Exhibit 2.55
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of March __, 1998, by and
among Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"), Cumulus
Licensing Corporation, a Nevada corporation ("Licensing), and Crystal Radio
Group, Inc. (the "Seller"). Broadcasting and Licensing are referred to
collectively herein as the "Buyers." The Buyers and the Seller are referred to
individually as the "Party" or collectively as the "Parties." Capitalized terms
used in this Agreement are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers hereby
agree to purchase substantially all of the assets (and assume certain of the
liabilities) of the Seller that are used or useful in the operation of radio
stations WKMI(AM) (licensed to Kalamazoo, Michigan), WRKR(FM) (licensed to
Portage, Michigan), and WKFR(FM) (licensed to Battle Creek, Michigan) (the
"Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. BASIC TRANSACTION.
A. PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, on the Closing Date (as defined herein) the Seller
shall sell, transfer, convey and deliver to (i) Licensing, and Licensing shall
purchase from the Seller, all of the FCC Licenses listed in Section 2(1) of the
disclosure schedule ("Disclosure Schedule"); and (ii) Broadcasting, and
Broadcasting shall purchase from the Seller, all of the Acquired Assets other
than the FCC Licenses. Both such sales shall take place at the Closing for the
consideration specified below in this Section 1.
B. ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, Broadcasting agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing. The Buyers will
not assume or have any responsibility, however, with respect to any other
obligation or Liability of the Seller not included within the definition of
Assumed Liabilities or otherwise expressly assumed by Broadcasting, and the
Seller agrees to pay and discharge all Liabilities and obligations of the Seller
other than the Assumed Liabilities.
C. PURCHASE PRICE. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the purchase price (the "Purchase Price")
described in Schedule A to this Agreement, and agrees to make the escrow deposit
(the "▇▇▇▇▇▇▇ Money Deposit") in the form and manner described in Schedule A and
more particularly in the ▇▇▇▇▇▇▇ money escrow agreement ("▇▇▇▇▇▇▇ Money Escrow
Agreement") attached hereto as Exhibit A and entered into by the Parties on the
date hereof.
D. CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a mutually agreed location,
commencing at 9:00 a.m. local time within
five (5) to ten (10) business days after FCC approval of the Assignment
Application becomes a Final Order, so long as all other conditions to the
obligations of the respective Parties to consummate the transactions
contemplated hereby will have been satisfied, or such other date as the Parties
may mutually determine (the "Closing Date").
E. DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyers the various certificates, instruments, and documents
referred to in Section 5(a) below; (ii) the Buyers will deliver to the Seller
the various certificates, instruments, and documents referred to in Section 5(b)
below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver
to the Buyers (A) assignments (including Lease and other Assumed Contract
assignments and Intellectual Property transfer documents), bills of sale and
warranty deeds in form acceptable to the Buyers, (B) such affidavits, transfer
tax returns, memorandums of lease, and other additional documents as may be
required by the terms of the title insurance commitments described in Section
4(o) hereof, as necessary to furnish title insurance as required by such section
or as may be necessary to convey title to the Real Estate to the Buyers in the
condition required herein or provide public notice of existence of the Leases,
and (C) such other instruments of sale, transfer, conveyance, and assignment as
the Buyers and their counsel reasonably may request; (iv) the Buyers will
execute, acknowledge (if appropriate), and deliver to the Seller (A) an
assumption in the form attached hereto as Exhibit B and (B) such other
instruments of assumption as the Seller and its counsel reasonably may request;
and (v) the Buyers will deliver to the Seller the consideration specified in
Section 1(c) above.
F. NONCOMPETITION AND RETAINAGE AGREEMENTS. On the Closing Date,
the Seller shall execute, and shall cause shareholder ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III to
execute, a Noncompetition Agreement with the Buyers including covenants not to
compete with the Buyers in the markets served by the Stations in the form of
Exhibit C attached hereto. A portion of the Purchase Price equal to One Hundred
Dollars ($100) shall be paid to the Seller by the Buyers on the Closing Date as
consideration for the agreements set forth in the Noncompetition Agreement. In
addition, on the Closing Date, the Seller and Buyers shall enter into a
Retainage Agreement in the form attached as Exhibit D hereto, pursuant to which
Six Hundred Thousand Dollars ($600,000) shall be deposited by Buyers with the
Retainage Agent and disbursed at the times and under the procedures specified in
the Retainage Agreement.
G. EMPLOYMENT AGREEMENT. On the Closing Date, the Seller shall
cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III to enter into an Employment Agreement with the
Buyers in the form of Exhibit E attached hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyers that the statements
contained in this SECTION 2 are correct and complete, except as set forth in the
Disclosure Schedule.
A. ORGANIZATION OF THE SELLER. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Seller does not have any Subsidiaries.
The Seller has the power and authority to own or lease its
-2-
properties and to carry on all business activities now conducted by it. The
shareholders of the Seller are set forth in Section 2(a) of the Disclosure
Schedule.
B. AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and all agreements and instruments to be executed and delivered
by Seller pursuant to this Agreement (collectively, the "Ancillary Agreements")
and to perform its obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the Board of Directors of the Seller has duly
authorized the execution, delivery, and performance of this Agreement and the
Ancillary Agreements by the Seller. This Agreement and the Ancillary Agreements
constitute the valid and legally binding obligation of the Seller, enforceable
in accordance with their respective terms and conditions.
C. NONCONTRAVENTION. Except as set forth in Section 2(c) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement or
the Ancillary Agreements, nor the consummation of the transactions contemplated
hereby and thereby (including the assignments and assumptions referred to in
Section 1(e) above), will (i) violate any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject or any
provision of the charter or bylaws of the Seller; or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice or third party consent under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
agreement, arrangement to which the Seller is a party or by which it is bound or
to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). Other than with respect to the
Assignment Application described in Section 4(b) the Seller does not need to
give any notice to, make any filing with, or obtain any Licenses, consent, or
approval of any court or government or governmental agency in order for the
Parties to enter into this agreement or the Ancillary Agreements or to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements (including the assignments and assumptions referred to in Section
1(e) above).
D. TITLE TO ACQUIRED ASSETS. Other than the Security Interests set
forth on Section 2(d) of the Disclosure Schedule (which shall be released at or
before the Closing) the Seller has good and marketable title to all of the
Acquired Assets, free and clear of any Security Interest or restriction on
transfer.
E. FINANCIAL STATEMENTS. Included in Section 2(e) of the Disclosure
Schedule are the following financial statements (collectively the "Financial
Statements"): (i) unaudited balance sheets and statements of income, and cash
flow as of and for the fiscal years ended December 31, 1993, December 31, 1994,
and December 31, 1995 for the Seller; and (ii) unaudited balance sheets and
statements of income, as of and for each month during 1996 and each month to
date in 1997 for the Seller. The Financial Statements have been prepared in
conformity with the Seller's normal accounting policies, practices and
procedures applied on a consistent basis, throughout the periods covered
thereby, are correct and complete in all material respects, fairly present the
financial condition of the Seller and the results of operation of Seller at the
dates and for
-3-
the periods indicated, and are consistent with the books and records of the
Seller (which books and records are correct and complete). The Financial
Statements accurately state the revenues of the Stations for the period
indicated therein and include an accurate breakout of cash and trade revenues.
F. EVENTS SUBSEQUENT TO JANUARY 1, 1997. During the period between
January 1, 1997, and the date of this Agreement, except as set forth in Section
2(f) of the Disclosure Schedule, there has not been any material adverse change
in the assets, Liabilities, business, financial condition, operations, or
results of operations of the Seller with respect to the operation of the
Stations. Without limiting the generality of the foregoing and with respect to
the operation of the Stations since January 1, 1997 until the date of this
Agreement:
i. other than this Agreement, the Seller has not entered into
any agreement, contract, lease, sublease, license, or sublicense (or series
of related agreements, contracts, leases, subleases, licenses, and
sublicenses) outside the Ordinary Course of Business;
ii. the Seller has not delayed or postponed (beyond its normal
practice in the Ordinary Course of Business) the payment of accounts
payable and other Liabilities;
iii. the Seller has not altered its credit and collection
policies or its accounting policies;
iv. the Seller has not entered into or terminated any employment
arrangement, employment contract, consulting contract or severance
agreement or collective bargaining agreement, written or oral, or modified
the terms of any existing such contract or agreement outside the Ordinary
Course of Business;
v. there have been no changes and, to Seller's knowledge, any
threatened changes in employment terms for any of its directors, officers,
and employees;
vi. there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the Seller;
vii. the Seller has not materially altered the programming,
format or call letters of the Stations, or its promotional and marketing
activities outside the Ordinary Course of Business;
viii. the Seller has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action necessary to
preserve the FCC Licenses and has operated the Stations in compliance
therewith and with all FCC rules and regulations;
ix. the Seller has not terminated or received notice of
termination for any syndicated programming outside the Ordinary Course of
Business; and
x. the Seller has not committed to any of the foregoing.
-4-
G. TAX MATTERS. The Seller has timely and properly filed all Tax
Returns that it was required to file with respect to the Seller's operations.
All such Tax Returns were correct and complete and properly reflect the tax
liability of the Seller. No Tax deficiencies have been proposed or assessed
against the Seller. All Taxes owed by the Seller with respect to its operations
(whether or not shown on any Tax Return) have been paid. The Seller has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor, or
other third party. No claim has ever been made by any authority in any
jurisdiction where the Seller does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
H. TANGIBLE ASSETS. Section 2(h) of the Disclosure Schedule sets
forth a listing (which, in certain cases, is done by general categories) of all
transmitter and station equipment, vehicles and other tangible personal property
owned by Seller and used in conducting the operation and business of the
Stations as of December 31, 1996, other than the tangible personal property
included in Retained Assets and identified in Schedule 8. The Seller owns or
leases all tangible assets necessary for the conduct of the operation and
business of the Stations as presently conducted. Any item of station equipment
on this list which is no longer used in the operation of the Stations was
either: (i) disposed of in the ordinary course of business because it was no
longer useful in the operation of the Stations; or (ii) replaced with another
item of equipment of substantially equivalent or greater value; or (iii) removed
from service due to malfunction or obsolescence, and although still on hand, no
longer being used in the operation of the Stations.
I. REAL PROPERTY. Section 2(i) of the Disclosure Schedule lists and
describes briefly all Owned Real Estate and real property leased to the Seller
(including, without limitation, complete legal descriptions for all of the Real
Estate) (but excluding real property included in Retained Assets and identified
in Schedule 8). The Seller has delivered to the Buyers correct and complete
copies of the Leases. With respect to the Real Estate:
i. the Seller has good and marketable title to all of the Owned
Real Estate free and clear of all liens, charges, mortgages, security
interests, easements, restrictions or other encumbrances of any nature
whatsoever except those disclosed in Section 2(i) of the Disclosure
Schedule (collectively, the "Permitted Real Estate Encumbrances");
ii. the Leases are and, as of Closing will be, legal, valid,
binding, enforceable, and in full force and effect;
iii. to Seller's Knowledge, no party to any Lease is in breach or
default (or has repudiated any provision thereof), and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default thereunder or permit termination, modification, or acceleration
thereunder;
iv. there are no disputes, oral agreements, or forbearance
programs in effect between the Seller and any landlord as to any Lease;
-5-
v. none of the Owned Real Estate and to the Seller's Knowledge,
none of the properties subject to the Leases is subject to any lease (other
than Leases), option to purchase or rights of first refusal;
vi. except for Permitted Real Estate Encumbrances and as
described in Section 2(i) of the Disclosure Schedule, there are no (i)
actual or, to the Seller's Knowledge, proposed special assessments with
respect to any of the Real Estate; (ii) pending or, to the Seller's
Knowledge, threatened condemnation proceedings with respect to any of the
Real Estate; (iii) structural or mechanical defects in any of the buildings
or improvements located on the Real Estate; (iv) any pending or, to the
Seller's Knowledge, threatened changed in any zoning laws or ordinances
which may materially adversely affect any of the Real Estate or Seller's
use thereof;
vii. the Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the Leases or its
rights thereunder;
viii. to the Seller's Knowledge, except as disclosed as
Section 2(i) of the Disclosure Schedule, all facilities on the Real Estate
have received all approvals of governmental authorities (including
licenses, permits and zoning approvals) required in connection with the
operation thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations; and
ix. to the Seller's Knowledge, the owner of each leased facility
has good and marketable title to the underlying parcel of real property,
free and clear of any Security Interest, easement, covenant, or other
restriction, except for Permitted Real Estate Encumbrances and Seller's
leasehold interest in each Lease has priority over any other interest
except for the fee interest therein and Permitted Real Estate Encumbrances.
J. CONTRACTS. Section 2(j) of the Disclosure Schedule lists any
written arrangement (or group of related written arrangements) either involving
more than $5,000 or not entered into in the Ordinary Course of Business. The
Seller has delivered to the Buyers a correct and complete copy of each written
arrangement listed in Section 2(j) of the Disclosure Schedule (as amended to
date). With respect to each written arrangement so listed which constitutes an
Assumed Contract: (A) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect; (B) the written arrangement will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing (if the arrangement has not
expired according to its terms); (C) to Seller's Knowledge, no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default or permit termination, modification, or
acceleration, under the written arrangement; and (D) no party has repudiated any
provision of the written arrangement. The Seller is not a party to any verbal
contract, agreement, or other arrangement which, if reduced to written form,
would be required to be listed in Section 2(j) of the Disclosure Schedule under
the terms of this Section 2(j). Except for the Assumed Contracts, the Buyers
shall not have any Liability or obligations for or in respect of any of the
contracts set forth in Section 2(j) of the Disclosure Schedule or any other
contracts or agreements of the Seller.
-6-
K. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION REQUIREMENTS.
i. All licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies, including,
without limitation, the FCC Licenses, used or useful in the operation of
the Stations as they are now being operated are (A) in full force and
effect, (B) unimpaired by any acts or omissions of the Seller or the
Seller's employees or agents, (C) free and clear of any restrictions which
might limit the full operation of the Stations, and (D) detailed in Section
2(k) of the Disclosure Schedule. With respect to the licenses, permits,
authorizations, franchises, certificates of compliance and consents
referenced in the preceding sentence, Section 2(k) of the Disclosure
Schedule also sets forth, without limitation, the date of the last renewal,
the expiration date thereof, and any conditions or contingencies related
thereto. Except as set forth in Section 2(k) of the Disclosure Schedule, no
condition exists or event has occurred that permits, or after notice or
lapse of time, or both, would permit, the revocation or termination of any
such license, permit, consent, franchise, or authorization (other than
pursuant to their express expiration date) or the imposition of any
material restriction or limitation upon the operation of the Stations as
now conducted. Except as set forth in Section 2(k) of the Disclosure
Schedule, the Seller is not aware of any reason why the FCC Licenses might
not be renewed in the ordinary course or revoked.
ii. The Stations are in compliance with the FCC's policy on
exposure to radio frequency radiation. No renewal of any FCC License would
constitute a major environmental action under the FCC's rules or policies.
Access to the Stations' transmission facilities is restricted in accordance
with the policies of the FCC.
iii. Except as set forth in Section 2(k) of the Disclosure
Schedule, to the Seller's Knowledge, the Seller is not the subject of any
FCC or other governmental investigation or any notice of violation or
order, or any material complaint, objection, petition to deny, or
opposition issued by or filed with the FCC or any other governmental
authority in connection with the operation of or authorization for the
Stations, and there are no proceedings (other than rule making proceedings
of general applicability) before the FCC or any other governmental
authority that could adversely affect any of the FCC Licenses or the
authorizations listed in Section 2(k) of the Disclosure Schedule.
iv. The Seller has filed with the FCC and all other governmental
authorities having jurisdiction over the Stations all material reports,
applications, documents, instruments, and other information required to be
filed, and will continue to make such filings through the Closing Date.
v. The Seller is not aware of any information concerning the
Stations that could cause the FCC or any other regulatory authority not to
issue to the Buyers all regulatory certificates and approvals necessary for
the consummation of the transactions contemplated hereunder or the Buyer's
operation and/or ownership of the Stations. As of the date hereof, without
having conducted any investigation, Seller is not aware of any pending FCC
applications which, if approved, would allow for the operation of a new
radio station
-7-
with a signal reaching the signal area of the Stations and, in addition,
Seller is not aware, without having conducted any investigation, of any
plans or proposals by any existing radio stations with a signal reaching
the signal area of the Stations to alter or change their format to a format
similar to that of the Stations, provided that Station WQSN(AM), Kalamazoo,
Michigan, has a construction permit to migrate to the expanded band.
L. INTELLECTUAL PROPERTY. The Seller owns or has the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the businesses of the Seller as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Seller immediately prior to the
Closing hereunder is set forth on Section 2(l) of the Disclosure Schedule and
each item listed will be owned or available for use the by the Buyers on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Seller has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and the Seller has never received any charge, complaint, or notice
alleging any such interference, infringement, misappropriation, or violation.
To the Knowledge of the Seller, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Seller.
M. INSURANCE. Section 2(m) of the Disclosure Schedule sets forth a
complete and accurate description of all Seller's insurance coverage. With
respect to each such insurance policy: (A) the policy is legal, valid, binding,
and enforceable and in full force and effect; (B) the policy will continue to be
legal, valid, binding, and enforceable and in full force and effect on identical
terms through the Closing Date.
N. LITIGATION. Section 2(n) of the Disclosure Schedule sets forth
each instance in which the Seller: (i) is subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. None of the charges, complaints,
actions, suits, proceedings, hearings, and investigations set forth in Section
2(n) of the Disclosure Schedule will, in the opinion of Seller, result in any
material adverse change in the assets, Liabilities, business, financial
condition, operations, results of operations, or future prospects of the Seller
or the Stations taken as a whole. There is no litigation or proceeding pending
by or against, or threatened against or affecting Seller that would affect
Seller's ability fully to carry out the transactions contemplated by this
Agreement.
O. EMPLOYEES. Section 2(o) of the Disclosure Schedule sets forth a
listing of the names, positions, titles, salary or wage rates and all other
forms of compensation paid for work at the Stations of each employee. To the
Knowledge of the Seller as of the date hereof, no key employee or group of
employees has any plans to terminate employment with the Seller. The Seller is
not a party to or bound by any collective bargaining or similar agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices or
other collective bargaining disputes. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the employees of the Seller. The Seller has no
Knowledge of any claim by past or current employees of the Seller or applicants
for employment that the Seller
-8-
or its management has discriminated based on each individuals race, sex,
national origin, religion, ethnicity, handicap or any other protected
characteristic under applicable law.
P. EMPLOYEE BENEFITS. Section 2(p) of the Disclosure Schedule lists
all Employee Benefit Plans that the Seller maintains or to which the Seller
contributes or is required to contribute for the benefit of any current or
former employee of the Seller and true and correct copies of each such Employee
Benefit Plan have been delivered to the Buyers. Each Employee Benefit Plan (and
each related trust or insurance contract) complies and at all times has complied
in form and in operation in all respects with the applicable requirements of
ERISA and the Code. The Seller does not have any commitment to create any
additional Employee Benefit Plan or modify or change any existing Employee
Benefit Plan that would affect any employee or terminated employee of the
Seller. There are no pending or, to the Knowledge of the Seller, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
Q. ENVIRONMENT, HEALTH, AND SAFETY.
i. With respect to the operation of the Stations and the Real
Estate, to Seller's Knowledge the Seller is, and at all times in the past
has been, in compliance in all material respects with all Environmental
Laws and all laws (including rules and regulations thereunder) of federal,
state, and local governments (and all agencies thereof) concerning employee
health and safety, and to Seller's Knowledge the Seller has no Liability
(and to Seller's Knowledge there is no Basis related to the past or present
operations of the Seller or its predecessors for any present or future
Liability) under any Environmental Law, except as described in Section
2(q) of the Disclosure Schedule. Except as described in Section 2(q) of
the Disclosure Schedule, to Seller's Knowledge, the Seller has no Liability
(and to Seller's Knowledge there is no Basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
or demand against the Seller giving rise to any Liability) under the
Occupational Safety and Health Act, as amended, or any other law (or rule
or regulation thereunder) of any federal, state, local, or foreign
government (or agency thereof) concerning employee health and safety, or
for any illness of or personal injury to any employee.
ii. To Seller's Knowledge, the Seller has obtained and at all
times has been in compliance in all material respects with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all Environmental Laws or law of any
federal, state, or local or foreign government relating to worker health
and safety.
iii. Except as described in Section 2(q) of the Disclosure
Schedule, to Seller's Knowledge all properties and equipment used in the
Stations and the Acquired Assets are, and to Seller's Knowledge have been,
free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances. To Seller's Knowledge,
no pollutant, contaminant, or chemical, industrial, hazardous, or toxic
material or waste ever has been buried, stored, spilled, leaked,
discharged, emitted, or released on any of the Real Estate. To Seller's
Knowledge, no above ground or underground storage tanks have ever been
located at, on or under the Real Estate. To Seller's Knowledge, the
Seller has delivered to the Buyers a complete copy of all environmental
claims, reports, studies, compliance actions or the like of the Seller or
which are available to the Seller with respect to any of the Real Estate or
any of the Acquired Assets.
R. LEGAL COMPLIANCE. To Seller's Knowledge, the Seller has complied
in all material respects with all laws (including rules and regulations
thereunder) of federal, state, local and foreign governments (and all agencies
thereof), subject to the matters disclosed in Section 2(q) of the Disclosure
Schedule. The Seller has filed in a timely manner all reports, documents, and
other materials it was required to file (and the information contained therein
was correct and complete in all material respects) under all applicable laws.
S. ADVERTISING CONTRACTS. Section 2(s) of the Disclosure Schedule
lists all arrangements in effect as of March 3, 1998 for the sale of air time or
advertising on the Stations in excess of $1000, and the amount to be paid to the
Seller therefor. The Seller has no reason to believe and has not received a
notice or indication of the intention of any of the advertisers or third parties
to material contracts of the Seller to cease doing business or to reduce in any
material respect the business transacted with the Seller or to terminate or
modify any agreements with the Seller (whether as a result of consummation of
the transactions contemplated hereby or otherwise).
T. BROKERS' FEES. The Seller has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
U. UNDISCLOSED COMMITMENTS OR LIABILITIES. There are no material
commitments, liabilities or obligations relating to the Stations, whether
accrued, absolute, contingent or otherwise including, without limitation,
guaranties by the Seller of the liabilities of third parties, for which specific
and adequate provisions have not been made on the Financial Statements except
those incurred in or as a result of the Ordinary Course of Business since
January 1, 1997.
V. DISCLOSURE. The representations and warranties contained in this
Section 2 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 2 not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyers each represent and warrant to the Seller that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement.
-10-
A. ORGANIZATION OF THE BUYERS. Broadcasting and Licensing are
corporations duly organized, validly existing, and in good standing under the
laws of Nevada.
B. AUTHORIZATION OF TRANSACTION. Buyers have full power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform their obligations hereunder and thereunder. This Agreement and the
Ancillary Agreements constitute legally binding obligations of the Buyers,
enforceable against the Buyers in accordance with their respective terms and
conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Buyers are subject or any provision of their articles of organization or other
charter documents, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than with respect to the Assignment Application described in Section 4(b),
the Buyers do not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any court or government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements (including the
assignments and assumptions referred to in Section 1 (e) above).
D. BROKERS' FEES. The Buyers have no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
E. QUALIFICATIONS. Each Buyer has the requisite legal, financial
and other qualifications under the Communications Act of 1934, as amended, and
the rules, regulations and policies of the FCC, as well as under all other
applicable federal, state and local laws, rules and regulations, to acquire the
FCC Licenses from Seller. Neither Buyer is required to obtain, nor will it seek
to obtain, an exemption from or waiver of any FCC rule, regulation or policy in
order to acquire the FCC Licenses or operate the Stations. Nor will any Buyer
or any of its Affiliates seek to divest itself of any interest in or
relationship to any media in order to permit Licensing to acquire the FCC
Licenses.
F. LITIGATION. There is no litigation or proceeding pending by or
against, or threatened against or affecting either Buyer that would affect
Buyers' ability fully to carry out the transactions contemplated by this
Agreement. To Buyers' knowledge, there is no action, suit, investigation,
inquiry, or other proceeding pending or threatened before any court or
quasijudicial or administrative agency of any federal, state, local or foreign
jurisdiction wherein an unfavorable judgment, order, degree, stipulation,
injunction or charge would (i) prevent consummation of any
-11-
of the transactions contemplated by this Agreement or impose damages or
penalties upon any of the parties if such transactions are consummated, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (iii) affect adversely the right of the Buyers to
own, operate or control the Acquired Assets.
G. MARKET ACQUISITIONS. Neither Buyers nor any of their Affiliates have
entered into a letter of intent, agreement or any other commitment or
arrangement pursuant to which such entity will acquire one or more additional
radio or television broadcast stations with respect to which the principal
community contour or Grade A contour, as applicable, of any of such broadcast
stations
would overlap the principal community contour of any of the Stations.
4. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
A. GENERAL. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
B. ASSIGNMENT APPLICATIONS. Within ten (10) business days after the
execution of this Agreement, the Seller and the Buyers shall jointly file with
the FCC an application for assignment of the FCC Licenses, permits and
authorizations pertaining to the Stations from the Seller to Licensing (the
"Assignment Application"). The costs of the FCC filing fees in connection with
the Assignment Application shall be divided equally between the Parties. Each
party shall pay its own attorneys' fees. The Seller and the Buyers shall
thereafter prosecute the Assignment Application with all reasonable diligence
and otherwise use commercially reasonable efforts to obtain the grant of the
Assignment Application as expeditiously as practicable (but neither the Seller
nor the Buyers shall have any obligation to satisfy complainants or the FCC by
taking any steps which would have a material adverse effect upon the Stations or
impose significant costs on such party). If the FCC imposes any condition on
either party to the Assignment Application, such party shall use commercially
reasonable efforts to comply with such condition, provided, that neither party
shall be required hereunder to comply with any condition that would have a
material adverse effect upon such party, any of the Stations or any Affiliate.
The Seller and the Buyers shall jointly oppose any requests for reconsideration
or judicial review of FCC approval of the Assignment Application and shall
jointly request from the FCC extension of the effective period of FCC approval
of the Assignment Application if the Closing shall not have occurred prior to
the expiration of the original effective period of the FCC Consent. Nothing in
this Section 4(b) shall be construed to limit either party's right to terminate
this Agreement pursuant to Section 9 of this Agreement.
C. EMPLOYMENT OFFERS. Upon notice to the Seller, and at mutually
agreeable times, the Seller will permit the Buyers to meet with its employees
prior to the Closing Date. The Buyers may, at their option, extend offers of
employment to all or any of the Seller's employees effective on the Closing
Date. From and after the execution of this Agreement, the Seller shall use
-12-
its reasonable efforts to assist Buyers in retaining those employees of the
Stations which the Buyers wish to hire in connection with the operation of the
Stations by the Buyers subsequent to the Closing, and the Seller will not take
any action to preclude or discourage any of the Seller's employees from
accepting any offer of employment extended by the Buyers.
D. NOTICES AND CONSENTS. The Seller will give all notices to third
parties and use reasonable effort to obtain third party consents that the Buyers
reasonably may request. Each of the Parties will file any notification and
report forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will use reasonable
efforts to obtain an early termination of the applicable waiting period, and
will make any further filings pursuant thereto that may be necessary, proper or
advisable. Each of the Parties will take any additional action that may be
necessary, proper, or advisable in connection with any other notices to, filings
with, and authorizations, consents, and approvals of governments, governmental
agencies, and third parties that it may be required to give, make, or obtain.
E. OPERATING STATEMENTS. If requested by Buyers, the Seller shall
deliver to the Buyers, for the Buyers' informational purposes only, monthly
unaudited statements of operating revenues and operating expenses of the
Stations within ten (10) days after each such statement is prepared by or for
the Seller.
G. CONTRACTS. The Seller will not without the prior written consent
of the Buyers (which shall not be unreasonably withheld or delayed) amend,
change, or modify any of the contracts listed on Section 2(k) of the Disclosure
Schedule in any material respect. The Seller will not without prior written
consent of the Buyers enter into any contract outside the Ordinary Course of
Business which involves more than Five Thousand Dollars ($5,000) if such
contract is to be an Assumed Contract.
H. OPERATION OF STATIONS. The Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. The Seller shall operate the Stations in material
compliance with the FCC Licenses and the rules and regulations of the FCC, and
the FCC Licenses shall at all times remain in full force and effect. The Seller
shall file with the FCC all material reports, applications, documents,
instruments and other information required to be filed in connection with the
operation of the Stations.
I. CREDIT AND RECEIVABLES. The Seller will follow its usual and
customary policies with respect to extending credit for sales of air time and
advertising on the Stations and with respect to collecting accounts receivable
arising from such extension of credit.
J. PRESERVATION OF STATIONS AND THE ACQUIRED ASSETS. The Seller
will use reasonable efforts to keep its Stations and the Acquired Assets and
properties substantially intact, including its present operations, physical
facilities, working conditions, relationships with lessors, licensors, all of
the Confidential Information, call letters and trade secrets of the Stations,
and the FCC Licenses.
-13-
K. FULL ACCESS AND CONSULTATION. The Seller will permit
representatives of the Buyers to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Stations, to all premises, properties, books, records, contracts, Tax records,
and documents of or pertaining to the Seller. The Seller will consult with the
Buyers' management with a view to informing Buyers' management as to the
operations, management and business of the Stations.
L. NOTICE OF DEVELOPMENTS. The Seller will give prompt written
notice to the Buyers of any material development affecting the Acquired Assets
or the ability of the Seller to perform hereunder.
M. EXCLUSIVITY. The Seller will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any person relating to
any (A) merger or consolidation, (B) acquisition or purchase of securities or
assets, or (C) similar transaction or business combination involving the Seller,
or (ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing. The Seller will notify the Buyers immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
N. TITLE INSURANCE, SURVEYS AND ENVIRONMENTAL ASSESSMENTS. The
Buyers will obtain (i) with respect to each parcel of Real Estate subject to the
Leases, a leasehold owner's policy issued by a title insurer reasonably
satisfactory to the Sellers, in an amount equal to the fair market value of such
Real Estate (including all improvements located thereon), insuring over the
standard pre-printed exceptions and insuring leasehold title to such Real Estate
in the Buyers as of the Closing subject only to the Permitted Real Estate
Encumbrances, together with such endorsements for zoning, contiguity, public
access and extended coverage as the Buyers or their lender reasonably request,
(ii) with respect to each parcel of Owned Real Estate, an owner's policy of
title insurance by a title insurer reasonably satisfactory to the Buyers, in an
amount equal to the fair market value of such Real Estate (including all
improvements located thereon), insuring over the standard pre-printed exceptions
and insuring title to the Owned Real Estate to be vested in the Buyers as of the
Closing free and clear of all liens and encumbrances except Permitted Real
Estate Encumbrances, together with such endorsements for zoning, contiguity,
public access and extended coverage as the Buyers or its lender reasonably
request, (iii) a current survey of each parcel of Real Estate certified to the
Buyers and its lender, prepared by a licensed surveyor and conforming to current
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Surveys') which shall not
disclose any survey defect or encroachment from or onto any of the Real Estate
which has not been cured or insured over prior to the Closing; and (iv) with
respect to each parcel of Real Estate, a current Phase I environmental site
assessment from an environmental consultant or engineer reasonably satisfactory
to the Sellers which, except as otherwise disclosed in Section 2(q) of the
Disclosure Schedule, does not indicate that the Seller and the Real Estate are
not in material compliance with any Environmental Law and which shall not
disclose or recommend any action with respect to any condition to be remediated
or investigated or any contamination on the site
-14-
assessed. The Seller will pay the costs of the title policies and Surveys, and
the Buyers will pay the costs of the environmental assessments.
O. CONTROL OF STATIONS. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Assignment Application. Between the date of this Agreement and
the Closing Date, the Buyers and their employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Seller.
P. RISK OF LOSS. The risk of loss, damage, or destruction to any of
the Acquired Assets shall remain with the Seller until the Closing. In the event
of any such loss, damage, or destruction the Seller will promptly notify the
Buyers of all particulars thereof, stating the cause thereof (if known) and the
extent to which the cost of restoration, replacement and repair of the Acquired
Assets lost, damaged or destroyed will be reimbursed under any insurance policy
with respect thereto. The Seller will, at Seller's expense (subject to its
collection of insurance proceeds), repair or replace such Acquired Assets to
their former condition as soon as possible after loss, damage or destruction
thereof and shall use reasonable efforts to restore as promptly as possible
transmissions as authorized in the FCC Licenses. The Closing Date shall be
extended (with FCC consent, if necessary) for up to sixty (60) days to permit
such repair or replacement. If repair or replacement cannot be accomplished
within sixty (60) days of the date of the Seller's notice to the Buyers and the
Buyers determine that the Seller's failure to repair or replace would have a
material adverse effect on the operation of the Stations:
i. the Buyers may elect to terminate this Agreement; or
ii. the Buyers may postpone the Closing Date until such time as
the property has been repaired, replaced or restored in a manner and to an
extent reasonably satisfactory to the Buyers, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Seller's
notice to the Buyers, in which case either party may terminate this
Agreement; or
iii. the Buyers may choose to accept the Acquired Asset in their
"then" condition, without any adjustment to the Purchase Price, together
with the Seller's assignment to the Buyers of all rights under any
insurance claims covering the loss, damage or destruction and payment over
to the Buyers of any proceeds under any such insurance policies, previously
received by the Seller with respect thereto plus an amount equal to the
amount of any deductible or self-insurance maintained by Seller on such
Acquired Assets. In the event the Closing Date is postponed pursuant to
this SECTION 4(N), the parties hereto will cooperate to extend the time
during which this Agreement must be closed as specified in the consent of
the FCC.
Q. ASBESTOS. Seller agrees prior to Closing to remove from the premises
all asbestos-containing materials at locations that are friable, as described in
the May 4, 1995 report of ▇▇▇▇▇▇
-15-
& Associates included in Section 2(q) of the Disclosure Schedule using such
methods as may comply with applicable law.
5. CONDITIONS TO OBLIGATION TO CLOSE.
A. CONDITIONS TO OBLIGATION OF THE BUYERS. The obligation of Buyers
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in Section 2
above shall be true and correct in all material respects (or with respect
to representations and warranties which include a condition of materiality,
in all respects) at and as of the Closing Date as though made on and as of
the Closing Date;
ii. the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
iii. the Seller shall have procured all of the third party
consents to consents and contracts designated by Buyers as material in
Section 2(j) of the Disclosure Schedule, and all of the title insurance
commitments (and endorsements), Surveys described in Section 4(n) above,
the asbestos-containing materials shall have been removed as provided in
Section 4(q) above, and if Buyers have obtained the environmental
assessments described in Section 4(n), except as otherwise disclosed in
Section 2(q) of the Disclosure Schedule, such assessments shall not
indicate that the Seller and the Stations are not in material compliance
with any Environmental Law and shall not disclose or recommend any action
with respect to any condition to be remediated or investigated or any
contamination on the site assessed;
iv. no action, suit, investigation, inquiry or other proceeding
shall be pending or threatened before any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction
wherein an unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or impose damages or penalties upon any of
the parties if such transactions are consummated, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyers to own,
operate, or control the Acquired Assets (and no such judgment, order,
decree, stipulation, injunction, or charge shall be in effect);
v. the Seller shall have delivered to the Buyers a certificate
(without qualification as to knowledge (except with respect to (iv) above)
or materiality or otherwise) to the effect that each of the conditions
specified above in Sections 5(a)(i) through (iv) is satisfied in all
respects;
vi. each of the Assignment Applications shall have been approved
by a Final Order of the FCC all applicable waiting periods (and any
extensions thereof) under the
-16-
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or been terminated and the Buyers
shall have received all governmental approvals required to transfer all
other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
vii. the relevant parties shall have entered into the
Noncompetition Agreement, Retainage Agreement, and the Employment
Agreement;
viii. the Buyers shall have received from counsel to the
Seller an opinion with respect to the matters set forth in Exhibit E
attached hereto, addressed to the Buyers and its lender and dated as of the
Closing Date;
ix. the Parties shall have agreed to allocate the Purchase Price
(and all other capitalizable costs) among the Acquired Assets for all
purposes (including financial accounting and tax purposes) in accordance
with an allocation schedule to be delivered at closing; and
x. all actions to be taken by the Seller in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyers.
B. CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in Section 3
above shall be true and correct in all material respects (or if the
representation or warranty includes a condition of materiality, in all
respects) at and as of the Closing Date as though made on and as of the
Closing Date;
ii. the Buyers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
iii. no action, suit, investigation, inquiry or other proceeding
shall be pending or threatened before any court or quasi judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
wherein an unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or impose damages or penalties upon any of
the Parties if such transactions are consummated, or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such judgment, order, decree, stipulation, injunction,
or charge shall be in effect);
iv. the Buyers shall have delivered to the Seller a certificate
(without qualification as to knowledge (except with respect to (iii) above)
or materiality or otherwise)
-17-
to the effect that each of the conditions specified above in Section
5(b)(i)-(iii) is satisfied in all respects and the statements contained in
such certificate shall be deemed a warranty of the Buyers which shall
survive the Closing;
v. each of the Assignment Applications shall have been approved
by a Final Order of the FCC and the Buyers shall have received all
governmental approvals required to transfer all other authorizations,
consents, and approvals of governments and governmental agencies set forth
in the Disclosure Schedule;
vi. the relevant parties shall have entered into the Postclosing
Agreement and the Employment Agreement; and
vii. all actions to be taken by the Buyers in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing:
A. GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 7 below).
B. LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Stations, each of the other Parties will reasonably cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
C. ADJUSTMENTS. Operation of the Stations and the income and
expenses attributable thereto up through the close of business on the day before
the Closing Date shall be for the account of the Seller and thereafter for the
account of the Buyers. Such items as employee salaries, vacation, sick day and
personal time accruals, and fringe benefits, power and utilities
-18-
charges, insurance, real and personal property taxes, prepaid expenses,
deposits, music license fees, and rents and payments pertaining to the Assumed
Contracts (including any contracts for the sale of time for cash, trade or
barter so assigned) shall be prorated between the Seller and the Buyers as of
the Closing Date in accordance with the foregoing principle. In addition, all
commissions payable with respect to the accounts receivable of the Seller
(whether due before or after Closing) shall be solely for the account and
responsibility of the Seller. Contractual arrangements that do not reflect an
equal rate of compensation to a Stations over the term of the agreement shall be
equitably adjusted as of the Closing Date. The prorations and adjustments
hereunder shall be made and paid insofar as feasible on the Closing Date, with a
final settlement sixty (60) days after the Closing Date. In the event of any
disputes between the Parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at such time and such disputes shall be determined by
an independent accounting firm mutually acceptable to both parties and the fees
and expenses of such accounting firm shall be paid one-half (1/2) by the Seller
and one-half (1/2) by the Buyer. The Purchase Price shall be allocated among
the Acquired Assets as mutually agreed upon by Buyers and Seller prior to
Closing. In the event that the parties are unable to mutually agree upon the
allocation by Closing, Buyers, on the one hand, and Seller, on the other, shall
each select an independent certified public accountant within ten (10) days
after the Closing and such independent certified public accountant shall within
ten (10) days select a third independent certified public accountant who shall
make a determination of the allocation within sixty (60) days after his or her
selection. Buyers and Seller agree that the allocation determined by their
mutual agreement or otherwise by the independent certified public accountant, as
the case may be, shall be conclusive and binding on Buyers and seller for all
purposes, including without limitation, reporting and disclosure requirements of
the Internal Revenue Service (including the reporting requirements of Section
1060(b) of the Internal Revenue Code of 1986, as amended).
D. COLLECTION OF ACCOUNTS RECEIVABLE. At the Closing, the Seller
will turn over to the Buyers, for collection only, the accounts receivable of
the Stations owing to the Seller as of the close of business on the day before
the Closing Date. A schedule of such accounts receivable will be delivered by
the Seller to the Buyers on the Closing Date or as soon thereafter as possible.
The Buyers agree to use commercially reasonable efforts in the ordinary course
of business (but without responsibility to institute legal or collection
proceedings) to collect such accounts receivable during the 120-day period
following the Closing Date, and will remit all payments received on such
accounts during this 120-day period on the tenth (10th) day of each month
following collection together with an accounting of all payments received within
such period. The Buyers shall have the sole right to collect such accounts
receivable during such one hundred twenty (120) day period. In the event the
Buyers receive monies during the 120-day period following the Closing Date from
an advertiser who, after the Closing Date, is advertising on the Stations, and
that advertiser was included among the accounts receivable as of the Closing
Date, the Buyers shall apply said monies to the oldest outstanding balance due
on the particular account, except in the case of a "disputed" account
receivable. For purposes of this Section 6(d), a "disputed" account receivable
means one which the account debtor refuses to pay because he asserts in writing
with a detailed explanation that the money is not owed or the amount is
incorrect. In the case of such a disputed account, the Buyers shall immediately
return the account to the Seller prior to expiration of the 120-day period
following the Closing Date. If the Buyers return a disputed account to the
Seller, the Buyers shall have no further responsibility for its collection and
may accept payment from the account debtor for
-19-
advertising carried on the Stations after the Closing Date. At the end of the
120-day period following the Closing Date, the Buyers will turn back to the
Seller all of the accounts receivable of the Stations as of the Closing Date
owing to the Seller which have not yet been collected, and the Buyers will
thereafter have no further responsibility with respect to the collection of such
receivables. During the 120-day period following the Closing Date, the Buyers
shall afford the Seller reasonable access to the accounts receivable "aging
list." The Seller acknowledges and agrees that the Buyers are acting as
collection agent hereunder for the sole benefit of the Seller and that Buyers
have accepted such responsibility for the accommodation of the Seller. The
Buyers shall not have any duty to inquire as to the form, manner of execution or
validity of any item, document, instrument or notice deposited, received or
delivered in connection with such collection efforts, nor shall the Buyers have
any duty to inquire as to the identity, authority or rights of the persons who
executed the same. The Seller shall indemnify Buyers and hold them harmless from
and against any judgments, expenses (including attorney's fees) costs or
liabilities which the Buyers may incur or sustain as a result of or by reason of
such collection efforts, except those resulting from the gross negligence or any
omission of Buyers or their intentional misconduct.
E. CONSENTS. In the event any of the Assumed Contracts are not
assignable or any consent to such assignment is not obtained on or prior to the
Closing Date, and the Buyers elect to consummate the transactions contemplated
herein despite such failure or inability to obtain such consent, the Seller
shall continue to use commercially reasonable efforts to obtain any such
assignment or consent after the Closing Date. Until such time as such assignment
or approval has been obtained, the Seller will cooperate with Buyers in any
lawful and economically feasible arrangement to provide that the Buyers shall
receive the Seller's interest in the benefits under any such Assumed Contract,
including performance by the Seller as agent, if economically feasible;
provided, however, that the Buyers shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent that
Buyers would have been responsible therefor if such consent or assignment had
been obtained.
F. FUTURE MARKET ACQUISITIONS. Each of the Buyers agrees that
between the date hereof and Closing neither it nor any of its affiliates will
enter into a letter of intent, agreement or any other commitment or arrangement
pursuant to which it would acquire one or more additional radio or television
broadcast stations with respect to which the principal community contour or
Grade A contour, as applicable, of any of such broadcast stations would overlap
the principal community contour of any of the Stations.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
A. Survival. All of the representations and warranties of the Seller
contained in Section 2 of this Agreement (other than the representations and
warranties of the Seller contained in SECTIONS 2(A), 2(B), 2(C), AND 2(D) hereof
or relating to the Seller's title to the Acquired Assets) shall survive the
Closing and continue in full force and effect for a period until 90 days after
the applicable statute of limitations has expired with respect to any claim by
the Buyers based on a claim or action by a third party and for a period of
eighteen (18) months following Closing with respect to any claim by the Buyers
not based on a claim or action by a third party. All of the other
representations and warranties (including the representations and warranties
Seller contained in
-20-
SECTIONS 2(A), 2(B), 2(C), AND 2(D) hereof or relating to the Seller's title to
the Acquired Assets) and all covenants of the Buyers and the Seller contained in
this Agreement shall survive the Closing and continue in full force and effect
forever thereafter.
B. Indemnification Provisions for the Benefit of the Buyers. Except
as described below in SECTION 7(E) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Seller agrees to indemnify the Buyers
from and against the entirety of any Adverse Consequences the Buyers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by:
i. any misrepresentation or breach of any of the Seller's
representations or warranties, and covenants contained in this Agreement or
in any Ancillary Agreement executed and/or delivered by the Seller (so long
as the Buyers make a written claim for indemnification within the
applicable survival period);
ii. any breach or nonfulfillment of any agreement or covenant of
the Seller contained herein or in any Ancillary Agreement;
iii. any Liability of the Seller which is not an Assumed
Liability; and/or
iv. any Liability of the Buyers arising by operation of law
(including under any bulk transfer law of any jurisdiction or under any
common law doctrine of defacto merger or successor liability) which is not
an Assumed Liability.
C. Indemnification Provisions for the Benefit of the Seller. Except
as described below in SECTION 7(E) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Buyers agree, jointly and severally, to
indemnify the Seller from and against the entirety of any Adverse Consequences
the Seller may suffer resulting from, arising out of, relating to, in the nature
of, or caused by (i) any misrepresentation or breach of any of the Buyers'
representations or warranties contained in this Agreement or in any Ancillary
Agreement executed and/or delivered by the Buyers (so long as the Seller makes a
written claim for indemnification within the applicable survival period) or (ii)
any breach or nonfulfillment of any agreement or covenant of the Buyers
contained herein or in any Ancillary Agreement, or (iii) any Assumed Liability.
D. Specific Performance. Each of the Parties acknowledges and agrees
that the Buyers would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the Buyers
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter
(subject to the provisions set forth in SECTION 10(O) below), in addition to any
other remedy to which it may be entitled, at law or in equity. Each of the
Parties acknowledges and agrees that not withstanding the provision in SECTION
7(E) with respect to the remedy of liquidated damages upon a breach of a
warranty or covenant of this Agreement prior
-21-
to the Closing, money damages would not be an adequate remedy for Buyers for a
breach of any provision of this Agreement.
E. Liquidated Damages. The Buyers and the Seller acknowledge that in
the event that the transactions contemplated by this Agreement are not closed
because of a default by the Buyers, the Adverse Consequences to the Seller as a
result of such default may be difficult, if not impossible, to ascertain.
Accordingly, in lieu of indemnification pursuant to Section 7(C), the Seller
shall be entitled to receive the ▇▇▇▇▇▇▇ Money Deposit as liquidated damages
without the need for proof of damages, subject only to successfully proving in a
court of competent jurisdiction that either Buyer materially breached this
Agreement and that the transactions contemplated thereby have not occurred. The
Seller shall proceed against the ▇▇▇▇▇▇▇ Money Deposit as full satisfaction of
liquidated damages owed by the Buyers and as its sole remedy for a failure of
the transactions contemplated hereby to occur as a result of a material breach
of the terms of this Agreement by the Buyers.
F. Matters Involving Third Parties. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the "Indemnifying
Party") under this SECTION 7, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; PROVIDED, HOWEVER, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is damaged as a result
of such failure. In the event any Indemnifying Party notifies the Indemnified
Party within 15 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified Party within 15 days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, however, and/or in the event the
Indemnifying Party shall fail to defend such claim actively and in good faith,
then the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
G. LIMITATION OF LIABILITY. Notwithstanding anything in this
Agreement to the contrary, after the Closing neither party shall indemnify or
otherwise be liable to the other party from and after the Closing Date except to
the extent that the Adverse Consequences suffered by the Identified Party, in
the aggregate from all indemnifiable events shall exceed Ten Thousand Dollars
-22-
($10,000) and indemnification shall be made by the indemnifying party only to
the extent of such excess over Ten Thousand Dollars ($10,000); provided however
that the foregoing limitation shall not be applicable to: (i) the obligations of
either Buyer to pay and discharge any Assumed Liability of the Seller; (ii) the
obligation of the Seller to pay and discharge any Retained Liability; or (iii)
the Seller's obligation to deliver clear title to the Acquired Assets.
8. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of the
assets of the Seller, other than Retained Assets, that are used or useful in the
operation of the Stations, wherever located, including but not limited to all of
its (a) Owned Real Estate; (b) leaseholds and other interests of any kind
therein, improvements, fixtures, and fittings thereon (such as towers and
antennae), and easements, rights-of-way, and other appurtenances thereto); (c)
tangible personal property (such as fixed assets, computers, data processing
equipment, electrical devices, monitoring equipment, test equipment, switching,
terminal and studio equipment, transmitters, transformers, receivers, broadcast
facilities, furniture, furnishings, inventories of compact disks, records, tapes
and other supplies, vehicles) and all assignable warranties with respect
thereto; (d) Intellectual Property, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions; (e) rights under orders and
agreements (including those Barter Agreements and Advertising Contracts
identified on the Disclosure Schedule) now existing or entered into in the
Ordinary Course of Business for the sale of advertising time on the Stations;
(f) Assumed Contracts, indentures, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (g) call letters of the Stations, jingles,
logos, slogans, and business goodwill of the Stations; (h) claims, deposits,
prepayments, refunds, causes of action, choses in action, rights of recovery
(including rights under policies of insurance), rights of set off, and rights of
recoupment; (i) Licenses and similar rights obtained from governments and
governmental agencies; and (j) FCC logs and records and all other books,
records, ledgers, logs, files, documents, correspondence, advertiser lists, all
other lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, program production materials,
studies, reports, and other printed or written materials; and (k) goodwill of
the Stations.
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"ADVERTISING CONTRACTS" has the meaning set forth in Section 2(s), above.
"AFFILIATE" means with reference to any person or entity, another person or
entity controlled by, under the control of or under common control with that
person or entity.
"ASSIGNMENT APPLICATION" has the meaning set forth in Section 4(b) above.
-23-
"ASSUMED CONTRACTS" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts identified on Section 2(j) of the
Disclosure Schedule.
"ASSUMED LIABILITIES" means (a) obligations of the Seller which accrue
after the Closing Date under the Assumed Contract either: (i) to furnish
services, and other non-Cash benefits to another party after the Closing; or
(ii) to pay for goods, services, and other non-Cash benefits that another party
will furnish to it after the Closing. The Assumed Liabilities shall not include
any Retained Liabilities.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"BUYERS" has the meaning set forth in the preface above.
"CASH" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"CLOSING" has the meaning set forth in SECTION 1(D) above.
"CLOSING DATE" has the meaning set forth in SECTION 1(D) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of the Seller.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 1 above.
"▇▇▇▇▇▇▇ MONEY DEPOSIT" has the meaning set forth in Section 1(c) above.
"▇▇▇▇▇▇▇ MONEY ESCROW AGREEMENT" has the meaning set forth in Section 1(c)
above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multi-employer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
-24-
"EMPLOYMENT AGREEMENT" has the meaning set forth in Section 1(g) above.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control Act
of 1976, the Refuse Act of 1899, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other law of any federal,
state, local, or foreign government or agency thereof (including rules,
regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means Michigan National Bank, NA.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC LICENSES" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"FINAL ORDER" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 2(E) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
-25-
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 7(D) above.
"Indemnifying party" has the meaning set forth in SECTION 7(D) above.
"INTELLECTUAL PROPERTY" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and registrations
and applications for registration thereof, (c) all programs, programming
materials, copyrights and registrations and applications for registration
thereof, (d) mask works and registrations and applications for registration
thereof, (e) computer software, data, and documentation, (f) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, market and other research information, drawings,
specifications, designs, plans proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
"KNOWLEDGE" means actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III.
"LEASES" means those real estate leases to which Seller is a party
governing Seller's studios and FM tower sites, as described in SECTION 2(I) of
the Disclosure Schedule.
"LIABILITY" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"MULTI-EMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"NONCOMPETITION AGREEMENT" means the Noncompetition Agreement with Seller's
Owner in the form attached as Exhibit C.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with Seller's past custom and practice (including with respect to
quantity and frequency).
"OWNED REAL ESTATE" means the real property owned by the Seller as
described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon.
"PARTY" has the meaning set forth in the preface above.
-26-
"PERMITTED REAL ESTATE ENCUMBRANCES" shall have the meaning set forth in
Section 2(i), above.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"PURCHASE PRICE " has the meaning set forth in SECTION 1(C) above.
"REAL ESTATE" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"RETAINAGE AGENT" means Michigan National Bank, NA.
"RETAINAGE AGREEMENT" means the Retainage Agreement among Seller, Buyers
and Retainage Agent in the form attached hereto as Exhibit D.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAINED ASSETS" means (i) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation; (ii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyers on
the other hand entered into on or after the date of this Agreement); (iii)
accounts, notes and other receivables of the Seller; (iv) Cash; and (v) the
assets listed in Schedule 8 hereto.
"RETAINED LIABILITIES" means any other obligations or Liabilities of the
Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the Closing; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(i) relating to Surveys, title commitments and environmental audits and
Section 4(b) with regard to the Assignment Application; or (iv) any Liability or
obligation of the Seller under this Agreement (or under any side agreement
between the Seller on the one hand and the Buyers on the other hand entered into
on or after the date of this Agreement).
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"SELLER" has the meaning set forth in the preface above.
-27-
"STATIONS" means the radio broadcast stations having the call letters
WKMI(AM) (licensed to Kalamazoo, Michigan); WRKR(FM) (licensed to Portage,
Michigan); and WKFR(FM) (licensed to Battle Creek, Michigan).
"SUBSIDIARY," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"SURVEYS" has the meaning set forth in SECTION 4(O) above.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
i. the Buyers and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
ii. the Buyers may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event the
Seller is in breach of any representation, warranty, or covenant contained
in this Agreement; provided, however, that if such breach is capable of
being cured, such breach also remains uncured for twenty (20) days after
notice of breach is received by the Seller from the Buyers;
iii. the Seller may terminate this Agreement by giving written
notice to the Buyers at any time prior to the Closing in the event the
Buyers are in breach of any representation, warranty, or covenant contained
in this Agreement; provided, however that if such breach is capable being
cured, such breach remains uncured for twenty (20) days after notice of
breach is received by the Buyers from the Seller;
-28-
iv. the Buyers may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under SECTION
5(A) hereof (unless the failure results primarily from the Buyers
themselves breaching any representation, warranty, or covenant contained in
this Agreement);
v. the Seller may terminate this Agreement by giving written
notice to the Buyers at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under SECTION
5(B) hereof (unless the failure results primarily from the Seller itself
breaching any representation, warranty, or covenant contained in this
Agreement);
vi. the Buyers or the Seller may terminate this Agreement if any
Assignment Application is denied by Final Order.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 9(a) above, all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
10. MISCELLANEOUS.
A. PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
B. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
C. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
D. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party, PROVIDED that (i) the Buyers may assign all of
their right, title and interest in, to and under this Agreement to one or more
Affiliates, who shall then, be subject to the terms and conditions of this
Agreement, have the right to receive the Acquired Assets, assume the Assumed
Liabilities, and pay to the Seller the Purchase Price therefor provided that
Buyers shall not be released from their performance obligations hereunder, and
provided further
-29-
that such assignment shall not hinder or delay either the receipt of FCC
approval of the assignment of the Stations' FCC Licenses or the Closing); and
(ii) Buyers may assign their indemnification claims and their rights under the
warranties and representations of the Sellers to the financial institution(s)
providing financing to the Buyers in connection with this transaction.
E. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
F. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
G. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be considered to be given
and received in all respects when hand delivered, when delivered via prepaid
express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
IF TO THE SELLER:
Crystal Radio Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Leader & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(which copy shall not constitute notice to Seller)
IF TO THE BUYERS:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
c/o QUAESTUS Management Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-30-
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
H. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Michigan.
I. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyers and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
J. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
K. EXPENSES. The Buyers and the Seller, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 4(b) with regard to the
-31-
Assignment Applications and as set forth in Section 4(n) with respect to
Surveys, title commitments and environmental audits. The Seller will pay its own
income taxes. The Seller and the Buyers will each pay one-half (1/2) of any
transfer or sales taxes and other recording or similar fees necessary to vest
title to each of the Acquired Assets in the Buyers.
L. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
M. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
N. SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Kalamazoo, Michigan in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto. Any Party may make service on the other
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
10(g) above. Nothing in this Section 10(n), however, shall affect the right of
any Party to serve legal process in any other manner permitted by law. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
O. CONFIDENTIAL INFORMATION. The Parties acknowledge that each has
furnished and will be furnishing the other with Confidential Information, and
they acknowledge the competitive value and confidential nature of the
Confidential Information and the damage that could result of Buyers, Seller or
the Stations if any Confidential Information is disclosed to any third party or
used or exploited by either party or others. Each party agrees that, except as
specifically permitted hereunder, it shall not disclose, or permit its
employees, agents, advisors or other persons under its control to disclose, to
any third party any of the Confidential Information; provided, however, that
either party may make such disclosure if it has received the written opinion of
outside counsel that such disclosure must be made in order to comply with a
requirement of law; provided, further, that
-32-
Buyers may disclose any of the Confidential Information to their legal,
accounting and other professional advisors and to their financial institutions
for the purpose of obtaining financing in connection with the transactions
contemplated hereunder so long as such entities shall have agreed not to
disclose any of the Confidential Information to any other party or use or
exploit any of the Confidential Information. The obligations set forth in this
Section 10(o) shall survive the termination of this Agreement or the Closing.
* * * * *
-33-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS BROADCASTING, INC.
By:
------------------------------
---------------------------------
(Printed)
Title:
---------------------------
CUMULUS LICENSING CORPORATION
By:
------------------------------
---------------------------------
(Printed)
Title:
---------------------------
CRYSTAL RADIO GROUP, INC.
By:
------------------------------
---------------------------------
(Printed)
Title:
---------------------------
-34-
SCHEDULE A
PURCHASE PRICE. The Buyers agree to pay to the Seller, as consideration
for the Acquired Assets, the amount of Fourteen Million and no/100 Dollars
($14,000,000), payable as follows:
(i) on the date of this Agreement, the Buyers will deposit with the
Escrow Agent the amount of Seven Hundred Thousand and no/100 Dollars
($700,000.00) (the "▇▇▇▇▇▇▇ Money Deposit") in the form of an irrevocable letter
of credit from ▇▇▇▇▇▇ Commercial Paper Inc.; and
(ii) on the Closing Date, the Buyers shall deposit with the Retainage
Agent by wire transfer of immediately available funds the amount of Six Hundred
Thousand and no/100 Dollars ($600,000) (the "Retainage Amount"); and
(iii) on the Closing Date, the Buyers shall pay to the Seller by wire
transfer of immediately available funds the amount of Thirteen Million Four
Hundred Thousand and no/100 Dollars (with adjustments as authorized by this
Agreement) ($13,400,000.00).
The ▇▇▇▇▇▇▇ Money Deposit referenced in this SCHEDULE A shall be placed in
escrow with the Escrow Agent pursuant to an escrow agreement in the form
attached hereto as EXHIBIT A (the "▇▇▇▇▇▇▇ MONEY ESCROW AGREEMENT"), and shall
be disbursed to Seller or returned to Buyer as provided in the ▇▇▇▇▇▇▇ Money
Escrow Agreement. The Retainage Amount referenced in this Schedule A shall be
placed with the Retainage Agent pursuant to the Retainage Agreement in the form
attached hereto as EXHIBIT D.
-35-
LIST OF OMITTED SCHEDULES AND/OR EXHIBITS
Ex. A - Escrow Agreement
Ex. B - Form of Instrument of Assumption
Ex. C - Form of Noncompetition Agreement
Ex. D - Form of Retainage Agreement
Ex. E - Employment Agreement
Ex. E - Opinion of Seller's Counsel
Disclosure Schedules
The preceding schedules and/or exhibits have been omitted from this exhibit.
The Company agrees to provide copies of such schedules and/or exhibits to the
Commission upon request.