1
EXHIBIT 10.1.3
[BENCHMARK COMMUNICATIONS LETTERHEAD]
January 31, 1997
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
c/o Hicks, Muse, Xxxxx & Xxxx Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Re: Agreement and Plan of Merger by and among Benchmark Communications
Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio
Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition
Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII
Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited
Partnership, Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Capstar Broadcasting
Partners, Inc. and BCR Holding, Inc. dated as of December 9, 1996 (the
"Merger Agreement")
Credit Agreement (Greenville) dated as of December 9, 1996 between BCR
Holding, Inc. and Benchmark Radio Acquisition Fund VII Limited
Partnership as Borrower (the "Greenville Credit Agreement")
Credit Agreement (Statesville) dated as of December 9, 1996 between BCR
Holding, Inc. and Benchmark Radio Acquisition Fund IX Limited
Partnership as Borrower (the "Statesville Credit Agreement")
Credit Agreement (Xxxxxxx) dated as of December 9, 1996 between BCR
Holding, Inc. and Benchmark Radio Acquisition Fund X Limited Partnership
as Borrower (the "Xxxxxxx Credit Agreement")
Credit Agreement (Xxxxxxxxxx) dated as of December 9, 1996
between BCR Holding, Inc. and Benchmark Radio Acquisition
Fund XI Limited Partnership as Borrower (the "Xxxxxxxxxx
Credit Agreement" and, together with the Greenville Credit
Agreement, the Statesville Credit Agreement, and the Xxxxxxx
Credit Agreement, the "Credit Agreements")
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 2
Side Letter Regarding Capital Expenditure Loans entered into by and
between Benchmark Acquisition, Inc. and Benchmark Communications
Radio Limited Partnership as of December 9, 1996 (the "Capital
Expenditure Side Letter")
Ladies and Gentlemen:
This letter, when signed by each of us and the other parties to the
Merger Agreement and the Credit Agreements, will memorialize the parties'
agreement with respect to the matters set forth herein. Capitalized terms in
paragraphs (1) through (5) and in paragraph (9) below not defined herein shall
have the meanings assigned to such terms in the Merger Agreement. Capitalized
terms in paragraphs (6) through (8) below not defined herein shall have the
meanings assigned to such terms in the Credit Agreements.
The parties hereto agree as follows:
1. Section 1.6(f) of the Merger Agreement is replaced in its entirety
with the following clause (f):
(f) BCF Calculation.
(1) Benchmark will use its commercially reasonable efforts to
close the books of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII by
February 3, 1997 in a manner that will enable Coopers & Xxxxxxx to
conduct an audit (the "Coopers Audit") of Benchmark and each of Fund I,
Fund IV, Fund VII and Fund VIII on a consolidated basis for the fiscal
year ended December 31, 1996. Mergeco shall use commercially reasonably
efforts to cause Xxxxxxx & Xxxxxxx to perform the Coopers Audit in the
manner described in this Section 1.6(f)(1) and to take the actions
described in this Section 1.6(f)(1), and Benchmark will permit Coopers &
Xxxxxxx to perform the Coopers Audit subject to the following
conditions:
(A) Benchmark shall be promptly reimbursed by Mergeco for
audit fees not to exceed $20,000 charged by Xxxxxx Xxxxxxxx LLP in
connection with the audit of Benchmark, Fund I, Fund IV, Fund VII and
Fund VIII for the 1996 fiscal year that was commenced (but not
completed) by Xxxxxx Xxxxxxxx LLP;
(B) Except to the extent set forth in Section 1.6(f)(2), no
audit other than the Coopers Audit shall be conducted for purposes of
preparing the BCF Calculation;
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 3
(C) Xxxxxxx & Xxxxxxx shall promptly make available to
Benchmark any proposed audit adjustments in connection with the
Coopers Audit, and any such adjustments must be approved by
Benchmark;
(D) Xxxxxxx & Xxxxxxx shall be responsible for all word
processing in connection with the Coopers Audit, and the financial
statements contained in the Coopers Audit shall be in substantially
the same format as the financial statements contained in the Coopers
& Xxxxxxx audit report relating to Benchmark, Fund I, Fund IV, Fund
VII and Fund VIII for the nine months ended September 30, 1996;
(E) Xxxxxxx & Xxxxxxx will conduct its field work at the
Benchmark's offices between February 3, 1997 and February 10, 1997
and will have all field work completed no later than February 15,
1997;
(F) Confirmations for accounts receivable and cash will be
rolled forward from September 30, 1996 and will not be required for
the Coopers Audit unless material variances, in the opinion of
Xxxxxxx & Xxxxxxx, exist to warrant such testing;
(G) The field work of Xxxxxxx & Xxxxxxx will consist of the
items outlined in the client assistance schedule provided to
Benchmark by Coopers & Xxxxxxx, and such schedule will be modified to
reflect that Item 3F should read "significant accounts greater than
120 days;"
(H) The fixed asset appraisals for stations acquired by
Benchmark or any Fund during 1996 will be set up in summary form and
not entered individually into the fixed asset system;
(I) Coopers & Xxxxxxx shall (i) schedule in the notes to the
report of Coopers & Xxxxxxx relating to the Coopers Audit (the
"Coopers Audit Report") the 1996 income for each of Fund I, Fund IV,
Fund VII and Fund VIII (the format for this schedule will be the same
as the one provided by Benchmark to Coopers & Xxxxxxx in connection
with the September 30, 1996 audit by Xxxxxxx & Xxxxxxx and shall
include each Fund's income statement with the appropriate elimination
entry in the format that such items appeared in the workpapers of
Coopers & Xxxxxxx relating to the September 1996 audit), (ii) include
in its work papers relating to the Coopers Audit and the Coopers
Audit Report (the "Coopers Work Papers") the 1996 income for each
individual radio station operated by Fund I, Fund IV, Fund VII and
Fund VIII and (iii) upon receipt of customary releases, make
available no later than February 22, 1997 to Benchmark and Xxxxxx
Xxxxxxxx LLP the Coopers Audit Report and the Coopers Work Papers;
and
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 4
(J) All inquiries of Xxxxxxx & Xxxxxxx to Benchmark regarding
the Coopers Audit shall be made prior to February 15, 1997.
(2) Benchmark shall use its commercially reasonable efforts to
cause Xxxxxx Xxxxxxxx LLP to, pursuant to certain agreed upon procedures
(the "Agreed Upon Audit Procedures"), perform a limited audit of the
applicable balance sheets and income statements in order to calculate the
Statesville Broadcast Cash Flow, the Xxxxxxx Broadcast Cash Flow and the
KRMD-AM/FM Broadcast Cash Flow (which shall constitute a component of the
Fund IV Broadcast Cash Flow). Xxxxxx Xxxxxxxx will qualify its report
relating to such audit to disclose that a statement of cash flow and
retained earnings and full footnote disclosure has been omitted from such
report.
(3) No later than April 30, 1997, Benchmark shall deliver to
Mergeco a certificate executed by the General Partners of Benchmark, dated
the date of its delivery, setting forth the calculation of Fund I
Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash
Flow, Statesville Broadcast Cash Flow, Xxxxxxx Broadcast Cash Flow and
Xxxxxxxxxx Broadcast Cash Flow on which the Fund I BCF Consideration, the
Fund IV BCF Consideration, the Fund VIII BCF Consideration and the
Benchmark Consideration will be based (the "BCF Calculation"). The
certificate will state that the BCF Calculation has been certified by
Xxxxxx Xxxxxxxx LLP and is based on (i) the terms of this agreement, (ii)
the Coopers Audit Report and the Coopers Work Papers (with respect to the
Fund I Broadcast Cash Flow, the Fund IV Broadcast Cash Flow and the Fund
VIII Broadcast Cash Flow) and (iii) the Agreed Upon Audit Procedures (with
respect to the Statesville Broadcast Cash Flow, the Xxxxxxx Broadcast Cash
Flow and the KRMD-AM/FM Broadcast Cash Flow). The procedures described in
Section 1.6(f)(2) relating to the Agreed Upon Audit Procedures shall be
agreed upon by Mergeco and Xxxxxxxxx in consultation with Xxxxxx Xxxxxxxx
and Xxxxxxx & Xxxxxxx no later than February 15, 1997. Prior to delivery
of the certificate setting forth the BCF Calculation, Benchmark shall
request Xxxxxx Xxxxxxxx LLP to consult with Coopers & Xxxxxxx regarding
the preparation of the BCF Calculation and to provide Coopers & Xxxxxxx
with applicable documentation setting forth the basis upon which Xxxxxx
Xxxxxxxx LLP calculated the Statesville Broadcast Cash Flow, the Xxxxxxx
Broadcast Cash Flow and the KRMD-AM/FM Broadcast Cash Flow.
2. The following sentence is inserted at the end of Section 1.6(i)
of the Merger Agreement:
The parties agree that neither Mergeco nor Xxxxxxx & Xxxxxxx may
dispute a component of the BCF Calculation to the extent the disputed
component was derived from the Coopers Audit, the Coopers Audit Report
(including the notes thereto) or the Coopers Work Papers and, in the event
any such dispute is raised, the Referee shall resolve such dispute in
favor of Xxxxxxxxx; provided, however, that
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 5
this shall not limit the right of Xxxxxxx & Xxxxxxx to dispute the
methods pursuant to which numbers contained in the Coopers Audit, the
Coopers Audit Report (including the notes thereto) or the Coopers Work
Papers are applied to calculate any disputed components of the BCF
Calculation.
3. Article IV of the Merger Agreement is amended by inserting
the following Section 4.14:
4.14 New Shreveport Station. Xxxxxxxxx agrees to consult with
Mergeco with respect to the incurrence of additional Shreveport
Expenses; provided that such consultation shall not require Benchmark
not to perform its obligations under the Shreveport Master Agreement
or other agreements relating thereto. Mergeco confirms that
Benchmarks' agreement to so consult shall not change the parties'
obligation to treat all Shreveport Expenses (including those incurred
to date) as a portion of the Fund IV Consideration regardless of
whether the Initial Closing (as defined in the Shreveport Master
Agreement) occurs.
4. The following definition is added to Article XI of the Merger
Agreement:
"KRMD-AM/FM Broadcast Cash Flow" means the aggregate revenues of
KRMD-AM/FM during 1996 minus the aggregate operating expenses of
KRMD-AM/FM during 1996 (regardless of whether such stations were owned
by Benchmark or its subsidiaries, or any third party, during such time
period), determined in accordance with GAAP, consistently applied,
excluding any expenses for (i) depreciation, (ii) amortization, (iii)
interest, (iv) income taxes, (v) management fees and expenses payable
to Benchmark or AmCom General Corporation and its affiliates, (vi)
legal fees and expenses incurred in connection with the sale of
KRMD-AM/FM and the reorganization of AmCom General Corporation and its
affiliates and (vii) Shreveport Expenses. In addition, in calculating
KRMD-AM/FM Broadcast Cash Flow, extraordinary gains and losses
(determined in accordance with GAAP), gains and losses on sales of
fixed assets and revenues and expenses under trade and barter
agreements shall be excluded. In addition, the KRMD-AM/FM Broadcast
Cash Flow shall be increased by approximately $68,700 to reflect that
KRMD-AM/FM will receive rental income from tenants at the stations'
studio building at 0000 Xxxxxxxxx Xxxxxxxxx xx Xxxxxxxxxx, Xxxxxxxxx,
will no longer incur studio/office rental expense at such site and will
no longer incur billboard rental expenses at the station's AM
transmitter site.
5. Clause (b) of Section 4.2 of the Merger Agreement is amended by
inserting the words "; provided, however that Benchmark shall not be required
to deliver any of the items referenced in this sentence for the months of
January 1997, February 1997 and March 1997 until April 30, 1997" at the end of
the first sentence of such clause.
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 6
6. Clause (a) of Section 5.01 of each Credit Agreement is amended by
replacing the words "as soon as available, but in any event within 90 days
after the end of each calendar year" with the words "beginning with the
calendar year ended December 31, 1997, as soon as available, but in any event
within 120 days after the end of each calendar year."
7. The following proviso is inserted at the end of clause (b) of
Section 5.01 of each Credit Agreement:
; provided, however, that the Borrower shall not be required to
deliver the unaudited consolidated balance sheets of the Borrower and
its Subsidiaries and the related unaudited consolidated statements of
income and of cash flows for the months of January 1997, February 1997
and March 1997 until April 30, 1997.
8. Under the Capital Expenditure Side Letter, the date by which the
parties agree to negotiate in good faith the documentation of the Capital
Expenditure Loans (as defined therein) is hereby extended from thirty days
after the date of the Capital Expenditure Side Letter to February 28, 1997.
9. The parties hereto agree to cooperate in good faith to enable
Xxxxxxx & Xxxxxxx to complete the Coopers Audit Report, the Coopers Audit and
the Coopers Work Papers within the time periods specified in paragraph 1 of
this Letter Agreement. The parties recognize, however, that Xxxxxxx & Xxxxxxx
(i) are independent public accountants to Mergeco, (ii) are not a party to this
Letter Agreement and (iii) may, in their professional discretion, determine
that they are unable to complete or deliver the Coopers Audit Report, the
Coopers Audit and/or the Coopers Work Papers under the conditions and/or within
the time period specified in paragraph 1 of this Letter Agreement. In the event
the Coopers Audit Report, the Coopers Audit and/or the Coopers Work Papers are
not completed and delivered in the manner and within the time periods specified
in paragraph 1 of this Letter Agreement (regardless of whether Mergeco has used
its commercially reasonable efforts to effect such completion and delivery),
the parties agree that paragraphs 1, 2, and 4 of this Letter Agreement will
terminate and that the original provisions contained in the Merger Agreement to
which such paragraphs relate will remain in full force and effect.
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 7
Please countersign this letter below to indicate your agreement with
respect to the matters set forth herein.
BENCHMARK COMMUNICATIONS RADIO
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
---------------------------------
BY: Xxxxx X. Xxxxxxx
Its: General Partner
Agreed to and Accepted,
BENCHMARK ACQUISITION, INC.
/s/ XXXXX X. XXXXXXX
---------------------------------
BY: Xxxxx X. Xxxxxxx
Its:
BCR HOLDING, INC.
/s/ XXXXX X. XXXXXXX
---------------------------------
By: Xxxxx X. Xxxxxxx
Its:
CAPSTAR BROADCASTING PARTNERS, INC.
/s/ XXXXX X. XXXXXXX
--------------------------------
By: Xxxxx X. Xxxxxxx
Its:
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 8
The undersigned parties hereby agree to the terms of this letter
agreement, as of the date first written above.
BENCHMARK RADIO ACQUISITION FUND I
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND IV
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND VII
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND VIII
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 9
BENCHMARK RADIO ACQUISITION FUND IX
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND X
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND XI
LIMITED PARTNERSHIP
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: General Partner
/s/ XXXXX X. XXXXXXX
--------------------------------------
Xxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXXX, XX
--------------------------------------
Xxxxxx X. Xxxxxxx, XX
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Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 10
HOME RUN RADIO LIMITED PARTNERSHIP
By: HR Radio Corporation
Its: General Partner
/s/ XXXXX X. XXXXXXX
--------------------------------------
By: Xxxxx X. Xxxxxxx
Its: President
GRAND SLAM RADIO LIMITED PARTNERSHIP
/s/ XXXXXXX XXXXXXX
--------------------------------------
By: Xxxxxxx Xxxxxxx
Xxx: General Partner
