Exhibit 10(44)
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT is made as of the 18th day of March,
1996, by and between Professional Broadcasting, Incorporated, a Virginia
corporation, and EZ New Orleans, Inc., a Virginia corporation (collectively,
"PBI"), and Heritage Media, Inc., a Delaware corporation ("HMI").
- - ------ -------
WITNESSETH:
-----------
WHEREAS, PBI owns and operates commercial radio broadcasting stations
WRNO(FM), WEZB(FM) and WBYU(AM) in the New Orleans, Louisiana market (the "New
---
Orleans Stations"), is engaged in the business of operating the New Orleans
- - ------------------
Stations and holds licenses and other authorizations issued by the Federal
Communications Commission ("FCC") for the operation of the New Orleans Stations;
-------
and
WHEREAS, HMI owns and operates commercial radio broadcasting stations
KCIN(FM) and KRPM(AM) in the Seattle, Washington market (the "Seattle Stations")
------------------,
is engaged in the business of operating the Seattle Stations and holds licenses
and other authorizations issued by the FCC for the operation of the Seattle
Stations (the New Orleans Stations and the Seattle Stations being collectively
referred to herein as the "Stations"); and
--------
WHEREAS, PBI and HMI desire to exchange ownership of the Stations and
their related assets, in a non-taxable, like-kind exchange pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended, under the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. EXCHANGE OF ASSETS.
------------------
1.1 Exchange of Station Assets. Upon the terms and subject to the
---------------------------
conditions set forth in this Agreement, at the Closing (as defined herein), PBI
shall assign, transfer, convey and deliver to HMI with respect to the New
Orleans Stations, and HMI shall assign, transfer, convey and deliver to PBI with
respect to the Seattle Stations, all right, title and interest in and to the
following assets (the "Transferred Assets"), free and clear of all liens,
------------ --------
security interests, charges, encumbrances and rights of others (other than
"Permitted Liens" as defined herein), except those assets specifically listed on
- - ---------- -----
Schedule 1.1(a) and Schedule 1.1(b) hereto (the "Excluded Assets"):
- - --------------- --------------- -------- --------
(a) All licenses, permits and auxiliary authorizations issued by the
FCC or any other governmental authority for the operation of the Stations,
together with any and all renewals, extensions and modifications thereof, any
temporary or special authorization, issued to or held by HMI in connection with
the business and operations
of the Seattle Stations, and any pending applications therefor ("Governmental
--------------
Licenses");
- - -----------
(b) All real and personal property, tangible or intangible, which is
used or useful in the operation of the Stations, including, but not limited to,
land, buildings, fixtures, leasehold improvements, broadcast towers and
antennas, transmitters and transmitter equipment, studio equipment, tapes and
record libraries, office equipment and furniture (all as more particularly set
forth on Schedule 1.1 (c) and Schedule 1.1(d) hereto), together with
----------------- -----------------------
replacements thereof and additions thereto made between the date hereof and the
Closing (the "Station Equipment");
---------------------
(c) All tradenames, trademarks, patents, service marks, call letters,
copyrights, logos, goodwill and similar intangibles owned by PBI or HMI and used
in the operations of the Stations and all programming materials, programs,
jingles and all promotional materials used in the operation of the Stations,
whether recorded an tape or any other substance or intended for live
performance, and whether completed or in production (collectively, the
"Intangible Property");
- - -----------------------
(d) All contracts or agreements, whether oral or written, relating to
the Station, including the PBI Barter Agreements and the HMI Barter Agreements
(each as defined below), contracts for the sale of time on the Stations, and
contracts or agreements relating to equity interests in the New Orleans
Stations' broadcast towers;
(a) Unless as may be otherwise required by law, all books and records
related to the Transferred Assets or the operation of the Stations, including
all financial, accounting and property tax records, computer data and programs,
market data, logs, all materials maintained in the FCC public file relating to
the Stations, technical data and records and all correspondence with and
documents pertaining to suppliers, governmental authorities and other third
parties (the "Business Records").
---------
The Transferred Assets to be transferred from PBI to HMI are referred to herein
as the "PBI Transferred Assets." The Transferred Assets to be transferred from
--------------------------
HMI to PBI are referred to herein as the "HMI Transferred Assets." The
--------------------------
consideration for the assets transferred by each party shall be the assets
transferred to such party by the other party hereunder and the assumption of
certain liabilities as set forth in Section 1.2. The fair market value of the
--------------
HMI Transferred Assets and the PBI Transferred Assets shall be allocated in
accordance with the allocation set forth on Exhibit A. PBI and HMI acknowledge
----------
that such allocation is the result of arm's length bargaining regarding the fair
market value of the HMI Transferred Assets and the PBI Transferred Assets.
The parties agree that they will use such asset values in calculating
gain (if any) recognized under Treas. Reg. Sec. 1. 1031 (j)-1(b)(3) with respect
to each "exchange group" (as defined in Treas. Reg. Sec. 1.1031(j)-l(b)(2)(i)),
the "residual group" as (defined in Treas. Reg. Sec. 1.1031(j)-1(b)(2)(iii))(if
any) and any properties transferred
2
and received that are not within any "exchange group" or the "residual group"
(if any) and will not take any position on any tax return inconsistent
therewith. To the extent required by Section 1060 of the Code, the regulations
thereunder and Treas. Reg. Sec. 1.1031 (d)-lT, each party shall allocate, in
accordance with the foregoing provisions, (a) the value of the consideration
transferred by it to the consideration received by it for purposes of
determining the tax basis of the property so received by it and (b) the value of
the consideration received by it to the consideration transferred by it for
purposes of determining the gain or loss (if any) with respect to the property
so transferred. For purposes of the preceding sentence, the parties shall use
the values of properties transferred and received determined in accordance with
Exhibit A. To the extent an IRS Form 8594 is required to be filed under Section
- - ---------
1060, the regulations thereunder and Treas. Reg. Sec. 1. 1031(d)-1T, the
parties agree to prepare and file on a timely basis with the IRS substantially
identical IRS Forms 8594 using the values of properties transferred and received
as determined by in accordance with Exhibit A, and shall not take any position
----------
on any tax return inconsistent therewith.
1.2 Assumed Liabilities.
-------------------
(a) At the Closing, HMI shall assume (i) those specified contractual
obligations of the New Orleans Stations listed on Schedule 1.2(a) hereto, as the
---------------
same may be amended through the Closing Date with the mutual consent of PBI and
HMI, and (ii) those obligations and liabilities incurred by HMI after the
Closing Date which arise out of the ownership and operation of the New Orleans
Stations by HMI after the Closing Date (collectively, the "HMI Assumed
-------------
Liabilities"), and HMI agrees to pay and perform the HMI Assumed Liabilities
- - -------------
after the Closing Date.
(b) At the Closing, PBI shall assume (i) those specified contractual
obligations of the Seattle Stations listed on Schedule 1.2(b)(i) hereto, as the
------------------
same may be amended through the Closing Date with the mutual consent of PBI and
HMI, and that specified indebtedness relating to the Seattle Stations listed on
Schedule 1.2(b)(ii), and (ii) those obligations and liabilities incurred by
- - -------- ----------
PBI after the Closing Date which arise out of the ownership and operation of the
Seattle Stations by PBI after the Closing Date (collectively, the "PBI Assumed
------------
Liabilities"), and PBI agrees to pay and perform the PBI Assumed Liabilities
- - -------------
after the Closing Date.
(c) Except as specifically set forth in this Section 1.2, HMI does
-----------
not assume and shall in no event be liable for any debt, obligation,
responsibility or liability of the New Orleans Stations, PBI, any subsidiary or
any affiliate or successor of PBI, or any claim against any of the foregoing,
whether known or unknown, contingent or absolute, or otherwise. Except as
specifically set forth in this Section 1.2, PBI does not assume and shall in no
-----------
event be liable for any debt, obligation, responsibility or liability of the
Seattle Stations, HMI, any subsidiary or any affiliate or successor of HMI, or
any claim against any of the foregoing, whether known or unknown, contingent or
absolute, or otherwise.
3
2. CLOSING.
-------
2.1 Time of Closing.
---------------
(a) A closing (the "Closing") for the exchange of the Transferred
Assets shall be held on the date which is the later of (i) the fifth business
day after the FCC Order (as defined hereinbelow) becomes a Final Order (as
defined below) or (ii) the satisfaction or waiver of all of the conditions
precedent to the obligations of HMI and PBI hereunder, or on such other date as
may be agreed upon by the parties in writing (the "Closing Date"). The Closing
shall be deemed to be effective as of 12:01 a.m. on the Closing Date.
(b) In order to consummate the exchange of the Stations, PBI and HMI
agree to use their best efforts to file within five business days an application
(the "Assignment Applications") requesting FCC consent to (i) the assignment
--------------------------
from PBI to HMI of all Governmental Licenses relating to the operation of the
New Orleans Stations (the " New Orleans Governmental Licenses ") and (ii) the
----------------------------------
assignment from HMI to PBI of all Governmental Licenses relating to the
operation of the Seattle Stations (the "Seattle Governmental Licenses"). The
-------------------------------
parties agree that the Assignment Applications will be prosecuted in good faith
and with due diligence. The parties agree to use their reasonable best efforts
to file additional information or amendments requested by the FCC orally or in
writing within five business days after such request and, in any event, to
commence preparation of such additional information or amendments immediately
upon request and to complete and file the same with the FCC as rapidly as
practical. Each party will be solely responsible for the expenses incurred by
it in the preparation, filing and prosecution of the Assignment Applications (it
being understood that the parties will bear equally the FCC filing fee). As
used herein, the term "FCC Order" shall mean that the FCC has granted or given
-----------
its initial consent, without any condition materially adverse to HMI or PBI, to
the Assignment Applications; the term "Final Order" shall mean that the FCC
-----------
Order shall have been final, that such FCC Order is not reversed, stayed,
enjoined or set aside, and with respect to such FCC Order, no timely request for
stay, reconsideration, review, rehearing or notice of appeal is pending, and as
to which FCC Order the time for filing any such request, petition or notice of
appeal or for review by the FCC staff on its own motion has expired.
(c) To the extent required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), the parties further agree to use their best efforts
---------
to make any necessary filings under the HSR Act. The fees associated with any
filings made pursuant to the HSR Act shall be split equally between the parties.
2.2 Closing Procedure; At the Closing, (i) PBI shall deliver to HMI
-----------------
the bills of sale, instruments of assignment, transfer and conveyance identified
in Section 8.1 below and such similar documents as HMI shall reasonably request
-----------
with respect to the
4
New Orleans Stations; and (ii) HMI shall deliver to PBI such bills of sale,
instruments of assignment, transfer and conveyance identified in Section 8.2
------------
below and such similar documents as PBI shall reasonably request with respect to
the Seattle Stations. Each party will cause to be prepared, executed and
delivered all other documents required to be delivered by such party pursuant to
this Agreement and all other appropriate and customary documents as the other
party or its counsel may reasonably request for the purpose of consummating the
transactions contemplated by this Agreement. All actions taken at the Closing
shall be deemed to have been taken simultaneously at the time the last of any
such actions is taken or completed.
2.3 Time Brokerage Agreements. On the date hereof, the parties shall
-------------------------
enter into certain Time Brokerage Agreements, substantially in the form of
Exhibits B and C attached hereto, with respect to the New Orleans Stations and
the Seattle Stations, respectively (each a "Time Brokerage Agreement" and
----------------------------
collectively the "Time Brokerage Agreements"). The date on which the Time
---------------- ------------
Brokerage become effective is referred to herein as the "Time Brokerage Date."
----------------------
Unless otherwise set forth herein, the parties agree that, the following Station
matters shall be governed in accordance with the Time Brokerage Agreements: (i)
employees; (ii) accounts receivable; and (iii) cash sales and trade agreements.
2.4 Non-Competition Agreement. On the Closing Date, the parties shall
-------------------------
enter into the Non-Competition Agreement, substantially in the form of Exhibit D
---------
hereto.
3. REPRESENTATIONS AND WARRANTIES OF PBI.
-------------------------------------
PBI hereby represents and warrants to HMI, as follows:
3.1 Organization: Good Standing. Each of Professional Broadcasting,
----------------------------
Incorporated and EZ New Orleans, Inc. is a corporation, duly incorporated,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and has all requisite corporate power and authority to own and lease
its properties and assets and to carry on its business as currently conducted.
Each of Professional Broadcasting Incorporated and EZ New Orleans, Inc. is
qualified as a foreign corporation in each jurisdiction where it is required to
be so qualified.
3.2 Due Authorization: Execution and Delivery. Subject to the
---------------------------------------------
issuance of the FCC Order and the Final Order and obtaining any other consents
required to be obtained hereunder, PBI has full power and authority to enter
into and perform this Agreement and to carry out the transactions contemplated
hereby. PBI has taken all requisite action to approve the execution and
delivery of this Agreement and the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of PBI,
enforceable against it in accordance with its terms, except as may be limited by
the availability of equitable remedies or by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
5
generally. Neither the execution and delivery by PBI of this Agreement nor the
consummation by it of the transactions contemplated hereby will: (i) conflict
with or result in a breach of the articles of incorporation or bylaws of PBI;
(ii) subject to the issuance of the FCC Order and the Final Order and obtaining
any other consents required to be obtained hereunder, violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority, which violation, either individually or in the
aggregate, might reasonably be expected to have a material adverse effect on the
business or operations of PBI or HMI's ownership of the PBI Transferred Assets;
or (iii) violate or conflict with or constitute a default under (or give rise to
any right of termination, cancellation or acceleration under), or result in the
creation of any lien on any of the PBI Transferred Assets pursuant to, any
material agreement, indenture, mortgage or other material instrument to which
PBI is a party or by which it or its assets may be bound or affected.
3.3 Governmental Consents. No approval, authorization, consent,
----------------------
order or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and delivery
by PBI of this Agreement or the consummation of the transactions contemplated
hereby, other than those of the FCC.
3.4 Title to Assets. Except as otherwise set forth on Schedule 3.4
---------------- ------------
and for PBI Permitted Liens (as defined herein), PBI is the sole and exclusive
legal owner of all right, title and interest in, and has good and marketable
title to, all of the PBI Transferred Assets, free and clear of liens, claims and
encumbrances. As used herein, "PBI Permitted Liens" shall mean, in each case
----------------------
with respect to the PBI Transferred Assets, (i) liens for current taxes and
other governmental charges not yet due and payable, (ii) mechanics' liens and
other similar liens arising in the ordinary course that will be discharged prior
to Closing, (iii) statutory landlord's liens arising in the ordinary course and
(iv) with respect to real property, liens that do not materially detract from,
or materially interfere with, the present use of the properties subject thereto
or materially affect the marketability of the property subject thereto.
3.5 Real Estate
-----------
(a) PBI has a valid, binding and enforceable leasehold interest, free
and clear of liens (other than PBI Permitted Liens), claims, encumbrances,
subleases or other restrictions, in and to the real estate on which the
operations of the New Orleans Stations are conducted and the buildings,
structures and improvements situated thereon (the "PBI Real Estate"). A true,
-------------------
complete and correct copy of the leases evidencing such interests has been
furnished to HMI.
(b) PBI has not received any notice of, and has no actual knowledge
of, any material violation of any zoning, building, health, fire, water use or
similar statute, ordinance, law, regulation or code in connection with the
leasehold interest in the PBI Real Estate. To the knowledge of PBI, no fact or
condition exists which would result in the termination or impairment of access
of the New Orleans Stations to the PBI Real
6
Estate or discontinuation of necessary sewer, water, electrical, gas, telephone
or other utilities or services.
(c) To the knowledge of PBI, no Hazardous Material (as defined below)
exists in any structure located on, or exists on or under the surface of, any of
the PBI Real Estate which is in material violation of Environmental Law. For
purposes of this Section, "Hazardous Material" shall mean waste, substance,
--------------------
materials, smoke, gas or particulate matter designated as hazardous, toxic or
dangerous under any Environmental Law. For purposes of this Section,
"Environmental Law" shall include the Comprehensive Environmental Response
- - --------------------
Compensation and Liability Act, the Clean Air Act, the Clean Water Act and any
other applicable federal, state or local environmental, health or safety law,
rule or regulation relating to or imposing liability or standards concerning or
in connection with Hazardous Materials.
3.6 Condition of Assets. All of the PBI Transferred Assets viewed as
-------------------
a whole and not on an asset by asset basis are in good condition and working
order, ordinary wear and tear excepted, and are suitable for the uses for which
intended, free from any known defects except such minor defects as do not
substantially interfere with the continued use thereof.
3.7 Governmental Licenses. Schedule 3.7 lists and accurately
---------------------- --------------
describes all of the New Orleans Governmental Licenses necessary for the lawful
ownership and operation of the New Orleans Stations and the conduct of its
business, except where the failure to hold such Governmental License would not
have a material adverse effect on the New Orleans Stations. PBI has furnished
to HMI true and accurate copies of all of the New Orleans Governmental Licenses.
Except as set or on Schedule 3.7. (i) each such Governmental License is in full
-------------
force and effect and is valid under applicable federal, state and local laws;
(ii) the New Orleans Stations are being operated in compliance in all material
respects with the Communications Act of 1934, as amended (the "Act"), and all
rules, regulations and policies of the FCC; and (iii) to the knowledge of PBI,
no event has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) is reasonably likely to result
in the revocation or termination of any Governmental License or the imposition
of any restriction of such a nature as might adversely affect the ownership or
operation of the New Orleans Stations as now conducted, except for proceedings
of a legislative or rule-making nature intended to affect the broadcasting
industry generally. The New Orleans Stations, their physical facilities,
electrical and mechanical systems and transmitting and studio equipment are
being opera ted in all material respects in accordance with the specifications
of the New Orleans Governmental Licenses. Except as noted on Schedule 3.7, the
------------
New Orleans Governmental Licenses are unimpaired by any act or omission of PBI
or any of PBI's officers, directors or employees and PBI has fulfilled and
performed all of its obligations with respect hereto and has full power and
authority thereunder. Except as noted on Schedule 3.7, no application, action
------------
or proceeding is pending for the renewal or modification of any of the New
Orleans Governmental Licenses. Except as noted on Schedule 3.7, no event
------------
7
has occurred which, individually or in the aggregate, and with or without the
giving of notice or the lapse of time or both, would constitute ground for
revocation thereof and would have a materially adverse effect on the business or
financial conditions of the New Orleans Stations.
3.8 Taxes. Other than taxes imposed upon the income of PBI (as to
-----
which no representation is made), all tax reports and returns required to be
filed by PBI relating to the PBI Transferred Assets or operations (including
sales, use, property and employment taxes) have been filed with the appropriate
federal, state and local governmental agencies, and there have been paid all
taxes, penalties, interest, deficiencies, assessments or other charges due as
reflected on the filed returns or claimed to be due by such federal, state or
local taxing authorities (other than taxes, deficiencies, assessments or claims
which are being contested in good faith and which in the aggregate are not
material). There are no examinations or audits pending or unresolved
examinations or audit issues with respect to PBI's state or local tax returns.
All additional taxes, if any, assessed as a result of such examinations or
audits have been paid. There are no pending claims or proceedings relating to,
or asserted for, taxes, penalties, interest, deficiencies or assessments against
the PBI Transferred Assets.
3.9 Litigation. Except as set forth on Schedule 3.7, there is no
---------- -------------
order of any court, governmental agency or authority and no complaint, notice of
violation, action, suit, proceeding or investigation, judicial, administrative
or otherwise, of which PBI has knowledge that is pending or threatened against
or affecting the New Orleans Stations which, if adversely determined, might
materially and adversely affect the business, operations, properties, assets or
conditions (financial or otherwise) of the New Orleans Stations or which
challenges the validity or propriety of any of the transactions contemplated by
this Agreement.
3.10 Reports. PBI has duly filed all reports required to be filed by
-------
law or applicable rule, regulation, order, writ or decree of any court,
governmental commission, body or instrumentality and has made payment of all
charges and other payments, if any, shown by such reports to be due and payable,
except where the failure to so file or make payment would not have a material
adverse effect upon the operations of the New Orleans Stations. All reports
required to be filed by PBI with the FCC with respect to the New Orleans
Stations have been filed, except where the failure to so file would not
materially and adversely affect the business, operations, properties, assets or
conditions (financial or otherwise) of the New Orleans Stations or which
challenges the validity or propriety of any of the transactions contemplated by
this Agreement. Such reports and disclosures are complete and accurate in all
material respects.
8
3.11 Employee Matters.
----------------
(a) Schedule 3.11 sets forth true and accurate descriptions of the
-------------
employee benefit plans for employees of the New Orleans Stations. Schedule 3.11
------------
contains a list of all of the New Orleans Station employees of PBI as of the
date hereof, each such employee's title or capacity in which employed, and such
employee's annual salary or wages.
(b) There are no labor disputes of a material nature pending between
PBI, on the one hand, and any of the employees of the New Orleans Stations, on
the other hand, and there are no known organizational efforts presently being
made involving any of such employees. The New Orleans Stations have complied in
all material respects with all laws relating to the employment of labor,
including any provisions thereof relating to wages, hours, collective bargaining
and the payment of social security and other taxes, and PBI is not liable for
any material arrearages of wages or any taxes or penalties for failure to comply
with any of the foregoing.
(c) PBI has, and on the Time Brokerage Date will have, paid when due
all salaries, bonuses, commissions and deferred compensation expenses in
connection with the employees of the New Orleans Stations for all periods prior
to the Time Brokerage Date, and has or will have on such date withheld and paid
over to the proper tax collecting agencies when due all taxes required to be
withheld from or paid with respect to such payments for all periods through the
payroll date ended most recently prior to the Time Brokerage Date.
(d) Other than scheduled anniversary raises consistent with prior
practice, from the date hereof no increases in compensation to employees will
occur or become due at any time.
(e) Schedule 3.11 sets forth a description of all termination or
-------------
severance benefits which PBI is obligated to pay to any of the New Orleans
Stations employees, including any such benefits set forth in employment
agreements or employee policy manuals.
3.12 Contracts and Agreements. Schedule 1.2(a) contains a list,
------------------------- ---------------
complete and accurate in all material respects, of all contracts and agreements
to which the New Orleans Stations are bound at the date hereof, excluding
contracts that may be cancelled without penalty upon 30 days or less notice
(collectively the "PBI Material" Contracts"). The New Orleans Stations are not
------------ -----------
in default with respect to any of the PBI Material Contracts contained on
Schedule 12(a) hereto, and, as of the Time Brokerage Date, the New Orleans
- - --------------
Stations will have paid all sums and performed all obligations under the PBI
Material Contracts included on Schedule l.2(a) which are required to be paid
---------------
or performed prior to the Time Brokerage Date. True and complete copies of
the PBI Material Contracts have been delivered to HMI on or prior to the date
hereof.
9
3.13 Intangible Property - Schedule 3.13 contains a complete list of
------------------- -------------
all intangible Property used in the operation of the New Orleans Stations
(whether owned, leased or licensed by PBI). Except as set forth on Schedule 3.13
-------------
PBI has, and after the Closing, HMI will have, the right to use such
Intangible Property, free and clear of any royalty or other payment obligations.
PBI's use of the Intangible Property does not conflict with, violate or infringe
upon any rights of any other person or entity with respect to such Intangible
Property and PBI has not received any notice of any such claimed conflict,
violation or infringement.
3.14 Barter Transactions. PBI acknowledges that it has entered into
-------------------
certain contracts and agreements in the ordinary course of its business which
obligate it to provide advertising time on the New Orleans Stations in exchange
for goods or services (collectively, the "PBI Barter Agreements"). Schedule
------------------------ --------
3.14 sets forth a true, accurate and complete copy of PBI's internally generated
- - ----
barter report dated February __ 1996, which includes a description of the goods
and services to be received under such agreements ("PBI Barter Receivables").
--------------------------
If the amount of the PBI Barter Receivables as of the Time Brokerage Date is
less than the amount of PBI's obligations thereunder, then the amount of such
difference shall be paid to HMI in cash at the Closing. PBI represents and
warrants that as of the close of business on the Time Brokerage Date, the PBI
Barter Agreements will not require PBI to provide any consideration other than
advertising time on the New Orleans Stations.
3.15 Third Party Consents. By the Closing Date, PBI will have
---------------------
obtained all consents from any person or entity (other than the Final Order from
the FCC) which are required in connection with the execution and delivery by PBI
of this Agreement and the consummation of the transactions contemplated hereby,
which such consents are described on Schedule 3.15, except where the failure to
-------------
obtain such consent has been waived by HMI on or prior to the Closing Date.
3.16 Financial Statements. PBI has delivered true, complete and
---------------------
correct copies of the unaudited results of operations of the New Orleans
Stations for the years ended December 31, 1994 and 1995 and for the two months
ended February 29, 1996 (collectively, the "PBI Station Financial Statements").
-----------------------------------
The PBI Station Financial Statements have been prepared in conformity with
generally accepted accounting principles and present fairly in all material
respects the results of operations of the New Orleans Stations for the periods
presented.
3.17 Qualification of PBI. Except as disclosed on Schedule 3.17, PBI
---------------- -------------
does not have any knowledge of any facts or proceedings which are reasonably
likely to disqualify it under the Act, the rules and regulations promulgated
hereunder, and the policies of the FCC in respect thereof, from acquiring or
operating the Seattle Stations or would otherwise cause the FCC not to approve
the assignment of the Seattle Governmental Licenses to PBI.
10
3.18 Finders and Brokers. All negotiations relating to this Agreement
-------------------
and the transactions contemplated herein have been carried on by PBI directly
with HMI and without the intervention of any other person as a result of any act
of PBI or its representatives in such a manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or other like payment.
3.19 Insurance. The insurable properties relating to the business of
---------
the New Orleans Stations and the conduct of the business of the New Orleans
Stations are, and will be until the Closing, in the reasonable judgment of PBI,
adequately insured. Schedule 3.19 identifies all insurance policies currently
-------------
maintained by PBI on the New Orleans Stations, all which shall remain in effect
until the Closing.
3.20 Accuracy of Information Furnished. No statement by PBI contained
---------------------------------
in this Agreement or in any Schedule or Exhibit hereto contains any material
untrue statement of a material fact, or omits to state any material fact which
is necessary to make the statements contained herein, in light of the
circumstances under which they were made, not materially misleading.
3.21 Conduct of Business in Ordinary Course. Between February 29,
--------------------------------------
1996 and the date hereof, PBI has conducted the business of the New Orleans
Stations only in the ordinary course and substantially consistent with past
practice and has not:
(a) suffered any material adverse change in the business, assets,
properties, financial condition or prospects of the New Orleans Stations,
including any damage, destruction or loss affecting the New Orleans Stations'
assets;
(b) except in the ordinary course of business, and substantially
consistent with past practices, made any material increase in compensation
payable or to become payable to any of the employees of the New Orleans
Stations; or
(c) made any sale, assignment, lease or other transfer of any of the
New Orleans Stations' properties other than in the normal and usual course of
business and substantially consistent with past practices.
4. REPRESENTATIONS AND WARRANTIES OF HMI.
-------------------------------------
HMI hereby represents and warrants to PBI, as follows:
4.1 Organization; Good Standing. HMI is a corporation, duly
---------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own and lease
its properties and assets and to carry on its business as currently conducted.
HMI is qualified as a foreign corporation in each jurisdiction where it is
required to be so qualified.
11
4.2 Due Authorization; Execution and Delivery. Subject to the
---------------------------------------------
issuance of the FCC Order and the Final Order and obtaining any other consents
required to be obtained hereunder, HMI has full power and authority to enter
into and perform this Agreement and to carry out the transactions contemplated
hereby. HMI has taken all requisite action to approve the execution and
delivery of this Agreement and the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of HMI,
enforceable against it in accordance with its terms, except as may be limited by
the availability of equitable remedies or by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.
Neither the execution and delivery by HMI of this Agreement nor the consummation
by it of the transactions contemplated hereby will: (i) conflict with or result
in a breach of the articles of incorporation or bylaws of HMI; (ii) subject to
the issuance of the FCC Order and the Final Order and obtaining any other
consents required to be obtained hereunder, violate any statute, law, rule or
regulation or any order, writ, injunction or decree of any court or governmental
authority, which violation, either individually or in the aggregate, might
reasonably be expected to have a material adverse effect on the business or
operations of HMI or PBI's ownership of the HMI Transferred Assets; or (iii)
violate or conflict with or constitute a default under (or give rise to any
right of termination, cancellation or acceleration under), or result in the
creation of any lien on any of the HMI Transferred Assets pursuant to, any
material agreement, indenture, mortgage or other material instrument to which
HMI is a party or by which it or its assets may be bound or affected.
4.3 Governmental Consents. No approval, authorization, consent, order
---------------------
or other action of, or filing with, any governmental authority or administrative
agency is required in connection with the execution and delivery by HMI of this
Agreement or the consummation of the transactions contemplated hereby, other
than those of the FCC.
4.4 Title to Assets. Except as otherwise set forth on Schedule 4.4
---------------- ------------
and for HMI Permitted Liens (as defined herein), HMI is the sole and exclusive
legal owner of all right, title and interest in, and has good and marketable
title to, all of the HMI Transferred Assets, free and clear of liens, claims and
encumbrances. As used herein, "HMI Permitted Liens" shall mean, in each case
----------------------
with respect to the HMI Transferred Assets, (i) liens for current taxes and
other governmental charges not yet due and payable, (ii) mechanics' liens and
other similar liens arising in the ordinary course that will be discharged prior
to Closing, (iii) statutory landlord's liens arising in the ordinary course, and
(iv) with respect to real property, liens that do not materially detract from,
or materially interfere with, the present use of the properties subject thereto
or materially affect the marketability of the property subject thereto.
4.5 Real Estate.
-----------
(a) HMI has a valid, binding and enforceable leasehold interest, free
and clear of liens (other than HMI Permitted Liens), claims, encumbrances,
subleases or
12
other restrictions, in and to the real estate on which the operations of the
Seattle Stations are conducted and the buildings, structures and improvements
situated thereon (the "HMI Real Estate"). A true, complete and correct copy of
------------------
the leases evidencing such interests has been furnished to HMI.
(b) HMI has not received any notice of, and has no actual knowledge
of, any material violation of any zoning, building, health, fire, water use or
similar statute, ordinance, law, regulation or code in connection with the
leasehold interest in the HMI Real Estate. To the knowledge of HMI, no factor
condition exists which would result in the termination or impairment of access
of the Seattle Stations to the HMI Real Estate or discontinuation of necessary
sewer, water, electrical, gas, telephone or other utilities or services.
(c) To the knowledge of HMI, no Hazardous Material exists in any structure
located on, or exists on or under the surface of, any of the HMI Real Estate
which is in material violation of Environmental Law.
4.6 Condition of Assets. All of the HMI Transferred Assets viewed as
--------------------
a whole and not on an asset by asset basis are in good condition and working
order, ordinary wear and tear excepted, and are suitable for the uses for which
intended, free from any known defects except such minor defects as do not
substantially interfere with the continued use thereof.
4.7 Governmental Licenses. Schedule 4.7 lists and accurately
----------------------
describes all of the Seattle Governmental Licenses necessary for the lawful
ownership and operation of the Seattle Stations and the conduct of their
business, except where the failure to hold such Governmental License would not
have a material adverse effect on the Seattle Stations. HMI has furnished to
PBI true and accurate copies of all of the Seattle Governmental Licenses. Each
such Governmental License is in full force and effect and is valid under
applicable federal, state and local laws; the Seattle Stations are being
operated in compliance in all material respects with the Act and all rules,
regulations and policies of the FCC; and, to the knowledge of HMI, no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) is reasonably likely to result in the
revocation or termination of any Governmental License or the imposition of any
restriction of such a nature as might adversely affect the ownership or
operation of the Seattle Stations as now conducted, except for proceedings of a
legislative or rule-making nature intended to affect the broadcasting industry
generally. The Seattle Stations, their physical facilities, electrical and
mechanical systems and transmitting and studio equipment are being operated in
all material respects in accordance with the specifications of the Seattle
Governmental Licenses. The Seattle Governmental Licenses are unimpaired by any
act or omission of HMI or any of HMI's officers, directors or employees and HMI
has fulfilled and performed all of its obligations with respect hereto and has
full power and authority thereunder. No application, action or proceeding is
pending for the renewal or modification of any of the Seattle
13
Governmental Licenses. No event has occurred which, individually or in the
aggregate, and with or without the giving of notice or the lapse of time or
both, would constitute ground for revocation thereof and would have a materially
adverse effect on the business or financial conditions of the Seattle Stations.
4.8 Taxes. Other than taxes imposed upon,the income of HMI (as to
-----
which no representation is made), all tax reports and returns required to be
filed by HMI relating to the HMI Transferred Assets or operations (including
sales, use, property and employment taxes) have been filed with the appropriate
federal, state and local governmental agencies, and there have been paid all
taxes, penalties, interest, deficiencies, assessments or other charges due as
reflected on the filed returns or claimed to be due by such federal, state or
local taxing authorities (other than taxes, deficiencies, assessments or claims
which are being contested in good faith and which in the aggregate are not
material). There are no examinations or audits pending or unresolved
examinations or audit issues with respect to HMI's state or local tax returns.
All additional taxes, if any, assessed as a result of such examinations or
audits have been paid. There are no pending claims or proceedings relating to,
or asserted for, taxes, penalties, interest, deficiencies or assessments against
the HMI Transferred Assets.
4.9 Litigation. There is no order of any court, governmental agency
----------
or authority and no complaint, notice of violation, action, suit, proceeding or
investigation, judicial, administrative or otherwise, of which HMI has knowledge
that is pending or threatened against or affecting the Seattle Stations which,
if adversely determined, might materially and adversely affect the business,
operations, properties, assets or conditions (financial or otherwise) of the
Seattle Stations or which challenges the validity or propriety of any of the
transactions contemplated by this Agreement.
4.10 Reports. HMI has duly filed all reports required to be filed by
-------
law or applicable rule, regulation, order, writ or decree of any court,
governmental commission, body or instrumentality and has made payment of all
charges and other payments, if any, shown by such reports to be due and payable,
except where the failure to so file or make payment would not have a material
adverse effect upon the operations of the Seattle Stations. All reports
required to be filed by HMI with the FCC with respect to the Seattle Stations
have been filed, except where the failure to so file would not materially and
adversely affect the business, operations, properties, assets or conditions
(financial or otherwise) of the Seattle Stations or which challenges the
validity or propriety of any of the transactions contemplated by this Agreement.
Such reports and disclosures are complete and accurate in all material respects.
14
4.11 Employee Matters.
----------------
(a) Schedule 4.11 sets forth true and accurate descriptions of the
-------------
employee benefit plans for employees of the Seattle Stations. Schedule 4.11
--------------
contains a list of all of the Seattle Stations' employees of HMI as of the date
hereof, each such employee's title or capacity in which employed, and such
employee's annual salary or wages.
(b) There are no labor disputes of a material nature pending between
HMI, on the one hand, and any of the employees of the Seattle Stations, on the
other hand, and there are no known organizational efforts presently being made
involving any of such employees. The Seattle Stations have complied in all
material respects with all laws relating to the employment of labor, including
any provisions thereof relating to wages, hours, collective bargaining and the
payment of social security and other taxes, and HMI is not liable for any
material arrearages of wages or any taxes or penalties for failure to comply
with any of the foregoing.
(c) HMI has, and on the Time Brokerage Date will have, paid when due
all salaries, bonuses, commissions and deferred compensation expenses in
connection with the employees of the Seattle Stations for all periods prior to
the Time Brokerage Date and has or will have on such date withheld and paid over
to the proper tax collecting agencies when due all taxes required to be withheld
from or paid with respect to such payments for all periods through the payroll
date ended most recently prior to the Time Brokerage Date.
(d) Other than scheduled anniversary raises consistent with prior
practice, from the date hereof no increases in compensation to employees will
occur or become due at any time.
(e) Schedule 4.11 sets forth a description of all termination or
-------------
severance benefits which HMI is obligated to pay to any of the Seattle Stations'
employees, including any such benefits set forth in employment agreements or
employee policy manuals.
4.12 Contracts and Agreements. Schedule 1.2(b) contains a list,
------------------------- ----------------
complete and accurate in all material respects, of all contracts and agreements
to which the Seattle Stations are bound at the date hereof, excluding contracts
that may be cancelled without penalty upon 30 days or less notice (collectively
the "HMI Material Contracts"). The Seattle Stations are not in default with
------------- -----------
respect to any of the HMI Material Contracts contained on Schedule 1.2(b)
--------------
hereto, and, as of the Time Brokerage Date, the Seattle Stations will have paid
all sums and performed all obligations under the HMI Material Contracts included
on Schedule 1(b) which are required to be paid or performed prior to the Time
- - ----------------
Brokerage Date. True and complete copies of the HMI Material Contracts have
been delivered to PBI on or prior to the date hereof.
15
4.13 Intangible Property. Schedule 4.13 contains a complete list of
------------------- -------------
all Intangible Property used in the operation of the Seattle Stations (whether
owned , leased or licensed by HMI). Except as set forth on Schedule 4.13, HMI
-------------
has, and after the Closing, PBI will have the right to use such Intangible
Property, free and clear of any royalty or other payment obligations. HMI's
use of the Intangible Property does not conflict with, violate or infringe upon
any rights of any other person or entity with respect to such Intangible
Property and HMI has not received any notice of any such claimed conflict,
violation or infringement.
4.14 Barter Transactions. HMI acknowledges that it has entered into
-------------------
certain contracts and agreements in the ordinary course of its business which
obligate it to provide advertising time on the Seattle Stations in exchange for
goods or services (collectively, the "HMI Barter Agreements"). Schedule 4.14
------------------------- -------------
sets forth a true, accurate and complete copy of HMI's internally generated
barter report dated February __, 1996 which includes a description of the goods
and services to be received under such agreements ("HMI Barter Receivables").
--------------------------
If the amount of the HMI Barter Receivables as of the Time Brokerage Date is
less than the amount of HMI's obligations thereunder, then the amount of such
difference shall be paid to PBI in cash at the Closing. HMI represents and
warrants that as of the close of business on the Time Brokerage Date, the HMI
Barter Agreements will not require HMI to provide any consideration other than
advertising time on the Seattle Stations.
4.15 Third Party Consents. By the Closing Date, HMI will have
--------------------
obtained all consents from any person or entity (other than the Final Order from
the FCC) which are required in connection with the execution and delivery by HMI
of this Agreement and the consummation of the transactions contemplated hereby,
which such consents are described on Schedule 4.15, except where the failure to
-------------
obtain such consent has been waived by PBI on or prior to the Closing Date.
4.16 Financial Statements. HMI has delivered true, complete and
--------------------
correct copies of the unaudited results of operations of the Seattle Stations
for the years ended December 31, 1994 and 1995 and the two months ended February
29, 1996 (collectively the "HMI Station Financial Statements"). The HMI Station
Financial Statements have been prepared in conformity with generally accepted
accounting principles and present fairly in all material respects the results of
operations of the Seattle Stations for the periods presented.
4.17 Qualification of HMI. Except as disclosed on Schedule 4.17, HMI
-------------------- -------------
does not have any knowledge of any facts or proceedings which are reasonably
likely to disqualify itunder the Act, the rules and regulations promulgated
thereunder, and the policies of the FCC in respect thereof, from acquiring or
operating the New Orleans Stations or would otherwise cause the FCC not to
approve the assignment of the New Orleans Governmental Licenses to HMI.
16
4.18 Finders and Brokers. All negotiations relating to this Agreement
-------------------
and the transactions contemplated herein have been carried on by HMI directly
with PBI and without the intervention of any other person as a result of any act
of HMI or its representatives in such a manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or other like payment.
4.19 Insurance. The insurable properties relating to the business of
---------
the Seattle Stations and the conduct of the business of the Seattle Stations
are, and will be until the Closing, in the reasonable judgment of HMI,
adequately insured. Schedule 4.19 identifies all insurance policies currently
-------- ----
maintained by HMI on the Seattle Stations, all which shall remain in effect
until the Closing.
4.20 Accuracy of Information Furnished. No statement by HMI contained
---------------------------------
in this Agreement or in any Schedule or Exhibit hereto contains any material
untrue statement of a material fact, or omits to state any material fact which
is necessary to make the statements contained herein, in light of the
circumstances under which they were made, not materially misleading.
4.21 Conduct of Business in Ordinary Course. Between February 29,
--------------------------------------
1996 and the date hereof, HMI has conducted the business of the Seattle Stations
only in the ordinary course and substantially consistent with past practice and
has not:
(a) suffered any material adverse change in the business, assets,
properties, financial condition or prospects of the Seattle Stations, including
any damage, destruction or loss affecting the Seattle Stations' assets;
(b) except in the ordinary course of business, and substantially
consistent with past practices, made any material increase in compensation
payable or to become payable to any of the employees of the Seattle Stations; or
(c) made any sale, assignment, lease or other transfer of any of the
Seattle Stations' properties other than in the normal and usual course of
business and substantially consistent with past practices.
5. CERTAIN COVENANTS AND AGREEMENTS.
--------------------------------
5.1 Access. Each of HMI and PBI will take all action reasonably
------
necessary to enable the other, its counsel, accountants and other
representatives to discuss the affairs, properties, business, operations and
records of the Transferred Assets at such times and as often as HMI or PBI (as
the case may be) may reasonably request with executives, independent
accountants, engineers and counsel of the other party. In the event that the
Closing does not occur and this Agreement is terminated, each party shall keep
in confidence, and shall cause its counsel, accountants and other
representatives to keep in, confidence, and shall not use or disclose to others,
all
17
information provided hereunder to it, except such information as is in the
public domain.
5.2 Best Efforts. Each of PBI and HMI shall take all reasonable
------------
action necessary to consummate the transactions contemplated by this Agreement
and will use all necessary and reasonable means at its disposal to obtain all
necessary consents and approvals of other persons and governmental authorities
required to enable it to consummate the transactions contemplated by this
Agreement; provided, however, nothing herein shall require the expenditure or
payment of monies or the giving of any other consideration by either party in
order to obtain any such consent. Each of HMI and PBI acknowledges and agrees
that it shall pay all costs, fees (other than with respect to FCC filing fee
which shall be shared equally by the parties hereto as provided hereinabove) and
expenses incurred by it in obtaining such necessary consents and approvals to
transfer the HMI Transferred Assets and PBI Transferred Assets, respectively.
Each party shall make all filings, applications, statements and reports to all
governmental agencies or entities which are required to be made prior to the
Closing Date by or on its behalf pursuant to any statute, rule or regulation in
connection with the transactions contemplated by this Agreement, and copies of
all such filings, applications, statements and reports shall be provided to the
other.
5.3 Public Announcements. Prior to the Closing Date, all notices to
--------------------
third parties and other publicity relating to the transaction contemplated by
this Agreement shall be jointly planned and agreed to by PBI and HMI; provided,
however, each of HMI and PBI shall be entitled to make such disclosure in its
sole discretion as may be required by any applicable governmental regulations.
5.4 Employees of the Stations.
-------------------------
(a) Except as contemplated by the Time Brokerage Agreements, as of the
Time Brokerage Date, HMI will offer employment to the employees of the New
Orleans Stations, and PBI will offer employment to the employees of the Seattle
Stations. Each of HMI and PBI will continue the provision of medical and dental
health benefits to the employees of the Seattle Stations and New Orleans
Stations, respectively, through March 31, 1996. In the event that on and after
the Time Brokerage Date, either HMI or PBI terminates the employment (other than
"for cause") of any employee of the New Orleans Stations or Seattle Stations,
respectively, HMI or PBI (as the case may be) shall provide a minimum of four
weeks severance pay to such terminated employee.
(b) Except as contemplated by the Time Brokerage Agreements, for a
period commencing on the Time Brokerage Date and continuing for one year after
the Closing Date, neither HMI nor PBI will directly or indirectly solicit for
employment any of the employees of the Seattle Stations or the New Orleans
Stations, respectively.
18
5.5 Maintenance of Business. Between the date of this Agreement and
-----------------------
the Closing, each party shall conduct the business of the Stations and use the
Transferred Assets only in the ordinary course of business, consistent with past
practices, which shall include compliance in all respects with all laws,
regulations and administrative orders of any federal, state or local
governmental authority that are applicable to each party with respect to the
Transferred Assets or the operation of the Stations, with the intent of
preserving the ongoing operations of the Stations and the Transferred Assets.
Without limiting the generality of the foregoing, and in each case subject to
the terms of the Time Brokerage Agreements:
(a) Each party shall: (i) maintain the Transferred Assets in their
present condition (reasonable wear and tear in normal use excepted); (ii)
remove, cure and correct prior to the Closing any violations under applicable
statutes, rules or regulations that render (or if unremedied would render)
inaccurate such party's representations and warranties contained in this
Agreement or in any certificate delivered by such party pursuant to this
Agreement; (iii) maintain its existing insurance coverage on the Stations and
the Transferred Assets; and (iv) maintain its books and records in the usual and
ordinary manner, on a basis consistent with prior periods.
(b) Neither party shall, without the other party's prior written
consent (which shall not unreasonably be withheld or delayed) create, assume or
permit to exist any lien upon the Transferred Assets, except for Permitted Liens
or liens in existence on the date of this Agreement which will be removed or
prior to Closing D ate.
(c) Neither party shall sell or agree to sell or otherwise dispose of
any of the Transferred Assets, unless such sale or disposal occurs in the
ordinary course of business, consistent with past practices and such Transferred
Assets are replaced with similar assets of equal or greater value and utility.
(d) Each party shall operate the Stations in all respect in accordance
with the Governmental Licenses, and all applicable rules and regulations of the
FCC and all other applicable laws, regulations, rules and orders. Each party
shall use its reasonable best efforts not to cause or permit any of the
Governmental Licenses to expire, be surrendered, adversely modified or otherwise
terminated.
5.6 Confidentiality.
---------------
(a) Each party shall each keep confidential and not directly or
indirectly reveal, report, publish, disclose or transfer any information
obtained by it with respect to the other in connection with this Agreement and
the negotiations preceding this Agreement (the "Confidential Information"), and
---------------------------
each will use such Confidential Information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return to the
other, without retaining any copies thereof, any
19
schedules, documents or other written information obtained from the other in
connection with this Agreement and the transactions contemplated hereby and
shall cause all of its officers, employees, agents, accountants, attorneys and
other representatives to whom it may have disclosed such Confidential
Information to do the same. Notwithstanding the foregoing limitation, neither
party shall be required to keep confidential or return any Confidential
Information that (i) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party, (ii) is or
becomes publicly known through no fault of the receiving party of its agents,
(iii) is required to be disclosed under state or federal securities laws, the
FCC rules and regulations or pursuant to an order or request of a judicial or
governmental authority (provided the other party is given reasonable prior
notice), and (iv) is developed by the receiving party independently of the
disclosure by the disclosing party.
(b) Because of the unique nature of the Confidential Information,
each party understands and agrees that the other party will suffer irreparable
harm if one party fails to comply with any of its obligations under this
Section 5.6 and that monetary damages will be inadequate to compensate the
- - -----------
other party for any such breach. Accordingly, each party agrees that the
other party will, in addition to any other remedies available to it at law
or in equity, be entitled in injunctive relief to enforce the terms of this
Section.
6. CONDITIONS TO HMI'S CLOSING.
---------------------------
All obligations of HMI under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that HMI may, in its sole discretion, waive any or all of such
conditions (except for the requirement of FCC consent) in whole or in part:
6.1 Representations, Etc. PBI shall have performed in all material
---------------------
respects the covenants and agreements contained in this Agreement that are to be
performed by it at or prior to the Closing, and the representations and
warranties of PBI contained in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though made at
such time, except as contemplated or permitted by this Agreement.
6.2 Consents. All consents and approvals from the FCC and
--------
governmental agencies (other than the Final Order) and (unless the failure to
obtain consent would not have a material adverse effect on the New Orleans
Stations) from other third parties required to consummate the transactions
contemplated by this Agreement shall have been obtained without material cost or
other materially adverse consequence to HMI and shall be in full force and
effect.
6.3 No Adverse Litigation. No order or temporary, preliminary,or
----------------------
permanent injunction or restraining order shall have been entered and no action,
suit or other legal
20
or administrative proceeding by any court or governmental authority, agency or
other person shall be pending or threatened on the Closing Date which may have
the effect of (i) making any of the transactions contemplated hereby illegal,
(ii) materially adversely affecting the value of the PBI Transferred Assets,
other than any of the foregoing which affects the radio broadcasting industry
generally or (iii) making HMI liable for the payment of damages to any person as
a result of the transactions contemplated hereby.
6.4 Time Brokerage Agreement. The Time Brokerage Agreement with
-------------------------
respect to the New Orleans Stations shall on the Closing Date be in full force
and effect; provided, however, this condition to HMI's obligation to close shall
not be applicable to any termination by PBI of such Time Brokerage Agreement due
to a "Payment Default" (as defined in such Time Brokerage Agreement) or other
------------------
default by HMI.
6.5 Closing Deliveries. HMI shall have received each of the documents
-------------------
or items required to be delivered to it pursuant to Section 8.1 hereof.
-----------
6.6 No Material Adverse Change. Since the date hereof, there shall not
---------------------------
have occurred (i) any failure of any of the New Orleans Stations for any reason
whatsoever to transmit in using its licensed facilities at full power for a
consecutive period of 48 hours or more (unless any other unaffiliated station in
the New Orleans, Louisiana Arbitron "metro survey area" is not broadcasting for
the same reason); (ii) any material adverse change in the assets of the New
Orleans Stations (including, without limitation, damage, destruction or loss to
any of their assets, unless covered by insurance); (iii) the filing of a
petition in bankruptcy by or against PBI; or (iv) the termination, expiration,
revocation or imposition of a materially adverse condition on the grant of
consent to any of the Assignment Applications.
6.7 Noncompetition Agreement. HMI and PBI shall have entered into
-------------------------
the Noncompetition Agreement in the form of Exhibit C hereto.
7. CONDITIONS TO PBI'S CLOSING.
---------------------------
All obligations of PBI under this Agreement shall be subject to
the fulfillment at or prior to the Closing of the following conditions, it being
understood that PBI may, in its sole discretion, waive any or all of such
conditions (except for the requirement of FCC consent) in whole or in part:
7.1 Representations, Etc. HMI shall have performed in all material
--------------------
respects the covenants and agreements contained in this Agreement that are to be
performed by it at or prior to the Closing, and the representations and
warranties of HMI contained in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though made at
such time, except as contemplated or permitted by this Agreement.
21
7.2 Consents. All consents and approvals from the FCC and
--------
governmental agencies (other than the Final Order) and (unless the failure to
obtain consent would not have a material adverse effect on the Seattle Stations)
from other third parties required to consummate the transactions contemplated by
this Agreement shall have been obtained without material cost or other
materially adverse consequence to PBI and shall be in full force and effect.
The FCC shall have issued a new station license for KRPM(AM) reflecting the
parameters set forth in the application for direct measurement of power filed in
FCC File No. BZ-960220AC, without any additions materially adverse to PBI.
7.3 No Adverse Litigation. No order or temporary, preliminary or
----------------------
permanent injunction or restraining order shall have been entered and no action,
suit or other legal or administrative proceeding by any court or governmental
authority, agency or other person shall be pending or threatened on the Closing
Date which may have the effect of (i) making any of the transactions
contemplated hereby illegal, (ii) materially adversely affecting the value of
the HMI Transferred Assets, other than any of the foregoing which affects the
radio broadcasting industry generally or (iii) making PBI liable for the payment
of damages to any person as a result of the transactions contemplated hereby.
7.4 Time Brokerage Agreements. The Time Brokerage Agreement with
--------------------------
respect to the Seattle Stations shall on the Closing Date be in full force and
effect; provided, however, this condition to PBI's obligation to close shall not
be applicable to any termination by HMI of the Time Brokerage Agreement due to a
"Payment Default" (as defined in the Time Brokerage Agreement) or other default
- - -------- --------
by PBI.
7.5 Closing Deliveries. PBI shall have received each of the
------------------
documents or items required to be delivered to it pursuant to
Section 8.2 hereof.
- - -----------
7.6 No Material Adverse Change. Since the date hereof, there shall
---------------------------
not have occurred (i) any failure of the Seattle Stations for any reason
whatsoever to transmit in using its licensed facilities at full power from a
consecutive period of 48 hours or more (unless any other unaffiliated station in
Seattle, Washington Arbitron "metro survey area" is not broadcasting for the
same reason); (ii) any material adverse change in the assets of the Seattle
Stations (including, without limitation, damage, destruction or loss to any of
their assets, unless covered by insurance); (iii) the filing of a petition in
bankruptcy by or against HMI; or (iv) the termination, expiration, revocation or
imposition of a materially adverse condition on the grant of consent to any of
the Assignment Applications.
7.7 Noncompetition Agreement. HMI and PBI shall have entered into
------------------------
the Noncompetition Agreement in the form of Exhibit D hereto.
22
8. DOCUMENTS TO BE DELIVERED AT CLOSING.
-------------------------------------
8. 1 Closing Documents To Be Delivered By PBI.
----------------------------------------
At the Closing, PBI shall deliver to HMI (in form and substance
reasonably satisfactory to HMI):
(a) One or more assignments assigning to HMI the PBI Governmental
Licenses, as HMI may request;
(b) A bill of sale conveying to HMI all of the Station Equipment;
(c) One or more assignment and assumption agreements by which PBI
assigns the PBI Material Contracts to HMI, and HMI assumes the Assumed
Liabilities and agrees to perform, from and after the Closing Date, all of the
Assumed Liabilities, together with each consent obtained by PBI necessary for
the assignments of such contracts and one or more assignments conveying to HMI
any equity interests owned by PBI related to the New Orleans Stations' broadcast
towers;
(d) Certified copies of resolutions of PBI's Board of Directors and
shareholders authorizing the execution, delivery and performance of this
Agreement;
(e) One or more assignments conveying to HMI the Intangible Property
and Business Records;
(f) I A certificate executed by PBI attesting to PBI's compliance with
the matters set forth in Section 6. 1, and Section 6.3;
-------------- ------------
(g) The Business Records;
(h) Appointment of HMI to collect the Accounts Receivable pursuant to
Section 13;
- - -----------
(i) A general assignment by PBI to HMI of all the PBI Transferred
Assets to be conveyed hereunder, other than the Excluded Assets;
(i) An opinion of counsel to PBI, dated as of the Closing, in form
reasonably satisfactory to HMI; and
(k) Such other instruments and further assurances of conveyance and
such other certificates or other documentation as HMI may reasonably request.
23
8.2 Closing-Documents To Be Delivered by HMI.
----------------------------------------
At the Closing, HMI shall deliver to PBI (in form and substance
reasonably satisfactory to PBI):
(a) One or more assignments assigning to PBI the HMI Governmental
Licenses, as PBI may request;
(b) A bill of sale conveying to PBI all of the Station Equipment;
(c) One or more assignment and assumption agreements by which HMI
assigns the HMI Material Contracts to PBI, and PBI assumes the Assumed
Liabilities and agrees to perform, from and after the Closing Date, all of the
Assumed Liabilities, together with each consent obtained by HMI necessary for
the assignments of such contracts;
(d) Certified copies of resolutions of HMI's Board of Directors and
shareholders authorizing the execution, delivery and performance of this
Agreement;
(e) One or more assignments conveying to PBI the Intangible Property
and Business Records;
(f) A certificate executed by HMI attesting to HMI's compliance with
the matters set forth in Section 7.1 and Section 7.3;
----------- -----------
(g) The Business Records;
(h) Appointment of PBI to collect the Accounts Receivable pursuant to
Section 13;
- - -----------
(i) A general assignment by HMI to PBI of all the HMI Transferred
Assets to be conveyed hereunder, other than the Excluded Assets;
(j) An opinion of counsel to HMI, dated as of the Closing, in form
reasonably satisfactory to PBI; and
(k) Such other instruments and further assurances of conveyance and
such other certificates or other documentation as PBI may reasonably request.
9. SURVIVAL.
--------
All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall be deemed to have been relied
upon by the parties hereto, and shall survive the Closing; provided, however,
that notice of any claim, whether made under the indemnification provisions
hereof or otherwise, based
24
on a breach of a representation, warranty, covenant or agreement must be given
within [one year] from the Closing Date or, in the case of representations or
warranties dealing with tax matters, within 60 days after the expiration of the
applicable tax statute of limitations; and provided, further, that
representations as to the title of the Transferred Assets shall survive
indefinitely. The representations and warranties hereunder shall not be
affected or diminished by any investigation at any time by or on behalf of the
party for whose benefit such representations and warranties were made. All
statements contained herein or in any certificate, exhibit, list or other
document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties. No
representation or warranty contained herein shall be deemed to be made at any
time after the date of this Agreement or, if made in a certificate, the date of
such certificate.
10. INDEMNIFICATION OF HMI.
----------------------
Subject to the limitations set forth in Sections 9 and 12, PBI shall
---------- --
indemnify and hold HMI harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by HMI because of the breach of any
written representation, warranty, agreement or covenant of PBI contained in this
Agreement or any document, certificate or agreement executed in connection with
this Agreement;
(b) any and all liabilities, obligations, claims and demands arising
out of the ownership and operation of the New Orleans Stations at all times
prior to the Closing Date (other than the HMI Assumed Liabilities and such
liabilities incurred by HMI between the Time Brokerage Date and the Closing Date
pursuant to its operation of the New Orleans Stations under the Time Brokerage
Agreement);
(c) any and all liabilities, obligations, claims and demands arising
out of the ownership and operation of the Seattle Stations with respect to
periods on and after the Closing Date;
(d) any employee severance claims above the amounts agreed to in
Section 5.4(a); and
- - --------------
(e) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by HMI in connection with
any action, suit, proceeding, demand, assessment or judgment incident to any
of the matters indemnified against in this Section 10.
-----------
25
11. INDEMNIFICATION OF PBI.
----------------------
Subject to the limitations set forth in Sections 9 and 12, HMI shall
---------- --
indemnify and hold PBI harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by PBI because of the breach of any
written representation, warranty, agreement or covenant of HMI contained in this
Agreement or any document, certificate or agreement executed in connection with
this Agreement;
(b) any and all liabilities, obligations, claims and demands arising
out of the ownership and operation of the Seattle Stations at all times prior to
the Closing Date (other than the PBI Assumed Liabilities and such liabilities
incurred by PBI between the Time Brokerage Date and the Closing Date pursuant to
its operation of the Seattle Stations under the Time Brokerage Agreement);
(c) any and all liabilities, obligations, claims and demands arising
out of the ownership and operation of the New Orleans Stations with respect to
periods on and after the Closing Date;
(d) any employee severance claims above the amounts agreed to in
Section 5.4(a); and
(e) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by PBI in connection with
any action, suit, proceeding, demand, assessment or judgment incident to any of
the matters indemnified against in this Section 11.
-----------
12. GENERAL RULES REGARDING INDEMNIFICATION.
---------------------------------------
The obligations and liabilities of each indemnifying party hereunder
with respect to claims resulting from the assertion of liability by the other
party or indemnified third parties shall be subject to the following terms and
conditions:
(a) Subject to Section 12(f) below, the indemnified party shall give
--------------
prompt written notice (which in no event shall exceed 30 days from the date on
which the indemnified party first became aware of such claim or assertion) to
the indemnifying party of any claim which might give rise to a claim by the
indemnified party against the indemnifying party based on the indemnity
agreements contained in Section 10 or hereof, stating the nature and basis of
----------
said claims and the amounts thereof, to the extent known;
(b) If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity
26
agreements contained in Section 10 or 11 hereof, the action, suit or proceeding
---------- --
shall, upon the written acknowledgement by the indemnifying party that it is
obligated to indemnify under such indemnity agreement, be defended (including
all proceedings on appeal or for review which counsel for the indemnified party
shall deem appropriate) by.the indemnifying party. The indemnified party shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the indemnified party's own expense unless
(A) the employment of such counsel and the payment of such fees and expenses
both shall have been specifically authorized in writing by the indemnifying
party in connection with the defense of such action, suit or proceeding, or (B)
counsel to such indemnified party shall have reasonably concluded and
specifically notified the indemnifying party that there may be specific defenses
available to it which are different from or additional to those available to the
indemnifying party or that such action, suit or proceeding involves or could
have an effect upon matters beyond the scope of the indemnity agreements
contained in Sections 10 and 11 hereof, in any of which events the indemnifying
----------- --
party, to the extent made necessary by such defenses, shall not have the right
to direct the defense of such action, suit or proceeding on behalf of the
indemnified party. In the latter such case only that portion of such fees and
expenses of the indemnified party's separate counsel reasonably related to
matters covered by the indemnity agreements contained in Section 10 or 11 hereof
---------- --
shall be borne by the indemnifying party. The indemnified party shall be kept
fully informed of such action, suit or proceeding at all stages thereof whether
or not it is represented by separate counsel.
(c) The indemnified party shall make available to the indemnifying
party and its attorneys and accountants all books and records of the indemnified
party relating to such proceedings or litigation and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(d) The indemnified party shall not make any settlement of any claims
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld or delayed.
(e) If any claims are made by third parties against an indemnified
party for which an indemnifying party would be liable, and it appears likely
that such claims might also be covered by the indemnified party's insurance
policies, the indemnified party shall make a timely claim under such policies
and to the extent that such party obtains any recovery from such insurance, such
recovery shall be offset against any sums due from an indemnifying party (or
shall be repaid by the indemnified party to the extent that an indemnifying
party has already paid any such amounts). The parties acknowledge, however,
that if an indemnified party is self-insured as to any matters, either directly
or through an insurer which assesses retroactive premiums based on loss
experience, then to the extent that the indemnified party bears the economic
burden of any claims through self-insurance or retroactive premiums or insurance
ratings, the indemnifying party's obligation shall only be reduced by any
insurance
27
recovery in excess of the amount paid or to be paid by the indemnified party
in insurance premiums.
(f) No claim or indemnification shall be made unless and until the
indemnified party has first incurred damages, losses and expenses for which it
would be entitled to be indemnified hereunder of at least $25,000; provided,
however, if such damages, losses and expenses are incurred by the indemnified
party, the indemnifying party shall be liable for the entire amount of such
damages, losses and expenses.
(g) Except as herein expressly provided, the remedies provided in
Sections 10 through 12 hereof shall be the exclusive remedy of the parties
-- --
hereto for damages, losses and expenses arising after the Closing Date, other
than for any such damages, losses and expenses due to the fraudulent or willful
misconduct of the indemnifying party. With respect to claims of fraudulent or
willful misconduct, the indemnified party shall not be precluded from asserting
any other rights or remedies against any other party hereto.
13. FAILURE TO CLOSE BECAUSE OF DEFAULT.
-----------------------------------
In the event that the Closing is not consummated by virtue of a
material default made by a party in the observance or in the due and timely
performance of any of its covenants or agreements herein contained
("Default"), the parties shall have and retain all of the rights afforded
them at law or in equity by reason of that Default. In addition, PBI and
HMI acknowledge that the Transferred Assets and the transactions contemplated
hereby are unique, that a failure by PBI or HMI to complete such transactions
will cause irreparable injury to the other, and that actual damages for any
such failure may be difficult to ascertain and may be inadequate.
Consequently, PBI and HMI agree that each shall be entitled, in the event of
a Default by the other, to specific performance of any of the provisions of
this Agreement in addition to any other legal or equitable remedies to
which the non-defaulting party may otherwise be entitled. In the event any
action is brought, the prevailing party shall be entitled to recover court
costs, arbitration expenses and reasonable attorneys' fees.
14. TERMINATION AND RESCISSION RIGHTS.
---------------------------------
14.1 Termination Prior to Closing. This Agreement may be terminated
----------------------------
by either HMI or PBI (as set forth below), if either such party is not then in
Default, upon written notice to the other upon the occurrence of any of the
following:
(a) By either HMI or PBI, if the Closing has not occurred on or before
March 31, 1997, or such later date as HMI and PBI shall mutually agree;
(b) By the non-defaulting party, if the other party Defaults and such
Default has not been cured within 30 days of written notice of such Default by
the other party; or
28
(c) By mutual consent of PBI and HMI.
14.2 Rescission of Purchase and Sale. In the event the parties elect
-------------------------------
to close prior to the time the FCC Order has become a Final Order, HMI and PBI
shall enter into rescission agreement to be mutually agreed upon which provides
for unwinding the transaction in the event a Final Order is not obtained.
15. BOOKS AND RECORDS TAX MATTERS.
------------------------------
(a) Books and Records. Each party agrees that it will cooperate with
-----------------
and make available (or cause to be made available) to the other party, during
normal business hours, all books and records, information and employees (without
substantial disruption of employment) retained and remaining in existence after
the Closing which are necessary or useful in connection with any tax inquiry,
audit, or dispute, any litigation or investigation or any other matter requiring
any such books and records, information or employees for any reasonable business
purpose (a "Permitted Use"). The party requesting any such books and records,
--------------
information or employees shall bear all of the out-of-pocket costs and expenses
reasonably incurred in connection with providing such books and records,
information or employees. All information received pursuant to this one
Section 15 (including duplicate copies of the Business Records retained by the
- - ----------
other party pursuant to Section 15(b) hereof) shall be kept confidential
-------------
pursuant to Section 5.6 by the party receiving it, except to the extent that
-----------
disclosure is reasonably necessary in connection with any Permitted Use.
(b) Cooperation Records Retention. Each party shall (i) provide the
------------------------------
other with such assistance as may reasonably be requested by either of them in
connection with the preparation of any return, audit or other examination by any
taxing authority or judicial or administrative proceedings relating to liability
for any taxes, (ii) retain and provide the other with any records or other
information that may be relevant to such return, audit or examination,
proceeding or determination, and (iii) provide the other with any final
determination of any such audit or examination, proceeding, or determination
that affects any amount required to be shown on any tax return of the other for
any period. Without limiting the generality of the foregoing, each party shall
retain (or cause to be retained), until the applicable statutes of limitations
(including any extensions) have expired, copies of all tax returns, supporting
work schedules, and other records or information that may be relevant to such
returns for all tax periods or portions thereof ending on or before the Closing.
16. MISCELLANEOUS PROVISIONS.
------------------------
16.1 Expenses. Except as otherwise expressly provided herein, each party
--------
shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. If any action is brought for breach
of this Agreement or to enforce any provision of this Agreement, the prevailing
party shall be entitled to recover court costs, arbitration expenses and
reasonable attorneys' fees.
29
16.2 Prorations.
----------
(a) Subject to the terms of the Time Brokerage Agreement, all items
of income and expense arising from the operation of the New Orleans Stations
and the HMI Assumed Liabilities before the Closing Date (or, if applicable,
the Time Brokerage Date) shall be for the account of PBI and thereafter shall
be for the account of HMI. Proration of the items described below between PBI
and HMI shall be effective as of 12:01 a.m., local time, on the Closing Date
(or, if applicable, the Time Brokerage Date) and shall occur as set forth in
subsections (c) through (e) below with respect to those rights, liabilities
and obligations of PBI transferred to and assumed by HMI hereunder.
(b) Subject to the terms of the Time Brokerage Agreement, all items
of income and expense arising from the operation of the Seattle Stations and the
PBI Assumed Liabilities before the Closing Date (or, if applicable, the Time
Brokerage Date) shall be for the account of HMI and thereafter shall be for the
account of PBI. Proration of the items described below between PBI and HMI
shall be effective as of 12:01 a.m., local time, on the Closing Date (or, if
applicable, the Time Brokerage Date) and shall occur as set forth in subsections
(c) through (e) below with respect to those rights, liabilities and obligations
of HMI transferred to and assumed by PBI hereunder.
(c) Liability for state and local taxes assessed on the Transferred
Assets payable with respect to the tax year in which the effective time of
proration falls shall be prorated as between PBI and HMI on the basis of the
number of days of the tax year elapsed to but excluding such effective time,
appropriately adjusted with respect to improvements to the Transferred Assets
effected by either party after such effective time.
(d) Prepaid items and accruals such as water, electricity, telephone,
other utility and service charges, lease expenses, license fees (if any),
payments under any contracts to be assumed by HMI or PBI (as the case may be)
and accrued vacation time for the employees of the Stations shall be prorated
between PBI and HMI on the basis of the period of time to which such
liabilities, prepaid items and accruals apply. In addition to the foregoing, on
the Closing Date, HMI shall pay to PBI $400,000 to cover prepaid rent associated
with the Lodestar tower licenses identified on Schedule 1.2(b).
-------
(e) All prorations shall be made and paid in cash insofar as feasible
on or before the Closing Date. Any prorations not made on the Closing Date
shall be made no later than 90 days thereafter. PBI and HMI agree to assume,
pay and perform all costs, liabilities and expenses allocated to each of them
pursuant to this Section 16.2.
-------------
16.3 Amendment. This Agreement may be amended at any time but only by
---------
an instrument in writing signed by the parties hereto.
30
16.4 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or mailed by
certified mail, return receipt requested, or by nationally recognized "next-day"
delivery service, to the parties at the addresses set forth below (or at such
other address for a party as shall be specified by like notice), or sent by
facsimile to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder):
If to HMI:
One Galleria Tower, Suite 1500
13355 Noel Road
Dallas, Texas 75240
ATTN: Paul W. Fiddick, President--Radio Group
Fax: 214-702-7382
With a copy (which shall not constitute notice) to:
Crouch & Hallett, L.L.P.
717 North Harwood Street, Suite 1400
Dallas, Texas 75201
ATTN: Bruce H. Hallett
Fax: 214-953-3154
If to PBI:
10800 Main Street
P.O. Box 10103
Fairfax, Virginia 22030
ATTN: Alan Box, President and CEO
Fax: 703-934-1200
With a copy (which shall not constitute notice) to:
Hunton & Williams
1751 Pinnacle Drive, Suite 1700
McLean, Virginia 22102
ATTN: Joseph W. Conroy
Fax: 703-714-7410
16.5 Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the parties hereto and their respective successors, heirs and
permitted assigns. The obligations of the parties hereto may be assigned by
either party hereto to any qualified person.
31
16.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.7 Headings. The headings of the Sections of this Agreement are
--------
inserted for convenience only and shall not constitute a part hereof.
16.8 Entire Agreement. This Agreement and the documents referred to
----------------
herein contain the entire understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
16.9 Waiver. No attempted waiver of compliance with any provision or
------
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
16.10 No Third Party Beneficiaries. This Agreement is made for the
-----------------------------
benefit of the parties hereto, and no third party shall be deemed to be a third
party beneficiary thereof.
16.11 Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Delaware.
16.12 Control of the Stations
-----------------------
(a) Prior to the Closing, HMI shall not, directly or indirectly,
control, or attempt to control, the operations of the New Orleans Stations; such
operations, including complete control and supervision of all programs,
employees and policies of the New Orleans Stations, shall be the sole
responsibility of PBI.
(b) Prior to the Closing, PBI shall not, directly or indirectly,
control, or attempt to control, the operations of the Seattle Stations; such
operations, including complete control and supervision of all programs,
employees and policies of the Seattle Stations, shall be the sole responsibility
of HMI.
16.13 Bulk Sales. The parties hereto waive compliance with the
-----------
provisions'of any bulk sales law applicable to the transactions contemplated
hereby.
[signatures on following page]
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HERITAGE MEDIA, INC.
By:
-------------------------------
Douglas N. Woodrum
Executive Vice President
EZ NEW ORLEANS, INC.
By:
-------------------------------
Alan Box
President
PROFESSIONAL BROADCASTING,
INCORPORATED
By:
-------------------------------
Alan Box
President
33