ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT is made as of the 14th day of
April, 1999, by and among Glendale Broadcasting, Inc., an Arizona corporation
("Glendale Inc."), KLNZ License Company, LLC, a Delaware limited liability
company ("KLNZ LLC") (collectively Glendale Inc. and KLNZ LLC shall be
referred to as "Z-SPANISH"), and Heftel Broadcasting Corporation, a Delaware
corporation ("HEFTEL").
W I T N E S S E T H:
WHEREAS, Z-Spanish owns and operates commercial radio
broadcasting station KLNZ-FM, 103.5, licensed to Glendale, Arizona (the
"Z-SPANISH STATION"), and holds licenses and other authorizations issued by
the Federal Communications Commission ("FCC") for the operation of the
Z-Spanish Station; and
WHEREAS, Heftel owns and operates commercial radio broadcasting
station KRTX-FM, 100.7, licensed to Winnie, Texas (the "HEFTEL STATION"), and
holds licenses and other authorizations issued by the FCC for the operation
of the Heftel Station (the Z-Spanish Station and the Heftel Station being
collectively referred to herein as the "STATIONS"); and
WHEREAS, Z-Spanish and Heftel desire to exchange ownership of the
Stations and their related assets, in a non-taxable, like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code"), under the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as
follows:
1. EXCHANGE OF ASSETS.
1.1 EXCHANGE OF STATION ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as defined herein),
Z-Spanish shall assign, transfer, convey and deliver to Heftel with respect
to the Z-Spanish Station, and Heftel shall assign, transfer, convey and
deliver to Z-Spanish with respect to the Heftel Station, all right, title and
interest in and to the following assets (the "TRANSFERRED ASSETS"), free and
clear of all liens, security interests, charges, encumbrances and rights of
others (other than "PERMITTED LIENS" as defined herein), except those assets
specifically listed on SCHEDULE 1.1(a) and SCHEDULE 1.1(b) hereto (the
"EXCLUDED ASSETS"):
(a) All licenses, permits and auxiliary authorizations issued by
the FCC or any other governmental authority for the operation of the
Stations, together with any and all renewals, extensions and modifications
thereof, any temporary or special authorization, issued to or held by Heftel
or Z-Spanish in connection with
the business and operations of the Stations, and any pending applications
therefor ("GOVERNMENTAL LICENSES");
(b) The real and personal property set forth on SCHEDULE 1.1(c)
and SCHEDULE 1.1(d) hereto, together with replacements thereof and additions
thereto made between the date hereof and the Closing; and
(c) Unless as may be otherwise required by law, the books and
records related to the Transferred Assets, such as property tax records,
logs, all materials maintained in the FCC public file relating to the
Stations, technical data and records and all correspondence with and
documents pertaining to governmental authorities and other third parties (the
"BUSINESS RECORDS").
The Transferred Assets to be transferred from Z-Spanish to Heftel are
referred to herein as the "Z-SPANISH TRANSFERRED ASSETS." The Transferred
Assets to be transferred from Heftel to Z-Spanish are referred to herein as
the "HEFTEL TRANSFERRED ASSETS." The consideration for the assets transferred
by each party shall be the assets transferred to such party by the other
party hereunder and the assumption of certain liabilities as set forth in
SECTION 1.2.
1.2 ASSUMED CONTRACTS.
(a) At the Closing, Heftel shall assume those specified
contractual obligations of the Z-Spanish Station listed on SCHEDULE 1.2(a)
hereto, as the same may be amended through the Closing Date with the mutual
consent of Z-Spanish and Heftel (the "HEFTEL ASSUMED CONTRACTS"), and Heftel
agrees to pay and perform the Heftel Assumed Contracts after the Closing Date.
(b) At the Closing, Z-Spanish shall assume those specified
contractual obligations of the Heftel Station listed on SCHEDULE 1.2(b)
hereto, as the same may be amended through the Closing Date with the mutual
consent of Z-Spanish and Heftel (the "Z-SPANISH ASSUMED CONTRACTS"), and
Z-Spanish agrees to pay and perform the Z-Spanish Assumed Contracts after the
Closing Date.
(c) Except as specifically set forth in this SECTION 1.2, Heftel
does not assume and shall in no event be liable for any debt, obligation,
responsibility or liability of the Z-Spanish Station, Z-Spanish, any
subsidiary or any affiliate or successor of Z-Spanish, or any claim against
any of the foregoing, whether known or unknown, contingent or absolute, or
otherwise. Except as specifically set forth in this SECTION 1.2, Z-Spanish
does not assume and shall in no event be liable for any debt, obligation,
responsibility or liability of the Heftel Station, Heftel, any
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subsidiary or any affiliate or successor of Heftel, or any claim against any
of the foregoing, whether known or unknown, contingent or absolute, or
otherwise. Without limiting the foregoing, neither party shall be liable for
any contractual obligation of the other unless specifically included on
SCHEDULE 1.2(a) or SCHEDULE 1.2(b), or for any obligations to the other's
employees.
1.3 TAX TREATMENT OF EXCHANGE. Z-Spanish and Heftel shall
structure the exchange of the Stations as a like-kind exchange of property in
accordance with Section 1031 of the Code and the Treasury Regulations
thereunder (the "Regulations"). Heftel and Z-Spanish shall use the values,
exchange groups, residual group and liabilities, as mutually determined by,
and acceptable to, Z-Spanish and Heftel, to determine their respective
taxable gain or loss, if any, resulting from the exchange of the Stations.
All federal and state tax returns and other reporting made to any
governmental agency, including specifically Form 8594 which shall be filed
with the Internal Revenue Service.
2. CLOSING.
2.1 TIME OF CLOSING.
(a) A closing (the "CLOSING") for the exchange of the Transferred
Assets shall be held at such place as may be selected by the parties on the
date which is the later of (i) the tenth business day after the Final Order
(as defined hereinbelow) or (ii) the satisfaction or waiver of all of the
conditions precedent to the obligations of Heftel and Z-Spanish hereunder, or
on such other date as may be agreed upon by the parties in writing (the
"CLOSING DATE"); provided, however, that in no event shall the Closing Date
be prior to the earlier of (i) 15 days after the acquisition of KCDX
(referenced in Section 5.4 below) or (ii) July 31, 1999. The Closing shall be
deemed to be effective as of 12:01 a.m. on the Closing Date.
(b) Z-Spanish shall prepare an application to be filed with the
FCC requesting its consent to the assignment of all Governmental Licenses
relating to the operation of the Z-Spanish Station to Heftel (the "Z-SPANISH
GOVERNMENTAL LICENSES"). Heftel shall prepare an application to be filed with
the FCC requesting its consent to the assignment of all Governmental Licenses
relating to the operation of the Heftel Station to Z-Spanish (the "HEFTEL
GOVERNMENTAL LICENSES"). Z-Spanish and Heftel shall assist the other in the
filing of the applications (collectively the "ASSIGNMENT APPLICATIONS"),
shall promptly furnish to the other any information necessary for the
Assignment Applications and shall jointly file the Assignment Applications
with the FCC, requesting that consent to each assignment be granted.
Z-Spanish and Heftel shall use their respective commercially reasonable
efforts to
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file the Assignment Applications within 10 days following the execution of
this Agreement. The parties agree that the Assignment Applications will be
prosecuted in good faith and with due diligence. The parties agree to use
their commercially reasonable efforts to file additional information or
amendments requested by the FCC orally or in writing within five business
days after such request and, in any event, to commence preparation of such
additional information or amendments immediately upon request and to complete
and file the same with the FCC as rapidly as practical. Each party will be
solely responsible for the expenses incurred by it in the preparation, filing
and prosecution of the Assignment Applications (it being understood that the
parties will bear equally the FCC filing fee). As used herein, the term "FCC
ORDER" shall mean that the FCC has granted or given its initial consent,
without any condition materially adverse to Heftel or Z-Spanish, to the
Assignment Applications; and the term "FINAL ORDER" shall mean that the FCC
Order shall have been final, that such FCC Order is not reversed, stayed,
enjoined or set aside, and with respect to such FCC Order, no timely request
for stay, reconsideration, review, rehearing or notice of appeal is pending,
and as to which FCC Order the time for filing any such request, petition or
notice of appeal or for review by the FCC on its own motion has expired.
(c) To the extent required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR ACT"), the parties further agree to use
their commercially reasonable efforts to make any necessary filings under the
HSR Act. Heftel and Z-Spanish will bear equally the filing fees due under the
HSR Act.
2.2 CLOSING PROCEDURE. At the Closing, (i) Z-Spanish shall
deliver to Heftel the bills of sale, instruments of assignment, transfer and
conveyance as Heftel shall reasonably request with respect to the Z-Spanish
Station; and (ii) Heftel shall deliver to Z-Spanish such deeds, bills of
sale, instruments of assignment, transfer and conveyance as Z-Spanish shall
reasonably request with respect to the Heftel Station. Each party will cause
to be prepared, executed and delivered all other documents required to be
delivered by such party pursuant to this Agreement and all other appropriate
and customary documents as the other party or its counsel may reasonably
request for the purpose of consummating the transactions contemplated by this
Agreement. All actions taken at the Closing shall be deemed to have been
taken simultaneously at the time the last of any such actions is taken or
completed.
3. REPRESENTATIONS AND WARRANTIES OF Z-SPANISH.
Z-Spanish hereby represents and warrants to Heftel, as follows:
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3.1 ORGANIZATION; GOOD STANDING. Glendale Inc. is a corporation,
duly incorporated, validly existing and in good standing under the laws of
the State of Arizona and has all requisite corporate power and authority to
own and lease its properties and assets and to carry on its business as
currently conducted. KLNZ LLC is a limited liability company, 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 and lease its own
properties and assets and to carry on its business as currently conducted.
Z-Spanish is qualified as a foreign corporation or limited liability company,
as applicable, in each jurisdiction where it is required to be so qualified.
3.2 DUE AUTHORIZATION; EXECUTION AND DELIVERY. Subject to the
issuance of the FCC Order and obtaining any other consents required to be
obtained hereunder, Z-Spanish has full power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated hereby.
Z-Spanish has taken all requisite action to approve the execution and
delivery of this Agreement and the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of Z-Spanish,
enforceable against it in accordance with its terms, except as may be limited
by the availability of equitable remedies or by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally. Neither the execution and delivery by Z-Spanish of this
Agreement nor the consummation by it of the transactions contemplated hereby
will: (i) conflict with or result in a breach of the certificate of
incorporation or bylaws of Z-Spanish; (ii) subject to the issuance of the FCC
Order and obtaining any other consents required to be obtained hereunder,
violate any statute, law, rule or regulation or any order, writ, injunction
or decree of any court or governmental authority, which violation, either
individually or in the aggregate, might reasonably be expected to have a
material adverse effect on the business or operations of Z-Spanish or
Heftel's ownership of the Z-Spanish Transferred Assets; or (iii) violate or
conflict with or constitute a default under (or give rise to any right of
termination, cancellation or acceleration under), or result in the creation
of any lien on any of the Z-Spanish Transferred Assets pursuant to, any
material agreement, indenture, mortgage or other material instrument to which
Z-Spanish is a party or by which it or its assets may be bound or affected.
3.3 GOVERNMENTAL CONSENTS. No approval, authorization, consent,
order or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and
delivery by Z-Spanish of this Agreement or the consummation of the
transactions contemplated hereby, other than those of the FCC and under the
HSR Act.
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3.4 TITLE TO ASSETS. Except as otherwise set forth on SCHEDULE
3.4 and for Z-Spanish Permitted Liens (as defined herein), Z-Spanish is the
sole and exclusive legal owner of all right, title and interest in, and has
good and marketable title to, all of the Z-Spanish Transferred Assets, free
and clear of liens, claims and encumbrances. As used herein, "Z-SPANISH
PERMITTED LIENS" shall mean, in each case with respect to the Z-Spanish
Transferred Assets, (i) liens for current taxes and other governmental
charges not yet due and payable, (ii) mechanics' liens and other similar
liens arising in the ordinary course that will be discharged prior to Closing
and (iii) statutory landlord's liens arising in the ordinary course.
3.5 REAL ESTATE.
(a) Z-Spanish has a valid, binding and enforceable leasehold
interest, free and clear of liens (other than Z-Spanish Permitted Liens),
claims, encumbrances, subleases or other restrictions, in and to the real
estate on which the operations of the Z-Spanish Station are conducted and the
buildings, structures and improvements situated thereon that are necessary
for the operation of the Z-Spanish Station (the "Z-SPANISH REAL ESTATE"). A
true, complete and correct copy of the leases evidencing such interests has
been furnished to Heftel.
(b) Z-Spanish has not received any notice of, and has no actual
knowledge of, any material violation of any zoning, building, health, fire,
water use or similar statute, ordinance, law, regulation or code in
connection with the leasehold interest in the Z-Spanish Real Estate. To the
knowledge of Z-Spanish, no fact or condition exists which would result in the
termination or impairment of access of the Z-Spanish Station to the Z-Spanish
Real Estate or discontinuation of necessary sewer, water, electrical, gas,
telephone or other utilities or services.
(c) To Z-Spanish's knowledge, no Hazardous Material (as defined
below) exists in any structure located on, or exists on or under the surface
of, any of the Z-Spanish Real Estate which is in violation of Environmental
Law. For purposes of this Agreement, "HAZARDOUS MATERIAL" shall mean waste,
substance, materials, smoke, gas or particulate matter designated as
hazardous, toxic or dangerous under any Environmental Law. For purposes of
this Agreement, "ENVIRONMENTAL LAW" shall include the Comprehensive
Environmental Response Compensation and Liability Act, the Clean Air Act, the
Clean Water Act and any other applicable federal, state or local
environmental, health or safety law, rule or regulation relating to or
imposing liability or standards concerning or in connection with Hazardous
Materials.
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3.6 CONDITION OF ASSETS. All of the Z-Spanish Transferred Assets
viewed as a whole and not on an asset by asset basis are in good condition
and working order, ordinary wear and tear excepted, and are suitable for the
uses for which intended, free from any known defects except such minor
defects that do not interfere with the continued use thereof.
3.7 GOVERNMENTAL LICENSES. SCHEDULE 3.7 lists and accurately
describes all of the Z-Spanish Governmental Licenses necessary for the lawful
ownership and operation of the Z-Spanish Station and the conduct of its
business, except where the failure to hold such Governmental License would
not have a material adverse effect on the Z-Spanish Station. Z-Spanish has
furnished to Heftel true and accurate copies of all of the Z-Spanish
Governmental Licenses. Each such Governmental License is in full force and
effect and is valid under applicable federal, state and local laws; the
Z-Spanish Station is being operated in compliance in all material respects
with the Communications Act of 1934, as amended (the "Act"), and all rules,
regulations and policies of the FCC; and to the knowledge of Z-Spanish, no
event has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) is reasonably likely to
result in the revocation or termination of any Governmental License or the
imposition of any restriction of such a nature as might adversely affect the
ownership or operation of the Z-Spanish Station as now conducted, except for
proceedings of a legislative or rule-making nature intended to affect the
broadcasting industry generally. The Z-Spanish Station, its physical
facilities, electrical and mechanical systems and transmitting and studio
equipment are being operated in all material respects in accordance with the
specifications of the Z-Spanish Governmental Licenses. The Z-Spanish
Governmental Licenses are unimpaired by any act or omission of Z-Spanish or
any of Z-Spanish's officers, directors or employees and Z-Spanish has
fulfilled and performed all of its obligations with respect to the Z-Spanish
Governmental Licenses and has full power and authority thereunder. No
application, action or proceeding is pending for the renewal or modification
of any of the Z-Spanish Governmental Licenses. No event has occurred which,
individually or in the aggregate, and with or without the giving of notice or
the lapse of time or both, would constitute ground for revocation thereof and
would have a materially adverse effect on the business or financial
conditions of the Z-Spanish Station.
3.8 TAXES. Other than taxes imposed upon the income of Z-Spanish (as
to which no representation is made), all tax reports and returns required to be
filed by Z-Spanish relating to the Z-Spanish Transferred Assets or operations
(including sales, use, property and employment taxes) have been filed with the
appropriate federal, state and local governmental agencies, and there have been
paid all taxes,
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penalties, interest, deficiencies, assessments or other charges due as
reflected on the filed returns or claimed to be due by such federal, state or
local taxing authorities (other than taxes, deficiencies, assessments or
claims which are being contested in good faith and which in the aggregate are
not material). There are no examinations or audits pending or unresolved
examinations or audit issues with respect to Z-Spanish's state or local tax
returns relating primarily to the Z-Spanish Transferred Assets. All
additional taxes, if any, assessed as a result of such examinations or audits
have been paid. There are no pending claims or proceedings relating to, or
asserted for, taxes, penalties, interest, deficiencies or assessments against
the Z-Spanish Transferred Assets.
3.9 LITIGATION. There is no order of any court, governmental
agency or authority and no complaint, notice of violation, action, suit,
proceeding or investigation, judicial, administrative or otherwise, of which
Z-Spanish has knowledge that is pending or threatened against or affecting
the Z-Spanish Station which, if adversely determined, might materially and
adversely affect the business, operations, properties, assets or conditions
(financial or otherwise) of the Z-Spanish Station or which challenges the
validity or propriety of any of the transactions contemplated by this
Agreement.
3.10 REPORTS. Z-Spanish has duly filed all reports required to be
filed by law or applicable rule, regulation, order, writ or decree of any
court, governmental commission, body or instrumentality and has made payment
of all charges and other payments, if any, shown by such reports to be due
and payable, except where the failure to so file or make payment would not
have a material adverse effect upon the operations of the Z-Spanish Station.
All reports required to be filed by Z-Spanish with the FCC with respect to
the Z-Spanish Station have been filed, except where the failure to so file
would not materially and adversely affect the business, operations,
properties, assets or conditions (financial or otherwise) of the Z-Spanish
Station or which challenges the validity or propriety of any of the
transactions contemplated by this Agreement. Such reports and disclosures are
complete and accurate in all material respects.
3.11 CONTRACTS AND AGREEMENTS. The Z-Spanish Station is not in
default with respect to any of the contracts contained on SCHEDULE 1.2(a)
hereto, and, as of the Closing Date, the Z-Spanish Station will have paid all
sums and performed all obligations under such contracts which are required to
be paid or performed prior to the Closing Date. True and complete copies of
such contracts have been delivered to Heftel on or prior to the date hereof.
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3.12 INTANGIBLE PROPERTY. Z-Spanish has, and after the Closing,
Heftel will have, the right to use the intangible property included in the
Z-Spanish Transferred Assets, free and clear of any royalty or other payment
obligations. Z-Spanish's use of such intangible property does not conflict
with, violate or infringe upon any rights of any other person or entity with
respect to such intangible property and Z-Spanish has not received any notice
of any such claimed conflict, violation or infringement.
3.13 THIRD PARTY CONSENTS. By the Closing Date, Z-Spanish will
have obtained all consents from any person or entity (other than the FCC
Order) which are required in connection with the execution and delivery by
Z-Spanish of this Agreement and the consummation of the transactions
contemplated hereby, which such consents are described on SCHEDULE 3.13,
except where the failure to obtain such consent has been waived by Heftel on
or prior to the Closing Date.
3.14. YEAR 2000. All operating system, application and other
computer software included in the Z-Spanish Transferred Assets is currently
Year 2000 compliant, or to the extent that such software or hardware is not
currently Year 2000 compliant, Z-Spanish has in place and is implementing
detailed plans to ensure that such software and hardware will be Year 2000
compliant no later than the Closing Date.
3.15 QUALIFICATION OF Z-SPANISH. Z-Spanish does not have any
knowledge of any facts or proceedings which are reasonably likely to
disqualify it under the Act, the rules and regulations promulgated
thereunder, and the policies of the FCC in respect thereof, from acquiring or
operating the Heftel Station or would otherwise cause the FCC not to approve
the assignment of the Heftel Governmental Licenses to Z-Spanish.
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3.16 FINDERS AND BROKERS. Except as to Rumbaut & Co. (whose fees
and expenses shall be paid by Heftel), there are no agreements or
understandings that give rise to any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
4. REPRESENTATIONS AND WARRANTIES OF HEFTEL.
Heftel hereby represents and warrants to Z-Spanish, as follows:
4.1 ORGANIZATION; GOOD STANDING. Heftel is a corporation, duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own
and lease its properties and assets and to carry on its business as currently
conducted. Heftel is qualified as a foreign corporation in each jurisdiction
where it is required to be so qualified.
4.2 DUE AUTHORIZATION; EXECUTION AND DELIVERY. Subject to the
issuance of the FCC Order and obtaining any other consents required to be
obtained hereunder, Heftel has full power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated hereby.
Heftel has taken all requisite action to approve the execution and delivery
of this Agreement and the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of Heftel, enforceable
against it in accordance with its terms, except as may be limited by the
availability of equitable remedies or by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally. Neither the execution and delivery by Heftel of this Agreement nor
the consummation by it of the transactions contemplated hereby will: (i)
conflict with or result in a breach of the certificate of incorporation or
bylaws of Heftel; (ii) subject to the issuance of the FCC Order and obtaining
any other consents required to be obtained hereunder, violate any statute,
law, rule or regulation or any order, writ, injunction or decree of any court
or governmental authority, which violation, either individually or in the
aggregate, might reasonably be expected to have a material adverse effect on
the business or operations of Heftel or Z-Spanish's ownership of the Heftel
Transferred Assets; or (iii) violate or conflict with or constitute a default
under (or give rise to any right of termination, cancellation or acceleration
under), or result in the creation of any lien on any of the Heftel
Transferred Assets pursuant to, any material agreement, indenture, mortgage
or other material instrument to which Heftel is a party or by which it or its
assets may be bound or affected.
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4.3 GOVERNMENTAL CONSENTS. No approval, authorization, consent,
order or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and
delivery by Heftel of this Agreement or the consummation of the transactions
contemplated hereby, other than those of the FCC or under the HSR Act.
4.4 TITLE TO ASSETS. Except for Heftel Permitted Liens (as
defined herein), Heftel or a subsidiary thereof is the sole and exclusive
legal owner of all right, title and interest in, and has good and marketable
title to, all of the Heftel Transferred Assets, free and clear of liens,
claims and encumbrances. As used herein, "HEFTEL PERMITTED LIENS" shall mean,
in each case with respect to the Heftel Transferred Assets, (i) liens for
current taxes and other governmental charges not yet due and payable, (ii)
mechanics' liens and other similar liens arising in the ordinary course that
will be discharged prior to Closing and (iii) statutory landlord's liens
arising in the ordinary course.
4.5 REAL ESTATE.
(a) Heftel has a valid, binding and enforceable leasehold
interest, free and clear of liens (other than Heftel Permitted Liens),
claims, encumbrances, subleases or other restrictions, in and to the real
estate on which the operations of the Heftel Station are conducted and the
buildings, structures and improvements situated thereon that are necessary
for the operation of the Heftel Station (the "HEFTEL REAL ESTATE"). A true,
complete and correct copy of the leases evidencing such interests has been
furnished to Z-Spanish.
(b) Heftel has not received any notice of, and has no actual
knowledge of, any material violation of any zoning, building, health, fire,
water use or similar statute, ordinance, law, regulation or code in
connection with its interest in the Heftel Real Estate. To the knowledge of
Heftel, no fact or condition exists which would result in the termination or
impairment of access of the Heftel Station to the Heftel Real Estate or
discontinuation of necessary sewer, water, electrical, gas, telephone or
other utilities or services.
(c) To Heftel's knowledge, no Hazardous Material exists in any
structure located on, or exists on or under the surface of, the Heftel Real
Property which is in violation of Environmental Law. Heftel has not received
any notice that Hazardous Material exists in any structure located on, or
exists on or under the surface of, the other Heftel Real Estate which is in
violation of Environmental Law.
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4.6 CONDITION OF ASSETS. All of the Heftel Transferred Assets
viewed as a whole and not on an asset by asset basis are in good condition
and working order, ordinary wear and tear excepted, and are suitable for the
uses for which intended, free from any known defects except such minor
defects that do not interfere with the continued use thereof.
4.7 GOVERNMENTAL LICENSES. SCHEDULE 4.7 lists and accurately
describes all of the Heftel Governmental Licenses necessary for the lawful
ownership and operation of the Heftel Station and the conduct of their
business, except where the failure to hold such Governmental Licenses would
not have a material adverse effect on the Heftel Station. Heftel has
furnished to Z-Spanish true and accurate copies of all of the Heftel
Governmental Licenses. Each such Governmental License is in full force and
effect and is valid under applicable federal, state and local laws; the
Heftel Station is being operated in compliance in all material respects with
the Act and all rules, regulations and policies of the FCC; and, to the
knowledge of Heftel, no event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) is
reasonably likely to result in the revocation or termination of any
Governmental License or the imposition of any restriction of such a nature as
might adversely affect the ownership or operation of the Heftel Station as
now conducted, except for proceedings of a legislative or rule-making nature
intended to affect the broadcasting industry generally. The Heftel Station,
its physical facilities, electrical and mechanical systems and transmitting
and studio equipment are being operated in all material respects in
accordance with the specifications of the Heftel Governmental Licenses. The
Heftel Governmental Licenses are unimpaired by any act or omission of Heftel
or any of Heftel's officers, directors or employees and Heftel has fulfilled
and performed all of its obligations with respect hereto and has full power
and authority thereunder. No application, action or proceeding is pending for
the renewal or modification of any of the Heftel Governmental Licenses. No
event has occurred which, individually or in the aggregate, and with or
without the giving of notice or the lapse of time or both, would constitute
grounds for revocation thereof and would have a materially adverse effect on
the business or financial conditions of the Heftel Station.
4.8 TAXES. Other than taxes imposed upon the income of Heftel (as to
which no representation is made), all tax reports and returns required to be
filed by Heftel relating to the Heftel Transferred Assets or operations
(including sales, use, property and employment taxes) have been filed with the
appropriate federal, state and local governmental agencies, and there have been
paid all taxes, penalties, interest, deficiencies, assessments or other charges
due as reflected on the filed returns or claimed to be due by such federal,
state or local taxing authorities (other
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than taxes, deficiencies, assessments or claims which are being contested in
good faith and which in the aggregate are not material). There are no
examinations or audits pending or unresolved examinations or audit issues
with respect to Heftel's state or local tax returns relating to the Heftel
Transferred Assets. All additional taxes, if any, assessed as a result of
such examinations or audits have been paid. There are no pending claims or
proceedings relating to, or asserted for, taxes, penalties, interest,
deficiencies or assessments against the Heftel Transferred Assets.
4.9 LITIGATION. There is no order of any court, governmental
agency or authority and no complaint, notice of violation, action, suit,
proceeding or investigation, judicial, administrative or otherwise, that is
pending or, to Heftel's knowledge, threatened against or affecting the Heftel
Station which, if adversely determined, might materially and adversely affect
the business, operations, properties, assets or conditions (financial or
otherwise) of the Heftel Station or which challenges the validity or
propriety of any of the transactions contemplated by this Agreement.
4.10 REPORTS. Heftel has duly filed all reports required to be
filed by law or applicable rule, regulation, order, writ or decree of any
court, governmental commission, body or instrumentality and has made payment
of all charges and other payments, if any, shown by such reports to be due
and payable, except where the failure to so file or make payment would not
have a material adverse effect upon the operations of the Heftel Station. All
reports required to be filed by Heftel with the FCC with respect to the
Heftel Station have been filed, except where the failure to so file would not
materially and adversely affect the business, operations, properties, assets
or conditions (financial or otherwise) of the Heftel Station or which
challenges the validity or propriety of any of the transactions contemplated
by this Agreement. Such reports and disclosures are complete and accurate in
all material respects.
4.11 CONTRACTS AND AGREEMENTS. The Heftel Station is not in
default with respect to any of the contracts contained on SCHEDULE 1.2(B)
hereto, and, as of the Closing Date, the Heftel Station will have paid all
sums and performed all obligations under such contracts which are required to
be paid or performed prior to the Closing Date. True and complete copies of
such contracts have been delivered to Z-Spanish on or prior to the date
hereof.
4.12 INTANGIBLE PROPERTY. Heftel has, and after the Closing,
Z-Spanish will have, the right to use the intangible property included in the
Heftel Transferred Assets, free and clear of any royalty or other payment
obligations. Heftel's use of such intangible property does not conflict with,
violate or infringe upon any rights
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of any other person or entity with respect to such intangible property and
Heftel has not received any notice of any such claimed conflict, violation or
infringement.
4.13 THIRD PARTY CONSENTS. By the Closing Date, Heftel will have
obtained all consents from any person or entity (other than the FCC Order)
which are required in connection with the execution and delivery by Heftel of
this Agreement and the consummation of the transactions contemplated hereby,
which such consents are described on SCHEDULE 4.13, except where the failure
to obtain such consent has been waived by Z-Spanish on or prior to the
Closing Date.
4.14 YEAR 2000. All operating system, application and other
computer software included in the Heftel Transferred Assets is currently Year
2000 compliant, or to the extent that such software or hardware is not
currently Year 2000 compliant, Heftel has in place and is implementing
detailed plans to ensure that such software and hardware will be Year 2000
compliant no later than the Closing Date.
4.15 QUALIFICATION OF HEFTEL. Heftel does not have any knowledge
of any facts or proceedings which are reasonably likely to disqualify it
under the Act, the rules and regulations promulgated thereunder, and the
policies of the FCC in respect thereof, from acquiring or operating the
Z-Spanish Station or would otherwise cause the FCC not to approve the
assignment of the Z-Spanish Governmental Licenses to Heftel.
4.16 FINDERS AND BROKERS. Except as to Rumbaut & Co. (whose fees
and expenses shall be paid by Heftel), there are no agreements or
understandings that give rise to any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
5. CERTAIN COVENANTS AND AGREEMENTS.
5.1 ACCESS. Each of Heftel and Z-Spanish will take all action
reasonably necessary to enable the other, its counsel, accountants and other
representatives to discuss the affairs, properties, business, operations and
records of the Transferred Assets at such times and as often as Heftel or
Z-Spanish (as the case may be) may reasonably request with executives,
independent accountants, engineers and counsel of the other party. In the
event that the Closing does not occur and this Agreement is terminated, each
party shall keep in confidence, and shall cause its counsel, accountants and
other representatives to keep in confidence, and shall not use or disclose to
others, all information provided hereunder to it, except such information as
is in the public domain or as required by law.
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5.2 COMMERCIALLY REASONABLE EFFORTS. Each of Z-Spanish and Heftel
shall take all reasonable action necessary to consummate the transactions
contemplated by this Agreement and will use all commercially reasonable
efforts to obtain all necessary consents and approvals of other persons and
governmental authorities required to enable it to consummate the transactions
contemplated by this Agreement; provided, however, nothing herein shall
require the expenditure or payment of monies or the giving of any other
consideration by either party in order to obtain any such consent (other than
governmental filing fees and the payment of reasonable fees and expenses of a
party's own advisors and representatives). Each of Heftel and Z-Spanish
acknowledges and agrees that it shall pay all costs, fees (other than as
expressly provided herein) and expenses incurred by it in obtaining such
necessary consents and approvals to transfer the Heftel Transferred Assets
and Z-Spanish Transferred Assets, respectively. Each party shall make all
filings, applications, statements and reports to all governmental agencies or
entities which are required to be made prior to the Closing Date by or on its
behalf pursuant to any statute, rule or regulation in connection with the
transactions contemplated by this Agreement, and copies of all such filings,
applications, statements and reports shall be provided to the other.
5.3 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all notices
to third parties and other publicity relating to the transaction contemplated
by this Agreement shall be jointly planned and agreed to by Z-Spanish and
Heftel; provided, however, each of Heftel and Z-Spanish shall be entitled to
make such disclosure in its sole discretion as may be required by any
applicable governmental regulations.
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5.4 MAINTENANCE OF BUSINESS. Between the date of this Agreement
and the Closing, each party shall conduct the business of the Stations and
use the Transferred Assets only in the ordinary course of business,
consistent with past practices, which shall include compliance in all
material respects with all laws, regulations and administrative orders of any
federal, state or local governmental authority that are applicable to each
party with respect to the Transferred Assets or the operation of the
Stations, with the intent of preserving the ongoing operations of the
Stations and the Transferred Assets. Without limiting the generality of the
foregoing:
(a) Each party shall: (i) maintain the Transferred Assets in
their present condition (reasonable wear and tear in normal use excepted);
(ii) remove, cure and correct prior to the Closing any violations under
applicable statutes, rules or regulations that render (or if unremedied would
render) inaccurate such party's representations and warranties contained in
this Agreement or in any certificate delivered by such party pursuant to this
Agreement; (iii) maintain its existing insurance coverage on the Stations and
the Transferred Assets; and (iv) maintain its books and records in the usual
and ordinary manner, on a basis consistent with prior periods.
(b) Neither party shall, without the other party's prior written
consent (which shall not unreasonably be withheld or delayed) create, assume
or permit to exist any lien upon the Transferred Assets, except for Permitted
Liens or liens in existence on the date of this Agreement which will be
removed on or prior to Closing Date.
(c) Neither party shall sell or agree to sell or otherwise
dispose of any of the Transferred Assets, unless such sale or disposal occurs
in the ordinary course of business, consistent with past practices and such
Transferred Assets are replaced with similar assets of equal or greater value
and utility.
(d) Each party shall operate the Stations in all respects in
accordance with the Governmental Licenses, and all applicable rules and
regulations of the FCC and all other applicable laws, regulations, rules and
orders. Each party shall use its commercially reasonable efforts not to cause
or permit any of the Governmental Licenses to expire, be surrendered,
adversely modified or otherwise terminated.
Notwithstanding the foregoing, Heftel acknowledges that, prior to Closing,
(i) Z-Spanish shall be permitted to simulcast its Z-Spanish Station
programming on station KCDX(FM), Florence, Arizona ("KCDX") for a period of
15 days from the date that a commonly owned or affiliated company of
Z-Spanish acquires KCDX,
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after which the Z-Spanish Station may program instrumental music and KCDX
shall continue to broadcast the programming format previously aired on the
Z-Spanish Station; and (ii) Z-Spanish shall be permitted to relinquish the
"KLNZ" call sign for the Z-Spanish Station and transfer said call sign, with
the approval of the FCC, to station KCDX (it being understood that Z-Spanish
shall request from the FCC any replacement call sign for the Z-Spanish
Station as may be requested by Heftel.
6. CONDITIONS TO HEFTEL'S CLOSING.
All obligations of Heftel under this Agreement shall be subject
to the fulfillment at or prior to the Closing of the following conditions, it
being understood that Heftel may, in its sole discretion, waive any or all of
such conditions (except for the requirement of FCC consent) in whole or in
part:
6.1 REPRESENTATIONS, ETC. Z-Spanish shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by it at or prior to the Closing, and the
representations and warranties of Z-Spanish contained in this Agreement shall
be true and correct in all material respects as of the Closing Date with the
same effect as though made at such time, except as contemplated or permitted
by this Agreement.
6.2 CONSENTS. All consents and approvals from the FCC and
governmental agencies (including the FCC Order) and from other third parties
required to consummate the transactions contemplated by this Agreement shall
have been obtained without material cost or other materially adverse
consequence to Heftel and shall be in full force and effect.
6.3 NO ADVERSE LITIGATION. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened
on the Closing Date which may have the effect of (i) making any of the
transactions contemplated hereby illegal, (ii) materially adversely affecting
the value of the Z-Spanish Transferred Assets, other than any of the
foregoing which affects the radio broadcasting industry generally or (iii)
making Heftel liable for the payment of damages to any person as a result of
the transactions contemplated hereby.
6.4 CLOSING DELIVERIES. Heftel shall have received each of the
documents or items required to be delivered to it pursuant to SECTION 8.1
hereof.
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7. CONDITIONS TO Z-SPANISH'S CLOSING.
All obligations of Z-Spanish under this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, it being understood that Z-Spanish may, in its sole discretion,
waive any or all of such conditions (except for the requirement of FCC
consent) in whole or in part:
7.1 REPRESENTATIONS, ETC. Heftel shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by it at or prior to the Closing, and the
representations and warranties of Heftel contained in this Agreement shall be
true and correct in all material respects as of the Closing Date with the
same effect as though made at such time, except as contemplated or permitted
by this Agreement.
7.2 CONSENTS. All consents and approvals from the FCC and
governmental agencies (including the FCC Order) and from other third parties
required to consummate the transactions contemplated by this Agreement shall
have been obtained without material cost or other materially adverse
consequence to Z-Spanish and shall be in full force and effect.
7.3 NO ADVERSE LITIGATION. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened
on the Closing Date which may have the effect of (i) making any of the
transactions contemplated hereby illegal, (ii) materially adversely affecting
the value of the Heftel Transferred Assets, other than any of the foregoing
which affects the radio broadcasting industry generally or (iii) making
Z-Spanish liable for the payment of damages to any person as a result of the
transactions contemplated hereby.
7.4 CLOSING DELIVERIES. Z-Spanish shall have received each of
the documents or items required to be delivered to it pursuant to SECTION 8.2
hereof.
8. DOCUMENTS TO BE DELIVERED AT CLOSING.
8.1 CLOSING DOCUMENTS TO BE DELIVERED BY Z-SPANISH.
At the Closing, Z-Spanish shall deliver to Heftel (in form and
substance reasonably satisfactory to Heftel):
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(a) One or more assignments assigning to Heftel the Z-Spanish
Governmental Licenses, as Heftel may request;
(b) A bill of sale conveying to Heftel all of the Z-Spanish
Transferred Assets constituting tangible personal property.
(c) One or more assignment and assumption agreements by which
Z-Spanish assigns the Z-Spanish Material Contracts to Heftel, and Heftel
assumes the Assumed Contracts and agrees to perform, from and after the
Closing Date, all of the Assumed Contracts, together with each consent
obtained by Z-Spanish necessary for the assignments of such contracts;
(d) Certified copies of resolutions of Z-Spanish's Board of
Directors and shareholders authorizing the execution, delivery and
performance of this Agreement;
(e) A certificate executed by Z-Spanish attesting to Z-Spanish's
compliance with the matters set forth in SECTION 6.1 and SECTION 6.3;
(f) The Business Records;
(g) Opinion of FCC counsel to Z-Spanish, dated as of the Closing,
in form reasonably satisfactory to Heftel; and
(h) Such other instruments and further assurances of conveyance
and such other certificates or other documentation as Heftel may reasonably
request.
8.2 CLOSING DOCUMENTS TO BE DELIVERED BY HEFTEL.
At the Closing, Heftel shall deliver to Z-Spanish (in form and
substance reasonably satisfactory to Z-Spanish):
(a) One or more assignments assigning to KLNZ LLC the Heftel
Governmental Licenses, as Z-Spanish may request;
(b) A bill of sale conveying to Glendale Inc. all of the Heftel
Transferred Assets constituting tangible personal property.
(c) One or more assignment and assumption agreements by which
Heftel assigns the Heftel Material Contracts to Glendale Inc., and Glendale
Inc. assumes the Assumed Contracts and agrees to perform, from and after the
Closing Date, all
19
of the Assumed Contracts, together with each consent obtained by Heftel
necessary for the assignments of such contracts;
(d) Certified copies of resolutions of Heftel's Board of
Directors authorizing the execution, delivery and performance of this
Agreement;
(e) A certificate executed by Heftel attesting to Heftel's
compliance with the matters set forth in SECTION 7.1 and SECTION 7.3;
(f) The Business Records;
(g) Opinion of FCC counsel to Heftel, dated as of the Closing, in
form reasonably satisfactory to Z-Spanish; and
(h) Such other instruments and further assurances of conveyance
and such other certificates or other documentation as Z-Spanish may
reasonably request.
9. SURVIVAL.
All representations, warranties, covenants and agreements made by
any party to this Agreement or pursuant hereto shall be deemed to have been
relied upon by the parties hereto, and shall survive the Closing; provided,
however, that notice of any claim, whether made under the indemnification
provisions hereof or otherwise, based on a breach of a representation,
warranty, covenant or agreement must be given within one year from the
Closing Date; provided, however, that representations as to the title of the
Transferred Assets shall survive indefinitely. The representations and
warranties hereunder shall not be affected or diminished by any investigation
at any time by or on behalf of the party for whose benefit such
representations and warranties were made. All statements contained herein or
in any certificate, exhibit, list or other document delivered pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to
be representations and warranties. No representation or warranty contained
herein shall be deemed to be made at any time after the date of this
Agreement or, if made in a certificate, the date of such certificate.
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10. INDEMNIFICATION OF HEFTEL.
Subject to the limitations set forth in SECTIONS 9 and 12,
Z-Spanish shall indemnify and hold Heftel harmless from, against, for and in
respect of:
(a) any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action and
encumbrances suffered, sustained, incurred or required to be paid by Heftel
because of the breach of any written representation, warranty, agreement or
covenant of Z-Spanish contained in this Agreement or any document,
certificate or agreement executed in connection with this Agreement;
(b) any and all liabilities, obligations, claims and demands
arising out of the ownership and operation of the Z-Spanish Station at all
times prior to the Closing Date (other than the Heftel Assumed Contracts);
(c) any and all liabilities, obligations, claims and demands
arising out of the ownership and operation of the Heftel Station with respect
to periods on and after the Closing Date;
(d) any and all liabilities, obligations, claims and demands of
third parties claiming a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated hereby as a result
of the actions or omissions of Z-Spanish; and
(e) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest and penalties) incurred by
Heftel in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this SECTION
10.
11. INDEMNIFICATION OF Z-SPANISH.
Subject to the limitations set forth in SECTIONS 9 and 12, Heftel
shall indemnify and hold Z-Spanish harmless from, against, for and in respect
of:
(a) any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action and
encumbrances suffered, sustained, incurred or required to be paid by
Z-Spanish because of the breach of any written representation, warranty,
agreement or covenant of Heftel contained in this Agreement or any document,
certificate or agreement executed in connection with this Agreement;
21
(b) any and all liabilities, obligations, claims and demands
arising out of the ownership and operation of the Heftel Station at all times
prior to the Closing Date (other than the Z-Spanish Assumed Contracts);
(c) any and all liabilities, obligations, claims and demands
arising out of the ownership and operation of the Z-Spanish Station with
respect to periods on and after the Closing Date;
(d) any and all liabilities, obligations, claims and demands of
third parties claiming a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated hereby as a result
of the actions or omissions of Heftel; and
(e) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest and penalties) incurred by
Z-Spanish in connection with any action, suit, proceeding, demand, assessment
or judgment incident to any of the matters indemnified against in this
SECTION 11.
12. GENERAL RULES REGARDING INDEMNIFICATION.
The obligations and liabilities of each indemnifying party
hereunder with respect to claims resulting from the assertion of liability by
the other party or indemnified third parties shall be subject to the
following terms and conditions:
(a) Subject to SECTION 12(f) below, the indemnified party shall
give prompt written notice (which in no event shall exceed 30 days from the
date on which the indemnified party first became aware of such claim or
assertion) to the indemnifying party of any claim which might give rise to a
claim by the indemnified party against the indemnifying party based on the
indemnity agreements contained in SECTION 10 or 11 hereof, stating the nature
and basis of said claims and the amounts thereof, to the extent known;
(b) If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in SECTION 10 or 11
hereof, the action, suit or proceeding shall, upon the written acknowledgment
by the indemnifying party that it is obligated to indemnify under such
indemnity agreement, be defended (including all proceedings on appeal or for
review which counsel for the indemnified party shall deem appropriate) by the
indemnifying party. The indemnified party shall have the right to employ its
own counsel in any such case, but the fees and expenses of
22
such counsel shall be at the indemnified party's own expense unless (A) the
employment of such counsel and the payment of such fees and expenses both
shall have been specifically authorized in writing by the indemnifying party
in connection with the defense of such action, suit or proceeding, or (B)
counsel to such indemnified party shall have reasonably concluded and
specifically notified the indemnifying party that there may be specific
defenses available to it which are different from or additional to those
available to the indemnifying party or that such action, suit or proceeding
involves or could have an effect upon matters beyond the scope of the
indemnity agreements contained in SECTIONS 10 and 11 hereof, in any of which
events the indemnifying party, to the extent made necessary by such defenses,
shall not have the right to direct the defense of such action, suit or
proceeding on behalf of the indemnified party. In the latter such case only
that portion of such fees and expenses of the indemnified party's separate
counsel reasonably related to matters covered by the indemnity agreements
contained in SECTION 10 or 11 hereof shall be borne by the indemnifying
party. The indemnified party shall be kept fully informed of such action,
suit or proceeding at all stages thereof whether or not it is represented by
separate counsel.
(c) The indemnified party shall make available to the
indemnifying party and its attorneys and accountants all books and records of
the indemnified party relating to such proceedings or litigation and the
parties hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding.
(d) The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld or delayed.
(e) If any claims are made by third parties against an
indemnified party for which an indemnifying party would be liable, and it
appears likely that such claims might also be covered by the indemnified
party's insurance policies, the indemnified party shall make a timely claim
under such policies and to the extent that such party obtains any recovery
from such insurance, such recovery shall be offset against any sums due from
an indemnifying party (or shall be repaid by the indemnified party to the
extent that an indemnifying party has already paid any such amounts). The
parties acknowledge, however, that if an indemnified party is self-insured as
to any matters, either directly or through an insurer which assesses
retroactive premiums based on loss experience, then to the extent that the
indemnified party bears the economic burden of any claims through
self-insurance or retroactive premiums or insurance ratings, the indemnifying
party's obligation
23
shall only be reduced by any insurance recovery in excess of the amount paid
or to be paid by the indemnified party in insurance premiums.
(f) No claim or indemnification shall be made unless and until
the indemnified party has first incurred, in the aggregate, damages, losses
and expenses for which it would be entitled to be indemnified hereunder of at
least $10,000.
13. SPECIFIC PERFORMANCE.
Z-Spanish and Heftel acknowledge that the Transferred Assets and
the transactions contemplated hereby are unique, that a failure by Z-Spanish
or Heftel to complete such transactions will cause irreparable injury to the
other, and that actual damages for any such failure may be difficult to
ascertain and may be inadequate. Consequently, Z-Spanish and Heftel agree
that each shall be entitled, in the event of a default by the other, to
specific performance of any of the provisions of this Agreement in addition
to any other legal or equitable remedies to which the non-defaulting party
may otherwise be entitled. In the event any action is brought, the prevailing
party shall be entitled to recover court costs, arbitration expenses and
reasonable attorneys' fees.
14. TERMINATION AND RESCISSION RIGHTS; RISK OF LOSS.
14.1 TERMINATION PRIOR TO CLOSING. This Agreement may be
terminated by the mutual consent of Z-Spanish and Heftel, or by either
Z-Spanish or Heftel, if the terminating party is not then in material breach
of its obligations hereunder, upon written notice to the other upon the
occurrence of any of the following:
(a) By the terminating party, if the other party is in
material breach of its obligations hereunder, and such breach has
not been cured by the other party within 30 days of written
notice of such breach (or such longer period of time if the
breach cannot be reasonably cured within 30 days and the
breaching party is diligently attempting to cure such breach);
(b) If the FCC designates either FCC Application contemplated
by Section 2.2(b) hereof for hearing at any time, or if either FCC
Application should be dismissed or denied; or
(c) If the Closing has not occurred on or before December 31,
1999.
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In the event that this Agreement is terminated as a result of either party's
material breach of this Agreement, the non-breaching party will incur
substantial damages that are difficult to quantify. In such event, the sum of
$2,000,000 (the "Break-up Fee") is deemed by the parties to be an amount
which is a fair and reasonable estimate of the damage the non-breaching party
may incur. Accordingly, in the event of such termination, the breaching party
will pay the Break-up Fee to the non-breaching party within 10 days of such
termination.
14.2 RESCISSION OF PURCHASE AND SALE. In the event the parties
elect to close prior to the time the FCC Order has become a Final Order,
Heftel and Z-Spanish shall enter into rescission agreement to be mutually
agreed upon which provides for unwinding the transaction in the event a Final
Order is not obtained.
14.3 RISK OF LOSS.
(a) Heftel shall bear the risk of all damage to, loss of or
destruction of any of the Heftel Transferred Assets between the date of this
Agreement and the Closing Date. If any material portion of the Heftel
Transferred Assets shall suffer any material damage or destruction prior to
the Closing Date, Heftel shall promptly notify Z-Spanish in writing of such
damage or destruction, shall promptly take all necessary steps to restore,
repair or replace such assets at its sole expense, and shall advise Z-Spanish
in writing of the estimated cost to complete such restoration, repair or
replacement and all amounts actually paid as of the date of the estimate.
Z-Spanish may extend the Closing Date for a period not exceeding 45 days to
accomplish such restoration, repair or replacement, but is not required to do
so. If such restoration, repair or replacement is not accomplished prior to
the Closing Date, whether or not extended as provided herein, Z-Spanish may,
at its option either (i) terminate this Agreement upon written notice to
Heftel; or (ii) receive all insurance proceeds paid or payable to Heftel in
excess of amounts actually applied towards such restoration, repair or
replacement, close this Agreement and thereafter complete such restoration,
repair or replacement at its sole expense; provided, however, Heftel shall
have no further liabilities with respect to such damage or destruction after
payment to Z-Spanish of such insurance proceeds.
(b) Z-Spanish shall bear the risk of all damage to, loss of or
destruction of any of the Z-Spanish Transferred Assets between the date of
this Agreement and the Closing Date. If any material portion of the Z-Spanish
Transferred Assets shall suffer any material damage or destruction prior to
the Closing Date, Z-Spanish shall promptly notify Heftel in writing of such
damage or destruction, shall promptly take all necessary steps to restore,
repair or replace such assets at its sole expense, and shall advise Heftel in
writing of the estimated cost to complete such restoration,
25
repair or replacement and all amounts actually paid as of the date of the
estimate. Heftel may extend the Closing Date for a period not exceeding 45
days to accomplish such restoration, repair or replacement, but is not
required to do so. If such restoration, repair or replacement is not
accomplished prior to the Closing Date, whether or not extended as provided
herein, Heftel may, at its option either (i) terminate this Agreement upon
written notice to Z-Spanish; or (ii) receive all insurance proceeds paid or
payable to Z-Spanish in excess of amounts actually applied towards such
restoration, repair or replacement, close this Agreement and thereafter
complete such restoration, repair or replacement at its sole expense;
provided, however, Z-Spanish shall have no further liabilities with respect
to such damage or destruction after payment to Heftel of such insurance
proceeds.
15. BOOKS AND RECORDS; TAX MATTERS.
(a) BOOKS AND RECORDS. Each party agrees that it will cooperate
with and make available (or cause to be made available) to the other party,
during normal business hours, all books and records, information and
employees (without substantial disruption of employment) retained and
remaining in existence after the Closing which are necessary or useful in
connection with any tax inquiry, audit, or dispute, any litigation or
investigation or any other matter requiring any such books and records,
information or employees for any reasonable business purpose (a "PERMITTED
Use"). The party requesting any such books and records, information or
employees shall bear all of the out-of-pocket costs and expenses reasonably
incurred in connection with providing such books and records, information or
employees. All information received pursuant to this SECTION 15 (including
duplicate copies of the Business Records retained by the other party pursuant
to SECTION 15(b) hereof) shall be kept confidential by the party receiving
it, except to the extent that disclosure is reasonably necessary in
connection with any Permitted Use.
(b) COOPERATION AND RECORDS RETENTION. Each party shall (i)
provide the other with such assistance as may reasonably be requested by
either of them in connection with the preparation of any return, audit or
other examination by any taxing authority or judicial or administrative
proceedings relating to liability for any taxes, (ii) retain and provide the
other with any records or other information that may be relevant to such
return, audit or examination, proceeding or determination, and (iii) provide
the other with any final determination of any such audit or examination,
proceeding, or determination that affects any amount required to be shown on
any tax return of the other for any period. Without limiting the generality
of the foregoing, each party shall retain (or cause to be retained), until
the applicable statutes of limitations (including any extensions) have
expired, copies of
26
all tax returns, supporting work schedules, and other records or information
that may be relevant to such returns for all tax periods or portions thereof
ending on or before the Closing.
16. MISCELLANEOUS PROVISIONS.
16.1 EXPENSES. Except as otherwise expressly provided herein,
each party shall pay the fees and expenses incurred by it in connection with
the transactions contemplated by this Agreement. If any action is brought for
breach of this Agreement or to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover court costs, arbitration
expenses and reasonable attorneys' fees.
16.2 PRORATIONS.
(a) All items of income and expense arising from the operation of
the Z-Spanish Station and the Heftel Assumed Contracts before the Closing
Date shall be for the account of Z-Spanish and thereafter shall be for the
account of Heftel. Proration of the items described below between Z-Spanish
and Heftel shall be effective as of 12:01 a.m., local time, on the Closing
Date and shall occur as set forth in subsections (c) through (e) below with
respect to those rights, liabilities and obligations of Z-Spanish transferred
to and assumed by Heftel hereunder.
(b) All items of income and expense arising from the operation of
the Heftel Station and the Z-Spanish Assumed Contracts before the Closing
Date shall be for the account of Heftel and thereafter shall be for the
account of Z-Spanish. Proration of the items described below between
Z-Spanish and Heftel shall be effective as of 12:01 a.m., local time, on the
Closing Date and shall occur as set forth in subsections (c) through (e)
below with respect to those rights, liabilities and obligations of Heftel
transferred to and assumed by Z-Spanish hereunder.
(c) Liability for state and local taxes assessed on the
Transferred Assets payable with respect to the tax year in which the
effective time of proration falls shall be prorated as between Z-Spanish and
Heftel on the basis of the number of days of the tax year elapsed to but
excluding such effective time, appropriately adjusted with respect to
improvements to the Transferred Assets effected by either party after such
effective time.
(d) Prepaid items and accruals such as water, electricity,
telephone, other utility and service charges, lease expenses, license fees
(if any) and payments under any contracts to be assumed by Heftel or
Z-Spanish (as the case may be)
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shall be prorated between Z-Spanish and Heftel on the basis of the period of
time to which such liabilities, prepaid items and accruals apply.
(e) All prorations shall be made and paid in cash insofar as
feasible on or before the Closing Date. Any prorations not made on the
Closing Date shall be made no later than 90 days thereafter. Z-Spanish and
Heftel agree to assume, pay and perform all costs, liabilities and expenses
allocated to each of them pursuant to this SECTION 16.2.
16.3 AMENDMENT. This Agreement may be amended at any time but
only by an instrument in writing signed by the parties hereto.
16.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
nationally recognized "next-day" delivery service, to the parties at the
addresses set forth below (or at such other address for a party as shall be
specified by like notice), or sent by facsimile (having a notification
receipt) to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder):
If to Heftel:
3102 Oak Lawn, Suite 215
Dallas, Texas 75219
Attn: McHenry T. Tichenor, Jr., President
Fax: 214-525-7750
If to Z-Spanish:
1436 Auburn Blvd.
Sacramento, California 95815
Attn: Amador Bustos, President and Catherine Sandoval, General Counsel
Fax: 916-646-3230
with a copy to:
Francisco R. Montero
Fisher Wayland Cooper Leader & Zaragoza, LLP
2001 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Fax: 202-296-6518
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16.5 ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, heirs
and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the others; provided, however,
that (i) Heftel may assign its rights under this Agreement to any of its
subsidiaries or an affiliated corporation and (ii) in the event of such
assignment, the assigning party shall remain liable for all of the
obligations of such assignee.
16.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.7 HEADINGS. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part
hereof.
16.8 ENTIRE AGREEMENT. This Agreement and the documents referred
to herein contain the entire understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
16.9 WAIVER. No attempted waiver of compliance with any provision
or condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
16.10 NO THIRD PARTY BENEFICIARIES. This Agreement is made for
the benefit of the parties hereto, and no third party shall be deemed to be a
third party beneficiary thereof.
16.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona (irrespective
of its choice of law provisions).
16.12 CONTROL OF THE STATIONS.
(a) Prior to the Closing, Heftel shall not, directly or
indirectly, control, or attempt to control, the operations of the Z-Spanish
Station; such operations,
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including complete control and supervision of all programs, employees and
policies of the Z-Spanish Station, shall be the sole responsibility of
Z-Spanish.
(b) Prior to the Closing, Z-Spanish shall not, directly or
indirectly, control, or attempt to control, the operations of the Heftel
Station; such operations, including complete control and supervision of all
programs, employees and policies of the Heftel Station, shall be the sole
responsibility of Heftel.
16.13 BULK SALES. The parties hereto waive compliance with the
provisions of any bulk sales law applicable to the transactions contemplated
hereby.
16.14 ARBITRATION. Any controversy or dispute among the parties
arising in connection with this Agreement shall be submitted to a panel of
three arbitrators and finally settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association. Each of
the disputing parties shall appoint one arbitrator, and these two arbitrators
shall independently select a third arbitrator. Arbitration shall take place
in Phoenix, Arizona, or such other location as the arbitrators may select.
The prevailing party in such arbitration shall be entitled to the award of
all costs and attorneys' fees in connection with such action but, in such
action or otherwise in respect to any claim or liabilities, shall in no event
be entitled to the receipt of any consequential or punitive damages. Any
award for monetary damages resulting from nonpayment of sums due hereunder
shall bear interest from the date on which such sums were originally due and
payable. Judgment upon the award rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance
of the award and an order of enforcement, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HEFTEL BROADCASTING CORPORATION
By: /s/ McHenry T. Tichenor, Jr.
----------------------------------------
McHenry T. Tichenor, Jr.
President
GLENDALE BROADCASTING, INC.
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By: /s/ Amador Bustos
----------------------------------------
Amador Bustos
President
KLNZ LICENSE COMPANY, LLC
By: /s/ Amador Bustos
----------------------------------------
Amador Bustos
President
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