MASTER RICHMOND STATION GROUP AGREEMENT
THIS MASTER RICHMOND STATION GROUP AGREEMENT is made and entered into
as of the 17th day of December, 1996, by and among SFX BROADCASTING, INC., a
Delaware corporation ("SFX"), ABS COMMUNICATIONS INCORPORATED, a Virginia
corporation ("ABS"), XXXXXXX X. XXXXX ("KAB"), EBF INC., a Delaware corporation
("EBFI"), EBF PARTNERS, a New York partnership ("EBFP" and, together with ABS,
KAB and EBFI, the "Current Partners"), ABS COMMUNICATIONS, L.L.C., a Virginia
limited liability company (the "LLC"), ABS RICHMOND PARTNERS, L.P., a Virginia
limited partnership ("RICH-I"), ABS RICHMOND PARTNERS II, L.P., a Virginia
limited partnership ("RICH-II" and, together with RICH-I, the "Partnerships"),
ABS RICHMOND TOWERS, L.P., a Virginia limited partnership and J. XXXXX XXXXXX
for certain limited purposes specified herein.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Parties have entered into that certain Letter of Intent,
dated August 9, 1996 (the "Letter of Intent") which provides, in part, the
Parties' intention for SFX (i) to acquire (A) substantially all of the Current
Partners' partnership interests in the Partnerships and (B) the Benchmark
Assets through the LLC as well as the financing of the acquisition of such
assets by the LLC, (ii) to finance and assume certain liabilities of KAB and
ABS under the Benchmark Agreements, including the repayment of all outstanding
loans under the Signet Loan Agreement, (iii) to indemnify KAB and ABS for any
losses which may be incurred by KAB and ABS under the Benchmark Agreements and
(iv) to enter into such other arrangements and transactions with the other
Parties which are more particularly described in the Letter of Intent
(collectively, the "Contemplated Transactions"); and
WHEREAS, the Parties understand that the Contemplated Transactions
must occur in several stages and accordingly desire to enter into this
Agreement to identify the timing and execution of the various agreements which
must be entered into to consummate the Contemplated Transactions;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions contained herein, and intending to be fully bound hereby, the
Parties hereby agree as follows:
SECTION 1. Certain Definitions. When used in this Agreement, the
following words or phrases shall have the following meanings:
"Agreement" shall mean this Master Richmond Station Group Agreement,
as it may be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"Amended and Restated Operating Agreement" shall mean the Amended and
Restated Operating Agreement substantially in the form attached hereto as
Exhibit A.
"Benchmark Agreements" shall mean all of the agreements set forth on
Schedule 1 attached hereto.
"Benchmark Asset Purchase Agreement" shall mean that certain Asset
Purchase Agreement, dated as of May 31, 1996 by and among Benchmark Radio
Acquisition Fund III Limited Partnership, WVGO License Limited Partnership,
WDCK License Limited Partnership and ABS Communications Incorporated.
"Benchmark Assets" shall mean all of the assets to be acquired by the
LLC pursuant to the Benchmark Agreements.
"Benchmark Stations" shall mean collectively, radio station WLEE(FM)
in Williamsburg, Virginia and radio station WBZU(FM) in Richmond Virginia.
"Xxxxx Employment Agreement" shall mean the Employment Agreement
substantially in the form attached hereto as Exhibit B.
"Xxxxx Non-Competition Agreement" shall mean the Non-Competition
Agreement substantially in the form attached hereto as Exhibit C.
"Closing" shall mean, as applicable, the Closing as defined under the
KAB Contribution Agreement or the Purchase and Sale Agreement.
"Collateral Assignment of Contracts" shall mean the Collateral
Assignment of Contracts substantially in the form attached hereto as Exhibit O.
"Xxxxxx Employment Agreement" shall mean the Employment Agreement
substantially in the form attached hereto as Exhibit D.
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"Xxxxxx Non-Competition Agreement" shall mean the Non-Competition
Agreement substantially in the form attached hereto as Exhibit E.
"Deed of Trust" shall mean the Deed of Trust substantially in the form
attached hereto as Exhibit N.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" shall mean Signet Trust Company.
"Escrow Agreement" shall mean the Escrow Agreement substantially in
the form attached hereto as Exhibit F.
"KAB Contribution Agreement" shall mean the KAB Contribution Agreement
substantially in the form attached hereto as Exhibit G.
"Letter of Intent" shall mean that certain letter of intent dated
August 9, 1996 by and among SFX Broadcasting, Inc., KAB, ABS, the LLC and each
of the Partnerships.
"Liberty Entities" shall mean Liberty Acquisition Subsidiary
Corporation and Liberty Broadcasting of Maryland II, Incorporated.
"Party" or "Parties" shall mean each of the parties, either
individually or collectively, as applicable, signatory to this Agreement.
"Purchase and Sale Agreement" shall mean the Purchase and Sale
Agreement substantially in the form attached hereto as Exhibit I.
"Put and Call Agreement" shall mean the Put and Call Agreement
substantially in the form attached hereto as Exhibit J.
"Related Agreements" shall mean each of the agreements attached to
this Agreement as an Exhibit.
"Rich Stations" shall mean, collectively, radio station WKHK-FM in
Colonial Heights, Virginia and radio station WVGO-FM in Crewe, Virginia.
"Security Agreement" shall mean the Security Agreement substantially
in the form attached hereto as Exhibit H.
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"SFX Contribution Agreement" shall mean the SFX Contribution Agreement
substantially in the form attached hereto as Exhibit K.
"SFX Convertible Note Agreement" shall mean the Convertible Note
Agreement substantially in the form attached hereto as Exhibit L.
"Signet Loan Agreement" shall mean that certain Promissory Note, dated
as of May 28, 1996, by and among Xxxxx Xxxxx, KAB and Signet Bank as assigned
to the LLC pursuant to that certain Assignment dated May 28, 1996.
"Tower Lease" shall mean the Tower Lease substantially in the form
attached hereto as Exhibit M.
SECTION 2. Order of Transactions.
(a) The applicable Parties shall have entered into the following
agreements and the following actions shall have taken place simultaneously with
the execution of this Agreement and the consummation of the transactions
contemplated by the Benchmark Agreements:
(i) SFX and the LLC shall have entered into the SFX Convertible
Note Agreement, the Security Agreement, the Deed of Trust and the Collateral
Assignment of Contracts and any and all other agreements or documents
contemplated thereunder;
(ii) SFX, the Current Partners, the LLC and the Escrow Agent
shall have entered into the Escrow Agreement;
(iii) All amounts outstanding under the Signet Loan Agreement
shall have been repaid, any and all security interests granted to Signet Bank
pursuant to the Signet Loan Agreement shall have been terminated, extinguished
and released and the Signet Loan Agreement shall have been terminated;
(iv) KAB and the LLC shall have entered into, and consummated the
transactions under, the KAB Contribution Agreement;
(v) The Current Partners and the LLC shall have entered into the
Purchase and Sale Agreement; and
(vi) The Liberty Entities, SFX and the LLC shall have entered
into the SFX Contribution Agreement.
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(b) The applicable Parties shall have executed each of the following
agreements contemporaneously herewith, which agreements shall become effective
automatically upon the consummation of the transactions contemplated by the
Purchase and Sale Agreement without any further action by any of the applicable
Parties thereto (other than on the date of its effectiveness, the applicable
Parties completing the appropriate blanks and dates to reflect its
effectiveness); provided, in the event the transactions contemplated by the
Purchase and Sale Agreement are not consummated, each of the agreements listed
below shall be null and void and of no force and effect: The Amended and
Restated Operating Agreement, the Xxxxx Employment Agreement, the Xxxxx
Non-Competition Agreement, the Xxxxxx Employment Agreement, the Xxxxxx
Non-Competition Agreement and the Put and Call Agreement.
(c) Contemporaneously herewith, ABS Richmond Towers, L.P. ("ABS
Tower") and RICH-I shall have entered into the Tower Lease. ABS Tower and
RICH-I hereby agree that until the closing of the Purchase and Sale Agreement,
neither ABS Tower nor RICH-I shall amend, modify, terminate or revise in any
manner the Tower Lease without the prior written consent of SFX.
SECTION 3. Payment of Expenses. SFX hereby agrees to lend to the LLC
sufficient funds under the SFX Convertible Note Agreement so that the LLC may:
(a) reimburse or pay all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees and any reasonable expenses
relating to the provisions of Article V of the Purchase and Sale Agreement)
incurred by the Current Partners which are directly related to the negotiation,
preparation and closing of this Agreement, the Benchmark Agreements, the
Purchase and Sale Agreement and the other agreements contemplated under this
Agreement and the Contemplated Transactions and such other reasonable costs and
expenses incurred by KAB to date in connection with the solicitation and
achievement of finding a financing source to consummate the Contemplated
Transactions;
(b) pay all fees and expenses of Interstate/Xxxxxxx Xxxx Corporation
("Interstate") when due as provided in that certain Placement Agency Agreement,
dated April 17, 1996 as modified by the partners thereto as reflected in Annex
A to the Letter of Intent between ABS and Interstate.
SECTION 4. [INTENTIONALLY OMITTED].
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SECTION 5. Certain Obligations of SFX. In addition to the obligations
of SFX contained in the agreements contemplated in this Master Agreement, SFX
hereby:
(a) agrees to cause to be performed, at its sole expense, promptly
after the execution of this Master Agreement, Phase I environmental studies of
the real property and transmitting equipment used by the Partnerships in
connection with the operation of the Rich Stations; and
(b) guaranties the obligations of the Liberty Entities (as defined in
the SFX Contribution Agreement) (and their assignees, if any) under the SFX
Contribution Agreement (in the event that such obligations have not already
been transferred to SFX by the Liberty Entities' valid assignment to SFX of all
of their respective rights and obligations thereunder).
SECTION 6. Further Assurances. Each Party hereby agrees and covenants
to the other Parties that:
(a) such Party will use his or its commercially reasonable best
efforts to cause the completion of each of the Contemplated Transactions as
expeditiously as practical and in connection therewith, such Party will avoid
taking any actions that would prevent or delay the consummation of the
Contemplated Transactions;
(b) such Party will deal with the other Parties in good faith in
completing the Contemplated Transactions; and
(c) such Party will execute all such documents which may be necessary
or appropriate to consummate the Contemplated Transactions as expeditiously as
practical and does hereby consent to the consummation of the Contemplated
Transactions and waive any rights that such Party has under any agreements
other than under this Agreement and the Related Agreements that would preclude
the consummation of the Contemplated Transactions.
SECTION 7. Indemnification.
(a) Current Partners' Indemnities. Each Current Partner hereby agrees,
severally and not jointly (based on such Current Partner's respective
percentage interests in the Partnerships), to indemnify, defend and hold the
LLC, SFX and each of their affiliates (collectively, the "SFX Parties")
harmless with respect to any and all demands, claims, actions, suits,
proceedings, assessments, judgments, costs, losses,
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damages, liabilities and expenses (including, without limitation, reasonable
attorneys' fees) (collectively, the "Losses") asserted against, resulting from,
imposed upon or incurred by the LLC or SFX or its assignees directly or
indirectly relating to or arising out of the breach of any of the
representations or warranties or failure by such Current Partner to perform any
covenants or agreements of such Current Partner set forth in this Agreement or
the Related Agreements.
(b) SFX's Indemnities. SFX hereby agrees to indemnify, defend and hold
the Current Partners and their affiliates harmless with respect to any and all
Losses asserted against, resulting from, imposed upon or incurred by the
Current Partners directly or indirectly relating to or arising out of the
breach of any of the representations, warranties, covenants or agreements of
SFX set forth in this Agreement or any of the Related Agreements.
(c) Limitation on Indemnity.
(i) The SFX Parties shall be entitled to indemnification under
this Agreement only to the extent that the aggregate sum of the SFX Parties'
Losses under this Agreement and the Related Agreements for which the Current
Partners are responsible hereunder individually or in the aggregate exceeds One
Hundred Fifty Thousand Dollars ($150,000) (the "Threshold Amount")(and only to
the extent of such excess). The aggregate indemnification liability for each of
the Current Partners under this Agreement shall be limited to an amount equal
to such Current Partner's allocable portion of the Purchase Price (as defined
in the Purchase and Sale Agreement) paid to such Current Partner pursuant to
Section 3.2 of the Purchase and Sale Agreement. Notwithstanding anything to the
contrary contained herein, the SFX Parties shall not be entitled to any
indemnification under this Agreement relating to any matter disclosed in the
Environmental Report (as defined in the Purchase and Sale Agreement).
(ii) The Current Partners shall be entitled to indemnification
under this Agreement only to the extent that the aggregate sum of the Current
Partners' Losses under this Agreement and the Related Agreements exceeds the
Threshold Amount (and only to the extent of such excess). The indemnification
liability of SFX under this Agreement shall be limited to an amount equal to
the total Purchase Price paid to the Current Partners pursuant to Section 3.2
of the Purchase and Sale Agreement which amount will be offset by such amounts
received by the Current Partners under the Escrow Agreement.
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(d) Survival of Representations and Warranties. The Current Partners
and the SFX Parties shall have the right to bring an action for indemnification
for a period of eighteen (18) months following the Conversion Date (as defined
in the SFX Convertible Note Agreement); upon the expiration of such period,
such right shall lapse and be of no further force or effect. Notwithstanding
the foregoing, the representations and warranties made in the KAB Contribution
Agreement, the Purchase and Sale Agreement and the SFX Contribution Agreement
with respect to (A) (i) title to the partnership interests being sold or
contributed thereunder and (ii) taxes shall survive the Closing until the
expiration of any applicable statutes of limitations including any extensions
thereof and shall thereupon expire together with any right to indemnification
with respect thereto and (B) environmental matters, three (3) years from the
Conversion Date.
(e) Procedures.
(i) Any party seeking indemnification under this Section 7 (the
"Indemnified Party") shall give the party from whom indemnification is being
sought (the "Indemnifying Party") notice of any matter which such Indemnified
Party has determined has given or could give rise to a right of indemnification
under this Agreement, within 30 days of such determination, stating the amount
of the Loss, if known, and method of computation thereof. The obligations of an
Indemnifying Party under this Section 7 with respect to Losses arising from
claims of any third party which are subject to the indemnification provided for
in this Section 7 ("Third Party Claims") shall be governed by and contingent
upon the following additional terms and conditions: Within 30 days after
receipt by an Indemnified Party of notice of (i) any Third Party Claim or (ii)
the commencement of any action or proceeding which may entitle such Indemnified
Party to indemnification under this Section 7, such Indemnified Party shall
give the Indemnifying Party written notice of such claim or the commencement of
such action or proceeding and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting from such claim. The
failure to give the Indemnifying Party timely notice under this Section 7 shall
not preclude the Indemnified Party from seeking indemnification from the
Indemnifying Party unless the Indemnifying Party has been materially prejudiced
by such failure.
(ii) If the Indemnifying Party assumes the defense of any such
claim or litigation resulting therefrom with counsel reasonably acceptable to
the Indemnified Party,
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the obligations of the Indemnifying Party as to such claim shall be limited to
assuming, in good faith, the defense of such claim or litigation and to holding
the Indemnified Party harmless from and against any losses, damages and
liabilities caused by or arising out of any settlement approved by the
Indemnifying Party or any judgment in connection with such claim or litigation
resulting therefrom; provided, however, that the Indemnified Party may
participate, at its expense, in the defense of such claim or litigation
provided that the Indemnifying Party shall direct and control the defense of
such claim or litigation. The Indemnified Party shall cooperate and make
available all books and records reasonably necessary and useful in connection
with the defense. Without the written consent of the Indemnified Party, the
Indemnifying Party shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation. No such claim or litigation
resulting therefrom which is being defended in good faith by the Indemnifying
Party shall be settled or compromised without the written consent of the
Indemnifying Party.
(iii) If the Indemnifying Party shall not, within 30 days of
receipt of notice of any such claim or litigation, give notice to the
Indemnified Party of its intention to assume the defense of any such claim or
litigation resulting therefrom, the Indemnified Party may, but shall have no
obligation to, defend against such claim or litigation, acting in good faith
and in such manner as it may deem appropriate, and the Indemnified Party may
compromise or settle such claim or litigation without the Indemnifying Party's
consent. The Indemnifying Party shall promptly pay any such settlement of such
claim or litigation and shall also promptly reimburse the Indemnified Party for
the amount of all reasonable expenses, legal or otherwise, incurred by the
Indemnified Party in connection with the defense against or settlement of such
claim or litigation. In addition, the Indemnifying Party shall promptly pay the
amount of any judgment rendered with respect to such claim or in such
litigation.
(f) Sole Remedy. The indemnification provided in this Section 7 shall
be the sole and exclusive post-Closing remedy available to any party with
respect to any claims relating to this Agreement, the Purchase and Sale
Agreement, the KAB Contribution Agreement, the SFX Contribution Agreement
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and the SFX Convertible Note Agreement. In furtherance of the foregoing, the
parties (on behalf of themselves and their respective affiliates, directors,
officers, employees, agents, successors and assigns) hereby waive from and
after the date of the Closing, to the fullest extent permitted under applicable
law, any and all rights, claims and causes of action they may have against any
other party relating to the subject matter of this Agreement or any of the
other agreements referred to in the preceding sentence arising under or based
upon any federal, state, local or foreign law, rule or regulation (including,
without limitation, any law, rule or regulation relating to environmental
matters).
SECTION 8. Rich LMA. The parties hereto contemplate that there may be
entered into a Local Marketing Agreement ("Rich LMA") between the Partnerships
and the LLC with respect to the Rich Stations. The parties hereby acknowledge
and agree that the Rich LMA shall be in a form satisfactory to SFX, the LLC and
the Partnerships.
SECTION 9. Consequential Damages. Notwithstanding any provision
contained herein, in the event that an arbitrator under the Escrow Agreement
determines that any Party shall have acted in bad faith in connection with any
of the Contemplated Transactions, any other Party who has incurred a Loss may
seek as one of its damages consequential damages.
SECTION 10. Restriction on Consents, Amendments, Waivers and
Modifications; Opinions. The LLC hereby agrees not to amend, waive or modify
any term or condition set forth in any Related Agreement or in any other
agreement contemplated hereby to which the LLC is a Party (or consent to any
change requested thereunder) without the prior written consent of SFX. In
addition, the LLC hereby agrees that any and all forms of opinions to be
delivered to the LLC under any of the Related Agreements shall be in a form
reasonably satisfactory to SFX.
SECTION 11. Restriction on Sale of Stations. While the Purchase and
Sale Agreement is in effect, each of (i) ABS, KAB and the LLC (with respect to
the Benchmark Stations) and (ii) EBFI, EBFP, RICH-I and RICH-II (with respect
to the Rich Stations) hereby agree that such Party shall not sell, transfer or
otherwise encumber any of the Benchmark Stations or the Rich Stations, as
applicable, without the prior written approval of SFX, other than as part of
the Contemplated Transactions.
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SECTION 12. Amendment. This Agreement may only be amended with the
written consent of all of the Parties.
SECTION 13. Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia without
giving effect to the choice of law provisions thereof.
SECTION 14. Notices. Any notice, demand or request required or
permitted to be given under the provisions of this Agreement shall be in
writing and shall be deemed to have been duly delivered and received on the
date of personal delivery or on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or on the date of
a stamped receipt, if sent by an overnight delivery service, and shall be
addressed to the following addresses, or to such other address as any Party may
request:
To KAB: Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
To ABS: ABS Communications Incorporated
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
To the LLC: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
To EBFI and EBFP: x/x Xxxxxxx Xxxxxxx, XXX
Xxxxxxxxx & Xx. xx Xxxxxxxx, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
To SFX: SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
To Partnerships: x/x Xxxxxxx Xxxxxxx, XXX
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
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Copies of all notices to KAB, ABS, the LLC, EBFI, EBFP and the Partnerships
shall also be sent to:
XxXxxxx Xxxx
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, Esq.
SECTION 15. Schedules and Exhibits. This Agreement and the Related
Agreements contain various schedules and exhibits. The Parties agree that
disclosure in any one schedule or exhibit shall constitute disclosure for all
purposes under this Agreement and the Related Agreements; provided, that the
disclosure is detailed enough to indicate its applicability to such other
schedule or exhibit.
SECTION 16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
SECTION 17. Guarantee to Provide Purchase Price. In the event that all
of the conditions precedent set forth in Article XIII of the Purchase and Sale
Agreement have been satisfied, SFX hereby irrevocably and unconditionally
guarantees to the Current Partners that SFX shall pay or cause to be paid the
Purchase Price to the Current Partners. The obligations of SFX under this
Section 17 are absolute and direct, and constitute primary obligations of SFX.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
and Secretary
ABS COMMUNICATIONS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
----------------------------------
EBF INC.
By: /s/ Xxxxxxx Xxxxxxx, III
-------------------------------
Name: Xxxxxxx Xxxxxxx, III
Title:
EBF PARTNERS
By: /s/ Xxxxxxx Xxxxxxx, III
-------------------------------
Partner Xxxxxxx Xxxxxxx, III
ABS COMMUNICATIONS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
ABS RICHMOND PARTNERS, L.P.
By: ABS COMMUNICATIONS INCORPORATED,
its General Partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
ABS RICHMOND PARTNERS II, L.P.
By: ABS COMMUNICATIONS INCORPORATED,
its General Partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
J. Xxxxx Xxxxxx is executing this
Agreement solely to evidence his rights
and obligations to enter into the Xxxxxx
Employment Agreement and the Xxxxxx
Non-Competition Agreement as of the
closing under the Purchase and Sale
Agreement:
J. XXXXX XXXXXX
----------------------------------
J. XXXXX XXXXXX
ABS RICHMOND TOWERS, L.P.
By: Xxxxxxx X. Xxxxx , its
----------------------------
General Partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
SCHEDULE 1
See attached list of documents.
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CONVERTIBLE NOTE AGREEMENT
DATED AS OF DECEMBER 17, 1996
AMONG
ABS COMMUNICATIONS, L.L.C.,
AS BORROWER,
AND
SFX BROADCASTING, INC.,
AS LENDER
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS............................................... 1
1.1 Certain Defined Terms.......................................... 1
1.2 Accounting Terms: Utilization of GAAP
for Purposes of Calculations Under
Agreement...................................................... 19
SECTION 2. THE LOAN.................................................. 20
2.1 Note; Procedure for Borrowings;
Prepayment..................................................... 20
2.2 Interest....................................................... 21
2.3 Payments of Principal and Interest............................. 21
2.4 Use of Proceeds................................................ 21
2.5 Taxes.......................................................... 22
SECTION 3. CONDITIONS TO THE LOANS................................... 23
3.1 Conditions to Initial Loan..................................... 23
3.2 Conditions to Each Other Loan.................................. 25
SECTION 4. BORROWER'S REPRESENTATIONS AND
WARRANTIES................................................ 26
4.1 Existence; Compliance with Law................................. 26
4.2 Executive Offices; Collateral Locations;
Corporate or Other Names....................................... 26
4.3 Power; Authorization; Enforceable
Obligations.................................................... 26
4.4 Financial Statements and Projections........................... 27
4.5 Conduct of Business; Material Contracts........................ 27
4.6 Subsidiaries................................................... 28
4.7 FCC and Station Matters........................................ 28
4.8 Real Property.................................................. 29
4.9 Personal Property Liens........................................ 29
4.10 No Material Adverse Change: No
Restricted Payments............................................ 29
4.11 Title to Properties: Liens.................................... 29
4.12 Litigation..................................................... 29
4.13 Payment of Taxes............................................... 30
4.14 Restrictions; No Default....................................... 30
4.15 Governmental Regulation........................................ 30
4.16 Securities Activities.......................................... 31
4.17 Employee Benefit Plans......................................... 31
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Page
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4.18 Environmental Matters.......................................... 31
4.19 Ventures and Outstanding Stock................................. 31
4.20 Labor Matters.................................................. 32
4.21 Insurance...................................................... 32
4.22 Disclosure..................................................... 32
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS.......................... 33
5.1 Financial Statements and Other Reports......................... 33
5.2 Corporate Existence; Compliance with Laws...................... 34
5.3 Payment of Taxes and Claims.................................... 34
5.4 Maintenance of Properties; Insurance........................... 35
5.5 Tax Treatment.................................................. 35
5.6 Books and Records.............................................. 35
5.7 Litigation..................................................... 35
5.8 Environmental Laws............................................. 36
5.9 Indemnity...................................................... 36
5.10 Access......................................................... 37
5.11 FCC Conversion Consent Filing.................................. 37
SECTION 6. BORROWER'S NEGATIVE COVENANTS............................. 38
6.1 Indebtedness................................................... 38
6.2 Liens.......................................................... 38
6.3 Investments; Joint Ventures.................................... 39
6.4 Contingent Obligations......................................... 39
6.5 Restricted Payments............................................ 39
6.6 Restriction on Fundamental Changes:
Asset Sales and Acquisitions................................... 39
6.7 Restriction on Leases.......................................... 40
6.8 Transactions with Affiliates................................... 40
6.9 Conduct of Business............................................ 40
6.10 Amendments or Waivers of Related
Documents...................................................... 40
6.11 ERISA.......................................................... 41
6.12 Hazardous Materials............................................ 41
6.13 Sale-Leasebacks................................................ 41
6.14 Fiscal Year.................................................... 41
SECTION 7. EVENTS OF DEFAULT......................................... 42
7.1 Events of Default.............................................. 42
7.2 Remedies....................................................... 43
SECTION 8. CONVERSION OF NOTE........................................ 44
8.1 Conversion..................................................... 44
8.2 Conversion Date Procedures..................................... 45
8.3 Taxes on Conversion............................................ 45
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Page
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8.4 Termination of Loan Documents.................................. 45
8.5 Termination of Conversion Right................................ 45
SECTION 9. MISCELLANEOUS............................................. 45
9.1 Expenses....................................................... 46
9.2 Amendments and Waivers......................................... 46
9.3 Independence of Covenants...................................... 46
9.4 Notices........................................................ 46
9.5 Survival of Representations, Warranties
and Agreements................................................. 47
9.6 Failure or Indulgence Not Waiver;
Remedies Cumulative............................................ 47
9.7 Marshalling; Payments Set Aside................................ 47
9.8 Severability................................................... 48
9.9 Headings....................................................... 48
9.10 Applicable Law................................................. 48
9.11 Successors and Assigns......................................... 48
9.12 Consent to Jurisdiction and Service of Process................. 48
9.13 Waiver of Jury Trial........................................... 49
9.14 Counterparts; Effectiveness.................................... 49
iii
Schedules
Schedule 1 - Benchmark Acquisition Documents
Schedule 2 - Rich Acquisition Documents
Schedule 4.2 - Collateral Locations
Schedule 4.4 - Financial Statements
Schedule 4.5 - Material Contracts
Schedule 4.7(a) - Radio Broadcast Stations
Schedule 4.7(b) - LMAs
Schedule 4.8 - Real Property
Schedule 4.9 - UCC-1 Filing Jurisdictions
Schedule 4.10 - Restricted Payments
Schedule 4.12 - Litigation
Schedule 4.18 - Environmental Matters
Schedule 4.19 - Options, Warrants; Members
Schedule 4.20 - Labor Matters
Schedule 4.21 - Insurance
Schedule 6.1 - Existing Indebtedness
Schedule 6.2 - Existing Liens
Schedule 6.4 - Existing Contingent Obligations
Schedule 6.8 - Leases
Exhibits
Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Convertible Note
EXHIBIT C - Form of Notice of Borrowing
Exhibit D - Form of Security Agreement
Exhibit E - Form of Loan Certificate
Exhibit F - Form of Amended and Restated Operating Agreement
EXHIBIT G - Form of Collateral Assignment of Contracts
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CONVERTIBLE NOTE AGREEMENT
THIS CONVERTIBLE NOTE AGREEMENT is dated as of December 17, 1996 and
entered into by and among ABS COMMUNICATIONS, L.L.C., a Virginia limited
liability company ("BORROWER") and SFX BROADCASTING, INC., a Delaware
corporation, as Lender ("LENDER").
R E C I T A L S
WHEREAS, Borrower has contractually agreed to acquire from Benchmark radio
stations WLEE(FM) and WBZU(FM) licensed to Williamsburg, Virginia and Richmond,
Virginia, respectively (collectively, the "BENCHMARK STATIONS");
WHEREAS, Borrower desires to obtain loans from Lender under this Agreement
in order to (i) pay off and terminate the Signet Loan Agreement, (ii) finance
the working capital needs of Borrower to perform under the Benchmark TBA, (iii)
finance the acquisition of the Benchmark Stations, (iv) finance the working
capital needs of Borrower to operate the Benchmark Stations after the Benchmark
Acquisition, and (v) to finance the working capital needs of Borrower under the
Rich LMA, if applicable;
WHEREAS, Borrower desires to secure its Obligations by granting to Lender,
to the extent permitted by law, first priority security interests (subject to
Permitted Liens) in all of its assets, other than the Excluded Assets, pursuant
to the Security Agreement and the other Security Documents;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower and Lender agree as
follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. The following terms used in this Agreement shall
have the following meanings:
"ABS" means ABS Communications Incorporated, a Virginia corporation.
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"ACCELERATION EVENT" has the meaning set forth in Section 2.2 hereof.
"ACQUISITION" means the Benchmark Acquisition and the Rich Acquisition.
"ACQUISITION DOCUMENTS" means collectively, the Benchmark Acquisition
Documents and the Rich Acquisition Documents.
"AFFILIATE", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities
or by contract or otherwise.
"AGREEMENT" means this Convertible Note Agreement, including all exhibits
and schedules hereto, as the same may be amended, restated or otherwise
modified from time to time.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"BENCHMARK" means, collectively, Benchmark Radio Acquisition Fund III
Limited Partnership, WVGO License Limited Partnership, and WDCK License Limited
Partnership, each a Maryland limited partnership.
"BENCHMARK ACQUISITION" means the acquisition by Borrower of the Benchmark
Stations pursuant to the Benchmark Acquisition Documents and upon terms and
conditions set forth therein.
"BENCHMARK ACQUISITION DOCUMENTS" means all of the purchase agreements and
related documents pursuant to which the Benchmark Acquisition is implemented or
evidenced as more particularly described on Schedule 1 annexed hereto.
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"BENCHMARK ACQUISITION FCC CONSENT" means the initial written action or
actions by the FCC approving the assignment of the FCC Licenses for each
Benchmark Station to be acquired as part of the Benchmark Acquisition to
Borrower in the manner contemplated by the Benchmark Acquisition Documents, in
form and substance satisfactory to Lender.
"BENCHMARK LOAN" means a Loan in the amount of $14,500,000 made by Lender
to Borrower under this Agreement in order to consummate the Benchmark
Acquisition.
"BENCHMARK STATIONS" has the meaning set forth in the recitals to this
Agreement.
"BENCHMARK TBA" means that certain Time Brokerage Agreement, dated May 31,
1996 between Benchmark and Buyer, as assigned by Buyer to Borrower pursuant to
that certain Assignment and Assumption Agreement, dated as of June 1, 1996 by
and between Buyer and Borrower.
"BENCHMARK TRANSACTIONS" means all of the transactions contemplated by the
Benchmark Acquisition Documents.
"BORROWER" has the meaning assigned to that term in the introduction to
this Agreement.
"XXXXX" means Xxxxxxx X. Xxxxx, an individual resident of the Commonwealth
of Virginia.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"BUYER" means ABS Communications Incorporated, a Virginia corporation.
"CAPITAL LEASE", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"CASH EQUIVALENTS" means, as at any date of determination, (i) marketable
securities (a) issued or
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directly and unconditionally guaranteed as to interest and principal by the
United States Government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date, (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time
of the acquisition thereof, the highest rating obtainable from either Standard
& Poor's or Moody's, (iii) commercial paper maturing no more than one year from
the date of creation thereof and having, at the time of the acquisition
thereof, a rating of at least A-1 from Standard & Poor's or at least P-1 from
Moody's, (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least "adequately capitalized" (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and (v)
shares of any money market mutual fund that (a) has at least 95 % of its assets
invested continuously in the types of investments referred to in clauses (i)
through (iv) above, (b) has net assets of not less than $500,000,000, and (c)
has the highest rating obtainable from either Standard & Poor's or Moody's.
"CHANGE OF CONTROL" means (i)(a) the failure of Xxxxx and ABS to own and
control collectively 100% of the Membership Interests of Borrower, or (b)
either of Xxxxx or ABS shall assign, delegate, encumber or otherwise transfer
or agree to assign, delegate, encumber or otherwise transfer in any manner or
to any extent, any of its rights or obligations as a Member (in each case,
other than as permitted under Section 8.1), or (ii) the failure of Xxxxx to be
the Manager of Borrower other than because of Xxxxx'x death or incapacity. For
the purpose of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise.
"CLAIM" has the meaning set forth in Section 5.9 hereof.
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"COLLATERAL" means, collectively, all real and personal property securing
the Obligations pursuant to the Security Documents in accordance with the terms
thereof.
"COLLATERAL ASSIGNMENT OF CONTRACTS" means the Collateral Assignment of
Contracts substantially in the form of Exhibit G annexed hereto.
"COMMITMENT PERIOD" means the period from and including the date hereof to,
but not including the Maturity Date or such earlier date in which Lender's
obligation to make any Loans under this Agreement shall terminate as provided
herein.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended,
including as amended by the Telecommunications Act of 1996, and the rules,
regulations and policies promulgated thereunder, as from time to time in
effect.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
Exhibit A annexed hereto delivered to Lender by Borrower pursuant to Section 3
hereof.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or
as to which that Person is otherwise liable for reimbursement of drawings, or
(iii) under any interest rate swap, hedge, cap, collar or similar agreement.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to
make take-or-pay or similar payments if
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required regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof
is as described in the preceding sentence. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if less, the amount to which such Contingent Obligation
is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any Stock issued by that Person or of any indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.
"CONVERSION CONSENT" means any Final Order approving Lender's conversion of
the Loan into Membership Interests pursuant to Section 8.1, in form and
substance satisfactory to Lender.
"CONVERSION DATE" has the meaning set forth in Section 8.1 hereof.
"CONVERSION EVENT" means the date on which all of the following shall have
occurred or shall be occurring contemporaneously: (i) the Rich Acquisition
shall have been completed, and (ii) all transactions contemplated pursuant to
that certain SFX Contribution Agreement dated of even date herewith between
Borrower, Lender and the other parties thereto (the "SFX CONTRIBUTION
AGREEMENT") shall have been completed.
"DEED OF TRUST" means a Deed of Trust substantially in the form of Exhibit
G annexed hereto
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"DEFAULT" means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default.
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member, (ii) any trade or business (whether or
not incorporated) which is, or was at any time, a member of a group of trades
or businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a member,
and (iii) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is, or was at any time, a member.
"ERISA EVENT" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation), (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan, (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA, (iv)
the withdrawal by Borrower or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability
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pursuant to Sections 4063 or 4064 of ERISA, (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan, (vi) the
imposition of liability on Borrower or any of its ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA, (vii) the withdrawal by Borrower or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by Borrower or any of its ERISA Affiliates
of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA, (viii) the
occurrence of an act or omission which could give rise to the imposition on
Borrower or any of its ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (1) or 4071 of ERISA in respect of any Employee Benefit Plan,
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Borrower or any of its ERISA Affiliates in connection with
any such Employee Benefit Plan, (x) receipt from the Internal Revenue Service
of notice of the failure of any Pension Plan (or any other Employee Benefit
Plan intended to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue Code, or the
failure of any trust forming part of any Pension Plan to qualify for exemption
from taxation under Section 501(a) of the Internal Revenue Code, or (xi) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or was at any time, maintained or contributed
to by Borrower or any of its ERISA Affiliates.
"ENVIRONMENTAL LAWS" means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and
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the like relating to (i) environmental matters, including, without limitation,
those relating to fines, injunctions, penalties, damages, contribution, cost
recovery compensation, losses or injuries resulting from the Release or
threatened Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Borrower, or any of its
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss.1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Clean Air Act (42
U.S.C. ss.7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss.2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.136
et seq.), the Occupational Safety and Health Act (29 U.S.C. ss.651 et seq.) and
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss.11001 et
seq.), each as amended or supplemented, and any analogous future or present
local, state and federal statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of determination.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean all liabilities,
obligations, responsibilities, remedial actions, removal costs, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand by any person or entity, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or common law (including any thereof arising under any Environmental Law,
permit, order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Release, threatened Release,
or the presence of a Hazardous Material.
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"ESCROW AGREEMENT" means that certain Escrow Agreement of even date
herewith entered into by and among Lender, Borrower and the other parties
signatory thereto.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"EXCLUDED ASSETS" means the Limited Partnership Interests and the
distributions or proceeds related to such Limited Partnership Interests.
"EXCLUDED LOAN AMOUNTS" means any Loan amount made by Lender to Borrower
for working capital purposes under this Agreement for any given month in excess
of $100,000. For the avoidance of doubt, Excluded Loan Amounts shall not
include the Benchmark Loan and such other Loan amount used to pay off all
amounts outstanding under the Signet Loan Agreement.
"FACILITIES" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Borrower or any of
its predecessors or Affiliates but specifically not including the transmission
tower currently used by radio station WKHK(FM).
"FCC" means the Federal Communications Commission and any successor
governmental agency performing functions similar to those performed by the
Federal Communications Commission on the date hereof.
"FCC LICENSE" means any license, permit or other authorization issued by
the FCC relating to the Stations.
"FINAL ORDER" means, as of any date of determination with respect to any
written action or consent by the FCC, such written action or consent which
shall have been obtained and (A)(i) which shall not have been reversed, stayed,
enjoined, annulled or suspended and (ii) for which the time for filing a
request for administrative or judicial review or for instituting administrative
review thereof sua
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sponte, shall have expired without any such filing having been made or action
for such review sua sponte having been taken, or, in the event of such filing
or review sua sponte, such filing or review sua sponte shall have disposed of
favorably to confirmation of such written action or the grant of such consent
and the time for seeking further relief or review with respect thereto shall
have expired without any request or action for such further relief or review
having been filed or taken or (B) Lender shall have notified Borrower that it
has determined in its sole discretion that there is no reasonable basis for
concluding that such written action or consent shall not become a final order
(as provided in clause (A) hereof) in due course.
"FINANCIAL STATEMENTS" means, for any period, the balance sheet of Borrower
as at the end of such period and the related statement of income and the
related statement of equity and cash flows of Borrower for such period and for
the period from the beginning of the then current Fiscal Year to the end of
such period, all in reasonable detail and certified by the chief financial
officer of Borrower that they fairly present the financial condition of
Borrower as at the dates indicated and the results of operations and cash flows
for the periods indicated, subject to changes resulting from audit and normal
year-end adjustments.
"FISCAL YEAR" means the fiscal year of Borrower ending on December 31 of
each calendar year.
"FTC" means the Federal Trade Commission and the Antitrust Department of
the Department of Justice and any successor governmental agency performing
functions similar to those performed by the Federal Trade Commission or the
Antitrust Department of the Department of Justice on the date hereof.
"GAAP" means generally accepted accounting principles set forth in opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
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"GOVERNMENTAL AUTHORITY" means any federal, state or local governmental
authority, agency or court.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent, order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto, (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance, (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources, (iv) any
flammable substances or explosives, (v) any radioactive materials, (vi)
asbestos in any form, (vii) urea formaldehyde foam insulation, (viii)
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million, (ix)
pesticides and (x) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority or which may
or could pose a hazard to the health and safety of the owners, occupants or any
Persons in the vicinity of the Facilities.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity
with GAAP, (iii) notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money, (iv) any
obligation owed for all or any part of the deferred purchase price of property
or services (excluding any such obligations incurred under ERISA), which
purchase price is (a) due more than six months from the date of incurrence of
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the obligation in respect thereof or (b) evidenced by a note or similar written
instrument, (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person and (vi) obligations under non-compete agreements and all other
obligations that would be properly classified as a liability on a balance sheet
conforming with GAAP (other than current trade payables and current accrued
expenses).
"INDEMNIFIED PERSON" has the meaning set forth in Section 5.9 hereof.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or other acquisition
by Borrower of, or of a beneficial interest in, any Stock of any other Person
(other than a Person that, prior to such purchase or acquisition, was a
wholly-owned Subsidiary of Borrower), or (ii) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by Borrower to any other Person other than a
wholly-owned Subsidiary of Borrower, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost
of all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention
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agreement, any lease in the nature thereof, and any agreement to give any
security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LIMITED PARTNERSHIP INTERESTS" means the limited partnership interests
that Borrower owns in the Rich Partnerships.
"LMA" means any joint sales agreement, advertising sales agreement, time
brokerage agreement, local marketing agreement or similar arrangement to which
Borrower is a party (whether originally or pursuant to an assignment).
"LOAN DOCUMENTS" means (i) this Agreement, (ii) the Note, and (iii) the
Security Documents.
"LOANS" means the revolving credit loans which may be made by Lender to
Borrower from time to time under the terms of this Agreement.
"MANAGER" means Xxxxx, or any other person designated by the Members from
time to time to manage Borrower.
"MANAGER'S CERTIFICATE" means a certificate executed by the Manager or, if
the Members have not designated a Manager, a certificate executed by any
Member, in form and substance satisfactory to Lender.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to
time.
"MASTER AGREEMENT" means that certain Master Richmond Station Group
Agreement of even date herewith entered into by and among Lender, Borrower and
each of the other parties signatory thereto.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Borrower or (ii) the impairment of any material portion of the
Collateral or the ability of Borrower to perform in any material respect, or of
Lender to enforce, the Obligations; provided, however, so long as Borrower has
not breached this Agreement through waiving any material rights that it has
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under the Benchmark Acquisition Documents or Borrower has not taken any actions
or omitted to any actions under any of the Benchmark Acquisition Documents
which are willfully or grossly negligent, Material Adverse Effect shall not
include or be caused by the poor performance (financial or otherwise) of the
Benchmark Stations.
"MATERIAL CONTRACT" has meaning assigned to it in Section 4.5.
"MATURITY DATE" means the earlier of (i) May 29, 1998, or (ii) the date on
which the Loan and other Obligations are declared immediately due and payable
in accordance with Section 7.2.
"MEMBER" has the meaning assigned to it in the Operating Agreement.
"MEMBERSHIP INTEREST" has the meaning assigned to it in the Operating
Agreement.
"MOODY'S" means Xxxxx'x Investors Service, Inc., or any Person succeeding
thereto by merger, consolidation or acquisition of all or substantially all of
its assets, including substantially all of its business of rating securities.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in Section
3(37) of ERISA, to which Borrower or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Borrower or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"NOTE" means that certain Convertible Grid Note of even date herewith
executed by Borrower, substantially in the form of Exhibit B attached hereto,
and all renewals, amendments, restatements and replacements thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of Exhibit C
annexed hereto delivered to Lender by Borrower pursuant to Section 2.1 hereof.
"OBLIGATIONS" means all obligations of every nature of Borrower from time
to time owed to Lender under the Loan
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Documents, whether for principal, interest, expenses, indemnification or
otherwise.
"OPERATING AGREEMENT" means the Operating Agreement of ABS Communications,
L.L.C., dated as of April 29, 1996.
"OPERATING LEASE" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real or personal) that is not a Capital Lease other than
(i) any such lease under which that Person is the lessor or (ii) any LMA.
"OTHER TAXES" has the meaning assigned to it in Section 2.5.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by Section 5.3;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and
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other similar obligations (exclusive of obligations for the payment of
borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under Section 7.1;
(vi) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Borrower;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens of a collecting bank under Section 4-208 of the Uniform
Commercial Code as in effect in the relevant jurisdiction; and
(x) Liens related to the Excluded Assets.
"PERMITTED LIENS" means Liens permitted pursuant to Section 6.2.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"RELATED DOCUMENTS" means the (i) Acquisition Documents and (ii) the LMAs.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles
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containing any Hazardous Materials), or into or out of any Facility, including
the movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.
"RESTRICTED PAYMENT" means, with respect to any Person, (a) the declaration
or payment of any dividend or distribution or the occurrence of any liability
to make any other payment or distribution of cash or other property or assets
in respect of such Person's Stock, (b) any payment on account of the purchase,
redemption, defeasance or other retirement of such Person's Stock or any other
payment or distribution made in respect thereof, either directly or indirectly,
or (c) any payment, loan, contribution, or other transfer of funds or other
property to any stockholder, partner or member of such Person or any Affiliate
of such stockholder, partner or member.
"RETIREE WELFARE PLAN" means any Welfare Plan providing for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the Internal Revenue Code and at
the sole expense of the participant or the beneficiary of the participant.
"RICH ACQUISITION" means the acquisition by Borrower of the Rich
Partnerships and the Rich Stations pursuant to the Rich Acquisition Documents
and upon terms and conditions set forth herein.
"RICH ACQUISITION DOCUMENTS" means all of the purchase agreements and
related documents pursuant to which the Rich Acquisition is implemented or
evidenced as more particularly described on Schedule 2 annexed hereto.
"RICH ACQUISITION FCC CONSENT" means the initial written action or actions
by the FCC approving the assignment of the FCC Licenses for each Rich Station
to be acquired as part of the Rich Acquisition to Borrower in the manner
contemplated by the Rich Acquisition Documents, in form and substance
satisfactory to Lender.
"RICH LMA" means that certain Local Marketing Agreement that may be entered
into between the Rich Partnerships and Borrower with respect to the Rich
Stations.
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"RICH PARTNERSHIPS" means ABS Richmond Partners, L.P., a Virginia limited
partnership and ABS Richmond Partners II, L.P., a Virginia limited partnership.
"RICH STATIONS" means, collectively, radio station WKHK(FM), licensed to
Colonial Heights, Virginia and radio station WVGO(FM), licensed to Crewe,
Virginia.
"SECURITY AGREEMENT" means the Security Agreement to be executed and
delivered by Borrower on the date hereof, substantially in the form of Exhibit
D annexed hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"SECURITY DOCUMENTS" means the Security Agreement, the Deed of Trust, the
Collateral Assignment of Contracts, mortgages, security agreements, pledge
agreements, assignments, licenses, landlord consents and releases and all other
instruments or documents (including, without limitation, UCC-1 financing
statements, fixture filings or similar documents required in order to perfect
the Liens created by the Security Documents) delivered by Borrower or any other
Person pursuant to this Agreement and the other Loan Documents to grant to
Lender Liens to secure the Obligations.
"SIGNET LOAN AGREEMENT" means that certain Promissory Note, dated as of May
28, 1996 by and among Xxxxx Xxxxx, Xxxxxxx X. Xxxxx and Signet Bank, as
assigned to the LLC pursuant to that certain Assignment dated April 29, 1996.
"STANDARD & POOR'S" means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc., or any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"STATIONS" means the Rich Stations and the Benchmark Stations.
"STOCK" means all membership interests, shares, options, warrants, general
or limited partnership interests, participation or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock, or any
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other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Exchange Act).
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
"TAXES" means taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or
measured by the net income of Lender by the United States of America or the
jurisdiction under the laws of which Lender is organized, or in each case, any
political subdivision thereof; provided, however, neither Taxes nor Other Taxes
shall include any item that is based on income, profits or gains or is in lieu
of such tax.
"TERMINAL DATE" means December 31, 1997 or such other date the parties may
mutually agree.
"WELFARE PLAN" means any welfare plan, as defined in Section 3(1) of ERISA,
which is maintained or contributed to by Borrower or any ERISA Affiliate.
1.2 ACCOUNTING TERMS: UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT. Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements required to be delivered
by Borrower to Lender shall be prepared in accordance with GAAP as in effect at
the time of such preparation. Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall utilize accounting
principles and policies
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in conformity with those used to prepare the financial statements referred to
in Section 4.4.
SECTION 2.
THE LOAN
2.1 NOTE; PROCEDURE FOR BORROWINGS; PREPAYMENT.
a. Subject to the terms and conditions hereof, Lender hereby agrees to make
Loan(s) to Borrower from time to time during the Commitment Period in an
aggregate principal amount at any one time not to exceed the amounts necessary
to fund Borrower's obligations hereunder and under the Master Agreement.
b. Borrower may borrow under the Note during the Commitment Period on any
Business Day; provided, Borrower shall give Lender irrevocable Notice of
Borrowing (which notice must be received by Lender before 1:00 P.M., New York
City Time) signed by the Chief Financial Officer of Borrower. Lender agrees to
fund in accordance with such notice as expeditiously as practicable but in no
event later than three (3) Business Days after receipt of such notice;
provided, in any thirty (30) day period, Lender agrees to fund (only once
during such thirty (30) day period) within one (1) Business Day after receipt
of a Notice of Borrowing, so long as the requested amount does not exceed two
hundred and fifty thousand dollars ($250,000). Borrower may not prepay the
Loans before the Terminal Date without the prior consent of Lender.
c. On the date hereof, Borrower shall execute and deliver to Lender a
Notice of Borrowing and a Note substantially in the form of Exhibit B annexed
hereto. Lender agrees to make, on the date hereof, an initial loan in the
amount requested and Lender is hereby authorized to record the date and amount
of such initial Loan and each subsequent Loan made by Lender, and the date and
amount of each payment or prepayment of principal thereof on the schedule
annexed to and constituting a part of such Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided, however, that the failure to make such notation shall not in any way
limit, affect or modify the obligation of Borrower to repay any of its
Obligations, or the rights
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of Lender to any amounts due under this Agreement or the Note.
2.2 INTEREST. Borrower shall not pay any interest on the Loans until the
Terminal Date; provided, however, in the event the repayment of the Loans are
accelerated for any reason pursuant to Section 7.2 (the "ACCELERATION EVENT"),
Borrower shall pay interest on the Loans (i) from the date such applicable Loan
was made to the Terminal Date (or, if applicable, the date such Acceleration
Event shall have occurred) at a rate equal to the product of (A) 1/2 and (B)
the sum of the prime rate of Citibank, N.A. on the date of such Acceleration
Event plus 1% ("PRIME PLUS 1%") and thereafter until such time such Loan is
fully repaid at a rate per annum equal to Prime plus 1%. All computations of
interest shall be made by Lender and on the basis of a three hundred and sixty
(360) day year, in each case for the actual number of days occurring in the
period for which such interest is payable. Each determination by Lender of the
interest payable hereunder shall be conclusive and binding for all purposes,
absent manifest error or bad faith.
2.3 PAYMENTS OF PRINCIPAL AND INTEREST.
a. Borrower shall pay in full all outstanding principal under the Loans on
the Maturity Date.
b. In the event Borrower is required to pay interest on the Loans under
Section 2.2, Borrower shall pay all accrued interest within thirty (30) days
after the event causing the interest to accrue, and then monthly thereafter
until the Maturity Date.
c. All payments by Borrower of principal, interest, fees and other
Obligations hereunder and under the Note shall be made in Dollars in same day
funds, free of any restriction or condition, and delivered to Lender not later
than 12:00 Noon (New York City Time) on the date due. Funds received by Lender
after that time on such due date shall be deemed to have been paid by Borrower
on the next succeeding Business Day.
2.4 USE OF PROCEEDS. Borrower shall use the proceeds of the Loans for
Borrower's obligations as they arise under the Master Agreement, including,
without limitation, (i) to pay off all amounts outstanding under the Signet
Loan Agreement,
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(ii) for the payment of reasonable costs and expenses of the Benchmark
Transactions that are payable by Borrower, (iii) payment of reasonable costs
and expenses under the Benchmark TBA, (iv) to finance the working capital
requirements of Borrower to operate the Benchmark Stations after the Benchmark
Acquisition (other than the $3.9 million that Borrower will incur to acquire
the Rich Stations from any Person other than Lender (or if from Lender not as
part of this Agreement)), (v) to finance the working capital requirements of
Borrower under the Rich LMA, if applicable and (vi) to finance the acquisition
of the Rich Stations (each a "PERMITTED USE").
2.5 TAXES.
a. Any and all payments by, or on behalf of, Borrower hereunder or under
the Note or any other Loan Document, shall be made, in accordance with this
Section 2.5, free and clear of and without deduction for any and all present or
future Taxes. If Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under the Note or any other Loan
Document to Lender, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with
applicable law.
b. In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Document (hereinafter referred to as "OTHER TAXES").
c. Borrower shall indemnify and pay, within ten (10) days of demand
therefor, Lender for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.5) paid by Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted.
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d. Within thirty (30) days after the date of any such payment of Taxes or
Other Taxes, Borrower shall furnish to Lender, the original or a certified copy
of a receipt evidencing payment thereof.
SECTION 3.
CONDITIONS TO THE LOANS
3.1 CONDITIONS TO INITIAL LOAN. The agreement of Lender to enter into this
Agreement is subject to the satisfaction of the following conditions:
a. This Agreement, the Note, the Security Agreement, the Deed of Trust and
the Collateral Assignment of Contracts shall have been duly executed by
Borrower and delivered to Lender and the security interest granted by the
Borrower to Lender under the Security Documents shall constitute, to the extent
permitted by law, a first priority perfected security interest in all of the
assets of the Borrower other than the Excluded Assets;
b. Lender shall have received such other documents, financing statements,
instruments, certificates, opinions and agreements as Lender shall reasonably
request in connection with the transactions contemplated by this Agreement;
c. Lender shall have received a loan certificate signed by the Manager of
Borrower, substantially in the form of Exhibit E attached hereto, including a
certificate of incumbency with respect to each authorized signatory of
Borrower, together with appropriate attachments which shall include, without
limitation, the following (i) a copy of the Articles of Organization of
Borrower certified to be true, complete and correct by the State Corporation
Commission for the Commonwealth of Virginia, (ii) a true, complete and correct
copy of the Operating Agreement and (iii) certificates of good standing from
each jurisdiction in which Borrower does business;
d. (i) Lender shall have received executed or conformed copies of the
Related Documents and any amendments thereto as of the date hereof, the terms
and conditions of which shall be in all respects satisfactory to Lender, (ii)
the Related Documents shall be in full force and effect and
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no term or condition thereof shall have been amended, modified or waived after
the execution thereof, (iii) Borrower shall not have failed in any respect to
perform any obligation or covenant required by the Related Documents to be
performed or complied with by it on or before the date hereof (other than such
failures of which Lender has actual knowledge), and (iv) Lender shall have
received a Manager's Certificate from Borrower in form and substance
satisfactory to Lender to the effect set forth in clauses (i), (ii) and (iii)
above;
e. The Benchmark Acquisition FCC Consent shall have been obtained and shall
have become a Final Order;
f. Borrower shall deliver to Lender a Manager's Certificate stating that
(i) the Benchmark Acquisition has been duly approved, (ii) all actions
necessary by it to consummate the Benchmark Acquisition have been taken (other
than the payment of the purchase price which shall not exceed $14,500,000 and
the conveyance of the appropriate assets) and (iii) Borrower will proceed to
consummate the Benchmark Acquisition immediately upon the making of the initial
Loan on the Closing Date. The Benchmark Acquisition shall become effective in
accordance with the Benchmark Acquisition Documents without any variation
therefrom (other than immaterial variations), except as disclosed to Lender;
g. Borrower shall have delivered copies of any environmental audit reports
delivered in connection with the Benchmark Acquisition and all other
environmental information and reports (other than immaterial environmental
information and reports) received in connection therewith to Lender;
h. The assets of the Benchmark Stations shall be free and clear of all
Liens (other than Permitted Liens) and all assets and liabilities assumed by
Borrower pursuant to the Benchmark Acquisition Documents and the transactions
contemplated thereby shall be acceptable to Lender;
i. (i) No event which would constitute an Event of Default or Default
(after giving effect to the making of the Loan on the Closing Date) shall have
occurred and be continuing, (ii) the representations and warranties in Section
4 shall be true, correct and complete in all material respects, (iii) since
April 29, 1996, no Material
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Adverse Effect shall have occurred, (iv) no litigation, inquiry or other action
and no injunction or restraining order shall be pending or threatened with
respect to the making of the Loan hereunder or the transactions contemplated
hereby, and (v) Borrower shall have delivered to Lender a Manager's Certificate
to such effect, in form and substance reasonably satisfactory to Lender;
j. Borrower shall have delivered to Lender a Compliance Certificate, dated
as of the Closing Date and calculated to give effect to the funding of the Loan
under this Agreement, demonstrating compliance with the covenants set forth in
this Agreement as of the Closing Date; and
k. Lender shall have received originally executed copies of the favorable
written opinions of each of the counsel referred to in the Benchmark
Acquisition Documents, dated as of the Closing Date, and each such opinion of
counsel shall state that Lender is entitled to rely thereon.
l. Lender shall have received originally executed copies of one or more
favorable written opinions, dated as of the date hereof, of XxXxxxx Xxxx,
counsel for Borrower, in form and substance reasonably satisfactory to Lender
and its counsel.
m. Borrower shall have certified to Lender that the Loan will be for a
Permitted Use.
Lender agrees to act reasonably and diligently in exercising Lender's
rights under this Section 3.1.
3.2 CONDITIONS TO EACH OTHER LOAN. The agreement of Lender to make any other
Loans requested to be made by it on any date after the date hereof is subject
to the satisfaction of the following conditions as of the date such Loan is
requested to be made:
a. Each of the representations and warranties made by Borrower, in or
pursuant to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date, except to
the extent a representation or a warranty made by Borrower which specifically
relates to an earlier date;
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b. No Default or Event of Default shall have occurred and be continuing on
such date or after giving effect to the Loan requested to be made on such date;
and
c. There shall not have occurred any change, or development or event which
could reasonably be expected to have a Material Adverse Effect.
d. Borrower shall have certified to Lender that the Loan will be for a
Permitted Use.
SECTION 4.
BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
initial Loan on the Closing Date, Borrower represents and warrants to Lender
that, as of the date hereof (after giving effect to the Benchmark Acquisition)
the following statements are true, correct and complete:
4.1 EXISTENCE; COMPLIANCE WITH LAW. Borrower (a) is a limited liability company
duly formed, validly existing and in good standing under the laws of the
Commonwealth of Virginia and is duly qualified to do business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, (b) has the requisite
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to conduct its business as now, heretofore and proposed to be
conducted and to enter into the transactions contemplated by this Agreement,
(c) has all licenses, permits, consents or approvals from or by, and has made
all filings with, and has given all notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation and
conduct, (d) is in compliance with the Operating Agreement and its Articles of
Organization and (e) is in compliance with all rules and regulations of the FCC
and the terms of all FCC Licenses, and is in compliance in all material
respects with all other applicable provisions of law.
4.2 EXECUTIVE OFFICES; COLLATERAL LOCATIONS; CORPORATE OR OTHER NAMES. The
current locations of Borrower's executive
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office, principal place of business, corporate offices, all warehouses and
premises within which any Collateral is stored or located, and the locations of
all of Borrower's records concerning the Collateral are set forth in Schedule
4.2 and, except as set forth in Schedule 4.2, such locations have not changed
during the preceding 12 months. During the prior five (5) years, except as set
forth in Schedule 4.2, Borrower (or any of its predecessors in interest) has
not been known as or used any corporate, fictitious or trade name.
4.3 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution, delivery and
performance by Borrower of the Loan Documents and the creation of all Liens
provided for herein and therein (a) are within Borrower's power, (b) have been
duly authorized by all necessary action by Borrower under applicable law and
under the Operating Agreement and its Articles of Organization, (c) are not in
contravention of any provision of the Operating Agreement or Borrower's
Articles of Organization, (d) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality, (e) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Borrower is a party or
by which Borrower or any of its property is bound, (f) will not result in the
creation or imposition of any Lien upon any of the property of Borrower other
than those in favor of Lender, all pursuant to the Loan Documents, and (g) do
not require the consent or approval of any Governmental Authority or any other
Person, all of which will have been duly obtained, made or complied with before
the date hereof and which will be in full force and effect as of the date
hereof. At or prior to the date hereof, each of the Loan Documents to which
Borrower is a party shall have been duly executed and delivered for the benefit
of or on behalf of Borrower, and each shall then constitute a legal, valid and
binding obligation of Borrower to the extent it is a party thereto, enforceable
against Borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization or
other similar laws affecting creditors' rights and to equitable principles of
general applicability.
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4.4 FINANCIAL STATEMENTS AND PROJECTIONS. Borrower has delivered the Financial
Statements for the period ended October 31, 1996 and projections identified in
Schedule 4.4.
4.5 CONDUCT OF BUSINESS; MATERIAL CONTRACTS. Borrower is engaged only in the
businesses permitted to be engaged in pursuant to Section 6.9 and is conducting
its business in accordance with the provisions of Section 6.9. Borrower holds
all licenses (including, without limitation, FCC Licenses), permits,
franchises, certificates of authority, or any waivers of the foregoing that are
necessary to permit it to conduct its businesses as now conducted or to be
conducted and to hold and operate its properties. All such licenses, permits,
franchises, certificates of authority, and waivers are valid and in full force
and effect. Schedule 4.5 contains a complete list, as of the date hereof, of
each contract, agreement, arrangement or understanding to which Borrower is a
party or any of its assets are bound, except for those time sales agreements
which (i) are on Borrower's standard form, (ii) are terminable by Borrower
within thirteen (13) weeks or less notice without penalty, and (iii) provide
for annual payments of fifty thousand dollars ($50,000) or less (each a
"MATERIAL CONTRACT"); provided, Lender acknowledges that the tower for the
WKHK(FM) radio station is not owned by the Rich Partnerships.
4.6 SUBSIDIARIES. Borrower has no Subsidiaries.
4.7 FCC AND STATION MATTERS. Upon and following consummation of each
Acquisition, each of the following representations and warranties will be true,
correct and complete in all respects (other than such inaccuracies which are
immaterial):
(i) Schedule 4.7(a) annexed hereto correctly describes each of the
radio broadcast stations owned by Borrower.
(ii) Borrower has duly filed in a timely manner all filings which are
required to be filed by Borrower under the Communications Act and is in all
respects in compliance with the Communications Act, including, without
limitation, the rules and regulations of the FCC relating to the broadcast
of radio signals. Borrower owns or has valid leasehold interests in all
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property necessary to operate in compliance with the Communications Act the
Stations Borrower has acquired in such Acquisition.
(iii) Schedule 4.7(b) annexed hereto correctly sets forth each of the
LMAs for Borrower and sets forth the termination date, if any, of each such
agreement and the amounts payable or receivable thereunder. Each such LMA
is in full force and effect and Borrower is in substantial compliance
therewith. Other than as contemplated in connection with the exercise by
Borrower of any option to acquire any radio station which is the subject of
such LMA, no event has occurred which permits, or after notice or lapse of
time would permit, the early termination of any such LMA, and Borrower has
no knowledge of any fact or circumstance which is likely to result in the
non-renewal of any LMA.
4.8 REAL PROPERTY. Borrower does not own any interest in real property other
than the real property identified in Schedule 4.8.
4.9 PERSONAL PROPERTY LIENS. Upon the filing of Uniform Commercial Code
financing statements naming Borrower as "debtor", naming Lender as "secured
party" and describing the Collateral (as defined in the Security Agreement) in
the filing offices set forth in Schedule 4.9 hereto, the security interests in
such Collateral granted to Lender will, to the extent a security interest in
such Collateral may be perfected by filing Uniform Commercial Code financing
statements, constitute valid and perfected security interests therein prior to
all other Liens. The Collateral has been duly and validly pledged to Lender
pursuant to the Security Agreement and the Deed of Trust and the Security
Agreement and the Deed of Trust create in favor of Lender a valid, perfected
first priority security interest in the Collateral as security for the
Obligations subject to no equal or prior security interest.
4.10 NO MATERIAL ADVERSE CHANGE: NO RESTRICTED PAYMENTS. Since April 29, 1996,
no event or change has occurred that has caused or evidences, either in any
case or in the aggregate, a Material Adverse Effect. Except as set forth on
Schedule 4.10, Borrower has not directly or indirectly
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declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Payment or agreed to do so.
4.11 TITLE TO PROPERTIES: LIENS. Borrower has (a) good, sufficient and legal
title to (in the case of fee interests in real property), (b) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
and (c) good title to (in the case of all other personal property), all of its
properties and assets reflected in the financial statements referred to in
Section 4.4, except for assets disposed of since the date of such financial
statements in the ordinary course of business. Except for Permitted Liens, all
such properties and assets are free and clear of Liens.
4.12 LITIGATION. There are no actions, suits, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of Borrower)
at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, including, without limitation, the FCC, pending or, to the
knowledge of Borrower, threatened against or affecting Borrower or any property
of Borrower other than those listed on Schedule 4.12.
4.13 PAYMENT OF TAXES. Except to the extent permitted by Section 5.3, all tax
returns and reports of Borrower required to be filed by, or on behalf of,
Borrower have been timely filed, and all taxes, assessments, fees and other
governmental charges upon Borrower and upon its properties, assets, income,
businesses and franchises which are due and payable have been paid when due and
payable. There is no proposed tax assessment against Borrower or any of its
Members which is not being actively contested by Borrower or such Member in
good faith and by appropriate proceedings.
4.14 RESTRICTIONS; NO DEFAULT. No Contractual Obligation, lease, agreement,
instrument or other document to which Borrower is a party or by which it or any
of its properties or assets is bound or affected and no provision of the
Operating Agreement, Borrower's Articles of Organization, applicable law or
governmental regulation has resulted in or will result in a Material Adverse
Effect. Borrower is not subject to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state,
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municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Borrower is not in default and, to Borrower's knowledge, no third party is in
default, under or with respect to any Contractual Obligation, lease, agreement,
instrument or other document to which Borrower is a party, or any final
judgment, writ, injunction, decree, rule or regulation of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, by which Borrower or
any of its properties or assets is bound, which default could result in a loss
or liability to Borrower in excess of $100,000. No Default has occurred and is
continuing.
4.15 GOVERNMENTAL REGULATION. Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any
other federal or state statute or regulation which may limit its ability to
incur Indebtedness or which may otherwise render all or any portion of the
Obligations unenforceable.
4.16 SECURITIES ACTIVITIES. Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock.
4.17 EMPLOYEE BENEFIT PLANS.
a. Borrower and each of its ERISA Affiliates are in compliance with all
applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit
Plan, and have performed all their obligations under each Employee Benefit
Plan.
b. No ERISA Event has occurred or is reasonably expected to occur.
c. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of
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insurance or otherwise) for any retired or former employees of Borrower or any
of its ERISA Affiliates.
d. As of the most recent valuation date for any Pension Plan, the amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $25,000.
4.18 ENVIRONMENTAL MATTERS. Except for routine operations in the ordinary
course of business in compliance with applicable permits issued by a
Governmental Authority, each Facility is free of any Hazardous Material and
Borrower has not caused or suffered to occur any Release at, under, above or
within any Facility. There are no existing or potential Environmental
Liabilities and Costs of Borrower of which Borrower, after due inquiry, has
knowledge, which could result in liability to Borrower in excess of $100,000.
Except as set forth on Schedule 4.18, Borrower is not involved in operations
which could lead to the imposition of any material Environmental Liabilities
and Costs on it, or any owner of any premises which it occupies, or any Lien
securing the same under any Environmental Law.
4.19 VENTURES AND OUTSTANDING STOCK. Borrower is not engaged in any Joint
Venture with any other Person. Except as set forth in Schedule 4.19, there are
no outstanding rights to purchase options, warrants or similar rights or
agreements pursuant to which Borrower or any Member may be required to issue,
sell or purchase any Membership Interests, Stock or other equity security.
Schedule 4.19 sets forth, as of the date hereof (and as of the Benchmark Loan
date, if applicable), the name and description of each of Borrower's Members,
the percentage interest of each such Member in the profits of Borrower and the
percentage voting rights of each such Member in Borrower.
4.20 LABOR MATTERS. There are no strikes or other labor disputes against
Borrower that are pending or, to Borrower's knowledge, threatened. Hours worked
by, and payment made to, employees of Borrower have not been in violation of
the Fair Labor Standards Act or any other material applicable law dealing with
such matters. All payments due from Borrower on account of employee health and
welfare insurance have been paid or accrued as a liability on the books of
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Borrower. Except as set forth in Schedule 4.20, Borrower has no obligation
under any collective bargaining agreement, management agreement, or any
employment agreement, and a correct and complete copy of each agreement listed
on Schedule 4.20 has been provided to Lender. There is no organizing activity
involving Borrower pending or, to Borrower's knowledge, threatened by any labor
union or group of employees.
4.21 INSURANCE. Borrower maintains, with financially sound and reputable
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by corporations of established
reputation engaged in the same or similar business of such types and in such
amounts as are customarily carried under similar circumstances by such other
corporations. Attached as Schedule 4.21 hereto is a complete and accurate
description of all policies of insurance of Borrower that will be in effect as
of the date hereof (and as of the Benchmark Loan Date, as applicable).
4.22 DISCLOSURE. No information contained in this Agreement, the other Loan
Documents, the Financial Statements or any written statement furnished by or on
behalf of Borrower, any Member of Borrower, or any Affiliate thereof pursuant
to the terms of this Agreement or any other Loan Document, which has previously
been delivered to Lender, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. With respect to all business plans and other forecasts and
projections furnished by, or on behalf of, Borrower and made available to
Lender relating to the financial condition, operations, business, properties or
prospects of Borrower (a) all facts stated as such therein are true and
complete, (b) all facts upon which the forecasts or projections therein
contained are based are true and complete in all material respects and no
material fact was omitted therefrom, (c) all assumptions made on that basis are
reasonable under the circumstances and are disclosed therein, and (d) the
forecasts or projections are reasonably based on those facts and assumptions.
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SECTION 5.
BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of the Loans and
other Obligations (or until the exercise of the Conversion Option), unless
Lender shall otherwise consent in writing, Borrower shall perform all covenants
in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Borrower will maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with
GAAP. Borrower will deliver to Lender:
(i) as soon as available and in any event within 30 days after the
end of each month ending after the date hereof, copies of Borrower's
Financial Statements for such month, together with the. monthly sales
reports and, if applicable, cash flow for such month of each Station as
furnished to Borrower by each Station. In addition, Borrower shall cause
the accountants who prepared any audited or unaudited Financial Statements
relating to Borrower (or the Benchmark Stations) to consent to the use of
such Financial Statements by Lender in its filings with the Securities and
Exchange Commission as well as filing such auditor's consents with any
such filing with the Securities and Exchange Commission. Concurrently with
the delivery of such Financial Statements, Borrower shall deliver to
Lender a certificate of Borrower's chief financial officer certifying that
no Default under the Loan Documents has occurred and is continuing or
specifying each such Default;
(ii) promptly upon their becoming available, copies of all
information required to be filed by Borrower with the FCC and all press
releases and other statements made available generally by Borrower to the
public and all material FCC notices and correspondence received by
Borrower;
(iii) promptly upon any officer of Borrower obtaining knowledge of
any condition or event that constitutes an Event of Default or Default, or
becoming aware that Lender has given any notice or taken any
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other action with respect to a claimed Event of Default or Default, a
Manager's Certificate specifying the nature and period of existence of
such event, change, Event of Default, Default, or condition, and what
action Borrower has taken, is taking and proposes to take with respect
thereto;
(iv) promptly upon their becoming available, all copies of subscribed
Arbitron rating reports with respect to the Stations, in a form agreed
upon by Borrower and Lender; and
(v) with reasonable promptness, such other information and data with
respect to Borrower or any of its Affiliates as from time to time may be
reasonably requested by Lender.
5.2 CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. Borrower will at all times (a)
preserve and keep in full force and effect its legal existence and all rights,
licenses and other authorizations, and franchises material to its business, (b)
comply with all provisions of all franchises and licenses, all FCC Licenses,
and all material agreements and leases to which it is a party, and shall suffer
no loss or forfeiture thereof or thereunder and (c) comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (other than non-compliances which are immaterial).
5.3 PAYMENT OF TAXES AND CLAIMS. Borrower will, and will cause each of its
Members to, pay all taxes, assessments and other governmental charges imposed
upon it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all claims,
including, without limitation, claims for labor, services, materials and
supplies (other than immaterial claims) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, before the time when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid if being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
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5.4 MAINTENANCE OF PROPERTIES; INSURANCE. Borrower will maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business of Borrower
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof. Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business against loss or damage of the kinds
customarily carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses. Each such policy of
insurance shall name Lender as the loss payee and additional insured, as
applicable, thereunder, and shall provide for at least 30 days prior written
notice to Lender of any modification or cancellation of such policy.
5.5 TAX TREATMENT. Borrower will take all reasonably necessary actions to
ensure that Borrower is not taxable as a corporation for Federal income tax
purposes and will take all reasonable actions to ensure that Borrower is not
taxable as a corporation under any applicable law of any state or political
subdivision thereof (other than any state or political subdivision which taxes
all limited liability companies as corporations).
5.6 BOOKS AND RECORDS. Borrower shall keep adequate records and books of
account with respect to its business activities, in which proper entries,
reflecting all of its financial transactions, are made in accordance with GAAP
and on a basis consistent with the Financial Statements.
5.7 LITIGATION. Borrower shall notify Lender in writing, promptly upon learning
thereof, of any litigation, Claim or other action commenced or threatened
against Borrower, and of the institution against Borrower of any suit or
administrative proceeding which (a) may involve an amount in excess of $100,000
individually or in the aggregate or (b) could have or result in a Material
Adverse Effect if adversely determined.
5.8 ENVIRONMENTAL LAWS. Borrower shall comply with all Environmental Laws.
Borrower shall promptly take any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or Release
of any Hazardous Materials on, under or about any Facility
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in order to comply with all applicable Environmental Laws and Governmental
Authorizations, except when, and only to the extent that, Borrower's liability
for such presence, storage, use, disposal, transportation or discharge of any
Hazardous Materials is being contested in good faith by Borrower.
5.9 INDEMNITY. Borrower shall indemnify and hold Lender and its Affiliates,
officers, directors, employees, attorneys and agents (each, an "INDEMNIFIED
PERSON"), harmless from and against any and all suits, actions, costs, fines,
deficiencies, penalties, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees and disbursements and other
costs of investigations or defense, including those incurred upon any appeal)
(each, a "CLAIM") which may be instituted or asserted against or incurred by
such Indemnified Person as the result of credit having been extended under this
Agreement or any other Loan Document or otherwise arising in connection with
the transactions contemplated hereunder and thereunder, including any and all
Environmental Liabilities and Costs and regardless of whether the Indemnified
Person is a party to such Claim; provided, that Borrower shall not be liable
for any indemnification to such Indemnified Person with respect to any portion
of any such Claim which results solely from such Indemnified Person's gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction; provided, further, that no member of Borrower shall
have any personal liability to Lender except as provided in the Master
Agreement and that Lender shall have no right to attach, liquidate or otherwise
take any interest in the Excluded Assets or their proceeds. NEITHER LENDER NOR
ANY OTHER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY
HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR
ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS
A RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS OR OTHERWISE
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED THEREBY.
5.10 ACCESS. Borrower shall, upon reasonable advance notice and during normal
business hours (unless a Default shall have occurred and be continuing, in
which event no notice shall be required and Lender shall have such access at
any
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and all times) (a) provide access to Lender and any of its officers, employees
and agents, as frequently as Lender determines to be appropriate to the
properties and facilities of Borrower, (b) permit Lender and any of its
officers, employees and agents to inspect, audit and make extracts from all of
Borrower's records, files and books of account, and (c) permit Lender to
conduct audits to inspect, review and evaluate the Collateral, and Borrower
agrees to render to Lender at Borrower's cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto. Borrower
shall make available to Lender and its counsel, as quickly as practicable under
the circumstances, originals or copies of all books, records, Member minutes,
contracts, insurance policies, environmental audits, business plans, files,
financial statements (actual and pro forma), filings with federal, state and
local regulatory agencies, and other instruments and documents which Lender may
request. Borrower shall deliver any document or instrument reasonably necessary
for Lender, as it may from time to time request, to obtain records from any
service bureau or other Person which maintains records for Borrower, and shall
maintain duplicate records or supporting documentation on media, including
computer tapes and discs owned by Borrower. Borrower agrees to make available
to Lender upon its reasonable request information and records prepared by its
independent certified public accountants and its banking and other financial
institutions.
5.11 FCC CONVERSION CONSENT FILING. Lender and Borrower shall use their
reasonable best efforts (i) to file with the FCC, within twelve (12) days
following the date of this Agreement, the requisite applications to obtain the
Conversion Consent and (ii) to obtain the prompt grant of such applications.
SECTION 6.
BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that until payment in full of the Loan and
other Obligations (or until the exercise of the Conversion Option), unless
Lender shall otherwise consent in writing or unless otherwise permitted under
the Master Agreement, Borrower shall perform all covenants in this Section 6.
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6.1 INDEBTEDNESS. Borrower shall not directly or indirectly, create, incur,
assume or guaranty, or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness, except:
(i) the Obligations;
(ii) Indebtedness existing on the date hereof and disclosed on
Schedule 6.1;
(iii) Contingent Obligations permitted by Section 6.4;
(iv) Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of Section 6.7; and
(v) Liabilities related to the Excluded Assets.
6.2 LIENS. Borrower shall not directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Borrower whether now owned or hereafter acquired, or any income
or profits therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien with
respect to any such property, asset, income or profits under the Uniform
Commercial Code of any State or under any similar recording or notice statute,
except for the following:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Security Documents;
(iii) Liens securing Capital Leases permitted under Section 6.7;
(iv) Liens existing on the date hereof and disclosed on Schedule 6.2;
and
(v) Liens related to the Excluded Assets.
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6.3 INVESTMENTS; JOINT VENTURES. Borrower shall not directly or indirectly,
make or own any Investment in any Person, including any Joint Venture, except:
(i) Investments in Cash Equivalents;
(ii) as it relates to the Limited Partnership Interests; and
(iii) Investments contemplated by the Acquisition Documents in
connection with any Acquisition.
6.4 CONTINGENT OBLIGATIONS. Borrower shall not directly or indirectly, create
or become or remain liable with respect to any Contingent Obligation, except:
(i) Contingent Obligations with respect to transactions permitted
pursuant to Section 6.6 (including, without limitation, any escrow deposits
made in connection with the Acquisition);
(ii) Other Contingent Obligations existing as of the date hereof as
set forth in Schedule 6.4; and
(iii) As related to the Excluded Assets.
6.5 RESTRICTED PAYMENTS. Borrower shall not make any Restricted Payment to any
Person; provided, however, so long as no Event of Default shall have occurred
and be continuing, (i) Borrower may from time to time make distributions to
each Member for payment of such Member's federal, state and local income tax
liability in respect of the net income of Borrower in accordance with the
Operating Agreement and (ii) Borrower may distribute to its Members at any time
distributions from, or proceeds related to, the Excluded Assets.
6.6 RESTRICTION ON FUNDAMENTAL CHANGES: ASSET SALES AND ACQUISITIONS. Until
such time Borrower has repaid in full all of the Loans or upon the occurrence
of the Conversion Event, Borrower shall not alter its corporate, capital or
legal structure or amend or modify in any respect the Operating Agreement or
its Articles of Organization or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, sub-
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lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or fixed assets,
whether now owned or hereafter acquired (other than in the ordinary course of
business), or acquire by purchase or otherwise all or substantially all the
business, property or fixed assets of, or Stock or other evidence of beneficial
ownership of, any Person or any division or line of business of any Person or
enter into any local management agreement, local marketing agreement, time
brokerage agreement or similar arrangement with respect to any broadcast
properties (including, without limitation, the Stations) except (i) in
connection with any Acquisition and (ii) Investments permitted pursuant to
Section 6.3.
6.7 RESTRICTION ON LEASES. Except as set forth in Schedule 6.7, Borrower shall
not become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any
Operating Lease or Capital Lease.
6.8 TRANSACTIONS WITH AFFILIATES. Borrower shall not directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of Borrower on terms that are less favorable to
Borrower than those that might be obtained at the time from Persons who are not
an Affiliate.
6.9 CONDUCT OF BUSINESS. From and after the date hereof, Borrower shall not
engage in any business other than (i) the business engaged in by Borrower on
the date hereof, (ii) owning and operating the Benchmark Stations and holding
of the FCC Licenses for the Benchmark Stations, (iii) performing under the Rich
LMA, and (iv) any other activities agreed to by the parties hereto.
6.10 AMENDMENTS OR WAIVERS OF RELATED DOCUMENTS. Borrower shall not agree to
any amendment to, or waive any of its rights under, any of the Related
Documents, including without limitation, without obtaining the written consent
of Lender to such amendment or waiver.
6.11 ERISA. Neither Borrower nor any ERISA Affiliate shall, without Lender's
prior written consent, acquire any new ERISA Affiliate that maintains or has an
obligation to
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contribute to a Pension Plan that has either an "accumulated funding
deficiency," as defined in Section 302 of ERISA, or any "unfunded vested
benefits," as defined in Section 4006(a)(3)(E)(iii) of ERISA in the case of any
Pension Plan other than a Multiemployer Plan and in Section 4211 of ERISA in
the case of a Multiemployer Plan. Additionally, neither Borrower nor any ERISA
Affiliate shall (a) terminate any Title IV Plan where such termination could
reasonably be anticipated to result in liability to Borrower, (b) permit any
accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA, to be
incurred with respect to any Pension Plan, (c) fail to make any contributions
or fail to pay any amounts due and owing as required by the terms of any Plan
before such contributions or amounts become delinquent, (d) make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan; (e) fail to provide Lender with copies of any Plan
documents or governmental reports or filings, if reasonably requested by
Lender, (f) fail to make any contribution or pay any amount due as required by
Internal Revenue Code Section 412 or Section 302 of ERISA, (g) allow any ERISA
Event or event described in Section 4062(e) of ERISA to occur with respect to
any Title IV Plan, or (h) with respect to all Retiree Welfare Plans, allow the
present value of future anticipated expenses to exceed $100,000 or fail to
provide copies of such projections to Lender.
6.12 HAZARDOUS MATERIALS. Except as set forth in Schedule 4.18, Borrower shall
not, and shall not permit any Person within its control (a) to cause a Release
of Hazardous Material on, under, in or about any Facility, (b) to use, store,
generate, treat or dispose of Hazardous Materials, except in compliance with
the Environmental Laws, or (c) to transport any Hazardous Materials to or from
any Facility, except in compliance with the Environmental Laws.
6.13 SALE-LEASEBACKS. Borrower shall not engage in any sale-leaseback or
similar transaction involving any of its property or assets.
6.14 FISCAL YEAR. Borrower shall not shall change its Fiscal Year end from
December 31 without the consent of Lender.
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SECTION 7.
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "EVENT OF
DEFAULT" hereunder:
a. Borrower shall fail to make any payment in respect of any Obligations
hereunder or under any of the other Loan Documents when due and payable or
declared due and payable in accordance with the terms hereof or of the other
Loan Documents;
b. Borrower shall fail or neglect to perform, keep or observe any of the
provisions of Section 2, Section 5 or Section 6 which is likely to result in a
Material Adverse Effect;
c. Any representation or warranty herein or in any Loan Document or in any
written statement pursuant thereto or hereto, made by any Person (other than
Lender) any report, financial statement or certificate made or delivered to
Lender by Borrower shall be untrue or incorrect in any material respect as of
the date when made;
d. A case or proceeding shall have been commenced against Borrower or any
Member, as the case may be, in a court having competent jurisdiction seeking a
decree or order (i) under the Bankruptcy Code, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
of Borrower or Member or of any substantial part of its properties, or (iii)
ordering the winding up, dissolution or liquidation of the affairs of Borrower
or such Member and such case or proceeding shall remain undismissed or unstayed
for sixty (60) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding;
e. Borrower or any Member (i) shall file a petition seeking relief under
the Bankruptcy Code, or an application seeking dissolution of Borrower under
any applicable federal, state or foreign bankruptcy or other similar law, (ii)
shall consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
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receiver, liquidator, assignee, trustee or sequestrator (or similar official)
of Borrower or any Member or of any substantial part of Borrower's or such
Member's properties, (iii) shall fail generally to pay its debts as such debts
become due, or (iv) shall take any corporate action in furtherance of any such
action;
f. Any material provision of any Loan Document shall for any reason cease
to be valid, binding and enforceable in accordance with its terms or Borrower
shall so state in writing, or any Lien created under any Collateral Document
shall cease to be a valid and perfected Lien having the first priority security
interest in any of the Collateral purported to be covered thereby, provided
such events are not caused by Lender's acts or omission;
g. There shall occur a Change of Control (other than pursuant to the Master
Agreement);
h. Any FCC License (other than non-material auxiliary service licenses)
relating to a Station shall be canceled, revoked, materially and adversely
modified, terminated or finally denied renewal for any reason;
i. (i) Borrower shall not receive (A) the Rich Acquisition FCC Consent
before the Terminal Date, or Borrower shall fail to comply with the Rich
Acquisition FCC Consent, or the Rich Acquisition FCC Consent shall be
rescinded, shall no longer be in full force and effect, or the effectiveness
thereof shall have been stayed by judicial proceedings, or the Rich Acquisition
FCC Consent shall not have become a Final Order before the Terminal Date, or
(B) any other required consents to the consummation of the Rich Acquisition
before the Terminal Date, including any required consent of the FTC (which may
be evidenced by the expiration of any premerger notification waiting period),
(ii) Lender shall not receive the Conversion Consent before the Terminal Date,
or (iii) the Rich Acquisition shall not be completed before the Terminal Date.
j. Any breach or default (other than immaterial breaches or defaults) by
any party to the Purchase and Sale Agreement (as defined in the Master
Agreement) shall have occurred.
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7.2 REMEDIES. Upon the occurrence of any Event of Default described in Section
7.1(d) or (e), the unpaid principal amount of the Loan and all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by Borrower. Upon the occurrence and during the
continuation of any other Event of Default, Lender may, at its option, by
written notice to Borrower, declare all or any portion of the amounts described
in the preceding sentence to be, and the same shall forthwith become,
immediately due and payable. Additionally, upon the occurrence of an Event of
Default, Lender shall have all the rights and remedies granted to it under any
Loan Document or under applicable law, including (subject to applicable FCC
requirements, if any) all remedies of a secured party under the Uniform
Commercial Code in any applicable jurisdiction. Notwithstanding the rights of
Lender as set forth herein, Lender agrees that it shall not exercise its right
to foreclose on any assets of Borrower until the Terminal Date other than in
the event where Borrower shall have willfully and knowingly breached or caused
an Event of Default under Section 7.1(b) or 7.1(c) or shall have intentionally
and in bad faith attempted to prevent the consummation of any of the
transactions contemplated in this Agreement.
7.3 EVOLUTION OF REMEDIES AND STANDARDS. The parties contemplate that Borrower
may enter into the Rich LMA. Upon Borrower entering into the Rich LMA, Lender
agrees that the standard for a Material Adverse Effect shall be related to all
of the Stations as a whole.
SECTION 8.
CONVERSION OF NOTE
8.1 CONVERSION. Simultaneously with the occurrence of the Conversion Event (the
"CONVERSION DATE"), all Loan amounts, other than the Excluded Loan Amounts,
outstanding hereunder (together with the contribution of the radio station
assets under the SFX Contribution Agreement) shall automatically convert into
Membership Interests in Borrower representing 96% of the Percentage Interest
(as defined in the Amended and Restated Operating Agreement) in Borrower. Any
Excluded Loan Amounts outstanding on the Conversion Date shall remain
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as an intercompany loan on the books of Borrower after the Conversion Date with
commercially reasonably terms of repayment. Notwithstanding anything in this
Agreement to the contrary, no such conversion into Membership Interests shall
occur unless and until the Conversion Consent shall (i) have been obtained and
(ii) be in full force and effect at the time of such conversion.
8.2 CONVERSION DATE PROCEDURES. On the Conversion Date, Lender will surrender
the Note to Borrower and furnish appropriate endorsements or transfer documents
as required by Borrower; provided, in the event there shall be any Excluded
Loan Amounts outstanding on the Conversion Date, Borrower shall execute a new
promissory note in favor of Lender in such principal amount equal to the
Excluded Loan Amounts which note shall bear interest at Prime plus 1% and which
principal shall be amortized on commercially reasonable terms. On the
Conversion Date, Borrower shall issue in Lender's name that percentage of
Membership Interest as may be determined in accordance with the Amended and
Restated Operating Agreement substantially in the form of Exhibit F hereto and,
if such Membership Interests are certificated, deliver to Lender such
certificates evidencing the Membership Interests. Additionally, on the
Conversion Date, Borrower and Lender shall, and Borrower shall cause its
Members to, execute such Amended and Restated Operating Agreement.
8.3 TAXES ON CONVERSION. On the Conversion Date, Borrower shall pay any
documentary, stamp or similar issue or transfer tax due on the issue on its
Membership Interests to Lender upon the conversion.
8.4 TERMINATION OF LOAN DOCUMENTS. Upon the completion of all matters set forth
in Sections 8.2 and 8.3 above, this Agreement and the other Loan Documents and
all of Borrower's obligations hereunder and thereunder (other than those
obligations which expressly survive the termination of this Agreement), shall
terminate, and Lender shall take such actions, at Borrower's expense, that are
reasonably necessary to release Lender's Liens on and security interest in, the
Collateral.
8.5 TERMINATION OF CONVERSION RIGHT. On and after the Terminal Date: (i) Lender
shall have no further right to convert the Note to any equity interest in
Borrower and (ii)
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Lender agrees to cooperate in good faith with Borrower until the Maturity Date
in Borrower's solicitation of debt or equity to fund the transactions
contemplated in the Acquisition Documents and the extinguishment of the Note.
SECTION 9.
MISCELLANEOUS
9.1 EXPENSES. Subject to Section 3(a) of the Master Agreement, Borrower agrees
to pay promptly all the reasonable costs and expenses of Lender (including the
reasonable fees, expenses and disbursements of counsel to Lender) in connection
with the negotiation, preparation, execution and administration of the Loan
Documents and the Loan and any consents, amendments, waivers or other
modifications hereto or thereto and any other documents or matters requested by
Borrower; provided, that any and all costs and expenses must be reasonable and
Lender has loaned the amounts necessary to fund these costs and expenses under
the Note. Borrower agrees to pay promptly, after the occurrence of an Event of
Default, all reasonable costs and expenses, including attorneys' fees
(including allocated costs of internal counsel) and reasonable costs of
settlement, incurred by Lender in enforcing any Obligations of or in collecting
any payments due from Borrower hereunder or under the other Loan Documents by
reason of such Event of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings;
provided, all such amounts shall become part of the Note and will be due and
payable in accordance with Sections 2.2 and 2.3.
9.2 AMENDMENTS AND WAIVERS. No amendment, modification, termination or waiver
of any provision of this Agreement or of the Note, or consent to any departure
by Borrower therefrom, shall in any event be effective without the written
concurrence of Lender.
9.3 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of an
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Event of Default or Default if such action is taken or condition exists.
9.4 NOTICES. Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered
in person or by courier service, upon receipt of telefacsimile or telex if
received by 5 p.m. (local time) on a Business Day (or if not received by such
time on a Business Day, the telefacsimile or telex shall be deemed received on
the next Business Day), or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed; provided that
notices to Lender shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth below (or shall
be such other address as may be designated by such Person in a written notice
delivered to the other party hereto):
If to Borrower: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
If to Lender: SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
9.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
a. All representations, warranties and agreements made herein shall survive
the execution and delivery of this Agreement and the making of the Loan
hereunder.
b. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower set forth in Sections 2.5, 5.9 and 9.1
shall survive the payment of the Loans and the termination of this Agreement.
9.6 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay
on the part of Lender in the exercise of any power, right or privilege
hereunder or under any other
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Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
9.7 MARSHALLING; PAYMENTS SET ASIDE. Lender shall not be under any obligation
to marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that Borrower makes a
payment or payments to Lender or Lender shall enforce any security interests or
exercise any right of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
9.8 SEVERABILITY. In case any provision in or obligation under this Agreement
or the Note shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
9.9 HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CONFLICTS OR CHOICE OF LAWS
PRINCIPLES THEREOF.
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9.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lender. Neither
Borrower's rights nor obligations hereunder nor any interest therein may be
assigned or delegated by Borrower without the prior written consent of Lender.
9.12 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST Borrower ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF VIRGINIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT Borrower ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION.
Borrower hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to Borrower at its address provided in Section 9.4, such service
being hereby acknowledged by Borrower to be sufficient for personal
jurisdiction in any action against Borrower in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Lender to bring proceedings against Borrower in the courts
of any other jurisdiction.
9.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES
TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already
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relied on this waiver in entering into this Agreement, and that each will
continue to rely on this waiver in their related future dealings. Each party
hereto further warrants and represents that it has reviewed this waiver with
its legal counsel and that it knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
9.14 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
This Agreement shall become effective upon the execution of a counterpart
hereof by each of the parties hereto and receipt by Borrower and Lender of
written or telephonic notification of such execution and authorization of
delivery thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers hereunto duly
authorized as of the date first written above.
BORROWER: ABS COMMUNICATIONS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
LENDER: SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title:
53
KAB CONTRIBUTION AGREEMENT
THIS KAB CONTRIBUTION AGREEMENT is made and entered into as of the
17th day of December, 1996, by and among XXXXXXX X. XXXXX ("KAB"), ABS
COMMUNICATIONS, L.L.C., a Virginia limited liability company (the "Company")
and for certain limited purposes as specified herein, ABS COMMUNICATIONS
INCORPORATED ("ABS").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, ABS Richmond Partners, L.P., a Virginia limited partnership
("RICH-I"), owns and operates radio station WKHK-FM in Colonial Heights,
Virginia ("WKHK") and ABS Richmond Partners II, L.P., a Virginia limited
partnership ("RICH-II" and, together with RICH-I, the "Partnerships"), owns and
operates radio station WVGO-FM in Crewe, Virginia ("WVGO" and, together with
WKHK, the "Stations"), each pursuant to licenses issued by the Federal
Communications Commission (together with any successor agency or body, the
"FCC"); and
WHEREAS, KAB is the owner of a 24.5% limited partnership interest in
RICH-I and a 24.5% limited partnership interest in RICH-II (collectively, the
"KAB Partnership Interests"); and
WHEREAS, KAB desires to contribute such portions of the KAB
Partnership Interests representing $1,700,000 in equity and $5,100,000 in gross
value (the "Contributed Interests") to the Company in exchange for an increase
in his capital interest in the Company; and
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions contained herein, and intending to be fully bound hereby, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. When used in this Agreement, the following
words or phrases shall have the following meanings:
"ABS" shall mean ABS Communications Incorporated, a Virginia
corporation.
"Agreement" shall mean this Contribution Agreement, as it may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"Closing" shall have the meaning assigned to such term in Section 3.1
of this Agreement.
"Closing Date" shall mean the date on which the Closing shall be
deemed to occur and shall be the date of this Agreement.
"Communications Act" shall mean the Communications Act of 1934, as
amended, including as amended by the Telecommunications Act of 1996, and the
rules, regulations and policies promulgated thereunder.
"Company" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"Contracts" shall mean all contracts, agreements, or binding
commitments or arrangements, written or oral, to which (i) either Partnership
is a party or by which any of the Partnership Assets may be bound or (ii) KAB
is a party and in which such contract, agreement or arrangement relates to the
Partnership Assets.
"Contributed Interests" shall have the meaning assigned to such term
in the recitals to this Agreement.
"Disclosure Schedule" shall mean the separate Disclosure Schedule
attached to this Agreement regarding certain representations and warranties
made by KAB as further described in Article V of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"FCC" shall have the meaning assigned to such term in the recitals to
this Agreement.
"FCC Licenses" shall mean the main transmitter licenses for the
Stations together with each of the other consents, rights, licenses, permits
and authorizations issued or granted by the FCC for the operation of or used in
connection with the ownership or operation of the Stations, together with any
renewals or extensions thereof.
-2-
"Financial Statements" shall have the meaning assigned to such term in
Section 5.16 of this Agreement.
"Governmental Authority" shall mean a federal, state or local court,
legislature, governmental agency, commission or regulatory or administrative
authority or instrumentality.
"KAB" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"KAB Partnership Interests" shall have the meaning assigned to such
term in the recitals to this Agreement.
"Law" shall mean applicable common law and any statute, ordinance,
code or other law, rule, permit, permit condition, regulation, order, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority or court.
"Lien" shall mean any security agreement or financing statement filed
with an appropriate Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for security
purposes, any lien, mortgage, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including, without limitation, reservations,
rights of entry, possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, leases and licenses) of any kind, which (i) creates
or confers an interest in property to secure payment or performance of a
liability, obligation or claim, or which retains or reserves such an interest
for such purpose; (ii) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to sell or otherwise dispose of, or otherwise
results or may result in any Person acquiring, any property or interest
therein; (iii) restricts the transfer of, or the exercise of any rights or the
enjoyment of any benefits arising by reason of ownership of, any property; or
(iv) otherwise constitutes an interest in or claim against property whether or
not arising pursuant to any Law, FCC License or Contract.
"Master Agreement" shall mean that certain Master Richmond Station
Group Agreement, dated as of even date herewith by and among the Company, KAB
and the other signatories party thereto.
-3-
"Operating Agreement" shall mean that certain operating agreement
governing the Company dated as of April 29, 1996 between KAB and ABS.
"Partnership Assets" shall mean all assets, properties, rights, titles
and privileges of the Partnerships of every kind, character and description,
whether tangible, intangible, real, personal or mixed, of whatever description
and wherever located, used in connection with the operation of the Stations
including, without limitation, all additions, accessions, and substitutions
made before the Closing as permitted pursuant to the terms of this Agreement.
For the avoidance of doubt, the parties agree (i) that WKHK Station Tower is
not included in this definition of Partnership Assets, and (ii) as contemplated
in Schedule A hereto.
"Partnerships" shall have the meaning assigned to such term in the
recitals to this Agreement.
"PCBs" shall have the meaning assigned to such term in Section 5.14 of
this Agreement.
"Permitted Liability" shall mean the proportionate share of the
Partnerships' liability allocable to the Contributed Interests which in the
aggregate is approximately $3,900,000 as of the Closing Date.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization or other legal entity.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended.
"Real Estate Contracts" shall have the meaning assigned to such term
in Section 5.11 of this Agreement.
"RICH-I" shall have the meaning assigned to such term in the recitals
to this Agreement.
"RICH-II" shall have the meaning assigned to such term in the recitals
to this Agreement.
"Stations" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Transfer Taxes" shall have the meaning assigned to such term in
Section 2.2 of this Agreement.
-4-
"WKHK" shall have the meaning assigned to such term in the recitals to
this Agreement.
"WVGO" shall have the meaning assigned to such term in the recitals to
this Agreement.
ARTICLE II
CONTRIBUTION
------------
SECTION 2.1 Contribution. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date, KAB shall contribute to the
Company, and the Company shall accept from KAB, the Contributed Interests, free
and clear of any and all Liens other than the Permitted Liability. For purposes
of this Agreement, any Liens on the assets of the Partnership shall not be
deemed to constitute Liens on the Contributed Interests. In consideration for
the Contributed Interests, KAB's Capital Account (as defined in Section 6.1 of
the Operating Agreement) shall be increased by $1,700,000. KAB and ABS hereby
agree to this value and agree that their profits interests in the Company shall
remain 99% and 1%, respectively.
SECTION 2.2 Payment of Taxes and Other Charges. KAB shall pay, at the
Closing or, if due thereafter, promptly when due, any and all taxes
(collectively, "Transfer Taxes") payable in connection with the transfer of the
Contributed Interests to the Company. Subject to the Company's right of
reasonable review and comment prior to filing, KAB shall prepare and file any
tax returns with respect to such Transfer Taxes.
SECTION 2.3 Indemnification of Permitted Liability. KAB hereby agrees
to indemnify and hold the Company and all of the members of the Company
harmless for the Permitted Liability if the other assets of the Company are
insufficient to extinguish such Permitted Liability.
SECTION 2.4 Amendment to Operating Agreement. To the extent necessary,
KAB and ABS agree that this Agreement shall constitute an amendment of the
Operating Agreement and hereby reaffirm the Operating Agreement as so amended.
-5-
ARTICLE III
CLOSING
-------
SECTION 3.1 The Closing. The consummation of the transactions
contemplated herein (the "Closing") shall take place at the offices of XxXxxxx
Xxxx, 000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000 on the date
hereof commencing at 9:00 a.m. local time or at such other place as the parties
shall mutually agree.
SECTION 3.2 FCC Consents. It is specifically understood and agreed by
the Company and KAB that the Closing and the assignment of the Contributed
Interests to the Company is not subject to the prior consent and approval of
the FCC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby makes the following representations and warranties
to KAB, each of which is true and correct on the date hereof, shall be
unaffected by any notice to KAB other than in the Disclosure Schedule and shall
survive the Closing to the extent provided in the Master Agreement. Such
representations and warranties are subject to, and qualified by, any fact or
facts disclosed in the appropriate section of the Disclosure Schedule.
SECTION 4.1 Organization and Standing. The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the Commonwealth of Virginia, and, as of the date hereof, the
Company shall be duly qualified to do business and be in good standing in the
Commonwealth of Virginia.
SECTION 4.2 Authorization and Binding Obligation. The Company has all
necessary power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and the Company's execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by the Company and this
Agreement constitutes, and the other agreements to be executed in connection
herewith will constitute, the valid and binding obligation of the Company,
enforceable in accordance with
-6-
their terms, except as limited by laws affecting creditors' rights or equitable
principles generally.
SECTION 4.3 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against the Company that would
adversely affect the Company's ability to perform its obligations pursuant to
this Agreement or the agreements to be executed in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF KAB
-------------------------------------
KAB hereby makes the following representations and warranties to the
Company, each of which is true and correct on the date hereof, shall be
unaffected by any notice to the Company other than in the Disclosure Schedule
and shall survive the Closing to the extent provided in the Master Agreement.
Such representations and warranties are subject to, and qualified by, any fact
or facts disclosed in the appropriate section of the Disclosure Schedule.
SECTION 5.1 Authorization and Binding Obligation. KAB has the legal
capacity to enter into and perform this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by KAB
and this Agreement and the agreements to be executed in connection herewith
will constitute the valid and binding obligation of KAB enforceable in
accordance with their terms, except as limited by laws affecting the
enforcement of creditor's rights or equitable principles generally.
SECTION 5.2 Title to Contributed Interests. Section 5.2 of the
Disclosure Schedule correctly and completely sets forth the percentage
partnership interest in the Partnerships owned by KAB as of the date hereof.
The Contributed Interests owned by KAB is free and clear of all Liens other
than the Permitted Liability. There are no agreements or commitments to which
KAB is a party obligating KAB to deliver or sell, or cause to be delivered or
sold, the Contributed Interests owned by KAB or granting or obligating KAB to
grant, extend, or enter into any option, right of first refusal, or other
similar agreement or commitment with respect to the Contributed Interests owned
by KAB, other than the rights waived in the consents attached hereto as Exhibit
5.3.
-7-
SECTION 5.3 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Section 5.3 of the Disclosure Schedule and as provided
in Exhibit 5.3, the execution, delivery and performance of this Agreement by
KAB: (i) does not require the consent of any third party; (ii) will not violate
any applicable law, judgment, order, injunction, decree, rule, regulation or
ruling of any governmental authority to which KAB is a party or by which it or
the Partnership Assets are bound; (iii) will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, agreement,
instrument, license or permit to which KAB or the Partnership Assets are now
subject; and (iv) will not result in the creation of any Lien, charge or
encumbrance on any of the Partnership Assets.
SECTION 5.4 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against KAB that would materially and
adversely affect KAB's ability to perform its obligations pursuant to this
Agreement or the agreements to be executed in connection herewith.
SECTION 5.5 Organization and Standing of Partnerships. Each
Partnership is a partnership duly organized and validly existing and in good
standing under the laws of the Commonwealth of Virginia, and has the requisite
partnership power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each Partnership is duly
qualified as a foreign partnership to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary. All certificates and other
documents relating to the organization and qualification of each Partnership
required to be filed by such Partnership in any jurisdiction in which such
Partnership is organized or qualified have been filed. True and complete copies
of all such certificates and other documents (including, without limitation,
the partnership agreements of the Partnerships and all amendments thereto)
relating to the organization and qualification of the Partnerships, as amended
to date, have been furnished to the Company. Copies of any amendment thereto
before the Closing Date will be furnished to the Company promptly upon the
effectiveness of any such amendment.
-8-
SECTION 5.6 Capitalization of the Partnerships. Section 5.6 of the
Disclosure Schedule correctly and completely sets forth the partnership
interests in the Partnerships and the record owner of all such partnership
interests. There are no agreements or commitments to which either Partnership
is a party of any character relating to any partnership interest in the
Partnerships, including, without limitation, any agreement or commitment
obligating such Partnership to issue, deliver or sell, or cause to be issued,
delivered or sold, any partnership interest or granting or obligating such
Partnership to grant, extend, or enter into any option, right of first refusal
or other similar agreement or commitment with respect to any partnership
interest.
SECTION 5.7 Title to Assets; Encumbrances. Except as set forth in
Section 5.7 of the Disclosure Schedule, the Partnerships have good, valid and
marketable title to, or other legal right to use, all the Partnership Assets,
free and clear of any Lien. No other Person has any properties or assets used
or held for use in connection with the operation of the Stations which are not
included in the Partnership Assets. The Partnership Assets constitute all the
assets which are currently used or are necessary to conduct the business and
operations of the Stations in all respects as currently conducted.
SECTION 5.8 Government Authorizations.
(a) Section 5.8 of the Disclosure Schedule contains a true and
complete list of the FCC Licenses and other material licenses, permits or other
authorizations from governmental and regulatory authorities which are necessary
for the lawful conduct of the business and operations of the Stations in the
manner and to the full extent they are presently conducted. The Partnerships
are the authorized legal holders of the FCC Licenses and other licenses,
permits and authorizations listed in said Section 5.8, none of which is subject
to any restrictions or condition which would limit in any respect the full
operation of the Stations as now operated.
(b) Except as set forth in said Section 5.8 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending (and, as
of the Closing, material applications, complaints or proceedings) or, to the
best of KAB's knowledge, threatened as of the date hereof by or before the FCC
relating to the business or operations of the Stations other than applications,
complaints or proceedings which generally affect the broadcasting industry. The
FCC Licenses
-9-
listed in said Section 5.8 are in good standing, are in full force and effect
and are unimpaired, and as of the Closing, are unimpaired in any material
respects, by any act or omission of the Partnerships, KAB or any of their
respective officers, directors or employees; and the operation of the Stations
is in accordance with the FCC Licenses. No proceedings are pending or, to the
knowledge of KAB, are threatened with respect to the FCC Licenses which may
result in the revocation, adverse modification, non-renewal or suspension of
any of the FCC Licenses, the denial of any pending applications for either of
the Stations, the issuance of any cease and desist order against either of the
Stations, the imposition of any administrative sanctions by the FCC with
respect to the FCC Licenses which as of the date of this Agreement may have an
adverse effect on or which as of the Closing may have a material adverse effect
on the Company's ability to continue to operate the Stations as they are
currently operated. KAB knows of no facts that would reasonably preclude the
FCC Licenses from being renewed in the ordinary course. All material reports,
forms and statements required to be filed by the Partnership and KAB with the
FCC with respect to the Stations since the grant of the last renewal of the FCC
Licenses have been filed and are substantially complete and accurate. KAB knows
of no facts which, under the Communications Act, or the existing rules and
regulations of the FCC, would disqualify KAB as an assignor of the Contributed
Interests.
SECTION 5.9 Compliance with FCC Regulations. The operation of the
Stations is and all of the Partnership Assets are in compliance in all material
respects with (i) all applicable engineering standards required to be met under
applicable FCC rules and (ii) all other applicable rules, regulations,
requirements and policies of the FCC, including, but not limited to, ANSI
Radiation Standards C95.1 - 1982 to the extent required to be met under
applicable FCC rules and regulations; and there are no existing claims known to
KAB to the contrary.
SECTION 5.10 Taxes. Except as set forth in Section 5.10 of the
Disclosure Schedule , KAB and, to the best of KAB's knowledge, the Partnerships
have filed all applicable federal, state, local and foreign income, franchise,
sales, use, property, excise, payroll and other tax returns required by law and
has paid in full all taxes, estimated taxes, interest, assessments, and
penalties due and payable. All returns and forms which have been filed have
been true and correct in all material respects and no tax or other payment in a
material amount other than as shown on
-10-
such returns and forms are required to be paid and have been paid by the
Partnerships or KAB. There are no present disputes as to taxes of any nature
payable by the Partnerships or KAB which in any event could materially
adversely affect any of the Partnership Assets or the operation of the
Stations.
SECTION 5.11 Real Property.
(a) Section 5.11 to the Disclosure Schedule contains a complete and
accurate list of all real property constituting Partnership Assets and used
primarily or exclusively by the Stations and all Contracts relating to the
tower, transmitter, studio site and offices of the Stations (collectively the
"Real Estate Contracts") and a summary of the applicable leases.
(b) The Real Estate Contracts listed in Section 5.11 constitute valid
and binding obligations of the applicable Partnership and, to the best of KAB's
knowledge, of all other persons purported to be parties thereto and are in full
force and effect as of the date hereof and will on the Closing Date constitute
valid and binding obligations of such Partnership and, to the best of KAB's
knowledge, of all other persons purported to be parties thereto and shall be in
full force and effect. Neither Partnership is in default under any of such Real
Estate Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto.
SECTION 5.12 Contracts. Section 5.12 of the Disclosure Schedule lists
all Contracts as of the date of this Agreement, except (A) Contracts entered
into in the ordinary course of business (i) of less than three (3) months
duration and which impose monetary obligations of less than Five Thousand
Dollars ($5,000) each or Fifty Thousand Dollars ($50,000) in the aggregate,
(ii) for the sale or sponsorship of broadcast time on the Stations for cash,
for which no prepayment has been received and with not more than twelve (12)
months remaining in their terms, or (iii) Contracts which are currently
scheduled to expire before the Closing Date and (B) time sales agreements which
(i) are on the Partnership's standard form, (ii) are terminable by the
Partnerships within thirteen (13) weeks or less notice without penalty, and
(iii) provide for annual payments of fifty thousands dollars ($50,000) or less.
SECTION 5.13 Status of Contracts. Except as noted in Section 5.13 of
the Disclosure Schedule, KAB has delivered
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to the Company true and complete copies of all Contracts, including any and all
amendments and other modifications to such Contracts. All Contracts are valid,
binding and enforceable by the Partnerships in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. To the best of KAB's knowledge, each Partnership has
complied in all material respects with all Contracts and is not in default
beyond any applicable grace periods under any of the Contracts, and no other
contracting party is in default under any of the Contracts.
SECTION 5.14 Environmental Matters. Neither the Partnerships nor KAB
in connection with the operation of the Stations have unlawfully disposed of
any hazardous waste or hazardous substance including Polychlorinated Byphenyls
("PCBs") in a manner which has caused, or could cause, the Company to incur any
liability under applicable law in connection therewith; and KAB warrants that
the technical equipment included in the Partnership Assets do not contain any
PCBs which are required by law to be removed and if any equipment does contain
PCBs, that such equipment is stored and maintained in compliance with
applicable law. The Partnership and KAB have complied in all material respects
with all federal, state and local environmental laws, rules and regulations
applicable to the Stations and its operations, including but not limited to the
FCC's guidelines regarding RF radiation. No hazardous waste has been disposed
of by KAB, and to the best of KAB's knowledge, no hazardous waste has been
disposed of by the Partnerships on the real estate occupied by the Stations or
their transmitters. As used herein, the term "hazardous waste" shall mean as
defined in the RCRA and in the equivalent state statute under the law of the
state in which such real estate is located.
SECTION 5.15 Copyrights, Trademarks and Similar Rights.
(a) Except for the FCC Licenses, Section 5.15 of the Disclosure
Schedule is a true and complete list of all copyrights, trademarks, trade
names, licenses, patents, permits, jingles and other similar intangible
property rights and interests applied for, issued to or owned by each of the
Partnerships or KAB or under which such Partnership or KAB is a licensee or
franchisee and used in the conduct of the business and operations of the
Stations.
(b) All of such rights and interests are issued to or owned by the
Partnerships or KAB, or if licensed or franchised
-12-
to the Partnerships, to the best of KAB's knowledge, are valid and in good
standing and uncontested. KAB has delivered or made available to the Company
copies of all documents establishing such rights, licenses or other authority.
KAB has received no written notice and has no knowledge of any infringements or
unlawful use of such property. The properties listed in Section 5.15 of the
Disclosure Schedule include all such properties necessary to conduct in all
respects the business and operations of the Stations as now conducted.
SECTION 5.16 Financial Statements. KAB has delivered to the Company
complete audited copies of the statement of income and the balance sheet for
the Partnerships and the Stations for the period ending December 31, 1995,
December 31, 1994 and an unaudited statement of income and balance sheet for
the nine (9) months ending September 30, 1996 (collectively, the "Financial
Statements"). The audited Financial Statements have been audited by the
accounting firm of Xxxxxxx, Xxxxxxx et al. The audited Financial Statements
accurately represent and present fairly the financial condition and results of
operations of the Partnerships for the periods indicated. The unaudited
Financial Statements accurately represent and present fairly the financial
condition and results of operations of the Partnerships for the nine (9) months
ending September 30, 1996. Between September 30, 1996 and the date hereof,
there has been no material adverse change in the business, property, assets or
condition (financial or otherwise) of the Partnerships and (except for the
transaction contemplated herein) the Partnerships have operated the Stations in
all respects only in the ordinary course of business.
Except for (i) liabilities as and to the extent reflected or reserved
against in the Financial Statements, (ii) liabilities not yet due and payable
or obligations to be performed or satisfied after the date hereof under
Contracts listed in the Disclosure Schedule, (iii) liabilities incurred between
September 30, 1996 and the date hereof in the ordinary and usual course of
business (including tax liabilities resulting solely from the normal operations
of the Partnerships during such period) and (iv) any other liabilities
disclosed in this Agreement or in the Disclosure Schedule, on the date hereof,
each Partnership has no liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, of a nature customarily reflected
in financial statements reflecting the accrual basis of accounting.
-13-
SECTION 5.17 Personnel Information.
(a) Section 5.17 of the Disclosure Schedule contains a true and
complete list of all persons employed by the Partnerships or the Stations,
including a description of material compensation arrangements (other than
employee benefit plans set forth in Section 5.20 of the Disclosure Schedule)
and a list of other terms of any and all agreements affecting such persons. KAB
has not received notification that any of the current key employees of the
Partnerships or the Stations presently plan to terminate their employment,
whether by reason of the transactions contemplated hereby or otherwise and KAB
shall immediately notify the Company upon receipt of any such notice.
(b) The Partnerships are not parties to any Contract with any labor
organization, nor have the Partnerships agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of the Partnerships' employees. KAB has
no knowledge of any organizational effort currently being made or threatened by
or on behalf of any labor union with respect to employees of the Partnerships.
Except as disclosed in Section 5.17 of the Disclosure Schedule, during the past
three (3) years, the Partnerships have not experienced any strikes, work
stoppages, grievance proceedings, claims of unfair labor practices filed or
other significant labor difficulties of any nature.
(c) Except as disclosed in Section 5.17 of the Disclosure Schedule,
the Partnerships, to the best of KAB's knowledge, have complied in all material
respects with all laws relating to the employment of labor, including, without
limitation, ERISA and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
SECTION 5.18 Litigation. Except as set forth in Section 5.18 of the
Disclosure Schedule, neither the Partnerships nor the Stations are subject to
any judgment, award, order, writ, injunction, arbitration decision or decree
materially adversely affecting the conduct of the business of the Partnerships,
the Stations or the Partnership Assets, and, to the best of KAB's knowledge,
there is no litigation or proceeding threatened against the Partnerships, KAB
or the Stations in any federal, state or local court, or before any
administrative agency or arbitrator (including, without limitation, any
proceeding which seeks the forfeiture of, or
-14-
opposes the renewal of, any of the FCC Licenses), or before any other tribunal
duly authorized to resolve disputes, which would reasonably be expected to have
any material adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Partnerships or the Stations or which seeks to
enjoin or prohibit, or otherwise questions the validity of, any action taken or
to be taken pursuant to or in connection with this Agreement. In particular,
but without limiting the generality of the foregoing, there are no
applications, complaints or proceedings pending or, to the best of KAB's
knowledge, threatened before the FCC or any other governmental organization
with respect to the business or operations of the Partnerships or the Stations
other than applications, complaints or proceedings which affect the
broadcasting industry generally.
SECTION 5.19 Compliance With Laws. Except as set forth in Section 5.19
of the Disclosure Schedule, KAB has not received any notice asserting any
non-compliance by the Partnerships or the Stations in connection with the
business or operation of the Partnerships or the Stations with any applicable
statute, rule or regulation, federal, state or local. Each of the Partnerships
and the Stations are not in default with respect to any judgment, order,
injunction or decree of any court, administrative agency or other Governmental
Authority or any other tribunal duly authorized to resolve disputes in any
respect material to the transactions contemplated hereby. Each of the
Partnerships and the Stations are in compliance in all material respects with
all laws, regulations and governmental orders applicable to the conduct of the
business and operations of the Stations, the failure to comply with which would
have a material adverse effect on the business, operations or financial
condition of the Partnerships or the Stations, and the present use of the
Partnership Assets do not violate any of such laws, regulations or orders.
SECTION 5.20 Employee Benefit Plans. Section 5.20 of the Disclosure
Schedule contains a true and complete list as of the date of this Agreement of
all employee benefit plans applicable to the employees of the Partnerships and
the Stations. The Partnerships do not maintain any other employee benefit plan
as the term is defined in Section 3 of the Employee Retirement Income Security
Act of 1984, as amended, applicable to the employees of the Partnerships
employed at the Stations.
SECTION 5.21 Accuracy of Information. No written statements made by
KAB herein and no information provided by
-15-
KAB herein or in the documents, instruments or other written communications
made or delivered directly by KAB to the Company in connection with the
negotiations covering the contribution of the Contributed Interests contains
any untrue statement of a material fact or omits a material fact necessary to
make the statements contained therein or herein not misleading, and there is no
fact known to KAB which relates to any information contained in any such
written document, instrument or communications which KAB has not disclosed to
the Company in writing which materially affects adversely the Stations or the
Partnership Assets.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
SECTION 6.1 KAB's Condition to Closing. The obligations of KAB
hereunder are subject to the representations and warranties of the Company set
forth in Article IV hereof being true and correct in all material respects on
the Closing Date.
SECTION 6.2 The Company's Conditions to Closing. The obligations of
the Company hereunder are, at the Company's option, subject to satisfaction, on
the Closing Date, of each of the following conditions:
(a) The representations and warranties of KAB set forth in Article V
hereof are true and correct in all material respects;
(b) KAB shall have delivered the Contributed Assets with good title,
free and clear of any and all liens and encumbrances. For purposes of this
Section 6.2, any Liens on the Partnerships Assets shall not be deemed to
constitute Liens on the Contributed Interests.
ARTICLE VII
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
SECTION 7.1 KAB's and ABS' Documents. At the Closing, ABS shall
deliver, and KAB shall cause ABS to deliver or cause to be delivered, to the
Company the following:
(a) Assignment of KAB's Contributed Interests (and all right, title
and interest therein) to the Company, free
-16-
and clear of any and all Liens other than the Permitted Liability.
(b) Certified resolutions of the Board of Directors of ABS approving
the execution and delivery of this Agreement;
(c) Governmental certificates showing that ABS is duly incorporated
and in good standing in the Commonwealth of Virginia dated not more than ten
(10) days before the Closing Date;
(d) Articles of Incorporation and Bylaws of ABS certified by the
secretary of ABS as of the Closing Date; and
(e) Such additional information and materials as the Company shall
have reasonably requested.
SECTION 7.2 The Company's Documents. At the Closing, the Company shall
deliver or cause to be delivered to KAB the following:
(a) Governmental certificates from the Commonwealth of Virginia
showing that the Company is duly incorporated and in good standing in the
Commonwealth of Virginia dated not more than ten (10) days before the Closing
Date;
(b) Certified resolutions of each of the members of the Company
approving the execution and delivery of this Agreement and each of the other
documents and agreements referred to herein and authorizing the consummation of
the transactions contemplated hereby and thereby;
(c) Articles of Organization and Operating Agreement of the Company
certified by the manager of the Company as of the Closing Date; and
(d) Such additional information and materials as KAB shall have
reasonably requested.
ARTICLE VIII
OTHER PROVISIONS
----------------
SECTION 8.1 Severability. If any part or any provision of this
Agreement shall be invalid or unenforceable under applicable law, said part or
provisions shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the
-17-
remaining provisions of this Agreement which shall be construed as if such
invalid parts or provisions had not been inserted, and such invalid or
unenforceable provisions shall become and be immediately amended and reformed
to include only the portions thereof as are enforceable by the court or such
other body having jurisdiction of this Agreement; and the parties agree that
such portions as so amended and reformed shall be valid and binding as though
any wholly invalid or unenforceable portion had not been included herein.
SECTION 8.2 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party.
SECTION 8.3 Entire Agreement. This Agreement and the Schedules hereto
embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings
relating to the matters provided for in this Agreement other than the Master
Agreement. No amendment, waiver of compliance with any provision or condition
hereof or consent pursuant to this Agreement shall be effective unless
evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
SECTION 8.4 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
SECTION 8.5 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia without
giving effect to the choice of law provisions thereof.
SECTION 8.6 Notices. Any notice, demand or request required or
permitted to be given under the provisions of this Agreement shall be in
writing and shall be deemed to have been duly delivered and received on the
date of personal delivery or on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or on the date of
a stamped receipt, if sent by an overnight delivery service, and shall be
addressed to the following addresses, or to such other address as any party may
request, in the case of KAB, by notifying the Company, and in the case of the
Company, by notifying KAB:
-18-
To KAB: Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
To the ABS Communications, L.L.C.
Company: 000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
SECTION 8.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
SECTION 8.8 Survival of Representations and Warranties;
Indemnification. The survival period of the representations and warranties set
forth in this Agreement and the indemnification obligations of KAB under this
Agreement shall be set forth in, and controlled by, the Master Agreement other
than KAB's obligations under Section 2.3 of this Agreement which shall remain
ongoing until such time KAB shall have fulfilled such obligations or such
obligations shall have been extinguished.
-19-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
ABS COMMUNICATIONS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
----------------------------------
FOR PURPOSES OF ARTICLE 2.1 AND 2.4
ONLY:
ABS COMMUNICATIONS INCORPORATED
/s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
-20-
Schedule A
KAB hereby agrees to provide Buyer within five (5) days of this Agreement an
itemized list of assets which may be excluded from the Partnership Assets,
which itemized list shall be in a form (and supported by appropriate back-up
documentation) reasonably satisfactory to SFX that such itemized assets have
been acquired solely with the funds of KAB or ABS.
-21-
SFX CONTRIBUTION AGREEMENT
THIS SFX CONTRIBUTION AGREEMENT is made and entered into as of the
17th day of December, 1996, by and among LIBERTY ACQUISITION SUBSIDIARY
CORPORATION, a Delaware corporation ("Liberty 1"), LIBERTY BROADCASTING OF
MARYLAND II INCORPORATED, a Maryland corporation ("Liberty 2" and, together
with Liberty 1, the "Liberty Entities"), SFX BROADCASTING, INC., a Delaware
corporation ("SFX") and ABS COMMUNICATIONS, L.L.C., a Virginia limited
liability company (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, radio station WMXB-FM in Richmond, Virginia (the "Station")
is operated pursuant to a license issued to Liberty 1 by the Federal
Communications Commission (together with any successor agency or body, the
"FCC"); and
WHEREAS, all of the assets (other than the FCC Licenses) used in
connection with the operation of the Station are owned by Liberty 2; and
WHEREAS, simultaneously with the execution of this Agreement, SFX has
entered into the Master Agreement (as defined) pursuant to which SFX has agreed
to contribute to the Company the Contributed Assets;
WHEREAS, on the Closing Date the Liberty Entities, which are
controlled by SFX, shall assign all of the Contributed Assets to SFX and SFX
shall contribute the Contributed Assets to the Company in accordance with this
Agreement; and
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions contained herein, and intending to be fully bound hereby, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 Definitions. When used in this Agreement, the following
words or phrases shall have the following meanings:
"Agreement" shall mean this SFX Contribution Agreement, as it may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"Amended Operating Agreement" shall mean that certain amended and
restated operating agreement governing the Company, dated as of the date
hereof.
"Closing" shall have the meaning assigned to such term in Section 3.1
of this Agreement.
"Closing Date" shall mean the date on which the Closing shall be
deemed to occur and shall be the date of this Agreement.
"Communications Act" shall mean the Communications Act of 1934, as
amended, including as amended by the Telecommunications Act of 1996, and the
rules, regulations and policies promulgated thereunder.
"Company" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"Contracts" shall mean all contracts, agreements, or binding
commitments or arrangements, written or oral, by which any of the Contributed
Assets may be bound.
"Contributed Assets" shall mean the FCC Licenses and the Station
Assets.
"Convertible Note Agreement" shall mean that certain Convertible Note
Agreement, dated as of even date herewith between the Company and SFX.
"Disclosure Schedule" shall mean the separate Disclosure Schedule
attached to this Agreement regarding certain representations and warranties
made by the Liberty Entities or SFX as further described in Article V or
Article VI of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"FCC" shall have the meaning assigned to such term in the recitals to
this Agreement.
"FCC Licenses" shall mean the main transmitter licenses for the
Station together with each of the other
-2-
consents, rights, licenses, permits and authorizations issued or granted by the
FCC for the operation of or used in connection with the ownership or operation
of the Station, together with any renewals or extensions thereof.
"Governmental Authority" shall mean a federal, state or local court,
legislature, governmental agency, commission or regulatory or administrative
authority or instrumentality.
"Law" shall mean applicable common law and any statute, ordinance,
code or other law, rule, permit, permit condition, regulation, order, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority or court.
"Lien" shall mean any security agreement or financing statement filed
with an appropriate Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for security
purposes, any lien, mortgage, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including, without limitation, reservations,
rights of entry, possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, leases and licenses) of any kind, which (i) creates
or confers an interest in property to secure payment or performance of a
liability, obligation or claim, or which retains or reserves such an interest
for such purpose; (ii) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to sell or otherwise dispose of, or otherwise
results or may result in any Person acquiring, any property or interest
therein; (iii) restricts the transfer of, or the exercise of any rights or the
enjoyment of any benefits arising by reason of ownership of, any property; or
(iv) otherwise constitutes an interest in or claim against property whether or
not arising pursuant to any Law, FCC License or Contract.
"Master Agreement" shall mean that certain Master Richmond Station
Group Agreement, dated as of even date herewith by and among the Company, SFX
and the other signatories party thereto.
"Permitted Liens" shall mean any Liens that do not interfere
materially with the ability to use, for the purpose currently being used, the
properties or assets subject thereto or affected thereby to the extent granted
by the Liberty Entities or SFX.
-3-
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization or other legal entity.
"Purchase and Sale Agreement" shall mean that certain Purchase and
Sale Agreement, dated as of even date herewith by and among the Company, EBF,
Inc., EBF Partners and the other parties thereto.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended.
"Real Estate Contracts" shall have the meaning assigned to such term
in Section 5.9 of this Agreement.
"SFX" shall mean SFX Broadcasting, Inc., a Delaware corporation.
"Station" shall have the meaning assigned to such term in the recitals
to this Agreement.
"Station Assets" shall mean, with the exception of the FCC Licenses,
all assets, properties, rights, titles and privileges of every kind, character
and description, whether tangible, intangible, real, personal or mixed, of
whatever description and wherever located, used exclusively in connection with
the operation of the Station including, without limitation, all additions,
accessions, and substitutions made before the Closing as permitted pursuant to
the terms of this Agreement.
ARTICLE II
CONTRIBUTION
------------
SECTION 2.1 Assignment and Contribution. (a) Subject to FCC consent as
provided in Section 3.1 hereof, immediately prior to the Closing hereunder, the
Liberty Entities and SFX shall enter into an assignment and assumption
agreement pursuant to which each of the Liberty Entities shall assign to SFX
and SFX shall accept and assume all of each Liberty Entities' respective right,
title, interest and obligations in and to the Contributed Assets owned by it,
free and clear of any and all Liens other than Permitted Liens.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, SFX shall
-4-
contribute to the Company, and the Company shall accept from SFX the
Contributed Assets, free and clear of any and all Liens other than Permitted
Liens. In consideration for the Contributed Assets and together with the
conversion of the loans as contemplated under the Convertible Note Agreement
and SFX's other obligations under the Amended Operating Agreement, SFX's
Percentage Interest (as defined in the Amended Operating Agreement) in the
Company shall equal 96%.
SECTION 2.2 Payment of Taxes and Other Charges. SFX shall pay, at the
Closing or, if due thereafter, promptly when due, any and all taxes
(collectively, "Transfer Taxes") payable in connection with the transfer of the
Contributed Assets to the Company. Subject to the Company's right of reasonable
review and comment prior to filing, SFX shall prepare and file any tax returns
with respect to such Transfer Taxes.
ARTICLE III
CLOSING
-------
SECTION 3.1 The Closing. The consummation of the transactions
contemplated herein (the "Closing") shall take place at the offices of Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
commencing at 9:00 a.m. local time concurrently with the closing of the
transactions contemplated under the Purchase and Sale Agreement.
Notwithstanding anything in this Agreement to the contrary, the
Closing shall not be consummated without prior FCC consent (the "FCC Consents")
with respect thereto having been obtained. It shall be a condition precedent to
the parties' obligation to consummate the Closing that such consent shall have
become a Final Order (defined below) without materially adverse conditions. For
purposes of this Agreement, a Final Order shall mean an FCC consent or grant as
to which the time within which any party in interest other than the FCC may
seek administrative or judicial reconsideration or review of such consent or
grant has expired and no petition for such reconsideration or review has been
timely filed with the FCC or with a court of competent jurisdiction, and the
normal time within which the FCC may review such consent or grant on its own
motion has expired and the FCC has not undertaken such review. The parties
shall, within ten (10) business days following the date of this Agreement, file
an appropriate application with the FCC
-5-
seeking its consent to the transactions contemplated hereunder and shall use
their best efforts to obtain such consent and a Final Order thereof promptly.
If the Closing would fall after the period permitted by such consent, the
parties shall file appropriate requests with the FCC for an extension of time
within which to complete the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby makes the following representations and warranties
to the Liberty Entities and SFX, each of which is true and correct on the date
hereof, shall be unaffected by any notice to SFX other than in the Disclosure
Schedule and shall survive the Closing to the extent provided in the Master
Agreement. Such representations and warranties are subject to, and qualified
by, any fact or facts disclosed in the appropriate section of the Disclosure
Schedule.
SECTION 4.1 Organization and Standing. The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the Commonwealth of Virginia, and, as of the date hereof, the
Company is duly qualified to do business and is in good standing in the
Commonwealth of Virginia.
SECTION 4.2 Authorization and Binding Obligation. Subject to obtaining
FCC consent as set forth in Section 3.1 hereof, the Company has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and the Company's execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by the Company and this
Agreement constitutes, and the other agreements to be executed in connection
herewith will constitute, the valid and binding obligation of the Company,
enforceable in accordance with their terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
SECTION 4.3 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against the Company that would
adversely affect the Company's ability to perform its obligations pursuant to
this Agreement or the agreements to be executed in connection herewith.
-6-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE LIBERTY ENTITIES
------------------------------------------------------
The Liberty Entities hereby jointly (other than with respect to
Sections 5.1, 5.2, 5.3 and 5.5 which are made severally and not jointly) make
the following representations and warranties to the Company, each of which is
true and correct on the date hereof. Such representations and warranties are
subject to, and qualified by, any fact or facts disclosed in the appropriate
section of the Disclosure Schedule.
SECTION 5.1 Organization and Standing. (a) Liberty 1 is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, and (b) Liberty 2 is a corporation duly organized, validly existing
and in good standing under the laws of Maryland and as of the date hereof,
Liberty 2 is duly qualified to do business and is in good standing in the
Commonwealth of Virginia.
SECTION 5.2 Authorization and Binding Obligation. Subject to obtaining
FCC consent as set forth in Section 3.1 hereof, each of the Liberty Entities
has all necessary power and authority to enter into and perform its obligations
under this Agreement and the transactions contemplated hereby and the
execution, delivery and performance of this Agreement by each of the Liberty
Entities, and the transactions contemplated hereby, have been duly and validly
authorized by all necessary action on the part of each of them. This Agreement
has been duly executed and delivered by each of the Liberty Entities and this
Agreement and the agreements to be executed in connection herewith will
constitute the valid and binding obligation of the Liberty Entities enforceable
in accordance with their terms, except as limited by laws affecting the
enforcement of creditor's rights or equitable principles generally.
SECTION 5.3 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Section 5.3 of the Disclosure Schedule and except as set
forth in Section 3.1 hereof, the execution, delivery and performance of this
Agreement by the Liberty Entities: (i) does not require the consent of any
third party; (ii) will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority to
which either of the Liberty Entities is a party or by which either of them or
the Contributed Assets is or are bound; (iii) will
-7-
not, either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, agreement, instrument, license or permit to which either of the
Liberty Entities or the Contributed Assets is or are now subject; and (iv) will
not result in the creation of any Lien, charge or encumbrance on any of the
Contributed Assets.
SECTION 5.4 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against either of the Liberty Entities
that would adversely affect the ability of either of them to perform its
obligations pursuant to this Agreement or the agreements to be executed in
connection herewith.
SECTION 5.5 Title to Contributed Assets. Except as set forth in
Section 5.5 of the Disclosure Schedule, (a) Liberty 1 has good, valid and
marketable title to, or other legal right to use, all the FCC Licenses, and (b)
Liberty 2 has good, valid and marketable title to, or other legal right to use
all the Station Assets, in both cases free and clear of any Lien other than
Permitted Liens.
SECTION 5.6 Government Authorizations.
(a) Section 5.6 of the Disclosure Schedule contains a true and
complete list of the FCC Licenses and other material licenses, permits or other
authorizations from governmental and regulatory authorities which are necessary
for the lawful conduct of the business and operations of the Station in the
manner and to the full extent they are presently conducted. Liberty 1 is the
authorized legal holder of the FCC Licenses and other licenses, permits and
authorizations listed in said Section 5.6, none of which is subject to any
restrictions or condition which would limit in any respect the full operation
of the Station as now operated.
(b) Except as set forth in said Section 5.6 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending (and as
of the Closing, material applications, complaints or proceedings) or, to the
best knowledge of either of the Liberty Entities, threatened as of the date
hereof by or before the FCC relating to the business or operations of the
Station other than applications, complaints or proceedings which generally
affect the broadcasting industry. The FCC Licenses listed in said Section 5.6
are in good standing, are in full force and effect and are unimpaired, and as
of the Closing are unimpaired in
-8-
any material respects, by any act or omission of Liberty 1 or any of its
respective officers, directors or employees; and the operation of the Station
is in accordance with the FCC Licenses. No proceedings are pending or, to the
knowledge of either of the Liberty Entities, are threatened with respect to the
FCC Licenses which may result in the revocation, adverse modification,
non-renewal or suspension of any of the FCC Licenses, the denial of any pending
applications for the Station, the issuance of any cease and desist order
against the Station, the imposition of any administrative sanctions by the FCC
with respect to the FCC Licenses which as of the date of this Agreement may
have an adverse effect on or which as of the Closing may have a material
adverse effect on the Company's ability to continue to operate the Station as
it is currently operated. Liberty 1 knows of no fact that would reasonably
preclude the FCC Licenses that are renewable in the ordinary course from being
renewed in the ordinary course. All material reports, forms and statements
required to be filed by Liberty 1 with the FCC with respect to the Station
since the grant of the last renewal of the FCC Licenses have been filed and are
substantially complete and accurate. Liberty 1 knows of no facts which, under
the Communications Act, or the existing rules and regulations of the FCC, would
disqualify Liberty 1 as an assignor of the FCC Licenses.
SECTION 5.7 Compliance with FCC Regulations. The operation of the
Station is and all of the Contributed Assets are in compliance in all material
respects with (i) all applicable engineering standards required to be met under
applicable FCC rules and (ii) all other applicable rules, regulations,
requirements and policies of the FCC, including, but not limited to, ANSI
Radiation Standards C95.1 - 1982 to the extent required to be met under
applicable FCC rules and regulations; and there are no existing claims known to
the Liberty Entities to the contrary.
SECTION 5.8 Taxes. Except as set forth in Section 5.8 of the
Disclosure Schedule, the Liberty Entities have filed with respect to the
Station all applicable federal, state, local and foreign income, franchise,
sales, use, property, excise, payroll and other tax returns required by law and
has paid in full all taxes, estimated taxes, interest, assessments, and
penalties due and payable. All returns and forms which have been filed have
been true and correct in all material respects and no tax or other payment in a
material amount other than as shown on such returns and forms are required to
be paid and have been paid by either of the Liberty Entities. There are no
present disputes as to taxes of any nature payable by either of the Liberty
Entities
-9-
relating to the Station which in any event could materially adversely affect
any of the Contributed Assets or the operation of the Station.
SECTION 5.9 Real Property.
(a) Section 5.9 to the Disclosure Schedule contains a complete and
accurate list of all real property constituting the Contributed Assets and used
by the Station and all Contracts relating exclusively to the tower,
transmitter, studio site and offices of the Station (collectively the "Real
Estate Contracts") and a summary of the applicable leases.
(b) The Real Estate Contracts listed in Section 5.9 constitute valid
and binding obligations of the respective Liberty Entity (as set forth therein)
and, to the best knowledge of the Liberty Entities, of all other persons
purported to be parties thereto and are in full force and effect as of the date
hereof and will on the Closing Date constitute valid and binding obligations of
SFX and, to the best knowledge of each of the Liberty Entities, of all other
persons purported to be parties thereto and shall be in full force and effect.
Neither of the Liberty Entities is in default under any of such Real Estate
Contracts nor has either of them received or given written notice of any
default thereunder from or to any of the other parties thereto.
SECTION 5.10 Contracts. Section 5.10 of the Disclosure Schedule lists
all Contracts as of the date of this Agreement, except (A) Contracts entered
into in the ordinary course of business (i) of less than three (3) months
duration and which impose monetary obligations of less than Five Thousand
Dollars ($5,000) each or Fifty Thousand Dollars ($50,000) in the aggregate,
(ii) for the sale or sponsorship of broadcast time on the Station for cash, for
which no prepayment has been received and with not more than twelve (12) months
remaining in their terms, or (iii) Contracts which are currently scheduled to
expire before the Closing Date and (B) time sales agreements which (i) are on
the Liberty Entities' standard form, (ii) are terminable by the Liberty
Entities within thirteen (13) weeks or less notice without penalty, and (iii)
provide for annual payments of fifty thousands dollars ($50,000) or less.
SECTION 5.11 Status of Contracts. Except as noted in Section 5.11 of
the Disclosure Schedule, each of the Liberty Entities has delivered to the
Company true and complete copies of all Contracts, including any and all
-10-
amendments and other modifications to such Contracts. All Contracts are valid,
binding and enforceable by the Liberty Entity party thereto in accordance with
their respective terms, except as limited by laws affecting creditors' rights
or equitable principles generally. Each of the Liberty Entities has complied in
all material respects with all Contracts to which it is a party and is not in
default beyond any applicable grace periods under any of the Contracts, and no
other contracting party is in default under any of the Contracts.
SECTION 5.12 Environmental Matters. Neither of the Liberty Entities
has unlawfully disposed of any hazardous waste or hazardous substance including
Polychlorinated Byphenyls ("PCBs") in a manner which has caused, or could
cause, the Company to incur any liability under applicable law in connection
therewith; and the Liberty Entities warrant that the technical equipment
included in the Contributed Assets do not contain any PCBs which are required
by law to be removed and if any equipment does contain PCBs, that such
equipment is stored and maintained in compliance with applicable law. Each of
the Liberty Entities has complied in all material respects with all federal,
state and local environmental laws, rules and regulations applicable to the
Station and its operations, including but not limited to the FCC's guidelines
regarding RF radiation. To the best of the Liberty Entities' knowledge, no
hazardous waste has been disposed of by any other person, on the real estate
occupied by the Station or its transmitters. As used herein, the term
"hazardous waste" shall mean as defined in the RCRA and in the equivalent state
statute under the law of the state in which such real estate is located.
SECTION 5.13 Copyrights, Trademarks and Similar Rights.
(a) Except for the FCC Licenses, Section 5.13 of the Disclosure
Schedule is a true and complete list of all copyrights, trademarks, trade
names, licenses, patents, permits, jingles and other similar intangible
property rights and interests applied for, issued to or owned by either of the
Liberty Entities or under which it is a licensee or franchisee and used
exclusively in the conduct of the business and operations of the Station.
(b) All of such rights and interests are issued to or owned by the
Liberty Entity indicated on the Disclosure Schedule or if licensed or
franchised to either of the Liberty Entities to the best of such Liberty
Entity's knowledge, are valid and in good standing and uncontested. The Liberty
Entities have delivered or made available to the Company
-11-
copies of all documents establishing such rights, licenses or other authority.
Neither of the Liberty Entities has received written notice nor has any
knowledge of any infringements or unlawful use of such property. The properties
listed in Section 5.13 of the Disclosure Schedule include all such properties
necessary to conduct in all respects the business and operations of the Station
as now conducted.
SECTION 5.14 Personnel Information.
(a) Section 5.14 of the Disclosure Schedule contains a true and
complete list of all persons employed exclusively by the Station in connection
with the operation of the Station, including a description of material
compensation arrangements (other than employee benefit plans set forth in
Section 5.14 of the Disclosure Schedule) and a list of other terms of any and
all agreements affecting such persons. Neither of the Liberty Entities has
received notification that any of the current key employees listed in Section
5.14 of the Disclosure Schedule presently plan to terminate their employment,
whether by reason of the transactions contemplated hereby or otherwise and the
applicable Liberty Entity shall immediately notify the Company upon receipt of
any such notice.
(b) The Station is not subject to any Contract with any labor
organization, and the Station has not agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of their employees.
(c) Except as disclosed in Section 5.14 of the Disclosure Schedule,
each of the Liberty Entities has, with respect to the Station, complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, ERISA and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
SECTION 5.15 Litigation. Except as set forth in Section 5.15 of the
Disclosure Schedule, the Station is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree materially adversely affecting
the conduct of the business of the Station or the Contributed Assets, and to
the best knowledge of each of the Liberty Entities, there is no litigation or
proceeding threatened against either of them or the Station in any federal,
state or local court, or before any administrative agency or arbitrator
-12-
(including, without limitation, any proceeding which seeks the forfeiture of,
or opposes the renewal of, the FCC Licenses), or before any other tribunal duly
authorized to resolve disputes, which would reasonably be expected to have any
material adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Station or which seeks to enjoin or prohibit,
or otherwise questions the validity of, any action taken or to be taken
pursuant to or in connection with this Agreement. In particular, but without
limiting the generality of the foregoing, except as set forth in Section 5.6 of
the Disclosure Schedule, there are no applications, complaints or proceedings
pending or to the best knowledge of each of the Liberty Entities threatened
before the FCC or any other governmental organization with respect to the
business or operations of the Station other than applications, complaints or
proceedings which affect the broadcasting industry generally.
SECTION 5.16 Compliance With Laws. Except as set forth in Section 5.16
of the Disclosure Schedule, neither of the Liberty Entities has received any
notice asserting any non-compliance by it in connection with the business or
operation of the Station with any applicable statute, rule or regulation,
federal, state or local. Neither of the Liberty Entities nor the Station is in
default with respect to any judgment, order, injunction or decree of any court,
administrative agency or other Governmental Authority or any other tribunal
duly authorized to resolve disputes in any respect material to the transactions
contemplated hereby. Each of the Liberty Entities and the Station are in
compliance in all material respects with all laws, regulations and governmental
orders applicable to the conduct of the business and operations of the Station,
the failure to comply with which would have a material adverse effect on the
business, operations or financial condition of the Station, and the present use
of the Contributed Assets do not violate any of such laws, regulations or
orders (other than immaterial violations).
SECTION 5.17 Employee Benefit Plans. Section 5.17 of the Disclosure
Schedule contains a true and complete list as of the date of this Agreement of
all employee benefit plans applicable to the employees at the Station. The
Station does not maintain any other employee benefit plan as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1984, as
amended, applicable to the employees of the Station.
-13-
SECTION 5.18 Accuracy of Information. No written statements made by
either of the Liberty Entities herein and no information provided by either of
the Liberty Entities herein or in the documents, instruments or other written
communications made or delivered directly by either of the Liberty Entities to
the Company covering the contribution of the Contributed Assets contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements contained therein or herein not misleading, and there is no fact
known to either of the Liberty Entities which relates to any information
contained in any such written document, instrument or communications which the
applicable Liberty Entity has not disclosed to the Company in writing which
materially affects adversely the Station or the Contributed Assets.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SFX
-------------------------------------
SFX hereby makes the following representations and warranties to the
Company, each of which shall be true and correct on the Closing Date, and SFX
makes the representations and warranties set forth in Sections 6.1, 6.2, 6.3
and 6.4, each of which is true and correct on the Closing Date and on the date
hereof). Such representations and warranties are subject to, and qualified by,
any fact or facts disclosed in the appropriate section of the Disclosure
Schedule.
SECTION 6.1 Organization and Standing. SFX is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
SECTION 6.2 Authorization and Binding Obligation. Subject to obtaining
FCC consent as set forth in Section 3.1 hereof, SFX has all necessary power and
authority to enter into and perform its obligations under this Agreement and
the transactions contemplated hereby and SFX's execution, delivery and
performance of this Agreement and the transactions contemplated hereby, have
been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by SFX and this Agreement and
the agreements to be executed in connection herewith will constitute the valid
and binding obligation of SFX enforceable in accordance with their terms,
except as limited by laws affecting the enforcement of creditor's rights or
equitable principles generally.
-14-
SECTION 6.3 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Section 5.3 of the Disclosure Schedule and except as set
forth in Section 3.1 hereof, the execution, delivery and performance of this
Agreement by SFX: (i) does not require the consent of any third party; (ii)
will not violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which SFX is a party or
by which it or the Contributed Assets are bound; (iii) will not, either alone
or with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
agreement, instrument, license or permit to which SFX or the Contributed Assets
are now subject; and (iv) will not result in the creation of any Lien, charge
or encumbrance on any of the Contributed Assets.
SECTION 6.4 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against SFX that would adversely affect
its ability to perform its obligations pursuant to this Agreement or the
agreements to be executed in connection herewith.
SECTION 6.5 Title to Contributed Assets. On the Closing Date, except
as set forth in Section 5.5 of the Disclosure Schedule, SFX will have (i) good,
valid and marketable title to, or other legal right to use, all the Station
Assets, free and clear of any Lien other than Permitted Liens, and (ii) the
legal right to assign to the Company all the FCC Licenses, free and clear of
any Lien other than Permitted Liens.
SECTION 6.6 Government Authorizations.
(a) Section 5.6 of the Disclosure Schedule contains a true and
complete list of the FCC Licenses and other material licenses, permits or other
authorizations from governmental and regulatory authorities which are necessary
for the lawful conduct of the business and operations of the Station in the
manner and to the full extent they are presently conducted. As of the Closing
Date, SFX will be the authorized legal holder of the FCC Licenses and other
licenses, permits and authorizations listed in said Section 5.6, none of which
is subject to any restrictions or condition which would limit in any respect
the full operation of the Station as now operated.
-15-
(b) Except as set forth in Section 5.6 of the Disclosure Schedule,
there are no applications, complaints or proceedings pending or, to the best of
SFX's knowledge, threatened as of the date hereof by or before the FCC relating
to the business or operations of the Station other than applications,
complaints or proceedings which generally affect the broadcasting industry. The
FCC Licenses listed in said Section 5.6 are in good standing, are in full force
and effect and are unimpaired by any act or omission of SFX or any of its
respective officers, directors or employees; and the operation of the Station
is in accordance with the FCC Licenses. No proceedings are pending or, to the
knowledge of SFX, are threatened with respect to the FCC Licenses which may
result in the revocation, adverse modification, non-renewal or suspension of
any of the FCC Licenses, the denial of any pending applications for the
Station, the issuance of any cease and desist order against the Station, the
imposition of any administrative sanctions by the FCC with respect to the FCC
Licenses or which may adversely affect the Company's ability to continue to
operate the Station as it is currently operated. SFX has no reason to believe
that the FCC Licenses that are normally renewable in the ordinary course will
not be renewed in their ordinary course. All material reports, forms and
statements required to be filed by SFX or any affiliate thereof with the FCC
with respect to the Station since the grant of the last renewal of the FCC
Licenses have been filed and are substantially complete and accurate. Subject
to obtaining the required FCC consents as contemplated by Section 3.1 hereof
and subject to the assignment of the Contributed Assets as contemplated in
Section 2.1 hereof, there are no facts which, under the Communications Act, or
the existing rules and regulations of the FCC, would disqualify SFX as an
assignor of the Contributed Assets.
SECTION 6.7 Compliance with FCC Regulations. The operation of the
Station and all of the Contributed Assets are in compliance in all material
respects with (i) all applicable engineering standards required to be met under
applicable FCC rules and (ii) all other applicable rules, regulations,
requirements and policies of the FCC, including, but not limited to, ANSI
Radiation Standards C95.1 - 1982 to the extent required to be met under
applicable FCC rules and regulations; and there are no existing claims known to
SFX to the contrary.
SECTION 6.8 Taxes. Except as set forth in Section 5.8 of the
Disclosure Schedule, SFX or an applicable affiliate thereof has filed with
respect to the Station all applicable federal, state, local and foreign income,
franchise, sales,
-16-
use, property, excise, payroll and other tax returns required by law and has
paid in full all taxes, estimated taxes, interest, assessments, and penalties
due and payable. All returns and forms which have been filed have been true and
correct in all material respects and no tax or other payment in a material
amount other than as shown on such returns and forms are required to be paid
and have been paid by SFX or its affiliates. There are no present disputes as
to taxes of any nature payable by SFX relating to the Station which in any
event could materially adversely affect any of the Contributed Assets or the
operation of the Station.
SECTION 6.9 Real Property.
(a) Section 5.9 to the Disclosure Schedule contains a complete and
accurate list of all real property constituting the Contributed Assets and used
by the Station and all Contracts relating exclusively to the tower,
transmitter, studio site and offices of the Station (collectively the "Real
Estate Contracts") and a summary of the applicable leases.
(b) On the Closing Date, the Real Estate Contracts listed in Section
5.9 constitute valid and binding obligations of SFX and, to the best of SFX's
knowledge, of all other persons purported to be parties thereto and constitute
valid and binding obligations of SFX and, to the best of SFX's knowledge, of
all other persons purported to be parties thereto and shall be in full force
and effect. SFX is not in default under any of such Real Estate Contracts nor
has it received or given written notice of any default thereunder from or to
any of the other parties thereto.
SECTION 6.10 Contracts. Section 5.10 of the Disclosure Schedule lists
all Contracts as of the date of this Agreement, except (A) Contracts entered
into in the ordinary course of business (i) of less than three (3) months
duration and which impose monetary obligations of less than Five Thousand
Dollars ($5,000) each or Fifty Thousand Dollars ($50,000) in the aggregate,
(ii) for the sale or sponsorship of broadcast time on the Station for cash, for
which no prepayment has been received and with not more than twelve (12) months
remaining in their terms, or (iii) Contracts which are currently scheduled to
expire before the Closing Date and (B) time sales agreements which (i) are on
SFX's (or any of its affiliates') standard form, (ii) are terminable by SFX or
any of its affiliates within thirteen (13) weeks or less notice without
penalty, and (iii) provide for annual payments of fifty thousands dollars
($50,000) or less.
-17-
SECTION 6.11 Status of Contracts. Except as noted in Section 5.11 of
the Disclosure Schedule, SFX (or an affiliate thereof) has delivered to the
Company true and complete copies of all Contracts, including any and all
amendments and other modifications to such Contracts. All Contracts are valid,
binding and enforceable by SFX in accordance with their respective terms,
except as limited by laws affecting creditors' rights or equitable principles
generally. SFX and its affiliates have complied in all material respects with
all Contracts and are not in default beyond any applicable grace periods under
any of the Contracts, and no other contracting party is in default under any of
the Contracts.
SECTION 6.12 Environmental Matters. Neither SFX nor any affiliate
thereof has in connection with the operation of the Station unlawfully disposed
of any hazardous waste or hazardous substance including Polychlorinated
Byphenyls ("PCBs") in a manner which has caused, or could cause, the Company to
incur any liability under applicable law in connection therewith; and SFX
warrants that the technical equipment included in the Contributed Assets do not
contain any PCBs which are required by law to be removed and if any equipment
does contain PCBs, that such equipment is stored and maintained in compliance
with applicable law. SFX has complied in all material respects with all
federal, state and local environmental laws, rules and regulations applicable
to the Station and its operations, including but not limited to the FCC's
guidelines regarding RF radiation. No hazardous waste has been disposed of by
SFX, and to the best of SFX's knowledge, no hazardous waste has been disposed
of by any other person, on the real estate occupied by the Station or its
transmitters. As used herein, the term "hazardous waste" shall mean as defined
in the RCRA and in the equivalent state statute under the law of the state in
which such real estate is located.
SECTION 6.13 Copyrights, Trademarks and Similar Rights.
(a) Except for the FCC Licenses, Section 5.13 of the Disclosure
Schedule is a true and complete list of all copyrights, trademarks, trade
names, licenses, patents, permits, jingles and other similar intangible
property rights and interests applied for, issued to or owned by SFX or under
which such SFX is a licensee or franchisee and used exclusively in the conduct
of the business and operations of the Station.
-18-
(b) All of such rights and interests are issued to or owned by SFX or
if licensed or franchised to SFX to the best of SFX's knowledge, are valid and
in good standing and uncontested. SFX has delivered or made available to the
Company copies of all documents establishing such rights, licenses or other
authority. SFX has received no written notice and has no knowledge of any
infringements or unlawful use of such property. The properties listed in
Section 5.13 of the Disclosure Schedule include all such properties necessary
to conduct in all respects the business and operations of the Station as now
conducted.
SECTION 6.14 Personnel Information.
(a) Section 5.14 of the Disclosure Schedule contains a true and
complete list of all persons employed exclusively by the Station in connection
with the operation of the Station, including a description of material
compensation arrangements (other than employee benefit plans set forth in
Section 5.14 of the Disclosure Schedule) and a list of other terms of any and
all agreements affecting such persons. SFX has not received notification that
any of the current key employees listed in Section 5.14 of the Disclosure
Schedule presently plan to terminate their employment, whether by reason of the
transactions contemplated hereby or otherwise and SFX shall immediately notify
the Company upon receipt of any such notice.
(b) The Station is not subject to any Contract with any labor
organization, and the Station has not agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of their employees.
(c) Except as disclosed in Section 5.14 of the Disclosure Schedule,
SFX has, with respect to the Station, complied in all material respects with
all laws relating to the employment of labor, including, without limitation,
ERISA and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes.
SECTION 6.15 Litigation. Except as set forth in Section 5.15 of the
Disclosure Schedule, the Station is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree materially adversely affecting
the conduct of the business of the Station or the Contributed Assets, and to
the best of SFX's knowledge, there is no
-19-
litigation or proceeding threatened against SFX or the Station in any federal,
state or local court, or before any administrative agency or arbitrator
(including, without limitation, any proceeding which seeks the forfeiture of,
or opposes the renewal of, the FCC Licenses), or before any other tribunal duly
authorized to resolve disputes, which would reasonably be expected to have any
material adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Station or which seeks to enjoin or prohibit,
or otherwise questions the validity of, any action taken or to be taken
pursuant to or in connection with this Agreement. In particular, but without
limiting the generality of the foregoing, except as set forth in Section 5.6 of
the Disclosure Schedule, there are no applications, complaints or proceedings
pending or to the best of SFX's knowledge threatened before the FCC or any
other governmental organization with respect to the business or operations of
the Station other than applications, complaints or proceedings which affect the
broadcasting industry generally.
SECTION 6.16 Compliance With Laws. Except as set forth in Section 5.16
of the Disclosure Schedule, SFX has not received any notice asserting any
non-compliance by it in connection with the business or operation of the
Station with any applicable statute, rule or regulation, federal, state or
local. Neither SFX nor the Station is in default with respect to any judgment,
order, injunction or decree of any court, administrative agency or other
Governmental Authority or any other tribunal duly authorized to resolve
disputes in any respect material to the transactions contemplated hereby. SFX
and the Station are in compliance in all material respects with all laws,
regulations and governmental orders applicable to the conduct of the business
and operations of the Station, the failure to comply with which would have a
material adverse effect on the business, operations or financial condition of
the Station, and the present use of the Contributed Assets do not violate any
of such laws, regulations or orders (other than immaterial violations).
SECTION 6.17 Employee Benefit Plans. Section 5.17 of the Disclosure
Schedule contains a true and complete list as of the date of this Agreement of
all employee benefit plans applicable to the employees at the Station. The
Station does not maintain any other employee benefit plan as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1984, as
amended, applicable to the employees of the Station.
-20-
SECTION 6.18 Accuracy of Information. No written statements made by
SFX herein and no information provided by SFX herein or in the documents,
instruments or other written communications made or delivered directly by SFX
to the Company covering the contribution of the Contributed Assets contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements contained therein or herein not misleading, and there is no fact
known to SFX which relates to any information contained in any such written
document, instrument or communications which SFX has not disclosed to the
Company in writing which materially affects adversely the Station or the
Contributed Assets.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
SECTION 7.1 SFX's Condition to Closing. The obligations of SFX
hereunder are, at SFX's option, subject to satisfaction, on the Closing Date,
of each of the following conditions:
a. The representations and warranties of the Company set forth in
Article IV hereof being true and correct in all material respects on the
Closing Date.
b. The consummation of all of the transactions contemplated by the
Purchase and Sale Agreement shall have occurred or shall occur
contemporaneously with the Closing of the transactions contemplated by this
Agreement.
c. The FCC Consents shall have become a Final Order.
SECTION 7.2 The Company's Conditions to Closing. The obligations of
the Company hereunder are, at the Company's option, subject to satisfaction, on
the Closing Date, of each of the following conditions:
a. The representations and warranties of SFX set forth in Article VI
hereof are true and correct in all material respects; and
b. SFX shall have delivered the Contributed Assets to the Company,
free and clear of any and all liens and encumbrances.
-21-
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
SECTION 8.1 SFX's Documents. At the Closing, SFX shall deliver to the
Company the following:
(a) With respect to the Contributed Assets, SFX shall deliver an
assignment and assumption agreement to effect the assignment of the Contributed
Assets to the Company, free and clear of any and all Liens other than Permitted
Liens.
(b) Certified resolutions of the Board of Directors of SFX approving
the execution and delivery of this Agreement;
(c) Governmental certificates showing that SFX is in good standing in
the Commonwealth of Virginia dated not more than five (5) days before the
Closing Date;
(d) Articles of Incorporation and Bylaws of SFX certified by the
secretary of SFX as of the Closing Date; and
(e) Such additional information and materials as the Company shall
have reasonably requested.
SECTION 8.2 The Company's Documents. At the Closing, the Company shall
deliver or cause to be delivered to SFX the following:
(a) An assumption agreement assuming all of the liabilities and
obligations relating to the Contributed Assets, effective as of the Closing
Date.
(b) Governmental certificates from the Commonwealth of Virginia
showing that the Company is duly organized and in good standing in the
Commonwealth of Virginia dated not more than five (5) days before the Closing
Date;
(c) Certified resolutions of each of the members of the Company
approving the execution and delivery of this Agreement and each of the other
documents and agreements referred to herein and authorizing the consummation of
the transactions contemplated hereby and thereby;
(d) Articles of Organization and the Amended Operating Agreement
certified by the manager of the Company as of the Closing Date; and
-22-
(e) Such additional information and materials as SFX shall have
reasonably requested.
ARTICLE IX
OTHER PROVISIONS
----------------
SECTION 9.1 Severability. If any part or any provision of this
Agreement shall be invalid or unenforceable under applicable law, said part or
provisions shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining provisions of
this Agreement which shall be construed as if such invalid parts or provisions
had not been inserted, and such invalid or unenforceable provisions shall
become and be immediately amended and reformed to include only the portions
thereof as are enforceable by the court or such other body having jurisdiction
of this Agreement; and the parties agree that such portions as so amended and
reformed shall be valid and binding as though any wholly invalid or
unenforceable portion had not been included herein.
SECTION 9.2 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party; provided, the Liberty Entities shall have the right, subject
to applicable FCC requirements, to assign any and all of their respective
rights in this Agreement or any of the Contributed Assets to any of their
affiliates without the prior written consent of the Company so long as SFX, on
the Closing Date, shall contribute the Contributed Assets to the Company as
contemplated in this Agreement.
SECTION 9.3 Entire Agreement. This Agreement and the Schedules hereto
embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings
relating to the matters provided for in this Agreement other than the Master
Agreement. No amendment, waiver of compliance with any provision or condition
hereof or consent pursuant to this Agreement shall be effective unless
evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
-23-
SECTION 9.4 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
SECTION 9.5 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia without
giving effect to the choice of law provisions thereof.
SECTION 9.6 Notices. Any notice, demand or request required or
permitted to be given under the provisions of this Agreement shall be in
writing and shall be deemed to have been duly delivered and received on the
date of personal delivery or on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or on the date of
a stamped receipt, if sent by an overnight delivery service, and shall be
addressed to the following addresses, or to such other address as any party may
request:
To the SFX Broadcasting, Inc.
Liberty 000 Xxxx 00xx Xxxxxx
Xxxxxxxx Xxx Xxxx, XX 00000
or SFX: Attn: Xxxxxx Xxxxx
To the ABS Communications, L.L.C.
Company: 000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
SECTION 9.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
SECTION 9.8 Survival of Representations and Warranties;
Indemnification. The survival period of the representations and warranties set
forth in this Agreement and the indemnification obligations of SFX under this
Agreement shall be set forth in, and controlled by, the Master Agreement.
-24-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
ABS COMMUNICATIONS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
LIBERTY ACQUISITION SUBSIDIARY
CORPORATION
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title:
LIBERTY BROADCASTING OF MARYLAND, II
INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title:
SFX BROADCASTING, INC.
By: Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title:
-25-
INSTRUMENT OF ASSIGNMENT
INSTRUMENT OF ASSIGNMENT from Xxxxxxx X. Xxxxx ("Assignor") to ABS
Communications, L.L.C., a Virginia limited liability company ("Assignee").
Assignor and Assignee (along with ABS Communications Incorporated, for
certain limited purposes as specified therein) have executed and delivered a
KAB Contribution Agreement, dated as of December 17, 1996 (the "KAB
Contribution Agreement"). Capitalized terms used herein without definition
shall have the respective meanings assigned to them in the KAB Contribution
Agreement.
1. Pursuant to Section 7.1 of the KAB Contribution Agreement, for
valuable consideration, receipt of which is hereby acknowledged, Assignor does
hereby assign, transfer and convey to the Assignee, its successors and assigns
forever, such portions of the KAB Partnership Interests representing $1,700,000
in equity and $5,100,000 in gross value.
2. Nothing contained in this Instrument of Assignment shall in any way
supersede, modify, replace, amend, change, rescind, waive, exceed, expend,
enlarge or in any way affect the provisions, including the warranties,
covenants, agreements, conditions, representations or, in obligations and
indemnifications of Assignor or Assignee set forth in the KAB Contribution
Agreement, including without limitation any limits on indemnification specified
therein. This Instrument of Assignment is intended only to effect the transfer
of certain interests the transfer of which is contemplated in the KAB
Contribution Agreement and shall be governed in accordance with the terms and
conditions of the KAB Contribution Agreement.
3. This Instrument of Assignment is (i) executed pursuant to the KAB
Contribution Agreement and may be executed in two counterparts, each of which
as so executed shall be deemed to be an original, but all of which together
shall constitute one instrument and (ii) shall be governed by and in accordance
with the internal laws of the Commonwealth of Virginia, without regard to the
principles of conflicts of law thereof.
IN WITNESS THEREOF, Assignor has caused this Instrument of Assignment
to be duly executed and delivered as of this 17th day of December, 1996.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Accepted:
ABS COMMUNICATIONS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Manager
-2-
===============================================================================
PURCHASE AND SALE AGREEMENT
DATED AS OF DECEMBER 17, 1996
AMONG
XXXXXXX X. XXXXX,
ABS COMMUNICATIONS INCORPORATED,
EBF INC.,
EBF PARTNERS,
AND
ABS COMMUNICATIONS, L.L.C.
===============================================================================
-1-
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS................................................ 2
SECTION 1.1 Definitions............................................ 2
ARTICLE II SIMULTANEOUS CONTRIBUTION;
PURCHASE AND SALE.......................................... 8
SECTION 2.1 Simultaneous Contribution.............................. 8
SECTION 2.2 Purchase and Sale of Partnership
Interests.............................................. 8
ARTICLE III PURCHASE PRICE; ADJUSTMENT;
TRANSFER TAXES............................................. 9
SECTION 3.1 Purchase Price......................................... 9
SECTION 3.2 Payment; Delivery...................................... 9
SECTION 3.4 Payment of Taxes and Other Charges..................... 11
SECTION 3.5 Sellers' Representative................................ 11
ARTICLE IV CLOSING.................................................... 12
SECTION 4.1 The Closing............................................ 12
SECTION 4.2 Place of Closing....................................... 12
ARTICLE V GOVERNMENTAL CONSENTS...................................... 12
SECTION 5.1 FCC Consents........................................... 12
SECTION 5.2 FCC Applications....................................... 13
SECTION 5.3 HSR Applications....................................... 13
ARTICLE VI REPRESENTATIONS AND WARRANTIES
OF BUYER................................................... 14
SECTION 6.1 Organization and Standing.............................. 14
SECTION 6.2 Authorization and Binding
Obligation............................................. 14
SECTION 6.3 Absence of Conflicting Agreements
or Required Consents................................... 14
SECTION 6.4 Litigation............................................. 15
SECTION 6.5 FCC Qualifications..................................... 15
ARTICLE VII REPRESENTATIONS AND WARRANTIES
OF EBF SELLERS............................................. 15
SECTION 7.1 Organization and Standing.............................. 15
SECTION 7.2 Authorization and Binding
Obligation............................................. 16
SECTION 7.3 Title to Partnership Interest.......................... 16
SECTION 7.4 Absence of Conflicting Agreements
or Required Consents................................... 16
SECTION 7.5 Litigation............................................. 17
Page
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ARTICLE VIII REPRESENTATIONS AND WARRANTIES
OF KAB/ABS SELLERS......................................... 17
SECTION 8.1 Organization and Standing.............................. 17
SECTION 8.2 Authorization and Binding
Obligation............................................. 17
SECTION 8.3 Title to Partnership Interest.......................... 18
SECTION 8.4 Absence of Conflicting Agreements
or Required Consents................................... 18
SECTION 8.5 Litigation............................................. 18
ARTICLE IX REPRESENTATIONS AND WARRANTIES
OF SELLERS................................................. 19
SECTION 9.1 Organization and Standing.............................. 19
SECTION 9.2 Capitalization of the Partnerships..................... 19
SECTION 9.3 Title to Assets; Encumbrances.......................... 20
SECTION 9.4 Government Authorizations.............................. 20
SECTION 9.5 Compliance with FCC Regulations........................ 21
SECTION 9.6 Taxes.................................................. 21
SECTION 9.7 Real Property.......................................... 22
SECTION 9.8 Contracts.............................................. 22
SECTION 9.9 Status of Contracts.................................... 23
SECTION 9.10 Environmental Matters.................................. 23
SECTION 9.11 Copyrights, Trademarks and Similar
Rights................................................. 23
SECTION 9.12 Financial Statements................................... 24
SECTION 9.13 Personnel Information.................................. 25
SECTION 9.14 Litigation............................................. 25
SECTION 9.15 Compliance With Laws................................... 26
SECTION 9.16 Employee Benefit Plans................................. 26
SECTION 9.17 Accuracy of Information................................ 27
ARTICLE X COVENANTS OF BUYER......................................... 27
SECTION 10.1 Notification........................................... 27
SECTION 10.2 No Inconsistent Action................................. 27
SECTION 10.3 Buyer's Post-Closing Covenant.......................... 27
ARTICLE XI COVENANTS OF SELLERS....................................... 28
SECTION 11.1 Sellers' Pre-Closing Covenants......................... 28
SECTION 11.2 Notification........................................... 30
SECTION 11.3 No Inconsistent Action................................. 31
SECTION 11.4 Environmental Studies.................................. 31
ARTICLE XII JOINT COVENANTS............................................ 31
SECTION 12.1 Conditions............................................. 32
SECTION 12.2 Confidentiality........................................ 32
SECTION 12.3 Cooperation............................................ 32
SECTION 12.4 Employee Matters....................................... 32
-ii-
Page
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SECTION 12.5 Update................................................. 33
ARTICLE XIII CONDITIONS OF CLOSING BY BUYER............................. 33
SECTION 13.1 Representations, Warranties and
Covenants.............................................. 33
SECTION 13.2 Governmental Consents.................................. 34
SECTION 13.3 Governmental Authorizations............................ 34
SECTION 13.4 Adverse Proceedings.................................... 35
SECTION 13.5 Legal Opinion.......................................... 35
SECTION 13.6 FCC Legal Opinion...................................... 35
SECTION 13.7 Third-Party Consents................................... 35
SECTION 13.8 Encumbrances; Financing Statements..................... 35
SECTION 13.9 Bank Loan.............................................. 35
ARTICLE XIV CONDITIONS OF CLOSING BY
SELLERS.................................................... 36
SECTION 14.1 Representations, Warranties and
Covenants.............................................. 36
SECTION 14.2 Governmental Consents.................................. 37
SECTION 14.3 Adverse Proceedings.................................... 37
SECTION 14.4 Legal Opinion.......................................... 37
SECTION 14.5 Bank Loan.............................................. 37
ARTICLE XV [INTENTIONALLY OMITTED].................................... 38
ARTICLE XVI COMMISSIONS OR FINDER'S FEE................................ 38
SECTION 16.1 Buyer's Representation and
Agreement to Indemnify................................. 38
SECTION 16.2 Sellers' Representation and
Agreement to Indemnify................................. 38
ARTICLE XVII DOCUMENTS TO BE DELIVERED AT
CLOSING.................................................... 39
SECTION 17.1 Sellers' Documents..................................... 39
SECTION 17.2 Buyer's Documents...................................... 40
ARTICLE XVIII TERMINATION RIGHTS......................................... 40
SECTION 18.1 Termination............................................ 40
SECTION 18.2 Liability.............................................. 41
ARTICLE XIX OTHER PROVISIONS........................................... 41
SECTION 19.1 Risk of Loss........................................... 41
SECTION 19.2 Further Assurances..................................... 42
SECTION 19.3 Waiver................................................. 42
SECTION 19.4 Severability........................................... 42
SECTION 19.5 Benefit and Assignment................................. 43
SECTION 19.6 Entire Agreement....................................... 43
-iii-
Page
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SECTION 19.7 Headings............................................... 43
SECTION 19.8 Governing Law.......................................... 43
SECTION 19.9 Notices................................................ 43
SECTION 19.10 Financial Statements................................... 44
SECTION 19.11 Counterparts........................................... 44
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered into as of the
17th day of December, 1996, by and among XXXXXXX X. XXXXX ("KAB"), ABS
COMMUNICATIONS INCORPORATED, a Virginia corporation ("ABS"), EBF INC., a
Delaware corporation ("EBFI"), EBF PARTNERS, a New York partnership ("EBFP"
and, together with KAB, ABS and EBFI, "Sellers"), and ABS COMMUNICATIONS,
L.L.C., a Virginia limited liability company ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, ABS Richmond Partners, L.P., a Virginia limited partnership
("RICH-I"), owns and operates radio station WKHK-FM in Colonial Heights,
Virginia ("WKHK") and ABS Richmond Partners II, L.P., a Virginia limited
partnership ("RICH-II" and, together with RICH-I, the "Partnerships"), owns and
operates radio station WVGO-FM in Crewe, Virginia ("WVGO" and, together with
WKHK, the "Stations"), each pursuant to licenses issued by the Federal
Communications Commission (together with any successor agency or body, the
"FCC"); and
WHEREAS, ABS is the owner of a 0.5% general partnership interest in
RICH-I and a 0.5% general partnership interest in RICH-II (collectively, the
"ABS Partnership Interests"); and
WHEREAS, EBFI is the owner of a 0.5% general partnership interest in
RICH-I and a 0.5% general partnership interest in RICH-II (collectively, the
"EBFI Partnership Interests"); and
WHEREAS, EBFP is the owner of a 74.5% limited partnership interest in
RICH-I and a 74.5% limited partnership interest in RICH-II (collectively, the
"EBFP Partnership Interests" and together with the EBFI Partnership Interests,
the "EBF Partnership Interests"); and
-iv-
Page
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WHEREAS, simultaneously with the execution of this Agreement, KAB has
contributed to Buyer, and Buyer has accepted from KAB, such portions of KAB's
limited partnership interests in the Partnerships representing in the aggregate
$1,700,000 in equity and $5,100,000 in gross value (the "Contributed
Interests"; to the extent KAB has remaining any limited partnership interests
in the Partnerships after giving effect to the contribution of the Contributed
Interests such remaining interests shall be referred to as the "KAB Sold
Interests") in exchange for an increase in KAB's capital interest in Buyer,
pursuant to, and upon the terms and subject to the conditions set forth in, the
KAB Contribution Agreement, dated of even date herewith by and between KAB and
Buyer (the "KAB Contribution Agreement"); and
WHEREAS, each of KAB and ABS desires to sell, and Buyer desires to
purchase, the KAB Sold Interests and the ABS Partnership Interests,
respectively, (collectively, the "KAB/ABS Sold Interests"), upon the terms and
conditions as contained herein; and
WHEREAS, EBFI and EBFP (the "EBF Sellers") desire to sell, and Buyer
desires to purchase, the EBF Partnership Interests (the "EBF Sold Interests"
and, together with the KAB/ABS Sold Interests, the "Partnership Interests"),
upon such terms and conditions as contained herein; and
WHEREAS, upon the acquisition of the Partnership Interests by Buyer,
the Partnerships will dissolve, terminate and liquidate into Buyer;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions contained herein, and intending to be fully bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 Definitions. When used in this Agreement, the following
words or phrases shall have the following meanings:
-v-
Page
----
"ABS" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"ABS Partnership Interests" shall have the meaning assigned to such
term in the recitals to this Agreement.
"Agreement" shall mean this Purchase and Sale Agreement, as it may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"Arbiter" shall have the meaning assigned to such term in Section
3.3(a) of this Agreement.
"Base Purchase Price" shall mean Twenty One Million and Three Hundred
Thousand Dollars ($21,300,000); provided, Buyer shall have borrowed Three
Million Nine Hundred Thousand Dollars ($3,900,000) of debt recourse to KAB as
of the Closing Date.
"Buyer" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"Closing" shall have the meaning assigned to such term in Section 4.1
of this Agreement.
"Closing Date" shall have the meaning assigned to such term in Section
4.1 of this Agreement.
"Closing Date Current Assets" shall mean current assets of the
Partnerships as of the Closing Date determined in accordance with GAAP.
"Closing Date Current Liabilities" shall mean current liabilities of
the Partnerships as of the Closing Date determined in accordance with GAAP.
"Closing Date Liabilities" shall mean all liabilities, other than
Estimated Closing Date Current Liabilities, of the Partnerships as of the
Closing Date determined in accordance with GAAP and certified in writing by
Sellers and delivered to Buyer not less than five (5) business days before the
Closing Date.
-vi-
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"Closing Statement" shall have the meaning assigned to such term in
Section 3.3(a) of this Agreement.
"Communications Act" shall mean the Communications Act of 1934, as
amended, including as amended by the Telecommunications Act of 1996, and the
rules, regulations and policies promulgated thereunder.
"Contracts" shall mean all contracts, agreements, or binding
commitments or arrangements, written or oral, to which (i) either Partnership
is a party or by which any of the Partnership Assets may be bound or (ii) any
Seller is a party and in which such contract, agreement or arrangement relates
to the Partnership Assets.
"Contributed Interests" shall have the meaning assigned to such term
in the recitals to this Agreement.
"Contribution Agreement" shall have the meaning assigned to such term
in the recitals to this Agreement.
"Disclosure Schedule" shall mean the separate Disclosure Schedule
attached to this Agreement regarding certain representations and warranties
made by Sellers or Buyer, as the case may be, as further described in Articles
6, 7, 8 and 9 of this Agreement.
"Distributions" shall mean (i) the declaration or payment of any
dividend or distribution or the occurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of the
Partnerships' partnership interests, (ii) any payment on account of the
purchase, redemption, defeasance or other retirement of the Partnerships'
partnership interests, or (iii) any payment, loan, contribution or other
transfers of funds or other property to any partner of the Partnerships or any
affiliate of such partner.
"EBF Partnership Interests" shall have the meaning assigned to such
term in the recitals to this Agreement.
"EBF Sellers" shall have the meaning assigned to such term in the
recitals to this Agreement.
-vii-
Page
----
"EBF Sold Interests" shall have the meaning assigned to such term in
the recitals to this Agreement.
"EBFI" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"EBFI Partnership Interests" shall have the meaning assigned to such
term in the recitals to this Agreement.
"EBFP" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"EBFP Partnership Interests" shall have the meaning assigned to such
term in the recitals to this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Estimated Adjustment Amount" shall have the meaning assigned to such
term in Section 3.3(b) of this Agreement.
"Estimated Closing Date Current Assets" shall mean the bona fide
estimate of the Closing Date Current Assets as of ten (10) days before the
Closing Date, as certified in writing by Sellers and delivered to Buyer not
less than five (5) business days before the Closing Date.
"Estimated Closing Date Current Liabilities" shall mean the bona fide
estimate of the Closing Date Current Liabilities as of ten (10) days before the
Closing Date, as certified in writing by Sellers and delivered to Buyer not
less than five (5) business days before the Closing Date.
"FCC" shall have the meaning assigned to such term in the recitals to
this Agreement.
"FCC Applications" shall have the meaning assigned to such term in
Section 5.2 of this Agreement.
"FCC Consents" shall have the meaning assigned to such term in Section
5.1 of this Agreement.
-viii-
Page
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"FCC Licenses" shall mean the main transmitter licenses for the
Stations together with each of the other consents, rights, licenses, permits
and authorizations issued or granted by the FCC for the operation of or used in
connection with the ownership or operation of the Stations, together with any
renewals or extensions thereof.
"Final Adjustment Amount" shall have the meaning assigned to such term
in Section 3.3(b) of this Agreement.
"Final Order" shall have the meaning assigned to such term in Section
4.1 of this Agreement.
"Financial Statements" shall have the meaning assigned to such term in
Section 9.12 of this Agreement.
"GAAP" shall mean United States generally accepted accounting
principals as in effect on the date of this Agreement.
"Governmental Authority" shall mean a federal, state or local court,
legislature, governmental agency, commission or regulatory or administrative
authority or instrumentality.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"HSR Applications" shall have the meaning assigned to such term in
Section 5.3 of this Agreement.
"KAB" shall have the meaning assigned to such term in the first
paragraph of this Agreement.
"KAB Partnership Interests" shall have the meaning assigned to such
term in the recitals to this Agreement.
"KAB/ABS Sellers" shall have the meaning assigned to such term in the
recitals to this Agreement.
"KAB/ABS Sold Interests" shall have the meaning assigned to such term
in the recitals to this Agreement.
-ix-
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"Law" shall mean applicable common law and any statute, ordinance,
code or other law, rule, permit, permit condition, regulation, order, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority or court.
"Lien" shall mean any security agreement or financing statement filed
with an appropriate Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for security
purposes, any lien, mortgage, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including, without limitation, reservations,
rights of entry, possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, leases and licenses) of any kind, which (i) creates
or confers an interest in property to secure payment or performance of a
liability, obligation or claim, or which retains or reserves such an interest
for such purpose; (ii) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to sell or otherwise dispose of, or otherwise
results or may result in any Person acquiring, any property or interest
therein; (iii) restricts the transfer of, or the exercise of any rights or the
enjoyment of any benefits arising by reason of ownership of, any property; or
(iv) otherwise constitutes an interest in or claim against property whether or
not arising pursuant to any Law, FCC License or Contract.
"Master Agreement" shall mean that certain Master Richmond Station
Group Agreement dated of even date herewith entered into by and among Sellers,
Buyer, SFX, J. Xxxxx Xxxxxx and the Partnerships.
"Partnership Assets" shall mean all assets, properties, rights, titles
and privileges of the Partnerships of every kind, character and description,
whether tangible, intangible, real, personal or mixed, of whatever description
and wherever located, used in connection with the operation of the Stations
including, without limitation, all additions, accessions, and substitutions
made prior to the Closing as permitted pursuant to the terms of this Agreement.
For the avoidance of doubt, the parties agree (i) that WKHK Station Tower is
not included in this definition of Partnership Assets, and (ii) as contemplated
in Schedule A hereto.
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"Partnership Interests" shall have the meaning assigned to such term
in the recitals to this Agreement.
"Partnerships" shall have the meaning assigned to such term in the
recitals to this Agreement.
"PCBs" shall have the meaning assigned to such term in Section 7.13 of
this Agreement.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization or other legal entity.
"Purchase Price" shall have the meaning assigned to such term in
Section 3.1 of this Agreement.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended.
"Real Estate Contracts" shall have the meaning assigned to such term
in Section 7.10(a) of this Agreement.
"Representative" shall have the meaning assigned to such term in
Section 3.5 of this Agreement.
"RICH LMA" shall mean a Local Marketing Agreement which may be entered
into between Buyer and the Partnerships with respect to the Stations.
"RICH-I" shall have the meaning assigned to such term in the recitals
to this Agreement.
"RICH-II" shall have the meaning assigned to such term in the recitals
to this Agreement.
"Sellers" shall mean collectively, the EBF Sellers and the KAB/ABS
Sellers.
"SFX" shall mean SFX Broadcasting, Inc., a Delaware corporation.
"SFX Contribution Agreement" shall mean the SFX Contribution Agreement
entered into by and between SFX and Buyer.
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"SFX Convertible Note Agreement" shall mean the Convertible Note
Agreement entered into by and between SFX and Buyer.
"Stations" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Transfer Taxes" shall have the meaning assigned to such term in
Section 3.4 of this Agreement.
"UCC" shall mean the Uniform Commercial Code.
"WKHK" shall have the meaning assigned to such term in the recitals to
this Agreement.
"WVGO" shall have the meaning assigned to such term in the recitals to
this Agreement.
ARTICLE II
SIMULTANEOUS CONTRIBUTION; PURCHASE AND SALE
--------------------------------------------
SECTION 2.1 Simultaneous Contribution. Simultaneously with the
execution of this Agreement, KAB has contributed to Buyer, and Buyer has
accepted from KAB, the Contributed Interests, free and clear of any and all
Liens, in exchange for an increase in KAB's capital interest in Buyer of
$1,700,000.
SECTION 2.2 Purchase and Sale of Partnership Interests. Upon the terms
and subject to the conditions set forth in this Agreement, on the Closing Date,
(i) the EBF Sellers shall sell, assign, transfer and convey to Buyer, and Buyer
shall purchase from the EBF Sellers, the EBF Sold Interests, free and clear of
any and all Liens and (ii) KAB/ABS Sellers shall sell, assign, transfer and
convey to Buyer, and Buyer shall purchase from the KAB/ABS Sellers, the KAB/ABS
Sold Interests, free and clear of any and all Liens. For purposes of this
Agreement, any Liens on the Partnership Assets shall not be deemed to
constitute Liens on the Partnership Interests.
ARTICLE III
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PURCHASE PRICE; ADJUSTMENT; TRANSFER TAXES
------------------------------------------
SECTION 3.1 Purchase Price. The consideration for the purchase of the
Partnership Interests shall be the aggregate sum of the following, as adjusted
pursuant to the provisions of Section 3.3 hereof (the "Purchase Price"):
(a)
the Base Purchase Price; plus
(b)
the Estimated Closing Date Current Assets; minus
(c)
the Estimated Closing Date Current Liabilities; minus
(d) the Closing Date Liabilities.
Sellers agree that each Seller's allocable portion of the Purchase Price shall
be indicated on Schedule 3.1. Sellers and Buyer agree that the fair market
value of any asset of the Partnerships that would otherwise be described in
Section 751(a) of the Internal Revenue Code of 1986, as amended (the "Code")
shall equal its adjusted tax basis as of the Closing Date. The parties will
file all documents and returns consistent with this agreement including, but
not limited to, pursuant to Section 743(b) and Section 1060 of the Code.
SECTION 3.2 Payment; Delivery. Buyer shall pay to each Seller such
Seller's allocable portion of the Purchase Price at the Closing by wire
transfer in immediately available funds as determined under Section 3.1 and
pursuant to Schedule 3.1 to a bank designated in writing by the Representative
(as defined below) of such Seller.
SECTION 3.3 Post-Closing Adjustments.
(a) Closing Statement. As promptly as practicable, but in any event
not later than 90 days after the Closing Date, Buyer shall deliver to Sellers a
statement (the "Closing Statement") which sets forth (i) the Closing Date
Current Assets and the Closing Date Current Liabilities and (ii) Buyer's
calculation of the adjustment to the Purchase Price resulting therefrom.
Concurrently with the delivery of the Closing Statement, Buyer shall deliver to
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Sellers copies of work papers which set forth in reasonable detail Buyer's
calculations of the various amounts included in such Closing Statement. Buyer
shall, and shall cause its independent certified public accountants to, give
Sellers access, during regular business hours upon reasonable notice, to the
books and records of the Partnerships which relate to or are necessary for the
preparation of the Closing Statement for the purpose of reviewing work
performed in preparation of, and the amounts set forth in, the Closing
Statement. The Closing Statement and the computations of Closing Date Current
Assets and the Closing Date Current Liabilities set forth therein shall be
conclusive and binding upon the parties unless, within 30 days after the
delivery of such Closing Statement, Sellers notify Buyer in writing that
Sellers dispute any of the amounts set forth therein. The parties shall in good
faith attempt to resolve any dispute, in which event the Closing Statement and
the computations of Closing Date Current Assets and Closing Date Current
Liabilities, as amended to the extent necessary to reflect the resolution of
the dispute, shall be conclusive and binding upon the parties. If the parties
do not reach agreement resolving the dispute within 10 days after notice
pursuant to the second preceding sentence, the parties shall submit the dispute
for resolution to the Washington D.C. office of Deloitte & Touche LLP (the
"Arbiter"). Promptly, but in no event later than 20 days after the appointment
of the Arbiter, the Arbiter shall determine, based on presentations by the
parties and such additional procedures as the Arbiter deems appropriate, only
those issues in dispute and shall render a report as to the dispute and the
resulting computations of the Closing Date Current Assets and the Closing Date
Current Liabilities, as the case may be, together with amendments to the
Closing Statement to the extent necessary to reflect the Arbiter's
determinations, which shall be conclusive and binding upon the parties. All
references hereinafter to amounts set forth in the Closing Statement shall be
references to the amounts which shall have become conclusive and binding on the
parties in accordance with this Section 3.3(a). The fees, costs and expenses of
the Arbiter shall be allocated between the parties in such manner as the
Arbiter in its sole discretion deems appropriate.
(b) Purchase Price Adjustments. In preparing the Closing Statement,
Buyer shall adjust the Purchase Price as follows: If the sum of (i) the Closing
Date Current Assets minus the Closing Date Current Liabilities (such sum,
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the "Final Adjustment Amount") exceeds the sum of (ii) the Estimated Closing
Date Current Assets minus the Estimated Closing Date Current Liabilities (such
sum, the "Estimated Adjustment Amount"), the Purchase Price shall be increased
by the amount of such excess. If the Estimated Adjustment Amount exceeds the
Final Adjustment Amount, the Purchase Price shall be reduced by the amount of
such excess.
(c) Interest. Any Purchase Price adjustment pursuant to Section 3.3(b)
payable by Buyer to Sellers or by Sellers to Buyer, as the case may be, shall
bear interest at an annual rate equal to the prime or reference rate from time
to time of Citibank, N.A., from and including the Closing Date to but not
including the date of payment. An amount equal to any such Purchase Price
adjustment (plus interest determined pursuant to the preceding sentence) shall
be paid by Sellers or Buyer, as the case may be, by wire transfer of
immediately available funds to Buyer or Sellers, as the case may be. The Final
Adjustment Amount, including interest thereon, shall be made on the third
business day following (i) the 30th day after delivery by Buyer to Sellers of
the Closing Statement if there shall have been no disputes between the parties
with respect thereto, or (ii) the date mutual agreement is reached as to any
Purchase Price adjustment, in the event of a dispute that is settled by the
parties without resort to the Arbiter, or (iii) the receipt of the report of
the Arbiter in the event of a dispute that is settled by the Arbiter, as
applicable.
SECTION 3.4 Payment of Taxes and Other Charges. Sellers shall pay, at
the Closing or, if due thereafter, promptly when due, all gross receipts taxes,
gains taxes (including, without limitation, real property gains tax or other
similar taxes), transfer taxes, sales taxes, stamp taxes, and any other taxes
(collectively, "Transfer Taxes") payable in connection with the transfer of the
Partnership Interests. Subject to Buyer's right of reasonable review and
comment before filing, Sellers shall prepare and file any tax returns with
respect to such Transfer Taxes.
SECTION 3.5 Sellers' Representative. To facilitate the consummation of
the transactions contemplated by this Agreement before, at and after the
Closing, the Sellers hereby irrevocably consent to the appointment of, and do
hereby appoint and empower, Xxxxxxx Xxxxxxx, III and KAB as the sole and
exclusive representative (each a
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"Representative") of the EBF Sellers and the KAB/ABS Sellers, respectively, to
make all decisions and determinations on behalf of such Seller that such
Representative may deem necessary or appropriate to accomplish the intent of
this Agreement. Without limiting the generality of the foregoing, each
Representative shall have the power to agree and determine on behalf of its
respective Seller, with Buyer, as to the amount of any adjustments to the
Purchase Price, or otherwise. All decisions of the Representatives shall be
final and binding on their respective Sellers.
ARTICLE IV
CLOSING
-------
SECTION 4.1 The Closing. Except as otherwise mutually agreed upon by
Sellers and Buyer, the consummation of the transactions contemplated herein
(the "Closing") shall occur within ten (10) days after the satisfaction or
waiver of each condition to Closing contained herein (such date of the closing,
the "Closing Date") (excluding conditions that by their terms cannot be
satisfied until the Closing Date). For purposes of this Agreement, the FCC
Consents shall be deemed to be a "Final Order" when (i) they have not been
vacated, reversed, stayed, set aside, annulled or suspended; (ii) they are not
the subject of any pending timely appeal, request for stay or petition or
motion for rehearing, reconsideration or review by any party or by the FCC on
its own motion; and (iii) they are actions by the FCC as to which the time for
filing any such appeal, request, petition or similar document or the normal
time for the reconsideration or review by the FCC on its own motion under the
Communications Act and the rules and regulations of the FCC has expired.
SECTION 4.2 Place of Closing. The Closing shall take place at the
offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, commencing at 9:00 a.m. local time or at such other place as
the parties shall mutually agree.
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ARTICLE V
GOVERNMENTAL CONSENTS
---------------------
SECTION 5.1 FCC Consents. It is specifically understood and agreed by
Buyer and Sellers that the Closing and the assignment of the Partnership
Interests is expressly conditioned on and is subject to the prior consent and
approval of the FCC and any conditions imposed in such approval, which
conditions are not deemed, in Buyer's reasonable judgment subject to Schedule
5.1, materially adverse to Buyer's interest in the Stations (the "FCC
Consents").
SECTION 5.2 FCC Applications. Sellers and Buyer shall use their
reasonable best efforts to file with the FCC the requisite applications
for consent to the transfer of control of the Partnerships to Buyer and
such other applications for the transactions contemplated hereunder
(including any applications in connection with assignments to Buyer of
the FCC Licenses) (the "FCC Applications") within ten (10) business days
following the date of this Agreement and Buyer shall, to the extent
deemed necessary, file temporary waiver requests with such applications for
the purposes of coming into compliance with the FCC's local ownership
limitations. Buyer shall have the right to make such amendments to the
FCC Applications and waiver requests as shall be necessary to reflect
changes that may occur in the structure of Buyer, for a period of fifteen
(15) days following the date on which the FCC Applications are accepted
for filing by the FCC, provided that Buyer remains qualified to be the
assignee of the Stations and provided that any such changes do not
materially adversely impact such waiver requests. Thereafter, Sellers
and Buyer shall prosecute the FCC Applications with reasonable best
efforts to obtain the grant of the FCC Applications as expeditiously
as practicable (but neither Sellers nor Buyer shall have any obligation
to satisfy complainants or the FCC by taking any steps which would have
a material adverse effect upon Sellers or Buyer or upon any affiliated
entity). If the FCC Consents impose any condition on any party hereto,
such party shall use its reasonable best efforts to comply with such
condition; provided, however, that no party hereto shall be required
hereunder to comply with any condition that would have a material adverse
effect upon it or any affiliated entity.
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The parties hereto acknowledge that, in the event the FCC Consents impose
conditions precedent to the effectiveness of the FCC Consents, the parties
hereto shall not effectuate the Closing without first having satisfied such
conditions precedent. If reconsideration or judicial review is sought with
respect to the FCC Consents, the party affected shall vigorously oppose such
efforts for reconsideration or judicial review; provided, however, that nothing
herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Article 18 hereof.
SECTION 5.3 HSR Applications. Sellers and Buyer shall use their
reasonable best efforts to file any notification and report form required under
the HSR Act with respect to the transactions contemplated by this Agreement
(the "HSR Applications") within ten (10) business days following the date of
this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Sellers, each of which is true and correct on the date hereof, shall remain
true and correct through and including the Closing Date, shall be unaffected
by any notice to Sellers other than in the Disclosure Schedule and shall
survive the Closing to the extent provided in the Master Agreement. Such
representations and warranties are subject to, and qualified by, any fact
or facts disclosed in the appropriate section of the Disclosure Schedule.
SECTION 6.1 Organization and Standing. Buyer is a limited liability
company duly organized, validly existing and in good standing under the
laws of the Commonwealth of Virginia, and, as of the Closing Date, Buyer
shall be duly qualified to do business and be in good standing in the
Commonwealth of Virginia. As of the date hereof, KAB and ABS own 99% and 1%,
respectively, of the profit interest in Buyer.
SECTION 6.2 Authorization and Binding Obligation. Subject to obtaining
the FCC Consents, Buyer has all necessary power and authority to enter into
and perform this Agreement and the transactions contemplated
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hereby, and Buyer's execution, delivery and performance of this Agreement
and the transactions contemplated hereby have been duly and validly
authorized by all necessary action on its part. This Agreement has been
duly executed and delivered by Buyer and this Agreement constitutes,
and the other agreements to be executed in connection herewith will
constitute, the valid and binding obligation of Buyer, enforceable in
accordance with their terms, except as limited by laws affecting creditors'
rights or equitable principles generally.
SECTION 6.3 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Article V hereof with respect to governmental
consents, the execution, delivery and performance of this Agreement by
Buyer: (a) does not require the consent of any third party; (b) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Buyer is a
party; and (c) will not, either alone or with the giving of notice or
the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any agreement, instrument, license or
permit to which Buyer is now subject.
SECTION 6.4 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation
before any court or governmental body, pending against Buyer that would
adversely affect Buyer's ability to perform its obligations pursuant to
this Agreement or the agreements to be executed in connection herewith.
SECTION 6.5 FCC Qualifications. Buyer knows of no facts that, under
the Communications Act or the existing rules and regulations of the FCC,
would disqualify Buyer as an assignee of the Stations.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF EBF SELLERS
---------------------------------------------
The EBF Sellers hereby jointly and severally make the following
representations and warranties to Buyer, each of which is true and correct
on the date hereof, shall
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remain true and correct to and including the Closing Date, shall be
unaffected by any notice to Buyer other than in the Disclosure Schedule
and shall survive the Closing to the extent provided in the Master
Agreement. Such representations and warranties are subject to, and
qualified by, any fact or facts disclosed in the appropriate section of
the Disclosure Schedule.
SECTION 7.1 Organization and Standing.
(a) EBFI is a corporation duly organized, validly existing and in
good standing under the laws of the State of its incorporation, is duly
qualified to do business in the Commonwealth of Virginia, and has the
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(b) EBFP is a partnership duly organized and validly existing and in
good standing under the laws of New York, and has the requisite partnership
power and authority to own, lease and operate its properties and to carry on
its business as it is now being conducted.
SECTION 7.2 Authorization and Binding Obligation. Subject to obtaining
the FCC Consents, each EBF Seller has the corporate or partnership power and
authority, as applicable, to enter into and perform this Agreement and the
transactions contemplated hereby; such EBF Seller's execution, delivery and
performance of this Agreement, and the transactions contemplated hereby, have
been duly and validly authorized by all necessary corporate or partnership
action, as applicable, on its part. This Agreement has been duly executed and
delivered by each EBF Seller and this Agreement and the agreements to be
executed by such EBF Seller in connection herewith will constitute the valid
and binding obligation of such EBF Seller enforceable in accordance with their
terms, except as limited by laws affecting the enforcement of creditor's rights
or equitable principles generally.
SECTION 7.3 Title to Partnership Interest. Section 7.3 of the
Disclosure Schedule correctly and completely sets forth the percentage
Partnership Interest in the Partnerships owned by each EBF Seller as of the
date hereof. The Partnership Interest owned by each such EBF Seller is free and
clear of all Liens. There are no agreements or commitments to which any EBF
Seller is a party
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obligating such EBF Seller to deliver or sell, or cause to be delivered or
sold, the Partnership Interest owned by such EBF Seller or granting or
obligating such EBF Seller to grant, extend, or enter into any option, right of
first refusal, or other similar agreement or commitment with respect to the
Partnership Interest owned by such EBF Seller.
SECTION 7.4 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Article V hereof with respect to governmental consents
and as set forth in Section 7.4 of the Disclosure Schedule, the execution,
delivery and performance of this Agreement by each EBF Seller: (i) does not
require the consent of any third party; (ii) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which such EBF Seller is a party or by which it or
the Partnership Assets are bound; (iii) will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, agreement,
instrument, license or permit to which such EBF Seller or the Partnership
Assets are now subject; and (iv) will not result in the creation of any Lien,
charge or encumbrance on any of the Partnership Assets.
SECTION 7.5 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against either EBF Seller that would
reasonably be expected to materially adversely affect such EBF Seller's ability
to perform its obligations pursuant to this Agreement or the agreements to be
executed by such EBF Seller in connection herewith.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF KAB/ABS SELLERS
-------------------------------------------------
The KAB/ABS Sellers hereby jointly and severally make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof, shall remain true and correct to and including the Closing
Date, shall be unaffected by any notice to Buyer
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other than in the Disclosure Schedule and shall survive the Closing to the
extent provided in the Master Agreement. Such representations and warranties
are subject to, and qualified by, any fact or facts disclosed in the
appropriate section of the Disclosure Schedule.
SECTION 8.1 Organization and Standing. ABS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation, is duly qualified to do business in the Commonwealth of
Virginia, and has the corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
SECTION 8.2 Authorization and Binding Obligation. Subject to obtaining
the FCC Consents, each KAB/ABS Seller has the corporate or individual power and
authority, as applicable, to enter into and perform this Agreement and the
transactions contemplated hereby; such KAB/ABS Seller's execution, delivery and
performance of this Agreement, and the transactions contemplated hereby, have
been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by each KAB/ABS Seller and this
Agreement and the agreements to be executed in connection herewith will
constitute the valid and binding obligation of each such KAB/ABS Seller
enforceable in accordance with their terms, except as limited by laws affecting
the enforcement of creditor's rights or equitable principles generally.
SECTION 8.3 Title to Partnership Interest. Section 8.3 of the
Disclosure Schedule correctly and completely sets forth the percentage
Partnership Interest in the Partnerships owned by each KAB/ABS Seller as of the
date hereof. The Partnership Interest owned by each such KAB/ABS Seller is free
and clear of all Liens. There are no agreements or commitments to which any
KAB/ABS Seller is a party obligating such KAB/ABS Seller to deliver or sell, or
cause to be delivered or sold, the Partnership Interest owned by such KAB/ABS
Seller or granting or obligating such KAB/ABS Seller to grant, extend, or enter
into any option, right of first refusal, or other similar agreement or
commitment with respect to the Partnership Interest owned by such KAB/ABS
Seller.
SECTION 8.4 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Article V
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hereof with respect to governmental consents and as set forth in Section 8.4 of
the Disclosure Schedule, the execution, delivery and performance of this
Agreement by each KAB/ABS Seller: (i) does not require the consent of any third
party; (ii) will not violate any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which such
KAB/ABS Seller is a party or by which it or the Partnership Assets are bound;
(iii) will not, either alone or with the giving of notice or the passage of
time, or both, conflict with, constitute grounds for termination of or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, agreement, instrument, license or permit to which such
KAB/ABS Seller or the Partnership Assets are now subject; and (iv) will not
result in the creation of any Lien, charge or encumbrance on any of the
Partnership Assets.
SECTION 8.5 Litigation. There is no litigation, administrative,
arbitration or other proceeding, or petition, complaint or investigation before
any court or governmental body, pending against either KAB/ABS Seller that
would reasonably be expected to materially adversely affect such KAB/ABS
Seller's ability to perform its obligations pursuant to this Agreement or the
agreements to be executed in connection herewith.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby jointly and severally make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof, shall remain true and correct to and including the Closing
Date, shall be unaffected by any notice to Buyer other than in the Disclosure
Schedule and shall survive the Closing to the extent provided in the Master
Agreement. Such representations and warranties are subject to, and qualified
by, any fact or facts disclosed in the appropriate section of the Disclosure
Schedule.
SECTION 9.1 Organization and Standing. Each Partnership is a
partnership duly organized and validly existing and in good standing under the
laws of the Commonwealth of Virginia, and has the requisite partnership
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power and authority to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each Partnership is duly qualified
as a foreign partnership to do business in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not have a material adverse effect
on the business, operations or prospects of such Partnership. True and complete
copies of all such certificates and other documents (including, without
limitation, the partnership agreements of the Partnerships and all amendments
thereto) relating to the organization and qualification of the Partnerships, as
amended to date, have been furnished to Buyer. Copies of any amendment thereto
prior to the Closing Date will be furnished to Buyer promptly upon the
effectiveness of any such amendment.
SECTION 9.2 Capitalization of the Partnerships. Section 9.2 of the
Disclosure Schedule correctly and completely sets forth the Partnership
Interests in the Partnerships and the record owner of all such Partnership
Interests. There are no agreements or commitments to which either Partnership
is a party of any character relating to any Partnership Interest, including,
without limitation, any agreement or commitment obligating such Partnership to
issue, deliver or sell, or cause to be issued, delivered or sold, any
Partnership Interest or granting or obligating such Partnership to grant,
extend, or enter into any option, right of first refusal or other similar
agreement or commitment with respect to any Partnership Interest except as
among the Sellers which have been and are hereby waived.
SECTION 9.3 Title to Assets; Encumbrances.
(a) Except as set forth in Section 9.3 of the Disclosure Schedule, the
Partnerships have good, valid and marketable title to, or other legal right to
use, all the Partnership Assets, free and clear of any Lien. The Partnership
Assets constitute all the assets which are currently used or are necessary to
conduct the business and operations of the Stations in all respects as
currently conducted, except for the WKHK Tower.
(b) To the best knowledge of each of the Sellers, the Partnership
Assets are in good working condition (normal wear and tear excepted) and are
adequate
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and suitable for the purposes for which they are currently used. To the best
knowledge of each of the Sellers, the technical equipment constituting
Partnership Assets has been maintained in accordance with industry practice and
is in good operating condition and complies in all material respects with all
applicable rules and regulations of the FCC and the terms of the FCC Licenses.
SECTION 9.4 Government Authorizations.
(a) Section 9.4 of the Disclosure Schedule contains a true and
complete list of the FCC Licenses and other material licenses, permits or other
authorizations from governmental and regulatory authorities which are necessary
for the lawful conduct of the business and operations of the Stations in the
manner and to the full extent they are presently conducted. The Partnerships
are the authorized legal holders of the FCC Licenses and other licenses,
permits and authorizations listed in said Section 9.4, none of which is subject
to any restrictions or condition which would limit in any respect the full
operation of the Stations as now operated.
(b) Except as set forth in said Section 9.4 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending (and as
of the Closing, material applications, complaints or proceedings) or, to the
best of Sellers' knowledge, threatened as of the date hereof by or before the
FCC relating to the business or operations of the Stations other than
applications, complaints or proceedings which generally affect the broadcasting
industry. Sellers have delivered to Buyer true and complete copies of the FCC
Licenses, including any and all amendments and other modifications thereto.
Except as set forth in Section 9.4 of the Disclosure Schedule, the FCC Licenses
listed in said Section 9.4 are in good standing, are in full force and effect
and are unimpaired, and as of the Closing are unimpaired in any material
respects, by any act or omission of the Partnerships, Sellers or any of their
respective officers, directors or employees; and the operation of the Stations
is in accordance with the FCC Licenses. Except as set forth in Section 9.4 of
the Disclosure Schedule, no proceedings are pending or, to the knowledge of
Sellers, are threatened with respect to the FCC Licenses which may result in
the revocation, modification, non-renewal or suspension of any of the FCC
Licenses, the denial of any pending applications, the issuance of any
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cease and desist order, the imposition of any administrative actions by the FCC
with respect to the FCC Licenses which as of the date of this Agreement may
have an adverse effect on or which as of the Closing may have a material
adverse effect on Buyer's ability to continue to operate the Stations as they
are currently operated. Sellers know of no fact that would reasonably preclude
the FCC Licenses from being renewed in the ordinary course. All material
reports, forms and statements required to be filed by the Partnership and
Sellers with the FCC with respect to the Stations since the grant of the last
renewal of the FCC Licenses have been filed and are substantially complete and
accurate. Sellers know of no facts which, under the Communications Act, or the
existing rules and regulations of the FCC, would disqualify any Seller as an
assignor of the Partnership Interests.
SECTION 9.5 Compliance with FCC Regulations. The operation of the
Stations is and all of the Partnership Assets are in compliance in all material
respects with (i) all applicable engineering standards required to be met under
applicable FCC rules and (ii) all other applicable rules, regulations,
requirements and policies of the FCC, including, but not limited to, ANSI
Radiation Standards C95.1 - 1982 to the extent required to be met under
applicable FCC rules and regulations; and there are no existing claims known to
Sellers to the contrary.
SECTION 9.6 Taxes. Except as set forth in Section 9.6 of the
Disclosure Schedule, the Partnerships and Sellers have filed all applicable
federal, state, local and foreign income, franchise, sales, use, property,
excise, payroll and other tax returns required by law and have paid in full all
taxes, estimated taxes, interest, assessments, and penalties due and payable.
All returns and forms which have been filed have been true and correct in all
material respects and no tax or other payment in a material amount other than
as shown on such returns and forms are required to be paid and have been paid
by the Partnerships or Sellers. There are no present disputes as to taxes of
any nature payable by the Partnerships or Sellers which in any event could
materially adversely affect any of the Partnership Assets or the operation of
the Stations.
SECTION 9.7 Real Property.
(a) Section 9.7 to the Disclosure Schedule contains a complete and
accurate list of all real property
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constituting Partnership Assets and used primarily or exclusively by the
Stations and all Contracts relating to the tower, transmitter, studio site and
offices of the Stations (collectively the "Real Estate Contracts") and a
summary of the applicable leases.
(b) The Real Estate Contracts listed in Section 9.7 constitute valid
and binding obligations of the applicable Partnership and, to the best of
Sellers' knowledge, of all other persons purported to be parties thereto and
are in full force and effect as of the date hereof and will on the Closing Date
constitute valid and binding obligations of such Partnership and, to the best
of Sellers' knowledge, of all other persons purported to be parties thereto and
shall be in full force and effect. Neither Partnership is in default (beyond
any applicable grace period) under any of such Real Estate Contracts and has
not received or given written notice of any default (beyond any applicable
grace period) thereunder from or to any of the other parties thereto. Each
Seller will use its reasonable best efforts to obtain valid and binding
third-party consents from all third parties to the Real Estate Contracts, if
required, so as to insure that Buyer will enjoy all of the privileges of the
Partnerships thereunder.
SECTION 9.8 Contracts. Section 9.8 of the Disclosure Schedule lists
all Contracts in effect as of the date of this Agreement, except (A) Contracts
entered into in the ordinary course of business (i) of less than three (3)
months duration and which impose monetary obligations of less than Five
Thousand Dollars ($5,000) each or Fifty Thousand Dollars ($50,000) in the
aggregate, (ii) for the sale or sponsorship of broadcast time on the Stations
for cash, for which no prepayment has been received and with not more than
twelve (12) months remaining in their terms, or (iii) Contracts which are
currently scheduled to expire prior to Closing Date and (B) time sales
agreements which (i) are on the Partnership's standard form, (ii) are
terminable by the Partnerships within thirteen (13) weeks or less notice
without penalty, and (iii) provide for annual payments of fifty thousands
dollars ($50,000) or less.
SECTION 9.9 Status of Contracts. Except as noted in Section 9.9 of the
Disclosure Schedule, Sellers have delivered to SFX true and complete copies of
all Contracts listed in Section 9.8 of the Disclosure Schedule,
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including any and all amendments and other modifications to such Contracts. All
Contracts are valid, binding and enforceable by the Partnerships in accordance
with their respective terms, except as limited by laws affecting creditors'
rights or equitable principles generally. To the best of Sellers' knowledge,
(i) each Partnership has complied in all material respects with all Contracts
and is not in default beyond any applicable grace periods under any of the
Contracts, and (ii) no other contracting party is in default under any of the
Contracts.
SECTION 9.10 Environmental Matters. Neither the Partnerships nor
Sellers in connection with the operation of the Stations have unlawfully
disposed of any hazardous waste or hazardous substance including
Polychlorinated Byphenyls ("PCBs") in a manner which has caused, or reasonably
be expected to cause, Buyer to incur any liability under applicable law in
connection therewith; and Sellers warrant that the technical equipment included
in the Partnership Assets do not contain any PCBs which are required by law to
be removed and if any equipment does contain PCBs, that such equipment is
stored and maintained in material compliance with applicable law. The
Partnership and Sellers have complied in all material respects with all
federal, state and local environmental laws, rules and regulations applicable
to the Stations and its operations, including but not limited to the FCC's
guidelines regarding RF radiation. To the best of Seller's knowledge, no
hazardous waste has been unlawfully disposed of by any other person on the real
estate occupied by the Stations or their transmitters. As used herein, the term
"hazardous waste" shall mean as defined in the RCRA and in the equivalent state
statute under the law of the state in which such real estate is located.
SECTION 9.11 Copyrights, Trademarks and Similar Rights.
(a) Section 9.11 of the Disclosure Schedule is a true and complete
list of all copyrights, trademarks, trade names, licenses, patents, permits,
jingles and other similar intangible property rights and interests applied for,
issued to or owned by each of the Partnerships or Sellers or under which such
Partnership or Seller is a licensee or franchisee and used in the conduct of
the business and operations of the Stations.
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(b) All of such rights and interests are issued to or owned by the
Partnerships or Sellers, or if licensed or franchised to the Partnerships or
Sellers, to the best of Sellers' knowledge, are valid and in good standing and
uncontested. Sellers have delivered or made available to Buyer copies of all
documents establishing such rights, licenses or other authority. Sellers have
received no written notice and has no knowledge of any infringements or
unlawful use of such property.
SECTION 9.12 Financial Statements. Sellers have delivered to Buyer
complete audited copies of the statement of income and the balance sheet for
the Partnerships and the Stations for the period ending December 31, 1995,
December 31, 1994 and an unaudited statement of income and balance sheet for
the nine (9) months ending September 30, 1996 (the "Financial Statements"). The
audited Financial Statements have been audited by the accounting firm of
Xxxxxxx, Xxxxxxx et al. and accurately represent and present fairly the
financial condition and results of operations of the Partnerships for the
periods indicated. The unaudited Financial Statements accurately represent and
present fairly the financial condition and results of operations of the
Partnerships for the nine (9) months ending September 30, 1996. Between
September 30, 1996 and the date hereof, there has been no material adverse
change in the business, property, assets or condition (financial or otherwise)
of the Partnerships and (except for the transaction contemplated herein) the
Partnerships have operated the Stations in all material respects only in the
ordinary course of business.
Except for (i) liabilities as and to the extent reflected or reserved
against in the Financial Statements, (ii) liabilities not yet due and payable
or obligations to be performed or satisfied after the date hereof under
Contracts listed in the Disclosure Schedule, (iii) liabilities incurred between
September 30, 1996 and the date hereof in the ordinary and usual course of
business (including tax liabilities resulting solely from the normal operations
of the Partnerships during such period) and (iv) any other liabilities
disclosed in this Agreement or in the Disclosure Schedule, on the date hereof,
each Partnership has no liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, of a nature customarily reflected
in financial statements reflecting the accrual basis of accounting.
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SECTION 9.13 Personnel Information.
(a) Section 9.13 of the Disclosure Schedule contains a true and
complete list of all persons employed by the Partnerships or the Stations,
including a description of material compensation arrangements (other than
employee benefit plans set forth in Section 9.13 of the Disclosure Schedule)
and a list of other terms of any and all agreements affecting such persons. As
of the date of this Agreement, Sellers have not received notification that any
of the current key employees of the Partnerships or the Stations presently plan
to terminate their employment, whether by reason of the transactions
contemplated hereby or otherwise and Sellers shall immediately notify Buyer
upon receipt of any such notice.
(b) The Partnerships are not parties to any Contract with any labor
organization, nor have the Partnerships agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of the Partnerships' employees. Sellers
have no knowledge of any organizational effort currently being made or
threatened by or on behalf of any labor union with respect to employees of the
Partnerships. During the past three (3) years, the Partnerships have not
experienced any strikes, work stoppages, grievance proceedings, claims of
unfair labor practices filed or other significant labor difficulties of any
nature.
(c) Except as disclosed in Section 9.13 of the Disclosure Schedule,
the Partnerships, to the best of Sellers' knowledge, have complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, ERISA and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
SECTION 9.14 Litigation. Except as set forth in Section 9.14 of the
Disclosure Schedule, neither the Partnerships nor the Stations are subject to
any judgment, award, order, writ, injunction, arbitration decision or decree
materially adversely affecting the conduct of the business of the Partnerships,
the Stations or the Partnership Assets, and there is no litigation or
proceeding
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or, to the best of Sellers' knowledge, investigation pending or threatened
against the Partnerships, Sellers or the Stations in any federal, state or
local court, or before any administrative agency or arbitrator (including,
without limitation, any proceeding which seeks the forfeiture of, or opposes
the renewal of, any of the FCC Licenses), or before any other tribunal duly
authorized to resolve disputes, (i) which would reasonably be expected to have
any material adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Partnerships or the Stations or (ii) which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken pursuant to or in connection with this Agreement, which
litigation or proceeding would reasonably be expected to materially adversely
affect the consummation of the transactions contemplated by this Agreement.
SECTION 9.15 Compliance With Laws. Except as set forth in Section 9.15
of the Disclosure Schedule, Sellers have not received any notice asserting any
non-compliance (other than notices of non-compliance which are immaterial) by
the Partnerships or the Stations in connection with the business or operation
of the Partnerships or the Stations with any applicable statute, rule or
regulation, federal, state or local. Each of the Partnerships and the Stations
are not in default with respect to any judgment, order, injunction or decree of
any court, administrative agency or other Governmental Authority or any other
tribunal duly authorized to resolve disputes in any respect material to the
transactions contemplated hereby. Each of the Partnerships and the Stations are
in compliance in all material respects with all laws, regulations and
governmental orders applicable to the conduct of the business and operations of
the Stations, the failure to comply with which would have a material adverse
effect on the business, operations or financial condition of the Partnerships
or the Stations, and the present use of the Partnership Assets do not violate
any of such laws, regulations or orders (other than immaterial violations).
SECTION 9.16 Employee Benefit Plans. Section 9.16 of the Disclosure
Schedule contains a true and complete list as of the date of this Agreement of
all employee benefit plans applicable to the employees of the Partnerships and
the Stations. Neither the Partnerships nor any Seller maintains any other
employee benefit plan as the term is defined in Section 3 of the Employee
Retirement
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Income Security Act of 1984, as amended, applicable to the employees of the
Partnerships employed at the Stations.
SECTION 9.17 Accuracy of Information. No written statements made by
Sellers herein and no information provided by Sellers herein or in the
documents, instruments or other written communications made or delivered
directly by Sellers to Buyer covering the contribution and purchase and sale of
the Partnership Interests contain any untrue statement of a material fact or
omits a material fact necessary to make the statements contained therein or
herein not misleading, and there is no fact known to Sellers which relates to
any information contained in any such written document, instrument or
communications which Sellers have not disclosed to Buyer in writing which
materially affects adversely the Stations or the Partnership Assets.
ARTICLE X
COVENANTS OF BUYER
------------------
SECTION 10.1 Notification. Prior to the Closing Date, Buyer shall
notify Sellers of any litigation, arbitration or administrative proceeding
pending or, to its knowledge, threatened against Buyer which challenges the
transactions contemplated hereby.
SECTION 10.2 No Inconsistent Action. Buyer shall not take any other
action which is materially inconsistent with its obligations under this
Agreement.
SECTION 10.3 Buyer's Post-Closing Covenant. Buyer, for a period of one
(1) year following the Closing Date, shall make available for audit and
inspection by Sellers and its representatives for any reasonable purpose all
records, files, documents and correspondence transferred to it hereunder (the
"Records"); provided, Buyer shall make available to Sellers all tax Records
relating to, and reasonably requested by, Sellers in connection with any tax
audit of Sellers even beyond the one (1) year period. Buyer shall at no time
dispose of or destroy any Records prior to the one (1) year period (or any such
tax Records thereafter) without giving sixty (60) days prior notice to Sellers
to permit Sellers, at their own expense, to examine, duplicate or take
possession of and title to such records, files, documents and correspondence.
All personnel records shall
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be maintained as confidential if required by any applicable state or federal
law.
ARTICLE XI
COVENANTS OF SELLERS
--------------------
SECTION 11.1 Sellers' Pre-Closing Covenants. Each Seller jointly and
severally covenants and agrees that between the date of this Agreement and the
Closing Date, such Seller shall (except (i) as expressly permitted by this
Agreement or with the prior written consent of Buyer (which consent shall not
be unreasonably withheld or delayed) or (ii) as otherwise provided under the
RICH LMA) act in accordance with the following:
(a) Each Seller shall cause the Partnerships to conduct the business
and operations of the Stations in the ordinary and prudent course of business
(without taking into account the existence of this Agreement) and with the
intent of preserving the ongoing operations and assets of the Stations,
including, but not limited to, maintaining the independent identity of the
Stations, retaining the current format of the Stations and using its reasonable
best efforts to retain the services of key employees.
(b) Each Seller shall cause each of the Partnerships to use its
reasonable best efforts to preserve the operation of the Stations intact and to
preserve the business of the Stations' customers, suppliers and others having
business relations with the Stations and continue to conduct financial
operations of the Stations, including its credit and collection policies, in
the ordinary course of business with substantially the same effort, and to
substantially the same extent and in the same manner, as in the prior conduct
of the business of the Stations.
(c) Each Seller shall cause the Partnerships to operate the Stations
in all material respects in accordance with FCC rules and regulations and the
FCC Licenses and with all other laws, regulations, rules and orders, and shall
not cause or permit by any act, or failure to act, any of the FCC Licenses to
expire, be surrendered, adversely modified, or otherwise terminated, or fail to
prosecute with reasonable due diligence any pending applications to the FCC.
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(d) [INTENTIONALLY OMITTED].
(e) Each Seller shall not, other than in the ordinary course of
business or after receiving Buyer's prior written approval, (i) sell or dispose
of or commit to sell or dispose of any of the Partnership Assets; (ii) grant or
agree to grant any general increases in the rates of salaries or compensation
payable to employees of the Partnerships; (iii) grant or agree to grant any
specific bonus or increase to any executive or management employee of the
Partnerships; or (iv) provide for any new pension, retirement or other
employment benefits for employees of the Partnerships or any increases in any
existing benefits.
(f) [INTENTIONALLY OMITTED].
(g) Sellers may cause the Partnerships to enter into or renew any
Contract in the ordinary course of business without taking into account the
existence of this Agreement.
(h) Sellers shall give Buyer and Buyer's counsel, accountants,
engineers and other representatives, full and reasonable access during normal
business hours to all of the Partnerships' personnel, properties, books,
Contracts, reports and records including financial information and tax returns
with supporting work papers relating to the Partnerships and the Stations, to
all real estate buildings and equipment relating to the Partnerships and the
Stations, and to the employees of the Partnerships and the Stations in order
that Buyer may have full opportunity to make such investigation as it desires
of the affairs of the Partnerships and the Stations. Sellers shall to furnish
Buyer with information and copies of all documents and agreements including but
not limited to financial and operating data and other information concerning
the financial condition, results of operations and business of the Partnerships
and the Stations, that Buyer may reasonably request in order to complete
Buyer's due diligence examination of the Partnerships and the Stations. The
rights of Buyer under this Section shall not be exercised in such a manner as
to materially interfere with the business of the Partnerships or the Stations.
(i) The Partnerships shall spend not less than one hundred percent
(100%) of the cash promotions,
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advertising and research expenditures the Partnerships budgeted for the
Stations for the period from the date of this Agreement through the Closing
Date.
(j) Sellers shall use their reasonable best efforts to maintain the
employment at the Stations and to renew, in accordance with this Agreement, the
existing employment Contracts of the employees listed in Section 9.13 of the
Disclosure Schedule. Between the date hereof and for a period of three (3)
years from the Closing Date, neither Sellers nor any executive officer of
Sellers shall, directly or indirectly, through any agent or otherwise, hire or
solicit the employment of any of the employees listed on Section 9.13 of the
Disclosure Schedule who are hired by Buyer at or after the Closing or who are
subject to non-competition agreements with Buyer (but only to the extent
limited by such non-competition agreements), except as agreed to in writing by
Buyer and Sellers. Notwithstanding anything to the contrary herein, the
covenants and agreements contained in the immediately preceding sentence shall
not constitute joint and several covenants and agreements of Sellers, but shall
constitute joint and several covenants and agreements (i) by the EBF Sellers
with respect to both EBF Sellers and any executive officer of such Sellers and
(ii) by the KAB/ABS Sellers with respect to both KAB/ABS Sellers and any
executive officer of such Sellers.
(k) Sellers shall provide Buyer with revenue pacing reports for the
Stations on a weekly basis during the term of this Agreement. Additionally,
within twenty-five (25) days of the end of each month, Sellers shall deliver to
Buyer an unaudited statement of revenue and expenses of the Stations for the
month then ended. The weekly revenue pacing reports and the monthly statements
of revenue and expenses shall be certified by the managing general partners of
the Partnerships, shall be true and complete in all material respects to the
best of Sellers' knowledge and shall fairly and accurately represent in all
material respects the results of operation of the Stations for the period
covered by such reports and statements. Sellers shall also furnish to Buyer any
and all other information at such times as is customarily prepared by Sellers
concerning the financial condition of the Stations as Buyer may reasonably
request.
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(l) Sellers shall cooperate with Buyer by providing Buyer with such
financial and accounting records as Buyer may reasonably request in connection
with the preparation of financial statements of the Partnerships and the
Stations.
(m) The Partnerships shall not, and Sellers shall cause the
Partnerships not to, make any Distributions other than Distributions to each
partner of the Partnerships for payment of such partner's federal, state and
local income tax liability in respect of the net income of the Partnerships.
SECTION 11.2 Notification. Sellers shall notify Buyer of any material
litigation, arbitration or administrative proceeding pending or, to their
knowledge, threatened against Sellers which challenges the transactions
contemplated hereby.
SECTION 11.3 No Inconsistent Action. Sellers shall not take any action
which is materially inconsistent with its obligations under this Agreement.
SECTION 11.4 Environmental Studies. Sellers shall cooperate fully and
in all respects with the carrying out of Phase I environmental studies of the
real property and transmitting equipment used by the Partnerships in connection
with the operation of the Stations as contemplated by Section 5(a) of the
Master Agreement. In the event that such Phase I environmental studies (the
"Environmental Report") disclose a potential environmental liability, whether
fixed or contingent, and such liability is reasonably estimated by the
Environmental Consultant (as defined below) to cost less than One Hundred Fifty
Thousand Dollars ($150,000) to cure, Sellers shall promptly either (i) begin
remedial action to cure the condition giving rise to such liability and cure
such condition prior to Closing (at a cost to Sellers not to exceed such
estimated costs) or (ii) reduce the Purchase Price by such amount, which shall
have been estimated no later than 45 days from the date of this Agreement by
the environmental consultant who shall be reasonably acceptable to Sellers and
who shall have conducted the Phase I environmental studies (the "Environmental
Consultant"). However, in the event the Environmental Consultant reasonably
estimates within such period that such remedial action is likely to cost in
excess of One Hundred Fifty Thousand Dollars ($150,000), Buyer
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shall have the right, which right must be exercised within 15 days of receipt
of such estimate by delivery of a written notice to Sellers, to (i) terminate
this Agreement prior to Closing and no party hereto shall have any liability to
the other as a result of such termination or (ii) require that the Purchase
Price shall be reduced by $150,000. Notwithstanding any provision contained in
this Section 11.5, in the event the findings of the Phase I studies render it
impossible for SFX to obtain financing on commercially reasonable terms to
effect the transactions contemplated by the Master Agreement, then Buyer shall
terminate this Agreement.
ARTICLE XII
JOINT COVENANTS
---------------
Buyer and Sellers covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
SECTION 12.1 Conditions. If any event should occur, either within or
without the control of any party hereto, which would prevent fulfillment of the
conditions upon the obligations of any party hereto to consummate the
transactions contemplated by this Agreement, the parties hereto shall use their
reasonable best efforts to cure the event as expeditiously as possible.
SECTION 12.2 Confidentiality. Buyer and Sellers shall each keep
confidential all information obtained by it with respect to the other in
connection with this Agreement and the negotiations preceding this Agreement,
and will use such information solely in connection with the transactions
contemplated by this Agreement, and if the transactions contemplated hereby are
not consummated for any reason, each shall return to the other, without
retaining a copy thereof, any schedules, documents or other written information
obtained from the other in connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing (i) no party hereto shall be
required to keep confidential or return any information which (A) is known or
available through other lawful sources, not bound by a confidentiality
agreement with the disclosing party; (B) is or becomes publicly known through
no fault of the receiving party or
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its agents; (C) is required to be disclosed pursuant to an order or request of
a judicial or governmental authority (provided the disclosing party is given
reasonable prior notice) or pursuant to the requirements of the Communications
Act, the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended; or (D) is independently acquired or developed by such party
without violating any of the provision of this Section 12.2, and (ii) KAB, with
the prior written consent of SFX, may make public announcements on behalf of
Sellers or Buyer if prudent or necessary.
SECTION 12.3 Cooperation. Buyer and Sellers shall cooperate fully with
each other in taking any actions, including actions to obtain the required
consent of any governmental instrumentality or any third party necessary or
helpful to accomplish the transactions contemplated by this Agreement;
provided, however, that no party shall be required to take any action which
would have a material adverse effect upon it or any affiliated entity.
SECTION 12.4 Employee Matters. Buyer has agreed to hire all of the
employees listed on Section 9.13 of the Disclosure Schedule immediately
following the Closing. Sellers shall be responsible for all salary and benefits
of the employees of the Stations for the period prior to the Closing Date. All
employees of the Stations shall cease active participation in all of the
Partnerships' employee benefit plans on the Closing Date, in accordance with
the terms of such plans.
SECTION 12.5 Update. Each Seller shall provide Buyer prompt written
notice ("Seller Update Notice") of any change in any of the information
contained in the representations and warranties made in Articles VII, VIII or
IX hereof or any Exhibits or Schedules herein or attached hereto. Buyer shall
provide Sellers prompt written notice ("Buyer Update Notice") of any change in
any of the information contained in the representations and warranties made in
Article VI or any Buyer Exhibits or Schedules herein or attached hereto.
Delivery of (i) the Seller Update Notice to Buyer and (ii) the Buyer Update
Notice to Sellers, shall not be deemed to amend, modify or revise any of the
representations and warranties made by the Sellers or Buyer herein or any
Exhibits or Schedules herein or attached hereto without the prior written
consent of Buyer or the Sellers, as applicable.
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SECTION 12.6 FCC Matters. Should any fact relating to any Seller or
Buyer which would cause the FCC to deny its consent to the transactions
contemplated by this Agreement come to such Seller's or Buyer's attention, as
applicable, such Seller or Buyer, as applicable, shall promptly notify Buyer or
the Sellers thereof, as applicable, and shall use its reasonable best efforts
to take such steps as may be necessary to remove any such impediment to the
transactions contemplated by this Agreement.
ARTICLE XIII
CONDITIONS OF CLOSING BY BUYER
------------------------------
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
SECTION 13.1 Representations, Warranties and Covenants.
(a) Except for the representations and warranties contained in Section
9.10 with respect to any matter which shall have been disclosed in the
Environmental Report, all representations and warranties of Sellers made in
this Agreement shall be true and complete in all material respects as of the
date hereof and on and as of the Closing Date as if made on and as of that
date, except (i) for changes expressly permitted or contemplated by the terms
of this Agreement or (ii) to the extent that a representation or a warranty of
Sellers made in this Agreement expressly relates to an earlier date.
(b) All of the terms, covenants and conditions to be complied with and
performed by Sellers on or prior to Closing Date shall have been complied with
or performed in all material respects.
(c) Buyer shall have received a certificate, dated as of the Closing
Date, executed by a duly authorized officer of ABS and EBFI, by a duly
authorized general partner of EBFP and by KAB, to the effect that the
representations and warranties of Sellers contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that
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date, and that each Seller has complied with or performed all terms, covenants
and conditions to be complied with or performed by it in all material respects
on or prior to the Closing Date.
SECTION 13.2 Governmental Consents.
(a) The FCC Consents shall have become a Final Order.
(b) All consents, notices, approvals and actions required to permit
the consummation of the transactions contemplated hereby under the HSR Act
shall have been obtained or made.
(c) The FCC consent authorizing SFX to convert its loan under the SFX
Convertible Note Agreement into membership interests in Buyer shall have become
a Final Order, or such condition shall have been specifically waived, in
writing, by Buyer.
SECTION 13.3 Governmental Authorizations. The Partnerships shall be
the holders of the FCC Licenses, and there shall not have been any modification
of any of such FCC Licenses which has a material adverse effect on the Stations
or the conduct of their business and operations. No proceeding shall be
pending, the effect of which reasonably could be to revoke, cancel, fail to
renew, suspend or modify materially and adversely the FCC Licenses.
SECTION 13.4 Adverse Proceedings. (i) No suit, action, claim or
governmental proceeding shall be pending against any party hereto which would
reasonably be expected to render the consummation of the transactions
contemplated by this Agreement unlawful, and (ii) no order, decree or judgment
of any court, agency or other governmental authority shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
SECTION 13.5 Legal Opinion. Sellers shall have delivered to Buyer a
written opinion of its counsel, dated as of the Closing Date with respect to
(i) due incorporation of ABS and EBFI, due organization and existence of EBFP
and the Partnerships and legal capacity of KAB, (ii) due authorization,
execution and delivery by Sellers, (iii)
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valid and binding obligation and enforceability of this Agreement and each of
the other agreements to be executed by each Seller, (iv) no conflicts as to the
Partnerships and (v) the sufficiency of this Agreement and the applicable
instruments of assignment to validly transfer all of each Seller's Partnership
Interests to Buyer, addressed to Buyer in a form reasonably satisfactory to
Buyer.
SECTION 13.6 FCC Legal Opinion. Sellers shall have furnished Buyer a
written opinion of Sellers' FCC counsel, dated the Closing Date, addressed to
Buyer in a form reasonably satisfactory to Buyer.
SECTION 13.7 Third-Party Consents. Sellers shall have obtained and
shall have delivered to Buyer all third-party consents listed on Section 13.7
of the Disclosure Schedule.
SECTION 13.8 Encumbrances; Financing Statements. Other than as set
forth in Section 9.3 of the Disclosure Schedule, Sellers shall have delivered
to Buyer releases, if any, under the UCC of any financing statements filed
against any Partnership Assets in the jurisdiction in which the Partnership
Assets are and have been located since such Partnership Assets were acquired by
Sellers. On the Closing Date, the Partnership Assets shall be free and clear of
all Liens other than (i) Liens which relate to Closing Date Current Liabilities
and (ii) as set forth in Section 9.3 of the Disclosure Schedule.
SECTION 13.9 Bank Loan. Simultaneously with the Closing hereunder, (i)
Buyer shall have paid in full all principal, interest, fees and any other
amounts outstanding (the "Loan Amount") under that certain Credit Agreement
dated August 30, 1993 (the "Chase Agreement") by and among Rich-I, Rich-II, ABS
Greenville Partners, L.P., ABS Toledo Partners, L.P. and The Chase Manhattan
Bank (as successor in interest to Chemical Bank) ("Chase"), as amended through
the Closing Date; provided, that in no event shall the Loan Amount exceed the
Base Purchase Price and such Loan Amount shall be treated as a Closing Date
Liability adjusting the Purchase Price as contemplated under Section 3.1 hereof
and (ii) Chase shall have provided the Partnerships with a payoff letter
acknowledging that upon receipt of the Loan Amount, (1) the Chase Agreement
shall be terminated, and any and all Liens held by Chase securing the Loan
Amount shall be released and the borrowers thereunder shall have been
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released from any and all liabilities under the Chase Agreement. In addition,
Buyer shall have paid such other liabilities or RICH-I and RICH-II set forth
on Schedule 13.9 hereto and such amounts shall be treated as a Closing Date
Liability adjusting the Purchase Price as contemplated under Section 3.1
hereof.
ARTICLE XIV
CONDITIONS OF CLOSING BY SELLERS
--------------------------------
The respective obligations of Sellers hereunder are, at their option,
subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
SECTION 14.1 Representations, Warranties and Covenants.
(a) All representations and warranties of Buyer made in this Agreement
shall be true and complete in all material respects as of the date hereof and
on and as of the Closing Date as if made on and as of that date, except (i) for
changes expressly permitted or contemplated by the terms of this Agreement or
(ii) to the extent that a representation or a warranty of Buyer made in this
Agreement expressly relates to an earlier date.
(b) All the terms, covenants and conditions to be complied with and
performed by Buyer on or prior to the Closing Date shall have been complied
with or performed in all material respects.
(c) Sellers shall have received a certificate, dated as of the Closing
Date, executed by a duly authorized officer of Buyer, to the effect that the
representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date, and that Buyer has complied with or performed all
terms, covenants and conditions to be complied with or performed by it in all
material respects on or prior to the Closing Date.
SECTION 14.2 Governmental Consents.
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(a) The FCC Consents shall have become a Final Order.
(b) All consents, notices, approvals and actions required to permit
the consummation of the transactions contemplated hereby under the HSR Act
shall have been obtained or made.
SECTION 14.3 Adverse Proceedings. (i) No suit, action, claim or
governmental proceeding shall be pending against any party hereto which would
reasonably be expected to render the consummation of the transactions
contemplated by this Agreement unlawful, and (ii) no order, decree or judgment
of any court, agency or other governmental authority shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
SECTION 14.4 Legal Opinion. Buyer shall have delivered to Sellers an
opinion of its counsel, dated as of the Closing Date with respect to (i) due
incorporation of Buyer, (ii) due authorization, execution and delivery by Buyer
and (iii) valid and binding obligation and enforceability of this Agreement and
each of the other agreements to be executed by Buyer, addressed to Sellers in a
form reasonably satisfactory to Sellers.
SECTION 14.5 Bank Loan. Simultaneously with the Closing hereunder, (i)
Buyer shall have paid in full the Loan Amount; provided, that in no event shall
the Loan Amount exceed the Base Purchase Price and such Loan Amount shall be
treated as a Closing Date Liability adjusting the Purchase Price as
contemplated under Section 3.1 hereof and (ii) Chase shall have provided the
Partnerships with a payoff letter acknowledging that upon receipt of the Loan
Amount, (1) the Chase Agreement shall be terminated, and any and all Liens held
by Chase securing the Loan Amount shall be released and the borrowers
thereunder shall have been released from any and all liabilities under the
Chase Agreement. In addition, Buyer shall have paid such other liabilities of
RICH-I and RICH-II set forth on Schedule 13.9 hereto and such amounts shall be
treated as a Closing Date Liability adjusting the Purchase Price as
contemplated under Section 3.1 hereof.
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ARTICLE XV
[INTENTIONALLY OMITTED]
ARTICLE XVI
COMMISSIONS OR FINDER'S FEE
---------------------------
SECTION 16.1 Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Sellers that neither it nor any Person acting on its
behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any Person other
than to Interstate/Xxxxxxx Xxxx Corporation ("Interstate") whose fees and
expenses shall be paid by SFX through a loan to Buyer in accordance with the
Master Agreement. Buyer further agrees to indemnify, defend and hold Sellers
harmless from and against any and all claims, losses, liabilities and expenses
(including reasonable attorney's fees) arising out of a claim by any Person
(other than Interstate) based on any such arrangement or agreement made or
alleged to have been made by Buyer.
SECTION 16.2 Sellers' Representation and Agreement to Indemnify. Each
Seller represents and warrants to Buyer that neither it nor any Person acting
on its behalf has agreed to pay a commission, finder's fee or similar payment
in connection with this Agreement or any matter related hereto to any Person
other than to (i) Interstate whose fees and expenses shall be paid by SFX in
accordance with the Master Agreement and (ii) Xxxxxxxxx & Co. of Virginia, Inc.
whose fees and expenses shall be paid by Sellers. Each Seller further agrees to
indemnify, defend and hold Buyer harmless from and against any and all claims,
losses, liabilities and expenses (including reasonable attorney's fees) arising
out of a claim by any Person (other than Interstate) based on any such
arrangement or agreement made or alleged to have been made by Sellers.
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ARTICLE XVII
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
SECTION 17.1 Sellers' Documents. At the Closing, Sellers shall deliver
or cause to be delivered to Buyer the following:
(a) Assignment of the Partnership Interests (and all right, title and
interest therein) to Buyer, free and clear of any and all Liens;
(b) Certified resolutions of the Board of Directors of each of ABS and
EBFI approving the execution and delivery of this Agreement, the Master
Agreement and each of the other documents to be executed and delivered by such
Seller and authorizing the consummation of the transactions contemplated hereby
and thereby;
(c) The certificates, dated the Closing Date, of each Seller in the
form described in Section 13.1(c);
(d) Governmental certificates showing, in the case of ABS and EBFI,
that such Sellers are duly incorporated in the Commonwealth of Virginia and the
State of Delaware, respectively, and that each of them is in good standing in
the Commonwealth of Virginia dated not more than ten (10) days before the
Closing Date;
(e) Articles of Incorporation and Bylaws of ABS and EBFI certified by
the respective secretary of ABS and EBFI as of the Closing Date;
(f) The Partnership Agreement of EBFP certified by an authorized
partner of EBFP as of the Closing Date;
(g) At the time of Closing, originals or copies of all programs,
operations, transmissions, or maintenance logs and all other records required
to be maintained by the FCC with respect to the Stations, including each
Station's public file, shall be left at the Stations and thereby delivered to
Buyer;
(h) Sellers' opinion letters referenced in Section 13.5 and Section
13.6 above; and
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(i) Such additional information and materials as Buyer shall have
reasonably requested.
SECTION 17.2 Buyer's Documents. At the Closing, Buyer shall deliver or
cause to be delivered to Sellers the following:
(a) The Purchase Price in accordance with Section 3.2 hereof;
(b) A certificate, dated the Closing Date, by Buyer in the form
described in Section 14.1(c) above;
(c) The opinion of Buyer's counsel, dated the Closing Date, to the
effect set forth in Section 14.4;
(d) Governmental certificates from the Commonwealth of Virginia
showing that Buyer is duly incorporated and in good standing in the
Commonwealth of Virginia dated not more than ten (10) days before the Closing
Date;
(e) Certified resolutions of each of the members of Buyer approving
the execution and delivery of this Agreement and each of the other documents
and agreements referred to herein and authorizing the consummation of the
transactions contemplated hereby and thereby;
(f) Articles of Organization and Operating Agreement of Buyer
certified by the manager of Buyer as of the Closing Date; and
(g) Such additional information and materials as Sellers shall have
reasonably requested.
ARTICLE XVIII
TERMINATION RIGHTS
------------------
SECTION 18.1 Termination. In addition to the termination rights
provided under Section 11.5 hereof, this Agreement may be terminated by any
party hereto, if the party seeking to terminate is not in material default or
breach of this Agreement, upon written notice to the other parties upon the
occurrence of any of the following:
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(a) If the other party or parties default in any material respect in
the observance or in the due and timely performance of any of its or their
covenants or agreements herein contained and such material default shall not be
cured within thirty (30) days of the date of notice of default served by the
party claiming such material default; or
(b) If the FCC denies the FCC Applications, or if the FCC fails to
grant the FCC Consents before December 31, 1997; provided, that the party
seeking termination has diligently prosecuted the FCC Applications in good
faith; or
(c) By Buyer only, if normal broadcast transmissions are not operating
on the date immediately preceding the Closing Date; or
(d) If all of the parties hereto agree that all of the transactions
contemplated in the Master Agreement can not be completed on or before December
31, 1997; or
(e) As provided in Sections 11.4 or 19.1 hereof.
SECTION 18.2 Liability. The termination of this Agreement under
Section 11.4, 18.1 or 19.1 hereof shall not relieve any party of any liability
for material breach of this Agreement prior to the date of termination.
ARTICLE XIX
OTHER PROVISIONS
----------------
SECTION 19.1 Risk of Loss. The risk of loss or damage to any of the
Partnership Assets before the Closing Date shall be upon Sellers unless
otherwise agreed in writing. Sellers shall repair, replace and restore any such
damaged or lost Partnership Asset to its condition as of the date of this
Agreement as soon as possible and in no event later than the Closing Date.
Sellers hereby agree to notify Buyer in writing of any loss or damage to any
Partnership Asset which Sellers' reasonably believe has a value exceeding Fifty
Thousand Dollars ($50,000) as soon as possible after the occurrence of such
loss or damage. Except as provided below, if Sellers fail to so restore or
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replace a Partnership Asset with a value exceeding Fifty Thousand Dollars
($50,000) which is lost or damaged after the date hereof, Buyer may, within 30
days after written notice of such failure from Sellers, elect either to
terminate this Agreement pursuant to Article XVIII hereof or to consummate the
Closing on the Closing Date. If Sellers fail to restore or replace such
Partnership Asset and Buyer does not elect to terminate this Agreement, Sellers
shall assign to Buyer at Closing Sellers' rights under any insurance policy or
pay over to Buyer all proceeds of insurance covering such Partnership Asset's
damage, destruction or loss. If the restoration and replacement of any damaged
or destroyed property has not been completed at the time the Closing would
otherwise be held, then unless Sellers and Buyer otherwise agree, the Closing
Date shall be delayed and shall take place within fifteen (15) days after
Sellers give written notice to Buyer of completion of the restoration or
replacement of such Partnership Asset. If the delay in the Closing Date under
this Section 19.1 would cause the Closing to fall at anytime after the period
permitted by the FCC Consents, Sellers and Buyer shall file an appropriate
request with the FCC for an extension of time within which to complete the
Closing.
SECTION 19.2 Further Assurances. After the Closing, Sellers shall from
time to time, at the request of and without further cost or expense to Buyer,
execute and deliver such other instruments of conveyance and transfer and take
such other actions as may reasonably requested in order to consummate the
transactions contemplated hereby to vest in Buyer good and marketable title to
the assets being transferred hereunder, and Buyer shall from time to time, at
the request of and without further cost or expense to Sellers, execute and
deliver such other instruments and take such other actions as may reasonably be
requested in order to more effectively relieve Sellers of any obligations being
assumed by Buyer hereunder.
SECTION 19.3 Waiver. No delay or failure by any party hereto in
exercising any right, power or privilege under this Agreement, or under any
other instrument or document given in connection with or pursuant to this
Agreement, shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
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exercise of any right, power of privilege, or the exercise of any other right,
power or privilege.
SECTION 19.4 Severability. If any part or any provision of this
Agreement shall be invalid or unenforceable under applicable law, said part or
provisions shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining provisions of
this Agreement which shall be construed as if such invalid parts or provisions
had not been inserted, and such invalid or unenforceable provisions shall
become and be immediately amended and reformed to include only the portions
thereof as are enforceable by the court or such other body having jurisdiction
of this Agreement; and the parties agree that such portions as so amended and
reformed shall be valid and binding as though any wholly invalid or
unenforceable portion had not been included herein.
SECTION 19.5 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party may voluntarily or involuntarily
assign its interest under this Agreement without the prior written consent of
the other party.
SECTION 19.6 Entire Agreement. This Agreement, the Master Agreement
and the Exhibits and Schedules attached hereto and thereto embody the entire
agreement and understanding of the parties hereto and supersede any and all
prior agreements, arrangements and understandings relating to the matters
provided for in this Agreement. No amendment, waiver of compliance with any
provision or condition hereof or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
SECTION 19.7 Headings. The headings set forth in this Agreement are
for convenience only and will not control or affect the meaning or construction
of the provisions of this Agreement.
SECTION 19.8 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia without
giving effect to the choice of law provisions thereof.
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SECTION 19.9 Notices. Any notice, demand or request required or
permitted to be given under the provisions of this Agreement shall be in
writing and shall be deemed to have been duly delivered and received on the
date of personal delivery or on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or on the date of
a stamped receipt, if sent by an overnight delivery service, and shall be
addressed to the following addresses, or to such other address as any party may
request, in the case of Sellers, by notifying Buyer, and in the case of Buyer,
by notifying Sellers:
To Sellers: ABS Communications Incorporated
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
EBF Inc.
x/x Xxxxxxx Xxxxxxx, XXX
Xxxxxxxxx & Xx. xx Xxxxxxxx, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
EBF Partners
x/x Xxxxxxx Xxxxxxx, XXX
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
To Buyer: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
To SFX: SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
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SECTION 19.10 Financial Statements. The Financial Statements required
to be delivered to Buyer shall be mailed to the following:
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
SECTION 19.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
SELLERS:
ABS COMMUNICATIONS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
----------------------------------
EBF INC.
By: /s/ Xxxxxxx Xxxxxxx, III
-------------------------------
Name: Xxxxxxx Xxxxxxx, III
Title:
EBF PARTNERS
By: /s/ Xxxxxxx Xxxxxxx, III
-------------------------------
Partner Xxxxxxx Xxxxxxx, III
Page
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BUYER:
-----
ABS COMMUNICATIONS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
Page
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Schedule A
----------
KAB hereby agrees to provide the Buyer within five (5) days of this
Agreement an itemized list of assets which may be excluded from the Partnership
Assets, which itemized list shall be in a form (and supported by appropriate
back-up documentation) reasonably satisfactory to SFX that such itemized assets
have been acquired solely with the funds of KAB or ABS.
Page
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Schedule 5.1
------------
It is specifically acknowledged and agreed by Sellers and Buyer that
it shall not be a materially adverse condition on the FCC Consents if the FCC
(a) denies the temporary waiver referenced in Section 5.2 and/or (b) imposes
conditions that consummation of the transactions contemplated hereby and/or the
commencement of operations of WLEE-FM as a Ft. Xxx station cannot occur unless
and until one FM radio station to be under common control by Buyer or parties
to Buyer is divested to a third party.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 17th day
of December 1996, by and between SFX Broadcasting, Inc. (the "Company") and
Xxxxxxx X. Xxxxx, an individual (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company's majority-owned subsidiary, ABS Communications,
L.L.C., a Virginia limited liability company (the "LLC"), owns and operates
certain radio stations in the Richmond and Williamsburg, Virginia areas; and
WHEREAS, the Executive has experience in managing the operation of
radio stations; and
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. When used in this Agreement, the following
initially capitalized words or phrases shall have the following meanings:
"ABS" means ABS Communications Incorporated, a Virginia corporation
wholly-owned by KAB.
"Incentive Compensation" has the meaning ascribed to such term in
Section 4.2(a) of this Agreement.
"Agreement" means this Employment Agreement, together with any and all
exhibits, attachments and schedules appended hereto, as the same may be
amended, modified or supplemented from time to time.
"Base Salary" means Two Hundred Thousand Dollars ($200,000.00) per
annum.
"Bonus Year" means the particular calendar year (or any portion
thereof covered by the Term of this Agreement), commencing on the Start Date
through and until the Termination Date for which Incentive Compensation is
calculated pursuant to Section 4.2 of this Agreement.
"Cause" means a good faith determination by the Company that one or
more of the following has occurred: (i) the Executive has been convicted of any
crime or offense which constitutes a felony in the jurisdiction involved, or
(ii) the Executive has engaged in gross misconduct or fraud.
"Company" has the meaning ascribed to such term in the preamble of
this Agreement and includes all permitted successors and assigns thereof.
"Comparable Executives" means other General Managers of radio station
area markets comparable in size to the Richmond Radio Market employed by the
Company.
"Customer Lists" means any information, complete or incomplete,
whether written, electronically recorded or otherwise, identifying any or all
of the Company's or the LLC's customers or vendors, whether former, current or
prospective, as it may exist at any time and from time to time.
"Duties and Responsibilities" has the meaning ascribed to such term in
Section 3.2 of this Agreement.
"Executive" has the meaning ascribed to such term in the preamble of
this Agreement.
"Fair Market Value" means the value of one (1) share of common stock
of the applicable company or corporation, determined as follows, without regard
to any restriction other than a restriction which, by its terms, will never
lapse:
(i) if the common stock is traded on an exchange or the National
Association of Securities Dealers, Inc. ("NASD") National Market
("National Market"), the closing price as reported for composite
transactions on the date of valuation or, if no sales occurred on that
date, then the average price on such exchange or the National Market
for the twenty (20) trading days ending on such date;
-2-
(ii) if the common stock is not traded on an exchange or the
National Market but is otherwise traded over-the-counter, the average
of the highest bid and lowest asked prices quoted on the NASD SmallCap
Market (the "SmallCap Market") as of the close of business on the date
of valuation or, if on such day such security is not quoted on the
SmallCap Market, the average of the representative bid and asked
prices on such date in the domestic over-the-counter market as
reported by the National Quotation Bureau, Inc., or any similar
successor organization; and
(iii) if neither clause (i) nor (ii) above applies, the fair
market value shall be determined by the mutual agreement of the
parties. If the parties cannot agree, either party may notify the
other party and each party will select an investment banker (a
"Banker") with a minimum of five years experience in the valuation of
radio stations to determine the fair market value. If a party fails to
select a Banker within 30 days of the notice, the sole Banker's
appraisal shall be the Fair Market Value. If two appraisals are so
obtained and if these appraisals are within 10% of each other, the
average of the appraisals shall be the Fair Market Value. If the
appraisals are not within 10% of each other, the two Bankers shall
select a third Banker, and such third Banker shall make its appraisal,
and of the three (3) appraisals, and the appraisal that is neither the
highest or the lowest shall be the Fair Market Value. Each party shall
bear the cost of its or his own Banker; provided, however, if only one
Banker is selected or if a third Banker is selected, both parties
shall bear half the cost of the one Banker or the third Banker, as the
case may be.
"KAB" means Xxxxxxx X. Xxxxx.
"Life Insurance Policy" means a permanent whole life insurance policy
in the amount of [___________] Dollars ($__________) in respect of the life of
the Executive, which Life Insurance Policy shall be owned by the Executive who
shall have the right to designate the beneficiary thereof.
"LLC" has the meaning ascribed to such term in the recitals hereto.
"Members" means the Company and KAB.
-3-
"Membership Interests" means the ownership interests in the LLC owned
by the Members.
"Non-compete Agreement" has the meaning ascribed to such term in
Section 3.4 of this Agreement.
"Operating Agreement" means the LLC's Amended and Restated Operating
Agreement among the Company and KAB.
"Permanent Disability" means, with respect to the Executive the
absence of the Executive from his employment by reason of any mental, emotional
or physical illness, injury, disability, handicap, impediment or incapacity for
a period of one hundred eighty (180) days during any twelve-month period (with
such one hundred eighty (180) days comprised solely of the number of days
during which the Executive is absent for a consecutive period of at least
thirty (30) days), effective as of the last day of such one hundred eighty
(180) day period.
"Personal Property" means, without limitation except for those items
of property listed on Schedule 1.1 hereto, all books, manuals, documents,
records, reports, notes, notebooks, contracts, lists, registers, blueprints,
computer programs and software, equipment (including office equipment), credit
cards, parking or other permits, security and access passes and all other
Proprietary Information relating to the business of the Company and the LLC,
together with any and all repositories and copies thereof, whether photostatic,
electronic or otherwise, held by the Executive from time to time.
"Prohibited Activity" means to directly or indirectly (i) own, manage,
operate, join, control, participate in, or become employed by, (ii) render any
services (including, without limitation, consulting services), advice or
assistance of any nature on behalf of or (iii) invest in, acquire any interest
in or participate in the management, operation or control of, any person,
corporation, partnership or other entity which is engaged in the ownership or
operation of radio stations or any other businesses in which the Company, the
LLC or any of their affiliates is engaged; provided, however, that this
restriction shall not preclude the Executive from (i) engaging in any activity
outside the Richmond Radio Market so long as such activity will not, directly
or indirectly, be in competition with the Company, the LLC or any of their
affiliates, (ii) any Tower Activity or (iii) investing his personal funds in
securities of any company or entity in
-4-
competition with the Company or the LLC if the securities of such company or
entity are listed for trading on any nationally registered securities exchange
or authorized for quotation on the National Market and the Executive's holdings
therein represent two percent (2%) or less of the total number of outstanding
shares or other securities of such company or entity, as long as the Executive
has no other connection or relationship, whether direct or indirect, with the
issuer of such securities.
"Proprietary Information" means information which would be treated
under appropriate legal standards as confidential or proprietary, including,
but not limited to (i) marketing, competitive or other information available
only to the management of the Company or the LLC, (ii) information pertaining
to the contracts between the Company or the LLC and their respective customers
or vendors, including Customer Lists, pricing information and contract
termination dates, (iii) information that is not generally known in the
business in which the Company or the LLC is engaged, concerning the Company's
or the LLC's suppliers, properties, products, designs, concepts, ideas,
methods, prospects, processes, techniques and services, including, but not
limited to, information related to research, development, programming,
techniques of application, inventions, operations, constructions, purchasing,
accounting, engineering, marketing, merchandising, selling, renting, leasing,
negotiating, contracting and recording, (iv) all patents, trademarks, trade
secrets and other intellectual or industrial property rights, title and
interest therein, if any, which are or will in the future be owned by the
Company or the LLC, including, without limitation, all works, ideas, processes,
systems and improvements to or relating to the Company's or the LLC's business
or methods of operation and (v) any and all other information related to the
Company or the LLC of which the Executive may become aware but which is not
generally known to outsiders, including, but not limited to, cost allocations
and all other confidential information concerning or relating to any of the
customers, business or methods of operation of the Company or the LLC;
provided, that the foregoing provisions shall not be construed to prevent the
Executive from making use of or disclosing any such information which (A) is
already in or subsequently enters the public domain through no fault on the
part of the Executive; provided, however, that specific information which is
compiled on behalf of the Company or the LLC shall not be deemed to be in the
public domain merely because the components thereof are encompassed in general
information
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that is published or in the public domain or in the Executive's prior
possession; (B) is intentionally disclosed by the Company or the LLC to any
entity (not an affiliate of the Company or the LLC) on a non-confidential
basis; (C) is developed by the Executive without the use of any Proprietary
Information; (D) is required to be disclosed in order to comply with any law or
any order or ruling of a federal, state or local governmental or regulatory
authority or (E) is related to a Tower Activity.
"Richmond Radio Market" means the geographic broadcast area covered by
the Richmond Station Group, as it may exist at any time and from time to time
during the term of this Agreement.
"Richmond Station Group" means, either individually or collectively,
as the context may require, each of WBZU, WKHK, WLEE, WMXB and WVGO not
previously disposed of.
"Severance Payment" means a lump sum payment of Five Hundred Thousand
Dollars ($500,000.00), immediately payable to the Executive by check or in
immediately available funds, payable only in the event (i) of the Executive's
death or Permanent Disability, or (ii) the Company terminates the Executive as
an employee of the Company without Cause before the expiration of the Term
pursuant to Section 5.2(b)(ii) of this Agreement.
"Start Date" means the date of this Agreement.
"Subsidiary" means any corporation, partnership, joint venture,
association or other entity in which the Company or the LLC has or may have,
directly or indirectly, a majority equity interest.
"Term" means the period of time commencing on the Start Date and
ending on the fifth anniversary of the Start Date, together with any extension
thereof, or any abbreviated portion of such period of time (including any
extensions thereof) resulting from termination of the Executive's employment
pursuant to the provisions of Section 5.1 of this Agreement.
"Termination Date" means the date on which the Executive's employment
is terminated due to the expiration of the Term in accordance with Section 2.1
of this Agreement or pursuant to Section 5.1 of this Agreement.
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"Tower Activity" means the ownership, leasing, or other activities
related to transmission towers and facilities, including, but not limited to,
the activities of Token Tower, LLC.
"WBZU" means WBZU-FM Radio Station in Richmond, Virginia.
"WKHK" means WKHK-FM Radio Station in Colonial Heights, Virginia.
"WLEE" means WLEE-FM Radio Station in Williamsburg, Virginia.
"WMXB" means WMXB-FM Radio Station in Richmond, Virginia.
"WVGO" means WVGO-FM Radio Station in Crewe, Virginia.
ARTICLE II
TERM OF EMPLOYMENT
------------------
SECTION 2.1 Initial Term. The Company hereby employs the Executive as
its General Manager of each of the radio stations in the Richmond Station Group
(the "General Manager") and the Executive hereby accepts employment from the
Company and agrees to perform in such capacity upon the terms and conditions
set forth in this Agreement, for a period commencing on the Start Date and
continuing thereafter for the duration of the Term. Such Term, including any
extensions thereof shall be subject to earlier termination pursuant to the
provisions of Article 5 of this Agreement.
ARTICLE III
POSITION; DUTIES AND RESPONSIBILITIES;
CONDITIONS TO EMPLOYMENT
--------------------------------------
SECTION 3.1 Position. During the Term, the Executive shall be employed
as the General Manager. In such capacity, the Executive shall faithfully and
diligently use his best efforts to perform the duties and bear the
responsibilities of such office as set forth in Section 3.2 of this Agreement.
The Executive shall report and be
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responsible directly to, and in discharging his Duties and Responsibilities (as
defined below) shall be subject to the ultimate supervision and control of, the
President and Chief Executive Officer of the Company.
SECTION 3.2 Duties and Responsibilities. The Executive acknowledges
and agrees that his exclusive function as an employee of the Company is to
perform such duties and bear such responsibilities as shall be required of him
to supervise adequately and direct the overall management and profitability of
the Richmond Station Group to enhance the value of the Richmond Station Group
(such exclusive function of the Executive is referred to as the "Duties and
Responsibilities"). Unless the parties mutually agree, the Executive shall have
no duty or responsibility with respect to the operation of other Subsidiaries
or management functions of the Company that are not directly associated with
the Executive's Duties and Responsibilities. The Executive shall obtain the
prior consent of the Company with respect to any of the transactions referred
to in Exhibit A attached hereto.
SECTION 3.3 Time Commitment. The Executive shall devote his full
business time and attention during normal working hours to the business of the
Company and the LLC to discharge satisfactorily his Duties and
Responsibilities; provided, however, that the Executive may engage in any
lawful activity other than a Prohibited Activity so long as such activity does
not interfere with his Duties and Responsibilities.
SECTION 3.4 Non-compete Agreement. Simultaneously with, and as a
condition to, the execution of this Agreement, the parties hereto shall enter
into a Non-compete and Non-solicitation Agreement (the "Non-compete
Agreement"), substantially in the form of Exhibit B attached hereto.
ARTICLE IV
SALARY AND BENEFITS
-------------------
SECTION 4.1 Base Salary. In consideration of the services to be
rendered by the Executive under this Agreement and commencing on the Start
Date, the Company shall pay the Executive the Base Salary, payable in
semi-monthly installments in arrears on the 15th day and the last day of each
month in accordance with the payroll policies of
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the Company as from time to time in effect, or at such other intervals as
Comparable Executives. The Base Salary shall not be reduced during the term of
this Agreement, except in the event the Executive is terminated for Cause.
SECTION 4.2 Other Compensation.
(a) Incentive Compensation. In addition to the Base Salary as provided
for in Section 4.1 of this Agreement, commencing on the Start Date the
Executive shall be entitled to receive from the Company certain additional
incentive compensation (the "Incentive Compensation"), subject to the
provisions of Section 5.2 of this Agreement. The Incentive Compensation shall
be determined by the Company based on the overall financial performance of the
Richmond Station Group, as a whole, (in a manner consistent with similar
incentive compensation arrangements for Comparable Executives) which in no
event may be less than Fifty Thousand Dollars ($50,000.00) for any Bonus Year.
The Company agrees to determine the amount of the Incentive Compensation to
which the Executive shall be entitled as soon as possible after the end of each
Bonus Year, and to pay such Incentive Compensation no later than April 1 of the
following calendar year or 90 days following the Termination Date, whichever is
first.
(b) Carried Interest Amount.
(i) In addition to the Base Salary and the Incentive Compensation
payable to the Executive as set forth in this Agreement, the Company shall also
pay to the Executive, subject to the terms and conditions of this Section
4.2(b), an amount (the "Carried Interest Amount") as described below.
(ii) Subject to Section 4.2(b)(vi) and Article V of this
Agreement, the Carried Interest Amount shall be paid to the Executive in cash
within ninety (90) days after the fifth anniversary of the Start Date (the
"Fifth Anniversary Date") regardless of the date of the termination of the
Executive's employment with the Company. Interest shall accrue on any unpaid
portion of the Carried Interest Amount beginning on the ninety-first day after
the Fifth Anniversary Date at a rate equal to the prime rate of Citibank, N.A.
on such ninety-first day plus 1%.
(iii) The Carried Interest Amount shall be an amount equal to the
greater of (1) the difference, if any, of (x) the Fair Market Value of one
hundred thousand
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(100,000) shares of the Common Stock of the Company ("SFX Common Stock") on the
date hereof over (y) the Fair Market Value of such shares (adjusted for stock
splits, stock dividends and any issuance of SFX Common Stock) on the Fifth
Anniversary Date, and (2) (x) twenty percent (20%) of the value of the Richmond
Station Group on the Fifth Anniversary Date (the "Fifth Anniversary Value")
minus (y) an amount equal to the sum of $78,189,501 (the "Hurdle Amount") and,
to the extent any of the stations in the Richmond Station Group (other than
WVGO) is sold, less the Imputed Disposition Value allocated to each such
station specified on Annex A of Schedule 4.2(b) attached hereto; provided,
however, if WVGO is sold, within 30 days after such sale, the Company and KAB
will each select an arbitrator and the two arbitrators so selected shall select
a third arbitrator (the "Final Arbitrator") who shall finally determine whether
the Hurdle Rate shall be adjusted as a result of such sale. The arbitration
proceedings shall be held on an expedited basis at a time selected by the Final
Arbitrator in Washington, D.C. and shall be conducted under the auspices and in
accordance with the rules of the American Arbitration Association. In the
arbitration proceeding, the Final Arbitrator shall be permitted to rely on any
and all documents and agreements as the Final Arbitrator shall deem
appropriate, including, without limitation, that certain Letter of Intent,
dated as of August 9, 1996 entered into among the Company, the Executive and
the other parties thereto (the "LOI"), testimony of all relevant persons who
participated in the negotiation of the LOI and in the negotiation and
consummation of the transactions contemplated under the LOI, experts in the
radio industry, customs and practices in the radio industry and the relevant
FCC laws, rules and regulations relating to radio stations. The sole function
of the Final Arbitrator will be to determine whether the Hurdle Rate shall or
shall not be adjusted as a result of the sale of WVGO. In the event the Final
Arbitrator determines that the Hurdle Rate shall be adjusted, then the Imputed
Disposition Value of WVGO as well as all of the other stations in the Richmond
Station Group for all purposes shall be as set forth in Annex B to Schedule
4.2(b) attached hereto; provided, in the event the Final Arbitrator determines
that the Hurdle Rate shall not be adjusted, the Imputed Disposition Value of
WVGO shall be $0. Any and all determinations made by the Final Arbitrator shall
be final and binding on all parties hereto. In the event the Company or the LLC
acquires any additional radio stations (the "Acquired Stations") and the
Executive agrees to become the General Manager of such Acquired Station, the
parties will agree in good faith to negotiate the amount
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(the "Adjusted Hurdle Amount") by which the Hurdle Amount shall be an adjusted
(as well as the Imputed Disposition Value with respect to the Acquired
Station). If the parties disagree as to the Adjusted Hurdle Amount (or the
Imputed Disposition Value of such Acquired Station) the Increased Hurdle Amount
(and, if applicable, the Imputed Disposition Value of such Acquired Station)
will be determined in accordance with clause (iii) of the definition of Fair
Market Value. Notwithstanding the foregoing, nothing in this Section 4.2 shall
obligate the Executive to manage any Acquired Station. For purposes of clause
(y) of the foregoing sentence, the parties agree that the aggregate amount of
the dispositions (including, without limitation, the Imputed Disposition Value)
could exceed the Hurdle Amount so that the amount calculated in such clause (y)
may be negative and thus would be added to any amount in clause (x) of the
foregoing sentence to compute the Carried Interest Amount.
(iv) Nothing in this Section 4.2(b) should be interpreted as any
limitation or restriction on the Company's or the LLC's right to acquire or
dispose of any of their respective radio stations or other assets.
(v) The Fifth Anniversary Value shall be determined by an
appraiser (the "Appraiser") mutually acceptable to the Company and the
Executive. The Company and the Executive shall use their best efforts to
mutually agree on the Appraiser on or before the fifteenth (15th) day after the
Fifth Anniversary Date; provided, if the Company and the Executive cannot agree
on the Appraiser, the Company and the Executive shall each select its own
Appraiser having a minimum of five years of experience appraising radio
stations. Each party shall select its or his Appraiser within 30 days after the
Fifth Anniversary Date and if any party fails to select its or his Appraiser
within such period, the Appraiser selected by the other party shall determine
the Fifth Anniversary Value. If two Appraisers are selected and if their
appraisals are within 10% of each other, the average of these appraisals shall
be the Fifth Anniversary Value. If these appraisals differ by more than 10%,
the two Appraisers shall select a third Appraiser and such third Appraiser
shall make its appraisal, and of the three (3) appraisals, the appraisal that
is neither the highest or the lowest shall be the Fifth Anniversary Value. Each
party will bear the cost of the Appraiser that he or it selects; provided,
however, if only one Appraiser is selected or if a third Appraiser is selected,
both parties shall bear the cost of the single Appraiser or the third
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Appraiser, as the case may be. Each Appraiser must agree upon his appointment
to render his appraisal within 15 days of such appointment. Each Appraiser
shall base its determination of the Fifth Anniversary Value on comparable
valuations for radio station groups similar to the Richmond Station Group,
shall not take into account balance sheet adjustments (i.e. cash and debt) of
the LLC and shall not include the value of any radio stations which are not
primarily managed by the Executive.
(vi) The Executive shall be entitled to receive the full Carried
Interest Amount, except that (X) if the Executive terminates his employment
with the Company on his own accord, then the amount payable in satisfaction of
the obligations of the Company under this Section 4.2(b) shall be reduced
according to the date of employment termination as follows:
===============================================================================
Percentage of Carried
Interest Amount the
Executive shall be
Employment Termination entitled to receive
-------------------------------------------------------------------------------
Any time before the second 0%
anniversary of the Start Date
-------------------------------------------------------------------------------
On or after the second and 40%
before the third anniversary of
the Start Date
-------------------------------------------------------------------------------
On or after the third and before 60%
the fourth anniversary of the
Start Date
-------------------------------------------------------------------------------
On or after the fourth and 80%
before the fifth anniversary of
the Start Date
-------------------------------------------------------------------------------
After the fifth anniversary of 100%
the Start Date
===============================================================================
and (Y) if the Executive's employment with the Company is terminated by the
Company for Cause, then the Executive shall not be entitled to receive the
Carried Interest Amount or any portion thereof. If the Executive's employment
is terminated other than as contemplated by clause (X) or (Y) of the preceding
sentence, the Carried Interest Amount shall be unaffected.
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SECTION 4.3 Benefits. During the Term, the Executive shall be entitled
to the following benefits:
(a) Automobile. The Company shall provide Executive with the use of an
automobile which is equal to or better than automobiles used by Comparable
Executives; provided, the initial automobile to be provided under this
Agreement shall be pursuant to that certain lease (whose lease payments will be
equal to $350.00/month) with ABS Communications, Incorporated.
(b) Insurance. The Company shall obtain and maintain during the Term
the Life Insurance Policy.
(c) Vacation. The Executive shall be entitled to three (3)
weeks of paid vacation per year to be taken at such times as shall be mutually
agreed by the Company and the Executive.
(d) Other Benefits. The Executive shall be entitled to
participate in, and receive benefits (which are comparable to all benefits
which are provided to Comparable Executives) under any plan, arrangement,
program or policy of the Company providing for health (including
hospitalization, major medical and dental) insurance coverage, supplemental
life insurance coverage, accident or disability or other accidental death and
dismemberment insurance coverage, additional vacation time, sick leave, stock
options or other interest ownership or incentive compensation payments or other
benefits which the Company may from time to time maintain for the benefit of
the Comparable Executives. Before the Termination Date, and during any
extension of the benefits period hereunder, the Executive's benefits will not
be reduced unless the reduction is consistent among Comparable Executives. To
the extent not prohibited by law and not commercially unreasonable, the Company
shall waive all waiting periods required for participation in such benefit
plans, arrangements, programs and policies described above including
pre-existing conditions.
SECTION 4.4 Withholding. The Company shall withhold such
taxes, deductions and other charges or withholdings as shall be required to be
withheld by applicable United States federal, state and local law or regulation
from compensation paid to the Executive, including, without limitation, from
all applicable payments of the Base Salary, Incentive Compensation and benefits
to the Executive.
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NY-173727.9
SECTION 4.5 Expense Reimbursement. The Executive shall be
authorized and entitled to incur reasonable ordinary and necessary business
expenses for managing the affairs of the LLC directly related to or arising out
of the Richmond Station Group. The Company shall reimburse the Executive from
time to time on a timely basis consistent with Comparable Executives for all
such business expenses incurred by the Executive in connection with his duties
under this Agreement; provided, that to be reimbursed, the Executive shall
submit to the Company, within a reasonable time period after incurring any such
expense, all documentation pertaining thereto, which documentation shall
include information required by the rules and regulations of the United States
Internal Revenue Service then in effect permitting expense reimbursement. The
Company may from time to time specify those business expenses which are and are
not reimbursable by the Company; provided, such policy is uniformly in force
among the Comparable Executives.
SECTION 4.6 Physical Examinations. The Executive agrees that
as soon as practicable after the Start Date, and from time to time thereafter,
he shall undergo any physical examinations and any other tests required for key
man, disability and employee benefit insurance (including, without limitation,
the Life Insurance Policy), as are reasonably required to obtain such
insurance. The Company acknowledges and accepts that the results of any such
examination and tests are confidential doctor-patient information and the
Company agrees not to make any request for such results. The cost of such
physical examinations shall be borne by the Company. The Executive shall
promptly sign any insurance applications submitted to enable the Company to
obtain key man insurance.
ARTICLE V
TERMINATION OF EMPLOYMENT
SECTION 5.1 Termination Events. Subject to the other terms
and conditions of this Agreement, the Executive's employment under this
Agreement shall terminate upon the earlier of the expiration of the Term or the
occurrence of any of the following events:
(a) Death; Permanent Disability. The Executive's
employment shall terminate upon (i) the death of the Executive or (ii) the
Permanent Disability of the Executive.
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NY-173727.9
(b) Termination Without Cause. The Executive's
employment may be terminated by the Company without Cause upon the giving of
written notice to the Executive, effective as of the date set forth in such
notice.
(c) Termination by Executive; Termination With Cause. The
Executive's employment may be terminated (i) by the Executive on his own accord
or (ii) by the Company with Cause, each upon the giving of written notice to
the other party, effective as of the date set forth in such notice.
SECTION 5.2 Termination Obligations of the Company. Upon the
Termination Date, subject in every respect to the fulfillment of the
Executive's obligations pursuant to Section 5.3 and Section 5.4 of this
Agreement, the Executive shall be entitled to the following:
(a) Death; Permanent Disability; Termination
Without Cause. In the event the Executive is terminated pursuant to
Section 5.1(a) or 5.1(b) of this Agreement, the Executive or his estate,
as applicable, shall be entitled to the following:
(i) Base Salary. The Base Salary accrued
and unpaid through the Termination Date.
(ii) Incentive Compensation. A pro rata portion of
the Incentive Compensation for the Bonus Year which includes the
Termination Date to be paid at the time specified in Section 4.2 of
this Agreement, with such proration to be calculated based on the
financial results of the Richmond Station Group for the entire Bonus
Year prorated for the period during which the Executive was employed;
provided, that the Executive may request that such results be
determined through an interim closing of the books.
(iii) Benefits. Any benefits pursuant to Section 4.3
of this Agreement accrued, if applicable, through the Termination
Date; provided, that such benefits shall continue for a period of
eighteen (18) months following the Termination Date, except that in
the event of termination of employment of the Executive as a result of
Permanent Disability, the Company shall maintain the Life Insurance
Policy through age 65 for the Executive.
(iv) Severance Payment. The Severance
Payment.
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NY-173727.9
(b) Voluntary Termination; Termination With Cause. In the
event of termination pursuant to Section 5.1(c) of this Agreement, the
Executive shall be entitled to the Base Salary accrued and unpaid through the
Termination Date plus any benefits pursuant to Section 4.3 of this Agreement
that shall have accrued through the Termination Date.
Except as expressly set forth in this Section 5.2, following
the Termination Date, the Executive shall be entitled to no compensation,
bonus, benefits, interests, options or other remuneration of any kind whether
under this Agreement or otherwise. Nothing in this Agreement is intended to
preclude the Executive from the full exercise of any remedies available to him
at law or equity to seek enforcement of this Agreement. Notwithstanding any
provision contained herein to the contrary, the Company shall be permitted to
maintain key man insurance policies regarding the life of the Executive for its
own benefit during any period of time, whether during the Term or thereafter.
SECTION 5.3 Termination Obligations of the Executive. Other
than as provided in Section 5.2(a)(iii) hereof, the Executive hereby
acknowledges and agrees that all Personal Property furnished to or prepared by
the Executive in the course of or incident to his employment, belongs to the
Company and the LLC and shall be promptly returned to the Company and the LLC
upon the Termination Date. The Executive hereby acknowledges that for the
duration of this Agreement, he has gained and will gain knowledge of
Proprietary Information. Following the Termination Date, the Executive shall
not retain any written or other tangible material containing any Proprietary
Information relating to the business of the Company and the LLC. The
Executive's obligations under this Section 5.3 are further subject to the terms
and conditions of the Non- compete Agreement.
SECTION 5.4 Other Positions. Upon the Termination Date, all
offices, positions and directorships then held by the Executive with the
Company, the LLC and any Subsidiaries shall automatically terminate and no
further action shall be required to effectuate any such termination.
SECTION 5.5 Survival. The representations, warranties,
covenants and agreements contained in Section 4.2(b), Section 5.2, Section 5.3,
Section 5.4 and Article 6 of this Agreement shall survive the Termination Date
and the
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NY-173727.9
expiration of this Agreement pursuant to their respective terms.
ARTICLE VI
REPRESENTATIONS OF THE EXECUTIVE AND THE COMPANY
SECTION 6.1 Other Agreements. The Executive hereby represents
and warrants to the Company that he is not bound by any employment agreement,
restrictive covenant, confidentiality or proprietary information or other
agreement that would prohibit or inhibit in any way the full and complete
performance by the Executive of his duties under the terms and limits of this
Agreement. The Executive further represents, warrants and agrees that the
fulfillment of his Duties and Responsibilities and his duties as General
Manager do not and will not conflict with, or infringe upon, any other
agreements or understandings of the Executive with any other party.
SECTION 6.2 Tax Consequences. The Executive acknowledges that
the payments and other benefits herein provided may have serious negative
income tax consequences to the Executive. The Executive represents, warrants
and agrees that he has consulted with an independent professional tax advisor,
that he is fully responsible for all the tax ramifications of the provisions of
this Agreement and that neither the Company nor any of its representatives,
agents or advisors has made any representation or warranty to the Executive as
to the appropriate tax treatment to the Executive of these matters.
SECTION 6.3 Health of the Executive. The Executive represents
and warrants that as of the date of this Agreement, the Executive has no reason
to believe that he suffers from a condition that would lead to a Permanent
Disability during the five-year period commencing on the Start Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Arbitration. Except as otherwise expressly
provided herein, any claim or controversy arising out of or relating to any
provision of this Agreement, or the breach thereof, shall, upon written demand
of either
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NY-173727.9
party, be settled by arbitration in accordance with the Commercial Arbitration
Rules then in effect of the American Arbitration Association, to the extent
consistent with the laws of the Commonwealth of Virginia (including the rights
to assess costs and fees) and judgment upon the award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction.
Arbitration proceedings shall be conducted in Washington, D.C.
SECTION 7.2 Assignment; Successors and Assigns. This
Agreement may not be assigned, nor may any obligations hereunder be delegated,
by the Executive; provided, however, the rights and obligations (to the extent
applicable) of the Executive shall inure to the benefit and be binding upon his
guardian, conservator, executor, administrator, or similar transferee through
operation of law and that the Executive and such successors will receive from
the Company full and complete financial statements of the Company to the extent
necessary to exercise their rights under this Agreement. This Agreement is
fully and freely assignable by the Company in connection with the consolidation
of the Company with, or its merger into, any other corporation, or the sale by
the Company of all or substantially all of its properties or assets; provided
that the surviving entity in any such merger, consolidation or sale shall be a
financially responsible party. Subject to the foregoing, the Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, legal representatives, successors and permitted assigns, and shall not
benefit any person or entity other than those enumerated above.
SECTION 7.3 Notices. Any notice, request, claim, demand,
document or other communication required or permitted to be given under any
provision of this Agreement to any party hereto shall be made in writing and
shall be deemed to have been duly delivered and received (i) on the date of
personal or same-day courier delivery, (ii) on the date of receipt, if mailed
by certified or registered mail, postage prepaid and return receipt requested,
(iii) three (3) business days following the date of deposit with the United
States Postal Service, if sent by regular first class mail, (iv) on the date of
transmission, if sent by telecopy, facsimile or other electronic transmission
and confirmatory evidence of such transmission is received and retained by
sender, or (v) on the date of the stamped receipt, if sent by an overnight
delivery service; and shall be addressed to the following addresses or to such
other address as either party may request and shall have specified by notice,
in writing, to the other:
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NY-173727.9
To the Company: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Manager
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
To the Executive: Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
With a copy to: XxXxxxx Xxxx
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
SECTION 7.4 Entire Agreement. The terms and provisions of
this Agreement, together with all exhibits and schedules attached hereto,
embody the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof, are intended by the parties to be the
final expression of such agreement and understanding, and supersede and
terminate, and may not be contradicted by evidence of, any and all prior or
contemporaneous agreements, arrangements or understandings, whether written or
verbal, between the parties hereto with respect to the subject matter hereof.
The parties hereby agree that this Agreement shall be in effect as of the date
hereof.
SECTION 7.5 Amendments. Neither this Agreement nor any term
or provision hereof may be modified, amended, changed, waived, extended,
suspended, discharged or terminated unless evidenced by an instrument in
writing signed by the party against whom enforcement is sought.
SECTION 7.6 Waivers. By an instrument in writing similarly
executed, either party may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform. A waiver of any provision of this Agreement shall not be
deemed a waiver of any other provision of this Agreement.
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NY-173727.9
No waiver of any breach of any provision of this Agreement shall be deemed the
waiver of any subsequent breach thereof or of any other provision. No failure
by either party hereto to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder by either party preclude any other or future
exercise of that right or any other right hereunder by that party.
SECTION 7.7 Severability; Enforcement. If any part or
provision of this Agreement, or the application thereof to any person, place or
circumstance, shall be held by a court or such other body of competent
jurisdiction to be invalid, illegal, unenforceable or void in any respect under
applicable law, said part or provision shall be ineffective only to the extent
of such invalidity or unenforceability, without in any way affecting the
remaining parts and provisions of this Agreement which shall be construed as if
such invalid or unenforceable part or provision had not been included, and such
invalid or unenforceable part or provision shall become and be immediately
amended and reformed to include only the portions thereof as are valid and
enforceable by such court or other body having jurisdiction of this Agreement,
including such portions as may continue to be applied to other persons, places
or circumstances which shall continue to remain in full force and effect; and
the parties to this Agreement agree that such part or provision as so amended
or reformed shall be valid and binding as though any wholly invalid or
unenforceable portion had not been included in this Agreement.
SECTION 7.8 Governing Law. The validity, construction,
operation, interpretation, enforceability, performance and effect of this
Agreement, and any and all terms and provisions hereof, and the respective
rights, duties and obligations of the parties hereunder, shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Virginia, without giving effect to principles of conflicts of law thereunder.
SECTION 7.9 Headings. The headings set forth in this
Agreement are provided for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement.
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SECTION 7.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first written above.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
______________________________
Name: Xxxxxx X. Xxxxx
Title:
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
-22-
NY-173727.9
SCHEDULE 4.2(b)
ANNEX A
The Imputed Disposition Value of each station (other than WVGO) in the
Richmond Station Group shall be the greater of (X) the sale price of such
station plus 8%; provided, if any such station is not sold in a bona fide arm's
length transaction, the sale price will be determined in accordance with clause
(iii) in the definition of Fair Market Value or (Y) for WBZU: $11,934,096; for
WLEE: $11,934,096; for WKHK: $29,632,161; and for WMXB:
$24,689,147.
ANNEX B
The Imputed Disposition Value of each station in the Richmond Station
Group shall be the greater of (X) the sale price of such station plus 8%;
provided, if any such station is not sold in a bona fide arm's length
transaction, the sale price will be determined in accordance with clause (iii)
in the definition of Fair Market Value or (Y) for WBZU: $10,797,970; for WLEE:
$10,797,970; for WVGO: $7,443,642; for WKHK: $26,811,179; and for WMXB:
$22,338,740.
-23-
EXHIBIT A
ACTIONS REQUIRING MANAGER'S PRIOR CONSENT
The Executive shall obtain the prior written authorization (unless
specified otherwise) of the Company or the Company's Representative with
respect to all transactions beyond the ordinary course of managing the Richmond
Station Group. The limitations specified below specifically do not include any
limitation on incurring trade payables in the ordinary course of business.
Specifically, the following transactions require the Company's consent:
1. Merger, consolidation or sale of substantially all of the assets or a
segment of the business of the LLC or any Subsidiary thereof;
2. Disposal or encumbrance, in a single transaction or series of related
transactions, of any assets of the LLC having a value of $50,000 or more;
3. Acquisition or disposition of an interest in, or substantial portion of the
assets or a segment of the business of, another entity;
4. Creation or dissolution of a subsidiary, branch, or foreign business rising
to a level of an operation;
5. Entry of the LLC into a line of business not conducted by the Richmond
Station Group as of the Start Date;
6. Entry into an agreement or arrangement for the borrowing of money or the
advance payment of funds by or the extension of credit to the LLC involving
$50,000 or more;
7. Guarantee by the LLC of the obligations of a third party (including those
of affiliated companies);
8. Entry into a collective bargaining agreement;
9. Entry into, modification of, or termination of significant employment
agreements, including compensation of officers or other senior executive
employees of the LLC whose annual compensation before bonus is $200,000 or
more;
10. Entry into, modification of or termination of any agreements or arrangement
with the LLC members, shareholders, directors, managers, officers,
employees, or relatives thereof (excluding any employment arrangements
which the Executive in good faith determines are consistent with past and
customary practices);
11. Appointment or removal of additional senior executive employees of the LLC
whose annual compensation before bonus is $200,000 or more;
12. Appointment or removal of outside auditors of the LLC;
13. Any capital expenditure or series of related capital expenditures by LLC
not in approved budgets in excess of $50,000;
14. The LLC's entry into or amendment of any profit sharing, pension, or
similar plan;
15. Any third-party license agreement as licensee or licensor of trademarks,
patents, or proprietary know-how involving more than $50,000;
16. Approval or revision of annual operating and capital budgets (which
approval or revision may be oral);
17. Approval or modification of the LLC's or any Subsidiary's investment
policies addressing short-, medium-and long-term investment of the LLC's or
such Subsidiary's non-working capital cash; and
18. Institution of or joinder of the LLC or any Subsidiary as a party to
litigation, arbitration, or similar proceedings involving more than
$50,000.
The Company's Representative with full and complete authority to act on
behalf of the LLC under this Exhibit A is:
[-----------------------------]
Phone No. [___________________]
Fax No. [___________________]
-2-
and if such Representative is unavailable, the person with full and complete
authority to act in lieu of such Representative is:
[-----------------------------]
Phone No. [___________________]
Fax No. [___________________]
The Company shall have the right to change the Representative or the alternate
Representative at any time and from time to time; provided, however, the
Company will endeavor to name such Representatives to provide for the efficient
and amicable fulfillment of the Executive's Duties and Responsibilities.
-3-
EXHIBIT B
FORM OF
NON-COMPETE AND NON-SOLICITATION AGREEMENT
THIS NON-COMPETE AND NON-SOLICITATION AGREEMENT is made as of the
[___] day of [________], 199[_], by and between SFX Broadcasting, Inc., a
Delaware corporation (the "Company"), ABS Communications, L.L.C., a Virginia
limited liability company (the "LLC") and Xxxxxxx X. Xxxxx, an individual (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have simultaneously herewith
entered into an Employment Agreement, dated as of even date herewith (the
"Employment Agreement"), setting forth certain terms and conditions of the
employment of the Executive by the Company; and
WHEREAS, the Executive acknowledges that in the course of, and as a
direct consequence of, the Executive's employment with the Company, the
Executive will be exposed to certain Proprietary Information; and
WHEREAS, due to the highly competitive nature of the Company's and the
LLC's business, the Company and the LLC desire to protect their rights to, and
the confidentiality of, the Proprietary Information and the Executive
acknowledges the necessity and desirability of such protection; and
WHEREAS, as a condition to the Executive's employment with the
Company, the Company and the LLC also desire to protect their respective
business, other employees and customers from competition and solicitation
actions on the part of the Executive during, and for a limited period of time
following, the Executive's employment; and
WHEREAS, as a condition to the execution and delivery of the
Employment Agreement, the parties hereto are entering into, and hereby agree to
comply in all respects with, the terms and provisions set forth in this
Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. When used in this Agreement, the following initially
capitalized words or phrases shall have the following meanings:
"Agreement" means this Non-compete and Non-solicitation Agreement,
together with any and all exhibits, attachments and schedules appended hereto,
as the same may be amended, modified or supplemented from time to time.
"Company" has the meaning ascribed to such term in the preamble to
this Agreement.
"Employment Agreement" has the meaning ascribed to such term in the
recitals to this Agreement.
"Executive" has the meaning ascribed to such term in the preamble to
this Agreement.
"Improvements" has the meaning ascribed to such term in Section 2 of
this Agreement.
"LLC" means ABS Communications, L.L.C., a Virginia limited liability
company.
All other initially capitalized words and phrases not otherwise herein
defined shall have the respective meanings ascribed to such terms in the
Employment Agreement.
2. Personal Property and Proprietary Information; Improvements. The
Executive hereby acknowledges and agrees that all Personal Property, including
all Proprietary Information, furnished to or prepared by the Executive in the
course of or incident to his employment, is, and shall forever hereafter
remain, the exclusive property of the Company or the LLC and of their
respective assignees and successors, including, but not limited to, any
portions thereof that may be created, enhanced, suggested or improved by the
Executive in connection with, or in the course of, the Executive's duties at
the Company and the LLC under the Employment Agreement (the "Improvements").
The Executive hereby covenants and agrees to fully disclose any and all
Improvements to the Proprietary Information, as and when such are created and
shall promptly upon the Company's or the LLC's request, and without further
consideration other than that provided for herein and in the Employment
Agreement, but at no expense to the Executive, make all such applications,
execute all such papers, and take all such actions as may be necessary, proper
or desirable so that the property rights with respect
-2-
to such Improvements shall vest in and remain with the Company or the LLC and
so that the Company or the LLC may obtain, own and exploit, for its own
benefit, letters patent and other property rights with respect to such
Improvements. This Section shall survive the termination of this Agreement and
the Employment Agreement.
3. Non-Disclosure of Proprietary Information. The Executive recognizes
and acknowledges that the Proprietary Information is a valuable, special and
unique asset of the Company's business. The Executive covenants and agrees that
he shall not, either directly or indirectly, other than in the performance of
his duties and obligations to the Company and the LLC, disclose, disseminate,
publish or use or permit the disclosure, dissemination, publishing or use of
the Proprietary Information and/or any part thereof to or for himself or any
other person, firm, corporation, association, partnership or any other entity
whatsoever outside the Company or to any officer, director, stockholder,
partner, member, associate, employee, agent or representative of any thereof
for any reason or any purpose whatsoever, except as may be required in the
proper discharge of the Executive's duties pursuant to the terms of the
Executive's employment with the Company under the Employment Agreement. This
Section shall survive the termination of this Agreement and the Employment
Agreement.
4. Obligations of the Executive Upon Termination.
(a) Regarding Personal Property. The Executive hereby acknowledges
that for the duration of the Employment Agreement, the Executive has gained and
will gain knowledge of Proprietary Information. Upon the Termination Date, the
Executive covenants and promises that all Personal Property, including all
Proprietary Information, then in the Executive's possession, control or
influence, whether prepared by the Executive or others, shall be promptly and
immediately returned by the Executive to the Company or the LLC. Following the
Termination Date, the Executive shall not retain any written or other tangible
material containing any Proprietary Information relating to the business of the
Company or the LLC.
(b) Regarding Prohibited Activity. For a period of one (1) year
following the Termination Date, the Executive agrees that the Executive shall
not engage in any Prohibited Activity within the Richmond Radio Market;
provided, however, that this provision shall not prohibit
-3-
the Executive from making any personal investment which is purely passive in
nature following the Termination Date; provided, further, that if the Executive
desires to become a consultant to an entity which is engaged in a Prohibited
Activity within the Richmond Radio Market, the Executive may seek the consent
of the Company by submitting to the Company in writing a detailed description
of the Executive's proposed consulting activities, the identity of the entity
to receive such consulting activities and the Executive's proposed
responsibilities (including, without limitation, the extent to which the
Executive will be engaged in consulting activities relating to a Prohibited
Activity).
5. Non-competition. During the Term and for a period of one (1) year
thereafter, the Executive shall not, without the express prior written consent
of the Company and the LLC, directly or indirectly, whether alone or by action
in concert with others, whether for the Executive's own purposes or for any
other person or persons, partnership, firm, association, syndicate, company or
corporation engaged in or concerned with or interested in a business similar to
or competitive with that conducted by the Company, the LLC or any of their
Subsidiaries, engage in or perform services with any person, business or
organization (or become interested therein or therewith as an individual,
partner, shareholder, member, director, officer, principal, agent, employee,
lender, trustee or in any relation or capacity whatsoever) in the Richmond
Radio Market which sells, solicits, bids for, contracts for, provides or
performs, or which proposes to sell, solicit, bid for, contract for, provide or
perform, services or products in the Richmond Radio Market in competition with
or similar to the activities engaged in, concerned with or conducted by the
Company, the LLC or any of their Subsidiaries during the Term.
6. Non-solicitation.
(a) Officers and Employees. The Executive acknowledges and agrees that
any solicitation of the Company's or the LLC's or any of their respective
Subsidiaries' officers, managers, members, consultants or other employees may
involve the use or disclosure of Proprietary Information protected by this
Agreement. In recognition of this fact, during the Term and for the period of
one (1) year following the Termination Date, the Executive agrees that the
Executive shall not, for himself or on behalf of any other person or persons,
company, corporation, partnership, firm, association, syndicate or
-4-
other entity, directly or indirectly, alone or by action in concert with
others, solicit or engage for employment any person who at the Termination Date
is or was an officer, manager, member, consultant or other employee of the
Company, the LLC or any of their Subsidiaries during the Term without the
express prior written consent of the Company.
(b) Customers and Suppliers. The Executive acknowledges and agrees
that any solicitation of the Company's, the LLC's or any of their respective
Subsidiaries' customers or suppliers may involve the use or disclosure of
Proprietary Information protected by this Agreement. In recognition of this
fact, during the Term and for a period of one (1) year following the
Termination Date, the Executive agrees that the Executive shall not, without
the express prior written permission of the Company, for himself or on behalf
of any other person, corporation, partnership or other entity, directly or
indirectly, whether alone or by action in concert with others, solicit, induce
or encourage or attempt to solicit, induce or encourage, any person known by
him to have a relationship with the Company, the LLC or any of their
Subsidiaries, or any customer or supplier of the Company, the LLC or any of
their Subsidiaries, to discontinue, terminate, cancel or refrain from entering
into any contractual or business relationship with the Company, the LLC or any
of their Subsidiaries.
7. Early Termination. Notwithstanding any other provision in Section 5
and Section 6 of this Agreement to the contrary, in the event that the
Executive's employment with the Company is terminated by the Executive due to a
material breach by the Company of its obligations under the Employment
Agreement, then the Executive's obligations under Section 5 and Section 6 of
this Agreement shall cease as of the Termination Date. Notwithstanding any
other provision contained herein (other than the preceding sentence which shall
control), the Executive's obligations under Section 5 and Section 6 of this
Agreement shall in all cases cease on the earlier of (i) one (1) year after the
Termination Date or (ii) the sixth (6th) anniversary of the date of this
Agreement.
8. Reasonableness of Covenants. Executive hereby acknowledges and
agrees that the foregoing covenants, promises duties and obligations are
commercially reasonable and reasonably necessary to protect the Company.
-5-
9. Injunctive Relief. The Executive agrees that it would be difficult
to measure damage to the Company for any breach or violation by the Executive
of the covenants, promises, duties and obligations set forth in this Agreement
and that injury to the Company from any such breach or violation by the
Executive would be impossible to calculate, and that money damages would be an
inadequate remedy for any such breach or violation. Accordingly, the Executive
agrees that if any provision of this Agreement is, or is threatened to be,
breached or violated, the Company shall be entitled, in addition to any and all
other rights and remedies it may have, either at law or in equity, to seek an
injunction or other appropriate orders enjoining or restraining any such breach
or violation, whether actual or threatened, by the Executive without showing or
proving any actual damage sustained by the Company.
10. Express Conditions of Company's Obligations. Subject to the
provisions of Section 7 hereof, the Executive acknowledges and agrees that any
obligations of the Company payable to or inuring to the benefit of the
Executive under this Agreement or the Employment Agreement following the
Termination Date are expressly conditioned upon the Executive's compliance with
and adherence to the provisions of Section 2 through (and including) Section 7
of this Agreement.
11. Miscellaneous.
(a) Assignment; Successors and Assigns. This Agreement may not be
assigned, nor may any obligations hereunder be delegated, by the Executive and
shall terminate upon his death. This Agreement is fully and freely assignable
by the Company in connection with the consolidation of the Company with, or its
merger into, any other corporation, or the sale by the Company of all or
substantially all of its properties or assets, but shall be assigned only
contemporaneously with the valid assignment of the Employment Agreement in
accordance with the terms thereof. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective heirs, legal representatives, successors and permitted assigns, and
shall not benefit any person or entity other than those enumerated above.
(b) Notices. Any notice, request, claim, demand, document or other
communication required or permitted to be given under any provision of this
Agreement to any party hereto shall be made in writing and shall be deemed to
have
-6-
been duly delivered and received (i) on the date of personal or same-day
courier delivery, (ii) on the date of receipt, if mailed by certified or
registered mail, postage prepaid and return receipt requested, (iii) three (3)
business days following the date of deposit with the United States Postal
Service, if sent by regular first class mail, (iv) on the date of transmission,
if sent by telecopy, facsimile or other electronic transmission and
confirmatory evidence of such transmission is received and retained by sender,
or (v) on the date of the stamped receipt, if sent by an overnight delivery
service; and shall be addressed to the following addresses or to such other
address as either party may request and shall have specified by notice, in
writing, to the other:
To the Company: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Manager
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
To the Executive: Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
With a copy to: XxXxxxx Xxxx
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
(c) Entire Agreement. The terms and provisions of this Agreement,
together with all exhibits and schedules attached hereto, embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, are intended by the parties to be the final expression of such
agreement and understanding, and supersede and terminate, and may not be
contradicted by evidence of, any and all prior or contemporaneous agreements,
arrangements or understandings, whether written or verbal, between the parties
hereto with respect to the
-7-
subject matter hereof. The parties hereby agree that this Agreement shall be in
effect as of the date hereof.
(d) Amendments. Neither this Agreement nor any term or provision
hereof may be modified, amended, changed, waived, extended, suspended,
discharged or terminated unless evidenced by an instrument in writing signed by
the party against whom enforcement is sought.
(e) Waivers. By an instrument in writing similarly executed, either
party may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or perform.
A waiver of any provision of this Agreement shall not be deemed a waiver of any
other provision of this Agreement. No waiver of any breach of any provision of
this Agreement shall be deemed the waiver of any subsequent breach thereof or
of any other provision. No failure by either party hereto to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder by either party
preclude any other or future exercise of that rights or any other right
hereunder by that party.
(f) Severability; Enforcement. If any part or provision of this
Agreement, or the application thereof to any person, place or circumstance,
shall be held by a court or such other body of competent jurisdiction to be
invalid, illegal, unenforceable or void in any respect under applicable law,
said part or provision shall be ineffective only to the extent of such
invalidity or unenforceability, without in any way affecting the remaining
parts and provisions of this Agreement which shall be construed as if such
invalid or unenforceable part or provision had not been included, and such
invalid or unenforceable part or provision shall become and be immediately
amended and reformed to include only the portions thereof as are valid and
enforceable by such court or other body having jurisdiction of this Agreement,
including such portions as may continue to be applied to other persons, places
or circumstances which shall continue to remain in full force and effect; and
the parties to this Agreement agree that such part or provision as so amended
or reformed shall be valid and binding as though any wholly invalid or
unenforceable portion had not been included in this Agreement.
(g) Governing Law. The validity, construction, operation,
interpretation, enforceability, performance and
-8-
effect of this Agreement, and any and all terms and provisions hereof, and the
respective rights, duties and obligations of the parties hereunder, shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Virginia, without giving effect to principles of conflicts of
law thereunder.
(h) Headings. The headings set forth in this Agreement are provided
for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
-9-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title:
ABS COMMUNICATIONS, L.L.C.
By: SFX BROADCASTING, INC.,
as Manager
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title:
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
-10-
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 17th day
of December, 1996, by and between SFX Broadcasting, Inc., a Delaware
corporation (the "Company") and J. Xxxxx Xxxxxx, an individual (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company's majority-owned subsidiary, ABS Communications,
L.L.C., a Virginia limited liability company ("LLC"), owns and operates certain
radio stations in the Richmond and Williamsburg, Virginia areas; and
WHEREAS, the Executive has experience in managing the operation of
radio stations; and
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 Definitions. When used in this Agreement, the following
initially capitalized words or phrases shall have the following meanings:
"ABS" means ABS Communications, Incorporated, a Virginia corporation.
"Incentive Compensation" has the meaning ascribed to such term in
Section 4.2(a) of this Agreement.
"Agreement" means this Employment Agreement, together with any and all
exhibits, attachments and schedules appended hereto, as the same may be
amended, modified or supplemented from time to time.
"Base Salary" means One Hundred Thirty Thousand Dollars ($130,000) per
annum.
"Bonus Year" means the particular calendar year (or any portion
thereof covered by the Term of this Agreement), commencing on the Start Date
through and until the Termination Date for which Incentive Compensation is
calculated pursuant to Section 4.2 of this Agreement.
"Cause" means a good faith determination by the Company that one or
more of the following has occurred: (i) the Executive has been convicted of any
crime or offense which constitutes a felony in the jurisdiction involved, or
(ii) the Executive has engaged in gross misconduct or fraud.
"Company" has the meaning ascribed to such term in the preamble of
this Agreement and includes all permitted successors and assigns thereof.
"Comparable Executives" means other station group level executives of
radio station area markets comparable in size to the Richmond Radio Market (but
below the level of a group general manager but reporting to a group general
manager) employed by the Company.
"Customer Lists" means any information, complete or incomplete,
whether written, electronically recorded or otherwise, identifying any or all
of the Company's or the LLC's customers or vendors, whether former, current or
prospective, as it may exist at any time and from time to time.
"Duties and Responsibilities" has the meaning ascribed to such term in
Section 3.2 of this Agreement.
"Executive" has the meaning ascribed to such term in the preamble of
this Agreement.
"Life Insurance Policy" means a permanent whole life insurance policy
in the amount of [___________] Dollars ($__________) in respect of the life of
the Executive, which Life Insurance Policy shall be owned by the Executive who
shall have the right to designate the beneficiary thereof.
"Members" means the Company and Xxxxxxx X. Xxxxx.
-2-
"Membership Interests" means the ownership interests in the LLC owned
by the Members.
"Non-compete Agreement" has the meaning ascribed to such term in
Section 3.4 of this Agreement.
"Operating Agreement" means the LLC's Amended and Restated Operating
Agreement among the Company and Xxxxxxx X. Xxxxx.
"Permanent Disability" means, with respect to the Executive the
absence of the Executive from his employment by reason of any mental, emotional
or physical illness, injury, disability, handicap, impediment or incapacity for
a period of one hundred eighty (180) days during any twelve-month period (with
such one hundred eighty (180) days comprised solely of the number of days
during which the Executive is absent for a consecutive period of at least
thirty (30) days), effective as of the last day of such one hundred eighty
(180) day period.
"Personal Property" means, without limitation except for those items
of property listed on Schedule 1.1 hereto, all books, manuals, documents,
records, reports, notes, notebooks, contracts, lists, registers, blueprints,
computer programs and software, equipment (including office equipment), credit
cards, parking or other permits, security and access passes and all other
Proprietary Information relating to the business of the Company and the LLC,
together with any and all repositories and copies thereof, whether photostatic,
electronic or otherwise, held by the Executive from time to time.
"Prohibited Activity" means to directly or indirectly (i) own, manage,
operate, join, control, participate in, or become employed by, (ii) render any
services (including, without limitation, consulting services), advice or
assistance of any nature on behalf of or (iii) invest in, acquire any interest
in or participate in the management, operation or control of, any person,
corporation, partnership or other entity which is engaged in the ownership or
operation of radio stations or any other businesses in which the Company, the
LLC or any of their affiliates is engaged; provided, however, that this
restriction shall not preclude the Executive from (i) engaging in any activity
outside the Richmond Radio Market so long as such activity will not, directly
or indirectly,
-3-
be in competition with the Company or any of its affiliates, or (ii) investing
his personal funds in securities of any company or entity in competition with
the Company or the LLC if the securities of such company or entity are listed
for trading on any nationally registered securities exchange or authorized for
quotation on the National Market and the Executive's holdings therein represent
two percent (2%) or less of the total number of outstanding shares or other
securities of such company or entity, as long as the Executive has no other
connection or relationship, whether direct or indirect, with the issuer of such
securities.
"Proprietary Information" means information which would be treated
under appropriate legal standards as confidential or proprietary, including,
but not limited to (i) marketing, competitive or other information available
only to the management of the Company or the LLC, (ii) information pertaining
to the contracts between the Company or the LLC and their respective customers
or vendors, including Customer Lists, pricing information and contract
termination dates, (iii) information that is not generally known in the
business in which the Company or the LLC is engaged, concerning the Company's
or the LLC's suppliers, properties, products, designs, concepts, ideas,
methods, prospects, processes, techniques and services, including, but not
limited to, information related to research, development, programming,
techniques of application, inventions, operations, constructions, purchasing,
accounting, engineering, marketing, merchandising, selling, renting, leasing,
negotiating, contracting and recording, (iv) all patents, trademarks, trade
secrets and other intellectual or industrial property rights, title and
interest therein, if any, which are or will in the future be owned by the
Company or the LLC, including, without limitation, all works, ideas, processes,
systems and improvements to or relating to the Company's or the LLC's business
or methods of operation and (v) any and all other information related to the
Company or the LLC of which the Executive may become aware but which is not
generally known to outsiders, including, but not limited to, cost allocations
and all other confidential information concerning or relating to any of the
customers, business or methods of operation of the Company or the LLC;
provided, that the foregoing provisions shall not be construed to prevent the
Executive from making use of or disclosing any such information which (A) is
already in or subsequently enters the public domain through no fault on the
part of the
-4-
Executive; provided, however, that specific information which is compiled on
behalf of the Company or the LLC shall not be deemed to be in the public domain
merely because the components thereof are encompassed in general information
that is published or in the public domain or in the Executive's prior
possession; (B) is intentionally disclosed by the Company or the LLC to any
entity (not an affiliate of the Company or the LLC) on a non-confidential
basis; (C) is developed by the Executive without the use of any Proprietary
Information; or (D) is required to be disclosed in order to comply with any law
or any order or ruling of a federal, state or local governmental or regulatory
authority.
"Richmond Radio Market" means the geographic broadcast area covered by
the Richmond Station Group, as it may exist at any time and from time to time
during the term of this Agreement.
"Richmond Station Group" means, either individually or collectively,
as the context may require, each of WBZU, WKHK, WLEE, WMXB and WVGO not
previously disposed of.
"Severance Payment" means a lump sum payment of the lesser of (i)
Three Hundred Thousand Dollars ($300,000), or (ii) an amount equal to the
aggregate of the remaining base salary (including the base salary accrued
through the applicable Termination Date) and guaranteed minimum incentive
compensation due to the Executive for the Term of this Agreement, immediately
payable to the Executive by check or in immediately available funds.
"Start Date" means the date of this Agreement.
"Subsidiary" means any corporation, partnership, joint venture,
association or other entity in which the Company or the LLC has or may have,
directly or indirectly, a majority equity interest.
"Term" means the period of time commencing on the Start Date and
ending on the fifth anniversary of the Start Date, together with any extension
thereof, or any abbreviated portion of such period of time (including any
extensions thereof) resulting from termination of the Executive's employment
pursuant to the provisions of Section 5.1 of this Agreement.
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"Termination Date" means the date on which the Executive's employment
is terminated due to the expiration of the Term in accordance with Section 2.1
of this Agreement or pursuant to Section 5.1 of this Agreement.
"WBZU" means WBZU-FM Radio Station in Richmond, Virginia.
"WKHK" means WKHK-FM Radio Station in Colonial Heights, Virginia.
"WLEE" means WLEE-FM Radio Station in Williamsburg, Virginia.
"WMXB" means WMXB-FM Radio Station in Richmond, Virginia.
"WVGO" means WVGO-FM Radio Station in Crewe, Virginia.
ARTICLE II
TERM OF EMPLOYMENT
------------------
SECTION 2.1 Initial Term. The Company hereby employs the Executive as
its Chief Financial Officer of each of the radio stations in the Richmond
Station Group (the "Chief Financial Officer") and the Executive hereby accepts
employment from the Company and agrees to perform in such capacity upon the
terms and conditions set forth in this Agreement, for a period commencing on
the Start Date and continuing thereafter for the duration of the Term. Such
Term, including any extensions thereof shall be subject to earlier termination
pursuant to the provisions of Article 5 of this Agreement.
ARTICLE III
POSITION; DUTIES AND RESPONSIBILITIES;
CONDITIONS TO EMPLOYMENT
--------------------------------------
SECTION 3.1 Position. During the Term, the Executive shall be employed
as the Chief Financial Officer. In such capacity, the Executive shall
faithfully and diligently use his best efforts to perform the duties and
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bear the responsibilities of such office as set forth in Section 3.2 of this
Agreement. The Executive shall report and be responsible directly to, and in
discharging his Duties and Responsbilities (as defined below) shall be subject
to the ultimate supervision and control of, the general manger of the Richmond
Station Group and the Chief Financial Officer of the Company.
SECTION 3.2 Duties and Responsibilities. The Executive acknowledges
and agrees that his exclusive function as an employee of the Company is to
perform such duties and bear such responsibilities as shall be required of him
to supervise adequately and direct the overall financial management and
profitability of the Richmond Station Group to enhance the value of the
Richmond Station Group (such exclusive function of the Executive is referred to
as the "Duties and Responsibilities"). Unless the parties mutually agree, the
Executive shall have no duty or responsibility with respect to the operation of
other Subsidiaries or management functions of the Company that are not directly
associated with the Executive's Duties and Responsibilities. The Executive
shall obtain the prior consent of the Company with respect to any of the
transactions referred to in Exhibit A attached hereto.
SECTION 3.3 Time Commitment. The Executive shall devote his full
business time and attention during normal working hours to the business of the
Company and the LLC to discharge satisfactorily his Duties and
Responsibilities; provided, however, that the Executive may engage in any
lawful activity other than a Prohibited Activity so long as such activity does
not interfere with his Duties and Responsibilities.
SECTION 3.4 Non-compete Agreement. Simultaneously with, and as a
condition to, the execution of this Agreement, the parties hereto shall enter
into a Non-compete and Non-solicitation Agreement (the "Non-compete
Agreement"), substantially in the form of Exhibit B attached hereto.
ARTICLE IV
SALARY AND BENEFITS
-------------------
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SECTION 4.1 Base Salary. In consideration of the services to be
rendered by the Executive under this Agreement and commencing on the Start
Date, the Company shall pay the Executive the Base Salary, payable in
semi-monthly installments in arrears on the 15th day and the last day of each
month in accordance with the payroll policies of the Company as from time to
time in effect, or at such other intervals as Comparable Executives. The Base
Salary shall not be reduced during the term of this Agreement, except in the
event the Executive is terminated for Cause.
SECTION 4.2 Incentive Compensation. In addition to the Base Salary as
provided for in Section 4.1 of this Agreement, commencing on the Start Date the
Executive shall be entitled to receive from the Company certain additional
incentive compensation (the "Incentive Compensation"), subject to the
provisions of Section 5.2 of this Agreement. The Incentive Compensation shall
be determined by the Company based on the overall financial performance of the
Richmond Station Group, as a whole, (in a manner consistent with similar
incentive compensation arrangements for Comparable Executives) which in no
event may be less than Ten Thousand Dollars ($10,000) but not greater than
$20,000 for any Bonus Year. The Company agrees to determine the amount of the
Incentive Compensation to which the Executive shall be entitled as soon as
possible after the end of each Bonus Year, and to pay such Incentive
Compensation no later than April 1 of the following calendar year or 90 days
following the Termination Date, whichever is first.
SECTION 4.3 Benefits. During the Term, the Executive shall be entitled
to the following benefits:
(a) Automobile. The Company will provide the Executive with the use of
an automobile the cost of which is comparable to the cost of automobiles used
by Comparable Executives; provided, the initial automobile to be provided under
this Agreement shall be pursuant to that certain automobile lease (which lease
payments will be equal to $350/month) with Xxxxxx & Associates, Inc.
(b) Insurance. The Company shall obtain and maintain during the Term
the Life Insurance Policy.
(c) Vacation. The Executive shall be entitled to three (3) weeks of
paid vacation per year to be taken at
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such times as shall be mutually agreed by the Company and the Executive.
(d) Other Benefits. The Executive shall be entitled to participate in,
and receive benefits (which are comparable to all benefits which are provided
to Comparable Executives) under any plan, arrangement, program or policy of the
Company providing for health (including hospitalization, major medical and
dental) insurance coverage, supplemental life insurance coverage, accident or
disability or other accidental death and dismemberment insurance coverage,
additional vacation time, sick leave, stock options or other interest ownership
or incentive compensation payments or other benefits which the Company may from
time to time maintain for the benefit of the Comparable Executives. Before the
Termination Date, and during any extension of the benefits period hereunder,
the Executive's benefits will not be reduced unless the reduction is consistent
among Comparable Executives. To the extent not prohibited by law and not
commercially unreasonable, the Company shall waive all waiting periods required
for participation in such benefit plans, arrangements, programs and policies
described above including pre-existing conditions.
SECTION 4.4 Withholding. The Company shall withhold such taxes,
deductions and other charges or withholdings as shall be required to be
withheld by applicable United States federal, state and local law or regulation
from compensation paid to the Executive, including, without limitation, from
all applicable payments of the Base Salary, Incentive Compensation and benefits
to the Executive.
SECTION 4.5 Expense Reimbursement. The Executive shall be authorized
and entitled to incur reasonable ordinary and necessary business expenses for
managing the affairs of the LLC directly related to or arising out of the
Richmond Station Group. The Company shall reimburse the Executive from time to
time on a timely basis consistent with Comparable Executives for all such
business expenses incurred by the Executive in connection with his duties under
this Agreement; provided, that to be reimbursed, the Executive shall submit to
the Company, within a reasonable time period after incurring any such expense,
all documentation pertaining thereto, which documentation shall include
information required by the rules and regulations of
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the United States Internal Revenue Service then in effect permitting expense
reimbursement. The Company may from time to time specify those business
expenses which are and are not reimbursable by the Company; provided, such
policy is uniformly in force among the Comparable Executives.
SECTION 4.6 Physical Examinations. The Executive agrees that as soon
as practicable after the Start Date, and from time to time thereafter, he shall
undergo any physical examinations and any other tests required for key man,
disability and employee benefit insurance (including, without limitation, the
Life Insurance Policy), as are reasonably required to obtain such insurance.
The Company acknowledges and accepts that the results of any such examination
and tests are confidential doctor-patient information and the Company agrees
not to make any request for such results. The cost of such physical
examinations shall be borne by the Company. The Executive shall promptly sign
any insurance applications submitted to enable the Company to obtain key man
insurance.
ARTICLE V
TERMINATION OF EMPLOYMENT
-------------------------
SECTION 5.1 Termination Events. Subject to the other terms and
conditions of this Agreement, the Executive's employment under this Agreement
shall terminate upon the earlier of the expiration of the Term or the
occurrence of any of the following events:
(a) Death; Permanent Disability. The Executive's employment shall
terminate upon (i) the death of the Executive or (ii) the Permanent Disability
of the Executive.
(b) Termination Without Cause. The Executive's employment may be
terminated by the Company without Cause upon the giving of written notice to
the Executive, effective as of the date set forth in such notice.
(c) Voluntary Termination; Termination With Cause. The Executive's
employment may be terminated (i) by the Company with Cause or (ii) by the
Executive of his own accord, each upon the giving of written notice to the
other party, effective as of the date set forth in such notice.
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SECTION 5.2 Termination Obligations of the
Company. Upon the Termination Date, subject in every respect to the
fulfillment of the Executive's obligations pursuant to Section 5.3 and Section
5.4 of this Agreement, the Executive shall be entitled to the following:
(a) Death; Permanent Disability; Termination
Without Cause. In the event the Executive is terminated pursuant to Section
5.1(a) or 5.1(b) of this Agreement, the Executive or his estate, as
applicable, shall be entitled to the following:
(i) Benefits. Any benefits pursuant to Section
4.3 of this Agreement accrued, if applicable, through the
Termination Date; provided, that such benefits shall continue
for a period of eighteen (18) months following the Termination
Date, except that in the event of termination of employment of
the Executive as a result of Permanent Disability, the Company
shall maintain the Life Insurance Policy through age 65 for the
Executive; and
(ii) Severance Payment. The Severance
Payment.
(b) Voluntary Termination; Termination With
Cause. In the event of termination pursuant to Section 5.1(c) of this
Agreement, the Executive shall be entitled to the Base Salary accrued and
unpaid through the Termination Date plus any benefits pursuant to Section 4.3
of this Agreement that shall have accrued through the Termination Date.
Except as expressly set forth in this Section 5.2,
following the Termination Date, the Executive shall be entitled to no
compensation, bonus, benefits, interests, options or other remuneration of any
kind whether under this Agreement or otherwise. Nothing in this Agreement is
intended to preclude the Executive from the full exercise of any remedies
available to him at law or equity to seek enforcement of this Agreement.
Notwithstanding any provision contained herein to the contrary, the Company
shall be permitted to maintain key man insurance policies regarding the life
of the Executive for its own benefit during any period of time, whether during
the Term or thereafter.
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SECTION 5.3 Termination Obligations of the
Executive. Other than as provided in Section 5.2(a)(i) hereof, the Executive
hereby acknowledges and agrees that all Personal Property furnished to or
prepared by the Executive in the course of or incident to his employment,
belongs to the Company and the LLC and shall be promptly returned to the
Company and the LLC upon the Termination Date. The Executive hereby
acknowledges that for the duration of this Agreement, he has gained and will
gain knowledge of Proprietary Information. Following the Termination Date, the
Executive shall not retain any written or other tangible material containing
any Proprietary Information relating to the business of the Company and the
LLC. The Executive's obligations under this Section 5.3 are further subject to
the terms and conditions of the Non- compete Agreement.
SECTION 5.4 Other Positions. Upon the Termination Date, all
offices, positions and directorships then held by the Executive with the
Company, the LLC and any Subsidiaries shall automatically terminate and no
further action shall be required to effectuate any such termination.
SECTION 5.5 Survival. The representations, warranties,
covenants and agreements contained in Section 4.2(b), Section 5.2, Section
5.3, Section 5.4 and Article 6 of this Agreement shall survive the Termination
Date and the expiration of this Agreement pursuant to their respective terms.
ARTICLE VI
REPRESENTATIONS OF THE EXECUTIVE AND THE COMPANY
SECTION 6.1 Other Agreements. The Executive hereby
represents and warrants to the Company that he is not bound by any employment
agreement, restrictive covenant, confidentiality or proprietary information or
other agreement that would prohibit or inhibit in any way the full and
complete performance by the Executive of his duties under the terms and limits
of this Agreement. The Executive further represents, warrants and agrees that
the fulfillment of his Duties and Responsibilities and his duties as Chief
Financial Officer do not and will not conflict with, or infringe upon, any
other agreements or understandings of the Executive with any other party.
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SECTION 6.2 Tax Consequences. The Executive acknowledges
that the payments and other benefits herein provided may have serious negative
income tax consequences to the Executive. The Executive represents, warrants
and agrees that he has consulted with an independent professional tax advisor,
that he is fully responsible for all the tax ramifications of the provisions
of this Agreement and that neither the Company nor any of its representatives,
agents or advisors has made any representation or warranty to the Executive as
to the appropriate tax treatment to the Executive of these matters.
SECTION 6.3 Health of the Executive. The Executive
represents and warrants that as of the date of this Agreement, the Executive
has no reason to believe that he suffers from a condition that would lead to a
Permanent Disability during the five-year period commencing on the Start Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Arbitration. Except as otherwise expressly
provided herein, in any claim or controversy arising out of or relating to any
provision of this Agreement, or the breach thereof, shall, upon written demand
of either party, be settled by arbitration in accordance with the Commercial
Arbitration Rules then in effect of the American Arbitration Association, to
the extent consistent with the laws of the Commonwealth of Virginia (including
the rights to assess costs and fees) and judgment upon the award rendered by
the arbitrator(s) may be entered in any court of competent jurisdiction.
Arbitration proceedings shall be conducted in Washington, D.C.
SECTION 7.2 Assignment; Successors and Assigns. This
Agreement may not be assigned, nor may any obligations hereunder be delegated,
by the Executive; provided, however, the rights and obligations (to the extent
applicable) of the Executive shall inure to the benefit and be binding upon
his guardian, conservator, executor, administrator, or similar transferee
through operation of law and that the Executive and such successors will
receive from the Company full and complete financial statements of the Company
to the extent necessary to exercise their rights under this Agreement.
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This Agreement is fully and freely assignable by the Company in connection
with the consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of its
properties or assets; provided that the surviving entity in any such merger,
consolidation or sale shall be a financially responsible party. Subject to the
foregoing, the Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective heirs, legal representatives, successors
and permitted assigns, and shall not benefit any person or entity other than
those enumerated above.
SECTION 7.3 Notices. Any notice, request, claim, demand,
document or other communication required or permitted to be given under any
provision of this Agreement to any party hereto shall be made in writing and
shall be deemed to have been duly delivered and received (i) on the date of
personal or same-day courier delivery, (ii) on the date of receipt, if mailed
by certified or registered mail, postage prepaid and return receipt requested,
(iii) three (3) business days following the date of deposit with the United
States Postal Service, if sent by regular first class mail, (iv) on the date
of transmission, if sent by telecopy, facsimile or other electronic
transmission and confirmatory evidence of such transmission is received and
retained by sender, or (v) on the date of the stamped receipt, if sent by an
overnight delivery service; and shall be addressed to the following addresses
or to such other address as either party may request and shall have specified
by notice, in writing, to the other:
To the Company: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Manager
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
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To the Executive: J. Xxxxx Xxxxxx
00 Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
With a copy to: XxXxxxx Xxxx
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
SECTION 7.4 Entire Agreement. The terms and provisions of
this Agreement, together with all exhibits and schedules attached hereto,
embody the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof, are intended by the parties to be the
final expression of such agreement and understanding, and supersede and
terminate, and may not be contradicted by evidence of, any and all prior or
contemporaneous agreements, arrangements or understandings, whether written or
verbal, between the parties hereto with respect to the subject matter hereof.
The parties hereby agree that this Agreement shall be in effect as of the date
hereof.
SECTION 7.5 Amendments. Neither this Agreement nor any term
or provision hereof may be modified, amended, changed, waived, extended,
suspended, discharged or terminated unless evidenced by an instrument in
writing signed by the party against whom enforcement is sought.
SECTION 7.6 Waivers. By an instrument in writing similarly
executed, either party may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to
comply with or perform. A waiver of any provision of this Agreement shall not
be deemed a waiver of any other provision of this Agreement. No waiver of any
breach of any provision of this Agreement shall be deemed the waiver of any
subsequent breach thereof or of any other provision. No failure by either
party hereto to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder by either party preclude any other or future exercise of
that right or any other right hereunder by that party.
SECTION 7.7 Severability; Enforcement. If any
part or provision of this Agreement, or the application
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thereof to any person, place or circumstance, shall be held by a court or such
other body of competent jurisdiction to be invalid, illegal, unenforceable or
void in any respect under applicable law, said part or provision shall be
ineffective only to the extent of such invalidity or unenforceability, without
in any way affecting the remaining parts and provisions of this Agreement
which shall be construed as if such invalid or unenforceable part or provision
had not been included, and such invalid or unenforceable part or provision
shall become and be immediately amended and reformed to include only the
portions thereof as are valid and enforceable by such court or other body
having jurisdiction of this Agreement, including such portions as may continue
to be applied to other persons, places or circumstances which shall continue
to remain in full force and effect; and the parties to this Agreement agree
that such part or provision as so amended or reformed shall be valid and
binding as though any wholly invalid or unenforceable portion had not been
included in this Agreement.
SECTION 7.8 Governing Law. The validity, construction,
operation, interpretation, enforceability, performance and effect of this
Agreement, and any and all terms and provisions hereof, and the respective
rights, duties and obligations of the parties hereunder, shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Virginia, without giving effect to principles of conflicts of law thereunder.
SECTION 7.9 Headings. The headings set forth in this
Agreement are provided for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement.
SECTION 7.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first written above.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
______________________________
Name: Xxxxxx X. Xxxxx
Title:
/s/ J. Xxxxx Xxxxxx
-----------------------------------
J. Xxxxx Xxxxxx
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EXHIBIT A
ACTIONS REQUIRING COMPANY'S PRIOR CONSENT
The Executive shall obtain the prior written authorization
(unless specified otherwise) of the Company or the Company's Representative
with respect to all transactions beyond the ordinary course of managing the
Richmond Station Group. The limitations specified below specifically do not
include any limitation on incurring trade payables in the ordinary course of
business. Specifically, the following transactions require the Company's
consent:
I. Merger, consolidation or sale of substantially all of
the assets or a segment of the business of the LLC or
any Subsidiary thereof;
II. Disposal or encumbrance, in a single transaction or
series of related transactions, of any assets of the
LLC having a value of $50,000 or more;
III. Acquisition or disposition of an interest in, or
substantial portion of the assets or a segment of the
business of, another entity;
IV. Creation or dissolution of a subsidiary, branch, or
foreign business rising to a level of an operation;
V. Entry of the LLC into a line of business not conducted
by the Richmond Station Group as of the Start Date;
VI. Entry into an agreement or arrangement for the
borrowing of money or the advance payment of funds by
or the extension of credit to the LLC involving $50,000
or more;
VII. Guarantee by the LLC of the obligations of a third
party (including those of affiliated companies);
VIII. Entry into a collective bargaining agreement;
IX. Entry into, modification of, or termination of
significant employment agreements, including
compensation of officers or other senior executive
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employees of the LLC whose annual compensation before
bonus is $200,000 or more;
X. Entry into, modification of or termination of any agreements or
arrangement with the LLC members, shareholders, directors, managers,
officers, employees, or relatives thereof (excluding any employment
arrangements which the Executive in good faith determines are
consistent with past and customary practices);
XI. Appointment or removal of additional senior executive
employees of the LLC whose annual compensation before
bonus is $200,000 or more;
XII. Appointment or removal of outside auditors of the LLC;
XIII. Any capital expenditure or series of related
capital expenditures by the LLC not in approved
budgets in excess of $50,000;
XIV. The LLC's entry into or amendment of any profit
sharing, pension, or similar plan;
XV. Any third-party license agreement as licensee or
licensor of trademarks, patents, or proprietary know-
how involving more than $50,000;
XVI. Approval or revision of annual operating and capital
budgets (which approval or revision may be oral);
XVII. Approval or modification of the LLC's or any
Subsidiary's investment policies addressing short-
, medium- and long-term investment of the LLC's or
such Subsidiary's non-working capital cash; and
XVIII. Institution of or joinder of the LLC or any
Subsidiary as a party to litigation, arbitration,
or similar proceedings involving more than
$50,000.
The Company's Representative with full and complete authority to act
on behalf of the LLC under this Exhibit A is:
[-----------------------------]
Phone No. [___________________]
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Fax No. [___________________]
and if such Representative is unavailable, the person with full and complete
authority to act in lieu of such Representative is:
[_____________________________]
Phone No. [___________________]
Fax No. [___________________]
The Company shall have the right to change the Representative or the alternate
Representative at any time and from time to time; provided, however, the
Company will endeavor to name such Representatives to provide for the efficient
and amicable fulfillment of the Executive's Duties and Responsibilities.
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EXHIBIT B
FORM OF
NON-COMPETE AND NON-SOLICITATION AGREEMENT
THIS NON-COMPETE AND NON-SOLICITATION AGREEMENT is made as of the
[___] day of [________], 199[_], by and between SFX Broadcasting, Inc., a
Delaware corporation (the "Company"), ABS Communications, L.L.C., a Virginia
limited liability company (the "LLC") and J. Xxxxx Xxxxxx, an individual (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Executive have simultaneously herewith
entered into an Employment Agreement, dated as of even date herewith (the
"Employment Agreement"), setting forth certain terms and conditions of the
employment of the Executive by the Company; and
WHEREAS, the Executive acknowledges that in the course of, and as a
direct consequence of, the Executive's employment with the Company, the
Executive will be exposed to certain Proprietary Information; and
WHEREAS, due to the highly competitive nature of the Company's and the
LLC's business, the Company and the LLC desire to protect their rights to, and
the confidentiality of, the Proprietary Information and the Executive
acknowledges the necessity and desirability of such protection; and
WHEREAS, as a condition to the Executive's employment with the
Company, the Company and the LLC also desire to protect their respective
businesses, other employees and customers from competition and solicitation
actions on the part of the Executive during, and for a limited period of time
following, the Executive's employment; and
WHEREAS, as a condition to the execution and delivery of the
Employment Agreement, the parties hereto are entering into, and hereby agree to
comply in all respects with, the terms and provisions set forth in this
Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. When used in this Agreement, the following initially
capitalized words or phrases shall have the following meanings:
"Agreement" means this Non-compete and Non-solicitation Agreement,
together with any and all exhibits, attachments and schedules appended hereto,
as the same may be amended, modified or supplemented from time to time.
"Company" has the meaning ascribed to such term in the preamble to
this Agreement.
"Employment Agreement" has the meaning ascribed to such term in the
recitals to this Agreement.
"Executive" has the meaning ascribed to such term in the preamble to
this Agreement.
"Improvements" has the meaning ascribed to such term in Section 2 of
this Agreement.
"LLC" means ABS Communications, L.L.C., a Virginia limited liability
company.
All other initially capitalized words and phrases not otherwise herein defined
shall have the respective meanings ascribed to such terms in the Employment
Agreement.
2. Personal Property and Proprietary Information; Improvements. The
Executive hereby acknowledges and agrees that all Personal Property, including
all Proprietary Information, furnished to or prepared by the Executive in the
course of or incident to his employment, is, and shall forever hereafter
remain, the exclusive property of the Company or the LLC and of their
respective assignees and successors, including, but not limited to, any
portions thereof that may be created, enhanced, suggested or improved by the
Executive in connection with, or in the course of, the Executive's duties at
the Company and the LLC under the Employment Agreement (the "Improvements").
The Executive hereby covenants and agrees to fully disclose any and all
Improvements to the Proprietary Information, as and when such are created and
shall promptly upon the Company's or the LLC's request, and
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without further consideration other than that provided for herein and in the
Employment Agreement, but at no expense to the Executive, make all such
applications, execute all such papers, and take all such actions as may be
necessary, proper or desirable so that the property rights with respect to such
Improvements shall vest in and remain with the Company or the LLC and so that
the Company or the LLC may obtain, own and exploit, for its own benefit,
letters patent and other property rights with respect to such Improvements.
This Section shall survive the termination of this Agreement and the Employment
Agreement.
3. Non-Disclosure of Proprietary Information. The Executive recognizes
and acknowledges that the Proprietary Information is a valuable, special and
unique asset of the Company's or the LLC's business. The Executive covenants
and agrees that he shall not, either directly or indirectly, other than in the
performance of his duties and obligations to the Company and the LLC, disclose,
disseminate, publish or use or permit the disclosure, dissemination, publishing
or use of the Proprietary Information and/or any part thereof to or for himself
or any other person, firm, corporation, association, partnership or any other
entity whatsoever outside the Company or to any officer, director, stockholder,
partner, member, associate, employee, agent or representative of any thereof
for any reason or any purpose whatsoever, except as may be required in the
proper discharge of the Executive's duties pursuant to the terms of the
Executive's employment with the Company under the Employment Agreement. This
Section shall survive the termination of this Agreement and the Employment
Agreement.
4. Obligations of the Executive Upon Termination.
(a) Regarding Personal Property. The Executive hereby acknowledges
that for the duration of the Employment Agreement, the Executive has gained and
will gain knowledge of Proprietary Information. Upon the Termination Date, the
Executive covenants and promises that all Personal Property, including all
Proprietary Information, then in the Executive's possession, control or
influence, whether prepared by the Executive or others, shall be promptly and
immediately returned by the Executive to the Company or the LLC. Following the
Termination Date, the Executive shall not retain any written or other tangible
material containing
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any Proprietary Information relating to the business of the Company or the LLC.
(b) Regarding Prohibited Activity. For a period of one (1) year
following the Termination Date, the Executive agrees that the Executive shall
not engage in any Prohibited Activity within the Richmond Radio Market;
provided, however, that this provision shall not prohibit the Executive from
making any personal investment which is purely passive in nature following the
Termination Date; provided, further, that if the Executive desires to become a
consultant to an entity which is engaged in a Prohibited Activity within the
Richmond Radio Market, the Executive may seek the consent of the Company by
submitting to the Company in writing a detailed description of the Executive's
proposed consulting activities, the identity of the entity to receive such
consulting activities and the Executive's proposed responsibilities (including,
without limitation, the extent to which the Executive will be engaged in
consulting activities relating to a Prohibited Activity).
5. Non-competition. During the Term and for a period of one (1) year
thereafter, the Executive shall not, without the express prior written consent
of the Company and the LLC, directly or indirectly, whether alone or by action
in concert with others, whether for the Executive's own purposes or for any
other person or persons, partnership, firm, association, syndicate, company or
corporation engaged in or concerned with or interested in a business similar to
or competitive with that conducted by the Company, the LLC or any of their
Subsidiaries, engage in or perform services with any person, business or
organization (or become interested therein or therewith as an individual,
partner, shareholder, member, director, officer, principal, agent, employee,
lender, trustee or in any relation or capacity whatsoever) in the Richmond
Radio Market which sells, solicits, bids for, contracts for, provides or
performs, or which proposes to sell, solicit, bid for, contract for, provide or
perform, services or products in the Richmond Radio Market in competition with
or similar to the activities engaged in, concerned with or conducted by the
Company, the LLC or any of their Subsidiaries during the Term.
6. Non-solicitation.
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(a) Officers and Employees. The Executive acknowledges and agrees that
any solicitation of the Company's, the LLC's or any of their Subsidiaries'
officers, managers, members, consultants or other employees may involve the use
or disclosure of Proprietary Information protected by this Agreement. In
recognition of this fact, during the Term and for the period of one (1) year
following the Termination Date, the Executive agrees that the Executive shall
not, for himself or on behalf of any other person or persons, company,
corporation, partnership, firm, association, syndicate or other entity,
directly or indirectly, alone or by action in concert with others, solicit or
engage for employment any person who at the Termination Date is or was an
officer, manager, member, consultant or other employee of the Company, the LLC
or any of their Subsidiaries during the Term without the express prior written
consent of the Company.
(b) Customers and Suppliers. The Executive acknowledges and agrees
that any solicitation of the Company's, the LLC's or any of their Subsidiaries'
customers or suppliers may involve the use or disclosure of Proprietary
Information protected by this Agreement. In recognition of this fact, during
the Term and for a period of one (1) year following the Termination Date, the
Executive agrees that the Executive shall not, without the express prior
written permission of the Company, for himself or on behalf of any other
person, corporation, partnership or other entity, directly or indirectly,
whether alone or by action in concert with others, solicit, induce or encourage
or attempt to solicit, induce or encourage, any person known by him to have a
relationship with the Company, the LLC or any of their Subsidiaries, or any
customer or supplier of the Company, the LLC or any of their Subsidiaries, to
discontinue, terminate, cancel or refrain from entering into any contractual or
business relationship with the Company, the LLC or any of their Subsidiaries.
7. Early Termination. Notwithstanding any other provision in Section 5
and Section 6 of this Agreement to the contrary, in the event that the
Executive's employment with the Company is terminated by the Executive due to a
material breach by the Company of its obligations under the Employment
Agreement, then the Executive's obligations under Section 5 and Section 6 of
this Agreement shall cease as of the Termination Date. Notwithstanding any
other provision contained herein (other than the preceding sentence which
-5-
shall control), the Executive's obligations under Section 5 and Section 6 of
this Agreement shall in all cases cease on the earlier of (i) one (1) year
after the Termination Date or (ii) the sixth (6th) anniversary of the date of
this Agreement.
8. Reasonableness of Covenants. Executive hereby acknowledges and
agrees that the foregoing covenants, promises duties and obligations are
commercially reasonable and reasonably necessary to protect the Company.
9. Injunctive Relief. The Executive agrees that it would be difficult
to measure damage to the Company for any breach or violation by the Executive
of the covenants, promises, duties and obligations set forth in this Agreement
and that injury to the Company from any such breach or violation by the
Executive would be impossible to calculate, and that money damages would be an
inadequate remedy for any such breach or violation. Accordingly, the Executive
agrees that if any provision of this Agreement is, or is threatened to be,
breached or violated, the Company shall be entitled, in addition to any and all
other rights and remedies it may have, either at law or in equity, to seek an
injunction or other appropriate orders enjoining or restraining any such breach
or violation, whether actual or threatened, by the Executive without showing or
proving any actual damage sustained by the Company.
10. Express Conditions of Company's Obligations. Subject to the
provisions of Section 7 hereof, the Executive acknowledges and agrees that any
obligations of the Company payable to or inuring to the benefit of the
Executive under this Agreement or the Employment Agreement following the
Termination Date are expressly conditioned upon the Executive's compliance with
and adherence to the provisions of Section 2 through (and including) Section 7
of this Agreement.
11. Miscellaneous.
(a) Assignment; Successors and Assigns. This Agreement may not be
assigned, nor may any obligations hereunder be delegated, by the Executive and
shall terminate upon his death. This Agreement is fully and freely assignable
by the Company in connection with the consolidation of the Company with, or its
merger into, any other corporation, or the sale by the Company of all or
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substantially all of its properties or assets, but shall be assigned only
contemporaneously with the valid assignment of the Employment Agreement in
accordance with the terms thereof. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective heirs, legal representatives, successors and permitted assigns, and
shall not benefit any person or entity other than those enumerated above.
(b) Notices. Any notice, request, claim, demand, document or other
communication required or permitted to be given under any provision of this
Agreement to any party hereto shall be made in writing and shall be deemed to
have been duly delivered and received (i) on the date of personal or same-day
courier delivery, (ii) on the date of receipt, if mailed by certified or
registered mail, postage prepaid and return receipt requested, (iii) three (3)
business days following the date of deposit with the United States Postal
Service, if sent by regular first class mail, (iv) on the date of transmission,
if sent by telecopy, facsimile or other electronic transmission and
confirmatory evidence of such transmission is received and retained by sender,
or (v) on the date of the stamped receipt, if sent by an overnight delivery
service; and shall be addressed to the following addresses or to such other
address as either party may request and shall have specified by notice, in
writing, to the other:
To the Company: ABS Communications, L.L.C.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Manager
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
To the Executive: J. Xxxxx Xxxxxx
00 Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
With a copy to: XxXxxxx Xxxx
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000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
(c) Entire Agreement. The terms and provisions of this Agreement,
together with all exhibits and schedules attached hereto, embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, are intended by the parties to be the final expression of such
agreement and understanding, and supersede and terminate, and may not be
contradicted by evidence of, any and all prior or contemporaneous agreements,
arrangements or understandings, whether written or verbal, between the parties
hereto with respect to the subject matter hereof. The parties hereby agree that
this Agreement shall be in effect as of the date hereof.
(d) Amendments. Neither this Agreement nor any term or provision
hereof may be modified, amended, changed, waived, extended, suspended,
discharged or terminated unless evidenced by an instrument in writing signed by
the party against whom enforcement is sought.
(e) Waivers. By an instrument in writing similarly executed, either
party may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or perform.
A waiver of any provision of this Agreement shall not be deemed a waiver of any
other provision of this Agreement. No waiver of any breach of any provision of
this Agreement shall be deemed the waiver of any subsequent breach thereof or
of any other provision. No failure by either party hereto to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder by either party
preclude any other or future exercise of that rights or any other right
hereunder by that party.
(f) Severability; Enforcement. If any part or provision of this
Agreement, or the application thereof to any person, place or circumstance,
shall be held by a court or such other body of competent jurisdiction to be
invalid, illegal, unenforceable or void in any respect under applicable law,
said part or provision shall be ineffective only to the extent of such
invalidity or unenforceability, without in any way affecting the remaining
parts and
-8-
provisions of this Agreement which shall be construed as if such invalid or
unenforceable part or provision had not been included, and such invalid or
unenforceable part or provision shall become and be immediately amended and
reformed to include only the portions thereof as are valid and enforceable by
such court or other body having jurisdiction of this Agreement, including such
portions as may continue to be applied to other persons, places or
circumstances which shall continue to remain in full force and effect; and the
parties to this Agreement agree that such part or provision as so amended or
reformed shall be valid and binding as though any wholly invalid or
unenforceable portion had not been included in this Agreement.
(g) Governing Law. The validity, construction, operation,
interpretation, enforceability, performance and effect of this Agreement, and
any and all terms and provisions hereof, and the respective rights, duties and
obligations of the parties hereunder, shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Virginia, without
giving effect to principles of conflicts of law thereunder.
(h) Headings. The headings set forth in this Agreement are provided
for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. xxxxx
Title:
ABS COMMUNICATIONS, L.L.C.
By: SFX BROADCASTING, INC., as
Company
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name:
Title:
/s/ J. Xxxxx Xxxxxx
-----------------------------------
J. Xxxxx Xxxxxx
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ABS COMMUNICATIONS, L.L.C.
AMENDED AND RESTATED OPERATING AGREEMENT
AMONG
SFX BROADCASTING, INC.,
XXXXXXX X. XXXXX
AND
ABS COMMUNICATIONS INCORPORATED
DATED AS OF
DECEMBER 17, 1997
.
AMENDED AND RESTATED OPERATING AGREEMENT
OF
ABS COMMUNICATIONS, L.L.C.
THIS AMENDED AND RESTATED OPERATING AGREEMENT of ABS COMMUNICATIONS,
L.L.C. (the "Agreement") is entered into this 17th day of December,
1996, by and among SFX Broadcasting, Inc., a Delaware corporation ("SFX"),
Xxxxxxx X. Xxxxx ("KAB") and ABS Communications Incorporated, a Virginia
corporation ("ABS").
RECITALS
WHEREAS, KAB and ABS formed ABS COMMUNICATIONS, L.L.C. (the "Company")
on April 29, 1996 by the filing of an Articles of Organization with the
Virginia State Corporation Commission and the execution and delivery of the
Operating Agreement of the Company, dated as of April 29, 1996 (the "Original
Operating Agreement");
WHEREAS, KAB and ABS initially contributed $99.00 and $1.00,
respectively, to the Company and received Capital Account credits therefor and
Percentage Interests of 99% and 1%, respectively;
WHEREAS, pursuant to that certain KAB Contribution Agreement, dated as
of December 17, 1996 by and among KAB and the Company (the "KAB Contribution
Agreement"), KAB has contributed the Contributed Interests (as defined in the
KAB Contribution Agreement) to the Company and received a Capital Account
credit therefor of $1,700,000 and the Percentage Interests of KAB and ABS have
remained 99% and 1%, respectively;
WHEREAS, the parties hereto wish to amend and restate the Original
Operating Agreement in its entirety to reflect the admission of SFX as a
Member, to conclude the withdrawal of ABS from the Company as a Member as of
the date of this Agreement, and to reflect the adjustment of the Percentage
Interests of the remaining Members, and to provide for the allocation of Profit
and Loss (as defined in Article I hereto), cash flow and other proceeds of the
Company among the Members, the respective rights, obligations and interests of
the Members to each other and to the Company, and certain other matters;
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WHEREAS, in accordance with the terms of the Contribution Agreement,
dated as of December 17, 1996 by and between SFX, the Company and the other
parties thereto (the "SFX Contribution Agreement"), SFX has agreed to
contribute, subject to certain conditions, the Contributed Assets (as defined
in the SFX Contribution Agreement) to the Company pursuant to the SFX
Contribution Agreement substantially in the form attached hereto as Exhibit B;
WHEREAS, in accordance with the terms of the Convertible Note
Agreement, dated as of December 17, 1996 by and between SFX and the Company
(the "Convertible Note Agreement"), SFX has agreed to convert, subject to the
occurrence of a Conversion Event (as defined in the Convertible Note
Agreement), all Loan amounts outstanding (other than the Excluded Loan Amounts
(as defined in the Convertible Note Agreement)) into membership interests in
the Company as contemplated thereunder.
ARTICLE I
DEFINED TERMS
The following capitalized terms shall have the meanings specified in
this Article I. Other terms may be defined in the text of this Agreement and,
throughout this Agreement those terms shall have the meanings respectively
ascribed to them.
"Act" means the Virginia Limited Liability Company Act (Virginia Code
ss.ss.13.1-1000 to 13.1-1063), as amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in the Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(a) increase such Capital Account by any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement (including
Section 3.6) or is deemed to be obligated to restore pursuant to the
penultimate sentences of Sections 1.704-(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(b) increase such Capital Account by the items described in Sections
1.704-1(b)(2)(ii)(d)(4),
-3-
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
"Agreement" means this Agreement, as amended from time to time.
"Capital Account" means, with respect to any Member, the account
maintained for each Member on the books of account of the Company in accordance
with Section 3.5; provided, however, the Capital Account balance as of the date
of this Agreement for each Member shall be as reflected on Exhibit A.
"Capital Contribution" means the total amount of cash and the fair
market value of any other assets contributed to the Company by a Member, net of
liabilities assumed or to which the assets are subject.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding law.
"Company" means ABS COMMUNICATIONS, L.L.C., the limited liability
company formed and existing pursuant to the Original Operating Agreement, as
such limited liability company may from time to time be constituted.
"Depreciation" means, for each taxable year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such taxable year, except that if the adjusted book
value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such taxable year, Depreciation shall be an amount
which bears the same ratio to such adjusted book value as the federal income
tax depreciation, amortization or other cost recovery deduction for such
taxable year bears to such beginning adjusted tax basis; provided, however,
that if the adjusted basis for federal income tax purposes of an asset at the
beginning of such taxable year is zero, Depreciation shall be determined with
reference to such beginning adjusted book value using any reasonable method
selected by the Manager.
-4-
"Fiscal Year" shall mean the Company's fiscal year, which shall be the
calendar year.
"Interest" means a Person's share of the Profits and Losses of, and
the right to receive distributions from, the Company.
"Majority Vote" means an affirmative vote by the Members whose
aggregate Percentage Interests on the date of such vote exceeds fifty percent
(50%).
"Member" means each Person signing this Agreement and any Person who
subsequently is admitted as a Member of the Company. The members of the Company
as of the date of this Agreement are those Persons listed in Section 2.7.
"Negative Capital Account" means a Capital Account with a debit
balance.
"Percentage Interest" means, as to the Members as of the date of this
Agreement, the percentage set forth after the Member's name below:
SFX Ninety-six percent (96%)
KAB Four percent (4%)
"Person" means and includes an individual, corporation, company,
association, partnership, limited liability company, trust, living trust,
estate, or other entity.
"Positive Capital Account" means a Capital Account with a credit
balance.
"Profit and Loss" means, for each Fiscal Year of the Company (or other
period for which Profit or Loss must be computed) the Company's taxable income
or loss determined in accordance with Code Section 703(a), with the following
adjustments:
(a) all items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in computing taxable income or loss;
(b) any tax-exempt income of the Company, not otherwise taken
into account in computing Profit or Loss, shall be included in computing
taxable income or loss;
-5-
(c) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as such pursuant to Regulation Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profit
or Loss, shall be subtracted from taxable income or loss;
(d) gain or loss resulting from any taxable disposition of
Company property shall be computed by reference to the adjusted book value of
the property disposed of, notwithstanding the fact that the adjusted book value
differs from the adjusted basis of the property for federal income tax
purposes;
(e) in lieu of depreciation, amortization or other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such taxable year;
(f) to the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution
other than in liquidation of a Partner's interest in the Partnership, the
amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset and shall
be taken into account for purposes of computing Profits or Losses; and
(g) notwithstanding any other provision of this definition, any
items which are specifically allocated pursuant to Section 5.3 hereof shall not
be taken into account in computing Profit or Loss.
"Regulations" means the Regulations, including any Temporary and
Proposed Regulations, promulgated by the U.S. Treasury Department under the
Code, as such Regulations may be amended from time to time (including
corresponding provisions of any succeeding Regulations).
"Transfer" means, when used as a noun, any voluntary sale,
hypothecation, pledge, assignment, attachment, or other transfer, and, when
used as a verb, means voluntarily to sell, hypothecate, pledge, assign, or
otherwise transfer.
-6-
ARTICLE II
FORMATION AND NAME; OFFICE; PURPOSE;
TERM; WITHDRAWAL OF ABS
2.1 FORMATION. KAB and ABS formed the Company as a limited liability
company pursuant to the Act and in accordance with the terms of the Original
Operating Agreement. The Members execute and adopt this Agreement as an
Operating Agreement of the Company pursuant to ss.13.1-1023 of the Act.
2.2 NAME OF THE COMPANY. The name of the Company shall be ABS
COMMUNICATIONS, L.L.C.
2.3 PURPOSE. The purpose of the Company is to engage in any lawful
business of every kind and character for which a limited liability company may
be organized under the Act, including, without limitation, to own, operate,
manage and maintain radio stations. The Company shall have all the powers
provided for a limited liability company under the Act.
2.4 TERM. The term of the Company began on April 29, 1996 and shall
continue in existence until December 31, 2046, unless sooner terminated
pursuant to this Agreement or the Act.
2.5 PRINCIPAL OFFICE. The principal office of the Company shall be in
care of SFX Broadcasting, Inc., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at any other place as the Manager may designate from time to time.
2.6 REGISTERED OFFICE; RESIDENT AGENT. The Company shall maintain a
registered office in Virginia and the name and address of the Company's
resident agent in Virginia shall be as set forth in the Company's Articles of
Organization.
2.7 WITHDRAWAL OF ABS. As of the date of this Agreement, ABS hereby
withdraws from the Company as a Member and shall have no further right, title,
or interest in the Company or in any of its assets. In exchange therefore, the
Company has paid ABS $100 in cash, and ABS acknowledges receipt of such $100 in
full redemption of its interest.
2.8 MEMBERS. The names and addresses of the Members as of the date of
this Agreement are as follows:
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SFX Broadcasting, Inc., with its principal office at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Xxxxxxx X. Xxxxx, an individual residing at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000.
ARTICLE III
MEMBERS; CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 CAPITAL CONTRIBUTIONS. On or prior to the date hereof, each Member
shall contribute, or has contributed, to the capital (whether in cash or
otherwise) of the Company the full amount of the capital contributions as set
forth opposite its name in Exhibit A attached hereto.
3.2 NO OTHER CAPITAL CONTRIBUTIONS. No Member shall be required to
contribute any additional capital to the Company. Other than as required in
Section 3.6, and except as set forth in the Act, no Member shall have any
personal liability to the Company, to any other Member of the Company, or to
any other person with respect to any obligations of the Company.
3.3 NO INTEREST ON CAPITAL CONTRIBUTIONS. Members shall not be paid
interest on their Capital Contributions.
3.4 RETURN OF CAPITAL CONTRIBUTIONS. No Member shall have the right to
receive the return of any Capital Contribution.
3.5 CAPITAL ACCOUNT MAINTENANCE. The Company shall maintain for each
Member a separate Capital Account in accordance with the following provisions
(which Capital Account shall be adjusted as otherwise required by Section
1.704-1(b) of the Regulations):
(a) Each Member's Capital Account shall be increased by such Member's
Capital Contributions, such Member's distributive share of Profits and any
items in the nature of income or gain which are specially allocated pursuant to
Article V hereof, and the amount of any Company liabilities assumed by such
Member or which are secured by any property distributed to such Member;
(b) Each Member's Capital Account shall be decreased by the amount of
cash and the fair market value of
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any property distributed to such Member pursuant to any provision of this
Agreement, such Member's distributive share of Losses and any items in the
nature of expenses or losses which are specially allocated pursuant to Section
5.3 hereof and the amount of any liabilities of such Member assigned by the
Company or which are secured by any property contributed by such Member to the
Company;
(c) In determining the amount of any liability for purpose of
paragraphs (a) and (b) hereof, there shall be taken into account Section 752(c)
of the Code and any other applicable provisions of the Code and Regulations;
and
(d) The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Section 1.704-1(b) of the
Regulations, and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Members shall determine that it is prudent
to modify the manner in which the Capital Account, or any debits or credits
thereto (including, without limitation, debits or credits relating to
liabilities that are secured by contributed or distributed property or which
are assumed by the Company or one or more of the Members), are computed in
order to comply with such Regulations, the Members may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Member pursuant to Section 8.3 of the Agreement upon the
dissolution of the Company. The Members also shall (i) make any adjustments
that are necessary or appropriate to maintain equality between the Capital
Accounts of the Members and the amount of Company capital reflected on the
Company's balance sheet, as computed for book purpose in accordance with
Section 1.704-1(b)(2)(iv)(g) of the Regulations, and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Section 1.704-1(b) of the Regulations.
3.6 INDEBTEDNESS OF THE COMPANY. The Members acknowledge and agree
that the only indebtedness for borrowed money the Company may incur, other than
(i) indebtedness incurred for working capital purposes and (ii) intercompany
indebtedness representating the Excluded Loan Amounts (as defined in the
Convertible Loan Agreement), shall be $3,900,000 which is recourse to KAB (the
"Recourse Indebtedness"). The amount, type and nature of all indebtedness for
borrowed money shall not change without the mutual consent of the Members. If
the assets of the Company are insufficient to extinguish the Recourse
Indebtedness
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when and if it becomes due or upon liquidation of the Company (not including
any additional capital contributions of SFX under Section 3.2 after such date),
KAB agrees to indemnify and hold the Company and the other Members harmless
for, and to the extent of, the Recourse Indebtedness.
3.7 GUARANTEE OF CERTAIN OBLIGATIONS. Notwithstanding any other
provision of this Agreement, the Company may guaranty, and, to the extent
permitted by law, use any or all of its assets to secure, any obligations of
SFX or any of its affiliates; provided:
(a) SFX shall indemnify and hold KAB harmless for any loss,
costs, or expenses that KAB incurs because of such guarantee;
(b) Such guarantee will not adversely affect or diminish the pro
rata distributions to the Members provided in Article 4; and
(c) SFX will insure that such guarantee does not diminish the
economic interest of KAB in the Company and its assets.
ARTICLE IV
DISTRIBUTIONS
4.1 DISTRIBUTIONS OF CASH FLOW. The cash distribution policy of the
Company shall be as follows:
(a) All distributions, other than in connection with the winding
up of the Company pursuant to Section 8.3 hereof, shall be governed by this
Section 4.1.
(b) Except as otherwise provided in Section 4.1(c) hereof, the
Company shall make distributions of available net cash flow from its operations
and investments, if any, to the Members in accordance with their Percentage
Interests to the extent net cash flow for any given month exceeds the cash
requirements of the Company for the next six (6) month period; provided,
however, in the event the Company is unable to make any distributions as a
result of the prior sentence, the Company may, at the request of a Member, make
an interest free loan in such amount as may be agreed to by such Member and the
Company, provided, that the other Member shall have the right to borrow in
proportionate
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amounts based on its or his Percentage Interest on the same terms (which may be
waived by such Member); provided, further, that the Manager shall be required
to make cash distributions at least quarterly to each Member in accordance with
their Percentage Interests so that the cash distributions made in each quarter
are at least equal to the (i) product of the "Rate" and the "Highest
Allocation" divided by (ii) the Percentage Interest of the Member receiving the
"Highest Allocation." For purposes of this Agreement, the term (i) "Rate" shall
mean the highest combined marginal federal, state and local income tax rate
applicable to any Member divided by four and (ii) "Highest Allocation" shall
mean the taxable income that the Company expects to allocate to a Member during
such year where such allocation divided by such Member's Percentage Interest
yields the highest number so computed for any Member.
(c) For any period in which KAB receives payment from SFX or an
affiliate thereof for services rendered in connection with the operation of the
Company, the distributions to which KAB would have otherwise been entitled
pursuant to Section 4.1(b) hereof shall be reduced, and the distributions to
which SFX would have otherwise been entitled shall be increased, by an amount
equal to the product of KAB's Percentage Interest and the cash compensation
made to KAB from SFX or its affiliate (including for this purpose the
employer's share of Old Age and Survivor's Disability Insurance and Medicare
taxes).
4.2 LIMITATION UPON DISTRIBUTIONS. No distribution shall be made to
Members if prohibited by Article V of the Act.
ARTICLE V
ALLOCATIONS
5.1 PROFITS. Profits, if any, for any Fiscal Year shall be allocated
among the Members in proportion to their Percentage Interests. Notwithstanding
the foregoing, Profits from a transaction or a series of transactions that will
result, or are deemed to result, in the liquidation of the Company, shall be
allocated as follows:
(a) first, to the Members so that, to the extent possible, the
Positive Capital Account balance of each Member divided by the aggregate
Positive Capital
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Account balances of all Members shall be in a ratio equal to each Member's
Percentage Interest; and
(b) the balance, if any, shall be allocated among the Members in
proportion to their Percentage Interests.
5.2 LOSSES. Losses for any Fiscal Year shall be allocated as set forth
in Section 5.2(a) below, subject to the limitation in Section 5.2(b) below.
(a) Losses for any Fiscal Year, including deductions attributable
to nonrecourse indebtedness of the Company, shall be allocated among the
Members in proportion to their Percentage Interests. Notwithstanding the
foregoing, any deductions attributable to nonrecourse indebtedness upon which a
Member bears the economic risk of loss shall be specially allocated to that
Member in a manner consistent with the Regulations.
(b) The Losses allocated pursuant to Section 5.2(a) above shall
not exceed the maximum amount of Losses that can be so allocated without
causing any Member to have an Adjusted Capital Account Deficit at the end of
any Fiscal Year. In the event some but not all of the Members would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 5.2(a) above, any Losses otherwise allocable to a Member
which would result in such an Adjusted Capital Account Deficit shall instead be
allocated to those other Members which would not have such a deficit in
proportion to such other Members' Percentage Interests; provided, however, that
such Losses may not be so allocated to such other Members to the extent such
allocation would result in any such Members having an Adjusted Capital Account
Deficit at the end of any Fiscal Year.
5.3 SPECIAL ALLOCATIONS. The following special allocations shall be
made in the following order:
(a) Special Allocation. Notwithstanding the provisions of Section
5.1 hereof, items of income and gain shall first be specially allocated to SFX
in an amount equal to the amount of cash distributed to SFX pursuant to Section
4.1(c) hereof.
(b) Minimum Gain Chargeback. Items of income and gain shall be
allocated between the Members at such time and in such amounts as necessary to
satisfy the
-12-
"minimum gain chargeback" requirements of the Regulations. Where such a minimum
gain chargeback would cause a distortion in the economic arrangement of the
Members and it is not expected that the Company will have sufficient other
income to correct that distortion, the Company shall apply for a waiver of the
minimum gain chargeback requirement in accordance with Section 1.704-2(f)(4) of
the Regulations.
(c) Qualified Income Offset. Items of Company income, gain, loss
and deduction shall be allocated in an amount and manner sufficient to satisfy
the "qualified income offset" provisions Section 1.704-1(b)(2)(ii)(d) of the
Regulations.
(d) Curative Allocations. Certain allocations set forth in this
Article V (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations. It is the intent of the Members that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other tax items of the
Company pursuant to this Article V (other than the Regulatory Allocations). The
Members shall make such offsetting special allocations of Company income, gain,
loss, or deduction in whatever manner they determine appropriate so that, after
such offsetting allocations are made, each Member's Capital Account balance is,
to the extent possible, equal to the Capital Account balance such Member would
have had if the Regulatory Allocations were not part of this Agreement and all
Company items were allocated pursuant to Sections 5.1 and 5.2 hereof.
5.4 TAX ALLOCATIONS; CODE SECTION 704(c). In accordance with Code
Section 704(c) and the Regulations thereunder, items of income, gain, loss, and
deduction with respect to any property (other than money) contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its initial
value using the traditional method as set forth in Treasury Regulations Section
1.704-3(b).
-13-
ARTICLE VI
MANAGER: RIGHTS, POWERS, AND DUTIES
6.1 MANAGER. The Company shall be managed by any Person ("Manager")
designated by Members by Majority Vote. SFX is hereby designated to serve as
the Manager. The Manager shall not owe any fiduciary duties to the Company or
any Member, but shall perform its managerial functions in good faith and within
the limits of Sections 6.2 and 6.3 hereof. Any Manager designated by the
Members may, by Majority Vote, be removed and replaced by any other Managers.
6.2 GENERAL POWERS. Subject to Section 6.3, the Manager shall have
full, exclusive and complete discretion, power and authority, subject in all
cases to the other provisions of this Agreement and the requirements of
applicable law, to manage, control, administer and operate the business and
affairs of the Company for the purposes herein stated. Without limiting the
foregoing, the Manager may, subject to the requirements of applicable laws:
(a) carry out all of the transactions contemplated hereunder;
(b) perform all acts, exercise all rights and make all decisions
for and on behalf of the Company;
(c) acquire, manage and dispose of any and all property, real or
personal, whether tangible or intangible, on behalf of the Company, including
through foreclosure or otherwise;
(d) compromise, arbitrate or otherwise adjust claims in favor of
or against the Company and initiate, prosecute and defend any litigation
relating to any Company business;
(e) employ, engage or subcontract with attorneys, accountants,
bookkeepers, underwriters, escrow agents, depositories, agents for collection,
banks, builders and any other service provider as the Manager may determine to
be appropriate and to terminate the services of any such entities, all at such
time or times as the Manager may determine;
(f) negotiate, execute, deliver and perform any and all contracts
and other documents on behalf of the
-14-
Company, including, but not limited to, promissory notes, security agreements,
contracts of purchase and sale, deeds and assignments and to take any and all
other action, as the Manager deems appropriate, to effectuate any such
transaction;
(g) acquire and enter into any contract of insurance for the
Company that the Manager deems necessary and proper for the protection of the
Company, either for the conservation of any asset of the Company or for any
purpose convenient or beneficial to the Company;
(h) cause the Company enter into contracts and transactions with
SFX or any of its affiliates in accordance with Section 6.3; and
(i) take any and all other actions relating to any asset of the
Company.
In connection with carrying out the foregoing duties, the Manager may appoint
and employ any Person as it deems necessary or advisable as officers
("Officers") of the Company to effectuate any of the foregoing and such
Officers shall exercise such powers and perform such duties as are prescribed
by the Manager.
6.3 LIMITATIONS ON POWERS. Notwithstanding any other provision in this
Agreement, the Manager shall not:
(a) cause the Company to enter into any contracts or transactions
with SFX or any of its affiliates other than on terms which are at least as
favorable to the Company as the Company would have obtained in a bona fide
arm's length transaction;
(b) issue additional equity interests in the Company of any kind
whatsoever without allowing KAB the right to acquire such interest on the same
terms as they are offered or, if such interest is offered to an affiliate of
SFX, on terms that the current Members agree are commercially reasonable;
(c) merge, recapitalize or effect any other material changes in
the Company that would have the effect of reducing KAB's Percentage Interest in
the Company without the consent of KAB;
(d) commit any act or omission which would have a material
adverse impact on the Percentage Interest of
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KAB in the Company disproportionate to such impact on other Members; and
(e) take any action to amend the Articles of Organization of the
Company.
ARTICLE VII
TRANSFER OF INTERESTS OF MEMBERS
7.1 TRANSFERS. No Member may Transfer all or any portion of such
Member's Interest, except by operation of law. The attempted Transfer of any
Interest in violation of the prohibition contained in this Section 7.1 shall be
deemed invalid, null and void, and of no force or effect, other than to give
rise to a cause of action against the purported transferor for breach of this
Agreement.
ARTICLE VIII
DISSOLUTION
8.1 DISSOLUTION. The Company shall be dissolved and its affairs wound
up in the event that:
(a) The term of the Company as may be provided in this Agreement
expires;
(b) All of the Members agree, by written consent, to dissolve the
Company;
(c) The death, withdrawal, expulsion, bankruptcy or dissolution
of a Member, or the occurrence of any other event which terminates the
continued participation of a Member in the Company.
8.2 WINDING UP. Upon dissolution of the Company, an accounting shall
be made by the Company's independent accountants of the accounts of the Company
and of the Company's assets, liabilities and operations, from the date of the
last previous accounting until the date of dissolution. The Manager, or if the
Manager is unable to act, the other Members, shall proceed to wind up the
affairs of the Company as soon as is practicable.
-16-
8.3 DISTRIBUTION. The proceeds of any dissolution of the Company shall
be distributed in accordance with the following order of priority;
(a) First, to the payment of the debts and liabilities of the
Company and the expenses of dissolution and liquidation (to the extent that
such order of priority is consistent with the laws of the Commonwealth of
Virginia);
(b) Then, to the establishment of any reserves which the Manager,
or if the Manager is unable to act, the other Members, shall deem reasonably
necessary for payment of such other debts and liabilities of the Company
(contingent or otherwise), as are specified by the Manager, and such reserves
shall be held by a bank or trust company selected by the Manager, as escrow
holder, to be disbursed as directed by the Manager in payment of any of the
specified debts and liabilities or, at the expiration of such period as the
Manager may deem advisable, to be distributed in the manner hereinafter
provided; and
(c) Then, to the Members in accordance with their Positive
Capital Account balances (after giving affect to all contributions,
distributions, allocations and other Capital Account adjustments for all Fiscal
Years, including the Fiscal Year during which such liquidation occurs).
(d) If any assets of the Company are to be distributed in kind,
the net fair market value of such assets as of the date of dissolution shall be
determined by independent appraisal or by agreement of the Members. Such assets
shall be deemed to have been sold as of the date of dissolution for their fair
market value, and the Capital Accounts of the Members shall be adjusted
pursuant to Article V hereof to reflect such deemed sale before the
distribution of the assets in liquidation.
8.4 NO OBLIGATION TO RESTORE NEGATIVE CAPITAL ACCOUNTS. Other than as
provided in Section 3.6, if any Member has a Negative Capital Account (after
giving effect to all contributions, distributions, and allocations for all
Fiscal Years, including the year during which dissolution of the Company
occurs), such Member shall have no obligation to make any contribution to the
capital of the Company with respect to such Negative Capital Account, and the
negative balance of any Member's Capital Account shall not be considered a debt
owed by such Member to the Company or to any other Person for any purposes
whatsoever.
-17-
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS
9.1 BANK ACCOUNTS. All funds of the Company shall be deposited in one
or more bank accounts opened in the Company's name. The Manager shall determine
the institution or institutions at which the accounts will be opened and
maintained, the types of accounts, and the Persons who will have authority with
respect to the accounts and the funds therein.
9.2 BOOKS AND RECORDS. The Manager shall keep or cause to be kept
complete and accurate books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the Company's
business. The books and records shall be maintained in accordance with
generally accepted United States accounting principles, consistently applied
and shall be available at the Company's principal office for examination by a
Member or the Member's duly authorized representative at any and all reasonable
time during normal business hours.
9.3 ANNUAL ACCOUNTING PERIOD. The annual accounting period of the
Company shall be its Fiscal Year.
9.4 TAX RETURNS.
(a) The Members intend that the Company shall be treated as a
"partnership" for federal, state, local and foreign income and franchise tax
purposes and agree to take all action, including the amendment of this
Agreement and the execution of other documents, as may be required to qualify
for and receive such treatment as a "partnership" for federal income tax
purposes.
(b) Federal, state, local, and foreign income tax returns of the
Company shall be prepared at the direction of the Manager.
9.5 TAX MATTERS PARTNER. SFX shall be the "tax matters partner"
pursuant to Code Section 6231(a)(7) and shall serve in a similar capacity under
any applicable state, local or foreign law, and is authorized to take all
necessary action to qualify as such. The tax matters partner shall represent
the Company on behalf of the Members in connection with all administrative and
judicial proceedings with respect to Company affairs involving or resulting
-18-
from examinations by any and all federal, state, local or foreign tax
authorities (including, but not limited to, examinations by the Internal
Revenue Service), and may expend Company funds for reasonable professional
services and costs in connection therewith as it deems advisable and necessary;
provided, that except as otherwise provided in this Agreement or by law, the
tax matters partner does not assume any obligations or responsibilities with
respect to the foregoing; provided, further, any settlement or act must adhere
to Section 6.3. The Company will reimburse the tax matters partner for all
reasonable expenses it incurs in fulfilling its duties as such.
9.6 MISCELLANEOUS.
(a) All elections by the Company for federal, state, local and
foreign income and franchise tax purposes shall be determined by the Manager.
(b) In the event of an audit of the tax returns of the Company by
the Internal Revenue Service or any other government agency, the tax matters
partner shall supervise, participate in and retain professionals to participate
in such audit and shall contest, to the extent it, in its sole discretion,
determines appropriate or advantageous, any assertions by such agency that may
be adverse to the Members or the Company; provided, any act must adhere to
Section 6.3.
ARTICLE X
GENERAL PROVISIONS
10.1 ASSURANCES.
(a) Each Member shall execute all such certificates and other
documents and shall do all such filing, recording, publishing, and other acts
as the Manager deems appropriate to comply with the requirements of law for the
formation and operation of the Company and to comply with any laws, rules, and
regulations relating to the acquisition, operation, or holding of the property
of the Company. Without limiting the foregoing, each of KAB and ABS hereby
agrees to provide the Manager with any and all information relating to KAB and
ABS, respectively, (and execute any and all agreements, certificates,
instruments and other
-19-
documents as reasonably requested by the Manager) in connection with operating
the business of the Company, or to comply with any laws, rules, and regulations
relating to the operation or holding of the property of the Company.
(b) No Member shall, directly or indirectly, take any action,
engage in any activity or have any ownership or management interest in any
Person which may adversely affect the ability of the Company or the other
Member to own, operate, acquire or manage any of their respective existing or
future radio stations.
10.2 COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the
complete and exclusive statement of the agreement among the Members with
respect to the subject matter hereof. It supersedes all prior written and oral
statements, including any prior representation, statement, condition, or
warranty, with respect to the subject matter hereof. This Agreement may only be
amended with the consent of all of the Members.
10.3 APPLICABLE LAW. All questions concerning the construction,
validity, and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal law,
not the law of conflicts, of the Commonwealth of Virginia.
10.4 HEADINGS. The headings herein are inserted as a matter of
convenience only, and do not define, limit, or describe the scope of this
Agreement or the intent of the provisions hereof.
10.5 BINDING PROVISIONS. This Agreement is binding upon, and inures to
the benefit of, the parties hereto and their respective successors and
permitted assigns.
10.6 SEPARABILITY OF PROVISIONS. Each provision of this Agreement
shall be considered separable; and if, for any reason, any provision or
provisions herein are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.
10.7 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which, when taken together, shall constitute one and the same instrument.
-20-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title:
XXXXXXX X. XXXXX, an individual
/s/ Xxxxxxx X. Xxxxx
--------------------------------
TO EVIDENCE ITS AGREEMENT AND
WITHDRAWAL:
ABS COMMUNICATIONS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
-21-
EXHIBIT A
CAPITAL CONTRIBUTIONS
------------------------------------------------------------------------------
MEMBERS CAPITAL CONTRIBUTION AGREED FAIR OWNERSHIP
MARKET VALUE PERCENTAGE
------------------------------------------------------------------------------
SFX Conversion of Note under [$___________]1 96%
Broadcasting, SFX Convertible Note
Inc. Agreement
[$15,000,000]
All assets, properties,
rights, titles and
privileges of SFX
Broadcasting, Inc.
relating to WMXB-FM
radio station
[$------------]
Purchase Price under the
Purchase and Sale
Agreement
------------------------------------------------------------------------------
Xxxxxxx X. Xxxxx A limited partnership $1,700,000 4%
interest representing
__% ownership in ABS
Richmond Partners, L.P.
A limited partnership
interest representing
__% ownership in ABS
Richmond Partners II,
L.P.
==============================================================================
--------------
(1) Full principal amount of the Convertible Note other than the Excluded Loan
Amounts (as defined in the Convertible Note Agreement).
-22-
PUT AND CALL AGREEMENT
----------------------
THIS PUT AND CALL AGREEMENT (this "Agreement") is entered into this
17th day of December, 1996, by and among SFX Broadcasting, Inc., a Delaware
corporation ("SFX") and Xxxxxxx X. Xxxxx, an individual ("KAB").
R E C I T A L S
- - - - - - - -
WHEREAS, pursuant to that certain KAB Contribution Agreement, dated as
of December 17, 1996 (the "KAB Contribution Agreement") by and between KAB and
ABS Communications, L.L.C., a Virginia limited liability company (the
"Company"), KAB contributed to the Company the Contributed Interests (as
defined in the KAB Contribution Agreement) and in consideration therefor
increased KAB's capital interest in the Company;
WHEREAS, SFX, KAB and ABS Communications Incorporated ("ABS") have
executed the Amended and Restated Operating Agreement dated as of the date
hereof (the "Amended Operating Agreement") and, pursuant thereto, ABS has
withdrawn from the Company and SFX and KAB have a 96% and 4%, respectively,
Percentage Interest (as defined in the Amended Operating Agreement; all of
KAB's interest in the Company is referred to as "KAB's Interest").
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the SFX Contribution Agreement, dated as of
December 17, 1996 (the "SFX Contribution Agreement") between SFX, the Company
and the other parties thereto that the parties hereto enter into this Agreement
pursuant to which KAB shall have the right to sell, and SFX shall have a right
to purchase, all, but not less than all, of KAB's Interest in accordance with
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Call Option. At any time after the fifth anniversary of the Amended
Operating Agreement (the "Exercise Date"), SFX shall have the right to purchase
all, but not less than all, of KAB's Interest for the Purchase Price calculated
pursuant to Section 3 hereof. The right to purchase KAB's Interest pursuant to
this Section 1 shall be referred to as the "Call Option."
2. Put Option. At any time after the Exercise Date, KAB shall have the
right to sell all, but not less than all, of KAB's Interest to SFX for the
Purchase Price calculated pursuant to Section 3 hereof. The right to sell KAB's
Interest pursuant to this Section 2 shall be referred
to as the "Put Option" and together with the Call Option, the "Options."
3. Purchase Procedures and Purchase Price. SFX and KAB may exercise
the Call Option and the Put Option, respectively, by giving written notice
thereof to the other party (the "Exercise Notice"). The purchase price (the
"Purchase Price") payable to KAB upon the exercise of the Call Option or the
Put Option, as applicable, shall be an amount equal to the fair market value of
KAB's Interest. SFX and KAB shall consult with one another for a period of ten
(10) business days following the receipt of the applicable Exercise Notice as
to the selection of a mutually acceptable arbitrator, who shall be a person
familiar with valuing radio station assets. If SFX and KAB do not so agree
within such ten (10)-day period, the arbitrator shall be appointed by a third
party selected by each of SFX and KAB. The arbitrator so selected shall then
determine the fair market value of KAB's Interest and shall notify SFX and KAB
of such arbitrator's determination within thirty (30) days following such
arbitrator's selection as arbitrator as described above and the amount of the
Purchase Price as so determined shall be binding upon the parties for all
purposes of this Agreement. In making such determination, the arbitrator shall
first determine the fair market value of the Company (which determination will
include the net working capital of the Company less recorded liabilities
(exclusive of current accounts payable which are included in computing net
working capital)) and then multiply such value by 4%. All of the reasonable
costs of any arbitration (including without limitation attorneys' fees) shall
be borne equally by SFX and KAB.
4. Closing.
(a) The closing (the "Closing") for the purchase and sale of KAB's
Interest pursuant to SFX's exercise of the Call Option or KAB's exercise of the
Put Option shall take place no later than 90 days after receipt by SFX or KAB
of the applicable Exercise Notice or, if later, seven (7) days following the
determination of the Purchase Price in the manner described in Section 3 hereof
and, if applicable, upon receipt by SFX and KAB of all third party consents,
including from the Federal Communications Commission (the "FCC"). The Closing
shall take place at 10:00 a.m. on the date of the Closing at the offices of
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. Notwithstanding anything in this Agreement to the contrary, in the event
that applicable FCC rules require prior FCC consent in order to consummate the
Closing, the Closing shall not be consummated without such
-2-
prior consent having been obtained. It shall be a condition precedent to SFX's
obligation to consummate the Closing, which condition SFX at its option shall
be permitted to waive in writing, that such consent shall have become a "Final
Order." For purposes of this Agreement, a "Final Order" shall mean an FCC
consent or grant as to which the time within which any party in interest other
than the FCC may seek administrative or judicial reconsideration or review of
such consent or grant has expired and no petition for such reconsideration or
review has been timely filed with the FCC or with a court of competent
jurisdiction, and the normal time within which the FCC may review such consent
or grant on its own motion has expired and the FCC has not undertaken such
review.
(b) At the Closing, the Purchase Price shall be paid in cash by SFX
to KAB and KAB shall execute and deliver to SFX such agreements, assignments or
other instruments or documents of transfer as may be requested by SFX as shall
be necessary to evidence or effect the sale, assignment, transfer and
conveyance of KAB's Interest to SFX (including, without limitation, causing
such sale, assignment and transfer to be recorded on the transfer records of
the Company as well as amending the Company's Amended Operating Agreement to
reflect such sale, assignment and transfer) free and clear of all liens and
encumbrances of any kind, nature and description (other than such liabilities
of the Company which may be allocated to KAB's Interest). Notwithstanding the
foregoing, in the event the Closing does not take place by the 90th day
following receipt by SFX or KAB of the applicable Exercise Notice (the "Agreed
Closing Date"), the Purchase Price shall bear interest at an annual rate equal
to the prime or reference rate from time to time of Citibank, N.A., from and
including the Agreed Closing Date to but not including the date of payment of
the Purchase Price. Upon the request of SFX, KAB shall provide to SFX a
certificate to the effect that KAB's Interest being sold by KAB is free and
clear of all liens and encumbrances of any kind, nature and description (other
than such liabilities of the Company which may be allocated to KAB's Interest).
(c) If the Purchase Price is a positive dollar amount, any
obligation of KAB under the Amended Operating Agreement or otherwise to make
additional capital contributions to the Company or to indemnify the Company or
any of its Members shall be extinguished as of the Closing. If the Purchase
Price is an amount less than $0, SFX shall have the option of dissolving and
liquidating the Company rather than effecting the transactions under this
Agreement.
-3-
If SFX fails to elect such option, the Purchase Price shall be $0.
5. Cooperation. If either the Call Option or the Put Option is
exercised, SFX and KAB shall cooperate fully with each other and take any and
all actions, including actions to obtain the consent, approval or authorization
from the FCC, any other governmental agency or instrumentality or any other
third party, if applicable, necessary or advisable to consummate the
transactions contemplated by this Agreement as expeditiously as practical.
Without limiting the generality of the foregoing, in the event that applicable
FCC rules require prior FCC consent in order to consummate the Closing, the
parties hereto shall, within fifteen (15) days following receipt by SFX or KAB
of the applicable Exercise Notice, file an appropriate application with the FCC
seeking such consent and shall use their best efforts to obtain such consent
and a Final Order thereof promptly.
6. Construction of Agreement. This Agreement shall be construed as a
whole in accordance with its fair meaning and in accordance with the laws of
the Commonwealth of Virginia. The language of the Agreement shall not be
construed for or against any particular party. The headings used herein are for
reference only and shall not affect the construction of this Agreement.
7. Assignment. No party hereto may assign any of its rights or
obligations under this Agreement to any person without the prior written
consent of all of the other parties hereto; provided, however, notwithstanding
the foregoing, SFX shall be permitted to assign all of its rights and
obligations under this Agreement to any of its wholly-owned subsidiaries so
long as SFX fully guarantees the performance of such wholly-owned subsidiary's
obligation; provided, further, that upon the death of KAB, his executor or
personal representative shall have the right to exercise the Put Option and SFX
shall have the right to exercise the Call Option rather than wait for the
dissolution and liquidation of the Company.
8. Sole Agreement. This Agreement and the Master Agreement represent
the sole and entire agreement between the parties and together supersede all
prior agreements, negotiations and discussions between the parties hereto
and/or their respective counsel with respect to the subject matters covered
hereby.
9. Amendment to Agreement. Any amendment to this Agreement must be in
a writing signed by duly autho-
-4-
rized representatives of the parties hereto and stating the intent of the
parties to amend this Agreement.
10. Notices. Any notice hereunder to SFX shall be delivered by
certified mail or by facsimile transmission to SFX, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx Xxx Xxxx 00000, Attn. Xxxxxx Xxxxx, fax number (000) 000-0000. Any notice
hereunder to KAB shall be delivered by certified mail or by facsimile
transmission to Xxxxxxx X. Xxxxx, 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx
00000.
[Signatures to follow]
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
-6-
