-----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, FBe6Ttd1Mr36SfUntrM914ZPs3ecYiJVeUuh1tvV4aEKvMdb6odlQhXTuns4rSxj /KafTLAFQml3w65bp7axfQ== 0000950134-97-004074.txt : 19970520 0000950134-97-004074.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950134-97-004074 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPSTAR BROADCASTING PARTNERS INC CENTRAL INDEX KEY: 0001026516 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 752672663 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-25263 FILM NUMBER: 97609890 BUSINESS ADDRESS: STREET 1: 600 CONGRESS AVE STREET 2: SUITE 1400 CITY: AUSTIN STATE: TX ZIP: 78701 BUSINESS PHONE: 5124046380 MAIL ADDRESS: STREET 1: 600 CONGRESS AVE STREET 2: SUITE 1400 CITY: AUSTIN STATE: TX ZIP: 78701 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 OR [ ] 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 333-25683 CAPSTAR BROADCASTING PARTNERS, INC. (Exact name of registrant as specified in its charter) DELAWARE 75-2672663 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 600 CONGRESS AVENUE SUITE 1400 AUSTIN, TEXAS 78701 (Address of principal executive offices) (Zip Code) (512) 404-6840 (Registrant's telephone number, including area code) 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 ------- -------- AT MAY 1, 1997, 131,305,432 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE, AND 18,181,818 SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE, OF THE REGISTRANT WERE OUTSTANDING. 2 CAPSTAR BROADCASTING PARTNERS, INC. TABLE OF CONTENTS
PAGE NUMBER ------ PART I -- FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets........................... 3 Consolidated Statements of Operations................. 4 Condensed Consolidated Statements of Cash Flows....... 5 Consolidated Statement of Stockholders' Equity........ 6 Notes to Consolidated Financial Statements............ 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................. 11 PART II -- OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders... 16 Item 6. Exhibits and Reports on Form 8-K...................... 16
2 3 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31, 1996 1997 ------------- ------------- (Unaudited) ASSETS Current assets: Cash and short term cash investments . . . . . . . . . . . . $ 5,028,014 $ 13,024,555 Accounts receivable, net . . . . . . . . . . . . . . . . . . 8,913,390 13,051,132 Note receivable . . . . . . . . . . . . . . . . . . . . . . -- 13,513,179 Prepaid expenses and other current assets . . . . . . . . . 443,900 3,629,218 ------------- ------------- Total current assets . . . . . . . . . . . . . . . . . . 14,385,304 43,218,084 Property, plant and equipment, net . . . . . . . . . . . . . . . 15,628,361 41,991,383 FCC licenses and goodwill, net . . . . . . . . . . . . . . . . . 228,332,079 354,799,887 Other intangible assets . . . . . . . . . . . . . . . . . . . . . 3,178,469 1,001,278 Deferred charges, net . . . . . . . . . . . . . . . . . . . . . . 1,800,234 9,711,614 Deposits and other assets . . . . . . . . . . . . . . . . . . . . 931,340 1,943,413 ------------- ------------- Total assets . . . . . . . . . . . . . . . . . . . . . . $ 264,255,787 $ 452,665,659 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued expenses . . . . . . . . . . . . $ 3,468,945 $ 11,604,929 Accrued interest . . . . . . . . . . . . . . . . . . . . . . 1,810,292 2,400,228 Accrued income taxes . . . . . . . . . . . . . . . . . . . . -- 1,268,418 Current maturities of capital lease obligations . . . . . . . 16,056 124,056 Current maturities of long-term debt. . . . . . . . . . . . . 3,750,000 -- Due to affiliate . . . . . . . . . . . . . . . . . . . . . . 536,738 92,421 ------------- ------------- Total current liabilities . . . . . . . . . . . . . . . . 9,582,031 15,490,052 Long term capital lease obligations . . . . . . . . . . . . . . . 49,629 262,025 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 131,950,000 229,955,145 Non-current compensation . . . . . . . . . . . . . . . . . . . . . -- 1,022,655 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 31,531,580 65,037,798 ------------- ------------- Total liabilities . . . . . . . . . . . . . . . . . . . . 173,113,240 311,767,675 Stockholders' equity Preferred Stock, $.01 par value, 10,000,000 shares authorized, none issued and outstanding . . . . . . . . . . -- -- Class A Common Stock, $.01 par value, 200,000,000 shares authorized, 94,155,000 and 128,578,160 shares issued and outstanding at December 31, 1996 and March 31, 1997, respectively . . . . . . . . . . . . . . . . . . . . . . . 941,550 1,285,782 Class B Common Stock, convertible into Class A Common Stock, $.01 par value, 50,000,000 shares authorized, none issued and outstanding at December 31, 1996, 18,181,818 issued and outstanding at March 31, 1997 . . . . -- 181,818 Additional paid-in capital. . . . . . . . . . . . . . . . . . 93,957,450 151,254,380 Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (3,756,453) (11,227,632) ------------- ------------- 91,142,547 141,494,348 Receivables from stockholders . . . . . . . . . . . . . . . . -- (596,364) ------------- ------------- Total stockholders' equity . . . . . . . . . . . . . . . . 91,142,547 140,897,984 ------------- ------------- Total liabilities and stockholders' equity . . . . . . . . $ 264,255,787 $ 452,665,659 ============= =============
See Accompanying Notes. 3 4 5 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Predecessor ------------ For the Three Months Ended ---------------------------- MARCH 31, MARCH 31, 1996 1997 ------------ ------------ Gross broadcast revenue . . . . . . . . . . . . . . . . . $ 8,047,568 $ 15,149,894 Less: agency commissions . . . . . . . . . . . . . . . . (631,887) (1,042,534) ------------ ------------ Net broadcast revenue . . . . . . . . . . . . . . . . . . 7,415,681 14,107,360 Operating expenses: Programming, technical and news . . . . . . . . . . 1,513,468 2,533,691 Sales and promotion . . . . . . . . . . . . . . . . 2,421,153 4,015,973 General and administrative . . . . . . . . . . . . . 1,440,612 2,767,300 Direct programmed music and entertainment. . . . . . -- 1,039,250 Corporate expenses . . . . . . . . . . . . . . . . . . . 465,684 1,423,892 Depreciation and amortization . . . . . . . . . . . . . . 480,210 2,389,250 ------------ ------------ Operating income (loss) . . . . . . . . . . . . . . . . . 1,094,554 (61,996) Interest expense, net . . . . . . . . . . . . . . . . . . 2,451,638 6,791,672 Interest income . . . . . . . . . . . . . . . . . . . . . 115,252 127,621 Other expenses, net . . . . . . . . . . . . . . . . . . . 167,594 100,562 ------------ ------------ Income (loss) before provision for income taxes and extraordinary item . . . . . . . . . . . . (1,409,426) (6,826,609) Provision for income taxes . . . . . . . . . . . . . . . 27,000 46,345 ------------ ------------ Net income (loss) before extraordinary item . . . . . . . (1,436,426) (6,872,954) Extraordinary item, loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . -- 598,225 ------------ ------------ Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (1,436,426) $ (7,471,179) ============ ============
See Accompanying Notes. 4 6 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Predecessor ------------- For the Three Months Ended : ------------------------------- March 31, March 31, 1996 1997 ------------- ------------- Net cash provided by operating activities . . . . . . . . . . . . . . . $ 1,890,560 $ 1,905,152 Cash flows from investing activities Purchase of property, plant and equipment . . . . . . . . . . . . (124,192) (1,024,350) Decrease in loan from affiliate . . . . . . . . . . . . . . . . . 447,317 Payments for intangible assets . . . . . . . . . . . . . . . . . . (290,766) (149,975) Loan to Affiliate . . . . . . . . . . . . . . . . . . . . . . . . -- (13,475,000) Deposits on acquisitions . . . . . . . . . . . . . . . . . . . . . (915,000) (90,000) Acquisitions of stations and companies (14,400,000) (115,325,036) Other investing activities, net . . . . . . . . . . . . . . . . . (68,177) -- ------------ ------------- Net cash used in investing activities . . . . . . . . . . . . . . (15,798,135) (129,617,044) Cash flows from financing activities . . . . . . . . . . . . . . . . . Repurchase of Common Stock . . . . . . . . . . . . . . . . . . . . (175,000) Proceeds from common stock . . . . . . . . . . . . . . . . . . . . -- 55,601,616 Proceeds from debt . . . . . . . . . . . . . . . . . . . . . . . 8,500,000 150,283,000 Payment of debt issuance costs . . . . . . . . . . . . . . . . . . (393,734) (10,295,815) Repayment of amounts borrowed . . . . . . . . . . . . . . . . . . -- (59,700,000) Principal payments on capital leases . . . . . . . . . . . . . . . (3,455) (5,368) ------------ ------------- Net cash provided by financing activities . . . . . . . . . . . . 8,102,811 135,708,433 ------------ ------------- Net increase (decrease) in cash and short term cash investments . . . . (5,804,764) 7,996,541 Cash and short term cash investments, beginning of period . . . . . . . 10,891,489 5,028,014 ------------ ------------- Cash and short term cash investments, end of period . . . . . . . . . . $ 5,086,725 $ 13,024,555 ============ ============= Interest paid . . . . . . . . . . . . . . . . . . . . . . . . $ 46,738 $ 337,097 Taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . 58,908 164,386
See Accompanying Notes. 5 7 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
CLASS A CLASS B ADDITIONAL RECEIVABLES TOTAL PREFERRED COMMON COMMON PAID-IN ACCUMULATED FROM STOCKHOLDERS' STOCK STOCK STOCK CAPITAL DEFICIT STOCKHOLDERS EQUITY --------- ------- ------- ---------- ----------- ------------ ------------ Balance at December 31, 1996........... 941,550 93,957,450 (3,756,453) 91,142,547 Repurchase and cancellation of Class A Common Stock................. (1,750) (173,250) (175,000) Issuance of Class A Common Stock....... 345,982 37,651,998 (596,364) 37,401,616 Issuance of Class B Common Stock....... 181,818 19,818,182 20,000,000 Net loss............................... (7,471,179) (7,471,179) --------- --------- ------- ----------- ----------- -------- ---------- Balance at March 31, 1997.............. 1,285,782 181,818 151,254,380 (11,227,632) (596,364) 140,897,984 ========= ========= ======= =========== =========== ======== ===========
See Accompanying Notes. 6 8 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying 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 footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997 or for any other interim period. The consolidated financial statements include the accounts of Capstar Broadcasting Partners, Inc. and its direct and indirect wholly-owned subsidiaries (the "Company"). 2. CONSUMMATED ACQUISITIONS AND DISPOSITION On February 20, 1997, the Company acquired (the "Osborn Acquisition") Southern Star Communications, Inc. (formerly named Osborn Communications Corporation ("Osborn")). The purchase price of the Osborn Acquisition was $118.8 million payable in cash and Class A Common Stock (as defined). In connection with the purchase of Osborn, the Company agreed to pay the President of Osborn a guaranteed monthly bonus over the next five years; accordingly, the Company has recorded a liability equal to the net present value of these payments of $1.2 million at the date of purchase. Osborn owned and operated or provided services to 18 stations upon consummation of the Osborn Acquisition and had pending (i) the acquisitions of five stations (two FM and three AM) in the Huntsville and Tuscaloosa, Alabama markets and (ii) the disposition of three stations (two FM and one AM) in the Ft. Myers, Florida market. Each of the pending transactions of Osborn has been completed as more fully described hereinafter. In April 1997, the Company acquired substantially all of the assets of Taylor Communications Corporation's two radio stations (one FM and one AM) in the Tuscaloosa, Alabama market (the "Tuscaloosa Acquisition"). The purchase price of the acquisition was approximately $1.0 million. Such stations were managed by Osborn pursuant to an LMA (as defined) since December 1996. In April 1997, the Company acquired substantially all of the assets of City Broadcasting Co., Inc. used or useful in the operations of two radio stations (one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market (the "City Acquisition"). The purchase price of the acquisition was approximately $3.0 million. In April 1997, the Company acquired substantially all of the assets of EZY Com, Inc. used or useful in the operations of two radio stations (one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market (the "EZY Acquisition"). The purchase price of the acquisition was approximately $5.0 million. In April 1997, the Company acquired substantially all of the assets of Roper Broadcasting, Inc. used or useful in the operations of one FM radio station in the Melbourne-Titusville-Cocoa, Florida market (the "Roper Acquisition" and, collectively with the City Acquisition and the EZY Acquisition, the "Space Coast Acquisitions"). The purchase price of the acquisition was approximately $4.0 million. In April 1997, the Company sold substantially all of the assets of its radio stations (two FM and one AM) in the Ft. Myers, Florida Market (the "Osborn Ft. Myers Disposition"). The sale price was $11.0 million. In May 1997, the Company acquired all of the outstanding capital stock of Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners of three radio stations (one FM and two AM) in the Huntsville, Alabama market (the "Huntsville Acquisition"). The purchase price of the acquisition was $24.5 million. 7 9 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) MARCH 31, 1997 (UNAUDITED) 2. CONSUMMATED ACQUISITIONS AND DISPOSITION (CONTINUED) Unaudited proforma results of the Company for the aforementioned acquisitions which were completed during the three month period ended March 31, 1997 and which were accounted for using the purchase method of accounting, and the aforementioned disposition as if they were purchased or sold on January 1, 1996 are as follows:
Three Months Ended: ---------------------------- March 31, March 31, 1996 1997 --------- ----------- (dollars in thousands) Net revenue $ 16,949 $ 22,451 ========= =========== Loss before extraordinary item $ (9,345) $ (10,295) ========= =========== Net loss $ (9,943) $ (10,295) ========= ===========
3. PENDING ACQUISITIONS Under the terms of several acquisition agreements, each dated December 1996, Benchmark Communications Radio Limited Partnership, L.P. ("Benchmark") will become an indirect wholly-owned subsidiary of the Company through a series of mergers and stock purchases (the "Benchmark Acquisition"). The purchase price of the Benchmark Acquisition will equal approximately $173.4 million. Benchmark owns and operates 31 radio stations (21 FM and 10 AM). Those stations are located in 11 markets primarily in the Southeastern United States, including Dover, Delaware; Salisbury-Ocean City, Maryland; Montgomery, Alabama; Shreveport, Louisiana; Jackson, Mississippi; Statesville, North Carolina; Columbia, South Carolina; Greenville, South Carolina; Roanoke, Lynchburg and Winchester, Virginia. The Company anticipates that the Benchmark Acquisition will be consummated in July 1997. The obligation of Benchmark to consummate the Benchmark Acquisition is subject to Federal Communication Commission (" FCC") approval. In December 1996, the Company agreed to acquire substantially all of the assets of Community Pacific Broadcasting Company L.P. ("Community Pacific") (the "Community Pacific Acquisition"). The purchase price of the Community Pacific Acquisition will equal approximately $35.0 million payable in cash. Community Pacific owns and operates 11 radio stations (six FM and five AM) in four markets located in Anchorage, Alaska, Modesto and Stockton, California and Des Moines, Iowa. The Company anticipates that the Community Pacific Acquisition will be consummated in November 1997. The Company entered into an LMA with Community Pacific on February 28, 1997 to provide services to the radio stations owned and operated by Community Pacific until the Community Pacific Acquisition is consummated. In January 1997, the Company agreed to acquire substantially all of the assets of The Madison Radio Group ("Madison") (the "Madison Acquisition"). The purchase price of the Madison Acquisition will equal approximately $38.8 million payable in cash. Madison owns and operates six radio stations (four FM and two AM) in Madison, Wisconsin. The Company anticipates that the Madison Acquisition will be consummated in October 1997. In January 1997, the Company agreed to acquire substantially all of the assets of Commonwealth Broadcasting of Arizona, L.L.C. ("Commonwealth") (the "Commonwealth Acquisition"). The purchase price of the Commonwealth Acquisition will equal approximately $5.3 million payable in cash. Commonwealth owns and operates three radio stations (two FM and one AM) in Yuma, Arizona. The Company anticipates that the Commonwealth Acquisition will be consummated in October 1997. In January 1997, the Company agreed to acquire substantially all of the assets of Cavalier Communications, L.P. ("Cavalier") (the "Cavalier Acquisition"). The purchase price of the Cavalier Acquisition will equal approximately $8.3 million payable in cash. Cavalier owns and operates five radio stations (four FM and one AM) in the Roanoke and Lynchburg, Virginia markets. FCC approval is pending. The Company anticipates 8 10 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) MARCH 31, 1997 (UNAUDITED) 3. PENDING ACQUISITIONS (CONTINUED) that the Cavalier Acquisition will be consummated in October 1997. In February 1997, the Company agreed to acquire substantially all of the assets of COMCO Broadcasting, Inc. ("COMCO") (the "COMCO Acquisition"). The purchase price of the COMCO Acquisition will equal approximately $6.7 million payable in cash. COMCO owns and operates six radio stations (four FM and two AM) in the Anchorage and Fairbanks, Alaska markets. FCC approval is pending. The Company anticipates that the COMCO Acquisition will be consummated in October 1997. Upon consummation of the Community Pacific Acquisition and the COMCO Acquisition, the Company will own and operate seven radio stations (four FM and three AM) in the Anchorage, Alaska market, which number exceeds the multiple station ownership limitations under the Communications Act of 1934, as amended (the "Communications Act"). Accordingly, the Company has sought permission from the FCC to consummate both the Community Pacific Acquisition and the COMCO Acquisition provided that the Company agrees to sell radio station KASH-AM in Anchorage, Alaska within 18 months of the date on which the Community Pacific Acquisition is consummated. The Company would be in compliance with the ownership limitations of the Communications Act in the Anchorage, Alaska market once it disposes of KASH-AM. In May 1997, the Company entered into a nonbinding letter of intent to sell substantially all of the assets used or useful in the operations of radio station KASH-AM to Alaska Broadcast Television, Inc. No assurances can be given that the FCC will grant permission to the Company to consummate both the Community Pacific Acquisition and the COMCO Acquisition and dispose of KASH-AM, or if the FCC grants such permission, that the Company will be able to sell KASH-AM. In March 1997, the Company agreed to acquire substantially all of the assets of Emerald City Radio Partners, L.P. ("Emerald City") (the "Emerald City Acquisition"). The Company has agreed to assign its right to acquire two of Emerald City's radio stations (WOIC-AM and WMFX-FM) to Clear Channel Radio Licensing, Inc. on or before the date on which the Company acquires Emerald City's third radio station (WNOK-FM). The purchase price of the Emerald City Acquisition will equal approximately $14.9 million payable in cash, of which approximately $9.5 million has been allocated to radio station WNOK-FM and will be payable by the Company. Emerald City owns and operates three radio stations (two FM and one AM) in the Columbia, South Carolina market. FCC approval is pending. The Company anticipates that the Emerald City Acquisition will be consummated in July 1997. In April 1997, the Company agreed to acquire substantially all of the assets of WRIS, Inc. used or held for use in the operations of radio station WJLM-FM in the Salem, Virginia market (the "WRIS Acquisition"). The purchase price of the WRIS Acquisition will equal approximately $3.1 million payable in cash. FCC approval is pending. The Company anticipates that the WRIS Acquisition will be consummated in August 1997. In April 1997, the Company agreed to acquire substantially all of the assets of Ameron Broadcasting, Inc. used or held for use in the operation of three radio stations (two FM and one AM) in the Birmingham, Alabama market (the "Ameron Acquisition"). The purchase price of the Ameron Acquisition will equal approximately $31.5 million payable in cash. FCC approval is pending. The Company anticipates that the Ameron Acquisition will be consummated in October 1997. The Company has entered into nine separate nonbinding letters of intent to acquire and/or exchange substantially all of the assets of the respective potential sellers used or useful in the operations of each seller's radio stations, each of which is subject to various conditions, including the ability of the Company to enter into a definitive agreement to acquire such assets. No assurances can be given that definitive agreements will be entered into to acquire such assets or that such acquisitions will be consummated. As part of the Company's ongoing acquisition strategy, the Company is continually evaluating certain other potential acquisition opportunities. 4. STOCKHOLDERS' EQUITY On February 20, 1997, the Company issued 31,634,527 shares of Class A Common Stock and 18,181,818 shares of Class B Common Stock (as defined) to affiliates of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse") at a purchase price of $1.10 per share. The proceeds were used in part to fund the Osborn Acquisition and retire existing indebtedness of Commodore Media, Inc., a wholly-owned subsidiary of the Company ("Commodore"), and Osborn. In addition, on February 20, 1997 the Company exchanged 1,636,361 shares of Class A Common Stock having a deemed value of $1.8 million for shares of common stock of Osborn as part of the purchase price of the Osborn Acquisition and contributed its interest in Osborn to Commodore. Additionally, during the three months ended March 31, 1997, the Company issued 1,327,272 shares of Class A Common Stock to related parties in exchange for cash and receivables totalling $1.4 million. 9 11 CAPSTAR BROADCASTING PARTNERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) MARCH 31, 1997 (UNAUDITED) 5. EXTRAORDINARY ITEM On February 20, 1997, in connection with the financing of the Osborn Acquisition, the Company repaid its outstanding loan balance (including principal and interest) under the senior credit facility (the "AT&T Credit Facility") of Commodore with AT&T Commercial Finance Corporation and recognized an extraordinary loss of $598,000 as a result of a prepayment penalty. 6. NEW CREDIT FACILITY On February 20, 1997, the Company and Commodore, as borrower, entered into a credit facility (the "New Credit Facility") with various banks and Bankers Trust Company, as administrative agent, which consists of a $50.0 million revolving loan facility. The indebtedness under the New Credit Facility is secured by a first priority perfected pledge of substantially all of the Company's assets, including, without limitation, the capital stock of the subsidiaries of the Company, and is guaranteed by the Company and all of the direct and indirect subsidiaries of the Company (other than Commodore). Borrowings under the New Credit Facility bear interest at floating rates and require interest payments on varying dates depending on the interest rate option selected by the Company. All loans outstanding under the New Credit Facility will mature in 2002. As of May 13, 1997, a principal balance of $24.9 million was outstanding under the New Credit Facility. 7. CREDIT AGREEMENT In March 1997, the Company entered into a $13.5 million Credit Agreement with Emerald City (the "Credit Agreement"). In accordance with the Credit Agreement, the Company loaned Emerald City $13.5 million (the "Loan") which is to be repaid in two installments. The first installment is to be a payment of principal of the Loan equal to the purchase price under the asset purchase agreement for radio station WNOK-FM, together with any accrued and unpaid interest thereon, with the second installment to consist of the remaining principal balance of the Loan, together with any accrued and unpaid interest thereon, due and payable on the Maturity Date (as defined in the Credit Agreement). 8. SENIOR DISCOUNT NOTES In connection with the Osborn Acquisition the Company issued $277.0 million in aggregate principal amount at maturity of its 12 3/4% Senior Discount Notes due 2009 (the "Notes"). The Notes were issued at a substantial discount from their aggregate principal amount at maturity under an Indenture dated as of February 20, 1997 (the "Indenture"), between the Company and U.S. Trust Company of Texas, N.A., as trustee, generating gross proceeds to the Company of approximately $150.3 million. The notes are general unsecured senior obligations of the Company, which will mature on February 1, 2009. No interest will accrue on the Notes prior to February 1, 2002. Thereafter, interest on the Notes will accrue at an annual rate of 12 3/4% and will be payable semi-annually in cash on February 1 and August 1 each year, commencing on August 1, 2002 to holders of record on the immediately preceding January 15 and July 15. The Notes are redeemable at the option of the Company, in whole or in part, at any time and from time to time on or after February 1, 2002 at the redemption prices set forth in the Indenture, plus, without duplication, accrued and unpaid interest to the redemption date. In addition, prior to February 1, 2001, the Company, at its option, may use the net cash proceeds of one or more Public Equity Offerings (as defined in the Indenture) or Major Asset Sales (as defined in the Indenture) to redeem up to 25% of the aggregate principal amount at maturity of the Notes at a redemption price of 112.75%; provided, however, that after any such redemption, there is outstanding at least 75% of the original aggregate principal amount at maturity of the Notes. 10 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THE COMPANY As of March 31, 1997, the Company and its predecessor, Commodore, owned and operated or provided services to 63 radio stations in 16 mid-sized markets. The following table sets forth the growth in number of radio stations by market since January 1, 1996:
Number of Acquisition Date or Market Stations Estimated Acquisition Date - ------------------------------------------------------------------------------- COMMODORE: Huntington WV- Ashland, KY 7 October 1996(1) 1 LMA Fairfield, CT Acquisition 1 2 March 1996(1) Acquisition 2 2 May 1996 Ft. Pierce-Stuart- Vero Beach, FL 3 May 1996(1) Westchester-Putnam Counties, NY 3 March 1996(1) OSBORN: Asheville, NC 2 February 1997 Wheeling, WV 6 February 1997 Wheeling, WV 1 JSA Jackson, TN 3 February 1997 Tuscaloosa, AL 1 February 1997 Tuscaloosa, AL 2 April 1997(1) Gadsden, AL 2 February 1997 Huntsville, AL 3 April 1997 COMMUNITY PACIFIC: Anchorage, AK 3 November 1997(1) Des Moines, IA 3 November 1997(1) Modesto, CA 2 November 1997(1) Stockton, CA 2 November 1997(1)
- ------------- (1) The Company provided services to these stations pursuant to an LMA or a JSA (as defined) prior to the date acquired. "JSA" refers to a joint sales agreement, whereby a station licensee obtains, for a fee, the right to sell substantially all of the commercial advertising on a separately-owned and licensed station. JSAs take varying forms. A JSA, unlike an LMA, normally does not involve programming. "LMA" refers to a local marketing agreement, whereby a radio station outsources the management of certain limited functions of its operations. LMAs take varying forms; however, the FCC requires that, in all cases, the licensee maintain independent control over the programming and operations of the station. On February 20, 1997, the Company acquired Osborn. The purchase price of the Osborn Acquisition was $118.8 million payable in cash and Class A Common Stock. Osborn owned and operated or provided services to 18 stations upon consummation of the Osborn Acquisition and had pending (i) the acquisitions of five stations (two FM and three AM) in the Huntsville and Tuscaloosa, Alabama markets and (ii) the disposition of three stations (two FM and one AM) in the Ft. Myers, Florida market. Each of the pending transactions of Osborn has been completed as more fully described hereinafter. In April 1997, the Company acquired substantially all of the assets of Taylor Communications Corporation's two radio stations (one FM and one AM) in the Tuscaloosa, Alabama market The purchase price of the acquisition was approximately $1.0 million. Such stations were managed by Osborn pursuant to an LMA since December 1996. In April 1997, the Company acquired substantially all of the assets of City Broadcasting Co., Inc. used or useful in the operations of two radio stations (one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market. The purchase price of the acquisition was approximately $3.0 million. In April 1997, the Company acquired substantially all of the assets of EZY Com, Inc. used or useful in the operations of two radio stations (one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market. The purchase price of the acquisition was approximately $5.0 million. In April 1997, the Company acquired substantially all of the assets of Roper Broadcasting, Inc used or useful in the operations of one FM radio station in the Melbourne-Titusville-Cocoa, Florida market. The purchase price of the acquisition was approximately $4.0 million. In April 1997, the Company sold substantially all of the assets of its radio stations (two FM and one AM) in the Ft. Myers, Florida Market. The sale price was $11.0 million. In May 1997, the Company acquired all of the outstanding capital stock of Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners of three radio stations (one FM and two AM) in the Huntsville, Alabama market. The purchase price of the acquisition was $24.5 million. On February 28, 1997, the Company entered into an LMA with Community Pacific to provide services to the radio stations owned and operated by Community Pacific until the Community Pacific Acquisition is consummated. 11 13 RESULTS OF OPERATIONS The following table sets forth certain consolidated summary data of the Company (dollars in thousands):
Predecessor ----------- For the Three Months Ended -------------------------- March 31, March 31, 1996 1997 ----------- ---------- OPERATING DATA: Net revenue . . . . . . . . . . . . . . . . . . . $ 7,416 $14,107 Station operating expenses . . . . . . . . . . . 5,375 10,356 Depreciation and amortization . . . . . . . . . . 480 2,389 Corporate expenses . . . . . . . . . . . . . . . 466 1,424 ---------- --------- Operating income (loss) . . . . . . . . . . . . . 1,095 (62) Interest expense . . . . . . . . . . . . . . . . 2,452 6,792 Other (income)expense . . . . . . . . . . . . . . 79 19 Extraordinary loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . 598 ---------- --------- Net loss . . . . . . . . . . . . . . . . . . . . $(1,436) $(7,471) ========== ========= OTHER DATA: Broadcast cash flow (1) . . . . . . . . . . . . . $ 2,041 $ 3,751 Broadcast cash flow margin . . . . . . . . . . . 27.5% 26.6% EBITDA (2) . . . . . . . . . . . . . . . . . . $ 1,575 $ 2,327
- ---------------- (1) Broadcast cash flow consists of operating income before depreciation, amortization, corporate expense and other expense. (2) EBITDA consists of operating income before depreciation, amortization and other expense. 12 14 RESULTS OF OPERATIONS (CONTINUED) THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996 Net Revenue. Net revenue increased $6.7 million or 90.2% to $14.1 million for the three months ended March 31, 1997 from $7.4 million for the three months ended March 31, 1996. Net revenue included from the operations purchased in connection with the Osborn Acquisition for the period February 21, 1997 through March 31, 1997 comprised $3.7 million of the increase. The inclusion of revenue from the acquisitions of radio stations and revenue generated from LMAs and JSAs provided $2.8 million of the increase. For stations owned or operated for a comparable period in 1997 and 1996, net revenue increased approximately $232,000 or 3.2% to $7.4 million for the three months ended March 31, 1997 from $7.2 million for the same period in 1996. Station Operating Expenses. Station operating expenses increased $5.0 million or 92.7% to $10.4 million for the three months ended March 31, 1997 from $5.3 million for the three months ended March 31, 1996. The increase is primarily attributable to (i) additional operating expenses of the operations purchased in connection with the Osborn Acquisition of $2.9 million, and (ii) station operating expenses of the radio station acquisitions and the JSAs and LMAs which contributed $2.2 million of the increase. For stations owned or operated for a comparable period in 1997 and 1996, station operating expenses declined approximately $86,000 or 1.7% to $5.1 million in 1997 from $5.2 million in 1996 as a result of efficiencies realized from market consolidation. Broadcast Cash Flow. As a result of the factors described above, broadcast cash flow increased approximately $1.7 million or 83.8% to $3.8 million for the three months ended March 31, 1997 from $2.0 million for the three months ended March 31, 1996. The broadcast cash flow margin was 26.6% for the three months ended March 31, 1997 compared to 27.5% for the three months ended March 31, 1996. The broadcast cash flow provided from the Osborn Acquisition accounted for approximately $861,000 of the increase; the broadcast cash flow margin from these operations was 23.0%. The inclusion of broadcast cash flows from the remaining acquisitions and LMAs accounts for approximately $531,000 of the increase. Excluding the effects of the acquisitions and LMAs, broadcast cash flow increased approximately $319,000, or 15.7% to $2.3 million for the three months ended March 31, 1997 from $2.0 million for the three months ended March 31, 1996 and the broadcast cash flow margin on a same station basis increased to 31.4% from 28.0%. Corporate Expenses. Corporate expenses increased approximately $958,000 to approximately $1.4 million for the three months ended March 31, 1997 from approximately $466,000 for the three months ended March 31, 1996. This increase was primarily due to the corporate offices of the Company which opened in October, 1996 and the additional corporate expense associated with the Osborn operations. EBITDA. As a result of the factors described above, EBITDA increased approximately $752,000 or 47.7% to $2.3 million for the three months ended March 31, 1997 from $1.6 million for the three months ended March 31, 1996. The EBITDA margin for the three months ended March 31, 1997 was 16.5% compared to 21.2% for the three months ended March 31, 1996. 13 15 RESULTS OF OPERATIONS (CONTINUED) Other Operating Expenses. Depreciation and amortization increased $1.9 million to $2.4 million for the three months ended March 31, 1997 from approximately $480,000 for the three months ended March 31, 1996 primarily due to the various acquisitions consummated during 1996 and 1997. Operating Income. As a result of the factors described above, the Company's results for the three months ended March 31, 1997 reflected an operating loss of $62,000 compared to an operating income of $1.1 million for the three months ended March 31, 1996. Other (Income) Expense. Interest expense increased approximately $4.3 million to $6.8 million for the three months ended March 31, 1997 from $2.5 million for the three months ended March 31, 1996. The increase is attributable to the write-off of $1.0 million of deferred financing costs and $606,000 of interest associated with the Company's credit facility with Bankers Trust Company, dated October 16, 1996, which was repaid in full in connection with the consummation of the Osborn Acquisition (the "Former Term Loan Facility"); $2.1 million of interest expense related to the Notes; and interest expense on the AT&T Credit Facility which was repaid in full in connection with the consummation of the Osborn Acquisition. Interest income increased 10.7% to $128,000 as a result of the interest accrual on the Loan under the Credit Agreement with Emerald City. The Company realized an extraordinary loss on the early retirement of the AT&T Credit Facility during the three months ended March 31, 1997 related to penalties and fees of approximately $598,000. Net Loss. As a result of the factors described above, net loss increased approximately $6.0 million to $7.5 million for the three months ended March 31, 1997 from $1.4 million for the three months ended March 31, 1996. LIQUIDITY AND CAPITAL RESOURCES The pursuit by the Company of its acquisition strategy has required a significant portion of the Company's capital resources. In October 1996, the Company funded the $213.6 million purchase price (including assumed debt of $93.7 million) for its first acquisition, the acquisition of Commodore (the "Commodore Acquisition"), from the proceeds of the sale of $94.0 million of Class A Common Stock to affiliates of Hicks Muse, R. Steven Hicks, the President and Chief Executive Officer of the Company, and certain other investors and with $34.8 million of borrowings under the Former Term Loan Facility. The Company funded the $118.8 million purchase price (excluding transaction costs) for the Osborn Acquisition and the retirement of existing indebtedness of Commodore and Osborn in connection therewith from the proceeds of the issuance of the Notes, $54.8 million in equity investments by affiliates of Hicks Muse, the equity investment of $600,000 by certain members of the Company's management team and the contribution by the President of Osborn of certain shares of common stock of Osborn to the Company in exchange for shares of Class A Common Stock having a deemed value of $1.8 million. The Company funded the purchase price of the Huntsville Acquisition, the Tuscaloosa Acquisition and the Space Coast Acquisitions through borrowings under the New Credit Facility in the aggregate principal amount of $35.9 million. As a result of the financing of its acquisitions, the Company has a substantial amount of long-term indebtedness, and for the foreseeable future, payments under the Company's credit agreement, payments under the Company's outstanding subordinated notes and future acquisitions will be the Company's principal uses of cash. In October 1996, the Company assumed the 13 1/4% Senior Subordinated Notes due 2003 (the "Commodore Notes") of Commodore in connection with the Commodore Acquisition. The Commodore Notes accrue interest at a stated rate of 13 1/4% per annum of their face value of $76.8 million. The Commodore Notes require semi-annual cash interest payments on each May 1 and November 1 of $2.9 million through May 1, 1998 and $5.2 million from November 1, 1998 until maturity. On February 20, 1997, the Company issued the Notes at a substantial discount from their principal amount at maturity of $277.0 million in the aggregate. The Notes generated gross proceeds of approximately $150.3 million and pay no cash interest until August 1, 2002. Accordingly, the carrying value will increase through accretion until August 1, 2002. Thereafter, interest will be payable semi-annually, in cash, on February 1 and August 1 of each year. Borrowings under the New Credit Facility bear interest at floating rates and require interest payments on varying dates depending on the interest rate option selected by the Company. The New Credit Facility consists of the $50.0 million revolver. All loans outstanding under the New Credit Facility will mature in 2002. As of May 13, 1997, a principal balance of $24.9 million was outstanding under the New Credit Facility. 14 16 LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) In addition to debt service, the Company's principal liquidity requirements will be for working capital and general corporate purposes, including capital expenditures, which are not expected to be material in amount, and, as appropriate opportunities arise, to acquire additional radio stations. The Company used the $11.0 million in net proceeds of the Osborn Ft. Myers Disposition to repay indebtedness under the New Credit Facility. The Company intends to fund the aggregate purchase price for the pending acquisitions through a combination of borrowings under the New Credit Facility (as it may be amended to increase the borrowing limit thereunder) and a combination of indebtedness of the Company and/or Commodore and/or capital stock of the Company or its subsidiaries. The Company anticipates that it will fund the pending acquisitions with indebtedness, rather than capital stock, to the fullest extent then permitted under the debt incurrence covenants contained in the New Credit Facility, as it may be amended, the indenture governing the Notes and the indenture governing the Commodore Notes. The Company has not determined the terms of any such indebtedness or capital stock. The Company's ability to make such borrowings and issue such indebtedness and capital stock will depend upon many factors, including, but not limited to, the Company's success in operating and integrating its radio stations and the condition of the capital markets at the times of consummation of the pending acquisitions. No assurances can be given that such financings can be consummated on terms considered to be favorable by management or at all. Management believes that cash from operating activities, together with available revolving credit borrowings under the New Credit Facility, should be sufficient to permit the Company to fund its operations and meet its obligations under the agreements governing the existing indebtedness. The Company may require financing for additional future acquisitions, if any, and there can be no assurance that it would be able to obtain such financing on terms considered to be favorable by management. Management evaluates potential acquisition opportunities on an on-going basis and has had, and continues to have, preliminary discussions concerning the purchase of additional stations. The Company expects that in connection with the financing of future acquisitions, it may consider disposing of stations in its markets. The Company has no current plans or arrangements to dispose of any of its stations other than the disposition of station KASH-AM in Anchorage, Alaska at or after consummation of the Community Pacific Acquisition and the possible exchange of three stations to be acquired in the Benchmark Acquisition for three stations owned by SFX Broadcasting, Inc. EXTRAORDINARY ITEM In connection with the Osborn Acquisition, the Company repaid the AT&T Credit Facility. The repayment of the AT&T Credit Facility resulted in a prepayment penalty in the amount of $598,000, which was reported as an extraordinary item. In connection with the Benchmark Acquisition, the Company will issue $750,000 of capital stock to an affiliate of Hicks Muse in consideration for its agreement, upon the occurrence of certain events, to purchase the outstanding indebtedness incurred by such affiliate's subsidiary in connection with the Benchmark Acquisition. The issuance of capital stock of the Company for the benefit of Commodore will be reported as an extraordinary item in the period in which the Company consummates the Benchmark Acquisition. Had the Benchmark Acquisition been consummated at December 31, 1996, the Company would have recorded an extraordinary charge of approximately $750,000. 15 17 PART II -- OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Pursuant to the unanimous written consent of the stockholders of the Company, dated as of February 13, 1997, the stockholders approved an amendment to the Company's Certificate of Incorporation pursuant to which (i) the number of authorized shares of common stock, par value $.01 per share ("Common Stock"), of the Company was increased to 200,000,000 shares and 10,000,000 shares of preferred stock, par value $.01 per share, of the Company were authorized and (ii) the number of shares of Common Stock available for issuance under the Capstar Broadcasting Partners, Inc. 1996 Stock Option Plan was increased to 9,000,000 shares. Pursuant to the written consent of the holder of a majority of the outstanding shares of Common Stock, dated as of February 19, 1997, an amendment to the Company's Certificate of Incorporation was approved, pursuant to which each share of Common Stock was reclassified into one share of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of the Company and 50,000,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"), of the Company were authorized. Pursuant to the written consent of the holder of a majority of the outstanding shares of Class A Common Stock and the holder of all of the outstanding shares of Class B Common Stock, dated as of April 24, 1997, an amendment to the Company's Certificate of Incorporation was approved, pursuant to which the right of certain holders of Class B Common Stock to convert such shares into Class A Common Stock or to transfer such shares was restricted, subject to certain conditions. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 3.1 Certificate of Incorporation of the Company.* 3.2 By-Laws of the Company.* 4.1 Amendment No. 7 to Indenture dated as of April 21, 1995, among Commodore Media, Inc. ("Commodore"), IBJ Schroder Bank & Trust Company, as Trustee, and the Guarantors named therein, governing Commodore's 13 1/4% Senior Subordinated Notes due 2003.(1) 10.1.1 Agreement and Plan of Merger, dated as of December 9, 1996, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited Partnership, Joe L. Mathis IV, Bruce R. Spector, the Company and BCR Holding, Inc. ("Benchmark Merger Agreement").* 10.1.2 Letter Agreement amending Benchmark Merger Agreement, dated January 9, 1997, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc. and the other signatories listed therein.* 10.1.3 Letter Agreement amending Benchmark Merger Agreement, dated January 31, 1997, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., BCR Holding, Inc., the Company, and the other signatories listed therein.* 10.1.4 Letter Agreement amending Benchmark Merger Agreement, dated April 8, 1997, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., BCR Holding, Inc., and the Company.* 10.2 Asset Purchase Agreement, dated as of December 26, 1996, between Community Pacific Broadcasting Company L.P. and Community Acquisition Company, Inc.* 10.3 Asset Purchase Agreement, dated as of January 27, 1997, by and among Point Communications Limited Partnership, Midcontinent Broadcasting Co. of Wisconsin, Inc., Madison Radio Group and Point Madison Acquisition Company, Inc.* 16 18 10.4.1 Asset Purchase Agreement, dated March 10, 1997, by and between Emerald City Radio Partners, L.P. and WNOK Acquisition Company, Inc.(1) 10.4.2 First Amendment to Asset Purchase Agreement, dated as of March 14, 1997, between Emerald City Radio Partners, L.P. and WNOK Acquisition Company, Inc.(1) 10.5.1 Asset Purchase Agreement dated as of April 24, 1997, between Ameron Broadcasting, Inc. and Capstar Acquisition Company, Inc., a wholly-owned subsidiary of Commodore.(1) 10.5.2 Letter Agreement, dated as of April 25, 1997, between Ameron Broadcasting, Inc. and Capstar Acquisition Company, Inc.(1) 10.6 Employment Agreement, dated January 1, 1997, between the Company and Paul D. Stone.* 10.7 Employment Agreement, dated January 1, 1997, between the Company and William S. Banowsky, Jr.* 10.8 Second Amendment, dated February 20, 1997, to Stockholders Agreement, dated October 16, 1996, among Capstar, Hicks, Muse, Tate & Furst Incorporated, R. Steven Hicks and the securityholders listed therein.* 27.1 Financial Data Schedule.* - --------------------- * Filed herewith. (1) Incorporated by reference to Commodore Media, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 33-92732. (b) Reports on Form 8-K During the quarter ended March 31, 1997, the Company did not file any reports on Form 8-K. 17 19 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. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ William S. Banowsky, Jr. ----------------------------- Name: William S. Banowsky, Jr. Title: Vice President Date: May 15, 1997 By: /s/ Paul D. Stone ------------------ Name: Paul D. Stone Title: Vice President and Chief Financial Officer (principal financial officer) Date: May 15, 1997 20
Exhibit Number Exhibit Title Page --------- ------------- ---- 3.1 Certificate of Incorporation of the Company.* 3.2 By-Laws of the Company.* 4.1 Amendment No. 7 to Indenture dated as of April 21, 1995, among Commodore Media, Inc. ("Commodore"), IBJ Schroder Bank & Trust Company, as Trustee, and the Guarantors named therein, governing Commodore's 13 1/4% Senior Subordinated Notes due 2003.(1) 10.1.1 Agreement and Plan of Merger, dated as of December 9, 1996, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited Partnership, Joe L. Mathis IV, Bruce R. Spector, the Company and BCR Holding, Inc. ("Benchmark Merger Agreement").* 10.1.2 Letter Agreement amending Benchmark Merger Agreement, dated January 9, 1997, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc. and the other signatories listed therein.* 10.1.3 Letter Agreement amending Benchmark Merger Agreement, dated January 31, 1997, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., BCR Holding, Inc., the Company, and the other signatories listed therein.* 10.1.4 Letter Agreement amending Benchmark Merger Agreement, dated April 8, 1997, by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., BCR Holding, Inc., and the Company.* 10.2 Asset Purchase Agreement, dated as of December 26, 1996, between Community Pacific Broadcasting Company L.P. and Community Acquisition Company, Inc.* 10.3 Asset Purchase Agreement, dated as of January 27, 1997, by and among Point Communications Limited Partnership, Midcontinent Broadcasting Co. of Wisconsin, Inc., Madison Radio Group and Point Madison Acquisition Company, Inc.* 10.4.1 Asset Purchase Agreement, dated March 10, 1997, by and between Emerald City Radio Partners, L.P. and WNOK Acquisition Company, Inc.(1) 10.4.2 First Amendment to Asset Purchase Agreement, dated as of March 14, 1997, between Emerald City Radio Partners, L.P. and WNOK Acquisition Company, Inc.(1) 10.5.1 Asset Purchase Agreement dated as of April 24, 1997, between Ameron Broadcasting, Inc. and Capstar Acquisition Company, Inc., a wholly-owned subsidiary of Commodore.(1) 10.5.2 Asset Purchase Agreement dated as of April 24, 1997, between Ameron Broadcasting, Inc. and Capstar Acquisition Company, Inc., a wholly-owned subsidiary of Commodore.(1) 10.6 Employment Agreement, dated January 1, 1997, between the Company and Paul D. Stone.* 10.7 Employment Agreement, dated January 1, 1997, between the Company and William S. Banowsky, Jr.* 10.8 Second Amendment, dated February 20, 1997, to Stockholders Agreement, dated October 16, 1996, among Capstar, Hicks, Muse, Tate & Furst Incorporated, R. Steven Hicks and the securityholders listed therein.* 27.1 Financial Data Schedule.* - ---------------
* Filed herewith. (1) Incorporated by reference to Commodore Media, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 33-92732. EX-3.1 2 CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF CAPSTAR BROADCASTING PARTNERS, INC. FIRST: The name of the corporation is Capstar Broadcasting Partners, Inc. SECOND: The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New Castle County, Delaware. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law. FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is Two Hundred Million (200,000,000) shares of Common Stock of the par value of One Cent ($0.01) per share. FIFTH: The name of the incorporator is P. Gregory Hidalgo and his mailing address is c/o Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201. SIXTH: The name and mailing address of each director, who shall serve until the first annual meeting of stockholders or until their successors are elected and qualified, are as follows:
Name Address ---- ------- Thomas O. Hicks 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Eric C. Neuman 200 Crescent Court, Suite 1600 Dallas, Texas 75201 R. Steven Hicks 600 Congress, Suite 1270 Austin, Texas 78701
1 2 The number of directors of the corporation shall be as specified in, or determined in the manner provided in, the bylaws. Election of directors need not be by written ballot. SEVENTH: In furtherance of, and not in limitation of, the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation. EIGHTH: Whenever a compromise or arrangement is proposed between the corporation and its creditors or any class of them and/or between the corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the corporation, as the case may be, and also on the corporation. 2 3 NINTH: No director of the corporation shall be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. In addition to the circumstances in which a director of the corporation is not personally liable as set forth in the preceding sentence, a director of the corporation shall not be liable to the fullest extent permitted by any amendment to the Delaware General Corporation Law hereafter enacted that further limits the liability of a director. TENTH: The corporation shall have the right, subject to any express provisions or restrictions contained in this certificate of incorporation or bylaws of the corporation, from time to time, to amend this certificate of incorporation or any provision hereof in any manner now or hereafter provided by law, and all rights and powers of any kind conferred upon a director or stockholder of this corporation by this certificate of incorporation or any amendment hereof are subject to such right of the corporation. I, the undersigned, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the Delaware General Corporation Law, do make this certificate, hereby declaring that this is my act and deed and that the facts herein stated are true, and accordingly have hereunto set my hand this 11th day of October, 1996. /s/ P. GREGORY HIDALGO ---------------------------------- P. Gregory Hidalgo 3 4 CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF CAPSTAR BROADCASTING PARTNERS, INC. (INCORPORATED ON OCTOBER 11, 1996) (PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE) - ------------------------------------------------------------------------------- Capstar Broadcasting Partners, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies: FIRST, that the board of directors of the Corporation duly adopted resolutions proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: "RESOLVED, that the Board of Directors of the Corporation deems and declares advisable an amendment to the Certificate of Incorporation of the Corporation to amend Article FOURTH to read in its entirety as follows: FOURTH: The total number of shares of all classes of capital stock which the corporation shall have authority to issue is 210,000,000 shares consisting of (a) 10,000,000 shares of preferred stock, par value of $.01 per share (the "Preferred Stock"), and (b) 200,000,000 shares of common stock, par value of $.01 per share (the "Common Stock"). The designations, powers, preferences, rights, qualifications, limitations, and restrictions of the Preferred Stock and the Common Stock are as follows: 1. Provisions Relating to the Preferred Stock. (a) The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations, powers, preferences and rights and such qualifications, limitations and restrictions thereof as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the Board of Directors of the corporation as hereafter prescribed. (b) Authority is hereby expressly granted to and vested in the Board of Directors to authorize the issuance of the Preferred Stock from time to time 5 in one or more classes or series, and with respect to each class or series of the Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the following: (i) whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock: (ii) the number of shares to constitute the class or series and the designations thereof; (iii) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; (iv) whether or not the shares of any class or series shall be redeemable at the option of the corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property) and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof; (vi) the dividend rate, whether dividends are payable in cash, securities of the corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative and, if cumulative, the date or dates from which such dividends shall accumulate; (vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the corporation; 2 6 (viii) whether or not the shares of any class or series, at the option of the corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities, or other property of the corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (ix) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable. (c) The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board of Directors may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock. 2. Provisions Relating to the Common Stock. (a) Each share of Common Stock of the corporation shall have identical rights and privileges in every respect. The holders of shares of Common Stock shall be entitled to vote upon all matters submitted to a vote of the stockholders of the corporation and shall be entitled to one vote for each share of Common Stock held. (b) Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock or any series thereof, the holders of shares of the Common Stock shall be entitled to receive such dividends (payable in cash, stock or otherwise) as may be declared thereon by the Board of Directors at any time and from time to time out of any funds of the corporation legally available therefor. (c) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock or any series thereof, the holders of shares of the Common Stock shall be entitled to receive all of the remaining assets of the corporation available for distribution to its stockholders, ratably in proportion to the number of shares of the 3 7 Common Stock held by them. A liquidation, dissolution or winding-up of the corporation, as such terms are used in this subparagraph (c), shall not be deemed to be occasioned by or to include any merger of the corporation with or into one or more corporations or other entities, any acquisition or exchange of the outstanding shares of one or more classes or series of the corporation or any sale, lease, exchange or other disposition of all or a part of the assets of the corporation." "RESOLVED, that the Board of Directors of the Corporation deems and declares advisable an amendment to the Certificate of Incorporation of the Corporation to amend Article ELEVENTH to read in its entirety as follows: ELEVENTH: The following provisions are included for the purpose of ensuring that control and management of the corporation remain with citizens of the United States and corporations formed under the laws of the Unites States or any of the states of the United States, as required by the Communications Act of 1934, as the same may be amended from time to time: (a) The corporation shall not issue to a) a person who is a citizen of a country other than the United States; any entity organized under the laws of a government other than the government of the United States or any state, territory, or possession of the United States; a government other than the government of the United States or of any state, territory, or possession of the United States; or a representative of, or an individual or entity controlled by, any of the foregoing (individually, an "Alien"; collectively, "Aliens") any shares of capital stock of the corporation if such issuance would result in the total number of shares of such capital stock held or voted by Aliens (or for or by the account of Aliens) exceeding 25% of (x) the total equity of the corporation outstanding at any time and from time to time or (y) the total voting power of all shares of such capital stock outstanding and entitled to vote at any time and from time to time and shall nor permit the transfer on the books of the corporation of any capital stock to any Alien that would result in the total number of shares of such capital stock held or voted by Aliens (or for or by the account of Aliens) exceeding such 25% limits. (b) No Alien or Aliens, individually or collectively, directly or indirectly, shall be entitled to vote or direct or control the vote of more than 25% of a. the total equity of the corporation outstanding at any time and from time to time or the total voting power of all shares of capital stock of the corporation outstanding and entitled to vote at any time and from time to time, and issuances and transfers of capital stock of the corporation in violation of this subsection (b) shall be prohibited. (c) The Board of Directors shall have all powers necessary to implement the provisions of this Article ELEVENTH and to ensure compliance with the alien ownership restrictions (the "Alien Ownership Restrictions") of the 4 8 Communications Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time (collectively, the "Communications Act"), including, without limitation, the power to prohibit the transfer of any shares of capital stock of the corporation to any Alien and to take or cause to be taken such action as it deems appropriate to implement such prohibition, including placing a legend regarding restrictions on foreign ownership of the capital stock on certificates representing such stock. (d) Without limiting the generality of the foregoing and notwithstanding any other provision of this Restated Certificate of Incorporation to the contrary, all shares of capital stock of the corporation determined by the Board of Directors to be owned beneficially by an Alien or Aliens or an entity directly or indirectly owned by Aliens in whole or in part shall always be subject to redemption by the corporation by action of the Board of Directors, pursuant to Section 151 of the General Corporation Law of the State of Delaware, or any other applicable provision of law, to the extent necessary in the judgment of the Board of Directors to comply with the Alien Ownership Restrictions. The terms and conditions of such redemption shall be as follows: (i) the redemption price of the shares to be redeemed pursuant to this Article ELEVENTH shall be equal to the lower of a) the fair market value of the shares to be redeemed, as determined by the Board of Directors in good faith, and such Alien's purchase price for such shares; (ii) the redemption price of such shares may be paid in cash, securities or any combination thereof; (iii) if less than all the shares held by Aliens are to be redeemed, the shares to be redeemed shall be selected in any manner determined by the Board of Directors to be fair and equitable; (iv) at least 10 days' written notice of the redemption date shall be given to the holders of record of the shares selected to be redeemed (unless waived in writing by any such holder), provided that the redemption date may be the date on which written notice shall be given to holders if the cash or securities necessary to effect the redemption shall have been deposited in trust for the benefit of such holders and subject to immediate withdrawal by them upon surrender of the stock certificates for their shares to be redeemed duly endorsed in blank or accompanied by duly executed proper instruments of transfer; (v) from and after the redemption date, the shares to be redeemed shall cease to be regarded as outstanding and any and all rights of 5 9 the holders in respect of the shares to be redeemed or attaching to such shares of whatever nature (including without limitation any rights to vote or participate in dividends declared on stock of the same class or series as such shares) shall cease and terminate, and the holders thereof thereafter shall be entitled only to receive the cash or securities payable upon redemption; and (vi) such other terms and conditions as the Board of Directors shall determine. For purposes of this Article ELEVENTH, the determination of beneficial ownership of shares of capital stock of the corporation shall be made pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, unless otherwise required by the Alien Ownership Restrictions." SECOND, that in lieu of a meeting and vote of stockholders, the stockholders of the Corporation have given written consent to said amendments in accordance with the provisions of Section 228(a) of the General Corporation Law of the State of Delaware. THIRD, that the previously stated amendments to the Certificate of Incorporation of the Corporation were duly adopted by the stockholders of the Corporation in accordance with the provisions of Section 242 and of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Certificate this 13th day of February, 1997. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ R. STEVEN HICKS -------------------------------- R. Steven Hicks, President 6 10 CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF CAPSTAR BROADCASTING PARTNERS, INC. (INCORPORATED ON OCTOBER 11, 1996) (PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE) - ------------------------------------------------------------------------------- Capstar Broadcasting Partners, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies: FIRST, that the board of directors of the Corporation duly adopted resolutions proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: "RESOLVED, that the Board of Directors of the Corporation deems and declares advisable an amendment to the Certificate of Incorporation of the Corporation to amend Article FOURTH to read in its entirety as follows: FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 260,000,000 shares consisting of (a) 10,000,000 shares of preferred stock, par value of One Cent ($.01) per share (the "Preferred Stock"), (b) 200,000,000 shares of Class A Common Stock, par value of One Cent ($.01) per share (the "Class A Common Stock"), and (c) 50,000,000 shares of Class B Common Stock, par value of One Cent ($.01) per share (the "Class B Common Stock) (the Class A Common Stock and Class B Common Stock, collectively, the "Common Stock"). The designations, powers, preferences, rights, qualifications, limitations, and restrictions of the Preferred Stock and the Common Stock are as follows: 1. Reclassification of Existing Capital Stock. (a) Subject to paragraph (b) below, upon the filing of this Certificate of Amendment to Certificate of Incorporation, each share of Common Stock, par value of One Cent ($.01) per share, of the Corporation then outstanding shall be reclassified into one share of the Class A Common Stock (such reclassification being the "Reclassification"), and thereupon the authorized capital stock of the Corporation shall be as provided in the first paragraph of Article FOURTH above. 11 (b) After the Reclassification, each holder of the shares of capital stock of the Corporation being reclassified as provided herein shall be entitled to receive, upon surrender at the office of the Corporation or the transfer agent for the Common Stock of such holder's certificate or certificates representing the shares being reclassified, duly endorsed in blank or accompanied by duly executed proper instruments of transfer, as promptly as practicable after such surrender one or more certificates evidencing the Class A Common Stock issuable to such holder in respect of the Reclassification. After the Reclassification, pending the issuance and delivery of such certificates in accordance herewith, the certificate or certificates evidencing the shares of capital stock being reclassified shall be deemed to evidence the shares of Class A Common Stock issuable upon the Reclassification. 2. Provisions Relating to the Preferred Stock. (a) The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations, powers, preferences and rights and such qualifications, limitations and restrictions thereof as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the Board of Directors of the corporation as hereafter prescribed. (b) Authority is hereby expressly granted to and vested in the Board of Directors to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and with respect to each class or series of the Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the following: (i) whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock: (ii) the number of shares to constitute the class or series and the designations thereof; (iii) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; (iv) whether or not the shares of any class or series shall be redeemable at the option of the corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other 2 12 property) and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof; (vi) the dividend rate, whether dividends are payable in cash, securities of the corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative and, if cumulative, the date or dates from which such dividends shall accumulate; (vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the corporation; (viii) whether or not the shares of any class or series, at the option of the corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities, or other property of the corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (ix) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable. (c) The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board of Directors may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred 3 13 Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock. 3. Provisions Relating to the Common Stock. (a) General. Except as otherwise provided herein or as otherwise provided by applicable law, all shares of Common Stock shall have identical rights and privileges in every respect. (b) Dividends. Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock, the holders of the Common Stock shall be entitled to participate ratably, on a share-for-share basis as if all shares were of a single class, in such dividends, whether in cash, stock or otherwise, as may be declared by the Board of Directors from time to time out of funds of the Corporation legally available therefor; provided, however, that any dividends payable in shares of Common Stock (or payable in rights to subscribe for or purchase shares of Common Stock or securities or indebtedness convertible into shares of Common Stock) shall be declared and paid at the same rate on each class of Common Stock and only in shares of Class A Common Stock (or rights to subscribe for or purchase shares of Class A Common Stock or securities or indebtedness convertible into shares of Class A Common Stock) to holders of Class A Common Stock, and in shares of Class B Common Stock (or rights to subscribe for or purchase shares of Class B Common Stock or securities or indebtedness convertible into shares of Class B Common Stock) to holders of Class B Common Stock. (c) Voting. The holders of Class A Common Stock shall be entitled to one vote per share with respect to all matters submitted to a vote of stockholders. The Class B Common Stock shall not be entitled to vote, except as required by law. (d) Adjustments for Stock Splits and Stock Dividends. The Corporation shall treat the shares of Common Stock identically in respect of any subdivisions or combinations (for example, if the Corporation effects a two-for-one stock split with respect to the Class A Common Stock, it shall at the same time effect a two-for-one stock split with respect to the Class B Common Stock). (e) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, after all creditors of the Corporation shall have been paid in full and after payment of all sums payable in respect of Preferred Stock, if any, the holders of the Common Stock shall share ratably on a share-for-share basis in all distributions of assets pursuant to such voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation. For the purposes of this paragraph (e), neither the merger nor the consolidation of the Corporation into or with another entity or the merger or consolidation of any other entity into or with the Corporation, or the sale, transfer, or other disposition of all or substantially all the assets of the Corporation, shall be deemed to be a voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation. 4 14 (f) Consideration in Substantial Transaction. In any merger, consolidation or business combination, the per share consideration received by the holders of the Common Stock must be economically identical, except that in any such transaction, any capital stock issued to holders of Common Stock may differ as to rights to the same extent as the rights of the classes of Common Stock authorized hereby differ. (g) Conversion. Subject to required consent of the Federal Communication Commission (the "FCC"), if any, the shares of Class B Common Stock shall be convertible in whole or in part at any time at the option of the holder or holders thereof into an equal number of fully paid and non-assessable shares of Class A Common Stock, for no additional consideration. At the time of any such conversion or, in the event such conversion requires the consent of the FCC, at the time the FCC order approving such a conversion becomes a final order, the holder or holders of Class B Common Stock shall deliver to the office of the Corporation or any transfer agent for the Common Stock the certificate or certificates representing the shares of Class B Common Stock to be converted, duly endorsed in blank or accompanied by duly executed proper instruments of transfer, and written notice to the Corporation stating that such holder or holders elect(s) to convert such share or shares and stating the name and addresses in which each certificate for shares of Class A Common Stock issued upon such conversion is to be issued. Conversion shall be deemed to have been effected at the time and date when such delivery is made to the Corporation or the transfer agent of the shares to be converted, and the person exercising such voluntary conversion shall be deemed to be the holder of record of the number of shares of Class A Common Stock issuable upon such conversion at such time. As promptly as practicable following any holder's conversion of shares of Class B Common Stock, the Corporation shall issue and deliver to the converting holder or to such holder's transferee, as the case may be, one or more certificates (as such holder may request) evidencing the shares of Class A Common Stock issuable in respect of the applicable conversion and if the certificates surrendered by the converting holder evidence more shares of Class B Common Stock than the holder has elected to convert, one or more certificates (as such holder may request) evidencing the shares of Class B Common Stock which have not been converted. Pending the issuance and delivery of the foregoing certificates, the certificate or certificates evidencing the shares of Class B Common Stock that have been surrendered for conversion shall be deemed to evidence the shares of Class A Common Stock issuable upon such conversion. Any dividends declared and not paid on shares of Class B Common Stock prior to their conversion as provided above shall be paid, on the payment date, to the holder or holders entitled thereto on the record date for such dividend payment, notwithstanding such conversion; provided, however, that such holder or holders shall not be entitled to receive the corresponding dividends declared but not paid on the shares of Class A Common Stock issuable upon such conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversions provided for herein, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversions provided for herein and shall take all such corporate action as may be necessary to assure that such shares of Class A Common Stock shall be validly issued, fully paid and non-assessable upon conversion of all of the outstanding shares of Class B Common Stock; moreover, if at any time the number of authorized but unissued shares of Class A Common Stock shall not be 5 15 sufficient to effect the conversions provided for herein, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Class A Common Stock to such number of shares as shall be sufficient for such purpose. SECOND, that in lieu of a meeting and vote of stockholders, the stockholders of the Corporation have given written consent to said amendments in accordance with the provisions of Section 228(a) of the General Corporation Law of the State of Delaware. THIRD, that the previously stated amendments to the Certificate of Incorporation of the Corporation were duly adopted by the stockholders of the Corporation in accordance with the provisions of Section 242 and of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Certificate this 19th day of February, 1997. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ R. STEVEN HICKS ------------------------------- R. Steven Hicks, President 6 16 CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF CAPSTAR BROADCASTING PARTNERS, INC. (Incorporated on October 11, 1996) (Pursuant to Section 242 of the General Corporation Law of the State of Delaware) - -------------------------------------------------------------------------------- Capstar Broadcasting Partners, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies: FIRST, that the board of directors of the Corporation duly adopted resolutions proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: "RESOLVED, that the Board of Directors of the Corporation deems and declares advisable an amendment to the Certificate of Incorporation of the Corporation to amend Article FOURTH to read in its entirety as follows: FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 260,000,000 shares consisting of (a) 10,000,000 shares of preferred stock, par value of One Cent ($.01) per share (the "Preferred Stock"), (b) 200,000,000 shares of Class A Common Stock, par value of One Cent ($.01) per share (the "Class A Common Stock"), and (c) 50,000,000 shares of Class B Common Stock, par value of One Cent ($.01) per share (the "Class B Common Stock) (the Class A Common Stock and Class B Common Stock, collectively, the "Common Stock"). The designations, powers, preferences, rights, qualifications, limitations, and restrictions of the Preferred Stock and the Common Stock are as follows: 1. Reclassification of Existing Capital Stock. (a) Subject to paragraph (b) below, upon the filing of this Certificate of Amendment to Certificate of Incorporation, each share of Common Stock, par value of One Cent ($.01) per share, of the Corporation then outstanding shall be reclassified into one share of the Class A Common Stock (such reclassification being the "Reclassification"), and thereupon the authorized capital stock of the Corporation shall be as provided in the first paragraph of Article FOURTH above. 17 (b) After the Reclassification, each holder of the shares of capital stock of the Corporation being reclassified as provided herein shall be entitled to receive, upon surrender at the office of the Corporation or the transfer agent for the Common Stock of such holder's certificate or certificates representing the shares being reclassified, duly endorsed in blank or accompanied by duly executed proper instruments of transfer, as promptly as practicable after such surrender one or more certificates evidencing the Class A Common Stock issuable to such holder in respect of the Reclassification. After the Reclassification, pending the issuance and delivery of such certificates in accordance herewith, the certificate or certificates evidencing the shares of capital stock being reclassified shall be deemed to evidence the shares of Class A Common Stock issuable upon the Reclassification. 2. Provisions Relating to the Preferred Stock. (a) The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations, powers, preferences and rights and such qualifications, limitations and restrictions thereof as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the Board of Directors of the corporation as hereafter prescribed. (b) Authority is hereby expressly granted to and vested in the Board of Directors to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and with respect to each class or series of the Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the following: (i) whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock: (ii) the number of shares to constitute the class or series and the designations thereof; (iii) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; (iv) whether or not the shares of any class or series shall be redeemable at the option of the corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other 2 18 property) and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof; (vi) the dividend rate, whether dividends are payable in cash, securities of the corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative and, if cumulative, the date or dates from which such dividends shall accumulate; (vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the corporation; (viii) whether or not the shares of any class or series, at the option of the corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities, or other property of the corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (ix) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable. (c) The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board of Directors may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred 3 19 Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock. 3. Provisions Relating to the Common Stock. (a) General. Except as otherwise provided herein or as otherwise provided by applicable law, all shares of Common Stock shall have identical rights and privileges in every respect. (b) Dividends. Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock, the holders of the Common Stock shall be entitled to participate ratably, on a share-for-share basis as if all shares were of a single class, in such dividends, whether in cash, stock or otherwise, as may be declared by the Board of Directors from time to time out of funds of the Corporation legally available therefor; provided, however, that any dividends payable in shares of Common Stock (or payable in rights to subscribe for or purchase shares of Common Stock or securities or indebtedness convertible into shares of Common Stock) shall be declared and paid at the same rate on each class of Common Stock and only in shares of Class A Common Stock (or rights to subscribe for or purchase shares of Class A Common Stock or securities or indebtedness convertible into shares of Class A Common Stock) to holders of Class A Common Stock, and in shares of Class B Common Stock (or rights to subscribe for or purchase shares of Class B Common Stock or securities or indebtedness convertible into shares of Class B Common Stock) to holders of Class B Common Stock. (c) Voting. The holders of Class A Common Stock shall be entitled to one vote per share with respect to all matters submitted to a vote of stockholders. The Class B Common Stock shall not be entitled to vote, except as required by law; provided, however, that the Class B Common Stock shall not have the right to vote on any matter if such right would cause the Class B Common Stock to become voting securities within the meaning of 12 C.F.R. 225.2(p), as that section may be amended from time to time. (d) Adjustments for Stock Splits and Stock Dividends. The Corporation shall treat the shares of Common Stock identically in respect of any subdivisions or combinations (for example, if the Corporation effects a two-for-one stock split with respect to the Class A Common Stock, it shall at the same time effect a two-for-one stock split with respect to the Class B Common Stock). (e) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, after all creditors of the Corporation shall have been paid in full and after payment of all sums payable in respect of Preferred Stock, if any, the holders of the Common Stock shall share ratably on a share-for-share basis in all distributions of assets pursuant to such voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation. For the purposes of this paragraph (e), neither the merger nor the consolidation of the Corporation into or with another entity or the merger or consolidation of any other entity into or with the 4 20 Corporation, or the sale, transfer, or other disposition of all or substantially all the assets of the Corporation, shall be deemed to be a voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation. (f) Consideration in Substantial Transaction. In any merger, consolidation or business combination, the per share consideration received by the holders of the Common Stock must be economically identical, except that in any such transaction, any capital stock issued to holders of Common Stock may differ as to rights to the same extent as the rights of the classes of Common Stock authorized hereby differ. (g) Conversion. Subject to required consent of the Federal Communication Commission (the "FCC"), if any, the shares of Class B Common Stock shall be convertible in whole or in part at any time at the option of the holder or holders thereof if such holder(s) is not a Regulated Entity (as defined below) into an equal number of fully paid and non-assessable shares of Class A Common Stock, for no additional consideration. "Regulated Entity" means (i) any entity that is a "bank holding company" (as defined in Section 2(a) of the Bank Holding Company Act of 1956, as amended (the "BHC Act")) or any non-bank subsidiary of such an entity and (ii) any entity, that pursuant to Section 8(a) of the International Banking Act of 1978, as amended, is subject to the provisions of the BHC Act or any non-bank subsidiary of such an entity. At the time of any such conversion or, in the event such conversion requires the consent of the FCC, at the time the FCC order approving such a conversion becomes a final order, the holder or holders of Class B Common Stock shall deliver to the office of the Corporation or any transfer agent for the Common Stock the certificate or certificates representing the shares of Class B Common Stock to be converted, duly endorsed in blank or accompanied by duly executed proper instruments of transfer, and written notice to the Corporation stating that such holder or holders elect(s) to convert such share or shares and stating the name and addresses in which each certificate for shares of Class A Common Stock issued upon such conversion is to be issued. Conversion shall be deemed to have been effected at the time and date when such delivery is made to the Corporation or the transfer agent of the shares to be converted, and the person exercising such voluntary conversion shall be deemed to be the holder of record of the number of shares of Class A Common Stock issuable upon such conversion at such time. As promptly as practicable following any holder's conversion of shares of Class B Common Stock, the Corporation shall issue and deliver to the converting holder or to such holder's transferee, as the case may be, one or more certificates (as such holder may request) evidencing the shares of Class A Common Stock issuable in respect of the applicable conversion and if the certificates surrendered by the converting holder evidence more shares of Class B Common Stock than the holder has elected to convert, one or more certificates (as such holder may request) evidencing the shares of Class B Common Stock which have not been converted. Pending the issuance and delivery of the foregoing certificates, the certificate or certificates evidencing the shares of Class B Common Stock that have been surrendered for conversion shall be deemed to evidence the shares of Class A Common Stock issuable upon such conversion. Any dividends declared and not paid on shares of Class B Common Stock prior to their conversion as provided above shall be paid, on the payment date, to the holder or holders entitled thereto on the record date for such dividend payment, notwithstanding such conversion; provided, 5 21 however, that such holder or holders shall not be entitled to receive the corresponding dividends declared but not paid on the shares of Class A Common Stock issuable upon such conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversions provided for herein, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversions provided for herein and shall take all such corporate action as may be necessary to assure that such shares of Class A Common Stock shall be validly issued, fully paid and non-assessable upon conversion of all of the outstanding shares of Class B Common Stock; moreover, if at any time the number of authorized but unissued shares of Class A Common Stock shall not be sufficient to effect the conversions provided for herein, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Class A Common Stock to such number of shares as shall be sufficient for such purpose. (h) Transferability. Notwithstanding any other provision contained in this Certificate of Incorporation, if a holder of the Class B Common Stock is a Regulated Entity, such holder may transfer the Class B Common Stock only under the following circumstances: (i) in a widely distributed public offering; (ii) in a transfer pursuant to Rule 144 under the Securities Act of 1933 or any similar rule then in force; (iii) in a transfer constituting two percent or less of the outstanding shares of the Class B Common Stock; (iv) in a transfer to a person if such person already owns or has negotiated to purchase at least a majority of the Class A Common Stock; (v) in a transfer to the Corporation; (vi) in a transfer to an affiliate of such holder or to any other Regulated Entity; or (vii) in any method of transfer permitted by the Board of Governors of the Federal Reserve System. SECOND, that in lieu of a meeting and vote of stockholders, the stockholders of the Corporation have given written consent to said amendments in accordance with the provisions of Section 228(a) of the General Corporation Law of the State of Delaware. THIRD, that the previously stated amendments to the Certificate of Incorporation of the Corporation were duly adopted by the stockholders of the Corporation in accordance with the provisions of Section 242 and of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Certificate this 24th day of April, 1997. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ R. Steven Hicks ---------------------------------- R. Steven Hicks President 6 22 CERTIFICATE OF CORRECTION OF CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF CAPSTAR BROADCASTING PARTNERS, INC. (PURSUANT TO SECTION 103(f) OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE) - ------------------------------------------------------------------------------- Capstar Broadcasting Partners, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies: That paragraph FIRST of the Certificate of Amendment to Certificate of Incorporation ("Certificate of Amendment"), filed with the Delaware Secretary of State on April 25, 1997, incorrectly purported to amend Article FOURTH to provide for a reclassification of the Corporation's then outstanding Common Stock into Class A Common Stock when the intent of the Corporation was not to reclassify its existing Common Stock. Thus, paragraph FIRST of the Certificate of Amendment in its corrected form should read as follows: FIRST, that the board of directors of the Corporation duly adopted resolutions proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: "RESOLVED, that the Board of Directors of the Corporation deems and declares advisable an amendment to the Certificate of Incorporation of the Corporation to amend Article FOURTH to read in its entirety as follows: FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 260,000,000 shares consisting of (a) 10,000,000 shares of preferred stock, par value of One Cent ($.01) per share (the "Preferred Stock"), (b) 200,000,000 shares of Class A Common Stock, par value of One Cent ($.01) per share (the "Class A Common Stock"), and (c) 50,000,000 shares of Class B Common Stock, par value of One Cent ($.01) per share (the "Class B Common Stock) (the Class A Common Stock and Class B Common Stock, collectively, the "Common Stock"). The designations, powers, preferences, rights, qualifications, limitations, and restrictions of the Preferred Stock and the Common Stock are as follows: 23 1. Provisions Relating to the Preferred Stock. (a) The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations, powers, preferences and rights and such qualifications, limitations and restrictions thereof as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the Board of Directors of the corporation as hereafter prescribed. (b) Authority is hereby expressly granted to and vested in the Board of Directors to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and with respect to each class or series of the Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the following: (i) whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock; (ii) the number of shares to constitute the class or series and the designations thereof; (iii)the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; (iv) whether or not the shares of any class or series shall be redeemable at the option of the corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property) and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof; (vi) the dividend rate, whether dividends are payable in cash, securities of the corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or 2 24 series of stock, whether or not such dividends shall be cumulative or noncumulative and, if cumulative, the date or dates from which such dividends shall accumulate; (vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the corporation; (viii) whether or not the shares of any class or series, at the option of the corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities, or other property of the corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (ix) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable. (c) The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board of Directors may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock. 2. Provisions Relating to the Common Stock. (a) General. Except as otherwise provided herein or as otherwise provided by applicable law, all shares of Common Stock shall have identical rights and privileges in every respect. (b) Dividends. Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock, the holders of the Common Stock shall be entitled to participate ratably, on a share-for-share basis as if all shares were of a single class, in such dividends, whether in cash, stock or otherwise, as may be declared by the Board of Directors from time to time out of funds of the Corporation legally available therefor; provided, however, that any dividends payable in shares of Common Stock (or payable in rights to subscribe for or purchase shares of 3 25 Common Stock or securities or indebtedness convertible into shares of Common Stock) shall be declared and paid at the same rate on each class of Common Stock and only in shares of Class A Common Stock (or rights to subscribe for or purchase shares of Class A Common Stock or securities or indebtedness convertible into shares of Class A Common Stock) to holders of Class A Common Stock, and in shares of Class B Common Stock (or rights to subscribe for or purchase shares of Class B Common Stock or securities or indebtedness convertible into shares of Class B Common Stock) to holders of Class B Common Stock. (c) Voting. The holders of Class A Common Stock shall be entitled to one vote per share with respect to all matters submitted to a vote of stockholders. The Class B Common Stock shall not be entitled to vote, except as required by law; provided, however, that the Class B Common Stock shall not have the right to vote on any matter if such right would cause the Class B Common Stock to become voting securities within the meaning of 12 C.F.R. 225.2(p), as that section may be amended from time to time. (d) Adjustments for Stock Splits and Stock Dividends. The Corporation shall treat the shares of Common Stock identically in respect of any subdivisions or combinations (for example, if the Corporation effects a two-for-one stock split with respect to the Class A Common Stock, it shall at the same time effect a two-for-one stock split with respect to the Class B Common Stock). (e) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation, after all creditors of the Corporation shall have been paid in full and after payment of all sums payable in respect of Preferred Stock, if any, the holders of the Common Stock shall share ratably on a share-for-share basis in all distributions of assets pursuant to such voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation. For the purposes of this paragraph (e), neither the merger nor the consolidation of the Corporation into or with another entity or the merger or consolidation of any other entity into or with the Corporation, or the sale, transfer, or other disposition of all or substantially all the assets of the Corporation, shall be deemed to be a voluntary or involuntary liquidation, dissolution, or winding-up of the Corporation. (f) Consideration in Substantial Transaction. In any merger, consolidation or business combination, the per share consideration received by the holders of the Common Stock must be economically identical, except that in any such transaction, any capital stock issued to holders of Common Stock may differ as to rights to the same extent as the rights of the classes of Common Stock authorized hereby differ. (g) Conversion. Subject to required consent of the Federal Communication Commission (the "FCC"), if any, the shares of Class B Common Stock shall be convertible in whole or in part at any time at the option of the holder 4 26 or holders thereof if such holder(s) is not a Regulated Entity (as defined below) into an equal number of fully paid and non-assessable shares of Class A Common Stock, for no additional consideration. "Regulated Entity" means (i) any entity that is a "bank holding company" (as defined in Section 2(a) of the Bank Holding Company Act of 1956, as amended (the "BHC Act")) or any non-bank subsidiary of such an entity and (ii) any entity, that pursuant to Section 8(a) of the International Banking Act of 1978, as amended, is subject to the provisions of the BHC Act or any non-bank subsidiary of such an entity. At the time of any such conversion or, in the event such conversion requires the consent of the FCC, at the time the FCC order approving such a conversion becomes a final order, the holder or holders of Class B Common Stock shall deliver to the office of the Corporation or any transfer agent for the Common Stock the certificate or certificates representing the shares of Class B Common Stock to be converted, duly endorsed in blank or accompanied by duly executed proper instruments of transfer, and written notice to the Corporation stating that such holder or holders elect(s) to convert such share or shares and stating the name and addresses in which each certificate for shares of Class A Common Stock issued upon such conversion is to be issued. Conversion shall be deemed to have been effected at the time and date when such delivery is made to the Corporation or the transfer agent of the shares to be converted, and the person exercising such voluntary conversion shall be deemed to be the holder of record of the number of shares of Class A Common Stock issuable upon such conversion at such time. As promptly as practicable following any holder's conversion of shares of Class B Common Stock, the Corporation shall issue and deliver to the converting holder or to such holder's transferee, as the case may be, one or more certificates (as such holder may request) evidencing the shares of Class A Common Stock issuable in respect of the applicable conversion and if the certificates surrendered by the converting holder evidence more shares of Class B Common Stock than the holder has elected to convert, one or more certificates (as such holder may request) evidencing the shares of Class B Common Stock which have not been converted. Pending the issuance and delivery of the foregoing certificates, the certificate or certificates evidencing the shares of Class B Common Stock that have been surrendered for conversion shall be deemed to evidence the shares of Class A Common Stock issuable upon such conversion. Any dividends declared and not paid on shares of Class B Common Stock prior to their conversion as provided above shall be paid, on the payment date, to the holder or holders entitled thereto on the record date for such dividend payment, notwithstanding such conversion; provided, however, that such holder or holders shall not be entitled to receive the corresponding dividends declared but not paid on the shares of Class A Common Stock issuable upon such conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversions provided for herein, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversions provided for herein and shall take all such corporate action as may be necessary to assure that such shares of Class A Common Stock shall be validly issued, fully paid and non-assessable upon conversion of all of the outstanding shares 5 27 of Class B Common Stock; moreover, if at any time the number of authorized but unissued shares of Class A Common Stock shall not be sufficient to effect the conversions provided for herein, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Class A Common Stock to such number of shares as shall be sufficient for such purpose. (h) Transferability. Notwithstanding any other provision contained in this Certificate of Incorporation, if a holder of the Class B Common Stock is a Regulated Entity, such holder may transfer the Class B Common Stock only under the following circumstances: (i) in a widely distributed public offering; (ii) in a transfer pursuant to Rule 144 under the Securities Act of 1933 or any similar rule then in force; (iii) in a transfer constituting two percent or less of the outstanding shares of the Class B Common Stock; (iv) in a transfer to a person if such person already owns or has negotiated to purchase at least a majority of the Class A Common Stock; (v) in a transfer to the Corporation; (vi) in a transfer to an Affiliate of such holder or to any other Regulated Entity; or (vii) in any method of transfer permitted by the Board of Governors of the Federal Reserve System. IN WITNESS WHEREOF, CAPSTAR BROADCASTING PARTNERS, INC. has caused this Certificate of Correction to be executed by its duly authorized officer this 6th day of May, 1997. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ R. STEVEN HICKS -------------------------------- R. Steven Hicks President 6 EX-3.2 3 BY-LAWS OF CAPSTAR BROADCASTING PARTNERS, INC. 1 EXHIBIT 3.2 BYLAWS OF CAPSTAR BROADCASTING PARTNERS, INC. ARTICLE I OFFICES Section 1. Registered Office. The registered office of the Corporation required by the General Corporation Law of the State of Delaware to be maintained in the State of Delaware, shall be the registered office named in the original Certificate of Incorporation of the Corporation (as the same may be amended and restated from time to time, the "Certificate of Incorporation"), or such other office as may be designated from time to time by the Board of Directors in the manner provided by law. Should the Corporation maintain a principal office within the State of Delaware such registered office need not be identical to such principal office of the Corporation. Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDERS Section 1. Place of Meetings. All meetings of the stockholders shall be held at the principal office of the Corporation, or at such other place within or without the State of Delaware as shall be specified or fixed in the notices or waivers of notice thereof. Section 2. Quorum; Adjournment of Meetings. Unless otherwise required by law or provided in the Certificate of Incorporation or these bylaws, the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders for the transaction of business and the act of a majority of such stock so represented at any meeting of stockholders at which a quorum is present shall constitute the act of the meeting of stockholders. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Notwithstanding the other provisions of the Certificate of Incorporation or these bylaws, the chairman of the meeting or the holders of a majority of the issued and outstanding stock, present in person or represented by proxy, at any meeting of stockholders, whether or not a quorum is present, shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting; provided, 2 however, if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at such meeting. At any such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally called. Section 3. Annual Meetings. An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, within or without the State of Delaware, on such date, and at such time as the Board of Directors shall fix and set forth in the notice of the meeting, which date shall be within thirteen (13) months subsequent to the later of the date of incorporation or the last annual meeting of stockholders. Section 4. Special Meetings. Unless otherwise provided in the Certificate of Incorporation, special meetings of the stockholders for any purpose or purposes may be called at any time by the Chairman of the Board (if any), by the President or by a majority of the Board of Directors, or by a majority of the executive committee (if any), and shall be called by the Chairman of the Board (if any), by the President or the Secretary upon the written request therefor, stating the purpose or purposes of the meeting, delivered to such officer, signed by the holder(s) of at least ten percent (l0%) of the issued and outstanding stock entitled to vote at such meeting. Section 5. Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors of the Corporation may fix, in advance, a date as the record date for any such determination of stockholders, which date shall not be more than sixty (60) days nor less than ten (l0) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If the Board of Directors does not fix a record date for any meeting of the stockholders, the record date for determining stockholders entitled to notice of or to vote at such meeting shall be at the close of business on the day next preceding the day on which notice is given, or, if in accordance with Article VIII, Section 3 of these bylaws notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If, in accordance with Section 12 of this Article II, corporate action without a meeting of stockholders is to be taken, the record date for determining stockholders entitled to express consent to such corporate action in writing, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 2 3 Section 6. Notice of Meetings. Written notice of the place, date and hour of all meetings, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by or at the direction of the Chairman of the Board (if any) or the President, the Secretary or the other person(s) calling the meeting to each stockholder entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the date of the meeting. Such notice may be delivered either personally or by mail. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. Section 7. Stock List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in the name of such stockholder, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The stock list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 8. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to a corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. Proxies for use at any meeting of stockholders shall be filed with the Secretary, or such other officer as the Board of Directors may from time to time determine by resolution, before or at the time of the meeting. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting who shall decide all questions touching upon the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions. No proxy shall be valid after three (3) years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power. Should a proxy designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of the same portion of the shares as he is of the proxies representing such shares. Section 9. Voting; Elections; Inspectors. Unless otherwise required by law or provided in the Certificate of Incorporation, each stockholder shall have one vote for each share of stock entitled to vote which is registered in his name on the record date for the meeting. Shares registered in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the bylaw (or comparable instrument) of such corporation may prescribe, or in the absence of such 3 4 provision, as the Board of Directors (or comparable body) of such corporation may determine. Shares registered in the name of a deceased person may be voted by his executor or administrator, either in person or by proxy. All voting, except as required by the Certificate of Incorporation or where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by stockholders holding a majority of the issued and outstanding stock present in person or by proxy at any meeting a stock vote shall be taken. Every stock vote shall be taken by written ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. All elections of directors shall be by ballot, unless otherwise provided in the Certificate of Incorporation. At any meeting at which a vote is taken by ballots, the chairman of the meeting may appoint one or more inspectors, each of whom shall subscribe an oath or affirmation to execute faithfully the duties of inspector at such meeting with strict impartiality and according to the best of his ability. Such inspector shall receive the ballots, count the votes and make and sign a certificate of the result thereof. The chairman of the meeting may appoint any person to serve as inspector, except no candidate for the office of director shall be appointed as an inspector. Unless otherwise provided in the Certificate of Incorporation, cumulative voting for the election of directors shall be prohibited. Section 10. Conduct of Meetings. The meetings of the stockholders shall be presided over by the Chairman of the Board (if any), or if he is not present, by the President, or if neither the Chairman of the Board (if any), nor President is present, by a chairman elected at the meeting. The Secretary of the Corporation, if present, shall act as secretary of such meetings, or if he is not present, an Assistant Secretary shall so act; if neither the Secretary nor an Assistant Secretary is present, then a secretary shall be appointed by the chairman of the meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him in order. Unless the chairman of the meeting of stockholders shall otherwise determine, the order of business shall be as follows: (a) Calling of meeting to order. (b) Election of a chairman and the appointment of a secretary if necessary. (c) Presentation of proof of the due calling of the meeting. (d) Presentation and examination of proxies and determination of a quorum. (e) Reading and settlement of the minutes of the previous meeting. (f) Reports of officers and committees. (g) The election of directors if an annual meeting, or a meeting called for that purpose. (h) Unfinished business. (i) New business. (j) Adjournment. 4 5 Section 11. Treasury Stock. The Corporation shall not vote, directly or indirectly, shares of its own stock owned by it and such shares shall not be counted for quorum purposes. Section 12. Action Without Meeting. Unless otherwise provided in the Certificate of Incorporation, any action permitted or required by law, the Certificate of Incorporation or these bylaws to be taken at a meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than a unanimous written consent shall be given by the Secretary to those stockholders who have not consented in writing. ARTICLE III BOARD OF DIRECTORS Section 1. Power; Number; Term of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, and subject to the restrictions imposed by law or the Certificate of Incorporation, they may exercise all the powers of the Corporation. Unless otherwise provided in the Certificate of Incorporation, the number of directors that shall constitute the entire Board of Directors shall be determined from time to time by resolution of the Board of Directors (provided that no decrease in the number of directors that would have the effect of shortening the term of an incumbent director may be made by the Board of Directors). If the Board of Directors makes no such determination, the number of directors shall be the number set forth in the Certificate of Incorporation as the number of directors constituting the initial Board of Directors. Each director shall hold office for the term for which he is elected and thereafter until his successor shall have been elected and qualified, or until his earlier death, resignation or removal. Unless otherwise provided in the Certificate of Incorporation, directors need not be stockholders nor residents of the State of Delaware. Section 2. Quorum. Unless otherwise provided in the Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business of the Board of Directors and the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 3. Place of Meetings; Order of Business. The directors may hold their meetings and may have an office and keep the books of the Corporation, except as otherwise provided by law, in such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine by resolution. At all meetings of the Board of Directors business shall be 5 6 transacted in such order as shall from time to time be determined by the Chairman of the Board (if any), or in his absence by the President, or by resolution of the Board of Directors. Section 4. First Meeting. Each newly elected Board of Directors may hold its first meeting for the purpose of organization and the transaction of business, if a quorum is present, immediately after and at the same place as the annual meeting of the stockholders. Notice of such meeting shall not be required. At the first meeting of the Board of Directors in each year at which a quorum shall be present, held next after the annual meeting of stockholders, the Board of Directors shall proceed to the election of the officers of the Corporation. Section 5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as shall be designated from time to time by resolution of the Board of Directors. Notice of such regular meetings shall not be required. Section 6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board (if any), the President or, on the written request of any two directors, by the Secretary, in each case on at least twenty-four (24) hours personal, written, telegraphic, cable or wireless notice to each director. Such notice, or any waiver thereof pursuant to Article VIII, Section 3 hereof, need not state the purpose or purposes of such meeting, except as may otherwise be required by law or provided for in the Certificate of Incorporation or these bylaws. Section 7. Removal. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided that, unless the Certificate of Incorporation otherwise provides, if the Board of Directors is classified, then the stockholders may effect such removal only for cause; and provided further that, if the Certificate of Incorporation expressly grants to stockholders the right to cumulate votes for the election of directors and if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors, or, if there be classes of directors, at an election of the class of directors of which such director is a part. Section 8. Vacancies; Increases in the Number of Directors. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or a sole remaining director; and any director so chosen shall hold office until the next annual election and until his successor shall be duly elected and shall qualify, unless sooner displaced. If the directors of the Corporation are divided into classes, any directors elected to fill vacancies or newly created directorships shall hold office until the next election of the class for which such directors shall have been chosen, and until their successors shall be duly elected and shall qualify. Section 9. Compensation. Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of directors. 6 7 Section 10. Action Without a Meeting; Telephone Conference Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors, or any committee designated by the Board of Directors, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Such consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any document or instrument filed with the Secretary of State of Delaware. Unless otherwise restricted by the Certificate of Incorporation, subject to the requirement for notice of meetings, members of the Board of Directors, or members of any committee designated by the Board of Directors, may participate in a meeting of such Board of Directors or committee, as the case may be, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 11. Approval or Ratification of Acts or Contracts by Stockholders. The Board of Directors in its discretion may submit any act or contract for approval or ratification at any annual meeting of the stockholders, or at any special meeting of the stockholders called for the purpose of considering any such act or contract, and any act or contract that shall be approved or be ratified by the vote of the stockholders holding a majority of the issued and outstanding shares of stock of the Corporation entitled to vote and present in person or by proxy at such meeting (provided that a quorum is present), shall be as valid and as binding upon the Corporation and upon all the stockholders as if it has been approved or ratified by every stockholder of the Corporation. In addition, any such act or contract may be approved or ratified by the written consent of stockholders holding a majority of the issued and outstanding shares of capital stock of the Corporation entitled to vote and such consent shall be as valid and as binding upon the Corporation and upon all the stockholders as if it had been approved or ratified by every stockholder of the Corporation. ARTICLE IV COMMITTEES Section 1. Designation; Powers. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, including, if they shall so determine, an executive committee, each such committee to consist of one or more of the directors of the Corporation. Any such designated committee shall have and may exercise such of the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation as may be provided in such resolution, except that no such committee shall have the power or authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders 7 8 a dissolution of the Corporation or a revocation of a dissolution of the Corporation, or amending, altering or repealing the bylaws or adopting new bylaws for the Corporation and, unless such resolution or the Certificate of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Any such designated committee may authorize the seal of the Corporation to be affixed to all papers which may require it. In addition to the above such committee or committees shall have such other powers and limitations of authority as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. Procedure; Meetings; Quorum. Any committee designated pursuant to Section 1 of this Article shall choose its own chairman, shall keep regular minutes of its proceedings and report the same to the Board of Directors when requested, shall fix its own rules or procedures, and shall meet at such times and at such place or places as may be provided by such rules, or by resolution of such committee or resolution of the Board of Directors. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution. Section 3. Substitution of Members. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. ARTICLE V OFFICERS Section 1. Number, Titles and Term of Office. The officers of the Corporation shall be a President, one or more Vice Presidents (any one or more of whom may be designated Executive Vice President or Senior Vice President), a Treasurer, a Secretary and, if the Board of Directors so elects, a Chairman of the Board and such other officers as the Board of Directors may from time to time elect or appoint. Each officer shall hold office until his successor shall be duly elected and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same person, unless the Certificate of Incorporation provides otherwise. Except for the Chairman of the Board, if any, no officer need be a director. Section 2. Salaries. The salaries or other compensation of the officers and agents of the Corporation shall be fixed from time to time by the Board of Directors. Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed, either with or without cause, by the vote of a majority of the whole Board of Directors at a special meeting called for the purpose, or at any regular meeting of the Board of Directors, provided the notice for such meeting shall specify that the matter of any such proposed removal 8 9 will be considered at the meeting but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors. Section 5. Powers and Duties of the Chief Executive Officer. The President shall be the chief executive officer of the Corporation unless the Board of Directors designates the Chairman of the Board as chief executive officer. Subject to the control of the Board of Directors and the executive committee (if any), the chief executive officer shall have general executive charge, management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incident to such responsibilities; he may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign all certificates for shares of capital stock of the Corporation; and shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him by the Board of Directors. Section 6. Powers and Duties of the Chairman of the Board. If elected, the Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors; and he shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the Board of Directors. Section 7. Powers and Duties of the President. Unless the Board of Directors otherwise determines, the President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation; and, unless the Board of Directors otherwise determines, he shall, in the absence of the Chairman of the Board or if there be no Chairman of the Board, preside at all meetings of the stockholders and (should he be a director) of the Board of Directors; and he shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him by the Board of Directors. Section 8. Vice Presidents. In the absence of the President, or in the event of his inability or refusal to act, a Vice President designated by the Board of Directors shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. In the absence of a designation by the Board of Directors of a Vice President to perform the duties of the President, or in the event of his absence or inability or refusal to act, the Vice President who is present and who is senior in terms of time as a Vice President of the Corporation shall so act. The Vice Presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 9. Treasurer. The Treasurer shall have responsibility for the custody and control of all the funds and securities of the Corporation, and he shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the Board of Directors. He shall perform all acts incident to the position of Treasurer, subject to the control of the chief executive officer and the Board of Directors; and he shall, if required by the Board of Directors, give 9 10 such bond for the faithful discharge of his duties in such form as the Board of Directors may require. Section 10. Assistant Treasurers. Each Assistant Treasurer shall have the usual powers and duties pertaining to his office, together with such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the chief executive officer or the Board of Directors. The Assistant Treasurers shall exercise the powers of the Treasurer during that officer's absence or inability or refusal to act. Section 11. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors, committees of directors and the stockholders, in books provided for that purpose; he shall attend to the giving and serving of all notices; he may in the name of the Corporation affix the seal of the Corporation to all contracts of the Corporation and attest the affixation of the seal of the Corpora tion thereto; he may sign with the other appointed officers all certificates for shares of capital stock of the Corporation; he shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, all of which shall at all reasonable times be open to inspection of any director upon application at the office of the Corporation during business hours; he shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the Board of Directors; and he shall in general perform all acts incident to the office of Secretary, subject to the control of the chief executive officer and the Board of Directors. Section 12. Assistant Secretaries. Each Assistant Secretary shall have the usual powers and duties pertaining to his office, together with such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the chief executive officer or the Board of Directors. The Assistant Secretaries shall exercise the powers of the Secretary during that officer's absence or inability or refusal to act. Section 13. Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the chief executive officer shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS Section 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative, is or was or has agreed to become a 10 11 director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving or having agreed to serve as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended, (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment) against all expense, liability and loss (including without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity hereunder and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof), other than a proceeding (or part thereof) brought under Section 3 of this Article VI, initiated by such person or his or her heirs, executors and administrators only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Article VI shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a current, former or proposed director or officer in his or her capacity as a director or officer or proposed director or officer (and not in any other capacity in which service was or is or has been agreed to be rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnified person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under this Section or otherwise. Section 2. Indemnification of Employees and Agents. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation, individually or as a group, with the same scope and effect as the indemnification of directors and officers provided for in this Article. Section 3. Right of Claimant to Bring Suit. If a written claim received by the Corporation from or on behalf of an indemnified party under this Article VI is not paid in full by the Corporation within ninety days after such receipt, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent 11 12 legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 4. Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any law (common or statutory), provision of the Certi ficate of Incorporation of the Corporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Section 5. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any person who is or was serving as a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. Section 6. Savings Clause. If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and hold harmless each director and officer of the Corporation, as to costs, charges and expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the fullest extent permitted by applicable law. Section 7. Definitions. For purposes of this Article, reference to the "Corporation" shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger prior to (or, in the case of an entity specifically designated in a resolution of the Board of Directors, after) the adoption hereof and which, if its separate existence had continued, would have had the power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. 12 13 ARTICLE VII CAPITAL STOCK Section 1. Certificates of Stock. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with that required by law and the Certificate of Incorporation, as shall be approved by the Board of Directors. The Chairman of the Board (if any), President or a Vice President shall cause to be issued to each stockholder one or more certificates, under the seal of the Corporation or a facsimile thereof if the Board of Directors shall have provided for such seal, and signed by the Chairman of the Board (if any), President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer certifying the number of shares (and, if the stock of the Corporation shall be divided into classes or series, the class and series of such shares) owned by such stockholder in the Corporation; provided, however, that any of or all the signatures on the certificate may be facsimile. The stock record books and the blank stock certificate books shall be kept by the Secretary, or at the office of such transfer agent or transfer agents as the Board of Directors may from time to time by resolution determine. In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature or signatures shall have been placed upon any such certificate or certificates shall have ceased to be such officer, transfer agent or registrar before such certificate is issued by the Corporation, such certificate may nevertheless be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The stock certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder's name and number of shares. Section 2. Transfer of Shares. The shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives upon surrender and cancellation of certificates for a like number of shares. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 3. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares of capital stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. Section 4. Regulations Regarding Certificates. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of capital stock of the Corporation. Section 5. Lost or Destroyed Certificates. The Board of Directors may determine the conditions upon which a new certificate of stock may be issued in place of a certificate which is alleged 13 14 to have been lost, stolen or destroyed; and may, in their discretion, require the owner of such certificate or his legal representative to give bond, with sufficient surety, to indemnify the Corporation and each transfer agent and registrar against any and all losses or claims which may arise by reason of the issue of a new certificate in the place of the one so lost, stolen or destroyed. ARTICLE VIII MISCELLANEOUS PROVISIONS Section 1. Fiscal Year. The fiscal year of the Corporation shall be such as established from time to time by the Board of Directors. Section 2. Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation. The Secretary shall have charge of the seal (if any). If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by the Assistant Secretary or Assistant Treasurer. Section 3. Notice and Waiver of Notice. Whenever any notice is required to be given by law, the Certificate of Incorporation or under the provisions of these bylaws, said notice shall be deemed to be sufficient if given (i) by telegraphic, cable or wireless transmission or (ii) by deposit of the same in a post office box in a sealed prepaid wrapper addressed to the person entitled thereto at his post office address, as it appears on the records of the Corporation, and such notice shall be deemed to have been given on the day of such transmission or mailing, as the case may be. Whenever notice is required to be given by law, the Certificate of Incorporation or under any of the provisions of these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or the bylaws. Section 4. Resignations. Any director, member of a committee or officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the chief executive officer or Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Section 5. Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors. 14 15 Section 6. Reliance upon Books, Reports and Records. Each director and each member of any committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made to the Corporation by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or by any such committee, or in relying in good faith upon other records of the Corporation. ARTICLE IX AMENDMENTS If provided in the Certificate of Incorporation of the Corporation, the Board of Directors shall have the power to adopt, amend and repeal from time to time bylaws of the Corporation, subject to the right of the stockholders entitled to vote with respect thereto to amend or repeal such bylaws as adopted or amended by the Board of Directors. 15 EX-10.1.1 4 AGREEMENT & PLAN OF MERGER 1 EXHIBIT 10.1.1 AGREEMENT AND PLAN OF MERGER by and among BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP, BENCHMARK ACQUISITION, INC., BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP, BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP, BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP, BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP, JOSEPH L. MATHIAS IV, BRUCE R. SPECTOR, CAPSTAR BROADCASTING PARTNERS, INC. and BCR HOLDING, INC. dated as of December 9, 1996 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I THE MERGER............................................................................... 2 1.1 The Merger.................................................................................. 2 1.2 Effective Time.............................................................................. 2 1.3 Effect of the Merger........................................................................ 2 1.4 Certificate and Agreement of Limited Partnership............................................ 2 1.5 Merger Consideration; Conversion of Partnership Interests; Total Consideration.............. 3 1.6 Calculation of and Adjustments to Total Consideration....................................... 4 1.7 Dissenting Partnership Interests............................................................ 9 1.8 Payment of Merger Consideration; Deposit of Holdback Funds; and Repayment of Funded Debt....10 1.9 Partnership Books...........................................................................11 1.10 Partner Approval...........................................................................11 1.11 Pre-Closing Escrow Deposit.................................................................12 1.12 Post-Closing Escrow Deposit................................................................14 1.13 Reserve Fund; Post-Closing Adjustment to Total Consideration...............................14 1.14 Dissenting Partner Funds...................................................................15 1.15 Other Benchmark Mergers....................................................................15 1.16 Instructions on Payments...................................................................15 ARTICLE II REPRESENTATIONS AND WARRANTIES .........................................................16 2.1 Representations and Warranties Regarding Benchmark..........................................16 2.2 Representations and Warranties of Mergeco...................................................31 2.3 Representations and Warranties Regarding Fund I, Fund IV, Fund VII and Fund VIII............33 ARTICLE III COVENANTS RELATING TO CONDUCT OF BUSINESS..............................................46 3.1 Covenants of Benchmark......................................................................46 3.2 Negative Trade Balance......................................................................50
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PAGE ---- 3.3 Environmental Site Assessments..............................................................50 3.4 Other Benchmark Mergers.....................................................................50 ARTICLE IV ADDITIONAL AGREEMENTS OF BENCHMARK......................................................50 4.1 No Solicitation of Transactions.............................................................50 4.2 Access and Information......................................................................51 4.3 Assistance..................................................................................52 4.4 Compliance With Station Licenses............................................................53 4.5 Notification of Certain Matters.............................................................53 4.6 Third Party Consents........................................................................54 4.7 Section 754 Election........................................................................54 4.8 Limited Partner Consent.....................................................................54 4.9 Consummation of Pending Transactions........................................................54 4.10 Consummation of Other Benchmark Mergers....................................................54 4.11 Withdrawal of Class A General Partners.....................................................55 4.12 Transfer of Partnership Interests..........................................................55 4.13 ERISA......................................................................................55 ARTICLE V COVENANTS OF MERGECO AND PARENT..........................................................55 5.1 Notification of Certain Matters.............................................................55 5.2 Compliance with Communications Act and HSR Act..............................................56 5.3 Station Acquisitions........................................................................56 5.4 Parent Loans................................................................................56 5.5 Benchmark Employment Agreements.............................................................56 5.6 Parent-Radioco III, Inc. Merger............................................................57 5.7 Election of Directors and Officers..........................................................57 ARTICLE VI MUTUAL COVENANTS........................................................................57
ii 4 TABLE OF CONTENTS (CONT'D)
PAGE ---- 6.1 Application for Commission Consent..........................................................57 6.2 Control of Stations........................................................................57 6.3 Other Governmental Consents.................................................................57 6.4 Brokers or Finders..........................................................................58 6.5 Additional Agreement........................................................................58 6.6 Execution and Delivery of Transaction.......................................................58 6.7 Certain Events..............................................................................58 6.8 WDHT Budget.................................................................................58 6.9 Purchase Price Allocation...................................................................59 6.10 Richmond Sale..............................................................................59 6.11 Richmond and Norfolk Stations..............................................................59 ARTICLE VII CONDITIONS PRECEDENT...................................................................59 7.1 Conditions to Each Party's Obligations......................................................59 7.2 Conditions to Obligations of Mergeco........................................................60 7.3 Conditions to Obligations of Benchmark......................................................61 ARTICLE VIII CLOSING...............................................................................62 8.1 Closing.....................................................................................62 8.2 Actions to Occur at Closing.................................................................64 ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.......................................................64 9.1 Termination.................................................................................64 9.2 Fees and Expenses...........................................................................68 9.3 Effect of Termination.......................................................................70 ARTICLE X GENERAL PROVISIONS.......................................................................72 10.1 Survival of Representations and Warranties and Covenants; Indemnification..................72
iii 5 TABLE OF CONTENTS (CONT'D)
PAGE ---- 10.2 Knowledge..................................................................................83 10.3 Amendment amd Modification.................................................................83 10.4 Waiver of Compliance.......................................................................83 10.5 Severability...............................................................................83 10.6 Expenses and Obligations...................................................................83 10.7 Parties in Interest........................................................................83 10.8 Notices....................................................................................83 10.9 Interpretation.............................................................................84 10.10 Counterparts..............................................................................85 10.11 Entire Agreement..........................................................................85 10.12 Governing Law; Consent to Jurisdiction....................................................85 10.13 Public Announcements......................................................................85 10.14 Assignment................................................................................85 10.15 Further Assurances........................................................................86 10.16 Partner, Director, Officer and Stockholder Liability......................................86 10.17 No Waiver of Fraud........................................................................86 10.18 Specific Performance......................................................................86 10.19 Arbitration...............................................................................86 ARTICLE XI DEFINITIONS.............................................................................87 11.1 Certain Definitions........................................................................87
iv 6 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of December 9, 1996 is entered into by and among Benchmark Acquisition, Inc., a Delaware corporation ("Mergeco"), Benchmark Communications Radio Limited Partnership, a Maryland limited partnership (including any successor thereto, "Benchmark"), Benchmark Radio Acquisition Fund I Limited Partnership, a Maryland limited partnership (including any successor thereto, "Fund I), Benchmark Radio Acquisition Fund IV Limited Partnership, a Maryland limited partnership (including any successor thereto, "Fund IV"), Benchmark Radio Acquisition Fund VII Limited Partnership, a Maryland limited partnership (including any successor thereto, "Fund VII"), Benchmark Radio Acquisition Fund VIII Limited Partnership, a Maryland limited partnership (including any successor thereto, "Fund VIII"), BCR Holding, Inc., a Delaware corporation which holds all of the outstanding stock of Mergeco (including any successor thereto, "Parent"), Capstar Broadcasting Partners, Inc., a Delaware corporation ("Capstar"), Bruce R. Spector and Joseph L. Mathias IV in their capacities as Partner Representatives and as General Partners, Grand Slam Radio Limited Partnership, a Maryland limited partnership and Home Run Radio Limited Partnership, a Maryland limited partnership. The obligations under this Agreement of each party hereto shall be limited to obligations specifically applicable to such party under the express terms of this Agreement. RECITALS: WHEREAS, the parties desire to effectuate a series of merger and other transactions under which Parent (directly or through affiliates) will (i) pay an aggregate consideration of One Hundred Sixty-Seven Million One Hundred Thousand Dollars ($167,100,000), plus certain advancements for working capital and capital expenditures, plus net current assets, less Funded Debt (as defined herein) and certain acquisition indebtedness advanced to Benchmark and certain of its subsidiaries by Parent, and subject to a series of additions, subtractions and adjustments, all as provided in this Agreement, and (ii) through such transactions, own or control the existing radio stations listed on Attachment I hereto and certain other radio stations to be acquired by Benchmark or its subsidiaries (also listed on Attachment I hereto) as contemplated herein, as provided herein; WHEREAS, Mergeco, upon the terms and subject to the conditions of this Agreement and in accordance with the Maryland Revised Uniform Limited Partnership Act ("Maryland Law") and applicable laws of the State of Delaware ("Delaware Law"), will merge with and into Benchmark (the "Merger"); WHEREAS, Parent, by its execution of this Agreement, has consented to, and has authorized, approved and adopted, this Agreement and the transactions contemplated hereby; WHEREAS, the general partners of Benchmark (the "General Partners") have determined that the Merger is in the best interests of Benchmark and its limited partners (the "Limited Partners") and have authorized, adopted and approved this Agreement and the transactions contemplated hereby; 7 WHEREAS, simultaneously with the execution of this Agreement, each of Fund I, Fund IV, Fund VII and Fund VIII has entered into the Fund I Merger Agreement, the Fund IV Merger Agreement, the Fund VII Merger Agreement and the Fund VIII Merger Agreement, respectively, with Benchmark Sub I, Inc. ("Sub I"), Benchmark Sub IV, Inc. ("Sub IV"), Benchmark Sub VII, Inc. ("Sub VII"), and Benchmark Sub VIII, Inc. ("Sub VIII"), respectively; WHEREAS, Benchmark has determined that each of the Other Benchmark Mergers is in the best interests of the Fund I Limited Partners, the Fund IV Limited Partners, the Fund VII Limited Partners and the Fund VIII Limited Partners (collectively, the "Fund Limited Partners") and has authorized, adopted and approved each of the Other Benchmark Merger Agreements and will recommend approval of this Agreement and the Other Benchmark Mergers by the Fund Limited Partners; NOW THEREFORE, in consideration of the foregoing and the mutual covenants, representations, warranties and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE I THE MERGER 1.1. THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Maryland Law and Delaware Law, at the Effective Time (as defined in Section 1.2), Mergeco shall be merged with and into Benchmark. As a result of the Merger, the separate existence of Mergeco shall cease and Benchmark shall continue as the surviving partnership of the Merger (including any successor thereto, the "Surviving Partnership"). The name of the Surviving Partnership shall be "Benchmark Communications Radio Limited Partnership." 1.2. EFFECTIVE TIME. The Merger shall be consummated, as and when provided in Section 8.1 hereof, by filing a Certificate of Merger with the Maryland State Department of Assessments and Taxation and the Secretary of State of the State of Delaware in such form as is required by, and executed in accordance with the relevant provisions of, Maryland Law and Delaware Law (the date and time of the completion of such filings being the "Effective Time"). 1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Maryland Law and Delaware law. Without limiting the generality of the foregoing, and subject to the applicable provisions of Maryland Law and Delaware law, at the Effective Time, all the property, rights, privileges, powers and franchises of Mergeco and Benchmark shall vest in the Surviving Partnership, and all debts, liabilities and duties of Mergeco and Benchmark shall become the debts, liabilities and duties of the Surviving Partnership. 1.4. CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP. At the Effective Time, the Amended and Restated Agreement of Limited Partnership of Benchmark, as in effect immediately prior to the Effective Time, shall (subject to the changes contemplated by the Merger, including, without limitation, any amendments necessary to substitute a new single General Partner and to remove Limited Partners as contemplated by Section 1.5) be the partnership agreement of the Surviving Partnership, and the Certificate of Limited Partnership of Benchmark, as in effect 2 8 immediately prior to the Effective Time, shall be the Certificate of Limited Partnership of the Surviving Partnership. 1.5. MERGER CONSIDERATION; CONVERSION OF PARTNERSHIP INTERESTS; TOTAL CONSIDERATION. At the Effective Time, by virtue of the Merger and without any action on the part of Mergeco, Benchmark or the holders of Partnership Interests, the following shall occur: (a) Subject to the other provisions of this Section 1.5, each Limited Partnership Interest (other than the Class A Limited Partnership Interests) and each General Partnership Interest outstanding immediately prior to the Effective Time (other than any Benchmark Dissenting Partnership Interests (as defined in Section 1.7)) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration in the manner contemplated by Section 1.8. As a result of its conversion, each converted Partnership Interest (the "Converted Partnership Interests") shall cease to be outstanding and shall automatically be canceled and retired. Notwithstanding the foregoing, if between the date of this Agreement and the Effective Time the outstanding Convertible Partnership Interests shall have been changed into a different number of partnership interests or a different class of partnership interests, by reason of any subdivision, reclassification, recapitalization, split, combination or exchange of partnership interests, the allocation of the Merger Consideration among the Converted Partnership Interests shall be correspondingly adjusted to reflect such subdivision, reclassification, recapitalization, split, combination or exchange of partnership interests. A portion of the Merger Consideration shall be delivered to the holders of Converted Partnership Interests at the Closing pursuant to Section 1.8. The remainder of the Merger Consideration shall be delivered to the holders of Converted Partnership Interests pursuant to the terms of Section 1.12 and the Post-Closing Escrow Agreement and as contemplated in Section 1.13 and Section 1.14. The aggregate Merger Consideration payable to each Partner holding a Converted Partnership Interest shall be rounded to the nearest penny. (b) Each Class A Limited Partnership Interest shall remain outstanding after the Merger and shall be unaffected by the Merger and, upon consummation of the Merger, such partnership interests shall constitute 100% of the limited partnership interests in the Surviving Partnership. (c) All outstanding shares of common stock, par value $.01 per share, of Mergeco issued and outstanding immediately prior to the Effective Time shall be converted into a single general partnership interest constituting 100% of the general partnership interests of the Surviving Partnership. (d) Immediately after the Effective Time, the General Partners will execute an amendment to the Existing Partnership Agreement to effectuate the changes contemplated by this Section 1.5. 3 9 1.6. CALCULATION OF AND ADJUSTMENTS TO TOTAL CONSIDERATION. (a) Fund I Consideration. The Fund I Consideration shall be adjusted as described in this Section 1.6(a). (1) In the event the Fund I Broadcast Cash Flow is less than Nine Hundred Seventy Thousand Dollars ($970,000), then the Fund I BCF Consideration shall be reduced by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of Nine Hundred Seventy Thousand Dollars ($970,000) minus the Fund I Broadcast Cash Flow. In the event the Fund I Broadcast Cash Flow is greater than One Million Thirty Thousand Dollars ($1,030,000), then the Fund I BCF Consideration shall be increased by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Fund I Broadcast Cash Flow minus One Million Thirty Thousand Dollars ($1,030,000). (2) The Fund I Consideration shall be reduced by the portion (if any) of the Fund I Post-Closing Escrow Deposit to which any Surviving Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof. (3) If the Adjustment Amount allocable to Fund I is a positive number, the Fund I Consideration shall be increased by the amount of the Adjustment Amount allocable to Fund I. If the Adjustment Amount allocable to Fund I is a negative number, the Fund I Consideration shall be decreased by the amount of the Adjustment Amount allocable to Fund I. (4) The Fund I Consideration shall be increased as provided in the last sentence of Section 8.1, if applicable. (b) Fund IV Consideration. The Fund IV Consideration shall be adjusted as described in this Section 1.6(b). (1) In the event the Fund IV Broadcast Cash Flow is less than Two Million Six Hundred Sixty Seven Thousand Five Hundred Dollars ($2,667,500), then the Fund IV BCF Consideration shall be reduced by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of Two Million Six Hundred Sixty Seven Thousand Five Hundred Dollars ($2,667,500) minus the Fund IV Broadcast Cash Flow. In the event the Fund IV Broadcast Cash Flow is greater than Two Million Eight Hundred Thirty Two Thousand Five Hundred Dollars ($2,832,500), then the Fund IV BCF Consideration shall be increased by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Fund IV Broadcast Flow minus Two Million Eight Hundred Thirty Two Thousand Five Hundred Dollars ($2,832,500). (2) The Fund IV Consideration shall be reduced by the portion (if any) of the Fund IV Post-Closing Escrow Deposit to which any Surviving Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof. (3) If the Adjustment Amount allocable to Fund IV is a positive number, the Fund IV Consideration shall be increased by the amount of the Adjustment Amount allocable to 4 10 Fund IV. If the Adjustment Amount allocable to Fund IV is a negative number, the Fund IV Consideration shall be decreased by the amount of the Adjustment Amount allocable to Fund IV. (4) The Fund IV Consideration shall be increased as provided in the last sentence of Section 8.1, if applicable. (c) Fund VII Consideration. The Fund VII Consideration shall be adjusted as described in this Section 1.6(c). (1) The Fund VII Consideration shall be reduced by the portion (if any) of the Fund VII Post-Closing Escrow Deposit to which any Surviving Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof. (2) If the Adjustment Amount allocable to Fund VII is a positive number, the Fund VII Consideration shall be increased by the amount of the Adjustment Amount allocable to Fund VII. If the Adjustment Amount allocable to Fund VII is a negative number, the Fund VII Consideration shall be decreased by the Adjustment Amount allocable to Fund VII. (3) The Fund VII Consideration shall be increased as provided in the last sentence of Section 8.1, if applicable. (d) Fund VIII Consideration. The Fund VIII Consideration shall be adjusted as described in this Section 1.6(d). (1) In the event the Fund VIII Broadcast Cash Flow is less than Two Million One Hundred Fifty Eight Thousand Two Hundred Fifty Dollars ($2,158,250), then the Fund VIII BCF Consideration shall be reduced by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of Two Million One Hundred Fifty Eight Thousand Two Hundred Fifty Dollars ($2,158,250) minus the Fund VIII Broadcast Cash Flow. In the event the Fund VIII Broadcast Cash Flow is greater than Two Million Two Hundred Ninety One Thousand Seven Hundred Fifty Dollars ($2,291,750), then the Fund VIII BCF Consideration shall be increased by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Fund VIII Broadcast Cash Flow minus Two Million Two Hundred Ninety One Thousand Seven Hundred Fifty Dollars ($2,291,750). (2) The Fund VIII Consideration shall be reduced by the portion (if any) of the Fund VIII Post-Closing Escrow Deposit to which any Surviving Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof. (3) If the Adjustment Amount allocable to Fund VIII is a positive number, the Fund VIII Consideration shall be increased by the amount of the Adjustment Amount allocable to Fund VIII. If the Adjustment Amount allocable to Fund VIII is a negative number, the Fund VIII Consideration shall be decreased by the amount of the Adjustment Amount allocable to Fund VIII. (4) The Fund VIII Consideration shall be increased as provided in the last sentence of Section 8.1, if applicable. 5 11 (e) Benchmark Consideration. The Benchmark Consideration shall be adjusted as described in this Section 1.6(e). (1) In the event the Statesville Broadcast Cash Flow is less than One Million Three Hundred Fifty Eight Thousand Dollars ($1,358,000), then the Benchmark Consideration shall be reduced by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One Million Three Hundred Fifty Eight Thousand Dollars ($1,358,000) minus the Statesville Broadcast Cash Flow. In the event the Statesville Broadcast Cash Flow is greater than One Million Four Hundred Forty Two Thousand Dollars ($1,442,000), then the Benchmark Consideration shall be increased by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Statesville Broadcast Cash Flow minus One Million Four Hundred Forty Two Thousand Dollars ($1,442,000). (2) In the event the Jackson Broadcast Cash Flow is less than One Million Four Hundred Seventy Nine Thousand Two Hundred Fifty Dollars ($1,479,250), then the Benchmark Consideration shall be reduced by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One Million Four Hundred Seventy Nine Thousand Two Hundred Fifty Dollars ($1,479,250) minus the Jackson Broadcast Cash Flow. In the event the Jackson Broadcast Cash Flow is greater than One Million Five Hundred Seventy Thousand Seven Hundred Fifty Dollars ($1,570,750), then the Benchmark Consideration shall be increased by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Jackson Broadcast Cash Flow minus One Million Five Hundred Seventy Thousand Seven Hundred Fifty Dollars ($1,570,750). (3) In the event the Montgomery Broadcast Cash Flow is less than One Million Seven Hundred Forty Six Thousand Dollars ($1,746,000), then the Benchmark Consideration shall be reduced by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One Million Seven Hundred Forty Six Thousand Dollars ($1,746,000) minus the Montgomery Broadcast Cash Flow. In the event the Montgomery Broadcast Cash Flow is greater than One Million Eight Hundred Fifty Four Thousand Dollars ($1,854,000), then the Benchmark Consideration shall be increased by an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Montgomery Broadcast Cash Flow minus One Million Eight Hundred Fifty Four Thousand Dollars ($1,854,000). (4) In the event any Statesville Acquisition Expenses, Jackson Acquisition Expenses, Montgomery Acquisition Expenses, Fund IV Expenses or Fund VIII Expenses are paid by Benchmark or any of the New Funds other than with the proceeds of the Statesville Loan, the Jackson Loan, the Montgomery Loan, the Fund IV Loan or the Fund VIII Loan, respectively, or other than with cash flow of Fund IX, Fund X, or Fund XI, respectively, then the Benchmark Consideration shall be increased by the amount of the expenses so paid to the extent such expenses are approved by Mergeco or its affiliates, which approval shall not be unreasonably withheld. (5) If the Adjustment Amount allocable to Benchmark is a positive number, the Benchmark Consideration shall be increased by the amount of the Adjustment Amount allocable to Benchmark. If the Adjustment Amount allocable to Benchmark is a negative number, 6 12 the Benchmark Consideration shall be decreased by the Adjustment Amount allocable to Benchmark. (6) The Benchmark Consideration shall be increased as provided in the last sentence of Section 8.1, if applicable. (7) In the event that the Statesville Agreement has not been consummated on or prior to the Effective Time, the Benchmark Consideration shall be reduced by an amount equal to $16,660,000; provided that upon consummation of the Statesville Agreement, the Surviving Partnership shall pay an amount equal to $7,060,000 to the General Partners or their affiliates, pursuant to instructions from the General Partners. In the event that the Statesville Agreement has been terminated prior to the Effective Time for any reason other than an event described in Section 9.1(d)(ii), the Benchmark Consideration shall be reduced by an amount equal to $16,660,000. (8) In the event that the Jackson Agreement has not been consummated on or prior to the Effective Time, the Benchmark Consideration shall be reduced by an amount equal to $18,147,500; provided that upon consummation of the Jackson Agreement, the Surviving Partnership shall pay an amount equal to $2,897,500 to the General Partners or their affiliates pursuant to instructions from the General Partners. In the event that the Jackson Agreement has been terminated prior to the Effective Time for any reason other than an event described in Section 9.1(d)(ii), the Benchmark Consideration shall be reduced by an amount equal to $18,147,500. (9) In the event that the Montgomery Agreement has not been consummated on or prior to the Effective Time, the Benchmark Consideration shall be reduced by an amount equal to $21,420,000, provided that upon consummation of the Montgomery Agreement, the Surviving Partnership shall pay an amount equal to $3,420,000 to the General Partners or their affiliates pursuant to instructions from the General Partners. In the event that the Montgomery Agreement has been terminated prior to the Effective Time for any reason other than an event described in Section 9.1(d)(ii), the Benchmark Consideration shall be reduced by an amount equal to $21,420,000. (10) In the event any of Fund IX, Fund X or Fund XI are in default under Section 6.10 of the Jackson Loan Agreement, the Statesville Loan Agreement or the Montgomery Loan Agreement at the Effective Time, then the Benchmark Consideration shall be reduced by an amount equal to the costs reasonably incurred and expected to be incurred by Benchmark or its subsidiaries or the Surviving Partnership in removing the Lien or Liens that were the cause of any such default. (f) No later than April 30, 1997, Benchmark shall deliver to Mergeco a certificate executed by the General Partners of Benchmark, dated the date of its delivery, setting forth the calculation of Fund I Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash Flow, Statesville Broadcast Cash Flow, Jackson Broadcast Cash Flow and Montgomery Broadcast Cash Flow on which the Fund I BCF Consideration, the Fund IV BCF Consideration, the Fund VIII BCF Consideration and the Benchmark Consideration will be based (the "BCF Calculation"). The certificate will state that the BCF Calculation has been certified 7 13 by Arthur Andersen LLP and is based on the terms of this Agreement and the appropriate financial statements for the calendar year ending December 31, 1996, which financial statements shall have been audited by Arthur Andersen LLP. Prior to delivery of the certificate setting forth the BCF Calculation, Benchmark shall request Arthur Andersen LLP to consult with Coopers & Lybrand, accountants for Mergeco, regarding the preparation of the BCF Calculation and to provide Coopers & Lybrand with applicable documentation setting forth the basis of the BCF Calculation. (g) No later than five (5) Business Days prior to the scheduled Closing Date, Benchmark will deliver to Mergeco an initial consolidated balance sheet for each of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, together with their respective subsidiaries, as of 11:59 p.m. on the date immediately prior to the Closing Date (but giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)) (the "Initial Closing Balance Sheet"), as well as a certificate signed by the General Partners setting forth a calculation of Initial Net Current Assets of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and their respective subsidiaries as of 11:59 p.m. on the date immediately prior to the Closing Date (but giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)), as determined from the Initial Closing Balance Sheet (such certificate, the "Initial Closing Certificate"). The Initial Closing Balance Sheet shall be prepared by Benchmark in consultation with Arthur Andersen L.L.P. in accordance with GAAP, subject to adjustments that would be made after audit, except as otherwise contemplated by this Agreement. Benchmark shall, and Benchmark shall request Arthur Andersen L.L.P. to, consult with Coopers & Lybrand, accountants for Mergeco, regarding preparation of the Initial Closing Balance Sheet. For purposes of this Section 1.6(g), Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and their respective subsidiaries shall be deemed not to be subsidiaries of Benchmark. (h) No later than 60 days after the Closing Date, the Partner Representatives shall cause to be prepared and delivered to the Surviving Partnership (i) a consolidated balance sheet for each of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, together with their subsidiaries, as of 11:59 p.m. on the date immediately prior to the Closing Date (but giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)) which shall be audited by Arthur Andersen LLP, together with the related audit report of such firm (the "Closing Balance Sheet") and (ii) a calculation of Actual Net Current Assets of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and their respective subsidiaries as determined from the Closing Balance Sheet. The Closing Balance Sheet shall be prepared in accordance with GAAP, except as otherwise contemplated by this Agreement, and shall fairly present the financial position of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and their respective subsidiaries as of 11:59 p.m. on the date immediately prior to the Closing Date (but giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)). Benchmark shall request Arthur Andersen L.L.P. to consult with Coopers & Lybrand, accountants for Mergeco, regarding preparation of the Closing Balance Sheet. For purposes of this Section 1.6(h), Fund I, Fund IV, Fund VII, Fund VIII, each of the 8 14 New Funds and their respective subsidiaries shall be deemed not to be subsidiaries of Benchmark. Unless otherwise provided in this Agreement, all Unfunded Debt attributable in accordance with GAAP to the periods prior to the Closing Date, whether or not invoiced at that date, will be included in calculating the Initial Closing Balance Sheet. (i) In the event Coopers & Lybrand disputes the accuracy of the BCF Calculation or the Closing Balance Sheet, Mergeco shall promptly inform Benchmark of the disputed amount of the BCF Calculation or the Closing Balance Sheet and the basis for Coopers & Lybrand's dispute in reasonable detail. If Benchmark does not agree to modify the BCF Calculation or the Closing Balance Sheet, as applicable, in accordance with Coopers & Lybrand's position regarding such disputed amount of the BCF Calculation or the Closing Balance Sheet, as applicable, Mergeco and Benchmark shall have ten (10) days to submit such dispute to an independent "big six" accounting firm selected jointly by Coopers & Lybrand and Arthur Andersen (the "Referee") for arbitration. Mergeco and Benchmark shall use all reasonable efforts to achieve a decision by such Referee as soon as practicable, and in any event no later than thirty (30) days from the date such dispute is submitted. The decision of the Referee shall be final, conclusive and binding on the parties. Each party shall be responsible for its own fees and expenses in connection with such arbitration, and the fees and expenses of the Referee shall be borne equally by Benchmark and Mergeco; provided, however, that in the event the Referee determines that one party has not proceeded in good faith in carrying forward such dispute, the fees and expenses of the prevailing party and of the Referee shall be borne by the party deemed not to have proceeded in good faith. In the event the Closing has occurred, all references to Benchmark in this Section 1.6(i) shall be deemed to be references to Partner Representatives. (j) In connection with calculating Total Consideration, Merger Consideration, Benchmark Consideration, Fund I Consideration, Fund IV Consideration, Fund VII Consideration, Fund VIII Consideration and all components thereof or adjustments necessary to calculate such items, including, without limitation, Fund I Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash Flow, Jackson Broadcast Cash Flow, Statesville Broadcast Cash Flow and Montgomery Broadcast Cash Flow, if an adjustment would otherwise be required to be made more than once by such definitions, the parties agree that such adjustment will be made only once to avoid double-counting. 1.7. DISSENTING PARTNERSHIP INTERESTS. Notwithstanding anything in this Agreement to the contrary, Partnership Interests that are outstanding immediately prior to the Effective Time and that are held by Partners who have properly and timely exercised appraisal rights with respect thereto under Section 10-208(f) of the Maryland Law (the "Benchmark Dissenting Partnership Interests") shall not be converted into the right to receive the Merger Consideration as provided in Section 1.5(a), but the holders of Benchmark Dissenting Partnership Interests shall be entitled to receive such payment from the Benchmark Dissenting Partner Fund and, if applicable, the Dissenting Partner 9 15 Reserve as shall be determined pursuant to Section 10-208(f) of the Maryland Law; provided, however, that if any such holder shall have failed to perfect or shall withdraw or lose the right to appraisal and payment under the Maryland Law, each such holder's Partnership Interests shall thereupon be deemed to have been converted as of the Effective Time into the right to receive the Merger Consideration, without any interest thereon, as provided in Section 1.5(a), and such Partnership Interests shall no longer be Benchmark Dissenting Partnership Interests. 1.8. PAYMENT OF MERGER CONSIDERATION; DEPOSIT OF HOLDBACK FUNDS; AND REPAYMENT OF FUNDED DEBT. (a) Exchange Fund. At or prior to the Effective Time, Mergeco shall deposit, or cause to be deposited, with a bank or trust company designated by Benchmark (such bank or trust company being referred to as the "Exchange Agent") for the benefit of the holders of Converted Partnership Interests for payment in accordance with this Section 1.8(a) through the Exchange Agent, cash in an amount equal to the aggregate amount of Merger Consideration to be paid to all holders of Converted Partnership Interests less the amount of the Benchmark Allocable Portion of the Post-Closing Escrow Deposits, the Reserve Funds and the Dissenting Partner Reserves. The cash deposited with the Exchange Agent in accordance with this Subsection 1.8(a) is hereinafter referred to as the "Exchange Fund." Promptly following the Effective Time, the Exchange Agent shall, pursuant to irrevocable instructions delivered by Benchmark immediately prior to the Effective Time, deliver cash equal in aggregate amount to the Exchange Fund to the holders of the Converted Partnership Interests as specified by Benchmark in such instructions pursuant to the terms of this Agreement out of the Exchange Fund. (b) Post-Closing Escrow Deposits. At or prior to the Effective Time, Mergeco shall deposit or cause to be deposited the Benchmark Allocable Portion of the Post-Closing Escrow Deposits with the Post-Closing Escrow Agent in accordance with Section 1.12 hereof, and Benchmark shall cause all other portions of the Post-Closing Escrow Deposits to be deposited in accordance with the terms of the Other Benchmark Transactions. (c) Reserve Funds. At or prior to the Effective Time, Mergeco shall deposit or cause to be deposited the Benchmark Allocable Portion of the Reserve Funds with the Post-Closing Escrow Agent in accordance with Section 1.13 hereof, and Benchmark shall cause all other portions of the Reserve Funds to be deposited in accordance with the terms of the Other Benchmark Transactions. (d) Dissenting Partner Funds and Reserves. On or prior to the Effective Time, Mergeco shall deposit or cause to be deposited the Benchmark Allocable Portion of the Dissenting Partner Funds and the Dissenting Partner Reserves in one or more accounts specified by Partner Representatives. (e) Funded Debt Payoff. On or before the date that is three (3) Business Days prior to the date scheduled for the Closing, Benchmark will provide Mergeco 10 16 with written notice (the "Funded Debt Notice"), which notice shall set forth the payments necessary to be made in order for the Funded Debt of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII to be repaid in full and retired as of the Effective Time of the Merger. Immediately prior to the Closing of this Agreement and the Other Benchmark Merger Agreements, Benchmark will, with the proceeds of the Parent Funded Debt Loan, (i) repay the Funded Debt of Benchmark identified in the Funded Debt Notice and (ii) contribute to the capital of Fund I, Fund IV, Fund VII and Fund VIII amounts sufficient to pay the Funded Debt of Fund I, Fund IV, Fund VII and Fund VIII, as applicable, identified in the Funded Debt Notice, and Benchmark shall, and shall cause each of Fund I, Fund IV, Fund VII and Fund VIII to, repay the Funded Debt of each such Person (the repayments in clauses (i) and (ii) are collectively referred to as the "Funded Debt Payoff"). For purposes of this Section 1.8(e), Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and their respective subsidiaries shall be deemed not to be subsidiaries of Benchmark. 1.9. PARTNERSHIP BOOKS. At the Effective Time, the partnership books of Benchmark shall be closed and there shall be no further registration of transfers of Partnership Interests on the records of Benchmark. 1.10. PARTNER APPROVAL. (a) Bruce R. Spector and Joseph L. Mathias IV, in their capacities as General Partners of Benchmark, by their execution hereof approve and adopt this Agreement and the transactions contemplated hereby. (b) Parent, in its capacity as the sole stockholder of Mergeco, by its execution hereof approves and adopts this Agreement and the transactions contemplated hereby. (c) Benchmark, acting through the General Partners, shall, in accordance with applicable law and the Existing Fund Partnership Agreements, solicit the requisite consents from the Fund Limited Partners to the Merger, this Agreement, the Other Benchmark Mergers and the Other Benchmark Merger Agreements and use its commercially reasonable efforts to receive such consents no later than sixteen (16) business days after the date hereof and, subject to the fiduciary obligations of Benchmark and the General Partners as advised by independent legal counsel, include in the consent solicitation (the "Consent Solicitation") circulated to the Fund Limited Partners the recommendation of Benchmark and the General Partners that the Fund Limited Partners approve and adopt this Agreement and the Other Benchmark Merger Agreements and the transactions contemplated hereby and thereby, including, without limitation, the Merger, and use its commercially reasonable efforts to obtain such approval and adoption and the Other Benchmark Mergers. 11 17 1.11. PRE-CLOSING ESCROW DEPOSIT. (a) Concurrently with the execution of this Agreement and as security for liquidated damages that may be payable by Mergeco to Benchmark, Fund I, Fund IV, Fund VII and Fund VIII (the "Sellers"), Mergeco shall deposit, or cause to be deposited, in favor of Benchmark, as Sellers' Representative (as defined below) (i) an irrevocable letter of credit issued by Bankers Trust Company ("Bankers Trust") in substantially the form of Exhibit 1 (the "Letter of Credit") for the sum of Five Million Four Hundred Ninety Thousand Dollars ($5,490,000) and (ii) Four Hundred Ten Thousand Dollars ($410,000) in cash (the "Capital Expenditure Deposit") in an escrow account with Citibank N.A.., a national banking association (the "Escrow Agent"), to be held in escrow and released therefrom in accordance with Section 1.11(b) and the terms of the Pre-Closing Escrow Agreement (herein so called) in substantially the form of Exhibit 2 attached hereto. The Capital Expenditure Deposit shall be released, pursuant to joint written instructions of Sellers' Representative and Mergeco, to fund loans made under the Fund IV Loan Agreement and the Fund VIII Loan Agreement. Mergeco shall cause additional letters of credit in favor of Sellers' Representative (collectively the "Additional Letters of Credit") to be deposited in escrow with the Escrow Agent on the closing dates of the Jackson Agreement, the Statesville Agreement and the Montgomery Agreement. Such Additional Letters of Credit shall conform to the requirements set forth above and be identical in all material respects to the Letter of Credit, and shall be for the sums of Seven Hundred Fifty Thousand Dollars ($750,000) with respect to the Jackson Agreement (the "Additional Jackson Escrow Deposit"), Five Hundred Thousand Dollars ($500,000) with respect to the Statesville Agreement (the "Additional Statesville Escrow Deposit") and One Million Dollars ($1,000,000) with respect to the Montgomery Agreement (the "Additional Montgomery Escrow Deposit"). The Letter of Credit, the Capital Expenditure Deposit (to the extent not released to fund the Fund IV Loan and the Fund VIII Loan), the Additional Letters of Credit, the Interest Letters of Credit and any replacement letters of credit pursuant to the terms of the Pre-Closing Escrow Agreement deposited in escrow pursuant to this Section 1.11 are referred to collectively as the "Pre-Closing Escrow Deposit." Interest earned on any cash portion of the Pre-Closing Escrow Deposit shall be paid to Mergeco quarterly in accordance with the Pre-Closing Escrow Agreement; provided, however, that any interest on any cash in the Pre-Closing Escrow Deposit drawn from any Interest Letter of Credit deposited shall be distributed pursuant to Section 1.11(b) of this Agreement. (b) If this Agreement is terminated and Benchmark, as Sellers' Representative, seeks liquidated damages on behalf of the Sellers pursuant to Section 9.3, then (i) if (A) Sellers are otherwise paid liquidated damages due under Section 9.3, or (B) Benchmark and Mergeco agree that the Sellers are not entitled to the Pre-Closing Escrow Deposit as liquidated damages, Benchmark and Mergeco shall deliver joint written instructions to the Escrow Agent authorizing the release of the Pre-Closing Escrow Deposit and any interest earned thereon to Mergeco; (ii) if 12 18 Benchmark and Mergeco agree that Sellers are entitled to the Pre-Closing Escrow Deposit as liquidated damages, Benchmark and Mergeco shall deliver joint written instructions to the Escrow Agent authorizing the Escrow Agent to release the Pre-Closing Escrow Deposit to Benchmark and any interest earned thereon (other than on cash drawings on Interest Letters of Credit) to Mergeco; (iii) if a final decision of an arbitrator under Section 10.19 hereof (a "Final Determination") establishes the Sellers' right to liquidated damages pursuant to Section 9.3, Benchmark shall deliver (A) a copy of the Final Determination to the Escrow Agent authorizing the Escrow Agent to release the Pre-Closing Escrow Deposit (and any Interest Letters of Credit or interest earned on cash from drawings thereon) and interest earned on all other Letters of Credit shall be delivered to Mergeco, to Benchmark and (B) an opinion of counsel to Benchmark that the decision of the arbitrator constitutes the Final Determination under this Agreement; or (iv) if a Final Determination establishes Mergeco's right to the Pre-Closing Escrow Deposit, Mergeco shall deliver (A) a copy of the Final Determination to the Escrow Agent authorizing the release of the Pre-Closing Escrow Deposit to Mergeco and (B) an opinion of counsel to Mergeco that the decision of the arbitrator constitutes the Final Determination under this Agreement. If this Agreement is terminated and the Sellers do not seek liquidated damages pursuant to Section 9.3 within sixty (60) days of such termination, Benchmark and Mergeco shall deliver joint written instructions to the Escrow Agent authorizing the release of the Pre-Closing Escrow Deposit to Mergeco. Immediately prior to the Effective Time and upon satisfaction of the conditions to Mergeco's and Benchmark's obligation to consummate the Merger set forth in Article VII, Sellers' Representative and Mergeco shall jointly instruct the Escrow Agent to release and return the Pre-Closing Escrow Deposit to Mergeco at the Effective Time. The Capital Expenditure Deposit shall be released, pursuant to joint written instructions of Sellers' Representative and Mergeco, to fund loans made under the Fund IV Loan Agreement and the Fund VIII Loan Agreement. If this Agreement is terminated and Mergeco and Sellers' Representative are unable to agree on which party is entitled to the Pre-Closing Escrow Deposit then, on the later of June 30, 1997 or the date of such termination, and every three (3) months thereafter, Sellers' Representative and Mergeco shall deposit a letter of credit (an "Interest Letter of Credit") (in substantially the same form as the Letter of Credit) in favor of Mergeco or Sellers' Representative, as applicable, with the Escrow Agent, in face amount equal to the amount of interest (at an annual interest rate of 8.0%) that would be earned on the Pre-Closing Escrow Deposit during the succeeding three (3) month period had the face amounts of the Letter of Credit and the Additional Letters of Credit been deposited in the form of cash on June 30, 1997 or such later termination date. In the event that Mergeco or Sellers' Representative fail to deposit an Interest Letter of Credit in timely fashion, the non-defaulting party shall provide written notification to the defaulting party of such failure and, if the Interest Letter of Credit is not deposited within five (5) Business Days of the date of such notice, the non-defaulting party shall be entitled to the Pre-Closing 13 19 Escrow Deposit, and Sellers' Representative and Mergeco shall deliver joint instructions to the Escrow Agent to deliver the Pre-Closing Escrow Deposit to the non-defaulting party. The party that is entitled to the Pre-Closing Escrow Deposit pursuant to a Final Determination shall, at the time the Pre-Closing Escrow Deposit is released by the Escrow Agent, also be entitled to all Interest Letter(s) of Credit posted as well as the return of the Interest Letter(s) of Credit posted by any parties, together with any cash drawn from any Interest Letter of Credit by the Escrow Agent and any interest earned on such cash. The parties agree that, unless otherwise ordered by an arbitrator, they will not, prior to receipt of a Final Determination from such arbitrator, involve the Escrow Agent in any matters or disputes with respect to whether liquidated damages are owed. (c) APPOINTMENT OF SELLERS' REPRESENTATIVES. By the execution and delivery of this Agreement, Sellers hereby irrevocably constitute and appoint Benchmark as the true and lawful agents and attorneys-in-fact (the "Sellers' Representative") of such Sellers with full power of substitution to act, jointly and severally, in the name, place and stead of such Sellers with respect to the performance of the obligations and rights of such Sellers under the Pre-Closing Escrow Agreement, including, without limitation, the power to execute the Pre-Closing Escrow Agreement and any amendments thereto on behalf of such Sellers, to do or refrain from doing all such further acts and things, and to execute, deliver and receive all such documents, waivers, extensions and amendments as such Sellers shall deem necessary or appropriate in their sole discretion in connection with the administration of the Pre-Closing Escrow Agreement (and any such actions shall be binding on such Sellers). 1.12. POST-CLOSING ESCROW DEPOSIT. On the Closing Date, Parent, Mergeco and the Partner Representatives, as representatives of Benchmark, Fund I, Fund IV, Fund VII, Fund VIII, and the Selling Stockholders shall execute and deliver an escrow agreement in substantially the form attached as Exhibit 3 hereto (the "Post-Closing Escrow Agreement") and Mergeco shall deposit or cause to be deposited in escrow with Mercantile-Safe Deposit & Trust Company or another banking institution designated by the Partner Representatives and reasonably acceptable to Mergeco (the "Post-Closing Escrow Agent") the Benchmark Allocable Portion of the Post-Closing Escrow Deposits to be held and disbursed in accordance with the terms of the Post-Closing Escrow Agreement and Section 10.1 of this Agreement, and Benchmark shall cause all other portions of the Post-Closing Escrow Deposits to be deposited in accordance with the terms of the Other Benchmark Transactions. Benchmark may, at its option, elect to supplement one or more of the Post-Closing Escrow Deposits after the Closing Date. All interest earned on the Post-Closing Escrow Deposits shall be held and distributed to Partner Representatives by the Post-Closing Escrow Agent on a quarterly basis as set forth in the Post-Closing Escrow Agreement and Section 10.1 of this Agreement. 1.13. RESERVE FUND; POST-CLOSING ADJUSTMENT TO TOTAL CONSIDERATION. On the Closing Date, Mergeco shall deposit or cause to be deposited in escrow with the Post-Closing Escrow Agent the Benchmark Allocable Portion of the Reserve Funds, which shall constitute a portion of the Total Consideration, to be held and disbursed in accordance with the terms of this Section 1.13 and the Post-Closing Escrow Agreement, and Benchmark shall cause all other portions 14 20 of the Reserve Fund to be deposited in accordance with the terms of the Other Benchmark Transactions (all such deposits, the "Reserve Fund Escrow Deposit"). All interest earned on the Reserve Fund Escrow Deposit shall be held and distributed to Partner Representatives by the Post-Closing Escrow Agent in accordance with the Post-Closing Escrow Agreement. If the Adjustment Amount identified in Sections 1.6(a)(3), 1.6(b)(3), 1.6(c)(2), 1.6(d)(3) or 1.6(e)(5) is a negative number, an amount equal to such Adjustment Amount shall be paid by the Post-Closing Escrow Agent to the Surviving Partnership from the applicable Reserve Fund pursuant to joint instructions from Partner Representatives and the Surviving Partnership, provided that if the applicable Reserve Fund is insufficient to cover such amount payable to the Surviving Partnership, the Surviving Partnership shall be entitled to recover an amount equal to the difference of such Adjustment Amount minus the amount of the applicable Reserve Fund, in accordance with Section 10.1. If such Adjustment Amount is a positive number, the Surviving Partnership shall pay an amount equal to such Adjustment Amount to Partner Representatives. Any Benchmark Allocable Portions of the applicable Reserve Fund remaining after the payments contemplated by this Section shall be paid by the Post-Closing Escrow Agent to Partner Representatives pursuant to joint instructions from Partner Representatives and the Surviving Partnership (and distributed by Partner Representatives in the manner that such funds would have been distributed had such amounts been distributed by the Exchange Agent pursuant to Section 1.8(a)). The parties agree to deliver the joint instructions referenced in this Section 1.13 promptly after determination of the applicable Adjustment Amounts. 1.14. DISSENTING PARTNER FUNDS. On or prior to the Effective Time, Mergeco shall deposit or cause to be deposited the Benchmark Allocable Portion of the Dissenting Partner Reserves, which shall constitute a portion of the Merger Consideration, and the Dissenting Partner Funds, which shall constitute a portion of the Total Consideration in one or more accounts specified by Partner Representatives. The Dissenting Partner Funds and, if necessary, the Dissenting Partner Reserves, shall be used to cover any costs, expenses or liabilities that may be incurred with respect to claims (if any) of holders of Dissenting Partnership Interests (if any) that are made in accordance with Maryland Law. Any Benchmark Allocable Portions of the applicable Dissenting Partner Funds or Dissenting Partner Reserves remaining after resolution of any such claims shall be distributed by Partner Representatives in the same manner that such amounts would have been distributed had such amounts been distributed by the Exchange Agent pursuant to Section 1.8(a). 1.15. OTHER BENCHMARK MERGERS. Immediately prior to the Closing of this Agreement, Benchmark will, with the proceeds of the Parent Merger Loan, contribute to the capital of Sub I, Sub IV, Sub VII and Sub VIII amounts sufficient to consummate the Other Benchmark Mergers. 1.16. INSTRUCTIONS ON PAYMENTS. Prior to the Effective Time, Benchmark shall deliver to Mergeco specific instructions with respect to the amount and allocation of payments to be made by Mergeco under this Article I, and Mergeco shall be entitled, without liability, to rely on such written instructions without being required to determine the correctness of any fact stated therein. 15 21 ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1. REPRESENTATIONS AND WARRANTIES REGARDING BENCHMARK. Benchmark represents and warrants to Mergeco and Parent as follows (with the understanding that Mergeco and Parent are relying on such representations and warranties in entering into and performing this Agreement), provided, however, that for purposes of this Section 2.1, no representations or warranties (other than the representations in Section 2.1(u)) are made with respect to the Statesville Stations, the Jackson Stations, the Montgomery Stations, WSCQ-FM, Columbia, South Carolina, WJMZ-FM, Anderson, South Carolina, KRMD-AM/FM, Shreveport, Louisiana and any additional stations acquired prior to the Closing Date except that, upon consummation of each such acquisition, the representations and warranties in this Section 2.1 shall apply to the stations acquired and the liabilities assumed to the extent of events, acts or omissions occurring or conditions coming into existence on or after the closing of the applicable acquisition. (a) Organization, Good Standing, Etc. Each of Benchmark and its subsidiaries is a partnership or other entity, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has all requisite partnership (or other) power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified and in good standing to do business in each state in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except where the failure to so qualify or be in good standing does not have and could not reasonably be expected to have a Material Adverse Effect. Benchmark has delivered to Mergeco true and complete copies of the Certificates and Agreements of Limited Partnership (or equivalent organizational documents) of Benchmark and each of its subsidiaries, as in effect at the date of this Agreement. Neither Benchmark nor any subsidiary is in violation of any provisions of its Certificate and Agreement of Partnership or equivalent organizational documents in a way that would result in a Material Adverse Effect. (b) Subsidiaries of Benchmark. Schedule 2.1(b) sets forth a true and complete list of all of Benchmark's directly or indirectly owned subsidiaries, together with the jurisdiction of incorporation or organization of each subsidiary. Schedule 2.1 also sets forth the type of equity interest in each subsidiary owned by Benchmark or another subsidiary of Benchmark and indicates whether any Person other than Benchmark or a subsidiary of Benchmark owns any equity interests in any subsidiary of Benchmark. Except as disclosed on Schedule 2.1(b), Benchmark does not own, directly or indirectly, any subsidiaries, or have the right, pursuant to a contract or otherwise, to acquire any capital stock, equity interest or other similar investment in any corporation, partnership, joint venture, association, limited liability company, trust or other entity. (c) Capital Structure. Except as set forth in Schedule 2.1(c), the Existing Partnership Agreement (or, if applicable, the Existing Fund Partnership Agreements) 16 22 and as contemplated by this Agreement, there are no options, warrants, calls, rights, commitments or agreements of any character to which Benchmark or any of its subsidiaries is a party or by which any of them is bound obligating Benchmark or any of its subsidiaries to issue, deliver or sell, or cause to be delivered or sold, additional partnership interests or any equity interests of Benchmark or any of its subsidiaries, or obligating Benchmark or any of its subsidiaries to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. Except as set forth in the Existing Partnership Agreement (or, if applicable, the Existing Fund Partnership Agreements), there are no outstanding contractual obligations of Benchmark or any subsidiary to repurchase, redeem or otherwise acquire any partnership interests of Benchmark or any partnership interest of, or any equity interest in, any subsidiary listed on Schedule 2.1(b). There are no bonds, debentures, notes or other indebtedness issued or outstanding having the right to vote ("Voting Debt") on any matters on which partners or holders of equity interests in Benchmark or its subsidiaries may vote. All the outstanding Partnership Interests of Benchmark have been duly authorized and validly issued, and all capital contributions required to be made with respect to such Partnership Interests have been made in full. The Partnership Interests have not been, and as to Partnership Interests in the future, will not be, issued in violation of any preemptive or similar rights. The partnership interests in the Surviving Partnership will, when issued, be duly authorized, validly issued, and (with respect to limited partnership interests) nonassessable and will not be issued in violation of any preemptive or similar rights. There are no voting trusts, proxies or other agreements or understandings to which Benchmark or any of its subsidiaries is a party or by which Benchmark or any of its subsidiaries is bound with respect to the voting of any partnership interests of Benchmark or partnership interests of or equity interests in any of its subsidiaries. All of the issued and outstanding partnership interests of or equity interests in each subsidiary of Benchmark are duly authorized, validly issued, and (with respect to limited partnership interests) nonassessable, and have not been issued in violation of any preemptive or similar rights. All capital contributions required to be made by the partners or stockholders of each such subsidiary have been made in full. Upon consummation of the Other Benchmark Mergers, Benchmark will own (either directly or indirectly) 100% of the partnership interests of Fund I, Fund IV, Fund VII and Fund VIII and 99.99999% of the partnership interests in Fund IX, Fund X and Fund XI (the remaining partnership interests in Fund IX, Fund X and Fund XI are held by Bruce R. Spector whose interests are subject to assignment pursuant to Exhibit 4) free and clear of all Liens (other than Liens arising under any of the Loan Agreements and Permitted Liens as defined therein). Upon consummation of the transactions contemplated by the Transaction Documents, Parent will own, directly or indirectly, 100% of all of the equity interests in Benchmark, each of the Funds and each of their respective subsidiaries. (d) Authority. Benchmark, the Selling Stockholders and each of the New Funds have, and upon receipt of the requisite consent of the Fund Limited Partners, each of Fund I, Fund IV, Fund VII, and Fund VIII shall have, all requisite partnership 17 23 power and authority to enter into this Agreement and any other agreement executed by the Selling Stockholders, Benchmark or such Funds in connection with the transactions contemplated by this Agreement including the Other Benchmark Transactions (collectively, the "Transaction Documents") and to consummate the transactions contemplated hereby or thereby. The execution and delivery of the Transaction Documents by Benchmark, and, if applicable, the Selling Stockholders, Fund IX, Fund X and Fund XI (and, upon receipt of the requisite consent of the Fund Limited Partners, by each of Fund I, Fund IV, Fund VII and Fund VIII) and the consummation by them (or by such Fund) of the transactions contemplated hereby or thereby have been duly authorized by all necessary partnership (or other) action on the part of Benchmark (or such Persons). The Transaction Documents have been duly executed and delivered and constitute the valid and binding obligations of Benchmark, the Selling Stockholders and the New Funds and, upon receipt of the requisite consent of the Fund Limited Partners, will constitute the valid and binding obligations of each of Fund I, Fund IV, Fund VII and VIII, enforceable against each such Person in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). (e) No Conflict; Required Filings and Consents. The execution and delivery of the Transaction Documents by Benchmark and its subsidiaries and, where applicable, the Selling Stockholders, do not, and the performance by Benchmark and its subsidiaries and, where applicable, the Selling Stockholders of the transactions contemplated hereby or thereby will not, subject to (i) with respect to the Other Benchmark Mergers, the approval of the Other Benchmark Merger Agreements and the transactions contemplated thereby by the Fund Limited Partners, (ii) obtaining the consents, approvals, authorizations and permits and making the filings described in this Section 2.1(e), and (iii) obtaining any consents required by the terms of any existing agreements of Benchmark or its subsidiaries with third parties that are not listed in Schedule 2.1(o) (A) violate, conflict with or result in any breach of any provision of the certificates and agreements of limited partnership or equivalent organizational documents, in each case as amended or restated, of Benchmark or any of its subsidiaries (or, where applicable, the Selling Stockholders), (B) violate, conflict with or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination or cancellation of or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change of control of Benchmark or otherwise) any obligation, or result in the loss of any benefit or give any person the right to require any security to be repurchased, or give rise to the creation of any lien, charge, security interest or encumbrance upon any of the properties or assets of Benchmark or any of its subsidiaries (or, where applicable, the Selling Stockholders) under, any of the terms, conditions or provisions of any contract, loan or credit agreement, note, bond, 18 24 mortgage, indenture or deed of trust or any license, lease, agreement or other instrument, permit, concession, franchise, license or obligation to which any of them is a party or by which they or any of their properties or assets may be bound or subjected, or (C) violate any order, writ, judgment, injunction, decree, statute, rule or regulation of any federal, state or local court, administrative agency or commission or other governmental authority or instrumentality (a "Governmental Entity") applicable to Benchmark or any of its subsidiaries (or, where applicable, the Selling Stockholders) or by which or to which any of their respective properties or assets is bound or subject. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Benchmark or any of its subsidiaries (or, where applicable, the Selling Stockholders) in connection with the execution and delivery of the Transaction Documents by Benchmark or its subsidiaries (or, where applicable, the Selling Stockholders) or the consummation of the transactions contemplated hereby or thereby, except for (1) the filing of a premerger notification report under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the consents of the Federal Communications Commission (the "FCC") to the transfers of control of the Station Licenses (as defined in Section 2.1(g)(ii) below) as contemplated by Section 6.1 hereof, (3) the filing of the Certificate of Merger with the State Department of Assessments and Taxation of Maryland and the Secretary of State of the State of Delaware, and (4) applicable requirements, if any, of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and state securities or blue sky laws. (f) Financial Statements; Absence of Certain Changes or Events. (i) Benchmark has delivered to Mergeco, if applicable, copies of audited (if available) or unaudited financial statements for 1994, 1995 and the nine months ended September 30, 1996 of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, accompanied (to the extent audited) by the reports thereon of Arthur Andersen LLP, independent public accountants (such audited or unaudited financial statements collectively being referred to as the "Financial Statements"). The Financial Statements, including, if applicable, the notes thereto, were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except to the extent disclosed therein or required by changes in GAAP) and, subject to adjustments that would be made after audit (in the case of any unaudited financial statements), present fairly in all material respects the financial position of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and their subsidiaries as of such dates and for the periods then ended. (ii) Except as disclosed in Schedule 2.1(f), as of the date of this Agreement, there is no liability or obligation of any kind, whether, accrued, absolute, fixed, contingent or otherwise, of Benchmark or its subsidiaries which has or could reasonably be expected to have a Material Adverse Effect 19 25 and that is not reflected or reserved against in the balance sheets of Benchmark, Fund I, Fund IV, Fund VII or Fund VIII (the "Balance Sheets") for the period ended September 30, 1996 (the "Balance Sheet Date"), other than (A) liabilities incurred in the ordinary course of business in a manner consistent with past practices, or (B) any such liability or obligation which would not be required to be presented in financial statements or the notes thereto prepared in conformity with GAAP applied, in a manner consistent with past practice, in the preparation of the Financial Statements. (iii) Except as disclosed in Schedule 2.1(f), since the Balance Sheet Date, Benchmark and its subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice and nothing has occurred that would have been prevented by Section 3.1 if the terms of such section had been in effect as of and after the Balance Sheet Date. Except as disclosed in Schedule 2.1(f), since the Balance Sheet Date and through (and including) the date of this Agreement there has not occurred any event that has resulted in or would reasonably be expected to result in Material Adverse Effect. (g) Compliance with Applicable Laws; FCC Matters; Station Licenses. (i) Except as permitted or contemplated hereby, the businesses of Benchmark and its subsidiaries have been conducted in compliance with each applicable law, ordinance, regulation, judgment, decree, injunction, rule or order of the FCC or any other Governmental Entity binding on Benchmark or any of its subsidiaries or their respective properties or assets, except for such instances of noncompliance that do not and would not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.1(g), no investigation or review by any Governmental Entity with respect to Benchmark or any of its subsidiaries is pending or, to Benchmark's knowledge, threatened, except for such investigations or reviews as do not and would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, Benchmark and its subsidiaries have complied with the Communications Act of 1934, as amended (the "Communications Act"), all rules, regulations and written policies of the FCC thereunder, all material obligations with respect to equal opportunity under applicable law, and all rules and regulations of the Federal Aviation Administration applicable to the towers used by the Stations, except, in each case, where the failure to so comply does not and would not reasonably be expected to result in a Material Adverse Effect. In addition, Benchmark and its subsidiaries have duly and timely filed, or caused to be so filed, with the FCC all material reports, statements, documents, registrations, filings or submissions with respect to the operation of the Stations and the ownership thereof, including, without limitation, applications for renewal of authority required by applicable law to be filed (except where the failure to make such 20 26 filings on a timely basis does not have and would not reasonably be expected to have a Material Adverse Effect). All such FCC filings complied with all material applicable laws when made and no material deficiencies have been asserted with respect to any such filings. The material required by 47 C.F.R. Section 73.3526 to be kept in the public inspection files of the Stations is materially complete. (ii) Schedule 2.1(g) lists (A) all licenses, permits and other authorizations, including the expiration dates thereof, issued to Benchmark or any of its subsidiaries by the FCC relating to the Stations and held by them as of the date of this Agreement and (B) all licenses, permits or authorizations issued to Benchmark or any of its subsidiaries by any other Governmental Entities which are material to the operations of the Stations and held by them as of the date of this Agreement, the loss of which have or would reasonably be expected to have a Material Adverse Effect. Such licenses, permits and authorizations, and all pending applications for modification, extension or renewal thereof or for new licenses, permits, permissions or authorizations, are, together with additional licenses, permits or authorizations of any additional stations acquired after the date hereof, collectively referred to herein as the "Station Licenses." Schedule 2.1(g) lists the legally authorized holder(s) of the Station Licenses, each of which is in full force and effect. The Stations have been operated in all material respects in accordance with the terms of the Station Licenses. There are no material proceedings pending or, to Benchmark's knowledge, threatened with respect to Benchmark's or any of its subsidiaries' ownership or operation of the Stations which reasonably may be expected to result in the revocation, material adverse modification, non-renewal or suspension of any of the Station Licenses, the issuance against Benchmark or any of its subsidiaries of any cease and desist order, or the imposition of any administrative actions by the FCC or any other Governmental Entity with respect to the Station Licenses, or which reasonably may be expected to adversely affect the Stations' ability to operate as currently operated or the Surviving Partnership's ability to obtain control of the Station Licenses. Except as set forth on Schedule 2.1(g), to Benchmark's knowledge, no other broadcast station or radio communications facility is causing interference to the Stations' transmissions beyond that which is allowed by FCC rules and regulations. Benchmark has no reason to believe that the FCC will not renew the Station Licenses issued by the FCC in the ordinary course of business. Benchmark knows of no facts relating to Benchmark or its subsidiaries under the Communications Act or the rules, regulations or written policies of the FCC in effect on the date of this Agreement that reasonably may be expected to disqualify Benchmark or its subsidiaries from transferring control of the Station Licenses pursuant to the terms of this Agreement or that would prevent the consummation by them of the transactions contemplated by this Agreement, provided that Benchmark makes no representation in this Section 2.1(g) with respect to any facts or 21 27 circumstances attributable to Mergeco or its affiliates which could prevent the consummation of the transactions contemplated by this Agreement. (h) Absence of Litigation. Except as set forth on Schedule 2.1(h), there is no claim, action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or, to the knowledge of Benchmark, threatened against Benchmark or any of its subsidiaries (including, for this purpose any action, suit, inquiry, judicial or administrative proceeding against Benchmark, its subsidiaries or the General Partners or its affiliates relating to the transactions contemplated by this Agreement) or any of their respective properties or assets by or before any arbitrator or Governmental Entity, nor to Benchmark's knowledge are there any investigations relating to Benchmark or any of its subsidiaries or any of their respective properties or assets pending or threatened by or before any arbitrator or Governmental Entity. Except as set forth in Schedule 2.1(h), there is no judgment, decree, injunction, order, determination, award, finding, or letter of deficiency of any Governmental Entity or arbitrator outstanding against Benchmark or any of its subsidiaries or any of their respective properties or assets which have or would reasonably be expected to have a Material Adverse Effect. (i) Insurance. Schedule 2.1(i) sets forth a summary of all fire, general liability, malpractice liability, theft and other forms of insurance and all fidelity bonds held by or applicable to Benchmark or any of its subsidiaries. No event has occurred, including, without limitation, the failure by Benchmark or any of its subsidiaries to give any notice or information or the delivery of any inaccurate or erroneous notice or information, which limits or impairs the rights of Benchmark or any of its subsidiaries under any such insurance policies in such a manner that has or would reasonably be expected to have a Material Adverse Effect. Excluding insurance policies that have expired and been replaced in the ordinary course of business, no insurance policy has been canceled within the last two years prior to the date hereof. (j) Real Estate. Each of Benchmark and its subsidiaries has good and marketable title in fee simple to all real properties owned by it (including owned facilities and improvements thereon, the "Owned Real Property") and valid leaseholds in each parcel of real property leased by it (including facilities and improvements thereon which are leased, the "Leased Real Property"), except to the extent marketability may be affected by the existence of Permitted Liens (as defined in Section 2.1(1)). Each lease is valid without default thereunder by the lessee or, as of the date hereof and to Benchmark's knowledge, the lessor. Schedule 2.1(j) lists as of the date hereof (i) the street address and use of each parcel of Owned Real Property and (ii) the street address and use of each parcel of Leased Real Property pursuant to which Benchmark or a subsidiary of Benchmark is a lessee. (k) Personal Property. Except for property held under capital leases and the liens of Benchmark's secured creditors (which shall be paid at Closing or, if both Benchmark and Mergeco elect, reflected on the Closing Balance Sheet) and Permitted 22 28 Liens, Benchmark or its subsidiaries have good title to all the items of machinery, equipment, furniture, fixtures, inventory, receivables and other tangible or intangible personal property reflected on the Balance Sheet and all such property acquired since the Balance Sheet Date, except for any such property or assets sold or otherwise disposed of in the ordinary course of business and consistent with past practices since such date or where the failure to have good title does not and would not reasonably be expected to have a Material Adverse Effect. The tangible personal property and fixtures owned or used by Benchmark or any of its subsidiaries that are necessary for the operation of the Stations, including all broadcasting equipment and broadcast towers, are in good operating condition and repair (subject to normal wear and tear) and permit the conduct of the business of the Stations in compliance with all material FCC rules and regulations. Benchmark or any of its subsidiaries owns or holds under valid leases all of the tangible personal property and fixtures necessary to conduct the business of the Stations as presently conducted except where the failure to own or hold under valid lease any tangible property or fixtures does not and would not reasonably be expected to have a Material Adverse Effect. (l) Liens and Encumbrances. All properties and assets, including leases, owned by Benchmark and its subsidiaries are free and clear of all liens, pledges, claims, security interests, restrictions, mortgages, tenancies and other possessory interests, conditional sale or other title retention agreements, assessments, easements, rights of way, covenants, restrictions, rights of first refusal, defects in title, encroachments and other burdens, options or encumbrances of any kind (collectively, "Liens"), except (i) statutory Liens securing payments not yet delinquent or the validity of which are being contested in good faith by appropriate actions, (ii) purchase money Liens arising in the ordinary course, (iii) Liens for taxes not yet delinquent, (iv) Liens reflected in the Balance Sheet (which have not been discharged) and will not, if Benchmark and Mergeco elect, be discharged prior to Closing), (v) Liens which in the aggregate do not materially detract from the value for use for broadcasting purposes or materially impair the present and continued use of the properties or assets subject thereto in the usual and normal conduct of the business of the Stations, (vi) Liens on leases arising from the provisions of such leases, (vii) any liens set forth on title reports for certain parcels of Owned Real Property which Benchmark obtained in connection with its acquisition of such parcels of Owned Real Property prior to the date hereof (copies of which reports have been delivered to Mergeco), (viii) any leases of Owned Real Property and Leased Real Property listed on Schedule 2.1(j) and (ix) any other Liens set forth on Schedule 2.1(1) (the Liens referred to in clauses (i) through (ix) being "Permitted Liens"). 23 29 (m) Environmental Matters. Except as set forth on Schedule 2.1(m) and except to the extent any inaccuracy in the representations and warranties set forth in this Section 2.1(m) does not and would not reasonably be expected to result in a Material Adverse Effect: (i) The Owned Real Property and, to Benchmark's knowledge, the Leased Real Property and the operations of Benchmark or its subsidiaries thereon comply in all material respects with all applicable federal, state and local laws, statutes, codes, rules, regulations, ordinances, orders, determinations or rules of common law pertaining to the environment, natural resources and public or employee health and safety including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Clean Air Act, as amended, the Federal Water Pollution Control Act, as amended, The Oil Pollution Act of 1990, as amended, the Safe Drinking Water Act, as amended, the Hazardous Materials Transportation Act as amended, the Toxic Substances Control Act, as amended, and other environmental conservation or protection laws ("Environmental Laws"); (ii) No judicial proceedings are pending or, to Benchmark's knowledge, threatened against Benchmark or its subsidiaries alleging the violation of any Environmental Laws, and there are no administrative proceedings pending or, to Benchmark's knowledge, threatened against Benchmark or its subsidiaries, alleging the violation of any Environmental Laws and no notice (in the case of clause (ii)(B), directed to Benchmark or any of its subsidiaries) from any Governmental Entity or any person has been received by Benchmark or its subsidiaries (A) claiming any violation of any Environmental Laws in connection with any Owned Real Property or Leased Real Property that has not been complied with or otherwise resolved or (B) requiring any remediation, clean-up, modification, repairs, work, construction, alterations or installations on or in connection with any Owned Real Property or Leased Real Property that are necessary to comply with any Environmental Laws; (iii) All material permits, registrations, licenses, authorizations, and the like ("Permits") required to be obtained or filed by each of Benchmark and its subsidiaries under any Environmental Laws in connection with Benchmark's and its subsidiaries' operations, including, without limitation, those activities relating to the generation, use, storage, treatment, disposal, release or remediation of Hazardous Substances (as such term is defined in Section 2.1(m)(iv) hereof), have been duly obtained or filed, and each of Benchmark and its subsidiaries are and have at all times been in compliance in all material respects with the terms and conditions of all such Permits; 24 30 (iv) All Hazardous Substances used or generated by Benchmark or its subsidiaries or, to Benchmark's knowledge, any of their predecessors, on, in, or under any of the Owned Real Property or the Leased Real Property are and have at all times been generated, stored, used, treated, disposed of, and released by such persons or on their behalf in such manner as not to result, or be reasonably be expected to result in any material Environmental Costs or Liabilities (as defined below). "Hazardous Substances" means (A) any hazardous materials, hazardous wastes, hazardous substances, toxic wastes, and toxic substances as those or similar terms are defined under any Environmental Laws; (B) any friable asbestos or any material which contains any hydrated mineral silicate, including chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite; (C) PCB, or PCB-containing materials, or fluids; (D) radon; (E) any other hazardous, radioactive, toxic or noxious substance, material, pollutant, contaminant, constituent, or solid, liquid or gaseous waste regulated under any Environmental Laws; (F) any petroleum, petroleum hydrocarbons, petroleum products, crude oil and any fractions or derivatives thereof, any oil or gas exploration or production waste, and any natural gas, synthetic gas and any mixtures thereof; (G) any substance that whether by its nature or its use, is subject to regulation under any Environmental Laws or with respect to which any Environmental Laws or Governmental Entity requires environmental investigation, monitoring or remediation; and (H) any underground storage tanks, dikes, or impoundments as defined under any Environmental Laws. "Environmental Costs or Liabilities" means any losses, liabilities, obligations, damages, fines, penalties, judgments, settlements, actions, claims, costs and expenses (including, without limitation, reasonable fees, disbursements and expenses of legal counsel, experts, engineers and consultants, and the costs of investigation or feasibility studies and performance of remedial or removal actions and cleanup activities) arising in connection with (a) any Environmental Laws, (b) any order of or contract of Benchmark or its subsidiaries with, any Governmental Entity or any private or public Persons or (c) any exposure of any Person or property to Hazardous Substances; (v) There are not now, nor have there been in the past, on, in or under any Owned Real Property or Leased Real Property when owned, leased or operated by Benchmark or its subsidiaries or, to Benchmark's knowledge, when owned, leased or operated by any of their predecessors, any Hazardous Substances that are in a condition or location that violates any Environmental Law in any material respect or that reasonably could be expected to (a) require remediation under any Environmental Law or (b) give rise to a claim for damages or compensation by any affected Person or to any Environmental Costs or Liabilities; provided that the representation and warranty of Benchmark in this Section 2.1(m)(v) with respect to matters or conditions caused by any Person other than Benchmark on the Leased Real Property is limited to Benchmark's knowledge. 25 31 (vi) Benchmark and its subsidiaries have not received, and to the knowledge of Benchmark do not expect to receive, any notification from any source advising Benchmark or such subsidiaries that: (A) it is a potentially responsible party under CERCLA or any other Environmental Laws; (B) any real property or facility currently or previously owned, operated, or leased, by it is identified or proposed for listing as a federal National Priorities List ("NPL") (or state-equivalent) site or a Comprehensive Environmental Response, Compensation and Liability Information System ("CERCLIS") list (or state-equivalent) site; and (C) any facility to which it has ever transported or otherwise arranged for the disposal of Hazardous Substances is identified or proposed for listing as an NPL (or state-equivalent) site or CERCLIS (or state-equivalent) site; and (vii) The Stations' operations do not have a significant environmental impact as defined by 47 C.F.R. Section 1.1307. (n) Taxes. Each of Benchmark and its subsidiaries has filed all tax returns, reports, statements and other documents ("Tax Returns") required to be filed (except where the failure to file any such Tax Returns has not and would not reasonably be expected to result in a Material Adverse Effect), and all such Tax Returns which have been filed are accurate and complete in all material respects. Each of Benchmark and its subsidiaries has paid (or there has been paid on its behalf), or has set up an adequate reserve for the payment of, all material taxes required to be paid, withheld, or deducted, or for which any of Benchmark or its subsidiaries are liable, in respect of the periods covered by such Tax Returns, and with respect to each tax, from the end of the period covered by the most recently filed Tax Return to the date hereof, and the Balance Sheet reflects an adequate reserve for all taxes payable, or required to be withheld and remitted, by Benchmark or any of its subsidiaries, or for which Benchmark or any of its subsidiaries are liable, accrued through the Balance Sheet Date. No material deficiencies for any taxes have been proposed, asserted or assessed by taxing authorities with respect to Benchmark or any of its subsidiaries and are pending, and no requests for waivers of the time to assess any such taxes are pending. Except as set forth on Schedule 2.1(n), for each taxable year or period not closed by the applicable statute of limitations, (i) Benchmark and each subsidiary are properly classified as partnerships (and not as associations taxable as corporations) for tax purposes and (ii) Benchmark and its subsidiaries have withheld all required amounts pursuant to Section 1446 of the Code. For the purposes of this Agreement, the term "taxes" shall include all federal, state, local, foreign and other income, gross receipts, use, ad valorem, transfer, franchise, profits, license, payroll, occupation, severance, property, sales, excise, withholding, unemployment compensation, social security, and other taxes and charges of any nature whatsoever (including interest, penalties and additions to tax relating to any of the specified items). 26 32 (o) Certain Agreements. Except as set forth in Schedule 2.1(o) and for oral or written agreements, plans or arrangements terminable without liability or penalty to Benchmark or its subsidiaries upon thirty days notice, the benefits of which do not exceed $50,000 per year, neither Benchmark nor any of its subsidiaries is a party to any oral or written agreement, plan or arrangement with any employee or other station or broadcast personnel (whether an employee, consultant or an independent contractor) of Benchmark or its subsidiaries (i) the benefits of which are contingent, or the terms of which are materially altered, upon, or result from, the occurrence of a transaction involving Benchmark or its subsidiaries of the nature of any of the transactions contemplated by this Agreement, (ii) providing severance benefits longer than forty-five days or other benefits after the termination of employment or other contractual relationship regardless of the reason for such termination and regardless of whether such termination is before or after a change of control, (iii) under which any person may receive payments subject to the tax imposed by Section 4999 of the Code or (iv) any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. Schedule 2.1(o) hereto lists (and, in the case of clause (iv), describes) each oral or written (i) agreement, contract, indenture or other instrument relating to the borrowing of money or the guarantee of any obligation for the borrowing of money, (ii) Employee Benefit Plan, as defined in Section 2.1(p), (iii) employment or consulting contract which is not terminable without liability or penalty to Benchmark or any of its subsidiaries on thirty (30) days or less notice, (iv) covenant, agreement, or arrangement under which Benchmark's or any of its subsidiary's ability or right to compete with another Person is restricted or impaired, or (v) contract, agreement or commitment (except for advertising, trade or barter agreements) under which any party thereto remains obligated to provide goods or services having a value, or to make payments aggregating, in excess of $50,000 per year, in any such case to which Benchmark or any of its subsidiaries is a party or bound. Each such agreement, contract or obligation described in Schedule 2.1(o) or required to be so described is a valid and binding obligation of Benchmark or one of its subsidiaries, as the case may be, and is in full force and effect without amendment, except where not being a valid and binding obligation or in full force and effect without amendment does not and would not reasonably be expected to have a Material Adverse Effect. Benchmark or one of its subsidiaries, as the case may be, has performed the obligations required to be performed by it under the agreements so described and is not (with or without lapse of time or the giving of notice, or both) in breach or default thereunder, except to the extent such nonperformance, breach or default does not and would not reasonably be expected to result in a Material Adverse Effect. As of the date hereof, each of Benchmark and its subsidiaries, and to their knowledge each other party to such contracts, has performed the obligations required to be performed by it under the agreements so described and is not (with or without lapse of time or the giving of notice or both) in breach or default thereunder, except to the extent such nonperformance, breach or default does not and would not reasonably be expected to 27 33 result in a Material Adverse Effect. Schedule 2.1(o) identifies, as to each agreement, contract or obligation listed thereon, whether the consent of the other party thereto is required in order for such agreement, contract or obligation to continue in full force and effect upon the consummation of the transactions contemplated hereby or whether such agreement, contract or obligation can be canceled by the other party without liability to such other party due to the consummation of the transactions contemplated hereby. A copy of each agreement, contract, obligation, plan or arrangement set forth in Schedule 2.1(o) has been made available to Mergeco. As of the Closing Date, neither Benchmark nor any of its subsidiaries shall have any indebtedness for borrowed money that is not pre-payable (whether with or without penalty). (p) ERISA Compliance; Labor. (i) The present value of all accrued benefits (vested and unvested) under each "employee pension benefit plan" as such term is defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which Benchmark or any other trades or businesses under common control within the meaning of Section 4001(b)(1) of ERISA with Benchmark or any Fund (collectively, the "ERISA Group") maintains, or to which Benchmark or any member of the ERISA Group is obligated to contribute (the "Pension Plan"), did not, as of the respective last annual valuation dates for such Pension Plans, exceed the value of the assets of such Pension Plan allocable to such benefits. None of the Pension Plans subject to Section 302 of ERISA has incurred any "accumulated funding deficiency," as such term is defined in Section 302 of ERISA (whether or not waived), since the effective date of such Section 302. Neither Benchmark or any member of the ERISA Group, nor any employee or partner of Benchmark or any member of the ERISA Group or any of the employee benefit plans of Benchmark or any member of the ERISA Group which are subject to ERISA, including the Pension Plans, or any trusts created thereunder, or any trustee or administrator thereof, has engaged in a "prohibited transaction" as such term is described in Section 4975 of the Code, which has subjected or which could subject Benchmark or any member of the ERISA Group, any partner or employee of Benchmark or any member of the ERISA Group or any of such plans or any trust to any material tax or penalty on prohibited transactions imposed by such Section 4975. None of such Pension Plans subject to Title IV of ERISA or any of their related trusts has been terminated or partially terminated, nor has there been any unreported "reportable event," as that term is defined in Section 4043 of ERISA, with respect thereto since the effective date of such Section 4043 (excluding those events as to which the thirty day notice period is waived pursuant to the regulations issued thereunder). Neither Benchmark nor any member of the ERISA Group has contributed or been obligated to contribute to any "multiemployer plan" as such term is defined in Section 3(37) or Section 4001(a)(3) of ERISA . Except as set forth on Schedule 2.1(p) 28 34 or the other Schedules to this Agreement, there are no "employee benefit plans" within the meaning of Section 3(3) of ERISA or any bonus (excluding bonuses granted on an individual basis in the ordinary course of business), pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, insurance or other plan or arrangement or understanding providing benefits to any present or former employee or contractor of Benchmark or any member of the ERISA Group maintained by Benchmark or any member of the ERISA Group or as to which Benchmark or any member of the ERISA Group has any material liability or obligation (collectively, "the Employee Benefit Plans"). (ii) True, correct and complete copies of each of the Employee Benefit Plans, and related trusts, if applicable, have been furnished or made available to Mergeco, along with the most recent report filed on Form 5500 and summary plan description with respect to each Employee Benefit Plan required to file Form 5500. All reports and disclosures relating to the Employee Benefit Plans required to be filed with or furnished to governmental agencies or plan participants or beneficiaries have been furnished in accordance with applicable law in a timely manner except where such failure has not resulted and would not reasonably be expected to result in a Material Adverse Effect. Each Employee Benefit Plan has been maintained in compliance in all material respects with ERISA and the Code, and each Employee Benefit Plan intended to be qualified under Section 401 of the Code has received or is awaiting receipt of a favorable determination letter from the Internal Revenue Service regarding the qualified status and has not since receipt of the most recent favorable determination letter been amended or, to the knowledge of Benchmark and the members of the ERISA Group, operated in a manner which would adversely affect such status. There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of Benchmark and the members of the ERISA Group, threatened against, or with respect to any of the Employee Benefit Plans. All contributions required to be made to the Employee Benefit Plans pursuant to their terms have been timely made. Except as disclosed on Schedule 2.1(p), there is no matter pending with respect to any of the Employee Benefit Plans before the Internal Revenue Service, Department of Labor or the Pension Benefit Guaranty Corporation. Except as required by applicable law, none of the Employee Benefit Plans provides medical insurance coverage following retirement. Each Employee Benefit Plan which is an "employee welfare benefit plan," as defined in Section 3(l) of ERISA, may be unilaterally amended or terminated in its entirety without liability except as to benefits accrued prior to such amendment or termination. (iii) Schedule 2.1(p) lists each collective bargaining agreement to which Benchmark or any of its subsidiaries is a party. Except for those unions 29 35 which are parties to one or more of the listed collective bargaining agreements or as otherwise listed on Schedule 2.1(p), neither Benchmark nor any of its subsidiaries has agreed to recognize any union or other collective bargaining representative, nor has any union or other collective bargaining representative been certified as the exclusive bargaining representative of any of their employees. Except as set forth on the Schedules to this Agreement, each of Benchmark and its subsidiaries (A) is, and has been since June 30, 1993 or the date of its formation, whichever is later, in substantial compliance with all applicable laws regarding labor, employment and employment practices, terms and conditions of employment, affirmative action, wages and hours, plant closing and mass layoff, occupational safety and health, immunization, and workers' compensation, (B) is not engaged, nor has it since June 30, 1993 or the date of its formation, whichever is later, engaged, in any unfair labor practices, and has no, and has not had since June 30, 1993 or the date of its formation, whichever is later, any, unfair labor practice charges or complaints before the National Labor Relations Board pending or, to Benchmark's knowledge, threatened against it, (C) has no, and has not had since June 30, 1993 or the date of its formation, whichever is later, any, grievances, arbitrations or other proceedings arising or asserted to arise under any collective bargaining agreement, pending or, to Benchmark's knowledge, threatened against it and (D) has no, and has not had since June 30, 1993 or the date of its formation, whichever is later, any, charges, complaints or proceedings before the Equal Employment Opportunity Commission, Department of Labor or any other federal, state or local agency responsible for regulating employment practices, pending, or, to Benchmark's knowledge, threatened against it, except, in each case (with respect to clauses (A) through (D) above) for any violations, practices, complaints, proceedings or charges that have not resulted and would not reasonably be expected to result in a Material Adverse Effect. There is no labor strike, slowdown, work stoppage or lockout pending or, to Benchmark's knowledge, threatened against or affecting Benchmark or its subsidiaries, and Benchmark or its subsidiaries has not experienced any labor strike, slowdown, work stoppage or lockout since June 30, 1993 or the date of its formation, whichever is later. Except as set forth on Schedule 2.1(p), to Benchmark's knowledge, no union organizational campaign or representation petition is currently pending with respect to the employees of Benchmark or its subsidiaries. (q) Patents, Trademarks, Etc. There is no material patent, patent application, trademark, trade name, trade name and trademark registration, service mark, copyright, and copyright registration (collectively, "Intellectual Rights") owned by or registered in the name of Benchmark of any of its subsidiaries, or in which Benchmark or any of its subsidiaries has any right, license or interest other than the call signs of each of the Stations and the registered service mark "Country Heartlines." Benchmark or its subsidiaries own or have the right to use all such call signs and such service mark. To the knowledge of Benchmark, neither Benchmark 30 36 nor any of its subsidiaries is infringing any such Intellectual Rights, and Benchmark is not aware of any infringement by others of any such rights owned by Benchmark or any of its subsidiaries. (r) Affiliate Relationships. Except as set forth in the Existing Partnership Agreement and the Existing Fund Partnership Agreements, Schedule 2.1(r) sets forth a complete list and summary description of all contracts or other arrangements involving Benchmark or any of its subsidiaries in which the General Partner or any of its affiliates has a financial interest, including indebtedness to Benchmark or its subsidiaries. (s) Vote Required. The only votes of the holders of any Partnership Interests of Benchmark that are necessary to approve the Merger and adopt this Agreement are the affirmative votes of the General Partners. The only votes of the holders of any partnership interests in Fund I, Fund IV, Fund VII and Fund VIII that are necessary to approve the applicable Other Benchmark Mergers and adopt the applicable Other Benchmark Merger Agreements are the affirmative votes of Benchmark and the Fund Limited Partners holding more than fifty percent (50%) of the applicable aggregate Limited Partner Percentage. (t) Fairness Opinion. The General Partners have received the fairness opinion (the "Alex Brown Fairness Opinion") of Alex. Brown & Sons Incorporated ("Alex. Brown") dated the date hereof, a copy of which has been provided to Mergeco. (u) Pending Acquisitions. There has occurred no failure to comply with, or breach of, any representation or warranty, covenant, obligation or undertaking made by Benchmark or its affiliates under the Statesville Agreement, the Jackson Agreement, or the Montgomery Agreements, and to Benchmark's knowledge, except as set forth in Schedule 2.1(u), there has occurred no failure to comply with, or breach of, any representation or warranty, covenant, obligation or undertaking made by any other party thereto which has or would reasonably be expected to result in a Material Adverse Effect (unless Mergeco or its affiliates have been informed of such breach and have consented to the consummation of the applicable acquisition). 2.2. REPRESENTATIONS AND WARRANTIES OF MERGECO. Mergeco represents and warrants to Benchmark as follows (with the understanding that Benchmark is relying on such representations and warranties in entering into and performing this Agreement): (a) Organization Standing and Power. Each of Mergeco and Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) Authority. Each of Mergeco and Parent has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions 31 37 contemplated hereby. The execution and delivery of this Agreement by Mergeco and Parent and the consummation by them of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Mergeco (including the approval and adoption of this Agreement and the transactions contemplated hereby by the Parent) and Parent. This Agreement has been duly executed and delivered and constitutes the valid and binding obligation of Mergeco and Parent, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation or to a loss of a material benefit under, any provision of the Articles of Incorporation or Bylaws of Mergeco or any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree, statute law, ordinance, rule or regulation applicable to Mergeco or its properties or assets, except for any such conflicts, violations or defaults or terminations, cancellations, or accelerations which individually or in the aggregate do not have a material adverse effect on Mergeco's or Parent's ability to consummate its obligations hereunder. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Mergeco or Parent in connection with the execution and delivery of this Agreement by Mergeco or Parent or the consummation by it of the transactions contemplated hereby, except for (i) the filing of a premerger notification report under the HSR Act, (ii) the filing of the Certificate of Merger with the Maryland State Department of Assessments and Taxation and the Secretary of State of the State of Delaware, (iii) the filing with the FCC and the grant of the consent of the FCC to the transfer of control of the Station Licenses pursuant to the terms of this Agreement (as contemplated by Section 6.1), and (iv) applicable requirements, if any, of the Securities Act and the Exchange Act and the rules and regulations thereunder and state securities or blue sky laws. Mergeco and Parent are acquiring the partnership interests of the Surviving Partnership for investment purposes and without a view to the distribution thereof in violation of the Securities Act. (c) Litigation. As of the date hereof, there is no action, suit, inquiry, judicial or administrative proceeding pending or, to the knowledge of Mergeco, threatened against it relating to the transactions contemplated by this Agreement. (d) FCC Matters. Mergeco and Parent are legally and otherwise qualified under the Communications Act, and the rules, regulations and policies of the FCC, to 32 38 become the licensee or transferee, as applicable, of the Stations (including the Jackson Stations, the Montgomery Stations and the Statesville Stations) and consummate this Agreement and the transactions contemplated hereby. There are no proceedings, complaints, notices of forfeiture, claims, investigations pending or, to the knowledge of Mergeco, threatened against any or in respect of any of the broadcast stations licensed to Mergeco or its affiliates that would materially impair the qualifications of Mergeco to take control of the Stations (including the Jackson Stations, the Montgomery Stations and the Statesville Stations). Neither Mergeco, nor any Person in which Mergeco has an interest or which has an interest in Mergeco, has an interest in any media property that will prevent or impair Mergeco from obtaining the FCC's consent to all the transactions contemplated hereby without the need for a waiver of the FCC's rules as they apply with respect to the transactions contemplated hereby; provided, however, no representation is made in this paragraph with respect to any prevention or impairment relating to or caused by filings and proceedings under the HSR Act. (e) Media Properties. Schedule 2.2(e) sets forth every media business (collectively, the "Mergeco Affiliated Businesses") which will be taken into account in determining what information to provide in any filing that will be made under the HSR Act by Mergeco or any of its affiliates with respect to the transactions contemplated hereby and by the Other Benchmark Transactions. (f) Real Estate. As of the date hereof, Mergeco does not own or lease any real property. (g) Alex. Brown Fee. Prior to the execution hereof, Mergeco or its affiliates have paid the Alex. Brown Fee to Alex. Brown. 2.3. REPRESENTATIONS AND WARRANTIES REGARDING FUND I, FUND IV, FUND VII AND FUND VIII. For purposes of Section 10.1 only, each of Fund I, Fund IV, Fund VII and Fund VIII, with respect to itself and its own subsidiaries, severally but not jointly, represents and warrants to Mergeco and Parent as follows: (a) Organization, Good Standing, Etc. Each of the Fund and its subsidiaries is a partnership or other entity, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has all requisite partnership (or other) power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified and in good standing to do business in each state in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except where the failure to so qualify or be in good standing does not have and could not reasonably be expected to have a Material Adverse Effect. The Fund has delivered to Mergeco true and complete copies of the Certificates and Agreements of Limited Partnership (or equivalent organizational documents) of the Fund and each of its subsidiaries, as in effect at the date of this Agreement. Neither the Fund nor any 33 39 subsidiary is in violation of any provisions of its Certificate and Agreement of Partnership or equivalent organizational documents in a way that would result in a Material Adverse Effect. (b) Subsidiaries of the Fund. Schedule 2.1(b) sets forth a true and complete list of all of the Fund's directly or indirectly owned subsidiaries, together with the jurisdiction of incorporation or organization of each subsidiary. Schedule 2.1(b) also sets forth the type of equity interest in each subsidiary owned by the Fund or another subsidiary of the Fund and indicates whether any Person other than Benchmark or a subsidiary of Benchmark owns any equity interest in any subsidiary of the Fund. Except as disclosed on Schedule 2.1(b), the Fund does not own, directly or indirectly, any subsidiaries, or have the right, pursuant to a contract or otherwise, to acquire any capital stock, equity interest or other similar investment in any corporation, partnership, joint venture, association, limited liability company, trust or other entity. (c) Capital Structure. Except as set forth in Schedule 2.1(c), in the Existing Fund Partnership Agreements and as contemplated by this Agreement, there are no options, warrants, calls, rights, commitments or agreements of any character to which the Fund or any of its subsidiaries is a party or by which any of them is bound obligating the Fund or any of its subsidiaries to issue, deliver or sell, or cause to be delivered or sold, additional partnership interests or any equity interests of the Fund or any of its subsidiaries, or obligating the Fund or any of its subsidiaries to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. Except as set forth in the Existing Fund Partnership Agreements, there are no outstanding contractual obligations of the Fund or any subsidiary to repurchase, redeem or otherwise acquire any partnership interests of the Fund or any partnership interest of, or any equity interest in, any subsidiary listed on Schedule 2.1(b). There is no Voting Debt on any matters on which partners or holders of equity interests in the Fund or its subsidiaries may vote. All the outstanding partnership interests of the Fund have been duly authorized and validly issued, and all capital contributions required to be made with respect to such partnership interests have been made in full. The partnership interests of the Fund have not been, and as to partnership interests in the future, will not be, issued in violation of any preemptive or similar rights. There are no voting trusts, proxies or other agreements or understandings to which the Fund or any of its subsidiaries is a party or by which the Fund or any of its subsidiaries is bound with respect to the voting of any partnership interests of or equity interests in the Fund or any of its subsidiaries. All of the issued and outstanding partnership interests of or equity interests in the Fund and each of its subsidiaries are duly authorized, validly issued, and (with respect to limited partnership interests) nonassessable, and have not been issued in violation of any preemptive or similar rights. All capital contributions required to be made by the partners or stockholders of each such Fund or subsidiary have been made in full. 34 40 (d) Authority. Upon receipt of the requisite consent of the applicable Fund Limited Partners, the Fund shall have all requisite partnership power and authority to enter into this Agreement and any other agreement executed by the Fund in connection with the transactions contemplated by this Agreement including the Transaction Documents and to consummate the transactions contemplated hereby or thereby. The execution and delivery of the Transaction Documents upon receipt of the requisite consent of the applicable Fund Limited Partners, by the Fund and the consummation by it of the transactions contemplated hereby or thereby have been duly authorized by all necessary partnership action on the part of the Fund. The Transaction Documents have been duly executed and delivered by the Fund and, upon receipt of the requisite consent of the applicable Fund Limited Partners, will constitute the valid and binding obligations of the Fund, enforceable against the Fund in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). (e) No Conflict; Required Filings and Consents. The execution and delivery of the Transaction Documents by the Fund do not, and the performance by the Fund of the transactions contemplated hereby or thereby will not, subject to (i) with respect to the applicable Other Benchmark Merger, the approval of the applicable Other Benchmark Merger Agreement and the transactions contemplated thereby by the applicable Fund Limited Partners, (ii) obtaining the consents, approvals, authorizations and permits and making the filings described in this Section 2.3(e), and (iii) obtaining any consents required by the terms of any existing agreements of the Fund with third parties that are not listed in Schedule 2.1(o) (A) violate, conflict with or result in any breach of any provision of the certificates and agreements of limited partnership or equivalent organizational documents, in each case as amended or restated, of the Fund or any of its subsidiaries, (B) violate, conflict with or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination or cancellation of or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change of control of the Fund or otherwise) any obligation, or result in the loss of any benefit or give any person the right to require any security to be repurchased, or give rise to the creation of any lien, charge, security interest or encumbrance upon any of the properties or assets of the Fund or any of its subsidiaries under, any of the terms, conditions or provisions of any contract, loan or credit agreement, note, bond, mortgage, indenture or deed of trust or any license, lease, agreement or other instrument, permit, concession, franchise, license or obligation to which any of them is a party or by which they or any of their properties or assets may be bound or subjected, or (C) violate any order, writ, judgment, injunction, decree, statute, rule or regulation, of any Governmental Entity applicable to the Fund or any of its subsidiaries or by which or to which any of their respective 35 41 properties or assets is bound or subject. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to the Fund or any of its subsidiaries in connection with the execution and delivery of the Transaction Documents by the Fund or any of its subsidiaries or the consummation of the transactions contemplated hereby or thereby, except for (1) the filing of a premerger notification report under the HSR Act, (2) the consents of the FCC to the transfers of control of the Station Licenses held by the Fund (the "Fund Station Licenses") as contemplated by Section 6.1 hereof, (3) the filing of the Certificate of Merger with the State Department of Assessments and Taxation of Maryland and the Secretary of State of the State of Delaware, and (4) applicable requirements, if any, of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and state securities or blue sky laws. (f) Financial Statements; Absence of Certain Changes or Events. (i) The Fund has delivered to Mergeco the Financial Statements of the Fund. The Financial Statements of the Fund, including, if applicable, the notes thereto, were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except to the extent disclosed therein or required by changes in GAAP) and, subject to adjustments that would be made after audit (in the case of any unaudited financial statements), present fairly in all material respects the financial position of the Fund and its subsidiaries as of such dates and for the periods then ended. (ii) Except as disclosed in Schedule 2.1(f), as of the date of this Agreement, there is no liability or obligation of any kind, whether, accrued, absolute, fixed, contingent or otherwise, of the Fund or its subsidiaries which has or could reasonably be expected to have a Material Adverse Effect and that is not reflected or reserved against in the Balance Sheet of the Fund for the period ended September 30, 1996, other than (A) liabilities incurred in the ordinary course of business in a manner consistent with past practices, or (B) any such liability or obligation which would not be required to be presented in financial statements or the notes thereto prepared in conformity with GAAP applied, in a manner consistent with past practice, in the preparation of the Financial Statements of the Fund. (iii) Except as disclosed in Schedule 2.1(f), since the Balance Sheet Date, the Fund and its subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice and nothing has occurred that would have been prevented by Section 3.1 if the terms of such section had been in effect as of and after the Balance Sheet Date. Except as disclosed in Schedule 2.1(f), since the Balance Sheet Date and through (and including) the date of this Agreement there has not occurred any event that has resulted in or would reasonably be expected to result in a Material Adverse Effect. 36 42 (g) Compliance with Applicable Laws; FCC Matters; Station Licenses. (i) Except as permitted or contemplated hereby, the businesses of the Fund and its subsidiaries have been conducted in compliance with each applicable law, ordinance, regulation, judgment, decree, injunction, rule or order of the FCC or any other Governmental Entity binding on the Fund or any of its subsidiaries or their respective properties or assets, except for such instances of noncompliance that do not and would not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.1(g), no investigation or review by any Governmental Entity with respect to the Fund or any of its subsidiaries is pending or, to the Fund's knowledge, threatened, except for such investigations or reviews as do not and would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the Fund and its subsidiaries have complied with the Communications Act, all rules, regulations and written policies of the FCC thereunder, all obligations with respect to equal opportunity under applicable law, and all rules and regulations of the Federal Aviation Administration applicable to the towers used by the Stations, except, in each case, where the failure to so comply does not and would not reasonably be expected to result in a Material Adverse Effect. In addition, the Fund and its subsidiaries have duly and timely filed, or caused to be so filed, with the FCC all material reports, statements, documents, registrations, filings or submissions with respect to the operation of the Stations and the ownership thereof, including, without limitation, applications for renewal of authority required by applicable law to be filed (except where the failure to make such filings on a timely basis does not have or would not reasonably be expected to have a Material Adverse Effect). All such FCC filings complied with all material applicable laws when made and no material deficiencies have been asserted with respect to any such filings. The material required by 47 C.F.R. Section 73.3526 to be kept in the public inspection files of the Stations is materially complete. (ii) Schedule 2.1(g) lists (A) all licenses, permits and other authorizations, including the expiration dates thereof, issued to the Fund or any of its subsidiaries by the FCC relating to the Stations and held by them as of the date of this Agreement and (B) all licenses, permits or authorizations issued to the Fund or any of its subsidiaries by any other Governmental Entities which are material to the operations of the Fund Stations and held by them as of the date of this Agreement, the loss of which have or would reasonably be expected to have a Material Adverse Effect. The Stations owned and operated by the Fund or its subsidiaries (the "Fund Stations") have been operated in all material respects in accordance with the terms of the Station Licenses held by the Fund or its subsidiaries (the "Fund Station Licenses"). There are no material proceedings pending or, to the Fund's knowledge, threatened with respect to the Fund's or any of its subsidiaries' ownership or operation of the Fund Stations which reasonably may be 37 43 expected to result in the revocation, material adverse modification, non-renewal or suspension of any of the Fund Station Licenses, the issuance against the Fund or any of its subsidiaries of any cease and desist order, or the imposition of any administrative actions by the FCC or any other Governmental Entity with respect to the Fund Station Licenses, or which reasonably may be expected to adversely affect the Fund Stations' ability to operate as currently operated or the Surviving Partnership's ability to obtain control of the Fund Station Licenses. Except as set forth on Schedule 2.1(g), to the Fund's knowledge, no other broadcast station or radio communications facility is causing interference to the Fund Stations' transmissions beyond that which is allowed by FCC rules and regulations. The Fund has no reason to believe that the FCC will not renew the Fund Station Licenses issued by the FCC in the ordinary course of business. The Fund knows of no facts relating to the Fund or its subsidiaries under the Communications Act or the rules, regulations or written policies of the FCC in effect on the date of this Agreement that reasonably may be expected to disqualify the Fund or its subsidiaries from transferring control of the Fund Station Licenses pursuant to the terms of this Agreement or that would prevent the consummation by them of the transactions contemplated by this Agreement, provided that the Fund makes no representation in this Section 2.3(g) with respect to any facts or circumstances attributable to Mergeco or its affiliates which could prevent the consummation of the transactions contemplated by this Agreement. (h) Absence of Litigation. Except as set forth on Schedule 2.1(h), there is no claim, action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or, to the knowledge of the Fund, threatened against the Fund or any of its subsidiaries (including, for this purpose any action, suit, inquiry, judicial or administrative proceeding against the Fund or its subsidiaries relating to the transactions contemplated by this Agreement) or any of their respective properties or assets by or before any arbitrator or Governmental Entity, nor to the Fund's knowledge are there any investigations relating to the Fund or any of its subsidiaries or any of their respective properties or assets pending or threatened by or before any arbitrator or Governmental Entity. Except as set forth in Schedule 2.1(h), there is no judgment, decree, injunction, order, determination, award, finding, or letter of deficiency of any Governmental Entity or arbitrator outstanding against the Fund or any of its subsidiaries or any of their respective properties or assets which have or would reasonably be expected to have a Material Adverse Effect. (i) Insurance. Schedule 2.1(i) sets forth a summary of all fire, general liability, malpractice liability, theft and other forms of insurance and all fidelity bonds held by or applicable to the Fund or any of its subsidiaries. No event has occurred, including, without limitation, the failure by the Fund or any of its subsidiaries to give any notice or information or the delivery of any inaccurate or erroneous notice or information, which limits or impairs the rights of the Fund or any of its subsidiaries under any such insurance policies in such a manner that has or would reasonably be 38 44 expected to have a Material Adverse Effect. Excluding insurance policies that have expired and been replaced in the ordinary course of business, no insurance policy has been canceled within the last two years prior to the date hereof. (j) Real Estate. Each of the Fund and its subsidiaries has good and marketable title in fee simple to all Owned Real Property held by the Fund and valid leaseholds in each parcel of Leased Real Property leased by the Fund, except to the extent marketability may be affected by the existence of Permitted Liens. Each lease is valid without default thereunder by the lessee or, as of the date hereof and to the Fund's knowledge, the lessor. Schedule 2.1(j) lists as of the date hereof (i) the street address and use of each parcel of Owned Real Property held by the Fund and (ii) the street address and use of each parcel of Leased Real Property pursuant to which the Fund or any of its subsidiaries is a lessee. (k) Personal Property. Except for property held under capital leases and the liens of the Fund's secured creditors (which shall be paid at Closing or, if both Benchmark and Mergeco elect, reflected on the Closing Balance Sheet) and Permitted Liens, the Fund or one of its subsidiaries has good title to all the items of machinery, equipment, furniture, fixtures, inventory, receivables and other tangible or intangible personal property reflected on the Balance Sheet of the Fund and all such property acquired since the Balance Sheet Date, except for any such property or assets sold or otherwise disposed of in the ordinary course of business and consistent with past practices since such date or where the failure to have good title does not and would not reasonably be expected to have a Material Adverse Effect. The tangible personal property and fixtures owned or used by the Fund or any of its subsidiaries that are necessary for the operation of the Fund Stations, including all broadcasting equipment and broadcast towers, are in good operating condition and repair (subject to normal wear and tear) and permit the conduct of the business of the Fund Stations in compliance with all material FCC rules and regulations. The Fund or its subsidiaries owns or holds under valid leases all of the tangible personal property and fixtures necessary to conduct the business of the Fund Stations as presently conducted except where the failure to own or hold under valid lease any tangible property or fixtures does not and would not reasonably be expected to have a Material Adverse Effect. (l) Liens and Encumbrances. All properties and assets, including leases, owned by the Fund and its subsidiaries are free and clear of all Liens except Permitted Liens. (m) Environmental Matters. Except as set forth on Schedule 2.1(m) and except to the extent inaccuracy of the representations and warranties set forth in this Section 2.3(m) does not and would not reasonably be expected to result in a Material Adverse Effect: (i) The Fund Owned Real Property and, to the Fund's knowledge, the Fund Leased Real Property and the operations of the Fund and its 39 45 subsidiaries thereon comply in all material respects with all applicable federal, state and local laws, statutes, codes, rules, regulations, ordinances, orders, determinations or rules of common law pertaining to the environment, natural resources and public or employee health and safety including, without limitation, the Environmental Laws; (ii) No judicial proceedings are pending or, to the Fund's knowledge, threatened against the Fund or its subsidiaries alleging the violation of any Environmental Laws, and there are no administrative proceedings pending or, to the Fund's knowledge, threatened against the Fund or its subsidiaries, alleging the violation of any Environmental Laws and no notice (in the case of clause (ii)(B), directed to the Fund or any of its subsidiaries) from any Governmental Entity or any person has been received by the Fund or its subsidiaries (A) claiming any violation of any Environmental Laws in connection with any Fund Owned Real Property or Fund Leased Real Property that has not been complied with or otherwise resolved or (B) requiring any remediation, clean-up, modification, repairs, work, construction, alterations or installations on or in connection with any Fund Owned Real Property or Fund Leased Real Property that are necessary to comply with any Environmental Laws; (iii) All Permits, required to be obtained or filed by each of the Fund and its subsidiaries under any Environmental Laws in connection with the Fund's and its subsidiaries' operations, including, without limitation, those activities relating to the generation, use, storage, treatment, disposal, release or remediation of Hazardous Substances (as such term is defined in Section 2.1(m)(iv) hereof), have been duly obtained or filed, and each of the Fund and its subsidiaries are and have at all times been in compliance in all material respects with the terms and conditions of all such Permits; (iv) All Hazardous Substances used or generated by the Fund or its subsidiaries or, to the Fund's knowledge, any of their predecessors, on, in, or under any of the Fund Owned Real Property or the Fund Leased Real Property are and have at all times been generated, stored, used, treated, disposed of, and released by such persons or on their behalf in such manner as not to result, or be reasonably be expected to result in any material Environmental Costs or Liabilities; (v) There are not now, nor have there been in the past, on, in or under any Fund Owned Real Property or Fund Leased Real Property when owned, leased or operated by the Fund or its subsidiaries or, to the Fund's knowledge, when owned, leased or operated by any of their predecessors, any Hazardous Substances that are in a condition or location that violates any Environmental Law in any material respect or that reasonably could be expected to (a) require remediation under any Environmental Law or (b) give 40 46 rise to a claim for damages or compensation by any affected Person or to any Environmental Costs or Liabilities; provided that the representation and warranty made in this Section (m)(v) with respect to matters or conditions caused by any Person other than the Fund on the Leased Real Property is limited to the Fund's knowledge. (vi) The Fund and its subsidiaries have not received, and to the knowledge of the Fund do not expect to receive, any notification from any source advising the Fund or such subsidiaries that: (A) it is a potentially responsible party under CERCLA or any other Environmental Laws; (B) any real property or facility currently or previously owned, operated, or leased, by it is identified or proposed for listing as a federal NPL (or state-equivalent) site or a CERCLIS list (or state-equivalent) site; and (C) any facility to which it has ever transported or otherwise arranged for the disposal of Hazardous Substances is identified or proposed for listing as an NPL (or state-equivalent) site or CERCLIS (or state-equivalent) site; and (vii) The Fund Stations' operations do not have a significant environmental impact as defined by 47 C.F.R. Section 1.1307. (n) Taxes. Each of the Fund and its subsidiaries has filed all Tax Returns required to be filed (except where the failure to file any such Tax Returns has not and would not reasonably be expected to result in a Material Adverse Effect), and all such Tax Returns which have been filed are accurate and complete in all material respects. Each of the Fund and its subsidiaries has paid (or there has been paid on its behalf), or has set up an adequate reserve for the payment of, all material taxes required to be paid, withheld, or deducted, or for which any of the Fund and its subsidiaries are liable, in respect of the periods covered by such Tax Returns, and with respect to each tax, from the end of the period covered by the most recently filed Tax Return to the date hereof, and the Balance Sheet reflects an adequate reserve for all taxes payable, or required to be withheld and remitted, by the Fund or any of its subsidiaries, or for which the Fund or any of its subsidiaries are liable, accrued through the Balance Sheet Date. No material deficiencies for any taxes have been proposed, asserted or assessed by taxing authorities with respect to the Fund or any of its subsidiaries and are pending, and no requests for waivers of the time to assess any such taxes are pending. Except as set forth on Schedule 2.1(n), for each taxable year or period not closed by the applicable statute of limitations, (i) the Fund and each subsidiary are properly classified as partnerships (and not as associations taxable as corporations) for tax purposes and (ii) the Fund and its subsidiaries has withheld all required amounts pursuant to Section 1446 of the Code. For the purposes of this Agreement, the term "taxes" shall include all federal, state, local, foreign and other income, gross receipts, use, ad valorem, transfer, franchise, profits, license, payroll, occupation, severance, property, sales, excise, withholding, unemployment compensation, social security, and other taxes and charges of any nature whatsoever (including interest, penalties and additions to tax relating to any of the specified items). 41 47 (o) Certain Agreements. Except as set forth in Schedule 2.1(o) and for oral or written agreements, plans or arrangements terminable without liability or penalty to the Fund or its subsidiaries upon thirty days notice, the benefits of which do not exceed $50,000 per year, neither the Fund nor any of its subsidiaries is a party to any oral or written agreement, plan or arrangement with any employee or other station or broadcast personnel (whether an employee, consultant or an independent contractor) of the Fund or its subsidiaries (i) the benefits of which are contingent, or the terms of which are materially altered, upon, or result from, the occurrence of a transaction involving the Fund or its subsidiaries of the nature of any of the transactions contemplated by this Agreement, (ii) providing severance benefits longer than forty-five days or other benefits after the termination of employment or other contractual relationship regardless of the reason for such termination and regardless of whether such termination is before or after a change of control, (iii) under which any person may receive payments subject to the tax imposed by Section 4999 of the Code or (iv) any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. Schedule 2.1(o) hereto lists (and, in the case of clause (iv), describes) each oral or written (i) agreement, contract, indenture or other instrument relating to the borrowing of money or the guarantee of any obligation for the borrowing of money, (ii) Employee Benefit Plan, (iii) employment or consulting contract which is not terminable without liability or penalty to the Fund or any of its subsidiaries on thirty (30) days or less notice, (iv) covenant, agreement, or arrangement under which the Fund's or any of its subsidiary's ability or right to compete with another Person is restricted or impaired, or (v) contract, agreement or commitment (except for advertising, trade or barter agreements) under which any party thereto remains obligated to provide goods or services having a value, or to make payments aggregating, in excess of $50,000 per year, in any such case to which the Fund or any of its subsidiaries is a party or bound. Each such agreement, contract or obligation described in Schedule 2.1(o) or required to be so described executed by the Fund or one of its subsidiaries is a valid and binding obligation of the Fund or one of its subsidiaries, as the case may be, and is in full force and effect without amendment, except where not being a valid and binding obligation or in full force and effect without amendment does not and would not reasonably be expected to have a Material Adverse Effect. The Fund or one of its subsidiaries, as the case may be, has performed the obligations required to be performed by it under the agreements so described and is not (with or without lapse of time or the giving of notice, or both) in breach or default thereunder, except to the extent such nonperformance, breach or default does not and would not reasonably be expected to result in a Material Adverse Effect. As of the date hereof, each of the Fund and its subsidiaries, and to the Fund's knowledge, each other party to such contracts, has performed the obligations required to be performed by it under the agreements so described and is not (with or without lapse of time or the giving of notice or both) in breach or default thereunder, except to the extent such nonperformance, breach or default does not and would not reasonably be expected to 42 48 result in a Material Adverse Effect. Schedule 2.1(o) identifies, as to each agreement, contract or obligation listed thereon, whether the consent of the other party thereto is required in order for such agreement, contract or obligation to continue in full force and effect upon the consummation of the transactions contemplated hereby or whether such agreement, contract or obligation can be canceled by the other party without liability to such other party due to the consummation of the transactions contemplated hereby. A copy of each agreement, contract, obligation, plan or arrangement set forth in Schedule 2.1(o) has been provided to Mergeco. As of the Closing Date, neither the Fund nor any of its subsidiaries shall have any indebtedness for borrowed money that is not prepayable (whether with or without penalty). (p) ERISA Compliance; Labor. (i) The present value of all accrued benefits (vested and unvested) under each "employee pension benefit plan" as such term is defined in Section 3(2) of ERISA, which the Fund or any other trades or businesses under common control within the meaning of Section 4001(b)(1) of ERISA with the Fund (collectively, the "Fund ERISA Group") maintains, or to which the Fund or any member of the ERISA Group is obligated to contribute (the "Fund Pension Plan"), did not, as of the respective last annual valuation dates for such Fund Pension Plans, exceed the value of the assets of such Fund Pension Plan allocable to such benefits. None of the Fund Pension Plans subject to Section 302 of ERISA has incurred any "accumulated funding deficiency," as such term is defined in Section 302 of ERISA (whether or not waived), since the effective date of such Section 302. Neither the Fund or any member of the Fund ERISA Group nor any employee or partner of the Fund or any member of the Fund ERISA Group or any of the employee benefit plans of the Fund or any member of the Fund ERISA Group which are subject to ERISA, including the Fund Pension Plans, or any trusts created thereunder, or any trustee or administrator thereof, has engaged in a "prohibited transaction" as such term is described in Section 4975 of the Code, which has subjected or which could subject the Fund or any member of the Fund ERISA Group, any partner or employee of the Fund or any member of the Fund ERISA Group or any of such plans or any trust to any material tax or penalty on prohibited transactions imposed by such Section 4975. None of such Fund Pension Plans subject to Title IV of ERISA or any of their related trusts has been terminated or partially terminated, nor has there been any unreported "reportable event," as that term is defined in Section 4043 of ERISA, with respect thereto since the effective date of such Section 4043 (excluding those events as to which the thirty day notice period is waived pursuant to the regulations issued thereunder). Neither the Fund nor any member of the Fund ERISA Group has contributed or been obligated to contribute to any "multiemployer plan" as such term is defined in Section 3(37) or Section 4001(a)(3) of ERISA. Except as set forth on Schedule 2.1(p) or the other Schedules to this Agreement, there are no "employee benefit plans" within the meaning of Section 3(3) of ERISA 43 49 or any bonus (excluding bonuses granted on an individual basis in the ordinary course of business), pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, insurance or other plan or arrangement or understanding providing benefits to any present or former employee or contractor of the Fund or any member of the Fund ERISA Group maintained by the Fund or any member of the Fund ERISA Group or as to which the Fund or any member of the Fund ERISA Group has any material liability or obligation (collectively, "the Fund Employee Benefit Plans"). (ii) True, correct and complete copies of each of the Fund Employee Benefit Plans, and related trusts, if applicable, have been furnished or made available to Mergeco, along with the most recent report filed on Form 5500 and summary plan description with respect to each Fund Employee Benefit Plan required to file Form 5500. All reports and disclosures relating to the Fund Employee Benefit Plans required to be filed with or furnished to governmental agencies or plan participants or beneficiaries have been furnished in accordance with applicable law in a timely manner except where such failure has not resulted and would not reasonably be expected to result in a Material Adverse Effect. Each Fund Employee Benefit Plan has been maintained in compliance in all material respects with ERISA and the Code, and each Fund Employee Benefit Plan intended to be qualified under Section 401 of the Code has received or is awaiting receipt of a favorable determination letter from the Internal Revenue Service regarding the qualified status and has not since receipt of the most recent favorable determination letter been amended or, to the knowledge of the Fund and the members of the Fund ERISA Group, operated in a manner which would adversely affect such status. There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of the Fund and the members of the Fund ERISA Group, threatened against, or with respect to any of the Fund Employee Benefit Plans. All contributions required to be made to Fund the Employee Benefit Plans pursuant to their terms have been timely made. Except as disclosed on Schedule 2.1(p), there is no matter pending with respect to any of the Fund Employee Benefit Plans before the Internal Revenue Service, Department of Labor or the Pension Benefit Guaranty Corporation. Except as required by applicable law, none of the Fund Employee Benefit Plans provides medical insurance coverage following retirement. Each Fund Employee Benefit Plan which is an "employee welfare benefit plan," as defined in Section 3(l) of ERISA, may be unilaterally amended or terminated in its entirety without liability except as to benefits accrued prior to such amendment or termination. (iii) Schedule 2.1(p) lists each collective bargaining agreement to which the Fund or the Fund's subsidiary is a party. Except for those unions 44 50 which are parties to one or more of the listed collective bargaining agreements or as otherwise listed on Schedule 2.1(p), neither the Fund nor any of its subsidiaries has agreed to recognize any union or other collective bargaining representative, nor has any union or other collective bargaining representative been certified as the exclusive bargaining representative of any of their employees. Except as set forth in the Schedules to this Agreement, each of the Fund and its subsidiaries (A) is, and has been since June 30, 1993 or the date of its formation, whichever is later, in substantial compliance with all applicable laws regarding labor, employment and employment practices, terms and conditions of employment, affirmative action, wages and hours, plant closing and mass layoff, occupational safety and health, immunization, and workers' compensation, (B) is not engaged, nor has it since June 30, 1993 or the date of its formation, whichever is later, engaged, in any unfair labor practices, and has no, and has not had since June 30, 1993 or the date of its formation, whichever is later, any, unfair labor practice charges or complaints before the National Labor Relations Board pending or, to the Fund's knowledge, threatened against it, (C) has no, and has not had since June 30, 1993 or the date of its formation, whichever is later, any, grievances, arbitrations or other proceedings arising or asserted to arise under any collective bargaining agreement, pending or, to the Fund's knowledge, threatened against it and (D) has no, and has not had since June 30, 1993 or the date of its formation, whichever is later, any, charges, complaints or proceedings before the Equal Employment Opportunity Commission, Department of Labor or any other federal, state or local agency responsible for regulating employment practices, pending, or, to the Fund's knowledge, threatened against it, except, in each case (with respect to clauses (A) through (D) above) for any violations, practices, complaints, proceedings or charges that have not resulted and would not reasonably be expected to result in a Material Adverse Effect. There is no labor strike, slowdown, work stoppage or lockout pending or, to the Fund's knowledge, threatened against or affecting the Fund or their subsidiaries, and the Fund or their subsidiaries have not experienced any labor strike, slowdown, work stoppage or lockout since June 30, 1993 or the date of its formation, whichever is later. Except as set forth on Schedule 2.1(p), to the Fund's knowledge, no union organizational campaign or representation petition is currently pending with respect to the employees of the Fund or its subsidiaries. (q) Patents, Trademarks, Etc. There are no Intellectual Rights owned by or registered in the name of the Fund or any of its subsidiaries, or in which the Fund or any of its subsidiaries has any right, license or interest other than the call signs of each of the Fund Stations. The Fund or one of its subsidiaries owns or has the right to use all such call signs. To the knowledge of the Fund, neither the Fund nor any of its subsidiaries is infringing any such Intellectual Rights, and the Fund is not aware of any infringement by others of any such rights owned by the Fund or any of its subsidiaries. 45 51 (r) Affiliate Relationships. Except as set forth in the applicable Existing Fund Partnership Agreement, Schedule 2.1(r) sets forth a complete list and summary description of all contracts or other arrangements involving the Fund or any of its subsidiaries in which the General Partner or any of its affiliates has a financial interest, including indebtedness to the Fund or its subsidiaries, other than such contracts or arrangements which are disclosed on the Balance Sheet. (s) Vote Required. The only votes of the holders of any partnership interests in the Fund that are necessary to approve the Other Benchmark Merger applicable to the Fund and adopt the Other Benchmark Merger Agreement to which the Fund is a party are the affirmative votes of the Fund Limited Partners holding more than fifty percent (50%) of the aggregate Limited Partner Percentage (as defined in the applicable Existing Fund Partnership Agreements). (t) Fairness Opinion. The General Partners have received the Alex. Brown Fairness Opinion. ARTICLE III COVENANTS RELATING TO CONDUCT OF BUSINESS 3.1. COVENANTS OF BENCHMARK. Except as contemplated by this Agreement or to the extent that Mergeco shall otherwise consent in writing, from the date of this Agreement until the Effective Time, Benchmark and each of Fund I, Fund IV, Fund VII and Fund VIII covenants and agrees that it shall not, and shall not permit any of its subsidiaries to (it being understood that each of the covenants contained in this Section 3.1 shall apply to the Statesville Stations, the Jackson Stations, the Montgomery Stations, WSCQ-FM, WJMZ-FM and KRMD-AM/FM, and any additional stations acquired prior to the Closing Date only to the extent of events, acts or omissions occurring or conditions coming into existence after the date such stations were acquired by Benchmark or its subsidiaries): (a) conduct its business in any material respect except in the ordinary course of business consistent with past practice; or (b) fail to use its commercially reasonable efforts (i) to preserve intact Benchmark's present business organization and to keep available the services of its present station managerial personnel (including the General Manager, General Sales Manager, Programming Director and Business Manager, or persons performing comparable duties, of each Station (collectively, the "Station Management")) and key over-the-air employees or key independent contractors and (ii) to preserve its relationships with customers, suppliers and others having business dealings with it. Benchmark and its subsidiaries shall be deemed to have used commercially reasonable efforts with respect to the matters set forth in this covenant if they conduct their business with respect to such matters in a manner that is consistent with their past practices. The (i) failure to renew an employment agreement pursuant to Section 46 52 3.1(g) or to agree to an increase in compensation due to a failure by Mergeco to consent to an increase in compensation or (ii) renewal of an employment agreement pursuant to Section 3.1(g) with an increase in compensation thereunder permitted under Section 3.1(g) without the consent of Mergeco or with respect to which Mergeco has consented, if required, shall not be deemed to be a violation of this Section 3.1(b); or (c) other than as previously disclosed in writing on the date hereof, fail to use its commercially reasonable efforts to maintain the present format of the Stations and with programming consistent with past practices; or (d) except as set forth in Section 4.11, split, combine, divide, or reclassify any of its partnership interests or make any distributions or payments of any kind to its partners or affiliates; provided that nothing herein shall prevent, subject to applicable provisions of the Fund IV Loan Agreement, the Fund VII Loan Agreement and the Fund VIII Loan Agreement, (i) Fund I, Fund IV, Fund VII or Fund VIII from continuing to pay management fees and expenses to Benchmark in the ordinary course of business consistent with past practice (it being understood that Benchmark shall earn no management fees from Fund IX, Fund X or Fund XI or their respective subsidiaries (if any)) while this Agreement is in effect) or (ii) any of Benchmark's subsidiaries (other than Fund IX, Fund X or Fund XI or their respective subsidiaries (if any)) from making distributions to Benchmark or its subsidiaries or (iii) any of Benchmark or its subsidiaries (other than Fund IX, Fund X or Fund XI or their respective subsidiaries (if any)) from making cash distributions to its partners or (iv) any of Fund IX, Fund X or Fund XI or their respective subsidiaries (if any) from making distributions permitted under the terms of the Jackson Loan Agreement, the Montgomery Loan Agreement and the Statesville Loan Agreement; or (e) except in connection with this transaction, and except as provided in Section 4.12, issue, sell, pledge, dispose of, encumber or deliver (whether through the issuance or granting of any options, warrants, commitments, subscriptions, rights to purchase or otherwise) any partnership interests or securities convertible into or exercisable or exchangeable for partnership interests of any class; provided that nothing herein shall prevent any Limited Partners (other than Bruce R. Spector or the Class A Limited Partners) or Fund Limited Partners from transferring or assigning their partnership interests to other Persons; or (f) change or amend its organizational documents or change, amend or waive any provision of any of the Jackson Agreement, the Statesville Agreement, or the Montgomery Agreement (except for any changes, amendments or waivers that the General Partners may deem advisable in connection with consummation of the transactions contemplated by this Agreement, the Jackson Agreement, the Statesville Agreement and the Montgomery Agreement that do not adversely affect Mergeco or Benchmark in any material respect); or 47 53 (g) except in the ordinary course of business and consistent with past practice (subject to prior consultation with Mergeco reasonably in advance thereof), enter into, materially amend, terminate, fail to use its commercially reasonable efforts to renew, or waive compliance with any material provision of, any contract or agreement of the type required to be described in Schedule 2.1(o) (provided that neither Benchmark nor its subsidiaries shall be required to renew any material contract on terms that are less favorable to Benchmark or its subsidiaries) or default in any material respect (or take or omit to take any action that, with or without the giving notice or passage of time, would constitute a material default) under any such contract or enter into any new contract of the type required to be described in Section 2.1(o) or increase in any manner (other than increases that are automatic under existing agreements or as contemplated by Section 3.1(g)(iii)) the compensation or fringe benefits of any employee or other station and broadcast personnel (whether employees or independent contractors) or pay any benefit not required by any existing agreement, except in each case in the ordinary course of business and consistent with past practices or as required by law; provided further that Benchmark and its affiliates shall not, without the prior consent of Mergeco, (i) grant any pay raises to General Managers, (ii) enter into new on-air talent contracts (other than replacement contracts with salaries at substantially the same rates as the rates in the contracts being replaced), (iii) increase the compensation of any single employee by more than 15% per year or the aggregate compensation of all employees by more than 3% per year or (iv) amend its existing management agreements (listed on Schedule 2.1(r)) to increase the management fee payable to Benchmark or its affiliates from any of the Funds or enter into new management agreements with any of the Funds or their subsidiaries; or (h) except in connection with this transaction and the transactions contemplated hereby, merge or consolidate with or into any other legal entity, dissolve or liquidate; or (i) (a) amend any Employee Benefit Plan, or adopt or amend any collective bargaining agreement, except, in each case, in the ordinary course of business and consistent with past practice or as required by law or (b) adopt any new Employee Benefit Plan except as required by law; or (j) except as set forth on Schedule 3.1(j), acquire (including, without limitation, by merger, consolidation or the acquisition of any equity interest or assets) or sell (whether by merger, consolidation or the sale of an equity interest or assets), lease or dispose of any assets except in the ordinary course of business and consistent with past practice or, even if in the ordinary course of business and consistent with past practices (other than sales of surplus or obsolete equipment), whether in one or more transactions, in no event having a fair market value in excess of $50,000 with respect to Benchmark and each Fund and its respective subsidiaries; provided, however, that nothing herein shall prevent Benchmark from assigning the Benchmark 48 54 Lease Agreement or from distributing any equipment, furniture, fixtures or other items located at the Corporate Facilities to either or both of the General Partners; or (k) except in connection with this transaction, mortgage, pledge or subject to any material Lien any of its properties or assets, tangible or intangible (unless such mortgage, pledge or Lien will be discharged at Closing), other than in the ordinary course of business consistent with past practice, or incur or assume any long-term debt other than (i) pursuant to existing lines of credit, (ii) pursuant to refinancings of existing long-term debt of Benchmark, Fund I, Fund IV or Fund VIII that are pre-payable and (ii) long-term debt incurred by Benchmark, Fund I, Fund IV or Fund VIII which is pre-payable; or (l) except as required by GAAP, applicable law or circumstances which did not exist as of the Balance Sheet Date, change any of the material accounting principles or practices used by it; or (m) other than with respect to making initial elections for the New Funds, change any tax election or tax method of accounting or make any new tax election or adopt any new tax method of accounting which method or election is material to Benchmark and its subsidiaries, taken as a whole; or (n) pay, discharge or satisfy any material claims, liabilities or obligations other than in the ordinary course or where such payment would not adversely affect the Surviving Partnership, or fail to pay or otherwise satisfy (except if being contested in good faith) any material accounts payable, claims, liabilities or obligations on a basis, and within the time, consistent with past practice; or (o) change in any material respect its existing practices and procedures with respect to the collection of accounts receivable of the Stations and, except with respect to good faith attempts consistent with past practice to obtain payment of a past due receivable or a contested receivable, offer to discount the amount of any outstanding receivable or extend any other incentive (whether to the account debtor or any employee or third party responsible for the collection of receivables) to accelerate the collection thereof, or change any Station's advertising rates or policies, procedures or methods in connection with the sale of advertising time in a manner primarily intended to accelerate the receipt of cash payments (other than in the ordinary course of business consistent with past practices) or fail to incur annual advertising and promotional department aggregate expenses in cash and trade below 90% of that budgeted for 1996 (as such budget previously has been delivered to Mergeco); or (p) except as set forth on Schedule 3.1(p), enter into, or enter into negotiations or discussions with any person other than Mergeco with respect to, any local marketing agreement, time brokerage agreement, joint sales agreement or similar arrangement; or 49 55 (q) agree to or make any commitment, orally or in writing, to take any actions prohibited by this Agreement; or (r) to the extent Benchmark or its subsidiaries has the right under the Statesville Agreement, the Jackson Agreement, or the Montgomery Agreement to agree to Liens not set forth on the Schedules to such Agreements, it shall not agree to assume any such additional Liens or to permit any assets acquired under such Agreements to be subject to any such additional Liens without the prior consent of Mergeco. 3.2. NEGATIVE TRADE BALANCE. Benchmark shall use commercially reasonable efforts to ensure that the Benchmark Negative Trade Balance (as defined below) of the Stations, taken as a whole, does not exceed the lesser of 100% of the Benchmark Negative Trade Balance at December 31, 1996 or Fifty Thousand Dollars ($50,000) in the aggregate at the Closing Date (it being understood that Benchmark may, if necessary, run more advertisements than it would run in the ordinary course of business in order to comply with this covenant). "Benchmark Negative Trade Balance" means the difference, if negative, of the value of the goods and services to be received under barter agreements to which any of the Stations is a party or by which any of them is bound minus the value of time owed under such agreements. 3.3. ENVIRONMENTAL SITE ASSESSMENTS. If Mergeco desires Phase I or Phase II environmental site assessments ("ESAs"), Benchmark covenants and agrees that, upon written notice from Mergeco to Benchmark identifying the locations at which such ESAs are desired, Benchmark shall permit Mergeco to perform (at Mergeco's expense) through a nationally recognized and duly qualified environmental consultant reasonably acceptable to Mergeco and Benchmark an ESA at each identified transmission site owned, operated or leased by Benchmark or its subsidiaries and at such other identified real properties and facilities owned, operated or leased by Benchmark or its subsidiaries, and Benchmark shall provide access and cooperate with Mergeco and such environment consultant with respect to such ESAs. The ESAs which are to be conducted for the benefit of Mergeco shall be performed in a manner that at a minimum satisfies the requirements of ASTM Practice E 1527-94, and the costs and expenses thereof shall be borne by Mergeco. 3.4. OTHER BENCHMARK MERGERS. Benchmark agrees that upon satisfaction of the conditions set forth in Sections 7.1 and 7.3 (other than the condition in Section 7.3(d) to the extent such condition relates to the Other Benchmark Mergers), it shall cause each of the Other Benchmark Mergers to be consummated. ARTICLE IV ADDITIONAL AGREEMENTS OF BENCHMARK 4.1. NO SOLICITATION OF TRANSACTIONS. Benchmark shall not, nor shall it permit its subsidiaries to, directly or indirectly, through any general partner, agent or otherwise, solicit, initiate or encourage the submission of any proposal or offer from any person relating to any acquisition or purchase of all or any material portion of the assets of, or any equity interest in, Benchmark or any of 50 56 its subsidiaries or any merger, consolidation, share exchange, business combination or other similar transaction with Benchmark or any of its subsidiaries or participate in any negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing; provided, however, that nothing contained in this Section 4.1 shall prohibit Benchmark from furnishing information to, or entering into discussions or negotiations with, any person in connection with an unsolicited proposal by such person to acquire Benchmark pursuant to a merger, consolidation, exchange of partnership interest, business combination or other similar transaction or to acquire all or substantially all of the assets of Benchmark if, and only to the extent that, (a) the General Partners determine in good faith that such action is required in order for the General Partners not to breach their fiduciary duties to limited partners (including the Fund Limited Partners) imposed by applicable law, such determination being based on consultations with their independent legal counsel, and (b) prior to furnishing such information to, or entering into discussions or negotiations with, such person, Benchmark (i) gives Mergeco as promptly as practicable prior written notice of Benchmark's intention to furnish such information or begin such discussions and (ii) receives from such person an executed confidentiality agreement on terms no less favorable to Benchmark than those contained in the Confidentiality Agreement (as defined in Section 4.2). Benchmark shall promptly communicate to Mergeco the material terms of any such proposal (and the identity of the party making such proposal) which it may receive. Benchmark agrees not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which Benchmark is a party. Benchmark immediately shall cease and cause to be terminated all existing discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. From and after the receipt of the requisite consent for approval by the holders of Fund Limited Partnership Interests of this Agreement, the Other Benchmark Merger Agreements and the transactions contemplated hereby and thereby, Benchmark shall not, nor shall it permit its subsidiaries to, directly or indirectly, through any general partner, agent or otherwise, solicit, initiate or encourage the submission of any proposal or offer from any person relating to any acquisition or purchase of all or any material portion of the assets of, or any equity interest in, Benchmark or any of its subsidiaries or any merger, consolidation, general partner, business combination or other similar action with Benchmark or any of its subsidiaries or participate in any negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing. 4.2. ACCESS AND INFORMATION. (a) Until the Closing, subject only to applicable rules and regulations of the FCC, Benchmark shall afford to Mergeco and its representatives (including accountants and counsel) access, during normal business hours, upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of the business of Benchmark or its subsidiaries, to all properties, books, records, documents and returns of Benchmark and its subsidiaries and all other information relating to Benchmark and its subsidiaries together with the opportunity to make copies of such books, records, returns and other documents and to discuss the business of Benchmark and its subsidiaries with such officers, station managerial personnel (including the General Manager, General Sales Manager, Programming Director and Business Manager, or persons performing comparable duties, of each Station), accountants, consultants and counsel for Benchmark as Mergeco deems reasonably necessary or appropriate for the purposes of 51 57 familiarizing itself with Benchmark and the Stations, including, without limitation, the right to visit each Station at least monthly; provided that such Station visits shall be scheduled at least five (5) Business Days in advance and shall be conducted in a manner intended to minimize the disruption to the operations of the Stations; further provided, that Mergeco shall not contact any Station personnel without the express prior consent of the General Partners. In furtherance of the foregoing, Benchmark shall authorize and instruct Arthur Andersen LLP to meet with Mergeco and its representatives, including its independent public accountants, to discuss the business and accounts of Benchmark and to make available (with the opportunity to make copies) to Mergeco and its representatives, including its independent public accountants, work papers prepared by Arthur Andersen LLP and related to their audit of the consolidated financial statements and tax returns of Benchmark. All information provided pursuant to this Agreement shall remain subject in all respects to the Confidentiality Agreement (herein so called) dated September 10, 1996 between Hicks, Muse, Tate & Furst Incorporated and the General Partners until such time as the transactions contemplated by this Agreement have been consummated. Benchmark waives any provisions in the Confidentiality Agreement that would otherwise prohibit the execution of this Agreement and the consummation of the transactions contemplated hereby. (b) Within thirty (30) days after the end of each calendar month, Benchmark shall deliver to Mergeco monthly operating statements for Benchmark and each of the Funds (in a form consistent with the monthly operating statements previously supplied to Mergeco) prepared in the ordinary course of business for internal purposes, including comparisons to comparable prior year periods and current year budget, as well as monthly statements prepared in the ordinary course for internal purposes containing the dollar amount of all trade and barter liabilities of each Station. Benchmark shall deliver to Mergeco the rating books and such other ratings information subscribed to by Benchmark including, without limitation, Arbitrends, Accuratings or any other written information reflective of the quantitative or qualitative nature of the audiences of the Stations for each of the Stations, to the extent subscribed, upon receipt of the same by the General Partners. Benchmark shall instruct the Station management of each Station to provide such information and reports to the General Partners promptly upon receipt by such Station management. In addition, upon request, as soon as the same are distributed to the General Partners by each Station, Benchmark will provide Mergeco with copies of each Station's weekly sales pacing reports, with comparisons to sales pacing in the corresponding period of the prior year. (c) Without duplication of Section 4.2(b), at such time as Benchmark provides the same to its lenders, Benchmark shall provide Mergeco with copies of the financial statements delivered by Benchmark or its subsidiaries to their respective lenders. 4.3. ASSISTANCE. If Mergeco requests, Benchmark (a) will cooperate, at the expense of Mergeco, and will request Arthur Andersen LLP to cooperate, at the expense of Mergeco, in all reasonable respects with the efforts of Mergeco to finance the transactions contemplated by this Agreement, including without limitation, providing assistance in the preparation of one or more 52 58 registration statements or other offering documents relating to debt and/or equity financing and any other filings that may be made, (b) will provide such customary management representation letters as Arthur Andersen LLP may require of Benchmark as a condition to its execution of any required accountants' consents necessary in connection with any filing by Mergeco with the SEC or in connection with the delivery of any "comfort" letters requested by Mergeco's financing sources, and (c) shall furnish to Mergeco all financial statements (audited and unaudited) and other information in the possession of Benchmark or its representatives or agents as Mergeco shall reasonably determine is necessary or appropriate for the preparation of such offering documents, registration statements or filings. Mergeco and Parent will indemnify and hold harmless Benchmark and their respective partners, employees and controlling persons and their affiliates against any and all claims, losses, liabilities, damages, costs or expenses (including reasonable attorneys' fees and expenses) that may arise out of or with respect to the efforts by Mergeco or Parent or their affiliates to finance the transactions contemplated hereby, including, without limitation, any registration statement, prospectus, offering documents and other filings related thereto; provided, however, that subject to the limitations and provisions of this Agreement, nothing herein shall prevent Mergeco from asserting any claim for breach of representation, warranty or covenant under this Agreement. 4.4. COMPLIANCE WITH STATION LICENSES. Benchmark shall cause the Stations to be operated in all material respects in accordance with the Station Licenses and all applicable rules and regulations of the FCC and in compliance in all material respects with all other applicable laws, regulations, rules and orders. Benchmark shall use its commercially reasonable efforts not to cause or permit any of the Station Licenses to expire or be surrendered, adversely modified or terminated. Benchmark shall file or cause to be filed with the FCC all applications (including license renewals) or other documents required to be filed in connection with the operation of the Stations. Should the FCC institute any proceedings for the suspension, revocation or adverse modification of any of the Station Licenses, Benchmark will use its commercially reasonable efforts to promptly contest such proceedings and to seek to have such proceedings terminated in a manner that is favorable to the Stations. Prior to the Closing, Benchmark will use its commercially reasonable efforts to maintain any FCC construction permits (if any) in effect until the applicable construction projects are complete and to diligently prosecute all pending FCC applications. If Benchmark (or its FCC counsel) receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any other Governmental Entity, that could affect Benchmark's ability to consummate the transactions contemplated hereby, or should Benchmark (or its FCC counsel) become aware of any fact relating to the qualifications of Benchmark that reasonably could be expected to cause the FCC to withhold its consent to the transfer of control of the Station Licenses, Benchmark shall promptly notify Mergeco in writing and use its commercially reasonable efforts to take steps to remove any such impediment to the transactions contemplated by this Agreement. 4.5. NOTIFICATION OF CERTAIN MATTERS. Benchmark shall give prompt written notice to Mergeco of (a) the occurrence, or failure to occur, of any event of which it becomes aware that has caused or that would be likely to cause any representation or warranty of Benchmark or its subsidiaries contained in this Agreement to be untrue or inaccurate (in any material respect for any representation or warranty not already qualified for materiality) at any time from the date hereof to the Closing Date, (b) the failure of Benchmark or its subsidiaries to comply with or satisfy in any 53 59 material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder, (c) the occurrence of a Station Event (as defined in Section 8.1) and (d) the occurrence of any notice by the General Manager of any Station to resign or otherwise terminate their employment or independent contractor relationship with Benchmark or its subsidiaries. No notification pursuant to this Section shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder; provided, however, that in the event any such notification relates to a matter that would give rise to the right of Mergeco to terminate this Agreement or that would result in the failure of Benchmark to satisfy the closing condition in Section 7.2(a), Mergeco shall, if Benchmark requests, within forty (40) Business Days of receiving such request, either waive such breach or, subject to Benchmark's right to cure such breach during such period, elect to terminate this Agreement pursuant to Section 9.1 (and, in either case, shall notify Benchmark in writing of its election). 4.6. THIRD PARTY CONSENTS. After the date hereof and prior to the Closing, Benchmark shall use its commercially reasonable efforts to obtain the written consent from any party to an agreement or instrument identified in Schedule 2.1(o) which is required to permit (a) the consummation of the transactions contemplated hereby and by the Other Benchmark Transactions and (b) the merger after the Closing Date of Benchmark and its affiliates into Radioco, III, Inc.; provided that Mergeco shall reimburse Benchmark for any expenses incurred by it in soliciting the consents referenced in clause (b) above to the extent that such expenses would not have otherwise been incurred by Benchmark under clause (a) above. 4.7. SECTION 754 ELECTION. Benchmark and each subsidiary will timely file an election under Section 754 of the Code with respect to the taxable year of the Merger to adjust the bases of their assets in the manner provided in Section 743 of the Code. 4.8. LIMITED PARTNER CONSENT. Benchmark agrees that, subject to fiduciary obligations, (i) it will use commercially reasonable efforts to obtain the requisite consents of the Fund Limited Partners to this Agreement and the Merger and the applicable Other Benchmark Merger Agreements and Other Benchmark Mergers within sixteen (16) Business Days after the date of this Agreement, (ii) it shall not withdraw its recommendation of this Agreement and the Other Benchmark Merger Agreements and (iii) it will vote in favor of this Agreement and the Other Benchmark Merger Agreements. 4.9. CONSUMMATION OF PENDING TRANSACTIONS. Benchmark shall use its commercially reasonable efforts to cause Fund IX, Fund X, and Fund XI to consummate the acquisitions of the Statesville Stations, the Jackson Stations, the Montgomery Stations, respectively, in accordance with the terms of the Statesville Agreement, the Jackson Agreement, and the Montgomery Agreement, respectively. 4.10. CONSUMMATION OF OTHER BENCHMARK MERGERS. Benchmark shall, upon satisfaction of the conditions to the obligations of Benchmark to close this Agreement, use the proceeds of the Parent Merger Loan and the Parent Funded Debt Loan to cause each of the Benchmark Mergers to be consummated in accordance with the terms of the Other Benchmark Merger Agreements. 54 60 4.11. WITHDRAWAL OF CLASS A GENERAL PARTNERS. Immediately prior to the Effective Time, Bruce R. Spector and Joseph L. Mathias IV shall withdraw as Class A General Partners of Benchmark, and Radioco I, Inc., Radioco II, Inc. and Radioco III, Inc. shall be substituted as Class A Limited Partners with respect to the Class A General Partnership Interests formerly held by Bruce R. Spector and Joseph L. Mathias IV such that, upon such substitution, Radioco I, Inc., Radioco II, Inc. and Radioco III, Inc. shall be the sole Class A Partners of Benchmark. 4.12. TRANSFER OF PARTNERSHIP INTERESTS. The General Partners agree that except as provided in this Agreement, they will not transfer, sell or exchange their Partnership Interests to any other Person, provided that each General Partner shall be permitted to transfer, sell or exchange Partnership Interests to a General Partner Related Party of such General Partner so long as, after giving effect to such transfer, sale or exchange, Bruce R. Spector and Joseph L. Mathias IV remain the sole General Partners of Benchmark and such General Partner continues to hold fifty percent (50%) of the economic interest in Benchmark currently held by such General Partner; further provided that in the event of the death of either of the General Partners, 100% of the Partnership Interests of such General Partner may be transferred to a General Partner Related Party. 4.13. ERISA. Within thirty days of the date hereof, Benchmark agrees to file the Form 5500 for the Benchmark Communications Disability Income Plan (the "Form 5500") under the Department of Labor's Delinquent Filer Voluntary Compliance Program (the "DFVC Program") and incur all costs necessary to complete the filing, including any penalties and fines associated with the DFVC Program, as well as all costs relating to the completion of the Form 5500 and the DFVC Program application. ARTICLE V COVENANTS OF MERGECO AND PARENT 5.1. NOTIFICATION OF CERTAIN MATTERS. If Mergeco (or its FCC counsel) receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any Governmental Entity, that could affect Mergeco's ability to consummate the transactions contemplated hereby, or should Mergeco (or its FCC counsel) become aware of any fact relating to the qualifications of Mergeco that reasonably could be expected to cause the FCC to withhold its consent to the transfer of control of the Station Licenses, Mergeco shall promptly notify Benchmark thereof and shall use its commercially reasonable efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement. Nothing in this Section 5.1 shall be deemed to expand Mergeco's obligations under Section 5.2 with respect to matters set forth in Section 5.2. In addition, Mergeco shall give to Benchmark prompt written notice of (a) the occurrence, or failure to occur, of any event of which it becomes aware that has caused or that would be likely to cause any representation or warranty of Mergeco contained in this Agreement to be untrue or inaccurate at any time from the date hereof to the Closing Date, and (b) the failure of Mergeco, or any officer, partner, employee or agent thereof, to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder. No notification pursuant to this Section shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder; provided, however, that in the event any such notification relates to a matter that would 55 61 give rise to the right of Benchmark to terminate this Agreement or that would result in the failure of Mergeco to satisfy the closing condition in Section 7.3(a), Benchmark shall, if Mergeco requests, within forty (40) Business Days of receiving such request, either waive such breach or, subject to Mergeco's right to cure such breach during such period, elect to terminate this Agreement pursuant to Section 9.1 (and, in either case, shall notify Mergeco in writing of its election). 5.2. COMPLIANCE WITH COMMUNICATIONS ACT AND HSR ACT. Mergeco covenants that it will not, and that it will cause any Person that directly or indirectly controls Mergeco or that will, as of the Effective Time, directly or indirectly, control Mergeco or the Surviving Partnership, not to acquire after the date of this Agreement (directly or through a Person controlled by a Person that controls Mergeco or that will, as of the Effective Time, control Mergeco or the Surviving Partnership) media businesses or interests in media businesses that will prevent or impair the parties from obtaining the Commission Consent by Final Order and a termination of the waiting period under the HSR Act, in each case, on or prior to June 30, 1997. For purposes of this section, a Person shall be deemed not to control a company with publicly traded securities unless such Person has caused a majority of such company's board of directors to be elected by such Person. Mergeco covenants to take any necessary commercially reasonable steps with respect to any media businesses other than the Mergeco Affiliated Businesses or the Stations located in the same markets as the Mergeco Affiliated Businesses (including, if required, divesting itself or causing its affiliates to divest themselves of media businesses or interests therein) to comply with the Communications Act, the FCC rules and regulations and the HSR Act so as to permit consummation of the Merger and the Other Benchmark Transactions on or prior to June 30, 1997. 5.3. STATION ACQUISITIONS. In the event any of the acquisitions contemplated by the Jackson Agreement, the Statesville Agreement or the Montgomery Agreement have not been consummated prior to the Effective Time, Mergeco agrees to use its commercially reasonable efforts pursuant to the terms of the applicable agreement to cause each such acquisition to be consummated promptly after the Effective Time, and upon any such consummation, Mergeco shall make the payments to the General Partners or their affiliates described in Sections 1.6(e)(7), 1.6(e)(8) and 1.6(e)(9). Nothing herein shall require the Surviving Partnership to waive any breaches or amend any provisions of the applicable agreements. 5.4. PARENT LOANS. Immediately prior to the Closing, Parent shall make the Parent Funded Debt Loan and the Parent Merger Loan to Benchmark and in connection therewith Benchmark shall issue promissory notes to Parent substantially in the form attached hereto as Exhibit 5. 5.5. BENCHMARK EMPLOYMENT AGREEMENTS. Commencing at the Effective Time, the Surviving Partnership shall employ each of Robert Schuler, Catherine Mecchi, Cindy Thayer, Rachel Mack and Maria Weist (collectively, the "Employees"), if they are employed at the Effective Time, for a period of at least one year after the Closing Date on substantially the same salary terms and conditions and benefit terms and conditions as are currently afforded to such Employees by Benchmark, provided that the Surviving Partnership shall have the right to terminate any of the Employees (i) for cause at any time without continuing obligations to an Employee so terminated or (ii) without cause so long as the Surviving Partnership continues to pay the salary and provide or pay 56 62 for benefits for the remainder of the one year term. Each of the Employees shall be deemed a third party beneficiary of this Agreement for purposes of this Section 5.5. 5.6. PARENT-RADIOCO III, INC. MERGER. Prior to the Effective Time, Mergeco and Parent shall take all necessary steps to become wholly owned subsidiaries of Capstar (direct, in the case of Parent, and indirect, in the case of Mergeco). 5.7. ELECTION OF DIRECTORS AND OFFICERS. Mergeco and Parent shall cause any successor entity of Parent to (i) elect Bruce R. Spector to the Board of Directors of such successor entity as Vice Chairman of such Board of Directors and (ii) elect Joseph L. Mathias, IV as President of such successor entity. ARTICLE VI MUTUAL COVENANTS 6.1. APPLICATION FOR COMMISSION CONSENT. By the tenth Business Day after the date that the requisite consent of the Fund I Limited Partners, the Fund IV Limited Partners, the Fund VII Limited Partners and the Fund VIII Limited Partners to this Merger and each of the Other Benchmark Merger Agreements is obtained, Benchmark and Mergeco will join and, if required, cause any of their affiliates to join in one or more applications filed with the FCC requesting the FCC's written consent to the transfer of control of the Station Licenses (including, for this purpose, the Jackson Stations, the Statesville Stations, the Montgomery Stations, WSCQ-FM and WJMZ-FM) pursuant to this Agreement (the "Applications"). The parties will take all proper steps reasonably necessary (a) to diligently prosecute the Applications and (b) to obtain the FCC's determination that the grant of each Application will serve the public interest, convenience and necessity (the "Commission Consent"). The failure by either party to timely file or diligently prosecute its portion of any Application shall be a material breach of this Agreement. Nothing in this Section 6.1 shall be deemed to expand Mergeco's obligations under Section 5.2 of the Agreement with respect to the matters set forth in Section 5.2. 6.2. CONTROL OF STATIONS. This Agreement will not be consummated until after the Commission Consents with respect to the Applications referred to in Section 6.1 are granted without conditions that are materially adverse to the Surviving Partnership and not customarily imposed on the grant of such applications and have become Final Orders. Between the date of this Agreement and the Closing Date, Mergeco will not directly or indirectly control, supervise or direct the operation of the Stations. Further, between the date of this Agreement and the Closing Date, Benchmark shall supervise and control the operation of the Stations. Such operation shall be the sole responsibility of Benchmark. 6.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of this Agreement, the parties shall proceed to prepare and file with the appropriate governmental authorities (other than the FCC) such requests, reports or notifications as may be required in connection with this Agreement, and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of such matters. Without limiting the foregoing, the parties shall file promptly with the Federal Trade Commission and the Antitrust Division of the Department of Justice the notifications and other information (if any) required to be filed under the 57 63 HSR Act with respect to the transactions contemplated hereby and shall use their commercially reasonable efforts to cause all applicable waiting periods under the HSR Act to expire or be terminated as of the earliest possible date. Nothing in this Section 6.3 shall be deemed to expand the obligations of Mergeco under Section 5.2 with respect to the matters set forth in Section 5.2. 6.4. BROKERS OR FINDERS. Other than fees and expenses that do not reduce the Total Consideration and for which Mergeco or the Surviving Partnership shall remain responsible, Mergeco represents and warrants to Benchmark, and other than Americom and Alex. Brown, Benchmark represents and warrants to Mergeco that no agent, broker, investment banker or other person is or will be entitled to any broker's, finder's or advisers' fees or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement. Benchmark also represents and warrants that the aggregate fees payable to Americom (the "Americom Fee") in connection with all of the transactions contemplated by this Agreement and the Other Benchmark Transactions shall not exceed One Million Dollars ($1,000,000). The Americom Fee shall be apportioned among Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and shall be considered Funded Debt of such Persons that shall be paid as part of the Funded Debt Payoff. 6.5. ADDITIONAL AGREEMENT. Subject to the terms and conditions of this Agreement, each of the parties hereto will use its commercially reasonable efforts to do, or cause to be taken all action and to do or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. 6.6. EXECUTION AND DELIVERY OF TRANSACTION . Upon the satisfaction of the conditions set forth in Section 7.1 and 7.2, Mergeco and Parent shall execute and deliver all Transaction Documents to which they will be a party and which they have not previously executed. Upon the satisfaction of the conditions set forth in Section 7.1 and Section 7.3, Sellers, the Selling Stockholders and the General Partners shall execute and deliver all Transaction Documents to which they will be a party and which they have not previously executed. 6.7. CERTAIN EVENTS. The parties agree that in the event (i) that any necessary consents under the HSR Act have not been obtained or (ii) the waiting period under the HSR Act has not expired on or prior to June 30, 1997, Benchmark may elect to remove the Fund(s) or Station(s) that were the cause of the failure to obtain such consents or of the non-expiration of such waiting period from this transaction. In the event such Fund or Stations are so removed, the parties agree (i) that this Agreement and any other applicable Other Benchmark Transaction will be appropriately amended to reflect the removal of such Fund or Stations from this transaction and (ii) at the time of such removal, to enter into an acquisition agreement pursuant to which such Funds(s) or Station(s) would be acquired from Benchmark or its affiliates by Mergeco or its affiliates on substantially the same terms and conditions as those contemplated by this Agreement, which acquisition agreement shall, unless the parties otherwise agree, terminate if it has not been consummated by September 30, 1997. 6.8. WDHT BUDGET. The parties agree to develop an operating budget for WDHT-FM, Luverne, Alabama prior to the acquisition of WDHT-FM by Fund XI. Operating expenses incurred under such budget shall be payable by Fund XI from the proceeds of the Montgomery Loan or from 58 64 operating revenues of the Montgomery Stations. Benchmark shall use its commercially reasonable efforts to cause Fund XI to operate within such budget. 6.9. PURCHASE PRICE ALLOCATION. The parties agree to allocate the Benchmark Consideration for purposes of Section 751 and 754 of the Code. In order to allocate the Benchmark Consideration for such purposes, the parties agree that Bond & Pecaro will appraise the assets of Benchmark and of each Fund as of the Closing Date. The values set forth in such appraisal shall determine the value of Benchmark's and each Fund's section 751 property, as such term is defined in Treas. Reg. Section 1.751-1, and shall be used to adjust the bases of the assets held by Benchmark and each Fund pursuant to Code Sections 743 and 755, as a result of the elections made under Section 754 of the Code. 6.10. RICHMOND SALE. The parties acknowledge that Fund III and the radio stations owned and operated by it are not intended to be acquired by Mergeco or its affiliates in this transaction. Benchmark agrees to use its commercially reasonable efforts to consummate the transactions contemplated by the Richmond Contract or otherwise dispose of the stations that are the subject of the Richmond Contract prior to the Closing Date. 6.11. RICHMOND AND NORFOLK STATIONS. The parties agree that in the event the General Partners have held back a reserve fund from the proceeds of the sales of Fund IV's Norfolk operations or Fund III's Richmond operations, they may distribute such reserve funds at any time prior to Closing, and any Persons who may be entitled to receive the proceeds of such reserve funds (including, without limitation, Benchmark and the Class A Limited Partners) may transfer their rights with respect to such proceeds to any other Person or Persons. ARTICLE VII CONDITIONS PRECEDENT 7.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of each party to effect the transactions contemplated hereby are subject to the satisfaction on or prior to the Closing Date of the following conditions: (a) Limited Partner Approval. The Other Benchmark Merger Agreements and this Agreement and the other transactions contemplated hereby or thereby shall have been approved and adopted by the requisite vote or consent of those of the Fund Limited Partners whose consent is required. (b) Other Approvals. All authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Entity required for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred or obtained. The Commission Consents shall have become Final Orders. 59 65 (c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect. (d) No Action. No action shall have been taken nor any statute, rule or regulation shall have been enacted by any Governmental Entity that makes the consummation of the transactions contemplated hereby illegal. 7.2. CONDITIONS TO OBLIGATIONS OF MERGECO. The obligations of Mergeco to effect the Merger and the transactions contemplated hereby are subject to the satisfaction of the following conditions unless waived, in whole or in part, by Mergeco: (a) Representations and Warranties. The representations and warranties of Benchmark set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (unless otherwise limited to the date of this Agreement) except (i) for any changes permitted by the terms of this Agreement (including changes in the operation of Benchmark) and (ii) to the extent that any inaccuracies in such representations or warranties (without regard to materiality (including Material Adverse Effect) qualifications) that have not been waived do not and would not reasonably be expected to have a Material Adverse Effect on the Surviving Partnership and its subsidiaries taken as a whole (for purposes of this Section 7.2(a), the representations and warranties of Benchmark in Sections 2.1(m)(i), (iv) and (v) shall be deemed to have made without qualifications for knowledge, and the representations and warranties of Benchmark and the applicable Funds in Section 2.1(m) shall be deemed to have been made without any of the exceptions listed on Schedule 2.1(m)). Mergeco shall have received a certificate signed on behalf of Benchmark by the General Partners to such effect with respect to Benchmark and its subsidiaries. (b) Performance of Obligations. Benchmark and its subsidiaries and its other affiliates shall have performed in all material respects the obligations required to be performed by them under this Agreement and the Other Benchmark Transactions prior to the Closing Date (subject to the right to cure any nonperformance within the Cure Period), and Mergeco shall have received a certificate signed on behalf of Benchmark and its subsidiaries by the General Partners to such effect. (c) Intentionally Left Blank. (d) Legal Opinions. Mergeco shall have received from Latham & Watkins, one or more opinions dated the Closing Date, substantially in the form of Exhibit 6 hereto. In rendering such opinions, Latham & Watkins shall be entitled to rely on the opinion of local Maryland counsel rendered to it with respect to certain matters governed by Maryland Law. 60 66 (e) Other Benchmark Transactions. Each of the Other Benchmark Transactions (other than the Parent-Radioco III, Inc. Merger) shall have been consummated and all of the conditions to closing of the Parent-Radioco III, Inc. Merger shall have been satisfied, except to the extent the failure to consummate any such Other Benchmark Transaction or satisfy such closing conditions was a result of a breach by Mergeco or Parent. (f) Reincorporation of Radioco III. Radioco III, Inc. shall have been reincorporated in the State of Delaware. (g) Closing Deliveries. All documents, instruments, certificates or other items required to be delivered by Benchmark pursuant to Section 8.2 shall have been delivered. 7.3. CONDITIONS TO OBLIGATIONS OF BENCHMARK. The obligations of Benchmark to effect the Merger and the transactions contemplated hereby are subject to the satisfaction of the following conditions unless waived, in whole or in part, by Benchmark. (a) Representations and Warranties. The representations and warranties of Mergeco set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (unless otherwise limited to the date of this Agreement) except to the extent that any inaccuracies in such representations or warranties (without regard to materiality (including Material Adverse Effect) qualifications) do not and would not reasonably be expected to, have a Material Adverse Effect on Benchmark and its subsidiaries taken as a whole. Benchmark shall have received a certificate signed on behalf of Mergeco by its President to such effect. (b) Performance of Obligations of Mergeco. Mergeco and Parent shall have performed in all material respects the obligations required to be performed by them under this Agreement (and the Other Benchmark Transactions) prior to the Closing Date (subject to the right to cure any nonperformance within the Cure Period), and Benchmark shall have received a certificate signed on behalf of Mergeco by its President to such effect. (c) Legal Opinion. Benchmark shall have received from Vinson & Elkins, counsel to Mergeco, an opinion dated the Closing Date substantially in the form of Exhibit 7 hereto. In rendering such opinions, Vinson & Elkins L.L.P. shall be entitled to rely on the opinion of local Maryland counsel rendered to it with respect to certain matters governed by Maryland law. (d) Other Benchmark Transactions. Each of the Other Benchmark Transactions shall have been consummated and all of the conditions to closing of the Parent-Radioco III, Inc. Merger shall have been satisfied, except to the extent the failure to consummate any such Other Benchmark Transaction or satisfy such 61 67 conditions was a result of a breach by Benchmark, its subsidiaries or the Selling Stockholders. (e) Facilities Reimbursement. Mergeco shall have reimbursed the General Partners for costs incurred by them in connection with leasehold improvements, fixtures and furniture at the Corporate Facilities, which reimbursement shall equal $202,000 pursuant to instructions from the General Partners. (f) Benchmark Lease Prepayment. Mergeco shall have made the Benchmark Lease Prepayment. (g) Parent Loans. Benchmark shall have received the proceeds from the Parent Funded Debt Loan and the Parent Merger Loan. (h) Closing Deliveries. All documents and instruments required to be delivered by Mergeco pursuant to Section 8.2 shall have been delivered. ARTICLE VIII CLOSING 8.1. CLOSING. Subject to the satisfaction or waiver of the conditions set forth in Article VII and to the provisions of this Section 8.1, the closing of the Merger (the "Closing") will take place at a location mutually acceptable to the parties, at 10:00 a.m., local time (or at such other place and time as Mergeco and Benchmark may agree) on a date mutually agreeable to the parties which date shall be on or before the 10th Business Day after the later of (i) the day on which the Commission Consents have been granted by Final Order or (ii) the date on which the applicable waiting period under the HSR Act has expired or been earlier terminated without receipt of any objection or the commencement or threat of any litigation by any Governmental Entity of competent jurisdiction to restrain the consummation of the Transaction (the "Closing Date"); provided, however, that in no event shall the Closing occur prior to June 30, 1997. Notwithstanding the foregoing: (a) In the case of a Trading Event, a Banking Event, a Conflict Event or a Station Event (in each case as defined below) the Closing Date may be extended as follows: (i) if the Cessation Date (as defined below) is less than 30 days after the Event Date (as defined below), Mergeco may extend the Closing Date to a date not later than the 10th Business Day after the Cessation Date, (ii) if the Cessation Date is more than 30, but less than 60, days after the Event Date, Mergeco shall elect on the first to occur of the 10th Business Day after the Cessation Date or the 60th day (or, if not a Business Day, the next Business Day) after the Event Date (the "Election Date") to either (A) close the Merger on the later to occur of the 5th Business Day after the Election Date or the 60th day (or, if not a Business Day, the next Business Day) after the Event Date, or (B) terminate this Agreement and (iii) if the Cessation Date has not occurred by the 60th day after the Event Date, then on the 60th day (or, if not a Business Day, the next Business Day) after the Event Date, Mergeco shall elect to close the Merger on the 5th Business Day thereafter or terminate this Agreement; 62 68 provided, however, that Benchmark may postpone the Closing in the event of a Station Event until the earlier to occur of the Cessation Date with respect to such Station Event or September 30, 1997 unless Mergeco has waived the elimination of such Station Event as a condition to its obligation to close the Merger and any right to indemnification it may have on account of such Station Event; (b) If a Cure Period (as defined in Section 9.1(b)(i)) has not ended on or before the Closing Date, the Closing Date shall be extended to the end of the Cure Period; and (c) If the Closing does not occur within 20 days after the date of the Final Order, the parties shall, if necessary, request approval from the FCC to extend the Closing so that the Closing contemplated hereunder will not violate any FCC rules or regulations. For purposes of this Agreement, a "Station Event" shall mean any act of nature, calamity or casualty (including but not limited to fires, floods, earthquakes and storms) that has caused one or more Stations representing an aggregate of 3% or more of the consolidated gross revenues of Benchmark, Fund I, Fund IV, Fund VII, Fund VIII and the New Funds for the 12 calendar months ending December 31, 1996 not to be operating in material compliance with its or their respective Station License(s) for a period of 72 consecutive hours or six days within any 30-day period; a "Trading Event" shall mean that trading generally in securities on the New York Stock Exchange shall have been suspended or materially limited; a "Banking Event" shall mean that a general moratorium on commercial banking activities in New York, New York shall have been declared by any federal or state authority; a "Conflict Event" shall mean the occurrence of any major armed conflict involving a substantial participation by the armed forces of the United States of America that causes a disruption of the capital markets of the United States of a magnitude substantially similar to the disruption that would be caused by a Trading Event or a Banking Event; an "Event Date" shall mean the date on which a Trading Event, Banking Event, Conflict Event or Station Event begins; and a "Cessation Date" shall mean the date on which a Trading Event, Banking Event, Conflict Event or a Station Event ends. Pro forma adjustments shall be made for purposes of calculating gross revenues for the 12-month period specified in the definition of "Station Event" (i) to eliminate revenues of any Station sold prior to the Closing Date and (ii) with respect to any radio broadcast station acquired prior to the Closing Date, to assume that such station was acquired at the beginning of such 12-month period and include the gross revenues of such station for the full 12-month period. In the event Mergeco elects to postpone the Closing pursuant to this Section 8.1 on account of a Trading Event, Banking Event or Conflict Event, each of the Fund I Consideration, the Fund IV Consideration, the Fund VII Consideration, the Fund VIII Consideration and the Benchmark Consideration shall be increased beginning after June 30, 1997, at a rate of fifteen percent (15%) per annum (it being understood that such adjustment to the Total Consideration shall not give Mergeco rights to extend the Closing in addition to those specified in this Section 8.1). 63 69 8.2. ACTIONS TO OCCUR AT CLOSING. (a) At the Closing, Mergeco shall deliver to Benchmark the following: (i) the certificates in Section 7.3(a) and (b); (ii) the opinions of counsel in Section 7.3(c); (iii) an executed copy of the Post-Closing Escrow Agreement; (iv) an executed copy of the Mathias Employment Agreement; (v) a certified copy of the resolutions of the Board of Directors and stockholders of Parent electing Bruce R. Spector as Vice Chairman of the Board of Directors of Parent; (vi) an executed copy of the License Agreement.; and (vii) a certified copy of the resolution of the Board of Directors of Parent electing Joseph L. Mathias IV as President of Parent (b) At the Closing, Benchmark shall deliver to Mergeco the following: (i) the certificates described in Section 7.2(a) and (b); (ii) the opinions of counsel in Section 7.2(d); (iii) an executed copy of the Post-Closing Escrow Agreement; (iv) the Mathias Employment Agreement; and (v) the Assignments of New Fund Limited Partnership Interests. (c) At the Closing, Mergeco shall receive from the partners of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII an affidavit described in Section 1445(b)(2) of the Code or a statement in conformance with Treas. Reg. Section 1.1445-11T(d)(2)(i) from the general partner of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII. (d) At the Closing, the Certificate of Merger and the certificates of merger contemplated by each of the Other Benchmark Merger Agreements shall be signed by the parties and filed with the Maryland State Department of Assessments and Taxation and the Secretary of State of the State of Delaware. ARTICLE IX TERMINATION, AMENDMENT AND WAIVER 9.1. TERMINATION. This Agreement may be terminated prior to the Closing: 64 70 (a) by mutual consent of Mergeco and Benchmark; (b) by either Mergeco or Benchmark: (i) if there shall have been any breach (which has not been waived) of one or more representations or warranties (on the date when any such representation or warranty was made or, if applicable, on the Closing Date), covenants or agreements set forth in this Agreement by a party, in each case without regard to materiality (including Material Adverse Effect) qualifications, which breach or breaches, when aggregated with any other such breaches, has or would reasonably be expected to have a Material Adverse Effect on the Surviving Partnership and its subsidiaries taken as a whole (in the case of one or more breaches by Benchmark or its affiliates) or Benchmark and its subsidiaries taken as a whole (in the case of one or more breaches by Mergeco or its affiliates) which breach or breaches shall not have been cured within twenty (20) Business Days (the "Cure Period") following receipt by the breaching party of written notice of such breach from the non-breaching party (for purposes of this Section 9.1(b), the representations and warranties of Benchmark in Sections 2.1(m)(i), (iv) and (v) shall be deemed to have made without qualifications for knowledge, and the representations and warranties of Benchmark in Section 2.1(m) shall be deemed to have been made without any of the exceptions listed on Schedule 2.1(m)); (ii) if a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; (iii) if, for any reason, the FCC denies or dismisses any of the Applications and the time for reconsideration or court review under the Communications Act with respect to such denial or dismissal has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review; (iv) if, for any reason, any of the Applications is designated for an evidentiary hearing by the FCC; or (v) if the Closing shall not have occurred by the later of September 30, 1997, or the date to which the Closing Date is extended pursuant to Section 8.1; 65 71 (c) by Mergeco: (i) with respect to a Station Event, Trading Event, Banking Event or Conflict Event as provided in Section 8.1; (ii) if the FCC grants any of the Applications with any conditions that are materially adverse to the Surviving Partnership and its subsidiaries, taken as a whole, and that are not generally imposed on grants of such applications, and the time for reconsideration or court review under the Communications Act with respect to such material adverse conditions has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review; (iii) if (x) Benchmark or the General Partners withdraw their recommendations of this Agreement, the Merger or any Other Benchmark Merger Agreement or Other Benchmark Merger (whether or not under the circumstances permitted by this Agreement), (y) Benchmark, Fund I, Fund IV, Fund VII or Fund VIII shall have entered into a Business Combination Transaction or (z) the General Partners or Benchmark shall have recommended to the Limited Partners or any Fund Limited Partners any Business Combination Transaction, whether or not in the circumstances under which Benchmark has a right to terminate this Agreement pursuant to Section 9.1(d)(i) of this Agreement; (iv) if Benchmark shall fail to perform its obligations under Section 8.2; (v) in the event of an Intentional Benchmark Default; (vi) in the event the requisite consent or approval by the Fund Limited Partners of this Agreement and the Other Benchmark Merger Agreements has not been obtained on or prior to the date that is sixteen (16) business days after the date of this Agreement; provided, however, that if such requisite consent or approval is obtained (and Mergeco is notified thereof) prior to receipt by Benchmark of notice from Mergeco that Mergeco intends to terminate this Agreement pursuant to this Section 9.1(c)(vi), then Mergeco shall not have the right to terminate this Agreement pursuant to this Section 9.1(c)(vi); (vii) upon the occurrence of a Credit Agreement Event of Default by the borrower under the Fund IV Loan Agreement, the Fund VII Loan Agreement, the Fund VIII Loan Agreement, the Jackson Loan Agreement, the Montgomery Loan Agreement or the Statesville Loan Agreement; or 66 72 (viii) if any of the Other Benchmark Transactions are terminated due to the breach or default of Benchmark or its affiliates or for any reason other than the breach or default of Mergeco or Parent; or (d) by Benchmark: (i) in the exercise of its good faith judgment (subject to Section 4.1) as to its fiduciary duties to the Limited Partners or the Fund Limited Partners under applicable law, the General Partners determine that such termination is required by such fiduciary duties by reason of a proposal that either constitutes a Business Combination Transaction or may reasonably be expected to lead to a Business Combination Transaction on terms more favorable to the Limited Partners (or the Fund Limited Partners) than the Merger (or the Other Benchmark Mergers) and which has a reasonable prospect of being consummated in accordance with its terms (such determination being based on consultations with a financial consultant and its independent legal counsel) (a "Business Combination Transaction Proposal"); provided that Benchmark has provided Mergeco with at least forty-eight (48) hours prior written notice of its intent to so terminate this Agreement (together with a summary of the material terms of such Business Combination Transaction Proposal); further provided that any termination of this Agreement by Benchmark pursuant to this Section 9.1(d)(i) shall not become effective until Benchmark has made payment of the Alternative Proposal Fee (as hereinafter defined) as required by Section 9.2 hereof; further provided that Benchmark may not terminate this Agreement pursuant to this Section 9.1(d)(i), if it has received the requisite vote or consent for approval by the Limited Partners and the Fund Limited Partners of this Agreement and the Other Benchmark Merger Agreements and the transactions contemplated hereby and thereby; or (ii) in the event Mergeco or its affiliate fails to fund all or any portion of the Statesville Loan, the Jackson Loan or the Montgomery Loan when obligated to fund in accordance with the terms of the Statesville Loan Agreement, the Jackson Loan Agreement and the Montgomery Loan Agreement, respectively; or (iii) if any of the Other Benchmark Transactions are terminated due to the breach or default of Mergeco or its affiliates or for any reason other than the breach or default of Benchmark or its subsidiaries or the Selling Stockholders; (iv) in the event the requisite consent or approval by the Fund Limited Partners of this Agreement and the Other Benchmark Merger Agreements has not been obtained on or prior to the date that is sixteen (16) business days after the date of this Agreement, provided that Benchmark shall 67 73 give Mergeco five (5) Business Days prior notice of its intention to terminate this Agreement pursuant to this clause 9.1(d)(iv); or (v) if Mergeco shall fail to perform any of its obligations under Section 8.2. The right of any party hereto to terminate this Agreement pursuant to this Section 9.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, any person controlling any such party or any of their respective partners, officers, directors, employees, accountants, consultants, legal counsel, agents or other representatives whether prior to or after the execution of this Agreement. Notwithstanding anything in the foregoing to the contrary, no party that is, or who is affiliated with a party that is, in material breach of this Agreement shall be entitled to terminate this Agreement except with the consent of the other parties hereto. 9.2. FEES AND EXPENSES. (a) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII jointly and severally agree to pay Mergeco a fee (an "Alternative Proposal Fee") of Eight Million One Hundred Fifty Thousand Dollars ($8,150,000), subject to the adjustments set forth below, (i) if this Agreement is terminated pursuant to Section 9.1(c)(iii), (ii) simultaneously with any termination of this Agreement pursuant to Section 9.1(d)(i), or (iii) if this Agreement is terminated pursuant to Section 9.1(c)(vi) or Section 9.1(d)(iv) and Benchmark, Fund I, Fund IV, Fund VII or Fund VIII enters into an agreement within six (6) months after the date of termination which, when consummated, would constitute a Business Combination Transaction or (iv) in the event each of the events in the following clauses (a), (b) and (c) occurs: (a) this Agreement is terminated pursuant to Section 9.1(c)(vi) or Section 9.1(d)(iv), (b) prior to the date that is fifteen Business Days from the date hereof either Alex. Brown withdraws, rescinds or revokes the fairness opinion described in Section 2.1(t) or Benchmark receives a Business Combination Transaction Proposal and (c) Benchmark, Fund I, Fund IV, Fund VII or Fund VIII enters into an agreement within twelve (12) months after the date of termination which, when consummated, would constitute a Business Combination Transaction; provided, however, that if the Business Combination Transaction giving rise to any fee payable under this Section 9.2(a) involves the disposition of 35% or more, but less than 50%, of the assets of Benchmark and its subsidiaries (on a combined basis), then the fee payable under this Section 9.2(b) shall equal to the percentage of assets being disposed times the Alternative Proposal Fee (as such fee may be adjusted pursuant to the following sentence). In the event the Jackson Agreement, the Montgomery Agreement or the Statesville Agreement has been terminated for any reason other than a breach of the applicable agreement by Benchmark or its subsidiaries, then the amount of the Alternative Proposal Fee shall be reduced by $907,375 (with respect to a termination of the Jackson Agreement), $1,071,000 (with respect to a termination of the Montgomery Agreement) and $833,000 (with respect to a termination of the 68 74 Statesville Agreement); provided, however, that there shall be no reduction if the applicable agreement was terminated due to a breach by Benchmark or its subsidiaries (other than a breach of Benchmark and its subsidiaries resulting from the failure of Mergeco or any of its affiliates to fund all or any portion of the Statesville Loan, the Jackson Loan or the Montgomery Loan, respectively, when obligated to fund in accordance with the terms of the Statesville Loan Agreement, the Jackson Loan Agreement or the Montgomery Loan Agreement, respectively),. (b) Mergeco agrees that in the event (i) (A) the Jackson Agreement is terminated for any reason other than the breach of Benchmark or Fund X (other than a default of Benchmark or Fund X that results from a breach of Parent under the terms of the Jackson Loan Agreement) and (B) Mergeco or any of its affiliates enters into an agreement to purchase any of the Jackson Stations within twelve (12) months of such termination, Mergeco shall pay to Benchmark a fee of Two Million Eight Hundred Ninety Seven Thousand Five Hundred Dollars ($2,897,500); (ii) (A) the Statesville Agreement is terminated for any reason other than the breach of Benchmark or Fund IX (other than a breach of Benchmark or Fund IX that results from a breach of Parent under the terms of the Statesville Loan Agreement) and (B) Mergeco or any of its affiliates enter into an agreement to purchase any of the Statesville Stations within twelve (12) months of such termination, Mergeco shall pay to Benchmark a fee of Seven Million Sixty Thousand Dollars ($7,060,000); and (iii) (A) the Montgomery Agreement is terminated for any reason other than the breach of Benchmark or Fund XI (other than a default of Benchmark or Fund IX that results from a breach of Parent under the terms of the Montgomery Loan Agreement) and (B) Mergeco or any of its affiliates enters into agreement to purchase any of the Montgomery Stations within twelve (12) months of such termination, Mergeco shall pay to Benchmark a fee of Three Million Four Hundred Twenty Thousand ($3,420,000). Capstar hereby fully, irrevocably and unconditionally guarantees Mergeco's obligation to pay any or all of the fees described in this Section 9.2(b). (c) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII agree to pay Mergeco a fee in the amount of Three Hundred Thousand Dollars ($300,000), together with interest at the Pass Through Rate which shall begin to accrue on the date hereof, in the event this Agreement is terminated due solely to a breach by Benchmark or its subsidiaries, which fee shall be apportioned among themselves as follows: 20% to Benchmark 20% to Fund I, 20% to Fund IV, 20% to Fund VII and 20% to Fund VIII. Benchmark, Fund I, Fund IV, Fund VII and Fund VIII agree to pay Mergeco a fee in the amount of One Hundred Thousand Dollars ($100,000), together with interest at the Pass Through Rate which shall begin to accrue on the date hereof, in the event this Agreement is terminated for any reason other than a breach by Benchmark or its subsidiaries or other than due to a breach solely by Mergeco or its affiliates, apportioned among themselves as follows: 20% to Benchmark; 20% to Fund I; 20% to Fund IV; 20% to Fund VII; and 20% to Fund VIII. If this Agreement is terminated due solely to a breach by Mergeco, Benchmark shall not be obligated to pay Mergeco any fee under this Section 9.2(c). 69 75 (d) Except as provided in Section 9.2(a)(ii), the fees payable under this Section 9.2 shall become due five (5) Business Days after the obligation to pay the applicable fee arises. 9.3. EFFECT OF TERMINATION. (a) In the event of termination of this Agreement by either Benchmark or Mergeco as provided in Section 9.1, this Agreement shall forthwith become void (other than with respect to covenants that survive the termination of this Agreement), the Merger shall be abandoned and there shall be no liability on the part of Benchmark, Mergeco or Parent of any kind whatsoever, except (i) with respect to Section 9.2 and Article X or as otherwise provided in this Section 9.3 which shall continue to apply in accordance with their terms and (ii) each party shall remain liable for a breach of this Agreement. Termination of this Agreement shall have no effect on the rights and obligations of the parties under the Confidentiality Agreement. In the event that Benchmark terminates this Agreement under Section 9.1(b)(i), 9.1(d)(ii), Section 9.1(d)(iii), or Section 9.1(d)(v), the parties agree and acknowledge that the Sellers will suffer damages that are not practicable to ascertain at the time of execution of this Agreement. Accordingly, the Sellers and Mergeco agree that, in such event, the Sellers shall be entitled, in the aggregate, to the sum of Eight Million One Hundred Fifty Thousand Dollars ($8,150,000) as liquidated damages, subject to the adjustments set forth in clause (b). The Sellers and Mergeco agree that the foregoing liquidated damages will be apportioned as set forth in clause (b), are reasonable considering all the circumstances existing as of the date hereof and constitute such parties' good faith estimate of the actual damages reasonably expected to result from the termination of this Agreement by Benchmark pursuant to Section 9.1(b)(i), Section 9.1((d))(ii), Section 9.1(d)(iii), or Section 9.1(d)(v). The Sellers agree that, to the fullest extent permitted by law, the right to payment of the Eight Million One Hundred Fifty Thousand Dollars ($8,150,000) as liquidated damages subject to the adjustments set forth in clause (b) under this Section 9.3 shall be their sole and exclusive remedy if the Closing does not occur with respect to any damages whatsoever that the Sellers may suffer as a result of any claim or cause of action asserted by the Sellers relating to or arising from breaches of the representations, warranties or covenants of Mergeco or Parent contained in this Agreement, the Loan Agreements or the Transaction Documents and to be made or performed at or prior to the Closing; provided that because the Selling Stockholders and the General Partners will benefit indirectly from the receipt by the Sellers of liquidated damages, as a condition of payment, and upon receipt of the liquidated damages under this Section 9.3, the Sellers, the Selling Stockholders and the General Partners (the "Releasing Parties") hereby irrevocably and unconditionally release, acquit, and forever discharge Mergeco, Parent and their respective successors, assigns, employees, agents, stockholders, partners, subsidiaries, parent companies and other affiliates (corporate or otherwise) (the "Released Parties") of and from any and all Released Claims, including, without limitation, all Released Claims arising out of, based upon, resulting from or relating to the negotiation, execution, performance, breach or 70 76 otherwise related to or arising out of the Merger Agreement, the Transaction Documents, the Loan Agreements or any agreement entered into in connection therewith or related thereto. "Released Claims" as used herein shall mean any and all charges, complaints, claims,causes of action, promises, agreements, rights to payment, rights to any equitable remedy, rights to any equitable subordination, demands, debts, liabilities, express or implied contracts, obligations of payment or performance, rights of offset or recoupment, accounts, damages, costs, losses or expenses (including attorneys' and other professional fees and expenses) held by any party hereto, whether known or unknown, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, absolute or contingent, direct or derivative, provided that this release shall not release any of the Released Parties from any claims, demands, causes of action or liabilities arising from any breach of the Confidentiality Agreement or from any anticompetitive or fraudulent actions attributable to any such parties (or other unlawful acts of a similar nature). (b) Subject to the adjustments set forth in this clause (b), liquidated damages shall be apportioned among the Sellers as follows: Benchmark shall be entitled to receive $2,828,050, Fund I shall be entitled to receive $578,650 Fund IV shall be entitled to receive $2,078,250, Fund VII shall be entitled to receive $1,230,650 and Fund VIII shall be entitled to receive $1,434,400. In the event the Jackson Agreement, the Montgomery Agreement or the Statesville Agreement has been terminated for any reason other than the failure of Mergeco or any of its affiliates to fund all or any portion of the Statesville Loan, the Jackson Loan or the Montgomery Loan, respectively, when required to fund accordance with the terms of the Statesville Loan Agreement, the Jackson Loan Agreement or the Montgomery Loan Agreement, respectively, then the amount of liquidated damages to which Benchmark is entitled to this Agreement shall be reduced by $907,375 (with respect to a termination of the Jackson Agreement) (the "Jackson Attributable Liquidated Damages"), $1,071,000 (with respect to a termination of the Montgomery Agreement) (the "Montgomery Attributable Liquidated Damages") and $833,000 (with respect to a termination of the Statesville Loan Agreement) (the "Statesville Attributable Liquidated Damages"). (c) In the event the liquidated damages are payable to the Sellers, such liquidated damages shall be payable as follows: (i) the Pre-Closing Escrow Deposit (including any cash drawn by the Pre-Closing Escrow Agent from any letters of credit) shall be released to Sellers' Representative, (ii) in the event the Additional Statesville Escrow Deposit, the Additional Jackson Escrow Deposit or the Additional Montgomery Escrow Deposit have not been placed in escrow, liquidated damages equaling amounts owed by Fund IX, Fund X or Fund XI, as applicable, under the Statesville Loan Agreement, the Jackson Loan Agreement or the Montgomery Loan Agreement, as applicable, shall be recoverable by Benchmark only by way of offset against amounts owed by Fund IX, Fund X or Fund XI, as applicable, to Parent under the applicable Loan Agreement and (iii) in the event the Capital Expenditure Deposit has been released to fund the Fund IV Loan or the Fund VII Loan, liquidated damages 71 77 equaling the amounts owed by Fund IV or Fund VIII, as applicable, under the Fund IV Loan Agreement or the Fund VIII Loan Agreement, as applicable, shall be recoverable by the Sellers' Representative only by way of offset against the Fund IV Loan or the Fund VII Loan. ARTICLE X GENERAL PROVISIONS 10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS; INDEMNIFICATION. (a) SURVIVAL PERIOD. All of the representations and warranties of Mergeco and Parent shall terminate at the Closing. All of the representations and warranties of Benchmark and the Funds (other than the representations and warranties in Section 2.1(m) and Section 2.3(m), which shall expire at Closing) contained in this Agreement shall survive the Merger and shall continue in full force and effect for a period of twelve (12) months thereafter. For purposes of this Section 10.1 only, each representation and warranty contained in this Agreement for which indemnification can be or is sought, or for which the Minimum Damage Amount can be satisfied, hereunder shall be read (including, without limitation, for purposes of determining whether a breach of such representation or warranty has occurred) without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. Notwithstanding any other provision of this Agreement, every covenant or agreement by a party under this Agreement that is applicable after the Effective Time shall survive the Closing. (b) INDEMNIFICATION OF SURVIVING PARTNERSHIP INDEMNIFIED PARTIES. Subject to the overall limitations, minimum amounts and time limitations set forth in this Section 10.1 and the limitations on recourse set forth in this Section 10.1: (i) Fund I agrees to indemnify and hold harmless Parent, Mergeco, the Surviving Partnership and each officer, director, employee, consultant, stockholder and affiliate of the Surviving Partnership or Parent (collectively, including Benchmark and its subsidiaries after the Closing, the "Surviving Partnership Indemnified Parties" and also referred to as the "Indemnified Parties") from and against any and all damages, losses, including taxes, claims, deficiencies, liabilities, demands, charges, suits, penalties, costs and all other expenses (including court costs and attorneys' fees and expenses incurred in investigating and preparing for any litigation or proceeding) (collectively, "Indemnified Costs") which any of the Surviving Partnership Indemnified Parties may sustain, or to which any of the Surviving Partnership Indemnified Parties may be subjected, relating to or arising out of (i) any claim, including direct claims under Section 10.1(e), action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or which may be brought against the Surviving Partnership Indemnified Parties, or any of their respective properties or assets, arising out of or as a result of 72 78 any breach of representation or warranty (other than the representations and warranties in Section 2.1(m) and 2.3(m)) of Fund I or of Benchmark with respect to Fund I or nonfulfillment or failure to perform any covenant or agreement on the part of Fund I or of Benchmark with respect to Fund I under this Agreement or the Fund I Merger Agreement or (ii) (a) any claim brought by any Governmental Entity or third party pursuant to Environmental Laws (including, without limitation, all common law duties covered by the definition of such term) in effect on the date of Closing or (b) any Required Remediation, in each case to the extent such Indemnified Costs are attributable to conditions that existed at, or releases or exposures that occurred in connection with, the Owned Real Property or the Leased Real Property of Fund I or any other activities that occurred thereon, in each case, prior to the date of Closing and are not attributable to (i) Mergeco or its affiliates' use and/or occupancy of Owned Real Property or the Leased Real Property or (ii) the Surviving Partnership Indemnified Parties' use and/or occupancy of Owned Real Property or Leased Real Property after the date of Closing; provided that the obligation to indemnify the Surviving Partnership Indemnified Parties for such Indemnified Costs shall not extend to the removal or abatement of asbestos-containing materials that were not friable on the date of Closing; and (ii) Fund IV agrees to indemnify and hold harmless Parent, Mergeco, the Surviving Partnership Indemnified Parties from and against any and all Indemnified Costs which any of the Surviving Partnership Indemnified Parties may sustain, or to which any of the Surviving Partnership Indemnified Parties may be subjected, relating to or arising out of any claim, including direct claims under Section 10.1(e), action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or which may be brought against the Surviving Partnership Indemnified Parties, or any of their respective properties or assets, arising out of or as a result of (i) any breach of representation or warranty (other than the representations and warranties in Section 2.1(m) and 2.3(m)) of Fund IV or of Benchmark with respect to Fund IV or nonfulfillment or failure to perform any covenant or agreement on the part of Fund IV or of Benchmark with respect to Fund IV under this Agreement or the Fund IV Merger Agreement or (ii) (a) any claim brought by any Governmental Entity or third party pursuant to Environmental Laws (including, without limitation, all common law duties covered by the definition of such term) in effect on the date of Closing or (b) any Required Remediation, in each case to the extent such Indemnified Costs are attributable to conditions that existed at, or releases or exposures that occurred in connection with, Owned Real Property or the Leased Real Property of Fund IV or any other activities that occurred thereon, in each case, prior to the date of Closing and are not attributable to (i) Mergeco or its affiliates' use and/or occupancy of Owned Real Property or the Leased Real Property or (ii) the Surviving Partnership Indemnified Parties' use and/or occupancy of Owned 73 79 Real Property or Leased Real Property after the date of Closing; provided that the obligation to indemnify the Surviving Partnership Indemnified Parties for such Indemnified Costs shall not extend to the removal or abatement of asbestos-containing materials that were not friable on the date of Closing; and (iii) Fund VII agrees to indemnify and hold harmless Parent, Mergeco, the Surviving Partnership Indemnified Parties from and against any and all Indemnified Costs which any of the Surviving Partnership Indemnified Parties may sustain, or to which any of the Surviving Partnership Indemnified Parties may be subjected, relating to or arising out of any claim, including direct claims under Section 10.1(e), action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or which may be brought against the Surviving Partnership Indemnified Parties, or any of their respective properties or assets, arising out of or as a result of (i) any breach of representation or warranty (other than the representations and warranties in Section 2.1(m) and 2.3(m)) of Fund VII or of Benchmark with respect to Fund VII or nonfulfillment or failure to perform any covenant or agreement on the part of Fund VII or of Benchmark with respect to Fund VII under this Agreement or the Fund VII Merger Agreement or (ii) (a) any claim brought by any Governmental Entity or third party pursuant to Environmental Laws (including, without limitation, all common law duties covered by the definition of such term) in effect on the date of Closing or (b) any Required Remediation, in each case to the extent such Indemnified Costs are attributable to conditions that existed at, or releases or exposures that occurred in connection with, Owned Real Property or the Leased Real Property of Fund VII or any other activities that occurred thereon, in each case, prior to the date of Closing and are not attributable to (i) Mergeco or its affiliates' use and/or occupancy of Owned Real Property or the Leased Real Property or (ii) the Surviving Partnership Indemnified Parties' use and/or occupancy of Owned Real Property or Leased Real Property after the date of Closing; provided that the obligation to indemnify the Surviving Partnership Indemnified Parties for such Indemnified Costs shall not extend to the removal or abatement of asbestos-containing materials that were not friable on the date of Closing; and (iv) Fund VIII agrees to indemnify and hold harmless Parent, Mergeco, the Surviving Partnership Indemnified Parties from and against any and all Indemnified Costs which any of the Surviving Partnership Indemnified Parties may sustain, or to which any of the Surviving Partnership Indemnified Parties may be subjected, relating to or arising out of any claim, including any claims arising under Section 10.1(e), action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or which may be brought against the Surviving Partnership Indemnified Parties, or any of their respective properties or assets, arising out of or as a result of (i) any breach of representation or warranty (other than the representations and warranties in Section 2.1(m) and 2.3(m)) of Fund VIII or of Benchmark with respect to 74 80 Fund VIII or nonfulfillment or failure to perform any covenant or agreement on the part of Fund VIII or of Benchmark with respect to Fund VIII under this Agreement or the Fund VIII Merger Agreement or (ii) (a) any claim brought by any Governmental Entity or third party pursuant to Environmental Laws (including, without limitation, all common law duties covered by the definition of such term) in effect on the date of Closing or (b) any Required Remediation, in each case to the extent such Indemnified Costs are attributable to conditions that existed at, or releases or exposures that occurred in connection with, Owned Real Property or the Leased Real Property of Fund VIII or any other activities that occurred thereon, in each case, prior to the date of Closing and that are not attributable to (i) Mergeco or its affiliates' use and/or occupancy of Owned Real Property or the Leased Real Property or (ii) the Surviving Partnership Indemnified Parties' use and/or occupancy of Owned Real Property or Leased Real Property after the date of Closing; provided that the obligation to indemnify the Surviving Partnership Indemnified Parties for such Indemnified Costs shall not extend to the removal or abatement of asbestos-containing materials that were not friable on the date of Closing; and (v) The General Partners, jointly and severally, agree to indemnify and hold harmless the Surviving Partnership Indemnified Parties from and against any and all Indemnified Costs which any of the Surviving Partnership Indemnified Parties may sustain, or to which any of Surviving Partnership Indemnified Parties may be subjected, relating to or arising out of any claim, including direct claims under Section 10.1(e), action, suit, inquiry, judicial or administrative proceeding, grievance or arbitration pending or which may be brought against the Surviving Partnership Indemnified Parties, or any of their respective properties or assets, arising out of or as a result of: (A) any breach of a representation or warranty of Benchmark (i) that relates only to Benchmark and does not relate to any of Fund I, Fund IV, Fund VII or Fund VIII or their respective subsidiaries or (ii) relating to Fund IX, Fund X or Fund XI (it being understood that, except with respect to a breach of the representation and warranty under Section 2.1(u), no indemnification obligation shall arise from an event, condition, act or omission relating to the Statesville Stations, the Jackson Stations or the Montgomery Stations and existing or occurring prior to the acquisition of the Statesville Stations, the Jackson Stations or the Montgomery Stations by Fund IX, Fund X, or Fund XI, as applicable); (B) any nonfulfillment or failure to perform any covenant or agreement on the part of Benchmark (i) that relates only to Benchmark and does not relate to any of Fund I, Fund IV, Fund VII or Fund VIII or their respective subsidiaries or (ii) relating to Fund IX, Fund or Fund XI (it being understood that, except with respect to a breach of the representation and 75 81 warranty under Section 2.1(u), no indemnification obligation shall arise from an event, condition, act or omission relating to the Statesville Stations, the Jackson Stations or the Montgomery Stations and existing or occurring prior to the acquisition of the Statesville Stations, the Jackson Stations or the Montgomery Stations by Fund IX, Fund X, or Fund XI, as applicable); (C) any failure of a Reserve Fund to cover the full amount of an applicable Adjustment Amount that is a negative number calculated pursuant to Section 1.13; (D) any liability arising from the Richmond Contracts or the Norfolk Contracts; (E) any claims arising under Maryland Law from the exercise of appraisal rights by holders of Dissenting Partnership Interests; or (F) any liabilities arising from the matters set forth in clauses (B)(1), (2), (3), (4) and (5) of the first sentence of Section 10.1(k). (c) PARTNER REPRESENTATIVES. After the Effective Time, Partner Representatives shall, on behalf of the former holders of partnership interests in Fund I, Fund IV, Fund VII, and Fund VIII, as applicable, act as the representatives of the Indemnifying Parties with respect to claims relating to Fund I, Fund IV, Fund VII, or Fund VIII, respectively, and the General Partners shall act as the Indemnifying Party with respect to claims relating to Benchmark or the New Funds. Such representation shall include receiving any Claim Notices (as defined below). (d) DEFENSE OF THIRD-PARTY CLAIMS. All claims for indemnification by any Indemnified Party involving third party actions, as defined below, shall be asserted and resolved as follows: (i) An Indemnified Party shall give prompt written notice (the "Claim Notice") to any entity or person who is obligated to provide indemnification hereunder (an "Indemnifying Party") of the commencement or assertion of any action, proceeding, demand or claim by a third party (collectively, a "third-party action") in respect of which such Indemnified Party shall seek indemnification hereunder. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it, he or she may have to such Indemnified Party under this Article X unless the failure to give such notice prejudices such Indemnifying Party in any material respect. (ii) The Indemnifying Party shall have thirty (30) days (the "Notice Period") from the delivery of the Claim Notice in accordance with Section 10.8 to notify the Indemnified Party (i) whether or not it disputes entitlement 76 82 of the Indemnified Party to indemnification hereunder with respect such claim or demand, or (ii) whether or not it agrees to defend the Indemnified Party against such claim or demand; provided, however, that any Indemnified Party is hereby authorized prior to and during the Notice Period to file any motion, answer, or other pleading which it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party and not materially prejudicial to the Indemnifying Party. In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it agrees to defend the Indemnifying Party against such claim or demand and except as hereinafter provided, the Indemnifying Party shall have the right to defend by all appropriate proceedings, which proceedings shall be promptly settled or prosecuted by it to a final conclusion. (iii) The Indemnified Party shall be entitled, at his, her or its own expense, to participate in the defense of such third-party action (provided, however, that the Indemnifying Parties shall pay the attorneys' fees of the Indemnified Party only if (1) the employment of separate counsel shall have been authorized in writing by any such Indemnifying Parties in connection with the defense of such third-party action, (2) the Indemnifying Parties shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third-party action, or (3) the Indemnified Party's counsel shall have advised the Indemnified Party in writing, with a copy to the Indemnifying Party, that there is a conflict of interest that would make it inappropriate under applicable standards of professional conduct to have common counsel). (iv) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party, which approval shall not be unreasonably withheld, before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such third-party action or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party. (v) Without the prior consent of the applicable Indemnified Party, which shall not be unreasonably withheld, no Indemnifying Party shall consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third-party action. (vi) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third-party 77 83 action (A) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time or (B) to the extent the third-party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party, which consent shall not be unreasonably withheld. (vii) The parties hereto shall extend reasonable cooperation in connection with the defense of any third-party action pursuant to this Article X and, if appropriate and related to the claim in question, in making any counterclaim against the person asserting the complaint against the Indemnified Party. In connection therewith, the parties shall furnish such records, information, and testimony as may be reasonably requested. (e) DIRECT CLAIMS. In any case in which an Indemnified Party seeks indemnification hereunder which is not subject to Section 10.1(d) because no third-party action is involved, the Indemnified Party shall send a Claim Notice with respect to such Indemnified Costs, and, if applicable, otherwise comply with the provisions of the Post-Closing Escrow Agreement and this Section 10.1. If the Indemnifying Party does not notify the Indemnified Party within the Notice Period that the Indemnifying Party disputes such claim, the Indemnified Party shall be conclusively deemed to be entitled to indemnification in the amount of such claim, subject to the limitations of Section 10.1(f). The failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim unless the resulting delay prejudices the position of the Indemnifying Party with respect to such claim in any material respect. (f) LIMITATIONS. The following provisions of this Section 10.1(f) shall be applicable after the time of the Closing to claims under Section 10.1: (i) Minimum Damage Amounts. (A) Neither Fund I, Fund IV, Fund VII, nor Fund VIII shall be required to indemnify an Surviving Partnership Indemnified Party under Section 10.1(b)(i) through (iv), as applicable, for a breach of any representation, warranty or covenant or the environmental indemnification except to the extent that the aggregate amount of Indemnified Costs for which all of the Surviving Partnership Indemnified Parties are entitled to indemnification exceeds the amounts set forth on Schedule 10.1(f) with respect to such Indemnifying Party (the amounts set forth on Schedule 10.1(f) are hereinafter referred to as the "Minimum Damage Amounts"). 78 84 (B) The General Partners shall not be required to indemnify an Surviving Partnership Indemnified Party under this Section 10.1 under Section 10.1(b)(v)(A) or (B), as applicable, for a breach of any representation or warranty or covenant, except to the extent that the aggregate amount of Indemnified Costs for which all of the Surviving Partnership Indemnified Parties are entitled to indemnification pursuant to Section 10.1(b)(v)(A) and (B) exceeds $281,137 (with respect to the General Partners, the "Minimum Damage Amount"). In the event the Statesville Agreement, the Jackson Agreement or the Montgomery Agreement is not consummated or is terminated, the Minimum Damage Amount with respect to the General Partners shall be reduced by $83,300, $90,737 and $107,100, respectively; provided, however, that notwithstanding the foregoing the Minimum Damage Amount with respect to the General Partners shall not be reduced below $20,000. In the event the Indemnified Costs exceed the Minimum Damage Amounts, the Surviving Partnership Indemnified Party shall be entitled to be paid the excess of (a) the aggregate amount of such Indemnified Costs over (b) the Minimum Damage Amounts, subject to the limitations on recovery and recourse set forth in this Section 10.1(f); provided, however, that (i) the Indemnified Costs relating to or arising out of any claims under Section 10.1(b)(v)(C) through (F) shall not be subject to the Minimum Damage Amounts requirement, (ii) any Indemnified Costs arising from a breach of the representations and warranties of Benchmark in Section 6.4 and of the agreement of Benchmark in Section 10.6 shall not be subject to the Minimum Damage Amounts and (iii) claims under Section 10.1(b)(v)(C), Section 10.1(b)(v)(E), and Section 10.1(b)(v)(F) ("Unlimited Claims") shall not be subject to the liability caps referred to in Section 10.1(f)(iii) or the limitations as to recourse referred to in Section 10.1(f)(iii) below. (ii) Limitation as to Time. No Indemnifying Party shall be liable for any Indemnified Costs pursuant to this Section 10.1 unless a written claim for indemnification in accordance with Section 10.1(d) or 10.1(e) is given by the Surviving Partnership Indemnified Party to the Indemnifying Party with respect thereto (i) within twelve (12) months after the Closing with respect to any claims for Indemnified Costs under this Section 10.1 other than claims made pursuant to Section 10.1(b)(v)(E) or (F) and (ii) prior to the date that is ten days after expiration of the applicable statute of limitations with respect to any claims for Indemnified Costs made pursuant to Section 10.1(b)(v)(E) or (F). (iii) Liability Cap. Without limiting any of the foregoing provisions of this Section 10.1(f), the parties hereto agree that (a) Fund I's liability for claims under Section 10.1(b)(i) shall be limited to the amount of the Fund I Post-Closing Escrow Deposit (excluding interest earned thereon); (b) Fund IV's liability for claims under Section 10.1(b)(ii) shall be limited to the amount of the Fund IV Post-Closing Escrow Deposit (excluding interest earned thereon); (c) Fund VII's liability for claims under Section 10.1(b)(iii) 79 85 shall be limited to the amount of the Fund VII Post-Closing Escrow Deposit (excluding interest earned thereon); (d) Fund VIII's liability for claims under Section 10.1(b)(iv) shall be limited to the amount of the Fund VIII Post-Closing Escrow Deposit (excluding interest earned thereon); (e) the General Partners' joint and severally liability for claims under Sections 10.1(b)(v)(A) together with claims under Section 10.1(b)(v)(B) shall not exceed, in the aggregate $1,546,250 (the "General Partner Liability Cap"), provided that in the event the Statesville Agreement, the Jackson Agreement or the Montgomery Agreement have not been consummated or are terminated, the General Partner Liability Cap shall be reduced by amounts equal to $458,150, $499,050 and $589,050, respectively (with respect to each such termination) further provided, that notwithstanding the foregoing, the General Partner Liability Cap shall not be reduced below $100,000; (h) the General Partners' joint and several liability for claims under Section 10.1(b)(v)(D) shall not exceed in the aggregate $250,000, and (i) the General Partners' liability for claims under Section 10.1(b)(v)(C), (E) and (F) shall be unlimited. The Surviving Partnership Indemnified Parties shall be entitled to indemnification for the claims described in clauses (a) through (d) above solely from the applicable Post-Closing Escrow Deposits. (g) INSTRUCTIONS TO ESCROW AGENT. (i) INDIVIDUAL INDEMNIFYING PARTIES. Each Indemnifying Party hereby covenants and agrees with each Surviving Partnerships Indemnified Party that, if such Indemnifying Party is or becomes obligated to indemnify an Surviving Partnership Indemnified Party for Indemnified Costs under this Article X, such Indemnifying Party hereby authorizes and directs the Partner Representatives (hereinafter defined) to, on behalf of such Indemnifying Party, execute and deliver to the Escrow Agent written instructions to release to such Surviving Partnership Indemnified Party such amounts of the applicable Post-Closing Escrow Deposit as are necessary to indemnify the Surviving Partnership Indemnified Party for such Indemnified Costs. (ii) APPOINTMENT OF PARTNERS REPRESENTATIVES. By the execution and delivery of this Agreement, each Indemnifying Party hereby irrevocably constitutes and appoints Bruce R. Spector and Joseph L. Mathias, IV as the true and lawful agents and attorneys-in-fact (the "Partner Representatives") of such Indemnifying Party with full power of substitution to act, jointly and severally, in the name, place and stead of such Indemnifying Party with respect to (A) the power to execute any amendment to this Agreement as such Partner Representative shall deem necessary or appropriate in his sole discretion, (B) delivery of the written instructions described in Section 10.1(g)(i) on behalf of such Indemnifying Party, and (C) the performance of the obligations and rights of such Indemnifying Party under the 80 86 Post-Closing Escrow Agreement, including, without limitation, the power to execute the Post-Closing Escrow Agreement and any amendments thereto on behalf of such Indemnifying Party, to do or refrain from doing all such further acts and things, and to execute, deliver and receive all such documents, waivers, extensions and amendments as such Partner Representatives shall deem necessary or appropriate in their sole discretion in connection with the administration of the Post-Closing Escrow Agreement (and any such actions shall be binding on such Indemnifying Party). Mergeco, the other Surviving Partnership Indemnified Parties, the Escrow Agent and any other person, may conclusively and absolutely rely, without inquiry, upon any action of any Partner Representative as the action of each Indemnifying Party in all matters referred to herein, and each such Indemnifying Party confirms all that each Partner Representative shall do or cause to be done by virtue of his appointment as a Partner Representative. All actions by the Partner Representatives are acknowledged by the parties hereto to be taken by it solely as agents and attorneys-in-fact for each Indemnifying Party. By the execution of this Agreement, Bruce R. Spector and Joseph L. Mathias, IV have accepted their respective appointments as Partner Representatives and in consideration for their agreement to act as the Partner Representatives, each Indemnifying Party hereby agrees to indemnify and hold Bruce R. Spector and Joseph L. Mathias, IV harmless from and against all damages, losses, liabilities, charges, penalties, costs and expenses (including court costs and attorneys' fees and expenses, if any) incurred by each of them in connection with their performance as Partner Representatives, and Partner Representatives may reserve a portion of the Total Consideration to be paid to the Partners and Fund Limited Partners for purposes of covering any such damages, liabilities, charges, penalties, costs and expenses. Each Indemnifying Party covenants and agrees that he, she or it will not voluntarily revoke the power of attorney conferred in this Section 10.1(g). If at any time Bruce R. Spector or Joseph L. Mathias, IV dies or resigns from his position as a Partner Representative, the remaining Partner Representative (if there is one) shall serve as the sole Partner Representative, or if there is no remaining Partner Representative, the other Indemnifying Parties that are not affiliates of the Surviving Partnership after the Effective Time shall designate a successor as soon as practicable. (h) NO CONTRIBUTION. The General Partners may not make any claim for contribution or indemnification after the Effective Time from the Surviving Partnership or any of its affiliates for any claim for which the General Partners are obligated to indemnify the Surviving Partners under Section 10.1(b)(v). Even though Benchmark and the Funds will be Surviving Partnership Indemnified Parties after the Effective Time, the Surviving Partnership Indemnified Parties shall have such rights to seek indemnification from the Post-Closing Escrow Deposits as are granted under this Article X. (i) RELEASE FROM ESCROW. Upon the expiration of twelve (12) months after the Closing Date, the Surviving Partnership and the Partner Representatives agree to instruct the Post-Closing Escrow Agent to release, pursuant to the terms and provisions of the Post-Closing Escrow Agreement, any amounts remaining in the Post-Closing Escrow Deposits to the Partner Representatives, subject to amounts 81 87 retained in such Post-Closing Escrow Deposits for pending claims pursuant to the terms and provisions of the Post-Closing Escrow Agreement. (j) EXCLUSIVE REMEDY FOR BREACH OF REPRESENTATION, WARRANTY OR COVENANT. Commencing with the Effective Time, subject to Section 10.17, the rights of the Surviving Partnership Indemnified Parties to indemnification pursuant to this Section 10.1 shall be the sole and exclusive remedy of such Surviving Partnership Indemnified Parties for any breach of a representation, warranty or covenant set forth in this Agreement, and, except for certain claims against the General Partners under Section 10.1(b)(v), such recourse shall, in each instance, be limited to the amounts held pursuant to the Post-Closing Escrow Agreement. (k) INDEMNIFICATION OF GENERAL PARTNERS. The Surviving Partnership shall indemnify Bruce R. Spector and Joseph L. Mathias, IV in respect of, and hold such individuals harmless against, any and all Indemnified Costs incurred by either or both of them in connection with any claim, demand, action, suit, proceeding or investigation relating to Benchmark and its subsidiaries (or any actions such individuals may have taken in their capacities as General Partners) and arising out of or pertaining to matters (including liabilities of Benchmark and its subsidiaries) existing or occurring at, prior to or after the Effective Time to the extent such individuals would be entitled to indemnification under the Existing Partnership Agreement or the Existing Fund Partnership Agreements had such agreements been in effect at such time; provided, however, that the Surviving Partnership and Funds shall have no obligation to indemnify such individuals with respect to, and Bruce R. Spector and Joseph L. Mathias IV hereby waive any rights to, indemnification with respect to (A) matters set forth in Section 10.1(h) or (B) the allocation of (1) any prior property or cash distributions or the Fund I Consideration among Fund I Limited Partners, (2) any prior property or cash distributions or the Fund IV Consideration among Fund IV Limited Partners, (3) any prior property or cash distributions or the Fund VII Consideration among Fund VII Limited Partners, (4) any prior property or cash distributions or the Fund VIII Consideration among Fund VIII Limited Partners or (5) any prior property or cash distributions or the Benchmark Consideration among the General Partners and the Limited Partners. For purposes of the foregoing sentence, allocation shall include the calculation and disposition of Holdback Funds (to the extent such Holdback Funds are distributed in accordance with instructions from Partner Representatives). Nothing in this Section 10.1(k) shall limit the Surviving Partnership from seeking recourse from the applicable Post-Closing Escrow Deposits in accordance with the terms of this Agreement for any indemnification obligations it may incur pursuant to this Section 10.1(k). The procedures relating to the defense of third party claims set forth in Section 10.1(d) and direct claims in Section 10.1(e) are incorporated into this Section 10.1(k) by reference and, for purposes of the implementation of such procedures, Bruce R. Spector and Joseph L. Mathias shall be considered the "Indemnified Party" and the Surviving Partnership shall be considered the "Indemnifying Party." 82 88 10.2. KNOWLEDGE. Wherever reference is made in this Agreement to a particular statement being "to the knowledge of Benchmark" or "to the knowledge of a Fund" (or any correlative phrase), such phrase shall be deemed to mean the actual knowledge of Bruce R. Spector, Joseph L. Mathias IV, Cindy Thayer, Robert Schuler or Catherine Mecchi. 10.3. AMENDMENT AND MODIFICATION. This Agreement may be amended by the parties hereto by mutual agreement at any time prior to the Effective Time. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. 10.4. WAIVER OF COMPLIANCE. Any failure of any party to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the party or parties entitled to rely upon any such obligation, covenant, agreement or condition, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure. 10.5. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of applicable law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Merger be consummated as originally contemplated to the fullest extent possible. 10.6. EXPENSES AND OBLIGATIONS. All FCC filing fees, HSR Act filing fees and fees payable to the Escrow Agent, the Post-Closing Escrow Agent or the Exchange Agent shall be paid on or prior to Closing, as applicable, one-half by Mergeco and one-half by Benchmark and its subsidiaries. Except as otherwise expressly provided in this Agreement or as provided by law, all other costs and expenses incurred by the parties hereto in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the party which has incurred such expenses. In the event of a dispute between the parties in connection with this Agreement and the transactions contemplated hereby, each of the parties hereto hereby agrees that the prevailing party shall be entitled to reimbursement by the other party of reasonable legal fees and expenses incurred in connection with any action or proceeding. 10.7. PARTIES IN INTEREST. This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each party hereto and their successors and assigns, and nothing in this Agreement, except as set forth below, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement. Any Surviving Partnership Indemnified Parties that are not parties to this Agreement are intended to be third party beneficiaries of Section 10.1. 10.8. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally (which shall include delivery by facsimile, or by a nationally recognized reputable overnight courier service that issues a receipt or other confirmation 83 89 of delivery), or three (3) business days after the date mailed by registered or certified U.S. mail (return receipt requested and postage prepaid) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to Mergeco or Parent, to: Hicks, Muse, Tate & Furst Incorporated 1325 Avenue of the Americas, 25th Floor New York, NY 10019 Attn: Lawrence D. Stuart, Jr. Facsimile: (212) 424-1450 with a copy to: Vinson & Elkins 3700 Trammell Crow Center 2001 Ross Avenue Dallas, Texas Attn: Michael D. Wortley, Esq. Facsimile: (214) 220-7716 (b) If to Benchmark, Fund I, Fund IV, Fund VII, Fund VIII, the Partner Representatives, or the General Partners: Benchmark Communications Radio Limited Partnership 111 South Calvert Street Suite 2850 Baltimore, Maryland 21202 Attn: Bruce R. Spector Facsimile: (410) 244-7170 with a copy to: Latham & Watkins 1001 Pennsylvania Avenue, N.W. Suite 1300 Washington, D.C. 20004 Attn: Eric L. Bernthal Facsimile: (202) 637-2201 10.9. INTERPRETATION. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section or Exhibit to this Agreement unless otherwise indicated. The table of contents, if any, and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 84 90 Whenever the words "include," "includes," or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." 10.10. COUNTERPARTS. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 10.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed to include the Confidentiality Agreement referred to in Section 4.2(a), the exhibits and schedules hereto, the other certificates, documents and instruments delivered hereunder and similar operative documents relating to the Other Benchmark Transactions) constitutes the entire agreement of the parties hereto and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. There are no representations, warranties, agreements or covenants other than those expressly set forth in this Agreement (as so defined). 10.12. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO CHOICE OF LAW RULES USED IN THAT JURISDICTION. 10.13. PUBLIC ANNOUNCEMENTS. Mergeco, Parent and Benchmark shall agree with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to reaching such agreement, except as required by applicable laws. 10.14. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, whether by operation of law or otherwise; provided, however, that (a) upon notice to Benchmark and without releasing Mergeco from any of its obligations or liabilities hereunder, Mergeco may assign or delegate any or all of its rights or obligations under this Agreement to any affiliate thereof so long as such assignment would by considered "pro forma" by the FCC, and (b) nothing in this Agreement shall limit Mergeco's ability to make a collateral assignment of its rights under this Agreement to any institutional lender that provides funds to Mergeco without the consent of Benchmark or any party hereto. Benchmark shall execute an acknowledgment of such assignment(s) and collateral assignments in such forms as Mergeco or its institutional lenders may from time to time reasonably request; provided, however, that unless written notice is given to Benchmark that any such collateral assignment has been foreclosed upon, Benchmark shall be entitled to deal exclusively with Mergeco as to any matters arising under this Agreement or any of the other agreements delivered pursuant hereto. In the event of an assignment permitted by this Section, the provisions of this Agreement shall inure to the benefit of and be binding on any Mergeco's assigns. Nothing in this Agreement shall prevent Parent from assigning its interests in Mergeco to an affiliate of Parent (so long as such assignment would be considered "pro forma" by the FCC). 85 91 10.15. FURTHER ASSURANCES. At the Closing or from time to time thereafter, the Surviving Partnership shall execute and deliver such other instruments of assignment, transfer and delivery and shall take such other actions as the other reasonably may request in order to consummate, complete and carry out the transactions contemplated by this Agreement. 10.16. PARTNER, DIRECTOR, OFFICER AND STOCKHOLDER LIABILITY. Except as otherwise expressly provided in this Agreement, the Loan Agreements, the Other Loan Documents (as defined in the Loan Agreements) or the other Transaction Documents, the directors, officers, stockholders and affiliates of Parent and Mergeco or their affiliates and the partners, officers, employees and affiliates of Benchmark or its affiliates shall not have any personal liability for any liabilities arising under this Agreement or in connection with this transaction. 10.17. NO WAIVER OF FRAUD. Notwithstanding any provision of this Agreement to the contrary, no party hereto shall be deemed to have waived any claim of fraud it may have against another party. 10.18. SPECIFIC PERFORMANCE. The parties hereto agree that the Stations are unique assets which cannot be readily obtained in the open market. Therefore, Mergeco shall have right to the remedy of specific performance in addition to any other rights or remedies which may be available to it. Accordingly, notwithstanding and in addition to any rights and remedies available hereunder, or under applicable law, Mergeco shall have the right to specifically enforce the parties' performance under this Agreement and each such party agrees to waive the defense in any suit that Mergeco has an adequate remedy at law and to interpose no opposition, legal or otherwise, as to the propriety of specific performance as a remedy. 10.19. ARBITRATION. (a) PRE-ARBITRATION MEETING. The parties shall attempt in good faith to resolve promptly any dispute, controversy or claim under, arising out of, relating to or in connection with this Agreement by negotiations between one representative designated by each party. If any such dispute, controversy or claim should arise, the designated representatives of the parties shall meet at least once and will attempt to resolve the matter. Either designated representative may request the other to meet within 14 days after delivery of written notice to the other party of any such dispute, controversy or claim, at a mutually agreed time and place. (b) ARBITRATION PROCEEDINGS. If the matter has not been resolved pursuant to the foregoing procedures within 60 days after the first meeting of the parties' designated representatives (which period may be extended or shortened by mutual agreement), the matter shall be settled exclusively by arbitration (except as provided in Section 10.19(f) herein) conducted in accordance with the provisions of the Federal Arbitration Act (99 U.S.C. Section Section 1-16), and in accordance with the Center for Public Resources, Inc.'s Rules (the "Rules of Arbitration") for Non-Administered Arbitration of Business Disputes, by three arbitrators, of whom each party shall appoint one arbitrator, and such appointed arbitrators shall appoint the third arbitrator. All arbitrators to be selected under this Section 10.19 shall, unless the parties 86 92 mutually agree otherwise, be persons: (a) who meet the qualifications set forth in Rule 7 of the Rules of Arbitration; (b) who are attorneys or retired judges; (c) who are residents of a State other than Maryland or Texas; and (d) who have past experience in settling complex litigation involving claims relating to mergers or acquisitions. The arbitration of such matters, including the determination of any amount of damages suffered by any party hereto by reason of the acts or omissions of any party, shall be final and binding upon the parties to the maximum extent permitted by law. The parties shall use their best efforts to cause a final decision of the arbitrators under this Section 10.19 to be issued no later than sixty (60) days after the date that the dispute is referred to arbitration and, in any event, with disputes arising prior to Closing, no later than November 30, 1997. No party shall seek, and no arbitrator shall be authorized to award, any punitive damages relating to any matter under, arising out of, in connection with or relating to this Agreement in the arbitration proceedings set forth herein or in any other forum. The parties intend that this agreement to arbitrate be valid, binding, enforceable and irrevocable. (c) PLACE OF ARBITRATION. Any arbitration proceedings hereunder shall be conducted in New York, New York or at such other location as the parties may agree. (d) JUDGMENTS. Any arbitration award hereunder shall be final and binding upon the parties, and judgment may be entered thereon, upon the application of either party, by any court having jurisdiction. (e) EXPENSES. Each party shall be entitled to be reimbursed by the other party for costs and expenses incurred in connection with commencing any action hereunder, including reasonable attorneys' fees and arbitrators' fees, if and to the extent determined by the arbitrator or arbitrators arbitrating any such action. (f) EQUITABLE REMEDIES. Notwithstanding anything else in this Section 10.19 to the contrary, each party shall be entitled to seek any equitable remedies available under applicable law from any court of competent jurisdiction, and the order or judgment of any such court shall be binding in any arbitration proceeding pursuant to this Section 10.19. ARTICLE XI DEFINITIONS 11.1. CERTAIN DEFINITIONS. For purposes of this Agreement, the term: "Accounts Receivable Consideration" allocable to a Person shall be an amount equal to ninety five percent (95%) of the aggregate dollar amount of accounts receivable of 120 days or less (and, in the case of agency accounts receivable, of 180 days or less) of such Person outstanding at the close of business on the Closing Date. 87 93 "Actual Net Current Assets" of a Person shall be equal to the difference of Current Assets of such Person (as reflected on the Closing Balance Sheet) minus Unfunded Debt of such Person (as reflected on the Closing Balance Sheet). "Additional Letters of Credit" shall have the meaning set forth in Section 1.11. "Adjustment Amount" means, with respect to any Person, the difference (whether positive or negative) of Actual Net Current Assets of such Person minus Initial Net Current Assets of such Person. For purposes of calculating the Adjustment Amount for Benchmark under this Agreement, Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and each of their respective subsidiaries shall be deemed not to be subsidiaries of Benchmark. "Affiliate" of a specified person means a person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person. "Alex. Brown" shall have the meaning set forth in Section 2.1(t). "Alternative Proposal Fee" shall have the meaning set forth in Section 9.2. "Americom Fee" shall have the meaning set forth in Section 6.4. "Alex. Brown Fee" shall mean the fee of the Three Hundred Thousand Dollars ($300,000) paid on the date hereof by Mergeco to Alex. Brown in connection with the Alex. Brown Fairness Opinion. "Alex. Brown Fairness Opinion" shall have the meaning set forth in Section 2.1(t). "Applications" shall have the meaning set forth in Section 6.1. "Assignments of New Fund Partnership Interests" means the Assignments of Partnership Interest, each in substantially the form of Exhibit 4 hereto, pursuant to which Bruce R. Spector will assign his limited partnership interest in each of Fund IX, Fund X and Fund XI to Parent immediately after the Effective Time. "Balance Sheet" shall have the meaning set forth in Section 2.1(f)(ii). "Balance Sheet Date" shall have the meaning set forth in Section 2.1(f)(ii). "Bankers Trust" shall have the meaning set forth in Section 1.11. "Banking Event" shall have the meaning set forth in Section 8.1. "BCF Calculation" shall have the meaning set forth in Section 1.6. "Benchmark" means Benchmark Communications Radio Limited Partnership. 88 94 "Benchmark Allocable Portion" means, with respect to any Holdback Fund or the Residual Consideration, the portion of such Holdback Fund or the Residual Consideration (assuming for this purpose that the Residual Consideration is a positive number) that the holders of Convertible Partnership Interests would be entitled to receive pursuant to this Agreement in the event the full amount of such Holdback Fund or the Residual Consideration had in fact been disbursed as part of the Merger Consideration by the Exchange Agent on the Closing Date. "Benchmark Consideration," which shall consist of consideration allocable to the New Funds and to the goodwill and other assets of Benchmark, means, subject to the adjustments described in Section 1.6(e) hereof, the sum of (i) Fifty Six Million Two Hundred Twenty Seven Thousand Five Hundred Dollars ($56,227,500) in cash minus (ii) the Funded Debt of Benchmark, plus (iii) the Current Assets of Benchmark minus (iv) the Unfunded Debt of Benchmark, minus (v) the principal amounts drawn under the Jackson Loan, the Statesville Loan and the Montgomery Loan but only to the extent such amounts were drawn to pay the Jackson Consideration, the Statesville Consideration and the Montgomery Consideration minus (vi) the Benchmark Allocable Portion of the Residual Consideration. For purposes of clauses (ii), (iii) and (iv) of the preceding sentence, Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and each of their respective subsidiaries shall be deemed not to be subsidiaries of Benchmark. "Benchmark Dissenting Partner Fund" means an amount equal to the portion of the Total Consideration that would have been allocable to the holders of Benchmark Dissenting Partnership Interests if such holders had not exercised appraisal rights in the Merger with respect to such partnership interests under Maryland Law. "Benchmark Dissenting Partner Reserve" means such amount as the General Partners shall reasonably determine is appropriate to cover any costs, expenses or liabilities that may be incurred with respect to holders of Benchmark Dissenting Partnership Interests. The Benchmark Dissenting Partner Reserve shall constitute a portion of the Total Consideration. "Benchmark Dissenting Partnership Interests" shall have the meaning set forth in Section 1.7. "Benchmark Lease Agreement" means the office lease for Suite 2850, 111 S. Calvert St., Baltimore, MD. "Benchmark Lease Prepayment" means the prepayment by Mergeco of all remaining payments, totaling $245,000, owed by the tenant under the Benchmark Lease Agreement from July 1, 1997 to the end of its term (September 30, 2000). "Benchmark Negative Trade Balance" shall have the meaning set forth in Section 3.2. "Business Combination Transaction" means any lease, sale, transfer or other disposition (including by way of merger, consolidation, business combination or sale, issuance or exchange of partnership interests but excluding any pledge or mortgage) of 35% or more of the assets of or interest in Benchmark and its subsidiaries (measured on an aggregate basis) in one or more transactions (whether or not related); 89 95 "Business Combination Transaction Proposal" means a bona fide and written proposal from a financially qualified third party addressed to Benchmark, the General Partners, the Limited Partners or the Fund Limited Partners, which proposal (i) has been communicated (whether or not by the General Partners) to holders of Fund Limited Partnership Interests who hold a substantial percentage of voting power (with respect to mergers) of a Fund that fails to approve the Other Benchmark Merger Agreement to which such Fund is a party, (ii) is a proposal to acquire Benchmark, its subsidiaries or any of their assets pursuant to a Business Combination Transaction, and (iii) contains a specific description of the consideration to be paid in such Business Combination Transaction; provided that a proposal shall not constitute a Business Combination Transaction Proposal unless such proposal, if pursued by the General Partners, would reasonably be expected to result in a Business Combination Transaction. "Business Day" means any day on which the principal offices of the SEC in Washington, DC are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in New York, New York. "Capital Expenditure Deposit" shall have the meaning set forth in Section 1.11. "CERCLA" shall have the meaning set forth in Section 2.1(m). "CERCLIS" shall have the meaning set forth in Section 2.1(m)(vi). "Cessation Date" shall have the meaning set forth in Section 8.1. "Claim Notice" shall have the meaning set forth in Section 10.1(d). "Class A General Partners" means each of the General Partners of Benchmark that hold Class A General Partnership Interests. "Class A General Partnership Interests" means the Partnership Interests of the Class A General Partners. "Class A Limited Partners" means each of the Limited Partners of Benchmark that hold Class A Limited Partnership Interests. "Class A Limited Partnership Interests" means the Partnership Interests of the Class A Limited Partners. "Class A Partners" means the Class A General Partners and the Class A Limited Partners. "Closing" shall have the meaning set forth in Section 8.1. "Closing Balance Sheet" shall have the meaning set forth in Section 1.6(h). "Closing Date" shall have the meaning set forth in Section 8.1. 90 96 "Code" shall have the meaning set forth in Section 2.1(n). "Commission Consents" shall have the meaning set forth in Section 6.1. "Communications Act" shall have the meaning set forth in Section 2.1(g)(i). "Confidentiality Agreement" shall have the meaning set forth in Section 4.2. "Conflict Event" shall have the meaning set forth in Section 8.1. "Consent Solicitation" shall have the meaning set forth in Section 1.10(c). "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise. "Converted Partnership Interest" shall have the meaning set forth in Section 1.5. "Convertible Partnership Interests" means the Limited Partnership Interests (other than the Class A Limited Partnership Interests) and the General Partnership Interests. "Corporate Facilities" means the facilities at 111 S. Calvert Street, Suite 2850, Baltimore, Maryland. "Credit Agreement Event of Default" means (a) an event described in Section 6.02 or 6.04 of any of the Loan Agreements, or (b) an event described in any other Section of Article VI of any of the Loan Agreements to the extent that such event constitutes (i) an intentional or willful act voluntarily taken by any party to a Loan Agreement other than the Lender, the purpose of which act is to materially breach the terms of the Loan Agreement and to induce Mergeco to exercise its termination rights under this Agreement, (ii) a material breach or, in the case of Section 5.14 or 6.10 of any of the Loan Agreements, any breach, by any party to a Loan Agreement other than the Lender of a covenant contained in any Loan Agreement to which such Person is a party, which breach is (a) capable of being cured within the Cure Period using commercially reasonable efforts and (b) is not cured within such Cure Period (which Cure Period shall commence upon receipt by such party of written notice of such breach from the Lender), or (iii) a material breach by any party to any Loan Agreement other than the Lender of a covenant to any Loan Agreement, which breach (a) is not capable of being cured within the Cure Period using commercially reasonable efforts and (b) would reasonably be expected to result in a Material Adverse Effect. For purposes of clause (iii) of this definition, a Material Adverse Effect shall be deemed to include any material adverse effect that would result in damages to the Surviving Partnership or its subsidiaries in excess of the Material Adverse Effect Threshold. "Cure Period" shall have the meaning set forth in Section 9.1. "Current Assets" of a Person means the Accounts Receivable Consideration allocable to such Person and the amount of cash, cash equivalents, prepaid items, security deposits, other 91 97 receivables not included among the receivables that form the basis of the calculation of the Accounts Receivable Consideration allocable to such Person (including employee and affiliate receivables) and other current assets (other than current assets relating to trade or barter agreements to which such Person is a party and other than any reserve fund held back by Benchmark relating to the Norfolk Contracts, the rights to which fund may be assigned to any other party prior to Closing) of such Person as of 11:59 p.m. on the day immediately preceding the Closing Date. "Delaware Law" shall have the meaning set forth in the Recitals. "Dissenting Partner Funds" means the Benchmark Dissenting Partner Fund, the Fund I Dissenting Partner Fund, the Fund IV Dissenting Partner Fund, the Fund VII Dissenting Partner Fund and the Fund VIII Dissenting Partner Fund. "Dissenting Partner Reserves" means the Benchmark Dissenting Partner Reserve, the Fund I Dissenting Partner Reserve, the Fund IV Dissenting Partner Reserve, the Fund VII Dissenting Partner Reserve and the Fund VIII Dissenting Partner Reserve. "Dissenting Partnership Interests" means, collectively, the Benchmark Dissenting Partnership Interests, the Fund I Dissenting Partnership Interests, the Fund IV Dissenting Partnership Interests, the Fund VII Dissenting Partnership Interests and the Fund VIII Dissenting Partnership Interests. "Effective Time" shall have the meaning set forth in Section 1.2. "Election Date" shall have the meaning set forth in Section 8.1. "Employee Benefit Plans" shall have the meaning set forth in Section 2.1(p)(i). "Environmental Costs or Liabilities" shall have the meaning set forth in Section 2.1(m)(iv). "Environmental Laws" shall have the meaning set forth in Section 2.1(m). "Environmental Report" means a "Phase I Environmental Site Assessment" or a "Phase II Environmental Site Assessment" as referred to in the ASTM Standards on Environmental Site Assessments for Commercial Real Estate, E 1527-94, any correspondence from a Governmental Entity identifying Hazardous Substance contamination, or any other similar environmental report. "ERISA" shall have the meaning set forth in Section 2.1(p)(i). "ERISA Group" shall have the meaning set forth in Section 2.1(p)(i). "Event Date" shall have the meaning set forth in Section 8.1. "ESAs" shall have the meaning set forth in Section 3.3. "Escrow Agent" shall have the meaning set forth in Section 1.11. 92 98 "Exchange Agent" shall have the meaning set forth in Section 1.8(a). "Exchange Fund" shall have the meaning set forth in Section 1.8(a). "Existing Fund Partnership Agreements" means the Amended and Restated Certificate and Agreement of Limited Partnership of each of Fund I, Fund IV, Fund VII and Fund VIII, in each case as in effect immediately prior to the Effective Time. "Existing Partnership Agreement" means the Third Amended and Restated Agreement of Limited Partnership (as such agreement may be amended from time to time) of Benchmark in effect immediately prior to the Effective Time. "FCC" shall have the meaning set forth in Section 2.1(e). "Final Determination" shall have the meaning set forth in Section 1.11(b). "Final Order" means an order, action or decision of the FCC (without the inclusion of any material adverse conditions not customarily imposed with respect to such consents) that has not been reversed, stayed, enjoined, annulled or suspended and as to which (a) no timely request for stay, appeal, petition for reconsideration, application for review, or reconsideration by the FCC on its own motion is pending and (b) the time for filing any such request, appeal, petition or application, or for reconsideration by the FCC on its own motion has expired. "Financial Statements" shall have the meaning set forth in Section 2.1(f). "Fund I" means Benchmark Radio Acquisition Fund I Limited Partnership. "Fund I BCF Consideration" shall have the meaning set forth in the definition of Fund I Consideration. "Fund I Broadcast Cash Flow" means the aggregate revenues of Fund I and its subsidiaries during 1996 minus the aggregate operating expenses of Fund I and its subsidiaries during 1996, determined in accordance with GAAP, consistently applied, excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income taxes, (v) management fees and expenses payable to Benchmark, and (vi) legal fees and expenses allocable to Fund I incurred in connection with the transactions contemplated by this Agreement and the Other Benchmark Transactions. In calculating Fund I Broadcast Cash Flow, the expense of employee health insurance during 1996 shall be adjusted to reflect the rates in effect under Benchmark's current insurance program which went into effect on October 1, 1996 (which adjustment is expected to increase Fund I Broadcast Cash Flow by approximately $3,105). In addition, in calculating Fund I Broadcast Cash Flow, extraordinary gains and losses (determined in accordance with GAAP), gains and losses on sales of fixed assets and revenues and expenses under trade and barter agreements shall be excluded. "Fund I Consideration" means, subject to the adjustments set forth in Section 1.6(a), (i) Eleven Million Nine Hundred Thousand Dollars ($11,900,000) in cash (the "Fund I BCF Consideration"), (ii) minus the Funded Debt of Fund I paid in accordance with Section 1.8(e), plus 93 99 (iii) the Current Assets of Fund I, minus (iv) the Unfunded Debt of Fund I, minus (v) the Fund I Limited Partner Allocable Portion of the Residual Consideration. "Fund I Dissenting Partner Fund" means an amount equal to the portion of the Total Consideration that would have been allocable to the holders of Fund I Dissenting Partnership Interests if such holders had not exercised appraisal rights in the Fund I Merger with respect to such partnership interests under Maryland Law. "Fund I Dissenting Partner Reserve" means such amount as the General Partners shall reasonably determine is appropriate to cover any costs, expenses or liabilities that may be incurred with respect to holders of Fund I Dissenting Partnership Interests. "Fund I Dissenting Partnership Interests" shall have the meaning assigned to such term in the Fund I Merger Agreement. "Fund I Limited Partner Allocable Portion" shall have the meaning set forth in the Fund I Merger Agreement. "Fund I Limited Partners" means the limited partners of Fund I. "Fund I Merger" means the merger contemplated by the Fund I Merger Agreement. "Fund I Merger Agreement" means that certain Plan and Agreement of Merger, dated as of December 9, 1996 by and among Sub I, Fund I, Benchmark and Benchmark Holdings Co., Inc. "Fund I Merger Consideration" shall have the meaning assigned to such term in the Fund I Merger Agreement. "Fund I Post-Closing Escrow Deposit" means a deposit of Three Hundred Twenty Seven Thousand Two Hundred Fifty Dollars ($327,250), which shall constitute a portion of the Fund I Consideration deposited in escrow with the Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12. "Fund III" means Benchmark Radio Acquisition Fund III Limited Partnership. "Fund IV" means Benchmark Radio Acquisition Fund IV Limited Partnership. "Fund IV BCF Consideration" shall have the meaning set forth in the definition of Fund IV Consideration. "Fund IV BCF Stations" means radio stations WCOS(AM), Columbia, South Carolina, WCOS(FM), Columbia, South Carolina, WHKZ(FM), Cayce, South Carolina, WVOC(AM), Columbia, South Carolina and KRMD-AM/FM, Shreveport, Louisiana. "Fund IV Broadcast Cash Flow" means the aggregate revenues of the Fund IV BCF Stations during 1996 minus the aggregate operating expenses of the Fund IV BCF Stations during 1996 (regardless of whether such stations were owned by Benchmark or its subsidiaries, or any third 94 100 party, during such time period), determined in accordance with GAAP, consistently applied, excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income taxes, (v) management fees and expenses payable to Benchmark, (vi) total compensation payable to operations manager Gary Barboza in 1996 (having a base salary of $46,000), (vii) severance payable to Ron Antill (expected to be approximately $7,187), former program director at WCOS, (viii) prepaid television advertisement expenses incurred in 1995 and carried forward to 1996 (approximately $48,825), (ix) compensation paid with respect to John Crenshaw and the Country Heartlines show, which has been reallocated to Fund VII (expected to be approximately $7,000), (x) legal fees and expenses allocable to Fund IV incurred in connection with the transactions contemplated by this Agreement and the Other Benchmark Transactions, (xi) legal fees and expenses incurred in connection with the acquisition of KRMD-FM/AM, Shreveport, Louisiana, (xii) Shreveport Expenses and (xiii) WSCQ Expenses. In calculating Fund IV Broadcast Cash Flow, the expense of employee health insurance during 1996 shall be adjusted to reflect the rates in effect under Benchmark's current insurance program which went into effect on October 1, 1996 (which adjustment is expected to increase Fund IV Broadcast Cash Flow by $7,425), and expenses incurred in connection with Arbitron in the Columbia, South Carolina market shall be adjusted to reflect the expenses in effect under the current Arbitron agreement for the Columbia, South Carolina stations which went into effect on April 1, 1996 (which adjustment is expected to increase Fund IV Broadcast Cash Flow by approximately $7,351). In addition, in calculating Fund IV Broadcast Cash Flow, extraordinary gains and losses (determined in accordance with GAAP), gains and losses on sales of fixed assets and revenues and expenses under trade and barter agreements shall be excluded. In addition, Fund IV Broadcast Cash Flow shall be increased by approximately $68,700 to reflect that KRMD AM/FM will receive rental income from tenants at the stations' studio building at 3109 Alexander Boulevard in Shreveport, Louisiana, will no longer incur studio/office rental expense at such site and will no longer incur billboard rental expenses at the station's AM transmitter site. "Fund IV Consideration" means, subject to the adjustments described in Section 1.6(b) hereof, the sum of (i) Forty Million Eight Hundred Ninety Five Thousand Dollars ($40,895,000) in cash (the "Fund IV BCF Consideration"), (ii) minus the Funded Debt of Fund IV paid in accordance with Section 1.8(e) plus (iii) the Current Assets of Fund IV minus (iv) the Unfunded Debt of Fund IV plus (v) the WSCQ Expenses and the Shreveport Expenses, minus (vi) the Fund IV Limited Partner Allocable Portion of the Residual Consideration. "Fund IV Dissenting Partner Fund" means such amount equal the portion of the Total Consideration that would have been allocable to the holders of Fund IV Dissenting Partnership Interests if such holders had not exercised appraisal rights in the Fund IV Merger with respect to such partnership interests under Maryland Law. "Fund IV Dissenting Partner Reserve" means such amount as the General Partners shall reasonably determine is appropriate to cover any costs, expenses or liabilities that may be incurred with respect to holders of Fund IV Dissenting Partnership Interests. "Fund IV Dissenting Partnership Interests" shall have the meaning assigned to such term in the Fund IV Merger Agreement. 95 101 "Fund IV Expenses" means all expenses and costs incurred by Fund IV prior to the Closing Date in connection with the move, rebuilding and repair of the WSCQ-FM studios and offices. "Fund IV Limited Partner Allocable Portion" shall have the meaning set forth in the Fund IV Merger Agreement. "Fund IV Limited Partners" means the limited partners of Fund IV. "Fund IV Loan" means amounts borrowed under the Fund IV Loan Agreement. "Fund IV Loan Agreement" means that certain Credit Agreement (Fund IV) to be entered into between Fund IV and Parent in accordance with the terms of the side letter relating to such loan dated the date hereof between Parent and Benchmark. "Fund IV Merger" means the merger contemplated by the Fund IV Merger Agreement. "Fund IV Merger Agreement" means that certain Plan and Agreement of Merger, dated as of December 9, 1996 by and among Sub IV, Fund IV, Benchmark and Benchmark Holdings Co., Inc. "Fund IV Merger Consideration" shall have the meaning assigned to such term in the Fund IV Merger Agreement. "Fund IV Post-Closing Escrow Deposit" means a deposit of One Million One Hundred Twenty Four Thousand Six Hundred Dollars ($1,124,600), which shall constitute a portion of the Fund IV Consideration, deposited in escrow with the Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12.. "Fund VII" means Benchmark Radio Acquisition Fund VII Limited Partnership.. "Fund VII Consideration" means, subject to the adjustments described in Section 1.6(c) hereof, the sum of (i) Twenty Five Million Dollars ($25,000,000) in cash minus, (ii) amounts drawn under the Fund VII Loan and accrued and unpaid interest thereon, provided, that for purposes of this definition, interest shall be deemed to have accrued on the Fund VII Loan from the date of funding of the Fund VII Loan to the Closing Date at an annual rate equal to the Pass Through Rate (as defined in the Fund VII Loan Agreement), (iii) minus the Funded Debt of Fund VII paid in accordance with Section 1.8(e), plus (iv) the Current Assets of Fund VII minus (v) the Unfunded Debt of Fund VII, minus (vi) the Fund VII Limited Partner Allocable Portion of the Residual Consideration. "Fund VII Dissenting Partner Fund" means an amount equal to the portion of the Total Consideration that would have been allocable to the holders of Fund VII Dissenting Partnership Interests if such holders had not exercised appraisal rights in the Fund VII Merger with respect to such partnership interests under Maryland Law. 96 102 "Fund VII Dissenting Partner Reserve" means such amount as the General Partners shall reasonably determine is appropriate to cover any costs, expenses or liabilities that may be incurred with respect to holders of Fund VII Dissenting Partnership Interests. "Fund VII Dissenting Partnership Interests" shall have the meaning assigned to such term in the Fund VII Merger Agreement. "Fund VII Limited Partner Allocable Portion" shall have the meaning set forth in the Fund VII Merger Agreement. "Fund VII Limited Partners" means the limited partners of Fund VII. "Fund VII Loan" means amounts borrowed by Fund VII under the Fund VII Loan Agreement. "Fund VII Loan Agreement" means that certain Credit Agreement (Fund VII) dated the date hereof between Fund VII and Parent. "Fund VII Merger" means the merger contemplated by the Fund VII Merger Agreement. "Fund VII Merger Agreement" means that certain Plan and Agreement of Merger, dated as of December 9, 1996 by and among Sub VII, Fund VII, Benchmark and Benchmark Holdings Co., Inc. "Fund VII Merger Consideration" shall have the meaning assigned to such term in the Fund VII Merger Agreement. "Fund VII Post-Closing Escrow Deposit" means a deposit of Six Hundred Eighty Seven Thousand Five Hundred Dollars ($687,500), which shall constitute a portion of the Fund VII Consideration, deposited in escrow with the Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12. "Fund VIII" means Benchmark Radio Acquisition Fund VIII Limited Partnership. "Fund VIII BCF Calculation" shall have the meaning set forth in the definition of Fund VIII Broadcast Cash Flow. "Fund VIII BCF Consideration" shall have the meaning set forth in the definition of Fund VIII Consideration. "Fund VIII Broadcast Cash Flow" means the aggregate revenues of Fund VIII and its subsidiaries (excluding any revenues with respect to WROV-AM/FM serving Roanoke, Virginia) during 1996 minus the aggregate operating expenses of Fund VIII and its subsidiaries (excluding any expenses with respect to WROV-AM/FM serving Roanoke, Virginia) during 1996, determined in accordance with GAAP, consistently applied, excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income taxes, (v) management fees and expenses payable to 97 103 Benchmark, (vi) total compensation of disc jockey Steve Stroud in 1996 (having a base salary of $17,566), (vii) total compensation payable to Debbie Motley in 1996 (having a base salary of $16,369), (viii) total compensation payable to local sales manager Jim Colston in 1996 (expected to be approximately $8,000), (ix) total compensation of engineer Jeff Parker charged to WYYD (expected to be approximately $3,840), (x) total compensation of business manager Hazel Bryant charged to WYYD (approximately $13,800), (xi) compensation paid with respect to John Crenshaw and the Country Heartlines show charged to WYYD (expected to be approximately $19,750) and (xii) legal fees and expenses allocable to Fund VIII incurred in connection with the transactions contemplated by this Agreement and the Other Benchmark Transactions, (xiii) legal fees and expenses incurred in connection with new offices and studios in the Winchester, Virginia market and (xiv) legal fees and expenses relating to the operation and acquisition of WLNI. In calculating Fund VIII Broadcast Cash Flow, the expense of employee health insurance during 1996 shall be adjusted to reflect the rates in effect under Benchmark's current insurance program which went into effect on October 1, 1996 (which adjustment is expected to increase Fund VIII Broadcast Cash Flow by approximately $8,910), and the expense of the Winchester, Virginia operations relating to the compensation of engineer Jeff Parker shall be adjusted to reflect that the Winchester, Virginia operations will pay one-third (rather than 100%) of the total compensation for his services as regional engineer on a going-forward basis (which adjustment is expected to increase Fund VIII Broadcast Cash Flow by approximately $12,329). In addition, in calculating Fund VIII Broadcast Cash Flow, extraordinary gains and losses (determined in accordance with GAAP), gains and losses on sales of fixed assets and revenues and expenses under trade agreements shall be excluded. "Fund VIII Consideration" means, subject to the adjustments described in Section 1.6(d) hereof, the sum of (i) Twenty Nine Million Four Hundred Seventy Seven Thousand Five Hundred Dollars ($29,477,500) in cash (the "Fund VIII BCF Consideration"), (ii) minus the Funded Debt of Fund VIII paid pursuant to Section 1.8(e) plus (iii) the Current Assets of Fund VIII minus (iv) the Unfunded Debt of Fund VIII, minus the Fund VIII Limited Partner Allocable Portion of the Residual Consideration. "Fund VIII Dissenting Partner Fund" means an amount equal to the portion of the Total Consideration that would have been allocable to the holders of Fund VIII Dissenting Partnership Interests if such holders had not exercised appraisal rights in the Fund VIII Merger with respect to such partnership interests under Maryland Law. "Fund VIII Dissenting Partner Reserve" means such amount as the General Partners shall reasonably determine is appropriate to cover any costs, expenses or liabilities that may be incurred with respect to holders of Fund VIII Dissenting Partnership Interests. "Fund VIII Dissenting Partnership Interests" shall have the meaning assigned to such term in the Fund VIII Merger Agreement. "Fund VIII Expenses" means all expenses and costs incurred with respect to the new offices and studios for the Winchester operations and all expenses and costs relating to the operation and, if applicable, acquisition of WLNI. 98 104 "Fund VIII Limited Partner Allocable Portion" shall have the meaning set forth in the Fund VIII Merger Agreement. "Fund VIII Limited Partners" means the limited partners of Fund VIII. "Fund VIII Loan" means amounts borrowed by Fund VIII under the Fund VIII Loan Agreement. Fund VIII Loan Agreement" means that certain Credit Agreement (Fund VIII) to be entered into between Fund VIII and Parent in accordance with the terms of the side letter dated the date hereof relating to such loan between Parent and Benchmark. "Fund VIII Merger" means the merger contemplated by the Fund VIII Merger Agreement. "Fund VIII Merger Agreement" means that certain Plan and Agreement of Merger, dated as of December 9, 1996 by and among Sub VIII, Fund VIII, Benchmark and Benchmark Holdings Co., Inc. "Fund VIII Merger Consideration" shall have the meaning assigned to such term in the Fund VIII Merger Agreement. "Fund VIII Post-Closing Escrow Deposit" means a deposit of Eight Hundred Ten Thousand Six Hundred Dollars ($810,600) which shall constitute a portion of the Fund VIII Consideration, deposited in escrow with the Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12. "Fund IX" means Benchmark Radio Acquisition Fund IX Limited Partnership.. "Fund X" means Benchmark Radio Acquisition Fund X Limited Partnership.. "Fund XI" means Benchmark Radio Acquisition Fund XI Limited Partnership.. "Fund Employee Benefit Plans" shall have the meaning set forth in Section 2.3(p). "Fund ERISA Group" shall have the meaning set forth in Section 2.3(p). "Fund Limited Partners" shall have the meaning set forth in the Recitals. "Fund Limited Partnership Interests" means the Fund I Limited Partnership Interests, Fund IV Limited Partnership Interests, Fund VII Limited Partnership Interests and Fund VIII Limited Partnership Interests (in each case, as defined in the Other Benchmark Merger Agreements). "Fund Pension Plan" shall have the meaning set forth in Section 2.3(p). "Fund Stations" shall have the meaning set forth in Section 2.3(g). 99 105 "Fund Station License" shall have the meaning set forth in Section 2.3(g). "Funded Debt, with respect to a Person, means, without duplication, (i) all obligations of such Person and its subsidiaries for borrowed money, including, without limitation, all obligations for accrued and unpaid interest thereon and any pre-payment premiums or penalties (and associated expenses) with respect thereto, (ii) any capitalized lease obligations of such Person or any of its subsidiaries, (iii) all obligations of such Person or its subsidiaries for the payment of brokerage, legal, accounting, advisory and other similar fees and expenses (excluding the Alex. Brown Fee) arising in connection with the transactions contemplated hereby, (iv) any obligation of such Person or its subsidiaries under equity participation agreements or any similar appreciation or phantom equity plans or rights (including without limitation, amounts due to Chris Walus in connection with the consummation of the Merger, as described in Schedule 2.1(o)) and (v) any amounts due by such Person or its subsidiaries (including to the manager or general partner of such Person) for unpaid advances and unpaid management fees and expenses. Obligations of Benchmark under the letter agreement dated December 9, 1996 by and among Benchmark, Bruce R. Spector, Joseph L. Mathias IV, Venhill Limited Partnership and certain other parties shall be considered Funded Debt of Benchmark. For purposes of this definition, obligations of Benchmark (if any), Fund IV, Fund VII and Fund VIII under the Fund IV Loan Agreement , the Fund VII Loan Agreement or the Fund VIII Loan Agreement shall not be considered Funded Debt of Benchmark, Fund IV, Fund VII or Fund VIII, and obligations of Benchmark under the Parent Funded Debt Loan and the Parent Merger Loan shall not be considered Funded Debt of Benchmark. "Funded Debt Notice" shall have the meaning set forth in Section 1.8(d). "Funded Debt Payoff" shall have the meaning set forth in Section 1.8(d). "Funds" means Fund I, Fund IV, Fund VII, Fund VIII and the New Funds. "GAAP" means United States generally accepted accounting principles. "General Partner Related Party" shall mean (A) the estate or any legatee, heir or distributee upon death of a General Partner; (B) the spouse of any General Partner; (C) any parent or grandparent and any lineal descendant (including any adopted child) of any parent or grandparent of a General Partner or of such General Partner's spouse; (D) any guardian or custodian (including a custodian for purposes of the Uniform Gift to Minors Act or Uniform Transfers to Minors Act) for, or any executor, administrator, conservator or other legal representative of, a General Partner or any General Partner Related Party; (E) the trustee of a trust (including a voting trust), and any savings or retirement account, such as an individual retirement account for purposes of federal income tax laws, whether or not involving a trust, principally for the benefit of such General Partner and/or any General Partner Related Party (or Parties), including any trust in respect of which such General Partner Related Party or any General Partner Related Party has any general or special testamentary power of appointment or general or special non-testamentary power of appointment limited to any General Partner Related Party (or Parties) thereof; (F) any organization contributions to which are deductible for federal income, estate or gift tax purposes established by such General Partner and/or any General Partner Related Party (or Parties); and (G) any corporation, partnership or other business entity if all the beneficial ownership thereof is held by a General Partner and/or any General Partner Related Party (or Parties). 100 106 "General Partners" means each of the general partners of Benchmark. "General Partnership Interests" means the Partnership Interests of the General Partners. "Governmental Entity" shall have the meaning set forth in Section 2.1(e). "Hazardous Substances" shall have the meaning set forth in Section 2.1(m)(iv). "Holdback Funds" means the Post-Closing Escrow Deposits, the Reserve Funds, the Dissenting Partner Funds and the Dissenting Partner Reserves. "HSR Act" shall have the meaning set forth in Section 2.1(e). "Indemnified Costs" shall have the meaning set forth in Section 10.1(b)(i). "Indemnified Parties" shall have the meaning set forth in Section 10.1. "Indemnifying Party" shall have the meaning set forth in Section 10.1. "Initial Closing Balance Sheet" shall have the meaning set forth in section 1.6(f). "Initial Closing Certificate" shall have the meaning set forth in Section 1.6(g). "Initial Net Current Assets", with respect to a Person, shall be equal to the difference of Current Assets (as reflected on the Initial Closing Certificate) minus Unfunded Debt of such Person (as reflected on the Initial Closing Certificate). "Intellectual Rights" shall have the meaning set forth in Section 2.1(q). "Intentional Benchmark Default" means (i) an intentional or willful act voluntarily taken by Benchmark, the General Partners or the Funds that gives rise to a right of Mergeco to terminate this Agreement (other than pursuant to Section 9.1(c)(v)), the purpose of which act is to materially breach the terms of this Agreement and to induce Mergeco to exercise its termination rights under this Agreement, (ii) a material breach by Benchmark, the General Partners or the Funds of a covenant to this Agreement, which breach is (a) capable of being cured within the Cure Period with commercially reasonable efforts and (b) not cured within such Cure Period (which Cure Period shall commence upon receipt by Benchmark of written notice of such breach from Mergeco), (iii) a material breach by Benchmark, the General Partners or the Funds of a covenant to this Agreement, which breach (a) is not capable of being cured within the Cure Period with commercially reasonable efforts and (b) would reasonably be expected to result in a Material Adverse Effect, or (iv) prior to the termination of this Agreement, the withdrawal by the General Partners or Benchmark of their recommendations of this Agreement or any Other Benchmark Merger Agreement under circumstances not permitted by this Agreement. For purposes of clause (iii) of this definition, a Material Adverse Effect shall be deemed to include any material adverse effect that would result in damages to the Surviving Partnership or its subsidiaries in excess of the Material Adverse Effect Threshold. 101 107 "Interest Letter of Credit" shall have the meaning set forth in Section 1.11. "Jackson Acquisition Expenses" means all expenses incurred by Benchmark or Fund X in connection with the acquisition of the Jackson Stations other than (i) expenses incurred on or prior to the execution date of the Jackson Agreement or (ii) brokerage fees relating to the acquisition of the Jackson Stations. "Jackson Attributable Liquidated Damages" shall have the meaning assigned to such term as Section 9.3(c). "Jackson Agreement" means that certain Purchase Agreement by and between CLG Media of Jackson, Inc. (as Seller), Benchmark Radio Acquisition Fund X Limited Partnership (as Buyer) and Chrysler Capital Corporation (as Seller Guarantor) dated as of September 9, 1996. "Jackson Broadcast Cash Flow" means the aggregate revenues of the Jackson Stations during 1996 minus the aggregate operating expenses of the Jackson Stations during 1996 (regardless of whether such stations were owned by Benchmark or its subsidiaries, or any third parties, during such period of time), determined in accordance with GAAP, consistently applied, excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income taxes, (v) management and corporate fees and expenses incurred by the Jackson Stations prior to the date of acquisition of such stations by Fund X, (vi) legal fees and other expenses incurred by the seller of the Jackson Stations in connection with the Jackson Agreement and the transactions contemplated thereby, and (vii) legal fees and expenses allocable to Benchmark incurred in connection with the transactions contemplated by this Agreement, the Other Benchmark Transactions and the Jackson Agreement. "Jackson Consideration" means an amount equal to the sum of (i) Fourteen Million Nine Hundred Ninety Seven Thousand Five Hundred Dollars ($14,997,500), plus (ii) expenses relating to the acquisition of the Jackson Stations incurred by Benchmark or Fund X prior to the execution of the Jackson Agreement, plus (iii) any brokerage fee paid by Benchmark or Fund X relating to the acquisition of the Jackson Stations. "Jackson Loan" means amounts borrowed by Fund X under the Jackson Loan Agreement. "Jackson Loan Agreement" means that certain Credit Agreement (Jackson) dated the date hereof between Fund X and Parent. "Jackson Stations" means WJMI-FM, WKXI(AM), WOAD-AM, Jackson, Mississippi, and WKXI(FM), Magee, Mississippi. "Leased Real Property" shall have the meaning set forth in Section 2.1(j). "Letter of Credit" shall have the meaning set forth in Section 1.11. "License Agreement" means the License Agreement substantially in the form of Exhibit 9 hereto. 102 108 "Liens" shall have the meaning set forth in Section 2.1(l). "Limited Partners" shall have the meaning set forth in the Recitals. "Limited Partners" means each of the limited partners of Benchmark. "Limited Partner Percentage" shall have the meaning set forth in Section 2.3(s). "Limited Partnership Interests" means the Partnership Interests of the Limited Partners. "Loan Agreements" means the Jackson Loan Agreement, the Statesville Loan Agreement, the Montgomery Loan Agreement, the Fund IV Loan Agreement, the Fund VII Loan Agreement and the Fund VIII Loan Agreement. "Maryland Law" shall have the meaning set forth in the Recitals. "Material Adverse Effect" shall mean (i) with respect to Benchmark and its subsidiaries, a material adverse effect on the business, operations, properties, condition (financial or otherwise), results of operations, assets or liabilities (other than liabilities that will be repaid in the Funded Debt Payoff or which will be reflected on the Closing Balance Sheet and result in a corresponding adjustment to the Total Consideration pursuant to this Agreement) of Benchmark and its subsidiaries taken as a whole and (ii) with respect to the Surviving Partnership, a material adverse effect or the business, operations, properties, condition (financial or otherwise), results of operations, assets or liabilities (other than liabilities that will be repaid in the Funded Debt Payoff or which will be reflected on the Closing Balance Sheet and result in a corresponding adjustment to the Total Consideration pursuant to this Agreement) of the Surviving Partnership and its subsidiaries taken as whole; provided, in each case, that effects of any events, circumstances or conditions resulting from changes, developments or circumstances in worldwide or national conditions (political, economic, or regulatory) that adversely affect generally the markets where any of the Stations are operated or affect generally the broadcasting business, or adversely affect a broad group of industries generally shall not constitute a Material Adverse Effect. "Material Adverse Effect Threshold" shall mean an amount equal to the sum of Four Million Five Hundred Thousand Dollars ($4,500,000) plus any amounts by which Benchmark or its subsidiaries supplement the Post-Closing Escrow Deposits pursuant to Section 1.12 after the date hereof. "Mathias Employment Agreement" means an employment agreement to be entered into at Closing in the form of Exhibit 10 hereto between Joseph L. Mathias IV and the Surviving Partnership. "Mergeco" means Benchmark Acquisition, Inc. "Mergeco Affiliated Businesses" shall have the meaning set forth in Section 2.2e. 103 109 "Mergeco Common Stock" shall have the meaning set forth in Section 1.5(c). "Merger" shall have the meaning set forth in the Recitals. "Merger Consideration" means, with respect to a holder of a Converted Partnership Interest, the portion of the Total Consideration that such holder of a Converted Partnership Interest would have been entitled to receive (as calculated by the General Partners) pursuant to the Existing Partnership Agreement in the event: (i) the Benchmark Consideration, the Fund I Consideration, the Fund IV Consideration, the Fund VII Consideration and the Fund VIII Consideration had been received by Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, respectively, in a Sale (as defined in the Existing Partnership Agreement or the applicable Existing Fund Partnership Agreement) of all of the assets and liabilities of Benchmark, Fund I, Fund IV, Fund VII, and Fund VIII, respectively, and (ii) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII had been liquidated immediately subsequent to such Sale, in each case, without making a positive capital account adjustment for the contribution by Benchmark to the capital of Fund I, Fund IV, Fund VII, Fund VIII, Sub I, Sub IV, Sub VII or Sub VIII, as applicable of the proceeds of the Parent Funded Debt Loan or the Parent Merger Loan, as applicable. After the Closing, the aggregate Merger Consideration payable to holders of Converted Partnership Interests shall be (i) increased by the amount (if any) of the Benchmark Allocable Portions of the Dissenting Partner Funds not expended in connection with claims of holders of Dissenting Partnership Interests and (ii) decreased by the amount (if any) of the Benchmark Allocable Portion of the Dissenting Partner Reserves expended in connection with claims of holders of Dissenting Partnership Interests made in accordance with Maryland Law. "Minimum Damage Amount" shall have the meaning set forth in Section 10.1(f). "Montgomery Acquisition Expenses" means all expenses incurred by Benchmark or Fund XI in connection with the acquisition of the Montgomery Stations other than any such expenses incurred on or before the execution date of the Montgomery Agreement. Montgomery Acquisition Expenses shall include, without limitation, all amounts payable, not to exceed One Million Nine Hundred Thousand Dollars ($1,900,000), under the Montgomery Agreement in connection with the acquisition of WDHT(FM), Luverne, Alabama. "Montgomery Agreement" means that certain Purchase Agreement by and between Capital Communications (as Seller), Benchmark Radio Acquisition Fund XI Limited Partnership (as Buyer) and Ronald Eubanks (as Guarantor) dated November 4, 1996. "Montgomery Attributable Liquidated Damages" shall have the meaning assigned to such term in Section 9.3(b). "Montgomery Broadcast Cash Flow" means Broadcast Cash Flow (as such term is defined in the Montgomery Agreement). "Montgomery Consideration" means an amount equal (i) the product of ten (10) multiplied by Montgomery Broadcast Cash Flow, plus (ii) expenses relating to the acquisition of the Montgomery Stations incurred by Benchmark or Fund XI prior to the execution of the Montgomery 104 110 Agreement, plus (iii) any brokerage fee paid by Benchmark or Fund XI relating to the acquisition of the Montgomery Stations. "Montgomery Loan" means amounts borrowed by Fund XI under the Montgomery Loan Agreement. "Montgomery Loan Agreement" means that certain Credit Agreement (Montgomery) dated the date hereof between Fund XI and Parent. "Montgomery Stations" means WZHT-FM, Troy, Alabama, WMCZ-FM, Millbrook, Alabama and WDHT-FM, Luverne, Alabama. "NPL" shall have the meaning set forth in Section 2.1(m)(vi). "New Funds" means Fund IX, Fund X and Fund XI. "New Shreveport Station" means the new FM station serving Shreveport, Louisiana on Channel 275C2. "Norfolk Contracts" means (i) the Purchase Agreement dated May 13, 1996 among Benchmark Radio Acquisition Fund IV Limited Partnership, WKOC License Limited Partnership, and Sinclair Telecable d/b/a Sinclair Communications and (ii) the Purchase Agreement dated as of May 20, 1996 between Benchmark Radio Acquisition Fund IV Limited Partnership and Susquehanna Radio Corp. "Notice Period" shall have the meaning set forth in Section 10.1. "Other Benchmark Mergers" means the mergers contemplated by the Other Benchmark Merger Agreements. "Other Benchmark Merger Agreements" means the Fund I Merger Agreement, the Fund IV Merger Agreement, the Fund VII Merger Agreement and the Fund VIII Merger Agreement. "Other Benchmark Transactions" means (i) each of the Other Benchmark Mergers, (ii) the Stock Purchase Agreements, (iii) the Limited Partnership Interests Purchase Agreement, (iv) the Parent-Radioco III, Inc. Merger Agreement, (v) the New Fund Assignments of Partnership and (vi) the Guaranty Agreement (Individuals) of Bruce R. Spector and Joseph L. Mathias IV in favor of Mergeco dated the date hereof. "Owned Real Property" shall have the meaning set forth in Section 2.1(j). "Parent" shall mean BCR Holding, Inc. "Parent Funded Debt Loan" means a loan to Benchmark from Parent evidenced by a promissory note in an amount equal to (i) the Funded Debt of Benchmark, plus (ii) the Funded Debt 105 111 of Fund I, plus (iii) the Funded Debt of Fund IV, plus (iv) the Funded Debt of Fund VII, plus (v) the Funded Debt of Fund VIII. "Parent Merger Loan" means a loan to Benchmark from Parent evidenced by a promissory note in an amount equal to the sum of (i) the aggregate Fund I Merger Consideration to be paid to holders of Fund I Converted Partnership Interests in the Fund I Merger plus (ii) the aggregate Fund IV Merger Consideration to be paid to holders of Fund IV Converted Partnership Interests in the Fund IV Merger plus (iii) the aggregate Fund VII Merger Consideration to be paid to holders of Fund VII Converted Partnership Interests in the Fund VII Merger plus (iv) the aggregate Fund VIII Merger Consideration to be paid to holders of Fund VIII Converted Partnership Interests in the Fund VIII Merger plus (v) the amount of Dissenting Partner Funds (other than the Benchmark Dissenting Partner Fund). "Parent-Radioco III, Inc. Merger Agreement" means that certain Agreement and Plan of Merger dated December 9, 1996 by and among BCR Holding, Inc., Radioco III, Inc. and Joseph L. Mathias IV. "Partner Representatives" shall have the meaning set forth in Section 1.12. "Partners" means, collectively, the General Partners and the Limited Partners. "Partnership Interest" means, with respect to a Partner, the entire percentage ownership interest of such Partner in Benchmark as set forth on the books and records of Benchmark (which may be segmented into and/or expressed as a percentage of various rights and/or liabilities), including the right of such Partner to any and all benefits to which a Partner may be entitled as provided in the Existing Partnership Agreement and under Maryland Law, together with the obligations of such Partner to comply with all the terms and provisions of the Existing Partnership Agreement and under Maryland Law. "Pass Through Rate" shall have the meaning assigned to such term in the Loan Agreements. "Pension Plan" shall have the meaning set forth in Section 2.1(p). "Permits" shall have the meaning set forth in Section 2.1(m)(iii). "Permitted Liens" shall have the meaning set forth in Section 2.1(1). "Person" means an individual, corporation, limited liability company, partnership, limited partnership, syndicate, person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association or other legal entity or government, political subdivision, agency or instrumentality of a government. "Post-Closing Escrow Agreement" shall have the meaning set forth in Section 1.12(a). 106 112 "Post-Closing Escrow Deposits" means the Fund I Post-Closing Escrow Deposit, the Fund IV Post-Closing Escrow Deposit, the Fund VII Post-Closing Escrow Deposit, the Fund VIII Post-Closing Escrow Deposit, and, in each case, any supplemental deposits to such Post-Closing Escrow Deposits made pursuant to Section 1.12. "Pre-Closing Escrow Agreement" shall have the meaning set forth in Section 1.11. "Pre-Closing, Escrow Deposit" shall have the meaning set forth in Section 1.11. "Referee" shall have the meaning set forth in Section 1.6(i). "Release" means a release in the form of Exhibit 11 hereto. "Releasing Parties" shall have the meaning set forth in Section 9.3(a). "Released Parties" shall have the meaning set forth in Section 9.3. "Required Remediation" means any response or remedial action required to be performed by the Surviving Partnership Indemnified Parties under any applicable Environmental Law that is (i) related to any release of Hazardous Substances in connection with any activity occurring on the Owned Real Property or the Leased Real Property owned or leased by the applicable Fund (including any off-site release resulting from any such activity) and (ii) identified in an Environmental Report as being so required "Reserve Fund Escrow Deposit" shall have the meaning set forth in Section 1.13. "Reserve Funds" means the reserve funds of each of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, equaling 75,000 for Fund I, $175,000 for Fund IV, $75,000 for Fund VII, $175,000 for Fund VIII and $50,000 for Benchmark, which funds shall be deposited in escrow with the Post-Closing Escrow Agent and distributed as set forth in Section 1.13. The reserve funds shall constitute a portion of the Benchmark Consideration, the Fund I Consideration, the Fund IV Consideration, the Fund VII Consideration and the Fund VIII Consideration, as applicable. "Residual Consideration means an amount equal to the amount of the Alex. Brown Fee minus Two Hundred Fifty Five Thousand Dollars ($255,000) plus the amount of interest that would have accrued beginning on the date hereof on a loan of One Hundred Thousand Dollars ($100,000) at the Pass Through Rate (as defined in the Loan Agreements). "Richmond Contracts" means the Asset Purchase Agreement dated as of May 31, 1996 by and between Benchmark Radio Acquisition Fund III Limited Partnership, WVGO License Limited Partnership, WDCK License Limited Partnership and ABS Communications Incorporated. "Rules of Arbitration" shall have the meaning set forth in Section 10.19(b). "Sellers" shall have the meaning set forth in Section 1.11(a). "Sellers' Representative" shall have the meaning set forth in Section 1.11. 107 113 "Selling Stockholders" means the holders of the capital stock of Radioco I, Inc., Radioco II, Inc. and Radioco III, Inc. "Shreveport Expenses" means all expenses and costs incurred by Fund IV prior to the date of closing, in connection with the acquisition, construction, development and operation of the New Shreveport Station (including, without limitation, all payments made by Fund IV pursuant to the Shreveport Master Agreement, professional fees, pre-acquisition costs, taxes, filing fees, due diligence costs, moving expenses and other reasonable costs), plus all operating losses of Fund IV associated with the New Shreveport Station commencing with the date that Fund IV begins to provide programming to such new station pursuant to a time brokerage arrangement. "Shreveport Master Agreement" means the Agreement dated September 19, 1996 by and among Fund IV, Port City Communications, L.P., Caddo Broadcasting Limited Partnership, Innovative Women's Media Association, NTW, Inc. and Larry English. "Statesville Acquisition Expenses" means all expenses incurred by Benchmark or Fund IX in connection with the acquisition of the Statesville Stations other than any such expenses incurred on or before the execution date of the Statesville Agreement. "Statesville Agreement" means that certain Purchase Agreement by and between Adventure Communications, Inc. (as Seller), Benchmark Radio Acquisition Fund IX Limited Partnership (as Buyer), Michael R. Shott (as Seller Guarantor) and Benchmark Communications Radio Limited Partnership (as Buyer Guarantor) dated as of May 1, 1996. "Statesville Attributable Liquidated Damages" shall have the meaning assigned to such term in Section 9.3(c). "Statesville Broadcast Cash Flow" means the aggregate revenues of the Statesville Stations during 1996 minus the aggregate operating expenses of the Statesville Stations during 1996 (regardless of whether such stations were owned by Benchmark or its subsidiaries, or any third parties, during such period of time), determined in accordance with GAAP, consistently applied, excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income taxes, (v) management fees and expenses paid to Adventure Communications or its affiliates and (vi) reimbursements to Adventure Communications for travel and meal expenses (expected to be approximately $1,161 at September 30, 1996), (vi) litigation expenses relating to the WFMX tower and guy wire lease (expected to be approximately $5,063 at September 30, 1996) and (vii) legal fees and other expenses of the seller of the Statesville Stations incurred in connection with the Statesville Agreement and the transactions contemplated thereby and (vi) legal fees and expenses allocable to Benchmark or Fund IX incurred in connection with the transactions contemplated by this Agreement and consummation of the transactions contemplated by the Statesville Agreement. "Statesville Consideration" means an amount equal (i) Nine Million Six Hundred Thousand Dollars ($9,600,000), plus (ii) expenses relating to the acquisition of the Statesville Stations incurred by Benchmark or Fund IX prior to the execution of the Statesville Agreement plus (iii) any brokerage fees paid by Benchmark or Fund IX relating to the acquisition of the Statesville Stations. 108 114 "Statesville Loan" means amounts borrowed by Fund IX under the Statesville Loan Agreement. "Statesville Loan Agreement" means that certain Credit Agreement (Statesville) dated the date hereof between Fund XI and Parent. "Statesville Stations" means WSIC(AM) and WFMX-FM, serving Statesville, North Carolina. "Station Event" shall have the meaning set forth in Section 8.1. "Station Licenses" shall have the meaning set forth in Section 2.1(g)(ii). "Station Management" shall have the meaning set forth in Section 3.1(b). "Stations" means the radio broadcast stations operated by Benchmark and its subsidiaries on the date hereof and, upon consummation of the acquisition of any additional stations after the date hereof shall include such additional stations. "Stock Purchase Agreements" means that certain Stock Purchase Agreement dated December 9, 1996 by and among Parent, Home Run Radio Limited Partnership and Radioco I, Inc. and that certain Stock Purchase Agreement dated December 9, 1996 by and among Parent, Grand Slam Radio Limited Partnership and Radioco II, Inc. "subsidiary" or "subsidiaries" of any person means any corporation, partnership, joint venture or other legal entity of which such person (either alone or through or together with any other subsidiary) is the direct or indirect general partner or owns or has rights to acquire, directly or indirectly, 50% or more of the capital stock or other equity interests the holders of which are generally entitled to vote for the election of, or are themselves, the board of directors, general partners or other governing body of such corporation, partnership or other legal entity. Unless indicated to the contrary in this Agreement, for purposes of this Agreement, Fund I, Fund IV, Fund VII, Fund VIII, Fund IX, Fund X and Fund XI and their direct or indirect subsidiaries shall be considered subsidiaries of Benchmark, and Fund III and its subsidiaries shall be deemed not to be subsidiaries of Benchmark. "Sub I" shall have the meaning set forth in the Recitals. "Sub IV" shall have the meaning set forth in the Recitals. "Sub VII" shall have the meaning set forth in the Recitals. "Sub VIII" shall have the meaning set forth in the Recitals. "Surviving Partnership" shall have the meaning set forth in Section 1.1. "Surviving Partnership Indemnified Parties" shall have the meaning set forth in Section 10.1(b). 109 115 "Tax Returns" shall have the meaning set forth in Section 2.1(n). "third-party action" shall have the meaning set forth in Section 10.1(d). "Total Consideration" means, subject to the adjustments described in Section 1.6 hereof, (i) the sum of the Fund I Consideration, the Fund IV Consideration, the Fund VII Consideration, the Fund VIII Consideration and the Benchmark Consideration minus the Residual Consideration. "Trading Event" shall have the meaning set forth in Section 8.1. "Transaction Documents" shall have the meaning set forth in Section 2.1(d). "Unfunded Debt" of a Person means the aggregate current liabilities (other than any liabilities attributable to Funded Debt and any liabilities of such Person under trade or barter agreements to which such Person is a party) and the aggregate principal amount of indebtedness (including any pre-payment premiums or penalties) of such Person and its subsidiaries that remains unpaid as of 11:59 p.m. on the day immediately preceding the Closing Date (but giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)). For purposes of this definition, obligations of Fund IV, Fund VII or Fund VIII under the Fund IV Loan, the Fund VII Loan and the Fund VIII Loan shall not be considered Unfunded Debt of Fund IV, Fund VIII or Benchmark, and obligations of Benchmark under the Parent Funded Debt Loan or the Parent Merger Loan shall not be considered Unfunded Debt of Benchmark. "Unlimited Claims" shall have the meaning set forth in Section 10.1. "Voting Debt" shall have the meaning set forth in Section 2.1(c). "WSCQ Expenses" means all expenses incurred by Fund IV to the date of Closing in connection with the acquisition of WSCQ-FM, Columbia, South Carolina (including, without limitation, professional fees, preacquisition costs, taxes, filing fees, due diligence costs, moving expenses and other reasonable costs, but excluding the purchase price for the capital stock of Congaree Broadcasters, Inc.) plus all operating losses associated with WSCQ-FM incurred by Fund IV after the date of acquisition. 110 116 IN WITNESS WHEREOF, Mergeco, Benchmark, Fund I, Fund IV, Fund VII, Fund VIII, Partner Representatives and the General Partners, the Selling Stockholders, Parent and Capstar have caused this Agreement to be signed, all as of the date first written above. MERGECO: BENCHMARK ACQUISITION, INC. -------------------------------------------------- By: ---------------------------------------------- Its: ---------------------------------------------- BENCHMARK: BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP By: ---------------------------------------------- Its: ---------------------------------------------- FUND I: BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP By: BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP By: ---------------------------------------------- Its: ---------------------------------------------- 111 117 FUND IV: BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP By: BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP By: --------------------------------------------- Its: --------------------------------------------- FUND VII: BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP By: BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP By: --------------------------------------------- Its: --------------------------------------------- FUND VIII: BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP By: BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP By: --------------------------------------------- Its: --------------------------------------------- 112 118 PARTNER REPRESENTATIVES AND GENERAL PARTNERS -------------------------------------------- Bruce R. Spector -------------------------------------------- Joseph L. Mathias SELLING STOCKHOLDERS: HOME RUN RADIO LIMITED PARTNERSHIP By: HR Radio Corporation Its: General Partner By: ------------------------------------ Name: Bruce R. Spector Its: General Partner GRAND SLAM RADIO LIMITED PARTNERSHIP By: ------------------------------------ Name: Michael Mathias Its: General Partner 113 119 PARENT: BCR HOLDING, INC. By: --------------------------------------- Its: --------------------------------------- CAPSTAR: CAPSTAR BROADCASTING PARTNERS, INC. By: --------------------------------------- Its: --------------------------------------- 114 120 SCHEDULES AND EXHIBITS Schedule 2.1(b) Benchmark Subsidiaries Schedule 2.1(c) Capital Structure Schedule 2.1(f) Financial Statements Schedule 2.1(g) Station Licenses and FCC Matters Schedule 2.1(h) Litigation and Pending Investigations Schedule 2.1(i) Insurance Schedule 2.1(j) Real Property Schedule 2.1(l) Liens and Encumbrances Schedule 2.1(m) Environmental Matters Schedule 2.1(n) Tax Matters Schedule 2.1(o) Certain Agreements Schedule 2.1(p) Employee Benefit Plans Schedule 2.1(r) Affiliate Relationships Schedule 2.1(u) Pending Acquisitions Schedule 2.2(e) Media Properties Schedule 3.1(j) Permitted Transactions Schedule 3.1(p) Business Agreements Schedule 10.1(f) Minimum Damage Amounts Exhibit 1 Letter of Credit Exhibit 2 Pre-Closing Escrow Agreement Exhibit 3 Post-Closing Escrow Agreement Exhibit 4 New Fund Assignment of Partnership Interests Exhibit 5 Form of Promissory Note Exhibit 6 Form of Opinion of Counsel to Benchmark Exhibit 7 Form of Opinion of Counsel to Mergeco Exhibit 8 Intentionally Left Blank Exhibit 9 License Agreement Exhibit 10 Mathias Employment Agreement Exhibit 11 Form of Release EX-10.1.2 5 LETTER AGREEMENT AMENDING BENCHMARK MERGER AGRMT 1 EXHIBIT 10.1.2 January 9, 1997 Benchmark Acquisition, Inc. c/o 1325 Avenue of the Americas, 25th Floor New York, NY 10019 Attn: Lawrence D. Stuart, Jr. Re: Agreement and Plan of Merger by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited Partnership, Joseph L. Mathias, Bruce R. Spector, Capstar Broadcasting Partners, Inc. and BCR Holding, Inc. dated as of December 9, 1996. Dear Larry: Reference is made to the above-referenced Agreement and Plan of Merger (the "Merger Agreement"). This letter when signed by each of us and the other parties to the Merger Agreement will memorialize our agreement with respect to the matters set forth herein. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. To simplify the transactions contemplated by the Merger Agreement, the parties have agreed that on the Closing Date prior to the Effective Time of the Merger and the Other Benchmark Mergers, Bruce R. Spector will assign his limited partnership interest in Fund IX, Fund X and Fund XI to Benchmark Holdings, Inc., a wholly owned subsidiary of Benchmark pursuant to an Assignments of Partnership Interest in the form of Exhibit A hereto. As a result of these assignments, Benchmark will, prior to and at the Effective Time of the Merger, directly or indirectly be the record holder of 100% of the partnership interests in each of Fund IX, Fund X and Fund XI. The parties agree that the definition of Assignment of New Fund Partnership Interests contained in the Merger Agreement shall mean the above referenced Assignments of Partnership Interest (rather than the forms of Assignments of Partnership Interests attached as Exhibit 4 to the Merger Agreement). 2 Please countersign this letter below to indicate your agreement with respect to the matters set forth herein. BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP /s/ BRUCE R, SPECTOR ---------------------------------- By: Bruce R. Spector Its: General Partner Agreed to and Accepted, BENCHMARK ACQUISITION, INC. /s/ PETER BRODSKY - --------------------------------- By: Its: 2 3 The undersigned parties hereby agree to the terms of this letter agreement, as of the date first written above. BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR --------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR --------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR --------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR --------------------------------------- By: Bruce R. Spector Its: General Partner /s/ BRUCE R. SPECTOR --------------------------------------- Bruce R. Spector /s/ JOSEPH L. MATHIAS --------------------------------------- Joseph L. Mathias IV 3 4 HOME RUN RADIO LIMITED PARTNERSHIP By: HR Radio Corporation Its: General Partner /s/ BRUCE R. SPECTOR --------------------------------------- By: Bruce R. Spector Its: President GRAND SLAM RADIO LIMITED PARTNERSHIP /s/ MICHAEL MATHIAS --------------------------------------- By: Michael Mathias Its: General Partner BCR HOLDING, INC. /s/ PETER S. BRODSKY --------------------------------------- By: Peter S. Brodsky Its: CAPSTAR BROADCASTING PARTNERS, INC. /s/ PETER S. BRODSKY --------------------------------------- By: Peter S. Brodsky Its: 4 5 EXHIBIT A 5 6 ASSIGNMENT OF PARTNERSHIP INTEREST THIS ASSIGNMENT is made as of _______________, 1997 by BRUCE R. SPECTOR, (the "Assignor"), in favor of BENCHMARK HOLDINGS CO., INC., a Delaware corporation (the "Assignee"). RECITALS WHEREAS, Benchmark Communications Radio Limited Partnership, certain affiliates thereof, Benchmark Acquisition, Inc., certain affiliates thereof and Assignor have entered into that certain Agreement and Plan of Merger dated December 9, 1996 (the "Merger Agreement"); and WHEREAS, to induce Benchmark Acquisition, Inc. to consummate the Merger Agreement, Assignor has agreed to assign its Class A Limited Partnership Interest (the "Assigned Interest") in the Benchmark Radio Acquisition Fund IX Limited Partnership (the "Partnership") to Benchmark Holdings Co., Inc. NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Assignment. Assignor assigns and grants to Assignee all of its right, title and interest in and to the Assigned Interest. 2. Representations, Warranties and Covenants of Assignee. Assignee represents, warrants and covenants as follows: (a) Good Standing. Assignee is a corporation, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation and has the corporate power to own its property and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary. (b) Corporate Authority. Assignee has full power and authority to enter into and to perform its obligations under this Assignment, all of which have been duly authorized by all proper and necessary corporate action. No consent or approval of shareholders of, or lenders to, Assignee and no consent, approval, filing or registration with or notice to any governmental authority on the part of the Assignee is required as a condition to the validity of this Assignment or the performance by the Assignee of their obligations under this Agreement. (c) Binding Agreement. This Assignment constitutes the valid and legally binding agreement of Assignee and is enforceable against Assignee in accordance with its terms. (d) No Conflicts. There is no statute, regulation, rule, order or judgment, no provision of Assignee's articles of incorporation, by-laws or other governing documents, and no provision of any mortgage, indenture, contract or other agreement binding on the Assignee or 7 affecting their properties, which would prohibit, or cause a default under or in any way prevent the execution, delivery, or performance of the terms of this Assignment. (e) Assignee will not encumber the Assigned Interest or execute any financing statement or security agreement in respect of the Assigned Interest. (f) Assignee will not sell, assign, contract for sale or otherwise dispose of any of the Assigned Interest other than to re-assign the Assigned Interest pursuant hereto, unless the other party to such disposition agrees in writing to be bond by the terms of this Agreement for the benefit of Assignor. 3. Representations, Warranties and Covenants of Assignor. Assignor represents and warrants to Assignee as follows: (a) Partnership Authority. Assignor has full power and authority to enter into and to perform its obligations under this Assignment. No consent or approval of lenders to, Assignor and no consent, approval, filing or registration with or notice to any governmental authority on the part of Assignor is required as a condition to the validity of this Assignment or the performance by Assignor of their obligations under this Assignment. (b) Binding Agreement. This Assignment constitutes the valid and legally binding agreement of Assignor and is enforceable against Assignor in accordance with its terms. (c) No Conflicts. There is no statute, regulation, rule, order or judgment, no provision of Assignor's partnership agreements or certificates, and no provision of any mortgage, indenture, contract or other agreement binding on the Assignor or affecting their properties, which would prohibit, or cause a default under or in any way prevent the execution, delivery, or carrying out of the terms of this Assignment. 4. Assignment. No party may assign its rights or obligations hereunder without the prior written consent of the other party; provided, however, (a) upon notice to Assignor and without releasing Assignee from any of its obligations or liabilities hereunder, Assignee may assign or delegate any or all of its rights or obligations under this Agreement to any affiliate thereof, and (b) nothing in this Agreement shall limit Assignee's ability to make a collateral assignment of its rights under this Agreement to any institutional lender that provides funds to Assignee without the consent of Assignor. Assignor shall execute an acknowledgment of such assignment(s) and collateral assignments in such forms as Assignee or its institutional lenders may from time to time reasonably request; provided, however, that unless written notice is given to Assignor that any such collateral assignment has been foreclosed upon, Assignor shall be entitled to deal exclusively with Assignee as to any matters arising under this Agreement or any of the other Agreements delivered pursuant thereto. Subject to the foregoing, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors and assignees. 5. Consent. Assignor and Benchmark hereby consent to this Assignment for purposes of Section 6.01(a)(1) of the Partnership Agreement. 2 8 6. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and referenced herein, supersede and terminate any prior agreements between the parties (written or oral). This Agreement may not be altered or amended except by an instrument in writing signed by the parties hereto. 7. Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures on each such counterpart were on the same instrument. 8. Construction. The Section headings of this Agreement are for convenience only and in no way modify, interpret or construe the meaning of specific provisions of the Agreement. 9. Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to the choice of law rules utilized in that jurisdiction. 10. Severability. If any one or more of the provisions contained in this Agreement should be found invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. Any illegal or unenforceable term shall be deemed to be void and of no force and effect only to the minimum extent necessary to bring such term within the provisions of applicable law and such term, as so modified, and the balance of this Agreement shall then be fully enforceable. 3 9 IN WITNESS WHEREOF, this Agreement has been executed by duly authorized officers or partners of each of the parties hereto as of the day and year above first written. BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP (for purposes of Section 5 only) ----------------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK HOLDING CO., INC. ----------------------------------------------- By: Its: ----------------------------------------------- Bruce R. Spector 4 EX-10.1.3 6 LETTER AGREEMENT AMENDING BENCHMARK MERGER AGRMT 1 EXHIBIT 10.1.3 [BENCHMARK COMMUNICATIONS LETTERHEAD] January 31, 1997 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. c/o Hicks, Muse, Furst & Tate Incorporated 1325 Avenue of the Americas, 25th Floor New York, NY 10019 Attn: Peter Brodsky Re: Agreement and Plan of Merger by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited Partnership, Joseph L. Mathias, Bruce R. Spector, Capstar Broadcasting Partners, Inc. and BCR Holding, Inc. dated as of December 9, 1996 (the "Merger Agreement") Credit Agreement (Greenville) dated as of December 9, 1996 between BCR Holding, Inc. and Benchmark Radio Acquisition Fund VII Limited Partnership as Borrower (the "Greenville Credit Agreement") Credit Agreement (Statesville) dated as of December 9, 1996 between BCR Holding, Inc. and Benchmark Radio Acquisition Fund IX Limited Partnership as Borrower (the "Statesville Credit Agreement") Credit Agreement (Jackson) dated as of December 9, 1996 between BCR Holding, Inc. and Benchmark Radio Acquisition Fund X Limited Partnership as Borrower (the "Jackson Credit Agreement") Credit Agreement (Montgomery) dated as of December 9, 1996 between BCR Holding, Inc. and Benchmark Radio Acquisition Fund XI Limited Partnership as Borrower (the "Montgomery Credit Agreement" and, together with the Greenville Credit Agreement, the Statesville Credit Agreement, and the Jackson Credit Agreement, the "Credit Agreements") 2 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 2 Side Letter Regarding Capital Expenditure Loans entered into by and between Benchmark Acquisition, Inc. and Benchmark Communications Radio Limited Partnership as of December 9, 1996 (the "Capital Expenditure Side Letter") Ladies and Gentlemen: This letter, when signed by each of us and the other parties to the Merger Agreement and the Credit Agreements, will memorialize the parties' agreement with respect to the matters set forth herein. Capitalized terms in paragraphs (1) through (5) and in paragraph (9) below not defined herein shall have the meanings assigned to such terms in the Merger Agreement. Capitalized terms in paragraphs (6) through (8) below not defined herein shall have the meanings assigned to such terms in the Credit Agreements. The parties hereto agree as follows: 1. Section 1.6(f) of the Merger Agreement is replaced in its entirety with the following clause (f): (f) BCF Calculation. (1) Benchmark will use its commercially reasonable efforts to close the books of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII by February 3, 1997 in a manner that will enable Coopers & Lybrand to conduct an audit (the "Coopers Audit") of Benchmark and each of Fund I, Fund IV, Fund VII and Fund VIII on a consolidated basis for the fiscal year ended December 31, 1996. Mergeco shall use commercially reasonably efforts to cause Coopers & Lybrand to perform the Coopers Audit in the manner described in this Section 1.6(f)(1) and to take the actions described in this Section 1.6(f)(1), and Benchmark will permit Coopers & Lybrand to perform the Coopers Audit subject to the following conditions: (A) Benchmark shall be promptly reimbursed by Mergeco for audit fees not to exceed $20,000 charged by Arthur Andersen LLP in connection with the audit of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII for the 1996 fiscal year that was commenced (but not completed) by Arthur Andersen LLP; (B) Except to the extent set forth in Section 1.6(f)(2), no audit other than the Coopers Audit shall be conducted for purposes of preparing the BCF Calculation; 3 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 3 (C) Coopers & Lybrand shall promptly make available to Benchmark any proposed audit adjustments in connection with the Coopers Audit, and any such adjustments must be approved by Benchmark; (D) Coopers & Lybrand shall be responsible for all word processing in connection with the Coopers Audit, and the financial statements contained in the Coopers Audit shall be in substantially the same format as the financial statements contained in the Coopers & Lybrand audit report relating to Benchmark, Fund I, Fund IV, Fund VII and Fund VIII for the nine months ended September 30, 1996; (E) Coopers & Lybrand will conduct its field work at the Benchmark's offices between February 3, 1997 and February 10, 1997 and will have all field work completed no later than February 15, 1997; (F) Confirmations for accounts receivable and cash will be rolled forward from September 30, 1996 and will not be required for the Coopers Audit unless material variances, in the opinion of Coopers & Lybrand, exist to warrant such testing; (G) The field work of Coopers & Lybrand will consist of the items outlined in the client assistance schedule provided to Benchmark by Coopers & Lybrand, and such schedule will be modified to reflect that Item 3F should read "significant accounts greater than 120 days;" (H) The fixed asset appraisals for stations acquired by Benchmark or any Fund during 1996 will be set up in summary form and not entered individually into the fixed asset system; (I) Coopers & Lybrand shall (i) schedule in the notes to the report of Coopers & Lybrand relating to the Coopers Audit (the "Coopers Audit Report") the 1996 income for each of Fund I, Fund IV, Fund VII and Fund VIII (the format for this schedule will be the same as the one provided by Benchmark to Coopers & Lybrand in connection with the September 30, 1996 audit by Coopers & Lybrand and shall include each Fund's income statement with the appropriate elimination entry in the format that such items appeared in the workpapers of Coopers & Lybrand relating to the September 1996 audit), (ii) include in its work papers relating to the Coopers Audit and the Coopers Audit Report (the "Coopers Work Papers") the 1996 income for each individual radio station operated by Fund I, Fund IV, Fund VII and Fund VIII and (iii) upon receipt of customary releases, make available no later than February 22, 1997 to Benchmark and Arthur Andersen LLP the Coopers Audit Report and the Coopers Work Papers; and 4 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 4 (J) All inquiries of Coopers & Lybrand to Benchmark regarding the Coopers Audit shall be made prior to February 15, 1997. (2) Benchmark shall use its commercially reasonable efforts to cause Arthur Andersen LLP to, pursuant to certain agreed upon procedures (the "Agreed Upon Audit Procedures"), perform a limited audit of the applicable balance sheets and income statements in order to calculate the Statesville Broadcast Cash Flow, the Jackson Broadcast Cash Flow and the KRMD-AM/FM Broadcast Cash Flow (which shall constitute a component of the Fund IV Broadcast Cash Flow). Arthur Andersen will qualify its report relating to such audit to disclose that a statement of cash flow and retained earnings and full footnote disclosure has been omitted from such report. (3) No later than April 30, 1997, Benchmark shall deliver to Mergeco a certificate executed by the General Partners of Benchmark, dated the date of its delivery, setting forth the calculation of Fund I Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash Flow, Statesville Broadcast Cash Flow, Jackson Broadcast Cash Flow and Montgomery Broadcast Cash Flow on which the Fund I BCF Consideration, the Fund IV BCF Consideration, the Fund VIII BCF Consideration and the Benchmark Consideration will be based (the "BCF Calculation"). The certificate will state that the BCF Calculation has been certified by Arthur Andersen LLP and is based on (i) the terms of this agreement, (ii) the Coopers Audit Report and the Coopers Work Papers (with respect to the Fund I Broadcast Cash Flow, the Fund IV Broadcast Cash Flow and the Fund VIII Broadcast Cash Flow) and (iii) the Agreed Upon Audit Procedures (with respect to the Statesville Broadcast Cash Flow, the Jackson Broadcast Cash Flow and the KRMD-AM/FM Broadcast Cash Flow). The procedures described in Section 1.6(f)(2) relating to the Agreed Upon Audit Procedures shall be agreed upon by Mergeco and Benchmark in consultation with Arthur Andersen and Coopers & Lybrand no later than February 15, 1997. Prior to delivery of the certificate setting forth the BCF Calculation, Benchmark shall request Arthur Andersen LLP to consult with Coopers & Lybrand regarding the preparation of the BCF Calculation and to provide Coopers & Lybrand with applicable documentation setting forth the basis upon which Arthur Andersen LLP calculated the Statesville Broadcast Cash Flow, the Jackson Broadcast Cash Flow and the KRMD-AM/FM Broadcast Cash Flow. 2. The following sentence is inserted at the end of Section 1.6(i) of the Merger Agreement: The parties agree that neither Mergeco nor Coopers & Lybrand may dispute a component of the BCF Calculation to the extent the disputed component was derived from the Coopers Audit, the Coopers Audit Report (including the notes thereto) or the Coopers Work Papers and, in the event any such dispute is raised, the Referee shall resolve such dispute in favor of Benchmark; provided, however, that 5 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 5 this shall not limit the right of Coopers & Lybrand to dispute the methods pursuant to which numbers contained in the Coopers Audit, the Coopers Audit Report (including the notes thereto) or the Coopers Work Papers are applied to calculate any disputed components of the BCF Calculation. 3. Article IV of the Merger Agreement is amended by inserting the following Section 4.14: 4.14 New Shreveport Station. Benchmark agrees to consult with Mergeco with respect to the incurrence of additional Shreveport Expenses; provided that such consultation shall not require Benchmark not to perform its obligations under the Shreveport Master Agreement or other agreements relating thereto. Mergeco confirms that Benchmarks' agreement to so consult shall not change the parties' obligation to treat all Shreveport Expenses (including those incurred to date) as a portion of the Fund IV Consideration regardless of whether the Initial Closing (as defined in the Shreveport Master Agreement) occurs. 4. The following definition is added to Article XI of the Merger Agreement: "KRMD-AM/FM Broadcast Cash Flow" means the aggregate revenues of KRMD-AM/FM during 1996 minus the aggregate operating expenses of KRMD-AM/FM during 1996 (regardless of whether such stations were owned by Benchmark or its subsidiaries, or any third party, during such time period), determined in accordance with GAAP, consistently applied, excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income taxes, (v) management fees and expenses payable to Benchmark or AmCom General Corporation and its affiliates, (vi) legal fees and expenses incurred in connection with the sale of KRMD-AM/FM and the reorganization of AmCom General Corporation and its affiliates and (vii) Shreveport Expenses. In addition, in calculating KRMD-AM/FM Broadcast Cash Flow, extraordinary gains and losses (determined in accordance with GAAP), gains and losses on sales of fixed assets and revenues and expenses under trade and barter agreements shall be excluded. In addition, the KRMD-AM/FM Broadcast Cash Flow shall be increased by approximately $68,700 to reflect that KRMD-AM/FM will receive rental income from tenants at the stations' studio building at 3109 Alexander Boulevard in Shreveport, Louisiana, will no longer incur studio/office rental expense at such site and will no longer incur billboard rental expenses at the station's AM transmitter site. 5. Clause (b) of Section 4.2 of the Merger Agreement is amended by inserting the words "; provided, however that Benchmark shall not be required to deliver any of the items referenced in this sentence for the months of January 1997, February 1997 and March 1997 until April 30, 1997" at the end of the first sentence of such clause. 6 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 6 6. Clause (a) of Section 5.01 of each Credit Agreement is amended by replacing the words "as soon as available, but in any event within 90 days after the end of each calendar year" with the words "beginning with the calendar year ended December 31, 1997, as soon as available, but in any event within 120 days after the end of each calendar year." 7. The following proviso is inserted at the end of clause (b) of Section 5.01 of each Credit Agreement: ; provided, however, that the Borrower shall not be required to deliver the unaudited consolidated balance sheets of the Borrower and its Subsidiaries and the related unaudited consolidated statements of income and of cash flows for the months of January 1997, February 1997 and March 1997 until April 30, 1997. 8. Under the Capital Expenditure Side Letter, the date by which the parties agree to negotiate in good faith the documentation of the Capital Expenditure Loans (as defined therein) is hereby extended from thirty days after the date of the Capital Expenditure Side Letter to February 28, 1997. 9. The parties hereto agree to cooperate in good faith to enable Coopers & Lybrand to complete the Coopers Audit Report, the Coopers Audit and the Coopers Work Papers within the time periods specified in paragraph 1 of this Letter Agreement. The parties recognize, however, that Coopers & Lybrand (i) are independent public accountants to Mergeco, (ii) are not a party to this Letter Agreement and (iii) may, in their professional discretion, determine that they are unable to complete or deliver the Coopers Audit Report, the Coopers Audit and/or the Coopers Work Papers under the conditions and/or within the time period specified in paragraph 1 of this Letter Agreement. In the event the Coopers Audit Report, the Coopers Audit and/or the Coopers Work Papers are not completed and delivered in the manner and within the time periods specified in paragraph 1 of this Letter Agreement (regardless of whether Mergeco has used its commercially reasonable efforts to effect such completion and delivery), the parties agree that paragraphs 1, 2, and 4 of this Letter Agreement will terminate and that the original provisions contained in the Merger Agreement to which such paragraphs relate will remain in full force and effect. 7 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 7 Please countersign this letter below to indicate your agreement with respect to the matters set forth herein. BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR --------------------------------- BY: Bruce R. Spector Its: General Partner Agreed to and Accepted, BENCHMARK ACQUISITION, INC. /s/ PETER S. BRODSKY - --------------------------------- BY: Peter S. Brodsky Its: BCR HOLDING, INC. /s/ PETER S. BRODSKY - --------------------------------- By: Peter S. Brodsky Its: CAPSTAR BROADCASTING PARTNERS, INC. /s/ PETER S. BRODSKY - -------------------------------- By: Peter S. Brodsky Its: 8 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 8 The undersigned parties hereby agree to the terms of this letter agreement, as of the date first written above. BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner 9 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 9 BENCHMARK RADIO ACQUISITION FUND IX LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND X LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner BENCHMARK RADIO ACQUISITION FUND XI LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: General Partner /s/ BRUCE R. SPECTOR -------------------------------------- Bruce R. Spector /s/ JOSEPH L. MATHIAS, IV -------------------------------------- Joseph L. Mathias, IV 10 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. January 31, 1997 Page 10 HOME RUN RADIO LIMITED PARTNERSHIP By: HR Radio Corporation Its: General Partner /s/ BRUCE R. SPECTOR -------------------------------------- By: Bruce R. Spector Its: President GRAND SLAM RADIO LIMITED PARTNERSHIP /s/ MICHAEL MATHIAS -------------------------------------- By: Michael Mathias Its: General Partner EX-10.1.4 7 LETTER AGREEMENT AMENDING BENCHMARK MERGER AGRMT 1 EXHIBIT 10.1.4 [BENCHMARK COMMUNICATIONS LETTERHEAD] April 8, 1997 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. c/o Hicks, Muse, Furst & Tate Incorporated 1325 Avenue of the Americas, 25th Floor New York, NY 10019 Attn: Peter Brodsky Re: Agreement and Plan of Merger by and among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited Partnership, Joseph L. Mathias, Bruce R. Spector, Capstar Broadcasting Partners, Inc. and BCR Holding, Inc. dated as of December 9, 1996 (the "Merger Agreement") Ladies and Gentlemen: This letter, when signed by each of us, will memorialize our agreement with respect to the matters set forth herein. Section 4.13 of the Merger Agreement requires Benchmark to file a Form 5500 for the Benchmark Communications Disability Income Plan under the Department of Labor's Delinquent Filer Voluntary Compliance Program and to incur all costs relating to such filing. Benchmark represents and warrants to Mergeco that it is not required to file a Form 5500 with respect to its Disability Income Plan because (1) less than 100 persons are covered by such Plan (and less than 100 persons were covered by such Plan at the beginning of the Plan year) and (2) such Plan is a fully insured welfare benefit plan. Based upon this representation, Mergeco and its affiliates agree to waive the provisions of Section 4.13 of the Merger Agreement. 2 Benchmark Acquisition, Inc. BCR Holding, Inc. Capstar Broadcasting Partners, Inc. April 8, 1997 Page 2 Please countersign this letter below to indicate your agreement with respect to the matters set forth herein. BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP /s/ BRUCE R. SPECTOR ------------------------------- By: BRUCE R. SPECTOR Its: General Partner Agreed to and Accepted, BENCHMARK ACQUISITION, INC. /s/ PETER S. BRODSKY - ------------------------------ By: PETER S. BRODSKY Its: BCR HOLDING, INC. /s/ PETER S. BRODSKY - ------------------------------ By: PETER S. BRODSKY Its: CAPSTAR BROADCASTING PARTNERS, INC. /s/ PETER S. BRODSKY - ------------------------------ By: PETER S. BRODSKY Its: EX-10.2 8 ASSET PURCHASE AGREEMENT 1 EXHIBIT 10.2 ASSET PURCHASE AGREEMENT between COMMUNITY PACIFIC BROADCASTING COMPANY L.P. and COMMUNITY ACQUISITION COMPANY, INC. dated as of December 26, 1996 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINED TERMS 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1 - 1.2. References and Titles . . . . . . . . . . . . . . . . . . . . 10 -- ARTICLE II SALE AND PURCHASE OF ASSETS 2.1. Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . 10 -- 2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 11 -- 2.3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 12 -- 2.4. Adjustments and Prorations . . . . . . . . . . . . . . . . . . 12 -- 2.5. Assumption of Liabilities and Obligations . . . . . . . . . . 14 -- 2.6. Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . 14 -- 2.7. Earnest Money . . . . . . . . . . . . . . . . . . . . . . . . 15 -- ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1. Representations and Warranties Regarding Seller. . . . . . . . 15 -- 3.2. Representations and Warranties of Buyer . . . . . . . . . . . 26 -- ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1. Covenants of Seller . . . . . . . . . . . . . . . . . . . . . 27 -- 4.2. Negative Trade Balance . . . . . . . . . . . . . . . . . . . . 29 -- 4.3. Environmental Site Assessments . . . . . . . . . . . . . . . . 29 --
(i) 3
PAGE ---- ARTICLE V ADDITIONAL AGREEMENTS OF SELLER 5.1. No Solicitation of Transactions . . . . . . . . . . . . . . . 30 -- 5.2. Access and Information . . . . . . . . . . . . . . . . . . . . 30 -- 5.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . 31 -- 5.4. Compliance With Station Licenses . . . . . . . . . . . . . . . 32 -- 5.5. Notification of Certain Matters . . . . . . . . . . . . . . . 32 -- 5.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . . 32 -- 5.7. David Benjamin Employment Agreement . . . . . . . . . . . . . 33 -- ARTICLE VI COVENANT OF BUYER 6.1. Notification of Certain Matters . . . . . . . . . . . . . . . 33 -- ARTICLE VII MUTUAL COVENANTS 7.1. Application for FCC Consents . . . . . . . . . . . . . . . . . 33 -- 7.2. Control of Stations . . . . . . . . . . . . . . . . . . . . . 34 -- 7.3. Other Governmental Consents . . . . . . . . . . . . . . . . . 34 -- 7.4. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 34 -- 7.5. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . 35 -- 7.6. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . 35 -- 7.7. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . 35 -- 7.8. Additional Agreements . . . . . . . . . . . . . . . . . . . . 36 -- 7.9. Local Marketing Agreement . . . . . . . . . . . . . . . . . . 36 -- ARTICLE VIII CONDITIONS PRECEDENT 8.1. Conditions to Each Party's Obligation . . . . . . . . . . . . 37 -- 8.2. Conditions to Obligation of Buyer . . . . . . . . . . . . . . 37 -- 8.3. Conditions to Obligations of the Seller . . . . . . . . . . . 39 --
(ii) 4
PAGE ---- ARTICLE IX CLOSING 9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 -- 9.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . . 41 -- ARTICLE X TERMINATION, AMENDMENT AND WAIVER 10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 42 -- 10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . 44 -- ARTICLE XII INDEMNIFICATION 11.1. Indemnification of Buyer . . . . . . . . . . . . . . . . . . . 45 -- 11.2. Indemnification of Seller . . . . . . . . . . . . . . . . . . 45 -- 11.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . . 45 -- 11.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . 46 -- 11.5. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 -- 11.6. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 47 -- 11.7. Recovery against Escrowed Funds . . . . . . . . . . . . . . . 48 -- 11.8. Instructions to Escrow Agent . . . . . . . . . . . . . . . . . 48 -- ARTICLE XII GENERAL PROVISIONS 12.1. Survival of Representations, Warranties, and Covenants . . . . 48 -- 12.2. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 49 -- 12.3. Amendment and Modification . . . . . . . . . . . . . . . . . . 49 -- 12.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . 49 -- 12.5. Specific Performance . . . . . . . . . . . . . . . . . . . . . 49 -- 12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 49 -- 12.7. Expenses and Obligations . . . . . . . . . . . . . . . . . . . 49 -- 12.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . . 50 -- 12.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 -- 12.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 51 --
(iii) 5
PAGE ---- 12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 51 -- 12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 51 -- 12.13. Public Announcements . . . . . . . . . . . . . . . . . . . . . 51 -- 12.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 51 -- 12.15. Director and Officer Liability . . . . . . . . . . . . . . . . 52 -- 12.16. No Reversionary Interest . . . . . . . . . . . . . . . . . . . 52 -- 12.17. No Waiver Relating to Claims for Fraud . . . . . . . . . . . . 52 --
ANNEXES: Annex A -- The Stations EXHIBITS: Exhibit A -- Form of Original Deposit Letter of Credit Exhibit B -- Deposit Escrow Agreement Exhibit C -- Form of Non-Competition Agreement Exhibit D -- Form of Employment Agreement Exhibit E -- Form of Bill of Sale and Assignment Exhibit F -- Form of Assumption Agreement Exhibit G -- Form of Indemnification Escrow Agreement Exhibit H -- Form of Local Marketing Agreement Exhibit I -- Form of Opinion of Bullivant, Houser, Bailey, Pendergrass and Hoffman Exhibit J -- Form of Opinion of Fisher, Wayland, Cooper, Leader & Zaragoza L.L.P. SCHEDULES: Schedule 2.5(b) -- Trade Deals Schedule 3.1(a) -- Qualification to do Business and Good Standing Schedule 3.1(c) -- List of Partners and Ownership Schedule 3.1(f) -- Reports; Financial Statements; Absence of Certain Changes or Events Schedule 3.1(g) -- Licenses and Permits Schedule 3.1(h) -- Litigation Schedule 3.1(i) -- Insurance Schedule 3.1(j) -- Owned Real Estate Schedule 3.1(k) -- Leased Real Property Schedule 3.1(l) -- Personal Property Schedule 3.1(m) -- Liens and Encumbrances Schedule 3.1(n) -- Environmental Schedule 3.1(p) -- Certain Agreements Schedule 3.1(q) -- Employee Benefit Plans; Labor Schedule 3.1(r) -- Patents, Trademarks; Etc. (iv) 6 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of December 26, 1996, between Community Pacific Broadcasting Company L.P., a Delaware limited partnership ("Seller"), and Community Acquisition Company, Inc., a Delaware corporation ("Buyer "). R E C I T A L S A. Seller is the licensee of and owns and operates the radio stations listed on Annex A hereto (each referred to individually as a "Station" and collectively, the "Stations") pursuant to licenses issued by the Federal Communications Commission ("FCC"). B. Seller desires to sell and Buyer desires to buy substantially all the assets used or useful in the operation of each of the Stations and by so doing to acquire the radio broadcast business presently conducted by each of the Stations, upon the terms and conditions hereinafter set forth. A G R E E M E N T S NOW, THEREFORE, in consideration of the respective representations, warranties, agreements, and conditions hereinafter set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINED TERMS 1.1. DEFINED TERMS. The following terms shall have the following meanings in this Agreement: "Accounts Receivable" means the rights of Seller to cash payment for the sale of advertising time by the Stations (a) if the LMA is entered into, then prior to 11:59 p.m. on the day immediately preceding the LMA Commencement Date, or (b) if the LMA is not entered into, then prior to 11:59 p.m. on the day prior to the Closing Date. "Affiliate" means, with respect to any person, any other person controlling, controlled by or under common control with such person. For purposes of this definition and this Agreement, the term "control" (and correlative terms) means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a person. 7 "Agreement of Limited Partnership" means the Amended and Restated Agreement of Limited Partnership of Seller, dated as of December 1, 1995, as the Schedule 1 thereto has been amended to reflect additional capital contributions to Seller. "Applicable Laws" means all laws, statutes, rules, regulations, ordinances, judgments, orders, decrees, injunctions, and writs of any Governmental Authority having jurisdiction over the Assets or the business or operations of the Stations, as may be in effect on or prior to the Closing. "Applications" has the meaning set forth in Section 7.1. "Assets" means all the tangible and intangible assets owned, leased, or licensed by Seller that are used or held for use in connection with the business or operations of any of the Stations, whether or not reflected on the Financial Statements or Balance Sheet of Seller, but specifically excluding therefrom the Excluded Assets. "Assumed Contracts" means (a) those Contracts set forth on Schedule 3.1(p) identified as being assumed by Buyer and all other contracts of Seller entered into in the ordinary course of business prior to the date of this Agreement that relate to the Assets or the business or operation of the Assets or any part thereof, (b) all other non-trade advertising Contracts for cash entered into by Seller for any of the Stations prior to the date of this Agreement and which are terminable on not more than 30 days notice, (c) all Contracts entered into by Seller on or after the date of this Agreement and before the Closing in accordance with the applicable provisions of Section 4.1, and (d) Trade Deals described in Section 2.5(b). "Assumption Agreement" means the Assumption Agreement between Buyer and Seller substantially in the form of Exhibit F. "Balance Sheet" has the meaning set forth in Section 3.1(f). "Balance Sheet Date" has the meaning set forth in Section 3.1(f). "Banking Event" has the meaning set forth in Section 9.1. "Bill of Sale and Assignment" means the Bill of Sale and Assignment between Buyer and Seller substantially in the form of Exhibit E. "business day" means any other day than (i) a Saturday or Sunday or (ii) a day on which commercial banks in New York, New York or Dallas, Texas are authorized or required to be closed. 2 8 "Buyer" has the meaning set forth in the first paragraph of this Agreement, and it includes its permitted successors and assigns. "Buyer Indemnified Costs" shall mean (a) any and all damages, losses, claims, liabilities (including, without limitation, those liabilities not expressly assumed by Buyer as provided in Section 2.5), demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys' fees and expenses incurred in investigating and preparing for any litigation or proceeding) which any of the Buyer Indemnified Parties incur and arise out of any breach or default by Seller of any of the representations, warranties, covenants, or agreements under this Agreement or any agreement or document executed by Seller in connection herewith; (b) any and all obligations or liabilities of Seller relating to the Stations not expressly assumed by Buyer pursuant to Section 2.5, including without limitation, any such obligation or liability imposed on Buyer by process of law as a successor to the business of Seller; (c) any and all losses, liabilities, or damages resulting from Seller's operation or control of any of the Stations prior to the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring prior to the Closing Date; and (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. "Buyer Indemnified Parties" means Buyer and each officer, director, employee, consultant, stockholder, and Affiliate of Buyer. "Capstar" means Capstar Broadcasting Partners, Inc., a Delaware corporation and includes its successors and assigns. "Cessation Date" has the meaning set forth in Section 9.1. "Choses in Action" means a right to receive or recover property, debt, or damages on a cause of action, whether pending or not and whether arising in contract, tort or otherwise. The term shall include rights to indemnification, damages for breach of warranty or any other event or circumstance, judgments, settlements, and proceeds from judgments or settlements. "Closing" means the consummation of the transactions contemplated by this Agreement in accordance with the provisions of Article IX. "Closing Date" means the date of the Closing specified in Article IX. "Code" shall mean the United States Internal Revenue Code of 1986, as amended. All references to the Code, U.S. Treasury regulations or other governmental pronouncements shall be deemed to include references to any applicable successor regulations or amending pronouncement. 3 9 "Communications Act" has the meaning set forth in Section 3.1(g). "Company Reports" has the meaning set forth in Section 3.1(f). "Conflict Event" has the meaning set forth in Section 9.1. "Consents" means all governmental consents and approvals, including the FCC Consents, and all consents and approvals of third parties, in each case that are necessary in order to transfer the Assets to Buyer and otherwise to consummate the transactions contemplated hereby. "Contracts" means all agreements, contracts, or other binding commitments or arrangements, written or oral (including any amendments and other modifications thereto), to which Seller is a party or is otherwise bound and which affect or relate to the Assets or the business or operations of each of the Stations. "CPA" means KPMG Peat Marwick, the Seller's certified public accountants. "Deposit Escrow Agreement" means the Deposit Escrow Agreement among Seller, Buyer and Escrow Agent, a copy of which is attached hereto as Exhibit B . "Deposit Letter of Credit" means (a) during any period in which the Original Deposit Letter of Credit is held under the Deposit Escrow Agreement, the Original Deposit Letter of Credit, and (b) during any period in which the Substitute Deposit Letter of Credit is held under the Deposit Escrow Agreement, the Substitute Deposit Letter of Credit. "Employee Benefit Plans" has the meaning set forth in Section 3.1(q). "Environmental Costs or Liabilities" has the meaning set forth in Section 3.1(n)(iv). "Environmental Laws" means all Applicable Laws and rules of common law pertaining to the environment, natural resources, and public or employee health and safety including the Comprehensive Environmental Response Compensation and Liability Act, (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Emergency Planning and Community Right to Know Act and the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990, the Hazardous Materials Transportation Act, and any similar or analogous statutes, regulations and decisional law of any Governmental Entity, as each of the foregoing may be amended and in effect on or prior to the Closing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 4 10 "ESA" means Phase I or Phase II environmental site assessments. "Escrow Agent" means Citibank, N.A. and includes its successors and assigns. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Excluded Assets" has the meaning set forth in Section 2.2. "FCC" has the meaning set forth in the first recital hereto. "FCC Consents" means actions by the FCC granting its consent to the assignment of the FCC Licenses for each of the Stations to Buyer as contemplated by this Agreement. "FCC Licenses" means all of the licenses, permits, and other authorizations issued by the FCC to Seller and applications of Seller, if any, to the FCC relating to or used in the business or operations of each of the Stations, including those listed on Schedule 3.1(g) and any additions thereto or renewals thereof between the date hereof and the Closing Date. "Final Order" means written action or order issued by the FCC setting forth the FCC Consents (without the inclusion of any adverse conditions affecting Buyer's operation or ownership of the Stations) and (a) which has not been reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with respect to which (i) no requests have been filed for administrative or judicial review, reconsideration, appeal, or stay, and the time for filing any such requests and for the FCC to set aside the action on its own motion has expired or (ii) in the event of review, reconsideration, or appeal, such review, reconsideration, or appeal has been denied and the time for further review, reconsideration, or appeal has expired. "Financial Statements"has the meaning set forth in Section 3.1(f). "GAAP" means generally accepted accounting principles in the United States. "General Partner" means Broadcast Management Corporation, a Delaware corporation, and its successors and assigns. "Governmental Entity" means any governmental department, commission, board, bureau, agency, court or other instrumentality of the United States or any state, county, parish or municipality, jurisdiction, or other political subdivision thereof. "Hazardous Substances" has the meaning set forth in Section 3.1(n). 5 11 "Holdback Amount" has the meaning set forth in Section 11.5. "HSR Act" has the meaning set forth in Section 3.1(e). "Indemnification Escrow Agreement" means the Indemnification Escrow Agreement among Seller, Buyer, and Escrow Agent substantially in the form attached hereto as Exhibit G. "Indemnified Costs" means the Buyer Indemnified Costs or the Seller Indemnified Costs, as the case may be. "Indemnified Parties" means the Buyer Indemnified Parties or the Seller Indemnified Parties, as the case may be. "Indemnifying Party" means any person who is obligated to provide indemnification hereunder. "Intellectual Property" has the meaning set forth in Section 2.1(f). "Know-how" means all plans, ideas, concepts and data, research records, all promotional literature, customer and supplier lists and similar data and information and all other confidential or proprietary technical and business information. "Knowledge" means, with respect to a specified party hereto, the actual knowledge of such party, together with such additional knowledge as would be acquired by a reasonable person upon conducting reasonable and diligent inquiry concerning the subject matter in question. "Leased Real Property" means all of the Seller's leasehold interests, easements, licenses, rights to access and rights-of-way which are used in the business and operations of the Stations, including those interests which are identified and described in Schedule 3.1(k) together with any addition or permitted deletion thereto between the date hereof and the Closing Date. "Licenses" means the FCC Licenses and all other Permits issued by any Governmental Entity to Seller and that are used in the business and operations of either Station, including those listed on Schedule 3.1(g) with any additions thereto and renewals thereof between the date hereof and the Closing Date. "Liens" has the meaning set forth in Section 3.1(m). "LMA" has the meaning set forth in Section 7.9. 6 12 "LMA Commencement Date" means the Commencement Date referred to in the LMA. "Material Adverse Effect" means a material adverse effect on the business, operations, properties (taken as a whole), condition (financial or otherwise), results of operations, assets (taken as a whole), liabilities, or prospects of Seller. "Non-Competition Agreement" means the Non-Competition Agreement between Buyer and Seller substantially in the form of Exhibit C. "Original Deposit Letter of Credit" means the certain original, irrevocable letter of credit in favor of Seller and the Escrow Agent issued by Bankers Trust Company for the sum of $1,750,000, substantially in the form of Exhibit A, and held in accordance with the provisions of the Deposit Escrow Agreement, and any substitute letter of credit issued in that amount in accordance with Section 4(b) of the Deposit Escrow Agreement. "Owned Real Property" means the real property owned in fee by the Real Property Owners and described in Schedule 3.1(j), and all buildings, structures, improvements, and fixtures thereon, together with all rights of way, easements, privileges, and appurtenances pertaining or belonging thereto, including any right, title, and interest of Seller in and to any street or other property adjoining any portion of such property. "Patents" means all patent and patent applications (including all reissues, divisions, continuations, continuations-in-part, renewals, and extensions of the foregoing) owned by Seller. "Permits" has the meaning set forth in Section 3.1(n). "Permitted Encumbrances" means (a) statutory liens for current taxes not yet due and payable, (b) in the case of leases of real property, agreements with, and/or conditions imposed on the issuance of land use permits, zoning, business licenses, use permits, or other entitlements of various types issued by, city, county, state, and federal governmental bodies or agencies, necessary or beneficial to the continued use and occupancy of the Assets or the continuation of the operation of each of the Stations, (c) mechanics', carriers', workers', repairers', and other similar liens imposed by law arising or incurred in the ordinary course of business for obligations not yet due, (d) in the case of leases of vehicles, rolling stock, and other personal property, encumbrances, which do not, individually or in the aggregate, materially impair the operation of the business at the facility at which such leased equipment or other personal property is located, and (e) other liens, charges or encumbrances incidental to the operation of the Stations or the ownership of the Assets which were not incurred in connection with the borrowing of money or the advance of credit which in the aggregate do not materially detract from the value of the Assets or materially interfere with the use thereof or the operation of the Stations. 7 13 "person" means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, or other entity. "Personal Property" means all of the machinery, equipment (including the transmitter and studio equipment), computer programs, computer software, tools, motor vehicles, furniture, furnishings, leasehold improvements, office equipment, inventories, supplies, plant, spare parts, and other tangible or intangible personal property which are owned or leased by Seller for any Station and which are used or held for use in the business or operations of the Stations, including the personal property which is listed on Schedule 3.1(l) hereto, together with any additions thereto between the date hereof and the Closing Date less any dispositions made in accordance with Section 4.1. "Purchase Price" means the consideration payable by Buyer to Seller as provided in Section 2.3 hereof. "Real Property" means the Leased Real Property and the Owned Real Property. "Released Claims" has the meaning set forth in Section 10.2(b). "Schedules" means the Schedules attached hereto. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Seller" has the meaning set forth in the first paragraph of this Agreement. "Seller Indemnified Costs" shall mean: (a) any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys' fees and expenses incurred in investigating and preparing for any litigation or proceeding) which any of the Seller Indemnified Parties incur and arise out of any breach or default by Buyer of any of the representations, warranties, covenants, or agreements under this Agreement or any agreement or document executed in connection herewith; (b) any and all obligations or liabilities of Seller relating to the Station expressly assumed by Buyer pursuant to Section 2.5; (c) any and all losses, liabilities, or damages resulting from Buyer's operation or control of the Stations on and after the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring after the Closing Date; and (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. "Seller Indemnified Parties" shall mean Seller, each partner of Seller and each officer, director, employee, consultant, stockholder, and Affiliate of the general partner of Seller. 8 14 "Seller Negative Trade Balance" has the meaning set forth in Section 4.2. "Station" has the meaning set forth in the first recital hereto. "Station Event" has the meaning set forth in Section 9.1. "Station Licenses" has the meaning set forth in Section 3.1(g). "Station Management" has the meaning set forth in Section 4.1(b). "Substitute Deposit Letter of Credit" means that certain original, irrevocable letter of credit in favor of Seller and the Escrow Agent issued by Bankers Trust Company or another lender reasonably acceptable to Seller for the sum of $2,625,000 and held in accordance with the provisions of the Deposit Escrow Agreement, and any substitute letter of credit issued in that amount in accordance with Section 4(b) of the Deposit Escrow Agreement. An increase in the amount of the Original Deposit Letter of Credit to $2,625,000 shall constitute the issuance of a Substitute Deposit Letter of Credit. "Taxes" means taxes, charges, fees, imposts, levies, interest, penalties, additions to tax or other assessments or fees of any kind, including, but not limited to, income, corporate, capital, excise, property, sales, use, turnover, value added and franchise taxes, deductions, withholdings and customs duties, imposed by any Governmental Entity and any payments with respect thereto required under any tax-sharing agreement. "Tax Returns" means any return, report, information return or other document (including any related or supporting information) filed or required to be filed with any Governmental Entity in connection with the determination, assessment, collection or administration of any Taxes or the administration of any laws, regulations or administrative requirements relating to any Taxes. "Title Commitment" means the commitment to issue an owner's title policy as provided in Section 8.2(e). "Title Company" means Chicago Title Insurance Company or such other title insurance company reasonably acceptable to Buyer and Seller. "Trade Deals" means the exchanges by a Station of its advertising time for goods or services, other than in connection with the licensing of programs and programming material. "Trademarks" means (a) trademarks, service marks, trade names, trade dress, labels, logos, and all other names and slogans associated with any products or embodying the goodwill of 9 15 the business of the Stations, whether or not registered, and any applications or registrations therefor and (b) any associated goodwill incident thereto owned by Seller. "Trading Event" has the meaning set forth in Section 9.1. "Transaction Documents" has the meaning set forth in Section 3.1(d). "Voting Debt" has the meaning set forth in Section 3.1(c). "Warranty Deed" means an Iowa general warranty deed in form and substance reasonably acceptable to the Buyer and the Title Company pursuant to which Seller conveys to Buyer the Owned Real Property at the Closing. 1.2. REFERENCES AND TITLES. All references in this Agreement to Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections, or other subdivisions of this Agreement are for convenience only, do not constitute any part of such Articles, Sections, subsections or other subdivisions, and shall be disregarded in construing the language contained therein. The words "this Agreement," "herein," "hereby," "hereunder," " and "hereof," and words of similar import, refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words "this Section" and "this subsection" and words of similar import, refer only to the Sections or subsections hereof in which such words occur. The word "or" is not exclusive, and the word "including" (in its various forms) means "including without limitation." Pronouns in masculine, feminine, or neuter genders shall be construed to state and include any other gender and words, terms, and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise expressly requires. Unless the context otherwise requires, all defined terms contained herein shall include the singular and plural and the conjunctive and disjunctive forms of such defined terms. ARTICLE II SALE AND PURCHASE OF ASSETS 2.1. AGREEMENT TO SELL AND BUY. Subject to the terms and conditions set forth in this Agreement, Seller shall sell, assign, transfer and deliver to Buyer on the Closing Date, and Buyer shall purchase on the Closing Date, all of the Assets, free and clear of any Liens or liabilities (except for Permitted Encumbrances and liabilities assumed by Buyer in accordance with Section 2.5). The Assets to be assigned, transferred and delivered by Seller hereunder shall include the following: (a) The Personal Property; 10 16 (b) The Leased Real Property; (c) The Owned Real Property; (d) The Licenses and Permits; (e) The Assumed Contracts; (f) To the extent assignable, all Trademarks, Know-how, copyrights, copyright registrations and applications for registration, Patents and all other intellectual property rights whether registered or not, licensed to or owned by the Seller relating to the business or operations of each Station, including the call letters of each of the Stations and the goodwill related to the foregoing (the "Intellectual Property"); (g) Each of the Station's technical information and data, machinery and equipment warranties (to the extent such warranties are assignable), if any, maps, plans, diagrams, blueprints and schematics relating to such Station, if any, including filings with the FCC which relate to such Station, and goodwill relating to the foregoing; (h) All books and records relating to the business and operation of any of the Stations (excluding those described in Section 2.2(b)), including (i) executed copies of the Assumed Contracts, or if no executed agreement exists, summaries of such Assumed Contracts transferred pursuant to clause (e) above and (ii) all records required by the FCC to be kept by the Stations, subject to the right of Seller to copy and have such books and records made reasonably available to Seller for tax and other legitimate partnership or corporate purposes for a period of six years after the Closing; (i) To the extent assignable, all computer programs and software, and all rights and interests of Seller in and to computer programs and software used in connection with the business or operations of any of the Stations; (j) Except for claims relating to Taxes, all rights and claims of Seller whether mature, contingent or otherwise, against third parties relating to the Assets (other than the Excluded Assets) or the Stations, whether in tort, contract, or otherwise, including, without limitation, causes of action, unliquidated rights and claims under or pursuant to all warranties, indemnities, representations and guarantees made by manufacturers, suppliers, vendors, sellers, transferors or predecessors; and (k) All intangible assets of Seller relating to any of the Stations or the business or operation of any Station not specifically described above, including goodwill, and all other 11 17 assets, other than the Excluded Assets, used or held for use in connection with the Stations and the business of the Seller. 2.2. EXCLUDED ASSETS. The Excluded Assets shall consist of the following: (a) Seller's cash on hand as of the Closing Date and all other cash in any of Seller's bank or savings accounts; notes receivable, letters of credit or other similar items of Seller; any stocks, bonds, certificates of deposit and similar investments of Seller and any other cash equivalents of Seller; (b) Seller's partnership books and other books and records relating solely to internal partnership matters and any other books and records not related to the Stations or their respective business or operations; (c) Any claims, rights and interest of Seller in and to any (i) refunds of Taxes or fees of any nature whatsoever or (ii) deposits or utility deposits, in each case which relate solely to the period prior to the Closing Date; (d) All insurance contracts, including the cash surrender value thereof, and all insurance proceeds or claims made by Seller relating to property or equipment repaired, replaced or restored by Seller prior to the Closing Date; (e) All Employee Benefit Plans and all assets or funds held in trust, or otherwise, associated with or used in connection with the Employee Benefit Plans; (f) Except for the Choses in Action included in the Assets described in Section 2.1, all Choses in Action of Seller which existed on or prior to the Closing Date and which relate entirely to the period prior to the Closing Date; (g) The Accounts Receivable; (h) All tangible and intangible personal property disposed of or consumed in the ordinary course of business between the date of this Agreement and the Closing Date, or as otherwise permitted under the terms hereof; and (i) Any collective bargaining agreement, any other Contract not included in the Assumed Contracts and all Contracts that have terminated or expired prior to the Closing Date in the ordinary course of business and as permitted hereunder. 2.3. PURCHASE PRICE. Subject to the adjustments set forth in Section 2.4 and 2.5(b), the Purchase Price for the Assets is Thirty-Five Million Dollars ($35,000,000). 12 18 2.4. ADJUSTMENTS AND PRORATIONS. (a) All revenues arising from the operation of the Stations earned or accrued up until 11:59 p.m. on the day prior to the Closing Date, and all expenses, costs and liabilities, arising therefrom incurred, accrued or payable up until such time, including expenses arising under the Assumed Contracts, tower rentals, business and license fees, utility charges, real and personal property Taxes levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, other Taxes, wages, salaries, vacation, sick and employee compensation pay shall be prorated between Buyer and Seller in accordance with the principle that (i) Seller shall receive all revenues, refunds and deposits of Seller held by third parties, and shall be responsible for all expenses, costs and liabilities incurred, payable or allocable to the conduct of the business and operations of the Stations for the period ending at 11:59 p.m. on the day prior to the Closing Date and (ii) Buyer shall receive all revenues earned or accrued and shall be responsible for all expenses, costs and liabilities incurred, payable or allocable to the conduct of the business and operations of the Stations for the period commencing on and continuing after the Closing Date. An adjustment of the Purchase Price and proration shall be made in favor of Buyer to the extent that Buyer assumes any liability under any Assumed Contract to refund (or to credit against payments otherwise due) any security deposit or similar prepayment paid to Seller by any lessee or other third party which is not otherwise credited to Buyer. Subject to Buyer's receipt of appropriate estoppel certificates, an adjustment of the Purchase Price and proration shall be made in favor of Seller to the extent that Seller has made (A) any security deposit under any Assumed Contract whether or not there is a proration under such Assumed Contract or (B) other prepayment under any Assumed Contracts for which there is a proration. Subject to the terms of the LMA, Seller shall be liable for all of the costs of employee compensation relating to each of the Stations properly attributable to or accruable on account of service with the Seller through 11:59 p.m. on the date prior to the Closing Date, including (1) all Taxes and related contributions, vacations and sick pay and (2) all group medical, dental or death benefits for expenses incurred, related to or arising from, events occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, or death or disability occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, whether reported by the Closing Date or thereafter. Subject to the terms of the LMA, Buyer will be liable for all of the costs of employee compensation relating to each of the Stations, properly attributable or accruable on or after the Closing Date on account of service with Buyer. Except as provided in Section 2.5(b), Trade Deals shall not be adjusted or pro rated. (b) Adjustments or prorations pursuant to this Section 2.4 will, insofar as feasible, be determined and paid on the Closing Date based upon Seller's good faith calculation delivered to Buyer five days prior to the Closing Date and reasonably approved by Buyer, with final settlement and payment by the appropriate party occurring no later than 60 days after the Closing Date. Within 60 days after the Closing Date, Buyer shall submit to Seller its good faith determination of the adjustments or prorations required by this Section 2.4. Buyer's determination of the amount of adjustment under this Section 2.4 shall be made in accordance with GAAP, consistently applied. If Seller disagrees with the determination made by Buyer of the adjustment, Seller shall give prompt written notice thereof, but in no event later than 20 days after notice of Buyer's determination, 13 19 specifying in reasonable detail the nature and extent of the disagreement, and Buyer and Seller shall have a period of 30 days in which to resolve the disagreement. If the parties are unable to resolve the disagreement within the 30-day period, the matter shall be submitted to Coopers & Lybrand L.L.P., an independent certified public accounting firm, which accounting firm shall be directed to submit a final resolution within 30 days. The accounting firm's determination shall be binding on Buyer and Seller. Each party shall bear the fees and expenses of its own representatives, including its independent accountants, if any, and shall share equally the fees and expenses of Coopers & Lybrand, L.L.P., if engaged, to resolve any disagreement between the parties. Within five business days following a final determination hereunder, the party obligated to make payment will make the payments determined to be due and owing in accordance with this Section 2.4. 2.5. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. (a) Subject to the provisions of Section 7.9, as of the Closing Date, Buyer shall assume and undertake to pay, discharge and perform all the obligations and liabilities of Seller relating to each Station under the Licenses and the Assumed Contracts assumed by Buyer relating to the time period beginning on or arising out of events occurring on or after the Closing Date. Subject to the provisions of the LMA, all other obligations and liabilities of Seller, including (i) obligations or liabilities under any contract not included in the Assumed Contracts, (ii) obligations or liabilities under any Assumed Contract for which a Consent, if required, has not been obtained as of the Closing, (iii) any obligations and liabilities arising under the Assumed Contracts that relate to the time period prior to the Closing Date or arise out of events occurring prior to the Closing Date and (iv) any forfeiture, claim or pending litigation or proceeding relating to the business or operations of any of the Stations prior to the Closing Date, shall remain and be the obligation and liability solely of Seller. Other than as specified in the first sentence of this Section 2.5, Buyer shall assume no liabilities or obligations of Seller and shall not be liable therefor. (b) Schedule 2.5(b) contains a list of all of the Trade Deals in effect as of October 31, 1996 and correctly sets forth the balance, in dollar value, of either (i) the Seller's obligations to the other party under each such Trade Deal (reflected as a negative balance on Schedule 2.5(b)) or (ii) the amount due (reflected as a positive balance on Schedule 2.5(b)) Seller under such Trade Deal. On the Closing Date, Buyer shall assume the Trade Deals listed on Schedule 2.5(b) and Seller's obligations under (A) the Trade Deals listed on Schedule 2.5(b) to the extent that the goods or services to be provided by the advertisers pursuant to such Trade Deals are solely used or useful in connection with the business or operations of any Station and (B) all Trade Deals entered into by Seller between the date hereof and the Closing Date with the consent of Buyer; provided, however, if, as of the Closing Date, the obligation of Seller for air time due another party pursuant to all Trade Deals to be assumed by Buyer exceeds $100,000 in the aggregate, then the amount of such excess shall be considered a pre-Closing Date operating expense of Seller that shall serve as a reduction of the Purchase Price in accordance with Section 2.4(a). The Trade Deals assumed by Buyer pursuant to the terms of this Section 2.5(b) shall be considered Assumed Contracts. 14 20 2.6. ALLOCATION. Within 30 days after the Closing Date, Seller and Buyer shall negotiate in good faith an allocation of the Purchase Price, among the Assets that complies with Section 1060 of the Code with respect to the allocation of the Purchase Price (as well as any liabilities assumed by Buyer). If the allocation is not agreed upon within 30 days after the Closing, then Buyer and Seller agree that the allocation shall be made and consistently reported by Buyer and Seller in compliance with Section 1060 based upon an asset valuation supplied by Broadcast Investment Analysts. The cost of such appraisal shall be shared equally by Buyer and Seller. Buyer will order such appraisal from Business Investment Analysts on or after such date as the FCC Consents have been placed on public notice. The appraisal, if required, shall be provided to Seller within 45 days after the Closing Date. 2.7. EARNEST MONEY. (a) Concurrently with the execution of this Agreement, Buyer shall deposit the Original Deposit Letter of Credit in an escrow account with the Escrow Agent to be held in escrow in accordance with the Deposit Escrow Agreement. (b) No later than the earlier of (i) the LMA Commencement Date or (ii) March 1, 1997, Buyer shall deposit the Substitute Deposit Letter of Credit in such escrow account with the Escrow Agent to be held in escrow in accordance with the Deposit Escrow Agreement and, effective upon such deposit, the Original Deposit Letter of Credit shall be returned to Buyer for cancellation. (c) Subject to satisfaction of the conditions to the obligations set forth in Article VIII, at the Closing, Seller shall instruct the Escrow Agent to release and return the Deposit Letter of Credit to Buyer for cancellation. (d) If this Agreement is terminated as provided in Section 10.1, Buyer and Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer or to Seller, all as provided in Section 10.2. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1. REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller represents and warrants to Buyer as follows (with the understanding that Buyer is relying on such representations and warranties in entering into and performing this Agreement and subject to the provisions of Section 7.9). (a) Organization, Good Standing, Etc. Seller is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified and in good standing to do business in each state listed 15 21 on Schedule 3.1(a), which states represent every jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except where the failure to so qualify or be in good standing would not have a Material Adverse Effect. Seller has delivered to Buyer true and complete copies of the Agreement of Limited Partnership of Seller, as in effect at the date of this Agreement. Seller is not in violation of any provisions of its Agreement of Limited Partnership. (b) Subsidiaries of Seller. Seller does not own, directly or indirectly, any of the capital stock of, or other equity interest in, any other corporation, partnership, or other person or have the right, pursuant to a contract or otherwise, to acquire any capital stock, equity interest or other similar investment in any corporation, partnership, or other person. (c) Partners. The General Partner is the sole general partner of Seller and it has the complete right and authority to manage the business and operations of Seller and to bind Seller subject to the limitations set forth in the Agreement of Limited Partnership. The equity interests of Seller consist of the following classes of partnership interests of Seller: General Partner Interest, Class A Limited Partner Interest, Class B Limited Partner Interest, Class C Limited Partner Interest, Class D Limited Partner Interest. Schedule 3.1(c) is a complete and accurate list of each partner of Seller which accurately sets forth the class of partnership interest owned by such partner. The percentage interest set forth opposite the name of each partner on Schedule 3.1(c) accurately reflects such partner's interest in Seller. As of the date hereof, there are no bonds, debentures, notes or other indebtedness issued or outstanding having the right to vote ("Voting Debt") on any matters on which the General Partner or holders of limited partner interests of Seller may vote. All the issued limited partner interests of Seller are duly and validly issued, are not subject to further capital calls or assessments and have not been issued in violation of any preemptive or similar rights. Except as set forth on Schedule 3.1(c), there are no options, warrants, calls, rights, commitments, or agreements of any character to which Seller is a party or by which Seller is bound obligating Seller to issue, deliver, or sell, or cause to be, delivered or sold, additional equity interests in Seller or any Voting Debt of Seller, or obligating Seller to grant, extend, or enter into any such option, warrant, call, right, commitment, or agreement. There are no outstanding contractual obligations of Seller to repurchase, redeem, or otherwise acquire any equity interests in Seller. (d) Authority. Seller has all requisite power and authority to enter into this Agreement, the Deposit Escrow Agreement, the Bill of Sale and Assignment, the Assumption Agreement, the Indemnification Escrow Agreement, the Non-Competition Agreement, the LMA Agreement and each other agreement, document, and instrument required to be executed by Seller in accordance herewith (collectively, the "Transaction Documents") and to consummate the transactions contemplated hereby or thereby. The execution and delivery of the Transaction Documents by Seller and the consummation by Seller of the transactions contemplated hereby or thereby have been duly authorized by all necessary action on the part of Seller, including, without limitation, the approval of the holders of at least a majority of the outstanding Voting Partnership 16 22 Units (as such term is defined in the Agreement of Limited Partnership). The Transaction Documents have been, or upon execution and delivery will be, duly executed and delivered and constitute the valid and binding obligations of Seller enforceable against it in accordance with their terms, subject as to enforceability to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). (e) No Conflict; Required Filings and Consents. The execution and delivery of the Transaction Documents by Seller do not and the performance by Seller of the transactions contemplated hereby or thereby will not, subject to obtaining the consents, approvals, authorizations, and permits and making the filings described in this Section 3.1(e), (A) violate, conflict with, or result in any breach of any provision of the Agreement of Limited Partnership, (B) violate, conflict with, or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination of, or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change of control of Seller or otherwise) any obligation, or result in the loss of any benefit, or give any person the right to require any security to be repurchased, or give rise to the creation of any lien, charge, security interest, or encumbrance upon any of the Assets under any of the terms, conditions, or provisions of any loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or any license, lease, agreement, or other instrument or obligation to which Seller is a party or by which it or any of the Assets may be bound or subjected, or (C) violate any order, writ, judgment, injunction, decree, statute, law, rule, or regulation, of any Governmental Entity applicable to Seller or by which or to which any of the Assets is bound or subject. No consent, approval, order, or authorization of, or registration, declaration, or filing with, any Governmental Entity is required by or with respect to Seller in connection with the execution and delivery of the Transaction Documents by Seller or the consummation of the transactions contemplated hereby or thereby, except for (1) the filing of a premerger notification report under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (2) the FCC Consents as contemplated by Section 7.1 hereof. (f) Reports; Financial Statements; Absence of Certain Changes or Events. (i) Seller has filed all forms, reports, statements, and other documents required to be filed with the FCC. Seller has filed all forms, reports, statements, and other documents required to be filed with any and all other Governmental Entities, except where the failure to file any such form, report, statement or other document would not have a Material Adverse Effect. All such forms, reports, statements and other documents required to be filed with the FCC or any other Governmental Entity are referred to herein, collectively, as the "Company Reports"). The Company Reports were prepared in accordance with the requirements of applicable law. 17 23 (ii) Seller has delivered to Buyer copies of (A) the audited balance sheets of Seller as of December 31, 1994 and December 31, 1995, together with the related audited statements of income, cash flows and changes in partners' equity of Seller for the periods then ended, and the notes thereto, accompanied by the reports thereon of CPA, and (B) the unaudited balance sheet of Seller as of September 30, 1995 and September 30, 1996, together with the related unaudited statements of income, cash flow and changes in partners' equity for the periods then ended (such audited and unaudited financial statements collectively being referred to as the "Financial Statements"). The Financial Statements, including the notes thereto, were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except to the extent disclosed therein or required by changes in GAAP) and present fairly the consolidated financial position, results of operations, and changes in partners' equity and cash flows of Seller as of such dates and for the periods then ended. (iii) Except as disclosed in Schedule 3.1(f), there is no liability or obligation of any kind, whether accrued, absolute, fixed, contingent, or otherwise, of Seller that is not reflected or reserved against in the balance sheet for the nine months ended September 30, 1996 (the "Balance Sheet"), other than (A) liabilities incurred in the ordinary course of business in a manner consistent with past practice since September 30, 1996 (the "Balance Sheet Date"), or (B) any such liability or obligation which would not be required to be presented in financial statements or the notes thereto prepared in conformity with GAAP applied, in a manner consistent with past practice, in the preparation of the Financial Statements. (iv) Except as disclosed in Schedule 3.1(f), since the Balance Sheet Date, Seller has conducted its business only in the ordinary course consistent with past practice and nothing has occurred that would have been prohibited by Section 4.1 if the terms of such section had been in effect as of and after the Balance Sheet Date. From September 30, 1996 until the date of this Agreement, there has not occurred, and Seller has not incurred or suffered, any event, circumstance, or fact that could result in a Material Adverse Effect. Additionally, since September 30, 1996, there has not occurred, and Seller has not incurred or suffered, any event, circumstance, or fact that materially impairs the physical assets at the Stations. To the Knowledge of Seller, there are no pending or proposed statutes, rules, or regulations, nor any current or pending developments or circumstances, which would have a Material Adverse Effect. (g) Compliance with Applicable Laws: FCC Matters. (i) The business of Seller has been conducted in compliance with each Applicable Law. No investigation or review by any Governmental Entity with respect to Seller is pending or, to the Knowledge of Seller, threatened. Without limiting the generality 18 24 of the foregoing, Seller has complied with the Communications Act of 1934, as amended, and all material rules, regulations and written policies of the FCC thereunder (collectively, the "Communications Act"), all obligations with respect to equal employment opportunity under Applicable Law, and all material rules and regulations of the Federal Aviation Administration applicable to the towers used by the Stations. In addition, Seller has duly and timely filed, or caused to be so filed, with the FCC and other appropriate Governmental Entities all reports, statements, documents, registrations, filings, or submissions with respect to the operation of the Stations and the ownership thereof, including, applications for renewal of authority required by Applicable Law to be filed except, in the case of filings with Governmental Entities other than the FCC, where the failure to duly or timely file such reports, statements, documents, registrations, filings, or submissions would not have a Material Adverse Effect. All such FCC filings complied with Applicable Laws when made and no deficiencies have been asserted with respect to any such filings. The material required by 47 C.F.R. Section 73.3526 to be kept in the public inspection files of the Stations is in such files. (ii) Schedule 3.1(g) is a true and complete list of (A) all of the FCC Licenses, including the expiration dates thereof, as of the date of this Agreement and (B) all other material licenses, permits, or authorizations issued to Seller by any other Governmental Entities and held by them as of the date of this Agreement. Such FCC Licenses, licenses, permits, and authorizations, and all applications for modification, extension, or renewal thereof or for new licenses, permits, permissions, or authorizations, are collectively referred to herein as the "Station Licenses." Schedule 3.1(g) accurately lists the legally authorized holder(s) of the Station Licenses. The Station Licenses constitute all the licenses, permits and authorizations required for the operation of the Stations and the business of Seller, and each of the Station Licenses is in full force and effect. The Stations have been operated in accordance with the terms of the Station Licenses in all material respects and the Seller is otherwise in compliance with, and has conducted its business so as to comply with, the terms of the respective Station Licenses. There are no proceedings pending or, to the Knowledge of Seller, threatened with respect to Seller's ownership or operation of the Stations which reasonably may be expected to result in the revocation, material adverse modification, non-renewal, or suspension of any of the Station Licenses, the denial of any pending applications for Station Licenses, the issuance against Seller of any cease and desist order, or the imposition of any administrative actions by the FCC or any other Governmental Entity with respect to the Station Licenses, or which reasonably may be expected to adversely affect the Stations' ability to operate as currently operated or Buyer's ability to obtain control of the Station Licenses. To the Knowledge of Seller, no other broadcast station or radio communications facility is causing interference to the Stations' transmissions beyond that which is allowed by FCC rules and regulations. Seller has no logical reason to believe that the FCC will not renew the Station Licenses issued by the FCC in the ordinary course of business. To the Knowledge of Seller, there are no facts relating to Seller under the 19 25 Communications Act that reasonably may be expected to disqualify Seller from transferring control of the Station Licenses pursuant to the terms of this Agreement or that would prevent the consummation by Seller of the transactions contemplated by this Agreement. (h) Absence of Litigation. Except as set forth on Schedule 3.1(h), there is no claim, action, suit, inquiry, judicial, or administrative proceeding, grievance, or arbitration pending or, to the Knowledge of Seller, threatened against Seller or any of the Assets by or before any arbitrator or Governmental Entity, nor are there any pending or unfunded settlements or any investigations relating to Seller or any of the Assets pending or, to the Knowledge of Seller, threatened by or before any arbitrator or Governmental Entity. Except as set forth in Schedule 3.1(h), there is no judgment, decree, injunction, order, determination, award, finding, or letter of deficiency of any Governmental Entity or arbitrator outstanding against Seller or any of the Assets. There is no action, suit, inquiry, judicial, or administrative proceeding pending or, to the Knowledge of Seller, threatened against Seller relating to the transactions contemplated by this Agreement. (i) Insurance. Since its organization on January 1, 1995, Seller has been insured against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. Schedule 3.1(i) sets forth an accurate summary of all fire, general liability, errors and omissions liability, theft, and other forms of insurance and all fidelity bonds held by or applicable to Seller. Except as set forth on Schedule 3.1(i), the policies of general liability, errors and omissions liability, fire, theft, and other insurance maintained with respect to the operations, assets, or business of Seller provided adequate coverage against loss. To the Knowledge of Seller, no event has occurred, including the failure by Seller to give any notice or information or the delivery of any inaccurate or erroneous notice or information, which limits or impairs the rights of Seller under any such insurance policies in such a manner as could have a Material Adverse Effect. Excluding insurance policies that have expired and been replaced in the ordinary course of business, no insurance policy has been canceled within the last two years prior to the date hereof. (j) Owned Real Property. Schedule 3.1(j) contains an accurate description of all the Owned Real Property. Seller has good and marketable, fee simple, absolute title in and to the Owned Real Property. Seller has sufficient title to such easements, rights of way and other rights appurtenant to each of the Owned Real Properties as are necessary to permit ingress and egress to and from the Owned Real Property to a public way and the improvements on the Owned Real Property have access to such, sewer, water, gas, electric, telephone and other utilities as are necessary to allow the business of the Seller to be operated in the ordinary course. There is no pending condemnation or similar proceeding affecting the Owned Real Property or any portion thereof, and to the Knowledge of Seller, no such action is threatened. The improvements located on the Owned Real Property are in sufficiently good condition (except for ordinary wear and tear) to allow the business of the Seller to be operated in the ordinary course and there has been no damage to such improvements that affects the conduct of such business in any material respect that has not been repaired or remedied. Except as set forth on Schedule 3.1(j), there are no lessees or tenants at will in possession of any portion of any of the Owned Real Property other than Seller, whether as lessees, 20 26 tenants at will, trespassers or otherwise. No zoning, building or other federal, state or municipal law, ordinance, regulation or restriction is violated in any material respect by the continued maintenance, operation or use of the Owned Real Property or any tract or portion thereof or interest therein in its present manner. The current use of the Owned Real Property and all parts thereof does not violate any restrictive covenants of record affecting any of the Owned Real Property. All necessary Licenses by any Governmental Authority with respect to the Owned Real Property have been obtained, have been validly issued and are in full force and effect. (k) Leased Real Property. Schedule 3.1(k) contains an accurate description of all the leasehold interests relating to the business and operations of each of the Stations as now conducted. Except as otherwise disclosed on Schedule 3.1(k) Seller is not, and to the Knowledge of the Seller, no other party is, in material default under any lease described in Schedule 3.1(k). Subject to obtaining the Consents disclosed in Schedule 3.1(k), Seller has the full legal power and authority to assign its rights under the leases listed in Schedule 3.1(k) to Buyer. All leasehold interests listed in Schedule 3.1(k) (including the improvements thereon) are available for immediate use in the conduct of the business and operations of each of the Stations as currently conducted. (l) Personal Property. Schedule 3.1(l) contains a description of the items of Personal Property (having a replacement cost of not less than $10,000 for each item) which comprise all Personal Property used or held for use in connection with the business and operations of the Stations or which permits the operation of the Stations as now conducted. Except as set forth on Schedule 3.1(l), Seller has good title to, or a valid leasehold or license interest in, all Personal Property and none of the Personal Property is subject to any Lien or other encumbrances, except for Permitted Encumbrances. Seller is not, and to the Knowledge of the Seller, no other party is, in material default under any of the leases, licenses and other Contracts relating to the Personal Property. Except as otherwise disclosed in Schedule 3.1(l), the Personal Property (i) is in good operating condition and repair (ordinary wear and tear excepted), (ii) is available for immediate use in the business and operation of each of the Stations as currently conducted, and (iii) permits each of the Stations to operate in accordance with the terms of their respective FCC Licenses, and the rules and regulations of the FCC, and with all other applicable federal, state and local statutes, ordinances, rules and regulations. (m) Liens and Encumbrances. Except as set forth on Schedule 3.1(m), all of the Assets, including leases, are free and clear of all liens, pledges, claims, security interests, restrictions, mortgages, tenancies, and other possessory interests, conditional sale or other title retention agreements, assessments, easements, rights of way, covenants, restrictions, rights of first refusal, defects in title, encroachments, and other burdens, options or encumbrances of any kind (collectively, "Liens") except (i) statutory Liens securing payments not yet delinquent or the validity of which are being contested in good faith by appropriate actions, (ii) Liens for taxes not yet delinquent, (iii) Liens reflected in the Balance Sheet (which have not been discharged), (iv) Liens 21 27 which in the aggregate do not materially detract from the value for use for broadcasting purposes or materially impair the present and continued use of the properties or assets subject thereto in the usual and normal conduct of the business of the Stations, and (v) Liens on leases arising from the provisions of such leases. (n) Environmental Matters. Except as set forth on Schedule 3.1(n) or as described in any ESA listed thereon and delivered to Buyer with enough specificity that a reasonable person reading such description would understand that the matter described was contrary to the following representations and warranties: (i) The real property and facilities owned, operated, and leased by Seller and the operations of Seller thereon comply and have at all times complied with all Applicable Laws and rules of common law pertaining to the environment, natural resources, and public or employee health and safety, including all Environmental Laws; (ii) No judicial proceedings are pending or, to the Knowledge of Seller, threatened against Seller alleging the violation of any Environmental Laws, and there are no administrative proceedings pending or, to the Knowledge of Seller, threatened against Seller, alleging the violation of any Environmental Laws and no notice from any Governmental Entity or any private or public person has been received by Seller claiming any violation of any Environmental Laws in connection with any real property or facility owned, operated or leased by Seller, or requiring any remediation, clean-up, modification, repairs, work, construction, alterations, or installations on or in connection with any real property or facility owned, operated or leased by Seller that are necessary to comply with any Environmental Laws and that have not been complied with or otherwise resolved to the satisfaction of the party giving notice; (iii) All permits, registrations, licenses, approvals, authorizations, and the like ("Permits") required to be obtained or filed by Seller under any Environmental Laws in connection with Seller's operations, including, those activities relating to the generation, use, storage, treatment, disposal, release, or remediation of Hazardous Substances (as such term is defined in Section 3.1(n)(iv) hereof), have been duly obtained or filed, and Seller is and has at all times been in full compliance with the terms and conditions of all such Permits; (iv) All Hazardous Substances used or generated by Seller or any of its predecessors on, in, or under any of the owned, operated, or leased real property or facilities are and have at all times been generated, stored, used, treated, disposed of, and released by such persons or on their behalf in such manner as not to result in any Environmental Costs or Liabilities. "Hazardous Substances" means (A) any hazardous materials, hazardous wastes, hazardous substances, toxic wastes, and toxic substances as those or similar terms are defined under any Environmental Laws; (B) any asbestos or any material which contains 22 28 any hydrated mineral silicate, including chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite, whether friable or non-friable; (C) PCBs, or PCB-containing materials, or fluids; (D) radon; (E) any other hazardous, radioactive, toxic or noxious substance, material, pollutant, contaminant, constituent, or solid, liquid or gaseous waste; (F) any petroleum, petroleum hydrocarbons, petroleum products, crude oil and any fractions or derivatives thereof, any oil or gas exploration or production waste, and any natural gas, synthetic gas and any mixtures thereof; (G) any substance that, whether by its nature or its use, is subject to regulation under any Environmental Laws or with respect to which any Environmental Laws or Governmental Entity requires environmental investigation, monitoring or remediation; and (H) any underground storage tanks, dikes, or impoundments as defined under any Environmental Laws. "Environmental Costs or Liabilities" means any losses, liabilities, obligations, damages, fines, penalties, judgments, settlements, actions, claims, costs and expenses (including, without limitation, reasonable fees, disbursements and expenses of legal counsel, experts, engineers and consultants, and the costs of investigation or feasibility studies and performance of remedial or removal actions and cleanup activities) in connection with (1) any Environmental Laws, (2) order of, or contract of Seller with, any Governmental Entity or any private or public persons, or (3) any exposure of any person or property to Hazardous Substances; (v) There are not now, nor have there been in the past, on, in or under any property or facilities when owned, leased, or operated by Seller or when owned, leased, or operated by any of its predecessors, any Hazardous Substances that are in a condition or location that violates any Environmental Law or that reasonably could be expected to require remediation under any Environmental Laws or give rise to claim for damages or compensation by any affected Person or to any Environmental Costs or Liabilities; and (vi) Seller has not received, and to the Knowledge of Seller, does not expect to receive, any notification from any source advising Seller that: (A) it is a potentially responsible party under CERCLA or any other Environmental Laws; (B) any real property or facility currently or previously owned, operated, or leased by it is identified or proposed for listing as a federal National Priorities List ("NPL") (or state-equivalent) site or a Comprehensive Environmental Response, Compensation and Liability Information System ("CERCLIS") list (or state-equivalent) site; and (C) any facility to which it has ever transported or otherwise arranged for the disposal of Hazardous Substances is identified or proposed for listing as an NPL (or state- equivalent) site or CERCLIS (or state-equivalent) site. (o) Taxes. Seller has filed or caused to be filed all Tax Returns affecting the Stations or the Assets which are required to be filed by Seller, all such Tax Returns which have been filed are accurate and complete in all material respects, and Seller has timely paid all Taxes shown on such returns or on any Tax assessment received by Seller to the extent that such Taxes have 23 29 become due. There are no Liens for Taxes upon the Stations or the Assets. Seller has not received notice of any Tax deficiency or delinquency. No Internal Revenue Service audit of Seller is pending or, to the Knowledge of Seller, threatened, and the results of any completed audits are properly reflected in the Financial Statements. All monies required to be withheld by Seller from employees or collected from customers for Taxes and the portion of any Taxes to be paid by Seller to governmental agencies or set aside in accounts for such purposes have been so paid or set aside, or such monies have been reserved against and entered upon the books and are reflected in the Financial Statements and Balance Sheet. For each taxable year or period not closed by the applicable statute of limitations, (i) Seller is properly classified as a partnership (and not as an association taxable as a corporation) for tax purposes, (ii) other than Assu Venture, FCPR and Natio Vie Developpement II, FCPR, Seller does not have a partner that is a "foreign partner" within the meaning of Section 1446(e) of the Code, and (iii) no partner of Seller, other than Assu Venture, FCPR and Natio Vie Developpement II, FCPR, is a "foreign person" within the meaning of Section 1445(f)(3) of the Code. There is no legal, administrative, or tax proceedings pursuant to which Seller 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 business of the Stations. (p) Certain Agreements. (i) Schedule 3.1(p) hereto lists each (A) employment or consulting Contract which is not terminable without liability or penalty on 30 days or less notice, (B) Contract under which any party thereto remains obligated to provide goods or services having a value, or to make payments aggregating, in excess of $50,000 per year, and (C) other Contract that is material to the operation of the Stations or to the Seller's business, in any such case to which Seller is a party or Seller or the Assets is bound. Each such Contract described in Schedule 3.1(p) or required to be so described is a valid and binding obligation of Seller and is in full force and effect without amendment. Seller and, to the Knowledge of Seller, each other party to such Contracts, has performed in all material respects the obligations required to be performed by it under such Contracts and is not (with or without lapse of time or the giving of notice, or both) in material breach or default thereunder. Schedule 3.1(p) identifies, as to each such Contract listed thereon, whether the consent of the other party thereto is required in order for such Contract to continue in full force and effect upon the consummation of the transactions contemplated hereby or whether such Contract can be canceled by the other party without liability to such other party due to the consummation of the transactions contemplated hereby. A complete copy of each written Contract and a description of each oral Contract set forth in Schedule 3.1(p) has been provided to Buyer. (ii) Seller is not a party to any oral or written agreement, plan or arrangement with any employee or other station or broadcast personnel (whether an employee, consultant or an independent contractor) of Seller (A) the benefits of which are 24 30 contingent, or the terms of which are materially altered, upon, or result from, the occurrence of a transaction involving Seller of the nature of any of the transactions contemplated by this Agreement, (B) providing severance benefits longer than forty-five days or other benefits after the termination of employment or other contractual relationship regardless of the reason for such termination and regardless of whether such termination is before or after a change of control, (C) under which any person may receive payments subject to the tax imposed by Section 4999 of the Code or (D) any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. (q) ERISA Compliance; Labor. (i) The present value of all accrued benefits (vested and unvested) under all the "employee pension benefit plans" as such term is defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which Seller or any other trades or businesses under common control within the meaning of Section 4001(b)(1) of ERISA with Seller (collectively, the "ERISA Group") maintains, or to which Seller or any member of the ERISA Group is or has been obligated to contribute (the "Pension Plans"), did not, as of the respective last annual valuation dates for such Pension Plans, exceed the value of the assets of such Pension Plan allocable to such benefits. None of such Pension Plans subject to Title IV of ERISA or any of their related trusts has been terminated or partially terminated. Neither Seller or any member of the ERISA Group has contributed or been obligated to contribute to any "multiemployer plan" as such term is defined in Section 3(37) or Section 4001(a)(3) of ERISA. Except as set forth on Schedule 3.1(q), there are no "employee benefit plans" within the meaning of Section 3(3) of ERISA or any bonus, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, vacation, severance, disability, death benefit, hospitalization, insurance, or other plan or arrangement or understanding providing benefits to any present or former employee or contractor of Seller or any member of the ERISA Group maintained by Seller or any member of the ERISA Group or as to which Seller or any member of the ERISA Group has any liability or obligation (collectively, "Employee Benefit Plans"). (ii) True, correct, and complete copies of each of the Employee Benefit Plans, and related trusts, if applicable, have been furnished to Buyer, along with the most recent report filed on Form 5500 and summary plan description with respect to each Employee Benefit Plan required to file Form 5500. (iii) Seller is not a party to any collective bargaining agreement. Seller has not agreed to recognize any union or other collective bargaining representative, nor has any 25 31 union or other collective bargaining representative been certified as the exclusive bargaining representative of any of its employees. Seller (A) is, and has been since January 1, 1995, in substantial compliance with all applicable laws regarding labor and employment, including laws regarding employment practices, terms and conditions of employment, equal employment opportunity, employee benefits, affirmative action, wages and hours, plant closing and mass layoff, occupational safety and health, immigration, and workers' compensation, (B) is not engaged, nor has it since January 1, 1995, engaged, in any unfair labor practices, and has no, and has not had since January 1, 1995, any, unfair labor practice charges or complaints before the National Labor Relations Board pending or, to the Knowledge of Seller threatened against it, (C) has no, and has not had since January 1, 1995, any, grievances, arbitrations, or other proceedings arising or asserted to arise under any collective bargaining agreement, pending or, to the Knowledge of Seller threatened, against it and (D) has no, and has not had since January 1, 1995, any, charges, complaints, or proceedings before the Equal Employment Opportunity Commission, Department of Labor or any other Governmental Entity responsible for regulating employment practices, pending, or, to Seller's Knowledge, threatened against it other than those listed in Schedule 3.1(q). There is no labor strike, slowdown, work stoppage or lockout pending or, to the Knowledge of Seller, threatened against or affecting Seller, and Seller has not experienced any labor strike, slowdown, work stoppage or lockout since January 1, 1995. To the Knowledge of Seller no union organizational campaign or representation petition is currently pending with respect to any of the employees of Seller. (r) Patents, Trademarks, Etc. Schedule 3.1(r) is a true and complete list of all of the Intellectual Property. Except as set forth on Schedule 3.1(r), Seller owns or has the unencumbered right to use pursuant to a valid, binding, and enforceable license agreement or other contract or arrangement all such Intellectual Property. To the Knowledge of Seller, Seller is not infringing any such Intellectual Property, and Seller is not aware of any infringement by others of any of the Intellectual Property owned by Seller. (s) Affiliate Relationships. There are no contracts or other arrangements involving Seller in which any partner or Affiliate of Seller, or any officer, director, stockholder, or Affiliates of a partner, has a financial interest, including indebtedness to Seller. (t) Assets. The Assets and the Excluded Assets include all assets used or held for use in connection with the business and operations of the Stations as currently conducted. (u) No Dispositions. Since the Balance Sheet Date, there has not occurred any sale, lease, transfer, assignment, abandonment or other disposition of any of the assets of any Station other than any disposition of (i) obsolete property, (ii) property in connection with the acquisition of replacement property of equal value, or (iii) assets having, in the aggregate, a value of less than $50,000 disposed of in the ordinary course of business and consistent with past practices. 26 32 (v) Disclosure. No representation or warranty by Seller contained in this Agreement or in any certificate furnished pursuant to this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. 3.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller as follows (with the understanding that Seller is relying on such representations and warranties in entering into and performing this Agreement): (a) Organization Standing and Power. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now being conducted. (b) Authority. Buyer has all requisite corporate power and authority to enter into this Agreement and any other agreements required to be entered into in connection herewith and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement by Buyer and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been duly executed and delivered and constitutes the valid and binding obligation of Buyer, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). The execution, delivery and performance by Buyer of this Agreement and such other agreements and instruments contemplated hereby (with or without the giving of notice, the lapse of time, or both) does not (i) conflict with the Certificate of Incorporation or By-Laws of Buyer; (ii) except for the necessity of obtaining applicable Consents, conflict with, result in a breach of, or constitute a default under any Applicable Law Known to Buyer or (iii) except for the necessity of obtaining applicable Consents, conflict with, result in a breach of, constitute a default under, permit any party to terminate, modify, accelerate the performance of or cancel the terms of, any material agreement, lease, instrument of indebtedness, or license to which Buyer is a party, or by which Buyer is bound, such that Buyer could not acquire or operate the Assets. No consent, approval, order, or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the consummation by it of the transactions contemplated hereby, except for (A) the filing of a premerger notification report under the HSR Act, (B) the consent of the FCC to the transfer of control of the Station Licenses pursuant to the terms of this Agreement (as contemplated by Section 7.1), and (C) applicable requirements, if any, of the Securities Act and the Exchange Act and the rules and regulations thereunder and state securities or blue sky laws. 27 33 (c) Litigation. As of the date hereof, there is no action, suit, inquiry, judicial or administrative proceeding pending or, to the Knowledge of Buyer, threatened against it relating to the transactions contemplated by this Agreement. (d) FCC Matters. Buyer knows of no facts relating to it under the Communications Act that reasonably may be expected to disqualify it from obtaining control of the Station Licenses or that would prevent it from consummating the transactions contemplated by this Agreement. Buyer is able to certify on an FCC Form 315 that it is financially qualified. (e) Disclosure. No representation or warranty made by Buyer contained in this Agreement or in any certificate furnished by Buyer pursuant to this Agreement contains or will contain an untrue statement of material fact, or omits or will omit to state a material fact necessary, in the light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1. COVENANTS OF SELLER. Except as contemplated by this Agreement or to the extent that Buyer shall otherwise consent in writing and subject to the provisions of Section 7.9, from the date of this Agreement until the Closing, Seller covenants and agrees that Seller shall not: (a) conduct its business in any manner except in the ordinary course consistent with past practice; or (b) fail to use all commercially reasonable efforts to preserve intact Seller's present business organization and to keep available the services of its present officers, station managerial personnel (including the General Manager, Station Manager, General Sales Manager, Local Sales Manager, Programming Director, and Business Manager, or persons performing comparable duties, of each Station (collectively, the "Station Management")) and over-the-air employees or independent contractors and preserve its relationships with customers, suppliers and others having business dealings with it; or (c) fail to maintain the Assets in their current condition, except for ordinary wear and tear and damage by casualty governed by Section 7.7; or (d) fail to use all commercially reasonable efforts to maintain the present format of the Stations and with programming consistent with past practices; or 28 34 (e) except for amendments, terminations (without payment of penalty or damages), renewals, or failures to renew (without payment of penalty or damages) of employment agreements with over-the-air personnel in the ordinary course of business and consistent with past practice (subject to prior consultation with Buyer reasonably in advance thereof), materially amend, terminate, or fail to use all commercially reasonable efforts to renew any material Contract (i.e., a contract or agreement of the type required to be described in Schedule 3.1(p)) (provided that Seller shall not be required to renew any material Contract on terms that are less favorable to Seller), or default in any material respect (or take or omit to take any action that, with or without the giving notice or passage of time, would constitute a material default) under any material Contract or enter into any new material Contract or amend the Agreement of Limited Partnership; or (f) merge or consolidate with or into any other legal entity, dissolve, or liquidate; or (g) adopt or amend any Employee Benefit Plan or collective bargaining agreement, or increase in any manner the compensation or fringe benefits of any Station Manager, officer, or employee or other station and broadcast personnel (whether employees or independent contractors), except as required by law; or (h) terminate any employee of any of the Stations (other than administrative personnel) without prior consultation with Buyer regarding the basis for such termination; or (i) acquire (including, without limitation, by merger, consolidation, or the acquisition of any equity interest or assets) or sell (whether by merger, consolidation, or the sale of an equity interest or assets), lease, or dispose of any Assets except in the ordinary course of business and consistent with past practice or, even if in the ordinary course of business and consistent with past practices (other than sales of surplus or obsolete equipment), whether in one or more transactions, in no event involving an Asset or Assets having an aggregate fair market value in excess of $50,000; or (j) mortgage, pledge, or subject to any Lien, other than Permitted Encumbrances, any of the Assets; or (k) except as required by GAAP, applicable law, or circumstances which did not exist as of the Balance Sheet Date, change any of the material accounting principles or practices used by it; or (l) change in any material respect its existing practices and procedures with respect to the collection of accounts receivable of the Stations and, except with respect to good faith attempts consistent with past practice to obtain payment of a past due receivable, or except in accordance with existing practices, a contested receivable, offer to discount the amount of any 29 35 outstanding receivable or extend any other incentive (whether to the account debtor or any employee or third party responsible for the collection of receivables) to accelerate the collection thereof; or (m) change any Station's advertising rates or policies, procedures or methods in connection with the sale of advertising time in a manner expected to accelerate the receipt of cash payments or fail to incur annual advertising and promotional department expenses in cash and trade other than as budgeted for 1997; or (n) enter into, or enter into negotiations or discussions with any person other than Buyer with respect to any local marketing agreement, time brokerage agreement, joint sales agreement, or any other similar agreement; or (o) agree to or make any commitment, orally or in writing, to take any actions prohibited by this Agreement. 4.2. NEGATIVE TRADE BALANCE. Seller shall use commercially reasonable efforts to ensure that the Seller Negative Trade Balance, as defined below, of the Stations, taken as a whole, does not exceed $100,000 in the aggregate at the Closing Date. "Seller Negative Trade Balance" means the difference, if negative, between the value of time owed under barter agreements to which any of the Stations is a party or by which any of them is bound and the value of the goods and services to be received under such agreements. 4.3. ENVIRONMENTAL SITE ASSESSMENTS. If Buyer or its lenders or other financing sources require Phase I or Phase II ESAs, Seller covenants and agrees that, upon written notice from Buyer to Seller identifying the locations at which such ESAs are required, Seller shall cause to be performed by a nationally recognized and duly qualified environmental consultant reasonably acceptable to Buyer and Seller an ESA at each identified transmission site owned, operated, or leased by Seller and at such other identified real properties and facilities owned, operated, or leased by Seller. The ESAs which are to be conducted for the benefit of Buyer shall be performed in a manner that at a minimum satisfies the requirements of ASTM Practice E 1527-94. Seller covenants and agrees that, upon receipt of the notice referred to above, it shall diligently pursue the performance of the requisite ESAs to their completion, with final copies of the Phase I environmental site assessment reports (and, if applicable, Phase II ESA reports) made available to Buyer by no later than 45 days following the date on which Seller receives the notice referred to above. The cost of any Phase I ESA shall be borne by Seller and the Seller and Buyer shall each bear one-half of the cost of any Phase II ESA. 30 36 ARTICLE V ADDITIONAL AGREEMENTS OF SELLER 5.1. NO SOLICITATION OF TRANSACTIONS. Seller shall not, directly or indirectly, through any officer, director, partner, employee, agent, financial advisor, banker or other representative, or otherwise, solicit, initiate, or encourage the submission of any proposal or offer from any person relating to any acquisition or purchase of all or any material portion of the Assets or any equity interest in Seller or any merger, consolidation, share exchange, business combination, or other similar transaction with Seller or participate in any negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate, or encourage, any effort or attempt by any other person to do or seek any of the foregoing. Seller shall immediately communicate to Buyer the material terms of any such proposal (and the identity of the party making such proposal) which it may receive and, if such proposal is in writing, the Seller shall promptly deliver a copy of such proposal to Buyer. Seller agrees not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which Seller is a party. Seller immediately shall cease and cause to be terminated all existing discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. 5.2. ACCESS AND INFORMATION. (a) Until the Closing, subject only to applicable rules and regulations of the FCC, Seller shall afford to Buyer and its representatives (including accountants and counsel) full access, during normal business hours, upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of the business of Seller, to all properties, books, records, and Tax Returns of Seller and all other information with respect to its business, together with the opportunity to make copies of such books, records, and other documents and to discuss the business of Seller with such corporate officers, station managerial personnel (including the Station Management of each Station), accountants, consultants, and counsel for Seller as Buyer deems reasonably necessary or appropriate for the purposes of familiarizing itself with Seller and the Stations, including the right to visit the Stations. In furtherance of the foregoing, Seller shall authorize and instruct CPA to meet with Buyer and its representatives, including Buyer's independent public accountants, to discuss the business and accounts of Seller and to make available (with the opportunity to make copies) to Buyer and its representatives, including its independent public accountants, all the work papers of its accountants related to their audit of the consolidated financial statements and Tax Returns of Seller. (b) Within 30 days after the end of each calendar month, Seller shall deliver to Buyer, for each of the Stations, and for Seller as a whole, monthly operating statements (in a form consistent with the monthly operating statements previously supplied to Buyer) prepared in the ordinary course of business for internal purposes, including comparisons to comparable prior year periods and current year budget. In addition, within 45 days after the end of each calendar quarter, 31 37 Seller shall deliver to Buyer, for each of the Stations, quarterly statements prepared in the ordinary course for internal purposes containing a detailed listing of all trade and barter agreements of each Station showing the status of all such agreements as of the end of the quarter. Further, within 90 days after December 31, 1996, Seller shall deliver to Buyer copies of its audited balance sheet as of such date, together with the related audited statements of income, cash flows and changes in partners' equity of Seller for the period then ended. Seller shall deliver to Buyer the rating books and such other ratings information subscribed to by Seller including, without limitation, Arbitrends, Accuratings or any other written information reflective of the quantitative or qualitative nature of the audiences of the Stations for each of the Stations upon receipt of the same by any officer of the General Partner. Seller shall instruct the Station Management of each Station to provide such information and reports to Buyer's corporate officers promptly upon receipt by such Station Management. In addition, as soon as the same are distributed to Seller's corporate officers by each Station, Seller will provide Buyer with copies of each Station's weekly sales pacing reports, with comparisons to sales pacing in the corresponding period of the prior year. (c) Without duplication of Section 5.2(b), at such time as Seller provides the same to its lenders, Seller shall provide Buyer with copies of the financial statements and other information delivered by Seller to such lenders. 5.3. ASSISTANCE. If Buyer requests, Seller will cooperate, and will cause its accountants to cooperate, in all reasonable respects with the efforts of Buyer to finance the transactions contemplated by this Agreement, all at the sole expense of Buyer. Seller (a) shall furnish to its accountants as independent accountants to Seller, such customary management representation letters as its accountants may require of Seller as a condition to its execution of any required accountants' consents necessary in connection with the delivery of any "comfort" letters requested by Buyer's financing sources and (b) shall furnish to Buyer all financial statements (audited and unaudited) and other information in the possession of Seller or its representatives or agents as Buyer shall reasonably determine is necessary or appropriate in connection with such financing. Buyer will indemnify and hold harmless Seller and its officers, directors, and controlling persons against any and all claims, losses, liabilities, damages, costs, or expenses (including reasonable attorneys' fees and expenses) that may arise out of or with respect to the efforts by Buyer to finance the transactions contemplated hereby, including offering documents, and other filings related thereto; provided, however, that subject to the limitations and provisions of this Agreement, nothing herein shall prevent Buyer from asserting any claim for breach of representation or warranty under this Agreement. 5.4. COMPLIANCE WITH STATION LICENSES. Seller shall cause the Stations to be operated in accordance with the Station Licenses and all applicable rules and regulations of the FCC and in compliance with all other applicable laws, regulations, rules, and orders. Seller shall use all commercially reasonable efforts not to cause or permit any of the Station Licenses to expire or be surrendered, adversely modified, or terminated. Seller shall file or cause to be filed with the FCC 32 38 all applications (including license renewals) or other documents required to be filed in connection with the operation of the Stations. In addition, if requested by Buyer and at Buyer's sole expense, Seller shall file or cause to be filed with the FCC applications for new, specifically identified frequencies that may be useful in connection with the operation of the Stations. Should the FCC institute any proceedings for the suspension, revocation or adverse modification of any of the Station Licenses, Seller will use all commercially reasonable efforts to promptly contest such proceedings and to seek to have such proceedings terminated in a manner that is favorable to the Stations. Seller will use all commercially reasonable efforts to maintain the FCC construction permits (if any) listed in Schedule 3.1(g) in effect until the applicable construction projects are complete and to diligently prosecute all pending FCC applications listed in Schedule 3.1(g). If Seller (or its FCC counsel) receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any other Governmental Entity, that could affect Seller's ability to consummate the transactions contemplated hereby, or should Seller (or its FCC counsel) become aware of any fact relating to the qualifications of Buyer that reasonably could be expected to cause the FCC to withhold its consent to the transfer of control of the Station Licenses, Seller shall promptly notify Buyer in writing and use its commercially reasonable efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement. 5.5. NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt written notice to Buyer of (a) the occurrence, or failure to occur, of any event of which it becomes aware that has caused or that would be likely to cause any representation or warranty of Seller contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, (b) the failure of Seller, or any officer, director, employee, or agent of Seller, to comply with or satisfy in any material respect any covenant, condition, or agreement to be complied with or satisfied by it hereunder, (c) the occurrence of a Station Event (as defined in Section 9.1), and (d) the occurrence of any threat made to Seller by any officer of Seller or any General Manager, Station Manager, General Sales Manager or Programming Director of a Station to resign or otherwise terminate their employment or independent contractor relationship with Seller. No such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder. 5.6. THIRD PARTY CONSENTS. After the date hereof and prior to the Closing, Seller shall use all commercially reasonable efforts to obtain the written consent from any party to an agreement or instrument identified in Schedule 3.1(p) or any other Assumed Contract which is required to permit the consummation of the transactions contemplated hereby. 5.7. DAVID BENJAMIN EMPLOYMENT AGREEMENT. Subject to the terms and conditions hereof, Buyer agrees to cause Capstar, and Seller agrees to cause David J. Benjamin, III, to execute and deliver an employment agreement in substantially the form of Exhibit D attached hereto at the Closing. 33 39 ARTICLE VI COVENANT OF BUYER 6.1. NOTIFICATION OF CERTAIN MATTERS. If Buyer (or its FCC counsel) receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any Governmental Entity, that could affect Buyer's ability to consummate the transactions contemplated hereby, or should Buyer (or its FCC counsel) become aware of any fact relating to the qualifications of Buyer that reasonably could be expected to cause the FCC to withhold its consent to the transfer of control of the Station Licenses, Buyer shall promptly notify Seller thereof and shall use its commercially reasonable efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement. In addition, Buyer shall give to Seller prompt written notice of (a) the occurrence, or failure to occur, of any event of which it becomes aware that has caused or that would be likely to cause any representation or warranty of Buyer contained in this Agreement to be untrue or inaccurate at any time from the date hereof to the Closing Date, and (b) the failure of Buyer, or any officer, director, employee, or agent thereof, to comply with or satisfy in any material respect any covenant, condition, or agreement to be complied with or satisfied by it hereunder. No such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder. ARTICLE VII MUTUAL COVENANTS 7.1. APPLICATION FOR FCC CONSENTS. By the 15th business day after the date hereof, Seller and Buyer will, and will cause all necessary persons or entities to join in one or more applications filed with the FCC requesting the FCC's written consent to the transfer of control of the FCC Licenses pursuant to this Agreement (the "Applications"). The parties will take all proper steps reasonably necessary (a) to diligently prosecute the Applications and (b) to obtain the FCC Consents. The failure by either party to timely file or diligently prosecute its portion of any Application shall be a material breach of this Agreement. 7.2. CONTROL OF STATIONS. This Agreement shall not be consummated until after the FCC Consents with respect to the Applications referred to in Section 7.1 are granted and have become Final Orders. Between the date of this Agreement and the Closing Date and subject to the provisions of the LMA, Buyer will not directly or indirectly control, supervise or direct the operation of the Stations. Such operation and control shall be the sole responsibility of Seller. 34 40 7.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of this Agreement, the parties shall proceed to prepare and file with the appropriate Governmental Entities (other than the FCC) such requests, reports, or notifications as may be required in connection with the consummation of the transactions contemplated by this Agreement, and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such matters. Without limiting the foregoing, the parties shall file promptly with the Federal Trade Commission and the Antitrust Division of the Department of Justice the notifications and other information (if any) required to be filed under the HSR Act with respect to the transactions contemplated hereby and shall use their commercially reasonable efforts to cause all applicable waiting periods under the HSR Act to expire or be terminated as of the earliest possible date. 7.4. ACCOUNTS RECEIVABLE. All Accounts Receivable shall remain the property of Seller. Seller hereby authorizes Buyer, however, to collect such receivables for a period of 180 days after the Closing. Seller shall deliver to Buyer a complete and detailed statement of each account within three days after Closing and Buyer shall use its reasonable efforts, consistent with its customary collection practices for its own accounts receivable, without compensation, to collect each Account Receivable during such 180 days. During that period Buyer shall provide to Seller a detailed bi-monthly statement of the Accounts Receivable showing amounts collected to the date, and amounts outstanding as of the same date, and, within 15 days of the end of the period covered by such statement, deliver to Seller the Accounts Receivable report and a check for the amounts collected during such period. All payments received by Buyer during the 180-day period following the Closing Date from a person obligated with respect to an Account Receivable shall be applied first to Seller's account and only after full satisfaction thereof to Buyer's account; provided, however, that if such person has, in the reasonable opinion of Buyer, a legitimate dispute with respect to such Account Receivable and Buyer also has an account receivable from such person, all payments received by Buyer during the 180-day period following the Closing Date from such person shall be applied first to Buyer's account and only after the earlier to occur of full satisfaction of Buyer's account or resolution of such dispute, to Seller's account. Buyer shall not be required to refer any Account Receivable to a collection agency or an attorney for collection, nor shall it compromise, settle, or adjust any Account Receivable having a value in excess of $5,000 without receiving the approval of Seller. Seller shall take no action with respect to the Accounts Receivable, such as litigation, until the expiration of such 180-day period. Following the expiration of said 180-day period, Seller shall be free to take such action as Seller may in its sole discretion determine to collect any Accounts Receivable then outstanding. 7.5. BROKERS OR FINDERS. Buyer represents and warrants to Seller, and Seller represents and warrants to Buyer, that other than the previously disclosed fee payable to Media Venture Partners, which fee shall be paid in accordance with the provisions of Section 12.7, no agent, broker, investment banker, or other or person is or will be entitled to any broker's or finder's fee or any other commission or similar fee payable by Buyer or Seller in connection with any of the transactions contemplated by this Agreement. 35 41 7.6. BULK SALES LAW. The parties do not believe that any bulk sales or fraudulent conveyance statute applies to the transactions contemplated by this Agreement. Buyer therefore waives compliance by Seller with the requirements of any such statutes, and Seller agrees to indemnify and hold Buyer harmless against any claim made against Buyer by any creditor of Seller as a result of a failure to comply with any such statute. 7.7. RISK OF LOSS. (a) 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. In the event of any such loss, damage, impairment, confiscation, or condemnation, whether or not covered by insurance, Seller shall promptly notify Buyer of such loss, damage, impairment, confiscation, or condemnation. (b) If Seller, at its expense, repairs, replaces, or restores such Assets to their prior condition to the satisfaction of Buyer before the Closing, Seller shall be entitled to all insurance proceeds and condemnation awards, if any, by reason of such award or loss. (c) If Seller does not or cannot restore or replace lost, damaged, impaired, confiscated or condemned Assets having a replacement cost in excess of $250,000 in the aggregate or informs Buyer that it does not intend to restore or replace such Assets, Buyer may at its option: (i) terminate this Agreement by notice forthwith without any further obligation hereunder; or (ii) proceed to the Closing of this Agreement without Seller completing the restoration and replacement of such Assets, provided that Seller shall assign all rights under applicable insurance policies and condemnation awards, if any, to Buyer; and in such event, Seller shall have no further liability with respect to the condition of the Assets directly attributable to the loss, damage, impairment, confiscation, or condemnation. (d) Buyer will notify Seller of a decision under the options described in Section 7.7(c)(i) or (ii) above within ten business days after Seller's notice to Buyer of the damage or destruction of Assets and the estimate of the costs to repair or replace; provided, however, that if Seller states that it intends to restore the damaged Assets and if Seller has not restored such damaged Assets immediately prior to the Closing Date, notwithstanding Buyer's prior delivery of a notice to proceed pursuant to this Section 7.7(d), Buyer shall have the right to either postpone the Closing or terminate this Agreement by notice forthwith. 7.8. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this Agreement, each of the parties hereto will use its commercially reasonable efforts to do, or cause to be taken all action 36 42 and to do, or cause to be done, all things necessary, proper, or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. If at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement, the parties to this Agreement and their duly authorized representatives shall take all such action. Without limiting the generality of the foregoing, if, after the Closing Date, Buyer seeks indemnification or recovery from one or more other parties to an Assumed Contract or otherwise seeks to enforce such Assumed Contract and, in order to obtain such indemnification, recovery or enforcement, it is necessary for Seller to initiate a suit, participate in any enforcement proceeding or otherwise provide assistance to Buyer, then, at the request and the sole expense of Buyer, Seller shall take such action as Buyer may reasonable request in connection with Buyer's efforts to obtain such indemnification, recovery or enforcement. 7.9. LOCAL MARKETING AGREEMENT. No later than the first day or 15th day (whichever occurs first after the occurrence of the event specified in the succeeding clause (a) or (b)) of the month following the earlier of (a) the termination of the applicable waiting period under the HSR Act or (b) the issuance of a notification, either in writing or orally, by the U.S. Department of Justice or the Federal Trade Commission of an early termination of such waiting period, Buyer and Seller shall enter into a Local Marketing Agreement substantially in the form of Exhibit H (with the exhibits to such form appropriately completed) pursuant to which Seller shall make the Stations' broadcasting facilities available to Buyer prior to the Closing (the "LMA"). If the LMA is entered into, then, notwithstanding any other provision of this Agreement: (i) Seller shall not be liable for the breach of a representation or warranty of Seller contained in Section 3.1 of this Agreement (other than subsections (a), (b), (c) or (d) thereof) if the fact, event or circumstance that gave rise to such breach occurs after the LMA Commencement Date and was caused by a failure by Buyer to perform its obligations under the LMA; (ii) Seller shall not be liable for the failure to perform or observe any covenant contained in Sections 4.1, 4.2, 5.2(b) or 5.4 if such failure was caused by a failure of Buyer to perform its obligations under the LMA; and (iii) Buyer shall not be entitled to fail to consummate the transactions contemplated by this Agreement pursuant to the provisions of Section 8.2(a) or 8.2(b) or to terminate this Agreement pursuant to the provisions of Section 10.1(b)(i) as a result of such breach of any such representation, warranty or covenant caused by the failure of Buyer to perform its obligations under the LMA. ARTICLE VIII CONDITIONS PRECEDENT 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligations of Buyer and Seller to effect the transactions contemplated hereby are subject to the satisfaction (or, in the case of the condition specified in the last sentence of Section 8.l(a), the waiver by Buyer) on or prior to the Closing Date of the following conditions: 37 43 (a) Consents and Approvals. All authorizations, consents, orders, or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Entity necessary for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred, or been obtained. The FCC Consents shall have become Final Orders and shall be in form and substance satisfactory to Buyer. (b) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect. (c) No Action. No action shall have been taken nor any statute, rule, or regulation shall have been enacted by any Governmental Entity that makes the consummation of the transactions contemplated hereby illegal. 8.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to effect the transactions contemplated hereby is subject to the satisfaction of the following conditions unless waived, in whole or in part, by Buyer: (a) Representations and Warranties. The representations and warranties of Seller set forth in this Agreement shall be true and correct in all material respects (provided that any representation or warranty of Seller contained herein that is qualified by a materiality standard shall not be further qualified hereby and that this Section 8.2(a) is subject to the provisions of Section 7.9) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and Buyer shall have received a certificate to such effect signed on behalf of Seller by the chief executive officer or by the chief financial officer of the General Partner of Seller. (b) Performance of Obligations. Subject to the provisions of Section 7.9, Seller shall have performed in all material respects all obligations required to be performed by it under this Agreement prior to the Closing Date, and Buyer shall have received a certificate to such effect signed on behalf of Seller by the chief executive officer or by the chief financial officer of the General Partner of Seller. (c) Consents Under Agreements. Buyer shall have been furnished with evidence reasonably satisfactory to it of the consent or approval of each person that is a party to a Contract identified in Schedule 3.1(p) whose consent or approval shall be required in order to permit the consummation of the transactions contemplated hereby and such consent or approval shall be in form and substance satisfactory to Buyer. (d) Legal Opinions. Buyer shall have received from (i) Bullivant, Houser, Bailey, Pendergrass and Hoffman, counsel to Seller, and (ii) Fisher, Wayland, Cooper, Leader & Zaragoza 38 44 L.L.P., special FCC counsel to Seller, one or more opinions, dated the Closing Date, in substantially the forms attached as Exhibits I and J hereto. (e) Real Estate Title Commitment. Within 60 days after the date of this Agreement, Seller, at its sole cost and expense, shall have obtained a preliminary report on title to the Owned Real Property covering a date subsequent to the date of this Agreement, issued by the Title Company, which preliminary report shall contain a commitment (the "Title Commitment") of the Title Company to issue an owner's title insurance policy at Seller's cost as Buyer may reasonably require (the "Title Policy") insuring the fee simple absolute interest of Seller in the Owned Real Property. The Title Commitment shall be in such amount as Buyer may reasonably determine to be the fair market value of the Owned Real Property (including all improvements located thereon) and shall be subject only to the standard printed exceptions and: (i) liens of current state and local property taxes which are not delinquent or subject to penalty; (ii) unviolated zoning regulations and restrictive covenants and easements of record which do not detract from the value of the Owned Real Property and do not materially and adversely affect, impair or interfere with the use of any property affected thereby as heretofore used by Seller or the Stations;(iii) public utility easements of record, in customary form, to serve the Owned Real Property; and (iv) Permitted Encumbrances. (f) Survey. If requested by Buyer, Seller, at its sole cost and expense, shall have obtained a survey of the Owned Real Property as of a date subsequent to the date hereof which shall: (i) be prepared by a registered land surveyor reasonably acceptable to Buyer; (ii) be certified to the Title Company and to Buyer; and (iii) show with respect to the Owned Real Property: (A) the legal description of the Owned Real Property (which shall be the same as the Title Policy pertaining thereto); (B) all buildings, structures and improvements thereon and all restrictions of record and other restrictions that have been established by an applicable zoning or building code or ordinance and all easements or rights of way across or serving the Owned Real Property (including any off-site easements affecting or appurtenant thereto); (C) no encroachments upon the Owned Real Property or adjoining parcels by buildings, structures or improvements and no other survey defects; (D) access to such parcel from a public street; and (E) provide a flood certification reasonably satisfactory to Buyer to the effect that no portion of the Owned Real Property necessary for the operation of the Stations is located within a flood hazard area. (g) Closing Deliveries. All documents, instruments, certificates or other items required to be delivered by Seller or David J. Benjamin, III pursuant to Section 9.2 shall have been delivered. 8.3. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of Seller to effect the transactions contemplated hereby is subject to the satisfaction of the following conditions unless waived, in whole or in part, by Seller. 39 45 (a) Representations and Warranties. The representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects (provided that any representation or warranty of Buyer contained herein that is qualified by a materiality standard shall not be further qualified hereby) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and Seller shall have received a certificate to such effect signed on behalf of Buyer by the chief executive officer or by the chief financial officer of Buyer. (b) Performance of Obligations of Buyer. Buyer shall have performed in all material respects the obligations required to be performed by it under this Agreement prior to the Closing Date, and Seller shall have received a certificate to such effect signed on behalf of Buyer by the chief executive officer or by the chief financial officer of Buyer. (c) Closing, Deliveries. All documents and instruments required to be delivered by Buyer or Capstar pursuant to Section 9.2 shall have been delivered. ARTICLE IX CLOSING 9.1. CLOSING. Subject to the satisfaction or waiver of the conditions set forth in Article VIII and to the next succeeding sentence, the Closing will take place at the offices of Vinson & Elkins L.L.P., Dallas, Texas, at 10:00 a.m., local time (or at such other place and time as Buyer and Seller may agree) on a date selected by Buyer on five business days notice to Seller which date shall be on or before the later of October 31, 1997 or the 10th business day after the day on which the FCC Consents have been granted by Final Order (the "Closing Date"). Notwithstanding the foregoing: (a) In the case of a Station Event (as defined below), (i) if the Cessation Date (as defined below) is less than 60 days after the date that the Station Event occurs, Buyer, in its discretion, may extend the Closing Date to a date not later than the 30th day after the Cessation Date, (ii) if the Cessation Date is more than 60, but less than 90, days after the date that the Station Event occurs, Buyer, in its discretion, shall elect on the first to occur of the 10th business day after the Cessation Date or the 90th day (or, if not a business day, the next business day) after the date that the Station Event occurs (the "Election Date") to either (A) close the transactions contemplated by this Agreement on the later to occur of the fifth business day after the Election Date or the 90th day (or, if not a business day, the next business day) after the date that the Station Event occurs, or (B) terminate this Agreement, and (iii) if the Cessation Date has not occurred by the 90th day after the date that the Station Event occurs (or, if not a business day, the next business day), Buyer shall elect, not later than the 95th day after the date of the Station Event (or if not a business day, the next business day), either to terminate this Agreement or close the transactions contemplated by this Agreement on the fifth business day after the date of such election; 40 46 (b) In the case of a Conflict Event, a Trading Event or a Banking Event (in each case, as defined below), Buyer, in its discretion, may extend the Closing Date to a date not to exceed the 90th day after the Event Date; (c) If a Cure Period (as defined in Section 10.1(b)(i)) has not ended on or before the Closing Date, the Closing Date shall be extended to the earlier to occur of five business days after the cure or waiver of the breach giving rise to the Cure Period or the end of the Cure Period; and (d) If the Closing does not occur within 20 days after the date of the Final Order, the parties shall request approval from the FCC to extend the Closing so that the Closing contemplated hereunder will not violate any FCC rules or regulations. For purposes of this Agreement, a "Trading Event" shall mean that trading generally in securities on the New York Stock Exchange shall have been suspended or materially limited; a "Banking Event" shall mean that a general moratorium on commercial banking activities in New York, New York shall have been declared by any federal or state authority; a "Conflict Event" shall mean the occurrence of any major armed conflict involving a substantial participation by the armed forces of the United States of America; a "Station Event" shall mean any act of nature (including fires, floods, earthquakes, and storms), calamity, casualty or condemnation or the act or omission to act of any state or federal regulatory agency having jurisdiction over the Stations that has caused one or more Stations representing an aggregate of 3% of the consolidated gross revenues of Seller for the last full 12 calendar months prior to the Station Event not to be operating in a manner substantially consistent with the operations conducted before such act, calamity, casualty, condemnation or agency action or omission occurred or not in compliance with its or their respective Station License(s); an "Event Date" shall mean the date on which a Trading Event, Banking Event or a Conflict Event occurs; and a "Cessation Date" shall mean the date on which a Station Event ends. Pro forma adjustments shall be made for purposes of calculating gross revenues for the 12-month period specified in the definition of "Station Event" with respect to any radio broadcast station acquired during such 12-month period, to assume that such station was acquired at the beginning of such 12-month period and include the gross revenues of such station for the full 12-month period. 9.2. ACTIONS TO OCCUR AT CLOSING. (a) At the Closing, Buyer shall deliver to Seller the following: (i) Purchase Price The Purchase Price by wire transfer of immediately available funds (less the Holdback Amount). 41 47 (ii) Assumption Agreement. A counterpart of the Assumption Agreement executed by Buyer; (iii) Indemnification Escrow Agreement. A counterpart of the Indemnification Escrow Agreement executed by Buyer; (iv) Certificates The certificates referred to in Section 8.3(a) and (b); and (b) At the Closing, Seller shall deliver to Buyer the following: (i) Certificates. The certificates described in Section 8.2(a) and (b); (ii) Legal Opinions. The opinions of counsel referred to in Section 8.2(d); (iii) Transfer Documents. The duly executed Bill of Sale and Assignment, together with any other assignments and other transfer documents as requested by Buyer; (iv) Consents; Acknowledgments. The original of each Consent; (v) Estoppel Certificates. An estoppel certificate from the lessor(s) of the Leased Real Property; (vi) Licenses, Contracts, Business Records, Etc. To the extent they are in possession of Seller, copies of all Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans, projections, statistics, engineering records and all files and records used by Seller in connection with the Stations' business and operations, which copies shall be available at the Closing or at the Stations' principal business offices; (vii) Indemnification Escrow Agreement. A counterpart of the Indemnification Escrow Agreement executed by Seller; (viii) Assumption Agreement. A counterpart of the Assumption Agreement executed by Seller; (ix) Non-Competition Agreement. A counterpart of the Non-Competition Agreement executed by Seller; (x) Warranty Deed. A statutory Warranty Deed conveying fee simple title to the Owned Real Property to Buyer, subject only to the Permitted Encumbrances, in proper statutory form for recording together with documentary stamps affixed thereto; 42 48 (xi) No-Lien Affidavit. A standard No-Lien Affidavit executed by Seller which shall be in the recordable form and otherwise satisfactory to the Title Company in order to delete the standard printed exceptions relating to mechanics' liens and parties-in-possession; (xii) GAP Affidavit. An affidavit, if requested by the Title Company, as may be necessary to insure the gap between the effective date of the Title Commitment to and through the date of the recordation of the deed to the Owned Real Property; and (xiii) Title Requirements. Such other documents as shall be reasonably required by the Title Company as called for or required under the terms of any title policy obtained or issued to Buyer. (c) At the Closing, Seller and Buyer shall instruct the Escrow Agent to deliver, and it shall deliver, the Deposit Letter of Credit to Buyer. (d) At the Closing, Buyer shall receive a statement in conformance with Treas. Reg. Section 1.1445-11T(d)(2)(i) from the General Partner of Seller. (e) At the Closing, Capstar and David J. Benjamin, III shall deliver a fully executed counterpart of the employment agreement referred to in Section 5.7. ARTICLE X TERMINATION, AMENDMENT AND WAIVER 10.1. TERMINATION. This Agreement may be terminated prior to the Closing: (a) by mutual consent of Buyer and Seller; (b) by either Seller or Buyer; (i) if there shall have been any material breach of any representation, warranty, covenant, or agreement, on the part of Buyer, on the one hand, or Seller, on the other hand, set forth in this Agreement which breach shall not have been cured within 20 days (the "Cure Period") following receipt by the breaching party of written notice of such breach; (ii) if a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree, or ruling or taken any other action (which order, decree or ruling the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining, or 43 49 otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling, or other action shall have become final and nonappealable; (iii) if, for any reason, the FCC denies or dismisses any of the Applications and the time for reconsideration or court review under the Communications Act with respect to such denial or dismissal has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review; (iv) if, for any reason, any of the Applications is designated for an evidentiary hearing by the FCC; or (v) if the Closing shall not have occurred by the later of October 31, 1997 or the date to which the Closing Date is extended pursuant to the second sentence of Section 9.1; provided, however, that the right to terminate this Agreement under this clause (v) shall not be available to any party whose breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; or (c) by Buyer: (i) pursuant to the provisions of Section 7.7; (ii) with respect to a Station Event, at its option, as provided in the second sentence of Section 9.1; or (iii) if the FCC grants any of the Applications with any adverse conditions not generally imposed on grants of such applications and the time for reconsideration or court review under the Communications Act with respect to such adverse conditions has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review. The right of any party hereto to terminate this Agreement pursuant to this Section 10.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, any person controlling any such party or any of their respective officers, directors, employees, accountants, consultants, legal counsel, agents, or other representatives whether prior to or after the execution of this Agreement. Notwithstanding anything in the foregoing to the contrary, no party that is in material breach of this Agreement shall be entitled to terminate this Agreement except with the consent of the other party. 10.2. EFFECT OF TERMINATION. (a) In the event of a termination of this Agreement by either Seller or Buyer as provided above, there shall be no liability on the part of either Buyer or Seller, except for liability 44 50 arising out of a breach of this Agreement. If this Agreement is terminated by Seller pursuant to Section 10.1(b)(i) or if this Agreement is terminated by Seller pursuant to Section 10.1(b)(v) and the failure to close by the date specified in such Section was a result of a breach of any representation, warranty, covenant or agreement on the part of Buyer, the parties agree and acknowledge that Seller will suffer damages that are not practicable to ascertain. Accordingly, in such event and if within 10 business days after termination of this Agreement Seller delivers to Buyer a written demand for liquidated damages, Seller shall be entitled to receive, as liquidated damages, the sum of (i) $1,750,000 if such termination occurs on or prior to the earlier of the LMA Commencement Date or March 1, 1997, or (ii) $2,625,000 if such termination occurs after the earlier of the LMA Commencement Date or March 1, 1997. Such sum shall be payable by Buyer within 10 business days after receipt of Seller's written demand and in accordance with the provisions of the Deposit Escrow Agreement, including receipt by Buyer of a general release as provided in the Deposit Escrow Agreement. As security for payment thereof, Buyer has, concurrently with the execution of this Agreement, entered into the Deposit Escrow Agreement with Seller and the Escrow Agent as provided in Section 2.7. The parties agree that the foregoing liquidated damages are reasonable considering all the circumstances existing as of the date hereof and constitute the parties' good faith estimate of the actual damages reasonably expected to result from the termination of this Agreement by Seller pursuant to Section 10.1(b)(i). Seller agrees that, to the fullest extent permitted by law, Seller's right to payment of the $1,750,000 or $2,625,000, whichever is applicable depending on the date of termination of this Agreement, as liquidated damages as provided in this Section 10.2 shall be its sole and exclusive remedy if the Closing does not occur with respect to any damages whatsoever that the Seller may suffer or allege to suffer as a result of any claim or cause of action asserted by the Seller relating to or arising from breaches of the representations, warranties or covenants of Buyer contained in this Agreement and to be made or performed at or prior to the Closing. If this Agreement is terminated by Seller pursuant to Section 10.1(b)(i) or if this Agreement is terminated pursuant to Section 10.1(b)(v) and the failure to close by the date specified in Section 10.1(b)(v) is a result of a breach of any representation, warranty, covenant or agreement on the part of Buyer, Buyer and Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit to Seller. If this Agreement is terminated (i) by Buyer and Seller pursuant to the provisions of Section 10.1(a), (ii) by either party pursuant to any provision of Section 10.1(b)(ii), (iii), or (iv), (iii) pursuant to the provisions of Section 10.1(b)(v) and the failure to close by the date specified in Section 10.1(b)(v) is not a result of a breach of any representation, warranty, covenant or agreement on the part of Buyer, or (iv) or by Buyer pursuant to the provisions of Section 10.1(c), Buyer and Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer. (b) As a condition of payment, and upon receipt of the appropriate sum of liquidated damages under this Section 10.2, Seller shall irrevocably and unconditionally release, acquit, and forever discharge Buyer and its successors, assigns, employees, agents, stockholders, partners, subsidiaries, parent companies and other Affiliates (corporate or otherwise) of and from any and all Released Claims, including, without limitation, all Released Claims arising out of, based upon, resulting from or relating to the negotiation, execution, performance, breach or otherwise 45 51 related to or arising out of this Agreement, the Transaction Documents, or any agreement entered into in connection therewith or related thereto. "Released Claims" as used herein shall mean any and all charges, complaints, claims, causes of action, promises, agreements, rights to payment, rights to any equitable remedy, rights to any equitable subordination, demands, debts, liabilities, express or implied contracts, obligations of payment or performance, rights of offset or recoupment, accounts, damages, costs, losses or expenses (including attorneys' and other professional fees and expenses) held by any party hereto, whether known or unknown, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, absolute or contingent, direct or derivative. ARTICLE XI INDEMNIFICATION 11.1. INDEMNIFICATION OF BUYER. Subject to the provisions of this Article XI, Seller agrees to indemnify and hold harmless the Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs. 11.2. INDEMNIFICATION OF SELLER. Subject to the provisions of this Article XI, Buyer agrees to indemnify and hold harmless the Seller Indemnified Parties from and against any and all Seller Indemnified Costs. 11.3. DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall give prompt written notice to any entity or person who is obligated to provide indemnification hereunder (an "Indemnifying Party") of the commencement or assertion of any action, proceeding, demand, or claim by a third party (collectively, a "third-party action") in respect of which such Indemnified Party shall seek indemnification hereunder. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it, he, or she may have to such Indemnified Party under this Article XI unless the failure to give such notice materially and adversely prejudices such Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle, or otherwise dispose of such third-party action on such terms as they deem appropriate; provided, however, that: (a) The Indemnified Party shall be entitled, at his, her, or its own expense, to participate in the defense of such third-party action (provided, however, that the Indemnifying Parties shall pay the attorneys' fees of the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by any such Indemnifying Party in connection with the defense of such third-party action, (ii) the Indemnifying Parties shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third-party action, (iii) the Indemnified Party shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (iv) the Indemnified Party's counsel shall have advised the Indemnified Party in writing, with a 46 52 copy to the Indemnifying Party, that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have common counsel); (b) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such third-party action or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the opinion of the Indemnified Party, such settlement, compromise, admission, or acknowledgment could have an adverse effect on its business or, in the case of an Indemnified Party who is a natural person, on his or her assets or interests; (c) No Indemnifying Party shall consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third-party action; and (d) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at their own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third- party action (i) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time or (ii) to the extent the third-party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party. The parties hereto shall extend reasonable cooperation in connection with the defense of any third-party action pursuant to this Article XI and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested. 11.4. DIRECT CLAIMS. In any case in which an Indemnified Party seeks indemnification hereunder which is not subject to Section 11.3 because no third-party action is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any Indemnified Costs which such Indemnified Party claims are subject to indemnification under the terms hereof. The failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim unless the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim. 47 53 11.5. ESCROW. On the Closing Date, Buyer and Seller will enter into the Indemnification Escrow Agreement in accordance with which Buyer shall, at Closing, deposit $700,000 (the "Holdback Amount") with the Escrow Agent. 11.6. LIMITATIONS. Subject to Section 11.7 and Section 12.17 hereof, the following provisions of this Section 11.6 shall be applicable after the time of the Closing: (a) Minimum Loss. Subject to the provisions of Section 12.17, no Indemnifying Party shall be required to indemnify an Indemnified Party for a breach of a representation or warranty unless and until the aggregate amount of Indemnified Costs for which the Indemnified Party is otherwise entitled to indemnification for one or more breaches of representations and warranties pursuant to this Article XI exceeds $100,000 (the "Minimum Loss"). There is no minimum loss threshold with respect to breaches of covenants. If an Indemnifying Party breaches a covenant, the Indemnified Party shall be entitled to the entire amount of its Indemnified Costs, subject to the limitations on recovery and recourse set forth in Sections 11.6 and 11.7 below. If an Indemnified Party breaches a representation or warranty, then after the Minimum Loss with respect to breaches of representations or warranties is exceeded, the Indemnified Party shall be entitled to be paid the entire amount of its Indemnified Costs in excess of (but not including) the Minimum Loss, subject to the limitations on recovery and recourse set forth in this Section 11.6 and in Section 11.7 below and subject to the exception contained in Section 12.17. For purposes of determining the aggregate amount of Minimum Loss suffered by an Indemnified Party, each representation and warranty contained in this Agreement for which indemnification can be or is sought hereunder shall be read (including, without limitation, for purposes of determining whether a breach of such representation or warranty has occurred) without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. In addition, in determining whether an Indemnifying Party shall be required to indemnify an Indemnified Party under this Article XI, once the Minimum Loss requirement set forth in this clause (a) has been satisfied, each representation and warranty contained in this Agreement for which indemnification can be or is sought hereunder shall be read (including, without limitation for purposes of determining whether a breach of such representation or warranty has occurred) without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. As used in the foregoing provisions of this Section 11.6, an "Indemnified Party" refers to all of the Buyer Indemnified Parties on the one hand and all of the Seller Indemnified Parties on the other hand, and an "Indemnifying Party" refers to the Buyer on the one hand and the Seller on the other hand. (b) Minimum Claim. Notwithstanding anything to the contrary stated herein, if any third-party action or direct claim results in any damages, losses, liabilities, charges, penalties, costs and expenses (including court costs and attorneys' fees and expenses incurred in investigating and preparing for any litigation or proceeding) which do not in the aggregate exceed $500, such damages, losses, liabilities, charges, penalties, costs and expenses shall not be deemed to be Indemnified Costs. 48 54 (c) Limitation as to Time. No Indemnifying Party shall be liable for any Indemnified Costs pursuant to this Article XI unless a written claim for indemnification in accordance with Section 11.3 or 11.4 is given by the Indemnified Party to the Indemnifying Party with respect thereto on or before the later of (i) 450 days after the Closing Date or (ii) October 31, 1998, except that this time limitation shall not apply to any claims contemplated by Section 12.17. 11.7. RECOVERY AGAINST ESCROWED FUNDS. Subject to Section 12.17 hereof, the following provisions of this Section 11.7 shall be applicable after the time of the Closing: (a) With respect to any claim by a Buyer Indemnified Party against Seller for Buyer Indemnified Costs payable under this Article XI, the Buyer Indemnified Party shall be entitled to payment only out of the Holdback Amount pursuant to the terms of this Article XI and the Indemnification Escrow Agreement for all amounts due to the Buyer Indemnified Party with respect to such claim. (b) Upon receipt of the Holdback Amount under this Section 11.7, Buyer shall irrevocably and unconditionally release, acquit and forever discharge Seller and its successors, assigns, employees, agents, stockholders, partners, subsidiaries, parent companies and other affiliates (corporate or otherwise) of and from any and all Released Claims with respect to Buyer Indemnified Costs in excess of the Holdback Amount other than claims specified in Section 12.17. 11.8. INSTRUCTIONS TO ESCROW AGENT. Seller hereby covenants and agrees that at any time Seller is or becomes obligated to indemnify a Buyer Indemnified Party for Buyer Indemnified Costs under this Article XI, Seller will execute and deliver to the Escrow Agent written instructions to release to the Buyer Indemnified Party such portion of the Holdback Amount as is necessary to indemnify the Buyer Indemnified Party for such Buyer Indemnified Costs. ARTICLE XII GENERAL PROVISIONS 12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. Regardless of any investigation at any time made by or on behalf of any party hereto or of any information any party may have in respect thereof, each of the representations and warranties made hereunder or pursuant hereto or in connection with the transactions contemplated hereby shall survive the Closing. Except as otherwise provided in the next two sentences, the representations, warranties and covenants set forth in this Agreement shall terminate on the later of (a) the 450th day following the Closing Date, and (b) October 31, 1998. Following the date of termination of a representation, warranty or covenant, no claim can be brought with respect to a breach of such representation, warranty or covenant, but no such termination shall not affect any claim for a breach of a representation, 49 55 warranty or covenant that was asserted before the date of termination. The covenants and agreements contained in this Article XII shall survive the Closing indefinitely. 12.2. FURTHER ACTIONS. After the Closing Date, Seller shall execute and deliver such other certificates, agreements, conveyances, and other documents, and take such other action, as may be reasonably requested by Buyer in order to transfer and assign to, and vest in, Buyer the Assets pursuant to the terms of this Agreement. 12.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. 12.4. WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand, or Seller, on the other hand, to comply with any obligation, covenant, agreement, or condition contained herein may be waived only if set forth in an instrument in writing signed by the party or parties to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure. 12.5. SPECIFIC PERFORMANCE. The parties recognize that in the event Seller should refuse to perform under the provisions of this Agreement, monetary damages alone will not be adequate. Buyer shall therefore be entitled, in addition to any other remedies which may be available, including money damages, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce this Agreement specifically, Seller hereby waive the defense that there is an adequate remedy at law. 12.6. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of applicable law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible. 12.7. EXPENSES AND OBLIGATIONS. Except as otherwise expressly provided in this Agreement or as provided by law, all costs and expenses incurred by the parties hereto in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the party which has incurred such expenses. Notwithstanding the foregoing, (a) the filing fees incurred in connection with the filings made pursuant to the HSR Act shall be borne equally by Seller and Buyer, (b) the fee payable to the Escrow Agent shall be borne as provided in the Indemnification Escrow Agreement and the Deposit Escrow Agreement, (c) the brokerage fees 50 56 payable to Media Venture Partners shall be borne by Buyer, and (d) all sales taxes arising out of the transactions contemplated by this Agreement shall be paid by Seller. In the event of a dispute between the parties in connection with this Agreement and the transactions contemplated hereby, each of the parties hereto hereby agrees that the prevailing party shall be entitled to reimbursement by the other party of reasonable legal fees and expenses incurred in connection with any action or proceeding. 12.8. PARTIES IN INTEREST. This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each party hereto and their successors and assigns, and nothing in this Agreement, except as set forth below, express or implied, is intended to confer upon any other person (other than the Indemnified Parties as provided in Article XI) any rights or remedies of any nature whatsoever under or by reason of this Agreement. 12.9. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to Buyer, to Community Acquisition Company, Inc. 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attn: Lawrence D. Stuart, Jr. Facsimile: (214) 740-7313 with a copy to Vinson & Elkins L.L.P. 3700 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201 Attn: Michael D. Wortley Facsimile: (214) 220-7716 51 57 (b) If to Seller, to Community Pacific Broadcasting Company L.P. P.O. Box 871 Monterey, California 93942 Attn: David J. Benjamin, III Facsimile: (408) 655-6355 with a copy to Bullivant, Houser, Bailey, Pendergrass and Hoffman 300 Pioneer Tower 888 SW 5th Avenue Portland, Oregon 97204 Attn: Kimball H. Ferris Facsimile: (503) 295-0915 12.10. COUNTERPARTS. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 12.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed to include the exhibits and schedules hereto and the other certificates, documents and instruments delivered hereunder) constitutes the entire agreement of the parties hereto and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the parties with respect to the subject matter hereof. There are no representations or warranties, agreements, or covenants other than those expressly set forth in this Agreement. 12.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. ANY SUIT OR PROCEEDING BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN DELAWARE. 12.13. PUBLIC ANNOUNCEMENTS. Seller and Buyer shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation. Prior to the Closing, Seller will not issue any other press release or otherwise make any public statements regarding its business, except as may be required by applicable law. 52 58 12.14. ASSIGNMENT. Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be assigned by any of the parties hereto, whether by operation of law or otherwise; provided, however, that (a) upon notice to Seller and without releasing Buyer from any of its obligations or liabilities hereunder, Buyer may assign or delegate any or all of its rights or obligations under this Agreement to any Affiliate thereof, and (b) nothing in this Agreement shall limit Buyer's ability to make a collateral assignment of its rights under this Agreement to any institutional lender that provides funds to Buyer without the consent of Seller. Seller shall execute an acknowledgment of such assignment(s) and collateral assignments in such forms as Buyer or its institutional lenders may from time to time reasonably request; provided, however, that unless written notice is given to Seller that any such collateral assignment has been foreclosed upon, Seller shall be entitled to deal exclusively with Buyer as to any matters arising under this Agreement or any of the other agreements delivered pursuant hereto. In the event of such an assignment, the provisions of this Agreement shall inure to the benefit of and be binding on Buyer's assigns. 12.15. DIRECTOR AND OFFICER LIABILITY. The directors, officers, and stockholders of Buyer and its affiliates shall not have any personal liability or obligation arising under this Agreement (including any claims that Seller may assert) other than as an assignee of this Agreement. 12.16. NO REVERSIONARY INTEREST. The parties expressly agree, pursuant to Section 73.1150 of the FCC's rules, that Seller does not retain any right to reassignment of any of the FCC Licenses in the future, or to operate or use the facilities of the Stations for any period beyond the Closing Date. 12.17. NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any party under Article XI shall be in addition to, and not exclusive of any other liability that such party may have at law or equity based on such party's fraudulent acts or omissions. None of the provisions set forth in this Agreement, including but not limited to the provisions set forth in Section 11.6(a) (relating to Minimum Loss), 11.6(b) (relating to minimum claims), 11.6(c) (relating to limitations on the period of time during which a claim for indemnification may be brought), 11.7 (relating to recourse against escrowed funds), or 12.1 (relating to survival periods), shall be deemed a waiver by any party to this Agreement of any right or remedy which such party may have at law or equity based on any other party's fraudulent acts or omissions, nor shall any such provisions limit, or be deemed to limit, (i) the amounts of recovery sought or awarded in any such claim for fraud, (ii) the time period during which a claim for fraud may be brought, or (iii) the recourse which any such party may seek against another party with respect to a claim for fraud; provided, that with respect to such rights and remedies at law or equity, the parties further acknowledge and agree that none of the provisions of this Section 12.17, nor any reference to this Section 12.17 throughout this Agreement, shall be deemed a waiver of any defenses which may be available in respect of actions or claims for fraud, including but not limited to, defenses of statutes of limitations or limitations of damages. 53 59 IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be signed, all as of the date first written above. SELLER: COMMUNITY PACIFIC BROADCASTING COMPANY L.P. By: Broadcast Management Corporation, its general partner /s/ DAVID J. BENJAMIN ------------------------------ By: David J. Benjamin, III Its: President BUYER: COMMUNITY ACQUISITION COMPANY, INC. /s/ ERIC C. NEUMAN ------------------------------ By: Eric C. Neuman Its: Vice President 60 ANNEX A THE STATIONS KASH AM-FM Anchorage, Alaska KBFX - FM Anchorage, Alaska KENI - AM Anchorage, Alaska KJSN - FM Modesto, California KVFX - FM Manteca, California KFIV - AM Modesto, California KJAX - AM Stockton, California KGGO - FM Des Moines, Iowa KHKI - FM Des Moines, Iowa KDMI - AM Des Moines, Iowa EX-10.3 9 ASSET PURCHASE AGREEMENT 1 EXHIBIT 10.3 ASSET PURCHASE AGREEMENT by and among POINT COMMUNICATIONS LIMITED PARTNERSHIP MIDCONTINENT BROADCASTING CO. OF WISCONSIN, INC. MADISON RADIO GROUP AND POINT MADISON ACQUISITION COMPANY, INC., dated as of January 27, 1997 2 TABLE OF CONTENTS
Page ARTICLE I DEFINED TERMS 1.1. Defined Terms.............................................. 2 1.2. References and Titles......................................11 ARTICLE II SALE AND PURCHASE OF ASSETS 2.1. Agreement to Sell and Buy..................................12 2.2. Excluded Assets............................................13 2.3. Purchase Price.............................................14 2.4. Adjustments and Prorations.................................14 2.5. Assumption of Liabilities and Obligations..................15 2.6. Allocation.................................................16 2.7. Earnest Money..............................................16 ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING SELLER 3.1. Representations and Warranties Regarding Seller............16 3.2. Representations and Warranties of Buyer....................27 ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1. Covenants of the Selling Group.............................28 4.2. Negative Trade Balance.....................................30 4.3. Environmental Site Assessments.............................30 4.4 Relocation of Operations...................................30 ARTICLE V ADDITIONAL AGREEMENTS OF THE SELLING GROUP 5.1. No Solicitation of Transactions............................31 5.2. Access and Information.....................................31 5.3. Assistance.................................................32 5.4. Compliance With Station Licenses...........................33 5.5. Notification of Certain Matters............................33
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Page 5.6. Third Party Consents.......................................34 5.7. Richard P. Verne Consulting Agreement......................34 5.8. Confidential Information...................................34 ARTICLE VI COVENANTS OF BUYER 6.1. Notification of Certain Matters............................34 6.2. Employee Matters...........................................35 ARTICLE VII MUTUAL COVENANTS 7.1. Application for FCC Consents...............................35 7.2. Control of Stations........................................35 7.3. Other Governmental Consents................................35 7.4. Accounts Receivable........................................36 7.5. Brokers or Finders.........................................36 7.6. Bulk Sales Law.............................................36 7.7. Risk of Loss...............................................37 7.8. Additional Agreements......................................37 ARTICLE VIII CONDITIONS PRECEDENT 8.1. Conditions to Each Party's Obligation......................38 8.2. Conditions to Obligation of Buyer..........................38 8.3. Conditions to Obligations of the Seller....................39 ARTICLE IX CLOSING 9.1. Closing....................................................40 9.2. Actions to Occur at Closing................................41 ARTICLE X TERMINATION, AMENDMENT AND WAIVER 10.1. Termination................................................44
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Page 10.2. Effect of Termination......................................45 ARTICLE XI INDEMNIFICATION 11.1. Indemnification of Buyer...................................46 11.2. Indemnification of the Selling Group and the Shareholders..46 11.3. Defense of Third-Party Claims..............................46 11.4. Direct Claims..............................................47 11.5. Escrow.....................................................47 11.6. Limitations on Indemnified Representation Costs............48 11.7. Instructions to Escrow Agent...............................48 ARTICLE XII GENERAL PROVISIONS 12.1. Survival of Representations, Warranties, and Covenants.....49 12.2. Further Actions............................................49 12.3. Amendment and Modification.................................49 12.4. Waiver of Compliance.......................................49 12.5. Specific Performance.......................................49 12.6. Severability...............................................49 12.7. Expenses and Obligations...................................50 12.8. Parties in Interest........................................50 12.9. Notices....................................................50 12.10. Counterparts...............................................52 12.11. Entire Agreement...........................................52 12.12. Governing Law..............................................52 12.13. Public Announcements.......................................52 12.14. Assignment.................................................52 12.15. Director and Officer Liability.............................53 12.16. No Reversionary Interest...................................53 12.17. No Waiver Relating to Claims for Fraud.....................53
iii 5 EXHIBITS: Exhibit A -- Deposit Escrow Agreement Exhibit B -- Form of Consulting Agreement Exhibit C -- Form of Indemnification Escrow Agreement Exhibit D -- Form of Bill of Sale and Assignment Exhibit E -- Form of Assumption Agreement Exhibit F -- Form of Opinion of Vinson & Elkins L.L.P. Exhibit G -- Form of Opinion of Stroock & Stroock & Lavan Exhibit H -- Form of Opinion of Schwartz, Woods & Miller Exhibit I -- Form of Opinion of Leonard, Street and Deinard Exhibit J -- Form of Non-Competition Agreement Exhibit K -- Form of Release of Claims SCHEDULES: Schedule 2.1(j) -- Choses in Action Schedule 2.2(h) -- Excluded Assets Schedule 2.5(b) -- Trade Deals Schedule 3.1(a) -- Qualification to do Business and Good Standing Schedule 3.1(f) -- Unrecorded Liabilities and Conduct of Business Schedule 3.1(g) -- Licenses and Permits Schedule 3.1(h) -- Litigation Schedule 3.1(i) -- Insurance Schedule 3.1(j) -- Real Estate Schedule 3.1(k) -- Personal Property Schedule 3.1(m) -- Environmental Matters Schedule 3.1(o) -- Certain Agreements Schedule 3.1(p) -- Employee Benefit Plans; Labor Schedule 3.1(q) -- Intellectual Property Schedule 3.1(r) -- Affiliate Relationships Schedule 4.1(c) -- Change of Format iv 6 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of January 27, 1997, by and among Point Communications Limited Partnership, a Delaware limited partnership ("Point"), Midcontinent Broadcasting Co. of Wisconsin, Inc., a Wisconsin corporation ("Midcontinent"), Madison Radio Group, a Wisconsin general partnership whose partners are Point and Midcontinent ("Seller"), and Point Madison Acquisition Company, Inc., a Delaware corporation ("Buyer"). R E C I T A L S A. Seller is the current licensee of and currently owns and operates radio stations WIBA-AM and WIBA-FM located in Madison, Wisconsin and WMAD-FM located in Sun Prairie, Wisconsin (collectively, the "Point Stations") pursuant to licenses issued by the Federal Communication Commission (the "FCC"). Seller is also the licensee of and owns and operates radio stations WTSO-AM and WZEE-FM located in Madison, Wisconsin and WMLI-FM located in Sauk City, Wisconsin (collectively, the "Midcontinent Stations") pursuant to licenses issued by the FCC. Each of the Point Stations and the Midcontinent Stations is referred to individually herein as a "Station" and collectively as the "Stations". B. Point and Midcontinent have organized Seller for purposes of holding all of the assets and liabilities related to the Stations. C. Prior to January 2, 1997, Point and Midcontinent were the respective licensee, owner and operator of the Point Stations and the Midcontinent Stations. D. On January 2, 1977, Point and Midcontinent contributed substantially all of the assets and liabilities related to each of the Stations to Seller in exchange for their respective partnership interests therein. E. Point and Midcontinent desire Seller to sell and Buyer desires to buy substantially all the assets used or held for use in the operation of each of the Stations, both tangible and intangible, excluding the Excluded Assets (as hereinafter defined), and by so doing to acquire the radio broadcast business presently conducted by each of the Stations, upon the terms and conditions hereinafter set forth. A G R E E M E N T S NOW, THEREFORE, in consideration of the respective representations, warranties, agreements, and conditions hereinafter set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1 7 ARTICLE I DEFINED TERMS 1.1. Defined Terms. The following terms shall have the following meanings in this Agreement: "Accounts Receivable" means the rights of any member of the Selling Group to cash payment for the sale of advertising time by each Station prior to 11:59 p.m. on the day prior to the Closing Date. "Affiliate" means, with respect to any person, any other person controlling, controlled by or under common control with such person. For purposes of this definition and this Agreement, the term "control" (and correlative terms) means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a person. "Applicable Laws" means all laws, statutes, rules, regulations, ordinances, judgments, orders, decrees, injunctions, and writs of any Governmental Entity having jurisdiction over any of the Assets or the business or operations of any Station, as may be in effect on or prior to the Closing. "Applications" has the meaning set forth in Section 7.1. "Assets" means all the tangible and intangible assets owned, leased, or licensed by any member of the Selling Group that are used or held for use in connection with the business or operations of any of the Stations, whether or not reflected on the Financial Statements or Balance Sheet of any member of the Selling Group, but specifically excluding therefrom the Excluded Assets. "Assumed Contracts" means (a) those Contracts set forth on Schedule 3.1(o) identified as being assumed by Buyer, (b) all other non-trade advertising Contracts for cash entered into by Seller for any of the Stations prior to the date of this Agreement and which are terminable on not more than 30 days notice, (c) all Contracts entered into by Seller on or after the date of this Agreement and before the Closing not in contravention of the applicable provisions of Section 4.1, and (d) Trade Deals described in Section 2.5(b). "Assumption Agreement" means the Assumption Agreement between Buyer and Seller substantially in the form of Exhibit E. "Balance Sheets" has the meaning set forth in Section 3.1(f). "Balance Sheet Date" has the meaning set forth in Section 3.1(f). "Banking Event" has the meaning set forth in Section 9.1. 2 8 "Bill of Sale and Assignment" means the Bill of Sale and Assignment between Buyer and Seller substantially in the form of Exhibit D. "Business Day" means any other day than (i) a Saturday or Sunday or (ii) a day on which commercial banks in New York, New York or Dallas, Texas are authorized or required to be closed. "Buyer" has the meaning set forth in the first paragraph of this Agreement, and it includes its permitted successors and assigns. "Buyer Indemnified Costs" means (a) any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys' fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Buyer Indemnified Parties incur and that arise out of any breach or default by any member of the Selling Group of (i) any of the representations or warranties under this Agreement or any agreement or document executed in connection herewith (collectively, "Buyer Indemnified Representation Costs") or (ii) any covenant or agreement under this Agreement or any agreement or document executed in connection herewith; (b) any and all obligations or liabilities of any member of the Selling Group not expressly assumed by Buyer pursuant to the terms hereof; (c) any and all losses, liabilities, or damages incurred by any of the Buyer Indemnified Parties resulting from operation or control of any of the Stations prior to the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring prior to the Closing Date; (d) the items indemnified against pursuant to Section 7.6; and (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. "Buyer Indemnified Parties" means Buyer and each officer, director, employee, consultant, stockholder, and Affiliate of Buyer. "CERCLA" has the meaning set forth in the definition of Environmental Laws contained in this Section 1.1 "CERCLIS" has the meaning set forth in Section 3.1(m). "Cessation Date" has the meaning set forth in Section 9.1. "Choses in Action" means a right to receive or recover property, debt, or damages on a cause of action, whether pending or not and whether arising in contract, tort or otherwise. The term shall include rights to indemnification, damages for breach of warranty or any other event or circumstance, judgments, settlements, and proceeds from judgments or settlements. "Closing" means the consummation of the transactions contemplated by this Agreement in accordance with the provisions of Article IX. 3 9 "Closing Date" means the date of the Closing. "Code" shall mean the United States Internal Revenue Code of 1986, as amended. All references to the Code, U.S. Treasury regulations or other governmental pronouncements shall be deemed to include references to any applicable successor regulations or amending pronouncement. "Commencement Date" has the meaning set forth in Section 3.1(m). "Communications Act" has the meaning set forth in Section 3.1(g). "Company Reports" has the meaning set forth in Section 3.1(f). "Confidential Information" has the meaning set forth in Section 5.8. "Conflict Event" has the meaning set forth in Section 9.1. "Consents" means (a) all consents, approvals, orders or authorizations of, or registrations, declarations or filings with, any Governmental Entity, including the FCC Consents, and (b) all consents and approvals of third parties, in each case that are necessary in order to transfer the Assets to Buyer and otherwise to consummate the transactions contemplated hereby. "Consulting Agreement" means the Consulting Agreement between Buyer and Richard P. Verne substantially in the form attached hereto as Exhibit B. "Contracts" means all agreements, contracts or other binding arrangements, written or oral (including any amendments and other modifications thereto), to which any member of the Selling Group is a party or is otherwise bound and which affect or relate to the Assets or the business or operations of any of the Stations. "Cure Period" has the meaning set forth in Section 10.1(b). "Deferral Notice" has the meaning set forth in Section 9.1. "Deposit Escrow Agreement" means the Deposit Escrow Agreement among Seller, Buyer and Escrow Agent, a copy of which is attached hereto as Exhibit A . "Deposit Letter of Credit" means (a) during any period in which the Original Deposit Letter of Credit is held under the Deposit Escrow Agreement, the Original Deposit Letter of Credit, and (b) during any period in which the Substitute Deposit Letter of Credit is held under the Deposit Escrow Agreement, the Substitute Deposit Letter of Credit. "Election Date" has the meaning set forth in Section 9.1. 4 10 "Employee Benefit Plans" means any "employee benefit plan" within the meaning of Section 3(3) of ERISA and any bonus, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, vacation, severance, disability, death benefit, hospitalization or insurance plan providing benefits to any present or former employee or contractor of Seller or any member of the ERISA Group maintained by any such entity or as to which any such entity has any liability or obligation. "Employee Pension Benefit Plans" has the meaning set forth in Section 3(2)of ERISA. "Environmental Costs or Liabilities" means any losses, liabilities, obligations, damages, fines, penalties, judgments, settlements, actions, claims, costs and expenses (including reasonable fees, disbursements and expenses of legal counsel, experts, engineers and consultants, and the costs of investigation or feasibility studies and the performance of remedial or removal actions and cleanup activities) in connection with (1) Environmental Laws, (2) any order of, or contract of any member of the Selling Group with, any Governmental Entity or any private or public persons relating to or arising from Environmental Laws, or (3) any exposure of any person or property to Hazardous Substances "Environmental Laws" means all Applicable Laws and rules of common law pertaining to the environment, natural resources, and public or employee health and safety including the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the Emergency Planning and Community Right to Know Act, the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990, the Hazardous Materials Transportation Act, and any similar or analogous statutes, regulations and decisional law of any Governmental Entity, as each of the foregoing may be amended and in effect on or prior to the Closing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA Group" means any member of the Selling Group and any other trades or businesses under common control within the meaning of Section 4001(b)(i) of ERISA with any member of the Selling Group. "ESA" has the meaning set forth in Section 4.3. "Escrow Agent" means Citibank, N.A. and includes its successors and assigns. "Event Date" has the meaning set forth in Section 9.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 5 11 "Excluded Assets" has the meaning set forth in Section 2.2. "FCC" has the meaning set forth in the first recital hereto. "FCC Consents" means actions by the FCC granting its consent to the assignment of the FCC Licenses for each of the Stations to Buyer as contemplated by this Agreement. "FCC Licenses" means all of the licenses, permits, and other authorizations issued by the FCC to any member of the Selling Group and applications of any member of the Selling Group, if any, to the FCC relating to or used in the business or operations of any of the Stations, including those listed on Schedule 3.1(g), with any additions thereto between the date hereof and the Closing Date. "Final Order" means written action or order issued by the FCC setting forth the FCC Consents (without the inclusion of any adverse conditions affecting Buyer's operation or ownership of any Station) and (a) which has not been reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with respect to which (i) no requests have been filed for administrative or judicial review, reconsideration, appeal, or stay, and the time for filing any such requests and for the FCC to set aside the action on its own motion has expired or (ii) in the event of review, reconsideration, or appeal, such review, reconsideration, or appeal has been denied and the time for further review, reconsideration, or appeal has expired. "Financial Statements"has the meaning set forth in Section 3.1(f). "GAAP" means generally accepted accounting principles in the United States. "Governmental Entity" means any governmental department, commission, board, bureau, agency, court or other instrumentality of the United States or any state, county, parish or municipality, jurisdiction, or other political subdivision thereof. "Hazardous Substances" has the meaning set forth in Section 3.1(m). "Holdback Amount" has the meaning set forth in Section 11.5. "HSR Act" has the meaning set forth in Section 3.1(e). "Indemnification Escrow Agreement" means the Indemnification Escrow Agreement among Seller, Buyer, and Escrow Agent substantially in the form attached hereto as Exhibit C. "Indemnified Costs" means the Buyer Indemnified Costs or the Seller Indemnified Costs, as the case may be. "Indemnified Parties" means the Buyer Indemnified Parties or the Seller Indemnified Parties, as the case may be. 6 12 "Indemnified Representation Costs" means the Buyer Indemnified Representation Costs or the Seller Indemnified Representation Costs, as the case may be. "Indemnifying Party" means any person who is obligated to provide indemnification hereunder. "Intellectual Property" means all Trademarks, Know-how, copyrights, copyright registrations and applications for registration, Patents and all other intellectual property rights whether registered or not, licensed to or owned by any member of the Selling Group relating to the business or operations of any Station, including the call letters of each of the Stations and the goodwill related to the foregoing. "Know-how" means all plans, ideas, concepts and data, research records, all promotional literature, customer and supplier lists and similar data and information, and all other confidential or proprietary technical and business information. "Knowledge" means, with respect to a specified party hereto, the actual knowledge of such party, together with such additional knowledge as would be gained by a reasonable person upon conducting reasonable and diligent inquiry concerning the subject matter in question. "Knowledge of the Selling Group" means the collective Knowledge of all the members of the Selling Group. "Leased Real Property" means all of any member of the Selling Group's leasehold interests, easements, licenses, rights to access and rights-of-way which are used or held for use in the business and operations of any Station, including those interests which are identified and described in Schedule 3.1(j), as modified by any addition or permitted deletion thereto between the date hereof and the Closing Date. "Licenses" means the FCC Licenses and all other Permits issued by any Governmental Entity to any member of the Selling Group relating to or used or held for use in the business and operations of any Station, including those listed on Schedule 3.1(g), with any additions thereto between the date hereof and the Closing Date. "Liens" has the meaning set forth in Section 3.1(l). "Material Adverse Effect" means a material adverse effect on the business, operations, properties, condition (financial or otherwise), results of operations, assets, liabilities, or prospects of Seller other than effects attributable to general or industry-wide economic, financial or political conditions. "Midcontinent" has the meaning set forth in the first paragraph of this Agreement. "Midcontinent Balance Sheet" has the meaning set forth in Section 3.1(f). 7 13 "Midcontinent Stations" has the meaning set forth in the first recital hereto. "Minimum Loss" has the meaning set forth in Section 11.6(a). "Multiemployer Plan" has the meaning set forth in Section 3(37) or Section 4001(a)(3) of ERISA. "Non-Competition Agreement" means the Non-Competition Agreement between Point, Mid Continent, Buyer and Seller substantially in the form of Exhibit J. "NPL" has the meaning set forth in Section 3.1(m). "Organizational Documents" has the meaning set forth in Section 3.1(a). "Original Deposit Letter of Credit" means the certain original, irrevocable letter of credit in favor of Seller and the Escrow Agent issued by Bankers Trust Company for the sum of $1,900,000, and held in accordance with the provisions of the Deposit Escrow Agreement, and any substitute letter of credit issued in that amount in accordance with Section 4 of the Deposit Escrow Agreement. "Owned Real Property" means certain parcels of real property owned in fee and used or held for use by any member of the Selling Group as described in Schedule 3.1(j), and all buildings, structures, improvements, and fixtures thereon, together with all rights of way, easements, privileges, and appurtenances pertaining or belonging thereto, including any right, title, and interest of any member of the Selling Group in and to any street adjoining any portion of such property. "Patents" means all patent and patent applications (including all reissues, divisions, continuations, continuations-in-part, renewals, and extensions of the foregoing) owned by any member of the Selling Group. "Permits" has the meaning set forth in Section 3.1(m). "Permitted Encumbrances" means (a) statutory liens for current Taxes not yet due and payable, (b) in the case of leases of real property, agreements with, and/or conditions imposed on the issuance of land use permits, zoning, business licenses, use permits, or other entitlements of various types issued by, any Governmental Entity, necessary or beneficial to the continued use and occupancy of the Assets or the continuation of the operation of any Station, (c) mechanics', carriers', workers', repairers', and other similar liens imposed by law arising or incurred in the ordinary course of business for obligations not yet due, (d) in the case of leases of vehicles, rolling stock, and other personal property, encumbrances, which do not, individually or in the aggregate, materially impair the operation of the business at the facility at which such leased equipment or other personal property is located, (e) purchase money liens arising in the ordinary course of business and (f) other liens, charges or encumbrances incidental to the operation of the Stations or the ownership of the Assets which were not incurred in connection with the borrowing of money or the advance of credit 8 14 and which, in the aggregate, do not materially detract from the value of the Assets or materially interfere with the use thereof or the operation of the Stations. "Permitted Liens" has the meaning set forth in Section 3.1(l). "Person" means an individual, corporation, partnership, association, trust, unincorporated organization, or other entity. "Personal Property" means all of the machinery, equipment (including transmitter and studio equipment), computer programs, computer software, tools, motor vehicles, furniture, leasehold improvements, office equipment, inventories, supplies, plant, spare parts, and other tangible or intangible personal property which are owned or leased by any member of the Selling Group for any Station and which are used or held for use in the business or operations of any Station, including the personal property which is listed on Schedule 3.1(k) hereto, together with any additions thereto between the date hereof and the Closing Date less any dispositions made in accordance with Section 4.1. The term Personal Property shall not include any of the Excluded Assets. "Point" has the meaning set forth in the first paragraph of this Agreement. "Point Balance Sheet" has the meaning set forth in Section 3.1(f). "Point Stations" has the meaning set forth in the first recital hereto. "Purchase Price" means the consideration payable by Buyer to Seller as provided in Section 2.3 hereof. "Real Property" means the Leased Real Property and the Owned Real Property. "Release" means the Release of Claims among Buyer and the Selling Group substantially in the form of Exhibit K. "Released Claims" has the meaning set forth in Section 10.2(b). "Released Parties" has the meaning set forth in Section 10.2(b). "Schedules" means the Schedules attached hereto. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Seller" has the meaning set forth in the first paragraph of this Agreement. "Seller Indemnified Costs" means: (a) any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable 9 15 attorneys' fees and expenses incurred in investigating and preparing for any litigation or proceeding) which any of the Seller Indemnified Parties incur and which arise out of any breach or default by Buyer of (i) any of the representations or warranties under this Agreement or any agreement or document executed in connection herewith (collectively, "Seller Indemnified Representation Costs") or (ii) any covenant or agreement under this Agreement or any agreement or document executed in connection herewith; (b) any and all losses, liabilities, or damages incurred by any of the Seller Indemnified Parties resulting from Buyer's operation or control of the Stations on and after the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring after the Closing Date; (c) the items indemnified against pursuant to Section 5.3; and (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. "Seller Indemnified Parties" shall mean each member of the Selling Group and each officer, director, employee, consultant, partner, and Affiliate of each member of the Selling Group. "Seller Negative Trade Balance" has the meaning set forth in Section 4.2. "Selling Group" shall mean Point, Midcontinent and Seller. "Sites" has the meaning set forth in Section 3.1(m). "Station or Stations" has the meaning set forth in the first recital hereto. "Station Event" has the meaning set forth in Section 9.1. "Station Licenses" has the meaning set forth in Section 3.1(g). "Station Management" has the meaning set forth in Section 4.1(b). "Substitute Deposit Letter of Credit" means that certain original, irrevocable letter of credit in favor of Seller and the Escrow Agent issued by Bankers Trust Company or another lender reasonably acceptable to Seller for the sum of $3,150,000 and held in accordance with the provisions of the Deposit Escrow Agreement, and any substitute letter of credit issued in that amount in accordance with Section 4 of the Deposit Escrow Agreement. An increase in the amount of the Original Deposit Letter of Credit to $3,150,000 shall constitute the issuance of a Substitute Deposit Letter of Credit. "Target Closing Date" has the meaning set forth in Section 9.1. "Taxes" means taxes, charges, fees, imposts, levies, interest, penalties, additions to tax or other assessments or fees of any kind, including, but not limited to, income, corporate, capital, excise, property, sales, use, turnover, value added and franchise taxes, deductions, withholdings 10 16 and customs duties, imposed by any Governmental Entity and any payments with respect thereto required under any tax-sharing agreement. "Tax Returns" means any return, report, information return or other document (including any related or supporting information) filed or required to be filed with any Governmental Entity in connection with the determination, assessment, collection or administration of any Taxes or the administration of any laws, regulations or administrative requirements relating to any Taxes. "Title Commitment" means the commitment to issue an owner's title policy as provided in Section 8.2(e). "Title Company" means First American Title Insurance Company or such other title insurance company reasonably acceptable to Buyer. "Title Policy" has the meaning set forth in Section 8.2(e). "Trade Deals" means the exchanges by a Station of its advertising time for goods or services, other than in connection with the licensing of programs and programming material. "Trademarks" means (a) trademarks, service marks, trade names, trade dress, labels, logos, and all other names and slogans associated with any products or embodying the goodwill of the business of any Station, whether or not registered, and any applications or registrations therefor (excluding marks, registered or unregistered, bearing the name "Midcontinent," "Midco," "M," "Point," "Point Communications" or marks of similar import) and (b) any associated goodwill incident thereto owned by any member of the Selling Group. "Trading Event" has the meaning set forth in Section 9.1. "Transaction Documents" has the meaning set forth in Section 3.1(d). "Voting Debt" has the meaning set forth in Section 3.1(c). "Warranty Deed" means a Wisconsin general warranty deed in form and substance acceptable to the Buyer and the Title Company pursuant to which Seller conveys to Buyer the Owned Real Property at the Closing. "WIBA Building" has the meaning set forth in Section 4.4. 1.2. References and Titles. All references in this Agreement to Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections, or other subdivisions of this Agreement are for convenience only, do not constitute any part of such Articles, Sections, subsections or other subdivisions, and shall be disregarded in construing the language 11 17 contained therein. The words "this Agreement," "herein," "hereby," "hereunder," and "hereof," and words of similar import, refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words "this Section," "this subsection," and words of similar import, refer only to the Sections or subsections hereof in which such words occur. The word "or" is not exclusive, and the word "including" (in its various forms) means "including without limitation." Pronouns in masculine, feminine, or neuter genders shall be construed to state and include any other gender, and words, terms, and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise expressly requires. Unless the context otherwise requires, all defined terms contained herein shall include the singular and plural and the conjunctive and disjunctive forms of such defined terms. ARTICLE II SALE AND PURCHASE OF ASSETS 2.1. Agreement to Sell and Buy. Subject to the terms and conditions set forth in this Agreement, Seller shall sell, assign, transfer and deliver to Buyer on the Closing Date, and Buyer shall purchase on the Closing Date, all of the Assets, free and clear of any Liens or liabilities (except for Permitted Encumbrances and liabilities assumed by Buyer in accordance with Section 2.5). The Assets to be assigned, transferred and delivered by Seller hereunder shall include the following: (a) All Personal Property; (b) All Leased Real Property; (c) All Owned Real Property; (d) All Licenses; (e) All Assumed Contracts; (f) All Intellectual Property; (g) To the extent that they are in the possession or control of any member of the Selling Group, each of the Station's technical information and data, machinery and equipment warranties (to the extent such warranties are assignable), if any, maps, plans, diagrams, blueprints and schematics relating to such Station, if any, including filings with the FCC which relate to such Station, and goodwill relating to the foregoing; 12 18 (h) To the extent that they are in the possession or control of any member of the Selling Group, all books and records relating to the business and operation of any of the Stations (excluding those described in Section 2.2), including (i) executed copies of the Assumed Contracts, or if no executed agreement exists, summaries of each Assumed Contracts transferred pursuant to clause (e) above and (ii) all records required by the FCC to be kept by each Station, subject to the right of Seller to have such books and records made reasonably available to Seller for tax and other legitimate partnership purposes for a period of six years after the Closing; (i) To the extent assignable, all computer programs and software, and all rights and interests of Seller in and to computer programs and software used or held for use in connection with the business or operations of any Station; (j) Except for claims relating to Taxes and Choses in Action, if any, of any member of the Selling Group described on Schedule 2.1(j), all Choses in Action of Seller; and (k) All intangible assets of Seller relating to any Station or the business or operation of any Station not specifically described above, including goodwill and all other assets, other than the Excluded Assets, used or held for use in connection with Station or the business of the Seller. 2.2. Excluded Assets. The Excluded Assets shall consist of the following: (a) In each case determined as of 11:59 p.m. on the day prior to the Closing Date, the cash on hand of any member of the Selling Group and all other cash in any of the bank or savings accounts of any member of the Selling Group; notes receivable, letters of credit or other similar items of any member of the Selling Group; any stocks, bonds, certificates of deposit and similar investments of any member of the Selling Group; and any other cash equivalents of any member of the Selling Group; (b) Partnership or corporate books and other books and records of any member of the Selling Group relating solely to internal partnership or corporate matters and any other books and records not related to any Station or the business or operations of any Station; (c) Any claims, rights and interest of any member of the Selling Group in and to any (i) refunds of Taxes or fees of any nature whatsoever or (ii) deposits or utility deposits, which in each case relate solely to the period prior to the Closing Date; (d) All insurance contracts, including the cash surrender value thereof, and all insurance proceeds or claims made by any member of the Selling Group relating to property or equipment repaired, replaced or restored by Seller prior to the Closing Date; 13 19 (e) All Employee Benefit Plans and all assets or funds held in trust, or otherwise, associated with or used in connection with the Employee Benefit Plans; (f) All Choses in Action, if any, of any member of the Selling Group excluded from Section 2.1(j); (g) All Accounts Receivable; (h) The assets, if any, described on Schedule 2.2(h); (i) All tangible and intangible personal property disposed of or consumed in the ordinary course of business between the date of this Agreement and the Closing Date, or as otherwise permitted under the terms hereof; and (j) Any Contracts not included in the Assumed Contracts and all Contracts that have terminated or expired prior to the Closing Date. 2.3. Purchase Price. Subject to the adjustments set forth in Sections 2.4, 2.5(b), 4.4, and 9.1, the Purchase Price for the Assets is Thirty- Eight Million Five Hundred Thousand Dollars ($38,500,000). 2.4. Adjustments and Prorations. (a) All revenues arising from the operation of the Stations earned or accrued up until 11:59 p.m. on the day prior to the Closing Date and all expenses, costs and liabilities, arising therefrom incurred, accrued or payable up until such time, including expenses arising under the Assumed Contracts, tower rentals, business and license fees, utility charges, real and personal property Taxes levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, other Taxes, wages, salaries, vacation and sick and employee compensation pay, shall be prorated between Buyer and Seller in accordance with the principle that (i) Seller shall receive all earned or accrued revenues, refunds and deposits of Seller held by third parties, and shall be responsible for all expenses, costs and liabilities incurred, payable or allocable to the conduct of the business and operations of each Station for the period ending at 11:59 p.m. on the day prior to the Closing Date and (ii) Buyer shall receive all revenues earned or accrued and shall be responsible for all expenses, costs and liabilities incurred, payable or allocable to the conduct of the business and operations of each Station for the period commencing on and continuing after the Closing Date. An adjustment of the Purchase Price and proration shall be made in favor of Buyer to the extent that Buyer assumes any liability under any Assumed Contract to refund (or to credit against payments otherwise due) any security deposit or similar prepayment paid to Seller by any lessee or other third party which is not otherwise credited to Buyer. Subject to Buyer's receipt of appropriate estoppel certificates, an adjustment of the Purchase Price and proration shall be made in favor of Seller to the extent that Seller has made (A) any security deposit under any Assumed Contract whether or not there is a proration under such Assumed Contract or (B) other prepayment under any Assumed Contracts for which there is a proration. Seller shall be liable for all of the costs 14 20 of employee compensation relating to each of the Stations properly attributable to or accruable on account of service with the Seller through 11:59 p.m. on the date prior to the Closing Date, including (1) all Taxes and related contributions, vacations and sick pay and (2) all group medical, dental or death benefits for claims incurred, related to or arising from, events occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, or death or disability occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, whether reported by the Closing Date or thereafter; Buyer shall be liable for all of the costs of employee compensation relating to each of the Stations properly attributable or accruable thereafter on account of service with Buyer. Except as provided in Section 2.5(b), Trade Deals shall not be adjusted or prorated. (b) Adjustments or prorations pursuant to this Section 2.4 will, insofar as feasible, be determined and paid on the Closing Date based upon Seller's good faith calculation delivered to Buyer five days prior to the Closing Date and reasonably approved by Buyer, with final settlement and payment by the appropriate party occurring no later than 60 days after the Closing Date. Within 60 days after the Closing Date, Buyer shall submit to Seller its good faith determination of the adjustments or prorations required by this Section 2.4. Buyer's determination of the amount of adjustment under this Section 2.4 shall be made in accordance with GAAP, consistently applied. If Seller disagrees with the determination made by Buyer of the adjustment, Seller shall give prompt written notice thereof, but in no event later than 20 days after notice of Buyer's determination, specifying in reasonable detail the nature and extent of the disagreement, and Buyer and Seller shall have a period of 30 days in which to resolve the disagreement. If the parties are unable to resolve the disagreement within the 30-day period, the matter shall be submitted to Coopers & Lybrand L.L.P., an independent certified public accounting firm, which accounting firm shall be directed to submit a final resolution within 30 days. The accounting firm's determination shall be binding on Buyer and Seller. Each party shall bear the fees and expenses of its own representatives, including its independent accountants, if any, and shall share equally the fees and expenses of Coopers & Lybrand, L.L.P., if engaged, to resolve any disagreement between the parties. Within five Business Days following a final determination hereunder, the party obligated to make payment will make the payments determined to be due and owing in accordance with this Section 2.4. 2.5. Assumption of Liabilities and Obligations. (a) As of the Closing Date, Buyer shall assume and undertake to pay, discharge and perform all the obligations and liabilities of Seller relating to each Station under the Licenses and the Assumed Contracts assumed by Buyer relating to the time period beginning on or arising out of events occurring on or after the Closing Date. All other obligations and liabilities of Seller, including (i) obligations or liabilities under any contract not included in the Assumed Contracts, (ii) obligations or liabilities under any Assumed Contract for which a Consent, if required, has not been obtained as of the Closing, (iii) any obligations and liabilities arising under the Assumed Contracts that relate to the time period prior to the Closing Date or arise out of events occurring prior to the Closing Date and (iv) any forfeiture, claim or pending litigation or proceeding relating to the business or operations of any Station, prior to the Closing Date, shall remain and be the obligation and liability solely of Seller. Other than as specified herein, Buyer, directly or indirectly, shall assume no liabilities or obligations of any member of the Selling Group. 15 21 (b) Schedule 2.5(b) contains a list of all of the Trade Deals in effect as of December 31, 1996 and correctly sets forth under the column entitled "balance" the balance, in dollar value, of either (i) the Seller's obligations to the other party under each such Trade Deal (denoted by a minus on Schedule 2.5(b)) or (ii) the amount due (reflected as a positive number on Schedule 2.5(b)) Seller under such Trade Deal. On the Closing Date, Buyer shall assume Seller's obligations under (i) the Trade Deals listed on Schedule 2.5(b) to the extent that the goods or services to be provided by the advertisers pursuant to such Trade Deals are used or useful in connection with the business or operations of any Station and (ii) all Trade Deals entered into by Seller between the date hereof and the Closing Date with the consent of Buyer; provided, however, if, as of the Closing Date, the obligation of Seller for air time due another party pursuant to all (x) Trade Deals (other than Trade Deals involving media trades with television stations) to be assumed by Buyer exceeds $5,000 in the aggregate or (y) Trade Deals involving media trades with television stations to be assumed by Buyer exceeds $45,000 in the aggregate, then in each case the amount of the applicable excess shall be considered a pre-Closing Date operating expense of Seller to be prorated in accordance with Section 2.4(a). The Trade Deals assumed by Buyer pursuant to the terms of this Section 2.5(b) shall be considered Assumed Contracts. 2.6. Allocation. Within 30 days after the Closing Date, Seller and Buyer shall negotiate in good faith an allocation of the Purchase Price among the Assets that complies with Section 1060 of the Code with respect to the allocation of the Purchase Price (as well as any liabilities assumed by Buyer). If the allocation is not agreed upon within 30 days after the Closing, then Buyer and Seller agree that the allocation shall be made and consistently reported by Buyer and Seller in compliance with Section 1060 based upon an asset valuation supplied by Broadcast Investment Analysts. The cost of such appraisal shall be shared equally by Buyer and Seller. Buyer will order such appraisal from Broadcast Investment Analysts on or after such date as the FCC Consents have been placed on public notice. The appraisal, if required, shall be provided to Seller within 45 days after the Closing Date. 2.7. Earnest Money. (a) Concurrently with the execution of this Agreement, Buyer shall deposit the Original Deposit Letter of Credit with the Escrow Agent to be held in escrow in accordance with the Deposit Escrow Agreement in the form of Exhibit A. (b) Concurrently with the giving of a Deferral Notice, Buyer shall deposit the Substitute Deposit Letter of Credit with the Escrow Agent to be held in escrow in accordance with the Deposit Escrow Agreement and, effective upon such deposit, Buyer and Seller shall instruct the Escrow Agent to release the Original Deposit Letter of Credit to Buyer for cancellation unless Buyer increases the amount of the Original Letter of Credit to $3,150,000 so as to constitute the issuance of a Substitute Letter of Credit. (c) Subject to satisfaction of the conditions to the obligations set forth in Article VIII, at the Closing, Seller shall instruct the Escrow Agent to release and return the Deposit Letter of Credit to Buyer for cancellation. (d) If this Agreement is terminated as provided in Section 10.1, Buyer and Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer or to Seller, all as provided in Section 10.2. 16 22 ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING SELLER 3.1. Representations and Warranties Regarding Seller. Each member of the Selling Group, jointly and severally, represents and warrants to Buyer as follows (with the understanding that Buyer is relying on such representations and warranties in entering into and performing this Agreement). (a) Organization, Good Standing, Etc. Each of Point and Midcontinent is duly organized and validly existing (and, as to Midcontinent only, is in good standing) under the laws of its jurisdiction of organization or incorporation, as applicable, and has all requisite partnership or corporate, as applicable, power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Seller is duly organized and validly existing under the laws of the State of Wisconsin and has all requisite partnership power and authority to own, lease and operate its properties and to carry on the business of the Stations as now being conducted and is duly qualified to do business in each State listed on Schedule 3.1(a), which States will represent every jurisdiction in which the nature of its business or the ownership or leasing of the Assets makes such qualification necessary, except where the failure to so qualify could not have a Material Adverse Effect. Point and Midcontinent have delivered to Buyer true and complete copies of the Agreement of Limited Partnership of Point, the Articles of Incorporation and Bylaws of Midcontinent and the Partnership Agreement (or equivalent organizational documents) of Seller (such documents being referred to collectively herein as the "Organizational Documents"), as in effect at the date of this Agreement. No member of the Selling Group is in violation of any provisions of its Organizational Documents. (b) Subsidiaries of Seller. Seller does not own, directly or indirectly, any of the capital stock of, or other equity interest in, any other Person or have the right, pursuant to a contract or otherwise, to acquire any capital stock, equity interest or other similar investment in any other Person. (c) Capital Structure. Point and Midcontinent own all of the outstanding equity interests in Seller, and will continue to be the sole owners of equity interests in Seller on the Closing Date. No partnership interests in Seller are reserved for issuance for any purpose and none will be issued after the date hereof and prior to the Closing Date. As of the date hereof, there are no bonds, debentures, notes or other indebtedness issued or outstanding having the right to vote ("Voting Debt") on any matters on which the partners of Seller may vote. All the issued and outstanding partnership interests of Seller are duly and validly issued, are not subject to further capital calls or assessments except as contemplated by the Partnership Agreement of Seller, and have not been issued in violation of any preemptive or similar rights. There are no options, warrants, calls, rights, commitments, or agreements of any character to which Seller is a party or by which Seller is bound obligating Seller to issue, deliver, or sell, or cause to be delivered or sold, any additional equity interests or Voting Debt in Seller, or obligating Seller to grant, extend, or enter into any such option, warrant, call, right, commitment, or agreement. There are no outstanding contractual obligations of Seller to repurchase, redeem, or otherwise acquire any equity interests in Seller. (d) Authority. To the extent that they are a party thereto, each member of the Selling Group has all requisite partnership or corporate, as applicable, power and authority to enter into this Agreement, the Deposit Escrow Agreement, the Bill of Sale and Assignment, the Assumption Agreement, the Indemnification Escrow Agreement, the Non-Competition Agreement 17 23 and each other agreement, document, and instrument required to be executed by any member of the Selling Group in accordance herewith or therewith (collectively, the "Transaction Documents") and to consummate the transactions contemplated hereby or thereby. The execution and delivery of the Transaction Documents by each member of the Selling Group, to the extent that they are a party thereto, and the consummation by each member of the Selling Group of the transactions contemplated hereby or thereby, to the extent that they are a party thereto, have been duly authorized by all necessary partnership or corporate, as applicable, action on the part of each member of the Selling Group. Each Transaction Document has been, or upon execution and delivery will be, duly executed and delivered and constitutes the valid and binding obligations of each member of the Selling Group that is a party thereto and is enforceable against each of them to the extent that they are a party thereto in accordance with their respective terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). (e) No Conflict; Required Filings and Consents. The execution and delivery of the Transaction Documents by each member of the Selling Group that is a party thereto does not, and the performance by each member of the Selling Group that is a party thereto of the transactions contemplated hereby or thereby to the extent that they are a party thereto will not, subject to obtaining the consents, approvals, authorizations, and permits and making the filings described in this Section 3.1(e) and obtaining any required consents under Assumed Contracts, (A) violate, conflict with, or result in any breach of any provision of any Organizational Documents, (B) violate, conflict with, or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination of, or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change of control of any member of the Selling Group or otherwise) any obligation, or result in the loss of any benefit, or give any Person the right to require any security to be repurchased, or give rise to the creation of any Lien, charge, security interest, or encumbrance upon any of the Assets under any of the terms, conditions, or provisions of any loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or any license, lease, agreement, or other instrument or obligation to which any member of the Selling Group is a party or by which any member of the Selling Group or any of the Assets may be bound or subjected, or (C) violate any order, writ, judgment, injunction, decree, statute, rule, or regulation of any Governmental Entity applicable to any member of the Selling Group or by which or to which any of the Assets is bound or subject. No Consent of any Governmental Entity is required by or with respect to any member of the Selling Group in connection with the execution and delivery of any Transaction Documents by any member of the Selling Group or the consummation of the transactions contemplated hereby or thereby, except for (1) the filing of a premerger notification report under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and (2) the FCC Consents (as contemplated by Section 7.1 hereof). (f) Reports; Financial Statements; Absence of Certain Changes or Events. 18 24 (i) Each member of the Selling Group has filed all forms, reports, statements, and other documents required to be filed with any and all Governmental Entities, including the FCC (all such forms, reports, statements and other documents being referred to herein, collectively, as the "Company Reports"). The Company Reports were prepared in all material respects in accordance with the requirements of applicable law. (ii) The Selling Group has delivered to Buyer copies of (i) the audited balance sheet as of December 31, 1995, together with the related audited statements of operations, partner's capital and cash flows, of Point for the four month period then ended, and the notes thereto, accompanied by the report thereon of Coopers & Lybrand L.L.P., independent public accountants, (ii) the unaudited WIBA and WMAD combined statement of operations for the nine month periods ended September 30, 1996 and September 30, 1995, (iii) the unaudited WIBA and WMAD combined statement of operations for the twelve month periods ending December 31, 1995 and December 31, 1994, (iv) the unaudited balance sheet of Point as of August 31, 1996 (the "Point Balance Sheet"), (v) the unaudited income statement of Midcontinent for the nine month period ended September 30, 1996 together with detailed profit and loss statements for the month of September 1996 and the nine month period ended September 30, 1996, (vi) the unaudited balance sheet as of August 31, 1996 of Midcontinent (the "Midcontinent Balance Sheet"), and (vii) the unaudited income statement of Midcontinent for the year ended December 31, 1995 together with a detailed profit and loss statement for such year. All of the foregoing financial statements are collectively referred to herein as the "Financial Statements". The Financial Statements, including the notes thereto, were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except to the extent disclosed therein or in Schedule 3.1(f) or required by changes in GAAP) and present accurately in all material respects the information purported to be presented therein as of such dates and for the periods then ended. (iii) The Selling Group has delivered to Buyer copies of all financial statements of WIBA and WMAD as of dates prior to September 1, 1995, which were delivered by the previous owners of such Stations to Point in connection with Point's acquisition of such Stations from such previous owners. No member of the Selling Group has reason to believe that such financial statements were not prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except to the extent disclosed therein or in Schedule 3.1(f) or required by changes in GAAP) or that such financial statements do not present accurately in all material respects the information purported to be presented therein as of such dates and for the periods then ended. (iv) Except as disclosed in Schedule 3.1(f), there is no liability or obligation of any kind, whether accrued, absolute, fixed, contingent, or otherwise, of Point, Midcontinent or Seller, as applicable, that is not reflected or reserved against in the Point Balance Sheet or the Midcontinent Balance Sheet, as applicable (collectively, the "Balance Sheets"), other than (A) liabilities and obligations incurred in the ordinary course of business in a manner consistent with past practice since August 31, 1996 (the "Balance Sheet Date"), 19 25 or (B) any such liability or obligation which would not be required to be presented in financial statements or the notes thereto prepared in conformity with GAAP applied, in a manner consistent with past practice, in the preparation of the Financial Statements. (v) Except as disclosed in Schedule 3.1(f), since the Balance Sheet Date, each member of the Selling Group has conducted its respective business only in the ordinary course consistent with past practice and nothing has occurred that would have been prevented by Section 4.1 if the terms of such section had been in effect as of and after the Balance Sheet Date. Since the Balance Sheet Date, there has not occurred, and no member of the Selling Group has incurred or suffered, any event, circumstance, or fact that would result in a Material Adverse Effect. Additionally, since August 31, 1996, there has not occurred any event, circumstance, or fact that materially impairs the physical assets at any Station. (g) Compliance with Applicable Laws: FCC Matters. (i) The respective business of each member of the Selling Group has been conducted in compliance in all material respects with each Applicable Law. No investigation or review by any Governmental Entity with respect to any member of the Selling Group is pending or, to the Knowledge of the Selling Group, threatened. Without limiting the generality of the foregoing, each member of the Selling Group has complied in all material respects with the Communications Act of 1934, as amended, and all rules, regulations and written policies of the FCC thereunder (collectively, the "Communications Act"), all obligations with respect to equal opportunity under Applicable Law, and all rules and regulations of the Federal Aviation Administration applicable to each of the towers used or held for use by each Station. In addition, in all material respects each member of the Selling Group has duly and timely filed, or caused to be so filed, with the FCC and other appropriate Governmental Entities all reports, statements, documents, registrations, filings, or submissions with respect to the operation of each Station and the ownership thereof, including applications for renewal of authority required by Applicable Law to be filed. All such FCC filings complied in all material respects with Applicable Laws when made, and no deficiencies have been asserted with respect to any such filings. The material required by 47 C.F.R. ss. 73.3526 to be kept in the public inspection files of each Station is in such files. (ii) Schedule 3.1(g) is a true and complete list of (A) all of the FCC Licenses, including the expiration dates thereof, as of the date of this Agreement and (B) all other material licenses, permits, or authorizations issued to any member of the Selling Group by any other Governmental Entities and held by any of them as of the date of this Agreement. Such FCC Licenses, licenses, permits, and authorizations, and all pending applications for modification, extension, or renewal thereof or for new licenses, permits, permissions, or authorizations, are collectively referred to herein as the "Station Licenses." Seller is the legally authorized holder of each of the Station Licenses. The Station Licenses constitute all the licenses, permits and authorizations required for the operation of the Stations and the business of Seller, and each of the Station Licenses is in full force and 20 26 effect. Each of the Stations has been operated in all material respects in accordance with the terms of the applicable Station Licenses, and Seller is otherwise in compliance with, and has conducted its business so as to comply with, the terms of the respective Station Licenses. There are no proceedings pending or, to the Knowledge of the Selling Group, threatened with respect to the ownership or operation of any Station which reasonably may be expected to result in the revocation, material adverse modification, non-renewal, or suspension of any Station Licenses, the denial of any pending applications for Station Licenses, the issuance against the Seller of any cease and desist order, or the imposition of any administrative actions by the FCC or any other Governmental Entity with respect to any of the Station Licenses, or which reasonably may be expected to materially and adversely affect any Station's ability to operate as currently operated or Buyer's ability to obtain control of any Station Licenses or operate any Station. To the Knowledge of the Selling Group, no other broadcast station or radio communications facility is causing interference to any Station's transmissions beyond that which is allowed by FCC rules and regulations and no Station is causing interference to any other broadcast station or radio communications facilities' transmissions beyond that which is allowed by the FCC rules and regulations. Each member of the Selling Group has no reason to believe that the FCC will not renew any of the Station Licenses issued by the FCC in the ordinary course of business. To the Knowledge of the Selling Group, there are no facts relating to any member of the Selling Group under the Communications Act that reasonably may be expected to disqualify Seller from transferring control of the Station Licenses pursuant to the terms of this Agreement or that would prevent the consummation by any of them of the transactions contemplated by this Agreement. (h) Absence of Litigation. Except as set forth on Schedule 3.1(h), there is no claim, action, suit, inquiry, judicial, or administrative proceeding, grievance, or arbitration pending or, to the Knowledge of the Selling Group, threatened against any member of the Selling Group or any of the Assets by or before any arbitrator or Governmental Entity, nor to the Knowledge of the Selling Group are there any investigations relating to any member of the Selling Group or any of the Assets pending or threatened by or before any arbitrator or Governmental Entity. Except as set forth in Schedule 3.1(h), there is no judgment, decree, injunction, order, determination, award, finding, or letter of deficiency of any Governmental Entity or arbitrator outstanding against any member of the Selling Group or any of the Assets. There is no action, suit, inquiry, judicial, or administrative proceeding pending or, to the Knowledge of the Selling Group, threatened against any member of the Selling Group relating to the transactions contemplated by this Agreement. (i) Insurance. Since the date that Point acquired the Point Stations and since January 1, 1992, in the case of the Midcontinent Stations, each of Point and Midcontinent has been insured and as of the date hereof the Seller is insured against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. Schedule 3.1(i) sets forth an accurate summary of all fire, general liability, malpractice liability, theft, and other forms of insurance and all fidelity bonds held by or applicable to Seller. Excluding insurance policies that have expired and been replaced in the ordinary course of business, no insurance policy held by any member of the Selling Group has been canceled within the last two years prior to the date hereof. 21 27 (j) Real Property. (i) Schedule 3.1(j) contains an accurate description of all the Owned Real Property. Seller has good and marketable, fee simple, absolute title in and to the Owned Real Property. Seller has sufficient title to such easements, rights of way and other rights appurtenant to each of the Owned Real Properties as are necessary to permit ingress and egress to and from the Owned Real Property to a public way and, except as set forth on Schedule 3.1(j), the improvements on the Owned Real Property have access to such sewer, water, gas, electric, telephone and other utilities as are necessary to allow the business of the Seller to be operated in the ordinary course. There is no pending condemnation or similar proceeding affecting the Owned Real Property or any portion thereof, and to the Knowledge of the Selling Group, no such action is threatened. The improvements on the Owned Real Property used in connection with the present day-to-day operation of the Stations are in operating condition and repair (ordinary wear and tear excepted), fit for the purposes for which they are being utilized, and there has been no damage to such improvements that affects the conduct of such business in any material respect that has not been repaired or remedied. Except as set forth on Schedule 3.1(j), there are no lessees or tenants at will in possession of any portion of any of the Owned Real Property other than Seller, whether as lessees, tenants at will, trespassers or otherwise. No zoning, building or other federal, state or municipal law, ordinance, regulation or restriction is violated in any material respect by the continued maintenance, operation or use of the Owned Real Property or any tract or portion thereof or interest therein in its present manner. The current use of the Owned Real Property and all parts thereof does not violate any restrictive covenants of record affecting any of the Owned Real Property. All necessary Licenses by any Governmental Entity with respect to the Owned Real Property have been obtained, have been validly issued, and are in full force and effect. (ii) Schedule 3.1(j) contains an accurate descriptions of all the leasehold interests relating to the business and operations of each of the Stations as now conducted. Each lease described in Schedule 3.1(j) is a valid and binding obligation of Seller and is in full force and effect without amendment other than as described in Schedule 3.1(j). Except as otherwise disclosed on Schedule 3.1(j) Seller is not, and to the Knowledge of the Selling Group, no other party is, in material default under any lease described in Schedule 3.1(j). Subject to obtaining the Consents disclosed in Schedule 3.1(j), Seller has the full legal power and authority to assign its rights under the leases listed in Schedule 3.1(j) to Buyer. All leasehold interests listed in Schedule 3.1(j) (including the improvements thereon) are available for immediate use in the conduct of the business and operations of each of the Stations as currently conducted. (k) Personal Property. Schedule 3.1(k) contains a description of the items of Personal Property (having a historical cost of not less than $10,000 for each item) which comprise all such Personal Property used or held for use in connection with the business and operations of any Station or which permits the operation of any Station as now conducted. Except as set forth on Schedule 3.1(k), Seller has good title to, or a valid leasehold or license interest in, all Personal Property, and none of the Personal Property is subject to any Lien or other encumbrances, except for Permitted Encumbrances. No member of the Selling Group is, and to the Knowledge of the Selling Group, no other party is, in material default under any of the leases, licenses and other Contracts relating to the Personal Property. Except as otherwise disclosed in Schedule 3.1(k), the Personal Property (i) is in operating condition and repair (ordinary wear and tear excepted) and not in need 22 28 of material repair or replacement, (ii) is available for immediate use in the business and operation of each of the Stations as currently conducted, and (iii) permits each of the Stations to operate in accordance with the terms of their respective FCC Licenses and the rules and regulations of the FCC and with all other applicable federal, state and local statutes, ordinances, rules and regulations. (l) Liens and Encumbrances. All of the Assets, including leases, are free and clear of all liens, pledges, claims, security interests, restrictions, mortgages, tenancies, and other possessory interests, conditional sale or other title retention agreements, assessments, easements, rights of way, covenants, restrictions, rights of first refusal, defects in title, encroachments, and other burdens, options or encumbrances of any kind (collectively, "Liens") except (i) Permitted Encumbrances and (ii) Liens in favor of Finova Capital Corporation securing that certain $13,500,000 loan from Finova Capital Corporation to Seller (the Liens referred to in clauses (i) and (ii) being "Permitted Liens"). At the Closing, all of the Assets shall be free and clear of all Liens other than Permitted Encumbrances. (m) Environmental Matters. (i) Schedule 3.1(m) sets forth each piece of real property owned, operated or leased by Seller with respect to the Stations (the "Sites") and the date that Point, Midcontinent or Seller purchased or commenced operating or leasing each site (the "Commencement Date"). With respect to each Site, since the Commencement Date, the operations of each member of the Selling Group on the Sites have complied and continue to comply in all material respects with all Applicable Laws and rules of common law pertaining to the environment, natural resources, and public or employee health and safety, including all Environmental Laws; (ii) No judicial proceedings are pending or, to the Knowledge of the Selling Group, threatened against any member of the Selling Group alleging the violation of any Environmental Laws, and there are no administrative proceedings pending or, to the Knowledge of the Selling Group, threatened against any member of the Selling Group, alleging the violation of any Environmental Laws, and no written notice from any Governmental Entity or any private or public Person has been received by any member of the Selling Group claiming any violation of any Environmental Laws in connection with any Site or requiring any remediation, clean-up, modification, repairs, work, construction, alterations, or installations on or in connection with any Site that are necessary to comply with any Environmental Laws and that have not been complied with or otherwise resolved to the satisfaction of the party giving notice; (iii) All permits, registrations, licenses, authorizations, and the like ("Permits") required to be obtained or filed by any member of the Selling Group under any Environmental Laws in connection with their respective operations at the Sites, including those activities relating to the generation, use, storage, treatment, disposal, release, or remediation of Hazardous Substances (as such term is defined in Section 3.1(m)(iv) hereof), have been duly obtained or filed, and each member of the Selling Group is and has at all 23 29 times been in full compliance in all material respects with the terms and conditions of all such Permits; (iv) Except as set forth on Schedule 3.1(m), all Hazardous Substances used or generated by each member of the Selling Group or any of their respective predecessors on, in, or under any Site are and have at all times been generated, stored, used, treated, disposed of, and released by such Persons or on their behalf in such manner as not to result in any Environmental Costs or Liabilities. "Hazardous Substances" means (A) any hazardous materials, hazardous wastes, hazardous substances, toxic wastes, and toxic substances as those terms are defined under any Environmental Laws; (B) any asbestos or any material which contains any hydrated mineral silicate, including chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite, whether friable or non-friable; (C) PCBs, or PCB- containing materials, or fluids; (D) radon; (E) any other hazardous, radioactive, toxic or noxious substance, material, pollutant, contaminant, constituent, or solid, liquid or gaseous waste; (F) any petroleum, petroleum hydrocarbons, petroleum products, crude oil and any fractions or derivatives thereof, any oil or gas exploration or production waste, and any natural gas, synthetic gas and any mixtures thereof; (G) any substance that, whether by its nature or its use, is subject to regulation under any Environmental Laws or with respect to which any Environmental Laws or Governmental Entity requires environmental investigation, monitoring or remediation; and (H) any underground storage tanks, dikes, or impoundments as defined under any Environmental Laws; (v) There are not now, nor have there been in the past, on, in or under any Site when owned, leased, or operated by any member of the Selling Group or when owned, leased, or operated by any of their respective predecessors, any Hazardous Substances that are in a condition or location that violates any Environmental Law or that reasonably could be expected to require remediation under any Environmental Laws or give rise to claim for damages or compensation by any affected Person or to any Environmental Costs or Liabilities; (vi) No member of the Selling Group has received and, to the Knowledge of the Selling Group, does not expect to receive, any notification from any source advising any member of the Selling Group that: (A) because of its operations at the Sites, it is a potentially responsible party under CERCLA or any other Environmental Laws; (B) any Site is identified or proposed for listing as a federal National Priorities List ("NPL") (or state- equivalent) site or a Comprehensive Environmental Response, Compensation and Liability Information System ("CERCLIS") list (or state-equivalent) site; or (C) any facility to which it has ever transported or otherwise arranged for the disposal of Hazardous Substances is identified or proposed for listing as an NPL (or state equivalent) site or CERCLIS (or state- equivalent) site; and (vii) No Station's operations has a significant environmental impact, as defined by 47 C.F.R. ss. 1.1307. 24 30 (n) Taxes. Since January 1, 1992, each member of the Selling Group has filed or caused to be filed all Tax returns affecting a Station or any of the Assets which are required to be filed by it, and all such Tax Returns which have been filed are accurate and complete in all material respects, and each member of the Selling Group has timely paid all Taxes shown on such returns or on any Tax assessment received by any of them to the extent that such Taxes have become due. There are no Liens for Taxes that have become due upon any of the Stations or any of the Assets. No member of the Selling Group has received notice of any Tax deficiency or delinquency. No Internal Revenue Service audit of any member of the Selling Group is pending (except a pending audit of the parent of Midcontinent) or, to the Knowledge of the Selling Group, threatened, and the results of any completed audits are properly reflected in the Financial Statements. All monies required to be withheld by each member of the Selling Group from employees or collected from customers for Taxes and the portion of any Taxes to be paid by any member of the Selling Group to any Governmental Entity or set aside in accounts for such purposes have been so paid or set aside, or such monies have been reserved against and are reflected in the Financial Statements and Balance Sheets. For each taxable year or period not closed by the applicable statute of limitations, (i) Seller and Point are each properly classified as a partnership (and not as an association taxable as a corporation) for tax purposes, (ii) neither Seller nor Point has a partner that is a "foreign partner" within the meaning of Section 1446(e) of the Code, and (iii) no partner of either Seller or Point is a "foreign Person" within the meaning of Section 1445(f)(3) of the Code. There is no legal, administrative, or Tax proceeding pending pursuant to which any member of the Selling Group 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 business of the Stations. (o) Certain Agreements. (i) Schedule 3.1(o) hereto lists each oral or written (A) employment or consulting Contract that is not terminable without liability or penalty on 30 days or less notice and (B) contract, agreement or commitment under which any party thereto remains obligated to provide goods or services having a value, or to make payments aggregating, in excess of $50,000 per year, in any such case to which any member of the Selling Group is a party or bound. Each such agreement, contract, or obligation described in Schedule 3.1(o) or required to be so described is a valid and binding obligation of Seller and is in full force and effect without amendment other than as described in Schedule 3.1(o). Each member of the Selling Group and, to the Knowledge of the Selling Group, each other party to such contracts, has performed the material obligations required to be performed by it under the agreements so described and is not (with or without lapse of time or the giving of notice, or both) in material breach or default thereunder. Schedule 3.1(o) identifies, as to each agreement, contract, or obligation listed thereon, whether the consent of the other party thereto is required in order for such agreement, contract, or obligation to continue in full force and effect upon the consummation of the transactions contemplated hereby or whether such agreement, contract, or obligation can be canceled by the other party without liability to such other party due to the consummation of the transactions contemplated hereby. A copy of each written agreement, contract, obligation, plan, or arrangement and a description 25 31 of each oral agreement, contract, obligation, plan, or arrangement set forth in Schedule 3.1(o) has been provided to Buyer. (ii) Except as described in Schedule 3.1(o), no member of the Selling Group is a party to any oral or written agreement, plan or arrangement with any employee or other Station or broadcast personnel (whether an employee, consultant or an independent contractor) of any member of the Selling Group (A) the benefits of which are contingent, or the terms of which are materially altered, upon, or result from, the occurrence of a transaction involving Seller of the nature of any of the transactions contemplated by this Agreement, (B) providing severance benefits longer than forty-five days or other benefits after the termination of employment or other contractual relationship regardless of the reason for such termination and regardless of whether such termination is before or after a change of control, (C) under which any Person may receive payments subject to the tax imposed by Section 4999 of the Code or (D) any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. (p) ERISA Compliance; Labor. (i) Neither Seller nor any other trades or businesses under common control within the meaning of Section 4001(b)(1) of ERISA with the Seller maintains or has contributed or been obligated to contribute to any Employee Pension Benefit Plan or to any Multiemployer Plan. (ii) True, correct, and complete copies of each of the Employee Benefit Plans maintained or contributed to by the Seller, and related trusts, if applicable, have been furnished to Buyer, along with the most recent report filed on Form 5500 and summary plan description with respect to each Employee Benefit Plan required to file Form 5500. (iii) Schedule 3.1(p) is a true and complete list of each collective bargaining agreement to which any member of the Selling Group is a party. Except for those unions which are parties to one or more of the listed collective bargaining agreements or as otherwise listed on Schedule 3.1(p), no member of the Selling Group has agreed to recognize any union or other collective bargaining representative, nor has any union or other collective bargaining representative been certified as the exclusive bargaining representative of any of its employees. Each member of the Selling Group (A) is, and has been since January 1, 1993, in substantial compliance with all applicable laws regarding labor and employment including laws regarding employment practices, terms and conditions of employment, equal employment opportunity, employee benefits, affirmative action, wages and hours, plant closing and mass layoff, occupational safety and health, immigration, and workers' compensation, (B) is not engaged, nor has it since January 1, 1993, engaged, in any unfair labor practices, and has no, and has not had since January 1, 1993, any, unfair labor practice charges or complaints before the National Labor Relations Board pending or, to the 26 32 Knowledge of the Selling Group, threatened against it, (C) has no, and has not had since January 1, 1993, any, grievances, arbitrations, or other proceedings arising or asserted to arise under any collective bargaining agreement, pending or, to the Knowledge of the Selling Group, threatened against it and (D) has no, and has not had since January 1, 1993, any, charges, complaints, or proceedings commenced before the Equal Employment Opportunity Commission, Department of Labor or any other Governmental Entity responsible for regulating employment practices, pending, or, to the Knowledge of the Selling Group, threatened against it. There is no labor strike, slowdown, work stoppage or lockout pending or, to the Knowledge of the Selling Group, threatened against or affecting any member of the Selling Group, and no member of the Selling Group has experienced any labor strike, slowdown, work stoppage or lockout since January 1, 1993. Except as set forth on Schedule 3.1(p), to the Knowledge of the Selling Group no union organizational campaign or representation petition is currently pending with respect to any of the employees of any member of the Selling Group. (q) Patents, Trademarks, Etc. Schedule 3.1(q) is a true and complete list of all of the Intellectual Property. Seller owns or has the unencumbered right to use pursuant to a valid, binding, and enforceable license agreement or other contract or arrangement all such Intellectual Property. To the Knowledge of the Selling Group, Seller is not infringing any such Intellectual Property, and no member of the Selling Group is aware of any infringement by others of any of the Intellectual Property owned by Seller. (r) Affiliate Relationships. Schedule 3.1(r) sets forth a true and complete list of all contracts or other arrangements involving Seller in which any partner, officer, director, or any of its Affiliates has a financial interest, including indebtedness to Seller. (s) Assets. Except for the Excluded Assets, the Assets to be assigned and transferred pursuant to Section 2.1 include all assets used or held for use in connection with the business and operations of the Stations as currently conducted. Prior to the date of this Agreement, Point and Midcontinent have respectively assigned and transferred to Seller the Assets respectively owned by each of them. (t) No Dispositions. Except for the assignment and transfer made by Point and Midcontinent to Seller and the sale of WMAD-AM, since the Balance Sheet Date there has not occurred any sale, lease, transfer, assignment, abandonment or other disposition of any of the Assets other than any disposition of (i) obsolete property or (ii) property in connection with the acquisition of replacement property of equal value. (u) Disclosure. No representation or warranty by any member of the Selling Group contained in this Agreement or in any certificate furnished pursuant to this Agreement contains or will contain any untrue statement of a material fact. 27 33 3.2. Representations and Warranties of Buyer. Buyer represents and warrants to the Selling Group as follows (with the understanding that the Selling Group is relying on such representations and warranties in entering into and performing this Agreement): (a) Organization Standing and Power. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now being conducted. (b) Authority. To the extent that Buyer is a party thereto, Buyer has all requisite corporate power and authority to enter into the Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of the Transaction Documents by Buyer and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Buyer. The Transaction Documents have been, or upon execution and delivery will be, duly executed and delivered and constitute the valid and binding obligations of Buyer, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith, and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). (c) No Conflict; Required Filings and Consents. The execution, delivery and performance by Buyer of the Transaction Documents (with or without the giving of notice, the lapse of time, or both) does not (i) conflict with the Certificate of Incorporation or By-Laws of Buyer; (ii) except for the necessity of obtaining applicable Consents, conflict with, result in a breach of, or constitute a default under any Applicable Law known to Buyer; or (iii) except for the necessity of obtaining applicable Consents, conflict with, result in a breach of, constitute a default under, permit any party to terminate, modify, accelerate the performance of or cancel the terms of, any material agreement, lease, instrument of indebtedness, or license to which Buyer is a party, or by which Buyer is bound, such that Buyer could not acquire or operate the Assets. No Consent of any Governmental Entity is required by or with respect to Buyer in connection with the execution and delivery of any Transaction Documents by Buyer or the consummation by it of the transactions contemplated hereby or thereby, except for (A) the filing of a premerger notification report under the HSR Act, (B) the FCC Consents (as contemplated by Section 7.1), and (C) applicable requirements, if any, of the Securities Act and the Exchange Act and the rules and regulations thereunder and state securities or blue sky laws. (d) Litigation. As of the date hereof, there is no action, suit, inquiry, judicial or administrative proceeding pending or, to the Knowledge of Buyer, threatened against it relating to the transactions contemplated by this Agreement. (e) FCC Matters. Buyer Knows of no facts relating to it under the Communications Act that reasonably may be expected to disqualify it from qualifying as an assignee 28 34 of the Station Licenses or that would prevent it from consummating the transactions contemplated by this Agreement. Buyer is able to certify on an FCC Form 314 that it is financially qualified and on the Closing Date shall be able to so certify. ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1. Covenants of the Selling Group. Except as contemplated by this Agreement or to the extent that Buyer shall otherwise consent in writing, from the date of this Agreement until the Closing, each member of the Selling Group, jointly and severally, covenants and agrees that Seller shall not: (a) except for the sale of Excluded Assets, conduct its business in any manner except in the ordinary course consistent with past practice; or (b) fail to use commercially reasonable efforts to preserve intact its present business organization and to keep available the services of its present officers, Station managerial personnel (including the General Manager, Station Manager, General Sales Manager, Local Sales Manager, Programming Director, and Business Manager, or Persons performing comparable duties, of each Station (collectively, the "Station Management")) and over-the-air personnel or independent contractors and to preserve its relationships with customers, suppliers and others having business dealings with it; or (c) except as described in Schedule 4.1(c), fail to use commercially reasonable efforts to maintain the present format of the Stations and with programming consistent with past practices; or (d) except for amendments, terminations (without payment of penalty or damages), renewals, or failures to renew (without payment of penalty or damages) of employment agreements with over-the-air personnel in the ordinary course of business and consistent with past practice (subject to prior consultation with Buyer reasonably in advance thereof), enter into, materially amend, terminate, or fail to use commercially reasonable efforts to renew any material Contract (i.e., a contract or agreement of the type required to be described in Schedule 3.1(o)) (provided that Seller shall not be required to renew any material Contract on terms that are less favorable to Seller); default in any material respect (or take or omit to take any action that, with or without the giving of notice or passage of time, would constitute a material default) under any material Contract; or enter into any new material Contract; or (e) merge or consolidate with or into any other legal entity, dissolve or liquidate; or (f) adopt or amend any Employee Benefit Plan or collective bargaining agreement or increase in any manner the compensation or fringe benefits of any director, officer, or 29 35 employee or other Station and broadcast personnel (whether employees or independent contractors), except as required by law; or (g) terminate any employee of any of the Stations (other than administrative personnel) without prior consultation with Buyer regarding the basis for such termination; or (h) except as contemplated by Section 4.4, acquire (including by merger, consolidation, or the acquisition of any equity interest or assets), sell (whether by merger, consolidation, or the sale of an equity interest or assets), lease, or dispose of any Assets other than Excluded Assets except in the ordinary course of business and consistent with past practice or, even if in the ordinary course of business and consistent with past practices (other than sales of surplus or obsolete equipment), whether in one or more transactions, acquire, sell, lease, or dispose of an Asset or Assets having an aggregate fair market value in excess of $50,000; or (i) mortgage, pledge, or subject to any Lien, other than Permitted Liens, any of the Assets; or (j) except as required by GAAP, applicable law, or circumstances which did not exist as of the Balance Sheet Date, change any of the material accounting principles or practices used by it; or (k) change in any material respect its existing practices and procedures with respect to the collection of accounts receivable of any Station or, except with respect to good faith attempts consistent with past practice to obtain payment of a past due receivable or except in accordance with existing practices, a contested receivable of any Station; offer to discount the amount of any outstanding receivable or extend any other incentive (whether to the account debtor or any employee or third party responsible for the collection of receivables) to accelerate the collection thereof; change any Station's advertising rates or policies, procedures or methods in connection with the sale of advertising time in a manner expected to accelerate the receipt of cash payments; or fail to incur annual advertising and promotional department expenses in cash and trade below 90% of that budgeted for 1997 (as such budget previously has been delivered to Buyer); or (l) enter into, or enter into negotiations or discussions with any Person other than Buyer with respect to, any local marketing agreement, time brokerage agreement, joint sales agreement, or any other similar agreement; or (m) agree to or make any commitment, orally or in writing, to take any actions prohibited by this Agreement. 4.2. Negative Trade Balance. Each member of the Selling Group shall use commercially reasonable efforts to ensure that as of the Closing Date the Seller Negative Trade Balance, as defined below, of the Stations, taken as a whole, does not in the aggregate exceed (x) $5,000 in the case of all Trade Deals (other than Trade Deals involving media trades with television stations) or (y) $45,000 in the case of Trade Deals involving media trades with television stations, provided that 30 36 in each case such excess shall be an adjustment to the Purchase Price as provided in Section 2.5(b). "Seller Negative Trade Balance" means the difference, if negative, between the value of time owed under the applicable barter agreements to which any of the Stations is a party or by which any of them is bound and the value of the goods and services to be received under such agreements. 4.3. Environmental Site Assessments. Buyer, at its sole costs and expenses, for itself or on behalf of its lenders or other financing sources shall have the right to have Phase I or Phase II environmental site assessments ("ESAs") performed by a nationally recognized and duly qualified environmental consultant at each identified transmission site owned, operated, or leased by Seller and at such other identified real properties and facilities owned, operated, or leased by Seller. Each member of the Selling Group covenants and agrees that they shall cooperate with Buyer and its representatives in the performance of such ESAs to their completion. 4.4 Relocation of Operations. Buyer acknowledges that Seller intends to relocate all operations of the Stations to the building now occupied by WIBA-FM and WIBA-AM, located at 2651 South Fish Hatchery Road, Madison, Wisconsin (the "WIBA Building"), subject to the construction of additional space to the WIBA Building and the purchase and installment of necessary equipment for such relocation. Provided that the transactions contemplated hereunder are consummated, Buyer shall bear all costs of such construction and equipment that are approved in writing by Buyer in advance. In any event, Seller shall bear all such costs that are not so approved by Buyer. Any amounts so approved by Buyer and paid by Seller prior to the Closing shall be added to the Purchase Price hereunder and paid by Buyer to Seller at the Closing. Seller shall deliver to Buyer reasonably detailed information on all proposed construction and equipment expenditures at least ten days before the date on which Seller proposes to become contractually obligated with respect thereto. If Buyer does not object in writing to any of such expenditures prior to the expiration of such ten day period, Buyer will be deemed to have approved such expenditures. ARTICLE V ADDITIONAL AGREEMENTS OF THE SELLING GROUP 5.1. No Solicitation of Transactions. No member of the Selling Group shall, directly or indirectly, through any partner, officer, director, agent, or otherwise, solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to any acquisition or purchase of all or any material portion of the Assets or any equity interest in any member of the Selling Group or any merger, consolidation, share exchange, business combination, or other similar transaction with any member of the Selling Group or participate in any negotiations regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate, or encourage, any effort or attempt by any other Person to do or seek any of the foregoing. The Selling Group shall promptly communicate to Buyer the material terms of any such proposal (and the identity of the party making such proposal) that it may receive. Each member of the Selling Group agrees not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which any member of the Selling Group is a party. The 31 37 Selling Group immediately shall cease and cause to be terminated all existing discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. 5.2. Access and Information. (a) Until the Closing, subject only to applicable rules and regulations of the FCC, each member of the Selling Group shall afford to Buyer and its representatives (including accountants and counsel) full access, during normal business hours, upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of the business of Seller, to all properties, books, records, and Tax Returns of each member of the Selling Group and all other information with respect to their respective businesses, together with the opportunity to make copies of such books, records, and other documents and to discuss the business of any member of the Selling Group with such directors, corporate officers, partners, Station managerial personnel (including the Station Management of each Station), accountants, consultants, and counsel for each member of the Selling Group as Buyer deems reasonably necessary or appropriate for the purposes of familiarizing itself with each member of the Selling Group and each of the Stations, including the right to visit each Station; provided that such Station visits shall be conducted in a manner intended to minimize the disruption to the operations of the Station. In furtherance of the foregoing, each member of the Selling Group shall authorize and instruct their respective accountants to meet with Buyer and its representatives, including its independent public accountants, to discuss the business and accounts of each member of the Selling Group and to make available (with the opportunity to make copies) to Buyer and its representatives, including its independent public accountants, all the work papers of its accountants related to their audit of the consolidated financial statements and Tax Returns of each member of the Selling Group. (b) Within 30 days after the end of each calendar month, Seller shall deliver to Buyer, for each of the Stations and for Seller, monthly operating statements (in a form consistent with the monthly operating statements previously supplied to Buyer) prepared in the ordinary course of business for internal purposes, including comparisons to comparable prior year periods and the current year budget. In addition, within 45 days after the end of each calendar quarter, Seller shall deliver to Buyer, for each of the Stations, quarterly statements prepared in the ordinary course for internal purposes containing a detailed listing of all trade and barter agreements of each Station showing the status of all such agreements as of the end of the quarter. Further, Point, at its sole costs and expenses, on or before February 10, 1997, shall deliver to Buyer copies of its audited balance sheet as of December 31, 1996, together with the related audited statements of income, cash flows and changes in partners' equity of Point for the period then ended. Seller shall deliver to Buyer the current rating books and such other ratings information subscribed to by it, including Arbitrends, Accuratings or any other written information reflective of the quantitative or qualitative nature of the audiences of each Station, upon receipt of the same by Seller. Seller shall instruct the Station Management of each Station to provide such information and reports to Buyer's corporate officers promptly upon receipt by such Station Management. In addition, Seller will provide Buyer with copies of each Station's weekly sales pacing reports, with comparisons to sales pacing in the corresponding period of the prior year, as soon as the same become available. (c) Without duplication of Section 5.2(b), at such time as any member of the Selling Group provides the same to their respective lenders, such member of the Selling Group shall 32 38 provide Buyer with copies of the financial statements and other information delivered by it to its lenders. 5.3. Assistance. If Buyer requests, each member of the Selling Group will cooperate, and will cause their accountants to cooperate, in all reasonable respects with any financing efforts of Buyer or its Affiliate, including providing assistance in the preparation of one or more registration statements or other offering documents relating to debt and/or equity financing and any other filings that may be made by Buyer or its Affiliate with the SEC, all at the sole expense of Buyer. Midcontinent shall allow Buyer's independent public accountants to conduct an audit of the books and records of Midcontinent for purposes of preparing an audited balance sheet for the twelve month period ended December 31, 1996 for the Midcontinent Stations, together with related audited statements of income, cash flows and changes in stockholder's equity for such period. The costs and expenses of such independent public accountants incurred in connection with such audit shall be borne by Buyer. Midcontinent shall cooperate with Buyer's independent public accountants in the conduct of the above described audit to the extent that may be necessary so as to allow such audit to be completed on or before February 10, 1997. In addition, each member of the Selling Group (a) shall furnish to their respective independent accountants (or, if requested by Buyer, to Buyer's independent public accountants) such customary management representation letters as such accountants may require as a condition to their execution of any required accountants' consents necessary in connection with the delivery of any "comfort" letters requested by financing sources of Buyer or its Affiliates and (b) shall furnish to Buyer all financial statements (audited and unaudited) and other information in the possession of any member of the Selling Group or their respective representatives or agents as Buyer shall reasonably determine is necessary or appropriate for the preparation of such offering documents, registration statements or filings. In accordance with Article XI, Buyer will indemnify and hold harmless each member of the Selling Group and their officers, directors, and controlling Persons against any and all claims, losses, liabilities, damages, costs, or expenses (including reasonable attorneys' fees and expenses) that may arise out of or with respect to the financing efforts of Buyer or its Affiliates, including any registration statement, prospectus, offering documents, and other filings related thereto; provided, however, that subject to the limitations and provisions of this Agreement, nothing herein shall prevent Buyer from asserting any claim for breach of representation or warranty under this Agreement. 5.4. Compliance With Station Licenses. Each member of the Selling Group shall cause each of the Stations to be operated in accordance with the applicable Station Licenses and all applicable rules and regulations of the FCC and in compliance in all material respects with all other applicable laws, regulations, rules, and orders. Each member of the Selling Group shall use commercially reasonable efforts to not cause or permit any of the Station Licenses to expire or be surrendered, adversely modified, or terminated. Each member of the Selling Group shall file or cause to be filed with the FCC all applications (including license renewals) or other documents required to be filed in connection with the operation of the Stations. In addition, if requested by Buyer and at Buyer's expense, each member of the Selling Group shall file or cause to be filed with the FCC applications for new, specifically identified frequencies that may be useful in connection with the operation of the Stations. Should the FCC institute any proceedings for the suspension, revocation or adverse modification of any of the Station Licenses, each member of the Selling Group 33 39 will use commercially reasonable efforts to promptly contest such proceedings and to seek to have such proceedings terminated in a manner that is favorable to the Stations. Each member of the Selling Group will use commercially reasonable efforts to maintain the FCC construction permits (if any) listed in Schedule 3.1(g) in effect until the applicable construction projects are complete and to diligently prosecute all pending FCC applications listed in Schedule 3.1(g). If any member of the Selling Group (or their respective FCC counsel) receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any other Governmental Entity, that could affect the ability of any member of the Selling Group to consummate the transactions contemplated hereby, or should any member of the Selling Group (or their respective FCC counsel) become aware of any fact relating to the qualifications of Buyer that reasonably could be expected to cause the FCC to withhold its consent to the assignment of the Station Licenses, the member shall promptly notify Buyer in writing and use commercially reasonable efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement. 5.5. Notification of Certain Matters. Each member of the Selling Group shall give prompt written notice to Buyer of (a) the occurrence, or failure to occur, of any event of which any member of the Selling Group becomes aware that has caused or that would be likely to cause any representation or warranty of any member of the Selling Group contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Closing Date, (b) the failure of any member of the Selling Group, or any officer, director, partner, employee, or agent thereof, to comply with or satisfy in any material respect any covenant, condition, or agreement to be complied with or satisfied by it hereunder, (c) the occurrence of a Station Event (as defined in Section 9.1), and (d) the occurrence of any threat by any officer of any member of the Selling Group or any General Manager, Station Manager, General Sales Manager or Programming Director of a Station to resign or otherwise terminate his employment or independent contractor relationship with Seller. No such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder. 5.6. Third Party Consents. After the date hereof and prior to the Closing, each member of the Selling Group shall use commercially reasonable efforts to obtain the written Consent from any party to an agreement or instrument identified in Schedule 3.1(o) or any other Assumed Contract which is required to permit the consummation of the transactions contemplated hereby. 5.7. Richard P. Verne Consulting Agreement. At the Closing, Buyer shall, and the Selling Group shall cause Richard P. Verne to, execute and deliver the Consulting Agreement. 5.8. Confidential Information. Each member of the Selling Group acknowledges that, following the Closing, the confidential information and data obtained or possessed by such member concerning the business affairs of the Stations (the "Confidential Information") will be the property of Buyer and not the Selling Group. Therefore, each such member agrees that it will not disclose to any Person or use for its own account or the account of any other Person any of the Confidential Information unless and to the extent that such Confidential Information is (a) required to be disclosed by law or pursuant to a judicial order or decree or (b) becomes generally known to and 34 40 available for use by the public otherwise than as a result of any such member's act or omission to act. Each such member further agrees to deliver to Buyer, at any time Buyer may request within six years after the Closing Date, all memoranda, notes, plans, records, reports, and other documents (and copies thereof) relating to the conduct of the Stations which such member may then possess or control. ARTICLE VI COVENANTS OF BUYER 6.1. Notification of Certain Matters. If Buyer (or its FCC counsel) receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any Governmental Entity, that could affect Buyer's ability to consummate the transactions contemplated hereby, or should Buyer (or its FCC counsel) become aware of any fact relating to the qualifications of Buyer that reasonably could be expected to cause the FCC to withhold its consent to the assignment of the Station Licenses, Buyer shall promptly notify Seller thereof and shall use commercially reasonable efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement; provided that Buyer shall not be required pursuant to this Section 6.1 to divest itself or cause any Affiliate thereof to divest itself of any media business or interest therein. In addition, Buyer shall give to Seller prompt written notice of (a) the occurrence, or failure to occur, of any event of which it becomes aware that has caused or that would be likely to cause any representation or warranty of Buyer contained in this Agreement to be untrue or inaccurate at any time from the date hereof to the Closing Date and (b) the failure of Buyer, or any officer, director, employee, or agent thereof, to comply with or satisfy in any material respect any covenant, condition, or agreement to be complied with or satisfied by it hereunder. No such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder. 6.2. Employee Matters. Buyer will use its reasonable efforts to determine at least ten days prior to the Closing Date those employees of Seller whom it desires to extend offers of employment. Any offers so extended by Buyer shall be on such terms and conditions that Buyer shall determine in its sole discretion. Buyer will give Seller prompt notice of the names of any employee of Seller who Buyer has determined not to extend an offer of employment. Seller waives any claims against Buyer and any of Seller's employees who are extended an offer of employment by Buyer arising under any employment agreement or noncompete agreement between such person and Seller. ARTICLE VII MUTUAL COVENANTS 7.1. Application for FCC Consents. On or before February 13, 1997, Buyer and Seller (and if necessary, Point and Midcontinent and any of their respective Affiliates) will join in one or more applications filed with the FCC requesting the FCC's written consent to the assignment of the FCC Licenses pursuant to this Agreement (the "Applications"). The parties will take all proper steps 35 41 reasonably necessary (a) to diligently prosecute the Applications and (b) to obtain the FCC Consents; provided that Buyer shall not be required pursuant to this Section 6.1 to divest itself or cause any Affiliates thereof to divest itself of any media business or interest therein. The failure by either party to timely file or diligently prosecute its portion of any Application shall be a material breach of this Agreement. 7.2. Control of Stations. This Agreement will not be consummated until after the FCC Consents with respect to the Applications referred to in Section 7.1 are granted and, unless waived by Buyer, have become Final Orders. Between the date of this Agreement and the Closing Date, Buyer will not directly or indirectly control, supervise or direct the operation of the Stations. Further, between the date of this Agreement and the Closing Date, Seller shall, directly or indirectly, supervise or control the operation of the Stations. Such operation shall be the sole responsibility of Seller. 7.3. Other Governmental Consents. Promptly following the execution of this Agreement, the parties shall proceed to prepare and file with the appropriate Governmental Entities (other than the FCC) such requests, reports, or notifications as may be required in connection with this Agreement and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such matters. Without limiting the foregoing, promptly following the execution of this Agreement, the parties shall (a) file with the Federal Trade Commission and the Antitrust Division of the Department of Justice the notifications and other information (if any) required to be filed under the HSR Act with respect to the transactions contemplated hereby and shall use their commercially reasonable efforts to cause all applicable waiting periods under the HSR Act to expire or be terminated as of the earliest possible date and (b) make all necessary filings and, thereafter, make any other required submissions with respect to the transactions contemplated hereby under the Securities Act and the rules and regulations thereunder and any other applicable federal or state securities laws. Nothing in this Section 7.3 shall require Buyer to divest itself or to cause any Affiliate thereof to divest itself of any media business or interest therein. 7.4. Accounts Receivable. All Accounts Receivable shall remain the property of Seller. Seller hereby authorizes Buyer, however, for purposes of collection only, to collect such receivables for a period of 180 days after the Closing. Seller shall deliver to Buyer a complete and detailed statement of each account within three days after Closing, and Buyer shall use its reasonable efforts, consistent with its customary collection practices for its own accounts receivable, without compensation, to collect each Account Receivable during said 180 days. During that period, Buyer shall provide to Seller a detailed monthly statement of the Accounts Receivable showing amounts collected to date and amounts outstanding as of the same date and, within 20 days after the end of each month, shall deliver to Seller the Accounts Receivable report and a check for the amounts collected during the prior month. All payments received by Buyer during the 180-day period following the Closing Date from a Person obligated with respect to an Account Receivable shall be applied first to Seller's account and only after full satisfaction thereof to Buyer's account; provided, however, that if such Person has, in the reasonable opinion of Buyer, a legitimate dispute with respect to such Account Receivable and Buyer also has an account receivable from such Person, all payments received by Buyer during the 180-day period following the Closing Date from such Person 36 42 shall be applied first to Buyer's account and only after the earlier to occur of full satisfaction of Buyer's account or resolution of such dispute, to Seller's account. Buyer shall not be required to refer any Account Receivable to a collection agency or an attorney for collection, nor shall it compromise, settle, or adjust any Account Receivable having a value in excess of $5,000 without receiving the approval of Seller. Seller shall take no action with respect to the Accounts Receivable, such as litigation, until the expiration of said 180-day period. Following the expiration of said 180- day period, Seller shall be free to take such action as Seller may in its sole discretion determine to collect any Accounts Receivable then outstanding. 7.5. Brokers or Finders. The Selling Group represents and warrants to Buyer that, other than the previously disclosed fee payable to Americom, which fee shall be paid in accordance with the provisions of Section 12.7, no agent, broker, investment banker, or other Person engaged by Seller is or will be entitled to any broker's or finder's fee or any other commission or similar fee payable by Buyer or Seller in connection with any of the transactions contemplated by this Agreement. Buyer represents and warrants to the Selling Group that Buyer has not engaged any broker, investment banker or other Person that will be entitled to any broker's or finder's fee or any other commissions or similar fee from Seller in connection with any of the transactions contemplated by this Agreement. 7.6. Bulk Sales Law. The parties do not believe that any bulk sales or fraudulent conveyance statute applies to the transactions contemplated by this Agreement. Buyer therefore waives compliance by the Selling Group with the requirements of any such statutes and, in accordance with Article XI, each member of the Selling Group agrees to indemnify and hold Buyer harmless against any claim made against Buyer by any creditor of any member of the Selling Group as a result of a failure to comply with any such statute and all losses, liabilities, damages, costs, or expenses (including reasonable attorney's fees and expenses) arising out of any such claim. 7.7. Risk of Loss. (a) 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. In the event of any such loss, damage, impairment, confiscation, or condemnation, whether or not covered by insurance, Seller shall promptly notify Buyer of such loss, damage, impairment, confiscation, or condemnation. (b) If Seller, at its expense, repairs, replaces, or restores such Assets to their prior condition to the satisfaction of Buyer before the Closing, Seller shall be entitled to all insurance proceeds and condemnation awards, if any, by reason of such award or loss. (c) If Seller does not or cannot restore or replace lost, damaged, impaired, confiscated or condemned Assets having a replacement cost in excess of $250,000 in the aggregate or informs Buyer that it does not intend to restore or replace such Assets, Buyer may at its option: 37 43 (i) terminate this Agreement by notice forthwith without any further obligation hereunder; or (ii) proceed to the Closing of this Agreement without Seller completing the restoration and replacement of such Assets, provided that Seller shall assign all rights under applicable insurance policies and condemnation awards, if any, to Buyer; and in such event, Seller shall have no further liability with respect to the condition of the Assets directly attributable to the loss, damage, impairment, confiscation, or condemnation. (d) Buyer will notify Seller of a decision under the options described in Section 7.7(c)(i) or (ii) above within ten Business Days after Seller's notice to Buyer of the damage or destruction of Assets and the estimate of the costs to repair or replace the Assets; provided, however, that if Seller states that it intends to restore the damaged Assets and if Seller has not restored such damaged Assets immediately prior to the Closing Date, notwithstanding Buyer's prior delivery of a notice to proceed pursuant to this Section 7.7(d), Buyer shall have the right to either postpone the Closing or terminate this Agreement by notice forthwith. 7.8. Additional Agreements. Subject to the terms and conditions of this Agreement, each of the parties hereto will use its commercially reasonable efforts to take or cause to be taken all action, and to do or cause to be done all things, necessary, proper, or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. If at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, the parties to this Agreement and their duly authorized representatives shall take all such action. Without limiting the generality of the foregoing, if, after the Closing Date, Buyer seeks indemnification or recovery from one or more other parties to an Assumed Contract or otherwise seeks to enforce such Assumed Contract and, in order to obtain such indemnification, recovery or enforcement, it is necessary for any member of the Selling Group to initiate a suit, participate in any enforcement proceeding or otherwise provide assistance to Buyer, then, at the request and the sole expense of Buyer, such member shall take such action as Buyer may reasonable request in connection with Buyer's efforts to obtain such indemnification, recovery or enforcement. ARTICLE VIII CONDITIONS PRECEDENT 8.1. Conditions to Each Party's Obligation. The respective obligations of Buyer and of each member of the Selling Group to effect the transactions contemplated hereby are subject to the satisfaction (or, in the case of the condition specified in the last sentence of Section 8.l(a), the waiver by Buyer) on or prior to the Closing Date of the following conditions: (a) Consents and Approvals. All authorizations, consents, orders, or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Entity necessary for the consummation of the transactions contemplated by this Agreement shall 38 44 have been filed, occurred, or been obtained. The FCC Consents shall have become Final Orders and shall be in form and substance reasonably satisfactory to Buyer. (b) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect. (c) No Action. No action shall have been taken nor any statute, rule, or regulation shall have been enacted by any Governmental Entity that makes the consummation of the transactions contemplated hereby illegal. 8.2. Conditions to Obligation of Buyer. The obligation of Buyer to effect the transactions contemplated hereby is subject to the satisfaction of the following conditions unless waived, in whole or in part, by Buyer: (a) Representations and Warranties. The representations and warranties of each member of the Selling Group set forth in this Agreement shall be true and correct in all material respects (provided that any representation or warranty of any member of the Selling Group contained herein that is qualified by a materiality standard or a Material Adverse Effect qualification shall not be further qualified hereby) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and Buyer shall have received a certificate to such effect signed on behalf of each member of the Selling Group by the chief executive officer or by the chief financial officer of each entity (or in the case of each of Point and Seller, by the chief executive officer or chief financial officer of the general partner(s) thereof acting in such capacity). (b) Performance of Obligations. Each member of the Selling Group shall have performed in all material respects all obligations required to be performed by it under this Agreement prior to the Closing Date, and Buyer shall have received a certificate to such effect signed on behalf of each member of the Selling Group by the chief executive officer or by the chief financial officer of each entity (or in the case of each of Point and Seller, by the chief executive officer or chief financial officer of the general partner(s) thereof acting in such capacity). (c) Consents Under Agreements. Buyer shall have been furnished with evidence reasonably satisfactory to it of the consent or approval of each Person that is a party to a Contract identified in Schedule 3.1(o) whose consent or approval shall be required in order to permit the consummation of the transactions contemplated hereby, and such consent or approval shall be in form and substance satisfactory to Buyer. (d) Legal Opinions. Buyer shall have received from (i) Stroock & Stroock & Lavan, counsel to Point and Seller, (ii) Schwartz, Woods & Miller, special FCC counsel to Seller and (iii) Leonard, Street and Deinard, counsel to Midcontinent, one or more opinions dated the Closing Date, in substantially the forms attached as Exhibits G, H and I, hereto, respectively, which 39 45 opinions shall expressly provide that they may be relied upon by Buyer's lenders, underwriters, or other sources of financing with respect to the transactions contemplated hereby. (e) Real Estate Title Commitment. Within 60 days after the date of this Agreement, Seller, at its sole cost and expense, shall have provided Buyer with a preliminary report on title to the Owned Real Property covering a date not earlier than January 2, 1997, issued by the Title Company, which preliminary report shall contain a commitment (the "Title Commitment") of the Title Company to issue an owner's title insurance policy at Seller's cost as Buyer may reasonably require (the "Title Policy") insuring the fee simple absolute interest of Seller in the Owned Real Property. The Title Commitment shall be in such amount as set forth in the Title Policy issued by the Title Company on January 2, 1997, with respect to the Owned Real Property. (f) Survey. If requested by Buyer, Seller, at its sole cost and expense, shall have obtained a recent survey of the Owned Real Property which shall: (i) be prepared by a registered land surveyor reasonably acceptable to Buyer; (ii) be certified to the Title Company and to Buyer; and (iii) show with respect to the Owned Real Property: (A) the legal description of the Owned Real Property (which shall be the same as the Title Policy pertaining thereto); (B) all buildings, structures and improvements thereon and all restrictions of record and other restrictions that have been established by an applicable zoning or building code or ordinance and all easements or rights of way across or serving the Owned Real Property (including any off-site easements affecting or appurtenant thereto); (C) no encroachments upon the Owned Real Property or adjoining parcels by buildings, structures or improvements and no other survey defects; (D) access to such parcel from a public street; and (E) a flood certification reasonably satisfactory to Buyer to the effect that no portion of the Owned Real Property is located within a flood hazard area. (g) Closing Deliveries. All documents, instruments, certificates or other items required to be delivered by any member of the Selling Group and Richard P. Verne, as applicable, pursuant to Section 9.2 shall have been delivered. 8.3. Conditions to Obligations of the Seller. The obligation of Seller to effect the transactions contemplated hereby is subject to the satisfaction of the following conditions unless waived, in whole or in part, by Seller. (a) Representations and Warranties. The representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects (provided that any representation or warranty of Buyer contained herein that is qualified by a materiality standard shall not be further qualified hereby) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and Seller shall have received a certificate to such effect signed on behalf of Buyer by the chief executive officer or by the chief financial officer of Buyer. (b) Performance of Obligations of Buyer. Buyer shall have performed in all material respects the obligations required to be performed by it under this Agreement prior to the Closing Date, and Seller shall have received a certificate to such effect signed on behalf of Buyer by the chief executive officer or by the chief financial officer of Buyer. 40 46 (c) Legal Opinions. Seller shall have received from Vinson & Elkins L.L.P., counsel to Buyer, an opinion dated the Closing Date in substantially the form attached as Exhibit F. (d) Closing Deliveries. All documents, instruments, certificates or other items required to be delivered by Buyer pursuant to Section 9.2 shall have been delivered. ARTICLE IX CLOSING 9.1. Closing. Subject to the right of Buyer to defer the Closing as provided in this Section 9.1 and subject to the satisfaction or waiver of the conditions set forth in Article VIII, or at such other place and time as Buyer and Seller may agree, the Closing will take place at the offices of Vinson & Elkins L.L.P., Dallas, Texas, at 10:00 a.m., local time, on a date selected by Buyer on five Business Days notice to Seller, which date shall be on or before the later of July 15, 1997 or the 10th Business Day after the day on which the FCC Consents have been granted by Final Order, (the "Target Closing Date"). Notwithstanding the foregoing, Buyer may, at its option, defer the Closing Date to a date no later than October 31, 1997 by giving Seller notice of such deferral (a "Deferral Notice") at any time prior to the Target Closing Date. At any time after the giving of a Deferral Notice, the Buyer may withdraw the Deferral Notice by giving Seller notice of such withdrawal and subject to the satisfaction or waiver of the conditions set forth in Article VIII, the Closing shall take place at the place and time provided above on the fifth Business Day after the giving of such notice of withdrawal. Upon the giving of a Deferral Notice, the Purchase Price shall be automatically increased by an amount equal to $2,777 per day for each day calculated to and including the day immediately prior to the Closing Date that the Closing Date is delayed from July 15, 1997 by reason of Buyer's deferral of the Closing pursuant to such Deferral Notice. Notwithstanding the foregoing: (a) In the case of a Trading Event, a Banking Event or a Station Event, (i) if the Cessation Date is less than 60 days after the Event Date, then Buyer, in its discretion, may extend the Closing Date to a date not later than the 30th day after the Cessation Date, (ii) if the Cessation Date is more than 60, but less than 90, days after the Event Date, then Buyer, in its discretion, shall elect on the first to occur of the 10th Business Day after the Cessation Date or the 90th day (or, if not a Business Day, the next Business Day) after the Event Date (the "Election Date") to either (A) close the transactions contemplated by this Agreement on the later to occur of the fifth Business Day after the Election Date or the 90th day (or, if not a Business Day, the next Business Day) after the Event Date or (B) terminate this Agreement, and (iii) if the Cessation Date has not occurred by the 90th day after the Event Date (or, if not a Business Day, the next Business Day), then Buyer, in its discretion, shall elect, not later than the 95th day after the Event Date (or if not a Business Day, the next Business Day), either to (1) terminate this Agreement or (2) close the transactions contemplated by this Agreement on the fifth Business Day after the date of such election; (b) In the case of a Conflict Event, Buyer, in its discretion, may extend the Closing Date to a date not to exceed the 90th day after the Event Date; 41 47 (c) If a Cure Period has not ended on or before the Closing Date, the Closing Date shall be extended to the earlier to occur of five Business Days after the cure or waiver of the breach giving rise to the Cure Period or the end of the Cure Period; and (d) If the Closing does not occur within 20 days after the date of the Final Order, the parties shall request approval from the FCC to extend the Closing so that the Closing contemplated hereunder will not violate any FCC rules or regulations. For purposes of this Agreement, a "Trading Event" shall mean that trading generally in securities on the New York Stock Exchange shall have been suspended or materially limited; a "Banking Event" shall mean that a general moratorium on commercial banking activities in New York, New York shall have been declared by any federal or state authority; a "Conflict Event" shall mean the occurrence of any major armed conflict involving a substantial participation by the armed forces of the United States of America that has an adverse affect on the availability or cost of either private or public debt or equity financing; a "Station Event" shall mean any act of nature (including fires, floods, earthquakes, and storms), calamity, casualty, condemnation, or the act or omission to act of any state or federal regulatory agency having jurisdiction over a Station that has caused one or more Stations representing an aggregate of at least 3% of the consolidated gross revenues of the Selling Group for the last full 12 calendar months prior to the Station Event not to be operating in a manner substantially consistent with the operations conducted before such act of nature, calamity, casualty, condemnation, or agency action or omission occurred or not to be in compliance in all material respects with its or their respective Station License(s); an "Event Date" shall mean the date on which a Trading Event, Banking Event, Conflict Event, or a Station Event occurs; and a "Cessation Date" shall mean the date on which a Trading Event, Banking Event, Conflict Event, or a Station Event ends. Pro forma adjustments shall be made, for purposes of calculating gross revenues for the 12-month period specified in the definition of "Station Event" with respect to any radio broadcast station acquired during such 12-month period, assuming that such station was acquired at the beginning of such 12-month period and shall include the gross revenues of such station for the full 12-month period. 9.2. Actions to Occur at Closing. (a) At the Closing, Buyer shall deliver to Seller (or to the Escrow Agent, as indicated) the following: (i) Purchase Price. The Purchase Price by wire transfer of immediately available funds (less the Holdback Amount); (ii) Holdback Amount. The Holdback Amount to the Escrow Agent by wire transfer of immediately available funds. (iii) Certificates. The certificates referred to in Section 8.3(a) and (b); 42 48 (iv) Assumption Agreement. A counterpart of the Assumption Agreement executed by Buyer; (v) Indemnification Escrow Agreement. A counterpart of the Indemnification Escrow Agreement executed by Buyer; (vi) Consulting Agreement. A counterpart of the Consulting Agreement executed by Buyer; and (vii) Non-Competition Agreement. A counterpart of the Non-Competition Agreement executed by Buyer. (viii) Legal Opinion. The opinion of counsel referred to in Section 8.3(c). (b) At the Closing, Seller and the other members of the Selling Group shall deliver to Buyer the following: (i) Certificates. The certificates described in Section 8.2(a) and (b); (ii) Assumption Agreement. A counterpart of the Assumption Agreement executed by Seller; (iii) Indemnification Escrow Agreement. A counterpart of the Indemnification Escrow Agreement executed by Seller; (iv) Non-Competition Agreement. A counterpart of the Non-Competition Agreement executed by each member of the Selling Group; (v) Legal Opinions. The opinions of counsel referred to in Section 8.2(d); (vi) Transfer Documents. The duly executed Bill of Sale and Assignment, together with any other assignments and other transfer documents as requested by Buyer; (vii) Consents; Acknowledgments. The original of each Consent; (viii) Estoppel Certificates. Estoppel certificates from the lessor(s) of the Leased Real Property in a form and substance satisfactory to Buyer and its lenders; (ix) Licenses, Contracts, Business Records, Etc. To the extent they are in the possession of any member of the Selling Group, copies of all Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans, projections, statistics, engineering records and all files and records used by any member of the Selling Group in connection with a Station's business and operations, which copies shall be available at the Closing or at the applicable Station's principal business offices; 43 49 (x) Warranty Deed. A Warranty Deed executed by Seller conveying fee simple title to the Owned Real Property to Buyer, subject only to the Permitted Encumbrances, in proper statutory form for recording together with documentary stamps affixed thereto; (xi) No-Lien Affidavit. A standard "No-Lien Affidavit" executed by Seller, which shall be in the recordable form and otherwise satisfactory to the Title Company in order to delete the standard printed exceptions relating to mechanics' liens and parties-in-possession; (xii) GAP Affidavit. An affidavit, if requested by the Title Company, as may be necessary to insure the gap between the effective date of the Title Commitment to and through the date of the recordation of the deed to the Owned Real Property; and (xiii) Title Requirements. Such other documents as shall be reasonably required by the Title Company as called for or required under the terms of any title policy obtained or issued to Buyer. (c) At the Closing, Seller and Buyer shall instruct the Escrow Agent to deliver, and it shall deliver, the Deposit Letter of Credit to Buyer. (d) At the Closing, Buyer shall receive (i) from each member of the Selling Group a non-foreign affidavit within the meaning of section 1445(b)(2) of the Code or (ii) a statement in conformance with Treas. Reg. ss.1.445-11T(d)(2)(i) from (A) Point and Midcontinent in their respective capacity as a general partner of Seller and (B) the general partner of Point. (e) At the Closing, Richard P. Verne shall deliver a fully executed counterpart of the Consulting Agreement. 44 50 ARTICLE X TERMINATION, AMENDMENT AND WAIVER 10.1. Termination. This Agreement may be terminated prior to the Closing: (a) by mutual consent of Buyer and Seller; (b) by either Seller or Buyer; (i) if there shall have been any material breach (provided that any representation or warranty of a party contained herein that is qualified by a materiality standard of a Material Adverse Effect qualification shall not be further qualified hereby) of any representation, warranty, covenant, or agreement, on the part of Buyer, on the one hand, or of any member of the Selling Group, on the other hand, set forth in this Agreement, which breach shall not have been cured within 20 days (the "Cure Period") following receipt by the breaching party of written notice of such breach; (ii) if a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree, or ruling or taken any other action (which order, decree or ruling the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining, or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling, or other action shall have become final and nonappealable; (iii) if, for any reason, the FCC denies or dismisses any of the Applications and the time for reconsideration or court review under the Communications Act with respect to such denial or dismissal has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review; (iv) if, for any reason, any of the Applications is designated for an evidentiary hearing by the FCC; or (v) if the Closing shall not have occurred by October 31, 1997; provided, however, that the right to terminate this Agreement under this clause (v) shall not be available to any party whose breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; or (c) by Buyer: (i) pursuant to the provisions of Section 7.7; (ii) pursuant to the provisions of Section 9.1; or 45 51 (iii) if the FCC grants any of the Applications with any adverse conditions not generally imposed on grants of such applications and the time for reconsideration or court review under the Communications Act with respect to such adverse conditions has expired and there is not pending with respect thereto a timely filed petition for reconsideration or request for review. The right of any party hereto to terminate this Agreement pursuant to this Section 10.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, any Person controlling any such party or any of their respective officers, directors, partners, employees, accountants, consultants, legal counsel, agents, or other representatives whether prior to or after the execution of this Agreement. Notwithstanding anything in the foregoing to the contrary, no party that is in material breach of this Agreement shall be entitled to terminate this Agreement except with the consent of the other parties hereto. 10.2. Effect of Termination. (a) In the event of a termination of this Agreement by either Seller or Buyer as provided above, there shall be no liability on the part of either Buyer or any member of the Selling Group, except for liability arising out of a breach of this Agreement. If this Agreement is terminated by Seller pursuant to Section 10.1(b)(i), the parties agree and acknowledge that Seller will suffer damages that are not practicable to ascertain. Accordingly, in such event and if within ten Business Days after termination of this Agreement Seller delivers to Buyer a written demand for liquidated damages, subject to Buyer's receipt of a counterpart of the Release executed by each member of the Selling Group, Seller shall be entitled to the sum of $1,900,000 (or $3,150,000, if Buyer has given a Deferral Notice pursuant to Section 9.1) as liquidated damages payable by Buyer within ten Business Days after receipt of Seller's written demand and payable in accordance with the provisions of the Deposit Escrow Agreement. As security for payment thereof, Buyer has, concurrently with the execution of this Agreement, entered into the Deposit Escrow Agreement with Seller and the Escrow Agent as provided in Section 2.7. The parties agree that the foregoing liquidated damages are reasonable considering all the circumstances existing as of the date hereof and constitute the parties' good faith estimate of the actual damages reasonably expected to result from the termination of this Agreement by Seller pursuant to Section 10.1(b)(i). The members of the Selling Group agree that, to the fullest extent permitted by law, Seller's right to payment of such liquidated damages as provided in this Section 10.2 shall be their sole and exclusive remedy if the Closing does not occur with respect to any damages whatsoever that any members of the Selling Group may suffer or allege to suffer as a result of any claim or cause of action asserted by any members of the Selling Group relating to or arising from breaches of the representations, warranties or covenants of Buyer contained in this Agreement and to be made or performed at or prior to the Closing. If this Agreement is terminated by Seller pursuant to Section 10.1(b)(i), upon Buyer's receipt of a counterpart of the Release executed by each member of the Selling Group, Buyer and Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit to Seller. If this Agreement is terminated either by Buyer or Seller pursuant to any provision of Section 10.1 other than a termination by Seller pursuant to Section 10.1(b)(i), then upon Buyer's receipt of a counterpart of the Release, Buyer and Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer. 46 52 (b) As a condition of payment, and upon receipt of the liquidated damages under this Section 10.2, each member of the Selling Group hereby irrevocably and unconditionally releases, acquits, and forever discharges Buyer and its successors, assigns, employees, agents, stockholders, partners, subsidiaries, parent companies and other affiliates (corporate or otherwise) (the "Released Parties") of and from any and all Released Claims, including, without limitation, all Released Claims arising out of, based upon, resulting from or relating to the negotiation, execution, performance, breach or otherwise related to or arising out of the Transaction Documents or any agreement entered into in connection therewith or related thereto. "Released Claims" as used herein shall mean any and all charges, complaints, claims, causes of action, promises, agreements, rights to payment, rights to any equitable remedy, rights to any equitable subordination, demands, debts, liabilities, express or implied contracts, obligations of payment or performance, rights of offset or recoupment, accounts, damages, costs, losses or expenses (including attorneys' and other professional fees and expenses) held by any party hereto, whether known or unknown, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, absolute or contingent, direct or derivative. ARTICLE XI INDEMNIFICATION 11.1. Indemnification of Buyer. Each of the members of the Selling Group jointly and severally agree to indemnify and hold harmless the Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs. 11.2. Indemnification of the Selling Group and the Shareholders. Buyer agrees to indemnify and hold harmless the Seller Indemnified Parties from and against any and all Seller Indemnified Costs. 11.3. Defense of Third-Party Claims. An Indemnified Party shall give prompt written notice to any entity or Person who is obligated to provide indemnification hereunder (an "Indemnifying Party") of the commencement or assertion of any action, proceeding, demand, or claim by a third party (collectively, a "third-party action") in respect of which such Indemnified Party shall seek indemnification hereunder. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it, he, or she may have to such Indemnified Party under this Article XI unless the failure to give such notice materially and adversely prejudices such Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle, or otherwise dispose of such third-party action on such terms as they deem appropriate; provided, however, that: (a) The Indemnified Party shall be entitled, at his, her, or its own expense, to participate in the defense of such third-party action (provided, however, that the Indemnifying Parties shall pay the attorneys' fees of the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by any such Indemnifying Party in connection with the defense of such third-party action, (ii) the Indemnifying Parties shall not have employed counsel 47 53 reasonably satisfactory to the Indemnified Party to have charge of such third-party action, (iii) the Indemnified Party shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (iv) the Indemnified Party's counsel shall have advised the Indemnified Party in writing, with a copy to the Indemnifying Party, that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have common counsel); (b) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such third-party action or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the opinion of the Indemnified Party, such settlement, compromise, admission, or acknowledgment could have an adverse effect on its business or, in the case of an Indemnified Party who is a natural Person, on his or her assets or interests; (c) No Indemnifying Party shall consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third-party action; and (d) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third-party action (i) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time or (ii) to the extent the third-party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party. The parties hereto shall extend reasonable cooperation in connection with the defense of any third-party action pursuant to this Article XI and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested. 11.4. Direct Claims. In any case in which an Indemnified Party seeks indemnification hereunder that is not subject to Section 11.3 because no third-party action is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any Indemnified Costs which such Indemnified Party claims are subject to indemnification under the terms hereof. The failure of the Indemnified Party to exercise promptness in such notification shall not constitute a waiver of such claim unless the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim. 48 54 11.5. Escrow. On the Closing Date, Buyer and Seller will enter into the Indemnification Escrow Agreement in accordance with which Buyer shall, at Closing, deposit from the Purchase Price an amount equal to $1,000,000 (the "Holdback Amount") with the Escrow Agent. 11.6. Limitations on Indemnified Representation Costs. Subject to Section 11.7 and Section 12.17 hereof, the following provisions of this Section 11.6 shall be applicable after the time of the Closing: (a) Minimum Loss. No Indemnifying Party shall be required to indemnify an Indemnified Party for Indemnified Representation Costs unless and until the aggregate amount of such Indemnified Representation Costs for which the Indemnified Party is otherwise entitled to indemnification pursuant to this Article XI exceeds $100,000 (the "Minimum Loss"). After the Minimum Loss is exceeded, the Indemnified Party shall be entitled to be paid the entire amount of its Indemnified Representation Costs in excess of (but not including) the Minimum Loss, subject to the limitations on recovery and recourse set forth in this Section 11.6 and in Section 11.7 below and subject to the exception contained in Section 12.17. For purposes of determining the aggregate amount of Minimum Loss suffered by an Indemnified Party, each representation and warranty contained in this Agreement for which indemnification can be or is sought hereunder shall be read (including for purposes of determining whether a breach of such representation or warranty has occurred) without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. In addition, in determining whether an Indemnifying Party shall be required to indemnify an Indemnified Party under this Article XI, once the Minimum Loss requirement set forth in this clause (a) has been satisfied, each representation and warranty contained in this Agreement for which indemnification can be or is sought hereunder shall be read (including, for purposes of determining whether a breach of such representation or warranty has occurred) without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. (b) Limitation as to Time. No Indemnifying Party shall be liable for any Indemnified Representation Costs pursuant to this Article XI unless a written claim for indemnification in accordance with Section 11.3 or 11.4 is given by the Indemnified Party to the Indemnifying Party with respect thereto on or before the later of (i) 460 days after the Closing Date or (ii) October 31, 1998, except that this time limitation shall not apply to any claims contemplated by Section 12.17. (c) Recovery against Escrowed Funds. Subject to Section 12.17 hereof, a Buyer Indemnified Party shall be entitled to payment only out of the Holdback Amount pursuant to the terms of this Article XI and the Indemnification Escrow Agreement for all amounts due to a Buyer Indemnified Party with respect to any claim by a Buyer Indemnified Party against any member of the Selling Group for Buyer Indemnified Representation Costs payable under this Article XI. (d) Other Indemnified Costs. The provisions of this Section 11.6 shall only be applicable to Indemnified Representation Costs and shall not be applicable to any other Indemnified Costs. 49 55 11.7. Instructions to Escrow Agent. Each member of the Selling Group hereby covenants and agrees that at any time any member of the Selling Group is or becomes obligated to indemnify a Buyer Indemnified Party for Buyer Indemnified Costs under this Article XI, Seller will execute and deliver to the Escrow Agent written instructions to release to the Buyer Indemnified Party such portion of the Holdback Amount as is necessary to indemnify the Buyer Indemnified Party for such Buyer Indemnified Costs. ARTICLE XII GENERAL PROVISIONS 12.1. Survival of Representations, Warranties, and Covenants. Regardless of any investigation at any time made by or on behalf of any party hereto or of any information any party may have in respect thereof, each of the representations and warranties made hereunder or pursuant hereto or in connection with the transactions contemplated hereby shall survive the Closing. Except as otherwise provided in the next two sentences, the representations and warranties set forth in this Agreement shall terminate on the later of (a) the 460th day following the Closing Date, and (b) October 31, 1998. Following the date of termination of a representation or warranty, no claim can be brought with respect to a breach of such representation or warranty, but no such termination shall affect any claim for a breach of a representation or warranty that was asserted before the date of termination. To the extent that such are performable after the Closing, each of the covenants and agreements contained in each of the Transaction Documents shall survive the Closing indefinitely. 12.2. Further Actions. After the Closing Date, each member of the Selling Group shall execute and deliver such other certificates, agreements, conveyances, and other documents and take such other action as may be reasonably requested by Buyer in order to transfer and assign to, and vest in, Buyer the Assets pursuant to the terms of this Agreement. 12.3. Amendment and Modification. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. 12.4. Waiver of Compliance. Any failure of Buyer on the one hand, or any member of the Selling Group, on the other hand, to comply with any obligation, covenant, agreement, or condition contained herein may be waived only if set forth in an instrument in writing signed by the party or parties to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure. 12.5. Specific Performance. The parties recognize that, in the event Seller or any other member of the Selling Group should refuse to perform under the provisions of this Agreement, monetary damages alone will not be adequate. Buyer shall therefore be entitled, in addition to any other remedies which may be available, including money damages, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce this Agreement specifically, the members of the Selling Group hereby waive the defense that there is an adequate remedy at law. 50 56 12.6. Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of applicable law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible. 12.7. Expenses and Obligations. Except as otherwise expressly provided in this Agreement or as provided by law, all costs and expenses incurred by the parties hereto in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the party which has incurred such expenses. Notwithstanding the foregoing, (a) the filing fees incurred in connection with the filings made pursuant to the HSR Act shall be borne equally by Seller and Buyer, (b) the fee payable to the Escrow Agent shall be borne as provided in the Indemnification Escrow Agreement and the Deposit Escrow Agreement, (c) the brokerage fees payable to Americom shall be borne equally by Seller and Buyer, provided neither Seller nor Buyer shall be obligated for more than $200,000 of such brokerage fees, and (d) all sales taxes arising out of the transactions contemplated by this Agreement shall be paid by Seller. In the event of a dispute between the parties in connection with this Agreement and the transactions contemplated hereby, each of the parties hereto hereby agrees that the prevailing party shall be entitled to reimbursement by the other party of reasonable legal fees and expenses incurred in connection with any action or proceeding. 12.8. Parties in Interest. This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each party hereto and their successors and assigns, and nothing in this Agreement, except as set forth below, express or implied, is intended to confer upon any other Person (other than the Indemnified Parties as provided in Article XI) any rights or remedies of any nature whatsoever under or by reason of this Agreement. 12.9. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by registered or certified mail (return receipt requested) or sent by facsimile transmission (with electronic confirmation of receipt) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to Buyer, to Point Madison Acquisition Company, Inc. 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attn: Lawrence D. Stuart, Jr. Facsimile: (214) 740-7313 51 57 with a copy to Capstar Broadcasting Partners 600 Congress Avenue Suite 1400 Austin, Texas 78701 Attn: William S. Banowsky, Jr. Facsimile: (512) 404-6850 Vinson & Elkins L.L.P. 2001 Ross Avenue 3700 Trammell Crow Center Dallas, Texas 75201-2975 Attn: A. Winston Oxley Facsimile: (214) 999-7891 (b) If to Seller or Point, to c/o Point Communications Inc. 27 South Davis Avenue P. O. Box 1094 Montauk, New York 11954 Attn: Richard P. Verne Facsimile: (516) 668-4611 with a copy to Melvin Epstein, Esq. Stroock & Stroock & Lavan 180 Maiden Lane New York, New York 10038 Facsimile: (212) 806-6006 (c) If to Midcontinent, to Mark Niblick, Esq. Executive Vice President and General Counsel Midcontinent Media, Inc. 7900 Xerxes Avenue, South, Suite 110 Minneapolis, Minnesota 55431 52 58 with a copy to George Reilly, Esq. Leonard, Street and Deinard 150 South Fifth Street, Suite 2300 Minneapolis, Minnesota 55402 Facsimile: (612) 335-1657 12.10. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 12.11. Entire Agreement. This Agreement (which term shall be deemed to include the Exhibits and Schedules hereto and the other certificates, documents and instruments delivered hereunder) constitutes the entire agreement of the parties hereto and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. There are no representations or warranties, agreements, or covenants other than those expressly set forth in this Agreement. 12.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN. ANY SUIT OR PROCEEDING BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN WISCONSIN. 12.13. Public Announcements. Seller and Buyer shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation. Prior to the Closing, neither Seller nor any other member of the Selling Group will issue any other press release or otherwise make any public statements (other than in connection with FCC filings) regarding this transaction, except as may be required by applicable law. 12.14. Assignment. Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be assigned by any of the parties hereto, whether by operation of law or otherwise; provided, however, that (a) upon notice to Seller and without releasing Buyer from any of its obligations or liabilities hereunder, Buyer may assign or delegate any or all of its rights or obligations under this Agreement to any Affiliate thereof and (b) nothing in this Agreement shall limit Buyer's ability to make a collateral assignment of its rights under this Agreement to any institutional lender that provides funds to Buyer without the consent of Seller. Seller shall execute on behalf of the Selling Group an acknowledgment of such assignment(s) and/or collateral 53 59 assignment(s) in such forms as Buyer or its institutional lenders may from time to time reasonably request; provided, however, that unless written notice is given to Seller that any such collateral assignment has been foreclosed upon, Seller shall be entitled to deal exclusively with Buyer as to any matters arising under this Agreement or any of the other agreements delivered pursuant hereto. In the event of such an assignment, the provisions of this Agreement shall inure to the benefit of and be binding on Buyer's assigns. 12.15. Director and Officer Liability. The directors, officers, and stockholders of Buyer and its Affiliates shall not have any personal liability or obligation arising under this Agreement (including any claims that any member of the Selling Group may assert) other than as an assignee of this Agreement. The directors, officers, stockholders and partners of Point and Midcontinent shall not have any personal liability or obligation arising under this Agreement (including any claims that Buyer may assert). 12.16. No Reversionary Interest. The parties expressly agree, pursuant to Section 73.1150 of the FCC's rules, that no member of the Selling Group retains either the right to reassignment of any of the FCC Licenses in the future or the right to operate or use the facilities of the Stations for any period beyond the Closing Date. 12.17. No Waiver Relating to Claims for Fraud. The liability of any party under Article XI shall be in addition to, and not exclusive of, any other liability that such party may have at law or equity based on such party's fraudulent acts or omissions. None of the provisions set forth in this Agreement, including the provisions set forth in Section 11.6 or Section 11.7, shall be deemed a waiver by any party to this Agreement of any right or remedy that such party may have at law or equity based on any other party's fraudulent acts or omissions, nor shall any such provisions limit, or be deemed to limit (i) the amounts of recovery sought or awarded in any such claim for fraud, (ii) the time period during which a claim for fraud may be brought, or (iii) the recourse that any such party may seek against another party with respect to a claim for fraud; provided, that with respect to such rights and remedies at law or equity, the parties further acknowledge and agree that none of the provisions of this Section 12.17, nor any reference to this Section 12.17 throughout this Agreement, shall be deemed a waiver of any defenses that may be available in respect of actions or claims for fraud, including but not limited to, defenses of statutes of limitations or limitations of damages. The prevailing party in any cause of action brought by a party seeking remedies at law or equity based upon a party's fraudulent acts or omissions shall be entitled to recover from the non-prevailing party all attorney's fees and expenses incurred by the prevailing party in connection with such cause of action. 54 60 IN WITNESS WHEREOF, Buyer and the members of the Selling Group have caused this Agreement to be signed, all as of the date first written above. BUYER: POINT MADISON ACQUISITION COMPANY, INC. ------------------------------------------------- By: Eric C. Neuman, President SELLING GROUP: MADISON RADIO GROUP By: POINT COMMUNICATIONS LIMITED PARTNERSHIP, Its General Partner By: POINT COMMUNICATIONS, INC., Its General Partner By: ------------------------------------ Richard P. Verne, President AND By: MIDCONTINENT BROADCASTING CO. OF WISCONSIN, INC., Its General Partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- 55 61 POINT COMMUNICATIONS LIMITED PARTNERSHIP By: POINT COMMUNICATIONS, INC., Its General Partner By: -------------------------------------- Richard P. Verne, President MIDCONTINENT BROADCASTING CO. OF WISCONSIN, INC. By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- 56 EX-10.6 10 EMPLOYMENT AGREEMENT 1 EXHIBIT 10.6 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into effective as of the 1st day of January, 1997, by and between PAUL D. STONE, an individual ("EXECUTIVE"), and CAPSTAR BROADCASTING PARTNERS, INC. (the "COMPANY"). In consideration of the covenants and conditions contained herein, the Company and Executive agree as follows: 1. EMPLOYMENT. The Company hereby employs Executive, and Executive hereby accepts such employment. During the term of this Agreement, Executive shall serve as Chief Financial Officer and Executive Vice President of the Company. Executive shall serve under the direction of the Company's Chairman of the Board (the "CHAIRMAN") and Board of Directors (the "BOARD"), devoting his full working time and attention to performing such duties as the Chairman of the Board may specify, working diligently, faithfully, loyally, and to the best of his ability, experience and talent, to help accomplish the goals of the Company, as set forth by the Chairman and the Board. 2. TERM OF AGREEMENT. The term of this Agreement shall commence on January 1, 1997 and continue until December 31, 2001, unless sooner terminated or renewed in accordance with this Agreement. This Agreement shall automatically renew for successive one (1) year terms unless either party gives the other written notice of its intention not to so renew at least ninety (90) days prior to the date this Agreement would otherwise expire. 3. LOCATION OF SERVICES. Executive's services under this Agreement shall be performed primarily at the Company's headquarters in Austin, Texas. 4. COMPENSATION. 4.1 BASE SALARY. The Company shall pay Executive an annual Base Salary (herein so called) of $200,000. The Base Salary shall be paid bi-monthly in accordance with the customary payroll practices of the Company from time to time in effect. No less frequently than annually, the Board shall review Executive's Base Salary and increase it as it deems appropriate. However, the Company agrees that, at a minimum, the Base Salary will be increased annually by an amount equal to the percentage increase, if any, in the Consumer Price Index (as published by the United States Department of Labor with respect to the Austin, Texas metropolitan area) during the preceding calendar year. 4.2 BONUS. Executive shall be entitled to receive such annual cash bonuses as the Board may determine. The extent to which Executive will be entitled to an annual cash bonus will be based upon two factors: first, and most importantly, individual job performance; and secondly, the attainment by the Company of reasonable broadcast cash flow projections established annually by the Board. 2 5. BENEFITS. 5.1 GENERAL. Executive shall be entitled to all fringe benefits and perquisites that the Company may make available from time to time for all senior executive employees. Without limitation, such fringe benefits and perquisites shall include those available under any health and benefits package, life insurance and disability programs, and participation in any incentive, stock option and employee benefits plan or program designed for senior executive employees. Executive shall be entitled to paid vacation in accordance with the Company's standard employment policies and practices for senior executive employees. Executive shall receive such additional fringe benefits, if any, as the Board shall determine. 5.2 BUSINESS EXPENSES. The Company shall reimburse Executive for all reasonable expenses incurred by Executive in the performance of Executive's duties, subject to compliance with the expense reimbursement policies established by the Company. 5.3 AUTOMOBILE ALLOWANCE. Executive shall furnish his own automobile in the performance of services required by him under this Agreement, and the Company shall pay Executive $850 per month as an automobile allowance. 5.4 RELOCATION EXPENSES. The Company shall pay the reasonable expenses incurred by Executive in (a) commuting from Dallas to Austin until the earlier of (i) December 31, 1997, or (ii) the date on which Executive relocates his family to Austin, and (b) relocating his family from Dallas to Austin. 5.5 COUNTRY CLUB. The Company shall pay (a) the initiation fee (up to $15,000) for Executive to join a country club in the Austin, Texas area, and (b) Executive's regular monthly dues at such club. 5.6 STOCK OPTIONS. The Company will grant to Executive tax qualified incentive stock options to purchase that number of shares of common stock of the Company which is equal to or greater than 60% of the total number of shares covered by options issued to its Chairman, R. Steven Hicks, under the Company's initial stock option plan. 5.7 TERMINATION OF BENEFITS. Except as may be provided in any separate agreement between the Company and Executive, all unvested benefits provided under this Section 5 shall terminate concurrently with termination of Executive's employment hereunder for any reason whatsoever. Nothing herein shall vest any rights in any profit sharing or bonus plans, general expense or automotive reimbursements, and similar fringe benefits which the Company may provide, if any, beyond the date on which Executive's employment is terminated for any reason. 2 3 6. TERMINATION OF EMPLOYMENT. 6.1 TERMINATION FOR CAUSE. Notwithstanding any other provision of this Agreement, Executive's employment with the Company may be terminated for cause at any time by the Company, upon reasonable notice to Executive. For purposes of this Agreement, "cause" shall mean Executive's (a) gross or habitual failure to perform Executive's obligations pursuant to the terms of this Agreement and such performance failure is not corrected within thirty (30) days after written notice thereof by the Board to Executive; or (b) conduct amounting to fraud or dishonesty against the Company; or (c) a conviction or plea of guilty or nolo contendere to a felony or a crime involving dishonesty against the Company. 6.2 TERMINATION WITHOUT CAUSE. The Company may terminate Executive's employment under this Agreement without cause at any time upon written notice to Executive. 6.3 TERMINATION FOR DEATH OR DISABILITY. Employment hereunder shall automatically terminate upon Executive's death or disability. Disability, for purposes of this Agreement, shall mean a physical or mental disability that renders it impossible or impracticable for Executive to perform his duties under this Agreement at the level he is capable of performing them at the date of this Agreement for a continuous period of ninety (90) days or more. 6.4 VOLUNTARY TERMINATION. Executive may terminate this Agreement upon thirty (30) days' written notice to the Company; provided, however, that if prior notice is given, the Company may, at its sole discretion upon receipt of such notice, require Executive to terminate at any time in advance of the proposed termination date so long as the Company pays Executive salary for at least one (1) month after such termination notice by Executive is received by the Company. 7. POST-TERMINATION COMPENSATION. 7.1 TERMINATION BY THE COMPANY FOR CAUSE. Notwithstanding any other provision of this Agreement to the contrary, if Executive's employment is terminated for cause pursuant to Section 6.1, the Company shall make no further salary payments except those earned prior to the date of termination and shall make no further bonus payments. 7.2 TERMINATION BY THE COMPANY WITHOUT CAUSE. If the Company terminates this Agreement without cause as defined in Section 6.2 hereof, then (a) all of Executive's stock options shall immediately vest, and (b) the Company shall pay Executive severance pay equal to twenty-four (24) months' Base Salary. The payment described in this Section 7.2 shall be made to the Executive in a lump sum within thirty (30) days after such termination without any obligation on Executive's part to render services and without regard to whether he receives compensation from any other source after the effective date of the termination of Executive's employment, and such payment is in full settlement of all of the obligations of the Company hereunder. 3 4 7.3 TERMINATION BY EXECUTIVE'S DEATH OR DISABILITY. If employment shall terminate by reason of Executive's death or disability, the Company shall pay Executive or Executive's estate severance equal to twelve (12) months' Base Salary, payable in a lump sum within thirty (30) days after such termination. 7.4 VOLUNTARY TERMINATION. If Executive terminates this Agreement, the Company shall make no further salary payments except those earned prior to the date of termination and shall make no further bonus payments. 8. NONCOMPETITION. Until one (1) year after termination of Executive's employment with the Company, Executive shall not (a) either directly or indirectly, carry on, engage in or have any interest in any business that competes with the Company, excepting ownership by Executive of no more than one percent (1%) of the publicly traded common stock of any corporation, (b) without the express written consent of the Company, accept employment with, or in any other manner agree to provide, for compensation, services for any other person or entity that competes with the Company, or (c) materially disrupt, damage, impair or interfere with the business of the Company, whether by way of interfering with or soliciting its employees, disrupting its relationship with customers, agents, representatives or vendors, or otherwise. The parties hereto specifically acknowledge and agree that the remedy at law for any breach of this Section 8 will be adequate and that the Company, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. 9. CONFIDENTIALITY. Executive agrees that he shall not, during his employment with the Company or any time after the termination of this employment with the Company, use or disclose to any third party, other than during the proper performance of this duties hereunder, any of the trade secrets, confidential dealings, or other confidential information concerning the business, finances, transactions, or affairs of the Company. 10. INDEMNIFICATION. The Company will indemnify, defend and hold Executive harmless from and against any and all loss, liability, cost and expense (including attorneys' fees and court costs) arising out of or relating to activities of Executive performed within the scope of Executive's employment hereunder, excluding Executive's gross negligence or willful misconduct. 11. ARBITRATION. Either the Company or Executive may require that any dispute under this Agreement be submitted to arbitration pursuant to this Section 11. To the extent the provisions of this Section 11 vary from or are inconsistent with the Commercial Arbitration Rules of the American Arbitration Association or any other arbitration tribunal, the provisions of this Section 11 shall govern. All arbitrations shall occur at a location in Austin, Texas chosen by the arbitrators and shall be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association (or any successor organization, of if no such successor organization exists, then from an organization composed of persons of similar professional qualifications). The party desiring arbitration shall give notice that effect to the other party and simultaneously therewith also shall give notice to the director of the Dallas, Texas regional office of the American Arbitration Association 4 5 (or any successor organization, or if no such successor organization exists, then to an organization composed of persons of similar professional qualifications), requesting such organization to select, as soon as possible but in any event within the next thirty (30) days, three (3) arbitrators with, if reasonably possible, recognized expertise in the subject matter of the arbitration. At the request of either party, the arbitrators shall authorize the service of subpoenas for the production of documents or attendance of witnesses. Within thirty (30) days after their appointment, the arbitrators so chosen shall hold a hearing at which each party may submit evidence, be heard and cross-examine witnesses, with each party having at least ten (10) days advance notice of the hearing. The hearing shall be conducted such that each of the Company and Executive shall have reasonably adequate time to present oral evidence or argument, but either party may present whatever written evidence it deems appropriate prior to the hearing (with copies of any such written evidence being sent to the other party). In the event of the failure, refusal or inability of any arbitrator to act, a new arbitrator shall be appointed in his stead, which appointment shall be made in the same manner as hereinbefore provided. The decision of the arbitrators so chosen shall be given within a period of thirty (30) days after the conclusion of such hearing, and shall be accompanied by conclusions of law and findings of fact. The decision in which any two arbitrators so appointed and acting hereunder concur shall in all cases be binding and conclusive upon the parties and shall be the basis for a judgment entered in any court of competent jurisdiction. The fees and expenses of arbitration under this Section 11 shall be apportioned to the Company and Executive in such a manner as decided by the arbitrators. The Company and Executive may at any time by mutual written agreement discontinue arbitration proceedings and themselves agree upon any such matter submitted to arbitration. 12. POWER AND AUTHORITY. Each party executing this Agreement hereby covenants, represents and warrants that such party has full power and authority to execute this Agreement, that no other consents or approvals of any other third parties are required or necessary for this Agreement to be so binding and that this Agreement shall be fully enforceable in accordance with its terms. 13. HEIRS, ADMINISTRATORS AND SUCCESSORS. Except as otherwise provided herein, this Agreement shall inure to the benefit of and be binding upon, the heirs, administrators and successors of each of the parties hereto. 14. NONASSIGNABILITY. The Company may assign the benefit of this Agreement to any successor in interest that results from a merger, reorganization or acquisition. Otherwise, no party to this Agreement may assign any right hereunder or delegate any duty hereunder without the written consent of the other party affected by such assignment or delegation. 15. NO ORAL MODIFICATION. This Agreement may only be changed or modified and any provisions hereof may only be waived in or by a writing signed by a party against whom enforcement of any waiver, change or modification is sought. 16. GOVERNING LAW. This Agreement shall be deemed to be a contract made under, and shall be construed in accordance with, the laws of the State of Texas. 5 6 17. SEVERABILITY. If any portion of this Agreement shall be held illegal, unenforceable, void or voidable by any court, each of the remaining terms hereof shall nevertheless remain in full force and effect as a separate contract. 18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties pertaining to the matters set forth herein, and all prior agreements, understandings or representations are hereby terminated and canceled in their entirety and are of no further force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above indicated. COMPANY: CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ R. STEVEN HICKS ----------------------------------- R. Steven Hicks Chairman/CEO EXECUTIVE: /s/ PAUL D. STONE ----------------------------------- Paul D. Stone Address: 1002 Forestwood Lane Coppell, Texas 75019 6 EX-10.7 11 EMPLOYMENT AGREEMENT 1 EXHIBIT 10.7 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into effective as of the 1st day of January, 1997, by and between WILLIAM S. BANOWSKY, JR., an individual ("EXECUTIVE"), and CAPSTAR BROADCASTING PARTNERS, INC. (the "COMPANY"). In consideration of the covenants and conditions contained herein, the Company and Executive agree as follows: 1. EMPLOYMENT. The Company hereby employs Executive, and Executive hereby accepts such employment. During the term of this Agreement, Executive shall serve as General Counsel and Executive Vice President of the Company. Executive shall serve under the direction of the Company's Chairman of the Board (the "CHAIRMAN") and Board of Directors (the "BOARD"), devoting his full working time and attention to performing such duties as the Chairman of the Board may specify, working diligently, faithfully, loyally, and to the best of his ability, experience and talent, to help accomplish the goals of the Company, as set forth by the Chairman and the Board. 2. TERM OF AGREEMENT. The term of this Agreement shall commence on January 1, 1997 and continue until December 31, 2001, unless sooner terminated or renewed in accordance with this Agreement. This Agreement shall automatically renew for successive one (1) year terms unless either party gives the other written notice of its intention not to so renew at least ninety (90) days prior to the date this Agreement would otherwise expire. 3. LOCATION OF SERVICES. Executive's services under this Agreement shall be performed primarily at the Company's headquarters in Austin, Texas. 4. COMPENSATION. 4.1 BASE SALARY. The Company shall pay Executive an annual Base Salary (herein so called) of $200,000. The Base Salary shall be paid bi-monthly in accordance with the customary payroll practices of the Company from time to time in effect. No less frequently than annually, the Board shall review Executive's Base Salary and increase it as it deems appropriate. However, the Company agrees that, at a minimum, the Base Salary will be increased annually by an amount equal to the percentage increase, if any, in the Consumer Price Index (as published by the United States Department of Labor with respect to the Austin, Texas metropolitan area) during the preceding calendar year. 4.2 BONUS. Executive shall be entitled to receive such annual cash bonuses as the Board may determine. The extent to which Executive will be entitled to an annual cash bonus will be based upon two factors: first, and most importantly, individual job performance; and secondly, the attainment by the Company of reasonable broadcast cash flow projections established annually by the Board. 1 2 5. BENEFITS. 5.1 GENERAL. Executive shall be entitled to all fringe benefits and perquisites that the Company may make available from time to time for all senior executive employees. Without limitation, such fringe benefits and perquisites shall include those available under any health and benefits package, life insurance and disability programs, and participation in any incentive, stock option and employee benefits plan or program designed for senior executive employees. Executive shall be entitled to paid vacation in accordance with the Company's standard employment policies and practices for senior executive employees. Executive shall receive such additional fringe benefits, if any, as the Board shall determine. 5.2 BUSINESS EXPENSES. The Company shall reimburse Executive for all reasonable expenses incurred by Executive in the performance of Executive's duties, subject to compliance with the expense reimbursement policies established by the Company. 5.3 AUTOMOBILE ALLOWANCE. Executive shall furnish his own automobile in the performance of services required by him under this Agreement, and the Company shall pay Executive $850 per month as an automobile allowance. 5.4 RELOCATION EXPENSES. The Company shall pay the reasonable expenses incurred by Executive in (a) commuting from Dallas to Austin until the earlier of (i) December 31, 1997, or (ii) the date on which Executive relocates his family to Austin, and (b) relocating his family from Dallas to Austin. 5.5 COUNTRY CLUB. The Company shall pay (a) the initiation fee (up to $15,000) for Executive to join a country club in the Austin, Texas area, and (b) Executive's regular monthly dues at such club. 5.6 STOCK OPTIONS. The Company will grant to Executive tax qualified incentive stock options to purchase that number of shares of common stock of the Company which is equal to or greater than 60% of the total number of shares covered by options issued to its Chairman, R. Steven Hicks, under the Company's initial stock option plan. 5.7 TERMINATION OF BENEFITS. Except as may be provided in any separate agreement between the Company and Executive, all unvested benefits provided under this Section 5 shall terminate concurrently with termination of Executive's employment hereunder for any reason whatsoever. Nothing herein shall vest any rights in any profit sharing or bonus plans, general expense or automotive reimbursements, and similar fringe benefits which the Company may provide, if any, beyond the date on which Executive's employment is terminated for any reason. 2 3 6. TERMINATION OF EMPLOYMENT. 6.1 TERMINATION FOR CAUSE. Notwithstanding any other provision of this Agreement, Executive's employment with the Company may be terminated for cause at any time by the Company, upon reasonable notice to Executive. For purposes of this Agreement, "cause" shall mean Executive's (a) gross or habitual failure to perform Executive's obligations pursuant to the terms of this Agreement and such performance failure is not corrected within thirty (30) days after written notice thereof by the Board to Executive; or (b) conduct amounting to fraud or dishonesty against the Company; or (c) a conviction or plea of guilty or nolo contendere to a felony or a crime involving dishonesty against the Company. 6.2 TERMINATION WITHOUT CAUSE. The Company may terminate Executive's employment under this Agreement without cause at any time upon written notice to Executive. 6.3 TERMINATION FOR DEATH OR DISABILITY. Employment hereunder shall automatically terminate upon Executive's death or disability. Disability, for purposes of this Agreement, shall mean a physical or mental disability that renders it impossible or impracticable for Executive to perform his duties under this Agreement at the level he is capable of performing them at the date of this Agreement for a continuous period of ninety (90) days or more. 6.4 VOLUNTARY TERMINATION. Executive may terminate this Agreement upon thirty (30) days' written notice to the Company; provided, however, that if prior notice is given, the Company may, at its sole discretion upon receipt of such notice, require Executive to terminate at any time in advance of the proposed termination date so long as the Company pays Executive salary for at least one (1) month after such termination notice by Executive is received by the Company. 7. POST-TERMINATION COMPENSATION. 7.1 TERMINATION BY THE COMPANY FOR CAUSE. Notwithstanding any other provision of this Agreement to the contrary, if Executive's employment is terminated for cause pursuant to Section 6.1, the Company shall make no further salary payments except those earned prior to the date of termination and shall make no further bonus payments. 7.2 TERMINATION BY THE COMPANY WITHOUT CAUSE. If the Company terminates this Agreement without cause as defined in Section 6.2 hereof, then (a) all of Executive's stock options shall immediately vest, and (b) the Company shall pay Executive severance pay equal to twenty-four (24) months' Base Salary. The payment described in this Section 7.2 shall be made to the Executive in a lump sum within thirty (30) days after such termination without any obligation on Executive's part to render services and without regard to whether he receives compensation from any other source after the effective date of the termination of Executive's employment, and such payment is in full settlement of all of the obligations of the Company hereunder. 3 4 7.3 TERMINATION BY EXECUTIVE'S DEATH OR DISABILITY. If employment shall terminate by reason of Executive's death or disability, the Company shall pay Executive or Executive's estate severance equal to twelve (12) months' Base Salary, payable in a lump sum within thirty (30) days after such termination. 7.4 VOLUNTARY TERMINATION. If Executive terminates this Agreement, the Company shall make no further salary payments except those earned prior to the date of termination and shall make no further bonus payments. 8. NONCOMPETITION. Until one (1) year after termination of Executive's employment with the Company, Executive shall not (a) either directly or indirectly, carry on, engage in or have any interest in any business that competes with the Company, excepting ownership by Executive of no more than one percent (1%) of the publicly traded common stock of any corporation, (b) without the express written consent of the Company, accept employment with, or in any other manner agree to provide, for compensation, services for any other person or entity that competes with the Company, or (c) materially disrupt, damage, impair or interfere with the business of the Company, whether by way of interfering with or soliciting its employees, disrupting its relationship with customers, agents, representatives or vendors, or otherwise. The parties hereto specifically acknowledge and agree that the remedy at law for any breach of this Section 8 will be adequate and that the Company, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. 9. CONFIDENTIALITY. Executive agrees that he shall not, during his employment with the Company or any time after the termination of this employment with the Company, use or disclose to any third party, other than during the proper performance of this duties hereunder, any of the trade secrets, confidential dealings, or other confidential information concerning the business, finances, transactions, or affairs of the Company. 10. INDEMNIFICATION. The Company will indemnify, defend and hold Executive harmless from and against any and all loss, liability, cost and expense (including attorneys' fees and court costs) arising out of or relating to activities of Executive performed within the scope of Executive's employment hereunder, excluding Executive's gross negligence or willful misconduct. 11. ARBITRATION. Either the Company or Executive may require that any dispute under this Agreement be submitted to arbitration pursuant to this Section 11. To the extent the provisions of this Section 11 vary from or are inconsistent with the Commercial Arbitration Rules of the American Arbitration Association or any other arbitration tribunal, the provisions of this Section 11 shall govern. All arbitrations shall occur at a location in Austin, Texas chosen by the arbitrators and shall be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association (or any successor organization, of if no such successor organization exists, then from an organization composed of persons of similar professional qualifications). The party desiring arbitration shall give notice that effect to the other party and simultaneously therewith also shall give notice to the director of the Dallas, Texas regional office of the American Arbitration Association 4 5 (or any successor organization, or if no such successor organization exists, then to an organization composed of persons of similar professional qualifications), requesting such organization to select, as soon as possible but in any event within the next thirty (30) days, three (3) arbitrators with, if reasonably possible, recognized expertise in the subject matter of the arbitration. At the request of either party, the arbitrators shall authorize the service of subpoenas for the production of documents or attendance of witnesses. Within thirty (30) days after their appointment, the arbitrators so chosen shall hold a hearing at which each party may submit evidence, be heard and cross-examine witnesses, with each party having at least ten (10) days advance notice of the hearing. The hearing shall be conducted such that each of the Company and Executive shall have reasonably adequate time to present oral evidence or argument, but either party may present whatever written evidence it deems appropriate prior to the hearing (with copies of any such written evidence being sent to the other party). In the event of the failure, refusal or inability of any arbitrator to act, a new arbitrator shall be appointed in his stead, which appointment shall be made in the same manner as hereinbefore provided. The decision of the arbitrators so chosen shall be given within a period of thirty (30) days after the conclusion of such hearing, and shall be accompanied by conclusions of law and findings of fact. The decision in which any two arbitrators so appointed and acting hereunder concur shall in all cases be binding and conclusive upon the parties and shall be the basis for a judgment entered in any court of competent jurisdiction. The fees and expenses of arbitration under this Section 11 shall be apportioned to the Company and Executive in such a manner as decided by the arbitrators. The Company and Executive may at any time by mutual written agreement discontinue arbitration proceedings and themselves agree upon any such matter submitted to arbitration. 12. POWER AND AUTHORITY. Each party executing this Agreement hereby covenants, represents and warrants that such party has full power and authority to execute this Agreement, that no other consents or approvals of any other third parties are required or necessary for this Agreement to be so binding and that this Agreement shall be fully enforceable in accordance with its terms. 13. HEIRS, ADMINISTRATORS AND SUCCESSORS. Except as otherwise provided herein, this Agreement shall inure to the benefit of and be binding upon, the heirs, administrators and successors of each of the parties hereto. 14. NONASSIGNABILITY. The Company may assign the benefit of this Agreement to any successor in interest that results from a merger, reorganization or acquisition. Otherwise, no party to this Agreement may assign any right hereunder or delegate any duty hereunder without the written consent of the other party affected by such assignment or delegation. 15. NO ORAL MODIFICATION. This Agreement may only be changed or modified and any provisions hereof may only be waived in or by a writing signed by a party against whom enforcement of any waiver, change or modification is sought. 16. GOVERNING LAW. This Agreement shall be deemed to be a contract made under, and shall be construed in accordance with, the laws of the State of Texas. 5 6 17. SEVERABILITY. If any portion of this Agreement shall be held illegal, unenforceable, void or voidable by any court, each of the remaining terms hereof shall nevertheless remain in full force and effect as a separate contract. 18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties pertaining to the matters set forth herein, and all prior agreements, understandings or representations are hereby terminated and canceled in their entirety and are of no further force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above indicated. COMPANY: CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ R. STEVEN HICKS -------------------------------- R. Steven Hicks Chairman/CEO EXECUTIVE: /s/ WILLIAM S. BANOWSKY, JR. ------------------------------------ William S. Banoowsky, Jr. Address: 3033 Westminister Dallas, Texas 75205 6 EX-10.8 12 SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT 1 EXHIBIT 10.8 SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT This SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT ("Amendment") dated as of February 20, 1997, is entered into by and among Capstar Broadcasting Partners, Inc., a Delaware corporation (the "Company"), Capstar Broadcasting Partners, L.P., a Delaware limited partnership ("Capstar L.P."), Capstar BT Partners, L.P., a Delaware limited partnership (the "New BT Holder"), Capstar Boston Partners, L.L.C., a Delaware limited liability company (the "New Putnam Holder") and the Required Holders and other parties named on the signature pages hereto. WHEREAS, the parties hereto, other than the New BT Holder and the New Putnam Holder (collectively, the "New Holders"), are parties to that certain Stockholders Agreement dated as of October 16, 1996, as previously amended, (the "Agreement"). A copy of the Agreement is attached hereto as Annex "A". WHEREAS, the parties hereto desire to amend the Agreement so as to add the New Holders as a party to the Agreement and to amend certain terms and provisions of the Agreement as provided in this Amendment. In consideration of the premises, mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. By its execution and delivery of this Amendment, each New Holder shall become a Holder (and shall have all rights of a Holder, including a Non-HMC Group Holder) under the terms and provisions of the Agreement and shall also be treated as a member of the HMC Group for all purposes of the Agreement; provided that for the purposes of Article 2, Article 7 and Article 8 of the Agreement each New Holder shall not be a member of the HMC Group. 2. For purposes of Article 8 the definition of HMC Group shall be deemed to include R. Steven Hicks but shall exclude any other officers, directors, and employees of HMTF or its Affiliates. 3. The rights and obligations of each New Holder arising under the Agreement are personal in nature and shall not be transferable or assignable to any other Person and shall not be enforceable by or binding upon any Person who receives or acquires from a New Holder any shares of Common Stock. 4. The definition of "Common Stock" is hereby amended and restated to read as follows: 2 "Common Stock" means (a) shares of Class A Common Stock, $0.01 par value per share, of the Company, (b) shares of Class B Common Stock, $0.01 par value per share, of the Company, and (c) any capital stock into which any such shares of common stock thereafter may be changed. 5. The term Rights Holder is hereby amended to refer to each of R. Steven Hicks and the New BT Holder and each reference to Rights Holder in Article 7 shall be deemed to refer to each of them severally (and not jointly). 6. Except as expressly amended hereby, the terms and provisions of the Agreement remain in force and effect and by reference are incorporated herein and made a part hereof. 7. Defined terms used herein but not defined herein shall have the meaning given such term in the Agreement. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 2 3 IN WITNESS WHEREOF, the parties below have caused this Amendment to be duly executed, all as of the date first written above. CAPSTAR BROADCASTING PARTNERS, INC. By: /s/ WILLIAM S. BANOWSKY, JR. ---------------------------------- Name: -------------------------------- Its: --------------------------------- HICKS, MUSE, TATE & FURST INCORPORATED By: /s/ MICHAEL D. SALIM ---------------------------------- Name: -------------------------------- Its: --------------------------------- HOLDERS: CAPSTAR BROADCASTING PARTNERS, L.P. By: HM3/Capstar Partners, L.P., its General Partner By: HM3/Capstar, Inc. its General Partner By: /s/ MICHAEL D. SALIM ---------------------- Name: -------------------- Its: --------------------- /s/ R. STEVEN HICKS ------------------------------------- R. Steven Hicks 3 4 /s/ JASON MABRY ------------------------------------- Name: Jason Mabry Address: ----------------------- ----------------------- ----------------------- /s/ KRISTEN LEA HICKS ------------------------------------- Name: Kristen Lea Hicks Address: ----------------------- ----------------------- ----------------------- /s/ SHELLY MABRY ELLARD ------------------------------------- Name: Shelly Mabry Ellard Address: ----------------------- ----------------------- ----------------------- /s/ LARRY TAYLOR ------------------------------------- Name: Larry Taylor as Custodian for Robert S. Hicks, Jr. under the Texas Uniform Gifts to Minors Act Address: ----------------------- ----------------------- ----------------------- /s/ LARRY TAYLOR ------------------------------------- Name: Larry Taylor as Custodian for Brandon Vaughan Hicks under the Texas Uniform Gifts to Minors Act Address: ----------------------- ----------------------- ----------------------- 4 5 NEW BT HOLDER: CAPSTAR BT PARTNERS, L.P. By: HM3/GP Partners, L.P., its General Partner By: Hicks, Muse GP Partners III, G.P., its General Partner By: Hicks, Muse Fund III Incorporated, its General Partner By: /s/ MICHAEL D. SALIM --------------------------- Name: ------------------------- Title: ------------------------ Address: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, TX 75201 Attn: Lawrence D. Stuart, Jr. Telecopier No.: (214) 740-7355 5 6 IN WITNESS WHEREOF the New Putnam Holder has caused this Amendment to be duly executed as of April 10, 1997. CAPSTAR BOSTON PARTNERS, L.L.C. By: HM3/GP Partners, L.P., its Manager By: Hicks, Muse GP Partners III, G.P., its General Partner By: Hicks, Muse Fund III Incorporated, its General Partner By: /s/ MICHAEL D. SALIM --------------------------- Name: ------------------------- Title: ------------------------ Address: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, TX 75201 Attn: Lawrence D. Stuart, Jr. Telecopier No.: (214) 740-7355 6 EX-27 13 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1997 MAR-31-1997 13,024,555 0 13,051,132 0 0 43,218,084 42,012,691 21,308 452,665,659 15,490,052 229,955,145 0 0 1,467,600 139,430,384 452,665,659 14,107,360 15,149,894 1,042,534 10,356,214 100,562 0 6,664,051 (6,826,649) 46,345 (6,872,954) 0 598,225 0 7,471,179 0 0
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