EXHIBIT 10.19
TRUST AGREEMENT
THIS TRUST AGREEMENT (the "Trust Agreement") is entered into as of
March____, 1997, by and among American Radio Systems Corporation, a Delaware
corporation and American Radio Systems License Corp. (collectively, "American")
a Delaware corporation wholly owned by American Radio Systems Corporation, and
Xxxxxxx X. Xxxxxxxxxxx (the "Trustee").
RECITALS
A. American holds various licenses, permits and authorizations issued by the
Federal Communication Commission (the "FCC") with respect to three FM radio
broadcast stations and three AM broadcast stations in the Sacramento,
California, radio market.
B. American has entered into an Amended and Restated Agreement and Plan of
Merger with EZ Communications, Inc. ("EZ"), a subsidiary of which holds various
licenses, permits and authorizations issued by the FCC for two FM radio
broadcast stations and one AM radio broadcast station in the Sacramento,
California, radio market. An application to transfer control of EZ to American
is pending before the FCC.
C. American has entered into certain other agreements by which it will acquire,
subject to FCC consent, the licenses to three additional FM radio broadcast
stations and two additional AM radio broadcast stations, including KXOA-FM,
Sacramento, California.
D. American has further entered in certain agreements by which it will sell,
subject to FCC consent, the licenses to two AM radio broadcast stations and one
FM radio broadcast station, such FM radio broadcast station being KXOA-FM.
E. The rules and regulations of the FCC state that in a radio market with 45 or
more commercial radio broadcast stations (such as Sacramento, California), a
party may own up to eight commercial radio broadcast stations, not more than
five of which are in the same service (AM or FM). American desires to enter into
this Trust Agreement to facilitate consummation of the merger with EZ and the
consummation of its other transactions in the Sacramento, California, radio
market by assuring that such consummations will not, under Section 73.3555(a) of
the FCC's rules, result in the attribution to American, at any given time, of
more than eight radio broadcast stations in any contour-based radio market in or
around Sacramento, California.
F. American has entered into an agreement to sell KXOA-FM to ECI License
Company, L.P. ("ECI") and has filed an application with the FCC seeking consent
to such assignment in order to comply with the FCC's rules regarding the maximum
number of radio broadcast stations that may be owned by a particular entity in a
single contour-based radio market. Interim acquisition by the Trustee, for the
benefit of American, of the assets of KXOA-FM
(the "Station") would provide an appropriate mechanism to facilitate
consummation of the merger with EZ and the consummation of American's other
transactions in or around Sacramento, California, while complying with the laws
and regulations relating to transactions of this type.
G. ECI and American have entered into a Time Brokerage Agreement ("TBA") dated
______, 1997, under Section 73.3555(a)(ii) of the Commission's, by which
American has agreed to permit ECI to program and sell advertising time on the
Station.
H. In the event that American requests that the Trustee sell the Stations
Assets, as hereinafter defined, pursuant to Section 3(f) of this Trust
Agreement, and the Trustee concurs with the decision, then the Trustee agrees to
use his best efforts to apply to the FCC for consent to the assignment of the
Station Assets within six (6) months of the date of this Trust Agreement.
Therefore, the parties agree as follows:
AGREEMENT
1. Creation and Purpose of The KXOA-FM Trust. Subject to the terms and
conditions hereof, a trust in respect of the Station Assets is hereby created
and established, to be known as the "The KXOA-FM Trust," and the Trustee hereby
accepts the trust created hereby and agrees to serve as trustee hereunder. The
trust created hereby shall be irrevocable until such time as American or its
affiliates no longer holds an ownership interest (through this Trust or
otherwise) in more than nine radio broadcast stations in two contour-based radio
markets in or around Sacramento, California.
2. Assets to be Conveyed; Assumption of Obligations.
(a) Upon execution of this Trust Agreement and pursuant to
consent by the FCC, American shall transfer and convey to Trustee, and Trustee
shall acquire from American, all of the assets, real, personal and mixed,
tangible and intangible (including the business of the Station as a going
concern), owned or held by American as of the date of the consummation of its
acquisition of the Station, and used, useful or necessary in the conduct of the
business and operation of the Station, including, but not limited to, the
following:
(i) all of American's right, title and interest
in and to the licenses, permits and other
authorizations issued by any governmental
authority and used, useful or necessary in
the conduct of the business and operation of
the Station, including the call letter
"KXOA-FM" and any applications for such
licenses, permits and authorizations;
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(ii) all of American's right, title and interest
in and to all real property, including
leasehold interests and easements, used,
useful or necessary in the conduct of the
business and the operation of the Station;
(iii) all equipment, office furniture and
fixtures, office materials and supplies,
inventory, spare parts, motor vehicles and
other tangible personal property of every
kind and description, owned, leased or held
by American and used, useful or necessary in
the conduct of the business and operation of
the Station;
(iv) all cash in the Station's operating bank
account;
(v) all accounts receivable arising out of the
operation of the Station;
(vi) all of American's rights under and interest
in all contracts relating to the conduct of
the business of the Station (but excluding
any contract or agreement for the sale of
the Station's assets following termination
of the Trust created hereby);
(vii) all programs and programming materials of
whatever form or nature owned by American
and used or intended for use on or by the
Station;
(viii) all of American's right, title and interest
in and to the trademarks, trade names,
service marks, franchises, copyrights,
including registrations and applications for
registration of any of them, jingles, logos,
slogans, licenses, permits and privileges
owned or held by American and used, useful
or necessary in the conduct of the business
and operation of the Station;
(ix) all files, records, books of account,
computer programs and software and logs
relating to the operation of the Station,
including, without limitation, payable
records, receivable records, invoices,
statements, traffic material, programming
information and studies, technical
information and engineering data, news and
advertising studies and consultants'
reports, ratings reports, marketing and
demographic data, sales correspondence,
lists of advertisers, promotional materials,
credit and sales reports, budgets, financial
reports and projections, sales, operating
and business plans, filings with the
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FCC and original executed copies of all
written contracts to be assigned hereunder;
and
(x) all of American's rights under
manufacturers' and vendors' warranties
relating to items included in the Station
Assets and all similar rights against third
parties relating to items included in the
Station Assets to the extent contractually
assignable.
(b) The assets to be transferred to Trustee hereunder are
hereinafter collectively referred to as the "Station Assets."
(c) The Trustee shall assume and undertake to pay, satisfy or
discharge the liabilities, obligations and commitments of the Station under all
its contracts, including time sales agreements and employment agreements.
(d) The Trustee shall retain and hold the Station Assets, and
assume the Station's obligations, only in accordance with, and subject to the
terms and conditions set forth in, this Trust Agreement.
3. Management and Other Actions by Trustee.
(a) During the term of this Trust Agreement, the right to
manage and direct the management of the business of the Station shall be solely
vested in the Trustee, subject to the TBA between American and ECI, which
agreement shall be assigned to Trustee on the date hereof, and subject to the
following:
(i) The Trustee shall conduct the operations of
Station as a radio broadcaster serving the
Sacramento, California, radio market in the
ordinary course of business consistent with
past operations of the Station. To the
extent possible, the Trustee shall maintain
the status quo of such operation as
currently operating with a view to
maximizing the value to be received by
American consistent with the Trustee's
duties as a licensee of the FCC and as a
fiduciary of American. With respect to so
conducting the operations and management of
the Station, Trustee shall within 15 days of
the end of each calendar month provide
American or its designee with such monthly
financial reports consisting of unaudited
balance sheets of the Station and related
statements of operations and cash flows for
the month and three-month period then ended
as shall be necessary for American to meet
its financial reporting requirements to its
accountants, lenders, the Securities and
Exchange Commission and any other
authorities of competent jurisdiction.
Trustee shall also provide American
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or its designee with monthly budgets and
estimates (which shall be prepared
consistent with all budgets and estimates
previously prepared by American), setting
forth on an aggregate basis only and not on
a line item basis, the Station's monthly
expenses, including expenditures for
equipment or other capital assets, and
operating income anticipated to be incurred
or earned monthly during the next upcoming
three calendar months as well as on an
aggregate basis through the next upcoming
twelve calendar months. American shall not
use or attempt to use these financial
materials to limit or restrict the Trustee's
discretion to operate the Station in the
manner described in this subsection;
(ii) to the extent that the Station's operations
generate cash accumulations in excess of the
Station's actual and projected expenses as
determined by the Trustee in his sole
discretion ("Excess Cash Flow"), such Excess
Cash Flow shall first be applied to repay
amounts due to American under the line of
credit provided for in Section 3(a)(iii) of
this Trust Agreement, and thereafter shall
be remitted to American from time to time as
the Trustee shall determine;
(iii) to the extent that the Trustee determines in
his discretion that management and operation
of the Station consistent with past practice
or that payment of the charges and other
expenses set forth in Section 4(c) hereof
requires funds in excess of the ordinary
cash flow of the Station (as diminished by
any prior remittances of Excess Cash Flow),
American agrees to provide a line of credit
to Trustee in the amount of $500,000,
repayable from Excess Cash Flow with
interest at prime plus one percent. American
shall not communicate directly or indirectly
with the Trustee about, or participate with
the Trustee in making, any decision to draw
on the line of credit or as to when or how
the funds will be used. The Trustee may draw
on the line of credit by making a written
draft on American for a specific amount of
funds. American shall, within ten days of
receipt of such draft, provide such funds to
Trustee in the amount requested, up to the
limit of the line of credit; and
(iv) any employee hired by the Trustee who is not
employed at the Station as of the effective
date of this Trust Agreement shall not be a
1% or greater shareholder, director,
officer, or employee of American or its
affiliates, and may not have any business
and familial relationship (as defined in the
FCC Policy Statement in
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MM Docket No. 85-218, FCC 86-67 (March 17,
1998)) with American or with any 1% or
greater shareholder, director, officer, or
employee of American or its affiliates.
(b) The Trustee shall cause any employee hired by him pursuant
to Section 3(a)(iv), and any person previously employed by American whom the
Trustee elects to retain, to execute and deliver to the Trustee an agreement, in
form and substance acceptable to the Trustee, pursuant to which such employee
agrees to comply with the rules, regulations and policies of the FCC, including
without limitation all rules, regulations and policies governing communications
among such employee and American or its officers, directors, employees, and
affiliates, regarding the Station and its management and operations.
(c) Subject to the terms of the TBA and this Trust Agreement,
no person other than the Trustee or managers designated by the Trustee shall
have any authority with respect to the management of the Station or the Station
Assets for so long as this Trust Agreement is in effect. The Trustee shall have
no beneficial interest in the Station Assets.
(d) Except as expressly provided in this Trust Agreement, the
Trustee shall not: incur any debt or guaranty obligation in favor of any other
person; engage in any business other than as necessary in Trustee's reasonable
opinion to meet his fiduciary duties with respect to the operation of the
Station as a broadcast licensee serving the Sacramento, California, radio
market; sell or otherwise transfer, assign or encumber all or any significant
Station Assets, or enter into any agreement to do so; or enter into any merger,
consolidation, or similar transaction or engage in any reclassification or
similar transaction.
(e) American has, prior to the execution of this Trust
Agreement, entered into a binding agreement for the sale of the Station Assets
to ECI. Upon FCC consent to that sale, and upon notification to the Trustee in
writing, provision to the Trustee with a copy of such binding agreement and
provision to the Trustee of a copy of the FCC consent, then the Trustee, acting
for the benefit of American, shall sell such Station Assets as soon as
practicable to ECI consistent with the terms of the binding agreement.
(f) In the event that the FCC does not consent to the
assignment of the Station Assets to ECI, American shall have the right to
request the Trustee to sell the Station Assets to any other unaffiliated third
party. Within 24 hours of receipt of such a request from American, Trustee shall
advise American whether he concurs in such a sale. In the event the Trustee so
concurs, the Trustee shall have the authority to take all actions necessary or
appropriate to effectuate the transfer of title to the Station Assets held by
the Trustee pursuant to this Trust Agreement to (and the assumption of the
liabilities, obligations and commitments of the Station by) an unaffiliated
third party. In this regard, Trustee shall enter into appropriate agreements,
submit and fully prosecute appropriate applications to the FCC requesting
approval to assign the Station Assets, and, following receipt of FCC consent,
transfer the Station Assets to the approved assignee. To facilitate any sale of
the Station
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Assets to an unaffiliated third party, the Trustee may request in writing from
American such information, representations and warranties regarding operation of
the Station as may be needed to effectuate such sale.
(g) The Trustee shall have any and all such further powers and
shall take such further actions (including, but not limited to, taking legal
action) as may be necessary to fulfill the Trustee's obligations under this
Trust Agreement.
4. Concerning the Trustee.
(a) Subject to the provisions of this Trust Agreement, The
KXOA-FM Trust created hereby and the operations of the Station shall be managed
by the Trustee, who shall comply with all rules, regulations and policies of the
FCC.
(b) The Trustee shall be entitled to receive compensation for
his services hereunder at the rate of $10,000.00 per month, but shall receive a
minimum of $10,000.00 irrespective of the duration of The KXOA-FM Trust. The
Trustee agrees that in return for such compensation, he will devote such time to
The KXOA-FM Trust as is necessary in the proper exercise of his fiduciary duties
hereunder. Payment of Trustee's monthly compensation shall be made by American
within 20 days after receipt of appropriately detailed invoices therefor. Such
invoices shall be rendered on a monthly basis and upon the termination of this
Trust Agreement under any of the provisions of Section 5 hereof.
(c) The Trustee is expressly authorized to incur and pay, from
the Station Assets held in trust, all reasonable charges and other expenses
which the Trustee deems necessary and proper in the performance of his duties
under this Trust Agreement, including fees and charges for legal counsel of his
choosing and the cost of any necessary secretarial staff. American hereby agrees
to reimburse, indemnify, defend and hold harmless the Trustee against all
claims, costs and defense of claims (including reasonable attorneys' fees and
disbursements), expenses and liability incurred by the Trustee in connection
with the performance of his duties under this Trust Agreement, except those
incurred as a result of the Trustee's gross negligence, intentional wrongful
action or willful misconduct. Payments to the Trustee pursuant to this Section
4(c) shall be made within 20 days of submission by the Trustee of appropriately
detailed invoices therefor. The obligations of American to the Trustee under
this Section 4(c) shall survive the resignation, incapacity to act, death or
insolvency of the Trustee and the termination of this Trust Agreement.
(d) The Trustee shall be free from liability in acting upon
any paper, document or signature believed by the Trustee to be genuine and to
have been signed by the proper party. The Trustee shall not be liable for any
error of judgment in any act done or omitted, nor for any mistake of fact or
law, nor for anything which the Trustee may do or refrain from doing in good
faith. The Trustee may consult with legal counsel of his own choosing and any
action under this Trust Agreement taken or suffered in good faith by the
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Trustee and in accordance with the opinion of the Trustee's counsel (if such
opinion shall have been obtained by Trustee) shall be conclusive on the parties
to this Trust Agreement, and the Trustee shall be fully protected and be subject
to no liability in respect thereto.
(e) Subject to Section 4(c) hereof, the rights and duties of
the Trustee hereunder shall terminate upon the Trustee's incapacity to act,
death or insolvency, and no interest in any of the Station Assets directly or
indirectly held by the Trustee nor any of the rights and duties of a deceased or
insolvent Trustee may be transferred by will, devise, succession or in any
manner except as provided in this Trust Agreement. The heirs, administrators,
executors or other representatives of an incapacitated, deceased or insolvent
Trustee shall, however, have the right and duty to convey any Station Assets
held by the Trustee to one or more successor Trustees designated by American
pursuant to Section 4(g) below.
(f) The Trustee may resign by giving not less than 60 days
advance written notice of resignation to American, provided that a successor
Trustee has been appointed, such appointment has received all necessary approval
from the FCC, and any order granting such approval has become a final order with
respect to which no action, request for stay, petition for hearing or
reconsideration, or appeal has been timely filed and is pending, and as to which
the time for filing any such request, petition or appeal has expired. American
shall cooperate fully prompt appointment of a successor Trustee and shall not
unreasonably interfere with or delay the effectiveness of such resignation.
(g) In the event of such resignation, incapacity to act, death
or insolvency of the Trustee, he shall be succeeded, subject to such prior
approval of the FCC as may be required, by a successor Trustee chosen by
American. Any successor Trustee shall succeed to all of the rights and
obligations of the Trustee replaced hereunder upon execution by such successor
Trustee of a counterpart of this Trust Agreement.
(h) The Trustee and any successor Trustee designated pursuant
to paragraphs (f) and (g) of this Section 4 shall not be a 1% or greater
shareholder, officer, employee, director, or affiliate of American, and may not
have any business or familial relationship (as defined in the FCC Policy
Statement in MM Docket No. 85-218, FCC 86-67 (March 17, 1986)) with any officer,
employee, director, or 1% or greater shareholder or affiliate of American. Nor
shall the Trustee or any successor Trustee serve as an officer, employee, or
director of American or its affiliates, or its successor companies following the
assignment specified in Section 3(e) or Section 3(f).
5. Termination of Trust Agreement; Distribution of Proceeds of Sale of
Assets.
(a) Subject to each FCC approval as may be required, and
following the receipt of such FCC approval, this Trust Agreement and The KXOA-FM
Trust created hereby shall terminate upon the first to occur of the following:
(i) the expiration of two
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years from the date of this Trust Agreement; or (ii) the assignment of the
Station Assets as contemplated by Section 3(e) or Section 3(f) of this Trust
Agreement.
(b) Upon the termination of this Trust Agreement pursuant to
Section 5(a)(ii) hereof and consistent with the requirements of the FCC, the
Trustee shall deliver to the assignee those Station Assets contemplated by the
assignment transaction that has been approved by the FCC, and shall deliver all
other property held by the Trustee pursuant to this Trust Agreement to American
or its designee. In the case of a sale of all or substantially all of the
Station Assets to an unaffiliated third party, specifically including ECI,
pursuant to Section 3(e) or 3(f) of this Trust Agreement, the Trustee shall
receive the money, securities, rights or property which are distributed or are
distributable in respect of the Station Assets, and, after paying (or reserving
for payment thereof) any expenses or liability incurred pursuant to this Trust
Agreement, shall distribute or cause the distribution of such money, securities,
rights or property to American or its designee.
6. Communications.
(a) The Trustee may communicate with and provide reports
(including specifically the financial reports provided for in Section 3(a)(i) to
American concerning the implementation of The KXOA-FM Trust, but not concerning
the management and operations of the Station except as provided in Section
3(a)(i) above.
(b) The Trustee may engage in the communications contemplated
by Section 3(e) hereof to facilitate a sale of the Station Assets to an
unaffiliated third party.
(c) Neither American nor any of its officers, directors,
employees, shareholders or affiliates shall communicate with the Trustee
regarding the operation or management of the Station. American may communicate
with the Trustee as provided in Section 3(e) hereof, and concerning the
mechanics of implementing any sale of the Station Assets. Existing programming
contracts between American or the Station or any affiliate of American for
programming broadcast by the Station may continue in force until their
termination, or may be renewed if renewal on the same terms is automatic upon
notification. Ministerial written communications in connection with existing
contracts may continue.
(d) Any communications permitted by Section 6(a), 6(b) or 6(c)
shall be evidenced in writing, and shall be retained by the Trustee for
inspection upon request by the FCC.
(e) All notices and other communications given under this
Trust Agreement shall be deemed to have been duly given when delivered in person
or by overnight express, mailed by first-class, registered or certified mail,
postage prepaid, or transmitted by facsimile and addressed to the parties as
follows:
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(i) If to American:
American Radio Systems Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
(000) 000-0000
Attn: Xx. Xxxxxx X. Xxxxx
with a copy, which shall not constitute notice,
to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
(000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
with a copy, which shall not constitute notice,
to:
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
(000) 000-0000
Attn: Xxxx X. Xxxxx, Xx.
(ii) If to the Trustee:
Xxxxxxx X. Xxxxxxxxxxx
c/o Signature Broadcasting
0000 Xxxxxxxxx Xxxxx
Xxxxx X
Xxxxxx, Xxxxx 00000
(000) 000-0000
with a copy, which shall not constitute notice,
to:
Rosenman & Colin
0000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
(000) 000-0000
Attn: Xxxxxxx Xxxxxxxx
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or to such other address as any of them by written notice to the others may from
time to time designate. Each notice or other communication which shall be
delivered, mailed or transmitted in the manner described above shall be deemed
sufficiently received for all purposes at such time as it is delivered to the
addressee (with any return receipt or deliver receipt being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation, but in the case of a facsimile, only if a hard copy
is also sent by overnight courier.
7. Miscellaneous
(a) This Trust Agreement, together with the February 24, 1997
Engagement and Assignment Agreement, constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior oral or other written agreements, commitments or understandings with
respect to the matters provided for herein. This Trust Agreement shall not be
amended, altered or modified except by an instrument in writing duly executed by
each of the parties hereto. Substantial changes in this Trust Agreement may be
made only as required or approved by FCC order. A copy of any substantial change
shall be filed by the Trustee with the FCC within ten days following the
execution thereof, with copies to the appropriate divisions and bureaus of the
FCC.
(b) This Trust Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective permitted successors
and permitted assigns. Subject to Section 4(g) hereof, this Trust Agreement
shall not be assignable by the Trustee.
(c) If any part of any provision of this Trust Agreement or
any other agreement, document or writing giving pursuant to or in connection
with this Trust Agreement shall be invalid or unenforceable under applicable
law, said part shall be ineffective to the extent of such invalidity only,
without in any way affecting the remaining part of said provision or the
remaining provisions of this Trust Agreement.
(d) The headings of the sections of this Trust Agreement are
inserted for convenience of reference only and do not form a part or affect the
meaning thereof.
(e) This Trust Agreement, the rights and obligations of the
parties hereto, and any claims and disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of ________ (not
including the choice of law rules thereof).
(f) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Trust
Agreement or caused this Trust Agreement to be duly executed on their behalf as
of the date and year first herein above set forth.
AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________
AMERICAN RADIO SYSTEMS LICENSE CORP.
By: ______________________________
XXXXXXX X. XXXXXXXXXXX, TRUSTEE
By: ______________________________
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