AGREEMENT AND PLAN OF MERGER
By and Between
AMERICAN RADIO SYSTEMS CORPORATION
and
ALTA BROADCASTING COMPANY, INC.
Dated as of
March 3, 1997
TABLE OF CONTENTS
Page
ARTICLE 1: THE MERGER............................................................................................1
SECTION 1.1 The Merger..................................................................................1
SECTION 1.2 Closing.....................................................................................2
SECTION 1.3 Effective Time..............................................................................2
SECTION 1.4 Effect of the Merger........................................................................2
SECTION 1.5 Certificate of Incorporation................................................................2
SECTION 1.6 Bylaws......................................................................................2
SECTION 1.7 Directors and Officers......................................................................2
ARTICLE 2: PRE-MERGER TRANSACTION................................................................................2
SECTION 2.1 Contributions of Assets and Assumption of Liabilities.......................................2
ARTICLE 3: CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES........................................................3
SECTION 3.1 Conversion of Capital Stock.................................................................3
SECTION 3.2 Exchange of Certificates....................................................................4
SECTION 3.3 Stock Transfer Books........................................................................4
SECTION 3.4 Option Securities and Convertible Securities; Payment Rights................................4
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................5
SECTION 4.1 Organization and Business; Power and Authority; Effect of Transaction......................5
SECTION 4.2 Financial and Other Information.......................................................6
SECTION 4.3 Changes in Condition.......................................................................7
SECTION 4.4 Liabilities................................................................................7
SECTION 4.5 Title to Properties; Leases................................................................7
SECTION 4.6 Compliance with Private Authorizations.....................................................8
SECTION 4.7 Compliance with Governmental Authorizations and Applicable Law.............................9
SECTION 4.8 Intangible Assets.........................................................................10
SECTION 4.9 Related Transactions......................................................................10
SECTION 4.10 Insurance.................................................................................11
SECTION 4.11 Tax Matters...............................................................................11
SECTION 4.12 Employee Retirement Income Security Act of 1974...........................................12
SECTION 4.13 Absence of Sensitive Payments.............................................................13
SECTION 4.14 Inapplicability of Specified Statutes.....................................................14
SECTION 4.15 Authorized and Outstanding Capital Stock..................................................14
SECTION 4.16 Employment Arrangements...................................................................14
SECTION 4.17 Material Agreements.......................................................................15
SECTION 4.18 Ordinary Course of Business...............................................................16
SECTION 4.19 Bank Accounts, Etc........................................................................17
SECTION 4.20 Material and Adverse Restrictions.........................................................18
SECTION 4.21 Broker or Finder..........................................................................18
SECTION 4.22 Environmental Matters.....................................................................18
SECTION 4.23 Compliance with Regulations Relating to Securities Credit.................................19
SECTION 4.24 Continuing Representation and Warranty....................................................19
SECTION 4.25 Contribution Assets.......................................................................19
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF AMERICAN...........................................................19
SECTION 5.1 Organization and Business; Power and Authority; Effect of Transaction......................19
SECTION 5.2 Financial and Other Information.......................................................20
SECTION 5.3 Changes in Condition.......................................................................21
SECTION 5.4 Compliance with Private Authorizations.....................................................21
SECTION 5.5 Compliance with Governmental Authorizations and Applicable Law.............................22
SECTION 5.6 Authorized and Outstanding Capital Stock...................................................22
SECTION 5.7 Broker or Finder...........................................................................22
SECTION 5.8 Continuing Representation and Warranty.....................................................22
ARTICLE 6: COVENANTS............................................................................................23
SECTION 6.1 Access to Information; Confidentiality.....................................................23
SECTION 6.2 Agreement to Cooperate.....................................................................24
SECTION 6.3 Public Announcements.......................................................................25
SECTION 6.4 Notification of Certain Matters............................................................25
SECTION 6.5 No Solicitation............................................................................26
SECTION 6.6 Termination of Option Securities and Convertible Securities................................27
SECTION 6.7 Conduct of Business by the Company Pending the Closing.....................................27
ARTICLE 7: CLOSING CONDITIONS...................................................................................28
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger...............................28
SECTION 7.2 Conditions to Obligations of American......................................................29
SECTION 7.3 Conditions to Obligations of the Company...................................................32
ARTICLE 8: TERMINATION, AMENDMENT AND WAIVER....................................................................33
SECTION 8.1 Termination................................................................................33
SECTION 8.2 Effect of Termination......................................................................35
ARTICLE 9: INDEMNIFICATION......................................................................................36
SECTION 9.1 Survival...................................................................................36
SECTION 9.2 Indemnification............................................................................36
SECTION 9.3 Limitation of Liability; Disposition of Escrow Indemnity Funds.............................37
SECTION 9.4 Notice of Claims...........................................................................38
SECTION 9.5 Defense of Third Party Claims..............................................................38
SECTION 9.6 Exclusive Remedy...........................................................................38
ARTICLE 10: GENERAL PROVISIONS..................................................................................38
SECTION 10.1 Amendment................................................................................39
SECTION 10.2 Waiver...................................................................................39
SECTION 10.3 Fees, Expenses and Other Payments........................................................39
SECTION 10.4 Notices..................................................................................39
SECTION 10.5 Specific Performance; Other Rights and Remedies..........................................40
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SECTION 10.6 Severability.............................................................................40
SECTION 10.7 Counterparts.............................................................................41
SECTION 10.8 Section Headings.........................................................................41
SECTION 10.9 Governing Law............................................................................41
SECTION 10.10 Further Acts.............................................................................41
SECTION 10.11 Entire Agreement.........................................................................41
SECTION 10.12 Assignment...............................................................................41
SECTION 10.13 Parties in Interest......................................................................41
SECTION 10.14 Mutual Drafting..........................................................................42
SECTION 10.15 Arbitration..............................................................................42
SECTION 10.16 CALIFORNIA SECURITIES LAW MATTERS........................................................42
APPENDIX A Definitions
EXHIBITS:
EXHIBIT A: Form of Escrow Agreement (Third Recital)
EXHIBIT B: Form of Leasehold Option (Section 7.2(k))
EXHIBIT C: Form of Investment Letter (Section 7.2(b))
EXHIBIT D: Form of Noncompetition Agreement (Section 7.2(m))
EXHIBIT E: Form of Registration Rights Agreement (Section 7.3(e))
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of March
3, 1997, is made by and between American Radio Systems Corporation, a Delaware
corporation ("American"), and Alta Broadcasting Company, Inc., a California
corporation (the "Company" and, together with American, the "parties").
RECITALS
WHEREAS, upon the terms and subject to the conditions of this
Agreement, in accordance with the general corporation laws of the State of
Delaware (the "DGCL") and of the State of California (the "CGCL"), the Company
and American will carry out a business combination transaction pursuant to which
the Company will merge with and into American (the "Merger") and the Company
stockholders (the "Company Stockholders") will receive (a) shares (the "American
Shares") of Class A Common Stock, par value $.01 per share, of American (the
"American Class A Stock") with a Current Market Price (as hereinafter defined)
of $20,000,000, and (b) $4,000,000 in immediately available funds, subject to
adjustment as herein provided; and
WHEREAS, the Board of Directors of each of the Company and American (a)
has unanimously determined that the Merger is advisable and fair to, and in the
best interests of, it and its respective stockholders and has approved and
adopted this Agreement as a plan of reorganization within the provisions of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code") and (b) has approved this Agreement, the Merger and the other
transactions contemplated hereby or thereby or by any Collateral Document
executed or required to be executed in connection herewith or therewith
(collectively the "Transactions"); and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, American, the Company and Xxxxxxxx & Worcester LLP and Xxxxxx, Xxxx &
Xxxxxxxx LLP as Escrow Agents (the "Escrow Agents") have entered into an
agreement (the "Escrow Agreement") dated as of the date hereof in the form of
Exhibit A attached hereto and made a part hereof, and in accordance with the
terms thereof American has made a deposit in the amount of $1,500,000 (the
"Escrow Deposit") pursuant thereto; and
WHEREAS, capitalized terms used in this Agreement without definition
shall have the meanings given to such terms in Appendix A attached hereto and
made a part hereof;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto, intending to be legally bound, do hereby covenant and agree
as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL and the CGCL, at
the Effective Time the Company shall be merged with and into American. As a
result of the Merger, the separate existence of the Company shall cease and
American shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 1.2 Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1 and the Merger and the Transactions shall have been
abandoned, the closing of the Merger (the "Closing") will take place, on the
Closing Date, at the offices of Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, on such date, not later than the Termination
Date, within ten (10) days following the satisfaction or, if permissible, waiver
of the conditions set forth in Article 7, other than those conditions which can
be satisfied only at the Closing, unless another date, time or place is agreed
to in writing by the parties.
SECTION 1.3 Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article 7
(but subject to the provisions of Section 1.2), the parties hereto shall cause
the Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DGCL with the Secretary of State of Delaware and this
Agreement, certified in accordance with the provisions of the CGCL and any
related filings required under the CGCL with the Secretary of State of
California. The Merger shall become effective at such time (but not prior to the
Closing Date) as such documents are duly filed with the Secretary of State of
Delaware and the Secretary of State of California or at such later time as is
specified in such documents (the "Effective Time").
SECTION 1.4 Effect of the Merger. From and after the Effective Time,
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties of
the Company and American, and the Merger shall otherwise have the effects
provided for under the DGCL and the CGCL.
SECTION 1.5 Certificate of Incorporation. The Certificate of
Incorporation of American in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation unless amended in
accordance with Applicable Law.
SECTION 1.6 Bylaws. The bylaws of American in effect at the Effective
Time shall be the bylaws of the Surviving Corporation unless amended in
accordance with Applicable Law.
SECTION 1.7 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified (or earlier
resignation or removal) in accordance with Applicable Law, (a) the directors of
American at the Effective Time shall be the directors of the Surviving
Corporation, and (b) the officers of American at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE 2
PRE-MERGER TRANSACTION
SECTION 2.1 Contributions of Assets and Assumption of Liabilities.
(a) Prior to the Effective Time, the Company shall make a distribution
(the "Shareholder Distribution") to the Company Stockholders of all of the
Company's right, title and interest in and to any and all of the assets of the
Company described in Section 2.1(a) of the Company Disclosure Schedule.
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(b) In partial consideration for the Shareholder Distribution,
concurrently therewith the Company Stockholders shall assume any and all
liabilities of the Company, whether fixed, contingent or otherwise, described in
Section 2.1(b) of the Company Disclosure Schedule.
(c) Any Taxes payable in connection with the Shareholder Distribution
pursuant to this Section 2.1 shall be borne by the Company Stockholders.
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
SECTION 3.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, American
or the holders of any of the following securities:
(a) Each share of American Class A Stock, each share of Class B Common
Stock, par value $.01 per share, of American and each share of Class C Common
Stock, par value $.01 per share, of American, and all Convertible Securities and
Option Securities of American issued and outstanding immediately prior to the
Effective Time shall remain outstanding.
(b) Each share of Common Stock, par value $1.00 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately prior to
the Effective Time (other than shares held in the treasury of the Company or by
any of its Subsidiaries) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive its
pro-rata share of the following:
(i) 723,402 shares of American Shares (being a number
of American Shares with a Current Market Price of $20,000,000)
(the "Common Stock Consideration"); and
(ii) $4,000,000 in immediately available funds (the
"Cash Consideration" and collectively, with the Common Stock
Consideration, the "Merger Consideration" which term shall
include any adjustments pursuant to the provisions of this
section).
Notwithstanding the foregoing, the Merger Consideration shall be subject to
adjustment in accordance with the following provisions: any such adjustment
shall be made first to increase or decrease, as the case may be, the Cash
Consideration or, in the event such adjustment is negative and exceeds the Cash
Consideration, to decrease the Common Stock Consideration (valuing the Common
Stock at the Current Market Price for such purpose). The amount of the Merger
Consideration shall be increased by an amount equal to the sum of (A) the
aggregate capital expenditures of the Company incurred subsequent to November
26, 1996 and prior to the Closing Date and described in Section 3.1 of the
Company Disclosure Schedule or hereafter approved in writing by American in its
sole and absolute discretion, and (B) the Net Working Capital of the Company (if
positive) on and as of the Closing Date. The amount of the Merger Consideration
shall be decreased by an amount equal to the sum of (x) the Net Working Capital
of the Company (if negative) on and as of the Closing Date, (y) the principal
amount of the Park Center Note, and (z) the principal amount of the Klue Note.
The term "Exchange Merger Consideration" shall mean an amount equal to the
Merger Consideration divided by the aggregate number of shares of Company Common
Stock (the "Company Shares") issued and outstanding at the Effective Time.
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At the Effective Time, all Company Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and certificates previously evidencing any such Company Shares (each, a
"Certificate") shall thereafter represent the right to receive, upon the
surrender of such Certificate in accordance with the provisions of Section 3.2,
the Exchange Merger Consideration multiplied by the number of Company Shares
represented by such Certificate, and a holder of more than one Certificate shall
have the right to receive the Exchange Merger Consideration multiplied by the
number of Company Shares represented by all such Certificates. The holders of
such Certificates previously evidencing Company Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Company Shares except as otherwise provided herein or by Applicable Law.
For purposes of this Agreement, the term "Current Market Price" shall
mean, with respect to the American Shares on any date specified herein, $27.647
which is the average of the daily Fair Market Value for the thirty (30) trading
days prior to January 3, 1997, and the term "Fair Market Value" shall mean, with
respect to the American Class A Stock, (a) the last reported sales price,
regular way, or, in the event that no sale takes place on such day, the average
of the reported closing bid and asked prices, regular way, in either case as
reported on the Nasdaq National Market System.
(c) Each Company Share held in the treasury of the Company or by any of
its Subsidiaries and each Company Share owned by American or any of its
Subsidiaries immediately prior to the Effective Time shall automatically be
canceled and extinguished without any conversion thereof and no payment shall be
made with respect thereto.
(d) In lieu of issuing fractional shares, American shall convert the
holder's right to receive American Shares pursuant to Section 3.1(b) into a
right to receive the highest whole number of American Shares constituting the
Exchange Merger Consideration plus cash equal to the fraction of a share of
American Class A Stock to which the holder would otherwise be entitled
multiplied by the Current Market Price, and the Exchange Merger Consideration to
which a holder is entitled shall be deemed to be such number of American Shares
and Cash Consideration and such cash.
SECTION 3.2 Exchange of Certificates. At and after the Effective Time,
each Company Stockholder, upon surrender of each of his Certificates, shall be
issued a certificate of American Class A Stock and cash representing the
Exchange Merger Consideration with respect to the Company Shares represented by
such Certificate, plus cash in amount sufficient to make payment for fractional
shares, subject, however, to the provisions of Section 9.3(b).
SECTION 3.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
transfer of shares of Company Common Stock thereafter on the records of the
Company. Any Certificates presented after the Effective Time for transfer shall
be canceled and exchanged for the amount to which the Company Shares represented
thereby shall be entitled pursuant to Sections 3.1 and 3.2.
SECTION 3.4 Option Securities and Convertible Securities; Payment
Rights. At the Effective Time, each outstanding Option Security and each
Convertible Security, whether or not then exercisable for or convertible into
Company Shares, outstanding immediately prior to the Effective Time, shall be
canceled and retired and shall cease to exist, and the holder thereof shall not
be entitled to receive any consideration therefor.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each Section of this Article is modified to the extent that the Company
Disclosure Schedule contains an item referencing that Section number. For
purposes of this Article, the inclusion of a description of an item on the
Company Disclosure Schedule with one Section reference will be deemed to be
included on the Company Disclosure Schedule for another Section reference where
such disclosure would be appropriate, except to the extent a particular Section
calls for a specific reference to it in the Company Disclosure Schedule. The
Company hereby represents, warrants and covenants to, and agrees with, American
as follows:
SECTION 4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) The Company: (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation; (ii)
has all requisite power and authority (corporate and other) to own or hold under
lease its properties and to conduct its business as now conducted and as
presently proposed to be conducted; and (iii) except as set forth in Section
4.1(a) of the Company Disclosure Schedule, is duly qualified and is authorized
to do business and is in good standing as a foreign corporation in each
jurisdiction (a true, accurate and complete list of which is set forth in
Section 4.1(a) of the Company Disclosure Schedule) in which the character of its
property or the nature of its business or operations requires such qualification
or authorization, and in which the failure to be so qualified would have a
Material Adverse Effect on the Company.
(b) The Company has all requisite power and authority (corporate and
other), and has in full force and effect all Governmental Authorizations and
Private Authorizations except for those set forth in Section 4.1(b) of the
Company Disclosure Schedule that must be obtained prior to the Closing Date, in
order to enable it to execute and deliver, and to perform its obligations under,
this Agreement and each Collateral Document executed or required to be executed
pursuant hereto or thereto and to consummate the Merger and the Transactions;
and the execution, delivery and performance of this Agreement and each
Collateral Document executed or required to be executed pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of the Company, except that the Company Stockholders have not
heretofore approved the Merger and the Transactions. This Agreement has been
duly executed and delivered by the Company and constitutes, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or to
consummate the Merger and the Transactions, when executed and delivered by the
Company, will constitute, legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
laws affecting the rights and remedies of creditors and the obligations of
debtors generally and by general principles of equity. The affirmative vote or
action by written consent of a majority of the votes that the holders of the
outstanding shares of Company Common Stock are entitled to cast is the only vote
of the holders of any class or series of the capital stock of the Company
necessary to approve the Merger and the Transactions under Applicable Law and
the Company's Organic Documents. To the knowledge of the Company, the provisions
of Section 1203 of the CGCL will not apply to this Agreement, the Merger or the
Transactions.
(c) Except as set forth in Section 4.1(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by the Company:
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(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Applicable Law on the part of the
Company, or will conflict with, or result in a breach or violation of,
or constitute a default under, or permit the acceleration of any
obligation or liability under, or but for any requirement of giving of
notice or passage of time or both would constitute such a conflict
with, breach or violation of, or default under, or permit any such
acceleration under, any Contractual Obligation of the Company, except
for such conflicts, breaches, violations, defaults or permitted
accelerations as would not, individually or in the aggregate, have an
Adverse Effect on the Company; or
(ii) will require the Company to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except for (x) the FCC Consents, the California
Proceedings, filings under the Xxxx-Xxxxx-Xxxxxx Act and Private
Authorizations, and (y) other filing requirements under Applicable Law
in connection with the Merger and the Transactions the failure of which
to be obtained or maintained would not, individually or in the
aggregate, have an Adverse Effect on the Company.
(d) The Company does not have any direct or indirect Subsidiaries.
SECTION 4.2 Financial and Other Information.
(a) The Company has heretofore furnished to American copies of the
financial statements of the Company listed in Section 4.2(a) of the Company
Disclosure Schedule (the "Company Financial Statements"). The Company Financial
Statements, including in each case the notes thereto, if any, have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, except as otherwise noted therein or as set forth in Section
4.2(a) of the Company Disclosure Schedule (which schedule reflects the inclusion
of "barter" transactions and the effects thereof), are true, accurate and
complete in accordance with GAAP, and fairly present the financial condition and
results of operations of the Company, on the bases therein stated, as of the
respective dates thereof, and for the respective periods covered thereby
subject, in the case of unaudited financial statements, to normal year-end audit
adjustments and accruals.
(b) Neither the Company Disclosure Schedule, the Company Financial
Statements or this Agreement nor any Collateral Document, data, information or
statement furnished or to be furnished by or on behalf of the Company pursuant
to this Agreement or any Collateral Document executed or required to be executed
by or on behalf of the Company pursuant hereto or thereto or to consummate the
Merger and the Transactions, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary in order to make the statements contained
herein or therein not misleading and all such Collateral Documents, data,
information or statements are and will be true, accurate and complete in all
material respects.
(c) The Company does not own any capital stock or equity or proprietary
interest in any other Entity or enterprise, however organized and however such
interest may be denominated or evidenced, except as set forth in Section 4.2(c)
of the Company Disclosure Schedule. None of the Entities, if any, so set forth
in Section 4.2(c) of the Company Disclosure Schedule is a Subsidiary of the
Company. The Company owns all of the outstanding capital stock or equity or
proprietary interests (as shown on Section 4.2(c) of the Company Disclosure
Schedule) of each such Entity or other enterprise, free and clear of all Liens
(except to the extent set forth in Section 4.2(c) of the Company Disclosure
Schedule), and all such stock or equity or proprietary interests has been duly
authorized and validly issued and is fully paid and
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nonassessable. There are no outstanding Option Securities or Convertible
Securities, or agreements or understandings with respect to any of the
foregoing, of any nature whatsoever.
(d) The Company has no Indebtedness other than (i) the Park Center Note
and the Klue Note, (ii) Long-term Indebtedness (including the current portion
thereof) and (iii) obligations incurred in the ordinary course of business
(other than for money borrowed or of a nature described in clause (b) of the
definition of Indebtedness).
SECTION 4.3 Changes in Condition. Since the date of the most recent
financial statements forming part of the Company Financial Statements, there has
been no Material Adverse Change in the Company. There is no Event known to the
Company which Materially Adversely Affects, or (so far as the Company can now
reasonably foresee) in the future is likely to Materially Adversely Affect, the
Company or the ability of the Company to perform any of the obligations set
forth in this Agreement or any Collateral Document executed or required to be
executed pursuant hereto or thereto or to consummate the Merger and the
Transactions, except (i) to the extent specifically described in Section 4.3 of
the Company Disclosure Schedule and (ii) for matters affecting the economy
(national or local) or the radio broadcasting industry generally.
SECTION 4.4 Liabilities. At the date of the most recent balance sheet
forming part of the Company Financial Statements, the Company did not have any
obligations or liabilities, past, present or deferred, accrued or unaccrued,
fixed, absolute, contingent or other, except as disclosed in such balance sheet,
or the notes thereto and except for obligations incurred in the ordinary course
of business which are not material or are not required under GAAP to be set
forth or reflected on a balance sheet or notes thereto, and since such date the
Company has not incurred any such obligations or liabilities, other than
obligations and liabilities incurred in the ordinary course of business
consistent with past practice of the Company, which do not, in the aggregate,
Materially Adversely Affect the Company, except to the extent specifically set
forth in Section 4.4 of the Company Disclosure Schedule. The Company has not
Guaranteed and is not otherwise primarily or secondarily liable in respect of
any obligation or liability of any other Person, except for endorsements of
negotiable instruments for deposit in the ordinary course of business or as
disclosed in the most recent balance sheet, or the notes thereto, forming part
of the Company Financial Statements or in Section 4.4 of the Company Disclosure
Schedule.
SECTION 4.5 Title to Properties; Leases.
(a) Section 4.5(a) of the Company Disclosure Schedule contains a true,
accurate and complete description of all real estate owned or leased by the
Company (the "Company Real Property") and all Leases and an identification of
all material items of personal property (the "Company Personal Property"). The
Company has good legal, indefeasible, insurable and marketable title in fee
simple to all Company Real Property, if any, owned by it and good indefeasible
and merchantable title to all Company Personal Property, free and clear of all
Liens, except (i) Liens reflected in the Company Financial Statements
(including, but not limited to, the Lien securing the Park Center Note), (ii)
Liens for current taxes not yet due and payable, (iii) Liens set forth on
Section 4.5(a) of the Company Disclosure Schedule, (iv) Liens that will be
released prior to the Closing Date (and which are listed on Section 4.5(a) of
the Company Disclosure Schedule), and (v) such imperfections of title,
easements, encumbrances and mortgages or other Liens, if any, as are not,
individually or in the aggregate, substantial in character, amount or extent and
do not materially detract from the value, or materially interfere with the
present use, of the property subject thereto or affected thereby, or otherwise
materially impair business operations. Except for financing statements
evidencing Liens referred to in the preceding sentence (a true, accurate and
complete list and description of which is set forth in Section 4.5(a) of the
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Company Disclosure Schedule), no financing statements under the Uniform
Commercial Code and no other filing which names the Company as debtor or which
covers or purports to cover any of the property of the Company is on file in any
state or other jurisdiction, and the Company has not signed or agreed to sign
any such financing statement or filing or any agreement authorizing any secured
party thereunder to file any such financing statement or filing. Except as set
forth in Section 4.5(a) of the Company Disclosure Schedule, the Company Real
Property (other than land) and all material items of Company Personal Property
are generally in a state of good repair and maintenance and are generally in
good operating condition, normal wear and tear excepted, have been maintained in
a manner consistent with generally accepted standards of good engineering
practice and will permit the Stations to operate in accordance with the terms
and conditions of their respective FCC Licenses and all Applicable Laws.
(b) Except as otherwise set forth in Section 4.5(b) of the Company
Disclosure Schedule, each Lease or other occupancy or other agreement under
which the Company holds real or personal property has been duly authorized,
executed and delivered by the Company and, to the Company's knowledge, each of
the other parties thereto, and is a legal, valid and binding obligation of each
of the Company that are parties thereto, and, to the Company's knowledge, each
of the other parties thereto, enforceable in accordance with its terms. The
Company has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all Leases pursuant to which it holds any Company Real Property
or Company Personal Property. All of such Leases are valid and subsisting and in
full force and effect; and neither the Company nor, to the Company's knowledge,
any other party thereto, is in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in any such
Lease.
(c) Except as set forth in Section 4.5(c) of the Company Disclosure
Schedule, all improvements on the Company Real Property are in compliance in all
material respects with, and the Company has not received any notice that any
Company Real Property, or the use thereof violates, any applicable title
covenant, condition, restriction or reservation or any applicable zoning,
wetlands, land use or other Applicable Law.
SECTION 4.6 Compliance with Private Authorizations. Section 4.6 of the
Company Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually or when taken
together with other substantially similar Private Authorizations is material to
the Company, all of which are in full force and effect. The Company has obtained
all Private Authorizations which are necessary for the ownership by the Company
of its properties and the conduct of its business as now conducted or as
presently proposed to be conducted or which, if not obtained and maintained,
could, singly or in the aggregate, Materially Adversely Affect the Company. The
Company is not in breach or violation of, and is not in default in the
performance, observance or fulfillment of, any Private Authorization, and no
Event exists or has occurred, which constitutes, or but for any requirement of
giving of notice or passage of time or both would constitute, such a breach,
violation or default, under any Private Authorization, except for such defaults,
breaches or violations, as do not and will not have in the aggregate any
Material Adverse Effect on the Company or the ability of the Company to perform
any of the obligations set forth in this Agreement or any Collateral Document
executed or required to be executed pursuant hereto or thereto or to consummate
the Merger and the Transactions. No Private Authorization is the subject of any
pending or, to the Company's knowledge, information or belief, threatened
attack, revocation or termination.
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SECTION 4.7 Compliance with Governmental Authorizations and Applicable
Law.
(a) Section 4.7(a) of the Company Disclosure Schedule contains a
description of:
(i) all Legal Actions which are pending or in which the
Company or any of its business, operations or properties, or any of its
officers or directors in connection therewith, is, or, to the Company's
knowledge, at any time during the past five (5) years has been,
engaged, or which involves, or, to the Company's knowledge, at any time
during such period involved, the business, operations or properties of
the Company or, to the Company's knowledge, which is threatened or
contemplated against, or in any other manner relating Materially and
Adversely to, the Company or any of its business, operations or
properties, or any of its officers or directors in connection
therewith;
(ii) all Claims and Legal Actions pending or, to the Company's
knowledge, threatened against the Company or the ownership or
operations of any of the Stations which, individually or in the
aggregate, are reasonably likely to result in the revocation or
termination of any of the FCC Licenses or the imposition of any
restriction of such a nature as would Adversely affect the ownership or
operations of any of the Stations, nor does the Company know of any
basis for any of the foregoing; in particular, but without limiting the
generality of the foregoing, there are no applications, complaints or
proceedings pending or, to the best of the Company's knowledge,
threatened (x) before the FCC relating to the business or operations of
any of the Stations other than applications, complaints or proceedings
which affect the radio broadcasting industry generally, or (y) before
any Authority involving charges of illegal discrimination by the
Stations under any federal or state employment Laws; and
(iii) each Governmental Authorization (including without
limitation all FCC Licenses) that is (x) owned or held by the Company
with respect to the ownership and operation of the Stations and the
conduct of the business of the Company, or (y) necessary to permit the
Company to execute and deliver this Agreement and to perform its
obligations hereunder.
The Company has delivered to American, true, correct and complete
copies of each of the Governmental Authorizations described in Section 4.7(a) of
the Company Disclosure Schedule (including without limitation any and all
amendments and other modifications thereto).
(b) The Company is the authorized legal holder of the FCC Licenses
listed in Section 4.7(a) of the Company Disclosure Schedule, none of which is
subject to any restriction or condition which would limit in any material
respect the operations of the Stations as currently conducted or proposed to be
conducted on or prior to the Closing Date. The FCC Licenses listed in Section
4.7(a) of the Company Disclosure Schedule are valid and in good standing, are in
full force and effect and are not impaired in any material respect by any act or
omission of the Company or its officers, directors, employees or agents, and the
operation of the Stations is in accordance in all material respects with the FCC
Licenses. The Stations are operating in accordance with the FCC Licenses, all
underlying construction permits and the FCA. Except as disclosed in Section
4.7(b) of the Company Disclosure Schedule, no application, action or proceeding
is pending for the renewal or modification of any of the FCC Licenses and, to
the Company's knowledge, there is not as of the date of this Agreement issued or
outstanding any investigation or material complaint against the Company at the
FCC relating to any of the Stations. Except as disclosed in Section 4.7(b) of
the Company Disclosure Schedule, as of the date of this Agreement, to the
Company's knowledge, there is no proceeding pending at or outstanding notice of
violation from the FCC relating to the Stations. All fees payable to Authorities
pursuant to the FCC
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Licenses, including FCC annual regulatory fees, have been paid and no event has
occurred which, individually or in the aggregate and without the giving of
notice or the lapse of time or both, would constitute grounds for revocation
thereof or would have an Adverse Effect on the Company. Except as set forth in
Section 4.7(b) of the Company Schedule, all material reports, forms and
statements required to be filed by the Company with the FCC with respect to the
Stations have been filed and are true, complete and accurate in all material
respects. To the best knowledge of the Company, under the FCA, there are no
facts that would disqualify the Company from transferring the Stations to
American.
The Governmental Authorizations listed in Section 4.7(a) of the Company
Disclosure Schedule comprise all Governmental Authorizations which are necessary
for the lawful ownership of operation and the lawful conduct of the business of
each of the Stations as now conducted, except for Governmental Authorizations,
the failure of which to obtain and maintain, would not individually or in the
aggregate have any Adverse Effect on the Company. No Governmental Authorization
is the subject of any pending or, to the Company's knowledge, threatened
challenge or proceeding to revoke or terminate any Governmental Authorization.
The Company has no reason to believe that any Governmental Authorization would
not be renewed in the name of the Company by the granting Authority in the
ordinary course.
(c) With respect to matters, if any, of a nature referred to in Section
4.7(a) or 4.7(b) of the Company Disclosure Schedule, except as otherwise
specifically described in Section 4.7(c) of the Company Disclosure Schedule, all
such information and matters set forth in the Company Disclosure Schedule, if
adversely determined against the Company, will not, in the aggregate, Materially
Adversely Affect the Company, or the ability of the Company to perform its
obligations under this Agreement or any Collateral Documents executed or
required to be executed pursuant hereto or thereto or to consummate the Merger
and the Transactions.
SECTION 4.8 Intangible Assets. Section 4.8 of the Company Disclosure
Schedule sets forth a true, accurate and complete description of all Intangible
Assets (other than Governmental Authorizations and Private Authorizations) held
or used by the Company, including without limitation the nature of the Company's
interest in each and the extent to which the same have been duly registered in
the offices as indicated therein. The Company owns or possesses or otherwise has
the right to use all such Intangible Assets necessary for the present and
planned future conduct of its business. Except as set forth in Section 4.8 of
the Company Disclosure Schedule, no authorizations or intangible assets (except
the Governmental Authorizations and Private Authorizations and such other
Intangible Assets so set forth) are required for the Company to conduct its
business as currently conducted or proposed to be conducted on or prior to the
Closing Date.
SECTION 4.9 Related Transactions. Section 4.9 of the Company Disclosure
Schedule specifically sets forth a true, accurate and complete description of
any Contractual Obligation or transaction between the Company and any of its
officers, directors or employees, any Company Stockholder, or any Affiliate of
any thereof (other than reasonable compensation for services as officers,
directors and employees), which are to continue following the Effective Time,
including without limitation any providing for the furnishing of services to or
by, providing for rental of property, real, personal or mixed, to or from, or
providing for the lending or borrowing of money to or from or otherwise
requiring payments to or from, any officer, director, Company Stockholder or
employee, or any Affiliate of any thereof. All such Contractual Obligations and
transactions which are to continue after the Effective Time (a) will be on terms
and conditions no less favorable to the Company than would be customary for such
between Persons who are not Affiliates or upon terms and conditions on which
similar Contractual Obligations and transactions with Persons who are not
Affiliates could fairly and reasonably be expected
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to be entered into, and (b) are specifically designated as so surviving in
Section 4.9 of the Company Disclosure Schedule.
SECTION 4.10 Insurance. Section 4.10 of the Company Disclosure Schedule
includes the insurers' names, policy numbers, expiration dates, amounts of
coverage, the annual premiums, Best policy holder's and financial size ratings
of the insurers, exclusions, deductibles and self-insured retention and
describes in reasonable detail any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed to by the
Company or imposed upon the Company by any such insurers, as well as any
self-insurance program that is in effect. The Company is not in breach or
violation of or in default under any such policy, and all premiums due thereon
have been paid.
SECTION 4.11 Tax Matters.
(a) The Company has in accordance with all Applicable Laws filed all
Tax Returns which are required to be filed, and has paid, or made adequate
provision for the payment of, all Taxes which have or may become due and payable
pursuant to said Tax Returns and all other governmental charges and assessments
received to date other than those Taxes being contested in good faith for which
adequate provision has been made on the most recent balance sheet forming part
of the Company Financial Statements. The Tax Returns of the Company have been
prepared in accordance with all Applicable Laws and generally accepted
principles applicable to taxation consistently applied. All Taxes which the
Company is required by law to withhold and collect have been duly withheld and
collected, and have been paid over, in a timely manner, to the proper
Authorities to the extent due and payable. The Company has not executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of the Company for the fiscal years prior to and
including the most recent fiscal year. Adequate provision has been made on the
most recent balance sheet forming part of the Company Financial Statements for
all Taxes accrued through the date of such balance sheet of any kind, including
interest and penalties in respect thereof, whether disputed or not, and whether
past, current or deferred, accrued or unaccrued, fixed, contingent, absolute or
other, and there are no past transactions or matters which could result in
additional Taxes to the Company for which an adequate reserve has not been
provided on such balance sheet. The Company is not a "consenting corporation"
within the meaning of Section 341(f) of the Code. The Company has for the period
indicated in Section 4.1(a) of the Company Disclosure Schedule qualified, and
immediately prior to the Effective Time will qualify, for taxable status as a
Subchapter S corporation under the Code.
(b) The Company has paid all Taxes which have become due pursuant to
its Returns and has paid all installments of estimated Taxes due and payable.
(c) From the end of its most recent fiscal year to the date hereof the
Company has not made any payment on account of any Taxes except regular payments
required in the ordinary course of business with respect to current operations
or property presently owned.
(d) The information shown on the Federal Income Tax Returns of the
Company (true, accurate and complete copies of which have been furnished by the
Company to American to the extent requested by American) is true, accurate and
complete in all material respects and fairly and accurately reflects the
information purported to be shown. To the Company's knowledge, Federal and state
income Tax Returns of the Company have not been examined by the IRS or
applicable state Authority, and the Company has not been notified of any
proposed examination, except as shown in Section 4.11(d) of the Company
Disclosure Schedule.
-11-
(e) The Company is not a party to any tax sharing agreement or
arrangement.
(f) The Company is not and, within five (5) years of the date hereof
has not been, a "United States real property holding corporation" as defined in
Section 897 of the Code.
SECTION 4.12 Employee Retirement Income Security Act of 1974.
(a) The Company (which for purposes of this Section shall include any
ERISA Affiliate) has not made at any time since its organization and is not
making any contribution to any Plan and has not sponsored and is not sponsoring
any Plan or Benefit Arrangement, except as set forth in Section 4.12(a) of the
Company Disclosure Schedule. True, complete and accurate copies of all such
written Plans and Benefit Arrangements (or related insurance policies) to the
extent requested by American have been furnished to American, along with copies
of any employee handbooks or similar documents describing such Plans or Benefit
Arrangements. Section 4.12(a) of the Company Disclosure Schedule also contains a
true, complete and accurate description of any unwritten Plan or Benefit
Arrangement. As to all Plans and Benefit Arrangements listed in Section 4.12(a)
of the Company Disclosure Schedule:
(i) all such Plans and Benefit Arrangements comply and have
been administered in form and in operation with all Applicable Laws in
all material respects, and the Company has not received any notice from
any Authority questioning or challenging such compliance;
(ii) all such Plans maintained or previously maintained by the
Company that are or were intended to comply with Sections 401 and 501
of the Code comply and complied in form and in operation with all
applicable requirements of such sections, and no event has occurred
which will or could give rise to disqualification of any such Plan
under such sections or to a tax under Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iv) there have been no "prohibited transactions" (as
described in Section 406 of ERISA or Section 4975 of the Code) with
respect to any such Plan and the Company has not otherwise engaged in
any prohibited transaction;
(v) there have been no acts or omissions by the Company which
have given rise to or may give rise to any material fines, penalties,
taxes or related charges under Sections 502(c), 502(i) or 4071 or ERISA
or Chapter 43 of the Code for which the Company may be liable;
(vi) there are no Claims (other than routine claims for
benefits or actions seeking qualified domestic relations orders)
pending or threatened involving such Plans or the assets of such Plans,
and, to the Company's knowledge, no facts exist which could give rise
to any such Claims (other than routine claims for benefits or actions
seeking qualified domestic relations orders);
(vii) no such Plan is subject to Title IV of ERISA, or, if
subject, there have been no "reportable events" (as described in
Section 4043 of ERISA), and no steps have been taken to terminate any
such Plan;
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(viii) all group health Plans of the Company have been
operated in compliance in all material respects with the group health
plan continuation coverage requirements of COBRA;
(ix) to the extent required by GAAP, actuarially adequate
accruals for all obligations under the Plans are reflected in the most
recent balance sheet forming part of the Company Financial Statements
and such obligations include a pro rata amount of the Shareholder
Distributions which would otherwise have been made in accordance with
past practices for the Plan years which include the Closing Date;
(x) neither the Company nor, to the Company's knowledge, any
of its respective directors, officers, employees or any other fiduciary
has committed any material breach of fiduciary responsibility imposed
by ERISA that would subject the Company or any of its respective
directors, officers or employees to any material liability under ERISA;
(xi) no such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code applied, nor would have had an
accumulated funding deficiency on such date if such year were the first
year of such Plan to which Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code applied;
(xii) no liability to the PBGC has been or is expected by the
Company to be incurred by the Company with respect to any Plan, and
there has been no event or condition which presents a risk of
termination of any Plan by the PBGC;
(xiii) the Company is not and never has been a party to any
Multiemployer Plan or made contributions to any such Plan;
(xiv) except as set forth in Section 4.12(a)(xiv) of the
Company Disclosure Schedule (which entry, if applicable, shall indicate
the present value of accumulated plan liabilities calculated in a
manner consistent with FAS 106 and actual annual expense for such
benefits for each of the last two (2) years) and pursuant to the
provisions of COBRA, the Company does not maintain any Plan that
provides benefits described in Section 3(1) of ERISA, except as the
provisions of COBRA may apply, to any former employees or retirees of
the Company; and
(xv) the Company has made available to American a copy of the
two most recently filed Federal Form 5500 series and accountant's
opinion, if applicable, for each Plan (and the two most recent
actuarial valuation reports for each Plan, if any, that is subject to
Title IV of ERISA), and all information provided by the Company to any
actuary in connection with the preparation of any such actuarial
valuation report was true, accurate and complete in all material
respects.
(b) The execution, delivery and performance of this Agreement and the
Collateral Documents executed or required to be executed pursuant hereto and
thereto will not involve any prohibited transaction within the meaning of ERISA
or Section 4975 of the Code.
SECTION 4.13 Absence of Sensitive Payments. Neither the Company nor, to
the Company's knowledge, any of its officers, directors, stockholders,
employees, agents or other representatives, has (a) made any contributions,
payments or gifts to or for the private use of any governmental official,
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employee or agent where either the payment or the purpose of such contribution,
payment or gift is illegal under the laws of the United States or the
jurisdiction in which made, (b) established or maintained any unrecorded fund or
asset for any purpose or made any false or artificial entries on its books, or
(c) made any payments to any person with the intention or understanding that any
part of such payment was to be used for any purpose other than that described in
the documents supporting the payment.
SECTION 4.14 Inapplicability of Specified Statutes. The Company is not
a "holding company", or a "subsidiary company" or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or an "investment company" or a company "controlled" by or
acting on behalf of an "investment company", as defined in the Investment
Company Act of 1940, as amended, or a "carrier" or a person which is in control
of a "carrier", as defined in section 11301 of Title 49, U.S.C.
SECTION 4.15 Authorized and Outstanding Capital Stock.
(a) The authorized and outstanding capital stock of the Company is as
set forth in Section 4.15(a) of the Company Disclosure Schedule. All of such
outstanding capital stock has been duly authorized and validly issued, is fully
paid and nonassessable and is not subject to any preemptive or similar rights.
There is neither outstanding nor has the Company agreed to grant or issue any
shares of its capital stock or any Option Security or Convertible Security, and
the Company is not a party to or bound by any agreement, put or commitment
pursuant to which it is obligated to purchase, redeem or otherwise acquire any
shares of capital stock or any Option Security or Convertible Security, except
as set forth in Schedule 4.15(a) of the Company Disclosure Schedule.
(b) All of the outstanding capital stock of the Company is owned as of
the date of this Agreement by the Company Stockholders as and to the extent set
forth in Section 4.15(b) of the Company Disclosure Schedule, to the Company's
knowledge, free and clear of all Liens.
SECTION 4.16 Employment Arrangements.
(a) Section 4.16(a) of the Company Disclosure Schedule contains a true,
accurate and complete list of all persons employed by the Company, together with
each such employee's date of hire, the title or capacity in which such person is
employed, and an accurate summary description of all Employment Arrangements.
(b) The Company has received no notice that, and the Company is not
aware of, any Company employee (other than the Company Stockholders) who shall
or is likely to terminate his or her employment relationship with the Company
upon the execution of this Agreement or with American after consummation of the
Merger.
(c) Each applicable Employment Arrangement has been administered in
compliance in all material respects with the provisions of ERISA, the Code, the
Age Discrimination in Employment Act and any other Applicable Law. The Company
has performed in all material respects all obligations required to be performed
under each Employment Arrangement and is not in material breach or violation of
or in material default or arrears under any of the terms, provisions or
conditions thereof. There exists no Claim or Legal Action (other than routine
claims for benefits) with respect to any Employment Arrangement pending or, to
the Company's knowledge, threatened against any Employment Arrangement, and the
Company possesses no knowledge of any facts which could give rise to any such
Legal Action or Claim.
-14-
(d) Except as described in Section 4.16(d) of the Company Disclosure
Schedule, (i) none of the employees of the Company is now, or, to the Company's
knowledge, during the past five (5) years has been, represented by any labor
union or other employee collective bargaining organization, or are now, or, to
the Company's knowledge during the past five (5) years have been, parties to any
labor or other collective bargaining agreement, (ii) there are no pending
grievances, disputes or controversies with any union or any other employee or
collective bargaining organization of such employees, or threats of strikes,
work stoppages or slowdowns or any pending demands for collective bargaining by
any union or other such organization, and (iii) neither the Company nor any of
its employees is now, or, to the Company's knowledge, during the past five (5)
years has been, subject to or involved in or, to the Company's knowledge,
threatened with, any union elections, petitions therefore or other
organizational or recruiting activities. The Company has performed all
obligations required to be performed under all Employment Arrangements and are
not in breach or violation of or in default or arrears under any of the terms,
provisions or conditions thereof. Section 4.16(a) of the Company Disclosure
Schedule sets forth the basis of funding, and the current status of, any past
service liability with respect to each Employment Arrangement to which the same
is applicable.
(e) Except as set forth on Section 4.16(e) of the Company Disclosure
Schedule, no employee shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Employment Arrangement,
including the right to receive any parachute payment, as defined in Section 280G
of the Code, or become entitled to severance, termination allowance or similar
payments as a result, directly or indirectly, of the transactions contemplated
by this Agreement. Notwithstanding the foregoing, the Company represents and
warrants that each employment, severance, consulting or other similar agreement,
if any, listed in Section 4.16(e) of the Company Disclosure Schedule may be
unconditionally terminated at no cost to the Company or American.
(f) The Company considers its relationships with its employees to be
good.
SECTION 4.17 Material Agreements. Specifically listed on Section 4.17
of the Company Disclosure Schedule are all Material Agreements relating to the
ownership or operation of the business and property of the Company or any
presently held or used by the Company or to which the Company is a party or to
which it or any of its property is subject or bound. True, accurate and complete
copies of each of the Material Agreements have been made available by the
Company to American and the Company has provided American with photocopies of
all such Material Agreements requested by American (or true, accurate and
complete descriptions thereof have been set forth in Section 4.17 of the Company
Disclosure Schedule, if any such Material Agreements are oral). All of the
Material Agreements are valid, binding and legally enforceable obligations of
the Company and, to the Company's knowledge, all other parties thereto, and the
Company is validly and lawfully operating its business and owning its property
under each of the Material Agreements. The Company has duly complied with all of
the terms and conditions of each Material Agreement and has not done or
performed, or failed to do or perform (and there is no pending or, to the
knowledge of the Company, threatened Claim that the Company has not so complied,
done and performed or fail to do and perform) any act which would invalidate or
provide grounds for the other party thereto to terminate (with or without
notice, passage of time or both) such Material Agreement or impair the rights or
benefits, or increase the costs, of the Company, under any of the Material
Agreements. The Company has not expressly granted any waivers of forbearance
under any Material Agreement and, to the Company's knowledge, no third party is
in material default in the performance of any of its obligations under any
Material Agreement. Except for those consents or approvals listed in Section
4.17 of the Company Disclosure Schedule, no consents or approvals of any third
party are necessary to permit the assignment of the Material Agreements to
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American pursuant to the Merger and such assignment will not affect the validity
or enforceability of any Material Agreement or cause any material change in the
substantive terms of any of them.
SECTION 4.18 Ordinary Course of Business. The Company, from the end of
its most recent fiscal quarter to the date hereof, and until the Closing Date,
except (i) as may be described on Section 4.18 of the Company Disclosure
Schedule, (ii) as may result from the consummation of the Shareholder
Distribution, (iii) as may be required or expressly contemplated by the terms of
this Agreement, or (iv) as are reflected in the Company Financial Statements:
(a) has operated, and will continue to operate, its business
in the normal, usual and customary manner in the ordinary and regular
course of business, consistent with prior practice;
(b) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of, and will not sell or otherwise dispose of
or contract to sell or otherwise dispose of, any of its properties or
assets having a value in excess of $10,000 with respect to any Station,
other than in the ordinary course of business;
(c) except in each case in the ordinary course of business:
(i) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other) having
a value in excess of $10,000 with respect to any Station;
(ii) has not entered and will not enter into any
commitments having a value in excess of $10,000 with respect
to any Station; and
(iii) has not cancelled and will not cancel any debts
or claims;
(d) has not made or committed to make, and will not make or
commit to make, any additions to its property or any purchases of
equipment, except for normal maintenance and replacements;
(e) has not discharged or satisfied and will not discharge or
satisfy any Lien, and has not paid and will not pay any obligation or
liability (absolute or contingent) other than current liabilities or
obligations under contracts then existing or thereafter entered into in
the ordinary course of business and commitments under Leases existing
on that date or incurred since that date in the ordinary course of
business or repaying or prepaying Long-Term Indebtedness or the current
portion thereof;
(f) has not created or permitted to be created, and will not
create or permit to be created, any Lien on any of its tangible
property, except for such Liens, if any, as do not materially detract
from the value of or materially interfere with the use of such
property;
(g) has not transferred or created or permitted to be created,
and will not transfer or create or permit to be created, any Lien on
any Intangible Assets , except for such Liens, if any, as do not
materially detract from the value of or materially interfere with the
use of such property;
(h) has not increased and will not increase the compensation
payable or to become payable to any of its directors, officers,
employees, advisers, consultants, salesmen or agents
-16-
other than in the ordinary course of business which will not, in any
event with respect to any of the foregoing, exceed the applicable rate
of inflation, or otherwise alter, modify or change the terms of their
employment or engagement;
(i) has not suffered and will not suffer any material damage,
destruction or loss (whether or not covered by insurance) or any
acquisition or taking of property by any Authority;
(j) has not waived and will not waive any rights of material
value without fair and adequate consideration;
(k) has not experienced any work stoppage;
(l) except in the ordinary cause of business as described in
Section 4.18(l) of the Company Disclosure Schedule, has not entered
into, amended or terminated, and will not enter into, amend or
terminate, any Lease, Governmental Authorization, Plan, Benefit,
Arrangement, Private Authorization, Material Agreement, Employment
Arrangement or Contractual Obligation, or any transaction, agreement or
arrangement with any Affiliate;
(m) has not amended or terminated, and will not amend or
terminate, and has kept and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and coverage with
financially responsible companies in such amounts and against such
risks and losses as are consistent with past practice;
(n) has not, and will not have, declared, made or paid, or
agreed to declare, make or pay, any Distribution;
(o) has not amended, and will not amend, any provision of its
Organic Documents;
(p) has not issued, sold, pledged or disposed of and will not
issue, sell, pledge or dispose of any additional shares of capital
stock or any Option Securities or Convertible Securities and has no
entered into, and will not enter into, any agreement or arrangement to
do the same;
(q) has not entered into, and will not enter into, any trade
or barter arrangements (i) which are outside the ordinary course of
business, (ii) otherwise than in accordance with the Company's prior
policies and practices, or (iii) if, together with all trade and barter
arrangements entered into after September 30, 1996, such arrangements
would cause the difference between fair value of the Company's trade
assets and trade liabilities with respect to the Stations to become
more unfavorable to the Company by more than $25,000;
(r) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is material to the Company, except in the ordinary course
of business; and
(s) will, on or prior to the Closing, apply the condemnation
fund account balance in the amount and as set forth in Section 4.18(s)
of the Company Disclosure Schedule.
SECTION 4.19 Bank Accounts, Etc. Section 4.19 of the Company Disclosure
Schedule contains a true, accurate and complete list as of the date hereof of
all banks, trust companies, savings and loan
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associations and brokerage firms in which the Company has an account or a safe
deposit box and the names of all Persons authorized to draw thereon, to have
access thereto, or to authorize transactions therein, the names of all Persons,
if any, holding powers of attorney from the Company and a summary statement as
to the terms thereof. The Company agrees that prior to the Closing Date it will
not make or permit to be made any change affecting any bank, trust company,
savings and loan association, brokerage firm or safe deposit box or in the names
of the Persons authorized to draw thereon, to have access thereto or to
authorize transactions therein or in such powers of attorney, or open any
additional accounts or boxes or grant any additional powers of attorney, without
in each case obtaining the prior written consent of American.
SECTION 4.20 Material and Adverse Restrictions. The Company is not a
party to or subject to, nor is any of its property subject to, any Applicable
Law, Governmental Authorization, Contractual Obligation, Employment Arrangement,
Material Agreement or Private Authorization, or any other obligation or
restriction of any kind or character not disclosed by the Company to American on
or prior to the date of this Agreement, which now or, as far as the Company can
now reasonably foresee, individually or in the aggregate is likely to, have any
Material Adverse Effect on the Company, except as specifically set forth in
Section 4.20 of the Company Disclosure Schedule.
SECTION 4.21 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company or to the knowledge of the Company or any
Company Stockholders other than Media Venture Partners, Ltd., which was retained
by, and whose fees and expenses shall be paid equally by, the Company and
American.
SECTION 4.22 Environmental Matters.
(a) Except as set forth in Section 4.22(a) of the Company Disclosure
Schedule, the Company:
(i) to the knowledge of the Company, has not been notified
that it is potentially liable under, has not received any request for
information or other correspondence concerning its potential liability
with respect to any site or facility under, and is not a "potentially
responsible party" under, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource
Conservation Recovery Act, as amended, or any similar state law;
(ii) has not entered into or received any consent decree,
compliance order or administrative order issued pursuant to
Environmental Laws;
(iii) is not a party in interest or in default under any
judgment, order, writ, injunction or decree of any final order issued
pursuant to Environmental Laws;
(iv) is, to the knowledge of the Company, in compliance in all
material respects with all Environmental Laws, has, to Company's
knowledge, obtained all Environmental Permits, and is not the subject
of or, to the Company's knowledge, threatened with any Legal Action
involving a demand for damages or other potential liability including
any Lien with respect to material violations or material breaches of
any Environmental Law; and
(v) the Company has no knowledge of any past or present Event
related to the Company or its business, operations or property which
Event, individually or in the aggregate, may
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interfere with or prevent continued material compliance with all
Environmental Laws, or which, individually or in the aggregate, will
form the basis of any material Claim for the release or threatened
release into the environment, of any Hazardous Material.
(b) Except as set forth in Section 4.22(b) of the Company Disclosure
Schedule:
(i) the Company has not disposed of, released, buried or
placed on any property or facility owned or leased by the Company
during the period that such facilities and properties were owned or
leased by it or on the property of any other Person any Hazardous
Materials which to Company's knowledge could form the basis for a
material Claim; and
(ii) to the knowledge of the Company, the Company has no
above-ground or underground fuel storage tanks on property owned or
leased by it.
SECTION 4.23 Compliance with Regulations Relating to Securities Credit.
None of the borrowings, if any, of the Company were incurred or used for the
purpose of purchasing or carrying any security which at the date of its
acquisition was, or any security which now is, margin stock or other margin
security within the meaning of Regulation T of the Margin Rules or a "security
that is publicly held," within the meaning of the Margin Rules, and the Company
owns no margin stock or other margin security, or a "security that is publicly
held", and the Company has no present intention of acquiring any margin stock or
other margin security, or any "security that is publicly held".
SECTION 4.24 Continuing Representation and Warranty. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article (as the
same may be updated pursuant to Section 6.4) shall be true and correct on the
Closing Date with the same force and effect as though made on and as of that
date and those, if any, which speak as of a specific date shall be true and
correct on the Closing Date.
SECTION 4.25 Contribution Assets. Notwithstanding anything to the
contrary in the foregoing representations and warranties of the Company, the
Company hereby makes no representations or warranties with respect to the assets
of the Company described in Section 2.1 of the Company Disclosure Schedule to be
contributed and transferred to the Company Stockholders pursuant to the
Shareholder Distribution.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American represents, warrants and covenants to, and agrees with, the
Company as follows:
SECTION 5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) American (i) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (ii) has
all requisite power and authority (corporate and other) to own or hold under
lease its properties and to conduct its business as now conducted and as
presently proposed to be conducted; and (iii) has duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
each jurisdiction in which the character of its property or the nature
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of its business or operations requires such qualification or authorization, and
in which the failure to be so qualified would have a Material Adverse Effect on
American.
(b) American has all requisite power and authority (corporate and
other), and has in full force and effect all Governmental Authorizations (other
than those referred to in Section 5.2(c)(iii)) and Private Authorizations in
order to enable it to execute and deliver, and to perform its obligations under,
this Agreement and each Collateral Document executed or required to be executed
pursuant hereto or thereto or to consummate the Merger and the Transactions; and
the execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed pursuant hereto or thereto have
been duly authorized by all requisite corporate or other action on the part of
American. No action or approval on the part of the American stockholders is
required in connection with the execution, delivery and performance of this
Agreement or any Collateral Document or the consummation of the Merger and the
Transactions. This Agreement has been duly executed and delivered by American
and constitutes, and each Collateral Document executed or required to be
executed pursuant hereto or thereto or to consummate the Merger and the
Transactions, when executed and delivered by American, will constitute, legal,
valid and binding obligations of American enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency and similar laws affecting the rights and remedies of
creditors and the obligations of debtors generally and by general principles of
equity.
(c) Except as set forth in Section 5.1(c) of the American Disclosure
Schedule, neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by American:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Applicable Law on the part of
American or will conflict with, or result in a breach or violation of,
or constitute a default under, or permit the acceleration of any
obligation or liability in, or but for any requirement of giving of
notice or passage of time or both would constitute such a conflict
with, breach or violation of, or default under, or permit any such
acceleration in, any Contractual Obligation of American, except for
such conflicts, breaches, violations, defaults or permitted
accelerations as would not, individually or in the aggregate, have an
Adverse Effect on the American; or
(ii) will require American to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except for
(x) the FCC Consents, filings under the Xxxx-Xxxxx-Xxxxxx Act and
Private Authorizations and (y) other filing requirements under
Applicable Law in connection with the Merger and the Transactions the
failure of which to be obtained or maintained would not, individually
or in the aggregate, have an Adverse Effect on American.
SECTION 5.2 Financial and Other Information.
(a) American has heretofore furnished to the Company copies of the
consolidated financial statements of American and its Subsidiaries listed in
Section 5.2(a) of the American Disclosure Schedule (the "American Financial
Statements"). The American Financial Statements, including in each case the
notes thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, except as otherwise
noted therein or as set forth in Section 5.2(a) of the American Disclosure
Schedule, are true, accurate and complete in accordance with GAAP, do not
contain
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any untrue statement of a material fact or omit to state a material fact
required by GAAP to be stated therein or necessary in order to make the
statements contained therein not misleading, and fairly present the financial
condition and results of operations of American and its Subsidiaries, on the
bases therein stated, as of the respective dates thereof, and for the respective
periods covered thereby subject, in the case of unaudited financial statements,
to normal year-end audit adjustments and accruals.
(b) Neither the American Disclosure Schedule, the American Financial
Statements or this Agreement nor any Collateral Document, data, information or
statement furnished or to be furnished by or on behalf of the Company pursuant
to this Agreement or any Collateral Document executed or required to be executed
by or on behalf of the Company pursuant hereto or thereto or to consummate the
Merger and the Transactions, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary in order to make the statements contained
herein or therein not misleading and all such Collateral Documents, data,
information or statements are and will be true, accurate and complete in all
material respects. The documents (collectively, the "American SEC Documents")
which American has filed pursuant to the provisions of the Securities Act or the
Exchange Act, as of the date of the filing thereof, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. Section 5.2(b) of
the American Disclosure Schedule contains an update of certain of the
information set forth in the American SEC Documents. No information material to
the Merger and the Transactions contemplated by this Agreement and which is
necessary to make the representations and warranties herein contained not
misleading, to the knowledge of American, has been withheld from, or has not
been delivered to, the Company.
SECTION 5.3 Changes in Condition. Since the date of the most recent
financial statements forming part of the American Financial Statements, there
has been no Material Adverse Change in the Company and its Subsidiaries taken as
a whole. There is no Event known to American which Materially Adversely Affects,
or (so far as American can now reasonably foresee) in the future is likely to
Materially Adversely Affect, American and its Subsidiaries taken as a whole, or
the ability of the Company to perform any of the obligations set forth in this
Agreement or any Collateral Document executed or required to be executed
pursuant hereto or thereto or to consummate the Merger and the Transactions,
except (i) to the extent specifically described in the American Disclosure
Schedule and (ii) for matters affecting the economy (national or local) or the
radio broadcasting industry generally.
SECTION 5.4 Compliance with Private Authorizations. Each of American
and each Subsidiary has obtained all Private Authorizations which are necessary
for the ownership by American or each Subsidiary of its properties and the
conduct of its business as now conducted or as presently proposed to be
conducted or which, if not obtained and maintained, could, singly or in the
aggregate, Materially Adversely Affect American and its Subsidiaries taken as a
whole. Neither American nor any Subsidiary is in breach or violation of, or is
in default in the performance, observance or fulfillment of, any Private
Authorization, and no Event exists or has occurred, which constitutes, or but
for any requirement of giving of notice or passage of time or both would
constitute, such a breach, violation or default, under any Private
Authorization, except for such defaults, breaches or violations, as do not and
will not have in the aggregate any Material Adverse Effect on American and its
Subsidiaries taken as a whole or the ability of American to perform any of the
obligations set forth in this Agreement or any Collateral Document executed or
required to be executed pursuant hereto or thereto or to consummate the Merger
and the Transactions. No Private Authorization is the subject of any pending or,
to American's knowledge, information or belief, threatened attack, revocation or
termination.
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SECTION 5.5 Compliance with Governmental Authorizations and Applicable
Law.
(a) American or one of its Subsidiaries is the authorized legal holder
of all FCC licenses required to carry on the operation of the radio broadcasting
stations of American, none of which is subject to any restriction or condition
which would limit in any material respect the operations of such stations as
currently conducted or proposed to be conducted. There are no applications,
complaints or other Legal Actions pending or, to the best knowledge of American,
threatened before the FCC which could Materially Adversely Affect the business
or operations of its stations, other than applications, complaints or
proceedings which affect the radio broadcasting industry generally. The FCC
licenses held by American or one of its Subsidiaries are valid and in good
standing, are in full force and effect and are not impaired in any material
respect by any act or omission of American or any of its Subsidiaries or its or
their officers, directors, employees or agents, and the operation of such
stations is in accordance in all material respects with its FCC licenses. All
material reports, forms and statements required to be filed by American with the
FCC with respect to such stations have been filed and are true, complete and
accurate in all material respects.
(b) Each of American and each of its Subsidiaries has obtained all
Governmental Authorizations which are necessary for the lawful ownership and the
lawful conduct of its business as now conducted or as presently proposed to be
conducted, except for Governmental Authorizations, the failure of which to
obtain and maintain, would not individually or in the aggregate, have any
Material Adverse Effect on American and its Subsidiaries taken as a whole. No
Governmental Authorization is the subject of any pending or, to American's
knowledge, threatened challenge or proceeding to revoke or terminate any
Governmental Authorization. American has no reason to believe that any
Governmental Authorization would not be renewed in the name of American by the
granting Authority in the ordinary course.
SECTION 5.6 Authorized and Outstanding Capital Stock.
(a) The authorized and outstanding capital stock of American is as set
forth in the American SEC Documents, except as otherwise set forth in Section
5.6(a) of the American Disclosure Schedule. All of such outstanding capital
stock has been duly authorized and validly issued, is fully paid and
nonassessable and is not subject to any preemptive or similar rights. There is,
as of the date hereof, neither outstanding nor has the Company agreed to grant
or issue any shares of its capital stock or any Option Security or Convertible
Security, and, as of the date hereof, neither American nor any Subsidiary is a
party to or is bound by any agreement, put or commitment pursuant to which it is
obligated to purchase, redeem or otherwise acquire any shares of capital stock
or any Option Security or Convertible Security, except as set forth in the
American Prospectus or Section 5.6(a) of the American Disclosure Schedule.
(b) To American's knowledge, as of the date hereof, no Person, and no
group of Persons acting in concert, owns as much as five percent (5%) of
American's outstanding Common Stock, and American is not controlled by any other
Person, except Baron Capital, Inc. or as set forth in the American SEC Documents
or Section 5.6(b) of the American Disclosure Schedule.
SECTION 5.7 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of American, other than Media Venture Partners, Ltd., which
was retained by, and whose fees and expenses shall be paid equally by, the
Company and American.
SECTION 5.8 Continuing Representation and Warranty. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of American set
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forth in this Article shall be true and correct on the Closing Date (as the same
may be updated pursuant to Section 6.4) with the same force and effect as though
made on and as of that date and those, if any, which speak as of a specific date
shall be true and correct on the Closing Date.
ARTICLE 6
COVENANTS
SECTION 6.1 Access to Information; Confidentiality.
(a) Each party shall afford to the other party and its accountants,
counsel, financial advisors and other representatives (the "Representatives")
full access during normal business hours throughout the period prior to the
Effective Time to all of its (and its Subsidiaries') properties, books,
contracts, commitments and records (including without limitation Tax Returns)
and, during such period, shall furnish promptly upon request (i) a copy of each
report, schedule and other document filed or received by any of them pursuant to
the requirements of any Applicable Law (including without limitation federal or
state securities laws) or filed by it or any of its Subsidiaries with any
Authority in connection with the Transactions or which may have a material
effect on their respective businesses, operations, properties, prospects,
personnel, condition, (financial or other), or results of operations, (ii) to
the extent not provided for pursuant to the preceding clause, all financial
records, ledgers, workpapers and other sources of financial information
possessed or controlled by the Company or its accountants deemed by American or
its Representatives necessary or useful for the purpose of performing an audit
of the Company and its Subsidiaries and certifying financial statements and
financial information, and (iii) such other information concerning any of the
foregoing as American or the Company shall reasonably request. All non-public
information furnished pursuant to the provisions of this Agreement, including
without limitation this Section, will be kept confidential and shall not,
without the prior written consent of the party disclosing such information, be
disclosed by the other party in any manner whatsoever, in whole or in part, and
shall not be used for any purposes, other than in connection with the Merger and
the Transactions. In no event shall either party or any of its Representatives
use such information to the detriment of the other party. Each party agrees to
reveal such information only to those of its Representatives who need to know
such information for the purpose of evaluating the Merger and the Transactions,
who are informed of the confidential nature of such information and who shall
undertake in writing (a copy of which, if requested, will be furnished to the
disclosing party) to act in accordance with the terms and conditions of this
Agreement. From and after the Closing, each of the Company Stockholders shall
not, without the prior written consent of American, disclose any information
remaining in his possession with respect to the Company, and no such information
shall be used for any purposes, other than in connection with the Merger or to
the extent required by Applicable Law.
(b) Subject to the terms and conditions of Section 6.1(a), each party
may disclose such information as may be necessary in connection with seeking all
Governmental and Private Authorizations or that is required by Applicable Law to
be disclosed. In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver all non-public written material
provided pursuant to this Section or any other provision of this Agreement or
otherwise in connection with the Merger and the Transactions and shall not
retain any copies, extracts or other reproductions in whole or in part of such
written material other than one copy thereof which shall be delivered to
independent counsel for such party.
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(c) No investigation pursuant to this Section or otherwise shall affect
any representation or warranty in this Agreement of either party or any
condition to the obligations of the parties hereto.
SECTION 6.2 Agreement to Cooperate.
(a) Each of the parties hereto shall use reasonable business efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Law to consummate the
Merger and make effective the Transactions, including without limitation using
its reasonable business efforts (i) to prepare and file with the applicable
Authorities as promptly as practicable after the execution of this Agreement all
requisite applications and amendments thereto, together with related
information, data and exhibits, necessary to request issuance of orders
approving the Merger and the Transactions by all such applicable Authorities,
each of which must be obtained or become final in order to satisfy the condition
applicable to it set forth in Section 8.1(c) hereof, (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to prepare and
file with the California Commissioner, as promptly as practicable after the
execution of this Agreement, an application for permit to issue securities and a
request for a hearing to determine the fairness of the Merger, to have the
hearing held and the Merger approved by the California Commissioner (the
"California Commissioner Fairness Ruling") , and to take such other actions,
including without limitation the preparation of a proxy statement of the Company
and responding to any comments on such proxy statement made by the California
Commissioner, (iv) to effect all necessary registrations, filings and
submissions (including without limitation filings under the Xxxx-Xxxxx-Xxxxxx
Act and all filings necessary for American to own and operate the Stations), (v)
to lift any injunction or other legal bar to the Merger and the Transactions
(and, in such case, to proceed with the Merger and the Transactions as
expeditiously as possible) and (vi) to obtain the satisfaction of the conditions
specified in Article 7. Without limiting the generality of the foregoing, the
parties acknowledge and agree that the assignment of the FCC Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. Within ten (10) business days following the date of this Agreement, the
Company and American shall file with the FCC appropriate applications for FCC
Consents. The parties shall prosecute said applications with all reasonable
diligence and otherwise use reasonable business efforts to obtain the grant of
FCC Consents to such applications as expeditiously as practicable. If the FCC
Consents, or any of them, imposes any condition on either party hereto, such
party shall use reasonable business efforts to comply with such condition unless
compliance would be unduly burdensome or would have a Material Adverse Effect
upon it. If reconsideration or judicial review is sought with respect to any FCC
Consent, the Company and American shall oppose such efforts to obtain
reconsideration or judicial review (but nothing herein shall be construed to
limit any party's right to terminate this Agreement pursuant to the provisions
of Section 8.1 of this Agreement). The Merger is expressly conditioned upon the
grant of the Final Order as to the FCC Consents for the transfer of control of
the Company to American without any condition Materially Adverse to American or
any of its Subsidiaries.
(b) The parties shall cooperate with one another in the preparation,
execution and filing of all Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the Transactions that are required or permitted to be filed on
or before the Effective Time.
(c) The Company shall cooperate and use its reasonable business efforts
to cause its independent accountants to reasonably cooperate with American, and
at American's expense, in order to enable American to have its or the Company's
independent accountants prepare audited financial statements for the Company
described in Section 7.2(d). The Company represents and warrants that such
financial
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statements will have been prepared in accordance with GAAP applied on a basis
consistent with past practices and will present fairly the financial condition
and results of operation of the Company. Without limiting the generality of the
foregoing, the Company agrees that it will (i) consent to the use of such
audited financial statements in any registration statement or other document
filed by American (or any of its Subsidiaries) under the Securities Act or the
Exchange Act, and (ii) execute and deliver, and cause its officers to execute
and deliver, such "representation" letters as are customarily delivered in
connection with audits and as American's independent accountants may reasonably
request under the circumstances.
(d) The parties shall cooperate with one another in making any required
or desired allocations of the Merger Consideration, it being agreed that (i)
there shall be allocated to the land and building located at 000 Xxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxxxxxxxxx, the sum of $3,180,000 (following expenditure of the
condemnation fund account balance in accordance with Section 4.18(s) of the
Company Disclosure Schedule) plus the cost of any capital improvements thereto
made after November 26, 1996, provided that any such capital improvement shall
have been approved in writing in advance by American and shall be completed
prior to Closing, and (ii) no amount shall be allocated to the Noncompetition
Agreement.
(e) The Company shall use its reasonable business efforts to cause
Xxxxxx Property Managers, Inc. ("LPM") to take all necessary steps and to pursue
diligently all Governmental Authorizations and Private Authorizations required
for the development of the Property (as defined in the Leasehold Option
Agreement) as a communications tower site and construction thereon of the
communications tower contemplated by the Leasehold Option Agreement. On or
before the tenth day of each month, commencing with February 1997, the Company
shall provide or shall cause LPM to provide American with a statement setting
forth, in reasonable detail, the amount of Development Costs (as defined in the
Leasehold Option Agreement) incurred as of the last day of the preceding month.
American shall have the right, at any time within twenty (20) business days
after receipt of any such statement, to request additional information or
verification with respect to any Development Costs shown on such statement and
the Company shall provide or shall cause LPM to provide such requested
information as promptly as is reasonably practicable. The failure of American to
request any such additional information or verification within such period shall
be deemed to mean that American has accepted the incurrence and amount of such
Development Costs.
SECTION 6.3 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, each party shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Merger or any Transaction and shall not issue any such
press release or make any such public statement without the prior consent of the
other. Notwithstanding the foregoing, the Company acknowledges and agrees that
American may, without the prior consent of the Company, issue such press
releases or make such public statements as may be required by Applicable Law, in
which case, to the extent practicable, American will consult with, and exercise
in good faith, all reasonable business efforts to agree with the Company
regarding the nature, extent and form of such press release or public statement,
and, in any event, with prior notice to the Company.
SECTION 6.4 Notification of Certain Matters. (a) Each party shall give
prompt notice to the other, of (i) the occurrence or non-occurrence of any Event
the occurrence or non-occurrence of which would be likely to cause (A) any
representation or warranty made by it contained in this Agreement to be untrue
or inaccurate in any respect such that one or more of the conditions of Closing
might not be satisfied, or (B) any covenant, condition or agreement made by it
contained in this Agreement not to be complied with or satisfied, or (C) in the
case of the Company, any change to be made in the Company Disclosure Schedule or
in the case of American, any change to be made in the American Disclosure
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Schedule, as the case may be, in any respect such that one or more of the
conditions of Closing might not be satisfied, and (ii) any failure made by it to
comply with or satisfy, or be able to comply with or satisfy, any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice, except as provided in paragraph (b) below.
(b) Each party shall have the right to deliver to the other party a
written disclosure letter which shall contain a specific reference to this
Section 6.4(b) and a request that the other party indicate its position with
respect to the disclosed breach within ten (10) business days after receipt of
such disclosure letter as to any matter which it becomes aware following
execution of this Agreement which would constitute a breach of any
representation, warranty, covenant or agreement set forth in this Agreement by
such party, identifying on such disclosure letter the representation, warranty,
covenant or agreement which would be so breached; provided, however, that each
such disclosure letter shall be delivered as soon as practicable after such
party becomes aware of the matter as disclosed therein. The non-disclosing party
shall have ten (10) business days after its receipt of such disclosure letter to
notify the disclosing party that (i) it will close notwithstanding the new
disclosure, (ii) it will not close based on such new disclosure, or (iii)
further investigation or negotiation is required for it to reach a determination
whether or not to close based on such new disclosure.
SECTION 6.5 No Solicitation.
(a) The Company shall not, nor shall it permit any of the Company's
Representatives (including, without limitation, any investment banker, broker,
finder, attorney or accountant retained by it) to, initiate, solicit or
facilitate, directly or indirectly, any inquiries or the making of any proposal
with respect to any Other Transaction, engage in any discussions or negotiations
concerning, or provide to any other person any information or data relating to,
it for the purposes of, or otherwise cooperate in any way with or assist or
participate in, or facilitate any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, a proposal to seek or
effect any Other Transaction, or agree to or endorse any Other Transaction;
provided, however, that nothing contained in this Section shall prohibit the
Company or its Board of Directors from making any disclosure to the Company
Stockholders or taking any other action that, in the reasonable judgment of its
Board of Directors in accordance with, and based upon the written advice of,
outside counsel, is required under Applicable Law. The Company shall promptly
advise American of, and communicate the material terms of, any proposal relating
to any Other Transaction it may receive, or any inquiries it receives which may
reasonably be expected to lead to such a proposal, and the identity of the
Person making it. The Company shall further advise American of the status and
changes in the material terms of any such proposal or inquiry (or of any
amendment to any of them). During the term of this Agreement, the Company shall
not enter into any agreement, oral or written, and whether or not legally
binding, with any Person that provides for, or in any way facilitates, any Other
Transaction, or affects any other obligation of the Company under this
Agreement.
(b) "Other Transaction" means a transaction or series of related
transactions (other than the Merger and the Transactions) resulting in (i) any
change of control of the Company, (ii) any merger or consolidation of the
Company, regardless of whether the Company is the surviving corporation, (ii)
any tender offer or exchange offer for, or any acquisitions of, any securities
of the Company, (iv) any sale or other disposition of assets of the Company not
otherwise permitted under the provisions of Section 4.18 or made pursuant to the
Shareholder Distribution, or (v) so long as this Agreement remains in effect,
any issue or sale, or any agreement to issue or sell, any capital stock,
Convertible Securities or Option Securities by the Company.
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(c) In the event (i) the Company does not, upon American's request,
take such actions as American may require in connection with the filing of an
application with the California Commissioner for the California Commissioner
Fairness Ruling as contemplated by Section 6.2(a) unless the Company has waived
all conditions, rights and remedies set forth in this Agreement which are based
upon obtaining such Ruling, or (ii) in the event a favorable ruling is not
obtained from the California Commissioner because of the existence of an Other
Transaction, or (iii) in the event the California Commissioner Fairness Ruling
has been obtained but the Company Stockholders shall have failed to approve this
Agreement, or (iv) (x) in the event a favorable ruling is not obtained from the
California Commissioner other than by reason of the existence of an Other
Transaction, (y) this Agreement is terminated (I) by American pursuant to the
provisions of Section 8.1(d)(ii), or (II) by either party because the Company
Stockholders shall have failed to approve this Agreement, and (z) within twelve
(12) months of such termination the company (or the Company Stockholders) enter
into an Other Transaction, the Company shall pay to American, as liquidated
damages, the sum of $1,500,000. American and the Company agree in advance that
actual damages would be difficult to ascertain and that such amount is a fair
and equitable amount to reimburse American for damages sustained due to the
Company's failure to consummate the Merger and the Other Transactions for the
above-stated reasons.
SECTION 6.6 Termination of Option Securities and Convertible
Securities. The Company will take all action necessary to terminate all
outstanding Option Securities and the conversion rights of all Convertible
Securities issued by the Company immediately prior to the Effective Time and to
provide timely notice to all holders of Option Securities and Convertible
Securities notifying them of such termination. Without the prior written consent
of American, except as set forth in Section 4.15(a) of the Company Disclosure
Schedule, (a) such termination will not cause an acceleration of the exercise,
conversion or vesting schedule of any Option Security or of any Convertible
Security, and (b) the Company will not otherwise accelerate, or cause an
acceleration of, the exercise, conversion or vesting schedule of any Option
Security or Convertible Security. Prior to the Closing, the Company shall issue
Certificates to all holders of properly exercised Option Securities and properly
converted Convertible Securities; such Certificates shall accurately represent
the number of Company Shares to which such holder is entitled by virtue of such
exercise or conversion and the Company shall amend Section 4.15(a) of the
Company Disclosure Schedule accordingly.
SECTION 6.7 Conduct of Business by the Company Pending the Closing.
Except as otherwise contemplated by this Agreement, after the date hereof and
prior to the Closing Date or earlier termination of this Agreement, unless
American shall otherwise agree in writing, the Company shall:
(a) comply with the provisions of Section 4.18;
(b) use all reasonable business efforts to preserve intact its business
organizations and goodwill, keep available the services of its present general
managers, on-air personalities and other key employees, and preserve the
goodwill and business relationships with customers and others having business
relationships with it and not engage in any action, directly or indirectly, with
the intent to Adversely Affect the Merger;
(c) maintain levels of advertising, marketing and promotion efforts and
expenditures at levels no less than those currently budgeted in the 1997
business plan;
(d) operate the Stations in conformity with the FCC Licenses on a basis
consistent with past practice and any special temporary authority or program
test authority issued thereunder, the FCA and
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the rules and regulations of any other Authority with jurisdiction over the
Stations, and take all actions necessary to maintain the FCC Licenses;
(e) refrain from changing the frequency or format of any Station or
making any material changes in any Station's studio or other structures, except
to the extent required by the FCA or the rules and regulation of the FCC;
(f) not make any material changes in the broadcast hours or in the
percentage or types of programming broadcast by any Station, or make any other
material changes in any Station's programming policies, except such changes as
in the good faith judgment of the Company are required by the public interest;
(g) notify American promptly if any Station's normal broadcast
transmissions are interrupted or impaired for (i) thirty (30) minutes or more
daily for a period of five (5) consecutive days or during any seven (7) days
within any period of thirty (30) consecutive days (except for normal
maintenance) or (ii) a period of six (6) continuous hours or more;
(h) not waive any material right relating to any Station;
(i) not (i) amend or propose to amend its Organic Documents, (ii)
split, combine or reclassify (whether by stock dividend or otherwise) its
outstanding capital stock, or (iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise;
(j) not (i) incur or become contingently liable with respect to any
Indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business or (B) borrowings to refinance existing Indebtedness, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock, Convertible Securities or Option Securities, (iii) take or fail to take
any action which action or failure to the knowledge of the Company would cause
American, the Company or any of their respective stockholders (except to the
extent of the Cash Consideration or the receipt of cash in lieu of fractional
shares) to recognize gain or loss for federal income tax purposes as a result of
the consummation of the Merger, or (iv) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing; and
(k) confer on a regular and frequent basis with one or more
representatives of American to report material operational matters and the
general status of ongoing operations.
ARTICLE 7
CLOSING CONDITIONS
SECTION 7.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
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(a) The American Shares constituting a part of the Exchange
Merger Consideration shall have been approved for trading on the Nasdaq
National Market, subject to official notice of issuance;
(b) As of the Closing Date, no Legal Action shall be pending
before or threatened in writing by any Authority or other Person
seeking to restrain, prohibit or make illegal the consummation of the
Merger, it being understood and agreed that one or more written
requests by any Authority for information or additional information
with respect to the Merger, which information could be used in
connection with such Legal Action, may not be deemed to be a threat of
Legal Action;
(c) Other than the filing of merger documents in accordance
with the DGCL and the CGCL, all authorizations, consents, waivers,
orders or approvals required to be obtained from all Authorities, and
all filings, submissions, registrations, notices or declarations
required to be made by American and the Company with any Authority,
prior to the consummation of the Merger and the Transactions shall have
been obtained from, and made with, the FCC and all other required
Authorities, except for such authorizations, consents, waivers, orders,
approvals, filings, registrations, notices or declarations the failure
to obtain or make would not, in the reasonable business judgment of
American, assuming consummation of the Merger, have a Material Adverse
Effect on American and its Subsidiaries taken as a whole. Without
limiting the generality of the foregoing, the FCC shall have issued all
necessary consents and approvals in connection with the transactions
contemplated by this Agreement, the same shall have become Final
Orders, and any conditions precedent to the effectiveness of such Final
Orders which are specified therein shall have been satisfied without
any Materially Adverse Effect upon American and its Subsidiaries taken
as a whole or the Stations; and
(d) The Shareholder Distribution shall have been consummated
in accordance with Section 2.1 hereof.
SECTION 7.2 Conditions to Obligations of American. The obligation of
American to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by Applicable Law:
(a) The Company shall have delivered or cause to be delivered
to American all of the Collateral Documents required to be delivered by
the Company to American at or prior to the Closing pursuant to the
terms of this Agreement; such Collateral Documents shall be reasonably
satisfactory in form, scope and substance to American and its counsel;
and American and its counsel shall have received all information and
copies of all documents, including without limitation lien searches and
records of corporate proceedings, which they may reasonably request in
connection therewith, such documents where appropriate to be certified
by proper corporate officers;
(b) The Company shall have furnished American and, at
American's request, any bank or other financial institution providing
credit to American or any Subsidiary, with favorable opinions, dated
the Closing Date of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel and Haley,
Bader & Xxxxx, FCC counsel for the Company, with respect to the matters
set forth in Sections 4.1(a), (b) and (c) (other than as to Private
Authorizations and as to the Company's Contractual Obligations, limited
to such counsel's knowledge), 4.7(a) (limited to its knowledge and to
Legal Actions), 4.14 and 4.15 (limited to such counsel's knowledge as
to liens, outstanding options and
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ownership) and with respect to FCC related matters of a nature and
scope customary in comparable transactions (including without
limitation with respect to the grant of all necessary FCC Consents and
their being Final Orders, that all FCC Licenses are valid, binding and
in good standing and in full force and effect, the absence of Legal
Actions which could Materially Adversely Affect the FCC Licenses and
the FCC Consents, and the filing of all Material reports and the
payment of all fees) and with respect to such other matters arising
after the date of this Agreement incident to the Merger, as American or
its counsel or American or its counsel may reasonably request or which
may be reasonably requested by any such bank or financial institution
or their respective counsel;
(c) The representations, warranties, covenants and agreements
of the Company contained in this Agreement or otherwise made in writing
by it or on its behalf pursuant hereto or otherwise made in connection
with the Transactions shall be true and correct in all respects
Material to the Company at and as of the Closing Date with the same
force and effect as though made on and as of such date except those
which speak as of a certain date which shall continue to be true and
correct as of such date on the Closing Date (including without
limitation giving effect to any later obtained knowledge, information
or belief of the Company or American and except for those additional
disclosures which have been accepted by American pursuant to the
provisions of Section 6.4); each and all of the agreements and
conditions to be performed or satisfied by the Company hereunder at or
prior to the Closing Date shall have been duly performed or satisfied
in all material respects; and the Company shall have furnished American
with such certificates and other documents evidencing the truth of such
representations, warranties, covenants and agreements and the
performance of such agreements or conditions as American or its counsel
shall have reasonably requested;
(d) American shall have received (i) from, at American's
election, its or the Company's independent public accountants (with the
understanding that (A) any additional costs associated with the
preparation of such financial statements in accordance with GAAP and
Regulation S-X under the Securities Act shall be borne in all cases by
American and (B) if American's independent accountants are used, all
costs and expenses incurred by such accountants shall be the
responsibility of American) an unqualified report (as the scope of the
audit, access to the books and records and the cooperation of
management) with respect to the financial statements of the Company for
the year ended December 31, 1996, which financial statements shall have
been prepared in conformity with GAAP and Regulation S-X under the
Securities Act; and, in the case of the Company's independent public
accountants, its agreement to provide, from time to time, its consent
to the inclusion of such report in filings of American or its
affiliates under all applicable federal and state securities laws, or
(ii) from the Company such documentation as shall enable American's
independent accountants to advise American in writing that they could
issue such an unqualified report;
(e) All actions taken by the Company Stockholders to approve
and adopt this Agreement, the Merger and the Transactions shall comply
in all respects with and shall be legal, valid, binding, enforceable
and effective under the Law of the State of California, the Company's
Organic Documents and all Material Agreements to which it or any of its
Subsidiaries is a party or by which it or any of them or any of its or
any of their property or assets is bound;
(f) All consents and approvals of all Persons (other than
Authorities) having jurisdiction over the Company or the Stations or
having a relationship with the Company or the Stations and whose
consents and approvals are required in order to vest in American all of
the Company's
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right, title and interest in its assets, including without limitation
the Stations, (including without limitation all Private Authorizations
and Material Agreements and all modifications or terminations of
Material Agreements, to the extent, in each case, set forth in Schedule
7.2(f) of the Company Disclosure Schedule) and the full enjoyment
thereof shall have been obtained, without the imposition, individually
or in the aggregate, of any condition or requirement which could
Materially Adversely Affect the Stations, other than such consents and
approvals, the absence of which, individually or in the aggregate,
would not Materially Adversely Affect the Stations;
(g) Each trustee under each Plan of the Company shall have
submitted his or her unqualified written resignation, dated as of the
Closing Date, as a trustee for each such Plan;
(h) American shall have received a favorable opinion, dated
the Closing Date, of Xxxxxxxx & Worcester LLP, its special tax counsel,
to the effect that this Agreement constitutes a plan of reorganization
in accordance with the provisions of Section 368(a)(1)(A) of the Code
and as to the consequences thereof to American and its stockholders and
the Company. In order to enable such firm to render such opinion, each
of the Company Stockholders by approving this Agreement, agrees to
execute and deliver to American and such counsel agreements, in form,
scope and substance, reasonably satisfactory to American and such
counsel, with respect to his intentions as to disposition, to assure
the continuity of ownership requirements of Section 368(a)(1)(A) of the
Code and the related regulations promulgated thereunder;
(i) As of the Closing Date, the condition, financial or other,
or results of operations of the Company shall not have been materially
and adversely affected, other than by reason of changes or developments
in the economy or the radio broadcast industry generally, whether or
not in the ordinary course of business, it being understood that the
failure to obtain all of the permits, licenses and other governmental
and private authorizations with respect to the Proposed Tower Site
shall not be deemed to materially and adversely affect the condition,
financial or other, or results of operation of the Stations;
(j) The Company shall have caused Xxxxxx Property Managers,
Inc. to execute and deliver a leasehold option agreement substantially
in the form of Exhibit B attached hereto and made a part hereof (the
"Leasehold Option Agreement");
(k) The Company Stockholders shall have executed and delivered
(i) in the event the California Commissioner Fairness Ruling is issued
a letter agreeing to abide by the provisions of Rule 144 (as made
applicable by Rule 145) under the Securities Act with respect to
dispositions of the American Shares, and (ii) in the event the
California Commissioner Fairness Ruling is not issued an investment
letter in the form of Exhibit C attached hereto and made a part hereof
(the "Investment Letter");
(l) The Company Stockholders shall have executed and delivered
a noncompetition agreement substantially in the form of Exhibit D
attached hereto and made a part hereof (the "Noncompetition
Agreement"); and
(m) No Legal Action has been instituted or threatened (other
than a Proposed Tower Site Challenge) by any Authority or by any other
Person which could materially and adversely affect the Stations (it
being understood and agreed that one or more written requests by any
Authority for information or additional information with respect to the
Merger, which information could
-31-
be used in connection with such action or proceedings, shall not be
deemed to be a threat of Legal Action).
SECTION 7.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by Applicable Law:
(a) American shall have delivered or cause to be delivered to
the Company all of the Collateral Documents required to be delivered by
American to the Company at or prior to the Closing pursuant to the
terms of this Agreement; such Collateral Documents shall be reasonably
satisfactory in form, scope and substance to the Company and its
counsel, and the Company and its counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which they may reasonably request in connection therewith,
such documents where appropriate to be certified by proper corporate
officers;
(b) American shall have furnished the Company with favorable
opinions, dated the Closing Date of Xxxxxxxx & Worcester LLP, counsel
for American, with respect to the matters set forth in Sections 5.1(a),
(b) and (c) (other than as to Private Authorizations and as to
American's Contractual Obligations, limited to such counsel's
knowledge), 5.5(a) (limited to its knowledge and to Legal Actions) and
5.6 and of Down, Xxxxxx & Xxxxxxxxx, FCC counsel for American, with
respect to FCC related matters of a nature and scope customary in
comparable transactions (including without limitation with respect to
the grant of all necessary FCC Consents and their being Final Orders,
that all FCC Licenses are valid, binding and in good standing and in
full force and effect, the absence of Legal Actions which could
Materially Adversely Affect the FCC Licenses and the FCC Consents, and
the filing of all Material reports and the payment of all fees) and
with respect to such other matters arising after the date of this
Agreement incident to the Merger, as the Company or its counsel may
reasonably request or which may be reasonably requested by any such
bank or financial institution or their respective counsel;
(c) The representations, warranties, covenants and agreements
of American contained in this Agreement or otherwise made in writing by
it or on its behalf pursuant hereto or otherwise made in connection
with the Transactions shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect
as though made on and as of such date except those which speak as of a
certain date which shall continue to be true and correct as of such
date on the Closing Date (including without limitation giving effect to
any later obtained knowledge, information or belief of American or the
Company and except for those additional disclosures which have been
accepted by the Company pursuant to the provisions of Section 6.4);
each and all of the agreements and conditions to be performed or
satisfied by American hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and
American shall have furnished the Company with such certificates and
other documents evidencing the truth of such representations,
warranties, covenants and agreements and the performance of such
agreements or conditions as the Company or its counsel shall have
reasonably requested;
(d) As of the Closing Date, the condition, financial or other,
or results of operation of American shall not have been materially and
adversely affected, other than by reasons of changes or developments in
the economy or the radio broadcast industry generally, whether or not
in the ordinary course of business; and
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(e) American shall have executed and delivered a registration
rights agreement substantially in the form of Exhibit E attached hereto
and made a part hereof (the "Registration Rights Agreement").
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual consent of the Company and American;
(b) by either American or the Company if any Legal Action
has been instituted or threatened by any Authority or
by any other Person seeking to enjoin or otherwise
prohibit the consummation of the Merger (it being
understood and agreed that one or more written
requests by any Authority for information or
additional information with respect to the Merger and
other Transactions, which could be used in connection
with any Legal Action, shall not be deemed a threat
of Legal Action); or
(c) by the Company in the event the Company is not in
material breach of this Agreement and none of its
representations or warranties shall have become and
continue to be untrue in any material respect, and
either (i) the Merger and the Transactions have not
been consummated prior to the Termination Date; or
(ii) American is in material breach of this Agreement
or any of its representations or warranties shall
have become and continue to be untrue in any material
respect, and such breach or untruth is not capable of
being cured by the Termination Date; or (iii) the
condition, financial or other, or results of
operation of American have been materially and
aversely affected, other than by reasons of changes
or developments in the economy or the radio broadcast
industry generally, whether or not in the ordinary
course of business; or
(d) by American
(i) in the event American is not in material
breach of this Agreement and none of its
representations or warranties shall have
become and continue to be untrue in any
material respect, and either (A) the Merger
and the Transactions have not been
consummated prior to the Termination Date or
(B) the Company is in material breach of
this Agreement or any of its representations
or warranties shall have become and continue
to be untrue in any material respect, and
such breach or untruth is not capable of
being cured by the Termination Date; or
(ii) if (A) the Board of Directors of the Company
shall (I) withdraw, modify or change its
recommendation so that it is not in favor of
this Agreement, the Merger or the
Transactions, or shall have resolved to do
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any of the foregoing, or (II) have
recommended or resolved to recommend to the
Company Stockholders any Other Transaction,
or (B) the Company shall have entered into
or agreed to enter into any Other
Transaction; or
(iii) if any Legal Action (other than a Proposed
Tower Site Challenge) has been instituted of
threatened by any Authority or any other
Person which could materially and adversely
affect the Stations (it being understood and
agreed that one or more written requests by
any Authority for information or additional
information with respect to the Merger and
other Transactions, which could be used in
connection with any Legal Action, shall not
be deemed a threat of Legal Action); or
(iv) if the condition, financial or other, or
results of operation of the Stations have
been materially and adversely affected,
other than by reason of changes or
developments in the economy or the radio
broadcast industry generally, whether or not
in the ordinary course of business, it being
understood that the failure to obtain all of
the permits, licenses and other governmental
and private authorizations with respect to
the Proposed Tower Site shall not be deemed
to materially and adversely affect the
condition, financial or other, or results of
operation of the Stations; or
(v) if all consents and approvals of (A) all
Authorities (including Final Orders of the
FCC) having jurisdiction over the Company or
the Stations, and (B) other Persons having a
relationship with the Company or the
Stations and whose consents and approvals
are required in order to vest in American
all of the Company's right, title and
interest in its assets, including without
limitation the Stations, other than such
consents and approvals the absence of which
would not materially and adversely affect
the Stations, have not been obtained; or
(vi) if it shall not have received from, at
American's election, its or the Company's
independent public accountants (with the
understanding that if American's independent
accountants are use, all costs and expenses
incurred by such accountants shall be the
responsibility of American) an unqualified
report (as the scope of the audit, access to
the books and records and the cooperation of
management) with respect to the financial
statements of the Company for the year ended
December 31, 1996, and, in the case of the
Company's independent public accountants,
its agreement to provide, from time to time,
its consent to the inclusion of such report
in filings of American or its affiliates
under all applicable federal and state
securities laws.
The term "Termination Date" shall mean April 1, 1998 or such other date
as the parties may, from time to time, mutually agree.
The right of either party to terminate this Agreement pursuant to this
Section 8.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of either party,
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any Person controlling any such party or any of their respective Representatives
whether prior to or after the execution of this Agreement.
SECTION 8.2 Effect of Termination.
(a) Except as provided in Sections 6.1 (with respect to
confidentiality) and 6.3, this Section and Section 10.3, in the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of either party,
or any of their respective officers or directors, to the other and all rights
and obligations of either party shall cease; provided, however, that such
termination shall not relieve either party from liability for any
misrepresentation or breach of any of its warranties, covenants or agreements
set forth in this Agreement; provided, however, that anything in this Agreement
to the contrary notwithstanding, in no event shall the liability of either
party, in the absence of fraud, for any breach of any covenant or agreement
exceed $1,500,000 or for any breach of warranty or misrepresentation exceed the
lesser of (i) $250,000 or (ii) the other party's reasonable out-of-pocket fees
and expenses.
(b) In the event this Agreement is terminated, the Company shall be
entitled to liquidated damages (which, in the absence of fraud on the part of
American, shall, in the event specific performance has not been granted to the
Company (it being understood that the Company shall have no obligation to seek
specific performance), be the sole recourse and remedy of the Company and its
stockholders for the failure of the Merger to be consummated) of $1,500,000
payable to the Company in the event:
(i) the Company is not in material breach of any agreement or
warranty made by it in, and has not made any material misrepresentation
in, this Agreement; and
(ii) (A) the Company has terminated this Agreement pursuant to
Section 8.1(c)(ii), or (B) the Company has terminated this Agreement
pursuant to the Section 8.1(c)(i) or American has terminated this
Agreement pursuant to Section 8.1(d)(i)(A) or (C) either party has
terminated this Agreement pursuant to Section 8.1(b), other than, in
any such case, by reason of the failure of Final Orders of the FCC to
be issued because of any action or inaction of the Company, whether or
not related to the Merger;
provided, however, that, notwithstanding the foregoing, no such
liquidated damages shall be payable to the Company in the event:
(x) American shall have terminated this Agreement pursuant to
Section 8.1(d)(i)(B), Section 8.1(d)(ii), Section 8.1(d)(iii), Section
8.1(d)(iv) or Section 8.1(d)(v) (other than because American has been
unable to obtain (A) the clearances required under the HSR Act or the
Department of Justice or the Federal Trade Commission has opposed the
Merger pursuant to the HSR Act or other applicable federal antitrust
laws, or (B) Final Orders of the FCC because of any action or inaction
of American, whether or not related to the Merger);
(y) the Company shall have terminated this Agreement pursuant
to the provisions of Section 8.1(c)(iii); or
(z) the Company shall have terminated this Agreement pursuant
to the provisions of Section 8.1(c)(i) or American shall have
terminated this Agreement pursuant to the provisions of Section
8.1(d)(i)(A) or either party shall have terminated this Agreement
pursuant to the provisions of Section 8.1(b), by reason, in any such
case, of the failure of Final Orders of the
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FCC to be issued because of any action or inaction of the Company,
whether or not related to the Merger.
American and the Company agree in advance that actual damages would be difficult
to ascertain and that such amount is a fair and equitable amount to reimburse
the Company for damages sustained due to American's failure to consummate the
Transactions for the above-stated reasons.
(c) In the event this Agreement is terminated, then, except as
otherwise provided in Section 8.2(b), the entire Escrow Deposit (together with
interest or other earnings thereon) shall be paid to American and, if such
termination is pursuant to the provisions of Section 8.1(d), American shall have
the right to seek specific performance pursuant to the provisions of Section
10.3 and, except as provided in Section 8.2(a), no other rights or remedies.
ARTICLE 9
INDEMNIFICATION
SECTION 9.1 Survival. The representations and warranties of the Company
contained in or made pursuant to this Agreement or any Collateral Document shall
survive the Closing and shall remain operative and in full force and effect for
a period of two (2) years after the Closing Date, regardless of any
investigation or statement as to the results thereof made by or on behalf of any
party hereto, except that, representations and warranties referred to in
Sections 4.11 and 4.22 shall extend until the expiration of any applicable
statute of limitations (the "Escrow Indemnity Period"). No claim for
indemnification may be asserted after the expiration of the Escrow Indemnity
Period. Notwithstanding anything herein to the contrary, any representation or
warranty which is the subject of a Claim which is asserted in writing prior to
the expiration of the Escrow Indemnity Period shall survive with respect to such
Claim or any dispute with respect thereto until the final resolution thereof.
The representations and warranties of American contained in or made
pursuant to this Agreement or any Collateral Document shall survive the Closing
and shall remain operative and in full force and effect for a period of two (2)
years after the Closing Date, regardless of any investigation or statement as to
the results thereof made by or on behalf of any party hereto. No claim for
indemnification may be asserted after the expiration of such period.
Notwithstanding anything herein to the contrary, any representation or warranty
which is the subject of a Claim which is asserted in writing prior to the
expiration of such period shall survive with respect to such Claim or any
dispute with respect thereto until the final resolution thereof.
SECTION 9.2 Indemnification. (a) Subject to the provisions of Section
9.3, the Company Stockholders agree that on and after the Closing they shall
indemnify American and hold American harmless from and against any and all
damages, claims, losses, expenses, costs, obligations and liabilities,
including, without limitation, liabilities for all reasonable attorneys',
accountants, and experts' fees and expenses including those incurred to enforce
the terms of this Agreement or any Collateral Document (collectively, "Loss and
Expense"), suffered, directly or indirectly, by American by reason of, or
arising out of:
(i) any breach of representation or warranty made by the
Company pursuant to this Agreement or any Collateral
Document or any failure by the Company to
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perform or fulfill any of its covenants or agreements
set forth in this Agreement or any Collateral
Document; or
(ii) any Legal Action or other Claim by any third party
relating to the Company or the ownership or
operations of any of the Stations to the extent such
Legal Action or other Claim has also resulted in a
breach of representation or warranty by the Company
pursuant to this Agreement or any Collateral
Document.
(b) American agrees that on and after the Closing it shall indemnify
and hold harmless Xxxxx Xxxxxx and Xxxx Xxxxxx and hold them harmless from and
against any and all damages, claims, losses, expenses, costs, obligations and
liabilities, including, without limitation, liabilities for all reasonable
attorneys', accountants and experts' fees and expenses, including those incurred
to enforce the provisions of this section, suffered, directly or indirectly, by
either of them by reason of, or arising out of:
(i) any breach of representation or warranty made by
American pursuant to this Agreement or any Collateral
Document or any failure by American to perform or
fulfill any of its covenants or agreements set forth
in this Agreement or any Collateral Document; or
(ii) the guarantees, dated October 31, 1996, made by
Messrs. Xxxxxx and Xxxxxx for the benefit of Xxxxxx
and Xxxxxx Xxxxxx with respect to the Proposed Tower
Site.
SECTION 9.3 Limitation of Liability; Disposition of Escrow Indemnity
Funds.
(a) Notwithstanding the provisions of Section 9.2, after the Closing,
American shall be entitled to recover its Loss and Expense in respect of any
Claim only to the extent that the aggregate Loss and Expense for all Claims
exceeds, in the aggregate, $25,000.
(b) At the Effective Time, one or more certificates representing
American Shares with an aggregate Current Market Price of $500,000 shall be
withheld pro rata from the Company Stockholders from the Common Stock
Consideration hereunder and shall be deposited (the "Escrow Indemnity Funds")
with an escrow agent, reasonably satisfactory to the Company Stockholders and
American, together with duly executed stock powers from the Company
Stockholders, all pursuant to an escrow agreement satisfactory in form and
substance to American and the Company Stockholders. Anything in this Agreement,
including without limitation the provisions of Sections 9.2 or 9.3(a), to the
contrary notwithstanding, the exclusive recourse of American with respect to
Claims brought after the Effective Time arising out of the transactions
contemplated by this Agreement shall be the Escrow Indemnity Funds (including
interest or other earnings thereon). The Escrow Indemnity Funds may also be
applied by American to reimburse American (the "Accounts Receivable
Reimbursement") for an amount equal to the excess, if any, of 98.5% of the
aggregate face value of the Company's accounts receivable as of the Effective
Date over the aggregate amount collected by American with respect to such
accounts receivable within one hundred eighty (180) days after Closing. American
shall use the same procedures as it uses to collect is own accounts receivable
to collect accounts receivable of the Company; provided, however, that in no
event shall American be obligated to use any extraordinary efforts to collect
any of the accounts receivable of the Company or to refer any of such accounts
receivable to a collection agency or to any attorney for collection. In the
event that American shall apply any portion of the Escrow Indemnity Funds to any
Accounts Receivable Reimbursement and American shall thereafter collect any
amounts with
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respect to the Company accounts receivable for which reimbursement was
previously made, American shall add to the Escrow Indemnity Funds a cash amount
equal to the amount so collected.
(c) In the event there shall be no Claims pursuant to the provisions of
this Agreement with respect to the Escrow Indemnity Funds, if any, existing at
the expiration of the Escrow Indemnity Period, the Escrow Indemnity Funds then
remaining (together with any then existing interest or earnings) shall be
distributed to the Persons entitled thereto. In the event one or more such
Claims with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Escrow Indemnity Period, American Shares with a Fair Market
Value measured as of the date of such expiration equal to the sum of (i) the
aggregate amount of such Claims and (ii) the amount reasonably estimated by
American to cover the fees, expense and other costs (including reasonable
counsel fees and expenses) which will be required to resolve such Claims shall
be retained as part of the Escrow Indemnity Funds and the balance thereof, if
any, shall be distributed to the Persons entitled thereto. Upon the resolution
of all such Claims and the payment of all such fees, expenses and costs out of
the Escrow Indemnity Funds, the balance of the American Shares, if any, shall be
distributed to the Persons entitled thereto.
SECTION 9.4 Notice of Claims. If American believes that it has suffered
or incurred any Loss and Expense, it shall notify the Company Stockholders
promptly in writing, and in any event within the applicable time period
specified in Section 9.2, describing such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. If any Legal Action
is instituted by a third party with respect to which American intends to claim
any liability or expense as Loss and Expense under this Article, American shall
promptly notify the indemnifying party of such Legal Action, but the failure to
so notify the indemnifying party shall not relieve it of its obligations under
this Article, except to the extent such failure to notify prejudices its ability
to defend against such Claim.
SECTION 9.5 Defense of Third Party Claims. The Company Stockholders
shall have the right to conduct and control, through counsel of their own
choosing, reasonably acceptable to American, any third party Legal Action or
other Claim, but American may, at its election, participate in the defense
thereof at its sole cost and expense; provided, however, that if the Company
Stockholders shall fail to defend any such Legal Action or other Claim, then
American may defend, through counsel of its own choosing, such Legal Action or
other Claim, and (so long as it gives the Company Stockholders at least fifteen
(15) days' notice of the terms of the proposed settlement thereof and permits
the Company Stockholders to then undertake the defense thereof) settle such
Legal Action or other Claim, and to recover out of the Escrow Indemnity Funds
the amount of such settlement or of any judgment and the costs and expenses of
such defense. The Company Stockholders shall not compromise or settle any such
Legal Action or other Claim without the prior written consent of American. All
costs and expenses defending any such third party Legal Action or other Claim,
including the amount of any settlement or of any judgment, shall be paid out of
the Escrow Indemnity Funds.
SECTION 9.6 Exclusive Remedy. The indemnification provided in this
Article shall be the sole and exclusive post-Closing remedy available to
American against the Company Stockholders for any Claim under this Agreement
absent a showing of fraud on the part of the Company or any of the Company
Stockholders.
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ARTICLE 10
GENERAL PROVISIONS
SECTION 10.1 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of this Agreement and the Merger by the Company Stockholders, no amendment,
which under Applicable Law may not be made without the approval of the Company
Stockholders, may be made without such approval. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 10.2 Waiver. At any time prior to the Effective Time, except to
the extent not permitted by Applicable Law, American or the Company may (a)
extend the time for the performance of any of the obligations or other acts of
the other, subject, however, to the provisions of Section 8.1, (b) waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, and (c) waive compliance by the
other with any of the agreements, covenants or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 10.3 Fees, Expenses and Other Payments. All costs and expenses,
incurred in connection with any filing fees (including, without limitation,
Xxxx-Xxxxx-Xxxxxx filings and FCC filing fees), transfer taxes, sales taxes,
document stamps or other charges levied by any Governmental Authority in
connection with this Agreement, the Merger and the Transactions, shall be borne
equally by American and the Company. Filing fees required in connection with the
Xxxx-Xxxxx-Xxxxxx filings shall initially be paid by American and the Company
shall reimburse American for one half of the cost of such fees at or prior to
the Effective Time. Except as otherwise set forth in Section 4.21 and Section
5.7, all other costs and expenses incurred in connection with this Agreement,
the Merger and the Transactions, and in compliance with Applicable Law and
Contractual Obligations as a consequence hereof and thereof, including without
limitation fees and disbursements of counsel, financial advisors and accountants
incurred by the parties hereto shall be borne solely and entirely by the party
which has incurred such costs and expenses.
SECTION 10.4 Notices. All notices and other communications which by any
provision of this Agreement are required or permitted to be given shall be given
in writing and shall be (a) mailed by first-class or express mail, or by
recognized courier service, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by mailing (by first
class or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid transmission,
or (c) personally delivered to the receiving party (which if other than an
individual shall be an officer or other responsible party of the receiving
party). All such notices and communications shall be mailed, sent or delivered
as follows:
(a) If to American:
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx,
President and Chief Executive Officer
Telecopier No.: (000) 000-0000
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with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to the Company:
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Chief Executive Officer
Telecopier No.:
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Buzz Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
SECTION 10.5 Specific Performance; Other Rights and Remedies. Each
party recognizes and agrees that in the event the Company should refuse to
perform any of its obligations under this Agreement or any Collateral Document,
American's remedy at law would be inadequate and agrees that for breach of such
provisions, American shall, in addition to such other remedies as may be
available to it at law or in equity or as provided in Article 9, be entitled to
injunctive relief and to enforce its rights by an action for specific
performance to the extent permitted by Applicable Law. Each party hereby waives
any requirement for security or the posting of any bond or other surety in
connection with any temporary or permanent award of injunctive, mandatory or
other equitable relief. Nothing herein contained shall be construed as
prohibiting any party from pursuing any other remedies available to it pursuant
to the provisions of, and subject to the limitations contained in, this
Agreement for such breach or threatened breach, including without limitation the
recovery of damages.
SECTION 10.6 Severability. If any term or provision of this Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative,
illegal or unenforceable as applied to any particular case in any jurisdiction
or jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the
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maximum extent permitted in such jurisdiction or in such case. Notwithstanding
the foregoing, in the event of any such determination the effect of which is to
Affect Materially and Adversely either party, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by Applicable Law
in an acceptable manner to the end that the Transactions are fulfilled and
consummated to the maximum extent possible.
SECTION 10.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
SECTION 10.8 Section Headings. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 10.9 Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by, and construed in
accordance with, the applicable laws of the United States of America and the
laws of the State of New York applicable to contracts made and performed in such
State and, in any event, without giving effect to any choice or conflict of laws
provision or rule that would cause the application of domestic substantive laws
of any other jurisdiction, except to the extent that the provisions of the DGCL
and the CGCL apply to the Merger. Anything in this Agreement to the contrary
notwithstanding, including without limitation the provisions of Article 9, in
the event of any dispute between the parties which results in a Legal Action,
the prevailing party shall be entitled to receive from the non-prevailing party
reimbursement for reasonable legal fees and expenses incurred by such prevailing
party in such Legal Action.
SECTION 10.10 Further Acts. Each party agrees that at any time, and
from time to time, before and after the consummation of the transactions
contemplated by this Agreement, it will do all such things and execute and
deliver all such Collateral Documents and other assurances, as any other party
or its counsel reasonably deems necessary or desirable in order to carry out the
terms and conditions of this Agreement and the transactions contemplated hereby
or to facilitate the enjoyment of any of the rights created hereby or to be
created hereunder.
SECTION 10.11 Entire Agreement. This Agreement (together with the
Company Disclosure Schedule and the other Collateral Documents delivered in
connection herewith), constitutes the entire agreement of the parties and
supersedes all prior agreements and undertakings, both written and oral, between
the parties, with respect to the subject matter hereof, including without
limitation that certain letter of intent, dated November 26, 1996, between the
parties.
SECTION 10.12 Assignment. This Agreement shall not be assignable by
either party and any such assignment shall be null and void, except that it
shall inure to the benefit of and by binding upon any successor to American by
operation of law, including by way of merger, consolidation or sale of all or
substantially all of its assets and except that American shall have the right to
assign this Agreement (without relieving it of any of its obligations hereunder)
as security to its senior lending banks and other financial institutions.
SECTION 10.13 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party, and nothing in this Agreement,
express or implied (other than the provisions of Article 9 which are intended to
be binding upon the Company Stockholders), is intended to or shall
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confer upon any Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 10.14 Mutual Drafting. This Agreement is the result of the
joint efforts of American and the Company, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of the parties and
there shall be no construction against either party based on any presumption of
that party's involvement in the drafting thereof.
SECTION 10.15 Arbitration. If there is any dispute between the parties
to this Agreement which remains unresolved for 30 days or more, either party
may, upon written notice to the other, submit such dispute to binding
arbitration in San Francisco, California in accordance with the choice of law
provisions of Section 10.9 of this Agreement and the commercial rules of the
American Arbitration Association (the "AAA") before a panel of three (3)
arbitrators knowledgeable in the radio broadcast industry, one arbitrator chosen
by American, one by the Company, and the third as mutually agreed upon by the
two arbitrators so appointed or, in the absence of such agreement, by the
President of the San Francisco Chapter of the AAA, and the decision of such
panel shall, in the absence of manifest error or error of law, be conclusively
binding on the parties.
SECTION 10.16 CALIFORNIA SECURITIES LAW MATTERS. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE CALIFORNIA COMMISSIONER AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100,25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF
ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
IN WITNESS WHEREOF, American and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
AMERICAN RADIO SYSTEMS CORPORATION
By:_____________________________________
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
ALTA BROADCASTING COMPANY, INC.
By:______________________________________
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
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APPENDIX A
DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms (or any variant in the form thereof) have the following
respective meanings. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein shall
have such meanings when used in the Company Disclosure Schedule, and each
Collateral Document executed or required to be executed pursuant hereto or
thereto or otherwise delivered, from time to time, pursuant hereto or thereto.
References to "hereof", "herein" or similar terms are intended to refer to this
Agreement as a whole and not a particular section, and references to "this
Section" are intended to refer to the entire section and not a particular
subsection thereof.
AAA shall have the meaning given to it in Section 10.15.
Accounts Receivable shall mean (a) any and all rights to the payment of
money or other forms of consideration of any kind (excluding any so-called trade
or barter accounts) at any time now or hereafter owing or to be owing to the
Company including without limitation accounts receivable, letters of credit and
the right to receive payment thereunder, chattel paper, insurance proceeds,
contract rights, notes, drafts, instruments, documents, acceptances, and all
other debts, obligations and liabilities in whatever form now or hereafter owing
to the Company from any other Person, all guarantees, security and Liens for the
payment of any thereof, and all of the Company's rights to goods, now owned or
hereafter acquired by the Company, sold (delivered, undelivered, in transit or
returned) which may be represented thereby; and (b) all proceeds of any of the
foregoing.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") shall mean any
Event of which American or the Company, as the case may be, becomes aware after
the date hereof which is reasonably likely, in the reasonable business judgment
of American or the Company, as the case may be, be expected to (a) adversely
affect the validity or enforceability of this Agreement or the likelihood of
consummation of the Merger, or (b) adversely affect the business, operation,
management or properties of the Company and its Subsidiaries taken as a whole or
American and its Subsidiaries taken as a whole, as the case may be, or (c)
impair the Company's or American's, as the case may be, ability to fulfill its
obligations under the terms of this Agreement, or (d) adversely affect the
aggregate rights and remedies of American or the Company, as the case may be,
under this Agreement. Notwithstanding the foregoing, neither an Event affecting
the radio broadcasting industry generally nor a decline in the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole or American and its Subsidiaries taken as a whole, as the case may be,
shall be deemed to constitute an Adverse Change, have an Adverse Effect or to
Adversely Affect or Effect.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar
Entity, any general partner thereof, and (f) when used with respect to an
individual, shall include any member of such individual's immediate family or a
family trust.
Agreement shall mean this Agreement as originally in effect, including
unless the context otherwise specifically requires, this Appendix A, all
schedules, including the Company Disclosure Schedule and all exhibits hereto,
and as any of the same may from time to time be supplemented, amended, modified
or restated in the manner herein or therein provided.
American shall have the meaning given to it in the Preamble.
American Disclosure Schedule shall mean the American Disclosure
Schedule dated as of the date of this Agreement delivered by American to the
Company.
American Financial Statements shall have the meaning given to it in
Section 5.2(a).
American SEC Documents shall have the meaning given to it in Section
5.2(b).
American Shares shall have the meaning given to it in the First
Recital.
American Class A Stock shall have the meaning given to it in the First
Recital.
American's Knowledge (including the term "to the knowledge of
American") means the knowledge of any American director or executive officer,
and that such director or executive officer, after reasonable inquiry of
appropriate American executives and reasonable review of appropriate American
records, to the degree customary in connection with transactions such as the
Merger, shall have reason to believe and shall believe that the subject
representation of warranty is true and accurate as stated.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation all federal and state securities and
Environmental Laws, to which a Person is subject or by which it or any of its
business or operations is subject or any of its property or assets is bound.
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
Benefit Arrangement shall mean any material benefit arrangement that is
not a Plan, including (a) any employment or consulting agreement (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice maintained by the Company with respect to employees or
directors of the Company or the beneficiaries of any such Persons.
Broadcast Cash Flow shall mean, with respect to the Company, the
excess, if any, of the net revenues (exclusive of trade or barter items) over
operating expenses (exclusive of trade or barter items and corporate overhead)
of the Company and its Subsidiaries taken as a whole.
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California Commissioner shall mean the Commissioner of Corporations of
the State of California.
California Commissioner Fairness Ruling shall have the meaning given to
it in Section 6.2(a).
California Proceedings shall mean the proceedings before the California
Commissioner to determine the fairness of the Merger and to obtain a permit as
contemplated by Section 6.2(a) of this Agreement.
Cash Consideration shall have the meaning given to it in Section
3.1(b).
Certificate shall have the meaning given to it in Section 3.1(b).
CGCL shall have the meaning given to it in the First Recital.
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 1.2.
Closing Date shall mean the date on which the transactions contemplated
by this Agreement are consummated and the Merger becomes effective.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
Code shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated from time to time thereunder.
Collateral Document shall mean any agreement, certificate, contract,
instrument, notice, opinion or other document delivered pursuant to the
provisions of this Agreement or any Collateral Document, including without
limitation the Investment Letter (if applicable), the Registration Rights
Agreement, the Noncompetition Agreement, the Leasehold Option Agreement and the
escrow agreement referred to in Section 9.3(b).
Common Stock shall have the meaning given to it in the First Recital.
Common Stock Consideration shall have the meaning given to it in
Section 3.1(b).
Company shall have the meaning given to it in the Preamble.
Company Assignees shall have the meaning given to it in Section 2.1(a).
Company Common Stock shall have the meaning given to it in Section
3.1(b).
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Company Disclosure Schedule shall mean the Company Disclosure Schedule
dated as of the date of this Agreement delivered by the Company to American
within seven (7) days after the date of this Agreement..
Company Financial Statements shall have the meaning given to it in
Section 4.2.
the Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge of any Company director or executive officer, and
that such director or executive officer, after reasonable inquiry of appropriate
Company executives and reasonable review of appropriate Company records, to the
extent customary in transactions such as the Merger, shall have reason to
believe and shall believe that the subject representation or warranty is true
and accurate as stated.
Company Personal Property shall have the meaning given to it in Section
4.5(a).
Company Real Property shall have the meaning given to it in Section
4.5(a).
Company Shares shall have the meaning given to it in Section 3.1(b).
Company Stockholders shall have the meaning given to it in the First
Recital.
Contract, Contractual Obligation shall mean any term, condition,
provision, representation, warranty, agreement, covenant, undertaking,
commitment, indemnity or other obligation set forth in the Organic Documents of
the obligee or which is outstanding or existing under any Instrument (including
without limitation any Instrument relating to or evidencing any Indebtedness) to
which the obligee is a party or by which it or any of its business is subject or
property or assets is bound.
Control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
Convertible Securities shall mean any evidences of indebtedness, shares
of capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
Credit Agreement shall mean the Credit Agreement dated as of December
19, 1995, as from time to time in effect, of American and the Agent, Co-Agents
and Lenders named therein, or any successor agreement thereto.
Current Market Price shall have the meaning given to it in Section
3.1(b).
DGCL shall have the meaning given to it in the First Recital.
Distribution shall mean, with respect to any Person, (a) the
declaration or payment of any dividend (except dividends payable in common stock
of such Person) on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary owned by a
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Person other than the Company or a Subsidiary, (b) the purchase, redemption or
other retirement of any shares of any class of capital stock of such Person or
any shares of capital stock of any Subsidiary of such Person owned by a Person
other than such Person or a Subsidiary of such Person, and (c) any other
distribution on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary of such Person
owned by a Person other than such Person or a Subsidiary of such Person.
Effective Time shall have the meaning given to it in Section 1.3.
Employment Arrangement shall mean, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate), or providing for severance, termination payments, insurance
coverage (including any self-insured arrangements), workers compensation,
disability benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or post-retirement
insurance, compensation or benefits, or any collective bargaining or other labor
agreement, whether or not any of the foregoing is subject to the provisions of
ERISA.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment, including without limitation Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials or other
chemicals or industrial pollutants, substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation or mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Surface Mining Control
and Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous
federal, state, local or foreign, Laws, and the rules and regulations
promulgated thereunder all as from time to time in effect, and any reference to
any statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
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ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is treated as a single
employer with the Company under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Escrow Agents shall have the meaning given to it in the Fourth Recital.
Escrow Agreement shall have the meaning given to it in the Fourth
Recital.
Escrow Deposit shall have the meaning given to it in the Fourth
Recital.
Escrow Indemnity Funds shall have the meaning given to it in Section
9.3(b).
Escrow Indemnity Period shall have the meaning given to it in Section
9.1.
Event shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the SEC thereunder, all as from time to time in effect,
or any successor law, rules or regulations, and any reference to any statutory
or regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Exchange Merger Consideration shall have the meaning given to it in
Section 3.1.
Fair Market Value shall have the meaning given to it in Section 3.1(b).
FCA shall mean the Communication Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FCC shall mean the Federal Communications Commission and shall include
any successor Authority.
FCC Consents shall mean the actions of the FCC granting its consents to
the transfer of control of the Company or the FCC Licenses relating to the
Stations to American.
FCC Licenses shall mean all of Governmental Authorizations issued by
the FCC to the Company or its Subsidiaries in connection with the conduct of the
business or operating of the Stations.
Final Determination (a) shall mean with respect to federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an IRS
Form 870AD and, with respect to Taxes other than federal Taxes, any final
determination of liability in respect of a Tax which, under Applicable Law, is
not subject to further appeal, review or modification through proceedings or
otherwise, including without
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limitation the expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse determinations;
and (b) shall include the payment of Tax by or whichever is responsible for
payment of such Tax under Applicable Law, with respect to any item disallowed or
adjusted by a Taxing Authority, provided that the other party is notified of
such payment and the party that is responsible for such Tax under this Agreement
determines that no action should be taken to recoup such payment from such
Taxing Authority.
Final Order shall mean, with respect to any Authority, including,
without limitation the FCC, one with respect to which no appeal, no stay, no
petition or application for rehearing, reconsideration, review or stay, whether
on motion of the applicable Authority or other Person or otherwise, and no other
Legal Action contesting such consent or approval, is in effect or pending and as
to which the time or deadline for filing any such appeal, petition or
application or other Legal Action has expired or, if filed, has been denied,
dismissed or withdrawn, and the time or deadline for instituting any further
Legal Action has expired.
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including the FCC Licenses issued by the FCC,
the Federal Aviation Administration and any other Authority in connection with
the conduct of the business or the operations of the Stations.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Guaranteed shall mean any agreement, undertaking or arrangement by
which the Company guarantees, endorses or otherwise becomes or is liable,
directly or indirectly, contingently or otherwise, upon any Indebtedness of any
other Person including without limitation the payment of amounts drawn down by
beneficiaries of letters of credit (other than by endorsements of negotiable
instruments for deposit or collection in the ordinary course of business). The
amount of the obligor's obligation under any Guaranty shall be deemed to be the
outstanding amount (or maximum permitted amount, if larger) of the Indebtedness
directly or indirectly guaranteed thereby (subject to any limitation set forth
therein).
Xxxx-Xxxxx-Xxxxxx Act shall mean the Xxxx-Xxxxx-Xxxxxx Improvement Act
of 1976, as from time to time in effect, or any successor law, and any reference
to any statutory provision shall be deemed to be a reference to any successor
statutory provision.
Hazardous Materials shall mean and include any substance (in whatever
state of matter): (a) that is defined as a "hazardous waste", "hazardous
material" or "hazardous substance", under any Environment Law; (c) is
radioactive and is regulated under any Environmental Law; (d) that contains or
consists of gasoline, diesel fuel or other petroleum hydrocarbons in any
unconfined manner; or (e) that contains or consists of PCBs, asbestos, or urea
formaldehyde foam insulation.
Indebtedness shall mean, with respect to any Person, (a) all items,
except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary of such Person
to the extent such interest is treated as a liability with indeterminate term on
the consolidated balance sheet of such Person, which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person, (b) all
-7-
obligations secured by any Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligation secured thereby shall have
been assumed, and (c) to the extent not otherwise included, all Contractual
Obligations of such Person constituting capitalized leases and all obligations
of such Person with respect to Leases constituting part of a sale and leaseback
arrangement.
Instrument shall mean, with respect to any Person, any agreement, bond,
certificate, commitment, contract, debenture, indenture, lease, letter of
credit, memorandum, mortgage, note, notice, permit, plan, purchase or sales
order, document or other writing (whether by formal agreement, letter or
otherwise), or any oral arrangement, understanding or commitment, under which
any debt, liability or other obligation is evidenced, assumed or undertaken, or
any Lien (or right or interest therein) is granted, perfected or exists.
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means, and shall include, without limitation, concessions, copyrights,
franchises, license, patents, permits, service marks, trademarks, trade names,
and applications with respect to any of the foregoing, technology and know-how.
Investment Letter shall have the meaning given to it in Section 7.2(k).
Klue Note shall mean the promissory note dated June 19, 1996, made by
the Company to the order of Ralin Broadcasting Corporation, in the original
principal amount of $187,500.00.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ or
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
Lease shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto.
Leasehold Option Agreement shall have the meaning given to it in
Section 7.2(k).
Legal Action shall mean, with respect to any Person, any litigation or
legal or other actions, arbitrations, counterclaims, investigations,
proceedings, requests for material information by or pursuant to the order of
any Authority or suits, at law or in arbitration, equity or admiralty, whether
or not purported to be brought on behalf of such Person affecting such Person or
any of such Person's business, property or assets.
Lien shall mean any of the following: mortgage; lien (statutory or
other); or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing
-8-
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
Long-term Indebtedness shall mean Indebtedness of the Company or its
Subsidiaries the maturity date of which is scheduled to become due and payable
after the first anniversary of the Effective Time.
Loss and Expense shall have the meaning given to it in Section 9.2(a).
LPM shall have the meaning given to it in Section 6.2(e).
Margin Rules shall mean Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., parts 207, 220, 221 and 224,
as now in effect.
Material, Materially or materiality for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement shall mean, with respect to any Person, any
Contractual Obligation which (a) was not entered into in the ordinary course of
business, (b) was entered into in the ordinary course of business which (i)
involved the purchase, sale or lease of goods or materials, or purchase of
services, aggregating more than Ten Thousand Dollars ($10,000) during any of the
last three fiscal years, (ii) extends for more than three (3) months, or (iii)
is not terminable on thirty (30) days or less notice without penalty or other
payment, (c) involves Indebtedness for Money Borrowed, (d) is or otherwise
constitutes a written agency, dealer, license, distributorship, sales
representative or similar written agreement, or (e) accounted for more than
three percent (3%) of revenues in any of the last three fiscal years or is
likely to account for more than three percent (3%) of revenues during the
current fiscal year.
Merger shall have the meaning given to it in the First Recital.
Merger Consideration shall have the meaning given to it in Section
3.1(b).
Multiemployer Plan shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)3 of ERISA.
Net Working Capital shall mean, with respect to the Company, the amount
by which the current assets of the Company exceed (or are less than) the current
liabilities of the Company (exclusive of current portions of principal on the
Park Center Note, the Klue Note and any other Long-term Indebtedness and any
assets or liabilities relating to any trade or barter agreements), as determined
in accordance with GAAP, consistently applied with the Company Financial
Statements; provided, however, that for the purpose of determining Net Working
Capital, accounts receivable shall be valued at 98.5% of their face amount.
Noncompetition Agreement shall have the meaning given to it in Section
7.2(m).
Option Securities shall mean all rights, options and warrants, and
calls or commitments evidencing the right, to subscribe for, purchase or
otherwise acquire shares of capital stock or Convertible Securities, whether or
not the right to subscribe for, purchase or otherwise acquire is immediately
-9-
exercisable or is conditioned upon the passage of time, the occurrence or
non-occurrence or the existence or non-existence of some other Event.
Organic Document shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all stockholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
Other Transaction shall have the meaning given to it in Section 6.5(b).
parties shall have the meaning given to it in the Preamble.
Park Center Note shall mean the promissory note, dated February 12,
1996, made by the Company to the order of Comerica Bank-California, in the
original principal amount of $1,600,000.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to the Company and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which the
Company or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
Prepayment Penalty shall mean the amount paid or payable from and after
the date hereof by the Company or American, as the Surviving Corporation, as a
prepayment premium or penalty with respect to all Long-Term Indebtedness of the
Company, including the current portion thereof, and the costs associated with
the breaking of any fixed rate financing arrangements then in place, assuming
that all such Indebtedness were to be prepaid on the Closing Date.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to copyrights,
computer software programs, patents, service marks, trademarks, trade names,
technology and know-how.
Proposed Tower Site shall mean the site in Xxxxxxx Park, California, at
which it is proposed to construct a communications tower, as more particularly
described in the Leasehold Option Agreement.
Proposed Tower Site Challenge shall mean any challenge by the County of
Santa Xxxxx, the City of San Xxxx or any other Authority or Person to the
ownership, development or use of the Proposed Tower Site by the Company,
American or any of their Subsidiaries or Affiliates.
Registration Rights Agreement shall have the meaning given to it in
Section 7.3(e).
Representatives shall have the meaning given to it in Section 6.1(a).
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SEC shall mean the United States Securities and Exchange Commission, or
any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the SEC thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Shareholder Distribution shall have the meaning given to it in Section
2.1(a).
Stations shall mean, collectively, radio stations KEZR-FM, San Jose,
California and KLUE-FM, Soledad, California.
Stockholder Agreement shall have the meaning given it in Section
7.2(m).
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Surviving Corporation shall have the meaning given to it in Section 1.1
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to the Company, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by the Company or
any of its Subsidiaries, payroll, employment, unemployment, social security,
excise, severance, stamp, occupation, premium, environmental or windfall profit
tax, custom, duty or other tax, or other like assessment or charge of any kind
whatsoever, together with any interest, levies, assessments, charges, penalties,
addition to tax or additional amount imposed by any Taxing Authority, (b) any
joint or several liability of the Company or any of its Subsidiaries with any
other Person for the payment of any amounts of the type described in (a) and (c)
any liability of the Company or any of its Subsidiaries for the payment of any
amounts of the type described in (a) as a result of any express or implied
obligation to indemnify any other Person.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 4.11.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
Termination Date shall have the meaning given to it in Section 8.1.
Transactions shall have the meaning given to it in the Second Recital.
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