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EXHIBIT 10.1.1
AGREEMENT AND PLAN OF MERGER
by and among
BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP,
BENCHMARK ACQUISITION, INC.,
BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP,
BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP,
BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP,
BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP,
JOSEPH L. MATHIAS IV,
BRUCE R. SPECTOR,
CAPSTAR BROADCASTING PARTNERS, INC.
and
BCR HOLDING, INC.
dated as of
December 9, 1996
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TABLE OF CONTENTS
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ARTICLE I THE MERGER............................................................................... 2
1.1 The Merger.................................................................................. 2
1.2 Effective Time.............................................................................. 2
1.3 Effect of the Merger........................................................................ 2
1.4 Certificate and Agreement of Limited Partnership............................................ 2
1.5 Merger Consideration; Conversion of Partnership Interests; Total Consideration.............. 3
1.6 Calculation of and Adjustments to Total Consideration....................................... 4
1.7 Dissenting Partnership Interests............................................................ 9
1.8 Payment of Merger Consideration; Deposit of Holdback Funds; and Repayment of Funded Debt....10
1.9 Partnership Books...........................................................................11
1.10 Partner Approval...........................................................................11
1.11 Pre-Closing Escrow Deposit.................................................................12
1.12 Post-Closing Escrow Deposit................................................................14
1.13 Reserve Fund; Post-Closing Adjustment to Total Consideration...............................14
1.14 Dissenting Partner Funds...................................................................15
1.15 Other Benchmark Mergers....................................................................15
1.16 Instructions on Payments...................................................................15
ARTICLE II REPRESENTATIONS AND WARRANTIES .........................................................16
2.1 Representations and Warranties Regarding Benchmark..........................................16
2.2 Representations and Warranties of Mergeco...................................................31
2.3 Representations and Warranties Regarding Fund I, Fund IV, Fund VII and Fund VIII............33
ARTICLE III COVENANTS RELATING TO CONDUCT OF BUSINESS..............................................46
3.1 Covenants of Benchmark......................................................................46
3.2 Negative Trade Balance......................................................................50
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TABLE OF CONTENTS (CONT'D)
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3.3 Environmental Site Assessments..............................................................50
3.4 Other Benchmark Mergers.....................................................................50
ARTICLE IV ADDITIONAL AGREEMENTS OF BENCHMARK......................................................50
4.1 No Solicitation of Transactions.............................................................50
4.2 Access and Information......................................................................51
4.3 Assistance..................................................................................52
4.4 Compliance With Station Licenses............................................................53
4.5 Notification of Certain Matters.............................................................53
4.6 Third Party Consents........................................................................54
4.7 Section 754 Election........................................................................54
4.8 Limited Partner Consent.....................................................................54
4.9 Consummation of Pending Transactions........................................................54
4.10 Consummation of Other Benchmark Mergers....................................................54
4.11 Withdrawal of Class A General Partners.....................................................55
4.12 Transfer of Partnership Interests..........................................................55
4.13 ERISA......................................................................................55
ARTICLE V COVENANTS OF MERGECO AND PARENT..........................................................55
5.1 Notification of Certain Matters.............................................................55
5.2 Compliance with Communications Act and HSR Act..............................................56
5.3 Station Acquisitions........................................................................56
5.4 Parent Loans................................................................................56
5.5 Benchmark Employment Agreements.............................................................56
5.6 Parent-Radioco III, Inc. Merger............................................................57
5.7 Election of Directors and Officers..........................................................57
ARTICLE VI MUTUAL COVENANTS........................................................................57
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TABLE OF CONTENTS (CONT'D)
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6.1 Application for Commission Consent..........................................................57
6.2 Control of Stations........................................................................57
6.3 Other Governmental Consents.................................................................57
6.4 Brokers or Finders..........................................................................58
6.5 Additional Agreement........................................................................58
6.6 Execution and Delivery of Transaction.......................................................58
6.7 Certain Events..............................................................................58
6.8 WDHT Budget.................................................................................58
6.9 Purchase Price Allocation...................................................................59
6.10 Richmond Sale..............................................................................59
6.11 Richmond and Norfolk Stations..............................................................59
ARTICLE VII CONDITIONS PRECEDENT...................................................................59
7.1 Conditions to Each Party's Obligations......................................................59
7.2 Conditions to Obligations of Mergeco........................................................60
7.3 Conditions to Obligations of Benchmark......................................................61
ARTICLE VIII CLOSING...............................................................................62
8.1 Closing.....................................................................................62
8.2 Actions to Occur at Closing.................................................................64
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.......................................................64
9.1 Termination.................................................................................64
9.2 Fees and Expenses...........................................................................68
9.3 Effect of Termination.......................................................................70
ARTICLE X GENERAL PROVISIONS.......................................................................72
10.1 Survival of Representations and Warranties and Covenants; Indemnification..................72
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TABLE OF CONTENTS (CONT'D)
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10.2 Knowledge..................................................................................83
10.3 Amendment amd Modification.................................................................83
10.4 Waiver of Compliance.......................................................................83
10.5 Severability...............................................................................83
10.6 Expenses and Obligations...................................................................83
10.7 Parties in Interest........................................................................83
10.8 Notices....................................................................................83
10.9 Interpretation.............................................................................84
10.10 Counterparts..............................................................................85
10.11 Entire Agreement..........................................................................85
10.12 Governing Law; Consent to Jurisdiction....................................................85
10.13 Public Announcements......................................................................85
10.14 Assignment................................................................................85
10.15 Further Assurances........................................................................86
10.16 Partner, Director, Officer and Stockholder Liability......................................86
10.17 No Waiver of Fraud........................................................................86
10.18 Specific Performance......................................................................86
10.19 Arbitration...............................................................................86
ARTICLE XI DEFINITIONS.............................................................................87
11.1 Certain Definitions........................................................................87
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of December
9, 1996 is entered into by and among Benchmark Acquisition, Inc., a Delaware
corporation ("Mergeco"), Benchmark Communications Radio Limited Partnership, a
Maryland limited partnership (including any successor thereto, "Benchmark"),
Benchmark Radio Acquisition Fund I Limited Partnership, a Maryland limited
partnership (including any successor thereto, "Fund I), Benchmark Radio
Acquisition Fund IV Limited Partnership, a Maryland limited partnership
(including any successor thereto, "Fund IV"), Benchmark Radio Acquisition Fund
VII Limited Partnership, a Maryland limited partnership (including any
successor thereto, "Fund VII"), Benchmark Radio Acquisition Fund VIII Limited
Partnership, a Maryland limited partnership (including any successor thereto,
"Fund VIII"), BCR Holding, Inc., a Delaware corporation which holds all of the
outstanding stock of Mergeco (including any successor thereto, "Parent"),
Capstar Broadcasting Partners, Inc., a Delaware corporation ("Capstar"), Bruce
R. Spector and Joseph L. Mathias IV in their capacities as Partner
Representatives and as General Partners, Grand Slam Radio Limited Partnership,
a Maryland limited partnership and Home Run Radio Limited Partnership, a
Maryland limited partnership. The obligations under this Agreement of each
party hereto shall be limited to obligations specifically applicable to such
party under the express terms of this Agreement.
RECITALS:
WHEREAS, the parties desire to effectuate a series of merger and other
transactions under which Parent (directly or through affiliates) will (i) pay
an aggregate consideration of One Hundred Sixty-Seven Million One Hundred
Thousand Dollars ($167,100,000), plus certain advancements for working capital
and capital expenditures, plus net current assets, less Funded Debt (as defined
herein) and certain acquisition indebtedness advanced to Benchmark and certain
of its subsidiaries by Parent, and subject to a series of additions,
subtractions and adjustments, all as provided in this Agreement, and (ii)
through such transactions, own or control the existing radio stations listed on
Attachment I hereto and certain other radio stations to be acquired by
Benchmark or its subsidiaries (also listed on Attachment I hereto) as
contemplated herein, as provided herein;
WHEREAS, Mergeco, upon the terms and subject to the conditions of this
Agreement and in accordance with the Maryland Revised Uniform Limited
Partnership Act ("Maryland Law") and applicable laws of the State of Delaware
("Delaware Law"), will merge with and into Benchmark (the "Merger");
WHEREAS, Parent, by its execution of this Agreement, has consented to, and
has authorized, approved and adopted, this Agreement and the transactions
contemplated hereby;
WHEREAS, the general partners of Benchmark (the "General Partners") have
determined that the Merger is in the best interests of Benchmark and its
limited partners (the "Limited Partners") and have authorized, adopted and
approved this Agreement and the transactions contemplated hereby;
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WHEREAS, simultaneously with the execution of this Agreement, each of Fund
I, Fund IV, Fund VII and Fund VIII has entered into the Fund I Merger
Agreement, the Fund IV Merger Agreement, the Fund VII Merger Agreement and the
Fund VIII Merger Agreement, respectively, with Benchmark Sub I, Inc. ("Sub I"),
Benchmark Sub IV, Inc. ("Sub IV"), Benchmark Sub VII, Inc. ("Sub VII"), and
Benchmark Sub VIII, Inc. ("Sub VIII"), respectively;
WHEREAS, Benchmark has determined that each of the Other Benchmark Mergers
is in the best interests of the Fund I Limited Partners, the Fund IV Limited
Partners, the Fund VII Limited Partners and the Fund VIII Limited Partners
(collectively, the "Fund Limited Partners") and has authorized, adopted and
approved each of the Other Benchmark Merger Agreements and will recommend
approval of this Agreement and the Other Benchmark Mergers by the Fund Limited
Partners;
NOW THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
covenant and agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Maryland Law and Delaware Law,
at the Effective Time (as defined in Section 1.2), Mergeco shall be merged
with and into Benchmark. As a result of the Merger, the separate existence of
Mergeco shall cease and Benchmark shall continue as the surviving partnership
of the Merger (including any successor thereto, the "Surviving Partnership").
The name of the Surviving Partnership shall be "Benchmark Communications Radio
Limited Partnership."
1.2. EFFECTIVE TIME. The Merger shall be consummated, as and when
provided in Section 8.1 hereof, by filing a Certificate of Merger with the
Maryland State Department of Assessments and Taxation and the Secretary of
State of the State of Delaware in such form as is required by, and executed in
accordance with the relevant provisions of, Maryland Law and Delaware Law (the
date and time of the completion of such filings being the "Effective Time").
1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Maryland Law and
Delaware law. Without limiting the generality of the foregoing, and subject to
the applicable provisions of Maryland Law and Delaware law, at the Effective
Time, all the property, rights, privileges, powers and franchises of Mergeco
and Benchmark shall vest in the Surviving Partnership, and all debts,
liabilities and duties of Mergeco and Benchmark shall become the debts,
liabilities and duties of the Surviving Partnership.
1.4. CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP. At the
Effective Time, the Amended and Restated Agreement of Limited Partnership of
Benchmark, as in effect immediately prior to the Effective Time, shall (subject
to the changes contemplated by the Merger, including, without limitation, any
amendments necessary to substitute a new single General Partner and to remove
Limited Partners as contemplated by Section 1.5) be the partnership agreement
of the Surviving Partnership, and the Certificate of Limited Partnership of
Benchmark, as in effect
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immediately prior to the Effective Time, shall be the Certificate of Limited
Partnership of the Surviving Partnership.
1.5. MERGER CONSIDERATION; CONVERSION OF PARTNERSHIP INTERESTS; TOTAL
CONSIDERATION. At the Effective Time, by virtue of the Merger and without any
action on the part of Mergeco, Benchmark or the holders of Partnership
Interests, the following shall occur:
(a) Subject to the other provisions of this Section 1.5, each
Limited Partnership Interest (other than the Class A Limited
Partnership Interests) and each General Partnership Interest
outstanding immediately prior to the Effective Time (other than any
Benchmark Dissenting Partnership Interests (as defined in Section
1.7)) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive
the Merger Consideration in the manner contemplated by Section 1.8.
As a result of its conversion, each converted Partnership Interest
(the "Converted Partnership Interests") shall cease to be
outstanding and shall automatically be canceled and retired.
Notwithstanding the foregoing, if between the date of this Agreement
and the Effective Time the outstanding Convertible Partnership
Interests shall have been changed into a different number of
partnership interests or a different class of partnership interests,
by reason of any subdivision, reclassification, recapitalization,
split, combination or exchange of partnership interests, the
allocation of the Merger Consideration among the Converted
Partnership Interests shall be correspondingly adjusted to reflect
such subdivision, reclassification, recapitalization, split,
combination or exchange of partnership interests. A portion of the
Merger Consideration shall be delivered to the holders of Converted
Partnership Interests at the Closing pursuant to Section 1.8. The
remainder of the Merger Consideration shall be delivered to the
holders of Converted Partnership Interests pursuant to the terms of
Section 1.12 and the Post-Closing Escrow Agreement and as
contemplated in Section 1.13 and Section 1.14. The aggregate Merger
Consideration payable to each Partner holding a Converted
Partnership Interest shall be rounded to the nearest penny.
(b) Each Class A Limited Partnership Interest shall remain
outstanding after the Merger and shall be unaffected by the Merger
and, upon consummation of the Merger, such partnership interests
shall constitute 100% of the limited partnership interests in the
Surviving Partnership.
(c) All outstanding shares of common stock, par value $.01 per
share, of Mergeco issued and outstanding immediately prior to the
Effective Time shall be converted into a single general partnership
interest constituting 100% of the general partnership interests of
the Surviving Partnership.
(d) Immediately after the Effective Time, the General Partners
will execute an amendment to the Existing Partnership Agreement to
effectuate the changes contemplated by this Section 1.5.
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1.6. CALCULATION OF AND ADJUSTMENTS TO TOTAL CONSIDERATION.
(a) Fund I Consideration. The Fund I Consideration shall be
adjusted as described in this Section 1.6(a).
(1) In the event the Fund I Broadcast Cash Flow is less than Nine
Hundred Seventy Thousand Dollars ($970,000), then the Fund I BCF Consideration
shall be reduced by an amount equal to the product of (i) eleven and nine
tenths (11.9) multiplied by (ii) the difference of Nine Hundred Seventy
Thousand Dollars ($970,000) minus the Fund I Broadcast Cash Flow. In the event
the Fund I Broadcast Cash Flow is greater than One Million Thirty Thousand
Dollars ($1,030,000), then the Fund I BCF Consideration shall be increased by
an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied
by (ii) the difference of the Fund I Broadcast Cash Flow minus One Million
Thirty Thousand Dollars ($1,030,000).
(2) The Fund I Consideration shall be reduced by the portion (if
any) of the Fund I Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(3) If the Adjustment Amount allocable to Fund I is a positive
number, the Fund I Consideration shall be increased by the amount of the
Adjustment Amount allocable to Fund I. If the Adjustment Amount allocable to
Fund I is a negative number, the Fund I Consideration shall be decreased by the
amount of the Adjustment Amount allocable to Fund I.
(4) The Fund I Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(b) Fund IV Consideration. The Fund IV Consideration shall be
adjusted as described in this Section 1.6(b).
(1) In the event the Fund IV Broadcast Cash Flow is less than Two
Million Six Hundred Sixty Seven Thousand Five Hundred Dollars ($2,667,500),
then the Fund IV BCF Consideration shall be reduced by an amount equal to the
product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference
of Two Million Six Hundred Sixty Seven Thousand Five Hundred Dollars
($2,667,500) minus the Fund IV Broadcast Cash Flow. In the event the Fund IV
Broadcast Cash Flow is greater than Two Million Eight Hundred Thirty Two
Thousand Five Hundred Dollars ($2,832,500), then the Fund IV BCF Consideration
shall be increased by an amount equal to the product of (i) eleven and nine
tenths (11.9) multiplied by (ii) the difference of the Fund IV Broadcast Flow
minus Two Million Eight Hundred Thirty Two Thousand Five Hundred Dollars
($2,832,500).
(2) The Fund IV Consideration shall be reduced by the portion (if
any) of the Fund IV Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(3) If the Adjustment Amount allocable to Fund IV is a positive
number, the Fund IV Consideration shall be increased by the amount of the
Adjustment Amount allocable to
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Fund IV. If the Adjustment Amount allocable to Fund IV is a negative number,
the Fund IV Consideration shall be decreased by the amount of the Adjustment
Amount allocable to Fund IV.
(4) The Fund IV Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(c) Fund VII Consideration. The Fund VII Consideration shall
be adjusted as described in this Section 1.6(c).
(1) The Fund VII Consideration shall be reduced by the portion
(if any) of the Fund VII Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(2) If the Adjustment Amount allocable to Fund VII is a positive
number, the Fund VII Consideration shall be increased by the amount of the
Adjustment Amount allocable to Fund VII. If the Adjustment Amount allocable to
Fund VII is a negative number, the Fund VII Consideration shall be decreased by
the Adjustment Amount allocable to Fund VII.
(3) The Fund VII Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(d) Fund VIII Consideration. The Fund VIII Consideration shall
be adjusted as described in this Section 1.6(d).
(1) In the event the Fund VIII Broadcast Cash Flow is less than
Two Million One Hundred Fifty Eight Thousand Two Hundred Fifty Dollars
($2,158,250), then the Fund VIII BCF Consideration shall be reduced by an
amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by
(ii) the difference of Two Million One Hundred Fifty Eight Thousand Two Hundred
Fifty Dollars ($2,158,250) minus the Fund VIII Broadcast Cash Flow. In the
event the Fund VIII Broadcast Cash Flow is greater than Two Million Two Hundred
Ninety One Thousand Seven Hundred Fifty Dollars ($2,291,750), then the Fund
VIII BCF Consideration shall be increased by an amount equal to the product of
(i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Fund
VIII Broadcast Cash Flow minus Two Million Two Hundred Ninety One Thousand
Seven Hundred Fifty Dollars ($2,291,750).
(2) The Fund VIII Consideration shall be reduced by the portion
(if any) of the Fund VIII Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(3) If the Adjustment Amount allocable to Fund VIII is a positive
number, the Fund VIII Consideration shall be increased by the amount of the
Adjustment Amount allocable to Fund VIII. If the Adjustment Amount allocable
to Fund VIII is a negative number, the Fund VIII Consideration shall be
decreased by the amount of the Adjustment Amount allocable to Fund VIII.
(4) The Fund VIII Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
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(e) Benchmark Consideration. The Benchmark Consideration shall
be adjusted as described in this Section 1.6(e).
(1) In the event the Statesville Broadcast Cash Flow is less than
One Million Three Hundred Fifty Eight Thousand Dollars ($1,358,000), then the
Benchmark Consideration shall be reduced by an amount equal to the product of
(i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One
Million Three Hundred Fifty Eight Thousand Dollars ($1,358,000) minus the
Statesville Broadcast Cash Flow. In the event the Statesville Broadcast Cash
Flow is greater than One Million Four Hundred Forty Two Thousand Dollars
($1,442,000), then the Benchmark Consideration shall be increased by an amount
equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii)
the difference of the Statesville Broadcast Cash Flow minus One Million Four
Hundred Forty Two Thousand Dollars ($1,442,000).
(2) In the event the Jackson Broadcast Cash Flow is less than One
Million Four Hundred Seventy Nine Thousand Two Hundred Fifty Dollars
($1,479,250), then the Benchmark Consideration shall be reduced by an amount
equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii)
the difference of One Million Four Hundred Seventy Nine Thousand Two Hundred
Fifty Dollars ($1,479,250) minus the Jackson Broadcast Cash Flow. In the event
the Jackson Broadcast Cash Flow is greater than One Million Five Hundred
Seventy Thousand Seven Hundred Fifty Dollars ($1,570,750), then the Benchmark
Consideration shall be increased by an amount equal to the product of (i)
eleven and nine tenths (11.9) multiplied by (ii) the difference of the Jackson
Broadcast Cash Flow minus One Million Five Hundred Seventy Thousand Seven
Hundred Fifty Dollars ($1,570,750).
(3) In the event the Montgomery Broadcast Cash Flow is less than
One Million Seven Hundred Forty Six Thousand Dollars ($1,746,000), then the
Benchmark Consideration shall be reduced by an amount equal to the product of
(i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One
Million Seven Hundred Forty Six Thousand Dollars ($1,746,000) minus the
Montgomery Broadcast Cash Flow. In the event the Montgomery Broadcast Cash
Flow is greater than One Million Eight Hundred Fifty Four Thousand Dollars
($1,854,000), then the Benchmark Consideration shall be increased by an amount
equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii)
the difference of the Montgomery Broadcast Cash Flow minus One Million Eight
Hundred Fifty Four Thousand Dollars ($1,854,000).
(4) In the event any Statesville Acquisition Expenses, Jackson
Acquisition Expenses, Montgomery Acquisition Expenses, Fund IV Expenses or Fund
VIII Expenses are paid by Benchmark or any of the New Funds other than with the
proceeds of the Statesville Loan, the Jackson Loan, the Montgomery Loan, the
Fund IV Loan or the Fund VIII Loan, respectively, or other than with cash flow
of Fund IX, Fund X, or Fund XI, respectively, then the Benchmark Consideration
shall be increased by the amount of the expenses so paid to the extent such
expenses are approved by Mergeco or its affiliates, which approval shall not be
unreasonably withheld.
(5) If the Adjustment Amount allocable to Benchmark is a positive
number, the Benchmark Consideration shall be increased by the amount of the
Adjustment Amount allocable to Benchmark. If the Adjustment Amount allocable
to Benchmark is a negative number,
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the Benchmark Consideration shall be decreased by the Adjustment Amount
allocable to Benchmark.
(6) The Benchmark Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(7) In the event that the Statesville Agreement has not been
consummated on or prior to the Effective Time, the Benchmark Consideration
shall be reduced by an amount equal to $16,660,000; provided that upon
consummation of the Statesville Agreement, the Surviving Partnership shall pay
an amount equal to $7,060,000 to the General Partners or their affiliates,
pursuant to instructions from the General Partners. In the event that the
Statesville Agreement has been terminated prior to the Effective Time for any
reason other than an event described in Section 9.1(d)(ii), the Benchmark
Consideration shall be reduced by an amount equal to $16,660,000.
(8) In the event that the Jackson Agreement has not been
consummated on or prior to the Effective Time, the Benchmark Consideration
shall be reduced by an amount equal to $18,147,500; provided that upon
consummation of the Jackson Agreement, the Surviving Partnership shall pay an
amount equal to $2,897,500 to the General Partners or their affiliates pursuant
to instructions from the General Partners. In the event that the Jackson
Agreement has been terminated prior to the Effective Time for any reason other
than an event described in Section 9.1(d)(ii), the Benchmark Consideration
shall be reduced by an amount equal to $18,147,500.
(9) In the event that the Montgomery Agreement has not been
consummated on or prior to the Effective Time, the Benchmark Consideration
shall be reduced by an amount equal to $21,420,000, provided that upon
consummation of the Montgomery Agreement, the Surviving Partnership shall pay
an amount equal to $3,420,000 to the General Partners or their affiliates
pursuant to instructions from the General Partners. In the event that the
Montgomery Agreement has been terminated prior to the Effective Time for any
reason other than an event described in Section 9.1(d)(ii), the Benchmark
Consideration shall be reduced by an amount equal to $21,420,000.
(10) In the event any of Fund IX, Fund X or Fund XI are in
default under Section 6.10 of the Jackson Loan Agreement, the Statesville Loan
Agreement or the Montgomery Loan Agreement at the Effective Time, then the
Benchmark Consideration shall be reduced by an amount equal to the costs
reasonably incurred and expected to be incurred by Benchmark or its
subsidiaries or the Surviving Partnership in removing the Lien or Liens that
were the cause of any such default.
(f) No later than April 30, 1997, Benchmark shall deliver to
Mergeco a certificate executed by the General Partners of Benchmark,
dated the date of its delivery, setting forth the calculation of
Fund I Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII
Broadcast Cash Flow, Statesville Broadcast Cash Flow, Jackson
Broadcast Cash Flow and Montgomery Broadcast Cash Flow on which the
Fund I BCF Consideration, the Fund IV BCF Consideration, the Fund
VIII BCF Consideration and the Benchmark Consideration will be based
(the "BCF Calculation"). The certificate will state that the BCF
Calculation has been certified
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by Arthur Andersen LLP and is based on the terms of this Agreement and the
appropriate financial statements for the calendar year ending December 31,
1996, which financial statements shall have been audited by Arthur
Andersen LLP. Prior to delivery of the certificate setting forth the BCF
Calculation, Benchmark shall request Arthur Andersen LLP to consult with
Coopers & Lybrand, accountants for Mergeco, regarding the preparation of
the BCF Calculation and to provide Coopers & Lybrand with applicable
documentation setting forth the basis of the BCF Calculation.
(g) No later than five (5) Business Days prior to the scheduled
Closing Date, Benchmark will deliver to Mergeco an initial
consolidated balance sheet for each of Benchmark, Fund I, Fund IV,
Fund VII and Fund VIII, together with their respective subsidiaries,
as of 11:59 p.m. on the date immediately prior to the Closing Date
(but giving effect to the Funded Debt Payoff pursuant to Section
1.8(e)) (the "Initial Closing Balance Sheet"), as well as a
certificate signed by the General Partners setting forth a
calculation of Initial Net Current Assets of Benchmark, Fund I, Fund
IV, Fund VII and Fund VIII and their respective subsidiaries as of
11:59 p.m. on the date immediately prior to the Closing Date (but
giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)),
as determined from the Initial Closing Balance Sheet (such
certificate, the "Initial Closing Certificate"). The Initial
Closing Balance Sheet shall be prepared by Benchmark in consultation
with Arthur Andersen L.L.P. in accordance with GAAP, subject to
adjustments that would be made after audit, except as otherwise
contemplated by this Agreement. Benchmark shall, and Benchmark
shall request Arthur Andersen L.L.P. to, consult with Coopers &
Lybrand, accountants for Mergeco, regarding preparation of the
Initial Closing Balance Sheet. For purposes of this Section 1.6(g),
Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and
their respective subsidiaries shall be deemed not to be subsidiaries
of Benchmark.
(h) No later than 60 days after the Closing Date, the Partner
Representatives shall cause to be prepared and delivered to the
Surviving Partnership (i) a consolidated balance sheet for each of
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, together with
their subsidiaries, as of 11:59 p.m. on the date immediately prior
to the Closing Date (but giving effect to the Funded Debt Payoff
pursuant to Section 1.8(e)) which shall be audited by Arthur
Andersen LLP, together with the related audit report of such firm
(the "Closing Balance Sheet") and (ii) a calculation of Actual Net
Current Assets of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII
and their respective subsidiaries as determined from the Closing
Balance Sheet. The Closing Balance Sheet shall be prepared in
accordance with GAAP, except as otherwise contemplated by this
Agreement, and shall fairly present the financial position of
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and their
respective subsidiaries as of 11:59 p.m. on the date immediately
prior to the Closing Date (but giving effect to the Funded Debt
Payoff pursuant to Section 1.8(e)). Benchmark shall request Arthur
Andersen L.L.P. to consult with Coopers & Lybrand, accountants for
Mergeco, regarding preparation of the Closing Balance Sheet. For
purposes of this Section 1.6(h), Fund I, Fund IV, Fund VII, Fund
VIII, each of the
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New Funds and their respective subsidiaries shall be deemed not to
be subsidiaries of Benchmark. Unless otherwise provided in this
Agreement, all Unfunded Debt attributable in accordance with GAAP to
the periods prior to the Closing Date, whether or not invoiced at
that date, will be included in calculating the Initial Closing
Balance Sheet.
(i) In the event Coopers & Lybrand disputes the accuracy of the
BCF Calculation or the Closing Balance Sheet, Mergeco shall promptly
inform Benchmark of the disputed amount of the BCF Calculation or
the Closing Balance Sheet and the basis for Coopers & Lybrand's
dispute in reasonable detail. If Benchmark does not agree to modify
the BCF Calculation or the Closing Balance Sheet, as applicable, in
accordance with Coopers & Lybrand's position regarding such disputed
amount of the BCF Calculation or the Closing Balance Sheet, as
applicable, Mergeco and Benchmark shall have ten (10) days to submit
such dispute to an independent "big six" accounting firm selected
jointly by Coopers & Lybrand and Arthur Andersen (the "Referee") for
arbitration. Mergeco and Benchmark shall use all reasonable efforts
to achieve a decision by such Referee as soon as practicable, and in
any event no later than thirty (30) days from the date such dispute
is submitted. The decision of the Referee shall be final,
conclusive and binding on the parties. Each party shall be
responsible for its own fees and expenses in connection with such
arbitration, and the fees and expenses of the Referee shall be borne
equally by Benchmark and Mergeco; provided, however, that in the
event the Referee determines that one party has not proceeded in
good faith in carrying forward such dispute, the fees and expenses
of the prevailing party and of the Referee shall be borne by the
party deemed not to have proceeded in good faith. In the event the
Closing has occurred, all references to Benchmark in this Section
1.6(i) shall be deemed to be references to Partner Representatives.
(j) In connection with calculating Total Consideration, Merger
Consideration, Benchmark Consideration, Fund I Consideration, Fund
IV Consideration, Fund VII Consideration, Fund VIII Consideration
and all components thereof or adjustments necessary to calculate
such items, including, without limitation, Fund I Broadcast Cash
Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash Flow,
Jackson Broadcast Cash Flow, Statesville Broadcast Cash Flow and
Montgomery Broadcast Cash Flow, if an adjustment would otherwise be
required to be made more than once by such definitions, the parties
agree that such adjustment will be made only once to avoid
double-counting.
1.7. DISSENTING PARTNERSHIP INTERESTS. Notwithstanding anything in this
Agreement to the contrary, Partnership Interests that are outstanding
immediately prior to the Effective Time and that are held by Partners who have
properly and timely exercised appraisal rights with respect thereto under
Section 10-208(f) of the Maryland Law (the "Benchmark Dissenting Partnership
Interests") shall not be converted into the right to receive the Merger
Consideration as provided in Section 1.5(a), but the holders of Benchmark
Dissenting Partnership Interests shall be entitled to receive such payment from
the Benchmark Dissenting Partner Fund and, if applicable, the Dissenting
Partner
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Reserve as shall be determined pursuant to Section 10-208(f) of the Maryland
Law; provided, however, that if any such holder shall have failed to perfect or
shall withdraw or lose the right to appraisal and payment under the Maryland
Law, each such holder's Partnership Interests shall thereupon be deemed to have
been converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon, as provided in Section 1.5(a), and
such Partnership Interests shall no longer be Benchmark Dissenting Partnership
Interests.
1.8. PAYMENT OF MERGER CONSIDERATION; DEPOSIT OF HOLDBACK FUNDS; AND
REPAYMENT OF FUNDED DEBT.
(a) Exchange Fund. At or prior to the Effective Time, Mergeco
shall deposit, or cause to be deposited, with a bank or trust
company designated by Benchmark (such bank or trust company being
referred to as the "Exchange Agent") for the benefit of the holders
of Converted Partnership Interests for payment in accordance with
this Section 1.8(a) through the Exchange Agent, cash in an amount
equal to the aggregate amount of Merger Consideration to be paid to
all holders of Converted Partnership Interests less the amount of
the Benchmark Allocable Portion of the Post-Closing Escrow Deposits,
the Reserve Funds and the Dissenting Partner Reserves. The cash
deposited with the Exchange Agent in accordance with this Subsection
1.8(a) is hereinafter referred to as the "Exchange Fund." Promptly
following the Effective Time, the Exchange Agent shall, pursuant to
irrevocable instructions delivered by Benchmark immediately prior to
the Effective Time, deliver cash equal in aggregate amount to the
Exchange Fund to the holders of the Converted Partnership Interests
as specified by Benchmark in such instructions pursuant to the terms
of this Agreement out of the Exchange Fund.
(b) Post-Closing Escrow Deposits. At or prior to the Effective
Time, Mergeco shall deposit or cause to be deposited the Benchmark
Allocable Portion of the Post-Closing Escrow Deposits with the
Post-Closing Escrow Agent in accordance with Section 1.12 hereof,
and Benchmark shall cause all other portions of the Post-Closing
Escrow Deposits to be deposited in accordance with the terms of the
Other Benchmark Transactions.
(c) Reserve Funds. At or prior to the Effective Time, Mergeco
shall deposit or cause to be deposited the Benchmark Allocable
Portion of the Reserve Funds with the Post-Closing Escrow Agent in
accordance with Section 1.13 hereof, and Benchmark shall cause all
other portions of the Reserve Funds to be deposited in accordance
with the terms of the Other Benchmark Transactions.
(d) Dissenting Partner Funds and Reserves. On or prior to the
Effective Time, Mergeco shall deposit or cause to be deposited the
Benchmark Allocable Portion of the Dissenting Partner Funds and the
Dissenting Partner Reserves in one or more accounts specified by
Partner Representatives.
(e) Funded Debt Payoff. On or before the date that is three
(3) Business Days prior to the date scheduled for the Closing,
Benchmark will provide Mergeco
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with written notice (the "Funded Debt Notice"), which notice shall
set forth the payments necessary to be made in order for the Funded
Debt of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII to be
repaid in full and retired as of the Effective Time of the Merger.
Immediately prior to the Closing of this Agreement and the Other
Benchmark Merger Agreements, Benchmark will, with the proceeds of
the Parent Funded Debt Loan, (i) repay the Funded Debt of Benchmark
identified in the Funded Debt Notice and (ii) contribute to the
capital of Fund I, Fund IV, Fund VII and Fund VIII amounts
sufficient to pay the Funded Debt of Fund I, Fund IV, Fund VII and
Fund VIII, as applicable, identified in the Funded Debt Notice, and
Benchmark shall, and shall cause each of Fund I, Fund IV, Fund VII
and Fund VIII to, repay the Funded Debt of each such Person (the
repayments in clauses (i) and (ii) are collectively referred to as
the "Funded Debt Payoff"). For purposes of this Section 1.8(e),
Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and
their respective subsidiaries shall be deemed not to be subsidiaries
of Benchmark.
1.9. PARTNERSHIP BOOKS. At the Effective Time, the partnership books of
Benchmark shall be closed and there shall be no further registration of
transfers of Partnership Interests on the records of Benchmark.
1.10. PARTNER APPROVAL.
(a) Bruce R. Spector and Joseph L. Mathias IV, in their
capacities as General Partners of Benchmark, by their execution
hereof approve and adopt this Agreement and the transactions
contemplated hereby.
(b) Parent, in its capacity as the sole stockholder of Mergeco,
by its execution hereof approves and adopts this Agreement and the
transactions contemplated hereby.
(c) Benchmark, acting through the General Partners, shall, in
accordance with applicable law and the Existing Fund Partnership
Agreements, solicit the requisite consents from the Fund Limited
Partners to the Merger, this Agreement, the Other Benchmark Mergers
and the Other Benchmark Merger Agreements and use its commercially
reasonable efforts to receive such consents no later than sixteen
(16) business days after the date hereof and, subject to the
fiduciary obligations of Benchmark and the General Partners as
advised by independent legal counsel, include in the consent
solicitation (the "Consent Solicitation") circulated to the Fund
Limited Partners the recommendation of Benchmark and the General
Partners that the Fund Limited Partners approve and adopt this
Agreement and the Other Benchmark Merger Agreements and the
transactions contemplated hereby and thereby, including, without
limitation, the Merger, and use its commercially reasonable efforts
to obtain such approval and adoption and the Other Benchmark
Mergers.
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1.11. PRE-CLOSING ESCROW DEPOSIT.
(a) Concurrently with the execution of this Agreement and as
security for liquidated damages that may be payable by Mergeco to
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII (the "Sellers"),
Mergeco shall deposit, or cause to be deposited, in favor of
Benchmark, as Sellers' Representative (as defined below) (i) an
irrevocable letter of credit issued by Bankers Trust Company
("Bankers Trust") in substantially the form of Exhibit 1 (the
"Letter of Credit") for the sum of Five Million Four Hundred Ninety
Thousand Dollars ($5,490,000) and (ii) Four Hundred Ten Thousand
Dollars ($410,000) in cash (the "Capital Expenditure Deposit") in an
escrow account with Citibank N.A.., a national banking association
(the "Escrow Agent"), to be held in escrow and released therefrom in
accordance with Section 1.11(b) and the terms of the Pre-Closing
Escrow Agreement (herein so called) in substantially the form of
Exhibit 2 attached hereto. The Capital Expenditure Deposit shall be
released, pursuant to joint written instructions of Sellers'
Representative and Mergeco, to fund loans made under the Fund IV
Loan Agreement and the Fund VIII Loan Agreement. Mergeco shall
cause additional letters of credit in favor of Sellers'
Representative (collectively the "Additional Letters of Credit") to
be deposited in escrow with the Escrow Agent on the closing dates of
the Jackson Agreement, the Statesville Agreement and the Montgomery
Agreement. Such Additional Letters of Credit shall conform to the
requirements set forth above and be identical in all material
respects to the Letter of Credit, and shall be for the sums of Seven
Hundred Fifty Thousand Dollars ($750,000) with respect to the
Jackson Agreement (the "Additional Jackson Escrow Deposit"), Five
Hundred Thousand Dollars ($500,000) with respect to the Statesville
Agreement (the "Additional Statesville Escrow Deposit") and One
Million Dollars ($1,000,000) with respect to the Montgomery
Agreement (the "Additional Montgomery Escrow Deposit"). The Letter
of Credit, the Capital Expenditure Deposit (to the extent not
released to fund the Fund IV Loan and the Fund VIII Loan), the
Additional Letters of Credit, the Interest Letters of Credit and any
replacement letters of credit pursuant to the terms of the
Pre-Closing Escrow Agreement deposited in escrow pursuant to this
Section 1.11 are referred to collectively as the "Pre-Closing Escrow
Deposit." Interest earned on any cash portion of the Pre-Closing
Escrow Deposit shall be paid to Mergeco quarterly in accordance with
the Pre-Closing Escrow Agreement; provided, however, that any
interest on any cash in the Pre-Closing Escrow Deposit drawn from
any Interest Letter of Credit deposited shall be distributed
pursuant to Section 1.11(b) of this Agreement.
(b) If this Agreement is terminated and Benchmark, as Sellers'
Representative, seeks liquidated damages on behalf of the Sellers
pursuant to Section 9.3, then (i) if (A) Sellers are otherwise paid
liquidated damages due under Section 9.3, or (B) Benchmark and
Mergeco agree that the Sellers are not entitled to the Pre-Closing
Escrow Deposit as liquidated damages, Benchmark and Mergeco shall
deliver joint written instructions to the Escrow Agent authorizing
the release of the Pre-Closing Escrow Deposit and any interest
earned thereon to Mergeco; (ii) if
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Benchmark and Mergeco agree that Sellers are entitled to the Pre-Closing
Escrow Deposit as liquidated damages, Benchmark and Mergeco shall
deliver joint written instructions to the Escrow Agent authorizing
the Escrow Agent to release the Pre-Closing Escrow Deposit to
Benchmark and any interest earned thereon (other than on cash
drawings on Interest Letters of Credit) to Mergeco; (iii) if a final
decision of an arbitrator under Section 10.19 hereof (a "Final
Determination") establishes the Sellers' right to liquidated damages
pursuant to Section 9.3, Benchmark shall deliver (A) a copy of the
Final Determination to the Escrow Agent authorizing the Escrow Agent
to release the Pre-Closing Escrow Deposit (and any Interest Letters
of Credit or interest earned on cash from drawings thereon) and
interest earned on all other Letters of Credit shall be delivered to
Mergeco, to Benchmark and (B) an opinion of counsel to Benchmark
that the decision of the arbitrator constitutes the Final
Determination under this Agreement; or (iv) if a Final Determination
establishes Mergeco's right to the Pre-Closing Escrow Deposit,
Mergeco shall deliver (A) a copy of the Final Determination to the
Escrow Agent authorizing the release of the Pre-Closing Escrow
Deposit to Mergeco and (B) an opinion of counsel to Mergeco that the
decision of the arbitrator constitutes the Final Determination under
this Agreement. If this Agreement is terminated and the Sellers do
not seek liquidated damages pursuant to Section 9.3 within sixty
(60) days of such termination, Benchmark and Mergeco shall deliver
joint written instructions to the Escrow Agent authorizing the
release of the Pre-Closing Escrow Deposit to Mergeco. Immediately
prior to the Effective Time and upon satisfaction of the conditions
to Mergeco's and Benchmark's obligation to consummate the Merger set
forth in Article VII, Sellers' Representative and Mergeco shall
jointly instruct the Escrow Agent to release and return the
Pre-Closing Escrow Deposit to Mergeco at the Effective Time. The
Capital Expenditure Deposit shall be released, pursuant to joint
written instructions of Sellers' Representative and Mergeco, to fund
loans made under the Fund IV Loan Agreement and the Fund VIII Loan
Agreement. If this Agreement is terminated and Mergeco and Sellers'
Representative are unable to agree on which party is entitled to the
Pre-Closing Escrow Deposit then, on the later of June 30, 1997 or
the date of such termination, and every three (3) months thereafter,
Sellers' Representative and Mergeco shall deposit a letter of credit
(an "Interest Letter of Credit") (in substantially the same form as
the Letter of Credit) in favor of Mergeco or Sellers'
Representative, as applicable, with the Escrow Agent, in face amount
equal to the amount of interest (at an annual interest rate of 8.0%)
that would be earned on the Pre-Closing Escrow Deposit during the
succeeding three (3) month period had the face amounts of the Letter
of Credit and the Additional Letters of Credit been deposited in the
form of cash on June 30, 1997 or such later termination date. In
the event that Mergeco or Sellers' Representative fail to deposit an
Interest Letter of Credit in timely fashion, the non-defaulting
party shall provide written notification to the defaulting party of
such failure and, if the Interest Letter of Credit is not deposited
within five (5) Business Days of the date of such notice, the
non-defaulting party shall be entitled to the Pre-Closing
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Escrow Deposit, and Sellers' Representative and Mergeco shall deliver
joint instructions to the Escrow Agent to deliver the Pre-Closing Escrow
Deposit to the non-defaulting party. The party that is entitled to the
Pre-Closing Escrow Deposit pursuant to a Final Determination shall, at the
time the Pre-Closing Escrow Deposit is released by the Escrow Agent, also
be entitled to all Interest Letter(s) of Credit posted as well as the
return of the Interest Letter(s) of Credit posted by any parties, together
with any cash drawn from any Interest Letter of Credit by the Escrow Agent
and any interest earned on such cash. The parties agree that, unless
otherwise ordered by an arbitrator, they will not, prior to receipt of a
Final Determination from such arbitrator, involve the Escrow Agent in any
matters or disputes with respect to whether liquidated damages are owed.
(c) APPOINTMENT OF SELLERS' REPRESENTATIVES. By the execution
and delivery of this Agreement, Sellers hereby irrevocably
constitute and appoint Benchmark as the true and lawful agents and
attorneys-in-fact (the "Sellers' Representative") of such Sellers
with full power of substitution to act, jointly and severally, in
the name, place and stead of such Sellers with respect to the
performance of the obligations and rights of such Sellers under the
Pre-Closing Escrow Agreement, including, without limitation, the
power to execute the Pre-Closing Escrow Agreement and any amendments
thereto on behalf of such Sellers, to do or refrain from doing all
such further acts and things, and to execute, deliver and receive
all such documents, waivers, extensions and amendments as such
Sellers shall deem necessary or appropriate in their sole discretion
in connection with the administration of the Pre-Closing Escrow
Agreement (and any such actions shall be binding on such Sellers).
1.12. POST-CLOSING ESCROW DEPOSIT. On the Closing Date, Parent, Mergeco
and the Partner Representatives, as representatives of Benchmark, Fund I, Fund
IV, Fund VII, Fund VIII, and the Selling Stockholders shall execute and deliver
an escrow agreement in substantially the form attached as Exhibit 3 hereto (the
"Post-Closing Escrow Agreement") and Mergeco shall deposit or cause to be
deposited in escrow with Mercantile-Safe Deposit & Trust Company or another
banking institution designated by the Partner Representatives and reasonably
acceptable to Mergeco (the "Post-Closing Escrow Agent") the Benchmark Allocable
Portion of the Post-Closing Escrow Deposits to be held and disbursed in
accordance with the terms of the Post-Closing Escrow Agreement and Section 10.1
of this Agreement, and Benchmark shall cause all other portions of the
Post-Closing Escrow Deposits to be deposited in accordance with the terms of
the Other Benchmark Transactions. Benchmark may, at its option, elect to
supplement one or more of the Post-Closing Escrow Deposits after the Closing
Date. All interest earned on the Post-Closing Escrow Deposits shall be held
and distributed to Partner Representatives by the Post-Closing Escrow Agent on
a quarterly basis as set forth in the Post-Closing Escrow Agreement and Section
10.1 of this Agreement.
1.13. RESERVE FUND; POST-CLOSING ADJUSTMENT TO TOTAL CONSIDERATION. On
the Closing Date, Mergeco shall deposit or cause to be deposited in escrow with
the Post-Closing Escrow Agent the Benchmark Allocable Portion of the Reserve
Funds, which shall constitute a portion of the Total Consideration, to be held
and disbursed in accordance with the terms of this Section 1.13 and the
Post-Closing Escrow Agreement, and Benchmark shall cause all other portions
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of the Reserve Fund to be deposited in accordance with the terms of the Other
Benchmark Transactions (all such deposits, the "Reserve Fund Escrow Deposit").
All interest earned on the Reserve Fund Escrow Deposit shall be
held and distributed to Partner Representatives by the Post-Closing Escrow
Agent in accordance with the Post-Closing Escrow Agreement. If the Adjustment
Amount identified in Sections 1.6(a)(3), 1.6(b)(3), 1.6(c)(2), 1.6(d)(3) or
1.6(e)(5) is a negative number, an amount equal to such Adjustment Amount shall
be paid by the Post-Closing Escrow Agent to the Surviving Partnership from the
applicable Reserve Fund pursuant to joint instructions from Partner
Representatives and the Surviving Partnership, provided that if the applicable
Reserve Fund is insufficient to cover such amount payable to the Surviving
Partnership, the Surviving Partnership shall be entitled to recover an amount
equal to the difference of such Adjustment Amount minus the amount of the
applicable Reserve Fund, in accordance with Section 10.1. If such Adjustment
Amount is a positive number, the Surviving Partnership shall pay an amount
equal to such Adjustment Amount to Partner Representatives. Any Benchmark
Allocable Portions of the applicable Reserve Fund remaining after the payments
contemplated by this Section shall be paid by the Post-Closing Escrow Agent to
Partner Representatives pursuant to joint instructions from Partner
Representatives and the Surviving Partnership (and distributed by Partner
Representatives in the manner that such funds would have been distributed had
such amounts been distributed by the Exchange Agent pursuant to Section
1.8(a)). The parties agree to deliver the joint instructions referenced in
this Section 1.13 promptly after determination of the applicable Adjustment
Amounts.
1.14. DISSENTING PARTNER FUNDS. On or prior to the Effective Time,
Mergeco shall deposit or cause to be deposited the Benchmark Allocable Portion
of the Dissenting Partner Reserves, which shall constitute a portion of the
Merger Consideration, and the Dissenting Partner Funds, which shall constitute
a portion of the Total Consideration in one or more accounts specified by
Partner Representatives. The Dissenting Partner Funds and, if necessary, the
Dissenting Partner Reserves, shall be used to cover any costs, expenses or
liabilities that may be incurred with respect to claims (if any) of holders of
Dissenting Partnership Interests (if any) that are made in accordance with
Maryland Law. Any Benchmark Allocable Portions of the applicable Dissenting
Partner Funds or Dissenting Partner Reserves remaining after resolution of any
such claims shall be distributed by Partner Representatives in the same manner
that such amounts would have been distributed had such amounts been distributed
by the Exchange Agent pursuant to Section 1.8(a).
1.15. OTHER BENCHMARK MERGERS. Immediately prior to the Closing of this
Agreement, Benchmark will, with the proceeds of the Parent Merger Loan,
contribute to the capital of Sub I, Sub IV, Sub VII and Sub VIII amounts
sufficient to consummate the Other Benchmark Mergers.
1.16. INSTRUCTIONS ON PAYMENTS. Prior to the Effective Time, Benchmark
shall deliver to Mergeco specific instructions with respect to the amount and
allocation of payments to be made by Mergeco under this Article I, and Mergeco
shall be entitled, without liability, to rely on such written instructions
without being required to determine the correctness of any fact stated therein.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES REGARDING BENCHMARK. Benchmark
represents and warrants to Mergeco and Parent as follows (with the understanding
that Mergeco and Parent are relying on such representations and warranties in
entering into and performing this Agreement), provided, however, that for
purposes of this Section 2.1, no representations or warranties (other than the
representations in Section 2.1(u)) are made with respect to the Statesville
Stations, the Jackson Stations, the Montgomery Stations, WSCQ-FM, Columbia,
South Carolina, WJMZ-FM, Anderson, South Carolina, KRMD-AM/FM, Shreveport,
Louisiana and any additional stations acquired prior to the Closing Date except
that, upon consummation of each such acquisition, the representations and
warranties in this Section 2.1 shall apply to the stations acquired and the
liabilities assumed to the extent of events, acts or omissions occurring or
conditions coming into existence on or after the closing of the applicable
acquisition.
(a) Organization, Good Standing, Etc. Each of Benchmark and
its subsidiaries is a partnership or other entity, duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization, has all requisite partnership (or
other) power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each state in which
the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the
failure to so qualify or be in good standing does not have and could
not reasonably be expected to have a Material Adverse Effect.
Benchmark has delivered to Mergeco true and complete copies of the
Certificates and Agreements of Limited Partnership (or equivalent
organizational documents) of Benchmark and each of its subsidiaries,
as in effect at the date of this Agreement. Neither Benchmark nor
any subsidiary is in violation of any provisions of its Certificate
and Agreement of Partnership or equivalent organizational documents
in a way that would result in a Material Adverse Effect.
(b) Subsidiaries of Benchmark. Schedule 2.1(b) sets forth a
true and complete list of all of Benchmark's directly or indirectly
owned subsidiaries, together with the jurisdiction of incorporation
or organization of each subsidiary. Schedule 2.1 also sets forth
the type of equity interest in each subsidiary owned by Benchmark or
another subsidiary of Benchmark and indicates whether any Person
other than Benchmark or a subsidiary of Benchmark owns any equity
interests in any subsidiary of Benchmark. Except as disclosed on
Schedule 2.1(b), Benchmark does not own, directly or indirectly, any
subsidiaries, or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other
similar investment in any corporation, partnership, joint venture,
association, limited liability company, trust or other entity.
(c) Capital Structure. Except as set forth in Schedule
2.1(c), the Existing Partnership Agreement (or, if applicable, the
Existing Fund Partnership Agreements)
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and as contemplated by this Agreement, there are no options, warrants,
calls, rights, commitments or agreements of any character to which
Benchmark or any of its subsidiaries is a party or by which any of them is
bound obligating Benchmark or any of its subsidiaries to issue, deliver or
sell, or cause to be delivered or sold, additional partnership interests
or any equity interests of Benchmark or any of its subsidiaries, or
obligating Benchmark or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
Except as set forth in the Existing Partnership Agreement (or, if
applicable, the Existing Fund Partnership Agreements), there are no
outstanding contractual obligations of Benchmark or any subsidiary to
repurchase, redeem or otherwise acquire any partnership interests of
Benchmark or any partnership interest of, or any equity interest in, any
subsidiary listed on Schedule 2.1(b). There are no bonds, debentures,
notes or other indebtedness issued or outstanding having the right to vote
("Voting Debt") on any matters on which partners or holders of equity
interests in Benchmark or its subsidiaries may vote. All the outstanding
Partnership Interests of Benchmark have been duly authorized and validly
issued, and all capital contributions required to be made with respect to
such Partnership Interests have been made in full. The Partnership
Interests have not been, and as to Partnership Interests in the future,
will not be, issued in violation of any preemptive or similar rights. The
partnership interests in the Surviving Partnership will, when issued, be
duly authorized, validly issued, and (with respect to limited partnership
interests) nonassessable and will not be issued in violation of any
preemptive or similar rights. There are no voting trusts, proxies or
other agreements or understandings to which Benchmark or any of its
subsidiaries is a party or by which Benchmark or any of its subsidiaries
is bound with respect to the voting of any partnership interests of
Benchmark or partnership interests of or equity interests in any of its
subsidiaries. All of the issued and outstanding partnership interests of
or equity interests in each subsidiary of Benchmark are duly authorized,
validly issued, and (with respect to limited partnership interests)
nonassessable, and have not been issued in violation of any preemptive or
similar rights. All capital contributions required to be made by the
partners or stockholders of each such subsidiary have been made in full.
Upon consummation of the Other Benchmark Mergers, Benchmark will own
(either directly or indirectly) 100% of the partnership interests of Fund
I, Fund IV, Fund VII and Fund VIII and 99.99999% of the partnership
interests in Fund IX, Fund X and Fund XI (the remaining partnership
interests in Fund IX, Fund X and Fund XI are held by Bruce R. Spector
whose interests are subject to assignment pursuant to Exhibit 4) free and
clear of all Liens (other than Liens arising under any of the Loan
Agreements and Permitted Liens as defined therein). Upon consummation of
the transactions contemplated by the Transaction Documents, Parent will
own, directly or indirectly, 100% of all of the equity interests in
Benchmark, each of the Funds and each of their respective subsidiaries.
(d) Authority. Benchmark, the Selling Stockholders and each of
the New Funds have, and upon receipt of the requisite consent of the
Fund Limited Partners, each of Fund I, Fund IV, Fund VII, and Fund
VIII shall have, all requisite partnership
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power and authority to enter into this Agreement and any other agreement
executed by the Selling Stockholders, Benchmark or such Funds in
connection with the transactions contemplated by this Agreement including
the Other Benchmark Transactions (collectively, the "Transaction
Documents") and to consummate the transactions contemplated hereby or
thereby. The execution and delivery of the Transaction Documents by
Benchmark, and, if applicable, the Selling Stockholders, Fund IX, Fund X
and Fund XI (and, upon receipt of the requisite consent of the Fund
Limited Partners, by each of Fund I, Fund IV, Fund VII and Fund VIII) and
the consummation by them (or by such Fund) of the transactions
contemplated hereby or thereby have been duly authorized by all necessary
partnership (or other) action on the part of Benchmark (or such Persons).
The Transaction Documents have been duly executed and delivered and
constitute the valid and binding obligations of Benchmark, the Selling
Stockholders and the New Funds and, upon receipt of the requisite consent
of the Fund Limited Partners, will constitute the valid and binding
obligations of each of Fund I, Fund IV, Fund VII and VIII, enforceable
against each such Person in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(e) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents by Benchmark and its
subsidiaries and, where applicable, the Selling Stockholders, do
not, and the performance by Benchmark and its subsidiaries and,
where applicable, the Selling Stockholders of the transactions
contemplated hereby or thereby will not, subject to (i) with respect
to the Other Benchmark Mergers, the approval of the Other Benchmark
Merger Agreements and the transactions contemplated thereby by the
Fund Limited Partners, (ii) obtaining the consents, approvals,
authorizations and permits and making the filings described in this
Section 2.1(e), and (iii) obtaining any consents required by the
terms of any existing agreements of Benchmark or its subsidiaries
with third parties that are not listed in Schedule 2.1(o) (A)
violate, conflict with or result in any breach of any provision of
the certificates and agreements of limited partnership or equivalent
organizational documents, in each case as amended or restated, of
Benchmark or any of its subsidiaries (or, where applicable, the
Selling Stockholders), (B) violate, conflict with or result in a
violation or breach of, or constitute a default (with or without due
notice or lapse of time or both) under, or permit the termination or
cancellation of or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of Benchmark or
otherwise) any obligation, or result in the loss of any benefit or give
any person the right to require any security to be repurchased, or give
rise to the creation of any lien, charge, security interest or encumbrance
upon any of the properties or assets of Benchmark or any of its
subsidiaries (or, where applicable, the Selling Stockholders) under, any
of the terms, conditions or provisions of any contract, loan or credit
agreement, note, bond,
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mortgage, indenture or deed of trust or any license, lease,
agreement or other instrument, permit, concession, franchise,
license or obligation to which any of them is a party or by which
they or any of their properties or assets may be bound or subjected,
or (C) violate any order, writ, judgment, injunction, decree,
statute, rule or regulation of any federal, state or local court,
administrative agency or commission or other governmental authority
or instrumentality (a "Governmental Entity") applicable to Benchmark
or any of its subsidiaries (or, where applicable, the Selling
Stockholders) or by which or to which any of their respective
properties or assets is bound or subject. No consent, approval,
order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to
Benchmark or any of its subsidiaries (or, where applicable, the
Selling Stockholders) in connection with the execution and delivery
of the Transaction Documents by Benchmark or its subsidiaries (or,
where applicable, the Selling Stockholders) or the consummation of
the transactions contemplated hereby or thereby, except for (1) the
filing of a premerger notification report under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (2) the consents of the Federal Communications
Commission (the "FCC") to the transfers of control of the Station
Licenses (as defined in Section 2.1(g)(ii) below) as contemplated by
Section 6.1 hereof, (3) the filing of the Certificate of Merger with
the State Department of Assessments and Taxation of Maryland and the
Secretary of State of the State of Delaware, and (4) applicable
requirements, if any, of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, and state
securities or blue sky laws.
(f) Financial Statements; Absence of Certain Changes or
Events.
(i) Benchmark has delivered to Mergeco, if applicable,
copies of audited (if available) or unaudited financial
statements for 1994, 1995 and the nine months ended September
30, 1996 of Benchmark, Fund I, Fund IV, Fund VII and Fund
VIII, accompanied (to the extent audited) by the reports
thereon of Arthur Andersen LLP, independent public accountants
(such audited or unaudited financial statements collectively
being referred to as the "Financial Statements"). The
Financial Statements, including, if applicable, the notes
thereto, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby
(except to the extent disclosed therein or required by changes
in GAAP) and, subject to adjustments that would be made after
audit (in the case of any unaudited financial statements),
present fairly in all material respects the financial position
of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and
their subsidiaries as of such dates and for the periods then
ended.
(ii) Except as disclosed in Schedule 2.1(f), as of the
date of this Agreement, there is no liability or obligation of
any kind, whether, accrued, absolute, fixed, contingent or
otherwise, of Benchmark or its subsidiaries which has or could
reasonably be expected to have a Material Adverse Effect
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and that is not reflected or reserved against in the balance
sheets of Benchmark, Fund I, Fund IV, Fund VII or Fund VIII
(the "Balance Sheets") for the period ended September 30, 1996
(the "Balance Sheet Date"), other than (A) liabilities
incurred in the ordinary course of business in a manner
consistent with past practices, or (B) any such liability or
obligation which would not be required to be presented in
financial statements or the notes thereto prepared in
conformity with GAAP applied, in a manner consistent with past
practice, in the preparation of the Financial Statements.
(iii) Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date, Benchmark and its subsidiaries have
conducted their respective businesses only in the ordinary
course consistent with past practice and nothing has occurred
that would have been prevented by Section 3.1 if the terms of
such section had been in effect as of and after the Balance
Sheet Date. Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date and through (and including) the date of
this Agreement there has not occurred any event that has
resulted in or would reasonably be expected to result in
Material Adverse Effect.
(g) Compliance with Applicable Laws; FCC Matters; Station
Licenses.
(i) Except as permitted or contemplated hereby, the
businesses of Benchmark and its subsidiaries have been
conducted in compliance with each applicable law, ordinance,
regulation, judgment, decree, injunction, rule or order of the
FCC or any other Governmental Entity binding on Benchmark or
any of its subsidiaries or their respective properties or
assets, except for such instances of noncompliance that do not
and would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.1(g), no
investigation or review by any Governmental Entity with
respect to Benchmark or any of its subsidiaries is pending or,
to Benchmark's knowledge, threatened, except for such
investigations or reviews as do not and would not reasonably
be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, Benchmark and its
subsidiaries have complied with the Communications Act of
1934, as amended (the "Communications Act"), all rules,
regulations and written policies of the FCC thereunder, all
material obligations with respect to equal opportunity under
applicable law, and all rules and regulations of the Federal
Aviation Administration applicable to the towers used by the
Stations, except, in each case, where the failure to so comply
does not and would not reasonably be expected to result in a
Material Adverse Effect. In addition, Benchmark and its
subsidiaries have duly and timely filed, or caused to be so
filed, with the FCC all material reports, statements,
documents, registrations, filings or submissions with respect
to the operation of the Stations and the ownership thereof,
including, without limitation, applications for renewal of
authority required by applicable law to be filed (except where
the failure to make such
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filings on a timely basis does not have and would not reasonably be
expected to have a Material Adverse Effect). All such FCC filings
complied with all material applicable laws when made and no material
deficiencies have been asserted with respect to any such filings.
The material required by 47 C.F.R. Section 73.3526 to be kept in the
public inspection files of the Stations is materially complete.
(ii) Schedule 2.1(g) lists (A) all licenses, permits and
other authorizations, including the expiration dates thereof,
issued to Benchmark or any of its subsidiaries by the FCC
relating to the Stations and held by them as of the date of
this Agreement and (B) all licenses, permits or authorizations
issued to Benchmark or any of its subsidiaries by any other
Governmental Entities which are material to the operations of
the Stations and held by them as of the date of this
Agreement, the loss of which have or would reasonably be
expected to have a Material Adverse Effect. Such licenses,
permits and authorizations, and all pending applications for
modification, extension or renewal thereof or for new
licenses, permits, permissions or authorizations, are,
together with additional licenses, permits or authorizations
of any additional stations acquired after the date hereof,
collectively referred to herein as the "Station Licenses."
Schedule 2.1(g) lists the legally authorized holder(s) of the
Station Licenses, each of which is in full force and effect.
The Stations have been operated in all material respects in
accordance with the terms of the Station Licenses. There are
no material proceedings pending or, to Benchmark's knowledge,
threatened with respect to Benchmark's or any of its
subsidiaries' ownership or operation of the Stations which
reasonably may be expected to result in the revocation,
material adverse modification, non-renewal or suspension of
any of the Station Licenses, the issuance against Benchmark or
any of its subsidiaries of any cease and desist order, or the
imposition of any administrative actions by the FCC or any
other Governmental Entity with respect to the Station
Licenses, or which reasonably may be expected to adversely
affect the Stations' ability to operate as currently operated
or the Surviving Partnership's ability to obtain control of
the Station Licenses. Except as set forth on Schedule 2.1(g),
to Benchmark's knowledge, no other broadcast station or radio
communications facility is causing interference to the
Stations' transmissions beyond that which is allowed by FCC
rules and regulations. Benchmark has no reason to believe
that the FCC will not renew the Station Licenses issued by the
FCC in the ordinary course of business. Benchmark knows of no
facts relating to Benchmark or its subsidiaries under the
Communications Act or the rules, regulations or written
policies of the FCC in effect on the date of this Agreement
that reasonably may be expected to disqualify Benchmark or its
subsidiaries from transferring control of the Station Licenses
pursuant to the terms of this Agreement or that would prevent
the consummation by them of the transactions contemplated by
this Agreement, provided that Benchmark makes no
representation in this Section 2.1(g) with respect to any
facts or
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circumstances attributable to Mergeco or its affiliates which could
prevent the consummation of the transactions contemplated by this
Agreement.
(h) Absence of Litigation. Except as set forth on Schedule
2.1(h), there is no claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or, to
the knowledge of Benchmark, threatened against Benchmark or any of
its subsidiaries (including, for this purpose any action, suit,
inquiry, judicial or administrative proceeding against Benchmark,
its subsidiaries or the General Partners or its affiliates relating
to the transactions contemplated by this Agreement) or any of their
respective properties or assets by or before any arbitrator or
Governmental Entity, nor to Benchmark's knowledge are there any
investigations relating to Benchmark or any of its subsidiaries or
any of their respective properties or assets pending or threatened
by or before any arbitrator or Governmental Entity. Except as set
forth in Schedule 2.1(h), there is no judgment, decree, injunction,
order, determination, award, finding, or letter of deficiency of any
Governmental Entity or arbitrator outstanding against Benchmark or
any of its subsidiaries or any of their respective properties or
assets which have or would reasonably be expected to have a Material
Adverse Effect.
(i) Insurance. Schedule 2.1(i) sets forth a summary of all
fire, general liability, malpractice liability, theft and other
forms of insurance and all fidelity bonds held by or applicable to
Benchmark or any of its subsidiaries. No event has occurred,
including, without limitation, the failure by Benchmark or any of
its subsidiaries to give any notice or information or the delivery
of any inaccurate or erroneous notice or information, which limits
or impairs the rights of Benchmark or any of its subsidiaries under
any such insurance policies in such a manner that has or would
reasonably be expected to have a Material Adverse Effect. Excluding
insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled
within the last two years prior to the date hereof.
(j) Real Estate. Each of Benchmark and its subsidiaries has
good and marketable title in fee simple to all real properties owned
by it (including owned facilities and improvements thereon, the
"Owned Real Property") and valid leaseholds in each parcel of real
property leased by it (including facilities and improvements thereon
which are leased, the "Leased Real Property"), except to the extent
marketability may be affected by the existence of Permitted Liens
(as defined in Section 2.1(1)). Each lease is valid without default
thereunder by the lessee or, as of the date hereof and to
Benchmark's knowledge, the lessor. Schedule 2.1(j) lists as of the
date hereof (i) the street address and use of each parcel of Owned
Real Property and (ii) the street address and use of each parcel of
Leased Real Property pursuant to which Benchmark or a subsidiary of
Benchmark is a lessee.
(k) Personal Property. Except for property held under capital
leases and the liens of Benchmark's secured creditors (which shall
be paid at Closing or, if both Benchmark and Mergeco elect,
reflected on the Closing Balance Sheet) and Permitted
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Liens, Benchmark or its subsidiaries have good title to all the items of
machinery, equipment, furniture, fixtures, inventory, receivables and other
tangible or intangible personal property reflected on the Balance Sheet and
all such property acquired since the Balance Sheet Date, except for any
such property or assets sold or otherwise disposed of in the ordinary
course of business and consistent with past practices since such date or
where the failure to have good title does not and would not reasonably be
expected to have a Material Adverse Effect. The tangible personal property
and fixtures owned or used by Benchmark or any of its subsidiaries that are
necessary for the operation of the Stations, including all broadcasting
equipment and broadcast towers, are in good operating condition and repair
(subject to normal wear and tear) and permit the conduct of the business of
the Stations in compliance with all material FCC rules and regulations.
Benchmark or any of its subsidiaries owns or holds under valid leases all
of the tangible personal property and fixtures necessary to conduct the
business of the Stations as presently conducted except where the failure to
own or hold under valid lease any tangible property or fixtures does not
and would not reasonably be expected to have a Material Adverse Effect.
(l) Liens and Encumbrances. All properties and assets,
including leases, owned by Benchmark and its subsidiaries are free
and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, tenancies and other possessory interests,
conditional sale or other title retention agreements, assessments,
easements, rights of way, covenants, restrictions, rights of first
refusal, defects in title, encroachments and other burdens, options
or encumbrances of any kind (collectively, "Liens"), except (i)
statutory Liens securing payments not yet delinquent or the validity
of which are being contested in good faith by appropriate actions,
(ii) purchase money Liens arising in the ordinary course, (iii)
Liens for taxes not yet delinquent, (iv) Liens reflected in the
Balance Sheet (which have not been discharged) and will not, if
Benchmark and Mergeco elect, be discharged prior to Closing), (v)
Liens which in the aggregate do not materially detract from the
value for use for broadcasting purposes or materially impair the
present and continued use of the properties or assets subject
thereto in the usual and normal conduct of the business of the
Stations, (vi) Liens on leases arising from the provisions of such
leases, (vii) any liens set forth on title reports for certain
parcels of Owned Real Property which Benchmark obtained in
connection with its acquisition of such parcels of Owned Real
Property prior to the date hereof (copies of which reports have been
delivered to Mergeco), (viii) any leases of Owned Real Property and
Leased Real Property listed on Schedule 2.1(j) and (ix) any other
Liens set forth on Schedule 2.1(1) (the Liens referred to in clauses
(i) through (ix) being "Permitted Liens").
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(m) Environmental Matters. Except as set forth on Schedule
2.1(m) and except to the extent any inaccuracy in the
representations and warranties set forth in this Section 2.1(m) does
not and would not reasonably be expected to result in a Material
Adverse Effect:
(i) The Owned Real Property and, to Benchmark's
knowledge, the Leased Real Property and the operations of
Benchmark or its subsidiaries thereon comply in all material
respects with all applicable federal, state and local laws,
statutes, codes, rules, regulations, ordinances, orders,
determinations or rules of common law pertaining to the
environment, natural resources and public or employee health
and safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Clean Air Act, as amended, the Federal Water
Pollution Control Act, as amended, The Oil Pollution Act of 1990, as
amended, the Safe Drinking Water Act, as amended, the Hazardous
Materials Transportation Act as amended, the Toxic Substances Control
Act, as amended, and other environmental conservation or protection
laws ("Environmental Laws");
(ii) No judicial proceedings are pending or, to
Benchmark's knowledge, threatened against Benchmark or its
subsidiaries alleging the violation of any Environmental Laws,
and there are no administrative proceedings pending or, to
Benchmark's knowledge, threatened against Benchmark or its
subsidiaries, alleging the violation of any Environmental Laws
and no notice (in the case of clause (ii)(B), directed to
Benchmark or any of its subsidiaries) from any Governmental
Entity or any person has been received by Benchmark or its
subsidiaries (A) claiming any violation of any Environmental
Laws in connection with any Owned Real Property or Leased Real
Property that has not been complied with or otherwise resolved
or (B) requiring any remediation, clean-up, modification,
repairs, work, construction, alterations or installations on
or in connection with any Owned Real Property or Leased Real
Property that are necessary to comply with any Environmental
Laws;
(iii) All material permits, registrations, licenses,
authorizations, and the like ("Permits") required to be
obtained or filed by each of Benchmark and its subsidiaries
under any Environmental Laws in connection with Benchmark's
and its subsidiaries' operations, including, without
limitation, those activities relating to the generation, use,
storage, treatment, disposal, release or remediation of
Hazardous Substances (as such term is defined in Section
2.1(m)(iv) hereof), have been duly obtained or filed, and each
of Benchmark and its subsidiaries are and have at all times
been in compliance in all material respects with the terms and
conditions of all such Permits;
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(iv) All Hazardous Substances used or generated by
Benchmark or its subsidiaries or, to Benchmark's knowledge, any of
their predecessors, on, in, or under any of the Owned Real Property
or the Leased Real Property are and have at all times been generated,
stored, used, treated, disposed of, and released by such persons or
on their behalf in such manner as not to result, or be reasonably be
expected to result in any material Environmental Costs or Liabilities
(as defined below). "Hazardous Substances" means (A) any hazardous
materials, hazardous wastes, hazardous substances, toxic wastes, and
toxic substances as those or similar terms are defined under any
Environmental Laws; (B) any friable asbestos or any material which
contains any hydrated mineral silicate, including chrysolite,
amosite, crocidolite, tremolite, anthophylite and/or actinolite; (C)
PCB, or PCB-containing materials, or fluids; (D) radon; (E) any
other hazardous, radioactive, toxic or noxious substance, material,
pollutant, contaminant, constituent, or solid, liquid or gaseous
waste regulated under any Environmental Laws; (F) any petroleum,
petroleum hydrocarbons, petroleum products, crude oil and any
fractions or derivatives thereof, any oil or gas exploration or
production waste, and any natural gas, synthetic gas and any mixtures
thereof; (G) any substance that whether by its nature or its use, is
subject to regulation under any Environmental Laws or with respect to
which any Environmental Laws or Governmental Entity requires
environmental investigation, monitoring or remediation; and (H) any
underground storage tanks, dikes, or impoundments as defined under
any Environmental Laws. "Environmental Costs or Liabilities" means
any losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and
the costs of investigation or feasibility studies and performance of
remedial or removal actions and cleanup activities) arising in
connection with (a) any Environmental Laws, (b) any order of or
contract of Benchmark or its subsidiaries with, any Governmental
Entity or any private or public Persons or (c) any exposure of any
Person or property to Hazardous Substances;
(v) There are not now, nor have there been in the past,
on, in or under any Owned Real Property or Leased Real
Property when owned, leased or operated by Benchmark or its
subsidiaries or, to Benchmark's knowledge, when owned, leased
or operated by any of their predecessors, any Hazardous
Substances that are in a condition or location that violates
any Environmental Law in any material respect or that
reasonably could be expected to (a) require remediation under
any Environmental Law or (b) give rise to a claim for damages
or compensation by any affected Person or to any Environmental
Costs or Liabilities; provided that the representation and
warranty of Benchmark in this Section 2.1(m)(v) with respect
to matters or conditions caused by any Person other than
Benchmark on the Leased Real Property is limited to
Benchmark's knowledge.
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(vi) Benchmark and its subsidiaries have not received,
and to the knowledge of Benchmark do not expect to receive,
any notification from any source advising Benchmark or such
subsidiaries that: (A) it is a potentially responsible party
under CERCLA or any other Environmental Laws; (B) any real
property or facility currently or previously owned, operated,
or leased, by it is identified or proposed for listing as a
federal National Priorities List ("NPL") (or state-equivalent)
site or a Comprehensive Environmental Response, Compensation
and Liability Information System ("CERCLIS") list (or
state-equivalent) site; and (C) any facility to which it has ever
transported or otherwise arranged for the disposal of Hazardous
Substances is identified or proposed for listing as an NPL (or
state-equivalent) site or CERCLIS (or state-equivalent) site; and
(vii) The Stations' operations do not have a significant
environmental impact as defined by 47 C.F.R. Section 1.1307.
(n) Taxes. Each of Benchmark and its subsidiaries has filed
all tax returns, reports, statements and other documents ("Tax
Returns") required to be filed (except where the failure to file any
such Tax Returns has not and would not reasonably be expected to
result in a Material Adverse Effect), and all such Tax Returns which
have been filed are accurate and complete in all material respects.
Each of Benchmark and its subsidiaries has paid (or there has been
paid on its behalf), or has set up an adequate reserve for the
payment of, all material taxes required to be paid, withheld, or
deducted, or for which any of Benchmark or its subsidiaries are
liable, in respect of the periods covered by such Tax Returns, and
with respect to each tax, from the end of the period covered by the
most recently filed Tax Return to the date hereof, and the Balance
Sheet reflects an adequate reserve for all taxes payable, or
required to be withheld and remitted, by Benchmark or any of its
subsidiaries, or for which Benchmark or any of its subsidiaries are
liable, accrued through the Balance Sheet Date. No material
deficiencies for any taxes have been proposed, asserted or assessed
by taxing authorities with respect to Benchmark or any of its
subsidiaries and are pending, and no requests for waivers of the
time to assess any such taxes are pending. Except as set forth on
Schedule 2.1(n), for each taxable year or period not closed by the
applicable statute of limitations, (i) Benchmark and each subsidiary
are properly classified as partnerships (and not as associations
taxable as corporations) for tax purposes and (ii) Benchmark and its
subsidiaries have withheld all required amounts pursuant to Section
1446 of the Code. For the purposes of this Agreement, the term
"taxes" shall include all federal, state, local, foreign and other
income, gross receipts, use, ad valorem, transfer, franchise,
profits, license, payroll, occupation, severance, property, sales,
excise, withholding, unemployment compensation, social security, and
other taxes and charges of any nature whatsoever (including
interest, penalties and additions to tax relating to any of the
specified items).
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(o) Certain Agreements. Except as set forth in Schedule 2.1(o)
and for oral or written agreements, plans or arrangements terminable
without liability or penalty to Benchmark or its subsidiaries upon thirty
days notice, the benefits of which do not exceed $50,000 per year, neither
Benchmark nor any of its subsidiaries is a party to any oral or written
agreement, plan or arrangement with any employee or other station or
broadcast personnel (whether an employee, consultant or an independent
contractor) of Benchmark or its subsidiaries (i) the benefits of which are
contingent, or the terms of which are materially altered, upon, or result
from, the occurrence of a transaction involving Benchmark or its
subsidiaries of the nature of any of the transactions contemplated by this
Agreement, (ii) providing severance benefits longer than forty-five days or
other benefits after the termination of employment or other contractual
relationship regardless of the reason for such termination and regardless
of whether such termination is before or after a change of control, (iii)
under which any person may receive payments subject to the tax imposed by
Section 4999 of the Code or (iv) any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement. Schedule 2.1(o)
hereto lists (and, in the case of clause (iv), describes) each oral or
written (i) agreement, contract, indenture or other instrument relating to
the borrowing of money or the guarantee of any obligation for the borrowing
of money, (ii) Employee Benefit Plan, as defined in Section 2.1(p), (iii)
employment or consulting contract which is not terminable without liability
or penalty to Benchmark or any of its subsidiaries on thirty (30) days or
less notice, (iv) covenant, agreement, or arrangement under which
Benchmark's or any of its subsidiary's ability or right to compete with
another Person is restricted or impaired, or (v) contract, agreement or
commitment (except for advertising, trade or barter agreements) under which
any party thereto remains obligated to provide goods or services having a
value, or to make payments aggregating, in excess of $50,000 per year, in
any such case to which Benchmark or any of its subsidiaries is a party or
bound. Each such agreement, contract or obligation described in Schedule
2.1(o) or required to be so described is a valid and binding obligation of
Benchmark or one of its subsidiaries, as the case may be, and is in full
force and effect without amendment, except where not being a valid and
binding obligation or in full force and effect without amendment does not
and would not reasonably be expected to have a Material Adverse Effect.
Benchmark or one of its subsidiaries, as the case may be, has performed the
obligations required to be performed by it under the agreements so
described and is not (with or without lapse of time or the giving of
notice, or both) in breach or default thereunder, except to the extent such
nonperformance, breach or default does not and would not reasonably be
expected to result in a Material Adverse Effect. As of the date hereof,
each of Benchmark and its subsidiaries, and to their knowledge each other
party to such contracts, has performed the obligations required to be
performed by it under the agreements so described and is not (with or
without lapse of time or the giving of notice or both) in breach or default
thereunder, except to the extent such nonperformance, breach or default
does not and would not reasonably be expected to
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result in a Material Adverse Effect. Schedule 2.1(o) identifies, as to each
agreement, contract or obligation listed thereon, whether the consent of
the other party thereto is required in order for such agreement, contract
or obligation to continue in full force and effect upon the consummation of
the transactions contemplated hereby or whether such agreement, contract or
obligation can be canceled by the other party without liability to such
other party due to the consummation of the transactions contemplated
hereby. A copy of each agreement, contract, obligation, plan or
arrangement set forth in Schedule 2.1(o) has been made available to
Mergeco. As of the Closing Date, neither Benchmark nor any of its
subsidiaries shall have any indebtedness for borrowed money that is not
pre-payable (whether with or without penalty).
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested and
unvested) under each "employee pension benefit plan" as such
term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which
Benchmark or any other trades or businesses under common
control within the meaning of Section 4001(b)(1) of ERISA with
Benchmark or any Fund (collectively, the "ERISA Group")
maintains, or to which Benchmark or any member of the ERISA
Group is obligated to contribute (the "Pension Plan"), did
not, as of the respective last annual valuation dates for such
Pension Plans, exceed the value of the assets of such Pension
Plan allocable to such benefits. None of the Pension Plans
subject to Section 302 of ERISA has incurred any "accumulated
funding deficiency," as such term is defined in Section 302 of
ERISA (whether or not waived), since the effective date of
such Section 302. Neither Benchmark or any member of the
ERISA Group, nor any employee or partner of Benchmark or any
member of the ERISA Group or any of the employee benefit plans
of Benchmark or any member of the ERISA Group which are
subject to ERISA, including the Pension Plans, or any trusts
created thereunder, or any trustee or administrator thereof,
has engaged in a "prohibited transaction" as such term is
described in Section 4975 of the Code, which has subjected or
which could subject Benchmark or any member of the ERISA
Group, any partner or employee of Benchmark or any member of
the ERISA Group or any of such plans or any trust to any
material tax or penalty on prohibited transactions imposed by
such Section 4975. None of such Pension Plans subject to
Title IV of ERISA or any of their related trusts has been
terminated or partially terminated, nor has there been any
unreported "reportable event," as that term is defined in
Section 4043 of ERISA, with respect thereto since the
effective date of such Section 4043 (excluding those events as
to which the thirty day notice period is waived pursuant to
the regulations issued thereunder). Neither Benchmark nor any
member of the ERISA Group has contributed or been obligated to
contribute to any "multiemployer plan" as such term is defined
in Section 3(37) or Section 4001(a)(3) of ERISA . Except as
set forth on Schedule 2.1(p)
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or the other Schedules to this Agreement, there are no "employee
benefit plans" within the meaning of Section 3(3) of ERISA or any
bonus (excluding bonuses granted on an individual basis in the
ordinary course of business), pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, insurance or
other plan or arrangement or understanding providing benefits to any
present or former employee or contractor of Benchmark or any member
of the ERISA Group maintained by Benchmark or any member of the ERISA
Group or as to which Benchmark or any member of the ERISA Group has
any material liability or obligation (collectively, "the Employee
Benefit Plans").
(ii) True, correct and complete copies of each of the
Employee Benefit Plans, and related trusts, if applicable,
have been furnished or made available to Mergeco, along with
the most recent report filed on Form 5500 and summary plan
description with respect to each Employee Benefit Plan
required to file Form 5500. All reports and disclosures
relating to the Employee Benefit Plans required to be filed
with or furnished to governmental agencies or plan
participants or beneficiaries have been furnished in
accordance with applicable law in a timely manner except where
such failure has not resulted and would not reasonably be
expected to result in a Material Adverse Effect. Each
Employee Benefit Plan has been maintained in compliance in all
material respects with ERISA and the Code, and each Employee
Benefit Plan intended to be qualified under Section 401 of the
Code has received or is awaiting receipt of a favorable
determination letter from the Internal Revenue Service
regarding the qualified status and has not since receipt of
the most recent favorable determination letter been amended
or, to the knowledge of Benchmark and the members of the ERISA
Group, operated in a manner which would adversely affect such
status. There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of
Benchmark and the members of the ERISA Group, threatened
against, or with respect to any of the Employee Benefit Plans.
All contributions required to be made to the Employee Benefit
Plans pursuant to their terms have been timely made. Except
as disclosed on Schedule 2.1(p), there is no matter pending
with respect to any of the Employee Benefit Plans before the
Internal Revenue Service, Department of Labor or the Pension
Benefit Guaranty Corporation. Except as required by
applicable law, none of the Employee Benefit Plans provides
medical insurance coverage following retirement. Each
Employee Benefit Plan which is an "employee welfare benefit
plan," as defined in Section 3(l) of ERISA, may be
unilaterally amended or terminated in its entirety without
liability except as to benefits accrued prior to such
amendment or termination.
(iii) Schedule 2.1(p) lists each collective bargaining
agreement to which Benchmark or any of its subsidiaries is a
party. Except for those unions
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35
which are parties to one or more of the listed collective bargaining
agreements or as otherwise listed on Schedule 2.1(p), neither
Benchmark nor any of its subsidiaries has agreed to recognize any
union or other collective bargaining representative, nor has any
union or other collective bargaining representative been certified
as the exclusive bargaining representative of any of their
employees. Except as set forth on the Schedules to this Agreement,
each of Benchmark and its subsidiaries (A) is, and has been since
June 30, 1993 or the date of its formation, whichever is later, in
substantial compliance with all applicable laws regarding labor,
employment and employment practices, terms and conditions of
employment, affirmative action, wages and hours, plant closing and
mass layoff, occupational safety and health, immunization, and
workers' compensation, (B) is not engaged, nor has it since June 30,
1993 or the date of its formation, whichever is later, engaged, in
any unfair labor practices, and has no, and has not had since June
30, 1993 or the date of its formation, whichever is later, any,
unfair labor practice charges or complaints before the National
Labor Relations Board pending or, to Benchmark's knowledge,
threatened against it, (C) has no, and has not had since June 30,
1993 or the date of its formation, whichever is later, any,
grievances, arbitrations or other proceedings arising or asserted to
arise under any collective bargaining agreement, pending or, to
Benchmark's knowledge, threatened against it and (D) has no, and has
not had since June 30, 1993 or the date of its formation, whichever
is later, any, charges, complaints or proceedings before the Equal
Employment Opportunity Commission, Department of Labor or any other
federal, state or local agency responsible for regulating employment
practices, pending, or, to Benchmark's knowledge, threatened against
it, except, in each case (with respect to clauses (A) through (D)
above) for any violations, practices, complaints, proceedings or
charges that have not resulted and would not reasonably be expected
to result in a Material Adverse Effect. There is no labor strike,
slowdown, work stoppage or lockout pending or, to Benchmark's
knowledge, threatened against or affecting Benchmark or its
subsidiaries, and Benchmark or its subsidiaries has not experienced
any labor strike, slowdown, work stoppage or lockout since June 30,
1993 or the date of its formation, whichever is later. Except as set
forth on Schedule 2.1(p), to Benchmark's knowledge, no union
organizational campaign or representation petition is currently
pending with respect to the employees of Benchmark or its
subsidiaries.
(q) Patents, Trademarks, Etc. There is no material patent,
patent application, trademark, trade name, trade name and trademark
registration, service mark, copyright, and copyright registration
(collectively, "Intellectual Rights") owned by or registered in the
name of Benchmark of any of its subsidiaries, or in which Benchmark
or any of its subsidiaries has any right, license or interest other
than the call signs of each of the Stations and the registered
service mark "Country Heartlines." Benchmark or its subsidiaries
own or have the right to use all such call signs and such service
mark. To the knowledge of Benchmark, neither Benchmark
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36
nor any of its subsidiaries is infringing any such Intellectual Rights, and
Benchmark is not aware of any infringement by others of any such rights
owned by Benchmark or any of its subsidiaries.
(r) Affiliate Relationships. Except as set forth in the
Existing Partnership Agreement and the Existing Fund Partnership
Agreements, Schedule 2.1(r) sets forth a complete list and summary
description of all contracts or other arrangements involving
Benchmark or any of its subsidiaries in which the General Partner or
any of its affiliates has a financial interest, including
indebtedness to Benchmark or its subsidiaries.
(s) Vote Required. The only votes of the holders of any Partnership
Interests of Benchmark that are necessary to approve the Merger and
adopt this Agreement are the affirmative votes of the General
Partners. The only votes of the holders of any partnership interests
in Fund I, Fund IV, Fund VII and Fund VIII that are necessary to
approve the applicable Other Benchmark Mergers and adopt the
applicable Other Benchmark Merger Agreements are the affirmative votes
of Benchmark and the Fund Limited Partners holding more than fifty
percent (50%) of the applicable aggregate Limited Partner Percentage.
(t) Fairness Opinion. The General Partners have received the
fairness opinion (the "Alex Brown Fairness Opinion") of Alex. Brown
& Sons Incorporated ("Alex. Brown") dated the date hereof, a copy of
which has been provided to Mergeco.
(u) Pending Acquisitions. There has occurred no failure to
comply with, or breach of, any representation or warranty, covenant,
obligation or undertaking made by Benchmark or its affiliates under
the Statesville Agreement, the Jackson Agreement, or the Montgomery
Agreements, and to Benchmark's knowledge, except as set forth in
Schedule 2.1(u), there has occurred no failure to comply with, or
breach of, any representation or warranty, covenant, obligation or
undertaking made by any other party thereto which has or would
reasonably be expected to result in a Material Adverse Effect
(unless Mergeco or its affiliates have been informed of such breach
and have consented to the consummation of the applicable
acquisition).
2.2. REPRESENTATIONS AND WARRANTIES OF MERGECO. Mergeco represents and
warrants to Benchmark as follows (with the understanding that Benchmark is
relying on such representations and warranties in entering into and performing
this Agreement):
(a) Organization Standing and Power. Each of Mergeco and
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
(b) Authority. Each of Mergeco and Parent has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions
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37
contemplated hereby. The execution and delivery of this Agreement by
Mergeco and Parent and the consummation by them of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Mergeco (including the approval and
adoption of this Agreement and the transactions contemplated hereby by
the Parent) and Parent. This Agreement has been duly executed and
delivered and constitutes the valid and binding obligation of Mergeco
and Parent, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to a loss of a material
benefit under, any provision of the Articles of Incorporation or
Bylaws of Mergeco or any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute law,
ordinance, rule or regulation applicable to Mergeco or its properties
or assets, except for any such conflicts, violations or defaults or
terminations, cancellations, or accelerations which individually or in
the aggregate do not have a material adverse effect on Mergeco's or
Parent's ability to consummate its obligations hereunder. No consent,
approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to
Mergeco or Parent in connection with the execution and delivery of
this Agreement by Mergeco or Parent or the consummation by it of the
transactions contemplated hereby, except for (i) the filing of a
premerger notification report under the HSR Act, (ii) the filing of
the Certificate of Merger with the Maryland State Department of
Assessments and Taxation and the Secretary of State of the State of
Delaware, (iii) the filing with the FCC and the grant of the consent
of the FCC to the transfer of control of the Station Licenses pursuant
to the terms of this Agreement (as contemplated by Section 6.1), and
(iv) applicable requirements, if any, of the Securities Act and the
Exchange Act and the rules and regulations thereunder and state
securities or blue sky laws. Mergeco and Parent are acquiring the
partnership interests of the Surviving Partnership for investment
purposes and without a view to the distribution thereof in violation
of the Securities Act.
(c) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to
the knowledge of Mergeco, threatened against it relating to the
transactions contemplated by this Agreement.
(d) FCC Matters. Mergeco and Parent are legally and otherwise
qualified under the Communications Act, and the rules, regulations
and policies of the FCC, to
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38
become the licensee or transferee, as applicable, of the Stations
(including the Jackson Stations, the Montgomery Stations and the
Statesville Stations) and consummate this Agreement and the
transactions contemplated hereby. There are no proceedings,
complaints, notices of forfeiture, claims, investigations pending or,
to the knowledge of Mergeco, threatened against any or in respect of
any of the broadcast stations licensed to Mergeco or its affiliates
that would materially impair the qualifications of Mergeco to take
control of the Stations (including the Jackson Stations, the
Montgomery Stations and the Statesville Stations). Neither Mergeco,
nor any Person in which Mergeco has an interest or which has an
interest in Mergeco, has an interest in any media property that will
prevent or impair Mergeco from obtaining the FCC's consent to all the
transactions contemplated hereby without the need for a waiver of the
FCC's rules as they apply with respect to the transactions
contemplated hereby; provided, however, no representation is made in
this paragraph with respect to any prevention or impairment relating
to or caused by filings and proceedings under the HSR Act.
(e) Media Properties. Schedule 2.2(e) sets forth every media
business (collectively, the "Mergeco Affiliated Businesses") which
will be taken into account in determining what information to
provide in any filing that will be made under the HSR Act by Mergeco
or any of its affiliates with respect to the transactions
contemplated hereby and by the Other Benchmark Transactions.
(f) Real Estate. As of the date hereof, Mergeco does not own
or lease any real property.
(g) Alex. Brown Fee. Prior to the execution hereof, Mergeco or
its affiliates have paid the Alex. Brown Fee to Alex. Brown.
2.3. REPRESENTATIONS AND WARRANTIES REGARDING FUND I, FUND IV, FUND VII
AND FUND VIII. For purposes of Section 10.1 only, each of Fund I, Fund IV,
Fund VII and Fund VIII, with respect to itself and its own subsidiaries,
severally but not jointly, represents and warrants to Mergeco and Parent as
follows:
(a) Organization, Good Standing, Etc. Each of the Fund and its
subsidiaries is a partnership or other entity, duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization, has all requisite partnership (or
other) power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each state in which
the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the
failure to so qualify or be in good standing does not have and could
not reasonably be expected to have a Material Adverse Effect. The
Fund has delivered to Mergeco true and complete copies of the
Certificates and Agreements of Limited Partnership (or equivalent
organizational documents) of the Fund and each of its subsidiaries,
as in effect at the date of this Agreement. Neither the Fund nor
any
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39
subsidiary is in violation of any provisions of its Certificate and
Agreement of Partnership or equivalent organizational documents in a way
that would result in a Material Adverse Effect.
(b) Subsidiaries of the Fund. Schedule 2.1(b) sets forth a
true and complete list of all of the Fund's directly or indirectly
owned subsidiaries, together with the jurisdiction of incorporation
or organization of each subsidiary. Schedule 2.1(b) also sets forth
the type of equity interest in each subsidiary owned by the Fund or
another subsidiary of the Fund and indicates whether any Person
other than Benchmark or a subsidiary of Benchmark owns any equity
interest in any subsidiary of the Fund. Except as disclosed on
Schedule 2.1(b), the Fund does not own, directly or indirectly, any
subsidiaries, or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other
similar investment in any corporation, partnership, joint venture,
association, limited liability company, trust or other entity.
(c) Capital Structure. Except as set forth in Schedule 2.1(c),
in the Existing Fund Partnership Agreements and as contemplated by
this Agreement, there are no options, warrants, calls, rights,
commitments or agreements of any character to which the Fund or any
of its subsidiaries is a party or by which any of them is bound
obligating the Fund or any of its subsidiaries to issue, deliver or
sell, or cause to be delivered or sold, additional partnership
interests or any equity interests of the Fund or any of its
subsidiaries, or obligating the Fund or any of its subsidiaries to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. Except as set forth in the Existing Fund
Partnership Agreements, there are no outstanding contractual
obligations of the Fund or any subsidiary to repurchase, redeem or
otherwise acquire any partnership interests of the Fund or any
partnership interest of, or any equity interest in, any subsidiary
listed on Schedule 2.1(b). There is no Voting Debt on any matters
on which partners or holders of equity interests in the Fund or its
subsidiaries may vote. All the outstanding partnership interests of
the Fund have been duly authorized and validly issued, and all
capital contributions required to be made with respect to such
partnership interests have been made in full. The partnership
interests of the Fund have not been, and as to partnership interests
in the future, will not be, issued in violation of any preemptive or
similar rights. There are no voting trusts, proxies or other
agreements or understandings to which the Fund or any of its
subsidiaries is a party or by which the Fund or any of its
subsidiaries is bound with respect to the voting of any partnership
interests of or equity interests in the Fund or any of its
subsidiaries. All of the issued and outstanding partnership
interests of or equity interests in the Fund and each of its
subsidiaries are duly authorized, validly issued, and (with respect
to limited partnership interests) nonassessable, and have not been
issued in violation of any preemptive or similar rights. All
capital contributions required to be made by the partners or
stockholders of each such Fund or subsidiary have been made in full.
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40
(d) Authority. Upon receipt of the requisite consent of the
applicable Fund Limited Partners, the Fund shall have all requisite
partnership power and authority to enter into this Agreement and any
other agreement executed by the Fund in connection with the
transactions contemplated by this Agreement including the
Transaction Documents and to consummate the transactions
contemplated hereby or thereby. The execution and delivery of the
Transaction Documents upon receipt of the requisite consent of the
applicable Fund Limited Partners, by the Fund and the consummation
by it of the transactions contemplated hereby or thereby have been
duly authorized by all necessary partnership action on the part of
the Fund. The Transaction Documents have been duly executed and
delivered by the Fund and, upon receipt of the requisite consent of
the applicable Fund Limited Partners, will constitute the valid and
binding obligations of the Fund, enforceable against the Fund in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(e) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents by the Fund do not, and
the performance by the Fund of the transactions contemplated hereby
or thereby will not, subject to (i) with respect to the applicable
Other Benchmark Merger, the approval of the applicable Other
Benchmark Merger Agreement and the transactions contemplated thereby
by the applicable Fund Limited Partners, (ii) obtaining the
consents, approvals, authorizations and permits and making the
filings described in this Section 2.3(e), and (iii) obtaining any
consents required by the terms of any existing agreements of the
Fund with third parties that are not listed in Schedule 2.1(o) (A)
violate, conflict with or result in any breach of any provision of
the certificates and agreements of limited partnership or equivalent
organizational documents, in each case as amended or restated, of
the Fund or any of its subsidiaries, (B) violate, conflict with or
result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under, or permit the
termination or cancellation of or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of
control of the Fund or otherwise) any obligation, or result in the
loss of any benefit or give any person the right to require any
security to be repurchased, or give rise to the creation of any
lien, charge, security interest or encumbrance upon any of the
properties or assets of the Fund or any of its subsidiaries under,
any of the terms, conditions or provisions of any contract, loan or
credit agreement, note, bond, mortgage, indenture or deed of trust
or any license, lease, agreement or other instrument, permit,
concession, franchise, license or obligation to which any of them is
a party or by which they or any of their properties or assets may be
bound or subjected, or (C) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation, of any Governmental
Entity applicable to the Fund or any of its subsidiaries or by which
or to which any of their respective
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41
properties or assets is bound or subject. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to the Fund or any
of its subsidiaries in connection with the execution and delivery of
the Transaction Documents by the Fund or any of its subsidiaries or
the consummation of the transactions contemplated hereby or thereby,
except for (1) the filing of a premerger notification report under the
HSR Act, (2) the consents of the FCC to the transfers of control of
the Station Licenses held by the Fund (the "Fund Station Licenses") as
contemplated by Section 6.1 hereof, (3) the filing of the Certificate
of Merger with the State Department of Assessments and Taxation of
Maryland and the Secretary of State of the State of Delaware, and (4)
applicable requirements, if any, of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and
state securities or blue sky laws.
(f) Financial Statements; Absence of Certain Changes or
Events.
(i) The Fund has delivered to Mergeco the Financial
Statements of the Fund. The Financial Statements of the Fund,
including, if applicable, the notes thereto, were prepared in
accordance with GAAP applied on a consistent basis throughout
the periods covered thereby (except to the extent disclosed
therein or required by changes in GAAP) and, subject to
adjustments that would be made after audit (in the case of any
unaudited financial statements), present fairly in all material
respects the financial position of the Fund and its subsidiaries
as of such dates and for the periods then ended.
(ii) Except as disclosed in Schedule 2.1(f), as of the
date of this Agreement, there is no liability or obligation of
any kind, whether, accrued, absolute, fixed, contingent or
otherwise, of the Fund or its subsidiaries which has or could
reasonably be expected to have a Material Adverse Effect and
that is not reflected or reserved against in the Balance Sheet
of the Fund for the period ended September 30, 1996, other
than (A) liabilities incurred in the ordinary course of
business in a manner consistent with past practices, or (B)
any such liability or obligation which would not be required
to be presented in financial statements or the notes thereto
prepared in conformity with GAAP applied, in a manner
consistent with past practice, in the preparation of the
Financial Statements of the Fund.
(iii) Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date, the Fund and its subsidiaries have
conducted their respective businesses only in the ordinary
course consistent with past practice and nothing has occurred
that would have been prevented by Section 3.1 if the terms of
such section had been in effect as of and after the Balance
Sheet Date. Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date and through (and including) the date of
this Agreement there has not occurred any event that has
resulted in or would reasonably be expected to result in a
Material Adverse Effect.
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42
(g) Compliance with Applicable Laws; FCC Matters; Station
Licenses.
(i) Except as permitted or contemplated hereby, the
businesses of the Fund and its subsidiaries have been
conducted in compliance with each applicable law, ordinance,
regulation, judgment, decree, injunction, rule or order of the
FCC or any other Governmental Entity binding on the Fund or
any of its subsidiaries or their respective properties or
assets, except for such instances of noncompliance that do not
and would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.1(g), no
investigation or review by any Governmental Entity with
respect to the Fund or any of its subsidiaries is pending or,
to the Fund's knowledge, threatened, except for such
investigations or reviews as do not and would not reasonably
be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Fund and its
subsidiaries have complied with the Communications Act, all
rules, regulations and written policies of the FCC thereunder,
all obligations with respect to equal opportunity under
applicable law, and all rules and regulations of the Federal
Aviation Administration applicable to the towers used by the
Stations, except, in each case, where the failure to so comply
does not and would not reasonably be expected to result in a
Material Adverse Effect. In addition, the Fund and its
subsidiaries have duly and timely filed, or caused to be so
filed, with the FCC all material reports, statements, documents,
registrations, filings or submissions with respect to the
operation of the Stations and the ownership thereof, including,
without limitation, applications for renewal of authority
required by applicable law to be filed (except where the failure
to make such filings on a timely basis does not have or would
not reasonably be expected to have a Material Adverse Effect).
All such FCC filings complied with all material applicable laws
when made and no material deficiencies have been asserted with
respect to any such filings. The material required by 47 C.F.R.
Section 73.3526 to be kept in the public inspection files of
the Stations is materially complete.
(ii) Schedule 2.1(g) lists (A) all licenses, permits and
other authorizations, including the expiration dates thereof,
issued to the Fund or any of its subsidiaries by the FCC
relating to the Stations and held by them as of the date of
this Agreement and (B) all licenses, permits or authorizations
issued to the Fund or any of its subsidiaries by any other
Governmental Entities which are material to the operations of
the Fund Stations and held by them as of the date of this
Agreement, the loss of which have or would reasonably be
expected to have a Material Adverse Effect. The Stations
owned and operated by the Fund or its subsidiaries (the "Fund
Stations") have been operated in all material respects in
accordance with the terms of the Station Licenses held by the
Fund or its subsidiaries (the "Fund Station Licenses"). There
are no material proceedings pending or, to the Fund's
knowledge, threatened with respect to the Fund's or any of its
subsidiaries' ownership or operation of the Fund Stations
which reasonably may be
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43
expected to result in the revocation, material adverse modification,
non-renewal or suspension of any of the Fund Station Licenses, the
issuance against the Fund or any of its subsidiaries of any cease and
desist order, or the imposition of any administrative actions by the
FCC or any other Governmental Entity with respect to the Fund Station
Licenses, or which reasonably may be expected to adversely affect the
Fund Stations' ability to operate as currently operated or the
Surviving Partnership's ability to obtain control of the Fund Station
Licenses. Except as set forth on Schedule 2.1(g), to the Fund's
knowledge, no other broadcast station or radio communications
facility is causing interference to the Fund Stations' transmissions
beyond that which is allowed by FCC rules and regulations. The Fund
has no reason to believe that the FCC will not renew the Fund Station
Licenses issued by the FCC in the ordinary course of business. The
Fund knows of no facts relating to the Fund or its subsidiaries under
the Communications Act or the rules, regulations or written policies
of the FCC in effect on the date of this Agreement that reasonably
may be expected to disqualify the Fund or its subsidiaries from
transferring control of the Fund Station Licenses pursuant to the
terms of this Agreement or that would prevent the consummation by
them of the transactions contemplated by this Agreement, provided
that the Fund makes no representation in this Section 2.3(g) with
respect to any facts or circumstances attributable to Mergeco or its
affiliates which could prevent the consummation of the transactions
contemplated by this Agreement.
(h) Absence of Litigation. Except as set forth on Schedule
2.1(h), there is no claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or, to
the knowledge of the Fund, threatened against the Fund or any of its
subsidiaries (including, for this purpose any action, suit, inquiry,
judicial or administrative proceeding against the Fund or its
subsidiaries relating to the transactions contemplated by this
Agreement) or any of their respective properties or assets by or
before any arbitrator or Governmental Entity, nor to the Fund's
knowledge are there any investigations relating to the Fund or any
of its subsidiaries or any of their respective properties or assets
pending or threatened by or before any arbitrator or Governmental
Entity. Except as set forth in Schedule 2.1(h), there is no
judgment, decree, injunction, order, determination, award, finding,
or letter of deficiency of any Governmental Entity or arbitrator
outstanding against the Fund or any of its subsidiaries or any of
their respective properties or assets which have or would reasonably
be expected to have a Material Adverse Effect.
(i) Insurance. Schedule 2.1(i) sets forth a summary of all
fire, general liability, malpractice liability, theft and other
forms of insurance and all fidelity bonds held by or applicable to
the Fund or any of its subsidiaries. No event has occurred,
including, without limitation, the failure by the Fund or any of its
subsidiaries to give any notice or information or the delivery of
any inaccurate or erroneous notice or information, which limits or
impairs the rights of the Fund or any of its subsidiaries under any
such insurance policies in such a manner that has or would
reasonably be
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44
expected to have a Material Adverse Effect. Excluding insurance
policies that have expired and been replaced in the ordinary course of
business, no insurance policy has been canceled within the last two
years prior to the date hereof.
(j) Real Estate. Each of the Fund and its subsidiaries has
good and marketable title in fee simple to all Owned Real Property
held by the Fund and valid leaseholds in each parcel of Leased Real
Property leased by the Fund, except to the extent marketability may
be affected by the existence of Permitted Liens. Each lease is
valid without default thereunder by the lessee or, as of the date
hereof and to the Fund's knowledge, the lessor. Schedule 2.1(j)
lists as of the date hereof (i) the street address and use of each
parcel of Owned Real Property held by the Fund and (ii) the street
address and use of each parcel of Leased Real Property pursuant to
which the Fund or any of its subsidiaries is a lessee.
(k) Personal Property. Except for property held under capital
leases and the liens of the Fund's secured creditors (which shall be
paid at Closing or, if both Benchmark and Mergeco elect, reflected
on the Closing Balance Sheet) and Permitted Liens, the Fund or one
of its subsidiaries has good title to all the items of machinery,
equipment, furniture, fixtures, inventory, receivables and other
tangible or intangible personal property reflected on the Balance
Sheet of the Fund and all such property acquired since the Balance
Sheet Date, except for any such property or assets sold or otherwise
disposed of in the ordinary course of business and consistent with
past practices since such date or where the failure to have good title
does not and would not reasonably be expected to have a Material
Adverse Effect. The tangible personal property and fixtures owned or
used by the Fund or any of its subsidiaries that are necessary for the
operation of the Fund Stations, including all broadcasting equipment
and broadcast towers, are in good operating condition and repair
(subject to normal wear and tear) and permit the conduct of the
business of the Fund Stations in compliance with all material FCC
rules and regulations. The Fund or its subsidiaries owns or holds
under valid leases all of the tangible personal property and fixtures
necessary to conduct the business of the Fund Stations as presently
conducted except where the failure to own or hold under valid lease
any tangible property or fixtures does not and would not reasonably be
expected to have a Material Adverse Effect.
(l) Liens and Encumbrances. All properties and assets,
including leases, owned by the Fund and its subsidiaries are free
and clear of all Liens except Permitted Liens.
(m) Environmental Matters. Except as set forth on Schedule
2.1(m) and except to the extent inaccuracy of the representations
and warranties set forth in this Section 2.3(m) does not and would
not reasonably be expected to result in a Material Adverse Effect:
(i) The Fund Owned Real Property and, to the Fund's
knowledge, the Fund Leased Real Property and the operations of
the Fund and its
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subsidiaries thereon comply in all material respects with all
applicable federal, state and local laws, statutes, codes,
rules, regulations, ordinances, orders, determinations or rules
of common law pertaining to the environment, natural resources
and public or employee health and safety including, without
limitation, the Environmental Laws;
(ii) No judicial proceedings are pending or, to the
Fund's knowledge, threatened against the Fund or its
subsidiaries alleging the violation of any Environmental Laws,
and there are no administrative proceedings pending or, to the
Fund's knowledge, threatened against the Fund or its
subsidiaries, alleging the violation of any Environmental Laws
and no notice (in the case of clause (ii)(B), directed to the
Fund or any of its subsidiaries) from any Governmental Entity
or any person has been received by the Fund or its
subsidiaries (A) claiming any violation of any Environmental
Laws in connection with any Fund Owned Real Property or Fund
Leased Real Property that has not been complied with or
otherwise resolved or (B) requiring any remediation, clean-up,
modification, repairs, work, construction, alterations or
installations on or in connection with any Fund Owned Real
Property or Fund Leased Real Property that are necessary to
comply with any Environmental Laws;
(iii) All Permits, required to be obtained or filed by
each of the Fund and its subsidiaries under any Environmental
Laws in connection with the Fund's and its subsidiaries'
operations, including, without limitation, those activities
relating to the generation, use, storage, treatment, disposal,
release or remediation of Hazardous Substances (as such term
is defined in Section 2.1(m)(iv) hereof), have been duly
obtained or filed, and each of the Fund and its subsidiaries
are and have at all times been in compliance in all material
respects with the terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by the
Fund or its subsidiaries or, to the Fund's knowledge, any of
their predecessors, on, in, or under any of the Fund Owned
Real Property or the Fund Leased Real Property are and have at
all times been generated, stored, used, treated, disposed of,
and released by such persons or on their behalf in such manner
as not to result, or be reasonably be expected to result in
any material Environmental Costs or Liabilities;
(v) There are not now, nor have there been in the past,
on, in or under any Fund Owned Real Property or Fund Leased
Real Property when owned, leased or operated by the Fund or
its subsidiaries or, to the Fund's knowledge, when owned,
leased or operated by any of their predecessors, any Hazardous
Substances that are in a condition or location that violates
any Environmental Law in any material respect or that
reasonably could be expected to (a) require remediation under
any Environmental Law or (b) give
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rise to a claim for damages or compensation by any affected
Person or to any Environmental Costs or Liabilities; provided
that the representation and warranty made in this Section (m)(v)
with respect to matters or conditions caused by any Person other
than the Fund on the Leased Real Property is limited to the
Fund's knowledge.
(vi) The Fund and its subsidiaries have not received, and
to the knowledge of the Fund do not expect to receive, any
notification from any source advising the Fund or such
subsidiaries that: (A) it is a potentially responsible party
under CERCLA or any other Environmental Laws; (B) any real
property or facility currently or previously owned, operated,
or leased, by it is identified or proposed for listing as a
federal NPL (or state-equivalent) site or a CERCLIS list (or
state-equivalent) site; and (C) any facility to which it has
ever transported or otherwise arranged for the disposal of
Hazardous Substances is identified or proposed for listing as
an NPL (or state-equivalent) site or CERCLIS (or
state-equivalent) site; and
(vii) The Fund Stations' operations do not have a
significant environmental impact as defined by 47 C.F.R.
Section 1.1307.
(n) Taxes. Each of the Fund and its subsidiaries has filed all
Tax Returns required to be filed (except where the failure to file
any such Tax Returns has not and would not reasonably be expected to
result in a Material Adverse Effect), and all such Tax Returns which
have been filed are accurate and complete in all material respects.
Each of the Fund and its subsidiaries has paid (or there has been
paid on its behalf), or has set up an adequate reserve for the
payment of, all material taxes required to be paid, withheld, or
deducted, or for which any of the Fund and its subsidiaries are
liable, in respect of the periods covered by such Tax Returns, and
with respect to each tax, from the end of the period covered by the
most recently filed Tax Return to the date hereof, and the Balance
Sheet reflects an adequate reserve for all taxes payable, or
required to be withheld and remitted, by the Fund or any of its
subsidiaries, or for which the Fund or any of its subsidiaries are
liable, accrued through the Balance Sheet Date. No material
deficiencies for any taxes have been proposed, asserted or assessed
by taxing authorities with respect to the Fund or any of its
subsidiaries and are pending, and no requests for waivers of the
time to assess any such taxes are pending. Except as set forth on
Schedule 2.1(n), for each taxable year or period not closed by the
applicable statute of limitations, (i) the Fund and each subsidiary
are properly classified as partnerships (and not as associations
taxable as corporations) for tax purposes and (ii) the Fund and its
subsidiaries has withheld all required amounts pursuant to Section
1446 of the Code. For the purposes of this Agreement, the term
"taxes" shall include all federal, state, local, foreign and other
income, gross receipts, use, ad valorem, transfer, franchise,
profits, license, payroll, occupation, severance, property, sales,
excise, withholding, unemployment compensation, social security, and
other taxes and charges of any nature whatsoever (including
interest, penalties and additions to tax relating to any of the
specified items).
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(o) Certain Agreements. Except as set forth in Schedule 2.1(o)
and for oral or written agreements, plans or arrangements terminable
without liability or penalty to the Fund or its subsidiaries upon
thirty days notice, the benefits of which do not exceed $50,000 per
year, neither the Fund nor any of its subsidiaries is a party to any
oral or written agreement, plan or arrangement with any employee or
other station or broadcast personnel (whether an employee, consultant
or an independent contractor) of the Fund or its subsidiaries (i) the
benefits of which are contingent, or the terms of which are materially
altered, upon, or result from, the occurrence of a transaction
involving the Fund or its subsidiaries of the nature of any of the
transactions contemplated by this Agreement, (ii) providing severance
benefits longer than forty-five days or other benefits after the
termination of employment or other contractual relationship regardless
of the reason for such termination and regardless of whether such
termination is before or after a change of control, (iii) under which
any person may receive payments subject to the tax imposed by Section
4999 of the Code or (iv) any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement. Schedule 2.1(o) hereto lists (and, in the case of
clause (iv), describes) each oral or written (i) agreement, contract,
indenture or other instrument relating to the borrowing of money or
the guarantee of any obligation for the borrowing of money, (ii)
Employee Benefit Plan, (iii) employment or consulting contract which
is not terminable without liability or penalty to the Fund or any of
its subsidiaries on thirty (30) days or less notice, (iv) covenant,
agreement, or arrangement under which the Fund's or any of its
subsidiary's ability or right to compete with another Person is
restricted or impaired, or (v) contract, agreement or commitment
(except for advertising, trade or barter agreements) under which any
party thereto remains obligated to provide goods or services having a
value, or to make payments aggregating, in excess of $50,000 per year,
in any such case to which the Fund or any of its subsidiaries is a
party or bound. Each such agreement, contract or obligation described
in Schedule 2.1(o) or required to be so described executed by the Fund
or one of its subsidiaries is a valid and binding obligation of the
Fund or one of its subsidiaries, as the case may be, and is in full
force and effect without amendment, except where not being a valid and
binding obligation or in full force and effect without amendment does
not and would not reasonably be expected to have a Material Adverse
Effect. The Fund or one of its subsidiaries, as the case may be, has
performed the obligations required to be performed by it under the
agreements so described and is not (with or without lapse of time or
the giving of notice, or both) in breach or default thereunder, except
to the extent such nonperformance, breach or default does not and
would not reasonably be expected to result in a Material Adverse
Effect. As of the date hereof, each of the Fund and its subsidiaries,
and to the Fund's knowledge, each other party to such contracts, has
performed the obligations required to be performed by it under the
agreements so described and is not (with or without lapse of time or
the giving of notice or both) in breach or default thereunder, except
to the extent such nonperformance, breach or default does not and
would not reasonably be expected to
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result in a Material Adverse Effect. Schedule 2.1(o) identifies, as
to each agreement, contract or obligation listed thereon, whether the
consent of the other party thereto is required in order for such
agreement, contract or obligation to continue in full force and effect
upon the consummation of the transactions contemplated hereby or
whether such agreement, contract or obligation can be canceled by the
other party without liability to such other party due to the
consummation of the transactions contemplated hereby. A copy of each
agreement, contract, obligation, plan or arrangement set forth in
Schedule 2.1(o) has been provided to Mergeco. As of the Closing Date,
neither the Fund nor any of its subsidiaries shall have any
indebtedness for borrowed money that is not prepayable (whether with
or without penalty).
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested and
unvested) under each "employee pension benefit plan" as such
term is defined in Section 3(2) of ERISA, which the Fund or
any other trades or businesses under common control within the
meaning of Section 4001(b)(1) of ERISA with the Fund
(collectively, the "Fund ERISA Group") maintains, or to which
the Fund or any member of the ERISA Group is obligated to
contribute (the "Fund Pension Plan"), did not, as of the
respective last annual valuation dates for such
Fund Pension Plans, exceed the value of the assets of such
Fund Pension Plan allocable to such benefits. None of the
Fund Pension Plans subject to Section 302 of ERISA has
incurred any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA (whether or not waived), since
the effective date of such Section 302. Neither the Fund or
any member of the Fund ERISA Group nor any employee or partner
of the Fund or any member of the Fund ERISA Group or any of
the employee benefit plans of the Fund or any member of the
Fund ERISA Group which are subject to ERISA, including the
Fund Pension Plans, or any trusts created thereunder, or any
trustee or administrator thereof, has engaged in a "prohibited
transaction" as such term is described in Section 4975 of the
Code, which has subjected or which could subject the Fund or
any member of the Fund ERISA Group, any partner or employee of
the Fund or any member of the Fund ERISA Group or any of such
plans or any trust to any material tax or penalty on
prohibited transactions imposed by such Section 4975. None of
such Fund Pension Plans subject to Title IV of ERISA or any of
their related trusts has been terminated or partially
terminated, nor has there been any unreported "reportable
event," as that term is defined in Section 4043 of ERISA, with
respect thereto since the effective date of such Section 4043
(excluding those events as to which the thirty day notice
period is waived pursuant to the regulations issued
thereunder). Neither the Fund nor any member of the Fund
ERISA Group has contributed or been obligated to contribute to
any "multiemployer plan" as such term is defined in Section
3(37) or Section 4001(a)(3) of ERISA. Except as set forth on
Schedule 2.1(p) or the other Schedules to this Agreement,
there are no "employee benefit plans" within the meaning of
Section 3(3) of ERISA
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or any bonus (excluding bonuses granted on an individual basis
in the ordinary course of business), pension, profit sharing,
deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization,
insurance or other plan or arrangement or understanding
providing benefits to any present or former employee or
contractor of the Fund or any member of the Fund ERISA Group
maintained by the Fund or any member of the Fund ERISA Group or
as to which the Fund or any member of the Fund ERISA Group has
any material liability or obligation (collectively, "the Fund
Employee Benefit Plans").
(ii) True, correct and complete copies of each of the
Fund Employee Benefit Plans, and related trusts, if
applicable, have been furnished or made available to Mergeco,
along with the most recent report filed on Form 5500 and
summary plan description with respect to each Fund Employee
Benefit Plan required to file Form 5500. All reports and
disclosures relating to the Fund Employee Benefit Plans
required to be filed with or furnished to governmental
agencies or plan participants or beneficiaries have been
furnished in accordance with applicable law in a timely manner
except where such failure has not resulted and would not
reasonably be expected to result in a Material Adverse Effect.
Each Fund Employee Benefit Plan has been maintained in
compliance in all material respects with ERISA and the Code,
and each Fund Employee Benefit Plan intended to be qualified
under Section 401 of the Code has received or is awaiting
receipt of a favorable determination letter from the Internal
Revenue Service regarding the qualified status and has not
since receipt of the most recent favorable determination
letter been amended or, to the knowledge of the Fund and the
members of the Fund ERISA Group, operated in a manner which
would adversely affect such status. There are no actions,
suits or claims pending (other than routine claims for
benefits) or, to the knowledge of the Fund and the members of
the Fund ERISA Group, threatened against, or with respect to
any of the Fund Employee Benefit Plans. All contributions
required to be made to Fund the Employee Benefit Plans
pursuant to their terms have been timely made. Except as
disclosed on Schedule 2.1(p), there is no matter pending with
respect to any of the Fund Employee Benefit Plans before the
Internal Revenue Service, Department of Labor or the Pension
Benefit Guaranty Corporation. Except as required by
applicable law, none of the Fund Employee Benefit Plans
provides medical insurance coverage following retirement.
Each Fund Employee Benefit Plan which is an "employee welfare
benefit plan," as defined in Section 3(l) of ERISA, may be
unilaterally amended or terminated in its entirety without
liability except as to benefits accrued prior to such
amendment or termination.
(iii) Schedule 2.1(p) lists each collective bargaining
agreement to which the Fund or the Fund's subsidiary is a
party. Except for those unions
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which are parties to one or more of the listed collective
bargaining agreements or as otherwise listed on Schedule 2.1(p),
neither the Fund nor any of its subsidiaries has agreed to
recognize any union or other collective bargaining
representative, nor has any union or other collective bargaining
representative been certified as the exclusive bargaining
representative of any of their employees. Except as set forth
in the Schedules to this Agreement, each of the Fund and its
subsidiaries (A) is, and has been since June 30, 1993 or the
date of its formation, whichever is later, in substantial
compliance with all applicable laws regarding labor, employment
and employment practices, terms and conditions of employment,
affirmative action, wages and hours, plant closing and mass
layoff, occupational safety and health, immunization, and
workers' compensation, (B) is not engaged, nor has it since June
30, 1993 or the date of its formation, whichever is later,
engaged, in any unfair labor practices, and has no, and has not
had since June 30, 1993 or the date of its formation, whichever
is later, any, unfair labor practice charges or complaints
before the National Labor Relations Board pending or, to the
Fund's knowledge, threatened against it, (C) has no, and has not
had since June 30, 1993 or the date of its formation, whichever
is later, any, grievances, arbitrations or other proceedings
arising or asserted to arise under any collective bargaining
agreement, pending or, to the Fund's knowledge, threatened
against it and (D) has no, and has not had since June 30, 1993
or the date of its formation, whichever is later, any, charges,
complaints or proceedings before the Equal Employment
Opportunity Commission, Department of Labor or any other
federal, state or local agency responsible for regulating
employment practices, pending, or, to the Fund's knowledge,
threatened against it, except, in each case (with respect to
clauses (A) through (D) above) for any violations, practices,
complaints, proceedings or charges that have not resulted and
would not reasonably be expected to result in a Material Adverse
Effect. There is no labor strike, slowdown, work stoppage or
lockout pending or, to the Fund's knowledge, threatened against
or affecting the Fund or their subsidiaries, and the Fund or
their subsidiaries have not experienced any labor strike,
slowdown, work stoppage or lockout since June 30, 1993 or the
date of its formation, whichever is later. Except as set forth
on Schedule 2.1(p), to the Fund's knowledge, no union
organizational campaign or representation petition is currently
pending with respect to the employees of the Fund or its
subsidiaries.
(q) Patents, Trademarks, Etc. There are no Intellectual Rights
owned by or registered in the name of the Fund or any of its
subsidiaries, or in which the Fund or any of its subsidiaries has
any right, license or interest other than the call signs of each of
the Fund Stations. The Fund or one of its subsidiaries owns or has
the right to use all such call signs. To the knowledge of the Fund,
neither the Fund nor any of its subsidiaries is infringing any such
Intellectual Rights, and the Fund is not aware of any infringement
by others of any such rights owned by the Fund or any of its
subsidiaries.
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(r) Affiliate Relationships. Except as set forth in the
applicable Existing Fund Partnership Agreement, Schedule 2.1(r) sets
forth a complete list and summary description of all contracts or
other arrangements involving the Fund or any of its subsidiaries in
which the General Partner or any of its affiliates has a financial
interest, including indebtedness to the Fund or its subsidiaries,
other than such contracts or arrangements which are disclosed on the
Balance Sheet.
(s) Vote Required. The only votes of the holders of any
partnership interests in the Fund that are necessary to approve the
Other Benchmark Merger applicable to the Fund and adopt the Other
Benchmark Merger Agreement to which the Fund is a party are the
affirmative votes of the Fund Limited Partners holding more than
fifty percent (50%) of the aggregate Limited Partner Percentage (as
defined in the applicable Existing Fund Partnership Agreements).
(t) Fairness Opinion. The General Partners have received the
Alex. Brown Fairness Opinion.
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1. COVENANTS OF BENCHMARK. Except as contemplated by this
Agreement or to the extent that Mergeco shall otherwise consent in writing,
from the date of this Agreement until the Effective Time, Benchmark and
each of Fund I, Fund IV, Fund VII and Fund VIII covenants and agrees that
it shall not, and shall not permit any of its subsidiaries to (it being
understood that each of the covenants contained in this Section 3.1 shall
apply to the Statesville Stations, the Jackson Stations, the Montgomery
Stations, WSCQ-FM, WJMZ-FM and KRMD-AM/FM, and any additional stations
acquired prior to the Closing Date only to the extent of events, acts or
omissions occurring or conditions coming into existence after the date such
stations were acquired by Benchmark or its subsidiaries):
(a) conduct its business in any material respect except in the
ordinary course of business consistent with past practice; or
(b) fail to use its commercially reasonable efforts (i) to
preserve intact Benchmark's present business organization and to keep
available the services of its present station managerial personnel
(including the General Manager, General Sales Manager, Programming
Director and Business Manager, or persons performing comparable
duties, of each Station (collectively, the "Station Management")) and
key over-the-air employees or key independent contractors and (ii) to
preserve its relationships with customers, suppliers and others having
business dealings with it. Benchmark and its subsidiaries shall be
deemed to have used commercially reasonable efforts with respect to
the matters set forth in this covenant if they conduct their business
with respect to such matters in a manner that is consistent with their
past practices. The (i) failure to renew an employment agreement
pursuant to Section
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3.1(g) or to agree to an increase in compensation due to a failure by
Mergeco to consent to an increase in compensation or (ii) renewal of
an employment agreement pursuant to Section 3.1(g) with an increase in
compensation thereunder permitted under Section 3.1(g) without the
consent of Mergeco or with respect to which Mergeco has consented, if
required, shall not be deemed to be a violation of this Section
3.1(b); or
(c) other than as previously disclosed in writing on the date
hereof, fail to use its commercially reasonable efforts to maintain
the present format of the Stations and with programming consistent
with past practices; or
(d) except as set forth in Section 4.11, split, combine, divide,
or reclassify any of its partnership interests or make any
distributions or payments of any kind to its partners or affiliates;
provided that nothing herein shall prevent, subject to applicable
provisions of the Fund IV Loan Agreement, the Fund VII Loan Agreement
and the Fund VIII Loan Agreement, (i) Fund I, Fund IV, Fund VII or
Fund VIII from continuing to pay management fees and expenses to
Benchmark in the ordinary course of business consistent with past
practice (it being understood that Benchmark shall earn no management
fees from Fund IX, Fund X or Fund XI or their respective subsidiaries
(if any)) while this Agreement is in effect) or (ii) any of
Benchmark's subsidiaries (other than Fund IX, Fund X or Fund XI or
their respective subsidiaries (if any)) from making distributions to
Benchmark or its subsidiaries or (iii) any of Benchmark or its
subsidiaries (other than Fund IX, Fund X or Fund XI or their
respective subsidiaries (if any)) from making cash distributions to
its partners or (iv) any of Fund IX, Fund X or Fund XI or their
respective subsidiaries (if any) from making distributions permitted
under the terms of the Jackson Loan Agreement, the Montgomery Loan
Agreement and the Statesville Loan Agreement; or
(e) except in connection with this transaction, and except as
provided in Section 4.12, issue, sell, pledge, dispose of, encumber
or deliver (whether through the issuance or granting of any options,
warrants, commitments, subscriptions, rights to purchase or
otherwise) any partnership interests or securities convertible into
or exercisable or exchangeable for partnership interests of any
class; provided that nothing herein shall prevent any Limited
Partners (other than Bruce R. Spector or the Class A Limited
Partners) or Fund Limited Partners from transferring or assigning
their partnership interests to other Persons; or
(f) change or amend its organizational documents or change,
amend or waive any provision of any of the Jackson Agreement, the
Statesville Agreement, or the Montgomery Agreement (except for any
changes, amendments or waivers that the General Partners may deem
advisable in connection with consummation of the transactions
contemplated by this Agreement, the Jackson Agreement, the
Statesville Agreement and the Montgomery Agreement that do not
adversely affect Mergeco or Benchmark in any material respect); or
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(g) except in the ordinary course of business and consistent
with past practice (subject to prior consultation with Mergeco
reasonably in advance thereof), enter into, materially amend,
terminate, fail to use its commercially reasonable efforts to renew,
or waive compliance with any material provision of, any contract or
agreement of the type required to be described in Schedule 2.1(o)
(provided that neither Benchmark nor its subsidiaries shall be
required to renew any material contract on terms that are less
favorable to Benchmark or its subsidiaries) or default in any
material respect (or take or omit to take any action that, with or
without the giving notice or passage of time, would constitute a
material default) under any such contract or enter into any new
contract of the type required to be described in Section 2.1(o) or
increase in any manner (other than increases that are automatic
under existing agreements or as contemplated by Section 3.1(g)(iii))
the compensation or fringe benefits of any employee or other station
and broadcast personnel (whether employees or independent
contractors) or pay any benefit not required by any existing
agreement, except in each case in the ordinary course of business
and consistent with past practices or as required by law; provided
further that Benchmark and its affiliates shall
not, without the prior consent of Mergeco, (i) grant any pay raises
to General Managers, (ii) enter into new on-air talent contracts
(other than replacement contracts with salaries at substantially the
same rates as the rates in the contracts being replaced), (iii)
increase the compensation of any single employee by more than 15%
per year or the aggregate compensation of all employees by more than
3% per year or (iv) amend its existing management agreements (listed
on Schedule 2.1(r)) to increase the management fee payable to
Benchmark or its affiliates from any of the Funds or enter into new
management agreements with any of the Funds or their subsidiaries;
or
(h) except in connection with this transaction and the
transactions contemplated hereby, merge or consolidate with or into
any other legal entity, dissolve or liquidate; or
(i) (a) amend any Employee Benefit Plan, or adopt or amend any
collective bargaining agreement, except, in each case, in the
ordinary course of business and consistent with past practice or as
required by law or (b) adopt any new Employee Benefit Plan except as
required by law; or
(j) except as set forth on Schedule 3.1(j), acquire (including,
without limitation, by merger, consolidation or the acquisition of
any equity interest or assets) or sell (whether by merger,
consolidation or the sale of an equity interest or assets), lease or
dispose of any assets except in the ordinary course of business and
consistent with past practice or, even if in the ordinary course of
business and consistent with past practices (other than sales of
surplus or obsolete equipment), whether in one or more transactions,
in no event having a fair market value in excess of $50,000 with
respect to Benchmark and each Fund and its respective subsidiaries;
provided, however, that nothing herein shall prevent Benchmark from
assigning the Benchmark
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Lease Agreement or from distributing any equipment, furniture,
fixtures or other items located at the Corporate Facilities to either
or both of the General Partners; or
(k) except in connection with this transaction, mortgage,
pledge or subject to any material Lien any of its properties or
assets, tangible or intangible (unless such mortgage, pledge or Lien
will be discharged at Closing), other than in the ordinary course of
business consistent with past practice, or incur or assume any
long-term debt other than (i) pursuant to existing lines of credit,
(ii) pursuant to refinancings of existing long-term debt of
Benchmark, Fund I, Fund IV or Fund VIII that are pre-payable and
(ii) long-term debt incurred by Benchmark, Fund I, Fund IV or Fund
VIII which is pre-payable; or
(l) except as required by GAAP, applicable law or circumstances
which did not exist as of the Balance Sheet Date, change any of the
material accounting principles or practices used by it; or
(m) other than with respect to making initial elections for the
New Funds, change any tax election or tax method of accounting or
make any new tax election or adopt any new tax method of accounting
which method or election is material to Benchmark and its
subsidiaries, taken as a whole; or
(n) pay, discharge or satisfy any material claims, liabilities
or obligations other than in the ordinary course or where such
payment would not adversely affect the Surviving Partnership, or
fail to pay or otherwise satisfy (except if being contested in good
faith) any material accounts payable, claims, liabilities or
obligations on a basis, and within the time, consistent with past
practice; or
(o) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of
the Stations and, except with respect to good faith attempts
consistent with past practice to obtain payment of a past due
receivable or a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether
to the account debtor or any employee or third party responsible for
the collection of receivables) to accelerate the collection thereof,
or change any Station's advertising rates or policies, procedures or
methods in connection with the sale of advertising time in a manner
primarily intended to accelerate the receipt of cash payments (other
than in the ordinary course of business consistent with past
practices) or fail to incur annual advertising and promotional
department aggregate expenses in cash and trade below 90% of that
budgeted for 1996 (as such budget previously has been delivered to
Mergeco); or
(p) except as set forth on Schedule 3.1(p), enter into, or
enter into negotiations or discussions with any person other than
Mergeco with respect to, any local marketing agreement, time
brokerage agreement, joint sales agreement or similar arrangement;
or
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(q) agree to or make any commitment, orally or in writing, to
take any actions prohibited by this Agreement; or
(r) to the extent Benchmark or its subsidiaries has the right
under the Statesville Agreement, the Jackson Agreement, or the
Montgomery Agreement to agree to Liens not set forth on the
Schedules to such Agreements, it shall not agree to assume any such
additional Liens or to permit any assets acquired under such
Agreements to be subject to any such additional Liens without the
prior consent of Mergeco.
3.2. NEGATIVE TRADE BALANCE. Benchmark shall use
commercially reasonable efforts to ensure that the Benchmark Negative Trade
Balance (as defined below) of the Stations, taken as a whole, does not
exceed the lesser of 100% of the Benchmark Negative Trade Balance at
December 31, 1996 or Fifty Thousand Dollars ($50,000) in the aggregate at
the Closing Date (it being understood that Benchmark may, if necessary, run
more advertisements than it would run in the ordinary course of business in
order to comply with this covenant). "Benchmark Negative Trade Balance"
means the difference, if negative, of the value of the goods and services
to be received under barter agreements to which any of the Stations is a
party or by which any of them is bound minus the value of time owed under
such agreements.
3.3. ENVIRONMENTAL SITE ASSESSMENTS. If Mergeco desires
Phase I or Phase II environmental site assessments ("ESAs"), Benchmark
covenants and agrees that, upon written notice from Mergeco to Benchmark
identifying the locations at which such ESAs are desired, Benchmark shall
permit Mergeco to perform (at Mergeco's expense) through a nationally
recognized and duly qualified environmental consultant reasonably
acceptable to Mergeco and Benchmark an ESA at each identified transmission
site owned, operated or leased by Benchmark or its subsidiaries and at such
other identified real properties and facilities owned, operated or leased
by Benchmark or its subsidiaries, and Benchmark shall provide access and
cooperate with Mergeco and such environment consultant with respect to such
ESAs. The ESAs which are to be conducted for the benefit of Mergeco shall
be performed in a manner that at a minimum satisfies the requirements of
ASTM Practice E 1527-94, and the costs and expenses thereof shall be borne
by Mergeco.
3.4. OTHER BENCHMARK MERGERS. Benchmark agrees that upon
satisfaction of the conditions set forth in Sections 7.1 and 7.3 (other
than the condition in Section 7.3(d) to the extent such condition relates
to the Other Benchmark Mergers), it shall cause each of the Other Benchmark
Mergers to be consummated.
ARTICLE IV
ADDITIONAL AGREEMENTS OF BENCHMARK
4.1. NO SOLICITATION OF TRANSACTIONS. Benchmark shall not,
nor shall it permit its subsidiaries to, directly or indirectly, through
any general partner, agent or otherwise, solicit, initiate or encourage the
submission of any proposal or offer from any person relating to any
acquisition or purchase of all or any material portion of the assets of, or
any equity interest in, Benchmark or any of
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its subsidiaries or any merger, consolidation, share exchange, business
combination or other similar transaction with Benchmark or any of its
subsidiaries or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other person to do or seek any of the foregoing;
provided, however, that nothing contained in this Section 4.1 shall
prohibit Benchmark from furnishing information to, or entering into
discussions or negotiations with, any person in connection with an
unsolicited proposal by such person to acquire Benchmark pursuant to a
merger, consolidation, exchange of partnership interest, business
combination or other similar transaction or to acquire all or substantially
all of the assets of Benchmark if, and only to the extent that, (a) the
General Partners determine in good faith that such action is required in
order for the General Partners not to breach their fiduciary duties to
limited partners (including the Fund Limited Partners) imposed by
applicable law, such determination being based on consultations with their
independent legal counsel, and (b) prior to furnishing such information to,
or entering into discussions or negotiations with, such person, Benchmark
(i) gives Mergeco as promptly as practicable prior written notice of
Benchmark's intention to furnish such information or begin such discussions
and (ii) receives from such person an executed confidentiality agreement on
terms no less favorable to Benchmark than those contained in the
Confidentiality Agreement (as defined in Section 4.2). Benchmark shall
promptly communicate to Mergeco the material terms of any such proposal
(and the identity of the party making such proposal) which it may receive.
Benchmark agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which
Benchmark is a party. Benchmark immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. From and after
the receipt of the requisite consent for approval by the holders of Fund
Limited Partnership Interests of this Agreement, the Other Benchmark Merger
Agreements and the transactions contemplated hereby and thereby, Benchmark
shall not, nor shall it permit its subsidiaries to, directly or indirectly,
through any general partner, agent or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any person relating
to any acquisition or purchase of all or any material portion of the assets
of, or any equity interest in, Benchmark or any of its subsidiaries or any
merger, consolidation, general partner, business combination or other
similar action with Benchmark or any of its subsidiaries or participate in
any negotiations regarding, or furnish to any other person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing.
4.2. ACCESS AND INFORMATION. (a) Until the Closing, subject
only to applicable rules and regulations of the FCC, Benchmark shall afford
to Mergeco and its representatives (including accountants and counsel)
access, during normal business hours, upon reasonable notice and in such
manner as will not unreasonably interfere with the conduct of the business
of Benchmark or its subsidiaries, to all properties, books, records,
documents and returns of Benchmark and its subsidiaries and all other
information relating to Benchmark and its subsidiaries together with the
opportunity to make copies of such books, records, returns and other
documents and to discuss the business of Benchmark and its subsidiaries
with such officers, station managerial personnel (including the General
Manager, General Sales Manager, Programming Director and Business Manager,
or persons performing comparable duties, of each Station), accountants,
consultants and counsel for Benchmark as Mergeco deems reasonably necessary
or appropriate for the purposes of
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familiarizing itself with Benchmark and the Stations, including, without
limitation, the right to visit each Station at least monthly; provided that
such Station visits shall be scheduled at least five (5) Business Days in
advance and shall be conducted in a manner intended to minimize the
disruption to the operations of the Stations; further provided, that
Mergeco shall not contact any Station personnel without the express prior
consent of the General Partners. In furtherance of the foregoing,
Benchmark shall authorize and instruct Arthur Andersen LLP to meet with
Mergeco and its representatives, including its independent public
accountants, to discuss the business and accounts of Benchmark and to make
available (with the opportunity to make copies) to Mergeco and its
representatives, including its independent public accountants, work papers
prepared by Arthur Andersen LLP and related to their audit of the
consolidated financial statements and tax returns of Benchmark. All
information provided pursuant to this Agreement shall remain subject in all
respects to the Confidentiality Agreement (herein so called) dated
September 10, 1996 between Hicks, Muse, Tate & Furst Incorporated and the
General Partners until such time as the transactions contemplated by this
Agreement have been consummated. Benchmark waives any provisions in the
Confidentiality Agreement that would otherwise prohibit the execution of
this Agreement and the consummation of the transactions contemplated
hereby.
(b) Within thirty (30) days after the end of each calendar
month, Benchmark shall deliver to Mergeco monthly operating
statements for Benchmark and each of the Funds (in a form consistent
with the monthly operating statements previously supplied to
Mergeco) prepared in the ordinary course of business for internal
purposes, including comparisons to comparable prior year periods and
current year budget, as well as monthly statements prepared in the
ordinary course for internal purposes containing the dollar amount
of all trade and barter liabilities of each Station. Benchmark
shall deliver to Mergeco the rating books and such other ratings
information subscribed to by Benchmark including, without
limitation, Arbitrends, Accuratings or any other written information
reflective of the quantitative or qualitative nature of the
audiences of the Stations for each of the Stations, to the extent
subscribed, upon receipt of the same by the General Partners.
Benchmark shall instruct the Station management of each Station to
provide such information and reports to the General Partners
promptly upon receipt by such Station management. In addition, upon
request, as soon as the same are distributed to the General Partners
by each Station, Benchmark will provide Mergeco with copies of each
Station's weekly sales pacing reports, with comparisons to sales
pacing in the corresponding period of the prior year.
(c) Without duplication of Section 4.2(b), at such time as
Benchmark provides the same to its lenders, Benchmark shall provide
Mergeco with copies of the financial statements delivered by
Benchmark or its subsidiaries to their respective lenders.
4.3. ASSISTANCE. If Mergeco requests, Benchmark (a) will
cooperate, at the expense of Mergeco, and will request Arthur Andersen LLP
to cooperate, at the expense of Mergeco, in all reasonable respects with
the efforts of Mergeco to finance the transactions contemplated by this
Agreement, including without limitation, providing assistance in the
preparation of one or more
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registration statements or other offering documents relating to debt and/or
equity financing and any other filings that may be made, (b) will provide
such customary management representation letters as Arthur Andersen LLP may
require of Benchmark as a condition to its execution of any required
accountants' consents necessary in connection with any filing by Mergeco
with the SEC or in connection with the delivery of any "comfort" letters
requested by Mergeco's financing sources, and (c) shall furnish to Mergeco
all financial statements (audited and unaudited) and other information in
the possession of Benchmark or its representatives or agents as Mergeco
shall reasonably determine is necessary or appropriate for the preparation
of such offering documents, registration statements or filings. Mergeco and
Parent will indemnify and hold harmless Benchmark and their respective
partners, employees and controlling persons and their affiliates against
any and all claims, losses, liabilities, damages, costs or expenses
(including reasonable attorneys' fees and expenses) that may arise out of
or with respect to the efforts by Mergeco or Parent or their affiliates to
finance the transactions contemplated hereby, including, without
limitation, any registration statement, prospectus, offering documents and
other filings related thereto; provided, however, that subject to the
limitations and provisions of this Agreement, nothing herein shall prevent
Mergeco from asserting any claim for breach of representation, warranty or
covenant under this Agreement.
4.4. COMPLIANCE WITH STATION LICENSES. Benchmark shall cause
the Stations to be operated in all material respects in accordance with the
Station Licenses and all applicable rules and regulations of the FCC and in
compliance in all material respects with all other applicable laws,
regulations, rules and orders. Benchmark shall use its commercially
reasonable efforts not to cause or permit any of the Station Licenses to
expire or be surrendered, adversely modified or terminated. Benchmark
shall file or cause to be filed with the FCC all applications (including
license renewals) or other documents required to be filed in connection
with the operation of the Stations. Should the FCC institute any
proceedings for the suspension, revocation or adverse modification of any
of the Station Licenses, Benchmark will use its commercially reasonable
efforts to promptly contest such proceedings and to seek to have such
proceedings terminated in a manner that is favorable to the Stations.
Prior to the Closing, Benchmark will use its commercially reasonable
efforts to maintain any FCC construction permits (if any) in effect until
the applicable construction projects are complete and to diligently
prosecute all pending FCC applications. If Benchmark (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or
of any other Governmental Entity, that could affect Benchmark's ability to
consummate the transactions contemplated hereby, or should Benchmark (or
its FCC counsel) become aware of any fact relating to the qualifications of
Benchmark that reasonably could be expected to cause the FCC to withhold
its consent to the transfer of control of the Station Licenses, Benchmark
shall promptly notify Mergeco in writing and use its commercially
reasonable efforts to take steps to remove any such impediment to the
transactions contemplated by this Agreement.
4.5. NOTIFICATION OF CERTAIN MATTERS. Benchmark shall give
prompt written notice to Mergeco of (a) the occurrence, or failure to
occur, of any event of which it becomes aware that has caused or that would
be likely to cause any representation or warranty of Benchmark or its
subsidiaries contained in this Agreement to be untrue or inaccurate (in any
material respect for any representation or warranty not already qualified
for materiality) at any time from the date hereof to the Closing Date, (b)
the failure of Benchmark or its subsidiaries to comply with or satisfy in
any
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material respect any covenant, condition or agreement to be complied with
or satisfied by it hereunder, (c) the occurrence of a Station Event (as
defined in Section 8.1) and (d) the occurrence of any notice by the General
Manager of any Station to resign or otherwise terminate their employment or
independent contractor relationship with Benchmark or its subsidiaries. No
notification pursuant to this Section shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder; provided, however, that in the event any such notification
relates to a matter that would give rise to the right of Mergeco to
terminate this Agreement or that would result in the failure of Benchmark
to satisfy the closing condition in Section 7.2(a), Mergeco shall, if
Benchmark requests, within forty (40) Business Days of receiving such
request, either waive such breach or, subject to Benchmark's right to cure
such breach during such period, elect to terminate this Agreement pursuant
to Section 9.1 (and, in either case, shall notify Benchmark in writing of
its election).
4.6. THIRD PARTY CONSENTS. After the date hereof and prior
to the Closing, Benchmark shall use its commercially reasonable efforts to
obtain the written consent from any party to an agreement or instrument
identified in Schedule 2.1(o) which is required to permit (a) the
consummation of the transactions contemplated hereby and by the Other
Benchmark Transactions and (b) the merger after the Closing Date of
Benchmark and its affiliates into Radioco, III, Inc.; provided that Mergeco
shall reimburse Benchmark for any expenses incurred by it in soliciting the
consents referenced in clause (b) above to the extent that such expenses
would not have otherwise been incurred by Benchmark under clause (a) above.
4.7. SECTION 754 ELECTION. Benchmark and each subsidiary
will timely file an election under Section 754 of the Code with respect to
the taxable year of the Merger to adjust the bases of their assets in the
manner provided in Section 743 of the Code.
4.8. LIMITED PARTNER CONSENT. Benchmark agrees that, subject
to fiduciary obligations, (i) it will use commercially reasonable efforts
to obtain the requisite consents of the Fund Limited Partners to this
Agreement and the Merger and the applicable Other Benchmark Merger
Agreements and Other Benchmark Mergers within sixteen (16) Business Days
after the date of this Agreement, (ii) it shall not withdraw its
recommendation of this Agreement and the Other Benchmark Merger Agreements
and (iii) it will vote in favor of this Agreement and the Other Benchmark
Merger Agreements.
4.9. CONSUMMATION OF PENDING TRANSACTIONS. Benchmark shall
use its commercially reasonable efforts to cause Fund IX, Fund X, and Fund
XI to consummate the acquisitions of the Statesville Stations, the Jackson
Stations, the Montgomery Stations, respectively, in accordance with the
terms of the Statesville Agreement, the Jackson Agreement, and the
Montgomery Agreement, respectively.
4.10. CONSUMMATION OF OTHER BENCHMARK MERGERS. Benchmark
shall, upon satisfaction of the conditions to the obligations of Benchmark
to close this Agreement, use the proceeds of the Parent Merger Loan and the
Parent Funded Debt Loan to cause each of the Benchmark Mergers to be
consummated in accordance with the terms of the Other Benchmark Merger
Agreements.
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4.11. WITHDRAWAL OF CLASS A GENERAL PARTNERS. Immediately
prior to the Effective Time, Bruce R. Spector and Joseph L. Mathias IV
shall withdraw as Class A General Partners of Benchmark, and Radioco I,
Inc., Radioco II, Inc. and Radioco III, Inc. shall be substituted as Class
A Limited Partners with respect to the Class A General Partnership
Interests formerly held by Bruce R. Spector and Joseph L. Mathias IV such
that, upon such substitution, Radioco I, Inc., Radioco II, Inc. and Radioco
III, Inc. shall be the sole Class A Partners of Benchmark.
4.12. TRANSFER OF PARTNERSHIP INTERESTS. The General
Partners agree that except as provided in this Agreement, they will not
transfer, sell or exchange their Partnership Interests to any other Person,
provided that each General Partner shall be permitted to transfer, sell or
exchange Partnership Interests to a General Partner Related Party of such
General Partner so long as, after giving effect to such transfer, sale or
exchange, Bruce R. Spector and Joseph L. Mathias IV remain the sole General
Partners of Benchmark and such General Partner continues to hold fifty
percent (50%) of the economic interest in Benchmark currently held by such
General Partner; further provided that in the event of the death of either
of the General Partners, 100% of the Partnership Interests of such General
Partner may be transferred to a General Partner Related Party.
4.13. ERISA. Within thirty days of the date hereof,
Benchmark agrees to file the Form 5500 for the Benchmark Communications
Disability Income Plan (the "Form 5500") under the Department of Labor's
Delinquent Filer Voluntary Compliance Program (the "DFVC Program") and
incur all costs necessary to complete the filing, including any penalties
and fines associated with the DFVC Program, as well as all costs relating
to the completion of the Form 5500 and the DFVC Program application.
ARTICLE V
COVENANTS OF MERGECO AND PARENT
5.1. NOTIFICATION OF CERTAIN MATTERS. If Mergeco (or its FCC
counsel) receives an administrative or other order or notification relating
to any violation or claimed violation of the rules and regulations of the
FCC, or of any Governmental Entity, that could affect Mergeco's ability to
consummate the transactions contemplated hereby, or should Mergeco (or its
FCC counsel) become aware of any fact relating to the qualifications of
Mergeco that reasonably could be expected to cause the FCC to withhold its
consent to the transfer of control of the Station Licenses, Mergeco shall
promptly notify Benchmark thereof and shall use its commercially reasonable
efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement. Nothing in
this Section 5.1 shall be deemed to expand Mergeco's obligations under
Section 5.2 with respect to matters set forth in Section 5.2. In addition,
Mergeco shall give to Benchmark prompt written notice of (a) the
occurrence, or failure to occur, of any event of which it becomes aware
that has caused or that would be likely to cause any representation or
warranty of Mergeco contained in this Agreement to be untrue or inaccurate
at any time from the date hereof to the Closing Date, and (b) the failure
of Mergeco, or any officer, partner, employee or agent thereof, to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder. No
notification pursuant to this Section shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder; provided, however, that in the event any such notification
relates to a matter that would
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give rise to the right of Benchmark to terminate this Agreement or that
would result in the failure of Mergeco to satisfy the closing condition in
Section 7.3(a), Benchmark shall, if Mergeco requests, within forty (40)
Business Days of receiving such request, either waive such breach or,
subject to Mergeco's right to cure such breach during such period, elect to
terminate this Agreement pursuant to Section 9.1 (and, in either case,
shall notify Mergeco in writing of its election).
5.2. COMPLIANCE WITH COMMUNICATIONS ACT AND HSR ACT. Mergeco
covenants that it will not, and that it will cause any Person that directly
or indirectly controls Mergeco or that will, as of the Effective Time,
directly or indirectly, control Mergeco or the Surviving Partnership, not
to acquire after the date of this Agreement (directly or through a Person
controlled by a Person that controls Mergeco or that will, as of the
Effective Time, control Mergeco or the Surviving Partnership) media
businesses or interests in media businesses that will prevent or impair the
parties from obtaining the Commission Consent by Final Order and a
termination of the waiting period under the HSR Act, in each case, on or
prior to June 30, 1997. For purposes of this section, a Person shall be
deemed not to control a company with publicly traded securities unless such
Person has caused a majority of such company's board of directors to be
elected by such Person. Mergeco covenants to take any necessary
commercially reasonable steps with respect to any media businesses other
than the Mergeco Affiliated Businesses or the Stations located in the same
markets as the Mergeco Affiliated Businesses (including, if required,
divesting itself or causing its affiliates to divest themselves of media
businesses or interests therein) to comply with the Communications Act, the
FCC rules and regulations and the HSR Act so as to permit consummation of
the Merger and the Other Benchmark Transactions on or prior to June 30,
1997.
5.3. STATION ACQUISITIONS. In the event any of the
acquisitions contemplated by the Jackson Agreement, the Statesville
Agreement or the Montgomery Agreement have not been consummated prior to
the Effective Time, Mergeco agrees to use its commercially reasonable
efforts pursuant to the terms of the applicable agreement to cause each
such acquisition to be consummated promptly after the Effective Time, and
upon any such consummation, Mergeco shall make the payments to the General
Partners or their affiliates described in Sections 1.6(e)(7), 1.6(e)(8) and
1.6(e)(9). Nothing herein shall require the Surviving Partnership to waive
any breaches or amend any provisions of the applicable agreements.
5.4. PARENT LOANS. Immediately prior to the Closing, Parent
shall make the Parent Funded Debt Loan and the Parent Merger Loan to
Benchmark and in connection therewith Benchmark shall issue promissory
notes to Parent substantially in the form attached hereto as Exhibit 5.
5.5. BENCHMARK EMPLOYMENT AGREEMENTS. Commencing at the
Effective Time, the Surviving Partnership shall employ each of Robert
Schuler, Catherine Mecchi, Cindy Thayer, Rachel Mack and Maria Weist
(collectively, the "Employees"), if they are employed at the Effective
Time, for a period of at least one year after the Closing Date on
substantially the same salary terms and conditions and benefit terms and
conditions as are currently afforded to such Employees by Benchmark,
provided that the Surviving Partnership shall have the right to terminate
any of the Employees (i) for cause at any time without continuing
obligations to an Employee so terminated or (ii) without cause so long as
the Surviving Partnership continues to pay the salary and provide or pay
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for benefits for the remainder of the one year term. Each of the Employees
shall be deemed a third party beneficiary of this Agreement for purposes of
this Section 5.5.
5.6. PARENT-RADIOCO III, INC. MERGER. Prior to the Effective Time,
Mergeco and Parent shall take all necessary steps to become wholly owned
subsidiaries of Capstar (direct, in the case of Parent, and indirect, in
the case of Mergeco).
5.7. ELECTION OF DIRECTORS AND OFFICERS. Mergeco and Parent shall
cause any successor entity of Parent to (i) elect Bruce R. Spector to the
Board of Directors of such successor entity as Vice Chairman of such Board
of Directors and (ii) elect Joseph L. Mathias, IV as President of such
successor entity.
ARTICLE VI
MUTUAL COVENANTS
6.1. APPLICATION FOR COMMISSION CONSENT. By the tenth Business Day
after the date that the requisite consent of the Fund I Limited Partners,
the Fund IV Limited Partners, the Fund VII Limited Partners and the Fund
VIII Limited Partners to this Merger and each of the Other Benchmark Merger
Agreements is obtained, Benchmark and Mergeco will join and, if required,
cause any of their affiliates to join in one or more applications filed
with the FCC requesting the FCC's written consent to the transfer of
control of the Station Licenses (including, for this purpose, the Jackson
Stations, the Statesville Stations, the Montgomery Stations, WSCQ-FM and
WJMZ-FM) pursuant to this Agreement (the "Applications"). The parties will
take all proper steps reasonably necessary (a) to diligently prosecute the
Applications and (b) to obtain the FCC's determination that the grant of
each Application will serve the public interest, convenience and necessity
(the "Commission Consent"). The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material
breach of this Agreement. Nothing in this Section 6.1 shall be deemed to
expand Mergeco's obligations under Section 5.2 of the Agreement with
respect to the matters set forth in Section 5.2.
6.2. CONTROL OF STATIONS. This Agreement will not be consummated
until after the Commission Consents with respect to the Applications
referred to in Section 6.1 are granted without conditions that are
materially adverse to the Surviving Partnership and not customarily imposed
on the grant of such applications and have become Final Orders. Between
the date of this Agreement and the Closing Date, Mergeco will not directly
or indirectly control, supervise or direct the operation of the Stations.
Further, between the date of this Agreement and the Closing Date, Benchmark
shall supervise and control the operation of the Stations. Such operation
shall be the sole responsibility of Benchmark.
6.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate governmental authorities (other than the FCC) such requests,
reports or notifications as may be required in connection with this
Agreement, and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of such matters. Without
limiting the foregoing, the parties shall file promptly with the Federal
Trade Commission and the Antitrust Division of the Department of Justice
the notifications and other information (if any) required to be filed under
the
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HSR Act with respect to the transactions contemplated hereby and shall
use their commercially reasonable efforts to cause all applicable waiting
periods under the HSR Act to expire or be terminated as of the earliest
possible date. Nothing in this Section 6.3 shall be deemed to expand the
obligations of Mergeco under Section 5.2 with respect to the matters set
forth in Section 5.2.
6.4. BROKERS OR FINDERS. Other than fees and expenses that
do not reduce the Total Consideration and for which Mergeco or the
Surviving Partnership shall remain responsible, Mergeco represents and
warrants to Benchmark, and other than Americom and Alex. Brown, Benchmark
represents and warrants to Mergeco that no agent, broker, investment banker
or other person is or will be entitled to any broker's, finder's or
advisers' fees or any other commission or similar fee in connection with
any of the transactions contemplated by this Agreement. Benchmark also
represents and warrants that the aggregate fees payable to Americom (the
"Americom Fee") in connection with all of the transactions contemplated by
this Agreement and the Other Benchmark Transactions shall not exceed One
Million Dollars ($1,000,000). The Americom Fee shall be apportioned among
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and shall be considered
Funded Debt of such Persons that shall be paid as part of the Funded Debt
Payoff.
6.5. ADDITIONAL AGREEMENT. Subject to the terms and
conditions of this Agreement, each of the parties hereto will use its
commercially reasonable efforts to do, or cause to be taken all action and
to do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
6.6. EXECUTION AND DELIVERY OF TRANSACTION . Upon the
satisfaction of the conditions set forth in Section 7.1 and 7.2, Mergeco
and Parent shall execute and deliver all Transaction Documents to which
they will be a party and which they have not previously executed. Upon the
satisfaction of the conditions set forth in Section 7.1 and Section 7.3,
Sellers, the Selling Stockholders and the General Partners shall execute
and deliver all Transaction Documents to which they will be a party and
which they have not previously executed.
6.7. CERTAIN EVENTS. The parties agree that in the event (i)
that any necessary consents under the HSR Act have not been obtained or
(ii) the waiting period under the HSR Act has not expired on or prior to
June 30, 1997, Benchmark may elect to remove the Fund(s) or Station(s) that
were the cause of the failure to obtain such consents or of the
non-expiration of such waiting period from this transaction. In the event
such Fund or Stations are so removed, the parties agree (i) that this
Agreement and any other applicable Other Benchmark Transaction will be
appropriately amended to reflect the removal of such Fund or Stations from
this transaction and (ii) at the time of such removal, to enter into an
acquisition agreement pursuant to which such Funds(s) or Station(s) would
be acquired from Benchmark or its affiliates by Mergeco or its affiliates
on substantially the same terms and conditions as those contemplated by
this Agreement, which acquisition agreement shall, unless the parties
otherwise agree, terminate if it has not been consummated by September 30,
1997.
6.8. WDHT BUDGET. The parties agree to develop an operating
budget for WDHT-FM, Luverne, Alabama prior to the acquisition of WDHT-FM by
Fund XI. Operating expenses incurred under such budget shall be payable by
Fund XI from the proceeds of the Montgomery Loan or from
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operating revenues of the Montgomery Stations. Benchmark shall use its
commercially reasonable efforts to cause Fund XI to operate within such
budget.
6.9. PURCHASE PRICE ALLOCATION. The parties agree to
allocate the Benchmark Consideration for purposes of Section 751 and 754 of
the Code. In order to allocate the Benchmark Consideration for such
purposes, the parties agree that Bond & Pecaro will appraise the assets of
Benchmark and of each Fund as of the Closing Date. The values set forth in
such appraisal shall determine the value of Benchmark's and each Fund's
section 751 property, as such term is defined in Treas. Reg. Section
1.751-1, and shall be used to adjust the bases of the assets held by
Benchmark and each Fund pursuant to Code Sections 743 and 755, as a result
of the elections made under Section 754 of the Code.
6.10. RICHMOND SALE. The parties acknowledge that Fund III
and the radio stations owned and operated by it are not intended to be
acquired by Mergeco or its affiliates in this transaction. Benchmark
agrees to use its commercially reasonable efforts to consummate the
transactions contemplated by the Richmond Contract or otherwise dispose of
the stations that are the subject of the Richmond Contract prior to the
Closing Date.
6.11. RICHMOND AND NORFOLK STATIONS. The parties agree that
in the event the General Partners have held back a reserve fund from the
proceeds of the sales of Fund IV's Norfolk operations or Fund III's
Richmond operations, they may distribute such reserve funds at any time
prior to Closing, and any Persons who may be entitled to receive the
proceeds of such reserve funds (including, without limitation, Benchmark
and the Class A Limited Partners) may transfer their rights with respect to
such proceeds to any other Person or Persons.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the transactions contemplated hereby
are subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Limited Partner Approval. The Other Benchmark Merger
Agreements and this Agreement and the other transactions
contemplated hereby or thereby shall have been approved and adopted
by the requisite vote or consent of those of the Fund Limited
Partners whose consent is required.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity required for the
consummation of the transactions contemplated by this Agreement
shall have been filed, occurred or obtained. The Commission
Consents shall have become Final Orders.
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(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect.
(d) No Action. No action shall have been taken nor any
statute, rule or regulation shall have been enacted by any
Governmental Entity that makes the consummation of the transactions
contemplated hereby illegal.
7.2. CONDITIONS TO OBLIGATIONS OF MERGECO. The obligations of Mergeco to
effect the Merger and the transactions contemplated hereby are subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Mergeco:
(a) Representations and Warranties. The representations and
warranties of Benchmark set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (unless otherwise
limited to the date of this Agreement) except (i) for any changes
permitted by the terms of this Agreement (including changes in the
operation of Benchmark) and (ii) to the extent that any inaccuracies
in such representations or warranties (without regard to materiality
(including Material Adverse Effect) qualifications) that have not been
waived do not and would not reasonably be expected to have a Material
Adverse Effect on the Surviving Partnership and its subsidiaries taken
as a whole (for purposes of this Section 7.2(a), the representations
and warranties of Benchmark in Sections 2.1(m)(i), (iv) and (v) shall
be deemed to have made without qualifications for knowledge, and the
representations and warranties of Benchmark and the applicable Funds
in Section 2.1(m) shall be deemed to have been made without any of the
exceptions listed on Schedule 2.1(m)). Mergeco shall have received a
certificate signed on behalf of Benchmark by the General Partners to
such effect with respect to Benchmark and its subsidiaries.
(b) Performance of Obligations. Benchmark and its subsidiaries
and its other affiliates shall have performed in all material
respects the obligations required to be performed by them under this
Agreement and the Other Benchmark Transactions prior to the Closing
Date (subject to the right to cure any nonperformance within the
Cure Period), and Mergeco shall have received a certificate signed
on behalf of Benchmark and its subsidiaries by the General Partners
to such effect.
(c) Intentionally Left Blank.
(d) Legal Opinions. Mergeco shall have received from Latham &
Watkins, one or more opinions dated the Closing Date, substantially
in the form of Exhibit 6 hereto. In rendering such opinions, Latham
& Watkins shall be entitled to rely on the opinion of local Maryland
counsel rendered to it with respect to certain matters governed by
Maryland Law.
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(e) Other Benchmark Transactions. Each of the Other Benchmark
Transactions (other than the Parent-Radioco III, Inc. Merger) shall
have been consummated and all of the conditions to closing of the
Parent-Radioco III, Inc. Merger shall have been satisfied, except to
the extent the failure to consummate any such Other Benchmark
Transaction or satisfy such closing conditions was a result of a
breach by Mergeco or Parent.
(f) Reincorporation of Radioco III. Radioco III, Inc. shall
have been reincorporated in the State of Delaware.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Benchmark
pursuant to Section 8.2 shall have been delivered.
7.3. CONDITIONS TO OBLIGATIONS OF BENCHMARK. The obligations of Benchmark
to effect the Merger and the transactions contemplated hereby are subject to
the satisfaction of the following conditions unless waived, in whole or in
part, by Benchmark.
(a) Representations and Warranties. The representations and
warranties of Mergeco set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (unless otherwise
limited to the date of this Agreement) except to the extent that any
inaccuracies in such representations or warranties (without regard
to materiality (including Material Adverse Effect) qualifications)
do not and would not reasonably be expected to, have a Material
Adverse Effect on Benchmark and its subsidiaries taken as a whole.
Benchmark shall have received a certificate signed on behalf of
Mergeco by its President to such effect.
(b) Performance of Obligations of Mergeco. Mergeco and Parent
shall have performed in all material respects the obligations
required to be performed by them under this Agreement (and the Other
Benchmark Transactions) prior to the Closing Date (subject to the
right to cure any nonperformance within the Cure Period), and
Benchmark shall have received a certificate signed on behalf of
Mergeco by its President to such effect.
(c) Legal Opinion. Benchmark shall have received from Vinson &
Elkins, counsel to Mergeco, an opinion dated the Closing Date
substantially in the form of Exhibit 7 hereto. In rendering such
opinions, Vinson & Elkins L.L.P. shall be entitled to rely on the
opinion of local Maryland counsel rendered to it with respect to
certain matters governed by Maryland law.
(d) Other Benchmark Transactions. Each of the Other Benchmark
Transactions shall have been consummated and all of the conditions
to closing of the Parent-Radioco III, Inc. Merger shall have been
satisfied, except to the extent the failure to consummate any such
Other Benchmark Transaction or satisfy such
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conditions was a result of a breach by Benchmark, its subsidiaries or
the Selling Stockholders.
(e) Facilities Reimbursement. Mergeco shall have reimbursed
the General Partners for costs incurred by them in connection with
leasehold improvements, fixtures and furniture at the Corporate
Facilities, which reimbursement shall equal $202,000 pursuant to
instructions from the General Partners.
(f) Benchmark Lease Prepayment. Mergeco shall have made the
Benchmark Lease Prepayment.
(g) Parent Loans. Benchmark shall have received the proceeds
from the Parent Funded Debt Loan and the Parent Merger Loan.
(h) Closing Deliveries. All documents and instruments required
to be delivered by Mergeco pursuant to Section 8.2 shall have been
delivered.
ARTICLE VIII
CLOSING
8.1. CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article VII and to the provisions of this Section
8.1, the closing of the Merger (the "Closing") will take place at a
location mutually acceptable to the parties, at 10:00 a.m., local time (or
at such other place and time as Mergeco and Benchmark may agree) on a date
mutually agreeable to the parties which date shall be on or before the
10th Business Day after the later of (i) the day on which the Commission
Consents have been granted by Final Order or (ii) the date on which the
applicable waiting period under the HSR Act has expired or been earlier
terminated without receipt of any objection or the commencement or threat
of any litigation by any Governmental Entity of competent jurisdiction to
restrain the consummation of the Transaction (the "Closing Date");
provided, however, that in no event shall the Closing occur prior to June
30, 1997. Notwithstanding the foregoing:
(a) In the case of a Trading Event, a Banking Event, a Conflict
Event or a Station Event (in each case as defined below) the Closing
Date may be extended as follows: (i) if the Cessation Date (as
defined below) is less than 30 days after the Event Date (as defined
below), Mergeco may extend the Closing Date to a date not later
than the 10th Business Day after the Cessation Date, (ii) if the
Cessation Date is more than 30, but less than 60, days after the
Event Date, Mergeco shall elect on the first to occur of the 10th
Business Day after the Cessation Date or the 60th day (or, if not a
Business Day, the next Business Day) after the Event Date (the
"Election Date") to either (A) close the Merger on the later to
occur of the 5th Business Day after the Election Date or the 60th
day (or, if not a Business Day, the next Business Day) after the
Event Date, or (B) terminate this Agreement and (iii) if the
Cessation Date has not occurred by the 60th day after the Event
Date, then on the 60th day (or, if not a Business Day, the next
Business Day) after the Event Date, Mergeco shall elect to close the
Merger on the 5th Business Day thereafter or terminate this
Agreement;
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provided, however, that Benchmark may postpone the Closing in the
event of a Station Event until the earlier to occur of the Cessation
Date with respect to such Station Event or September 30, 1997 unless
Mergeco has waived the elimination of such Station Event as a
condition to its obligation to close the Merger and any right to
indemnification it may have on account of such Station Event;
(b) If a Cure Period (as defined in Section 9.1(b)(i)) has not
ended on or before the Closing Date, the Closing Date shall be
extended to the end of the Cure Period; and
(c) If the Closing does not occur within 20 days after the date
of the Final Order, the parties shall, if necessary, request
approval from the FCC to extend the Closing so that the Closing
contemplated hereunder will not violate any FCC rules or
regulations.
For purposes of this Agreement, a "Station Event" shall mean any act of
nature, calamity or casualty (including but not limited to fires, floods,
earthquakes and storms) that has caused one or more Stations representing an
aggregate of 3% or more of the consolidated gross revenues of Benchmark, Fund
I, Fund IV, Fund VII, Fund VIII and the New Funds for the 12 calendar months
ending December 31, 1996 not to be operating in material compliance with its or
their respective Station License(s) for a period of 72 consecutive hours or six
days within any 30-day period; a "Trading Event" shall mean that trading
generally in securities on the New York Stock Exchange shall have been
suspended or materially limited; a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; a "Conflict Event" shall mean
the occurrence of any major armed conflict involving a substantial
participation by the armed forces of the United States of America that causes a
disruption of the capital markets of the United States of a magnitude
substantially similar to the disruption that would be caused by a Trading Event
or a Banking Event; an "Event Date" shall mean the date on which a Trading
Event, Banking Event, Conflict Event or Station Event begins; and a "Cessation
Date" shall mean the date on which a Trading Event, Banking Event, Conflict
Event or a Station Event ends. Pro forma adjustments shall be made for
purposes of calculating gross revenues for the 12-month period specified in the
definition of "Station Event" (i) to eliminate revenues of any Station sold
prior to the Closing Date and (ii) with respect to any radio broadcast station
acquired prior to the Closing Date, to assume that such station was acquired at
the beginning of such 12-month period and include the gross revenues of such
station for the full 12-month period.
In the event Mergeco elects to postpone the Closing pursuant to this
Section 8.1 on account of a Trading Event, Banking Event or Conflict Event,
each of the Fund I Consideration, the Fund IV Consideration, the Fund VII
Consideration, the Fund VIII Consideration and the Benchmark Consideration
shall be increased beginning after June 30, 1997, at a rate of fifteen percent
(15%) per annum (it being understood that such adjustment to the Total
Consideration shall not give Mergeco rights to extend the Closing in addition
to those specified in this Section 8.1).
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8.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Mergeco shall deliver to Benchmark the
following:
(i) the certificates in Section 7.3(a) and (b);
(ii) the opinions of counsel in Section 7.3(c);
(iii) an executed copy of the Post-Closing Escrow Agreement;
(iv) an executed copy of the Mathias Employment Agreement;
(v) a certified copy of the resolutions of the Board of
Directors and stockholders of Parent electing Bruce R. Spector
as Vice Chairman of the Board of Directors of Parent;
(vi) an executed copy of the License Agreement.; and
(vii) a certified copy of the resolution of the Board of
Directors of Parent electing Joseph L. Mathias IV as President
of Parent
(b) At the Closing, Benchmark shall deliver to Mergeco the
following:
(i) the certificates described in Section 7.2(a) and (b);
(ii) the opinions of counsel in Section 7.2(d);
(iii) an executed copy of the Post-Closing Escrow Agreement;
(iv) the Mathias Employment Agreement; and
(v) the Assignments of New Fund Limited Partnership
Interests.
(c) At the Closing, Mergeco shall receive from the partners of
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII an affidavit
described in Section 1445(b)(2) of the Code or a statement in
conformance with Treas. Reg. Section 1.1445-11T(d)(2)(i) from the
general partner of Benchmark, Fund I, Fund IV, Fund VII and Fund
VIII.
(d) At the Closing, the Certificate of Merger and the
certificates of merger contemplated by each of the Other Benchmark
Merger Agreements shall be signed by the parties and filed with the
Maryland State Department of Assessments and Taxation and the
Secretary of State of the State of Delaware.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
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(a) by mutual consent of Mergeco and Benchmark;
(b) by either Mergeco or Benchmark:
(i) if there shall have been any breach (which has not
been waived) of one or more representations or warranties (on
the date when any such representation or warranty was made or,
if applicable, on the Closing Date), covenants or agreements
set forth in this Agreement by a party, in each case without
regard to materiality (including Material Adverse Effect)
qualifications, which breach or breaches, when aggregated with
any other such breaches, has or would reasonably be expected
to have a Material Adverse Effect on the Surviving Partnership
and its subsidiaries taken as a whole (in the case of one or
more breaches by Benchmark or its affiliates) or Benchmark and
its subsidiaries taken as a whole (in the case of one or more
breaches by Mergeco or its affiliates) which breach or
breaches shall not have been cured within twenty (20) Business
Days (the "Cure Period") following receipt by the breaching
party of written notice of such breach from the non-breaching
party (for purposes of this Section 9.1(b), the
representations and warranties of Benchmark in Sections
2.1(m)(i), (iv) and (v) shall be deemed to have made without
qualifications for knowledge, and the representations and
warranties of Benchmark in Section 2.1(m) shall be deemed to
have been made without any of the exceptions listed on
Schedule 2.1(m));
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree or
ruling the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable;
(iii) if, for any reason, the FCC denies or dismisses any
of the Applications and the time for reconsideration or court
review under the Communications Act with respect to such
denial or dismissal has expired and there is not pending with
respect thereto a timely filed petition for reconsideration or
request for review;
(iv) if, for any reason, any of the Applications is
designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the later
of September 30, 1997, or the date to which the Closing Date
is extended pursuant to Section 8.1;
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(c) by Mergeco:
(i) with respect to a Station Event, Trading Event,
Banking Event or Conflict Event as provided in Section 8.1;
(ii) if the FCC grants any of the Applications with any
conditions that are materially adverse to the Surviving
Partnership and its subsidiaries, taken as a whole, and that
are not generally imposed on grants of such applications, and
the time for reconsideration or court review under the
Communications Act with respect to such material adverse
conditions has expired and there is not pending with respect
thereto a timely filed petition for reconsideration or request
for review;
(iii) if (x) Benchmark or the General Partners withdraw
their recommendations of this Agreement, the Merger or any
Other Benchmark Merger Agreement or Other Benchmark Merger
(whether or not under the circumstances permitted by this
Agreement), (y) Benchmark, Fund I, Fund IV, Fund VII or Fund
VIII shall have entered into a Business Combination
Transaction or (z) the General Partners or Benchmark shall
have recommended to the Limited Partners or any Fund Limited
Partners any Business Combination Transaction, whether or not
in the circumstances under which Benchmark has a right to
terminate this Agreement pursuant to Section 9.1(d)(i) of this
Agreement;
(iv) if Benchmark shall fail to perform its obligations
under Section 8.2;
(v) in the event of an Intentional Benchmark Default;
(vi) in the event the requisite consent or approval by
the Fund Limited Partners of this Agreement and the Other
Benchmark Merger Agreements has not been obtained on or prior
to the date that is sixteen (16) business days after the date
of this Agreement; provided, however, that if such requisite
consent or approval is obtained (and Mergeco is notified
thereof) prior to receipt by Benchmark of notice from Mergeco
that Mergeco intends to terminate this Agreement pursuant to
this Section 9.1(c)(vi), then Mergeco shall not have the right
to terminate this Agreement pursuant to this Section
9.1(c)(vi);
(vii) upon the occurrence of a Credit Agreement Event of
Default by the borrower under the Fund IV Loan Agreement, the
Fund VII Loan Agreement, the Fund VIII Loan Agreement, the
Jackson Loan Agreement, the Montgomery Loan Agreement or the
Statesville Loan Agreement; or
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(viii) if any of the Other Benchmark Transactions are
terminated due to the breach or default of Benchmark or its
affiliates or for any reason other than the breach or default
of Mergeco or Parent; or
(d) by Benchmark:
(i) in the exercise of its good faith judgment (subject
to Section 4.1) as to its fiduciary duties to the Limited
Partners or the Fund Limited Partners under applicable law,
the General Partners determine that such termination is
required by such fiduciary duties by reason of a proposal that
either constitutes a Business Combination Transaction or may
reasonably be expected to lead to a Business Combination
Transaction on terms more favorable to the Limited Partners
(or the Fund Limited Partners) than the Merger (or the Other
Benchmark Mergers) and which has a reasonable prospect of
being consummated in accordance with its terms (such
determination being based on consultations with a financial
consultant and its independent legal counsel) (a "Business
Combination Transaction Proposal"); provided that Benchmark
has provided Mergeco with at least forty-eight (48) hours
prior written notice of its intent to so terminate this
Agreement (together with a summary of the material terms of
such Business Combination Transaction Proposal); further
provided that any termination of this Agreement by Benchmark
pursuant to this Section 9.1(d)(i) shall not become effective
until Benchmark has made payment of the Alternative Proposal
Fee (as hereinafter defined) as required by Section 9.2
hereof; further provided that Benchmark may not terminate this
Agreement pursuant to this Section 9.1(d)(i), if it has
received the requisite vote or consent for approval by the
Limited Partners and the Fund Limited Partners of this
Agreement and the Other Benchmark Merger Agreements and the
transactions contemplated hereby and thereby; or
(ii) in the event Mergeco or its affiliate fails to fund
all or any portion of the Statesville Loan, the Jackson Loan
or the Montgomery Loan when obligated to fund in accordance
with the terms of the Statesville Loan Agreement, the Jackson
Loan Agreement and the Montgomery Loan Agreement,
respectively; or
(iii) if any of the Other Benchmark Transactions are
terminated due to the breach or default of Mergeco or its
affiliates or for any reason other than the breach or default
of Benchmark or its subsidiaries or the Selling Stockholders;
(iv) in the event the requisite consent or approval by
the Fund Limited Partners of this Agreement and the Other
Benchmark Merger Agreements has not been obtained on or prior
to the date that is sixteen (16) business days after the date
of this Agreement, provided that Benchmark shall
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give Mergeco five (5) Business Days prior notice of its
intention to terminate this Agreement pursuant to this clause
9.1(d)(iv); or
(v) if Mergeco shall fail to perform any of its
obligations under Section 8.2.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective partners, officers,
directors, employees, accountants, consultants, legal counsel, agents or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is, or
who is affiliated with a party that is, in material breach of this Agreement
shall be entitled to terminate this Agreement except with the consent of the
other parties hereto.
9.2. FEES AND EXPENSES.
(a) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII jointly
and severally agree to pay Mergeco a fee (an "Alternative Proposal
Fee") of Eight Million One Hundred Fifty Thousand Dollars
($8,150,000), subject to the adjustments set forth below, (i) if
this Agreement is terminated pursuant to Section 9.1(c)(iii), (ii)
simultaneously with any termination of this Agreement pursuant to
Section 9.1(d)(i), or (iii) if this Agreement is terminated pursuant
to Section 9.1(c)(vi) or Section 9.1(d)(iv) and Benchmark, Fund I,
Fund IV, Fund VII or Fund VIII enters into an agreement within six
(6) months after the date of termination which, when consummated,
would constitute a Business Combination Transaction or (iv) in the
event each of the events in the following clauses (a), (b) and (c)
occurs: (a) this Agreement is terminated pursuant to Section
9.1(c)(vi) or Section 9.1(d)(iv), (b) prior to the date that is
fifteen Business Days from the date hereof either Alex. Brown
withdraws, rescinds or revokes the fairness opinion described in
Section 2.1(t) or Benchmark receives a Business Combination
Transaction Proposal and (c) Benchmark, Fund I, Fund IV, Fund VII or
Fund VIII enters into an agreement within twelve (12) months after
the date of termination which, when consummated, would constitute a
Business Combination Transaction; provided, however, that if the
Business Combination Transaction giving rise to any fee payable
under this Section 9.2(a) involves the disposition of 35% or more,
but less than 50%, of the assets of Benchmark and its subsidiaries
(on a combined basis), then the fee payable under this Section
9.2(b) shall equal to the percentage of assets being disposed times
the Alternative Proposal Fee (as such fee may be adjusted pursuant
to the following sentence). In the event the Jackson Agreement, the
Montgomery Agreement or the Statesville Agreement has been
terminated for any reason other than a breach of the applicable
agreement by Benchmark or its subsidiaries, then the amount of the
Alternative Proposal Fee shall be reduced by $907,375 (with respect
to a termination of the Jackson Agreement), $1,071,000 (with respect
to a termination of the Montgomery Agreement) and $833,000 (with
respect to a termination of the
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Statesville Agreement); provided, however, that there shall be no
reduction if the applicable agreement was terminated due to a breach
by Benchmark or its subsidiaries (other than a breach of Benchmark and
its subsidiaries resulting from the failure of Mergeco or any of its
affiliates to fund all or any portion of the Statesville Loan, the
Jackson Loan or the Montgomery Loan, respectively, when obligated to
fund in accordance with the terms of the Statesville Loan Agreement,
the Jackson Loan Agreement or the Montgomery Loan Agreement,
respectively),.
(b) Mergeco agrees that in the event (i) (A) the Jackson
Agreement is terminated for any reason other than the breach of
Benchmark or Fund X (other than a default of Benchmark or Fund X
that results from a breach of Parent under the terms of the Jackson
Loan Agreement) and (B) Mergeco or any of its affiliates enters into
an agreement to purchase any of the Jackson Stations within twelve
(12) months of such termination, Mergeco shall pay to Benchmark a
fee of Two Million Eight Hundred Ninety Seven Thousand Five Hundred
Dollars ($2,897,500); (ii) (A) the Statesville Agreement is
terminated for any reason other than the breach of Benchmark or Fund
IX (other than a breach of Benchmark or Fund IX that results from a
breach of Parent under the terms of the Statesville Loan Agreement)
and (B) Mergeco or any of its affiliates enter into an agreement to
purchase any of the Statesville Stations within twelve (12) months
of such termination, Mergeco shall pay to Benchmark a fee of Seven
Million Sixty Thousand Dollars ($7,060,000); and (iii) (A) the
Montgomery Agreement is terminated for any reason other than the
breach of Benchmark or Fund XI (other than a default of Benchmark or
Fund IX that results from a breach of Parent under the terms of the
Montgomery Loan Agreement) and (B) Mergeco or any of its affiliates
enters into agreement to purchase any of the Montgomery Stations
within twelve (12) months of such termination, Mergeco shall pay to
Benchmark a fee of Three Million Four Hundred Twenty Thousand
($3,420,000). Capstar hereby fully, irrevocably and unconditionally
guarantees Mergeco's obligation to pay any or all of the fees
described in this Section 9.2(b).
(c) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII agree to
pay Mergeco a fee in the amount of Three Hundred Thousand Dollars
($300,000), together with interest at the Pass Through Rate which
shall begin to accrue on the date hereof, in the event this
Agreement is terminated due solely to a breach by Benchmark or its
subsidiaries, which fee shall be apportioned among themselves as
follows: 20% to Benchmark 20% to Fund I, 20% to Fund IV, 20% to
Fund VII and 20% to Fund VIII. Benchmark, Fund I, Fund IV, Fund VII
and Fund VIII agree to pay Mergeco a fee in the amount of One
Hundred Thousand Dollars ($100,000), together with interest at the
Pass Through Rate which shall begin to accrue on the date hereof, in
the event this Agreement is terminated for any reason other than a
breach by Benchmark or its subsidiaries or other than due to a
breach solely by Mergeco or its affiliates, apportioned among
themselves as follows: 20% to Benchmark; 20% to Fund I; 20% to Fund
IV; 20% to Fund VII; and 20% to Fund VIII. If this Agreement is
terminated due solely to a breach by Mergeco, Benchmark shall not be
obligated to pay Mergeco any fee under this Section 9.2(c).
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(d) Except as provided in Section 9.2(a)(ii), the fees payable
under this Section 9.2 shall become due five (5) Business Days after
the obligation to pay the applicable fee arises.
9.3. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
Benchmark or Mergeco as provided in Section 9.1, this Agreement
shall forthwith become void (other than with respect to covenants
that survive the termination of this Agreement), the Merger shall be
abandoned and there shall be no liability on the part of Benchmark,
Mergeco or Parent of any kind whatsoever, except (i) with respect to
Section 9.2 and Article X or as otherwise provided in this Section
9.3 which shall continue to apply in accordance with their terms and
(ii) each party shall remain liable for a breach of this Agreement.
Termination of this Agreement shall have no effect on the rights and
obligations of the parties under the Confidentiality Agreement. In
the event that Benchmark terminates this Agreement under Section
9.1(b)(i), 9.1(d)(ii), Section 9.1(d)(iii), or Section 9.1(d)(v),
the parties agree and acknowledge that the Sellers will suffer
damages that are not practicable to ascertain at the time of
execution of this Agreement. Accordingly, the Sellers and Mergeco
agree that, in such event, the Sellers shall be entitled, in the
aggregate, to the sum of Eight Million One Hundred Fifty Thousand
Dollars ($8,150,000) as liquidated damages, subject to the
adjustments set forth in clause (b). The Sellers and Mergeco agree
that the foregoing liquidated damages will be apportioned as set
forth in clause (b), are reasonable considering all the
circumstances existing as of the date hereof and constitute such
parties' good faith estimate of the actual damages reasonably
expected to result from the termination of this Agreement by
Benchmark pursuant to Section 9.1(b)(i), Section 9.1((d))(ii),
Section 9.1(d)(iii), or Section 9.1(d)(v). The Sellers agree that,
to the fullest extent permitted by law, the right to payment of the
Eight Million One Hundred Fifty Thousand Dollars ($8,150,000) as
liquidated damages subject to the adjustments set forth in clause
(b) under this Section 9.3 shall be their sole and exclusive remedy
if the Closing does not occur with respect to any damages whatsoever
that the Sellers may suffer as a result of any claim or cause of
action asserted by the Sellers relating to or arising from breaches
of the representations, warranties or covenants of Mergeco or Parent
contained in this Agreement, the Loan Agreements or the Transaction
Documents and to be made or performed at or prior to the Closing;
provided that because the Selling Stockholders and the General
Partners will benefit indirectly from the receipt by the Sellers of
liquidated damages, as a condition of payment, and upon receipt of
the liquidated damages under this Section 9.3, the Sellers, the
Selling Stockholders and the General Partners (the "Releasing
Parties") hereby irrevocably and unconditionally release, acquit,
and forever discharge Mergeco, Parent and their respective
successors, assigns, employees, agents, stockholders, partners,
subsidiaries, parent companies and other affiliates (corporate or
otherwise) (the "Released Parties") of and from any and all Released
Claims, including, without limitation, all Released Claims arising
out of, based upon, resulting from or relating to the negotiation,
execution, performance, breach or
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otherwise related to or arising out of the Merger Agreement, the
Transaction Documents, the Loan Agreements or any agreement
entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints,
claims,causes of action, promises, agreements, rights to payment,
rights to any equitable remedy, rights to any equitable
subordination, demands, debts, liabilities, express or implied
contracts, obligations of payment or performance, rights of offset
or recoupment, accounts, damages, costs, losses or expenses
(including attorneys' and other professional fees and expenses) held
by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or
contingent, direct or derivative, provided that this release shall
not release any of the Released Parties from any claims, demands,
causes of action or liabilities arising from any breach of the
Confidentiality Agreement or from any anticompetitive or fraudulent
actions attributable to any such parties (or other unlawful acts of
a similar nature).
(b) Subject to the adjustments set forth in this clause (b),
liquidated damages shall be apportioned among the Sellers as
follows: Benchmark shall be entitled to receive $2,828,050, Fund I
shall be entitled to receive $578,650 Fund IV shall be entitled to
receive $2,078,250, Fund VII shall be entitled to receive $1,230,650
and Fund VIII shall be entitled to receive $1,434,400. In the event
the Jackson Agreement, the Montgomery Agreement or the Statesville
Agreement has been terminated for any reason other than the failure
of Mergeco or any of its affiliates to fund all or any portion of
the Statesville Loan, the Jackson Loan or the Montgomery Loan,
respectively, when required to fund accordance with the terms of the
Statesville Loan Agreement, the Jackson Loan Agreement or the
Montgomery Loan Agreement, respectively, then the amount of
liquidated damages to which Benchmark is entitled to this Agreement
shall be reduced by $907,375 (with respect to a termination of the
Jackson Agreement) (the "Jackson Attributable Liquidated Damages"),
$1,071,000 (with respect to a termination of the Montgomery
Agreement) (the "Montgomery Attributable Liquidated Damages") and
$833,000 (with respect to a termination of the Statesville Loan
Agreement) (the "Statesville Attributable Liquidated Damages").
(c) In the event the liquidated damages are payable to the
Sellers, such liquidated damages shall be payable as follows: (i)
the Pre-Closing Escrow Deposit (including any cash drawn by the
Pre-Closing Escrow Agent from any letters of credit) shall be
released to Sellers' Representative, (ii) in the event the
Additional Statesville Escrow Deposit, the Additional Jackson Escrow
Deposit or the Additional Montgomery Escrow Deposit have not been
placed in escrow, liquidated damages equaling amounts owed by Fund
IX, Fund X or Fund XI, as applicable, under the Statesville Loan
Agreement, the Jackson Loan Agreement or the Montgomery Loan
Agreement, as applicable, shall be recoverable by Benchmark only by
way of offset against amounts owed by Fund IX, Fund X or Fund XI, as
applicable, to Parent under the applicable Loan Agreement and (iii)
in the event the Capital Expenditure Deposit has been released to
fund the Fund IV Loan or the Fund VII Loan, liquidated damages
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equaling the amounts owed by Fund IV or Fund VIII, as applicable, under the
Fund IV Loan Agreement or the Fund VIII Loan Agreement, as applicable,
shall be recoverable by the Sellers' Representative only by way of offset
against the Fund IV Loan or the Fund VII Loan.
ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS;
INDEMNIFICATION.
(a) SURVIVAL PERIOD. All of the representations and warranties
of Mergeco and Parent shall terminate at the Closing. All of the
representations and warranties of Benchmark and the Funds (other
than the representations and warranties in Section 2.1(m) and
Section 2.3(m), which shall expire at Closing) contained in this
Agreement shall survive the Merger and shall continue in full force
and effect for a period of twelve (12) months thereafter. For
purposes of this Section 10.1 only, each representation and warranty
contained in this Agreement for which indemnification can be or is
sought, or for which the Minimum Damage Amount can be satisfied,
hereunder shall be read (including, without limitation, for purposes
of determining whether a breach of such representation or warranty
has occurred) without regard to materiality (including Material
Adverse Effect) qualifications that may be contained therein.
Notwithstanding any other provision of this Agreement, every
covenant or agreement by a party under this Agreement that is
applicable after the Effective Time shall survive the Closing.
(b) INDEMNIFICATION OF SURVIVING PARTNERSHIP INDEMNIFIED
PARTIES. Subject to the overall limitations, minimum amounts and
time limitations set forth in this Section 10.1 and the limitations
on recourse set forth in this Section 10.1:
(i) Fund I agrees to indemnify and hold harmless Parent,
Mergeco, the Surviving Partnership and each officer, director,
employee, consultant, stockholder and affiliate of the Surviving
Partnership or Parent (collectively, including Benchmark and its
subsidiaries after the Closing, the "Surviving Partnership
Indemnified Parties" and also referred to as the "Indemnified
Parties") from and against any and all damages, losses,
including taxes, claims, deficiencies, liabilities, demands,
charges, suits, penalties, costs and all other expenses
(including court costs and attorneys' fees and expenses incurred
in investigating and preparing for any litigation or proceeding)
(collectively, "Indemnified Costs") which any of the Surviving
Partnership Indemnified Parties may sustain, or to which any of
the Surviving Partnership Indemnified Parties may be subjected,
relating to or arising out of (i) any claim, including direct
claims under Section 10.1(e), action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or
which may be brought against the Surviving Partnership
Indemnified Parties, or any of their respective properties or
assets, arising out of or as a result of
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any breach of representation or warranty (other than the
representations and warranties in Section 2.1(m) and 2.3(m)) of
Fund I or of Benchmark with respect to Fund I or nonfulfillment
or failure to perform any covenant or agreement on the part of
Fund I or of Benchmark with respect to Fund I under this
Agreement or the Fund I Merger Agreement or (ii) (a) any claim
brought by any Governmental Entity or third party pursuant to
Environmental Laws (including, without limitation, all common
law duties covered by the definition of such term) in effect on
the date of Closing or (b) any Required Remediation, in each
case to the extent such Indemnified Costs are attributable to
conditions that existed at, or releases or exposures that
occurred in connection with, the Owned Real Property or the
Leased Real Property of Fund I or any other activities that
occurred thereon, in each case, prior to the date of Closing and
are not attributable to (i) Mergeco or its affiliates' use
and/or occupancy of Owned Real Property or the Leased Real
Property or (ii) the Surviving Partnership Indemnified Parties'
use and/or occupancy of Owned Real Property or Leased Real
Property after the date of Closing; provided that the obligation
to indemnify the Surviving Partnership Indemnified Parties for
such Indemnified Costs shall not extend to the removal or
abatement of asbestos-containing materials that were not friable
on the date of Closing; and
(ii) Fund IV agrees to indemnify and hold harmless
Parent, Mergeco, the Surviving Partnership Indemnified Parties
from and against any and all Indemnified Costs which any of
the Surviving Partnership Indemnified Parties may sustain, or
to which any of the Surviving Partnership Indemnified Parties
may be subjected, relating to or arising out of any claim,
including direct claims under Section 10.1(e), action, suit,
inquiry, judicial or administrative proceeding, grievance or
arbitration pending or which may be brought against the
Surviving Partnership Indemnified Parties, or any of their
respective properties or assets, arising out of or as a result
of (i) any breach of representation or warranty (other than
the representations and warranties in Section 2.1(m) and
2.3(m)) of Fund IV or of Benchmark with respect to Fund IV or
nonfulfillment or failure to perform any covenant or agreement
on the part of Fund IV or of Benchmark with respect to Fund IV
under this Agreement or the Fund IV Merger Agreement or (ii)
(a) any claim brought by any Governmental Entity or third
party pursuant to Environmental Laws (including, without
limitation, all common law duties covered by the definition
of such term) in effect on the date of Closing or (b) any
Required Remediation, in each case to the extent such
Indemnified Costs are attributable to conditions that existed
at, or releases or exposures that occurred in connection with,
Owned Real Property or the Leased Real Property of Fund IV or
any other activities that occurred thereon, in each case,
prior to the date of Closing and are not attributable to (i)
Mergeco or its affiliates' use and/or occupancy of Owned Real
Property or the Leased Real Property or (ii) the Surviving
Partnership Indemnified Parties' use and/or occupancy of Owned
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Real Property or Leased Real Property after the date of
Closing; provided that the obligation to indemnify the
Surviving Partnership Indemnified Parties for such Indemnified
Costs shall not extend to the removal or abatement of
asbestos-containing materials that were not friable on the
date of Closing; and
(iii) Fund VII agrees to indemnify and hold harmless
Parent, Mergeco, the Surviving Partnership Indemnified Parties
from and against any and all Indemnified Costs which any of
the Surviving Partnership Indemnified Parties may sustain, or
to which any of the Surviving Partnership Indemnified Parties
may be subjected, relating to or arising out of any claim,
including direct claims under Section 10.1(e), action, suit,
inquiry, judicial or administrative proceeding, grievance or
arbitration pending or which may be brought against the
Surviving Partnership Indemnified Parties, or any of their
respective properties or assets, arising out of or as a result
of (i) any breach of representation or warranty (other than
the representations and warranties in Section 2.1(m) and
2.3(m)) of Fund VII or of Benchmark with respect to Fund VII
or nonfulfillment or failure to perform any covenant or
agreement on the part of Fund VII or of Benchmark with respect
to Fund VII under this Agreement or the Fund VII Merger
Agreement or (ii) (a) any claim brought by any Governmental
Entity or third party pursuant to Environmental Laws
(including, without limitation, all common law duties covered
by the definition of such term) in effect on the date of
Closing or (b) any Required Remediation, in each case to the
extent such Indemnified Costs are attributable to conditions
that existed at, or releases or exposures that occurred in
connection with, Owned Real Property or the Leased Real
Property of Fund VII or any other activities that occurred
thereon, in each case, prior to the date of Closing and are
not attributable to (i) Mergeco or its affiliates' use and/or
occupancy of Owned Real Property or the Leased Real Property
or (ii) the Surviving Partnership Indemnified Parties' use
and/or occupancy of Owned Real Property or Leased Real
Property after the date of Closing; provided that the
obligation to indemnify the Surviving Partnership Indemnified
Parties for such Indemnified Costs shall not extend to the
removal or abatement of asbestos-containing materials that
were not friable on the date of Closing; and
(iv) Fund VIII agrees to indemnify and hold harmless
Parent, Mergeco, the Surviving Partnership Indemnified Parties
from and against any and all Indemnified Costs which any of
the Surviving Partnership Indemnified Parties may sustain, or
to which any of the Surviving Partnership Indemnified
Parties may be subjected, relating to or arising out of any
claim, including any claims arising under Section 10.1(e),
action, suit, inquiry, judicial or administrative proceeding,
grievance or arbitration pending or which may be brought
against the Surviving Partnership Indemnified Parties, or any
of their respective properties or assets, arising out of or as
a result of (i) any breach of representation or warranty
(other than the representations and warranties in Section
2.1(m) and 2.3(m)) of Fund VIII or of Benchmark with respect
to
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Fund VIII or nonfulfillment or failure to perform any covenant
or agreement on the part of Fund VIII or of Benchmark with
respect to Fund VIII under this Agreement or the Fund VIII
Merger Agreement or (ii) (a) any claim brought by any
Governmental Entity or third party pursuant to Environmental
Laws (including, without limitation, all common law duties
covered by the definition of such term) in effect on the date of
Closing or (b) any Required Remediation, in each case to the
extent such Indemnified Costs are attributable to conditions
that existed at, or releases or exposures that occurred in
connection with, Owned Real Property or the Leased Real Property
of Fund VIII or any other activities that occurred thereon, in
each case, prior to the date of Closing and that are not
attributable to (i) Mergeco or its affiliates' use and/or
occupancy of Owned Real Property or the Leased Real Property or
(ii) the Surviving Partnership Indemnified Parties' use and/or
occupancy of Owned Real Property or Leased Real Property after
the date of Closing; provided that the obligation to indemnify
the Surviving Partnership Indemnified Parties for such
Indemnified Costs shall not extend to the removal or abatement
of asbestos-containing materials that were not friable on the
date of Closing; and
(v) The General Partners, jointly and severally, agree to
indemnify and hold harmless the Surviving Partnership
Indemnified Parties from and against any and all Indemnified
Costs which any of the Surviving Partnership Indemnified
Parties may sustain, or to which any of Surviving Partnership
Indemnified Parties may be subjected, relating to or arising
out of any claim, including direct claims under Section
10.1(e), action, suit, inquiry, judicial or administrative
proceeding, grievance or arbitration pending or which may be
brought against the Surviving Partnership Indemnified Parties,
or any of their respective properties or assets, arising out
of or as a result of:
(A) any breach of a representation or warranty of
Benchmark (i) that relates only to Benchmark and does not
relate to any of Fund I, Fund IV, Fund VII or Fund VIII or
their respective subsidiaries or (ii) relating to Fund IX,
Fund X or Fund XI (it being understood that, except with
respect to a breach of the representation and warranty
under Section 2.1(u), no indemnification obligation shall
arise from an event, condition, act or omission relating to
the Statesville Stations, the Jackson Stations or the
Montgomery Stations and existing or occurring prior to the
acquisition of the Statesville Stations, the Jackson
Stations or the Montgomery Stations by Fund IX, Fund X, or
Fund XI, as applicable);
(B) any nonfulfillment or failure to perform any
covenant or agreement on the part of Benchmark (i) that
relates only to Benchmark and does not relate to any of
Fund I, Fund IV, Fund VII or Fund VIII or their respective
subsidiaries or (ii) relating to Fund IX, Fund or Fund XI
(it being understood that, except with respect to a breach
of the representation and
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warranty under Section 2.1(u), no indemnification
obligation shall arise from an event, condition, act or
omission relating to the Statesville Stations, the
Jackson Stations or the Montgomery Stations and
existing or occurring prior to the acquisition of the
Statesville Stations, the Jackson Stations or the
Montgomery Stations by Fund IX, Fund X, or Fund XI, as
applicable);
(C) any failure of a Reserve Fund to cover the full
amount of an applicable Adjustment Amount that is a
negative number calculated pursuant to Section 1.13;
(D) any liability arising from the Richmond Contracts
or the Norfolk Contracts;
(E) any claims arising under Maryland Law from the
exercise of appraisal rights by holders of Dissenting
Partnership Interests; or
(F) any liabilities arising from the matters set forth
in clauses (B)(1), (2), (3), (4) and (5) of the first
sentence of Section 10.1(k).
(c) PARTNER REPRESENTATIVES. After the Effective Time, Partner
Representatives shall, on behalf of the former holders of
partnership interests in Fund I, Fund IV, Fund VII, and Fund VIII,
as applicable, act as the representatives of the Indemnifying
Parties with respect to claims relating to Fund I, Fund IV, Fund
VII, or Fund VIII, respectively, and the General Partners shall act
as the Indemnifying Party with respect to claims relating to
Benchmark or the New Funds. Such representation shall include
receiving any Claim Notices (as defined below).
(d) DEFENSE OF THIRD-PARTY CLAIMS. All claims for
indemnification by any Indemnified Party involving third party
actions, as defined below, shall be asserted and resolved as
follows:
(i) An Indemnified Party shall give prompt written notice
(the "Claim Notice") to any entity or person who is obligated
to provide indemnification hereunder (an "Indemnifying Party")
of the commencement or assertion of any action, proceeding,
demand or claim by a third party (collectively, a "third-party
action") in respect of which such Indemnified Party shall seek
indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party
from any liability that it, he or she may have to such
Indemnified Party under this Article X unless the failure to
give such notice prejudices such Indemnifying Party in any
material respect.
(ii) The Indemnifying Party shall have thirty (30) days
(the "Notice Period") from the delivery of the Claim Notice in
accordance with Section 10.8 to notify the Indemnified Party
(i) whether or not it disputes entitlement
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of the Indemnified Party to indemnification hereunder with
respect such claim or demand, or (ii) whether or not it agrees
to defend the Indemnified Party against such claim or demand;
provided, however, that any Indemnified Party is hereby
authorized prior to and during the Notice Period to file any
motion, answer, or other pleading which it shall deem necessary
or appropriate to protect its interests or those of the
Indemnifying Party and not materially prejudicial to the
Indemnifying Party. In the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that it
agrees to defend the Indemnifying Party against such claim or
demand and except as hereinafter provided, the Indemnifying
Party shall have the right to defend by all appropriate
proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion.
(iii) The Indemnified Party shall be entitled, at his,
her or its own expense, to participate in the defense of such
third-party action (provided, however, that the Indemnifying
Parties shall pay the attorneys' fees of the Indemnified Party
only if (1) the employment of separate counsel shall have been
authorized in writing by any such Indemnifying Parties in
connection with the defense of such third-party action, (2)
the Indemnifying Parties shall not have employed counsel
reasonably satisfactory to the Indemnified Party to have
charge of such third-party action, or (3) the Indemnified
Party's counsel shall have advised the Indemnified Party in
writing, with a copy to the Indemnifying Party, that there is
a conflict of interest that would make it inappropriate under
applicable standards of professional conduct to have common
counsel).
(iv) The Indemnifying Party shall obtain the prior
written approval of the Indemnified Party, which approval
shall not be unreasonably withheld, before entering into or
making any settlement, compromise, admission, or
acknowledgment of the validity of such third-party action or
any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or
acknowledgment, injunctive or other equitable relief would be
imposed against the Indemnified Party.
(v) Without the prior consent of the applicable
Indemnified Party, which shall not be unreasonably withheld,
no Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by each claimant or
plaintiff to each Indemnified Party of a release from all
liability in respect of such third-party action.
(vi) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own
expense in the defense of), and the Indemnified Party shall be
entitled to have sole control over, the defense or settlement,
compromise, admission, or acknowledgment of any third-party
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action (A) as to which the Indemnifying Party fails to assume
the defense within a reasonable length of time or (B) to the
extent the third-party action seeks an order, injunction, or
other equitable relief against the Indemnified Party which, if
successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified
Party; provided, however, that the Indemnified Party shall make
no settlement, compromise, admission, or acknowledgment that
would give rise to liability on the part of any Indemnifying
Party without the prior written consent of such Indemnifying
Party, which consent shall not be unreasonably withheld.
(vii) The parties hereto shall extend reasonable
cooperation in connection with the defense of any third-party
action pursuant to this Article X and, if appropriate and
related to the claim in question, in making any counterclaim
against the person asserting the complaint against the
Indemnified Party. In connection therewith, the parties shall
furnish such records, information, and testimony as may be
reasonably requested.
(e) DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section
10.1(d) because no third-party action is involved, the Indemnified
Party shall send a Claim Notice with respect to such Indemnified
Costs, and, if applicable, otherwise comply with the provisions of
the Post-Closing Escrow Agreement and this Section 10.1. If the
Indemnifying Party does not notify the Indemnified Party within the
Notice Period that the Indemnifying Party disputes such claim, the
Indemnified Party shall be conclusively deemed to be entitled to
indemnification in the amount of such claim, subject to the
limitations of Section 10.1(f). The failure of the Indemnified Party
to exercise promptness in such notification shall not amount to a
waiver of such claim unless the resulting delay prejudices the
position of the Indemnifying Party with respect to such claim in any
material respect.
(f) LIMITATIONS. The following provisions of this Section
10.1(f) shall be applicable after the time of the Closing to claims
under Section 10.1:
(i) Minimum Damage Amounts.
(A) Neither Fund I, Fund IV, Fund VII, nor Fund VIII
shall be required to indemnify an Surviving Partnership
Indemnified Party under Section 10.1(b)(i) through (iv), as
applicable, for a breach of any representation, warranty or
covenant or the environmental indemnification except to the
extent that the aggregate amount of Indemnified Costs for
which all of the Surviving Partnership Indemnified Parties
are entitled to indemnification exceeds the amounts set
forth on Schedule 10.1(f) with respect to such Indemnifying
Party (the amounts set forth on Schedule 10.1(f) are
hereinafter referred to as the "Minimum Damage Amounts").
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(B) The General Partners shall not be required to
indemnify an Surviving Partnership Indemnified Party under
this Section 10.1 under Section 10.1(b)(v)(A) or (B), as
applicable, for a breach of any representation or warranty
or covenant, except to the extent that the aggregate amount
of Indemnified Costs for which all of the Surviving
Partnership Indemnified Parties are entitled to
indemnification pursuant to Section 10.1(b)(v)(A) and (B)
exceeds $281,137 (with respect to the General Partners, the
"Minimum Damage Amount"). In the event the Statesville
Agreement, the Jackson Agreement or the Montgomery
Agreement is not consummated or is terminated, the Minimum
Damage Amount with respect to the General Partners shall be
reduced by $83,300, $90,737 and $107,100, respectively;
provided, however, that notwithstanding the foregoing the
Minimum Damage Amount with respect to the General Partners
shall not be reduced below $20,000.
In the event the Indemnified Costs exceed the Minimum Damage Amounts, the
Surviving Partnership Indemnified Party shall be entitled to be paid the excess
of (a) the aggregate amount of such Indemnified Costs over (b) the Minimum
Damage Amounts, subject to the limitations on recovery and recourse set forth
in this Section 10.1(f); provided, however, that (i) the Indemnified Costs
relating to or arising out of any claims under Section 10.1(b)(v)(C) through
(F) shall not be subject to the Minimum Damage Amounts requirement, (ii) any
Indemnified Costs arising from a breach of the representations and warranties
of Benchmark in Section 6.4 and of the agreement of Benchmark in Section 10.6
shall not be subject to the Minimum Damage Amounts and (iii) claims under
Section 10.1(b)(v)(C), Section 10.1(b)(v)(E), and Section 10.1(b)(v)(F)
("Unlimited Claims") shall not be subject to the liability caps referred to in
Section 10.1(f)(iii) or the limitations as to recourse referred to in Section
10.1(f)(iii) below.
(ii) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Costs pursuant to this Section
10.1 unless a written claim for indemnification in accordance
with Section 10.1(d) or 10.1(e) is given by the Surviving
Partnership Indemnified Party to the Indemnifying Party with
respect thereto (i) within twelve (12) months after the
Closing with respect to any claims for Indemnified Costs under
this Section 10.1 other than claims made pursuant to Section
10.1(b)(v)(E) or (F) and (ii) prior to the date that is ten
days after expiration of the applicable statute of limitations
with respect to any claims for Indemnified Costs made pursuant
to Section 10.1(b)(v)(E) or (F).
(iii) Liability Cap. Without limiting any of the
foregoing provisions of this Section 10.1(f), the parties
hereto agree that (a) Fund I's liability for claims under
Section 10.1(b)(i) shall be limited to the amount of the Fund
I Post-Closing Escrow Deposit (excluding interest earned
thereon); (b) Fund IV's liability for claims under Section
10.1(b)(ii) shall be limited to the amount of the Fund IV
Post-Closing Escrow Deposit (excluding interest earned
thereon); (c) Fund VII's liability for claims under Section
10.1(b)(iii)
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shall be limited to the amount of the Fund VII Post-Closing
Escrow Deposit (excluding interest earned thereon); (d) Fund
VIII's liability for claims under Section 10.1(b)(iv) shall be
limited to the amount of the Fund VIII Post-Closing Escrow
Deposit (excluding interest earned thereon); (e) the General
Partners' joint and severally liability for claims under
Sections 10.1(b)(v)(A) together with claims under Section
10.1(b)(v)(B) shall not exceed, in the aggregate $1,546,250 (the
"General Partner Liability Cap"), provided that in the event the
Statesville Agreement, the Jackson Agreement or the Montgomery
Agreement have not been consummated or are terminated, the
General Partner Liability Cap shall be reduced by amounts equal
to $458,150, $499,050 and $589,050, respectively (with respect
to each such termination) further provided, that notwithstanding
the foregoing, the General Partner Liability Cap shall not be
reduced below $100,000; (h) the General Partners' joint and
several liability for claims under Section 10.1(b)(v)(D) shall
not exceed in the aggregate $250,000, and (i) the General
Partners' liability for claims under Section 10.1(b)(v)(C), (E)
and (F) shall be unlimited. The Surviving Partnership
Indemnified Parties shall be entitled to indemnification for the
claims described in clauses (a) through (d) above solely from
the applicable Post-Closing Escrow Deposits.
(g) INSTRUCTIONS TO ESCROW AGENT.
(i) INDIVIDUAL INDEMNIFYING PARTIES. Each Indemnifying
Party hereby covenants and agrees with each Surviving
Partnerships Indemnified Party that, if such Indemnifying
Party is or becomes obligated to indemnify an Surviving
Partnership Indemnified Party for Indemnified Costs under this
Article X, such Indemnifying Party hereby authorizes and
directs the Partner Representatives (hereinafter defined) to,
on behalf of such Indemnifying Party, execute and deliver to
the Escrow Agent written instructions to release to such
Surviving Partnership Indemnified Party such amounts of the
applicable Post-Closing Escrow Deposit as are necessary to
indemnify the Surviving Partnership Indemnified Party for such
Indemnified Costs.
(ii) APPOINTMENT OF PARTNERS REPRESENTATIVES. By the
execution and delivery of this Agreement, each Indemnifying
Party hereby irrevocably constitutes and appoints Bruce R.
Spector and Joseph L. Mathias, IV as the true and lawful
agents and attorneys-in-fact (the "Partner Representatives")
of such Indemnifying Party with full power of substitution to
act, jointly and severally, in the name, place and stead of
such Indemnifying Party with respect to (A) the power to
execute any amendment to this Agreement as such Partner
Representative shall deem necessary or appropriate in his sole
discretion, (B) delivery of the written instructions described
in Section 10.1(g)(i) on behalf of such Indemnifying Party,
and (C) the performance of the obligations and rights of such
Indemnifying Party under the
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Post-Closing Escrow Agreement, including, without limitation,
the power to execute the Post-Closing Escrow Agreement and any
amendments thereto on behalf of such Indemnifying Party, to do
or refrain from doing all such further acts and things, and to
execute, deliver and receive all such documents, waivers,
extensions and amendments as such Partner Representatives shall
deem necessary or appropriate in their sole discretion in
connection with the administration of the Post-Closing Escrow
Agreement (and any such actions shall be binding on such
Indemnifying Party).
Mergeco, the other Surviving Partnership Indemnified Parties, the Escrow
Agent and any other person, may conclusively and absolutely rely, without
inquiry, upon any action of any Partner Representative as the action of each
Indemnifying Party in all matters referred to herein, and each such
Indemnifying Party confirms all that each Partner Representative shall do or
cause to be done by virtue of his appointment as a Partner Representative. All
actions by the Partner Representatives are acknowledged by the parties hereto
to be taken by it solely as agents and attorneys-in-fact for each Indemnifying
Party. By the execution of this Agreement, Bruce R. Spector and Joseph L.
Mathias, IV have accepted their respective appointments as Partner
Representatives and in consideration for their agreement to act as the Partner
Representatives, each Indemnifying Party hereby agrees to indemnify and hold
Bruce R. Spector and Joseph L. Mathias, IV harmless from and against all
damages, losses, liabilities, charges, penalties, costs and expenses (including
court costs and attorneys' fees and expenses, if any) incurred by each of them
in connection with their performance as Partner Representatives, and Partner
Representatives may reserve a portion of the Total Consideration to be paid to
the Partners and Fund Limited Partners for purposes of covering any such
damages, liabilities, charges, penalties, costs and expenses. Each
Indemnifying Party covenants and agrees that he, she or it will not voluntarily
revoke the power of attorney conferred in this Section 10.1(g). If at any time
Bruce R. Spector or Joseph L. Mathias, IV dies or resigns from his position as
a Partner Representative, the remaining Partner Representative (if there is
one) shall serve as the sole Partner Representative, or if there is no
remaining Partner Representative, the other Indemnifying Parties that are not
affiliates of the Surviving Partnership after the Effective Time shall
designate a successor as soon as practicable.
(h) NO CONTRIBUTION. The General Partners may not make any
claim for contribution or indemnification after the Effective Time
from the Surviving Partnership or any of its affiliates for any
claim for which the General Partners are obligated to indemnify the
Surviving Partners under Section 10.1(b)(v). Even though Benchmark
and the Funds will be Surviving Partnership Indemnified Parties
after the Effective Time, the Surviving Partnership Indemnified
Parties shall have such rights to seek indemnification from the
Post-Closing Escrow Deposits as are granted under this Article X.
(i) RELEASE FROM ESCROW. Upon the expiration of twelve (12)
months after the Closing Date, the Surviving Partnership and the
Partner Representatives agree to instruct the Post-Closing Escrow
Agent to release, pursuant to the terms and provisions of the
Post-Closing Escrow Agreement, any amounts remaining in the
Post-Closing Escrow Deposits to the Partner Representatives, subject
to amounts
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retained in such Post-Closing Escrow Deposits for pending claims
pursuant to the terms and provisions of the Post-Closing Escrow
Agreement.
(j) EXCLUSIVE REMEDY FOR BREACH OF REPRESENTATION, WARRANTY OR
COVENANT. Commencing with the Effective Time, subject to Section 10.17,
the rights of the Surviving Partnership Indemnified Parties to
indemnification pursuant to this Section 10.1 shall be the sole and
exclusive remedy of such Surviving Partnership Indemnified Parties for any
breach of a representation, warranty or covenant set forth in this
Agreement, and, except for certain claims against the General Partners
under Section 10.1(b)(v), such recourse shall, in each instance, be limited
to the amounts held pursuant to the Post-Closing Escrow Agreement.
(k) INDEMNIFICATION OF GENERAL PARTNERS. The Surviving
Partnership shall indemnify Bruce R. Spector and Joseph L. Mathias,
IV in respect of, and hold such individuals harmless against, any
and all Indemnified Costs incurred by either or both of them in
connection with any claim, demand, action, suit, proceeding or
investigation relating to Benchmark and its subsidiaries (or any
actions such individuals may have taken in their capacities as
General Partners) and arising out of or pertaining to matters
(including liabilities of Benchmark and its subsidiaries) existing
or occurring at, prior to or after the Effective Time to the extent
such individuals would be entitled to indemnification under the
Existing Partnership Agreement or the Existing Fund Partnership
Agreements had such agreements been in effect at such time;
provided, however, that the Surviving Partnership and Funds shall
have no obligation to indemnify such individuals with respect to,
and Bruce R. Spector and Joseph L. Mathias IV hereby waive any
rights to, indemnification with respect to (A) matters set forth in
Section 10.1(h) or (B) the allocation of (1) any prior property or
cash distributions or the Fund I Consideration among Fund I Limited
Partners, (2) any prior property or cash distributions or the Fund
IV Consideration among Fund IV Limited Partners, (3) any prior
property or cash distributions or the Fund VII Consideration among
Fund VII Limited Partners, (4) any prior property or cash
distributions or the Fund VIII Consideration among Fund VIII Limited
Partners or (5) any prior property or cash distributions or the
Benchmark Consideration among the General Partners and the Limited
Partners. For purposes of the foregoing sentence, allocation shall
include the calculation and disposition of Holdback Funds (to the
extent such Holdback Funds are distributed in accordance with
instructions from Partner Representatives). Nothing in this Section
10.1(k) shall limit the Surviving Partnership from seeking recourse
from the applicable Post-Closing Escrow Deposits in accordance with
the terms of this Agreement for any indemnification obligations it
may incur pursuant to this Section 10.1(k). The procedures relating
to the defense of third party claims set forth in Section 10.1(d)
and direct claims in Section 10.1(e) are incorporated into this
Section 10.1(k) by reference and, for purposes of the implementation
of such procedures, Bruce R. Spector and Joseph L. Mathias shall be
considered the "Indemnified Party" and the Surviving Partnership
shall be considered the "Indemnifying Party."
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10.2. KNOWLEDGE. Wherever reference is made in this Agreement to a
particular statement being "to the knowledge of Benchmark" or "to the knowledge
of a Fund" (or any correlative phrase), such phrase shall be deemed to mean the
actual knowledge of Bruce R. Spector, Joseph L. Mathias IV, Cindy Thayer,
Robert Schuler or Catherine Mecchi.
10.3. AMENDMENT AND MODIFICATION. This Agreement may be amended by the
parties hereto by mutual agreement at any time prior to the Effective Time.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
10.4. WAIVER OF COMPLIANCE. Any failure of any party to comply with any
obligation, covenant, agreement or condition contained herein may be waived
only if set forth in an instrument in writing signed by the party or parties
entitled to rely upon any such obligation, covenant, agreement or condition,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any other failure.
10.5. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of applicable law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the Merger be consummated as originally contemplated to the fullest extent
possible.
10.6. EXPENSES AND OBLIGATIONS. All FCC filing fees, HSR Act filing fees
and fees payable to the Escrow Agent, the Post-Closing Escrow Agent or the
Exchange Agent shall be paid on or prior to Closing, as applicable, one-half by
Mergeco and one-half by Benchmark and its subsidiaries. Except as otherwise
expressly provided in this Agreement or as provided by law, all other costs and
expenses incurred by the parties hereto in connection with the consummation of
the transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. In the event of a dispute between the
parties in connection with this Agreement and the transactions contemplated
hereby, each of the parties hereto hereby agrees that the prevailing party
shall be entitled to reimbursement by the other party of reasonable legal fees
and expenses incurred in connection with any action or proceeding.
10.7. PARTIES IN INTEREST. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement. Any Surviving Partnership Indemnified Parties that are not parties
to this Agreement are intended to be third party beneficiaries of Section 10.1.
10.8. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally (which shall include
delivery by facsimile, or by a nationally recognized reputable overnight
courier service that issues a receipt or other confirmation
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of delivery), or three (3) business days after the date mailed by
registered or certified U.S. mail (return receipt requested and postage
prepaid) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to Mergeco or Parent, to:
Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas, 25th Floor
New York, NY 10019
Attn: Lawrence D. Stuart, Jr.
Facsimile: (212) 424-1450
with a copy to:
Vinson & Elkins
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas
Attn: Michael D. Wortley, Esq.
Facsimile: (214) 220-7716
(b) If to Benchmark, Fund I, Fund IV, Fund VII, Fund VIII, the
Partner Representatives, or the General Partners:
Benchmark Communications Radio
Limited Partnership
111 South Calvert Street
Suite 2850
Baltimore, Maryland 21202
Attn: Bruce R. Spector
Facsimile: (410) 244-7170
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attn: Eric L. Bernthal
Facsimile: (202) 637-2201
10.9. INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The table of contents, if any, and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
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Whenever the words "include," "includes," or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
10.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
10.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed to
include the Confidentiality Agreement referred to in Section 4.2(a), the
exhibits and schedules hereto, the other certificates, documents and
instruments delivered hereunder and similar operative documents relating to the
Other Benchmark Transactions) constitutes the entire agreement of the parties
hereto and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. There are
no representations, warranties, agreements or covenants other than those
expressly set forth in this Agreement (as so defined).
10.12. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
WITHOUT REGARD TO CHOICE OF LAW RULES USED IN THAT JURISDICTION.
10.13. PUBLIC ANNOUNCEMENTS. Mergeco, Parent and Benchmark shall agree
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to reaching such agreement, except as required by applicable
laws.
10.14. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Benchmark and without releasing Mergeco from any of its
obligations or liabilities hereunder, Mergeco may assign or delegate any or all
of its rights or obligations under this Agreement to any affiliate thereof so
long as such assignment would by considered "pro forma" by the FCC, and (b)
nothing in this Agreement shall limit Mergeco's ability to make a collateral
assignment of its rights under this Agreement to any institutional lender that
provides funds to Mergeco without the consent of Benchmark or any party hereto.
Benchmark shall execute an acknowledgment of such assignment(s) and collateral
assignments in such forms as Mergeco or its institutional lenders may from time
to time reasonably request; provided, however, that unless written notice is
given to Benchmark that any such collateral assignment has been foreclosed
upon, Benchmark shall be entitled to deal exclusively with Mergeco as to any
matters arising under this Agreement or any of the other agreements delivered
pursuant hereto. In the event of an assignment permitted by this Section, the
provisions of this Agreement shall inure to the benefit of and be binding on
any Mergeco's assigns. Nothing in this Agreement shall prevent Parent from
assigning its interests in Mergeco to an affiliate of Parent (so long as such
assignment would be considered "pro forma" by the FCC).
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10.15. FURTHER ASSURANCES. At the Closing or from time to time
thereafter, the Surviving Partnership shall execute and deliver such other
instruments of assignment, transfer and delivery and shall take such other
actions as the other reasonably may request in order to consummate,
complete and carry out the transactions contemplated by this Agreement.
10.16. PARTNER, DIRECTOR, OFFICER AND STOCKHOLDER LIABILITY. Except as
otherwise expressly provided in this Agreement, the Loan Agreements, the Other
Loan Documents (as defined in the Loan Agreements) or the other Transaction
Documents, the directors, officers, stockholders and affiliates of Parent and
Mergeco or their affiliates and the partners, officers, employees and
affiliates of Benchmark or its affiliates shall not have any personal liability
for any liabilities arising under this Agreement or in connection with this
transaction.
10.17. NO WAIVER OF FRAUD. Notwithstanding any provision of this
Agreement to the contrary, no party hereto shall be deemed to have waived any
claim of fraud it may have against another party.
10.18. SPECIFIC PERFORMANCE. The parties hereto agree that the Stations
are unique assets which cannot be readily obtained in the open market.
Therefore, Mergeco shall have right to the remedy of specific performance in
addition to any other rights or remedies which may be available to it.
Accordingly, notwithstanding and in addition to any rights and remedies
available hereunder, or under applicable law, Mergeco shall have the right to
specifically enforce the parties' performance under this Agreement and each
such party agrees to waive the defense in any suit that Mergeco has an adequate
remedy at law and to interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy.
10.19. ARBITRATION.
(a) PRE-ARBITRATION MEETING. The parties shall attempt in good
faith to resolve promptly any dispute, controversy or claim under,
arising out of, relating to or in connection with this Agreement by
negotiations between one representative designated by each party.
If any such dispute, controversy or claim should arise, the
designated representatives of the parties shall meet at least once
and will attempt to resolve the matter. Either designated
representative may request the other to meet within 14 days after
delivery of written notice to the other party of any such dispute,
controversy or claim, at a mutually agreed time and place.
(b) ARBITRATION PROCEEDINGS. If the matter has not been
resolved pursuant to the foregoing procedures within 60 days after
the first meeting of the parties' designated representatives (which
period may be extended or shortened by mutual agreement), the matter
shall be settled exclusively by arbitration (except as provided in
Section 10.19(f) herein) conducted in accordance with the provisions
of the Federal Arbitration Act (99 U.S.C. Section Section 1-16),
and in accordance with the Center for Public Resources, Inc.'s Rules
(the "Rules of Arbitration") for Non-Administered Arbitration of
Business Disputes, by three arbitrators, of whom each party shall
appoint one arbitrator, and such appointed arbitrators shall appoint
the third arbitrator. All arbitrators to be selected under this
Section 10.19 shall, unless the parties
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mutually agree otherwise, be persons: (a) who meet the qualifications
set forth in Rule 7 of the Rules of Arbitration; (b) who are attorneys
or retired judges; (c) who are residents of a State other than
Maryland or Texas; and (d) who have past experience in settling
complex litigation involving claims relating to mergers or
acquisitions. The arbitration of such matters, including the
determination of any amount of damages suffered by any party hereto by
reason of the acts or omissions of any party, shall be final and
binding upon the parties to the maximum extent permitted by law. The
parties shall use their best efforts to cause a final decision of the
arbitrators under this Section 10.19 to be issued no later than sixty
(60) days after the date that the dispute is referred to arbitration
and, in any event, with disputes arising prior to Closing, no later
than November 30, 1997. No party shall seek, and no arbitrator shall
be authorized to award, any punitive damages relating to any matter
under, arising out of, in connection with or relating to this
Agreement in the arbitration proceedings set forth herein or in any
other forum. The parties intend that this agreement to arbitrate be
valid, binding, enforceable and irrevocable.
(c) PLACE OF ARBITRATION. Any arbitration proceedings
hereunder shall be conducted in New York, New York or at such other
location as the parties may agree.
(d) JUDGMENTS. Any arbitration award hereunder shall be final
and binding upon the parties, and judgment may be entered thereon,
upon the application of either party, by any court having
jurisdiction.
(e) EXPENSES. Each party shall be entitled to be reimbursed by
the other party for costs and expenses incurred in connection with
commencing any action hereunder, including reasonable attorneys'
fees and arbitrators' fees, if and to the extent determined by the
arbitrator or arbitrators arbitrating any such action.
(f) EQUITABLE REMEDIES. Notwithstanding anything else in this
Section 10.19 to the contrary, each party shall be entitled to seek
any equitable remedies available under applicable law from any court
of competent jurisdiction, and the order or judgment of any such
court shall be binding in any arbitration proceeding pursuant to
this Section 10.19.
ARTICLE XI
DEFINITIONS
11.1. CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
"Accounts Receivable Consideration" allocable to a Person shall be an
amount equal to ninety five percent (95%) of the aggregate dollar amount of
accounts receivable of 120 days or less (and, in the case of agency accounts
receivable, of 180 days or less) of such Person outstanding at the close of
business on the Closing Date.
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"Actual Net Current Assets" of a Person shall be equal to the difference
of Current Assets of such Person (as reflected on the Closing Balance Sheet)
minus Unfunded Debt of such Person (as reflected on the Closing Balance Sheet).
"Additional Letters of Credit" shall have the meaning set forth in Section
1.11.
"Adjustment Amount" means, with respect to any Person, the difference
(whether positive or negative) of Actual Net Current Assets of such Person
minus Initial Net Current Assets of such Person. For purposes of calculating
the Adjustment Amount for Benchmark under this Agreement, Fund I, Fund IV, Fund
VII, Fund VIII, each of the New Funds and each of their respective subsidiaries
shall be deemed not to be subsidiaries of Benchmark.
"Affiliate" of a specified person means a person who, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified person.
"Alex. Brown" shall have the meaning set forth in Section 2.1(t).
"Alternative Proposal Fee" shall have the meaning set forth in Section
9.2.
"Americom Fee" shall have the meaning set forth in Section 6.4.
"Alex. Brown Fee" shall mean the fee of the Three Hundred Thousand Dollars
($300,000) paid on the date hereof by Mergeco to Alex. Brown in connection with
the Alex. Brown Fairness Opinion.
"Alex. Brown Fairness Opinion" shall have the meaning set forth in Section
2.1(t).
"Applications" shall have the meaning set forth in Section 6.1.
"Assignments of New Fund Partnership Interests" means the Assignments of
Partnership Interest, each in substantially the form of Exhibit 4 hereto,
pursuant to which Bruce R. Spector will assign his limited partnership interest
in each of Fund IX, Fund X and Fund XI to Parent immediately after the
Effective Time.
"Balance Sheet" shall have the meaning set forth in Section 2.1(f)(ii).
"Balance Sheet Date" shall have the meaning set forth in Section
2.1(f)(ii).
"Bankers Trust" shall have the meaning set forth in Section 1.11.
"Banking Event" shall have the meaning set forth in Section 8.1.
"BCF Calculation" shall have the meaning set forth in Section 1.6.
"Benchmark" means Benchmark Communications Radio Limited Partnership.
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"Benchmark Allocable Portion" means, with respect to any Holdback Fund or
the Residual Consideration, the portion of such Holdback Fund or the Residual
Consideration (assuming for this purpose that the Residual Consideration is a
positive number) that the holders of Convertible Partnership Interests would
be entitled to receive pursuant to this Agreement in the event the full amount
of such Holdback Fund or the Residual Consideration had in fact been disbursed
as part of the Merger Consideration by the Exchange Agent on the Closing Date.
"Benchmark Consideration," which shall consist of consideration allocable
to the New Funds and to the goodwill and other assets of Benchmark, means,
subject to the adjustments described in Section 1.6(e) hereof, the sum of (i)
Fifty Six Million Two Hundred Twenty Seven Thousand Five Hundred Dollars
($56,227,500) in cash minus (ii) the Funded Debt of Benchmark, plus (iii) the
Current Assets of Benchmark minus (iv) the Unfunded Debt of Benchmark, minus
(v) the principal amounts drawn under the Jackson Loan, the Statesville Loan
and the Montgomery Loan but only to the extent such amounts were drawn to pay
the Jackson Consideration, the Statesville Consideration and the Montgomery
Consideration minus (vi) the Benchmark Allocable Portion of the Residual
Consideration. For purposes of clauses (ii), (iii) and (iv) of the preceding
sentence, Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and each
of their respective subsidiaries shall be deemed not to be subsidiaries of
Benchmark.
"Benchmark Dissenting Partner Fund" means an amount equal to the portion
of the Total Consideration that would have been allocable to the holders of
Benchmark Dissenting Partnership Interests if such holders had not exercised
appraisal rights in the Merger with respect to such partnership interests under
Maryland Law.
"Benchmark Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs,
expenses or liabilities that may be incurred with respect to holders of
Benchmark Dissenting Partnership Interests. The Benchmark Dissenting
Partner Reserve shall constitute a portion of the Total Consideration.
"Benchmark Dissenting Partnership Interests" shall have the meaning set
forth in Section 1.7.
"Benchmark Lease Agreement" means the office lease for Suite 2850, 111 S.
Calvert St., Baltimore, MD.
"Benchmark Lease Prepayment" means the prepayment by Mergeco of all
remaining payments, totaling $245,000, owed by the tenant under the Benchmark
Lease Agreement from July 1, 1997 to the end of its term (September 30, 2000).
"Benchmark Negative Trade Balance" shall have the meaning set forth in
Section 3.2.
"Business Combination Transaction" means any lease, sale, transfer or
other disposition (including by way of merger, consolidation, business
combination or sale, issuance or exchange of partnership interests but
excluding any pledge or mortgage) of 35% or more of the assets of or interest
in Benchmark and its subsidiaries (measured on an aggregate basis) in one or
more transactions (whether or not related);
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"Business Combination Transaction Proposal" means a bona fide and written
proposal from a financially qualified third party addressed to Benchmark, the
General Partners, the Limited Partners or the Fund Limited Partners, which
proposal (i) has been communicated (whether or not by the General Partners) to
holders of Fund Limited Partnership Interests who hold a substantial percentage
of voting power (with respect to mergers) of a Fund that fails to approve the
Other Benchmark Merger Agreement to which such Fund is a party, (ii) is a
proposal to acquire Benchmark, its subsidiaries or any of their assets pursuant
to a Business Combination Transaction, and (iii) contains a specific
description of the consideration to be paid in such Business Combination
Transaction; provided that a proposal shall not constitute a Business
Combination Transaction Proposal unless such proposal, if pursued by the
General Partners, would reasonably be expected to result in a Business
Combination Transaction.
"Business Day" means any day on which the principal offices of the SEC in
Washington, DC are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in New York, New York.
"Capital Expenditure Deposit" shall have the meaning set forth in Section
1.11.
"CERCLA" shall have the meaning set forth in Section 2.1(m).
"CERCLIS" shall have the meaning set forth in Section 2.1(m)(vi).
"Cessation Date" shall have the meaning set forth in Section 8.1.
"Claim Notice" shall have the meaning set forth in Section 10.1(d).
"Class A General Partners" means each of the General Partners of Benchmark
that hold Class A General Partnership Interests.
"Class A General Partnership Interests" means the Partnership Interests of
the Class A General Partners.
"Class A Limited Partners" means each of the Limited Partners of Benchmark
that hold Class A Limited Partnership Interests.
"Class A Limited Partnership Interests" means the Partnership Interests of
the Class A Limited Partners.
"Class A Partners" means the Class A General Partners and the Class A
Limited Partners.
"Closing" shall have the meaning set forth in Section 8.1.
"Closing Balance Sheet" shall have the meaning set forth in Section
1.6(h).
"Closing Date" shall have the meaning set forth in Section 8.1.
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"Code" shall have the meaning set forth in Section 2.1(n).
"Commission Consents" shall have the meaning set forth in Section 6.1.
"Communications Act" shall have the meaning set forth in Section
2.1(g)(i).
"Confidentiality Agreement" shall have the meaning set forth in Section
4.2.
"Conflict Event" shall have the meaning set forth in Section 8.1.
"Consent Solicitation" shall have the meaning set forth in Section
1.10(c).
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"Converted Partnership Interest" shall have the meaning set forth in
Section 1.5.
"Convertible Partnership Interests" means the Limited Partnership
Interests (other than the Class A Limited Partnership Interests) and the
General Partnership Interests.
"Corporate Facilities" means the facilities at 111 S. Calvert Street,
Suite 2850, Baltimore, Maryland.
"Credit Agreement Event of Default" means (a) an event described in
Section 6.02 or 6.04 of any of the Loan Agreements, or (b) an event described
in any other Section of Article VI of any of the Loan Agreements to the
extent that such event constitutes (i) an intentional or willful act
voluntarily taken by any party to a Loan Agreement other than the Lender,
the purpose of which act is to materially breach the terms of the Loan
Agreement and to induce Mergeco to exercise its termination rights under
this Agreement, (ii) a material breach or, in the case of Section 5.14 or
6.10 of any of the Loan Agreements, any breach, by any party to a Loan
Agreement other than the Lender of a covenant contained in any Loan
Agreement to which such Person is a party, which breach is (a) capable of
being cured within the Cure Period using commercially reasonable efforts
and (b) is not cured within such Cure Period (which Cure Period shall
commence upon receipt by such party of written notice of such breach from
the Lender), or (iii) a material breach by any party to any Loan Agreement
other than the Lender of a covenant to any Loan Agreement, which breach (a)
is not capable of being cured within the Cure Period using commercially
reasonable efforts and (b) would reasonably be expected to result in a
Material Adverse Effect. For purposes of clause (iii) of this definition,
a Material Adverse Effect shall be deemed to include any material adverse
effect that would result in damages to the Surviving Partnership or its
subsidiaries in excess of the Material Adverse Effect Threshold.
"Cure Period" shall have the meaning set forth in Section 9.1.
"Current Assets" of a Person means the Accounts Receivable Consideration
allocable to such Person and the amount of cash, cash equivalents, prepaid
items, security deposits, other
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receivables not included among the receivables that form the basis of the
calculation of the Accounts Receivable Consideration allocable to such
Person (including employee and affiliate receivables) and other current
assets (other than current assets relating to trade or barter agreements to
which such Person is a party and other than any reserve fund held back by
Benchmark relating to the Norfolk Contracts, the rights to which fund may
be assigned to any other party prior to Closing) of such Person as of 11:59
p.m. on the day immediately preceding the Closing Date.
"Delaware Law" shall have the meaning set forth in the Recitals.
"Dissenting Partner Funds" means the Benchmark Dissenting Partner Fund,
the Fund I Dissenting Partner Fund, the Fund IV Dissenting Partner Fund, the
Fund VII Dissenting Partner Fund and the Fund VIII Dissenting Partner Fund.
"Dissenting Partner Reserves" means the Benchmark Dissenting Partner
Reserve, the Fund I Dissenting Partner Reserve, the Fund IV Dissenting Partner
Reserve, the Fund VII Dissenting Partner Reserve and the Fund VIII Dissenting
Partner Reserve.
"Dissenting Partnership Interests" means, collectively, the Benchmark
Dissenting Partnership Interests, the Fund I Dissenting Partnership Interests,
the Fund IV Dissenting Partnership Interests, the Fund VII Dissenting
Partnership Interests and the Fund VIII Dissenting Partnership Interests.
"Effective Time" shall have the meaning set forth in Section 1.2.
"Election Date" shall have the meaning set forth in Section 8.1.
"Employee Benefit Plans" shall have the meaning set forth in Section
2.1(p)(i).
"Environmental Costs or Liabilities" shall have the meaning set forth in
Section 2.1(m)(iv).
"Environmental Laws" shall have the meaning set forth in Section 2.1(m).
"Environmental Report" means a "Phase I Environmental Site Assessment" or
a "Phase II Environmental Site Assessment" as referred to in the ASTM Standards
on Environmental Site Assessments for Commercial Real Estate, E 1527-94, any
correspondence from a Governmental Entity identifying Hazardous Substance
contamination, or any other similar environmental report.
"ERISA" shall have the meaning set forth in Section 2.1(p)(i).
"ERISA Group" shall have the meaning set forth in Section 2.1(p)(i).
"Event Date" shall have the meaning set forth in Section 8.1.
"ESAs" shall have the meaning set forth in Section 3.3.
"Escrow Agent" shall have the meaning set forth in Section 1.11.
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"Exchange Agent" shall have the meaning set forth in Section 1.8(a).
"Exchange Fund" shall have the meaning set forth in Section 1.8(a).
"Existing Fund Partnership Agreements" means the Amended and Restated
Certificate and Agreement of Limited Partnership of each of Fund I, Fund IV,
Fund VII and Fund VIII, in each case as in effect immediately prior to the
Effective Time.
"Existing Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership (as such agreement may be amended from time to
time) of Benchmark in effect immediately prior to the Effective Time.
"FCC" shall have the meaning set forth in Section 2.1(e).
"Final Determination" shall have the meaning set forth in Section 1.11(b).
"Final Order" means an order, action or decision of the FCC (without the
inclusion of any material adverse conditions not customarily imposed with
respect to such consents) that has not been reversed, stayed, enjoined,
annulled or suspended and as to which (a) no timely request for stay, appeal,
petition for reconsideration, application for review, or reconsideration by the
FCC on its own motion is pending and (b) the time for filing any such request,
appeal, petition or application, or for reconsideration by the FCC on its own
motion has expired.
"Financial Statements" shall have the meaning set forth in Section 2.1(f).
"Fund I" means Benchmark Radio Acquisition Fund I Limited Partnership.
"Fund I BCF Consideration" shall have the meaning set forth in the
definition of Fund I Consideration.
"Fund I Broadcast Cash Flow" means the aggregate revenues of Fund I and
its subsidiaries during 1996 minus the aggregate operating expenses of Fund I
and its subsidiaries during 1996, determined in accordance with GAAP,
consistently applied, excluding any expenses for (i) depreciation, (ii)
amortization, (iii) interest, (iv) income taxes, (v) management fees and
expenses payable to Benchmark, and (vi) legal fees and expenses allocable to
Fund I incurred in connection with the transactions contemplated by this
Agreement and the Other Benchmark Transactions. In calculating Fund I
Broadcast Cash Flow, the expense of employee health insurance during 1996 shall
be adjusted to reflect the rates in effect under Benchmark's current insurance
program which went into effect on October 1, 1996 (which adjustment is expected
to increase Fund I Broadcast Cash Flow by approximately $3,105). In addition,
in calculating Fund I Broadcast Cash Flow, extraordinary gains and losses
(determined in accordance with GAAP), gains and losses on sales of fixed assets
and revenues and expenses under trade and barter agreements shall be excluded.
"Fund I Consideration" means, subject to the adjustments set forth in
Section 1.6(a), (i) Eleven Million Nine Hundred Thousand Dollars ($11,900,000)
in cash (the "Fund I BCF Consideration"), (ii) minus the Funded Debt of Fund I
paid in accordance with Section 1.8(e), plus
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(iii) the Current Assets of Fund I, minus (iv) the Unfunded Debt of Fund I,
minus (v) the Fund I Limited Partner Allocable Portion of the Residual
Consideration.
"Fund I Dissenting Partner Fund" means an amount equal to the portion of
the Total Consideration that would have been allocable to the holders of Fund I
Dissenting Partnership Interests if such holders had not exercised appraisal
rights in the Fund I Merger with respect to such partnership interests under
Maryland Law.
"Fund I Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund I
Dissenting Partnership Interests.
"Fund I Dissenting Partnership Interests" shall have the meaning assigned
to such term in the Fund I Merger Agreement.
"Fund I Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund I Merger Agreement.
"Fund I Limited Partners" means the limited partners of Fund I.
"Fund I Merger" means the merger contemplated by the Fund I Merger
Agreement.
"Fund I Merger Agreement" means that certain Plan and Agreement of Merger,
dated as of December 9, 1996 by and among Sub I, Fund I, Benchmark and
Benchmark Holdings Co., Inc.
"Fund I Merger Consideration" shall have the meaning assigned to such term
in the Fund I Merger Agreement.
"Fund I Post-Closing Escrow Deposit" means a deposit of Three Hundred
Twenty Seven Thousand Two Hundred Fifty Dollars ($327,250), which shall
constitute a portion of the Fund I Consideration deposited in escrow with the
Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and
Section 1.12.
"Fund III" means Benchmark Radio Acquisition Fund III Limited Partnership.
"Fund IV" means Benchmark Radio Acquisition Fund IV Limited Partnership.
"Fund IV BCF Consideration" shall have the meaning set forth in the
definition of Fund IV Consideration.
"Fund IV BCF Stations" means radio stations WCOS(AM), Columbia, South
Carolina, WCOS(FM), Columbia, South Carolina, WHKZ(FM), Cayce, South Carolina,
WVOC(AM), Columbia, South Carolina and KRMD-AM/FM, Shreveport, Louisiana.
"Fund IV Broadcast Cash Flow" means the aggregate revenues of the Fund IV
BCF Stations during 1996 minus the aggregate operating expenses of the Fund
IV BCF Stations during 1996 (regardless of whether such stations were owned by
Benchmark or its subsidiaries, or any third
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party, during such time period), determined in accordance with GAAP,
consistently applied, excluding any expenses for (i) depreciation, (ii)
amortization, (iii) interest, (iv) income taxes, (v) management fees and
expenses payable to Benchmark, (vi) total compensation payable to
operations manager Gary Barboza in 1996 (having a base salary of $46,000),
(vii) severance payable to Ron Antill (expected to be approximately
$7,187), former program director at WCOS, (viii) prepaid television
advertisement expenses incurred in 1995 and carried forward to 1996
(approximately $48,825), (ix) compensation paid with respect to John
Crenshaw and the Country Heartlines show, which has been reallocated to
Fund VII (expected to be approximately $7,000), (x) legal fees and expenses
allocable to Fund IV incurred in connection with the transactions
contemplated by this Agreement and the Other Benchmark Transactions, (xi)
legal fees and expenses incurred in connection with the acquisition of
KRMD-FM/AM, Shreveport, Louisiana, (xii) Shreveport Expenses and (xiii)
WSCQ Expenses. In calculating Fund IV Broadcast Cash Flow, the expense of
employee health insurance during 1996 shall be adjusted to reflect the
rates in effect under Benchmark's current insurance program which went into
effect on October 1, 1996 (which adjustment is expected to increase Fund IV
Broadcast Cash Flow by $7,425), and expenses incurred in connection with
Arbitron in the Columbia, South Carolina market shall be adjusted to
reflect the expenses in effect under the current Arbitron agreement for the
Columbia, South Carolina stations which went into effect on April 1, 1996
(which adjustment is expected to increase Fund IV Broadcast Cash Flow by
approximately $7,351). In addition, in calculating Fund IV Broadcast Cash
Flow, extraordinary gains and losses (determined in accordance with GAAP),
gains and losses on sales of fixed assets and revenues and expenses under
trade and barter agreements shall be excluded. In addition, Fund IV
Broadcast Cash Flow shall be increased by approximately $68,700 to reflect
that KRMD AM/FM will receive rental income from tenants at the stations'
studio building at 3109 Alexander Boulevard in Shreveport, Louisiana, will
no longer incur studio/office rental expense at such site and will no
longer incur billboard rental expenses at the station's AM transmitter
site.
"Fund IV Consideration" means, subject to the adjustments described in
Section 1.6(b) hereof, the sum of (i) Forty Million Eight Hundred Ninety Five
Thousand Dollars ($40,895,000) in cash (the "Fund IV BCF Consideration"), (ii)
minus the Funded Debt of Fund IV paid in accordance with Section 1.8(e) plus
(iii) the Current Assets of Fund IV minus (iv) the Unfunded Debt of Fund IV
plus (v) the WSCQ Expenses and the Shreveport Expenses, minus (vi) the Fund IV
Limited Partner Allocable Portion of the Residual Consideration.
"Fund IV Dissenting Partner Fund" means such amount equal the portion of
the Total Consideration that would have been allocable to the holders of Fund
IV Dissenting Partnership Interests if such holders had not exercised appraisal
rights in the Fund IV Merger with respect to such partnership interests under
Maryland Law.
"Fund IV Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund IV
Dissenting Partnership Interests.
"Fund IV Dissenting Partnership Interests" shall have the meaning assigned
to such term in the Fund IV Merger Agreement.
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"Fund IV Expenses" means all expenses and costs incurred by Fund IV prior
to the Closing Date in connection with the move, rebuilding and repair of the
WSCQ-FM studios and offices.
"Fund IV Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund IV Merger Agreement.
"Fund IV Limited Partners" means the limited partners of Fund IV.
"Fund IV Loan" means amounts borrowed under the Fund IV Loan Agreement.
"Fund IV Loan Agreement" means that certain Credit Agreement (Fund IV) to
be entered into between Fund IV and Parent in accordance with the terms of the
side letter relating to such loan dated the date hereof between Parent and
Benchmark.
"Fund IV Merger" means the merger contemplated by the Fund IV Merger
Agreement.
"Fund IV Merger Agreement" means that certain Plan and Agreement of
Merger, dated as of December 9, 1996 by and among Sub IV, Fund IV, Benchmark
and Benchmark Holdings Co., Inc.
"Fund IV Merger Consideration" shall have the meaning assigned to such
term in the Fund IV Merger Agreement.
"Fund IV Post-Closing Escrow Deposit" means a deposit of One Million One
Hundred Twenty Four Thousand Six Hundred Dollars ($1,124,600), which shall
constitute a portion
of the Fund IV Consideration, deposited in escrow with the Post-Closing Escrow
Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12..
"Fund VII" means Benchmark Radio Acquisition Fund VII Limited
Partnership..
"Fund VII Consideration" means, subject to the adjustments described in
Section 1.6(c) hereof, the sum of (i) Twenty Five Million Dollars ($25,000,000)
in cash minus, (ii) amounts drawn under the Fund VII Loan and accrued and
unpaid interest thereon, provided, that for purposes of this definition,
interest shall be deemed to have accrued on the Fund VII Loan from the date of
funding of the Fund VII Loan to the Closing Date at an annual rate equal to the
Pass Through Rate (as defined in the Fund VII Loan Agreement), (iii) minus the
Funded Debt of Fund VII paid in accordance with Section 1.8(e), plus (iv) the
Current Assets of Fund VII minus (v) the Unfunded Debt of Fund VII, minus (vi)
the Fund VII Limited Partner Allocable Portion of the Residual Consideration.
"Fund VII Dissenting Partner Fund" means an amount equal to the portion of
the Total Consideration that would have been allocable to the holders of Fund
VII Dissenting Partnership Interests if such holders had not exercised
appraisal rights in the Fund VII Merger with respect to such partnership
interests under Maryland Law.
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"Fund VII Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund VII
Dissenting Partnership Interests.
"Fund VII Dissenting Partnership Interests" shall have the meaning
assigned to such term in the Fund VII Merger Agreement.
"Fund VII Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund VII Merger Agreement.
"Fund VII Limited Partners" means the limited partners of Fund VII.
"Fund VII Loan" means amounts borrowed by Fund VII under the Fund VII Loan
Agreement.
"Fund VII Loan Agreement" means that certain Credit Agreement (Fund VII)
dated the date hereof between Fund VII and Parent.
"Fund VII Merger" means the merger contemplated by the Fund VII Merger
Agreement.
"Fund VII Merger Agreement" means that certain Plan and Agreement of
Merger, dated as of December 9, 1996 by and among Sub VII, Fund VII, Benchmark
and Benchmark Holdings Co., Inc.
"Fund VII Merger Consideration" shall have the meaning assigned to such
term in the Fund VII Merger Agreement.
"Fund VII Post-Closing Escrow Deposit" means a deposit of Six Hundred
Eighty Seven Thousand Five Hundred Dollars ($687,500), which shall constitute a
portion of the Fund VII Consideration, deposited in escrow with the
Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and
Section 1.12.
"Fund VIII" means Benchmark Radio Acquisition Fund VIII Limited
Partnership.
"Fund VIII BCF Calculation" shall have the meaning set forth in the
definition of Fund VIII Broadcast Cash Flow.
"Fund VIII BCF Consideration" shall have the meaning set forth in the
definition of Fund VIII Consideration.
"Fund VIII Broadcast Cash Flow" means the aggregate revenues of Fund VIII
and its subsidiaries (excluding any revenues with respect to WROV-AM/FM serving
Roanoke, Virginia) during 1996 minus the aggregate operating expenses of Fund
VIII and its subsidiaries (excluding any expenses with respect to WROV-AM/FM
serving Roanoke, Virginia) during 1996, determined in accordance with GAAP,
consistently applied, excluding any expenses for (i) depreciation, (ii)
amortization, (iii) interest, (iv) income taxes, (v) management fees and
expenses payable to
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Benchmark, (vi) total compensation of disc jockey Steve Stroud in 1996 (having
a base salary of $17,566), (vii) total compensation payable to Debbie Motley in
1996 (having a base salary of $16,369), (viii) total compensation payable to
local sales manager Jim Colston in 1996 (expected to be approximately $8,000),
(ix) total compensation of engineer Jeff Parker charged to WYYD (expected to be
approximately $3,840), (x) total compensation of business manager Hazel Bryant
charged to WYYD (approximately $13,800), (xi) compensation paid with respect to
John Crenshaw and the Country Heartlines show charged to WYYD (expected to be
approximately $19,750) and (xii) legal fees and expenses allocable to Fund VIII
incurred in connection with the transactions contemplated by this Agreement and
the Other Benchmark Transactions, (xiii) legal fees and expenses incurred in
connection with new offices and studios in the Winchester, Virginia market and
(xiv) legal fees and expenses relating to the operation and acquisition of
WLNI. In calculating Fund VIII Broadcast Cash Flow, the expense of employee
health insurance during 1996 shall be adjusted to reflect the rates in effect
under Benchmark's current insurance program which went into effect on October
1, 1996 (which adjustment is expected to increase Fund VIII Broadcast Cash Flow
by approximately $8,910), and the expense of the Winchester, Virginia
operations relating to the compensation of engineer Jeff Parker shall be
adjusted to reflect that the Winchester, Virginia operations will pay one-third
(rather than 100%) of the total compensation for his services as regional
engineer on a going-forward basis (which adjustment is expected to increase
Fund VIII Broadcast Cash Flow by approximately $12,329). In addition, in
calculating Fund VIII Broadcast Cash Flow, extraordinary gains and losses
(determined in accordance with GAAP), gains and losses on sales of fixed assets
and revenues and expenses under trade agreements shall be excluded.
"Fund VIII Consideration" means, subject to the adjustments described in
Section 1.6(d) hereof, the sum of (i) Twenty Nine Million Four Hundred Seventy
Seven Thousand Five Hundred Dollars ($29,477,500) in cash (the "Fund VIII BCF
Consideration"), (ii) minus the Funded Debt of Fund VIII paid pursuant to
Section 1.8(e) plus (iii) the Current Assets of Fund VIII minus
(iv) the Unfunded Debt of Fund VIII, minus the Fund VIII Limited Partner
Allocable Portion of the Residual Consideration.
"Fund VIII Dissenting Partner Fund" means an amount equal to the portion
of the Total Consideration that would have been allocable to the holders of
Fund VIII Dissenting Partnership Interests if such holders had not exercised
appraisal rights in the Fund VIII Merger with respect to such partnership
interests under Maryland Law.
"Fund VIII Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund VIII
Dissenting Partnership Interests.
"Fund VIII Dissenting Partnership Interests" shall have the meaning
assigned to such term in the Fund VIII Merger Agreement.
"Fund VIII Expenses" means all expenses and costs incurred with respect to
the new offices and studios for the Winchester operations and all expenses and
costs relating to the operation and, if applicable, acquisition of WLNI.
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"Fund VIII Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund VIII Merger Agreement.
"Fund VIII Limited Partners" means the limited partners of Fund VIII.
"Fund VIII Loan" means amounts borrowed by Fund VIII under the Fund VIII
Loan Agreement.
Fund VIII Loan Agreement" means that certain Credit Agreement (Fund VIII)
to be entered into between Fund VIII and Parent in accordance with the terms of
the side letter dated the date hereof relating to such loan between Parent and
Benchmark.
"Fund VIII Merger" means the merger contemplated by the Fund VIII Merger
Agreement.
"Fund VIII Merger Agreement" means that certain Plan and Agreement of
Merger, dated as of December 9, 1996 by and among Sub VIII, Fund VIII,
Benchmark and Benchmark Holdings Co., Inc.
"Fund VIII Merger Consideration" shall have the meaning assigned to such
term in the Fund VIII Merger Agreement.
"Fund VIII Post-Closing Escrow Deposit" means a deposit of Eight Hundred
Ten Thousand Six Hundred Dollars ($810,600) which shall constitute a portion of
the Fund VIII Consideration, deposited in escrow with the Post-Closing Escrow
Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12.
"Fund IX" means Benchmark Radio Acquisition Fund IX Limited Partnership..
"Fund X" means Benchmark Radio Acquisition Fund X Limited Partnership..
"Fund XI" means Benchmark Radio Acquisition Fund XI Limited Partnership..
"Fund Employee Benefit Plans" shall have the meaning set forth in Section
2.3(p).
"Fund ERISA Group" shall have the meaning set forth in Section 2.3(p).
"Fund Limited Partners" shall have the meaning set forth in the Recitals.
"Fund Limited Partnership Interests" means the Fund I Limited Partnership
Interests, Fund IV Limited Partnership Interests, Fund VII Limited Partnership
Interests and Fund VIII Limited Partnership Interests (in each case, as defined
in the Other Benchmark Merger Agreements).
"Fund Pension Plan" shall have the meaning set forth in Section 2.3(p).
"Fund Stations" shall have the meaning set forth in Section 2.3(g).
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"Fund Station License" shall have the meaning set forth in Section 2.3(g).
"Funded Debt, with respect to a Person, means, without duplication, (i)
all obligations of such Person and its subsidiaries for borrowed money,
including, without limitation, all obligations for accrued and unpaid interest
thereon and any pre-payment premiums or penalties (and associated expenses)
with respect thereto, (ii) any capitalized lease obligations of such Person or
any of its subsidiaries, (iii) all obligations of such Person or its
subsidiaries for the payment of brokerage, legal, accounting, advisory and
other similar fees and expenses (excluding the Alex. Brown Fee) arising in
connection with the transactions contemplated hereby, (iv) any obligation of
such Person or its subsidiaries under equity participation agreements or any
similar appreciation or phantom equity plans or rights (including without
limitation, amounts due to Chris Walus in connection with the consummation of
the Merger, as described in Schedule 2.1(o)) and (v) any amounts due by such
Person or its subsidiaries (including to the manager or general partner of such
Person) for unpaid advances and unpaid management fees and expenses.
Obligations of Benchmark under the letter agreement dated December 9, 1996 by
and among Benchmark, Bruce R. Spector, Joseph L. Mathias IV, Venhill Limited
Partnership and certain other parties shall be considered Funded Debt of
Benchmark. For purposes of this definition, obligations of Benchmark (if any),
Fund IV, Fund VII and Fund VIII under the Fund IV Loan Agreement , the Fund VII
Loan Agreement or the Fund VIII Loan Agreement shall not be considered Funded
Debt of Benchmark, Fund IV, Fund VII or Fund VIII, and obligations of Benchmark
under the Parent Funded Debt Loan and the Parent Merger Loan shall not be
considered Funded Debt of Benchmark.
"Funded Debt Notice" shall have the meaning set forth in Section 1.8(d).
"Funded Debt Payoff" shall have the meaning set forth in Section 1.8(d).
"Funds" means Fund I, Fund IV, Fund VII, Fund VIII and the New Funds.
"GAAP" means United States generally accepted accounting principles.
"General Partner Related Party" shall mean (A) the estate or any legatee,
heir or distributee upon death of a General Partner; (B) the spouse of any
General Partner; (C) any parent or grandparent and any lineal descendant
(including any adopted child) of any parent or grandparent of a General Partner
or of such General Partner's spouse; (D) any guardian or custodian (including a
custodian for purposes of the Uniform Gift to Minors Act or Uniform Transfers
to Minors Act) for, or any executor, administrator, conservator or other legal
representative of, a General Partner or any General Partner Related Party; (E)
the trustee of a trust (including a voting trust), and any savings or
retirement account, such as an individual retirement account for purposes of
federal income tax laws, whether or not involving a trust, principally for the
benefit of such General Partner and/or any General Partner Related Party (or
Parties), including any trust in respect of which such General Partner Related
Party or any General Partner Related Party has any general or special
testamentary power of appointment or general or special non-testamentary power
of appointment limited to any General Partner Related Party (or Parties)
thereof; (F) any organization contributions to which are deductible for federal
income, estate or gift tax purposes established by such General Partner and/or
any General Partner Related Party (or Parties); and (G) any corporation,
partnership or other business entity if all the beneficial ownership thereof is
held by a General Partner and/or any General Partner Related Party (or
Parties).
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"General Partners" means each of the general partners of Benchmark.
"General Partnership Interests" means the Partnership Interests of the
General Partners.
"Governmental Entity" shall have the meaning set forth in Section 2.1(e).
"Hazardous Substances" shall have the meaning set forth in Section
2.1(m)(iv).
"Holdback Funds" means the Post-Closing Escrow Deposits, the Reserve
Funds, the Dissenting Partner Funds and the Dissenting Partner Reserves.
"HSR Act" shall have the meaning set forth in Section 2.1(e).
"Indemnified Costs" shall have the meaning set forth in Section
10.1(b)(i).
"Indemnified Parties" shall have the meaning set forth in Section 10.1.
"Indemnifying Party" shall have the meaning set forth in Section 10.1.
"Initial Closing Balance Sheet" shall have the meaning set forth in
section 1.6(f).
"Initial Closing Certificate" shall have the meaning set forth in Section
1.6(g).
"Initial Net Current Assets", with respect to a Person, shall be equal to
the difference of Current Assets (as reflected on the Initial Closing
Certificate) minus Unfunded Debt of such Person (as reflected on the Initial
Closing Certificate).
"Intellectual Rights" shall have the meaning set forth in Section 2.1(q).
"Intentional Benchmark Default" means (i) an intentional or willful act
voluntarily taken by Benchmark, the General Partners or the Funds that gives
rise to a right of Mergeco to terminate this Agreement (other than pursuant to
Section 9.1(c)(v)), the purpose of which act is to materially breach the terms
of this Agreement and to induce Mergeco to exercise its termination rights
under this Agreement, (ii) a material breach by Benchmark, the General Partners
or the Funds of a covenant to this Agreement, which breach is (a) capable of
being cured within the Cure Period with commercially reasonable efforts and (b)
not cured within such Cure Period (which Cure Period shall commence upon
receipt by Benchmark of written notice of such breach from Mergeco), (iii) a
material breach by Benchmark, the General Partners or the Funds of a covenant
to this Agreement, which breach (a) is not capable of being cured within the
Cure Period with commercially reasonable efforts and (b) would reasonably be
expected to result in a Material Adverse Effect, or (iv) prior to the
termination of this Agreement, the withdrawal by the General Partners or
Benchmark of their recommendations of this Agreement or any Other Benchmark
Merger Agreement under circumstances not permitted by this Agreement. For
purposes of clause (iii) of this definition, a Material Adverse Effect shall be
deemed to include any material adverse effect that would result in damages to
the Surviving Partnership or its subsidiaries in excess of the Material Adverse
Effect Threshold.
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"Interest Letter of Credit" shall have the meaning set forth in Section
1.11.
"Jackson Acquisition Expenses" means all expenses incurred by Benchmark or
Fund X in connection with the acquisition of the Jackson Stations other than
(i) expenses incurred on or prior to the execution date of the Jackson
Agreement or (ii) brokerage fees relating to the acquisition of the Jackson
Stations.
"Jackson Attributable Liquidated Damages" shall have the meaning assigned
to such term as Section 9.3(c).
"Jackson Agreement" means that certain Purchase Agreement by and between
CLG Media of Jackson, Inc. (as Seller), Benchmark Radio Acquisition Fund X
Limited Partnership (as Buyer) and Chrysler Capital Corporation (as Seller
Guarantor) dated as of September 9, 1996.
"Jackson Broadcast Cash Flow" means the aggregate revenues of the Jackson
Stations during 1996 minus the aggregate operating expenses of the Jackson
Stations during 1996 (regardless of whether such stations were owned by
Benchmark or its subsidiaries, or any third parties, during such period of
time), determined in accordance with GAAP, consistently applied, excluding any
expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income
taxes, (v) management and corporate fees and expenses incurred by the Jackson
Stations prior to the date of acquisition of such stations by Fund X, (vi)
legal fees and other expenses incurred by the seller of the Jackson Stations in
connection with the Jackson Agreement and the transactions contemplated
thereby, and (vii) legal fees and expenses allocable to Benchmark incurred in
connection with the transactions contemplated by this Agreement, the Other
Benchmark Transactions and the Jackson Agreement.
"Jackson Consideration" means an amount equal to the sum of (i) Fourteen
Million Nine Hundred Ninety Seven Thousand Five Hundred Dollars ($14,997,500),
plus (ii) expenses relating to the acquisition of the Jackson Stations incurred
by Benchmark or Fund X prior to the execution of the Jackson Agreement, plus
(iii) any brokerage fee paid by Benchmark or Fund X relating to the acquisition
of the Jackson Stations.
"Jackson Loan" means amounts borrowed by Fund X under the Jackson Loan
Agreement.
"Jackson Loan Agreement" means that certain Credit Agreement (Jackson)
dated the date hereof between Fund X and Parent.
"Jackson Stations" means WJMI-FM, WKXI(AM), WOAD-AM, Jackson, Mississippi,
and WKXI(FM), Magee, Mississippi.
"Leased Real Property" shall have the meaning set forth in Section 2.1(j).
"Letter of Credit" shall have the meaning set forth in Section 1.11.
"License Agreement" means the License Agreement substantially in the form
of Exhibit 9 hereto.
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"Liens" shall have the meaning set forth in Section 2.1(l).
"Limited Partners" shall have the meaning set forth in the Recitals.
"Limited Partners" means each of the limited partners of Benchmark.
"Limited Partner Percentage" shall have the meaning set forth in Section
2.3(s).
"Limited Partnership Interests" means the Partnership Interests of the
Limited Partners.
"Loan Agreements" means the Jackson Loan Agreement, the Statesville Loan
Agreement, the Montgomery Loan Agreement, the Fund IV Loan Agreement, the Fund
VII Loan Agreement and the Fund VIII Loan Agreement.
"Maryland Law" shall have the meaning set forth in the Recitals.
"Material Adverse Effect" shall mean (i) with respect to Benchmark and its
subsidiaries, a material adverse effect on the business, operations,
properties, condition (financial or otherwise), results of operations, assets
or liabilities (other than liabilities that will be repaid in the Funded Debt
Payoff or which will be reflected on the Closing Balance Sheet and result in a
corresponding adjustment to the Total Consideration pursuant to this Agreement)
of Benchmark and its subsidiaries taken as a whole and (ii) with respect to the
Surviving Partnership, a material adverse effect or the business, operations,
properties, condition (financial or otherwise), results of operations, assets
or liabilities (other than liabilities that will be repaid in the Funded Debt
Payoff or which will be reflected on the Closing Balance Sheet and result in a
corresponding adjustment to the Total Consideration pursuant to this Agreement)
of the Surviving Partnership and its subsidiaries taken as whole; provided, in
each case, that effects of any events, circumstances or conditions resulting
from changes, developments or circumstances in worldwide or national conditions
(political, economic, or regulatory) that adversely affect generally the
markets where any of the Stations are operated or
affect generally the broadcasting business, or adversely affect a broad group
of industries generally shall not constitute a Material Adverse Effect.
"Material Adverse Effect Threshold" shall mean an amount equal to the sum
of Four Million Five Hundred Thousand Dollars ($4,500,000) plus any amounts by
which Benchmark or its subsidiaries supplement the Post-Closing Escrow Deposits
pursuant to Section 1.12 after the date hereof.
"Mathias Employment Agreement" means an employment agreement to be entered
into at Closing in the form of Exhibit 10 hereto between Joseph L. Mathias IV
and the Surviving Partnership.
"Mergeco" means Benchmark Acquisition, Inc.
"Mergeco Affiliated Businesses" shall have the meaning set forth in
Section 2.2e.
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"Mergeco Common Stock" shall have the meaning set forth in Section 1.5(c).
"Merger" shall have the meaning set forth in the Recitals.
"Merger Consideration" means, with respect to a holder of a Converted
Partnership Interest, the portion of the Total Consideration that such holder
of a Converted Partnership Interest would have been entitled to receive (as
calculated by the General Partners) pursuant to the Existing Partnership
Agreement in the event: (i) the Benchmark Consideration, the Fund I
Consideration, the Fund IV Consideration, the Fund VII Consideration and the
Fund VIII Consideration had been received by Benchmark, Fund I, Fund IV, Fund
VII and Fund VIII, respectively, in a Sale (as defined in the Existing
Partnership Agreement or the applicable Existing Fund Partnership Agreement) of
all of the assets and liabilities of Benchmark, Fund I, Fund IV, Fund VII, and
Fund VIII, respectively, and (ii) Benchmark, Fund I, Fund IV, Fund VII and Fund
VIII had been liquidated immediately subsequent to such Sale, in each case,
without making a positive capital account adjustment for the contribution by
Benchmark to the capital of Fund I, Fund IV, Fund VII, Fund VIII, Sub I, Sub
IV, Sub VII or Sub VIII, as applicable of the proceeds of the Parent Funded
Debt Loan or the Parent Merger Loan, as applicable. After the Closing, the
aggregate Merger Consideration payable to holders of Converted Partnership
Interests shall be (i) increased by the amount (if any) of the Benchmark
Allocable Portions of the Dissenting Partner Funds not expended in connection
with claims of holders of Dissenting Partnership Interests and (ii) decreased
by the amount (if any) of the Benchmark Allocable Portion of the Dissenting
Partner Reserves expended in connection with claims of holders of Dissenting
Partnership Interests made in accordance with Maryland Law.
"Minimum Damage Amount" shall have the meaning set forth in Section
10.1(f).
"Montgomery Acquisition Expenses" means all expenses incurred by Benchmark
or Fund XI in connection with the acquisition of the Montgomery Stations other
than any such expenses incurred on or before the execution date of the
Montgomery Agreement. Montgomery Acquisition Expenses shall include, without
limitation, all amounts payable, not to exceed One Million Nine
Hundred Thousand Dollars ($1,900,000), under the Montgomery Agreement in
connection with the acquisition of WDHT(FM), Luverne, Alabama.
"Montgomery Agreement" means that certain Purchase Agreement by and
between Capital Communications (as Seller), Benchmark Radio Acquisition Fund XI
Limited Partnership (as Buyer) and Ronald Eubanks (as Guarantor) dated November
4, 1996.
"Montgomery Attributable Liquidated Damages" shall have the meaning
assigned to such term in Section 9.3(b).
"Montgomery Broadcast Cash Flow" means Broadcast Cash Flow (as such term
is defined in the Montgomery Agreement).
"Montgomery Consideration" means an amount equal (i) the product of ten
(10) multiplied by Montgomery Broadcast Cash Flow, plus (ii) expenses relating
to the acquisition of the Montgomery Stations incurred by Benchmark or Fund XI
prior to the execution of the Montgomery
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Agreement, plus (iii) any brokerage fee paid by Benchmark or Fund XI relating
to the acquisition of the Montgomery Stations.
"Montgomery Loan" means amounts borrowed by Fund XI under the Montgomery
Loan Agreement.
"Montgomery Loan Agreement" means that certain Credit Agreement
(Montgomery) dated the date hereof between Fund XI and Parent.
"Montgomery Stations" means WZHT-FM, Troy, Alabama, WMCZ-FM, Millbrook,
Alabama and WDHT-FM, Luverne, Alabama.
"NPL" shall have the meaning set forth in Section 2.1(m)(vi).
"New Funds" means Fund IX, Fund X and Fund XI.
"New Shreveport Station" means the new FM station serving Shreveport,
Louisiana on Channel 275C2.
"Norfolk Contracts" means (i) the Purchase Agreement dated May 13, 1996
among Benchmark Radio Acquisition Fund IV Limited Partnership, WKOC License
Limited Partnership, and Sinclair Telecable d/b/a Sinclair Communications and
(ii) the Purchase Agreement dated as of May 20, 1996 between Benchmark Radio
Acquisition Fund IV Limited Partnership and Susquehanna Radio Corp.
"Notice Period" shall have the meaning set forth in Section 10.1.
"Other Benchmark Mergers" means the mergers contemplated by the Other
Benchmark Merger Agreements.
"Other Benchmark Merger Agreements" means the Fund I Merger Agreement, the
Fund IV Merger Agreement, the Fund VII Merger Agreement and the Fund VIII
Merger Agreement.
"Other Benchmark Transactions" means (i) each of the Other Benchmark
Mergers, (ii) the Stock Purchase Agreements, (iii) the Limited Partnership
Interests Purchase Agreement, (iv) the Parent-Radioco III, Inc. Merger
Agreement, (v) the New Fund Assignments of Partnership and (vi) the Guaranty
Agreement (Individuals) of Bruce R. Spector and Joseph L. Mathias IV in favor
of Mergeco dated the date hereof.
"Owned Real Property" shall have the meaning set forth in Section 2.1(j).
"Parent" shall mean BCR Holding, Inc.
"Parent Funded Debt Loan" means a loan to Benchmark from Parent evidenced
by a promissory note in an amount equal to (i) the Funded Debt of Benchmark,
plus (ii) the Funded Debt
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of Fund I, plus (iii) the Funded Debt of Fund IV, plus (iv) the Funded Debt of
Fund VII, plus (v) the Funded Debt of Fund VIII.
"Parent Merger Loan" means a loan to Benchmark from Parent evidenced by a
promissory note in an amount equal to the sum of (i) the aggregate Fund I
Merger Consideration to be paid to holders of Fund I Converted Partnership
Interests in the Fund I Merger plus (ii) the aggregate Fund IV Merger
Consideration to be paid to holders of Fund IV Converted Partnership Interests
in the Fund IV Merger plus (iii) the aggregate Fund VII Merger Consideration to
be paid to holders of Fund VII Converted Partnership Interests in the Fund VII
Merger plus (iv) the aggregate Fund VIII Merger Consideration to be paid to
holders of Fund VIII Converted Partnership Interests in the Fund VIII Merger
plus (v) the amount of Dissenting Partner Funds (other than the Benchmark
Dissenting Partner Fund).
"Parent-Radioco III, Inc. Merger Agreement" means that certain Agreement
and Plan of Merger dated December 9, 1996 by and among BCR Holding, Inc.,
Radioco III, Inc. and Joseph L. Mathias IV.
"Partner Representatives" shall have the meaning set forth in Section
1.12.
"Partners" means, collectively, the General Partners and the Limited
Partners.
"Partnership Interest" means, with respect to a Partner, the entire
percentage ownership interest of such Partner in Benchmark as set forth on the
books and records of Benchmark (which may be segmented into and/or expressed as
a percentage of various rights and/or liabilities), including the right of such
Partner to any and all benefits to which a Partner may be entitled as provided
in the Existing Partnership Agreement and under Maryland Law, together with the
obligations of such Partner to comply with all the terms and provisions of the
Existing Partnership Agreement and under Maryland Law.
"Pass Through Rate" shall have the meaning assigned to such term in the
Loan Agreements.
"Pension Plan" shall have the meaning set forth in Section 2.1(p).
"Permits" shall have the meaning set forth in Section 2.1(m)(iii).
"Permitted Liens" shall have the meaning set forth in Section 2.1(1).
"Person" means an individual, corporation, limited liability company,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or other legal entity or government, political subdivision,
agency or instrumentality of a government.
"Post-Closing Escrow Agreement" shall have the meaning set forth in
Section 1.12(a).
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"Post-Closing Escrow Deposits" means the Fund I Post-Closing Escrow
Deposit, the Fund IV Post-Closing Escrow Deposit, the Fund VII Post-Closing
Escrow Deposit, the Fund VIII Post-Closing Escrow Deposit, and, in each case,
any supplemental deposits to such Post-Closing Escrow Deposits made pursuant to
Section 1.12.
"Pre-Closing Escrow Agreement" shall have the meaning set forth in Section
1.11.
"Pre-Closing, Escrow Deposit" shall have the meaning set forth in Section
1.11.
"Referee" shall have the meaning set forth in Section 1.6(i).
"Release" means a release in the form of Exhibit 11 hereto.
"Releasing Parties" shall have the meaning set forth in Section 9.3(a).
"Released Parties" shall have the meaning set forth in Section 9.3.
"Required Remediation" means any response or remedial action required to
be performed by the Surviving Partnership Indemnified Parties under any
applicable Environmental Law that is (i) related to any release of Hazardous
Substances in connection with any activity occurring on the Owned Real Property
or the Leased Real Property owned or leased by the applicable Fund (including
any off-site release resulting from any such activity) and (ii) identified in
an Environmental Report as being so required
"Reserve Fund Escrow Deposit" shall have the meaning set forth in Section
1.13.
"Reserve Funds" means the reserve funds of each of Benchmark, Fund I, Fund
IV, Fund VII and Fund VIII, equaling 75,000 for Fund I, $175,000 for Fund IV,
$75,000 for Fund VII, $175,000 for Fund VIII and $50,000 for Benchmark, which
funds shall be deposited in escrow with the Post-Closing Escrow Agent and
distributed as set forth in Section 1.13. The reserve funds shall constitute a
portion of the Benchmark Consideration, the Fund I Consideration, the Fund IV
Consideration, the Fund VII Consideration and the Fund VIII Consideration, as
applicable.
"Residual Consideration means an amount equal to the amount of the Alex.
Brown Fee minus Two Hundred Fifty Five Thousand Dollars ($255,000) plus the
amount of interest that would have accrued beginning on the date hereof on a
loan of One Hundred Thousand Dollars ($100,000) at the Pass Through Rate (as
defined in the Loan Agreements).
"Richmond Contracts" means the Asset Purchase Agreement dated as of May
31, 1996 by and between Benchmark Radio Acquisition Fund III Limited
Partnership, WVGO License Limited Partnership, WDCK License Limited Partnership
and ABS Communications Incorporated.
"Rules of Arbitration" shall have the meaning set forth in Section
10.19(b).
"Sellers" shall have the meaning set forth in Section 1.11(a).
"Sellers' Representative" shall have the meaning set forth in Section
1.11.
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"Selling Stockholders" means the holders of the capital stock of Radioco
I, Inc., Radioco II, Inc. and Radioco III, Inc.
"Shreveport Expenses" means all expenses and costs incurred by Fund IV
prior to the date of closing, in connection with the acquisition, construction,
development and operation of the New Shreveport Station (including, without
limitation, all payments made by Fund IV pursuant to the Shreveport Master
Agreement, professional fees, pre-acquisition costs, taxes, filing fees, due
diligence costs, moving expenses and other reasonable costs), plus all
operating losses of Fund IV associated with the New Shreveport Station
commencing with the date that Fund IV begins to provide programming to such new
station pursuant to a time brokerage arrangement.
"Shreveport Master Agreement" means the Agreement dated September 19, 1996
by and among Fund IV, Port City Communications, L.P., Caddo Broadcasting
Limited Partnership, Innovative Women's Media Association, NTW, Inc. and Larry
English.
"Statesville Acquisition Expenses" means all expenses incurred by
Benchmark or Fund IX in connection with the acquisition of the Statesville
Stations other than any such expenses incurred on or before the execution date
of the Statesville Agreement.
"Statesville Agreement" means that certain Purchase Agreement by and
between Adventure Communications, Inc. (as Seller), Benchmark Radio Acquisition
Fund IX Limited Partnership (as Buyer), Michael R. Shott (as Seller Guarantor)
and Benchmark Communications Radio Limited Partnership (as Buyer Guarantor)
dated as of May 1, 1996.
"Statesville Attributable Liquidated Damages" shall have the meaning
assigned to such term in Section 9.3(c).
"Statesville Broadcast Cash Flow" means the aggregate revenues of the
Statesville Stations during 1996 minus the aggregate operating expenses of the
Statesville Stations during 1996 (regardless of whether such stations were
owned by Benchmark or its subsidiaries, or any third parties, during such
period of time), determined in accordance with GAAP, consistently applied,
excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest,
(iv) income taxes, (v) management fees and expenses paid to Adventure
Communications or its affiliates and (vi) reimbursements to Adventure
Communications for travel and meal expenses (expected to be
approximately $1,161 at September 30, 1996), (vi) litigation expenses relating
to the WFMX tower and guy wire lease (expected to be approximately $5,063 at
September 30, 1996) and (vii) legal fees and other expenses of the seller of
the Statesville Stations incurred in connection with the Statesville Agreement
and the transactions contemplated thereby and (vi) legal fees and expenses
allocable to Benchmark or Fund IX incurred in connection with the transactions
contemplated by this Agreement and consummation of the transactions
contemplated by the Statesville Agreement.
"Statesville Consideration" means an amount equal (i) Nine Million Six
Hundred Thousand Dollars ($9,600,000), plus (ii) expenses relating to the
acquisition of the Statesville Stations incurred by Benchmark or Fund IX prior
to the execution of the Statesville Agreement plus (iii) any brokerage fees
paid by Benchmark or Fund IX relating to the acquisition of the Statesville
Stations.
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"Statesville Loan" means amounts borrowed by Fund IX under the Statesville
Loan Agreement.
"Statesville Loan Agreement" means that certain Credit Agreement
(Statesville) dated the date hereof between Fund XI and Parent.
"Statesville Stations" means WSIC(AM) and WFMX-FM, serving Statesville,
North Carolina.
"Station Event" shall have the meaning set forth in Section 8.1.
"Station Licenses" shall have the meaning set forth in Section 2.1(g)(ii).
"Station Management" shall have the meaning set forth in Section 3.1(b).
"Stations" means the radio broadcast stations operated by Benchmark and
its subsidiaries on the date hereof and, upon consummation of the acquisition
of any additional stations after the date hereof shall include such additional
stations.
"Stock Purchase Agreements" means that certain Stock Purchase Agreement
dated December 9, 1996 by and among Parent, Home Run Radio Limited Partnership
and Radioco I, Inc. and that certain Stock Purchase Agreement dated December 9,
1996 by and among Parent, Grand Slam Radio Limited Partnership and Radioco II,
Inc.
"subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary) is the direct or
indirect general partner or owns or has rights to acquire, directly or
indirectly, 50% or more of the capital stock or other equity interests the
holders of which are generally entitled to vote for the election of, or are
themselves, the board of directors, general partners or other governing body of
such corporation, partnership or other legal entity. Unless indicated to the
contrary in this Agreement, for purposes of this Agreement, Fund I, Fund IV,
Fund VII, Fund VIII, Fund IX, Fund X and Fund XI and their direct or indirect
subsidiaries shall be considered subsidiaries of Benchmark, and Fund III and
its subsidiaries shall be deemed not to be subsidiaries of Benchmark.
"Sub I" shall have the meaning set forth in the Recitals.
"Sub IV" shall have the meaning set forth in the Recitals.
"Sub VII" shall have the meaning set forth in the Recitals.
"Sub VIII" shall have the meaning set forth in the Recitals.
"Surviving Partnership" shall have the meaning set forth in Section 1.1.
"Surviving Partnership Indemnified Parties" shall have the meaning set
forth in Section 10.1(b).
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"Tax Returns" shall have the meaning set forth in Section 2.1(n).
"third-party action" shall have the meaning set forth in Section 10.1(d).
"Total Consideration" means, subject to the adjustments described in
Section 1.6 hereof, (i) the sum of the Fund I Consideration, the Fund IV
Consideration, the Fund VII Consideration, the Fund VIII Consideration and the
Benchmark Consideration minus the Residual Consideration.
"Trading Event" shall have the meaning set forth in Section 8.1.
"Transaction Documents" shall have the meaning set forth in Section
2.1(d).
"Unfunded Debt" of a Person means the aggregate current liabilities (other
than any liabilities attributable to Funded Debt and any liabilities of such
Person under trade or barter agreements to which such Person is a party) and
the aggregate principal amount of indebtedness (including any pre-payment
premiums or penalties) of such Person and its subsidiaries that remains unpaid
as of 11:59 p.m. on the day immediately preceding the Closing Date (but giving
effect to the Funded Debt Payoff pursuant to Section 1.8(e)). For purposes of
this definition, obligations of Fund IV, Fund VII or Fund VIII under the Fund
IV Loan, the Fund VII Loan and the Fund VIII Loan shall not be considered
Unfunded Debt of Fund IV, Fund VIII or Benchmark, and obligations of Benchmark
under the Parent Funded Debt Loan or the Parent Merger Loan shall not be
considered Unfunded Debt of Benchmark.
"Unlimited Claims" shall have the meaning set forth in Section 10.1.
"Voting Debt" shall have the meaning set forth in Section 2.1(c).
"WSCQ Expenses" means all expenses incurred by Fund IV to the date of
Closing in connection with the acquisition of WSCQ-FM, Columbia, South Carolina
(including, without limitation, professional fees, preacquisition costs, taxes,
filing fees, due diligence costs, moving expenses and other reasonable costs,
but excluding the purchase price for the capital stock of Congaree
Broadcasters, Inc.) plus all operating losses associated with WSCQ-FM incurred
by Fund IV after the date of acquisition.
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IN WITNESS WHEREOF, Mergeco, Benchmark, Fund I, Fund IV, Fund VII, Fund
VIII, Partner Representatives and the General Partners, the Selling
Stockholders, Parent and Capstar have caused this Agreement to be signed, all
as of the date first written above.
MERGECO:
BENCHMARK ACQUISITION, INC.
--------------------------------------------------
By:
----------------------------------------------
Its:
----------------------------------------------
BENCHMARK:
BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP
By:
----------------------------------------------
Its:
----------------------------------------------
FUND I:
BENCHMARK RADIO ACQUISITION FUND I LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
----------------------------------------------
Its:
----------------------------------------------
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FUND IV:
BENCHMARK RADIO ACQUISITION FUND IV LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
---------------------------------------------
Its:
---------------------------------------------
FUND VII:
BENCHMARK RADIO ACQUISITION FUND VII LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
---------------------------------------------
Its:
---------------------------------------------
FUND VIII:
BENCHMARK RADIO ACQUISITION FUND VIII LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
---------------------------------------------
Its:
---------------------------------------------
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PARTNER REPRESENTATIVES AND GENERAL PARTNERS
--------------------------------------------
Bruce R. Spector
--------------------------------------------
Joseph L. Mathias
SELLING STOCKHOLDERS:
HOME RUN RADIO LIMITED PARTNERSHIP
By: HR Radio Corporation
Its: General Partner
By:
------------------------------------
Name: Bruce R. Spector
Its: General Partner
GRAND SLAM RADIO LIMITED PARTNERSHIP
By:
------------------------------------
Name: Michael Mathias
Its: General Partner
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PARENT:
BCR HOLDING, INC.
By:
---------------------------------------
Its:
---------------------------------------
CAPSTAR:
CAPSTAR BROADCASTING PARTNERS, INC.
By:
---------------------------------------
Its:
---------------------------------------
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SCHEDULES AND EXHIBITS
Schedule 2.1(b) Benchmark Subsidiaries
Schedule 2.1(c) Capital Structure
Schedule 2.1(f) Financial Statements
Schedule 2.1(g) Station Licenses and FCC Matters
Schedule 2.1(h) Litigation and Pending Investigations
Schedule 2.1(i) Insurance
Schedule 2.1(j) Real Property
Schedule 2.1(l) Liens and Encumbrances
Schedule 2.1(m) Environmental Matters
Schedule 2.1(n) Tax Matters
Schedule 2.1(o) Certain Agreements
Schedule 2.1(p) Employee Benefit Plans
Schedule 2.1(r) Affiliate Relationships
Schedule 2.1(u) Pending Acquisitions
Schedule 2.2(e) Media Properties
Schedule 3.1(j) Permitted Transactions
Schedule 3.1(p) Business Agreements
Schedule 10.1(f) Minimum Damage Amounts
Exhibit 1 Letter of Credit
Exhibit 2 Pre-Closing Escrow Agreement
Exhibit 3 Post-Closing Escrow Agreement
Exhibit 4 New Fund Assignment of Partnership Interests
Exhibit 5 Form of Promissory Note
Exhibit 6 Form of Opinion of Counsel to Benchmark
Exhibit 7 Form of Opinion of Counsel to Mergeco
Exhibit 8 Intentionally Left Blank
Exhibit 9 License Agreement
Exhibit 10 Mathias Employment Agreement
Exhibit 11 Form of Release