................................ Section 3.1.18
ERISA Group.................................. Section 3.1.18
Estimate Statement........................... Section 1.3.3
Excepted Representations..................... Section 14.1
Exchange Act................................. Section 14.4
FCC.......................................... Section 2.1
FCC Applications............................. Section 2.2
FCC Consent.................................. Section 2.1
Final Order.................................. Section 1.4
Final Statement.............................. Section 1.3.4
FTC.......................................... Section 7.5
GAAP......................................... Section 3.1.6
Governmental Entity.......................... Section 3.1.5
Hazardous Substances......................... Section 3.1.14
HSR Act...................................... Section 7.5
Indemnification Escrow Agreement............. Section 1.2
Independent Group Acquisition................ Recitals
Intellectual Property........................ Section 3.1.20
Leased Real Estate........................... Section 3.1.11(c)
Liability Adjustment Amount.................. Section 1.3.2
Liens........................................ Section 3.1.13
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Material Adverse Effect...................... Section 3.1.4
May 1998 Balance Sheet....................... Section 3.1.7
Objection Period............................. Section 1.3.5
Other Acquisitions........................... Recitals
Owned Real Estate............................ Section 3.1.11(c)
Participant.................................. Section 7.7(a)
Permitted Liens.............................. Section 3.1.13
Predecessor.................................. Section 3.1.14
Purchase Price............................... Section 1.2
Real Estate.................................. Section 3.1.11(c)
Reviewing Firm............................... Section 1.3.5
RP Radio Agreement........................... Section 5.1.13
Securities Act............................... Section 4.1.8
Seller....................................... Preamble
Seller's 401(k) Plan......................... Section 7.7(a)
Settlement Agreement......................... Section 3.1.31
Shares....................................... Recitals
Specified Event.............................. Section 13.1
Station...................................... Recitals
Station Licenses............................. Section 2.1
Station Management........................... Section 3.1.16
Studies...................................... Section 7.6
Tax or Taxes................................. Section 3.1.15
Tax Return................................... Section 3.1.15
TBA.......................................... Recitals
Trade Agreements............................. Section 1.3.2
WIN-Florida.................................. Section 3.1.3
WIN-Indiana.................................. Section 3.1.3
WINCO........................................ Preamble
WINCO Subsidiaries........................... Section 3.1.3
WINCOM....................................... Preamble
Working Capital Amount....................... Section 1.3.1
Zapis Acquisition............................ Recitals
Zebra Acquisition............................ Recitals
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), made as of August 11,
1998, is by and among ML Media Partners L.P., a Delaware limited partnership
("Seller"), WINCOM Broadcasting Corporation, an Ohio corporation ("WINCOM"), WIN
Communications, Inc., an Ohio corporation ("WINCO," and together with WINCOM,
the "Companies"), and Chancellor Media Corporation of Los Angeles, a Delaware
corporation ("Buyer").
WITNESSETH:
WHEREAS, WINCO owns certain assets, which are used in connection with
the operation of radio station WQAL 104.1 FM in Cleveland, Ohio (the "Station");
and
WHEREAS, Seller owns all of the issued and outstanding shares of common
stock of WINCOM, which constitutes all of the issued and outstanding equity
interests of WINCOM (the "Shares") and WINCOM owns all of the issued and
outstanding equity interests in WINCO;
WHEREAS, concurrently herewith, Buyer and WINCO are entering into a
Time Brokerage Agreement (the "TBA"), pursuant to which, following the
expiration or termination of the applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), Buyer will purchase substantially all of the broadcast time of the
Station, subject to the rules and policies of the Federal Communications
Commission (the "FCC");
WHEREAS, contemporaneously herewith, Buyer also is entering into (a) a
Stock Purchase Agreement with the other signatories thereto to purchase all of
the stock of Young Ones, Inc. and Zebra Broadcasting Corporation, which operates
radio stations WZJM 92.3 FM and WJMO 1490 AM in Cleveland Heights, Ohio (the
"Zebra Acquisition"), (b) an Asset Purchase Agreement with Independent Group
Limited Partnership to purchase substantially all of the assets used in
connection with the operation of radio stations WDOK 102.1 FM and WRMR 850 AM in
Cleveland, Ohio (the "Independent Group Acquisition") and (c) an Asset Purchase
Agreement with Zapis Communications Inc. to purchase substantially all of the
assets used in connection with the operation of radio stations WZAK 93.1 FM in
Cleveland, Ohio (the "Zapis Acquisition," and together with the Independent
Group Acquisition and the Zebra Acquisition, the "Other Acquisitions"); and
WHEREAS, Seller desires to sell the Shares and Buyer desires to
purchase the Shares in accordance with the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound hereby agree as follows:
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ARTICLE 1
TERMS OF THE TRANSACTION
1.1 SALE OF SHARES. On the terms and subject to the conditions
contained in this Agreement, at the Closing, Seller shall sell and assign to
Buyer, and Buyer shall purchase and acquire from Seller, the Shares.
1.2 PURCHASE PRICE. In exchange for the Shares, Buyer shall,
subject to Articles 8 and 9 hereof, at the Closing deliver to Seller the amount
equal to Fifty-One Million Two Hundred Fifty Thousand Dollars ($51,250,000.00),
plus or minus as the case may be, the Working Capital Amount as defined in
Section 1.3.1 hereof, minus the Liability Adjustment Amount as defined in
Section 1.3.2 hereof (as adjusted, the "Purchase Price") by wire transfer of
immediately available funds; provided that a portion of the Purchase Price equal
to $2,500,000 will be paid by Buyer into escrow pursuant to the Indemnification
and Escrow Agreement among Buyer, Seller and Key Trust Company of Ohio, N.A., as
escrow agent in the form attached as EXHIBIT A hereto (the "Indemnification and
Escrow Agreement").
1.3 ADJUSTMENTS.
1.3.1 The "Working Capital Amount" means the amount equal to
the Companies' consolidated current assets, net of reserves for bad debt, as of
12:01 a.m. on the Closing Date (as defined in Section 1.4) (the "Effective
Time"), minus the Companies' consolidated current liabilities as of the
Effective Time, in each case calculated in accordance with GAAP (as hereinafter
defined in Section 3.1.6).
1.3.2 The "Liability Adjustment Amount" means the amount equal
to the total of, without duplication, (a) all of the liabilities and obligations
of the Companies as of the Effective Time required to be reflected on a balance
sheet prepared in accordance with GAAP (as defined in Section 3.1.6), (b) any
prepayment penalties and premiums and other penalties, costs and expenses
associated with the prepayment or retirement of any indebtedness of the
Companies, whether or not incurred at Closing, (c) any stay bonuses paid to
employees of the Companies prior to or at the Closing or committed to, prior to
the Closing, to be paid by either of the Companies after the Closing, (d) Taxes
relating to any periods ending on or prior to the Closing Date, whether or not
then due and (e) any severance obligations of the Company with respect to
employees terminated prior to or as of the Closing, but, excluding (i) the
liabilities and obligations of the Companies which relate to the operations of
the Companies after the Closing, (ii) any liabilities and obligations reflected
in the Working Capital Amount, (iii) any liabilities and obligations related to
vacation and sick pay of employees who remain with the Companies accrued since
January 1, 1998, (iv) any liabilities and obligations of the Companies paid
prior to or as of the Closing, provided that to the extent that cash of either
of the Companies is used to make such payments, the use of such cash is
reflected in the Working Capital Amount, and (v) all liabilities and obligations
relating to bartered goods and services ("Trade Agreements").
1.3.3 Seller shall prepare and deliver to Buyer, at least five
business days prior to the Closing Date, a statement (the "Estimate Statement")
showing the amount reasonably
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estimated by Seller, in good faith, to be (a) the Working Capital Amount,
together with reasonable detail as to how such amount was determined and (b) the
Liability Adjustment Amount, together with reasonable detail as to how such
amount was determined. Prior to Closing, Seller and the Companies shall provide
to Buyer copies of or reasonable access to all books and records as Buyer may
reasonably request for purposes of verifying the estimated Working Capital
Amount, the estimated Liability Adjustment Amount and the calculations set forth
on the Estimate Statement. Seller and Buyer agree to work together in good faith
to resolve on or before the Closing Date any disagreement with respect to any
matter set forth in the Estimate Statement. The Purchase Price paid by Buyer
shall be based on the estimated Working Capital Amount and estimated Liability
Adjustment Amount set forth in the Estimate Statement agreed to by Buyer and
shall be adjusted post-Closing, if necessary pursuant to this Section 1.3.
1.3.4 Buyer will deliver to Seller, within 60 days after the
Closing Date, a schedule which sets forth the actual Working Capital Amount and
the actual Liability Adjustment Amount as of the Effective Time and sets forth
in reasonable detail how such amounts were determined (the "Final Statement").
Buyer shall provide to Seller copies of or reasonable access to all books and
records of the Companies as Seller may reasonably request for purposes of
verifying the final Working Capital Amount, the final Liability Adjustment
Amount and the calculations set forth in the Final Statement.
1.3.5 If within 30 days after Buyer delivers the Final
Statement to Seller (the "Objection Period"), Seller notifies Buyer of any
objections to the calculation of the amounts set forth in the Final Statement,
Buyer and Seller will attempt in good faith to agree by the date which is 100
days after the Closing Date upon such amounts. If Buyer and Seller cannot agree
by such date as to the final Working Capital Amount and/or Liability Adjustment
Amount, Buyer and Seller hereby designate Ernst & Young LLP (the "Reviewing
Firm") to review the Final Statement, Seller's objections and any other relevant
documents. The cost of retaining such Reviewing Firm shall be borne one-half by
Buyer and one-half by Seller. The Reviewing Firm shall report its conclusions in
writing to both Buyer and Seller and such conclusions as to factual and
accounting matters respecting the final Working Capital Amount and/or the final
Liability Adjustment Amount and the calculations set forth in the Final
Statement shall be conclusive on all parties to this Agreement and not subject
to review or dispute. Buyer or Seller, as applicable, shall within ten days of
the earlier to occur of (a) the parties' agreement to the final Working Capital
Amount and the final Liability Adjustment Amount or (b) the Reviewing Firm's
final determination of such amounts, pay the amount owing to the other party by
wire transfer of immediately available funds.
1.4 CLOSING. The consummation of the transactions contemplated
herein (the "Closing") shall occur, except as otherwise mutually agreed upon by
Buyer and Seller (a) within ten (10) business days after the FCC Consent (as
defined in Section 2.1) to the transfer of control of the Station Licenses (as
defined in Section 2.1) have become Final Orders (as hereinafter defined) or (b)
at such later date that all other terms and conditions as set forth in Articles
8 and 9 have been satisfied, or such other date as may be mutually agreed to by
the parties ("Closing Date"); provided, however, that in no event shall the
Closing occur prior to January 4, 1999. For purposes of the Agreement, "Final
Order" means action by the FCC (as defined in Section 2.1)
3
consenting to the transactions contemplated by this Agreement which is not
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which action no timely request for stay, petition for rehearing, or
reconsideration, application for review or appeal is pending, and as to which
the time for filing any such request, petition or appeal or reconsideration by
the FCC on its own motion has expired. The Closing shall be held in the offices
of Benesch, Friedlander, Xxxxxx & Aronoff, LLP, 2300 BP America Building,
Cleveland, Ohio, or at such place as the parties hereto may agree.
ARTICLE 2
GOVERNMENTAL CONSENTS
2.1 FCC CONSENT. It is specifically understood and agreed by
Buyer and Seller that the Closing and the transfer of control of the Station
Licenses and the transfer of the Shares are expressly conditioned on and are
subject to the prior consent and approval of the Federal Communications
Commission ("FCC Consent"). "Station Licenses" means all of the Companies'
rights in and to the licenses, permits and other authorizations issued to the
Companies by any governmental authority, including those issued by the FCC, used
in connection with the operation of the Station, along with renewals or
modifications of such items between the date hereof and the Closing, including
but not limited to those listed in SCHEDULE 2.1 hereto.
2.2 FCC APPLICATIONS. Within ten business days after the
execution of this Agreement or such earlier time as shall be agreed to by all of
the parties hereto, Buyer, Seller and the Companies shall file applications with
the FCC for the FCC Consent ("FCC Application").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANIES.
Seller and the Companies, jointly and severally, represent and warrant to the
Buyer the following:
3.1.1 TITLE TO SHARES. Seller is the true and lawful owner, of
record and beneficially, of the Shares. Except as set forth on SCHEDULE 3.1.1,
the Shares are, and at the Closing will be, owned by Seller free and clear of
all Liens. Except as set forth on SCHEDULE 3.1.1, other than the rights and
obligations arising under this Agreement, none of the Shares is subject to any
rights of any other person to acquire the same. Except as set forth on SCHEDULE
3.1.1, none of the Shares is subject to any Liens (as defined in Section 3.1.13)
or restrictions on transfer thereof, except for restrictions imposed by
applicable federal and state securities laws.
3.1.2 SUBSIDIARIES. (a) Except as set forth on SCHEDULE 3.1.2,
none of the Companies or WINCO Subsidiaries (as defined in Section 3.1.3) have
any subsidiaries or any debt or equity investment in any other corporation,
partnership, joint venture or other business enterprise.
4
(b) ______ Each of the WINCO Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation. The WINCO Subsidiaries have no assets
(other than its respective corporate seal, minute books, charter documents,
stock record books and other books and records as pertain to its organization,
existence and share capitalization) or liabilities. WIN-Indiana (as defined in
Section 3.1.3) and WIN-Florida (as defined in Section 3.1.3) have no, and since
October 1, 1993 and July 31, 1990, respectively, have had no operations of any
kind. None of the Companies have any liabilities arising from or relating to the
WINCO Subsidiaries.
3.1.3 CAPITAL STOCK. The authorized capital stock of WINCOM
consists solely of 2,500 shares of common stock, without par value, 1,275 of
which are issued and outstanding. The authorized capital stock of WINCO consists
solely of 750 shares of common stock, without par value, 99.99 of which are
issued and outstanding. The authorized capital stock of WIN Communications Inc.
of Indiana, an Indiana corporation ("WIN-Indiana"), consists solely of 1,000
shares of common stock, without par value, all of which are issued and
outstanding. The authorized capital stock of Win Communications of Florida,
Inc., a Florida corporation ("WIN-Florida," and together with WIN-Indiana, the
"WINCO Subsidiaries") consists solely of 750 shares of common stock, par value
$10.00 per share of which 100 are outstanding. There are no shares of capital
stock of the Companies or of the WINCO Subsidiaries held in treasury. All of the
outstanding shares of capital stock of the Companies and the WINCO Subsidiaries
are duly authorized and validly issued, fully paid and nonassessable. None of
the outstanding shares of the Companies or of the WINCO Subsidiaries were issued
in violation of any preemptive or preferential right. There are no other equity
securities of the Companies or of the WINCO Subsidiaries outstanding. There are
outstanding no securities or indebtedness convertible into, exchangeable for or
carrying the right to acquire, common stock or other equity securities of the
Companies or of the WINCO Subsidiaries, or subscriptions, warrants, options,
rights or other arrangements or commitments obligating the Companies or the
WINCO Subsidiaries to issue or dispose of any of their common stock or other
equity securities or any ownership therein, except as set forth in SCHEDULE
3.1.3 hereto. Except as set forth on SCHEDULE 3.1.1, there are no voting trusts,
proxies or other agreements or understandings with respect to the voting of any
capital stock of the Companies or the WINCO Subsidiaries.
3.1.4 ORGANIZATION, GOOD STANDING, ETC. (a) Seller is a
limited partnership and the Companies are corporations duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation and each has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is duly qualified to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure to so qualify has
not had and would not reasonably be expected to have a material adverse effect
on the assets, liabilities or the business of the Companies or the Station, or
on Seller's or the Companies' ability to consummate the transactions
contemplated by this Agreement (a "Material Adverse Effect").
(b) Each of Seller and the Companies has all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The
5
execution and delivery of this Agreement by Seller and the Companies and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Seller and the Companies. This
Agreement has been duly executed and delivered by Seller and the Companies and
constitutes the legal, valid and binding obligation of Seller and the Companies,
enforceable against each of them in accordance with its terms.
3.1.5 AUTHORITY. Assuming the consents identified in this
Section 3.1.5 and Section 3.1.17 are obtained, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby by the Companies or Seller (a) violate, conflict with or result in any
breach of any provision of the certificate of limited partnership, limited
partnership agreement, articles of incorporation or code of regulations (whether
written or oral) of Seller or either of the Companies, (b) violate, conflict
with or will result in a violation or breach of, or constitute a default (with
or without due notice or lapse of time or both) under, or permit the termination
of, or will result in the acceleration of, or entitle any party to accelerate
(whether as a result of the sale of the Shares or otherwise) any obligation, or
result in the loss of any benefit, or give rise to the creation of any lien,
charge, security interest or encumbrance upon any of the properties or assets of
Seller or the Companies under any of the terms, conditions or provisions of any
loan or credit agreement, note, bond, mortgage, indenture or deed of trust, or
any license, lease, agreement or other instrument or obligation to which any of
them are a party or by which they or any of their properties or assets may be
bound or affected, or (c) violate any order, writ, judgment, injunction, decree,
statute, rule or regulation, of any court, administrative agency or commission
or other governmental authority or instrumentality (a "Governmental Entity")
applicable to Seller or either of the Companies or any of their respective
properties or assets, except, in the case of (b) and (c) above, for those
violations that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Seller or either of the Companies in
connection with the execution, and delivery of this Agreement by Seller or
either of the Companies or the consummation by Seller or either of the Companies
of the transactions contemplated hereby, except for (x) the filing of a
premerger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the expiration of the applicable
waiting period thereunder, and (y) the FCC Consent.
3.1.6 FINANCIAL STATEMENTS. Attached as SCHEDULE 3.1.6 are
copies of the (a) Companies' consolidated unaudited balance sheet of WINCOM and
its subsidiaries at (x) December 31, 1996 and the related statements of
operations for the fiscal year then ended; and (y) December 31, 1997 and the
related statements of operations for the fiscal year then ended (the "Draft 1997
Financial Statements") and (b) unaudited balance sheets of WINCO as of May 31,
1997 and 1998, and the related statements of income for the periods then ended
(such financial statements collectively being referred to as the "Companies'
Financial Statements"). Except as set forth on SCHEDULE 3.1.6 hereto, the
Companies' Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby ("GAAP") and present fairly, in all material respects,
the financial position and results of operations of WINCOM and its subsidiaries
(or WINCO, as the case may be) as of such dates and for the periods then ended
(subject to the absence of notes and
6
to normal, recurring adjustments that would not be material in the aggregate),
other than Trade Agreements.
3.1.7 ABSENCE OF UNDISCLOSED LIABILITIES. There are no
material liabilities of the Companies of any kind whatsoever (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) that are
required to be reflected on, or disclosed in the notes to, a consolidated
balance sheet of the Companies prepared in accordance with GAAP, other than
liabilities and obligations (a) provided for or reserved against in WINCO's
unaudited balance sheet at May 31, 1998 described in Section 3.1.6 (the "May
1998 Balance Sheet") or reflected in the notes thereto or (b) arising after May
31, 1998, in the ordinary course of business and consistent with past practices
and which individually or in the aggregate have not had and could not reasonably
be expected to have a Material Adverse Effect.
3.1.8 COMPLIANCE WITH APPLICABLE LAWS, FCC MATTERS. (a) Except
as permitted or contemplated hereby, the operations of the Companies, including,
without limitation, the operation of the Station have been and now are being
conducted in substantial compliance, in all material respects, with the Station
Licenses, each law, ordinance, regulation, judgment, decree, injunction, rule or
order of the FCC or any other Governmental Entity binding on the Companies or
its respective properties or assets. No investigation or review by any
Governmental Entity with respect to the Companies is pending or, to Seller's or
the Companies' knowledge, is threatened. Without limiting the generality of the
foregoing, each of Seller and the Companies has complied in all material
respects with the Communications Act of 1934, as amended (the "Communications
Act"), all rules, regulations and written policies of the FCC thereunder, all
obligations with respect to equal opportunity under applicable law, and the
FCC's policy on exposure to radio frequency radiation applicable to the Station.
No renewal of any Station Licenses would constitute a major environmental action
under the rules of the FCC. Access to the Station's transmission facilities are
restricted in accordance with the policies of the FCC. In addition, each of
Seller and the Companies has duly and timely filed, or caused to be filed, with
the appropriate Governmental Entities all reports, statements, documents,
registrations, filings or submissions with respect to the operations of the
Companies, including, without limitation, the operation of the Station and the
ownership thereof, including, without limitation, applications for renewal of
authority required by applicable law to be filed. All such filings complied in
all material respects with applicable laws when made and to the Seller's or the
Companies' knowledge, no deficiencies have been asserted with respect to any
such filings. All of the material required by 47 C.F.R. ss. 73.3526 to be kept
in the public inspection files of the Station is in such files. Except as
disclosed on SCHEDULE 3.1.8, neither Seller nor either of the Companies has
knowledge of any fact or circumstance relating to the Companies or the Station
arising from noncompliance with the Communications Act, or the rules,
regulations or written policies of the FCC in effect on the date of this
Agreement that could reasonably be expected to (i) disqualify Seller from
assigning the Shares to the Buyer or (ii) prevent or delay the consummation by
Seller and Buyer of the transactions contemplated by this Agreement.
(b) SCHEDULE 2.1 lists (i) all licenses, permits and other
authorizations (including all STL licenses and construction permits) issued to
the Companies or the Seller by the FCC relating to the Station and held by them
as of the date of this Agreement and (ii) all
7
licenses, permits, or authorizations issued to the Companies by any other
Governmental Entities. Such licenses, permits and authorizations, and all
applications for modification, extension or renewal thereof or for new licenses,
permits, permissions or authorizations that would be material to the operations
of the Station, are collectively referred to herein as the Station Licenses (as
further defined in Section 2.1), each of which is in full force and effect. All
towers and other structures used in the operation of the Station or located on
the Real Property are obstruction marked and lighted to the extent required by,
and in accordance with the rules and regulations of the FAA, the FCC and other
federal, state and local authorities. Appropriate notifications to the FAA and
registrations with the FCC have been filed for such towers where required.
Except for proceedings affecting the radio broadcast industry generally, there
are no proceedings pending or, to Seller's or the Companies' knowledge,
threatened with respect to the Companies' ownership or operation of the Station
which reasonably may be expected to result in the revocation, material adverse
modification, non-renewal or suspension of any of the Station Licenses, the
denial of any pending applications for Station Licenses, the issuance against
the Companies of any cease and desist order, or the imposition of any
administrative actions by the FCC or any other Governmental Entity with respect
to the Station Licenses, or which reasonably may be expected to adversely affect
the Station's ability to operate as currently operated or Buyer's ability to
obtain assignment of the Shares. With the exception of such temporary reduced
power operations as are necessary for routine maintenance, the Station operates
(i) in conformity with its licenses and (ii) within the operating power
tolerances specified in 47 C.F.R. ss. 73.1560(b). No other broadcast station or
radio communications facility is causing interference to the Station's
transmissions beyond that which is allowed by FCC rules and regulations. The
Companies have all necessary authority to use the call signs set forth on
SCHEDULE 2.1.
3.1.9 LITIGATION. Except as disclosed on SCHEDULE 3.1.9, there
are no actions, suits, inquiries, judicial or administrative proceedings, or
arbitrations pending or, to the knowledge of Seller or either of the Companies,
threatened against Seller, or any of the Companies or the WINCO Subsidiaries or
any of their respective properties or assets by or before any arbitrator or
Governmental Entity nor are there any investigations relating to Seller or any
of the Companies or the WINCO Subsidiaries or any of their respective properties
or assets pending or, to the knowledge of Seller or either of the Companies
threatened by or before any arbitrator or Governmental Entity that has had or
that reasonably could be expected to have a Material Adverse Effect. There are
no material judgments, decrees, injunctions, or orders of any Governmental
Entity or arbitrator outstanding against Seller or any of the Companies or the
WINCO Subsidiaries or any of their respective properties or assets. There is no
action, suit, inquiry, judicial or administrative proceeding pending or, to the
knowledge of Seller or either of the Companies threatened against Seller or any
of the Companies or the WINCO Subsidiaries by a third party relating to the
transactions contemplated by this Agreement.
3.1.10 INSURANCE. SCHEDULE 3.1.10 sets forth a list of all
fire, liability and other forms of insurance and all fidelity bonds held by or
applicable to the Companies or the Station setting forth in respect of each such
policy the policy name, policy number, carrier, term, type of coverage and
annual premium, each of which is in full force and effect on the date hereof,
valid and enforceable in accordance with its terms and in amounts which are
adequate in relation to the business and assets of the Companies and the
Station. To Seller's knowledge, no event has
8
occurred, including, without limitation, the failure by Seller or either of the
Companies to give any notice or information, or the delivery of any inaccurate
or erroneous notice or information, which limits or impairs the rights of Seller
or either of the Companies under any such insurance policies. The Companies
shall keep comparable policies of insurance in effect for acts, omissions and
events occurring on or prior to the Closing Date.
3.1.11 REAL ESTATE. (a) The Companies have, and upon Closing,
will continue to have, good and marketable title to the Owned Real Estate (as
hereinafter defined) and, except as set forth on SCHEDULE 3.1.11, valid
leaseholds in the Leased Real Estate (as defined in subparagraph (c) below),
free and clear of any Liens except for the Permitted Liens (as defined in
Section 3.1.13). The buildings (or portions thereof), improvements and fixtures
that are included in the Real Estate (as defined in subparagraph (c) below) are
suitable for their intended use. The Companies own, or have a valid right to use
adequate routes of ingress and egress to, from and over all of the Real Estate
necessary to operate the Station. The Real Estate has adequate water supply,
sewage and waste disposal facilities, is connected to and served by telephone,
gas, electricity and other utility equipment facilities and services necessary
for the operation or use of the Real Estate. Such facilities and services are
adequate for the present use and operation of the Real Estate on a fully
occupied basis, and are installed and connected pursuant to valid material
permits and are in material compliance with all material governmental
regulations. To Seller's and the Companies' knowledge, no fact or condition
exists which would result in the termination or impairment of the furnishing of
utility services to the Real Estate. SCHEDULE 3.1.11 lists the street address
and/or legal descriptions of the Owned Real Estate and the street addresses
and/or legal descriptions of the Leased Real Estate. All real estate Taxes,
assessments and use charges pertaining to the Owned Real Estate that have become
due have been paid in full.
(b) ______ The Real Estate, any improvements thereon, and the
use by the Companies thereof, conform in all material respects, to (i) all
applicable laws, including but not limited to zoning requirements and the
Americans With Disabilities Act, and (ii) all restrictive covenants, if any.
There are no eminent domain proceedings pending, or to Seller's and the
Companies' knowledge, threatened against the Real Estate. All material
improvements (i) have been constructed in a good and workmanlike manner, free,
in all material respects, from defects in workmanship and material; and (ii)
have been constructed, occupied, maintained and operated in material compliance
with all applicable laws, insurance requirements, contracts, leases, permits,
licenses, ordinances, restrictions, building set-back lines, covenants,
reservations, and easements, and neither of the Companies have received any
notice, written or verbal, claiming any material violation of any of the same or
requesting or requiring the performance of any material repairs, alterations or
other work in order to so comply. Other than Permitted Liens, no improvement on
any of the Real Estate encroaches upon any adjacent real property of any other
person or entity. The heating, air conditioning, plumbing, ventilating, utility,
sprinkler and other mechanical and electrical systems, apparatus and appliances
located on the Real Estate or in the improvements are in good operating
condition (normal wear and tear excepted), free from material defects in
workmanship and material.
(c) ______ The "Owned Real Estate" means all real property
owned by the Companies together with all appurtenant easements thereunto and all
structures, fixtures and improvements
9
located thereon as more fully described in SCHEDULE 3.1.11 hereto, together with
any additions thereto between the date hereof and the Closing. The "Leased Real
Estate" means all rights and interests of the Companies under any and all of the
leases of real property held by the Companies as more fully described in
SCHEDULE 3.1.11. The "Real Estate" means the Owned Real Estate together with the
Leased Real Estate.
3.1.12 PERSONAL PROPERTY. SCHEDULE 3.1.12 hereto contains a
list of all material tangible personal property and assets owned or held by the
Companies (other than Real Estate, which is addressed in the foregoing Section
3.1.11). Except as disclosed in SCHEDULE 3.1.12, the Companies own and will have
as of the Closing, good and marketable title to all property referred to in the
immediately preceding sentence and none of such property is, or at the Closing
will be, subject to any Liens (as defined in Section 3.1.13) other than
Permitted Liens (as defined in Section 3.1.13). The tangible personal property
and fixtures owned or used by the Companies are, in all material respects, in
good operating condition (subject to normal wear and tear) and are sufficient to
permit the conduct of the business of the Station in material compliance with
FCC rules and regulations. The Companies own or hold under valid leases all of
the tangible personal property and fixtures necessary to conduct the business of
the Companies as presently conducted. The assets owned or held by the Companies
(including the Real Estate) constitute all of the assets, rights and properties
that are required for the operation of the Companies and the Station as they are
now conducted.
3.1.13 LIENS AND ENCUMBRANCES. All properties and assets,
including leases, owned by the Companies are free and clear of all liens,
pledges, claims, security interests, restrictions, mortgages, tenancies and
other possessory interests, conditional sale or other title retention
agreements, assessments, easements, rights of way, covenants, restrictions,
rights of first refusal, defects in title, encroachments and other burdens,
options or encumbrances of any kind (collectively, "Liens") except (a) statutory
Liens securing payments not yet delinquent or the validity of which are being
contested in good faith by appropriate actions, (b) purchase money Liens arising
in the ordinary course, (c) Liens for Taxes (as defined in Section 3.1.15(k))
not yet delinquent, (d) Liens securing indebtedness, all of which Liens will be
discharged at the Closing upon repayment by Seller of all amounts due and owing,
(e) Liens which in the aggregate do not materially detract from the value or
materially impair the present and continued use of the properties or assets
subject thereto in the usual and normal conduct of the business of the
Companies, (f) Liens on leases arising from the provisions of such leases, (g)
zoning ordinances and (h) any other permitted exceptions listed on SCHEDULE
3.1.13 hereto (the Liens referred to in clauses (a) through (h) being "Permitted
Liens").
3.1.14 ENVIRONMENTAL MATTERS.
On the date of this Agreement, except as disclosed on SCHEDULE 3.1.14:
(a) ______ The Station and any and all Real Estate is, and to
any of Seller's and the Companies' actual knowledge with respect to any
predecessor or prior owner, operator or lessee (each a "Predecessor")
has been, in compliance in all material respects, with all
Environmental Laws (as defined in subparagraph (f) below;
10
(b) ______ No judicial or administrative proceedings are
pending or, to the knowledge of the Seller or either of the Companies,
threatened against Seller or either of the Companies, relating to any
of the Real Estate alleging the violation of or seeking to impose
liability on Seller or either of the Companies pursuant to any
Environmental Law. Neither the Seller nor either of the Companies has
received any written notice, claim or other written communication from
any Governmental Entity or other person alleging the violation of or
liability under any Environmental Laws in connection with any of the
Real Estate or operations thereon;
(c) ______ There are no facts, circumstances or conditions
associated with Real Estate or the operations thereon that could
reasonably be expected to give rise to a material environmental claim
against the Station or the owner or operator thereof or result in the
Station or the owners or operators thereof incurring material
Environmental Costs and Liabilities (as defined in subparagraph (f)
below);
(d) ______ All substances, materials or waste that are
regulated by federal, state or local government under the Environmental
Laws as hazardous, toxic or a pollutant or contaminant as well as any
petroleum or petroleum derived product (collectively, "Hazardous
Substances"), used or generated by the Companies or to Seller's or
either of the Companies' actual knowledge, by any Predecessor in
connection with the Real Estate, have been stored, used, treated, and
disposed of by such persons or on their behalf in such manner as not to
result in any material Environmental Costs or Liabilities;
(e) ______ There are not now, nor have there been in the past,
on, in or under any Real Estate when owned, leased or operated by the
Companies or, to Seller's or either of the Companies' knowledge, when
owned, leased or operated by any Predecessor, any of the following: any
(i) underground storage tanks, above-ground storage tanks, dikes or
impoundments containing Hazardous Substances, (ii) asbestos containing
materials, (iii) polychlorinated biphenyls or related compounds (other
than those labeled and maintained in accordance with applicable
Environmental Laws) in amounts or concentrations regulated under the
Environmental Laws or (iv) radioactive substances in amounts or
concentrations regulated under the Environmental Laws; and
(f) ______ For purposes of this Section 3.1.14, the following
terms have the following meanings: "Environmental Laws" shall mean all
applicable federal, state and local laws, statutes, codes, rules,
regulations, common law or other legal requirements relating the
environment, natural resources, and public or employee health and
safety; "Environmental Costs and Liabilities" means any losses,
including environmental remediation costs, liabilities, obligations,
damages, fines, penalties or judgments, arising from or under any
Environmental Law or order of or agreement with any Governmental Entity
or other person.
3.1.15 TAXES. (a) All Tax Returns (as defined in subsection
(l) below) that are required to be filed by or on behalf of the Companies on or
before the execution of this Agreement have been duly filed on a timely basis
under the statutes, rules and regulations of
11
each jurisdiction in which such Tax Returns are required to be filed and Seller
and the Companies will file or will cause to be duly filed, all Tax Returns
required to be filed by or on behalf of the Companies on or prior to the Closing
Date and with respect to any taxable period prior to or which includes the
Closing Date. All such Tax Returns are (or will be) complete and accurate in all
respects. Except as set forth on SCHEDULE 3.1.15, all Taxes, whether or not
reflected on the Tax Returns, which are due with respect to the Companies and
any Affiliates as of the date hereof have been timely paid by the Companies,
and/or any such Affiliates. For the purposes of this Section 3.1.15, Affiliates
shall mean any entity that files a consolidated, combined or unitary, Tax Return
with the Companies. All Taxes, whether or not reflected on the Tax Returns,
which are due with respect to the Companies through the Closing Date will be
included as a liability in Working Capital Amount or the Liability Adjustment
Amount.
(b) ______ No claim for assessment or collection of Taxes has
been asserted against the Companies or any Affiliates. Neither of the Companies
nor any of their Affiliates are a party to any pending audit, action, proceeding
or investigation by any Governmental Entity for the assessment or collection of
Taxes nor do either of the Companies or any of their Affiliates have knowledge
of any threatened audit, action, proceeding or investigation. No deficiencies
for any Taxes have been proposed, asserted or assessed against either of the
Companies or their Affiliates that have not been fully paid.
(c) Neither of the Companies nor any of their Affiliates has
waived or extended any statutes of limitation for the assessment or collection
of Taxes. No claim has ever been made by a Governmental Entity in a jurisdiction
where either of the Companies or any of their Affiliates do not currently file
Tax Returns that it is or may be subject to taxation by that jurisdiction nor
are either of the Companies or any of their Affiliates aware that any such
assertion of jurisdiction is pending or threatened. No Liens, other than
Permitted Liens (whether filed or arising by operation of law), have been
imposed upon or asserted against any of the assets of the Companies as a result
of or in connection with any failure, or alleged failure to pay any Tax.
(d) The Companies have withheld and paid over to the
appropriate Governmental Entity all Taxes required to be withheld in connection
with any amounts paid or owing to any employee, creditor, independent contractor
or other third party.
(e) Seller is not a foreign person within the meaning
of Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code").
(f) There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively (either alone
or upon the occurrence of any additional or subsequent event), could give rise
to the payment of any amount that would not be deductible by the Companies by
reason of Section 280G of the Code.
(g) The Companies have not (A) filed a consent pursuant
to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to the disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by the
12
Companies, (B) agreed nor are required to make any adjustments pursuant to
Section 481(a) of the Code or any other similar provision of state, local or
foreign law by reason of a change in accounting method initiated by the
Companies or have any knowledge that the Internal Revenue Service ("IRS") has
proposed any such adjustment or change in accounting method, or has any
application pending with any Governmental Entity requesting permission for any
changes in accounting methods that relate to the business or operations of the
Companies, (C) executed or entered into a closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof or any similar provision
of state, local or foreign law with respect to the Companies, (D) requested any
extension of time within which to file any Tax Return, which Tax Return has
since not been filed, or (E) executed a power of attorney with respect to any
Tax matter which is currently in force.
(h) No property owned by the Companies constitutes (i)
"tax-exempt use property" within the meaning of Section 168(h)(1) of the Code,
(ii) "tax-exempt bond financed property" within the meaning of Section 168(g) of
the Code, or (iii) "limited use property" (as that term is used in Rev. Proc.
76-30), nor is any such property required to be treated as owned by another
person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986.
(i) The Companies are not a party to any tax sharing,
tax indemnification or similar agreement or arrangement (whether or not written)
with respect to Taxes pursuant to which either of them will have any obligation
to make any payments after the Closing Date.
(j) None of the Companies nor any WINCO Subsidiaries
has ever been a member of any consolidated, combined, unitary or affiliated
group of corporations for any Tax purposes, other than the affiliated group of
which WINCOM is the common parent.
(k) For federal income tax purposes, Seller is treated
as a partnership and not as an association or "publicly traded partnership"
taxable as a corporation.
(l) For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean all federal, state, local, or foreign taxes, assessments,
duties, levies or similar charges of any kind including, without limitation, all
income, payroll, Medicare, withholding, unemployment insurance, social security,
sales, use, service, service use, leasing, leasing use, excise, franchise, gross
receipts, value added, alternative or add-on minimum, estimated, occupation,
real and personal property, stamp, duty, transfer, workers' compensation,
severance, windfall profits, environmental (including Taxes under Section 59A of
the Code), other Tax, charge, fee, levy or assessment of the same or of a
similar nature, including any interest, penalty, or addition thereto whether
disputed or not. The term "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes or any
amendment thereto, and including any schedule or attachment thereto.
3.1.16 PERSONNEL. Attached as SCHEDULE 3.1.16 is a complete
and correct list as of the date of this Agreement of the names, positions, and
location of all employees or other
13
station and broadcast personnel (whether employees or independent contractors)
of the Companies, which sets forth the current salaries of all such employees
and the other compensation arrangements with all General Managers, Station
Managers, General Sales Managers, Local Sales Managers, National Sales Managers,
Program Directors, Business Managers and Traffic Managers (collectively,
"Station Management"), all on-the-air broadcast personnel of the Station and all
directors and officers of the Companies and indicates which of those employees,
Station Management, on-the-air broadcast personnel, or director or officer is a
party to an employment or consulting or similar contract with the Companies. The
Companies have delivered to Buyer accurate and complete copies of all such
employment agreements, confidentiality agreements and all other agreements,
plans and other instruments to which either of the Companies is a party and
under which such employees are entitled to receive benefits of any value that
involve payment by or to the Companies in excess of $25,000.
3.1.17 CERTAIN AGREEMENTS. The Contracts (as defined below)
are the only contractual agreements necessary to carry out the business and
operations of the Companies and the Station as currently conducted. Each
Contract is a valid and binding obligation of the applicable Companies and is in
full force and effect and, to the knowledge of Seller and the Companies, each
other party to such Contract, has performed in all material respects the
obligations required to be performed by it and is not (with or without lapse of
time or the giving of notice, or both) in material breach or default thereunder.
SCHEDULE 3.1.17 identifies, as to each Contract, whether the consent of the
other party thereto is required in order for such Contract to continue in full
force and effect upon the consummation of the transactions contemplated hereby.
"Contracts" means all of the Companies' right in and under those contracts,
agreements, leases and legally binding contractual rights of any kind, written
or oral, relating to the operation of the Companies listed in SCHEDULE 3.1.17
hereto and (i) those contracts entered into by the Companies between the date
hereof and the Closing in the ordinary course of business of the Companies
consistent with past practices, subject to Section 5.1 hereto; (ii) all
contracts for the sale of advertising time for cash, subject to Section 5.1
hereto; and (iii) all Trade Agreements, subject to Section 5.1 hereto; and (iv)
all other contracts, agreements, leases, understandings, arrangements and
legally binding contractual rights of any kind, written or oral, to which the
Companies is a party or by which either of the Companies' assets or properties
are bound that involve a payment by or to the Companies of less than $25,000
individually or $150,000 in the aggregate. There has not been (i) any threatened
cancellation of any material Contracts, (ii) any outstanding disputes, of a
material nature, under any material Contracts or (iii) to Seller's or the
Companies' knowledge, any bases for any claims of breach or default thereunder.
Seller and the Company have no knowledge that any of the material Contracts that
are renewable will not be renewed by the other party on commercially reasonable
terms.
3.1.18 ERISA COMPLIANCE. (a) Neither of the Companies nor any
other trades or businesses under common control, or which is treated as a single
employer with either of the Companies under Sections 414(b), (c), (m) or (o) of
the Code (collectively, the "ERISA Group") has, within the past six years,
contributed or been obligated to contribute to any "multi-employer plan" as such
term is defined in Section 3(37) or Section 4001(a)(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") except as disclosed
on SCHEDULE 3.1.18. SCHEDULE 3.1.18 lists all "employee benefit plans" within
the meaning of Section 3(3) of ERISA
14
and bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
salary continuation, educational assistance, club memberships, company car
(other than those provided to employees pursuant to employment agreements listed
on SCHEDULE 3.1.18 hereto), retirement, vacation, severance, disability, death
benefit, hospitalization, insurance or other plan or arrangement or
understanding providing benefits to any present or former employee or contractor
of either of the Companies or as to which either of the Companies (with respect
to such individuals) has any liability or obligation (collectively, "Employee
Benefit Plans"). Accurate and complete copies of such plans and their related
summary plan descriptions have been delivered or made available to Buyer. The
ERISA Group does not maintain or contribute to, and is not obligated to maintain
or contribute to, any employee pension benefit plan, as defined in Section 3(2)
of ERISA, subject to Title IV of ERISA.
(b) Each Employee Benefit Plan and its related trust
intended to qualify under Sections 401 and 501(a) of the Code, respectively, has
received an opinion letter or notification from the IRS issued to the prototype
provider for such plan to the effect that the form of plan is qualified under
Section 401 of the Code and its related trust is exempt under Section 501(a) of
the Code and, to the knowledge of the Companies, nothing has occurred that would
have a material adverse effect on the qualified status of such plan.
(c) All contributions or other payments required to
have been made by Companies to or under any Employee Benefit Plan by applicable
law or the terms of such Employee Benefit Plan have been timely and properly
made or, where applicable, accrued for on the Companies' Financial Statements to
the extent required by GAAP.
(d) Except as disclosed in SCHEDULE 3.1.18, the
Employee Benefit Plans have been maintained and administered in all material
respects in accordance with their terms and applicable laws.
(e) Except as disclosed in SCHEDULE 3.1.18, there are
no pending or, to the knowledge of either of the Companies, threatened actions,
claims or proceedings against or relating to any Employee Benefit Plan other
than routine benefit claims by persons entitled to benefits thereunder.
(f) Except as disclosed in SCHEDULE 3.1.18, neither of
the Companies maintain or have an obligation to contribute to retiree life or
retiree health plans which provide for continuing benefits or coverage for
current or former officers, directors or employees of the Companies except (i)
as may be required under Part 6 of Title I of ERISA) and at the sole expense of
the participant or the participant's beneficiary or (ii) a medical expense
reimbursement account plan pursuant to Section 125 of the Code.
(g) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment becoming due to any employee of either of the Companies,
(ii) increase any amounts otherwise payable
15
under any Employee Benefit Plan or (iii) result in the acceleration of the time
of payment or vesting of any such benefits.
3.1.19 LABOR. The Companies have not agreed to recognize any
union or other collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of its employees. Except as
disclosed on SCHEDULE 3.1.19, since June 30, 1995, the Companies (a) are and
have been in compliance, in all material respects, with all applicable laws
regarding employment and employment practices, terms and conditions of
employment, wages and hours, and plant closing, occupational safety and health
and workers' compensation and is not engaged, nor has it engaged, in any unfair
labor practices, (b) have no, and have not had, any unfair labor practice
charges or complaints pending or, to Seller's or either of the Companies'
knowledge, threatened against either of the Companies before the National Labor
Relations Board, (c) have no and have not had any grievances pending or, to
Seller's or either of the Companies' knowledge, threatened against either of the
Companies and (d) have no, and have not had any charges pending or, to Seller's
or the Companies' knowledge, threatened against either of the Companies before
the Equal Employment Opportunity Commission, the FCC or any state or local
agency responsible for the prevention of unlawful employment practices. There is
no labor strike, slowdown, work stoppage or lockout actually pending or, to the
knowledge of Seller or either of the Companies, threatened against or affecting
either of the Companies. To Seller's and the Companies' knowledge, no union
organizational campaign or representation petition is currently pending with
respect to the employees of the Companies.
3.1.20 PATENTS, TRADEMARKS, ETC. SCHEDULE 3.1.20 sets forth
all call letters, patents, patent applications, trademarks, trade names,
Internet domain names, service marks, trade secrets, applied for, issued, owned
or used, copyrights and other proprietary Intellectual Property (as defined
below) used in the operation of the Companies' businesses (whether owned, leased
or licensed by the Companies). The Companies have, and upon the Closing will
continue to have, good and marketable title to the material Intellectual
Property owned by them, free and clear of any Liens except for Permitted Liens
and for any infringement claims by third parties of which Seller is not aware.
Neither of the Companies has received any notice of any claimed conflict,
violation or infringement of such Intellectual Property rights, and to Seller's
and the Companies' knowledge, none of such Intellectual Property rights are
being infringed by any third party. To Seller's knowledge, the operation of the
Companies' businesses do not infringe on the intellectual property rights of any
other person. "Intellectual Property" means all of the Companies' rights in and
to all call letters, trademarks, trade names, service marks, franchises,
copyrights, Internet domain names, including registrations and applications for
registration of any of them, computer software programs and programming material
of whatever form or nature, jingles, slogans, the Station's logos and all other
logos or licenses to use same and all other intangible property rights of the
Companies, including, but not limited to those listed on SCHEDULE 3.1.20 hereto
together with any associated goodwill and any additions thereto between the date
hereof and the Closing.
3.1.21 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
contemplated or expressly permitted by this Agreement or as disclosed on
SCHEDULE 3.1.21, since December 31, 1997 there has not been (a) any material
damage, destruction or loss of any kind with respect to
16
the Companies or the Station not covered by valid and collectible insurance,
nor, to Seller's or the Companies' knowledge, has there been any event or
circumstance which has had or reasonably could be expected to have a Material
Adverse Effect; (b) the execution of any agreement with any Station Management
or broadcast personnel of the Companies (whether an employee or independent
contractor) providing for his/her employment, or any increase in compensation or
severance or termination of benefits payable or to become payable by the
Companies to any officer, Station Management, or broadcast personnel of the
Companies (whether an employee or independent contractor), or any increase in
benefits under any collective bargaining agreement, except as to all of the
foregoing in this clause (b), in the ordinary course of business consistent with
past practices and except as permitted by Section 5.1.1 or (c) any change by
either of the Companies in their financial or Tax accounting principles or
methods, except insofar as required by GAAP, applicable law or circumstances
which did not exist as of the date of the December 31, 1997 balance sheet
included in the Companies' 1997 Audited Financial Statements (as defined in
Section 5.14).
3.1.22 COMMISSION OR FINDER'S FEES. Neither Seller, either of
the Companies, or any entity acting on behalf of any of them has agreed to pay a
commission, finder's fee or similar payment to any person or entity in
connection with this Agreement or any matter related hereto.
3.1.23 FULL DISCLOSURE. No representation or warranty by
Seller or either of the Companies contained in this Agreement (including the
Schedules hereto) or in any certificate furnished pursuant to this Agreement
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
3.1.24 THE COMPANIES' FINANCIAL CONDITION. No insolvency
proceedings of any character, including, without limitation, bankruptcy,
receivership, reorganization, composition or arrangement with creditors,
voluntary or involuntary, affecting either of the Companies or any of their
respective assets or properties are pending, or to Seller's or either of the
Companies' knowledge, threatened, and neither of the Companies have made
assignment for the benefit of creditors, nor taken any action with a view to, or
which would constitute a basis for, the institution of any such insolvency
proceedings.
3.1.25 BOOKS AND RECORDS. The books, records and accounts of
the Companies and the WINCO Subsidiaries maintained with respect to each of the
Companies, the WINCO Subsidiaries and the Station, accurately and fairly
reflect, in reasonable detail, in all material respects, the transactions and
the assets and liabilities of the applicable Companies, the WINCO Subsidiaries
and the Station. Neither Seller nor either of the Companies have engaged in any
transaction, maintained any bank account or used any of the funds of the
Companies except for transactions, bank accounts and funds which have been and
are reflected, in all material respects, in the normally maintained books and
records of the Companies.
3.1.26 ACCOUNTS RECEIVABLE. All accounts, notes and loans
receivable of the Companies reflected in the Companies' Financial Statements or
arising since the date thereof (a) arose in the ordinary course of business of
the Companies, (b) are subject to a reserve for bad
17
debts which has been computed in accordance with GAAP and (c) are valid and
genuine. Except as set forth on SCHEDULE 3.1.26, all such accounts, notes and
loans receivable are free and clear of Liens. There is no right or claim of
offset, no valid defenses or counterclaims with respect to any such accounts,
notes or loans receivable. None of the obligors of such accounts, notes or loans
receivable has refused or given notice that it refuses to pay the full amount or
any material portion thereof.
3.1.27 AVAILABILITY OF DOCUMENTS. Each of the Companies has
heretofore made available for inspection by Buyer and its representatives true,
correct and complete copies of the charter and bylaws or other organizational
documents of each Company and of each WINCO Subsidiary, all written agreements,
arrangements, commitments, and documents referred to in the Schedules hereto,
and the corporate minute books of each Company and of each WINCO Subsidiary.
Such corporate minute books contain all of the minutes of meetings of
stockholders, board of directors, and any committees of the board of directors
of the Companies and of each WINCO Subsidiary and all of the written consents to
action executed in lieu thereof.
3.1.28 INTEREST IN COMPETITORS, SUPPLIERS AND CUSTOMERS.
Except as set forth on SCHEDULE 3.1.28 hereto, neither Seller nor any officer,
director, partner or Affiliate of the Companies or Seller has any ownership
interest in any competitor, supplier, customer or other service provider of the
Companies or any property used in the operation of the businesses of the
Companies.
3.1.29 CONTROLLED GROUP LIABILITY. The Companies are not and
will not be subject to any liability on account of Seller and the Companies
having been affiliated, prior to the Closing Date, directly or indirectly, with
any other entity or person under Code Section 414, ERISA Section 4001 or any
similar foreign law.
3.1.30 BARTER ARRANGEMENTS. SCHEDULE 3.1.30 accurately
describes all Trade Agreements of the Companies or of Seller relating to the
operation of the Station which are outstanding as of the date hereof. With
respect to the Station, all such advertising time sold under Trade Agreements
may, at the Station's option, be, preempted by advertising time that is sold for
cash. All Trade Agreements have been entered into in the ordinary course of
business consistent with past practices.
3.1.31 SETTLEMENT AGREEMENT. Buyer has been provided with true
and complete copies of the Letter Agreement dated January 24, 1997 between the
Rainbow-PUSH Coalition, successor to the National Rainbow Coalition, and WINCO
and all other documents related thereto (collectively, the "Settlement
Agreement"). The Settlement Agreement is a valid and binding obligation of WINCO
and is in full force and effect and WINCO has complied and satisfied all of its
obligations under the Settlement Agreement required to be satisfied as of the
date hereof and Seller and the Companies shall continue to comply with and
satisfy such obligations of WINCO through the Closing Date. WINCO has no
outstanding payment obligations under, or arising from, the Settlement
Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents
and warrants to Seller the following:
4.1.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is duly qualified to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure to so qualify has
not had and would not reasonably be expected to have a material adverse effect
on the assets, or the business of Buyer, or on Buyer's ability to consummate the
transactions contemplated by this Agreement.
4.1.2 AUTHORIZATION AND BINDING OBLIGATION. Buyer has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. Buyer's execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms.
4.1.3 QUALIFICATION. To Buyer's knowledge, there is no fact,
allegation, condition, or circumstance that could reasonably be expected to
prevent the prompt grant of the FCC Consent. Buyer knows of no fact that would,
under the Communications Act, or the rules, regulations and policies of the FCC,
disqualify Buyer from acquiring the Shares or, as of the date hereof, otherwise
require Buyer to obtain a waiver of any FCC rule, regulation or policy in order
to obtain the FCC Consent. There are no proceedings, complaints, notices of
forfeiture, claims, or investigations pending or, to the knowledge of Buyer,
threatened against any or in respect of any of the broadcast stations licensed
to Buyer or its Affiliates that would materially impair the qualifications of
Buyer to acquire the Shares or delay the FCC's processing of the FCC
Applications.
4.1.4 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in SCHEDULE 4.1.4 hereof, the execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby by
Buyer: (a) do not violate, conflict with or result in any breach of any
provision of the charter or bylaws of Buyer; (b) violate, conflict with or will
result in a violation or breach of, or constitute a default (with or without due
notice or lapse of time or both) under, or permit the termination of, or will
result in the acceleration of, or entitle any party to accelerate (whether as a
result of the sale of the Shares or otherwise) any obligation, or result in the
loss of any benefit, or give rise to the creation of any lien, charge, security
interest or encumbrance upon any of the properties or assets of Buyer or any of
its subsidiaries under any of the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture or deed of trust, or any
license, lease, agreement or other instrument or obligation to which any of them
are a party or by which they or any of their
19
properties or assets may be bound or affected, or (iii) violate any order, writ,
judgment, injunction, decree, statute, rule or regulation of any Governmental
Entity applicable to Buyer or any of its respective properties or assets, except
for those violations that individually or in the aggregate could not reasonably
be expected to have a material adverse effect on Buyer's ability to consummate
the transactions contemplated by this Agreement.
4.1.5 LITIGATION. There are no actions, suits, inquiries,
judicial or administrative proceedings, or arbitrations pending or, to the
knowledge of Buyer, threatened against Buyer or any of its respective properties
or assets by or before any arbitrator or Governmental Entity nor are there any
investigations relating to Buyer or any of its respective properties or assets
pending or, to the knowledge of Buyer, threatened by or before any arbitrator or
Governmental Entity that has had or that reasonably could be expected to have a
material adverse effect on Buyer's ability to consummate the transactions
contemplated by this Agreement. There are no material judgments, decrees,
injunctions, or orders of any Governmental Entity or arbitrator outstanding
against Buyer or any of its respective properties or assets that has had or that
reasonably could be expected to have a material adverse effect on Buyer's
ability to consummate the transactions contemplated by this Agreement. There is
no action, suit, inquiry, judicial or administrative proceeding pending, or, to
the knowledge of Buyer, threatened against Buyer by a third party relating to
the transactions contemplated by this Agreement.
4.1.6 COMMISSION OR FINDER'S FEES. Neither Buyer nor any
entity acting on behalf of Buyer has agreed to pay a commission, finder's fee or
similar payment to any person or entity in connection with this Agreement or any
matter related hereto.
4.1.7 FULL DISCLOSURE. No representation or warranty by Buyer
contained in this Agreement (including the Disclosure Schedules hereto) or in
any certificate furnished pursuant to this Agreement contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading.
4.1.8 INVESTMENT INTENT; SOPHISTICATED BUYER. Buyer (a) is an
informed sophisticated entity with sufficient knowledge and experience in
investing so as to be able to evaluate the risks and merits of its investment in
the Shares, (b) is financially able to bear the risks of investing in the
Companies, (c) has had an opportunity to discuss the business, management and
financial affairs of the Companies with the management of the Companies, (d) is
acquiring the Shares for its own account for the purpose of investment and not
with a view to or for sale in connection with any distribution thereof, (e)
understands that (i) the Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), (ii) the Shares must be held
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, (f) has no present need for
liquidity in connection with its purchase of the Shares, (g) understands that
the purchase of the Shares involves a high degree of risk, and (h) acknowledges
that the purchase of the Shares is consistent with its general investment
objectives.
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ARTICLE 5
COVENANTS OF SELLER AND THE COMPANIES
5.1 Each of the Companies and Seller covenant and agree with
Buyer that, pending Closing and except as otherwise agreed to in writing by
Buyer:
5.1.1 CONDUCT PRIOR TO THE CLOSING DATE. Each of the Companies
shall:
(a) ______ subject to the provisions of the TBA if the
Commencement Date (as defined in the TBA) has occurred, use
commercially reasonable efforts to maintain its present business
organization, keep available the services of its present employees and
independent contractors, preserve its relationships with its customers
and others having business relationships with it, and refrain from
materially and adversely changing any of its business policies
(including but not limited to advertising (including substantially the
same amount of cash expenditure), marketing, pricing, purchasing,
personnel, sales, and budget policies);
(b) ______ maintain its books of account and records in the
usual and ordinary manner and in accordance with GAAP except as
otherwise provided in Section 3.1.6;
(c) ______ notify Buyer if the regular broadcast transmission
of the Station from its main transmitting facilities at full authorized
effective radiated power is interrupted for a period of more than five
consecutive hours or for an aggregate of ten or more hours in any
continuous three-day period;
(d) ______ conduct its business in all material respects in
compliance with the terms of the Station Licenses and all applicable
laws, rules, and regulations, including, without limitation, the
applicable rules and regulations of the FCC through the Closing Date
and, subject to the provisions of the TBA if the Commencement Date has
occurred, operate in the usual and ordinary course of business in
accordance with past practices;
(e) ______ use, repair, and, if necessary, replace any of the
Station's studio and transmission assets in a reasonable manner
consistent with historical practice and maintain its assets in
substantially their current condition, ordinary wear and tear excepted;
(f) ______ maintain insurance in conformity with Section
3.1.10 through the Closing Date;
(g) ______ not knowingly incur any debts, obligations, or
liabilities (absolute, accrued, contingent, or otherwise) that include
obligations (monetary or otherwise) to be performed by Buyer after the
Closing that exceed $50,000 individually or $150,000 in the aggregate;
21
(h) not lease, mortgage, pledge, or subject to a lien,
claim, or encumbrance (other than Permitted Liens) any of its assets or
sell or transfer any of its assets without replacing such assets with
an asset of substantially the same value and utility;
(i) without the prior consent of Buyer, which consent
shall not be unreasonably withheld or delayed, (x) not modify or extend
any Contracts, other than Contracts for the sale of advertising for
cash, or (y) enter into any new Contract, other than Contracts for the
sale of advertising time for cash, or other than non-advertising
Contracts obligating the Companies to provide payments or benefits of
less than $50,000 each over the life of the Contract and $150,000 in
the aggregate;
(j) except for stay bonuses which are taken into
account in the Working Capital Amount or the Liability Adjustment
Amount, not make or grant any general wage or salary increase or
generally materially modify the employees' terms and conditions of
employment, other than in the ordinary course of business, consistent
with past practices, and with respect to any Station Management and
on-air personnel, the Companies shall not make or grant any wage or
salary increase or modify any terms and conditions of employment
without the prior consent of Buyer;
(k) not make (x) any change in the accounting
principles, methods, or practices followed by it or depreciation or
amortization policies or rates or (y) any change in any Tax election or
settle or compromise any Tax liability;
(l) not make any loans or make any dividends or
distributions;
(m) other than in the ordinary course of business, not
cancel or compromise any debt or claim, or waive or release any right,
of material value;
(n) not disclose to any person (other than Buyer and
its representatives) any confidential or proprietary information;
(o) use its commercially reasonable efforts to maintain
the present format of the Station and with programming consistent with
past practices;
(p) subject to the provisions of the TBA if the
Commencement Date has occurred, other than in the ordinary course of
business, not increase the number of regularly scheduled commercial
units run during the day-parts on the Station (other than changes in
the number of commercial units run during any day-part as a result of
operating difficulties that require commercial units to be broadcast at
times other than as scheduled);
(q) not make capital expenditures, or enter into any
commitment which commits the Companies to expend, in the aggregate, in
excess of $500,000;
22
(r) not (x) issue, grant or dispose of, or make any
agreement, arrangement or commitment obligating it to issue, grant or
dispose of, any of its capital stock or other securities, (y) authorize
or effect any reorganization, recapitalization, or split-up of its
capital stock or (z) redeem, purchase, or otherwise acquire, directly
or indirectly, any of its capital stock;
(s) not amend or otherwise change its articles of
incorporation or code of regulations or the charters or bylaws of the
WINCOM Subsidiaries; and
(t) agree to do any of the foregoing.
5.1.2 ACCESS. The Companies and Seller shall (a) give Buyer
and Buyer's counsel, accountants, engineers and other representatives, including
environmental consultants, reasonable access during normal business hours to all
of the Companies' properties, books, Contracts, Trade Agreements, reports and
records including financial information and Tax Returns, and to all Real Estate,
buildings and equipment, in order that Buyer may have full opportunity to make
such investigation, including but not limited to, environmental assessments, as
it desires of the affairs of the Companies and the Station and (b) furnish Buyer
with information, and copies of all documents and agreements including but not
limited to financial and operating data and other information concerning the
financial condition, results of operations and business of the Companies and the
Station, that Buyer may reasonably request. The rights of Buyer under this
Section shall not be exercised in such a manner as to interfere unreasonably
with the business of the Station.
5.1.3 SATISFACTION OF CONDITIONS; CLOSING. Seller and the
Companies shall use all commercially reasonable efforts to conduct the business
of the Companies and the Station in such a manner that on the Closing Date the
representations and warranties of Seller and the Companies contained in this
Agreement shall be true in all material respects as though such representations
and warranties were made on and as of such date. Furthermore, the Companies
shall cooperate with Buyer and use all commercially reasonable efforts to
satisfy promptly all conditions required hereby to be satisfied by Seller and
the Companies in order to expedite the consummation of the transactions
contemplated hereby.
5.1.4 SALE OF ACQUIRED ASSETS; NEGOTIATIONS. Neither Seller
nor either of the Companies shall, and Seller and the Companies shall cause
their respective Affiliates, directors, officers, employees, agents,
representatives, legal counsel, and financial advisors not to, (a) solicit,
initiate, accept, consider, entertain or encourage the submission of proposals
or offers from any person or entity with respect to the transactions
contemplated by this Agreement or any similar transaction wherein such person or
entity would directly or indirectly acquire all or any portion of the assets of
either of the Companies or ownership interests in either of the Companies, or
any merger, consolidation, or business combination, directly or indirectly, with
or for either of the Companies or all or substantially all of either of the
Companies' business, or (b) participate in any negotiations regarding, or,
except as required by legal process (including pursuant to discovery or
agreements existing on the date hereof), furnish to any person or entity (other
than Buyer) to do or seek any of the foregoing. Neither Seller nor either of the
Companies
23
shall enter into any agreement or consummate any transactions that would
interfere with the consummation of the transactions contemplated by this
Agreement. Each of Seller and the Companies shall promptly notify Buyer if it
receives any written inquiry, proposal or offer described in this Section 5.1.4
or any verbal inquiry, proposal or offer described in this Section 5.1.4 that is
competitive with the terms of the transactions contemplated by this Agreement,
and such Companies or Seller, as applicable, shall inform such inquiring person
or entity of the existence of this Agreement and make such inquiring person or
entity aware of Seller's and the Companies' obligations under this Section
5.1.4. The notification under this Section 5.1.4 shall include the identity of
the person or entity making such inquiry, offer, or other proposal, the terms
thereof, and any other information with respect thereto as Buyer may reasonably
request. Neither Seller nor the Companies shall provide any confidential
information concerning the Companies' business or properties or assets to any
third party other than in the ordinary course of the business of the Companies
and consistent with prior practices of the Companies. Seller and the Companies
have ceased and caused to be terminated any existing activities, discussions or
negotiations with any person or entity conducted heretofore with respect to any
of the foregoing.
5.1.5 NO INCONSISTENT ACTION. Neither Seller nor either of the
Companies shall take any action which is materially inconsistent with its
respective obligations under this Agreement.
5.1.6 NOTIFICATION. Seller and the Companies shall promptly
notify Buyer in writing of (a) the failure of Seller or either of the Companies
or, to Seller's or the Companies' knowledge, any employee or agent of Seller or
the Companies to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with hereunder; (b) the occurrence of any
event that would entitle Buyer to terminate this Agreement pursuant to Section
12.1; or (c) of any overt threat or actual resignation or termination of any
Station Management or over-the-air personnel at the Station or any officers or
directors of the Companies prior to the Closing.
5.1.7 FCC REPORTS. Except as set forth on SCHEDULE 5.1.7, the
Companies shall file on a current basis through the Closing Date all reports and
documents required to be filed with the FCC with respect to the Station
Licenses. Copies of each such report and document filed between the date hereof
and the Closing Date shall be furnished to Buyer promptly after its filing.
5.1.8 UPDATING OF INFORMATION. Between the date of this
Agreement and the Closing Date, unless and until the Commencement Date has
occurred, the Companies will deliver to Buyer, on a monthly basis within 30 days
of the end of each month, information relating to the operation of the Station,
including weekly sales reports and such other financial information that may be
reasonably requested.
5.1.9 RESPONSE TO CERTAIN ACTIONS. Seller and the Companies
agree to cooperate and use their commercially reasonable efforts to contest and
resist any action, including administrative or judicial action, and make
reasonable attempts to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
24
permanent, that is in effect and that restricts, prevents or prohibits the
consummation of the transactions contemplated by this Agreement.
5.1.10 BARTER AND TRADE. Seller and the Companies shall use
their commercially reasonable efforts to (a) reduce the total amount of
advertising time owed for other than cash and (b) if the value of the Companies'
obligations to provide goods or services other than for cash is greater than the
value of the goods or services to be received by the Companies other than for
cash on or after the Closing Date, reduce such excess amount prior to the
Closing Date; provided, however, that in no event shall the Purchase Price be
decreased as result of such remaining excess value existing as of the Closing.
Any Trade Agreements entered into during the period between the date hereof and
the Closing Date shall be entered into only in the ordinary course of the
Companies' business and consistent with past practices.
5.1.11 INTERIM FINANCIAL STATEMENTS. Seller and the Companies
shall promptly deliver to Buyer copies of any monthly, quarterly or annual
financial statements relating to the Companies' operations that may be prepared
by either of them during the period from the date hereof through the Closing
Date. Such financial statements shall fairly present, in all material respects,
the financial position and results of operations of the Companies as at the
dates and for the periods indicated, and shall be prepared on a basis consistent
and in accordance with the basis upon which the financial statements in Section
3.1.6 were prepared.
5.1.12 ESTOPPEL CERTIFICATES. If requested by Buyer within 30
days of the date of this Agreement, the Companies and Seller shall use
commercially reasonable efforts to obtain from third parties the estoppel
certificates, nondisturbance agreements, and/or written clarifications of the
rights of Buyer thereunder, all in form and substance reasonably satisfactory to
Buyer.
5.1.13 TERMINATION OF RP RADIO AGREEMENT. Seller shall cause
any agreements, arrangements or understandings of the Companies or the WINCO
Subsidiaries with RP Radio, LLC (the "RP Radio Agreement") to be terminated and
of no further force and effect as of the Closing. Sellers agree that Buyer (and
following the Closing, Buyer and the Companies) shall have no obligations or
liabilities arising from or related to such agreements, arrangements or
understandings.
5.1.14 1997 AUDITED FINANCIAL STATEMENTS. Seller agrees that
within fifteen (15) business days from the date hereof, Seller shall provide to
Buyer true and complete copies of the consolidated audited balance sheet of
WINCOM and its subsidiaries and Affiliated Radio Stations at December 31, 1997
and the related statements of operations and cash flow for the fiscal year then
ended, with an audit report thereon issued by Deloitte & Touche LLP, together
with unaudited combining balance sheet and statement of operations of WINCOM and
its subsidiaries (the "1997 Audited Financial Statements"). The 1997 Audited
Financial Statements, including the related notes, will be prepared in
accordance with GAAP and, will present fairly, in all material respects, the
financial position, results of operations of WINCOM and its subsidiaries as of
such date and for the period then ended (subject to the absence of notes). The
1997 Audited Financial Statements shall be substantially identical in all
respects to the Draft
25
1997 Financial Statements except for the debt with Chemical Bank which will be
reclassified from long-term debt to current portion of long-term debt. Upon the
delivery of the 1997 Audited Financial Statements by Seller pursuant to this
Section 5.1.14, the Companies' Financial Statements shall be deemed to include
the 1997 Audited Financial Statements for all purposes under this Agreement.
ARTICLE 6
COVENANTS OF BUYER
6.1 Buyer covenants and agrees that, pending the Closing and
except as otherwise agreed to in writing by Seller:
6.1.1 NOTIFICATION. Buyer shall promptly notify Seller in
writing of (a) any litigation, arbitration or administrative proceeding pending
or, to its knowledge, threatened against Buyer which challenges the transactions
contemplated hereby or (b) the failure of Buyer, or, to Buyer's knowledge, any
employee or agent of Buyer to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
hereunder and (c) the occurrence of any event that would entitle Seller to
terminate this Agreement pursuant to Section 12.1.
6.1.2 NO INCONSISTENT ACTION. Buyer shall not take any action
which is materially inconsistent with its obligations under this Agreement.
6.1.3 POST-CLOSING ACCESS. Buyer, for a period of seven years
following the Closing Date, shall make available during normal business hours
for audit and inspection by Seller and its representatives, for any reasonable
purpose and upon reasonable notice, all records, files, documents and
correspondence of the Companies relating to the pre-Closing period. During such
seven-year period, Buyer shall at no time dispose of or destroy any such
records, files, documents and correspondence without giving 30 days prior notice
to Seller to permit Seller, at its expense, to examine, duplicate or take
possession of and title to such records, files, documents and correspondence.
All information, records, files, documents and correspondence made available or
disclosed under this Section 6.1.3 shall be kept confidential.
6.1.4 SATISFACTION OF CONDITIONS; CLOSING. Buyer shall use all
commercially reasonable efforts to conduct its business in such a manner that on
the Closing Date the representations and warranties of Buyer contained in the
Agreement shall be true in all material respects as though such representations
and warranties were made on and as of such date. Buyer shall cooperate with
Seller and the Companies and use commercially reasonable efforts to satisfy
promptly all conditions required hereby to be satisfied by Buyer in order to
expedite the consummation of the transactions contemplated hereby.
6.1.5 RESPONSE TO CERTAIN ACTIONS. Buyer agrees to cooperate
and use its commercially reasonable efforts to contest and resist any action,
including administrative or judicial action, and make reasonable attempts to
have vacated, lifted, reversed or overturned any
26
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that restricts, prevents or prohibits the
consummation of the transactions contemplated by this Agreement and Buyer agrees
to take the actions described (under the circumstances so described) in SCHEDULE
6.1.5.
ARTICLE 7
JOINT COVENANTS
Buyer, Seller and the Companies covenant and agree that, pending the
Closing and except as otherwise agreed to in writing, they shall act in
accordance with the following:
7.1 FCC APPLICATIONS. Buyer, Seller and the Companies shall
prosecute the FCC Applications with all reasonable diligence and otherwise use
their commercially reasonable efforts to obtain the FCC Consent as expeditiously
as practicable, but none of Buyer, the Companies or Seller shall have any
obligation to satisfy complainants or the FCC by taking any steps which would
have a material adverse effect upon Buyer, the Companies or Seller (other than
Buyer's obligations under Section 6.1.5). Notwithstanding anything to the
contrary contained herein, Buyer or Seller may terminate this Agreement upon
notice to the other, if, for any reason, other than Buyer's failure to comply
with Section 6.1.5 (in which case only Seller can terminate), the FCC
Applications are designated for hearing by the FCC; provided, however, that
notice of termination must be given within 20 days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section 7.1, the parties shall be released and
discharged from any further obligation hereunder without being subject to a
claim by Seller for liquidated damages or for any other claims for damages.
7.2 CONFIDENTIALITY. Each of Buyer, Seller and the Companies
shall keep confidential all information obtained by it with respect to the other
parties hereto in connection with this Agreement and the negotiations preceding
this Agreement, including, without limitation, the results of, and information
relating to, the Studies (as defined in Section 7.6), and will use such
information solely in connection with the transactions contemplated by this
Agreement, and if the transactions contemplated hereby are not consummated for
any reason, each shall return to each other party hereto, without retaining a
copy thereof, any schedules, documents or other written information obtained
from such other party in connection with this Agreement and the transactions
contemplated hereby except to the extent required or useful in connection with
any claim made with respect to the transactions contemplated by this Agreement
or the negotiation thereof which will be returned following settlement of the
claim. Notwithstanding the foregoing, no party shall be required to keep
confidential or return any information which (a) is known or available through
other lawful sources, not bound by a confidentiality agreement with the
disclosing party, or (b) is or becomes publicly known through no fault of the
receiving party or its agents, or (c) is required to be disclosed pursuant to an
order or request of a judicial or government authority (provided the
non-disclosing party is given reasonable prior notice such that it may seek, at
its expense, confidential treatment of the information to be disclosed), (d) is
developed by the receiving party independently of the disclosure by the
disclosing party or (e) is
27
required to be disclosed under applicable law or rule, as determined by
counsel for the receiving party.
7.3 COOPERATION. Buyer, Seller and the Companies shall cooperate
fully with one another in taking any actions, including actions to obtain the
required consent of any governmental instrumentality or any third party
necessary or helpful to accomplish the transactions contemplated by this
Agreement; provided, however, that no party shall be required to take any action
which would have a material adverse effect upon it.
7.4 PUBLIC ANNOUNCEMENTS. None of Buyer, Seller or the Companies
shall issue any press release or make any disclosure with respect to the
transactions contemplated by this Agreement without the prior written approval
of the other party, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any securities exchange or
the Nasdaq National Market or any stock exchange or Nasdaq National Market
regulations in which case Buyer, Seller or the Companies, as the case may be,
shall give notice to the other parties prior to making such disclosure.
7.5 XXXX-XXXXX-XXXXXX. Seller, Buyer and the Companies shall
submit to the United States Department of Justice and the United States Federal
Trade Commission ("FTC") not later than 15 business days after the date of this
Agreement all of the forms and information applicable to this transaction
required under the HSR Act and will use commercially reasonable efforts to
respond promptly to any request by them for additional information. Buyer, the
Companies and Seller shall use commercially reasonable efforts (including the
filing of a request for early termination) to obtain the early termination of
the waiting period under the HSR Act. Seller shall reimburse Buyer for one-half
of the filing fees for Buyer's HSR Act filing.
7.6 CONDITION OF REAL ESTATE. Buyer may, at its sole expense,
conduct environmental studies, title examinations, and land surveys (the
"Studies") of the Real Estate provided all information received as a result of,
or in the course of, any of the Studies will be deemed confidential (subject to
Section 7.2). Seller and the Companies agree to cooperate with any reasonable
request of Buyer for a site assessment or site review concerning any
environmental, title or survey matter, including the making available of such
personnel of the Companies as Buyer may reasonably request, so long as such
activities do not unreasonably interfere with the conduct of the Companies'
businesses. At the discretion of Buyer, Buyer may arrange, at its sole expense,
for one or more independent contractors to conduct tests of the Real Estate,
including tests of air, soil (including surface and subsurface materials),
surface water and ground water, or any equipment or facilities located thereon,
in order to identify any present or past release or threatened release of any
hazardous substances. Such tests may be done at any time, or from time to time,
upon reasonable notice and under reasonable conditions, which do not impede the
performance of such tests. If Buyer notifies Seller within 45 days of the date
of this Agreement that the Studies disclose potential Environmental Costs and
Liabilities in excess of $100,000, or the presence of Hazardous Materials at
concentrations exceeding those allowed by Environmental Laws, evidence
encroachments that materially and adversely affect the use (for the purpose
currently used) of the Real Estate, or any other matters that materially affect
the title, value or use of the Real Estate, Seller shall promptly commence
remedial action at its expense to
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cure the condition giving rise to such matter and attempt to cure such condition
prior to the Closing; provided that Seller shall not be obligated to spend (but
may choose to spend) more than $100,000 in the aggregate in its attempts to cure
all such conditions. Seller shall notify Buyer within 30 days after its receipt
of Buyer's Studies if it determines that it is unable to cure such conditions
for $100,000 or less and chooses not to attempt to cure such conditions, in
which case Buyer may elect, within 30 days after Buyer's receipt of Seller's
notice that it chooses not to attempt to cure such conditions (a) to terminate
this Agreement or (b) to waive such obligations and receive a $100,000 credit at
the Closing. If this Agreement is terminated in accordance with the immediately
preceding sentence, no party shall have any liability to the other with respect
to such termination. Either party may extend the Closing by not more than 30
days if either reasonably determines that any necessary remedial action can be
completed during such period.
7.7 EMPLOYEE BENEFITS MATTERS.
(a) ______ As of the Closing Date, Buyer shall permit each
employee of the Companies who has an account balance under the Seller's 401(k)
Plan (as hereinafter defined) (a "Participant") to rollover (whether by direct
or indirect rollover, as selected by such Participant), at any time, his or her
"eligible rollover distribution" (as defined under Section 402(c)(4) of the
Code) from the 401(k) plan in which the Companies are participating employers
(the "Seller's 401(k) Plan") to a retirement plan maintained by Buyer that is
qualified under Section 401(a) of the Code and contains a cash or deferred
feature under Section 401(k) of the Code ("Buyer's 401(k) Plan"). Buyer's 401(k)
Plan shall not impose any waiting periods, service requirements or other
limitations that would prohibit any Participant from rolling over an eligible
rollover distribution from Seller's 401(k) Plan, at any time, into Buyer's
401(k) Plan following the Closing Date. Seller and Buyer shall cooperate with
each other (and cause the trustees of Seller's 401(k) Plan and Buyer's 401(k)
Plan to cooperate with each other) with respect to the rollover of the
distributions to the Participants.
(b) ______ Seller shall be responsible for providing
continuation coverage pursuant to Section 601 et seq. of ERISA and Section 4980B
of the Code ("COBRA Coverage") to the current and former employees of the
Companies and their beneficiaries who have elected COBRA coverage prior to the
Closing Date. Buyer shall be responsible for COBRA Coverage to the current and
former employees of the Company and their beneficiaries who experience a
"qualifying event" (as defined in Section 4980B of the Code) prior to, on, or
after the Closing Date but who have not elected COBRA Coverage prior to the
Closing Date. Buyer shall cause its health plan(s) (A) to waive any pre-existing
condition exclusions, evidence of insurability provisions and waiting periods
(except to the extent that such exclusions would have then applied or waiting
periods were not satisfied under Seller's health plan(s)); and (B) to credit or
otherwise consider any monies paid or accrued under Seller's health plan(s), by
employees of the Companies prior to the Closing Date toward any deductibles,
co-pays or other maximums under Buyer's health plan(s) during the first plan
year in which the Closing Date occurs.
(c) Buyer shall cause each employee benefit plan or
compensation arrangement established, maintained or contributed to by Buyer, the
Companies or any of their Affiliates to grant full credit for all service or
employment with, or recognized by, Seller, the
29
Companies and any of their Affiliates for purposes of eligibility and vesting
with respect to any employee pension benefit plan, as defined in Section 3(2) of
ERISA, and, for purposes of eligibility and determining the amount of any
benefit with respect to any vacation program and any employee welfare benefit
plan, as defined in Section 3(1) of ERISA, including, without limitation, any
sick pay plan and severance plan.
(d) For purposes of this Section 7.7, "Affiliate" shall
mean an entity required to be aggregated as a single employer under Section 414
of the Code with respect to Seller, any of the Companies or Buyer, as the
context may require.
ARTICLE 8
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder, including, without limitation, the
obligation to close the transactions contemplated herein, are, at its option,
subject to satisfaction, at or prior to the Closing Date, of all of the
following conditions, any of which may be waived by Buyer:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Subject to the
provisions of this Section 8.1, all representations and warranties of Seller and
the Companies made in this Agreement or in any Exhibit, Schedule or document
delivered pursuant hereto, shall be true and correct in all material respects as
of the date hereof, on and as of the Commencement Date, if applicable, and on
and as of the Closing Date as if made on and as of that date, except for changes
expressly permitted by the terms of this Agreement and except those given as of
a specified date which must only be true and correct as of such specified date.
Notwithstanding anything herein to the contrary, (i) a breach of Section 3.1.9
resulting from Buyer's breach of Section 6.1.5 shall not be deemed a breach of
Section 3.1.9 by Seller and (ii) if the Commencement Date has occurred, the
conditions to Buyer's obligation to effect the Closing shall not be deemed to
have failed to be satisfied solely as the result of the failure of the
representations and warranties of Seller and the Companies in Sections 3.1.7,
3.1.8(a), 3.1.9, 3.1.14, 3.1.17, 3.1.20 or 3.1.21 to be true and correct in all
material respects as of the Closing Date if such failure is caused by actions
taken by Buyer pursuant to the TBA.
8.2 COMPLIANCE WITH AGREEMENT. All of the terms, covenants and
conditions to be complied with and performed by Seller and the Companies on or
prior to the Closing Date shall have been complied with or performed in all
material respects.
8.3 THIRD PARTY CONSENTS AND APPROVALS. Seller and the Companies
shall have obtained all third-party consents and approvals, if any, required for
the transfer or continuance, as the case may be, of the Contracts designated by
an asterisk as "essential" on SCHEDULE 3.1.17 (and contracts of a similar nature
that would have been marked as such on SCHEDULE 3.1.17 had they been in
existence on the date of this Agreement).
8.4 CLOSING CERTIFICATES. Buyer shall have received a
certificate, dated as of the Closing Date, from Seller and the Companies,
executed by an executive officer of each of Seller and the Companies to the
effect of Sections 8.1 and 8.2.
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8.5 GOVERNMENTAL CONSENTS. (a) The FCC Consent shall have been
issued by the FCC without any conditions that would otherwise permit Buyer to
terminate this Agreement pursuant to Section 12.1(e), below, and the FCC Consent
shall have become a Final Order (as defined in Section 1.4).
(b) All applicable notification and waiting period
requirements under the HSR Act shall have been satisfied.
8.6 ADVERSE PROCEEDINGS. No injunction, order, decree or
judgment of any court, agency or other Governmental Entities shall have been
rendered against Seller, Buyer or either of the Companies which would render it
unlawful, as of the Closing, to effect the transactions contemplated by this
Agreement in accordance with its terms.
8.7 THE SHARES. Seller and the Companies shall have delivered or
caused to be delivered to Buyer, on the Closing Date, the stock certificates
evidencing the Shares, duly endorsed or accompanied by a duly executed stock
power assigning the shares to Buyer and otherwise in good form for transfer.
8.8 INDEMNIFICATION AND ESCROW AGREEMENT. Seller shall have executed
and delivered to Buyer the Indemnification and Escrow Agreement.
8.9 RELEASE OF ENCUMBRANCES. Evidence satisfactory to Buyer's counsel
of the payment or release of any and all Liens (other than Liens not required to
be released pursuant to the provisions of this Agreement).
8.10 LEGAL OPINIONS. Buyer shall have received an opinion of Proskauer
Rose LLP and Wiley, Rein & Fielding, each dated as of the Closing Date,
substantially in the form of EXHIBITS B-1 AND B-2 hereto.
8.11 XXXXXXX MONEY LETTER OF CREDIT. The Xxxxxxx Money Letter of Credit
(as defined in Section 11.3) shall have been returned to Buyer for cancellation.
8.12 NO MATERIAL ADVERSE CHANGE. Since the date hereof, and prior to
the Commencement Date, there shall have been no material adverse change to the
financial condition or operating results of the Companies (other than as a
result of regulatory changes affecting the radio broadcasting industry generally
or general economic conditions); provided, however, that a material decline in
ratings and/or a material decline in revenues caused by any decline in ratings
occurring at any time prior to the Closing shall not be deemed to be a material
adverse change to the financial condition or operating results of the Companies.
Following the Commencement Date, there shall have been no material adverse
change to the financial condition or operating results of the Companies that is
caused by actions taken by Seller or the Companies following the Commencement
Date.
8.13 RESIGNATION OF DIRECTORS. The directors of the Companies shall
have resigned effective as of the Closing Date.
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8.14 [Intentionally Omitted].
8.15 1445 CERTIFICATE. Seller shall have executed and delivered a
certificate, in a form reasonably satisfactory to Buyer, stating that Seller is
not a foreign person within the meaning of Section 1445 of the Code.
8.16 CREDIT FACILITY. Each of the Companies and the WINCO Subsidiaries
shall be released in full from all of their obligations and liabilities under
the Amended and Restated Credit Security and Pledge Agreement dated as of August
15, 1988 among Seller, the Companies, the WINCO Subsidiaries, WEBE Associates,
WICC Associates, Media Management Partners and Chemical Bank and Chemical Bank,
as Agent, together with any amendments and any successor agreements thereto (the
"Credit Agreement"). Buyer (and the Companies and the WINCO Subsidiaries after
the Closing Date) shall have no obligations or liabilities arising from or
related to the Credit Agreement.
8.17 RP RADIO AGREEMENT. Each of the Companies and the WINCO
Subsidiaries shall be released in full from all of their obligations and
liabilities under the RP Radio Agreement and Buyer (and the Companies and the
WINCO Subsidiaries after the Closing Date) shall have no obligations or
liabilities arising from or related to the RP Radio Agreement.
8.18 MANAGEMENT FEES. The management fees of Seller accrued by WINCO as
of Closing shall have been paid in full by WINCO to Seller and no further
obligation of WINCO to Seller with respect to such management fees shall be
outstanding.
ARTICLE 9
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder including, without limitation, the
obligation to close the transactions contemplated herein, are, at their option,
subject to the satisfaction, at or prior to the Closing Date, of all of the
following conditions any of which may be waived by Seller:
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Buyer made in this Agreement or in any
Exhibit, Schedule or document delivered pursuant hereto, shall be true and
correct in all material respects as of the date hereof and on and as of the
Closing Date as if made on and as of that date, except for changes expressly
permitted by the terms of this Agreement and except those given as of a
specified date which must only be true and correct as of such specified date.
9.2 COMPLIANCE WITH AGREEMENT. All the terms, covenants, and
conditions to be complied with and performed by Buyer on or prior to the Closing
Date shall have been complied with or performed in all material respects.
9.3 CERTIFICATIONS, ETC. Seller shall have received a
certificate, dated as of the Closing Date, from Buyer, executed by an executive
officer of Buyer to the effect of Sections 9.1 and 9.2.
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9.4 GOVERNMENTAL APPROVAL. (a) The FCC Consent shall have been issued
by the FCC and shall have become a Final Order (as defined in Section 4.1).
(b) All applicable notification and waiting period
requirements under the HSR Act shall have been satisfied.
9.5 ADVERSE PROCEEDINGS. No injunction, order, decree or judgment of
any court, agency or other Governmental Entities shall have been rendered
against Buyer, Seller or either of the Companies which would render it unlawful,
as of the Closing, to effect the transactions contemplated by this Agreement in
accordance with its terms.
9.6 OPINIONS. Buyer shall have delivered to Seller an opinion of Weil,
Gotshal & Xxxxxx LLP, dated as of the Closing Date, in the form of EXHIBIT C
hereto.
9.7 INDEMNIFICATION AND ESCROW AGREEMENT. Buyer shall have executed
and delivered to Seller the Indemnification and Escrow Agreement.
ARTICLE 10
TRANSFER TAXES; FEES AND EXPENSES
10.1 EXPENSES. Except as set forth in Sections 10.2 and, 10.3 below,
each party hereto shall be solely responsible for all costs and expense incurred
by it in connection with the negotiation, preparation and performance of and
compliance with the terms of this Agreement; provided that all such costs and
expenses of the Companies shall be borne by the Seller.
10.2 SALES AND TRANSFER TAXES. All sales, excise, use, transfer, deed,
duties, stamp, notary public and other similar taxes, duties and transfer fees
applicable to the transactions contemplated by this Agreement, including fees to
record assignments, shall be borne equally by Seller and Buyer. Buyer and Seller
agree to cooperate with each other and to file all necessary documentation
(including but not limited to, all Tax Returns) with respect to all amounts in a
timely manner.
10.3 GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees
imposed by any governmental authority the consent of or filing with which is
required for the consummation of the transactions contemplated hereby, including
but not limited to, the FCC, the FTC, and the Department of Justice shall be
borne equally by Buyer and Seller.
ARTICLE 11
LIQUIDATED DAMAGES, SPECIFIC PERFORMANCE, LETTER OF CREDIT
11.1 LIQUIDATED DAMAGES. If this Agreement is terminated by Seller
pursuant to Sections 12.1(b)(ii) or 12.1(g) the parties agree and acknowledge
that Seller will suffer damages that are not practicable to ascertain.
Accordingly, in such event, Seller shall be entitled to the
33
sum of $5,125,000 as liquidated damages (and not as a penalty), payable solely
and exclusively by drawing upon the Xxxxxxx Money Letter of Credit and through
the delivery to Seller, of the sum of $2,562,500 via wire transfer of
immediately available funds. The parties agree that the foregoing liquidated
damages are reasonable considering all the circumstances existing as of the date
hereof and constitute the parties' good faith estimate of the actual damages
reasonably expected to result from the termination of this Agreement pursuant to
Sections 12.1(b)(ii) or 12.1(g). In such event, Buyer shall immediately instruct
the Xxxxxxx Money Escrow Agent (as hereinafter defined) to deliver the Xxxxxxx
Money Letter of Credit to Seller to permit it to draw upon the Xxxxxxx Money
Letter of Credit and shall deliver to Seller, via wire transfer of immediately
available funds, the sum of $2,562,500. Seller agrees that, to the fullest
extent permitted by law, the right to draw upon the Xxxxxxx Money Letter of
Credit and to receive the additional sum of $2,562,500 from Buyer as provided in
this Section 11.1 shall be its sole and exclusive remedy with respect to any
damages whatsoever that Seller may suffer or allege to suffer as a result of a
termination pursuant to Sections 12.1(b)(ii) or 12.1(g). Except for a
termination pursuant to Sections 12.1(b)(ii) or 12.1(g) (for which the sole
recourse of Seller shall be as provided in this Section 11.1) or pursuant to
Section 12.1(a) or 7.6 (for which no party shall have any liability to the
other), the termination of this Agreement shall not relieve the parties for any
liability or obligation relating to their breaches of this Agreement occurring
prior to such termination.
11.2 SPECIFIC PERFORMANCE. In addition to any other remedies which
Buyer may have at law or in equity, Seller hereby acknowledges that the Shares
are unique, and that the harm to Buyer resulting from a breach by Seller of its
obligations to sell the Shares to Buyer cannot be adequately compensated by
damages. Accordingly, Seller agrees that Buyer shall have the right to have this
Agreement specifically performed by Seller, provided that Buyer is not in
material breach of this Agreement, and hereby agrees, in such event, not to
assert any objections to the imposition of the equitable remedy of specific
performance by any court of competent jurisdiction.
11.3 LETTER OF CREDIT.
11.3.1 Concurrently with the execution of this Agreement,
Buyer shall deposit an original, irrevocable letter of credit, which shall be in
a form reasonably satisfactory to Buyer and Seller (the "Xxxxxxx Money Letter of
Credit"), issued by The Toronto-Dominion Bank for the sum of $2,562,500 with Key
Trust Company of Ohio, N.A. (the "Xxxxxxx Money Escrow Agent") to be held in
escrow in accordance with the Xxxxxxx Money Escrow Agreement substantially in
the form of EXHIBIT D hereto.
11.3.2 The Xxxxxxx Money Letter of Credit shall be held by the
Xxxxxxx Money Escrow Agent in accordance with the terms of the Xxxxxxx Money
Escrow Agreement. Subject to satisfaction of the conditions to the Seller's
obligations set forth in Article 9, at the Closing, Seller shall instruct the
Xxxxxxx Money Escrow Agent to release and return the Xxxxxxx Money Letter of
Credit to Buyer for cancellation.
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11.3.3 If this Agreement is terminated as provided in Sections
12.1(b)(ii) or 12.1(g), Buyer shall instruct the Xxxxxxx Money Escrow Agent to
release the Xxxxxxx Money Letter of Credit to Seller, all as provided in Section
11.1. In all other events, Seller shall join in instructions to the Xxxxxxx
Money Escrow Agent to return the Xxxxxxx Money Letter of Credit to Buyer.
ARTICLE 12
TERMINATION RIGHTS
12.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing as follows:
(a) by the mutual consent of Buyer and Seller;
(b) by written notice of (i) Buyer to Seller if Seller
or either of the Companies breaches in any material respect any of
their representations or warranties or defaults in any material respect
in the observance or in the due and timely performance of any of their
covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of
breach or default served by Buyer or (ii) Seller or either of the
Companies to the Buyer if Buyer breaches in any material respect any of
its representations or warranties or default in any material respect in
the observance or in the due and timely performance of any of its
covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the notice of breach or
default served by Seller or the Companies;
(c) by Buyer, Seller or the Companies by written notice
to the other, if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or
taken any other action (which order, decree or ruling the parties
hereto shall use their best efforts to lift), in each case permanently
restraining, permanently enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable;
provided that Buyer shall not have the right to terminate this
Agreement pursuant to Section 12.1(c) unless Buyer has satisfied the
covenants contained in Section 6.1.5 hereof;
(d) by the party whose qualifications are not at issue,
if, for any reason, the FCC denies or dismisses any of the FCC
Applications and the time for reconsideration or court review under the
Communications Act with respect to such denial or dismissal has expired
and there is not pending with respect thereto a timely filed petition
for reconsideration or request for review;
(e) by written notice of Buyer to Seller if the FCC
Consent contains a condition on Buyer that (i) is unrelated to Buyer's
qualifications, (ii) could reasonably be expected to have a materially
adverse impact on the financial condition or business
35
operations of the Station, and (iii) the time for reconsideration or
court review under the Communications Act with respect to such
condition(s) has expired without the filing with respect thereto
of a timely petition for reconsideration or request for review;
(f) by written notice of Buyer to Seller, or by Seller
to the Buyer, if the Closing shall not have been consummated on or
before June 1, 1999, subject to extensions as provided in Sections 7.6
and 13.1; or
(g) by written notice of Seller to Buyer, if by May 31,
1999 all of the conditions of Closing by Buyer identified in Article 8
have been satisfied other than the expiration of the applicable waiting
period requirements under the HSR Act.
Notwithstanding the foregoing, no party hereto may effect a termination hereof
if such party is in material default or breach of this Agreement.
ARTICLE 13
RISK OF LOSS
13.1 RISK OF LOSS. (a) The risk of loss or damage to the assets of the
Companies shall be upon Seller at all times prior to the Closing Date. In the
event of loss or damage, Seller shall promptly notify Buyer thereof (the
"Seller's Risk of Loss Notice") and if the lost or damaged assets of the
Companies are capable of being replaced or repaired for an aggregate amount less
than $100,000, then Seller shall, at its sole cost and expense, replace or
repair such assets of the Companies prior to the Closing Date or deliver to
Buyer at the Closing an amount in cash equal to the cost of replacement or
repair of such assets of the Companies, as mutually agreed in good faith by
Buyer and Seller. Notwithstanding the foregoing, if the amount required to
replace or repair such Station Assets exceeds $100,000, Seller may elect not to
replace or repair such assets of the Companies (which election must be set forth
in the Seller's Risk of Loss Notice), provided, however, that in such event
Buyer, at its option, may elect, within 30 days after its receipt of the
Seller's Risk of Loss Notice, to terminate this Agreement without either party
being subject to a claim by the other for liquidated damages or any other
claims/or damages, or waive any default or breach with respect to the loss or
damage and receive a $100,000 credit at Closing. Either party may extend the
Closing Date by up to 30 days in order to allow Seller and the Companies to
complete the repair or replacement.
(b) Each of the Companies shall use its commercially
reasonable efforts to avoid the Station being off the air for three or more
consecutive days or five or more days in any 30 day period. The Companies shall
give prompt written notice to Buyer if either of the following (a "Specified
Event") shall occur: (i) the regular broadcast transmissions of the Station in
the normal and usual manner are interrupted or discontinued for more than thirty
(30) minutes; or (ii) the Station is operated at less than its licensed antenna
height above average terrain or at less than ninety percent (90%) of its
licensed effective radiated power. If any Specified Event persists for more than
seventy-two (72) consecutive hours, or five or more days, whether or not
consecutive, during any period of thirty (30) consecutive days, then Buyer may,
at its option:
36
(i) terminate this Agreement by written notice given to Seller and the Companies
not more than ten (10) days after the expiration of such thirty (30) day period
(without either party being subject to a claim by the other for liquidated
damages or any other claims for damages); or (ii) proceed in the manner set
forth in Section 13.1(a) above. In the event of termination of this Agreement by
Buyer pursuant to this Section 13.1, the parties shall be released and
discharged from any further obligation hereunder (without being subject to a
claim by Seller or the Companies for liquidated damages or any other claims for
damages). With respect to Acts of God which may adversely affect Station
operations, Seller shall use its commercially reasonable efforts to reinstate
Station operations within 30 days and shall have the Station operating at not
less than seventy percent (70%) of maximum authorized effective radiated power
by the Closing Date.
(c) RESOLUTION OF DISAGREEMENTS. If the parties are
unable to agree upon the extent of any loss or damage, the cost to repair,
replace or restore any lost or damaged property, the adequacy of any repair,
replacement, or restoration of any lost or damaged property, or any other matter
arising under this Section 13.1, the disagreement shall be referred to a
qualified consulting communications engineer mutually acceptable to Seller,
Buyer and the Companies who is a member of the Association of Federal
Communications Consulting Engineers, whose decision shall be final, binding upon
and non-appealable by the parties, and whose fees and expenses shall be paid
one-half by Seller and one-half by Buyer.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as to
representations and warranties contained in Section 3.1.1 which shall survive
the Closing indefinitely and Sections 3.1.14, 3.1.15 and 3.1.18 which shall
survive the Closing for a period of two years after the Closing Date (the
"Excepted Representations"), all representations and warranties made by Seller,
Buyer and the Companies in this Agreement, or pursuant hereto, shall survive the
consummation of the transactions contemplated in this Agreement for a period of
one year after the Closing Date, regardless of any investigation at any time
made by or on behalf of Buyer or Seller, and shall not be deemed merged in any
document or instrument executed or delivered at the Closing; provided, however,
that in the event the Closing occurs on or prior to January 4, 1999, all
representations and warranties surviving for one year after the Closing Date
shall instead survive until December 31, 1999. Buyer's sole remedies for any
breach of representation or warranty (other than Section 3.1.1) or pre-Closing
breach of a covenant or agreement shall be those set forth in the
Indemnification and Escrow Agreement.
14.2 CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. Unless the context
otherwise requires, (a) all references to Sections, Articles or Schedules are to
Sections, Articles or Schedules of or to this Agreement, (b) each term defined
in this Agreement has the meaning assigned to it, (c) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with generally accepted accounting principles as in effect on the date hereof,
(d) "or" is disjunctive but not necessarily exclusive, and (e) words in the
singular include
37
the plural and VICE VERSA, and (f) except with respect to Sections 3.1.15 and
7.7, the term "Affiliate" has the meaning given it in Rule 12b-2 of Regulation
12B under the Securities Exchange Act of 1934, as amended. All references to "$"
or dollar amounts will be to lawful currency of the United States of America.
14.3 FURTHER ASSURANCES. At and after the Closing, Seller shall from
time to time, at the request of and without further cost or expense to Buyer,
execute and deliver such other instruments of assignment, conveyance and
transfer and take such other actions as may reasonably be requested in order to
more effectively consummate the transactions contemplated hereby.
14.4 FINANCIAL STATEMENTS. At all times after the date hereof, Seller
and the Companies shall, and shall cause their representatives (including their
independent public accountants) to, cooperate in all reasonable respects with
the efforts of Buyer and their independent auditors to prepare such audited and
interim unaudited financial statements of the Companies as Buyer may reasonably
determine are necessary in connection with any filing required to be made by it
or any of its Affiliates under the Exchange Act of 1934, as amended (the
"Exchange Act"), or the Securities Act. Seller and the Companies shall execute
and deliver to Buyer's independent accountants such customary management
representation letters as they may require as a condition to their ability to
sign an unqualified report upon the audited financial statements of the
Companies for the periods for which such financial statements are required under
the Exchange Act or the Securities Act. Seller and the Companies shall cause
their independent public accountants to make available to Buyer and its
representatives all of their work papers related to the financial statements or
Tax Returns of Seller (to the extent they relate to the Station) and the
Companies and to provide Buyer's independent public accountants with full access
to those personnel who previously have been involved in the audit or review of
Seller's and the Companies' financial statements or Tax Returns. Any reasonable
out-of-pocket costs incurred by Seller in connection with Seller's obligations
under this Section 14.4 shall be promptly reimbursed by Buyer upon Buyer's
receipt of reasonably detailed information regarding such costs.
14.5 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that
without releasing Buyer from any of its obligations or liabilities hereunder (a)
nothing in this Agreement shall limit Buyer's ability to sell or transfer any or
all of its respective assets (whether by sale of stock or assets, or by merger,
consolidation or otherwise) without the consent of Seller or the Companies, (b)
nothing in this Agreement shall limit Buyer's ability to assign the Shares
(including the right to acquire the Shares at the Closing) to any Affiliate of
Buyer without the consent of Seller or the Companies, and (c) nothing in this
Agreement shall limit Buyer's ability to make a collateral assignment of its
rights under this Agreement to any institutional lender that provides funds to
Buyer without the consent of Seller or the Companies. Seller and the Companies
shall execute an acknowledgment of such assignment(s) and collateral assignments
in such forms as Buyer or its institutional lenders may from time to time
reasonably request; provided, however, that unless written notice is given to
Seller and the Companies that any such collateral assignment has been foreclosed
upon, Seller
38
and the Companies shall be entitled to deal exclusively with Buyer as to any
matters arising under this Agreement or any of the other agreements delivered
pursuant hereto. In the event of such an assignment, the provisions of this
Agreement shall inure to the benefit of and be binding on Buyer's successors and
assigns.
14.6 AMENDMENTS. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
14.7 HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
14.8 GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of New York without giving effect to
the choice of law provisions thereof.
14.9 NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and received when electronically confirmed if
sent by facsimile; on the date of personal delivery; on the third day after
deposit in the U.S. mail if mailed by registered or certified mail, postage
prepaid and return receipt requested; on the day after delivery to a nationally
recognized overnight courier service if sent by an overnight delivery service
for next morning delivery and shall be addressed to the following addresses (or
at such other address which party shall specify to the other party in accordance
herewith):
(a) In the case of Seller, to:
ML Media Partners L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx XxXxx-Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Proskauer Rose, LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
39
(b) In the case of Buyer:
Chancellor Media Corporation of Los Angeles
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
With copies to:
Chancellor Media Corporation of Los Angeles
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
14.10 SCHEDULES. The schedules and exhibits attached to this Agreement
and the other documents delivered pursuant hereto are hereby made a part of this
Agreement as if set forth in full herein.
14.11 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties hereto with respect to its subject matter and supersedes all
negotiations, prior discussions, agreements, letters of intent, and
understandings, written or oral, relating to the subject matter of this
Agreement.
14.12 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, invalid, or void to any extent for any reason, that provision
shall remain in force and effect to the maximum extent allowable, and the
enforceability and validity of the remaining provisions of this Agreement shall
not be affected thereby.
14.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute but one and the same instrument.
40
14.14 NO THIRD-PARTY RIGHTS. Nothing in this Agreement, express or
implied, shall be construed to confer upon any person, other than the parties
hereto, their successors and permitted assigns, any legal or equitable rights,
remedies, claims, obligations or liabilities under or by reason of this
Agreement (other than as provided for in the Indemnification and Escrow
Agreement).
14.15 ARBITRATION. All disputes which cannot be resolved by agreement
of the parties shall be arbitrated in Washington, D.C. in accordance with the
rules of the American Arbitration Association before a single arbitrator who
shall be jointly selected by Seller and Buyer, or if Seller and Buyer cannot
agree on the selection of such arbitrator, such arbitrator shall be selected by
the head of the Washington, D.C. Office of the American Arbitration Association.
The costs of such arbitrator shall be paid by Seller and Buyer in such
proportion as the arbitrator deems equitable based on the relative merits of the
positions of the parties.
[The remainder of this page is intentionally left blank]
41
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered as of the first above written.
SELLER:
ML MEDIA PARTNERS, L.P.
By: Media Management Partners, its general partner
By: RP Media Management, its general partner
By: IMP Media Management, Inc.
By: /S/ XXXXXXXXX XXXXX-XXXXX
Xxxxxxxxx XxXxx-Xxxxx
Vice President
THE COMPANIES:
WINCOM BROADCASTING CORP.
By: /S/ XXXXXXXXX XXXXX-XXXXX
Name:
Title:
WIN COMMUNICATIONS, INC.
By: /S/ XXXXXXXXX XXXXX-XXXXX
Name:
Title:
BUYER:
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By: /S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx
Senior Vice President
42
WQAL-FM, CLEVELAND, OHIO
STOCK PURCHASE AGREEMENT SCHEDULES
SCHEDULE 3.1.18 ERISA
ITEM NO. DESCRIPTION POLICY MANUAL
SECTION REFERENCE
(MANUAL ATTACHED)
1 BENEFITS AVAILABLE TO EMPLOYEES: SECTION 111
MEDICAL INSURANCE
MEDICAL INSURANCE UPON
TERMINATION
WORKERS COMPENSATION
2 COBRA SECTION 112
3 HOLIDAYS/COMPENSATION SECTIONS 113, 114,
PERSONAL DAYS/VACATION 115
4 ABSENCES SECTION 116
5 SHORT TERM SICK PAY POLICY SECTION 116
6 DISABILITY LEAVE OF ABSENCE SECTION 118
7 SEVERANCE SEE ATTACHED
SUMMARY
8 VACATION SEE ATTACHED
SUMMARY
9 401-K SAVINGS PLAN BOOKLET INCLUDED
10 ANTHEM BLUE CROSS/BLUE SHIELD 80/20% SPLIT
11 SALES COMMISSION SEE SCHEDULE
3.1.16 AND ATTACHED
SUMMARY
12 BONUS SEE SCHEDULE
3.1.16 AND ATTACHED
SUMMARY
13 OTHER FRINGE BENEFITS SEE ATTACHED
SUMMARY
14 LONG TERM DISABILITY
ITEM NO. DESCRIPTION POLICY MANUAL
SECTION REFERENCE
(MANUAL ATTACHED)
15 DENTAL
16 LIFE INSURANCE
17 SECTION 125 CAFETERIA PLAN SEE ATTACHED
SUMMARY
18 HIPPA
SCHEDULE 3.1.8
COMPLIANCE
ERISA
The Company has not filed Forms 5500 in connection with its Section 125 Fringe
Benefit Plan under the Company's health and welfare plans for several years. The
Company shall file all such forms before the Closing.
The Company has not treated its severance policy (policy 133) (a copy of which
is attached) as an ERISA plan and, therefore, has not filed Forms 5500 with the
U.S. Department of Labor or satisfied any other requirements of ERISA that may
be applicable. In connection with the transaction, the Company has adopted a new
severance policy described in item 1 of Schedule 3.1.18.
It is unclear whether Fairfield Communications, Inc. ("Fairfield") was part of
an "affiliated service group" ("ASG") as defined under Section 414(m)(5) of the
Internal Revenue Code of 1986, as amended. In the event that Fairfield was not
part of an ASG with the Company, certain Employee Benefit Plans (in particular,
the 401(k) plan), may have been "multiple employer plans" and the Company may
not have complied with certain reporting requirements.
