-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QpiH/RzuYsA62x5YUj9dSKGkjAPzj3zns60VW8ylBzfVH0VTC51fSO7h5WMQTpCf J6evnWZ0TKFa4jlVHvXLUA== /in/edgar/work/0000950144-00-013558/0000950144-00-013558.txt : 20001114 0000950144-00-013558.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950144-00-013558 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COX RADIO INC CENTRAL INDEX KEY: 0001018522 STANDARD INDUSTRIAL CLASSIFICATION: [4832 ] IRS NUMBER: 581620022 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-08737 FILM NUMBER: 761801 BUSINESS ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048435000 MAIL ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 10-Q 1 g65355e10-q.txt COX RADIO, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER 1-12187 COX RADIO, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 58-1620022 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 1400 LAKE HEARN DRIVE, ATLANTA, GEORGIA 30319 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (404) 843-5000 --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] --------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. There were 40,670,133 shares of Class A common stock outstanding as of October 31, 2000. There were 58,733,016 shares of Class B common stock outstanding as of October 31, 2000. 2 COX RADIO, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000 TABLE OF CONTENTS PAGE ---- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS............................................. 3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................ 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....... 19 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS................................................ 21 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................. 22 SIGNATURES................................................................ 24 2 3 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS COX RADIO, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, 2000 1999 ----------------- ------------------- (AMOUNTS IN THOUSANDS) ASSETS Current Assets: Cash and cash equivalents............................................ $ 20,596 $ 14,704 Restricted cash...................................................... 1,444 -- Accounts receivable, less allowance for doubtful accounts of $3,305 and $2,966, respectively .............................. 90,148 74,775 Prepaid expenses and other current assets ........................... 6,539 4,387 Amounts due from Cox Enterprises, Inc. .............................. 20,216 -- ----------------- ------------------- Total current assets ............................................. 138,943 93,866 Plant and equipment, net .............................................. 73,092 56,582 Intangible assets, net ................................................ 2,127,262 829,307 Station investment note receivable .................................... -- 850 Other assets .......................................................... 8,894 6,016 ----------------- ------------------- Total assets ..................................................... $ 2,348,191 $ 986,621 ================= =================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses ............................... $ 25,682 $ 28,115 Accrued salaries and wages .......................................... 6,838 4,464 Accrued interest .................................................... 8,258 2,476 Income taxes payable ................................................ 6,092 5,462 Other current liabilities ........................................... 979 1,572 Current portion of notes payable .................................... 230,000 -- Amounts due to Cox Enterprises, Inc. ............................... -- 17,138 ----------------- ------------------- Total current liabilities ........................................ 277,849 59,227 Notes payable ......................................................... 549,937 420,105 Deferred income taxes ................................................. 483,995 128,623 ----------------- ------------------- Total liabilities ................................................ 1,311,781 607,955 ----------------- ------------------- Commitments and contingencies (Note 3) Shareholders' Equity: Preferred stock, $1.00 par value: 15,000,000 shares authorized, None outstanding.................................................. -- -- Class A common stock, $0.33 par value; 210,000,000 shares authorized; 40,658,397 and 28,015,983 shares outstanding at September 30, 2000 and December 31, 1999, respectively ........... 13,418 9,245 Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares outstanding at September 30, 2000 and December 31, 1999, respectively .............................. 19,382 19,382 Additional paid-in capital .......................................... 609,469 265,155 Retained earnings ................................................... 395,792 86,535 ----------------- ------------------- 1,038,061 380,317 Less: Class A common stock held in treasury (119,856 shares at cost) (1,651) (1,651) ----------------- ------------------- Total shareholders' equity ....................................... 1,036,410 378,666 ----------------- ------------------- Total liabilities and shareholders' equity ....................... $ 2,348,191 $ 986,621 ================= ===================
See notes to unaudited consolidated financial statements. 3 4 COX RADIO, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------------- ----------------------------------- 2000 1999 2000 1999 --------------- -------------- --------------- --------------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) NET REVENUES: Local .................................. $ 69,468 $ 57,244 $ 193,005 $ 160,635 National ............................... 21,209 19,814 61,348 52,064 Other .................................. 4,392 2,696 12,263 6,013 --------------- -------------- --------------- --------------- Total revenues ...................... 95,069 79,754 266,616 218,712 COSTS AND EXPENSES: Operating .............................. 21,684 18,422 59,479 51,043 Selling, general and administrative .... 32,865 28,058 102,043 84,005 Corporate general and administrative ... 3,611 2,673 9,590 7,268 Depreciation and amortization .......... 11,206 7,544 26,261 20,758 Loss on sales of assets ................ 63 -- 5 -- Gain on sales of radio stations ........ (437,977) (719) (483,330) (40,521) --------------- -------------- --------------- --------------- OPERATING INCOME ......................... 463,617 23,776 552,568 96,159 OTHER INCOME (EXPENSE): Interest income ........................ 2,775 -- 4,482 466 Interest expense ....................... (9,268) (5,831) (23,409) (16,288) Non-cash mark-to-market unrealized (loss)/gain ......................... (698) -- 1,474 -- Other - net ............................ (122) (135) (466) (266) --------------- -------------- --------------- --------------- INCOME BEFORE INCOME TAXES................ 456,304 17,810 534,649 80,071 Income taxes ........................... 193,382 7,750 225,392 33,513 --------------- -------------- --------------- --------------- NET INCOME ............................... $ 262,922 $ 10,060 $ 309,257 $ 46,558 =============== ============== =============== =============== Basic net income per common share......... $ 2.65 $ 0.12 $ 3.39 $ 0.54 =============== ============== =============== =============== Diluted net income per common share....... $ 2.63 $ 0.12 $ 3.37 $ 0.54 =============== ============== =============== =============== Weighted average basic common shares outstanding............................. 99,362 86,274 91,230 85,946 =============== ============== =============== =============== Weighted average diluted common shares outstanding............................. 99,966 86,761 91,892 86,362 =============== ============== =============== ===============
See notes to unaudited consolidated financial statements. 4 5 COX RADIO, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
CLASS A CLASS B TREASURY STOCK COMMON STOCK COMMON STOCK ADDITIONAL ------------------ ----------------- ----------------- PAID-IN RETAINED SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL ------ ------ ------ ------ ---------- -------- ------ ------ ----- (IN THOUSANDS) BALANCE AT DECEMBER 31, 1999........ 28,016 $ 9,245 58,733 $ 19,382 $ 265,155 $ 86,535 120 $ (1,651) $ 378,666 Net income............... -- -- -- -- -- 309,257 -- -- 309,257 Issuance of Class A common stock pursuant to equity offering............... 12,392 4,089 -- -- 340,116 -- -- -- 344,205 Issuance of Class A common stock related to incentive plans........ 250 84 -- -- 4,198 -- -- -- 4,282 ------- -------- -------- -------- --------- --------- -------- -------- ---------- BALANCE AT SEPTEMBER 30, 2000....... 40,658 $ 13,418 58,733 $ 19,382 $ 609,469 $ 395,792 120 $ (1,651) $1,036,410 ======= ======== ======== ======== ========= ========= ======== ======== ==========
See notes to unaudited consolidated financial statements. 5 6 COX RADIO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, --------------------------- 2000 1999 ------------ ------------ (AMOUNTS IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income ............................................................. $ 309,257 $ 46,558 Items not requiring cash: Depreciation ......................................................... 5,198 5,173 Amortization ......................................................... 21,063 15,585 Deferred income taxes ................................................ 207,372 17,741 Tax benefit from exercise of stock options ........................... 1,382 2,442 Non-cash mark-to-market unrealized (gain)............................. (1,474) -- Loss on sales of assets............................................... 5 -- (Gain) on sales of radio stations .................................... (483,330) (40,521) Changes in assets and liabilities (net of effects of acquisitions and dispositions): Increase in accounts receivable ...................................... (15,541) (9,264) (Decrease) increase in accounts payable and accrued expenses ......... (49) 1,381 Increase in accrued salaries and wages ............................... 2,374 1,233 Increase in accrued interest ......................................... 5,782 3,121 Increase in taxes payable ............................................ 630 5,637 Other, net ........................................................... (2,613) (1,287) ------------- ----------- Net cash provided by operating activities ....................... 50,056 47,799 ------------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................... (7,346) (4,901) Acquisitions, net of cash acquired ..................................... (811,330) (208,776) Decrease in station investment note receivable ......................... 850 6,400 Decrease (increase) in other long-term assets .......................... 1,256 (6,652) Proceeds from sales of assets .......................................... 423 -- Proceeds from sales of radio stations .................................. 107,618 5,868 Increase in cash restricted for investment.............................. (1,444) -- (Decrease) increase in amounts due to/from Cox Enterprises, Inc. ....... (37,354) 37,361 ------------- ----------- Net cash used in investing activities ........................... (747,327) (170,700) ------------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings of revolving credit facility ............................ 359,832 119,857 Proceeds from stock options exercised .................................. 2,899 5,720 Net proceeds from stock offering ....................................... 344,205 -- Repurchase of Class A common stock ..................................... -- (1,651) (Decrease) increase in book overdrafts ................................. (2,635) 311 Payment of credit facility financing costs ............................. (1,138) -- ------------- ----------- Net cash provided by financing activities ....................... 703,163 124,237 ------------- ----------- Net increase in cash and cash equivalents .............................. 5,892 1,336 Cash and cash equivalents at beginning of period ....................... 14,704 6,479 ------------- ----------- Cash and cash equivalents at end of period ............................. $ 20,596 $ 7,815 ============= =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest ......................................................... $ 17,627 $ 13,167 Income taxes ..................................................... $ 16,097 $ 7,697 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: Value of businesses exchanged ................................... $ 470,000 $55,000
See notes to unaudited consolidated financial statements. 6 7 COX RADIO, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND OTHER INFORMATION Cox Radio is a leading national radio broadcasting company whose business, which constitutes one reportable segment, is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises, Inc. indirectly owns approximately 63% of the common stock of Cox Radio and has approximately 94% of the voting power of Cox Radio. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal, recurring nature. These unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 1999 and notes thereto contained in Cox Radio's Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000 or any other interim period. Certain prior year amounts have been reclassified for comparative purposes. 2. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES During the past several years, Cox Radio has actively managed its portfolio of radio stations through selected acquisitions, dispositions and exchanges, as well as through the use of local marketing agreements, or LMAs, and joint sales agreements, or JSAs. Under an LMA, the company operating a station provides programming, sales and marketing services. Under a JSA, the company operating a station provides sales and marketing services. The broadcast revenues and operating expenses of stations operated by Cox Radio under LMAs and JSAs have been included in Cox Radio's operations since the respective dates of such agreements. All consummated and pending acquisitions discussed below have been or will be accounted for using the purchase method. As such, the results of operations of acquired stations have been or will be included in the results of operations from the date of acquisition. Specific transactions entered into or consummated by Cox Radio during the nine months ended September 30, 2000 and through November 7, 2000 are discussed below. In January 2000, Cox Radio acquired the assets of KRTQ-FM (formerly KTFX-FM) in Tulsa, Oklahoma for consideration of $3.5 million. Cox Radio had been operating this station pursuant to an LMA since January 1999. Also in January 2000, Cox Radio disposed of the assets of KACE-FM and KRTO-FM, serving Los Angeles, California, for consideration of approximately $75 million. On April 2, 2000, the LMA for WCNN-AM, serving Atlanta, Georgia, terminated. Also in April 2000, Cox Radio disposed of the assets of KGMZ-FM, serving Honolulu, Hawaii, for approximately $6.6 million. Cox Radio continues to manage this station's local, regional and national 7 8 advertising sales efforts under a JSA. In addition, Cox Radio is a guarantor of the buyer's financing for this transaction. On May 1, 2000, Cox Radio acquired the assets of KINE-FM, KCCN-FM and KCCN-AM, serving Honolulu, Hawaii, for consideration of approximately $17.8 million. On July 13, 2000, Cox Radio acquired the outstanding capital stock of Marlin Broadcasting, Inc., which owned radio stations WTMI-FM serving Miami, Florida, WCCC-FM and WCCC-AM serving Hartford, Connecticut, and WBOQ-FM serving Gloucester, Massachusetts, for approximately $125 million. As part of this transaction, Cox Radio sold those assets of Marlin comprising WCCC-FM, WCCC-AM and WBOQ-FM to certain of the former principals of Marlin for approximately $25 million. Cox Radio did not recognize any gain or loss on the sale of these assets. On August 25, 2000, Cox Radio acquired WEDR-FM in Miami, Florida; WFOX-FM in Atlanta, Georgia; WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in Jacksonville, Florida; WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in Stamford/Norwalk, Connecticut; and WPLR-FM and national and local sales and marketing rights at WYBC-FM in New Haven, Connecticut in exchange for KFI-AM and KOST-FM in Los Angeles, California, plus approximately $3 million. The transaction was accounted for as a purchase business combination with a fair value of $473 million based on an independent appraisal. Cox Radio recorded a $252.6 million after-tax gain on the transaction in the third quarter of 2000. Cox Radio has operated the acquired stations (other than WYBC-FM) pursuant to an LMA and WYBC-FM pursuant to a JSA since October 1999. Cox Radio obtained a temporary waiver of the FCC's newspaper-radio cross-ownership rule for the acquisition of WFOX-FM in Atlanta. On August 30, 2000, Cox Radio acquired the assets of radio stations KKBQ-FM, KLDE-FM and KKTL-FM, serving Houston, Texas, and WKHK-FM, WMXB-FM, WKLR-FM and WVBB-AM (formerly WTVR-AM), serving Richmond, Virginia, for consideration of approximately $380 million. Also on August 30, 2000, Cox Radio acquired the capital stock of Midwestern Broadcasting Company, Inc., which owned WALR-FM, serving Atlanta, Georgia, for $280 million. In a related transaction with Salem Communications Corporation on September 1, 2000, Cox Radio exchanged the license and transmitting facilities of WALR-FM, as well as the license and transmitting facilities of radio stations KLUP-AM, serving San Antonio, Texas, and WSUN-AM, serving Tampa, Florida, for the license and transmitting facilities of radio station KHPT-FM (formerly KKHT-FM), serving Houston, Texas. Cox Radio retained the intellectual property of WALR-FM and is broadcasting WALR-FM's programming on its WJZF-FM signal in Atlanta. Cox Radio has changed WJZF-FM's call letters to WALR-FM. The following unaudited pro forma summary of operations presents the consolidated results of operations as if all consummated and pending transactions had occurred on January 1, 1999 and does not purport to be indicative of what would have occurred had these transactions been made as of that date, or indicative of results which may occur in the future.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues.................................... $104,486 $ 97,002 $305,356 $267,758 Net income...................................... 11,256 7,465 31,839 21,570 =============================================== Basic pro forma net income per common share..... $ 0.11 $ 0.09 $ 0.35 $ 0.25 =============================================== Diluted pro forma net income per common......... $ 0.11 $ 0.09 $ 0.35 $ 0.25 =============================================== Basic pro forma shares outstanding.............. 99,362 86,274 91,230 85,946 =============================================== Diluted pro forma shares outstanding............ 99,966 86,761 91,892 86,362 ===============================================
8 9 3. COMMITMENTS AND CONTINGENCIES On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility with certain guarantors and banks, including Texas Commerce Bank National Association as Administrative Agent, Nationsbank of Texas, N.A. as Syndications Agent, and Citibank, N.A. as Documentation Agent. The interest rate was based on the London Interbank Offered Rate plus a spread determined by the ratio of Cox Radio's debt to EBITDA. This facility included a commitment fee on the unused portion of the total amount available of .1% to .25% based on the ratio of Cox Radio's debt to EBITDA. At December 31, 1999, Cox Radio had approximately $220 million of outstanding indebtedness and approximately $80 million available under the bank credit facility. Borrowings under the bank credit facility approximated fair value based upon current borrowing rates available to Cox Radio. The interest rate applied to amounts due under the bank credit facility was 6.9% at December 31, 1999. This bank credit facility contained, among other provisions, defined requirements as to ratio of debt to EBITDA and ratio of EBITDA to interest expense. At December 31, 1999, Cox Radio was in compliance with these covenants. On June 27, 2000, all amounts previously outstanding under this facility were repaid with a portion of the net proceeds from the offering of Class A common stock discussed in Note 5 below. On June 30, 2000, Cox Radio replaced its $300 million, five-year, senior, unsecured revolving credit facility, with a $350 million, five-year, senior, unsecured revolving credit facility and a $350 million, 364-day, senior, unsecured revolving credit facility, each with certain banks, including The Chase Manhattan Bank as the Administrative Agent, Bank of America, N.A. as the Syndications Agent, and Citibank, N.A. as the Documentation Agent. The interest rate for each facility is based on the Federal funds borrowing rate plus 1/2%; the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio's senior, long-term debt; or the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio's senior, long-term debt. Each facility includes a commitment fee on the unused portion of the total amount available of .1% to .25% based on the credit ratings of Cox Radio's senior, long-term debt. Each facility also contains, among other provisions, defined requirements as to the ratio of debt to EBITDA and the ratio of EBITDA to interest expense. At September 30, 2000, Cox Radio was in compliance with the covenants. At September 30, 2000, Cox Radio had approximately $350 million of outstanding indebtedness under the five-year facility with no additional amounts available, and $230 million of outstanding indebtedness under the 364-day facility with $120 million available. The interest rate applied to amounts due under the bank credit facilities was 7.13% at September 30, 2000. On May 26, 1998, Cox Radio issued and sold an aggregate of $200 million principal amount of notes in an offering exempt from registration under Rule 144A of the Securities Act of 1933, as amended, (the "Securities Act"), which were later exchanged for notes registered under the Securities Act. The notes consisted of $100 million principal amount of 6.25% notes due in 2003 and $100 million principal amount of 6.375% notes due in 2005. Pursuant to the Registration Rights Agreement dated as of May 26, 1998 among Cox Radio, its then-wholly owned subsidiaries WSB, Inc. and WHIO, Inc. (each a former guarantor of the notes), NationsBanc Montgomery Securities LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc., on December 14, 1998, an exchange offer was consummated pursuant to which Cox Radio exchanged $200 million principal amount of the notes originally sold on May 26, 1998, for an aggregate of $200 million principal amount of notes (the terms and form of which are the same in all material respects as the original notes, except as to restrictions on transfer) which have been registered under the Securities Act. As a result of the mergers of WSB, Inc. and WHIO, Inc. into Cox Radio, WSB, Inc. and WHIO, Inc. are no longer guarantors of the notes. As a result of the transfer of certain Federal Communications Commission licenses, permits and authorizations held by Cox Radio to CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, CXR Holdings became a guarantor of the notes on February 1, 1999. At 9 10 September 30, 2000 and December 31, 1999, the estimated fair value of these notes was approximately $194.1 million and $191.0 million, respectively, based on quoted market prices. In September 1997, Cox Radio entered into interest rate swap agreements with certain lenders providing bank financing under its bank credit facility. Pursuant to the interest rate swap agreements, Cox Radio exchanged its floating rate interest obligations on an aggregate of $100 million in principal amount at an average fixed rate of 6.23% per annum having an average maturity of 6.25 years. The fixing of interest rates for this period reduces Cox Radio's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties nor would we expect any such loss to be material. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $1.9 million at December 31, 1999. Prior to June 27, 2000, Cox Radio accounted for the interest rate swap agreements as hedges. In connection with the offering of Class A common stock as discussed in Note 5 below, Cox Radio used a portion of the net proceeds from the offering to repay all amounts then outstanding under its bank credit facility. As the interest rate swap agreements were no longer matched with existing debt, Cox Radio recorded a non-cash mark-to-market unrealized gain as of June 30, 2000 of $2.2 million, which represents the fair value of the interest rate swap agreements at that date. On August 4, 2000, Cox Radio redesignated these interest rate swap agreements as hedges of floating rate borrowings under the new revolving credit facilities dated June 30, 2000 discussed above. Concurrent with the redesignation of these swaps, Cox Radio recorded a non-cash, mark-to-market unrealized loss of $0.7 million, which represents the difference in the fair value of the interest rate swap agreements from June 30, 2000 to August 4, 2000. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $0.9 million at September 30, 2000. On May 2, 2000, Cox Radio's universal shelf registration statement filed with the Securities and Exchange Commission on Form S-3 was declared effective. Under the universal shelf registration statement, Cox Radio and two financing trusts sponsored by Cox Radio may from time to time offer and issue debentures, notes, bonds and other evidences of indebtedness, forward contracts in respect of any such indebtedness, shares of preferred stock, shares of Class A common stock, warrants, stock purchase contracts and stock purchase units of Cox Radio and preferred securities of the Cox Radio trusts for a maximum aggregate offering amount of $750 million. Unless otherwise described in future prospectus supplements, Cox Radio intends to use the net proceeds from the sale of securities registered under this universal shelf registration statement for general corporate purposes, which may include additions to working capital, the repayment or redemption of existing indebtedness and the financing of capital expenditures and acquisitions. See Note 5 below for a discussion of an offering of Class A common stock during the second quarter of 2000 under the universal shelf registration statement of Cox Radio. On March 6, 2000, Cox Radio was named as a defendant in a putative class action suit filed in the state court of Gwinnett County, Georgia, alleging violations of the federal Telephone Consumer Protection Act and related Georgia telemarketing laws. The complaint sought statutory damages in the amount of $1,500, plus actual and punitive damages and attorneys' fees, on behalf of each person "throughout the State of Georgia" who received an unsolicited pre-recorded telephone message delivering an "advertisement" from a Cox Radio radio station. On May 1, 2000, the lawsuit was dismissed without prejudice. Counsel for the plaintiff has indicated his intention to file a similar action against Cox Radio at a later date. 4. GUARANTOR FINANCIAL INFORMATION CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, was formed on September 11, 1998, and Cox Radio transferred certain of its Federal Communications Commission licenses, permits and authorizations to CXR Holdings as of January 1, 1999. CXR Holdings became the guarantor of Cox Radio's $200 million in registered notes described in Note 3 above pursuant to a full and unconditional 10 11 guarantee on February 1, 1999. Separate financial statements and other disclosures concerning CXR Holdings are not presented because CXR Holdings is comprised primarily of non-operating assets, including Federal Communications Commission licenses, permits and authorizations and cash royalties, and such separate financial statements and other disclosures would not be meaningful to investors. The following table sets forth condensed financial information of CXR Holdings as of September 30, 2000 and December 31, 1999 and for the three and nine month periods ended September 30, 2000 and 1999.
AS OF SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------------------------------- (AMOUNTS IN THOUSANDS) ASSETS: Accounts receivable - Cox Radio........................... $ 62,481 $ 15,066 Intangible assets, net.................................... 670,259 391,832 Other assets.............................................. 29 767 ------------------------------------- Total assets........................................... $ 732,769 $ 407,665 ===================================== ------------------------------------- Shareholders' equity...................................... $ 732,769 $ 407,665 =====================================
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2000 1999 2000 1999 ------------------------------------------------------ (AMOUNTS IN THOUSANDS) Royalty income - Cox Radio................................ $ 13,805 $ 6,559 $ 38,611 $ 20,081 Intercompany interest, net................................ 1,259 -- 2,282 -- Depreciation and amortization............................. (3,241) (1,135) (8,299) (3,387) ------------------------------------------------------ Operating income.......................................... $ 11,823 $ 5,424 $ 32,594 $ 16,694 ======================================================
5. EARNINGS PER COMMON SHARE AND CAPITAL STRUCTURE
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- -------------------- 2000 1999 2000 1999 ---- ---- ---- ---- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) NET INCOME............................................ $ 262,922 $ 10,060 $ 309,257 $ 46,558 ========= ======== ========= ======== BASIC EPS Weighted-average common shares outstanding ........... 99,362 86,274 91,230 85,946 ========= ======== ========= ======== Basic net income per common share..................... $ 2.65 $ 0.12 $ 3.39 $ 0.54 ========= ======== ========= ======== DILUTED EPS Weighted-average common shares outstanding - basic.... 99,362 86,274 91,230 85,946 Shares issuable on exercise of dilutive options.... 1,445 1,751 1,445 1,751 Shares assumed to be purchased with proceeds from options.......................................... (986) (1,295) (939) (1,347) Shares issuable pursuant to employee stock purchase plan.................................... 229 234 229 234 Shares assumed to be purchased with proceeds from employee stock purchase plan.................... (84) (203) (73) (222) --------- -------- --------- -------- Shares applicable to diluted EPS...................... 99,966 86,761 91,892 86,362 ========= ======== ========= ======== Diluted net income per common share................... $ 2.63 $ 0.12 $ 3.37 $ 0.54 ========= ======== ========= ========
In January 1999, Cox Radio reacquired 119,856 shares of previously restricted Class A common stock from employees for cash consideration of approximately $1.7 million which was used to pay employee withholding taxes. On February 7, 2000, Cox Radio announced that its Board of Directors approved a three-for-one stock split. The stock split resulted in a decrease in par value of each share, including shares of preferred stock (authorized with no shares presently outstanding), from $1.00 to $0.33 per share. At the Annual Meeting of Stockholders, the stockholders voted to amend Cox Radio's Articles of Incorporation to increase 11 12 authorized (a) Class A common stock from 70,000,000 to 210,000,000 shares; (b) Class B common stock from 45,000,000 to 135,000,000 shares; and (c) preferred stock from 5,000,000 to 15,000,000 shares. The stock split was distributed on May 19, 2000 to stockholders of record on May 12, 2000. All financial information contained elsewhere in these financial statements has been adjusted to reflect the impact of this stock split. On June 27, 2000, Cox Radio consummated a public offering of 8,800,000 shares of its Class A common stock pursuant to its universal shelf registration statement and completed a concurrent private placement of 3,591,954 shares of Class A common stock directly to Cox Enterprises at the public offering price per share, less underwriting discounts and commissions. Cox Radio received net proceeds of approximately $344.2 million from this offering to partially finance acquisitions, repay outstanding indebtedness and for general corporate purposes. 6. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). This statement requires that all derivatives be recognized in the statement of financial position as either assets or liabilities and measured at fair value. In addition, all hedging relationships must be designated, reassessed and documented pursuant to the provisions of SFAS 133. SFAS 133, as amended by SFAS 137 and 138, is effective for fiscal years beginning after June 15, 2000. Accordingly, Cox Radio will be required to adopt SFAS 133 on January 1, 2001. In November 1999, Cox Radio developed an SFAS 133 implementation plan and appointed a team to implement SFAS 133 on a company-wide basis. The implementation plan includes, among other things, the education of both financial and non-financial personnel, the conducting of an inventory of all free-standing and embedded derivatives, the development of a SFAS 133 compliant risk management process, the development of controls and processes to identify and account for derivatives on an on going basis, and the documentation and assessment of the Company's hedging strategies. Cox Radio does not believe that the adoption of SFAS 133 will have a material impact on the financial statements. 7. SUBSEQUENT EVENT On November 8, 2000, Cox Radio entered into an agreement to acquire the assets of radio stations WDYL-FM serving Richmond, Virginia, and WJMZ-FM and WPEK-FM serving Greenville, South Carolina for a purchase price of $52.5 million in cash. Pending customary regulatory approvals, Cox Radio anticipates closing this transaction during the first quarter of 2001. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying unaudited historical Consolidated Statements of Income for the three and nine-month periods ended September 30, 2000 and 1999. This report contains "forward-looking" statements, including but not limited to statements relating to future cash requirements, which are statements that relate to Cox Radio's future plans, earnings, objectives, expectations, performance, and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the radio broadcasting industry, advertising demand in our markets, competition for audience share, our success in executing and integrating acquisitions, our ability to execute our Internet strategy effectively, and our ability to generate sufficient cash flow to meet our debt service obligations and finance operations. For a more detailed discussion of these and other risk factors, see the Risk Factors section of Cox Radio's Annual Report on Form 10-K, as amended, for the year ended 12 13 December 31, 1999. Cox Radio assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise. GENERAL Cox Radio is a leading national radio broadcast company whose business, which constitutes one reportable segment, is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises indirectly owns approximately 63% of the common stock of Cox Radio through its wholly-owned subsidiary, Cox Broadcasting, Inc., and has approximately 94% of the voting power of Cox Radio. The performance of a radio station group such as Cox Radio is customarily measured by its ability to generate Broadcast Cash Flow, EBITDA and After-tax Cash Flow. Broadcast Cash Flow is defined as net revenues less station operating expenses. EBITDA is defined as operating income excluding the gain on sales of assets and radio stations plus depreciation and amortization. After-tax Cash Flow is defined as income (loss) before extraordinary items excluding gain on sales of assets and radio stations plus depreciation and amortization. Although Broadcast Cash Flow, EBITDA and After-tax Cash Flow are not recognized under generally accepted accounting principles, they are accepted by the broadcasting industry as generally recognized measures of performance and are used by analysts who report publicly on the condition and performance of broadcasting companies. For the foregoing reasons, Cox Radio believes that these measures will be useful to investors. However, Broadcast Cash Flow, EBITDA or After-tax Cash Flow should not be considered to be an alternative to operating income or cash flows from operating activities as a measure of liquidity, each as determined in accordance with accounting principles generally accepted in the United States of America, or an indicator of Cox Radio's performance under generally accepted accounting principles. The primary source of Cox Radio's revenues is the sale of local and national advertising. Historically, approximately 73% and 25% of Cox Radio's net revenues have been generated from local and national advertising, respectively. Cox Radio's most significant station operating expenses are employees' salaries and benefits, commissions, programming expenses and advertising and promotional expenditures. Cox Radio's revenues vary throughout the year. As is typical in the radio broadcasting industry, Cox Radio's revenues and broadcast cash flows are typically lowest in the first quarter and higher in the second and fourth quarters. Cox Radio's operating results in any period may be affected by the incurrence of advertising and promotional expenses that do not necessarily produce commensurate revenues until the impact of advertising and promotion is realized in future periods. ACQUISITIONS AND DISPOSITIONS During the past several years, Cox Radio has actively managed its portfolio of radio stations through selected acquisitions, dispositions and exchanges, as well as through the use of local marketing agreements, or LMAs, and joint sales agreements, or JSAs. Under an LMA, the company operating a station provides programming, sales and marketing services. Under a JSA, the company operating a station provides sales and marketing services. The broadcast revenues and operating expenses of stations operated by Cox Radio under LMAs and JSAs have been included in Cox Radio's operations since the respective dates of such agreements. All consummated and pending acquisitions discussed below have been or will be accounted for using the purchase method. As such, the results of operations of acquired stations have been or will be included in the results of operations from the date of acquisition. Specific transactions entered into or consummated by Cox Radio during the nine months ended September 30, 2000 and through November 7, 2000 are discussed below. 13 14 In January 2000, Cox Radio acquired the assets of KRTQ-FM (formerly KTFX-FM) in Tulsa, Oklahoma for consideration of $3.5 million. Cox Radio had been operating this station pursuant to an LMA since January 1999. Also in January 2000, Cox Radio disposed of the assets of KACE-FM and KRTO-FM, serving Los Angeles, California, for consideration of approximately $75 million. On April 2, 2000, the LMA for WCNN-AM, serving Atlanta, Georgia, terminated. Also in April 2000, Cox Radio disposed of the assets of KGMZ-FM, serving Honolulu, Hawaii, for approximately $6.6 million. Cox Radio continues to manage this station's local, regional and national advertising sales efforts under a JSA. In addition, Cox Radio is a guarantor of the buyer's financing for this transaction. On May 1, 2000, Cox Radio acquired the assets of KINE-FM, KCCN-FM and KCCN-AM, serving Honolulu, Hawaii, for consideration of approximately $17.8 million. On July 13, 2000, Cox Radio acquired the outstanding capital stock of Marlin Broadcasting, Inc., which owned radio stations WTMI-FM serving Miami, Florida, WCCC-FM and WCCC-AM serving Hartford, Connecticut, and WBOQ-FM serving Gloucester, Massachusetts, for approximately $125 million. As part of this transaction, Cox Radio sold those assets of Marlin comprising WCCC-FM, WCCC-AM and WBOQ-FM to certain of the former principals of Marlin for approximately $25 million. Cox Radio did not recognize any gain or loss on the sale of these assets. On August 25, 2000, Cox Radio acquired WEDR-FM in Miami, Florida; WFOX-FM in Atlanta, Georgia; WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in Jacksonville, Florida; WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in Stamford/Norwalk, Connecticut; and WPLR-FM and national and local sales and marketing rights at WYBC-FM in New Haven, Connecticut in exchange for KFI-AM and KOST-FM in Los Angeles, California, plus approximately $3 million. The transaction was accounted for as a purchase business combination with a fair value of $473 million based on an independent appraisal. Cox Radio recorded a $252.6 million after-tax gain on the transaction in the third quarter of 2000. Cox Radio has operated the acquired stations (other than WYBC-FM) pursuant to an LMA and WYBC-FM pursuant to a JSA since October 1999. Cox Radio obtained a temporary waiver of the FCC's newspaper-radio cross-ownership rule for the acquisition of WFOX-FM in Atlanta. On August 30, 2000, Cox Radio acquired the assets of radio stations KKBQ-FM, KLDE-FM and KKTL-FM, serving Houston, Texas, and WKHK-FM, WMXB-FM, WKLR-FM and WVBB-AM (formerly WTVR-AM), serving Richmond, Virginia, for consideration of approximately $380 million. Also on August 30, 2000, Cox Radio acquired the capital stock of Midwestern Broadcasting Company, Inc., which owned WALR-FM, serving Atlanta, Georgia, for $280 million. In a related transaction with Salem Communications Corporation on September 1, 2000, Cox Radio exchanged the license and transmitting facilities of WALR-FM, as well as the license and transmitting facilities of radio stations KLUP-AM, serving San Antonio, Texas, and WSUN-AM, serving Tampa, Florida, for the license and transmitting facilities of radio station KHPT-FM (formerly KKHT-FM), serving Houston, Texas. Cox Radio retained the intellectual property of WALR-FM and is broadcasting WALR-FM's programming on its WJZF-FM signal in Atlanta. Cox Radio has changed WJZF-FM's call letters to WALR-FM. RESULTS OF OPERATIONS Three months ended September 30, 2000 compared to three months ended September 30, 1999 Net revenues for the third quarter of 2000 increased $15.3 million to $95.1 million, a 19.2% increase over the third quarter of 1999. This increase was primarily a result of the acquisition of radio stations in Honolulu, 14 15 Hawaii; Houston, Texas; Richmond, Virginia; Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida; and was offset somewhat by the disposition of stations in Los Angeles, California. In addition, significant increases in net revenues at Cox Radio's previously owned radio stations in Atlanta, Georgia; Long Island, New York; Tampa, Florida; and San Antonio, Texas, were realized as a result of continued strong ratings performance. Station operating expenses increased $8.1 million to $54.5 million, an increase of 17.4% over the third quarter of 1999. This increase was primarily a result of the acquisition of radio stations in Honolulu, Hawaii; Houston, Texas; Richmond, Virginia; Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida, as well as higher programming and sales related costs which are driven by ratings and revenues, respectively. These increases were offset somewhat by the disposition of stations in Los Angeles, California. Broadcast cash flow increased $7.2 million to $40.5 million, a 21.8% increase over the third quarter of 1999, for the reasons discussed above. Corporate general and administrative expenses increased $0.9 million to $3.6 million, primarily due to higher overhead costs incurred as a result of the increase in number of stations owned and/or operated in 2000. Operating income increased $439.8 million to $463.6 million for the third quarter of 2000, for the reasons discussed above and as a result of a $438.0 million pre-tax gain recorded in the third quarter of 2000 on the exchange of KFI-AM and KOST-FM in Los Angeles, California. Interest expense during the third quarter of 2000 increased $3.4 million to $9.3 million as a result of borrowings incurred to complete Cox Radio's acquisitions during 1999 and the first nine months of 2000. Net income increased $252.9 million to $262.9 million for the third quarter of 2000, primarily for the reasons discussed above. In addition, a $252.6 million after-tax gain was recorded in the third quarter of 2000 on the exchange of KFI-AM and KOST-FM in Los Angeles, California, offset by a $0.4 million non-cash after-tax "mark-to-market" unrealized loss related to Cox Radio's interest rate swap agreements. Nine months ended September 30, 2000 compared to nine months ended September 30, 1999 Net revenues for the first nine months of 2000 increased $47.9 million to $266.6 million, a 21.9% increase over the first nine months of 1999. This increase was primarily a result of the acquisition of radio stations in Tampa, Florida; Louisville, Kentucky; Honolulu, Hawaii; Houston, Texas; Richmond, Virginia; Jacksonville, Florida; New Haven, Connecticut; Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida; and offset somewhat by the disposition of radio stations in Syracuse, New York and Los Angeles, California. In addition, significant increases in net revenues at Cox Radio's previously owned radio stations in Atlanta, Georgia; Birmingham, Alabama; Long Island, New York; Orlando, Florida; Southern Connecticut; Tulsa, Oklahoma; and San Antonio, Texas, were realized as a result of continued strong ratings performance. Station operating expenses increased $26.5 million to $161.5 million, an increase of 19.6% over the first nine months of 1999. This increase was primarily as a result of the acquisition of radio stations in Tampa, Florida; Louisville, Kentucky; Honolulu, Hawaii; Houston, Texas; Richmond, Virginia; Jacksonville, Florida; New Haven and Stamford-Norwalk, Connecticut; Atlanta, Georgia; and Miami, Florida, as well as higher programming and sales related costs which are driven by ratings and revenues, respectively. These increases were offset somewhat by the disposition of stations in Syracuse, New York and Los Angeles, California. Broadcast cash flow increased $21.4 million to $105.1 million, a 25.6% increase over the first nine months of 1999, for the reasons discussed above. Corporate general and administrative expenses increased $2.3 million to $9.6 million, primarily due to higher overhead costs incurred as a result of the increase in number of stations owned and/or operated in 2000. 15 16 Operating income increased $456.4 million to $552.6 million for the first nine months of 2000, primarily as a result of a $438.0 million pre-tax gain recorded on the exchange of KFI-AM and KOST-FM in Los Angeles, California and for the reasons discussed above. In addition, a $46.6 million pre-tax gain was recorded in the first nine months of 2000 on the sale of KACE-FM and KRTO-FM in Los Angeles, California. These gains were significantly greater than the $39.8 million pre-tax gain recorded in the first nine months of 1999 on the sale of Cox Radio's stations in Syracuse, New York. Interest expense during the first nine months of 2000 increased $7.1 million to $23.4 million as a result of borrowings incurred to complete Cox Radio's acquisitions during 1999 and the first nine months of 2000. Net income increased $262.7 million to $309.3 million for the first nine months of 2000, primarily for the reasons discussed above and due to a $0.9 million after-tax non-cash "mark-to-market" unrealized gain related to Cox Radio's interest rate swap agreements in the first nine months of 2000. In addition, a $27.9 million after-tax gain was recorded on the sale of KACE-FM and KRTO-FM in Los Angeles, California and a $252.6 million after-tax gain was recorded on the exchange of KFI-AM and KOST-FM in Los Angeles, California in the first nine months of 2000. These gains were significantly greater than the $23.8 million after-tax gain recorded in the first nine months of 1999 on the sale of Cox Radio's stations in Syracuse, New York. LIQUIDITY AND CAPITAL RESOURCES Cox Radio's primary source of liquidity is cash provided by operations. Historically, cash requirements have been funded through Cox Radio's operating activities and borrowings under Cox Radio's bank credit facility. For the nine months ended September 30, 2000 as compared to the nine months ended September 30, 1999, cash flow from operations increased $2.3 million to $50.1 million, primarily attributable to the net change in working capital accounts. In addition, cash requirements historically have been funded on a temporary basis through intercompany advances under a revolving credit facility with Cox Enterprises. Borrowings, if any, by Cox Radio under the Cox Enterprises credit facility would typically be repaid by Cox Radio within 30 days and would accrue interest at Cox Enterprises' commercial paper rate plus .4%. Cox Enterprises continues to perform day-to-day cash management services for Cox Radio. On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility with certain guarantors and banks, including Texas Commerce Bank National Association as Administrative Agent, Nationsbank of Texas, N.A. as Syndications Agent, and Citibank, N.A. as Documentation Agent. The interest rate was based on the London Interbank Offered Rate plus a spread determined by the ratio of Cox Radio's debt to EBITDA. This facility included a commitment fee on the unused portion of the total amount available of .1% to .25% based on the ratio of Cox Radio's debt to EBITDA. At December 31, 1999, Cox Radio had approximately $220 million of outstanding indebtedness and approximately $80 million available under the bank credit facility. Borrowings under the bank credit facility approximated fair value based upon current borrowing rates available to Cox Radio. The interest rate applied to amounts due under the bank credit facility was 6.9% at December 31, 1999. This bank credit facility contained, among other provisions, defined requirements as to ratio of debt to EBITDA and ratio of EBITDA to interest expense. At December 31, 1999, Cox Radio was in compliance with these covenants. On June 27, 2000, all amounts previously outstanding under this facility were repaid with a portion of the net proceeds from the offering of Class A common stock discussed in Note 5 to the financial statements. On June 30, 2000, Cox Radio replaced its $300 million, five-year, senior, unsecured revolving credit facility, with a $350 million, five-year, senior, unsecured revolving credit facility and a $350 million, 364-day, senior, unsecured revolving credit facility, each with certain banks, including The Chase Manhattan Bank as the Administrative Agent, Bank of America, N.A. as the Syndications Agent, and Citibank, N.A. as the Documentation Agent. The interest rate for each facility is based on the Federal funds borrowing rate plus 1/2%; the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio's senior, long-term debt; or the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio's senior, long-term debt. Each facility 16 17 includes a commitment fee on the unused portion of the total amount available of .1% to .25% based on the credit ratings of Cox Radio's senior, long-term debt. Each facility also contains, among other provisions, defined requirements as to the ratio of debt to EBITDA and the ratio of EBITDA to interest expense. At September 30, 2000, Cox Radio was in compliance with the covenants. At September 30, 2000, Cox Radio had approximately $350 million of outstanding indebtedness under the five-year facility with no additional amounts available, and $230 million of outstanding indebtedness under the 364-day facility with $120 million available. The interest rate applied to amounts due under the bank credit facilities was 7.13% at September 30, 2000. On May 26, 1998, Cox Radio issued and sold an aggregate of $200 million principal amount of notes in an offering exempt from registration under Rule 144A of the Securities Act of 1933, as amended, (the "Securities Act"), which were later exchanged for notes registered under the Securities Act. The notes consisted of $100 million principal amount of 6.25% notes due in 2003 and $100 million principal amount of 6.375% notes due in 2005. Pursuant to the Registration Rights Agreement dated as of May 26, 1998 among Cox Radio, its then-wholly owned subsidiaries WSB, Inc. and WHIO, Inc. (each a former guarantor of the notes), NationsBanc Montgomery Securities LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc., on December 14, 1998, an exchange offer was consummated pursuant to which Cox Radio exchanged $200 million principal amount of the notes originally sold on May 26, 1998, for an aggregate of $200 million principal amount of notes (the terms and form of which are the same in all material respects as the original notes, except as to restrictions on transfer) which have been registered under the Securities Act. As a result of the mergers of WSB, Inc. and WHIO, Inc. into Cox Radio, WSB, Inc. and WHIO, Inc. are no longer guarantors of the notes. As a result of the transfer of certain Federal Communications Commission licenses, permits and authorizations held by Cox Radio to CXR Holdings, Inc., a wholly-owned subsidiary of Cox Radio, CXR Holdings became a guarantor of the notes on February 1, 1999. At September 30, 2000 and December 31, 1999, the estimated fair value of these notes was approximately $194.1 million and $191.0 million, respectively, based on quoted market prices. In September 1997, Cox Radio entered into interest rate swap agreements with certain lenders providing bank financing under its bank credit facility. Pursuant to the interest rate swap agreements, Cox Radio exchanged its floating rate interest obligations on an aggregate of $100 million in principal amount at an average fixed rate of 6.23% per annum having an average maturity of 6.25 years. The fixing of interest rates for this period reduces Cox Radio's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties nor would we expect any such loss to be material. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $1.9 million at December 31, 1999. Prior to June 27, 2000, Cox Radio accounted for the interest rate swap agreements as hedges. In connection with the offering of Class A common stock as discussed in Note 5 to the financial statements included in Item 1. hereof, Cox Radio used a portion of the net proceeds from the offering to repay all amounts then outstanding under its bank credit facility. As the interest rate swap agreements were no longer matched with existing debt, Cox Radio recorded a non-cash mark-to-market unrealized gain as of June 30, 2000 of $2.2 million, which represents the fair value of the interest rate swap agreements at that date. On August 4, 2000, Cox Radio redesignated these interest rate swap agreements as hedges of floating rate borrowings under the new revolving credit facilities dated June 30, 2000 discussed above. Concurrent with the redesignation of these swaps, Cox Radio recorded a non-cash, mark-to-market unrealized loss of $0.7 million, which represents the difference in the fair value of the interest rate swap agreements from June 30, 2000 to August 4, 2000. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $0.9 million at September 30, 2000. Future cash requirements are expected to include capital expenditures, principal and interest payments on indebtedness and funds for acquisitions. Cox Radio expects its operations to generate sufficient cash to meet its capital expenditures and debt service requirements. Additional cash requirements, including funds 17 18 for pending or other acquisitions, will be funded from various sources, including the proceeds from bank financing and, if or when appropriate, other issuances of Company securities. On May 2, 2000, Cox Radio's universal shelf registration statement filed with the Securities and Exchange Commission on Form S-3 was declared effective. Under the universal shelf registration statement, Cox Radio and two financing trusts sponsored by Cox Radio may from time to time offer and issue debentures, notes, bonds and other evidences of indebtedness, forward contracts in respect of any such indebtedness, shares of preferred stock, shares of Class A common stock, warrants, stock purchase contracts and stock purchase units of Cox Radio and preferred securities of the Cox Radio trusts for a maximum aggregate offering amount of $750 million. Unless otherwise described in future prospectus supplements, Cox Radio intends to use the net proceeds from the sale of securities registered under this universal shelf registration statement for general corporate purposes, which may include additions to working capital, the repayment or redemption of existing indebtedness and the financing of capital expenditures and acquisitions. On June 27, 2000, Cox Radio consummated a public offering of 8,800,000 shares of its Class A common stock pursuant to its universal shelf registration statement and completed a concurrent private placement of 3,591,954 shares of Class A common stock directly to Cox Enterprises at the public offering price per share, less underwriting discounts and commissions. Cox Radio received net proceeds of approximately $344.2 million from this offering to partially finance acquisitions, repay outstanding indebtedness and for general corporate purposes. 18 19 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates. The Company manages interest-rate risk through the use of fixed- and floating-rate debt, and through the use of derivatives. On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility with certain guarantors and banks, including Texas Commerce Bank National Association as Administrative Agent, Nationsbank of Texas, N.A. as Syndications Agent, and Citibank, N.A. as Documentation Agent. The interest rate was based on the London Interbank Offered Rate plus a spread determined by the ratio of Cox Radio's debt to EBITDA. This facility included a commitment fee on the unused portion of the total amount available of .1% to .25% based on the ratio of Cox Radio's debt to EBITDA. At December 31, 1999, Cox Radio had approximately $220 million of outstanding indebtedness and approximately $80 million available under the bank credit facility. Borrowings under the bank credit facility approximated fair value based upon current borrowing rates available to Cox Radio. The interest rate applied to amounts due under the bank credit facility was 6.9% at December 31, 1999. This bank credit facility contained, among other provisions, defined requirements as to ratio of debt to EBITDA and ratio of EBITDA to interest expense. At December 31, 1999, Cox Radio was in compliance with these covenants. On June 27, 2000, all amounts previously outstanding under this facility were repaid with a portion of the net proceeds from the offering of Class A common stock discussed in Note 5 to the financial statements included in Item 1 hereof. On June 30, 2000, Cox Radio replaced its $300 million, five-year, senior, unsecured revolving credit facility, with a $350 million, five-year, senior, unsecured revolving credit facility and a $350 million, 364-day, senior, unsecured revolving credit facility, each with certain banks, including The Chase Manhattan Bank as the Administrative Agent, Bank of America, N.A. as the Syndications Agent, and Citibank, N.A. as the Documentation Agent. The interest rate for each facility is based on the Federal funds borrowing rate plus 1/2%; the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio's senior, long-term debt; or the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio's senior, long-term debt. Each facility includes a commitment fee on the unused portion of the total amount available of .1% to .25% based on the credit ratings of Cox Radio's senior, long-term debt. Each facility also contains, among other provisions, defined requirements as to the ratio of debt to EBITDA and the ratio of EBITDA to interest expense. At September 30, 2000, Cox Radio was in compliance with the covenants. At September 30, 2000, Cox Radio had approximately $350 million of outstanding indebtedness under the five-year facility with no additional amounts available, and $230 million of outstanding indebtedness under the 364-day facility with $120 million available. The interest rate applied to amounts due under the bank credit facilities was 7.13% at September 30, 2000. On May 26, 1998, Cox Radio issued and sold an aggregate of $200 million principal amount of notes in an offering exempt from registration under Rule 144A of the Securities Act of 1933, as amended, (the "Securities Act"), which were later exchanged for notes registered under the Securities Act. The notes consisted of $100 million principal amount of 6.25% notes due in 2003 and $100 million principal amount of 6.375% notes due in 2005. Pursuant to the Registration Rights Agreement dated as of May 26, 1998 among Cox Radio, its then-wholly owned subsidiaries WSB, Inc. and WHIO, Inc. (each a former guarantor of the notes), NationsBanc Montgomery Securities LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc., on December 14, 1998, an exchange offer was consummated pursuant to which Cox Radio exchanged $200 million principal amount of the notes originally sold on May 26, 1998, for an aggregate of $200 million principal amount of notes (the terms and form of which are the same in all material respects as the original notes, except as to restrictions on transfer) which have been registered under the Securities Act. As a result of the mergers of WSB, Inc. and WHIO, Inc. into Cox Radio, WSB, Inc. and WHIO, Inc. are no longer guarantors of the notes. As a result of the transfer of certain Federal Communications Commission licenses, permits and authorizations held by Cox Radio to CXR Holdings, Inc., a wholly- 19 20 owned subsidiary of Cox Radio, CXR Holdings became a guarantor of the notes on February 1, 1999. At September 30, 2000 and December 31, 1999, the estimated fair value of these notes was approximately $194.1 million and $191.0 million, respectively, based on quoted market prices. In September 1997, Cox Radio entered into interest rate swap agreements with certain lenders providing bank financing under its bank credit facility. Pursuant to the interest rate swap agreements, Cox Radio exchanged its floating rate interest obligations on an aggregate of $100 million in principal amount at an average fixed rate of 6.23% per annum having an average maturity of 6.25 years. The fixing of interest rates for this period reduces Cox Radio's exposure to the uncertainty of floating interest rates. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. The counterparties to these interest rate swap agreements are a diverse group of major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties nor would we expect any such loss to be material. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $1.9 million at December 31, 1999. Prior to June 27, 2000, Cox Radio accounted for the interest rate swap agreements as hedges. In connection with the offering of Class A common stock as discussed in Note 5 to the financial statements included in Item 1. hereof, Cox Radio used a portion of the net proceeds from the offering to repay all amounts then outstanding under its bank credit facility. As the interest rate swap agreements were no longer matched with existing debt, Cox Radio recorded a non-cash mark-to-market unrealized gain as of June 30, 2000 of $2.2 million, which represents the fair value of the interest rate swap agreements at that date. On August 4, 2000, Cox Radio redesignated these interest rate swap agreements as hedges of floating rate borrowings under the new revolving credit facilities dated June 30, 2000 discussed above. Concurrent with the redesignation of these swaps, Cox Radio recorded a non-cash, mark-to-market unrealized loss of $0.7 million, which represents the difference in the fair value of the interest rate swap agreements from June 30, 2000 to August 4, 2000. The estimated fair value of the interest rate swap agreements, based on current market rates, approximated a net receivable of $0.9 million at September 30, 2000. 20 21 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On March 6, 2000, Cox Radio was named as a defendant in a putative class action suit filed in the state court of Gwinnett County, Georgia, alleging violations of the federal Telephone Consumer Protection Act and related Georgia telemarketing laws. The complaint sought statutory damages in the amount of $1,500, plus actual and punitive damages and attorneys' fees, on behalf of each person "throughout the State of Georgia" who received an unsolicited pre-recorded telephone message delivering an "advertisement" from a Cox Radio radio station. On May 1, 2000, the lawsuit was dismissed without prejudice. Counsel for the plaintiff has indicated his intention to file a similar action against Cox Radio at a later date. 21 22 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Listed below are the exhibits which are filed as part of this Report (according to the number assigned to them in Item 601 of Regulation S-K): EXHIBIT NUMBER DESCRIPTION - ------- ----------------------------------------------------------------- (1) 2.1 -- Asset Exchange Agreement dated August 30, 1999 by and among Cox Radio, Inc. and AMFM Inc. (2) 2.2 -- Letter dated as of August 30, 1999 by and among Cox Radio, Inc. and AMFM Inc. (3) 2.3 -- Merger Agreement dated March 14, 2000 by and among Marlin Broadcasting, Inc., Cox Radio, Inc., Cox Miami Merger Sub, Inc. and Marlin Broadcasting, LLC (4) 2.4 -- Asset Purchase Agreement dated March 3, 2000 by and among Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Citicasters Co., Capstar Radio Operating Company, Capstar TX Limited Partnership, AMFM Texas Broadcasting, L.P., AMFM Texas Licenses Limited Partnership, Cox Radio, Inc., and CXR Holdings, Inc. (5) 2.5 -- Asset Exchange Agreement dated as of May 31, 2000 by and among Cox Radio, Inc., CXR Holdings, Inc., Salem Communications Corporation and South Texas Broadcasting, Inc. (6) 2.6 -- Letter dated May 31, 2000 by and among Cox Radio, Inc., CXR Holdings, Inc., Salem Communications Corporation and South Texas Broadcasting, Inc. (7) 2.7 -- Letter dated June 7, 2000 by and among Cox Radio, Inc., CXR Holdings, Inc., Salem Communications Corporation and South Texas Broadcasting, Inc. (8) 2.8 -- Stock Purchase Agreement dated as of June 7, 2000 by and among Midwestern Broadcasting Company, Inc., the stockholders of Midwestern Broadcasting Company, Inc., and Cox Radio, Inc. 2.9 -- Asset Purchase Agreement dated November 8, 2000 between and among Cox Radio, Inc., CXR Holdings, Inc. and Radio One, Inc. (9) 3.1 -- Amended and Restated Certificate of Incorporation of Cox Radio, Inc. (9) 3.2 -- Amended and Restated Bylaws of Cox Radio, Inc. (10) 4.1 -- Indenture dated as of May 26, 1998 between Cox Radio, Inc., The Bank of New York, WSB, Inc., and WHIO, Inc. (11) 4.2 -- Supplemental Indenture dated as of February 1, 1999 by and among trustee, Cox Radio, Inc., CXR Holdings, Inc. and The Bank of New York (12) 4.3 -- Registration Rights Agreement dated May 26, 1998 among Cox Radio, Inc., WSB, Inc., WHIO, Inc., and Nationsbanc Montgomery Securities, LLC, Chase Securities, Inc., and J.P. Morgan Securities, Inc. (13) 4.4 -- Specimen of Class A Common Stock Certificate. 27.1 -- Financial Data Schedule (for SEC use only) - ---------- (1) Incorporated by reference to Exhibit 99.1 of Cox Radio's Report on Form 8-K dated September 17, 1999. (2) Incorporated by reference to Exhibit 99.2 of Cox Radio's Report on Form 8-K dated September 17, 1999. 22 23 (3) Incorporated by reference to Exhibit 2.2 of Cox Radio's Report on Form 8-K dated April 19, 2000. (4) Incorporated by reference to Exhibit 2.3 of Cox Radio's Report on Form 8-K dated April 19, 2000. (5) Incorporated by reference to Exhibit 10.5 of Cox Radio's Report on Form 10-Q for the period ending June 30, 2000. (6) Incorporated by reference to Exhibit 10.6 of Cox Radio's Report on Form 10-Q for the period ending June 30, 2000. (7) Incorporated by reference to Exhibit 10.7 of Cox Radio's Report on Form 10-Q for the period ending June 30, 2000. (8) Incorporated by reference to Exhibit 10.8 of Cox Radio's Report on Form 10-Q for the period ending June 30, 2000. (9) Incorporated by reference to the corresponding exhibit of Cox Radio's Registration Statement on Form S-1 (Commission File No. 333-08737). (10) Incorporated by reference to Exhibit 4.1 of Cox Radio's Registration Statement on Form S-4 (Commission File No. 333-61179). (11) Incorporated by reference to Exhibit 4.2 of Cox Radio's Report on Form 10-Q for the period ending March 31, 1999. (12) Incorporated by reference to Exhibit 4.2 of Cox Radio's Registration Statement on Form S-4 (Commission File No. 333-61179). (13) Incorporated by reference to Exhibit 4.3 of Cox Radio's Registration Statement on Form S-1 (Commission File No. 333-08737). (b) Reports on Form 8-K On September 11, 2000, Cox Radio filed a Current Report on Form 8-K to report the following consummated transactions: (a) On August 25, 2000, Cox Radio acquired from AMFM Inc., one FM station serving Miami, Florida; one FM station serving Atlanta, Georgia; two FM stations and two AM stations serving Stamford/Norwalk, Connecticut; four FM and two AM stations serving Jacksonville, Florida; and one FM station and national and local sales and marketing rights at another FM station serving New Haven, Connecticut in exchange for one FM and one AM station serving Los Angeles, California plus approximately $3 million (the "AMFM Acquisition"); (b) On August 30, 2000, Cox Radio acquired from Clear Channel Communications, Inc, three FM stations serving Houston, Texas and three FM stations and one AM station serving Richmond, Virginia, for consideration of $380 million (the "Clear Channel Acquisition"); (c) Also on August 30, 2000, Cox Radio acquired the capital stock of Midwestern Broadcasting Company, Inc. which owns one FM station serving Atlanta, Georgia, for $280 million. In a related transaction on September 1, 2000, Cox Radio acquired from Salem Communications Corporation the license and transmitting facilities of one FM station serving Houston, Texas in exchange for the license and transmitting facilities of one FM station serving Atlanta, Georgia as well as the license and transmitting facilities of one AM station serving San Antonio, Texas and one AM station serving Tampa, Florida. On November 8, 2000, Cox Radio filed a Current Report on Form 8-K to provide certain financial information for the AMFM Acquisition and the Clear Channel Acquisition, including certain audited financial information as of and for the year ended December 31, 1999; certain unaudited financial information as of June 30, 2000 and for the six months ended June 30, 2000 and 1999; and certain unaudited pro forma financial information for the year ended December 31, 1999 and as of and for the six months ended June 30, 2000. 23 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COX RADIO, INC. November 13, 2000 /s/ Neil O. Johnston ----------------------------------- Neil O. Johnston Chief Financial Officer (Principal Financial Officer and duly authorized officer) 24 EX-2.9 2 g65355ex2-9.txt ASSET PURCHASE AGREEMENT 1 EXHIBIT 2.9 ASSET PURCHASE AGREEMENT DATED AS OF NOVEMBER 8, 2000 BY AND AMONG COX RADIO, INC., CXR HOLDINGS, INC., AND RADIO ONE, INC. 2 TABLE OF CONTENTS PAGE SECTION 1. DEFINITIONS.......................................................1 "Accounts Receivable"........................................................1 "Adjustment Time"............................................................1 "Assets".....................................................................1 "Assumed Contracts"..........................................................1 "Closing"....................................................................2 "Closing Date"...............................................................2 "Consents"...................................................................2 "Contracts"..................................................................2 "Escrow Agent"...............................................................2 "Escrow Agreement"...........................................................2 "FCC" ....................................................................2 "FCC Consent"................................................................2 "FCC Licenses"...............................................................2 "Final Order"................................................................2 "HSR Act"....................................................................2 "Intangibles"................................................................2 "Licenses"...................................................................3 "Permitted Liens"............................................................3 "Purchase Price".............................................................3 "Real Property"..............................................................3 "Tangible Personal Property".................................................3 Section 2. PURCHASE AND SALE OF ASSETS.......................................3 2.1 Agreement to Sell and Buy..................................3 2.2 Excluded Assets............................................4 2.3 Purchase Price.............................................4 2.4 Manner of Determining Adjustments..........................5 2.5 Payment of Purchase Price..................................6 2.6 Assumption of Liabilities and Obligations..................6 2.7 Appraisal..................................................7 -i- 3 TABLE OF CONTENTS (continued) PAGE 2.8 Like-Kind Exchange.........................................7 2.9 Qualified Intermediary.....................................7 Section 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.........................8 3.1 Organization, Standing, and Authority......................8 3.2 Authorization and Binding Obligation.......................8 3.3 Absence of Conflicting Agreements..........................8 3.4 Governmental Licenses......................................8 3.5 Title to and Condition of Real Property....................9 3.6 Title to and Condition of Tangible Personal Property.......9 3.7 Contracts.................................................10 3.8 Consents..................................................10 3.9 Intangibles...............................................10 3.10 Financial Statements......................................11 3.11 Insurance.................................................11 3.12 Reports...................................................11 3.13 Taxes.....................................................11 3.14 Claims and Legal Actions..................................12 3.15 Environmental Matters.....................................12 3.16 Compliance with Laws......................................13 3.17 Conduct of Business in Ordinary Course....................13 3.18 Transactions with Affiliates..............................14 3.19 Broker....................................................14 3.20 Personnel.................................................14 3.21 Labor Relations...........................................15 3.22 WPEK Purchase Agreement...................................16 3.23 Full Disclosure...........................................16 Section 4. REPRESENTATIONS AND WARRANTIES OF BUYER..........................16 4.1 Organization, Standing, and Authority.....................16 4.2 Authorization and Binding Obligation......................16 4.3 Absence of Conflicting Agreements.........................16 -ii- 4 TABLE OF CONTENTS (continued) PAGE 4.4 Broker....................................................17 4.5 Qualification.............................................17 4.6 Full Disclosure...........................................17 Section 5. OPERATIONS OF THE STATIONS PRIOR TO CLOSING......................17 5.1 Generally.................................................17 5.2 Contracts.................................................17 5.3 Disposition of Assets.....................................17 5.4 Encumbrances..............................................18 5.5 Licenses..................................................18 5.6 Rights....................................................18 5.7 No Inconsistent Action....................................18 5.8 Access to Information.....................................18 5.9 Maintenance of Assets.....................................18 5.10 Insurance.................................................19 5.11 Consents..................................................19 5.12 Books and Records.........................................19 5.13 Notification..............................................19 5.14 Compliance with Laws......................................19 5.15 Financing Leases..........................................19 5.16 Preservation of Business..................................19 5.17 Personnel Recommendations.................................19 5.18 Programming...............................................19 Section 6. SPECIAL COVENANTS AND AGREEMENTS.................................20 6.1 Governmental Approvals....................................20 6.2 HSR Act Filing............................................20 6.3 Control of the Station....................................20 6.4 Risk of Loss..............................................20 6.5 Confidentiality...........................................20 6.6 Environmental Survey......................................21 6.7 Cooperation...............................................21 -iii- 5 TABLE OF CONTENTS (continued) PAGE 6.8 Bulk Sales Law............................................21 6.9 Title Insurance and Surveys...............................21 6.10 Sales Tax Filings.........................................22 6.11 Access to Books and Records...............................22 6.12 Employee Matters..........................................22 6.13 Financial Information.....................................23 6.14 Fees and Expenses.........................................23 6.15 Collection of Accounts Receivable.........................23 6.16 WPEK Purchase Agreement...................................24 6.17 KDGE Purchase Agreement...................................24 Section 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING.........24 7.1 Conditions to Obligations of Buyer........................24 7.2 Conditions to Obligations of Seller.......................25 Section 8. CLOSING AND CLOSING DELIVERIES...................................26 8.1 Closing...................................................26 8.2 Deliveries by Seller......................................26 8.3 Deliveries by Buyer.......................................27 Section 9. TERMINATION......................................................28 9.1 Termination by Seller.....................................28 9.2 Termination by Buyer......................................28 9.3 Rights on Termination.....................................28 9.5 Escrow Deposit............................................29 Section 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES................................................29 10.1 Representations and Warranties............................29 10.2 Indemnification by Seller.................................29 10.3 Indemnification by Buyer..................................30 10.4 Procedure for Indemnification.............................30 10.5 Limitations...............................................31 10.6 Specific Performance......................................31 -iv- 6 TABLE OF CONTENTS (continued) PAGE 10.7 Attorneys' Fees...........................................32 Section 11. MISCELLANEOUS...................................................32 11.1 Notices...................................................32 11.2 Benefit and Binding Effect................................33 11.3 Further Assurances........................................33 11.4 Governing Law.............................................33 11.5 Headings..................................................33 11.6 Gender and Number.........................................33 11.7 No Strict Construction....................................33 11.8 Entire Agreement..........................................33 11.9 Waiver of Compliance; Consents............................33 11.10 Counterparts..............................................34 11.11 Press Releases............................................34 -v- 7 SCHEDULES The following schedules have been omitted and will be furnished supplementally to the Commission upon request. Schedule 3.3 -- Consents Schedule 3.4 -- Licenses Schedule 3.5 -- Real Property Schedule 3.6 -- Tangible Personal Property Schedule 3.7 -- Contracts Schedule 3.9 -- Intangibles Schedule 3.11 -- Insurance Matters Schedule 3.14 -- Claims and Legal Actions Schedule 3.18 -- Transactions with Affiliates Schedule 3.20 -- Personnel Matters Schedule 5.18 -- Change in WPEK Format Schedule 8.2(j) -- Opinions of Seller's Counsel 8 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT is dated as of November 8, 2000, by and among Cox Radio, Inc., a Delaware corporation ("CRI"); CXR Holdings, Inc., a Nevada corporation ("CXR", CRI and CXR are collectively referred to herein as "Buyer"); and Radio One, Inc., a Delaware corporation ("Seller"). RECITALS A. Seller and Radio One Licenses, Inc., a Delaware corporation and a wholly-owned subsidiary of Seller ("ROLI"), currently own and operate radio stations WDYL(FM), Chester, Virginia ("WDYL") and WJMZ-FM, Anderson, South Carolina ("WJMZ") pursuant to licenses and authorizations issued by the Federal Communications Commission and Seller has entered into an Asset Purchase Agreement (the "WPEK Purchase Agreement"), dated as of August 7, 2000, by and between Radio One and Alpeak Broadcasting Corp. pursuant to which Seller has agreed to acquire radio station WPEK(FM), Seneca, South Carolina ("WPEK"). WDYL, WJMZ and WPEK are collectively referred to herein as the "Stations". B. Seller desires to sell, and Buyer wishes to buy, substantially all the assets that are used or useful in the business or operations of the Stations, for the price and on the terms and conditions set forth in this Agreement. AGREEMENTS In consideration of the above recitals and of the mutual agreements and covenants contained in this Agreement, Buyer and Seller, intending to be bound legally, agree as follows: SECTION 1. DEFINITIONS The following terms, as used in this Agreement, shall have the meanings set forth in this Section: "Accounts Receivable" means the rights of Seller to payment for the sale of advertising or programming time run on the Stations prior to the Adjustment Time. "Adjustment Time" means 12:01 a.m., local Virginia and South Carolina time, on the Closing Date. "Assets" means the assets to be sold, transferred, or otherwise conveyed to Buyer under this Agreement, as specified in SECTIONS 2.1(a) and (b). "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 (except for any trade or barter agreements relating to WDYL which Buyer shall not assume at Closing), (ii) Contracts with advertisers for the sale of advertising time on the Stations for cash at prevailing rates which 9 have not been prepaid and which may be canceled by the Stations without penalty on not more than thirty (30) days' notice, and (iii) any Contracts entered into by Seller between the date of this Agreement and the Closing Date that Buyer agrees in writing to assume. "Closing" means the consummation of the purchase and sale of the Assets pursuant to this Agreement in accordance with the provisions of SECTION 8. "Closing Date" means the date on which the Closing occurs, as determined pursuant to SECTION 8. "Consents" means the consents, permits, or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transactions contemplated by this Agreement. "Contracts" means all contracts, leases, non-governmental licenses, and other agreements (including leases for personal or real property and employment agreements), written or oral (including any amendments and other modifications thereto) that Seller will assume under the WPEK Purchase Agreement or to which Seller is a party or which are binding upon Seller and which relate to or affect the Assets or the business or operations of the Stations, and (i) which are in effect on the date of this Agreement or (ii) which are entered into by Seller between the date of this Agreement and the Closing Date. "Escrow Agent" means The Bank of New York. "Escrow Agreement" means the Escrow Agreement dated as of the date hereof by and among Buyer, Seller and the Escrow Agent. "FCC" means the Federal Communications Commission. "FCC Consent" means action by the FCC granting its consent to the assignment of the FCC Licenses to Buyer as contemplated by this Agreement. "FCC Licenses" means all Licenses issued by the FCC in connection with the business or operations of the Stations. "Final Order" means an action by the FCC that has not been reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal, or stay, and the time for filing any such requests and the time for the FCC to set aside the action on its own motion have expired. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Intangibles" means all copyrights, trademarks, trade names, service marks, service names, licenses, patents, permits, jingles, proprietary information, domain names, technical information and data and machinery and equipment warranties (and any goodwill associated with any of the foregoing) applied for, issued to, or owned by Seller or under which Seller is licensed -2- 10 or franchised and which are used or useful in the business and operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date. "Licenses" means all licenses, permits, tower registrations and other authorizations issued by the FCC, the Federal Aviation Administration, or any other federal, state, or local governmental authorities in connection with the conduct of the business or operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date. "Permitted Liens" mean liens for current taxes not yet due and payable and liens set forth on Schedules 3.5 and 3.6 that are designated on such schedules as liens that will remain on the Assets following the Closing. "Purchase Price" means the purchase price specified in SECTION 2.3. "Real Property" means all real property and interests in real property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon, and other real property interests which are used or useful in the business or operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date. "Tangible Personal Property" means all machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, inventory, spare parts, and other tangible personal property which (i) with respect to WJMZ and WPEK is used or useful in the conduct of the business or operations of WJMZ and WPEK and (ii) with respect to WDYL is predominantly used or useful in the conduct of the business or operations of WDYL, in each case together with any additions thereto between the date of this Agreement and the Closing Date. SECTION 2. PURCHASE AND SALE OF ASSETS 2.1 Agreement to Sell and Buy. (a) Subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver to Buyer on the Closing Date, and Buyer hereby agrees to purchase on the Closing Date, all of the tangible and intangible assets used or useful in connection with the conduct of the business or operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date, but excluding the assets described in SECTION 2.2, free and clear of any claims, liabilities, security interests, mortgages, liens, pledges, conditions, charges, or encumbrances of any nature whatsoever (except for Permitted Liens), including the following: (i) The Tangible Personal Property; (ii) The Real Property; (iii) The Licenses; (iv) The Assumed Contracts; -3- 11 (v) The Intangibles and all intangible assets of Seller relating to the Stations that are not specifically included within the Intangibles, including the goodwill of the Stations; (vi) All of Seller's proprietary information, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints, and schematics, including filings with the FCC relating to the business and operation of the Stations; (vii) All choses in action of Seller relating to the Stations; and (viii) All books and records relating to the business or operations of the Stations, including executed copies of the Assumed Contracts, and all records required by the FCC to be kept by the Stations. (b) Subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to cause ROLI to sell, transfer, and deliver to Buyer on the Closing Date, and Buyer hereby agrees to purchase on the Closing Date, all of the Licenses, including, without limitations, all FCC Licenses, owned or held by or issued to ROLI, together with any other assets or records owned or held by ROLI which are used or useful in connection with the Stations (collectively, the "License Assets"). 2.2 Excluded Assets. The Assets shall exclude the following assets: (a) Seller's cash on hand as of the Closing and all other cash in any of Seller's bank accounts; (b) Any notes receivable, insurance policies, bonds, letters of credit, or other similar items, and any cash surrender value in regard thereto; (c) Any pension, profit-sharing, or employee benefit plans, and employment, consulting or collective bargaining agreements; (d) All books and records that Seller is required by law to retain; (e) Any interest in and to any refunds of federal, state, or local franchise, income, or other taxes for periods prior to the Closing Date; and (f) The Accounts Receivable. 2.3 Purchase Price. The Purchase Price for the Assets shall be Fifty Two Million Five Hundred Thousand Dollars ($52,500,000), adjusted as provided below: (a) Prorations. The Purchase Price shall be increased or decreased as required to effectuate the proration of expenses. All expenses arising from the operation of the Stations, including business and license fees, FCC annual regulatory fees, utility charges, real and personal property taxes and assessments levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, taxes (except for taxes -4- 12 arising from the transfer of the Assets under this Agreement), and similar prepaid and deferred items shall be prorated between Buyer and Seller in accordance with the principle that Seller shall be responsible for all expenses, costs, and liabilities allocable to the period prior to the Adjustment Time, and Buyer shall be responsible for all expenses, costs, and liabilities allocable to the period after the Adjustment Time. Notwithstanding the preceding sentence, there shall be no adjustment for, and Seller shall remain solely liable with respect to, any Contracts not included in the Assumed Contracts and any other obligation or liability not being assumed by Buyer in accordance with SECTION 2.6. (b) Trade Adjustment. The Purchase Price shall be reduced by the amount in excess of Ten Thousand Dollars ($10,000) by which the value of the advertising time remaining to be run by WJMZ and WPEK under trade or barter agreements as of the Adjustment Time exceeds the value of the goods or services to be received by WJMZ and WPEK under such trade or barter agreements as of the Adjustment Time. For purposes of this Section, the liability of WJMZ and WPEK for unperformed time shall be valued according to those stations' prevailing rates as of the Adjustment Time and the value of the goods or services to be received by WJMZ and WPEK shall be valued at their fair market value as of the Adjustment Time. 2.4 Manner of Determining Adjustments. The Purchase Price, taking into account the adjustments and prorations pursuant to SECTIONS 2.3(a) and (b) will be determined finally in accordance with the following procedures: (a) Not later than five (5) days before the Closing Date, (A) Seller shall prepare and deliver to Buyer a preliminary statement which shall set forth Seller's good faith estimate of the adjustments to the Purchase Price under SECTIONS 2.3(a) and (b) as of the Closing Date (the "Prorations Statement"). The Prorations Statement (A) shall contain all information reasonably necessary to determine the adjustments to the Purchase Price under SECTIONS 2.3(a) and (b), to the extent such adjustments can be determined or estimated as of the date of such statement, and such other information as may be reasonably requested by Buyer, and (B) shall be certified by Seller to be true and complete as of the date thereof. The adjustments to the Purchase Price to be made at Closing shall be based upon the Prorations Statement, except that any item disputed by Buyer shall be omitted therefrom. (b) Not later than sixty (60) days after the Closing Date, Buyer will deliver to Seller a statement setting forth Buyer's determination of the Purchase Price and the calculation thereof pursuant to SECTIONS 2.3(a) and (b). If Seller disputes the amount of the Purchase Price determined by Buyer, Seller shall deliver to Buyer within thirty (30) days after its receipt of Buyer's statement a statement setting forth Seller's determination of the amount of the Purchase Price. If Seller notifies Buyer of its acceptance of Buyer's statement, or if Seller fails to deliver its statement within the thirty (30) day period specified in the preceding sentence, Buyer's determination of the Purchase Price shall be conclusive and binding on the parties as of the last day of the thirty (30) day period. (c) Buyer and Seller shall use good faith efforts to resolve any dispute involving the determination of the Purchase Price. If the parties are unable to resolve the dispute within fifteen (15) days following the delivery of Seller's statement, Buyer and Seller shall jointly designate an independent certified public accountant, who shall be knowledgeable and -5- 13 experienced in the operation of radio broadcasting stations, to resolve the dispute. The accountant's resolution of the dispute shall be final and binding on the parties, and a judgment may be entered thereon in any court of competent jurisdiction. Any fees of this accountant shall be split equally between Seller on the one hand and Buyer on the other hand. 2.5 Payment of Purchase Price. The Purchase Price shall be paid by Buyer to Seller as follows: (a) Payment of Estimated Purchase Price. At the Closing, Buyer shall pay or cause to be paid to or for the account of Seller the Purchase Price as adjusted pursuant to SECTIONS 2.3 (a) and (b) (the "Estimated Purchase Price") by federal wire transfer of same-day funds pursuant to wire instructions which shall be delivered by Seller to Buyer at least two (2) business days prior to the Closing Date. (b) Payments to Reflect Adjustments. (i) If the Purchase Price as finally determined pursuant to SECTIONS 2.4(b) or (c) exceeds the Estimated Purchase Price, Buyer shall pay to Seller, in immediately available funds within five (5) days after the date on which the Purchase Price is determined pursuant to SECTION 2.4(b) or (c), the difference between the Purchase Price and the Estimated Purchase Price. (ii) If the Purchase Price as finally determined pursuant to SECTION 2.4(b) or (c) is less than the Estimated Purchase Price, Seller shall pay to Buyer, in immediately available funds within five (5) days after the date on which the Purchase Price is determined pursuant to SECTION 2.4(b) or (c), the difference between the Purchase Price and the Estimated Purchase Price. 2.6 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer shall assume and undertake to pay, discharge, and perform all obligations and liabilities of Seller under the Licenses and the Assumed Contracts insofar as they relate to the time on and after the Closing Date, and arise out of events related to Buyer's ownership of the Assets or its operation of the Stations on or after the Closing Date. Buyer shall not assume any other obligations or liabilities of Seller, including (i) any obligations or liabilities under any Contract not included in the Assumed Contracts, (ii) any obligations or liabilities under the Assumed Contracts relating to the period prior to the Closing Date, (iii) any claims or pending litigation or proceedings relating to the ownership or operation of the Stations prior to the Closing, (iv) other than the Assumed Contracts, any obligations or liabilities arising under capitalized leases or other financing agreements, (v) any obligations or liabilities arising under agreements entered into other than in the ordinary course of business, (vi) any obligations or liabilities of Seller under any employee pension, retirement, health and welfare or other benefit plans, including the Employee Plans and the Compensation Arrangements (in each case as defined below), and under any employment, consulting or collective bargaining agreements, (vii) any obligation to any employee of the Stations for severance benefits, vacation time, or sick leave accrued prior to the Closing Date, except that Buyer shall assume the unused vacation time and sick leave of employees of the Stations who are hired by Buyer at Closing subject to Buyer receiving an adjustment in its favor for the value of such time and leave under SECTION 2.3(a) or (viii) any obligations or liabilities -6- 14 caused by, arising out of, or resulting from any action or omission of Seller prior to the Closing, and all such obligations and liabilities shall remain and be the obligations and liabilities solely of Seller. 2.7 Appraisal. The Purchase Price shall be allocated among the Assets as mutually agreed among the parties based upon an appraisal to be prepared by Bond & Pecaro. Seller and Buyer shall use the mutually agreed upon allocations determined pursuant to this SECTION 2.7 for all tax purposes, including without limitation, those matters subject to Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), provided, however, that if Buyer and Seller are unable to reasonably agree on such appraisal, neither party shall be bound by such appraisal. The cost of such appraisal shall be paid one-half by Buyer and one-half by Seller. 2.8 Like-Kind Exchange. Buyer shall reasonably cooperate with Seller to facilitate the transfer of all or some of the Assets to Buyer as part of a like-kind exchange of property within the meaning of Section 1031 the Code, which cooperation shall include, without limitation, the acceptance of notice of the assignment of Seller's rights under this Agreement to a qualified intermediary (as defined in Treas. Reg. ss. 1.1031(k)-1(g)) (a "Qualified Intermediary"). 2.9 Qualified Intermediary. Seller desires and intends to effect the transfers of all or some of the Assets pursuant to this Agreement as part of an exchange of like-kind properties under Section 1031 of the Code (the "1031 Exchange"). To facilitate the completion of the 1031 Exchange, Seller may assign to a Qualified Intermediary its rights with respect to the transfer of all or some of the Assets, and its right to receive the Purchase Price, as adjusted. The parties hereto agree to cooperate with any other party to complete the 1031 Exchange; provided, however that (i) Buyer shall not assume responsibility for the tax consequences to Seller arising out of the 1031 Exchange; (ii) assignment(s) by Seller to a Qualified Intermediary shall not limit or modify any obligations or liabilities of the assigning party, and, notwithstanding any such assignment(s), Seller shall remain directly and primarily bound by all conditions, representations, warranties, covenants and indemnities contained herein and all remedies related thereto; (iii) title to the Assets shall be delivered by Seller directly to Buyer; and (iv) the Qualified Intermediary, and not Buyer, shall be solely responsible for all actions necessary to acquire and transfer any replacement property in connection with the 1031 Exchange. -7- 15 SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS Seller represents and warrants to Buyer as follows: 3.1 Organization, Standing, and Authority. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is authorized to conduct business as a foreign corporation under the laws of the States of Virginia and South Carolina. Seller owns all of the issued and outstanding shares of ROLI and has the authority to cause ROLI to transfer the License Assets to Buyer at Closing. ROLI is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is authorized to conduct business as a foreign corporation under the laws of the State of Virginia. Except for WPEK for which this representation will be only true and correct following the closing under the WPEK Purchase Agreement (the "WPEK Closing"), Seller and ROLI have all requisite power and authority (i) to own, lease, and use the Assets as now owned, leased, and used, and (ii) to conduct the business and operations of the Stations as now conducted. Seller has all requisite power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and comply with all of the terms, covenants, and conditions to be performed and complied with by Seller hereunder and thereunder. Seller and ROLI are not participants in any joint venture or partnership with any other person or entity with respect to any part of the operations of the Stations or any of the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery, and performance of this Agreement by Seller has been duly authorized by all necessary action on the part of Seller. The sale of the License Assets by ROLI hereunder will be duly authorized by all necessary action on the part of ROLI. This Agreement has been duly executed and delivered by Seller and constitutes the legal, valid, and binding obligation of Seller, enforceable against Seller in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, and by judicial discretion in the enforcement of equitable remedies. 3.3 Absence of Conflicting Agreements. Subject to obtaining the FCC Consent, the Consents listed on Schedule 3.3, and any filing under the HSR Act, the execution, delivery, and performance by Seller of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) do not require the consent of any third party; (ii) will not conflict with any provision of the organizational documents of Seller or ROLI; (iii) will not conflict with, result in a breach of, or constitute a default under, any law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; (iv) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, instrument, license, or permit to which Seller or ROLI is a party or by which Seller or ROLI may be bound; and (v) will not create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon any of the Assets. 3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list of all of the Licenses together with their expiration dates. Seller has delivered to Buyer true and complete copies of the Licenses (including any amendments and other modifications thereto). The -8- 16 Licenses have been validly issued pursuant to Final Orders, and except for WPEK, ROLI is the authorized legal holder thereof. Following the WPEK Closing, ROLI will be the authorized legal holder of all of the Licenses set forth on Schedule 3.4 relating to WPEK. The Licenses comprise all of the licenses, permits, and other authorizations required from any governmental or regulatory authority for the lawful conduct of the business and operations of the Stations in the manner and to the full extent they are now conducted, and none of the Licenses is subject to any restriction or condition that would limit the full operation of the Stations as now operated except as appears on the face of the Licenses. The Licenses are in full force and effect, and the conduct of the business and operations of the Stations is in accordance therewith. Seller has no reason to believe that any of the Licenses would not be renewed for a full term with no materially adverse conditions by the FCC or other granting authority in the ordinary course. 3.5 Title to and Condition of Real Property. Schedule 3.5 contains a complete and accurate description of all the Real Property and Seller's interests therein (including the street address, use and legal description of such Real Property). Except for the studio of WDYL, the Real Property listed on Schedule 3.5 comprises all real property interests necessary to conduct the business and operations of the Stations as now conducted. Except for WPEK, Seller has good and marketable fee simple title, insurable at standard rates, to all fee estates, if any (including the improvements thereon), included in the Real Property, and following the WPEK Closing, Seller will have good and marketable fee simple title, insurable at standard rates, to all fee estates (including the improvements thereon), included in the Real Property of WPEK, in each case free and clear of all liens, mortgages, pledges, covenants, easements, restrictions, encroachments, leases, charges, and other claims and encumbrances of any nature whatsoever, and without reservation or exclusion of any mineral, timber, or other rights or interests, except for liens for real estate taxes not yet due and payable and liens disclosed on Schedule 3.5. With respect to each leasehold or subleasehold interest included in the Real Property, so long as Seller fulfills its obligations under the lease therefor, Seller has enforceable rights to nondisturbance and quiet enjoyment, and no third party holds any interest in the leased premises with the right to foreclose upon Seller's leasehold or subleasehold interest (this representation will be true and accurate with respect to WPEK only following the WPEK Closing). All towers, guy anchors, and buildings and other improvements included in the Assets are located entirely on the Real Property listed in Schedule 3.5. Seller has delivered to Buyer true and complete copies of all deeds pertaining to the Real Property. All Real Property (including the improvements thereon) (i) is in good condition and repair consistent with its present use, (ii) is available for immediate use in the conduct of the business and operations of the Stations, and (iii) complies in all material respects with all applicable building or zoning codes and the regulations of any governmental authority having jurisdiction. Except for WPEK, Seller has full legal and practical access to the Real Property and following the WPEK Closing, Seller will have full legal and practical access to the Real Property of WPEK. All easements, rights-of-way, and real property licenses included in the Real Property have been properly recorded in the appropriate public recording offices. 3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6 lists all material items of Tangible Personal Property. The Tangible Personal Property listed on Schedule 3.6 comprises all material items of tangible personal property necessary to conduct the business and operations of the Stations as now conducted. Except as described in Schedule 3.6, Seller owns and has good title to each item of Tangible Personal Property, and none of the -9- 17 Tangible Personal Property owned by Seller is subject to any security interest, mortgage, conditional sales agreement, or other lien or encumbrance, except for liens for current taxes not yet due and payable except that this representation shall only be true and correct with respect to WPEK following the WPEK Closing. Each item of Tangible Personal Property is available for immediate use in the business and operations of the Stations. All items of transmitting and studio equipment included in the Tangible Personal Property (i) have been maintained in a manner consistent with generally accepted standards of good engineering practice, (ii) are in good condition and repair consistent with their use, and (iii) will permit the Stations and any associated auxiliary broadcast stations to operate in accordance with the terms of the FCC Licenses and the rules and regulations of the FCC, and in material compliance with all other applicable federal, state, and local statutes, ordinances, rules, and regulations. 3.7 Contracts. Schedule 3.7 is a true and complete (i) list of all Contracts except contracts with advertisers for the sale of advertising time on the Stations for cash at prevailing rates and which have not been prepaid and which may be canceled by the Stations without penalty on not more than thirty (30) days' notice, and (ii) summary of the Stations' rights and obligations as of the date hereof under trade and barter agreements. Seller has delivered to Buyer true and complete copies of all written Contracts, and true and complete memoranda of all oral Contracts (including any amendments and other modifications to such Contracts). Other than the Contracts listed on Schedule 3.7, Contracts with advertisers for the sale of advertising time on the Stations for cash and the studio lease for WDYL, the Stations require no contract, lease, or other agreement to enable them to carry on their business as now conducted. All of the Assumed Contracts are in full force and effect, and are valid, binding, and enforceable in accordance with their terms. There is not under any Assumed Contract any default by any party thereto or any event that, after notice or lapse of time or both, could constitute a default. Seller is not aware of any intention by any party to any Assumed Contract (i) to terminate such Assumed Contract or amend the terms thereof, (ii) to refuse to renew such Assumed Contract upon expiration of its term, or (iii) to renew such Assumed Contract upon expiration only on terms and conditions which are more onerous than those now existing. Except for the need to obtain the Consents listed in Schedule 3.3, Seller has full legal power and authority to assign its rights under the Assumed Contracts to Buyer in accordance with this Agreement, and such assignment will not affect the validity, enforceability, or continuation of any of the Assumed Contracts. 3.8 Consents. Except for the FCC Consent provided for in SECTION 6.1, any filings required under the HSR Act, and the other Consents described in Schedule 3.3, no consent, approval, permit, or authorization of, or declaration to or filing with any governmental or regulatory authority, or any other third party is required (i) to consummate this Agreement and the transactions contemplated hereby, (ii) to permit Seller and ROLI to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the business and operations of the Stations in essentially the same manner as such business and operations are now conducted. 3.9 Intangibles. Schedule 3.9 is a true and complete list of all Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid and in good standing and uncontested. Seller has delivered to Buyer copies of all documents establishing or evidencing all Intangibles. Seller is not infringing upon or otherwise acting adversely to any trademarks, trade names, service marks, service names, copyrights, patents, patent applications, know-how, methods, or processes owned by any other person or persons, and there is no claim or action pending, or to -10- 18 the knowledge of Seller threatened, with respect thereto. The Intangibles listed on Schedule 3.9 comprise all intangible property interests necessary to conduct the business and operations of the Stations as now conducted. 3.10 Financial Statements. Seller has furnished Buyer with true and complete copies of unaudited results of operations of the Stations for the twelve-month period ended December 31, 1998 and 1999 and an unaudited results of operations of the Stations for the eight-month period ending August 31, 2000 ("Financial Statements"). Attached hereto as Schedule 3.10 are the Financial Statements. The Financial Statements have been prepared from the books and records of Seller, have been prepared materially in accordance with generally accepted accounting principles consistently applied and maintained throughout the periods indicated, accurately reflect the books, records, and accounts of the Stations (which books, records, and accounts are complete and correct), are complete and correct in all material respects, and present fairly the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended. None of the Financial Statements understates the true costs and expenses of conducting the business or operations of the Stations, fails to disclose any material contingent liabilities, or inflates the revenues of the Stations. With respect to each Station, the representations and warranties in this SECTION 3.10 as they relate to such Station are to Seller's knowledge for periods prior to the acquisition by Seller of such Station. 3.11 Insurance. Schedule 3.11 is a true and complete list of all insurance policies of Seller that insure any part of the Assets or the business of the Stations. All policies of insurance listed in Schedule 3.11 are in full force and effect. The insurance policies listed in Schedule 3.11 are adequate in amount with respect to, and for the full value (subject to customary deductibles) of, the Assets, and insure the Assets and the business of the Stations against all customary and foreseeable risks. No insurance policy of Seller on the Assets or the Stations has been canceled by the insurer and no application of Seller for insurance has been rejected by any insurer. 3.12 Reports. All returns, reports, and statements which the Stations are currently required to file with the FCC or with any other governmental agency have been filed, and all reporting requirements of the FCC and other governmental authorities having jurisdiction over Seller, ROLI or the Stations have been complied with in all material respects. All of such returns, reports, and statements are substantially complete and correct as filed. Seller and ROLI have timely paid to the FCC all annual regulatory fees payable with respect to the FCC Licenses. All tower registration applications that the Stations are required to file with the FCC with respect to the Assets have been filed and the FCC has issued registrations with respect to such towers. 3.13 Taxes. Each of Seller and ROLI has filed or caused to be filed all federal income tax returns and all other federal, state, county, local, or city tax returns which are required to be filed by it, and each of Seller and ROLI has paid or caused to be paid all taxes shown on those returns or on any tax assessment received by Seller or ROLI to the extent that such taxes have become due, or has set aside on its books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. There are no governmental investigations or other legal, administrative, or tax proceedings pursuant to which Seller or ROLI is or could be made liable for any taxes, penalties, interest, or other charges, the liability for which could extend to Buyer as transferee of the Assets and the business of the Stations, and no -11- 19 event has occurred that could impose on Buyer any transferee liability for any taxes, penalties, or interest due or to become due from Seller or ROLI. 3.14 Claims and Legal Actions. Except for any FCC rulemaking proceedings generally affecting the radio broadcasting industry, there is no claim, legal action, counterclaim, suit, arbitration, governmental investigation or other legal, administrative, or tax proceeding, nor any order, decree or judgment, in progress or pending, or to the knowledge of Seller threatened, against Seller or ROLI with respect to its ownership or operation of the Stations or otherwise relating to the Assets or the business or operations of the Stations, nor does Seller know or have reason to be aware of any basis for the same. In particular, but without limiting the generality of the foregoing, except as disclosed on Schedule 3.14, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened (i) before the FCC relating to the business or operations of the Stations other than rule making proceedings which affect the radio industry generally, (ii) before any federal or state agency relating to the business or operations of the Stations involving charges of illegal discrimination under any federal or state employment laws or regulations, or (iii) before any federal, state, or local agency relating to the business or operations of the Stations involving zoning issues under any federal, state, or local zoning law, rule, or regulation. 3.15 Environmental Matters. To Seller's knowledge, (a) Seller has complied in all material respects with all laws, rules, and regulations of all federal, state, and local governments (and all agencies thereof) concerning the environment, public health and safety, and employee health and safety, and no charge, complaint, action, suit, proceeding, hearing, investigation, claim, demand, or notice has been filed or commenced against any Seller in connection with Seller's ownership or operation of the Stations alleging any failure to comply with any such law, rule, or regulation. (b) Seller has no liability relating to Seller's ownership and operation of the Stations (and there is no basis related to the past or present operations, properties, or facilities of Seller for any present or future charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand against Seller giving rise to any such liability) under the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Refuse Act, or the Emergency Planning and Community Right-to-Know Act (each as amended) or any other law, rule, or regulation of any federal, state, or local government (or agency thereof) concerning release or threatened release of hazardous substances, public health and safety, or pollution or protection of the environment. (c) Seller has no liability relating to its ownership and operation of the Stations (and there is no basis for any present or future charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand against Seller giving rise to any such liability) under the Occupational Safety and Health Act, as amended, or under any other law, rule, or regulation of any federal, state, or local government (or agency thereof) concerning employee health and safety. -12- 20 (d) In connection with its ownership and operation of the Stations, Seller has obtained and been in material compliance with all of the terms and conditions of all permits, licenses, and other authorizations which are required under, and have complied in all material respects with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules, and timetables which are contained in, all federal, state, and local laws, rules, and regulations (including all codes, plans, judgments, orders, decrees, stipulations, injunctions, and charges thereunder) relating to public health and safety, worker health and safety, and pollution or protection of the environment, including laws relating to emissions, discharges, releases, or threatened releases of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes into ambient air, surface water, ground water, or lands or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes. (e) All properties and equipment used in the business of the Stations are and have been free of asbestos and asbestos-related products, PCB's, methylene chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous Substances (as defined in Section 302 of the Emergency Planning and Community Right-to-Know Act). (f) No pollutant, contaminant, or chemical, industrial, hazardous, or toxic material or waste has ever been manufactured, buried, stored, spilled, leaked, discharged, emitted, or released by Seller in connection with its ownership and operation of the Stations, or, by any other party on any Real Property. 3.16 Compliance with Laws. Each of Seller and ROLI has complied in all material respects with (i) the Licenses, and (ii) all federal, state, and local laws, rules, regulations, and ordinances applicable or relating to the ownership and operation of the Stations. Neither the ownership or use of the properties of the Stations nor the conduct of the business or operations of the Stations conflicts with the rights of any other person or entity. 3.17 Conduct of Business in Ordinary Course. Since December 31, 1999 with respect to WDYL, since the acquisition of WJMZ by Seller with respect to WJMZ and since the WPEK Closing with respect to WPEK, each of Seller and ROLI has conducted the business and operations of the Stations only in the ordinary course and has not: (a) Suffered any material adverse change in the business, assets, prospects or properties of the Stations, including any damage, destruction, or loss affecting any assets used or useful in the conduct of the business of the Stations; (b) Made any sale, assignment, lease, or other transfer of the Stations' properties other than in the normal and usual course of business with suitable replacements being obtained therefor; (c) Canceled any debts owed to or claims held by Seller with respect to the Stations, except in the normal and usual course of business; -13- 21 (d) Suffered any material write-down of the value of any Assets or any material write-off as uncollectible of any accounts receivable of the Stations; or (e) Transferred or granted any right under, or entered into any settlement regarding the breach or infringement of, any license, patent, copyright, trademark, trade name, franchise, or similar right, or modified any existing right relating to the Stations. 3.18 Transactions with Affiliates. Except as disclosed in Schedule 3.18, neither Seller nor ROLI has been involved in any business arrangement or relationship relating to the Stations with any affiliate of Seller or ROLI, and no affiliate of Seller or ROLI owns any property or right, tangible or intangible, which is used in the business of the Stations. As used in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934. 3.19 Broker. Neither Seller nor any person or entity acting on Seller's behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement. 3.20 Personnel. (a) Seller has furnished to Buyer a copy of the employee handbook(s) describing Seller's Employee Plans and Compensation Arrangements. Schedule 3.20 contains a true and complete list of all employees of the Stations, their job titles, dates of hire and salary amounts. (b) Except as described in Schedule 3.20, neither Seller nor any other trade or business under common control with Seller (within the meaning of Sections 414(b), (c), (m) or (o) of the Code) sponsor, maintain or contribute to any Employee Plan or Compensation Arrangement that provides retiree medical or retiree life insurance coverage to employees of Seller at the Stations upon their retirement. (c) Except as described in Schedule 3.20, with respect to each Employee Plan and, to the extent applicable, each Compensation Arrangement: (i) each Employee Plan that is intended to be tax-qualified, and each amendment thereto, is the subject of a favorable determination letter (or an opinion of counsel that the form of such Employee Plan is so qualified under Section 401(a) of the Code) and no plan amendment would affect the validity of an Employee Plan's letter (or of such opinion of counsel); (ii) no prohibited transaction, within the definition of section 4975 of the Code or Title 1, Part 4 of ERISA, has occurred which would subject Seller to any liability that could become a liability of Buyer; and (iii) all contributions, premiums or payments accrued, in whole or in part, under each Employee Plan or Compensation Arrangement or with respect thereto as of the Closing will be paid by Seller prior to the Closing. (d) Seller shall furnish to Buyer as soon as practicable prior to the Closing (but no later than 15 days prior to the Closing) (i) a list, calculated as of the Closing Date, estimating the total amount of compensation deferred under Seller's 401(k) plan by each employee of Seller employed at the Stations under the terms of Section 402(g) of the Code during the calendar year in which the Closing occurs; and (ii) a list of those employees who, as -14- 22 of the Closing Date, have outstanding participant loans from Seller's 401(k) plan, including the amount and term of such loans. (e) For purposes of this Agreement, the following terms shall have the meaning indicated: (i) "Employee Plan" shall mean any pension, profit-sharing, deferred compensation, vacation, bonus, incentive, medical, vision, dental, disability, life insurance or any other employee benefit plan as defined in Section 3(3) of ERISA to which Seller or any entity related to Seller (under the terms of Section 414(b), (c), (m) or (o) of the Code) contribute or to which Seller or any entity related to Seller (under the terms of Section 414(b), (c), (m) or (o) of the Code) sponsor, maintain or otherwise are bound which provides benefits to persons employed or previously employed at the Stations; (ii) "Code" shall mean the Internal Revenue Code of 1986, as amended, any successor thereto and any regulations promulgated thereunder; (iii) "Compensation Arrangement" shall mean any plan or compensation arrangement other than an Employee Plan, whether written or unwritten, which provides to persons employed or previously employed at the Stations any compensation or other benefits, whether deferred or not, in excess of base salary or wages, including, but not limited to, any bonus or incentive plan, vacation or sick pay plan, stock rights plan, deferred compensation arrangement, life insurance, stock purchase plan, severance pay plan and any other employee fringe benefit plan; and (iv) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, any successor thereto and any regulations promulgated thereunder. 3.21 Labor Relations. Seller is not a party to or subject to any collective bargaining agreements with respect to the Stations. Seller has no written or oral contracts of employment with any employee of the Stations, other than those listed in Schedule 3.7. Seller has complied in all material respects with all laws, rules, and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and Seller has not received any written notice alleging that they have failed to comply with any such laws, rules, or regulations. No controversies, disputes, or proceedings are pending or, to the best of Seller's knowledge, threatened, between Seller and any employee (singly or collectively) of the Stations. No labor union or other collective bargaining unit represents or claims to represent any of the employees of the Stations. There is no union campaign being conducted to represent employees of the Stations or to solicit cards from employees to authorize a union to request a National Labor Relations Board certification election with respect to any employees at the Stations. 3.22 WPEK Purchase Agreement. Seller has provided Buyer with a true and complete copy of the WPEK Purchase Agreement and any other agreements related thereto (the "WPEK Purchase Documents"). As of the date hereof, Seller has no knowledge of any material breaches or defaults under such documents. 3.23 Full Disclosure. No representation or warranty made by Seller in this Agreement or in any certificate, document, or other instrument furnished or to be furnished by Seller pursuant hereto contains or will contain any untrue statement of a material fact, or willfully omits or willfully will omit to state any material fact and required to make any statement made herein or therein not misleading. -15- 23 SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Organization, Standing, and Authority. CRI is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and on or before the Closing Date will be qualified to conduct business as a foreign corporation under the laws of the Commonwealth of Virginia and the State of South Carolina. CXR is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada. Buyer has all requisite power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and comply with all of the terms, covenants, and conditions to be performed and complied with by Buyer hereunder and thereunder. 4.2 Authorization and Binding Obligation. The execution, delivery, and performance of this Agreement by Buyer have been duly authorized by all necessary actions on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 4.3 Absence of Conflicting Agreements. Subject to obtaining the FCC Consent, the Consents and any filings required under the HSR Act, the execution, delivery, and performance by Buyer of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) do not require the consent of any third party; (ii) will not conflict with the organizational documents of Buyer; (iii) will not conflict with, result in a breach of, or constitute a default under, any law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; and (iv) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, instrument, license, or permit to which Buyer is a party or by which Buyer may be bound, such that Buyer could not acquire or operate the Assets. 4.4 Broker. Except for Media Venture Partners whose fees shall be paid by Buyer, neither Buyer nor any person or entity acting on Buyer's behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement. 4.5 Qualification. To Buyer's knowledge, Buyer is legally and financially qualified under the Communications Act of 1934, as amended, and the current rules and regulations of the FCC to acquire the Stations under this Agreement and Buyer requires no waiver under the current rules and regulations of the FCC in order for the FCC to grant the FCC Consent. 4.6 Full Disclosure. No representation or warranty made by Buyer in this Agreement or in any certificate, document or other instrument furnished or to be furnished by Buyer pursuant hereto contains or will contain any untrue statement of a material fact, or willfully omits -16- 24 or willfully will omit to state any material fact and required to make any statement made herein or therein not misleading. SECTION 5. OPERATIONS OF THE STATIONS PRIOR TO CLOSING 5.1 Generally. Seller agrees that, (i) between the date of this Agreement and the Closing Date, Seller shall operate the Stations other than WPEK only in the ordinary course of business and only in accordance with the covenants in this SECTION 5 and (ii) between the WPEK Closing and the Closing Date, Seller shall operate WPEK only in the ordinary course of business and only in accordance with the covenants in this SECTION 5. 5.2 Contracts. Seller will not enter into any contract or commitment relating to the Stations or the Assets, or amend or terminate any Contract (or waive any material right thereunder), or incur any obligation (including obligations relating to the borrowing of money or the guaranteeing of indebtedness) that will be binding on Buyer after Closing without Buyer's prior written consent, except that Seller may enter into in the ordinary course of business Contracts with advertisers for the sale of advertising time on the Stations for cash at prevailing rates which have not been prepaid and which may be cancelled by the Stations without penalty on not more than thirty (30) days' notice. Prior to the Closing Date, Seller shall deliver to Buyer a list of all Contracts entered into between the date of this Agreement and the Closing Date, together with copies of such Contracts. 5.3 Disposition of Assets. Seller shall not, and shall cause ROLI not to, sell, assign, lease, or otherwise transfer or dispose of any of the Assets, except in connection with the acquisition of replacement property of equivalent kind and value. 5.4 Encumbrances. Seller shall not, and shall cause ROLI not to, create, assume or permit to exist any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Assets, except for (i) Permitted Liens and (ii) mechanics' liens and other similar liens which shall be removed prior to the Closing Date. 5.5 Licenses. Seller shall not, and shall cause ROLI not to, knowingly or willfully cause or permit, by any act or failure to act, any of the Licenses to expire or to be revoked, suspended, or modified, or take any action that could cause the FCC or any other governmental authority to institute proceedings for the suspension, revocation, or adverse modification of any of the Licenses. Seller shall not, and shall cause ROLI not to, fail to prosecute with due diligence any applications to any governmental authority in connection with the operation of the Stations. 5.6 Rights. Seller shall not, and shall cause ROLI not to, waive any material right relating to the Stations or any of the Assets. 5.7 No Inconsistent Action. Seller shall not, and shall cause ROLI not to, take any action that is inconsistent with Seller's obligations under this Agreement or that could hinder or delay the consummation of the transactions contemplated by this Agreement. 5.8 Access to Information. Seller shall give Buyer and its counsel, accountants, engineers, and other authorized representatives reasonable access to the Assets and to all other -17- 25 properties, equipment, books, records, Contracts, and documents relating to the Stations for the purpose of audit and inspection, including inspections incident to the environmental survey described in SECTION 6.4, and will furnish or cause to be furnished to Buyer or its authorized representatives all information with respect to the affairs and business of the Stations that Buyer may reasonably request (including any financial reports and operations reports produced with respect to the affairs and business of the Stations). Without limiting the generality of the foregoing, Seller shall give Buyer and its counsel, accountants and other authorized representatives reasonable access to Seller's financial records and Seller's employees, counsel, accountants and other representatives for the purpose of preparing and auditing such financial statements as Buyer determines, in its judgment, are required or advisable to comply with federal or state securities laws and the rules and regulations of securities markets as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 5.9 Maintenance of Assets. Seller shall maintain all of the Assets in good condition (ordinary wear and tear excepted), and use, operate, and maintain all of the Assets in a reasonable manner. Seller shall maintain inventories of spare parts and expendable supplies at levels consistent with past practices. If any loss, damage, impairment, confiscation, or condemnation of or to any of the Assets occurs, Seller shall repair, replace, or restore the Assets to their prior condition as represented in this Agreement as soon thereafter as possible, and Seller shall use the proceeds of any claim under any insurance policy solely to repair, replace, or restore any of the Assets that are lost, damaged, impaired, or destroyed. 5.10 Insurance. Seller shall maintain the existing insurance policies on the Stations and the Assets. 5.11 Consents. Seller shall obtain the estoppel certificates described in SECTION 8.2(b) and shall use commercially reasonable efforts to obtain the Consents in each case without any change in the terms or conditions of any Contract or License that could be less advantageous to the Stations than those pertaining under the Contract or License as in effect on the date of this Agreement. Seller shall promptly advise Buyer of any difficulties experienced in obtaining any of the Consents and of any conditions proposed, considered, or requested for any of the Consents. Except in the case of a Material Consent (as defined below), the inability of Seller to obtain any such Consent shall not be an excuse to Buyer's obligation to purchase the Assets under this Agreement provided that Seller has used commercially reasonable efforts to obtain such consent. Seller and Buyer agree that if Seller is unable to obtain a Consent to the assignment of any of the Assumed Contracts (other than a Material Consent), then Seller agrees to hold such Assumed Contract for the benefit of Buyer, but at the expense of Buyer (so long as Buyer receives the benefits thereunder), from and after Closing and until such time as the Consent is eventually obtained or the Assumed Contract expires and Seller shall continue to use commercially reasonable efforts to obtain such Consent. 5.12 Books and Records. Seller shall maintain the books and records relating to the Stations in accordance with past practices. 5.13 Notification. Seller shall promptly notify Buyer in writing of any unusual or material developments with respect to the business or operations of the Stations, and of any -18- 26 material change in any of the information contained in Seller's representations and warranties contained in SECTION 3 of this Agreement. 5.14 Compliance with Laws. Seller shall, and shall cause ROLI to, comply in all material respects with all laws, rules, and regulations applicable or relating to the ownership and operation of the Stations. 5.15 Financing Leases. Other than Assumed Contracts, Seller will satisfy at or prior to Closing all outstanding obligations under capital or financing leases, if any, with respect to any of the Assets and obtain good title to the Assets leased by Seller pursuant to those leases so that those Assets shall be transferred to Buyer at Closing free of any interest of the lessors. 5.16 Preservation of Business. Seller shall use its commercially reasonable efforts to preserve the business and organization of the Stations, to keep available to the Stations their present employees and to preserve the audience of the Stations and the Stations' present relationships with suppliers, advertisers, and others having business relations with the Stations, to the end that the business, operations, and prospects of the Stations shall be unimpaired at the Closing Date. 5.17 Personnel Recommendations. Seller shall promptly notify Buyer as personnel vacancies occur at the Stations with respect to department heads or managers and consider without obligation for employment all personnel recommended by Buyer for such vacant positions. Other than reasonable raises for certain employees of WJMZ and WPEK, Seller shall not increase the compensation, retirement or other employee benefits payable or to become payable to any employee of the Stations, except as may be required by law or pursuant to any contract in effect on the date hereof. 5.18 Programming. Except as set forth in Schedule 5.18, Seller shall not make any material changes in the broadcast hours or in the type of programming broadcast by the Stations except such changes as in the good faith judgment of Seller are required by the public interest. SECTION 6. SPECIAL COVENANTS AND AGREEMENTS 6.1 Governmental Approvals. (a) The assignment of the FCC Licenses in connection with the purchase and sale of the Assets pursuant to this Agreement shall be subject to the prior consent and approval of the FCC. (b) Seller and Buyer shall promptly prepare appropriate applications for the FCC Consent and shall file the applications with the FCC within three (3) business days of the date hereof. The parties shall prosecute the applications with all reasonable diligence and otherwise use their best efforts to obtain a grant of the applications as expeditiously as practicable. Each party agrees to comply with any condition imposed on it by the FCC Consent except such condition which would have a material adverse effect upon it. Buyer and Seller shall oppose any requests for reconsideration or judicial review of the FCC Consent. If the Closing shall not have occurred for any reason within the original effective period of the FCC Consent, and no party shall have terminated this Agreement under SECTION 9, the parties shall -19- 27 jointly request an extension of the effective period of the FCC Consent. No extension of the FCC Consent shall limit the exercise by any party of its rights under SECTION 9. 6.2 HSR Act Filing. Seller and Buyer agree to (a) file, or cause to be filed, with the U.S. Department of Justice ("DOJ") and Federal Trade Commission ("FTC") all filings, if any, which are required in connection with the transactions contemplated hereby under the HSR Act within six (6) business days of the date of this Agreement; (b) submit to the other party, prior to filing, their respective HSR Act filings to be made hereunder, and to discuss with the other any comments the reviewing party may have; (c) cooperate with each other in connection with all HSR Act filings, which cooperation shall include furnishing the other with any information or documents in such party's possession that may be reasonably required in connection with such filings; (d) promptly file, after any request by the FTC or DOJ, any information or documents requested by the FTC or DOJ; and (e) furnish each other with any correspondence from or to, and notify each other of any other communications with, the FTC or DOJ which relates to the transactions contemplated hereunder, and to the extent practicable, to permit each other to participate in any conferences with the FTC or DOJ. 6.3 Control of the Station. Prior to Closing, Buyer shall not, directly or indirectly, control, supervise, direct, or attempt to control, supervise, or direct, the operations of the Stations, and all such operations, including complete control and supervision of all of the Stations' programs, employees, and policies, shall be the sole responsibility of Seller until the Closing. 6.4 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Assets from any cause whatsoever shall be borne by Seller at all times prior to the Closing. 6.5 Confidentiality. Except as necessary for the consummation of the transaction contemplated by this Agreement and except as and to the extent required by law, including disclosure requirements of federal and state securities laws and rules and regulations of securities markets, each party will keep confidential any information obtained from the other party in connection with the transactions contemplated by this Agreement. If this Agreement is terminated, each party will return to the other party upon request all information obtained by such party from the other party in connection with the transactions contemplated by this Agreement and will not disclose such information for a period of three (3) years without the other party's prior written consent. 6.6 Environmental Survey. Buyer may, at its option and expense, retain an environmental consultant to be selected by Buyer to perform a Phase I environmental survey and if necessary, a Phase II environmental survey of the Real Property within forty-five (45) days of the date hereof. If the survey discloses any material environmental hazard or liability for environmental damages or clean-up costs, Buyer shall so notify Seller within forty-five (45) days of the date of this Agreement and Seller shall be required to cure such environmental hazards or damages prior to Closing, provided, that if the remediation of all such hazards or damages under this Agreement and the WARV Purchase Agreement, dated as of the date hereof by and between Honolulu Broadcasting, Inc. and Seller (the "WARV Purchase Agreement") would require expenditures in excess of $200,000 by Seller, Seller shall not be obligated to remediate such -20- 28 defects. If Seller determines not to effect any remediation requiring expenditures in excess of $200,000 under this Agreement and the WARV Purchase Agreement, Buyer shall have the right at its option either to terminate this Agreement or to consummate the Closing under this Agreement and reduce the Purchase Price by the amount of the expenditures required by Buyer to remediate the environmental hazard or damage provided that the reduction to the purchase price hereunder and under the WARV Purchase Agreement shall not exceed $200,000. The parties hereto agree that Seller shall to the extent reasonably possible effectuate any remediation required by this SECTION 6.6 prior to Closing but to the extent it is not reasonably possible through no fault of Seller to remediate any environmental defects prior to Closing, Seller shall only be required to effectuate the portion of such remediation which is reasonably possible to be made prior to Closing and the Purchase Price shall be reduced by any additional costs consistent with Seller's obligations under this Section which are required to be made after Closing to remediate such environmental defect. 6.7 Cooperation. Buyer and Seller shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement, and Buyer and Seller shall execute such other documents as may be necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their best efforts to consummate the transaction contemplated hereby and to fulfill their obligations under this Agreement. Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend funds or deliver any other consideration to obtain any of the Consents or (ii) to agree to any adverse change in any License or Assumed Contract to obtain a Consent required with respect thereto. 6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the Commonwealth of Virginia and the State of South Carolina shall be complied with by Seller. Any loss, liability, obligation, or cost suffered by Seller or Buyer as the result of the failure of Seller or Buyer to comply with the provisions of any bulk sales law applicable to the transfer of the Assets as contemplated by this Agreement shall be borne by Seller. 6.9 Title Insurance and Surveys. (a) Title Insurance on Fee Property. With respect to each parcel of owned Real Property included in the Assets, Buyer may obtain, at Buyer's expense, at or prior to Closing, an ALTA Owner's Policy of Title Insurance Form B-1987 (or equivalent policy acceptable to Buyer), issued by a title insurer satisfactory to Buyer, in an amount equal to the fair market value of the property and any improvements thereon (as reasonably determined by Buyer), insuring title to such parcel in the name of Buyer as of the Closing, subject only to liens or encumbrances expressly permitted by this Agreement. (b) General Requirements as to Title Insurance Policies. Each title insurance policy obtained by Buyer pursuant to this Agreement shall (1) insure title to the Real Property described in the policy and all recorded easements benefiting such Real Property, (2) contain an "extended coverage endorsement" insuring over the general exceptions customarily contained in title policies, (3) contain an endorsement insuring that the Real Property described in the policy is the same real estate shown in the survey delivered with respect to such property, (4) contain a "contiguity" endorsement with respect to any Real Property consisting of more than one record -21- 29 parcel, and (5) not be subject to any survey exception or any defect or encroachment disclosed by a survey delivered with respect to the property. (c) Surveys. With respect to each parcel of Real Property, as to which a title insurance policy is to be procured pursuant to this Agreement, Buyer may procure a current survey of the parcel, prepared by a licensed surveyor and conforming to current ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location of all improvements, easements, party walls, sidewalks, roadways, utility lines, and other matters customarily shown on such surveys, and showing access affirmatively to public streets and roads. 6.10 Sales Tax Filings. Prior to Closing, Seller shall continue to file Virginia and South Carolina sales tax returns with respect to the Stations in accordance with Seller's past practices and shall concurrently deliver copies of all such returns to Buyer. 6.11 Access to Books and Records. Seller shall provide Buyer access and the right to copy for a period of three (3) years from the Closing Date any books and records relating to the Assets but not included in the Assets. Buyer shall provide Seller access and the right to copy for a period of three (3) years from the Closing Date any books and records relating to the Assets that are included in the Assets. 6.12 Employee Matters. (a) Seller agrees to make full and final settlement with Seller's employees employed at the Stations within 20 days after the Closing, with respect to all liabilities and obligations relating to their employment with Seller to the extent earned or accrued through the Closing Date, except for liabilities and obligations for which there is a legitimate dispute between Seller and the applicable employee. (b) Seller shall be liable for all payments for all of Seller's employees at the Stations for work-related injuries that occur on or prior to the Closing Date, in each case whether or not the claims for, or the payment of, such expenses or payment were or are to be made prior to or following the Closing Date. (c) Seller agrees to provide all health continuation, life continuation, and other continuation coverage arising under, or related to, Seller's Employee Plans, Compensation Agreements, or insurance policies, including any coverage required by Code Section 4980B(f), other applicable state or federal laws or the terms of Seller's Employee Plans, Compensation Agreements or insurance policies. Seller shall provide such coverage to all persons entitled to continuation coverage, whether that entitlement arose or continued before or at Closing, with respect to employment at the Stations. Buyer shall have no responsibility or liability for providing continuation coverage arising under, or related to, any Employee Plan, Compensation Agreement or insurance policy of Seller to the extent that coverage arises before or at Closing. The parties agree that this provision is intended only to set forth Seller's obligations as between Seller and Buyer, and is not intended to give rise to additional rights on the part of employees or other third parties. -22- 30 (d) Nothing in this Agreement shall be deemed or construed to require Buyer to hire or continue to employ any of Seller's employees for any period on or after Closing. (e) Seller represents and warrants to Buyer that none of the "full-time employees" of Seller (as said term is defined under the WARN Act) employed at the Stations has experienced an "employment loss" (as said term is defined under the WARN Act) during the 90-day period prior to the date hereof, and Seller agrees to provide to Buyer at Closing an updated list of such employees, effective as of the Closing Date. 6.13 Financial Information. Seller shall furnish to Buyer within thirty (30) days after the end of each month ending between the date of this Agreement and the Closing Date a profit and loss statement for the Stations for the month just ended and such other financial information (including information on payables and receivables) relating to the Stations as Buyer may reasonably request. As soon as practicable following December 31, 2000, but no later than 90 days following such date, Seller shall provide Buyer with audited financial statements of the Stations for fiscal year 2000 (which shall include a profit and loss statement). All financial information delivered by Seller to Buyer pursuant to this Section shall be prepared from the books and records of Seller, shall accurately reflect the books, records, and accounts of the Stations, shall be prepared in accordance with generally accepted accounting principles consistently applied, shall be complete and correct in all material respects, and shall present fairly the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended. With respect to each Station, the representations and warranties in this SECTION 6.13 as they relate to such Station are to Seller's knowledge for periods prior to the acquisition by Seller of such Station. 6.14 Fees and Expenses. Seller shall pay any transfer taxes, recordation taxes, sales taxes, document stamps, or other charges levied by any governmental entity on account of the transfer of the Assets from Seller to Buyer, except that Seller on the one hand and Buyer on the other hand each shall pay one-half of the filing fees payable upon filing of the applications for FCC Consent and any filing fees required under the HSR Act. Except as otherwise provided in this Agreement, each party shall pay its own expenses incurred in connection with the authorization, preparation, execution, and performance of this Agreement, including all fees and expenses of counsel, accountants, agents, and representatives. 6.15 Collection of Accounts Receivable. Seller shall deliver to Buyer not later than five (5) days after the Closing Date a complete and detailed statement of all Accounts Receivable of WJMZ and WPEK (the "Greenville Accounts Receivable") as of the Closing Date, showing the name, amount and age of each account. During the period from the Closing Date through the end of the fourth successive calendar month after the Closing Date (including the calendar month during which the Closing occurs) (the "Collection Period"), with respect to the Greenville Accounts Receivable, (i) Buyer will use reasonable best efforts, in accordance with Buyer's customary business practices, to collect the Greenville Accounts Receivable, but Buyer shall not be obligated to use any efforts to collect any of the Greenville Accounts Receivable that are more extensive than the efforts that Buyer uses to collect its own accounts receivable, (ii) Buyer shall not make any referral or compromise of any of the Greenville Accounts Receivable to any collection agency or attorney for collections and shall not settle or adjust the amount of any of such Greenville Accounts Receivable without the prior written authorization of Seller, and -23- 31 (iii) Buyer shall remit to Seller, on or before the fifth business day after the end of each successive calendar month during the Collection Period, all amounts collected by Buyer with respect to the Greenville Accounts Receivable that have not previously been remitted to Seller, net of any commissions paid or payable with respect thereto. If Buyer receives any payment from an account debtor that is liable under any of the Greenville Accounts Receivable, Buyer shall credit the payment to the oldest account due unless the account debtor directs otherwise. Buyer shall not collect the Accounts Receivable of WDYL. 6.16 WPEK Purchase Agreement. Seller shall not amend, terminate or waive any of Seller's rights under the WPEK Purchase Documents without Buyer's prior written approval. Seller shall notify Buyer promptly upon learning of any material breach or default under the WPEK Purchase Documents. Seller shall comply with the terms of the WPEK Purchase Documents and use its commercially reasonable efforts to consummate the closing under the WPEK Purchase Agreement in accordance with the terms thereof. 6.17 KDGE Purchase Agreement. Seller shall use commercially reasonable efforts to cause the transactions contemplated by the Purchase Agreement for the purchase by Seller of Radio Station KDGE(FM), Gainesville, Texas (the "KDGE Purchase Agreement") to be consummated. 6.18 WJMZ Coordinates. Seller shall file with the FCC all applications which are necessary to ensure that the transmission site coordinates listed on the station license for WJMZ correspond to the coordinates listed on the tower registration for the WJMZ transmission site. 6.19 WJMZ Matters. Seller shall cooperate with Buyer in its attempt to obtain a renewal of the studio lease for WJMZ. Prior to Closing, Seller shall repair the main transmitter of WJMZ so that it operates at a power consistent with its FCC license and the FCC rules. 6.20 WPEK Matters. Seller shall seal or paint and put an ice shield on the currently used transmitter building of WPEK. If Seller is unable to complete these tasks before Closing, the Purchase Price shall be reduced by the amount necessary for Buyer to complete such work. Prior to Closing, Seller shall outfit the second production room in the WJMZ studio so that WPEK can broadcast from such location in accordance with good engineering practices. Seller shall cooperate with Buyer in its attempt to get a lease on the adjacent space to the WJMZ studio for additional space for WPEK. Seller shall cooperate with Buyer in giving termination notices under the programming agreements of WPEK included among the Assumed Contracts so that they may be possibly terminated at Closing. SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING 7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the Closing are subject at Buyer's option to the fulfillment prior to or at the Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Seller contained in this Agreement shall be true and complete in all material respects at and as of the Closing Date as though made at and as of that time. -24- 32 (b) Covenants and Conditions. Seller shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by Seller prior to or on the Closing Date. (c) Consents. All Consents under contracts and agreements indicated as material on Schedules 3.5 and 3.7 (the "Material Consents") shall have been obtained and delivered to Buyer without any adverse change in the terms or conditions of any agreement or any governmental license, permit, or other authorization. (d) FCC Consent. The FCC Consent shall have been granted without the imposition on Buyer of any conditions that need not be complied with by Buyer under SECTION 6.1 hereof and Seller and ROLI shall have complied with any conditions imposed on Seller and ROLI by the FCC Consent. (e) Governmental Authorizations. ROLI shall be the holder of all Licenses and there shall not have been any modification of any License that could have an adverse effect on the Stations or the conduct of the business and operations of the Stations. No proceeding shall be pending the effect of which could be to revoke, cancel, fail to renew, suspend, or modify adversely any License. (f) Deliveries. Seller shall have made or stand willing to make all the deliveries to Buyer set forth in SECTION 8.2. (g) HSR Act. The waiting period under the HSR Act shall have expired or terminated without unresolved action by the DOJ or the FTC to prevent the Closing. (h) Adverse Change. Between the date of this Agreement and the Closing Date, there shall have been no material adverse change in the assets, properties, or business of the Stations, and no damage, destruction, or loss affecting any Assets which would have a material adverse effect on the operations of the Stations. Any legislative or regulatory action, or threat thereof, affecting the radio broadcast industry, shall not constitute a material adverse change under this SECTION 7.1(h). (i) WPEK Purchase Agreement. The closing under the WPEK Purchase Agreement shall have been consummated substantially in accordance with the terms thereof and ROLI shall be the holder of the FCC Licenses of WPEK and Seller shall be the owner of the other assets of WPEK to be acquired pursuant to the WPEK Purchase Agreement. 7.2 Conditions to Obligations of Seller. All obligations of Seller at the Closing are subject at Seller's option to the fulfillment prior to or at the Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the Closing Date as though made at and as of that time. -25- 33 (b) Covenants and Conditions. Buyer shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by Buyer prior to or on the Closing Date. (c) Deliveries. Buyer shall have made or stand willing to make all the deliveries set forth in SECTION 8.3. (d) FCC Consent. The FCC Consent shall have been granted without the imposition on Seller or ROLI of any conditions that need not be complied with by Seller or ROLI under SECTION 6.1 hereof and Buyer shall have complied with any conditions imposed on it by the FCC Consent. (e) HSR Act. The waiting period under the HSR Act shall have expired or terminated without unresolved action by the DOJ or the FTC to prevent the Closing. (f) KDGE Purchase Agreement. The conditions of closing under the KDGE Purchase Agreement shall have been satisfied or waived by the parties thereto and neither party shall have terminated the KDGE Purchase Agreement. SECTION 8. CLOSING AND CLOSING DELIVERIES 8.1 Closing. (a) Closing Date. Subject to satisfaction or waiver of the conditions of Closing set forth in this Agreement, the Closing shall take place at 10:00 a.m. on a date which shall be within five (5) business days following the later to occur of (i) the satisfaction or waiver (by the party entitled to waive such condition) of the conditions of Closing set forth in SECTIONS 7.1(d) and 7.2(d) and (ii) notice by Seller to Buyer that the condition set forth in SECTION 7.2(f) has been satisfied or waived by Seller. Seller shall notify Buyer that the condition set forth in SECTION 7.2(f) has been satisfied or waived within two business days of satisfaction or waiver of such condition. If the date of Closing determined in accordance with the requirements of this SECTION 8.1(a) falls on a date that is not a business day, the Closing shall occur on the next business day. Notwithstanding the foregoing, the parties further agree that if the FCC Consent for WJMZ and WPEK is obtained prior to receiving the FCC Consent for WDYL, Seller may demand that Buyer close its purchase of WJMZ and WPEK provided all of the conditions of Closing of Buyer with regard to WJMZ and WPEK have been satisfied or waived by Buyer. At the Closing of the sale of WJMZ and WPEK, Buyer shall pay Seller $43,500,000 of the Purchase Price for the assets of WJMZ and WPEK subject to the adjustments and other terms and provisions set forth in this Agreement. Subject to the satisfaction of the conditions set forth in this Agreement with respect to WJMZ and WPEK, the Closing of the sale of WJMZ and WPEK shall occur within five (5) business days of the grant of the FCC Consent for such stations. (b) Closing Place. The Closing shall be held at the offices of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Ave., N.W., Suite 800, Washington, D.C. 20036, or any other place that is agreed upon by Buyer and Seller. 8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: -26- 34 (a) Transfer Documents. Duly executed warranty bills of sale, general warranty deeds, motor vehicle titles, assignments, and other transfer documents which shall be sufficient to vest good and marketable title to the Assets (including, without limitations, the License Assets) in the name of Buyer, free and clear of all claims, liabilities, security interests, mortgages, liens, pledges, conditions, charges and encumbrances, except for Permitted Liens; (b) Estoppel Certificates. Estoppel certificates of the lessors of all leasehold and subleasehold interests included in the Real Property; (c) Consents. A manually executed copy of any instrument evidencing receipt of any Consent; (d) Officer's Certificate. A certificate, dated as of the Closing Date, executed on behalf of Seller by a duly authorized officer of Seller certifying (1) that the representations and warranties of Seller contained in this Agreement are true and complete in all material respects as of the Closing Date as though made on and as of that date and (2) that Seller has in all material respects performed and complied with all of the covenants, agreements and conditions set forth in this Agreement to be performed and complied with by Seller on or prior to the Closing Date; (e) INTENTIONALLY OMITTED; (f) UCC, Tax, Lien, and Judgment Searches. Results of a search for UCC, tax, lien, and judgment filings in the Secretary of State's records of the Commonwealth of Virginia and the State of South Carolina and in the records of the county or counties in which the Stations' main studio and transmission plant are located, such searches having been made no earlier than fifteen (15) days prior to the Closing Date; (g) Licenses, Contracts, Business Records, Etc. Copies of all Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans, projections, engineering records, and all files and records used by Seller in connection with the business and operation of the Stations; (h) Authorizing Resolutions. Certified copies of the resolutions of Seller's board of directors and if necessary, shareholders, approving the transactions contemplated by this Agreement; and (i) Opinion of Seller's Counsel. Opinions of Seller's corporate and FCC counsel containing opinions substantially in the form of Schedule 8.2(i) hereto. 8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall deliver to Seller the following, in form and substance reasonably satisfactory to Seller and their counsel: (a) Purchase Price. The Estimated Purchase Price as provided in SECTION 2.5(a); -27- 35 (b) Assumption Agreements. Appropriate assumption agreements pursuant to which Buyer shall assume and undertake to perform Seller's obligations under the Licenses and Assumed Contracts in accordance with SECTION 2.6; (c) Officer's Certificate. A certificate, dated as of the Closing Date, executed on behalf of each of CRI and CXR by a duly authorized officer of such entity, certifying (1) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of the Closing Date as though made on and as of that date, and (2) that Buyer has in all material respects performed and complied with all of the covenants, agreements and conditions set forth in this Agreement to be performed and complied with by Buyer on or prior to the Closing Date; and (d) Authorizing Resolutions. Certified copies of the resolutions of the board of directors of each of CRI and CXR and if necessary, shareholders, approving the transactions contemplated by this Agreement. SECTION 9. TERMINATION 9.1 Termination by Seller. This Agreement may be terminated by Seller and the purchase and sale of the Stations abandoned, if Seller is not then in material default, upon written notice to Buyer, upon the occurrence of any of the following: (a) Conditions. If on the date that would otherwise be the Closing Date any of the conditions precedent to the obligations of Seller set forth in this Agreement have not been satisfied or waived in writing by Seller. (b) Judgments. If there shall be in effect on the date that would otherwise be the Closing Date any judgment, decree, or order that would prevent or make unlawful the Closing. (c) Upset Date. If the Closing shall not have occurred on or before August 1, 2001 (the "Upset Date"). (d) KDGE Purchase Agreement. If the KDGE Purchase Agreement is terminated. 9.2 Termination by Buyer. This Agreement may be terminated by Buyer and the purchase and sale of the Stations abandoned, if Buyer is not then in material default, upon written notice to Seller, upon the occurrence of any of the following: (a) Conditions. If on the date that would otherwise be the Closing Date any of the conditions precedent to the obligations of Buyer set forth in this Agreement have not been satisfied or waived in writing by Buyer. (b) Judgments. If there shall be in effect on the date that would otherwise be the Closing Date any judgment, decree, or order that would prevent or make unlawful the Closing. -28- 36 (c) Upset Date. If the Closing shall not have occurred on or before the Upset Date. (d) Interruption of Service. If any event shall have occurred that prevented signal transmission by any Station in the normal and usual manner for a continuous period of seven (7) days. (e) Environmental Hazards. Buyer shall have notified Seller of material environmental hazards or liability for environmental damages or clean-up costs, as indicated in the environmental survey described in SECTION 6.6, and the cause thereof shall not have been remedied by Seller prior to the date that would be the Closing Date. 9.3 Rights on Termination. If this Agreement is terminated pursuant to SECTION 9.1 or SECTION 9.2 and no party is in material breach of any provision of this Agreement, the parties hereto shall not have any further liability to each other with respect to the purchase and sale of the Assets and Buyer shall be entitled to the return of the Escrow Deposit (as defined below), together with all interest earned thereon. If this Agreement is terminated by Seller due to Buyer's material breach of this Agreement and Seller is not in material breach of this Agreement, then the payment of Two Million Five Hundred Thousand Dollars ($2,500,000) to Seller under SECTION 9.4(c) shall be liquidated damages by reason of Buyer's material breach of this Agreement. Seller and Buyer agree in advance that actual damages would be difficult to ascertain and that the sum of Two Million Five Hundred Thousand Dollars ($2,500,000) is a fair and equitable amount to reimburse Seller for damages sustained due to Buyer's material breach of this Agreement. If Seller believes that it has suffered actual damages in excess of the amount of the Escrow Deposit, Seller shall have the right to institute legal proceedings against Buyer to recover such additional damages, provided, that Buyer shall not be liable to Seller for damages (including the amount of the Escrow Deposit) in excess of Ten Million Dollars ($10,000,000) and Buyer shall not be liable to Seller for any punitive or other similar damages. If this Agreement is terminated by Buyer due to Seller's material breach of any provision of this Agreement, Buyer shall have all rights and remedies available at law or equity. 9.4 Escrow Deposit. Buyer has deposited on the date hereof with the Escrow Agent the sum of Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Escrow Deposit") in accordance with the Escrow Agreement. All such funds deposited with the Escrow Agent shall be held and disbursed in accordance with the terms of the Escrow Agreement and the following provisions: (a) At the Closing, the Escrow Deposit together with any interest or other proceeds from the investment thereof shall be disbursed to Seller in partial payment of the Purchase Price. (b) If this Agreement is terminated pursuant to Section 9.1 or 9.2 for any reason other than as provided in Section 9.4(c), the Escrow Deposit together with any interest or other proceeds from the investment thereof shall be disbursed to or at the direction of Buyer; and (c) If this Agreement is terminated by Seller due to Buyer's material breach of this Agreement and Seller is not in material breach of this Agreement, then the Escrow Deposit -29- 37 shall be disbursed to or at the direction of Seller as liquidated damages under Section 9.3 above and any interest or other proceeds from the investment thereof shall be disbursed by the Escrow Agent to or at the direction of Buyer. SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES 10.1 Representations and Warranties. All representations and warranties contained in this Agreement shall be deemed continuing representations and warranties and shall survive the Closing for a period of one (1) year. Any investigations by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation, warranty, or covenant contained in this Agreement. No notice or information delivered by Seller shall affect Buyer's right to rely on any representation or warranty made by Seller or relieve Seller of any obligations under this Agreement as the result of a breach of any of its representations and warranties. 10.2 Indemnification by Seller. Notwithstanding the Closing, and regardless of any investigation made at any time by or on behalf of Buyer or any information Buyer may have, Seller hereby agrees to indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities, or damages resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant or agreement by Seller contained in this Agreement or in any certificate, document, or instrument delivered to Buyer under this Agreement. (b) Any and all obligations of Seller not assumed by Buyer pursuant to this Agreement, including any liabilities arising at any time under any Contract not included in the Assumed Contracts. (c) Any loss, liability, obligation, or cost resulting from the failure of the parties to comply with the provisions of any bulk sales law applicable to the transfer of the Assets. (d) Any and all losses, liabilities, or damages resulting from the operation or ownership of the Stations prior to the Closing, including any liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring prior to the Closing Date. (e) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 10.3 Indemnification by Buyer. Notwithstanding the Closing, and regardless of any investigation made at any time by or on behalf of Seller or any information Seller may have, Buyer hereby agrees to indemnify and hold Seller harmless against and with respect to, and shall reimburse Seller for: -30- 38 (a) Any and all losses, liabilities, or damages resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant or agreement by Buyer contained in this Agreement or in any certificate, document, or instrument delivered to Seller under this Agreement. (b) Any and all obligations of Seller assumed by Buyer pursuant to this Agreement. (c) Any and all losses, liabilities, or damages resulting from the operation or ownership of the Stations on and after the Closing. (d) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 10.4 Procedure for Indemnification. The procedure for indemnification shall be as follows: (a) The party claiming indemnification (the "Claimant") shall promptly give notice to the party from which indemnification is claimed (the "Indemnifying Party") of any claim, whether between the parties or brought by a third party, specifying in reasonable detail the factual basis for the claim. If the claim relates to an action, suit, or proceeding filed by a third party against Claimant, such notice shall be given by Claimant as promptly as practicable. (b) With respect to claims solely between the parties, following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty (30) days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of the thirty (30) day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying Party do not agree within the thirty (30) day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate remedy at law or equity. (c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification under this Agreement, the Indemnifying Party shall have the right at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifying Party. If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third party claim, it shall be bound by the results obtained by the Claimant with respect to -31- 39 such claim. The Indemnifying Party shall not settle any claim without Claimant's approval unless there is a full release of Claimant. (d) If a claim, whether between the parties or by a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible. (e) The indemnification rights provided in SECTIONS 10.2 AND 10.3 shall extend to the shareholders, directors, officers, employees, and representatives of any Claimant although for the purpose of the procedures set forth in this SECTION 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 10.5 Limitations. Neither Seller nor Buyer shall be liable to the other in respect of any indemnification hereunder except to the extent that the aggregate amount of all losses, liabilities, damages, costs and expenses (the "Losses") of the party to be indemnified under this Agreement exceed Forty-Nine Thousand Dollars ($49,000) (the "Basket Amount"), whereupon the party to be indemnified shall be entitled to indemnification from the other party hereunder for all Losses incurred by the party to be indemnified without taking into consideration the Basket Amount. The limitation set forth in this SECTION 10.5 shall not apply to adjustments to the Purchase Price under SECTION 2.3 and to FCC violations. 10.6 Specific Performance. The parties recognize that if Seller breaches this Agreement and refuses to perform under the provisions of this Agreement, monetary damages alone would not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled, in addition to any other remedies that may be available, including money damages, to obtain specific performance of the terms of this Agreement. If any action is brought by Buyer to enforce this Agreement, Seller shall waive the defense that there is an adequate remedy at law. 10.7 Attorneys' Fees. In the event of a default by any party which results in a lawsuit or other proceeding for any remedy available under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its reasonable legal fees and expenses. SECTION 11. MISCELLANEOUS 11.1 Notices. All notices, demands, and requests required or permitted to be given under the provisions of this Agreement shall be (a) in writing, (b) delivered by personal delivery, or sent by commercial delivery service or registered or certified mail, return receipt requested, (c) deemed to have been given on the date of personal delivery or the date set forth in the records of the delivery service or on the return receipt, and (d) addressed as follows: If to Seller: Radio One, Inc. 5900 Princess Garden Parkway Lanham, Maryland 20706 Attention: Alfred Liggins, President With a copy to: Linda Eckard, Esq. -32- 40 Radio One, Inc. 5900 Princess Garden Parkway Lanham, Maryland 20706 If to Buyer: Cox Radio, Inc. 1400 Lake Hearn Drive, N.E. Atlanta, Georgia 30319 Attention: Mr. Robert F. Neil and CXR Holdings, Inc. 3553 Howard Hughes Parkway Las Vegas, Nevada 89109 Attention: Mr. Richard F. Klumpp With a copy to: Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20036-6802 Attention: Kevin F. Reed, Esq. or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in accordance with this SECTION 11.1. 11.2 Benefit and Binding Effect. None of the parties hereto may assign this Agreement without the prior written consent of the other parties hereto, except as provided in SECTIONS 2.8 AND 2.9 and except that Buyer may assign any or all its rights and obligations under this Agreement without obtaining Seller's consent to an affiliate of Buyer provided such assignment does not require the filing of an FCC Form 314 or 315 or materially delay the FCC Consent. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 11.3 Further Assurances. The parties shall take any actions and execute any other documents that may be necessary or desirable to the implementation and consummation of this Agreement, including, in the case of Seller, any additional bills of sale, deeds, or other transfer documents that, in the reasonable opinion of Buyer, may be necessary to ensure, complete, and evidence the full and effective transfer of the Assets to Buyer pursuant to this Agreement. 11.4 Governing Law. This agreement shall be governed, construed, and enforced in accordance with the laws of the State of Delaware (without regard to any choice of law or conflict of law provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than the State of Delaware). 11.5 Headings. The headings in this Agreement are included for ease of reference only and shall not control or affect the meaning or construction of the provisions of this Agreement. -33- 41 11.6 Gender and Number. Words used in this Agreement, regardless of the gender and number specifically used, shall be deemed and construed to include any other gender, masculine, feminine, or neuter, and any other number, singular or plural, as the context requires. 11.7 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any person or entity by virtue of the authorship of any of the provisions of this Agreement. 11.8 Entire Agreement. This Agreement, the schedules and exhibits hereto, and all documents, certificates, and other documents to be delivered by the parties pursuant hereto, collectively represent the entire understanding and agreement among Buyer and Seller with respect to the subject matter hereof. This Agreement supersedes all prior negotiations between the parties and cannot be amended, supplemented, or changed except by an agreement in writing that makes specific reference to this Agreement and which is signed by the party against which enforcement of any such amendment, supplement, or modification is sought. 11.9 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement, or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this SECTION 11.9. 11.10 Counterparts. This Agreement may be signed in counterparts with the same effect as if the signature on each counterpart were upon the same instrument. 11.11 Press Releases. The parties hereto shall reasonably cooperate in the issuance of any press release or any other public announcement or other communication with any news media concerning this Agreement or the transactions contemplated hereby; provided, however, that nothing contained herein shall prevent any party from promptly making all filings with governmental authorities as may, in its judgment, be required or advisable in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, in which case the other parties shall be first notified in writing. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -34- 42 IN WITNESS WHEREOF, this Agreement has been executed by Seller and Buyer as of the date first written above. COX RADIO, INC. By: /s/ Neil O. Johnston ---------------------------------- Name: Neil O. Johnston Title: Chief Financial Officer CXR HOLDINGS, INC. By: /s/ Andrew A. Merdeck ---------------------------------- Name: Andrew A. Merdeck Title: Secretary RADIO ONE, INC. By: /s/ Scott R. Royster ---------------------------------- Name: Scott R. Royster Title: Executive VP/CFO -35- EX-27.1 3 g65355ex27-1.txt FINANCIAL DATA SCHEDULE
5 0001018522 COX RADIO, INC. U.S. DOLLARS 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 22,040 0 93,453 3,305 0 138,943 110,614 37,522 2,348,191 277,849 0 0 0 32,800 1,003,610 2,348,191 0 266,616 0 161,522 35,851 0 23,409 534,649 225,392 534,649 0 0 0 534,649 3.39 3.37
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