Document/Exhibit Description Pages Size
1: 10-K Annual Report 114 508K
2: EX-4.(F) Credit Agreement 148 416K
3: EX-10.(A) Long-Term Management Incentive Plan 18 63K
4: EX-10.(B) Long-Term Management Incentive Plan 18 62K
5: EX-10.(U) Stock Purchase Agreement 53 173K
6: EX-11 Computation of Net Earnings Per Share 2± 13K
7: EX-21 Subsidiaries of the Registrant 13 72K
8: EX-23.(A) Consent of Independent Accountants 1 7K
9: EX-24 Power of Attorney 8 18K
10: EX-27 Financial Data Schedule 1 8K
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STOCK PURCHASE AGREEMENT
----------------------------------------
dated as of February 16, 1997
between
VIACOM INTERNATIONAL INC.
and
EVERGREEN MEDIA CORPORATION OF
LOS ANGELES
================================================================================
TABLE OF CONTENTS
Section Page
-------- ----
ARTICLE I...................................................................2
DEFINITIONS.................................................................2
1.01 Certain Defined Terms.................................................2
1.02 Other Defined Terms...................................................7
1.03 Terms Generally.......................................................9
ARTICLE II..................................................................9
PURCHASE AND SALE...........................................................9
2.01 Purchase and Sale of the Shares.......................................9
2.02 Purchase Price........................................................9
2.03 Closing...............................................................9
2.04 Closing Deliveries by Seller..........................................9
2.05 Closing Deliveries by Purchaser.......................................10
2.06 Purchase Price Adjustment.............................................10
2.07 Interest Amount.......................................................12
2.08 Payments and Computations.............................................12
ARTICLE III.................................................................12
REPRESENTATIONS AND WARRANTIES OF SELLER....................................12
3.01 Incorporation and Authority of Seller.................................13
3.02 Incorporation and Qualification of Each Company.......................13
3.03 Capital Stock of the Companies........................................13
3.04 No Conflict...........................................................13
3.05 Consents and Approvals................................................14
3.06 Financial Information.................................................14
3.07 Absence of Undisclosed Liabilities....................................15
3.08 Absence of Certain Changes or Events..................................15
3.09 Absence of Litigation.................................................16
3.10 Compliance with Laws..................................................16
3.11 Licenses and Permits..................................................16
3 12 The Assets............................................................17
3.13 Real Property.........................................................17
3.14 Employee Benefit Matters..............................................17
3.15 Taxes.................................................................18
3.16 Brokers...............................................................19
3.17 Environmental Compliance..............................................19
3.18 EXCLUSIVITY OF REPRESENTATIONS........................................19
ARTICLE IV..................................................................19
REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................19
4.01 Incorporation and Authority of Purchaser..............................20
4.02 No Conflict...........................................................20
4.03 Consents and Approvals................................................20
4.04 Absence of Litigation.................................................20
4.05 Securities Matters....................................................21
4.06 FCC Qualification.....................................................21
4.07 Brokers...............................................................22
4.08 EXCLUSIVITY OF REPRESENTATIONS........................................22
ARTICLE V...................................................................22
ADDITIONAL AGREEMENTS.......................................................22
5.01 Conduct of Business Prior to the Closing..............................22
5.02 Access to Information.................................................24
5.03 Confidentiality.......................................................25
5.04 Regulatory and Other Authorizations; Consents.........................25
5.05 Intercompany Accounts.................................................26
5.06 Insurance.............................................................26
5.07 Financial Statements..................................................27
5.08 Notification..........................................................27
5.09 No Other Bids.........................................................27
5.10 Environmental Audit...................................................28
5.11 Further Action........................................................28
ARTICLE VI..................................................................28
EMPLOYEE MATTERS............................................................28
6.01 Employees.............................................................28
6.02 INTENTIONALLY OMITTED.................................................30
6.03 Retirement Plan.......................................................30
6.04 Indemnity.............................................................30
6.05 No Third Party Beneficiaries..........................................31
ARTICLE VII.................................................................31
TAX MATTERS.................................................................31
7.01 Tax Indemnities.......................................................31
7.02 Refunds and Tax Benefits..............................................32
7.03 Contests..............................................................33
7.04 Preparation of Tax Returns............................................34
7.05 Section 338(h)(10) Election...........................................34
7.06 Cooperation and Exchange of Information...............................35
7.07 Conveyance Taxes......................................................35
7.08 Miscellaneous.........................................................35
ARTICLE VIII................................................................36
CONDITIONS TO CLOSING.......................................................36
8.01 Conditions to Obligations of Seller...................................36
8.02 Conditions to Obligations of Purchaser................................37
ARTICLE IX..................................................................38
TERMINATION, AMENDMENT AND WAIVER...........................................38
9.01 Termination...........................................................38
9.02 Termination is Nonexclusive Remedy....................................39
9.03 Waiver................................................................40
ARTICLE X...................................................................40
INDEMNIFICATION.............................................................40
10.01 Indemnification by Purchaser.........................................40
10.02 Indemnification by Seller............................................41
10.03 Notification of Claims...............................................42
10.04 Exclusive Remedies...................................................43
ARTICLE XI..................................................................43
GENERAL PROVISIONS..........................................................43
11.01 Survival.............................................................43
11.02 Expenses.............................................................43
11.03 Notices..............................................................43
11.04 Public Announcements.................................................44
11.05 Non-Solicitation.....................................................44
11.06 Headings.............................................................44
11.07 Severability.........................................................44
11.08 Entire Agreement.....................................................45
11.09 Successors and Assigns...............................................45
11.10 No Recourse..........................................................45
11.11 No Third-Party Beneficiaries.........................................45
11.12 Amendment............................................................46
11.13 Sections and Schedules...............................................46
11.14 Governing Law........................................................46
11.15 Counterparts.........................................................46
11.16 No Presumption.......................................................46
11.17 Specific Performance.................................................46
STOCK PURCHASE AGREEMENT, dated as of February 16, 1997, between
VIACOM INTERNATIONAL INC., a Delaware corporation ("Seller"), and EVERGREEN
MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock of each of the companies listed in Schedule 1 and each company
listed in such Schedule owns and operates the radio broadcast station or
stations set forth opposite its name in such Schedule;
WHEREAS, the Shares (as hereinafter defined) constitute all of the
issued and outstanding shares of capital stock of each of the Companies (as
hereinafter defined);
WHEREAS, the Companies operate all of the radio broadcast stations
owned directly or indirectly by Seller (the "Stations") and serving the radio
broadcast markets in New York, NY (the "NY Market"), Los Angeles, CA (the "LA
Market"), Washington, D.C. (the "D.C. Market"), Chicago, IL (the "Chicago
Market") and Detroit, MI (the Detroit Market") (individually a "Market" and
collectively, the "Markets"), in each case as reflected in Schedule 1;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Purchaser has delivered to Seller a deposit (the "Deposit") in an
amount equal to 10% of the Base Price (as hereinafter defined);
WHEREAS, Purchaser has informed Seller that Purchaser and certain of
its Affiliates (as hereinafter defined) intend to consummate a business
combination (the "Purchaser Merger") with Chancellor Broadcasting Company, a
Delaware company, and certain of its Affiliates; and
WHEREAS, Seller now wishes to sell to Purchaser, and Purchaser now
wishes to purchase from Seller, the Shares upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, Purchaser and Seller hereby agree as follows:
2
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accounting Firm" means (a) an independent certified public
accounting firm in the United States of national recognition (other than a firm
which then serves as the independent auditor for Seller, or Purchaser or any of
their respective Affiliates) mutually acceptable to Seller and Purchaser or (b)
if Seller and Purchaser are unable to agree upon such a firm, then the regular
independent auditors for Seller and Purchaser shall mutually agree upon a third
independent certified public accounting firm, in which event, "Accounting Firm"
shall mean such third firm.
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person who or which, directly or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with such specified
Person; provided, however, that for purposes of this definition and except as
used in Section 5.02(b), Affiliates of Seller shall be limited to Viacom and its
direct and indirect Subsidiaries.
"Agreement" means this Agreement, including the Disclosure Schedule,
all exhibits and schedules hereto, all documents, certificates and instruments
delivered pursuant hereto and all amendments hereto made in accordance with
Section 11.12.
"Assets" means all of the assets, properties and rights of every
type and description, real, personal and mixed, tangible and intangible, that
are owned, leased or licensed by each of the Companies and are used exclusively
or held for use exclusively in the conduct of the Business on the date hereof,
including the following:
(i) the goodwill relating exclusively to the Business;
(ii) all the Owned Real Property and all rights in respect of the
Leased Real Property;
(iii) all furniture, fixtures, equipment, machinery and other
tangible personal property;
(iv) all vehicles;
(v) all receivables;
3
(vi) all books of account, general, financial, tax and personnel
records, invoices, supplier lists, correspondence and other documents,
records and files and all computer software and programs and any rights
thereto;
(vii) all intellectual property;
(viii) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind (including rights to insurance
proceeds and rights under and pursuant to all warranties, representations
and guarantees made by suppliers of products, materials or equipment, or
components thereof);
(ix) all sales and promotional literature, customer lists and other
sales-related materials;
(x) all rights under all contracts, licenses, sublicenses,
agreements, leases, commitments, and sales and purchase orders, and under
all commitments, bids and offers (to the extent such offers are
transferable);
(xi) all of the FCC Licenses;
(xii) all municipal, state and federal franchises, permits,
licenses, agreements, waivers and authorizations, to the extent
transferable; and
(xiii) all of each Company's right, title and interest in and to all
other assets, rights and claims of every kind and nature used exclusively
or held for use exclusively in the operation of the Business.
"Base Price" means One Billion Seventy-Five Million Dollars
($1,075,000,000), which is the aggregate purchase price for all of the Companies
being acquired by Purchaser hereunder.
"Business" means the business of operating the Stations, considered
as a single enterprise, as conducted on the date hereof.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in the
City of New York.
"Cash" means the aggregate of all cash, cash equivalents and bank
accounts owned by each of the Companies from time to time from the date hereof
to the Closing Date.
4
"Closing Working Capital" means Working Capital as of the close of
business on the day immediately preceding the Closing Date, as reflected on the
Final WC Statement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as
amended.
"Companies" means WAXQ Inc. and Riverside Broadcasting Co., Inc. in
the NY Market, KYSR Inc. and KIBB Inc. in the LA Market, Viacom Broadcasting
East Inc. and WMZQ Inc. in the D.C. Market, WLIT Inc. in the Chicago Market and
WDRQ Inc. in the Detroit Market, each of which is a Delaware corporation.
"Control" means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. The term "Controlled"
shall have a correlative meaning.
"Disclosure Schedule" means the Disclosure Schedule attached as
Schedule 1.01 hereto.
"Environmental Laws" means any applicable federal, state or local
law, rule or regulation relating to the environment, natural resources, or
public health and safety.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"FCC" means the Federal Communications Commission and any successor
thereto.
"FCC Consent" means the FCC's initial grant of its consent to the
transfer of the FCC Licenses to Purchaser pursuant to this Agreement.
"FCC Licenses" means all of the licenses, permits and authorizations
granted and issued from time to time by the FCC to each of the Companies to
operate their respective Station or Stations as currently operated.
"Final Order" means the FCC Consent to the extent not reversed,
stayed, enjoined, set aside, annulled or suspended, and with respect to which no
timely request for stay, petition for rehearing, or appeal is pending, and as to
which the time for filing any such request, petition or appeal or
reconsideration by the FCC on its own motion has expired.
5
"Governmental Authority" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Interest Amount" means, as of any date of determination, the
aggregate amount of interest accrued on the Base Price (less the amount of the
Deposit) pursuant to Section 2.07 as of such date of determination.
"Interest Payment Date" means the earlier of the (i) Closing Date
and (ii) the fifth Business Day following the date of the termination, if any,
of this Agreement pursuant to Section 9.01 (other than clause (a) thereof).
"Interest Rate" means 8% per annum.
"IRS" means the Internal Revenue Service.
"knowledge of Seller " or "Seller's knowledge" means the actual
knowledge of Mr. William Figenshu, President, Viacom Radio, and Mr. Kevin
Reymond, Senior Vice President and Chief Financial Officer, Viacom Radio, in
each case without specific investigation.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"liabilities" means all liabilities or obligations, with respect to
the Business, Assets or Stations, whether direct or indirect, matured or
unmatured or absolute, contingent or otherwise.
"Lien" means any mortgage, deed or trust, pledge, hypothecation,
security interest, encumbrance, claim, lien, lease (including any capitalized
lease) or charge of any kind, whether voluntarily incurred or arising by
operation of Law or otherwise, affecting any assets or property, including any
agreement to give or grant any of the foregoing, any conditional sale or other
title retention agreement and the filing of or agreement to give any financing
statement with respect to any assets or property under the Uniform Commercial
Code of any state or comparable Law of any U.S. jurisdiction.
"Material Adverse Effect" means a material adverse effect on the
Assets, taken as a whole, or on the results of operations or the condition
(financial or
6
otherwise) of the Stations, considered as a single enterprise; provided,
however, that any material adverse effect arising out of or resulting from an
event or series of events or circumstances affecting (i) the radio broadcast
industry generally or (ii) the Market or Markets in which any of the Stations
operate, shall not constitute a Material Adverse Effect.
"Permitted Liens" means the following Liens: (a) Liens for Taxes,
assessments or other governmental charges or levies not yet due; (b) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanic, material and
other Liens imposed by Law and on a basis consistent with past practice for
amounts not yet due; (c) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of the Business and on a basis
consistent with past practice in connection with worker's compensation,
unemployment insurance or other types of social security; (d) minor defects of
title, easements, rights-of-way, restrictions and other similar charges or
encumbrances with respect to any parcel of Owned Real Property not materially
detracting from the value of such Owned Real Property or interfering with the
current use of such Owned Real Property or interfering with the ordinary conduct
of the Business; (e) Liens not created by Seller or any of the Companies which
affect the underlying fee interest of any Leased Real Property; (f) Liens
incurred in the ordinary course of the Business and on a basis consistent with
past practice securing liabilities which are not individually or in the
aggregate material; (g) any state of facts an accurate survey would show,
provided such facts do not render title unmarketable or materially interfere
with the present use of the Owned Real Property; and (h) other Liens that,
individually or in the aggregate, would not have a Material Adverse Effect.
"Person" means any natural person, general or limited partnership,
corporation, limited liability company, firm, association or other legal entity.
"Purchase Price" means the sum of (i) the Base Price, plus (ii) the
Interest Amount, if any, and (iii) either (a) if Estimated Closing Working
Capital is positive, plus the amount of Estimated Closing Working Capital, or
(b) if Estimated Closing Working Capital is negative, less the amount of
Estimated Closing Working Capital.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller's Account" means the account of Seller maintained by Seller
with Chase Manhattan Bank, N.A. at its office at One Chase Manhattan Plaza, New
York, NY, Account No. XXX-X-XXXXXX, ABA No. XXXXXXXXX.
"Shares" means all of the issued and outstanding shares of capital
stock of each of the Companies.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50%
7
of (a) the issued and outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or Controlled
by such Person.
"Tax" or "Taxes" means all income, excise, gross receipts, ad
valorem, sales, use, employment, franchise, profits, gains, property, transfer,
use, payroll, intangibles or other taxes, fees, stamp taxes, duties, charges,
levies or assessments of any kind whatsoever (whether payable directly or by
withholding), together with any interest and any penalties, additions to tax or
additional amounts imposed by any Tax authority with respect thereto.
"Tax Returns" means all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
"Viacom" means Viacom Inc., a Delaware corporation, the parent of
Seller.
"Working Capital" means, for all Markets, on a combined basis, as of
any date of determination, (a) the sum of (i) Cash, (ii) receivables and (iii)
prepaid expenses minus (b) the sum of (i) accounts payable and (ii) accrued
expenses, in each case as of such date, calculated in the same manner and using
the same methods, as the line items on the Reference Balance Sheet(s).
SECTION 1.02. Other Defined Terms. The following terms have the
meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Acquisition Proposal 5.09
Allocations 7.05(b)
Chicago Market Recitals
Closing 2.03
Closing Date 2.03
COBRA 6.03(c)
Confidentiality Agreement 5.03
Contest 7.03(b)
Continuation Period 6.01(d)
D.C. Market Recitals
Deposit Recitals
Deposit Delivery Time 2.02
8
Detroit Market Recitals
Election 7.05(a)
Environmental Assessments 5.10
Estimated Closing Working Capital 2.06(a)
Filing 5.02(b)
Final WC Statement 2.06(a)
Financial Statements 3.06
Forms 7.05(a)
Indemnified Party 10.03(a)
Indemnifying Party 10.03(a)
Initial WC Statement 2.06(a)
KIBB Assets Article III
LA Market Recitals
Leased Real Property 3.13
Losses 10.01(a)
MADSP 7.05(b)
Market Recitals
Markets Recitals
Multiemployer Plan 3.14(b)
Multiple Employer Plan 3.14(b)
Notice of Disagreement 2.06(a)
NY Market Recitals
Outside Date 9.01(b)
Owned Real Property 3.13
Post-Closing Date Tax Benefit 7.02(b)
Purchaser Preamble
Purchaser Assignee 11.09
Purchaser Indemnified Parties 10.02(a)
Purchaser's DC Plan 6.03(b)
Purchaser Merger Recitals
Reference Balance Sheet(s) 3.06
Securities Acts 5.02(b)
Seller Preamble
Seller Indemnified Parties 10.01(a)
Stations Recitals
Station Employees 6.01(a)
Sublease 2.04(d)
Submitted Notice of Disagreement 2.06(a)
Submitted WC Statement 2.06(a)
Surviving Entity 11.09
Supplemental Financial Statements 5.07
Transferred Employees 6.01(b)
Viacom ERISA Plan 3.14(a)
Viacom Plans 3.14(a)
VIP 3.14(d)
9
VPP 3.14(d)
SECTION 1.03. Terms Generally. (a) Words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other genders as the context requires, (b) the term "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement and not to any particular
provision of this Agreement, and Article, Section, paragraph, Exhibit and
Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified, (c) the word "including"
and words of similar import when used in this Agreement means "including,
without limitation," unless otherwise specified, and (d) the word "or" shall not
be exclusive.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. On the terms and
subject to the conditions set forth in this Agreement, at the Closing, Seller
shall sell, convey, assign, transfer and deliver to Purchaser, and Purchaser
shall purchase, acquire and accept from Seller, the Shares.
SECTION 2.02. Purchase Price. Subject to the adjustments set forth
in Section 2.06, Purchaser shall pay the Purchase Price in cash to Seller as
follows: (i) the Deposit, which will be delivered to Seller's Account by wire
transfer in immediately available funds no later than 3:00 P.M. (New York City
time) on the second Business Day immediately succeeding the date hereof (the
"Deposit Delivery Time") and (ii) the balance of the Purchase Price at the
Closing as provided in Section 2.05(a).
SECTION 2.03. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Shares contemplated hereby shall take
place at a closing (the "Closing") to be held at 10:00 A.M. (New York City time)
on the fifth Business Day following the later to occur of (i) the expiration or
termination of the applicable waiting periods under the HSR Act and (ii) the
satisfaction or waiver of the other conditions to the obligations of the parties
set forth in Article VIII, at the offices of Seller, 1515 Broadway, New York,
New York, or at such other time or on such other date or at such other place as
Seller and Purchaser may mutually agree upon in writing (the day on which the
Closing takes place being the "Closing Date").
SECTION 2.04. Closing Deliveries by Seller. At the Closing, Seller
shall deliver or cause to be delivered to Purchaser:
10
(a) stock certificates evidencing the Shares, duly endorsed in blank
or accompanied by stock powers duly executed in blank, with all required
stock transfer tax stamps affixed;
(b) a receipt for the Purchase Price;
(c) the certificates and other documents required to be delivered
pursuant to Section 8.02; and
(d) the sublease described on Schedule 3.13(b) (the "Sublease") duly
executed by Seller.
SECTION 2.05. Closing Deliveries by Purchaser. At the Closing,
Purchaser shall deliver to Seller :
(a) the balance of the Purchase Price after the application of the
Deposit thereto, by wire transfer in immediately available funds to
Seller's Account;
(b) the certificates and other documents required to be delivered
pursuant to Section 8.01; and
(c) the Sublease duly executed by Purchaser.
All deliveries under Sections 2.04 and 2.05 shall occur simultaneously.
SECTION 2.06. Purchase Price Adjustment. (a) No less than two
Business Days prior to the Closing Date, Seller shall deliver a notice to
Purchaser which sets forth Seller's good faith estimate of Working Capital as
of the close of business on the day immediately preceding the Closing Date (the
"Estimated Closing Working Capital"). Within 30 days after the Closing Date,
Purchaser shall prepare and deliver to Seller a statement setting forth Working
Capital as of the close of business on the day immediately preceding the Closing
Date (the "Initial WC Statement"). During the 30 days immediately following
Seller's receipt of the Initial WC Statement, Seller will be permitted to
review Purchaser's working papers relating to the Initial WC Statement, all of
Purchaser's and each Company's books and records with respect thereto and such
other books and records of Purchaser and each Company as Seller may reasonably
request in connection with such review. The Initial WC Statement shall become
final and binding upon the parties (and shall thereupon become the Final WC
Statement) on the 31st day following receipt thereof by Seller, unless Seller
shall provide a written notice (the "Notice of Disagreement") of its
disagreement with the Initial WC Statement to Purchaser prior to such date. Any
Notice of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted. If a timely Notice of Disagreement is received by
Purchaser, then the Initial WC Statement (as revised in accordance with clause
(x) or (y) below) shall become final and binding upon
11
the parties, and shall thereupon become the "Final WC Statement", on the earlier
of (x) the date on which the parties hereto resolve in writing any differences
they have with respect to any matter specified in the Notice of Disagreement,
and agree upon a Final WC Statement, or (y) the date on which the Accounting
Firm finally resolves in writing any matters with respect to the Initial WC
Statement that are properly in dispute by providing each of the parties hereto
with a Final WC Statement. During the 30 days immediately following the delivery
of a Notice of Disagreement, Seller and Purchaser shall seek in good faith to
resolve in writing (and thereby agree on a Final WC Statement) any differences
which they may have with respect to any matter specified in the Notice of
Disagreement. During such period, Purchaser shall have access to the working
papers of Seller prepared in connection with Seller's preparation of the Notice
of Disagreement. At the end of such 30-day period, Seller and Purchaser shall
submit to the Accounting Firm for review and resolution any and all matters
which remain in dispute and which were properly included in the Notice of
Disagreement (the Initial WC Statement, as it may be modified by Purchaser prior
to submission to the Accounting Firm, being the "Submitted WC Statement", and
the Notice of Disagreement, as it may be modified by Seller prior to submission
to the Accounting Firm, being the "Submitted Notice of Disagreement"), and,
within 30 days of its receipt of the Submitted Notice of Disagreement, the
Accounting Firm shall make a final determination, binding on the parties hereto,
of Working Capital as of the close of business on the day immediately preceding
the Closing Date. Purchaser and Seller shall share equally the cost of the
Accounting Firm's review and determination.
(b) (i) If Closing Working Capital exceeds Estimated Closing Working
Capital, then Purchaser shall pay to Seller an amount equal to such excess or
(ii) if Estimated Closing Working Capital exceeds Closing Working Capital, then
Seller shall pay to Purchaser an amount equal to such excess, in either case
within 10 Business Days after the Final WC Statement becomes final and binding
on the parties hereto, together with interest thereon from the Closing Date to
the date of payment at the rate of interest publicly announced by Citibank, N.A.
in New York, New York from time to time as its base rate. If Closing Working
Capital is equal to Estimated Closing Working Capital, then neither Purchaser
nor Seller shall owe any amount to the other party pursuant to this Section
2.06.
(c) Purchaser agrees that following the Closing through the date
that payment, if any, is made pursuant to Section 2.06(b), it will not, and will
cause the Companies not to, take any actions with respect to any accounting
books, records, policy or procedure on which the Initial WC Statement is to be
based that are inconsistent with past practices of Seller or that would make it
impossible or impracticable to calculate Working Capital in the manner utilizing
the methods required hereby. Without limiting the generality of the foregoing,
no changes shall be made in any reserve or other account existing as of the date
of the Reference Balance Sheet(s) except as a result of events occurring after
the date of the Reference Balance Sheet(s) and, in such event, only in a manner
consistent with the past practices of Seller.
12
SECTION 2.07. Interest Amount. If the Closing shall not have
occurred on or prior to the 120th day following the date hereof for any reason
other than as a result of Seller's failure to comply in all material respects
with its covenants and agreements hereunder or the material inaccuracy of the
representations and warranties made by Seller herein, then interest shall
commence to accrue on the Base Price (less the amount of the Deposit) at the
Interest Rate from such date through the Interest Payment Date. Purchaser shall
pay the Interest Amount to Seller on the Interest Payment Date.
SECTION 2.08. Payments and Computations. Each party shall make each
payment due to the other party hereunder as soon as practicable on the day when
due in U.S. dollars, in the case of payments to Seller at Seller's Account or
as otherwise directed by Seller, and in the case of payments to Purchaser as
directed by Purchaser in writing, by wire transfer in immediately available
funds. All computations of interest shall be made by the party entitled to
receive payment on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest is payable. Each determination by the party
to which interest is to be paid pursuant to the terms of this Agreement of an
interest rate or any amount of interest due hereunder shall be conclusive and
binding for all purposes, absent manifest error. Whenever any payment hereunder
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Purchaser understands and acknowledges that as of the date of this
Agreement such of the Assets as are used or held for use exclusively in the
operation of the radio broadcast station identified by the call letters KIBB-FM
(the "KIBB Assets") and serving the Los Angeles Market, are held directly by
Viacom. Seller hereby represents and warrants to Purchaser that KIBB Inc. is a
recently-formed Delaware corporation that, other than for its organization, has
undertaken no operations and conducted no business as of the date hereof.
Purchaser further understands and Seller hereby covenants and agrees that prior
to the Closing, Viacom shall contribute the KIBB Assets to Seller which will
then contribute such assets to KIBB Inc. Accordingly, the references to "each
Company", "any of the Companies", the "Companies", any "Company" or any
comparable phrase or reference contained in Sections 3.11, 3.12 or 3.13, to the
extent the representations and warranties set forth in such Sections are made as
of the date hereof and solely to the extent referring to or including KIBB Inc.,
shall be deemed to include Viacom. The immediately preceding sentence shall not
apply to the representations and warranties set forth in Sections
13
3.11, 3.12 or 3.13 when made as of the Closing Date. Seller represents and
warrants to Purchaser as follows:
SECTION 3.01. Incorporation and Authority of Seller . Seller is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Seller, the performance by Seller of its
obligations hereunder and the consummation by Seller of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
on the part of Seller. This Agreement has been duly executed and delivered by
Seller and (assuming due authorization, execution and delivery by Purchaser)
this Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject, as to
enforceability, to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or similar Laws affecting
creditors' rights generally and to the effect of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law).
SECTION 3.02. Incorporation and Qualification of Each Company. Each
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own or lease and operate its respective Assets. Each Company is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or leased and
operated or the nature of its activities makes such qualification necessary,
except for where the failure to be so qualified would not have a Material
Adverse Effect.
SECTION 3.03. Capital Stock of the Companies. The Shares constitute
all the authorized, issued and outstanding shares of capital stock of the
Companies. The Shares have been duly authorized and validly issued and are fully
paid and nonassessable and were not issued in violation of any pre-emptive
rights. There are no options, warrants or rights of conversion or other rights,
agreements, arrangements or commitments relating to the capital stock of any
Company obligating such Company to issue or sell any of its shares of capital
stock. Seller owns the Shares, free and clear of all Liens except for Permitted
Liens specified in clause (a) of the definition of Permitted Liens and any Liens
arising out of, under or in connection with this Agreement or through Purchaser.
There are no voting trusts, stockholder agreements, proxies or other agreements
in effect with respect to the voting or transfer of the Shares. None of the
Companies owns, directly or indirectly, any shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity.
SECTION 3.04. No Conflict. Assuming all consents, approvals,
authorizations and other actions described in Section 3.05 have been obtained
and all
14
filings and notifications listed in Section 3.05 of the Disclosure Schedule have
been made, and except as may result from any facts or circumstances relating
solely to Purchaser or as described in Section 3.04 of the Disclosure Schedule,
the execution, delivery and performance of this Agreement by Seller do not and
will not (a) violate or conflict with the Certificate of Incorporation or
By-laws of Seller or any Company, (b) conflict with or violate any Law or
Governmental Order applicable to Seller or any Company, except as would not,
individually or in the aggregate, have a Material Adverse Effect or prohibit
Seller from consummating the purchase and sale of the Shares as contemplated
hereby or (c) result in any breach of, or constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, or give to any Person any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of any Lien on any Shares or on
any of the Assets pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument to which Seller
or any Company is a party or by which any of the Shares or, to the knowledge of
Seller, the Assets are bound or affected, except as would not, individually or
in the aggregate, have a Material Adverse Effect or prohibit Seller from
consummating the purchase and sale of the Shares as contemplated hereby.
SECTION 3.05. Consents and Approvals. The execution and delivery of
this Agreement by Seller does not, and the performance of this Agreement by
Seller will not, require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority or other
Person except (a) as described in Section 3.05 of the Disclosure Schedule, (b)
the notification requirements of the HSR Act, (c) for consents required from the
FCC prior to the Closing and those notices to be filed with the FCC after the
Closing, (d) where failure to obtain such consent, approval, authorization or
action, or to make such filing or notification, would not prohibit Seller from
consummating the purchase and sale of the Shares as contemplated hereby, (e) as
would not have a Material Adverse Effect and (f) as may be necessary as a result
of any facts or circumstances relating solely to Purchaser or its Affiliates.
SECTION 3.06. Financial Information. The unaudited balance sheet
relating to all of the Stations, on a combined basis, in each Market as at
December 31, 1996 (collectively for all of the Markets, the "Reference Balance
Sheet(s)") and the related unaudited statement of income of all such Stations,
on a combined basis, in each such Market for the fiscal year then ended
(collectively, the "Financial Statements"), all of which are included in Exhibit
3.06 hereto, fairly present, in all material respects, the financial condition
and results of operations of all such Stations, on a combined basis, in each
such Market at such date, or for the period covered thereby, and were prepared
on a basis consistent with the past practices of Seller for purposes of
inclusion in the consolidated financial statements of Viacom and, except as
disclosed in Section 3.06(a) of the Disclosure Schedule, were prepared in
accordance with generally accepted accounting principles.
15
SECTION 3.07. Absence of Undisclosed Liabilities. As of the Closing
Date, there shall be no liability of any Company except liabilities (i)
disclosed in Section 3.07(a) of the Disclosure Schedule or otherwise included in
the Disclosure Schedule or addressed by or referred to in any of the
representations, warranties, covenants or agreements made by Seller in this
Agreement, (ii) as, and to the extent, reflected or reserved against in the
Reference Balance Sheet(s), (iii) covered by insurance, indemnification,
contribution or comparable arrangements, the benefits of which will be available
to Purchaser or the Companies after the Closing, (iv) with respect to the
matters addressed in Sections 3.14 and 3.15 and Articles VI and VII (which shall
be governed solely by the terms of such Sections and Articles), (v) incurred in
the ordinary course of the Business after the date hereof and prior to the
Closing and (vi) liabilities which would not individually or in the aggregate
have a Material Adverse Effect.
SECTION 3.08. Absence of Certain Changes or Events. (a) Since the
date of the Reference Balance Sheet(s) or such other date as specified below,
except as disclosed in Section 3.08 of the Disclosure Schedule, the Business has
been conducted in the ordinary course and consistent with past practice.
(b) Since the date of the Reference Balance Sheet(s) and, except as
set forth in Section 3.08 of the Disclosure Schedule or as contemplated by this
Agreement or in the ordinary course of the Business, there has not been:
(i) a Material Adverse Effect;
(ii) the creation of any Lien on the Assets or the Shares, other
than, in the case of the Shares, Permitted Liens specified in clause (a)
of the definition of Permitted Liens;
(iii) any establishment or material increase in any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including any grant of any stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plans, or other material increase in
the compensation payable or to become payable to any officer or key
employee of any of the Stations by Seller or by any Company, except, in
any case described above, as may be required by Law, existing contracts or
applicable collective bargaining agreements;
(iv) any employment or severance agreement providing for annual
compensation or severance payments in excess of $100,000 entered into by
Seller or by any Company with any of the Station Employees;
(v) any sale, assignment, transfer, lease or other disposition or
agreement to sell, assign, transfer, lease or otherwise dispose of any of
the Assets having an aggregate replacement value exceeding $100,000;
16
(vi) by any Company, (A) any acquisition (by merger, consolidation,
acquisition of stock or assets or otherwise) of any corporation,
partnership or other business organization or division thereof or interest
therein or (B) any incurrence of any indebtedness for borrowed money
(other than to Seller on arm's-length terms) or issuance of any debt
securities or assumption, grant, guarantee or endorsement, or other
accommodation or arrangement making any Company responsible for, the
obligations of any Person or any distributions of cash (other than by one
or more of the Companies to Seller) or any loans or advances other than to
Seller on arm's-length terms;
(vii) any material change in any method of accounting or accounting
practice used by any Company.
SECTION 3.09. Absence of Litigation. Except as set forth in Section
3.09 of the Disclosure Schedule, there are no Actions pending, or to Seller's
knowledge threatened in writing, against Seller or any Company, or to which any
of the Shares or Assets are subject, before any Governmental Authority that,
individually or in the aggregate, would have a Material Adverse Effect or would
prohibit Seller from consummating the purchase and sale of the Shares as
contemplated hereby.
SECTION 3.10. Compliance with Laws. Except as set forth in Section
3.10 of the Disclosure Schedule, to the knowledge of Seller, neither Seller nor
any Company is in material violation of any Law or Governmental Order applicable
to the Business, Shares or any material Asset, or by which any of them is bound.
SECTION 3.11. Licenses and Permits. Each Company holds and is in
material compliance with all FCC Licenses necessary to operate as currently
operated each of the Stations set forth opposite such Company's name on Schedule
1 as a radio broadcast station with the power disclosed in Section 3.11 of the
Disclosure Schedule. Except as set forth in Section 3.11 of the Disclosure
Schedule, no governmental qualifications, registrations, filings, privileges,
franchises, licenses, permits, approvals or authorizations other than the FCC
Licenses are required to operate each of the Stations as a radio broadcast
station in substantially the same manner as each such Station is being operated
as of the date hereof, other than those that the failure to hold or obtain would
not, individually or in the aggregate, have a material adverse effect on the
results of operations or financial condition of any Station. Except as set forth
in Section 3.11 of the Disclosure Schedule, no application, action or proceeding
is pending for the renewal or modification of any of the FCC Licenses, and,
except for actions or proceedings affecting radio broadcast stations generally,
no application, complaint, action or proceeding is pending, or to Seller's
knowledge threatened in writing, that would reasonably be expected to result in
(i) the denial of an application for renewal of any of the FCC Licenses, (ii)
the revocation, modification, nonrenewal or suspension of any of the FCC
Licenses, (iii) the issuance of a cease-and-desist order with respect to any of
the FCC Licenses or (iv) the imposition of any material
17
administrative or judicial sanction with respect to Seller, any Company or any
Station. To Seller's knowledge, there is no fact or circumstance relating to
Seller, the Companies or any of Seller's Affiliates that would cause the FCC to
deny the FCC application for assignment of the FCC Licenses as provided in this
Agreement. No waiver of any FCC rule or policy is necessary to be obtained by
Seller, any Company or any of Seller's Affiliates for the grant of the FCC
application for assignment of the FCC Licenses as provided in this Agreement,
nor will processing pursuant to any exception to a rule of general applicability
be requested or required in connection with the consummation by Seller of the
transactions contemplated hereby except in each case for facts or circumstances
not related to Seller, the Companies or any of Seller's Affiliates.
SECTION 3.12. The Assets. (a) Except as set forth in Section 3.12(a)
of the Disclosure Schedule, the Assets include all of the assets, properties and
rights of every type and description, real, personal and mixed, tangible and
intangible, that are owned, leased or licensed by any of the Companies and are
used exclusively or held for use exclusively in the operation of the Business as
of the date hereof. All of the tangible Assets material to the operation of any
Station are in good operating condition and repair, subject to normal wear and
maintenance, except to the extent the failure to be in such condition or repair
would not result in a Material Adverse Effect. The Assets constitute all of the
assets necessary for the continued operation of the Business in substantially
the same manner as conducted on the date of this Agreement.
(b) The Companies hold, and at the Closing will hold, good title to
or have valid leasehold interests in all of their respective Assets (other than
the Owned Real Property and Leased Real Property as to which the provisions of
Section 3.13 apply), free and clear of any and all Liens, except (i) as
disclosed in Section 3.12(b) of the Disclosure Schedule, (ii) for Permitted
Liens and (iii) for Liens created by or through Purchaser or any of its
Affiliates.
SECTION 3.13. Real Property. Each parcel of real property, including
those properties set forth in Sections 3.13(a) (which lists material real
property owned by each Company, the "Owned Real Property") and 3.13(b) (which
lists material real property leased by each Company, the "Leased Real Property")
of the Disclosure Schedule, owned or leased by any Company is, and at the
Closing will be, owned in fee simple or held pursuant to a valid leasehold
estate, free and clear of all Liens, except (i) as disclosed in Section 3.13(a)
or in Section 3.13(b), as the case may be, of the Disclosure Schedule, (ii) for
Permitted Liens and (iii) for Liens created by or through Purchaser or any of
its Affiliates.
SECTION 3.14. Employee Benefit Matters. (a) Section 3.14 of the
Disclosure Schedule contains a true and complete list of all employee benefit
plans (within the meaning of Section 3(3) of ERISA, hereafter "Viacom ERISA
Plan") and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, supplemental retirement, severance or other benefit
plans, programs or
18
arrangements (collectively, the "Viacom Plans") with respect
to which Seller or any Company has any obligation or which are maintained,
contributed to or sponsored by Viacom, Seller or any Company for the benefit of
any current employee, officer or director of Seller or any Company or any former
employee of Seller or any Company who was previously employed in the Business,
other than plans, programs, arrangements, contracts or agreements for which no
benefits are payable after the Closing. Except as disclosed in Section 3.14 of
the Disclosure Schedule, each Viacom ERISA Plan is in writing and Seller has
previously made available to Purchaser a true and complete copy of each Viacom
ERISA Plan and a true and complete copy of each of the following documents, to
the extent applicable, prepared in connection with each such Viacom Plan: (i) a
copy of each trust or other funding arrangement, (ii) the most recently filed
IRS Form 5500 and (iii) the most recently received IRS determination letter.
(b) Except as otherwise disclosed in Section 3.14 of the Disclosure
Schedule, none of the Viacom ERISA Plans (i) is a multiemployer plan, within the
meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a
single employer pension plan, within the meaning of Section 4001(a)(15) of
ERISA, for which Seller could incur liability under Section 4063 or 4064 of
ERISA (a "Multiple Employer Plan"), or (ii) provides or promises to provide
retiree medical or life insurance benefits.
(c) With respect to each Viacom ERISA Plan, neither Seller nor any
Company is currently liable for any material tax arising under Section 4971,
4972, 4975, 4979, 4980 or 4980B of the Code. Seller has not incurred any
material liability under, arising out of or by operation of Title IV of ERISA
(other than liability for premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), including any liability in connection with (i)
the termination or reorganization of any employee pension benefit plan subject
to Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or
Multiple Employer Plan.
(d) The Viacom Pension Plan (the "VPP") and the Viacom Investment
Plan (the "VIP") which are intended to be qualified under Section 401(a) of the
Code have received favorable determination letters from the IRS that such plans
are so qualified, and the related trusts which are intended to be exempt from
federal income tax pursuant to Section 501(a) of the Code have received
determination letters from the IRS that such trusts are so exempt.
(e) Seller and the Companies have complied with their obligations
under the collective bargaining agreements disclosed in Section 3.14 of the
Disclosure Schedule, except for any failure to comply that would not result in a
Material Adverse Effect.
SECTION 3.15. Taxes. Except as set forth in Section 3.15 of the
Disclosure Schedule, (a) each Company has timely filed or been included in, or
will timely file or be included in, all material Tax Returns required to be
filed by it or in
19
which it is to be included with respect to Taxes for any period ending on or
before the Closing Date, (b) all material Taxes which are due with respect to
each Company have been paid except to the extent such Taxes are being contested
in good faith, (c) no deficiency for any material amount of Tax has been
asserted or assessed by a Tax authority against any Company or for which any
Company may be liable, (d) there are no judicial proceedings with respect to
material Taxes due from any Company; and (e) there is no contract, agreement,
plan or arrangement covering any Person that, individually or collectively,
could give rise to the payment of any amount that would not be deductible by any
Company by reason of Section 280G of the Internal Revenue Code of 1986, as
amended.
SECTION 3.16. Brokers. Except for Credit Suisse First Boston
Corporation, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or any Company. Seller is solely responsible for the fees
and expenses of Credit Suisse First Boston Corporation.
SECTION 3.17. Environmental Compliance. Except as set forth in
Section 3.17 of the Disclosure Schedule or as would not result in a Material
Adverse Effect, (i) Seller and each Company is in compliance with all
Environmental Laws and (ii) there are no judicial or administrative actions,
proceedings or investigations pending or, to the knowledge of Seller, threatened
in writing against Seller or any Company or any real property owned, operated or
leased by any Company alleging the violation of or seeking to impose liability
pursuant to any Environmental Law.
SECTION 3.18. EXCLUSIVITY OF REPRESENTATIONS. THE REPRESENTATIONS
AND WARRANTIES MADE BY SELLER IN THIS AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE
OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES.
SELLER HEREBY DISCLAIMS ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO PURCHASER OR ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION (INCLUDING, WITHOUT LIMITATION, ANY FINANCIAL PROJECTIONS OR OTHER
SUPPLEMENTAL DATA).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
20
SECTION 4.01. Incorporation and Authority of Purchaser. Purchaser is
a corporation duly incorporated, validly existing and in good standing under the
Laws of its jurisdiction of incorporation or organization and has all necessary
corporate power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Purchaser, the performance by
Purchaser of its obligations hereunder and the consummation by Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and (assuming due authorization, execution and
delivery by Seller) constitutes the legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, subject,
as to enforceability, to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance or similar Laws
affecting creditors' rights generally and to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at Law).
SECTION 4.02. No Conflict. Except as may result from any facts or
circumstances relating solely to Seller, the execution, delivery and performance
of this Agreement by Purchaser do not and will not (a) violate or conflict with
the Certificate of Incorporation or By-laws (or other similar applicable
documents) of Purchaser, (b) conflict with or violate any Law or Governmental
Order applicable to Purchaser or (c) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Lien on any of the assets or properties of Purchaser pursuant to, any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties to which
Purchaser is a party or by which any of such assets or properties is bound or
affected, except as would not, individually or in the aggregate, prohibit
Purchaser from consummating the purchase and sale of the Shares as contemplated
hereby.
SECTION 4.03. Consents and Approvals. The execution and delivery of
this Agreement by Purchaser do not, and the performance of this Agreement by
Purchaser will not, require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority or other
Person, except (a) as described in a writing delivered to Seller by Purchaser on
the date hereof, (b) the notification requirements of the HSR Act, (c) for
consents required from the FCC prior to the Closing and those notices to be
filed with the FCC after the Closing, (d) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prohibit Purchaser from consummating the purchase and sale of the Shares as
contemplated hereby and (e) as may be necessary as a result of any facts or
circumstances relating solely to Seller or its Affiliates.
SECTION 4.04. Absence of Litigation. There are no Actions pending
against Purchaser before any Governmental Authority that, individually or in the
21
aggregate, would prohibit Purchaser from consummating the purchase and sale of
the Shares as contemplated hereby.
SECTION 4.05. Securities Matters. (a) Purchaser understands that (i)
the offering and sale of the Shares hereunder is intended to be exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
and (ii) there is no existing public or other market for the Shares and there
can be no assurance that such a market will exist or that Purchaser will be able
to sell or dispose of the Shares.
(b) The Shares are being acquired by Purchaser for its own account
and without a view to the public distribution of the Shares or any interest
therein.
(c) Purchaser is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act.
(d) Purchaser is not a broker-dealer subject to Regulation T
promulgated by the Board of Governors of the Federal Reserve System.
(e) Purchaser has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Shares, and Purchaser is capable of bearing the economic
risks of such investment, including a complete loss of its investment in the
Shares.
(f) In evaluating the suitability of an investment in the Shares,
Purchaser has relied solely upon the representations, warranties, covenants and
agreements made by Seller herein and Purchaser has not relied upon any other
representations or other information (whether oral or written and including any
estimates, projections or supplemental data) made or supplied by or on behalf of
Seller or any Affiliate, employee, agent or other representative of Seller other
than as contemplated by this Section 4.05.
(g) Purchaser understands and agrees that it may not sell or dispose
of any of the Shares other than pursuant to a registered offering or in a
transaction exempt from the registration requirements of the Securities Act.
SECTION 4.06. FCC Qualification. Except as set forth on Schedule
4.06, Purchaser is legally, technically, financially and otherwise qualified
under the Communications Act and all rules, regulations and policies of the FCC
to acquire the FCC Licenses and own and operate each of the Stations. Except as
set forth on Schedule 4.06, and except for proceedings of general applicability
to the radio industry, there are no proceedings pending or, to the knowledge of
Purchaser, threatened in writing, or facts, which could reasonably be expected
to disqualify Purchaser under the Communications Act or otherwise from acquiring
the FCC Licenses or owning and operating each of the Stations or would cause the
FCC not to approve the assignment
22
of the FCC Licenses to Purchaser. Except as set forth on Schedule 4.06, there is
no fact or circumstance relating to Purchaser or any of its Affiliates that
could (i) cause the FCC to deny the FCC application for assignment of the FCC
Licenses as provided for in this Agreement or (ii) delay processing of the FCC
application for the assignment of the FCC Licenses as provided for in this
Agreement because the FCC is considering whether acts or omissions of Purchaser
or any of its Affiliates warrant admonishing Purchaser or any of its Affiliates,
or imposing a fine, forfeiture, or other penalty against Purchaser or any of its
Affiliates. Except as set forth on Schedule 4.06, no waiver of any FCC rule or
policy is necessary to be obtained by Purchaser and/or its Affiliates for the
grant of the FCC application for assignment of the FCC Licenses as provided for
in this Agreement, nor will processing pursuant to any exception to a rule of
general applicability be requested or required in connection with the
consummation by Purchaser of the transactions contemplated hereby.
SECTION 4.07. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.
SECTION 4.08. EXCLUSIVITY OF REPRESENTATIONS. THE REPRESENTATIONS
AND WARRANTIES MADE BY PURCHASER IN THIS AGREEMENT ARE IN LIEU OF AND ARE
EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED
WARRANTIES. PURCHASER HEREBY DISCLAIMS ANY SUCH OTHER OR IMPLIED REPRESENTATIONS
OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO SELLER OR ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION
OR OTHER INFORMATION.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) Between
the date hereof and the Closing Date, Purchaser shall not directly or indirectly
control, supervise or direct, or attempt to control, supervise or direct, the
operation of the Business or any Station. Such operation, including complete
control and supervision of all programs, employees and policies of the Business
and each Station shall be the sole responsibility of Seller and the Companies.
Neither title nor right to possession of the Shares, the Business or any Station
shall pass to Purchaser until the Closing, but Purchaser shall, however, be
entitled to reasonable inspection of each Station and the Assets (upon
reasonable prior notice and approval of Seller, which shall not be unreasonably
withheld) during normal business hours with the purpose that an uninterrupted
and efficient transfer thereof may be accomplished.
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(b) Unless Purchaser otherwise agrees in writing and except as
otherwise set forth herein or in the Disclosure Schedule, between the date of
this Agreement and the Closing Date, Seller shall, and shall cause each Company
to, (i) conduct the Business only in the ordinary course consistent with past
practice, (ii) use commercially reasonable efforts to preserve substantially
intact the organization of the Business, (iii) use commercially reasonable
efforts to keep available to Purchaser the services of the key employees and
on-air talent of each Station, (iv) use commercially reasonable efforts to
preserve the current relationships of each Station with its customers,
suppliers, distributors and other Persons with which such Station has
significant business relationships and (v) pay and discharge all material
liabilities of the Companies and the Stations substantially in accordance with
their terms (other than liabilities being contested in good faith and for which
appropriate reserves are established in the books and records of the appropriate
Company).
(c) Except as expressly provided in this Agreement, including,
without limitation, the contribution by Viacom of the KIBB Assets to Seller and
the subsequent contribution of such assets by Seller to KIBB Inc., between the
date of this Agreement and the Closing Date, Seller shall not, and shall not
permit any Company to, do any of the following without the prior written consent
of Purchaser (which consent shall not be unreasonably withheld):
(i) grant any Lien on any material Asset, other than Permitted Liens
or incur any liabilities other than, in either such case, in the ordinary
course of the Business consistent with past practice;
(ii) establish or materially increase any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing,
stock option (including the granting of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or
other employee benefit plan, or otherwise materially increase the
compensation payable to or to become payable to any officers or key
employees and on-air talent of any Station by Seller or any Company,
except in any case described above, in the ordinary course of the Business
consistent with past practice or as may be required by Law, existing
contracts or applicable collective bargaining agreements;
(iii) enter into any material employment or severance agreement
providing for annual compensation or severance payments in excess of
$100,000 with any of the Station Employees;
(iv) except (A) in the ordinary course of the Business and (B) cash
dividends by any Company to Seller, sell, assign, transfer, lease or
otherwise dispose of any of the Assets having an aggregate replacement
value exceeding $100,000;
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(v) solely in the case of each of the Companies, (A) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division
thereof or interest therein or (B) incur any indebtedness for borrowed
money (other than to Seller on terms no more advantageous to Seller than
could be procured by the Companies at arm's length) or issue any debt
securities or assume, grant, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans, advances or distributions of cash (other than by one or
more of the Companies to Seller);
(vi) except in accordance with Law or changes required by U.S.
generally accepted accounting principles, materially change any method of
accounting or accounting practice used by any Company;
(vii) issue or sell any additional shares of the capital stock of,
or other equity interests in, any Company or securities convertible into
or exchangeable for such shares or equity interests, or issue or grant any
options, warrants, calls, subscription rights or other rights of any kind
to acquire additional shares of such capital stock, such other equity
interests, or such securities;
(viii) amend the Certificate of Incorporation or By-laws of any
Company; or
(ix) agree to do any of the foregoing.
SECTION 5.02. Access to Information. (a) From the date hereof until
the Closing, upon reasonable notice, Seller shall, and shall cause the officers,
directors, employees, auditors and agents of each Company to (i) afford the
officers, employees and agents and representatives of Purchaser reasonable
access, during normal business hours, to the offices, properties, books and
records of each Station and (ii) furnish to the officers, employees and
authorized agents and representatives of Purchaser such additional financial and
operating data and other information regarding the Business and the Assets as
Purchaser may from time to time reasonably request; provided, however, that such
investigation shall not unreasonably interfere with the Business or any of the
businesses or operations of Seller or any Affiliate of Seller, any Company or
any Station.
(b) Seller shall, and shall cause its officers, employees and
representatives to, cooperate in all reasonable respects with the efforts of
Purchaser and Purchaser's independent auditors to prepare such audited and
interim unaudited financial statements of the Stations and/or the Companies as
Purchaser may reasonably determine are necessary to satisfy the requirements of
the Securities Act of 1933 or the Securities Exchange Act of 1934 (the
"Securities Acts") applicable to Purchaser and its Affiliates. Without limiting
the foregoing, Seller shall execute and deliver to Purchaser's independent
auditors such customary management
25
representation letters as the auditors may reasonably require as a condition to
such auditors' ability to deliver a report upon the audited financial statements
of the Stations and/or the Companies for the periods for which such financial
statements are required under the Securities Acts; provided, however, under no
circumstance shall Seller or any such officer, employee or representative have
any liability whatsoever (other than as expressly provided in this Agreement) to
Purchaser, Purchaser's independent auditors or otherwise to any Person or
Governmental Authority, including, without limitation, under the Securities Acts
as a result of providing such management representation letters and Purchaser
shall indemnify and hold Seller and each such Person harmless against any and
all such liability. Seller hereby consents to the inclusion of the audited and
interim financial statements referred to in this Section 5.02(b) in any
registration statement or report (each a "Filing") filed by Seller under the
Securities Acts as registrant under such Filing and hereby waives such
provisions of the Confidentiality Agreement as are necessary solely to permit
such public disclosure.
SECTION 5.03. Confidentiality. (a) Except as provided in Section
5.02(b), the terms of the letter agreement dated as of November 22, 1996 (the
"Confidentiality Agreement") between Seller and Purchaser are hereby
incorporated herein by reference and shall continue in full force and effect
until the Closing, at which time the Confidentiality Agreement and the
obligations of Purchaser under this Section 5.03 shall terminate; provided,
however, that the Confidentiality Agreement shall terminate only in respect of
that portion of the Evaluation Material (as defined in the Confidentiality
Agreement) exclusively relating to the transactions contemplated by this
Agreement. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall nonetheless continue in full force
and effect.
(b) Except as Seller in its sole discretion may determine to be
required by applicable law, rule or regulation or by any stock exchange rule,
after the Closing, Seller agrees to keep confidential all material non-public
information with respect to the Stations and all material non-public information
obtained by it with respect to Purchaser in connection with this Agreement and
the negotiations preceding this Agreement. Notwithstanding the foregoing, Seller
shall not be required to keep confidential or return any information which (a)
is known by it through other lawful sources not, to the knowledge of Seller,
subject to a confidentiality agreement with the disclosing party, (b) is or
becomes publicly known through no breach of a confidentiality obligation owed by
Seller or its agents or (c) is developed by Seller independently of any
disclosure by Purchaser.
SECTION 5.04. Regulatory and Other Authorizations; Consents. (a)
Each party hereto shall use its reasonable best efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. With respect to Purchaser, the
foregoing obligation to use reasonable best efforts shall be
26
deemed to include, without limitation, the obligation to divest such radio
station or stations in such radio broadcast market or markets as may be required
by the FCC or any other Governmental Authority or as may be necessary in order
to secure all required approvals of the FCC or any other Governmental Authority.
Except for the Purchaser Merger, the parties hereto will not take any action
that would have the effect of delaying, impairing or impeding the receipt of any
required approval.
(b) Seller and Purchaser shall prepare and file with the FCC as soon
as practicable, but in no event later than five Business Days after the
execution of this Agreement, the requisite applications and other necessary
instruments or documents requesting the FCC Consent. After the aforesaid
applications and documents have been filed with the FCC, Seller and Purchaser
shall prosecute such applications with all reasonable diligence to obtain the
requisite FCC Consent; provided, however, except as provided in the following
sentence, that neither Seller nor Purchaser shall be required to pay
consideration to any third party to obtain the FCC Consent. Purchaser shall pay
all FCC filing fees relating to the Transaction.
(c) Each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby within 10 Business Days after the date hereof
and to supply promptly any additional information and documentary material that
may be requested pursuant to the HSR Act. Purchaser shall bear all filing fees
associated with both its and Seller's HSR filings.
(d) Each party hereto agrees to cooperate in obtaining any other
consents and approvals which may be required in connection with the transactions
contemplated by this Agreement; provided, however, that Seller in cooperation
with Purchaser shall use its commercially reasonable efforts to obtain each
consent identified in Section 3.05 of the Disclosure Schedule prior to the
Closing Date. Notwithstanding the foregoing, neither Seller nor Purchaser shall
be required to pay consideration to any third party to obtain any such consent
or approval.
SECTION 5.05. Intercompany Accounts. Immediately prior to the
Closing, Seller will contribute to the capital of each Company all amounts then
owing from such Company to Seller and Seller's Affiliates, and each Company will
forgive all amounts then owing from Seller and its Affiliates to such Company,
and all of such debts shall be cancelled. Any tax sharing or tax allocation or
other similar contract shall be cancelled with respect to each Company as of the
Closing Date, and no Company shall have any further obligations or liability
under any such tax sharing or tax allocation agreement or other similar
contract.
SECTION 5.06. Insurance. (a) Effective 12:01 A.M. on the Closing
Date, each Company and the Assets shall cease to be insured by Seller's or its
Affiliates' insurance policies. With respect to insurance coverage written on an
"occurrence basis," Seller and its Affiliates will have no liability for
occurrences which take place on
27
and after 12:01 A.M. on the Closing Date. With respect to insurance coverage
written on a "claims made basis," Seller and its Affiliates will have no
liability for claims made after 12:01 A.M. on the Closing Date. Purchaser agrees
to indemnify and hold harmless Seller and its Affiliates in respect to any
liability, claim, damage or expense of any kind whatsoever, which Seller and its
Affiliates might incur arising out of or relating to any occurrences, losses or
claims arising after 12:01 A.M. on the Closing Date.
(b) From and after the Closing Date, neither Seller nor any of its
Affiliates shall have any liability for self-insured workers' compensation
claims with respect to the Transferred Employees in existence on the Closing
Date or arising from any event or circumstance taking place or existing prior
to, on or subsequent to the Closing Date. Purchaser shall take all steps
necessary under any applicable Law to assume the liability for self-insured
workers' compensation pursuant to this Section 5.06 and shall fully indemnify
Seller and its Affiliates with respect to any liability, claim, damage or
expense of any kind whatsoever arising out of or relating to any workers'
compensation claim assumed by Purchaser hereunder. Purchaser shall cooperate
with Seller and its Affiliates in order to obtain the return or release of bonds
or securities or indemnifications given by Seller or any of its Affiliates to
any state in connection with workers' compensation self-insurance with respect
to the Station Employees; and, in order to effectuate such return or release,
Purchaser shall, to the extent required by any state, post its own bonds,
letters of credit, indemnifications or other securities in substitution
therefor.
SECTION 5.07. Financial Statements. Within 30 days of the end of
each month, Seller shall use commercially reasonable efforts to deliver to
Purchaser an unaudited income statement and a balance sheet of all the Stations,
on a combined basis in each Market for the month then ended (collectively, the
"Supplemental Financial Statements"). The Supplemental Financial Statements
shall be prepared on a basis consistent with past practices regarding the
preparation of internal monthly financial statements.
SECTION 5.08. Notification. Seller shall notify Purchaser, and
Purchaser shall notify Seller, of any litigation, arbitration or administrative
proceeding pending or, to Seller's knowledge, threatened in writing against
Seller or any Company, on one hand, or Purchaser, on the other hand, which
challenges the transactions contemplated hereby or the Purchaser Merger.
Purchaser shall keep Seller informed and shall consult with Seller concerning
the status, scope and nature of Purchaser's efforts to comply with its covenant
in Section 5.04, and regarding the status of the Purchaser Merger.
SECTION 5.09. No Other Bids. From and after the date hereof, neither
Seller nor any of Seller's Affiliates shall, nor shall it permit any of the
Companies to, nor shall it authorize or permit any officer, director or employee
of, or any investment banker, attorney or other advisor or representative of
Seller, any of the Companies or any of Seller's Affiliates to, directly or
indirectly, (a) solicit, initiate or encourage the
28
submission of any Acquisition Proposal (as hereinafter defined) or (b)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes an Acquisition
Proposal. For purposes of this Agreement, "Acquisition Proposal" means any
proposal with respect to a merger, consolidation, share exchange or similar
transaction or business combination involving any Company, or any proposal or
offer to acquire in any manner a substantial equity interest in any Company or
any proposal or offer to purchase of all or any significant portion of the
Assets, other than the transactions contemplated hereby.
SECTION 5.10. Environmental Audit. Within 60 days of the date of
this Agreement, Purchaser may, at its sole cost and expense, perform Phase I
environmental assessments (the "Environmental Assessments") of the parcels of
the Owned Real Property and/or Leased Real Property designated by Purchaser and
the improvements thereon and shall deliver to Seller a report prepared by an
environmental consulting firm designated by Purchaser and reasonably acceptable
to Seller summarizing the results of the Environmental Assessments. In the event
that such report indicates that any material remediation is necessary in order
to cause the Companies and the Assets to comply with any Environmental Law,
Seller shall, at Seller's cost and expense, cause such remediation to be
completed in all material respects.
SECTION 5.11. Further Action. Each of the parties hereto shall
execute and deliver such documents and other papers and take such further
actions as may be reasonably required to carry out the provisions of this
Agreement and give effect to the transactions contemplated hereby.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Employees. (a) Set forth in Section 6.01(a) of the
Disclosure Schedule is a true and complete list showing the names and current
annual salary rates of all of the employees and on-air talent of each Station as
of the date hereof (all such employees and on-air talent together being the
"Station Employees"), which includes for such employees the amounts paid or
payable as a base salary and lists any other compensation arrangements for such
employees for 1996, including bonuses or other compensation arrangements. The
Station Employees constitute all of the on-air talent and personnel working at
the Stations (whether full-time or part-time) or otherwise involved in the
operations of the Stations.
(b) Purchaser shall furnish to Seller at the earliest practicable
date but no later than 10 days prior to Closing a list of the Station Employees
which Purchaser desires Seller to terminate prior to Closing. Seller shall
indemnify and hold harmless Purchaser from and against all costs and liabilities
resulting from the termination of
29
such Station Employees, except that Seller shall have no obligation with respect
to, and Purchaser shall indemnify and hold harmless Seller and Seller's
Affiliates from and against, all costs and liabilities resulting from any
termination requested by Purchaser pursuant to this Section 6.01(b) which
violates of any federal, state or local law, rule or regulation or any
collective bargaining agreement. For the purposes hereof, those Station
Employees who remain as employees of the Companies following the Closing Date
are hereinafter referred to collectively as the "Transferred Employees".
(c) Purchaser agrees (i) subject to the rights of the affected
Transferred Employees regarding representation, to recognize the unions listed
in Section 3.14 of the Disclosure Schedule as the sole and exclusive collective
bargaining agents for the affected Transferred Employees and (ii) to be bound
by, and to comply in all respects with, the terms and conditions of the
collective bargaining agreements listed in Section 3.14 of the Disclosure
Schedule applicable to Transferred Employees.
(d) For the one-year period commencing on the Closing Date (the
"Continuation Period"), Purchaser agrees to provide (i) those Transferred
Employees whose employment is governed by the terms of a collective bargaining
agreement with such employee benefits as are required by the terms of such
collective bargaining agreement and (ii) all other Transferred Employees with
employee benefits that in the aggregate are substantially equivalent in value
as, and no less favorable in value than, those provided to such Transferred
Employees immediately prior to the Closing. Notwithstanding anything to the
contrary herein, Purchaser shall not have any obligation to provide any equity,
equity-based or similar compensation or benefit to any Transferred Employee with
respect to the equity of Purchaser or any Company, and no equity or equity-based
compensation or benefits provided to Transferred Employees immediately prior to
the Closing shall be taken into account for purposes of this Section 6.01(d) in
determining substantial equivalence.
(e) To the extent that service is relevant for eligibility, vesting,
benefit accrual, benefit contributions, benefit calculations or allowances
(including entitlements to vacation and sick days) under any employee benefit
plan, program or arrangement established or maintained by Purchaser or any
Company for the benefit of Transferred Employees, such plan, program or
arrangement shall credit such Transferred Employees for service on or prior to
the Closing with Seller or any Affiliate thereof; provided, however, that
Purchaser shall not be obligated to give credit for such service to the extent
it (i) would result in duplication of any benefits to which a Transferred
Employee is entitled to under any comparable plans, programs or arrangements
maintained by Seller or any of its Affiliates on or prior to the Closing Date or
by Purchaser after the Closing Date or (ii) was not a service which was
recognized for purposes of such comparable plans, programs or arrangements. In
addition, Purchaser shall waive any pre-existing conditions and recognize for
purposes of annual deductible and out-of-pocket limits under its medical and
dental plans, claims of Transferred Employees incurred during the year in which
the Closing Date occurs and prior to the Closing Date.
30
SECTION 6.02. INTENTIONALLY OMITTED.
SECTION 6.03. Retirement Plan. (a) As soon as practicable after the
Closing, Seller shall prepare and deliver to Purchaser a schedule listing the
Transferred Employees who were participants in the VPP and the VIP as of the
Closing. Seller shall cause all Transferred Employees to be paid such benefits
under the terms of the VPP and VIP, and Purchaser shall not have any
responsibility with respect thereto. Purchaser shall cooperate with Seller to
provide such current information regarding Transferred Employees on an ongoing
basis as may be necessary to facilitate payment of benefits to such Transferred
Employees from the VPP and VIP.
(b) Purchaser agrees that it shall designate a defined contribution
plan ("Purchaser's DC Plan") that will accept a direct rollover, within the
meaning of Section 401(a)(31) of the Code, of the account balances of
Transferred Employees in the VIP, including any loan obligation that a
Transferred Employee may have in his or her account in the VIP. To the extent
that a Transferred Employee transfers a loan obligation to Purchaser's DC Plan,
Purchaser's DC Plan shall continue to accept repayments of such loan amounts and
shall otherwise administer such loans in accordance with their terms and the
terms of ERISA until such loan amounts are repaid or are foreclosed upon.
(c) Purchaser shall provide continuation health care coverage to all
Transferred Employees and their qualified beneficiaries who incur a qualifying
event on and after the Closing in accordance with the continuation health care
coverage requirements of Section 4980D of the Code and Sections 601 through 608
of ERISA ("COBRA"). Seller shall be responsible for providing continuation
coverage to the extent required by law (i) to any Transferred Employee who
incurs a "qualifying event" under COBRA on or before the Closing Date and (ii)
to any employee who is not a Transferred Employee who incurs a "qualifying
event" under COBRA on or before the Closing Date.
SECTION 6.04. Indemnity. Anything in this Agreement to the contrary
notwithstanding (including Section 10.01), Purchaser hereby agrees to indemnify
Seller and its Affiliates against and hold Seller and its Affiliates harmless
from any and all claims, losses, damages, expenses, obligations and liabilities
(including costs of collection, reasonable attorneys' fees and other costs of
defense) arising out of or otherwise in respect of (i) any failure of Purchaser
or any Company to comply with their obligations under any collective bargaining
agreement applicable to Transferred Employees, (ii) any withdrawal liability
attributable to a withdrawal as a result of or after the Closing assessed
against Seller or any of its Affiliates in respect of any Multiemployer Plan
listed in Section 3.14 of the Disclosure Schedule, (iii) any claim made by any
Transferred Employee against Seller or any of its Affiliates for any severance
or termination benefits pursuant to the provisions of any Viacom Plan which was
disclosed in Section 3.14 of the Disclosure Schedule, (iv) any suit or claim of
violation brought against Seller or any of its Affiliates under WARN for any
actions taken by Purchaser or any Company on or after the Closing Date with
respect to any
31
facility, site of employment, operating unit or Transferred Employee, and (v)
any claim for payments of benefits by Transferred Employees or their
beneficiaries with respect to their employment after the Closing.
SECTION 6.05. No Third Party Beneficiaries. Nothing in this Article
VI or elsewhere in this Agreement shall be deemed to make any of the Station
Employees third party beneficiaries of this Agreement.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Tax Indemnities. (a) From and after the Closing Date,
Seller shall indemnify Purchaser and each Company against all Taxes (i) imposed
on Seller or any member of an affiliated group with which Seller files a
consolidated or combined income Tax Return (other than the Companies) with
respect to any taxable period that ends on or before the Closing Date or
includes the Closing Date; (ii) imposed on any Company with respect to any
taxable period or portion thereof that ends on or before the Closing Date, in
excess of any amount reserved for Taxes on such Company's Financial Statements
or (iii) arising as a result of the Election; provided, however, that no
indemnity shall be provided under this Agreement for any Tax resulting from any
transaction of any Company occurring on the Closing Date but after the Closing
that is not in the ordinary course of the Business other than the Election.
(b) From and after the Closing Date, Purchaser and each Company
shall, jointly and severally, indemnify Seller and its Affiliates against all
Taxes imposed on or with respect to such Company that are not subject to
indemnification pursuant to paragraph (a) of this Section 7.01, including Taxes
resulting from any transaction of the Company occurring on the Closing Date but
after the Closing that is not in the ordinary course of the Business.
(c) Payment by the indemnitor of any amount due under this Section
7.01 shall be made within 10 days following written notice by the indemnitee
that payment of such amounts to the appropriate Tax authority is due, provided
that the indemnitor shall not be required to make any payment earlier than two
days before it is due to the appropriate Tax authority. In the case of a Tax
that is contested in accordance with the provisions of Section 7.03, payment of
the Tax to the appropriate Tax authority will not be considered to be due
earlier than the date a final determination to such effect is made by such Tax
authority or a court.
(d) For purposes of this Agreement, in the case of any Tax that is
imposed on a periodic basis and is payable for a period that begins before the
Closing Date and ends after the Closing Date, the portion of such Taxes payable
for the period
32
ending on the Closing Date shall be (i) in the case of any Tax other than a Tax
based upon or measured by income, the amount of such Tax for the entire period
multiplied by a fraction, the numerator of which is the number of days in the
period ending on the Closing Date and the denominator of which is the number of
days in the entire period and (ii) in the case of any Tax based upon or measured
by income, the amount which would be payable if the taxable year ended on the
Closing Date. Any credit shall be prorated based upon the fraction employed in
clause (i) of the preceding sentence. In the case of any Tax based upon or
measured by capital (including net worth or long-term debt) or intangibles, any
amount thereof required to be allocated under this Section 7.01(d) shall be
computed by reference to the level of such items on the Closing Date.
SECTION 7.02. Refunds and Tax Benefits. (a) Purchaser shall promptly
pay to Seller any refund or credit (including any interest paid or credited with
respect thereto) received by Purchaser or any Company of Taxes of any Company
(i) relating to taxable periods or portions thereof ending on or before the
Closing Date or (ii) attributable to an amount paid by Seller or any of its
Affiliates under Section 7.01 hereof. Purchaser shall, if Seller so requests and
at Seller's expense, cause the relevant entity to file for and obtain any
refund to which Seller is entitled under this Section 7.02. Purchaser shall
permit Seller to control (at Seller's expense) the prosecution of any such
refund claimed, and shall cause the relevant entity to authorize by appropriate
power of attorney such Persons as Seller shall designate to represent such
entity with respect to such refund claimed. In the event that any refund or
credit of Taxes for which a payment has been made pursuant to this Section
7.02(a) is subsequently reduced or disallowed, Seller shall indemnify and hold
harmless the payor for any Tax liability, including interest and penalties,
assessed against such payor by reason of the reduction or disallowance.
(b) Any amount otherwise payable by Seller under Section 7.01 shall
be reduced by any Tax benefit to Purchaser or any Company for a period or
portion thereof beginning after the Closing Date (a "Post-Closing Date Tax
Benefit") that arose as a result of any underlying adjustment resulting in the
obligation of Purchaser or such Company to pay Taxes for which Seller is
responsible under Section 7.01 or the payment of such Taxes. If a payment is
made by Seller in accordance with Section 7.01, and if in a subsequent taxable
year a Post-Closing Date Tax Benefit is realized by Purchaser or any Company
(that was not previously taken into account pursuant to the preceding sentence
to reduce an amount otherwise payable by Seller under Section 7.01), Purchaser
or such Company shall pay to Seller at the time of such realization the amount
of such Post-Closing Date Tax Benefit to the extent that the Post-Closing Date
Tax Benefit would have resulted in a reduction in the amount paid by Seller
under Section 7.01 if the Post-Closing Date Tax Benefit had been obtained in the
year of such payment. A Post-Closing Date Tax Benefit will be considered to be
realized for purposes of this Section 7.02 at the time that it is actually
utilized on a Tax Return which includes Purchaser or any Company.
33
(c) Neither Purchaser nor any Company shall carryback to any taxable
period ending on or before the Closing Date any net operating loss, capital loss
or tax credit incurred by any Company in any taxable period beginning after the
Closing Date.
SECTION 7.03. Contests. (a) After the Closing, Purchaser shall
promptly notify Seller in writing of the commencement of any Tax audit or
administrative or judicial proceeding or of any demand or claim on Purchaser or
any Company which, if determined adversely to the taxpayer or after the lapse of
time, would be grounds for indemnification under Section 7.01. Such notice shall
contain factual information (to the extent known) describing the asserted Tax
liability in reasonable detail and shall include copies of any notice or other
document received from any Tax authority in respect of any such asserted Tax
liability. If Purchaser fails to give Seller prompt notice of an asserted Tax
liability as required by this Section 7.03, then (a) if Seller is precluded by
the failure to give prompt notice from contesting the asserted Tax liability in
both the administrative and judicial forums, then Seller shall not have any
obligation to indemnify for any loss arising out of such asserted Tax liability,
and (b) if Seller is not so precluded from contesting but such failure to give
prompt notice results in a detriment to Seller, then any amount which Seller is
otherwise required to pay Purchaser pursuant to Section 7.01 with respect to
such liability shall be reduced by the amount of such detriment.
(b) Seller may elect to direct, through counsel of its own choosing
and at its own expense, any audit, claim for refund and administrative or
judicial proceeding involving any asserted liability with respect to which
indemnity may be sought under Section 7.01 (any such audit, claim for refund or
proceeding relating to an asserted Tax liability is referred to herein as a
"Contest"). If Seller elects to direct a Contest, it shall within 30 days of
receipt of the notice of asserted Tax liability notify Purchaser of its intent
to do so, and Purchaser shall cooperate and shall cause each Company to
cooperate, at the expense of Seller, in each phase of such Contest. Seller shall
keep Purchaser informed regarding the progress but not any substantive aspect of
any Contest which Seller has elected to direct. If Seller elects not to direct
the Contest, fails to notify Purchaser of its election as herein provided or
contests its obligation to indemnify under Section 7.01, Purchaser or the
relevant Company may pay, compromise or contest, at its own expense, such
asserted liability. However, in such case, neither Purchaser nor such Company
may settle or compromise any asserted liability over the objection of Seller;
provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, Seller may participate, at its own expense,
in the Contest. If Seller chooses to direct the Contest, Purchaser shall
promptly empower and shall cause the relevant Company promptly to empower (by
power of attorney and such other documentation as may be appropriate) such
representatives of Seller as it may designate to represent Purchaser and such
Company in the Contest insofar as the Contest involves an asserted Tax liability
for which Seller would be liable under Section 7.01.
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SECTION 7.04. Preparation of Tax Returns. Seller shall prepare and
file U.S. federal, state and local income and franchise Tax Returns relating to
each Company for any Tax period ending on or prior to the Closing Date and which
are required to be filed after the Closing Date. The parties agree that if any
Company is permitted, but not required, under applicable state or local income
or franchise Tax Laws to treat the Closing Date as the last day of a Tax period,
it will treat the Tax period as ending on the Closing Date. Seller shall prepare
and file all other Tax Returns for any period ending on or prior to the Closing
Date to the extent Seller or an Affiliate of Seller previously was responsible
for the preparation and filing of such Tax Returns for the immediately preceding
Tax period. All Tax Returns relating to any Company and prepared by Seller shall
be prepared in a manner consistent with past practices, except as otherwise
required by applicable law. Purchaser shall prepare and timely file, and shall
cause each Company to prepare and timely file, all Tax Returns for which Seller
is not responsible pursuant to this Section 7.04. Purchaser will deliver to
Seller a complete and accurate copy of each Tax Return required to be filed by
Purchaser or any Company under this Section 7.04 for Tax periods that include
the Closing Date, and any amendment to such return, within 10 days of the date
such Tax Return is filed with the appropriate Tax authority.
SECTION 7.05. Section 338(h)(10) Election. (a) At the option of
Purchaser given in writing to Seller on or before the Closing Date, Seller and
Purchaser shall jointly make the election provided for by Section 338(h)(10) of
the Code and any corresponding elections under state, local or foreign Tax Law
(the "Election") with respect to the Shares. Seller and Purchaser shall provide
to the other all necessary information to permit the Election to be made. Seller
and Purchaser shall, as promptly as practicable following the Closing Date, take
all actions necessary and appropriate (including filing IRS Form 8023-A and
other such forms, returns, elections, schedules, attachments, and other
documents as may be required (the "Forms")) to effect and preserve a timely
Election.
(b) In connection with the Election, Seller and Purchaser shall
mutually (i) determine the amount of the modified aggregate deemed sales price
("MADSP") of the Shares (within the meaning of Treas. Reg. ss.1.338(h)(10)-1(f))
and (ii) the proper allocations of the MADSP among the Assets in accordance with
Treas. Reg. ss.1.338(h)(10)-1. The allocations referred to in the preceding
sentence are referred to herein as the "Allocations". Seller will calculate the
gain or loss, if any, in a manner consistent with the Allocations and will not
take any position inconsistent with the Allocations in any Tax Return or
otherwise (subject to appropriate adjustments pursuant to Treas. Reg.
ss.1.338(h)(10)-1(f)(4)). Purchaser will allocate the Purchase Price
consistently with the Allocations and will not take any position inconsistent
with the Allocations in any Tax Return or otherwise (subject to appropriate
adjustments pursuant to Treas. Reg. ss.1.338(h)(10)-1(f)(4)).
(c) At least 120 days prior to the latest date for the filing of
each Form, Seller, after consultation with Purchaser, shall prepare and submit
to Purchaser a draft
35
of each Form. No party hereto shall file any Form unless it shall have obtained
the consent of the other party hereto, which consent shall not be unreasonably
withheld. On or prior to the 30th day after Purchaser's receipt of a draft Form,
Purchaser shall deliver to Seller either (i) its consent to such filing or (ii)
a written notice specifying in reasonable detail all disputed items and the
basis therefor. If Purchaser and Seller have been unable to resolve their
differences within 30 days after Seller's receipt of Purchaser's written notice
of disputed items, any remaining disputed issues shall be submitted to the
Accounting Firm to resolve in a final binding manner after hearing the views of
both parties. The fees and expenses of the Accounting Firm pursuant to this
Section 7.05 shall be shared equally between Seller and Purchaser.
SECTION 7.06. Cooperation and Exchange of Information. Seller and
Purchaser shall, and they shall cause each Company to, provide each other with
such cooperation and information as any of them reasonably may request of
another in filing any Tax Return, amended return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of
relevant Tax Returns or portions thereof, together with accompanying schedules
and related work papers and documents relating to rulings or other
determinations by Tax authorities. Each such party shall make its employees
available on a mutually convenient basis to provide explanations of any
documents or information provided hereunder. Each such party will retain all Tax
Returns, schedules and work papers and all material records or other documents
relating to Tax matters of any Company for its taxable period first ending after
the Closing Date and for all prior taxable periods until the later of (i) the
expiration of the statute of limitations of the taxable periods to which such
Tax Returns and other documents relate, without regard to extensions except to
the extent notified by another party in writing of such extensions for the
respective Tax periods, or (ii) eight years following the due date (without
extension) for such Tax Returns. Any information obtained under this Section
7.06 shall be kept confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding.
SECTION 7.07. Conveyance Taxes. Purchaser agrees to assume liability
for and to pay all sales, transfer, stamp, real property transfer or gains and
similar Taxes incurred as a result of the sale of the Shares contemplated
hereby. In addition, Purchaser agrees to indemnify Seller and its Affiliates for
any and all liabilities, losses, damages, claims, costs, expenses, interest,
awards, judgments and penalties (including attorneys' and consultants' fees and
expenses) incurred by Seller and its Affiliates arising out of Purchaser's
failure to make timely or full payments of such Taxes. Purchaser and Seller
shall jointly prepare all Tax Returns relating to such Taxes.
SECTION 7.08. Miscellaneous. (a) The parties agree to treat all
payments made under Article X or this Article VII (except payments made pursuant
to Section 7.07) as adjustments to the Purchase Price for Tax purposes.
36
(b) Except as expressly provided otherwise and except for the
representations contained in Section 3.15 of this Agreement, this Article VII
shall be the sole provision governing Tax matters and indemnities therefor under
this Agreement.
(c) For purposes of this Article VII, all references to Seller,
Purchaser or a Company includes successors thereto.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of Seller . The obligations
of Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or waiver, at or prior to the Closing, of each of the
following conditions:
(a) Representations and Warranties; Covenants. (i) The
representations and warranties of Purchaser contained in Article IV (A) that are
qualified as to materiality, shall be true and correct and (B) that are not
qualified as to materiality, shall be true and correct in all material respects,
in each case as of the Closing, other than representations and warranties made
as of another date, which representations and warranties shall have been true
and correct, or true and correct in all material respects, as the case may be,
as of such date; (ii) the obligations, covenants and agreements of Purchaser
contained in this Agreement to be performed or complied with on or prior to the
Closing Date (A) that are qualified as to materiality shall have been performed
or complied with and (B) that are not qualified as to materiality shall have
been performed or complied with in all material respects, in each case on or
prior to the Closing Date, except that Purchaser shall have complied in all
respects with its obligations under Article II hereof; and (iii) Seller shall
have received a certificate to such effect signed by a duly authorized senior
officer of Purchaser;
(b) Communications Act. The FCC Consent shall have been issued and
shall contain no provision materially adverse to Seller;
(c) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase and sale of the Shares contemplated
hereby shall have expired or shall have been terminated;
(d) No Governmental Order. There shall be no Governmental Order in
existence which restrains or which materially and adversely affects the
transactions contemplated by this Agreement or is likely to render it impossible
or unlawful to consummate such transactions; and
(e) Resolutions. Seller shall have received a true and complete
copy, certified by the Secretary or an Assistant Secretary of Purchaser, of the
resolutions
37
duly and validly adopted by the Board of Directors of Purchaser evidencing its
authorization of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 8.02. Conditions to Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Representations and Warranties; Covenants. (i) The
representations and warranties of Seller contained in this Agreement (A) that
are qualified as to materiality, shall be true and correct and (B) that are not
qualified as to materiality, shall be true and correct in all material respects,
in each case as of the Closing, other than representations and warranties made
as of another date, which representations and warranties shall have been true
and correct, or true and correct in all material respects, as the case may be,
as of such date; (ii) the obligations, covenants and agreements of Seller
contained in this Agreement to be performed or complied with on or prior to the
Closing Date (A) that are qualified as to materiality, shall have been performed
or complied with and (B) that are not qualified as to materiality, shall have
been performed or complied with in all material respects, in each case on or
prior to the Closing Date; and (iii) Purchaser shall have received a certificate
to such effect signed by a duly authorized senior officer of Seller;
(b) Communications Act. The FCC Consent shall have been issued and
shall contain no provision materially adverse to Purchaser; provided, however,
that Purchaser shall not be required to close before the FCC Consent has become
a Final Order if a financing source from whom Purchaser is obtaining financing
for the purpose of consummating the purchase and sale of the Shares as
contemplated by this Agreement refuses, after Purchaser has used its good faith
reasonable best efforts to persuade such financing source to close upon receipt
of the FCC Consent, to consummate such financing arrangements until the FCC
Consent has become a Final Order.
(c) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase and sale of the Shares contemplated
hereby shall have expired or shall have been terminated;
(d) No Governmental Order. There shall be no Governmental Order in
existence which restrains or which materially and adversely affects the
transactions contemplated by this Agreement or is likely to render it impossible
or unlawful to consummate such transactions;
(e) Resolutions. Purchaser shall have received a true and complete
copy, certified by the Secretary or an Assistant Secretary of Seller, of the
resolutions duly and validly adopted by the Board of Directors of Seller
evidencing its authorization
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of the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(f) Leased Transmission Properties. Seller shall have obtained and
delivered to Purchaser all material consents (in writing and signed by the
applicable lessor) required in connection with the consummation of the
transactions contemplated hereby with respect to any lease pursuant to which any
Company leases a main transmission facility; and
(g) Indebtedness. Seller shall have satisfied in full all
indebtedness for borrowed money of the Companies other than the current portion
of such indebtedness that would reduce the Working Capital of the Companies as
to the Closing Date.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Closing as follows:
(a) by the mutual written consent of Seller and Purchaser;
(b) by either Seller or Purchaser, if the Closing shall not have
occurred prior to the nine-month anniversary of the date hereof (the "Outside
Date"); provided, however, that the right to terminate this Agreement under this
Section 9.01(b) shall be suspended as to any party whose failure to fulfill any
material obligation under this Agreement shall have been the cause of, or shall
have resulted in, the failure of the Closing to occur prior to such date, until
the 10th day after such failure has been cured; provided further, that subject
to Purchaser's good faith obligation in Section 8.02(b) to seek to consummate
the Closing following receipt of the FCC Consent but prior receipt of Final
Order, the Outside Date shall be automatically extended by 60 days if the FCC
shall have issued the FCC Consent on or before the Outside Date, but such FCC
Consent shall not have become a Final Order.
(c) by Seller in the event that any representation or warranty of
Purchaser made hereunder shall be materially inaccurate or breached or Purchaser
shall have failed to comply with or satisfy, in all material respects, its
covenants and agreements made hereunder; provided that written notice of such
material inaccuracy, breach or failure shall have been given to Purchaser and
Purchaser shall not have cured the same within 10 Business Days of receipt of
such notice, except that Seller shall be entitled to terminate this Agreement
and there shall be no cure period for any breach, whether or not material, for a
failure by Purchaser to deliver the Purchase Price pursuant to Section 2.05;
39
(d) by Purchaser in the event that any representation or warranty of
Seller made hereunder shall be materially inaccurate or breached or Seller shall
fail to comply with or satisfy, in all material respects, its covenants and
agreements made hereunder provided that written notice of such material
inaccuracy, breach or failure shall have been given to Seller and Seller shall
not have cured the same within 10 Business Days of receipt of such notice,
except that Purchaser shall be entitled to terminate this Agreement, and there
shall be no cure period for any breach, whether or not material, for a failure
by Seller to deliver the Shares pursuant to Section 2.04;
(e) by either Seller or Purchaser in the event of the issuance of a
final, nonappealable Governmental Order restraining or prohibiting the
transactions contemplated herein; or
(f) by Seller if the Deposit has not been delivered by Purchaser to
Seller on or prior to the Deposit Delivery Time.
Notwithstanding the foregoing, neither party may terminate this
Agreement pursuant to clauses (c) or (d) of this Section 9.01 if any
representation or warranty of the party seeking to terminate is materially
inaccurate or breached or such party has failed to comply with or satisfy, in
all material respects, its covenants and agreements made hereunder.
SECTION 9.02. Termination is Non-exclusive Remedy. (a) If this
Agreement is terminated pursuant to Section 9.01(b) (provided that Seller is not
then in material breach of this Agreement), Section 9.01(c) or 9.01(e) (unless,
in the case of Section 9.01(e), such Governmental Order is attributable to facts
or circumstances relating exclusively to Seller, any of Seller's Affiliates, any
of the Companies or any of the Stations), then (i) Seller shall retain the
Deposit and (ii) Purchaser shall pay the Interest Amount to Seller on the
Interest Payment Date. The termination rights of Seller under Section 9.01 and
the rights of Seller under this Section 9.02(a) are in addition to, and not
exclusive of, any other rights or remedies Seller may have hereunder, at Law or
otherwise.
(b) If this Agreement is terminated by Purchaser pursuant to Section
9.01(d) or 9.01(e) (if such Governmental Order is attributable to facts or
circumstances relating exclusively to Seller, any of Seller's Affiliates, any of
the Companies or any of the Stations) or is terminated by Seller other than in
compliance with the terms of this Agreement, then the Deposit (together with
interest thereon at the Interest Rate through the date of repayment) shall be
refunded by Seller promptly to Purchaser and the Interest Amount shall not be
payable to Seller.
(c) In the event of the termination of this Agreement as provided in
Section 9.01, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto, except as set forth in Sections 5.03,
9.02(a) and 11.02
40
and nothing herein shall relieve either party from liability for any breach
hereof or failure to perform hereunder.
SECTION 9.03. Waiver. At any time prior to the Closing, any party
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party hereto contained herein or in
any document delivered pursuant hereto or (c) waive compliance by the other
party hereto with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnification by Purchaser. (a) Subject to Section
11.01, Purchaser shall indemnify and hold Seller, its Affiliates and their
respective employees, officers and directors (collectively, the "Seller
Indemnified Parties") harmless from and against, and agrees to promptly defend
any Seller Indemnified Party from and reimburse any Seller Indemnified Party
for, any and all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind (including any Action brought by any Governmental Authority
or Person and including reasonable attorneys' fees and expenses reasonably
incurred) (collectively, "Losses"), which such Seller Indemnified Party may at
any time suffer or incur, or become subject to, as a result or in connection
with:
(i) the inaccuracy as of the date of this Agreement or the Closing
Date of any representations and warranties made by Purchaser in or
pursuant to this Agreement or in any instrument or certificate delivered
by Purchaser at the Closing in accordance herewith; or
(ii) any failure by Purchaser to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and/or
other instruments delivered by Purchaser pursuant to this Agreement.
(b) The amounts for which Purchaser shall be liable under Section
10.01(a) shall be net of (i) any insurance payable to Seller Indemnified Parties
from their own insurance policies in connection with the facts giving rise to
the right of indemnification and (ii) any Tax benefits received by or accruing
to Seller Indemnified Parties.
(c) Notwithstanding any other provision to the contrary, Purchaser
shall not be required to indemnify and hold harmless any Seller Indemnified
Party
41
pursuant to Section 10.01(a) unless Seller has asserted a claim with respect to
such matters within the applicable survival period set forth in Section 11.01,
and the cumulative indemnification obligation of Purchaser under Section
10.01(a)(i) of this Article X shall in no event exceed the Purchase Price.
SECTION 10.02. Indemnification by Seller . (a) Subject to Section
11.01 hereof, Seller shall indemnify and hold Purchaser, its Affiliates and
their respective employees, officers and directors (collectively, the "Purchaser
Indemnified Parties") harmless from and against, and agrees to promptly defend
any Purchaser Indemnified Party from and reimburse any Purchaser Indemnified
Party for, any and all Losses which such Purchaser Indemnified Party may at any
time suffer or incur, or become subject to, as a result or in connection with:
(i) the inaccuracy as of the date of this Agreement or the Closing
Date of any representations and warranties made by Seller in or pursuant
to this Agreement or in any instrument or certificate delivered by Seller
at the Closing in accordance herewith; or
(ii) any failure by Seller to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and/or
other instruments delivered by Seller pursuant to this Agreement.
(b) The amounts for which Seller shall be liable under Section
10.02(a) shall be net of (i) any insurance payable to Purchaser Indemnified
Parties from their own insurance policies in connection with the facts giving
rise to the right of indemnification and (ii) any Tax benefits received by or
accruing to Purchaser Indemnified Parties.
(c) Notwithstanding any other provision to the contrary, Seller
shall not be required to indemnify and hold harmless any Purchaser Indemnified
Party pursuant to Section 10.02(a), (i) unless Purchaser has asserted a claim
with respect to such matters within the applicable survival period set forth in
Section 11.01, and (ii) until the aggregate amount of Purchaser Indemnified
Parties' Losses exceeds an amount equal to 1% of the Purchase Price, after which
Seller shall be obligated for all Losses of Purchaser Indemnified Parties in
excess of such amount; provided, however, that the cumulative indemnification
obligation of Seller under this Article X shall in no event exceed the Purchase
Price.
(d) For purposes of calculating the amount of Losses subject to
indemnification pursuant to Sections 10.01 and 10.02, it is understood and
agreed between the parties hereto that to determine if there has been an
inaccuracy or breach of a representation or warranty which is qualified as to
materiality by the party making such representation or warranty or contains an
exception for matters that would not
42
have a Material Adverse Effect, then such representation or warranty shall be
read as if it were not so qualified or contained no such exception.
SECTION 10.03. Notification of Claims. (a) A party entitled to be
indemnified pursuant to Section 10.01 or 10.02 (the "Indemnified Party") shall
promptly notify the party liable for such indemnification (the "Indemnifying
Party") in writing of any claim or demand which the Indemnified Party has
determined has given or could give rise to a right of indemnification under this
Agreement; provided, however, that a failure to give prompt notice or to include
any specified information in any notice will not affect the rights or
obligations of any party hereunder except and only to the extent that, as a
result of such failure, any party which was entitled to receive such notice was
damaged as a result of such failure. Subject to the Indemnifying Party's right
to defend in good faith third party claims as hereinafter provided, the
Indemnifying Party shall satisfy its obligations under this Article X within 30
days after the receipt of written notice thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 10.03(a), and if such claim or demand
relates to a claim or demand asserted by a third party against the Indemnified
Party which the Indemnifying Party acknowledges is a claim or demand for which
it must indemnify or hold harmless the Indemnified Party under Section 10.01 or
10.02, the Indemnifying Party shall have the right to employ counsel reasonably
acceptable to the Indemnified Party to defend any such claim or demand asserted
against the Indemnified Party for so long as the Indemnifying Party shall
continue in good faith to diligently defend against such action or claim. The
Indemnified Party shall have the right to participate in the defense of any such
claim or demand at its own expense. The Indemnifying Party shall notify the
Indemnified Party in writing, as promptly as possible (but in any case five
Business Days before the due date for the answer or response to a claim) after
the date of the notice of claim given by the Indemnified Party to the
Indemnifying Party under Section 10.03(a) of its election to defend in good
faith any such third party claim or demand. So long as the Indemnifying Party is
defending in good faith any such claim or demand asserted by a third party
against the Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand without the consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, and the Indemnified Party
shall make available to the Indemnifying Party or its agents all records and
other material in the Indemnified Party's possession reasonable required by it
for its use in contesting any third party claim or demand. Whether or not the
Indemnifying Party elects to defend any such claim or demand, the Indemnified
Party shall have no obligations to do so. In the event the Indemnifying Party
elects not to defend such claim or action or if the Indemnifying Party elects to
defend such claim or action but fails to diligently defend such claim or action
in good faith, the Indemnified Party shall have the right to settle or
compromise such claim or action without the consent of the Indemnifying Party,
except that the Indemnified Party shall not settle or compromise any such claim
or demand, unless the Indemnifying Party is given a full and completed release
of any and all liability by all relevant parties relating thereto.
43
SECTION 10.04. Certain Exclusive Remedies. Except (i) as provided in
Section 9.02(a) and (ii) for the indemnification obligations specified in
Sections 5.02(b) and 5.06, Article VI and Article VII, Seller and Purchaser
acknowledge and agree that the indemnification provisions of Sections 10.01 and
10.02 shall be the sole and exclusive remedies of Seller and Purchaser,
respectively, for any breach of the representations or warranties herein or
nonperformance of any covenants and agreements herein of the other party.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Survival. The representations, warranties, covenants
and agreements of Seller and Purchaser contained in or made pursuant to this
Agreement or in any certificate furnished pursuant hereto shall terminate at the
Closing, except that the representations and warranties made in Article III and
Article IV and the convenants and agreements made herein shall survive in full
force and effect until the later of (x) the six-month anniversary of the Closing
Date or (y) March 31, 1998. In addition, Section 10.04, including the
indemnification obligations contained in Sections 5.02(b), 5.06, 6.04 and 7.01,
shall survive in perpetuity and Section 2.06 shall survive until the working
capital adjustment contemplated therein has been completed.
SECTION 11.02. Expenses. Except as may be otherwise specified
herein, all costs and expenses, including fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.
SECTION 11.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given or made when delivered in person one Business Day after having
been dispatched via a nationally recognized overnight courier service, when
dispatched by facsimile, or three Business Days after being sent by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11.03):
(a) if to Seller :
Viacom International Inc.
1515 Broadway
New York, New York 10036
Attention: General Counsel and
44
Deputy General Counsel
Telecopier: (212) 258-6099
(b) if to Purchaser:
Evergreen Media Corporation of Los Angeles
433 East Las Colinas Boulevard, Suite 1130
Irving, Texas 75039
Attention: Scott K. Ginsburg
Telecopier: (977) 432-0754
With a copy to:
Latham & Watkins
1001 Pennsylvania Ave., N.W., Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal
Telecopier: (202) 637-2201
SECTION 11.04. Public Announcements. Except as may be required by
Law or stock exchange rules, no party to this Agreement shall make any public
announcements in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without prior notification
to the other party, and the parties shall cooperate as to the timing and
contents of any such announcement.
SECTION 11.05. Non-Solicitation. Until the six-month anniversary of
the Closing Date, Seller (excluding any of Seller's Affiliates) will not solicit
or offer employment to any general manager or on-air talent who is then a
Transferred Employee except that a general solicitation through advertisement or
a professional broker will not constitute a violation of this Section.
SECTION 11.06. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.07. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced because of any Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in
45
a mutually acceptable manner in order that the transactions contemplated hereby
be consummated as originally contemplated to the greatest extent possible.
SECTION 11.08. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and undertakings, both written
and oral, between Seller and Purchaser with respect to the subject matter hereof
and thereof, except as otherwise expressly provided herein.
SECTION 11.09. Successors and Assigns. This Agreement will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns but will not be assignable or delegable by any
party without the prior written consent of the other party which shall not be
unreasonably withheld; provided, however, that in the event the Purchaser Merger
is completed either prior to or after the Closing, then this Agreement and all
of the rights and obligations of Purchaser hereunder, hereto and herein shall
become binding upon and inure to the benefit of the corporation or other Person
(the "Surviving Entity") surviving the Purchaser Merger; provided, further, that
(a) except as otherwise permitted in this Section 11.09, prior to Closing,
Purchaser or the Surviving Entity, as the case may be, may assign this Agreement
to another party (the "Purchaser Assignee") without the consent of Seller if,
but only if, (A) such Purchaser Assignee is legally, financially and in all
other respects qualified under the laws, rules, and regulations of the FCC and
each other applicable Governmental Authority to own the FCC Licenses and to
operate the Stations as currently operated and (B) Purchaser or the Surviving
Entity, as the case may be, agrees in a writing, in form and substance
satisfactory to Seller, to remain primarily liable and responsible for the
timely performance by Purchaser Assignee of this Agreement, and (b) Purchaser or
the Surviving Entity, as the case may be, may without the consent of Seller make
a collateral assignment of its rights under this Agreement to any financing
source who provides funds to Purchaser or the Surviving Entity, as the case may
be. Seller agrees to execute acknowledgments of such assignment(s) and
collateral assignments in such forms as Purchaser or the Surviving Entity, as
the case may be, or institutional lender(s) may from time to time reasonably
request. In the event that the Purchaser Merger is consummated, all references
herein to Purchaser shall be deemed to be references to the Surviving Entity.
SECTION 11.10. No Recourse. Notwithstanding any of the terms or
provisions of this Agreement, each of Seller on the one hand, and Purchaser, on
the other hand, agree that neither it nor any Person acting on its behalf may
assert any claims or cause of action against any employee, officer or director
of the other party or stockholder of such other party in connection with or
arising out of this Agreement or the transactions contemplated hereby.
SECTION 11.11. No Third-Party Beneficiaries. Except as expressly
provided in Articles VII and X, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended
46
to or shall confer upon any other Person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.12. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by Seller and Purchaser.
SECTION 11.13. Sections and Schedules. Any disclosure with respect
to a Section or Schedule of this Agreement shall be deemed to be disclosure for
all other Sections and Schedules of this Agreement.
SECTION 11.14. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York. All actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined in a New York state or federal court sitting in the City of New York,
and the parties hereto hereby irrevocable submit to the nonexclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
waive the defense of an inconvenient forum to the maintenance of any such action
or proceeding.
SECTION 11.15. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 11.16. No Presumption. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
SECTION 11.17. Specific Performance. Seller agrees that the Shares
represent unique property that cannot be readily obtained on the open market and
that Purchaser would be irreparably injured if this Agreement is not
specifically enforced after default. Therefore, in addition to any other remedy
Purchaser may have under this Agreement or at law or in equity, Seller agrees to
waive the defense to the remedy of specific performance that Purchaser has an
adequate remedy at law and to interpose no opposition, legal or otherwise, as to
the propriety of specific performance as a remedy.
47
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
VIACOM INTERNATIONAL INC.
By_______________________________
Name:
Title:
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By_______________________________
Name:
Title:
SCHEDULES
Schedule 1 Markets, Companies and Radio Station Call Letters
Schedule 1.01 Disclosure Schedule
EXHIBITS
Exhibit 3.06 Financial Statements
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SCHEDULE 1
MARKETS, COMPANIES AND RADIO STATION CALL LETTERS
Radio Station
Markets Companies Call Letters
------- --------- ------------
New York WAXQ Inc. WAXQ -FM
Riverside Broadcasting Co., Inc. WLTW-FM
Los Angeles KYSR Inc. KYSR-FM
KIBB Inc. KIBB-FM
Washington, DC WMZQ Inc. WMZQ -FM
WZHF-AM
Viacom Broadcasting East Inc. WJZW-FM
WBZS-AM
Chicago, IL WLIT Inc. WLIT-FM
Detroit, MI WDRQ Inc. WDRQ-FM
Dates Referenced Herein and Documents Incorporated by Reference
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