Exhibit 2.11
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of December 1, 1997, by
and between Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"),
Cumulus Licensing Corporation, a Nevada corporation ("Licensing"), and ▇▇▇▇
▇▇▇▇▇▇ Management, Inc., a Colorado corporation (the "Seller"). Broadcasting and
Licensing are referred to collectively herein as the "Buyers." The Buyers and
the Seller are referred to collectively herein as the "Parties." Capitalized
terms used in this Agreement are defined in Section 8 hereof.
Subject to the prior approval of the Federal Communications Commission,
and 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
station KARX-FM, licensed to Claude, Texas (the "Station") 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, Licensing agrees to acquire from the Seller, and
the Seller agrees to transfer, convey, and deliver to Licensing, all of the FCC
Licenses listed in Section 2(l) of the Disclosure Schedule. In addition,
Broadcasting agrees to purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to Broadcasting, all of the Acquired Assets other
than the FCC Licenses. Both such transactions 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, the Buyer agrees to assume and become responsible for all of
the Assumed Liabilities at the Closing. The Buyer 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 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
("Escrow 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.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Station in
Amarillo, Texas (or at such other location
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as the parties may mutually determine) commencing at 9:00 a.m. local time on the
date set by the Buyers not earlier than the fifth business day or later than the
tenth business day after the FCC approval of the Assignment Application becomes
a Final Order, by which date all other conditions to the obligations of the
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 the forms attached hereto as Exhibits B-1 through B-2, (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 to 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 C 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 l(c) above.
(f) Noncompetition Agreement. On the Closing Date, the Seller shall
execute, and shall cause shareholders ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇ to execute, a Noncompetition Agreement with the Buyer
including covenants not to compete with the Buyer in the markets served by the
Station in the form of Exhibit D attached hereto. A portion of the Purchase
Price equal to Ten Thousand Dollars ($10,000) shall be paid to the Seller by the
Buyers on the Closing Date as consideration for the agreements set forth in the
Postclosing Agreement.
(g) Allocation. The Parties agree 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 the allocation
schedule attached hereto as Exhibit E.
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 as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 2),
except as set forth in the lettered and numbered paragraphs contained in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule") corresponding to the lettered and numbered sections
of this Section 2.
(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
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any Subsidiaries. The Seller has the power and authority to own or lease its
properties and to carry on all business activities now conducted by it. The
shareholders of the Seller are ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
and ▇▇▇▇ ▇▇▇▇▇.
(b) Authorization of Transaction. The Seller has full corporate power and
authority to execute and deliver this Agreement and all agreements and
instruments to be executed and delivered by such Party 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. 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 (other than as disclosed in the Disclosure Schedule) 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 as of and for the fiscal years ended
December 31, 1995, and December 31, 1996, for the Seller; (ii) unaudited balance
sheet as of October 31, 1997; and (iii) unaudited profit and loss statements for
May through December 1995, January through December 1996, and January through
October 1997 for the Seller. The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, are correct and complete, fairly represent the financial
condition of the Seller on such dates and the results of
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operations for the periods designated therein, and are consistent with the books
and records of the Seller (which books and records are correct and complete).
(f) Events Subsequent to January 1, 1997. Since January 1, 1997, except as
set forth in Section 2(f) of the Disclosure Schedule, there has not been any
adverse change in the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Seller with
respect to the operation of the Station. Without limiting the generality of the
foregoing and with respect to the operation of the Station since that date:
(i) the Seller has not sold, leased, transferred, or assigned any of its
material assets, tangible or intangible;
(ii) 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;
(iii) no party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and sublicenses)
involving more than $5,000 to which the Seller is a party or by which it or any
of its assets are bound;
(iv) no Security Interest has been imposed upon any of Seller's assets,
tangible or intangible;
(v) the Seller has not made any capital expenditure (or series of related
capital expenditures) outside the Ordinary Course of Business;
(vi) the Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of any other person (or series of
related capital investments, loans, and acquisitions);
(vii) the Seller has not created, incurred, assumed, or guaranteed any
indebtedness (including capitalized lease obligations) outside the Ordinary
Course of Business;
(viii) 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;
(ix) the Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
(x) the Seller has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
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(xi) the Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of its property or any action
adversely affecting the FCC Licenses;
(xii) the Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees giving rise to
any claim or right on its part against the person or on the part of the person
against it;
(xiii) the Seller has not entered into any 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;
(xiv) the Seller has not granted any increase (outside routine salary and
wage increases in the Ordinary Course of Business) in the rate of compensation,
commissions, bonus or other remuneration payable, or granted any severance or
termination pay to, any of its directors, officers, and employees;
(xv) the Seller has not adopted any (A) bonus, (B) profit-sharing, (C)
incentive compensation, (D) pension, (E) retirement, (F) medical,
hospitalization, life, or other insurance, (G) severance, or (H) other plan,
contract, or commitment for any of its directors, officers, and employees, or
modified or terminated any existing such plan, contract, or commitment;
(xvi) the Seller has not made any other change in employment terms for any
of its directors, officers, and employees;
(xvii) the Seller has not made or pledged to make any charitable or other
capital contribution;
(xviii) there has not been any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving
the Station;
(xix) the Seller has not altered its credit and collection policies or its
accounting policies;
(xx) the Seller has not materially altered the programming, format or call
letters of the Station, or its promotional and marketing activities;
(xxi) 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 Station in substantial compliance therewith and with all
FCC rules and regulations; or
(xxii) the Seller has not committed to any of the foregoing.
(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
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complete in all respects and properly reflect the tax liability of the Seller.
The Seller has not requested any extension of time within which to file returns
in respect of any Taxes with respect to the Seller's operations. No Tax
deficiencies have been proposed or assessed against the Seller. There are no
pending, or to the Seller's knowledge, threatened audits, investigations, or
claims for or relating to any liability in respect of Taxes with respect to the
Seller's operations. 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. There are no Security Interests on any
of the assets of the Seller that arose in connection with any failure (or
alleged failure) to pay any Tax.
(h) Tangible Assets. Section 2(h) of the Disclosure Schedule sets forth a
listing of all transmitter and station equipment, and other tangible personal
property used in conducting the operation and business of the Station. The
Seller owns or leases all tangible assets necessary for the conduct of the
operation and business of the Station as presently conducted and as presently
proposed to be conducted and all leased assets are specifically identified as
such in Section 2(h) of the Disclosure Schedule. Each such tangible asset is
free from defects (patent and latent), has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used. No such tangible asset is in need of replacement. Any leased personal
property included within the tangible personal property is in the condition
required of such property by the terms of the lease applicable thereto during
the term of the lease and upon the expiration thereof. All of the equipment
utilized in the operation of the Station is in substantial compliance with all
FCC and FAA requirements and is sufficient to satisfy the intended needs of the
normal customary operations of the Station at all times of the year and all such
equipment is in substantial compliance with all applicable laws.
(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). The Seller has delivered to the Buyer 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
real estate taxes for the year of Closing and municipal and zoning ordinances
and recorded utility easements which do not impair the current use, occupancy or
value or the marketability of title of the property and which are disclosed in
Section 2(i) of the Disclosure Schedule (collectively, the "Permitted Real
Estate Encumbrances");
(ii) the Leases are and, following the Closing will continue to be, legal,
valid, binding, enforceable, and in full force and effect;
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(iii) 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 as to any Lease;
(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, 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) pending or, to the Seller's Knowledge, threatened litigation or
administrative actions with respect to any of the Real Estate; (iv) mechanic's
or materialmens' liens with respect to the Owned Real Estate; (v) structural or
mechanical defects in any of the buildings or improvements located in the Real
Estate; (vi) planned or commenced improvements which will result in an
assessment or otherwise affect the Real Estate; (vii) governmental agency or
court orders requiring the repair, alteration or correction of any existing
condition with respect to the Real Estate or any portion thereof; or (viii) any
pending or, to the Seller's Knowledge, threatened change in any zoning laws or
ordinances which may affect any of the Real Estate or Seller's use thereof;
(vii) all buildings and improvements on the Real estate are in good
operating condition and repair, normal wear and tear excepted;
(viii) the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the Leases or its rights
thereunder;
(ix) to the Seller's Knowledge, 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;
(x) all facilities on the Real Estate are supplied with utilities and
other services necessary for the operation of said facilities; and
(viii) 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;
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(j) Intellectual Property. The Seller owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for or currently used in the operation of the business 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 will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Seller has taken all necessary or desirable action to protect each item of
Intellectual Property that it owns or uses. With respect to such Intellectual
Property:
(i) 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, claim, 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.
(ii) Section 2(j) of the Disclosure Schedule identifies each patent,
trademark or copyright registration which has been issued to the Seller with
respect to any of its Intellectual Property and the call letters (current and
past) of the Station, identifies each pending patent, trademark or copyright
application for registration which the Seller has made with respect to any of
its Intellectual Property, and identifies each license, agreement, or other
permission which the Seller has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). With respect to
each item of Intellectual Property that the Seller owns:
(A) the Seller possesses all right, title, and interest in and to
the item and all registrations and applications are in full force and
effect;
(B) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction, or charge;
(C) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Seller has not ever agreed to indemnify any person or entity
for or against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iii) Section 2(j) of the Disclosure Schedule also identifies each item of
Intellectual Property that any third party owns and that the Seller uses
pursuant to license, sublicense, agreement, or permission including, but not
limited to the call letters of the Station. With respect to each such item of
used Intellectual Property:
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(A) the license, sublicense, agreement, or permission covering the
item is, and following the Closing will continue to be on identical terms,
legal, valid, binding, enforceable, and in full force and effect;
(B) no party to the license, sublicense, agreement, or permission 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 or permit termination, modification, or acceleration
thereunder;
(C) with respect to each sublicense, the representations and
warranties set forth in subsections (A) and (B) above are true and correct
with respect to the underlying license;
(D) the underlying item of Intellectual Property is not subject to
any outstanding judgment, order, decree, stipulation, injunction, or
charge;
(E) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending, or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property;
(F) the Seller has not agreed to indemnify any person or entity for
or against any interference, infringement, misappropriation, or other
conflict with respect to the underlying item of Intellectual Property; and
(G) the Seller has not granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
(k) Contracts. Section 2(k) of the Disclosure Schedule lists the following
contracts, agreements, and other written arrangements (other than with
advertisers for the sale of air time which are listed in Section 2(s) of the
Disclosure Schedule) to which the Seller is a party:
(i) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of $1,000 per year;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of supplies, products, or other
personal property or for the furnishing or receipt of services which
either calls for performance over a period of more than one year or
involves more than the sum of $1,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or guaranteed
(or may create, incur, assume, or guarantee) indebtedness (including
capitalized lease obligations) involving more than $1,000 or under
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which it has imposed (or may impose) a Security Interest on any of its
assets, tangible or intangible;
(v) any written arrangement concerning confidentiality or
noncompetition;
(vi) any written arrangement with any of its employees in the nature
of a collective bargaining agreement, consulting agreement, compensation
agreement, employment agreement, commission agreement, or severance
agreement;
(vii) any written arrangement under which the consequences of a
default or termination could have an adverse effect on the assets,
Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Seller or the Station;
(viii) any written arrangement concerning a guaranty by the Seller
of the obligations of any other party; or
(ix) any other 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 Buyer a correct and complete copy of each
written arrangement listed in Section 2(k) 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) 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(k) of the Disclosure Schedule under the terms
of this Section 2(k). Except for the Assumed Contracts, the Buyer shall not have
any Liability or obligations for or in respect of any of the contracts set forth
in Section 2(k) of the Disclosure Schedule or any other contracts or agreements
of the Seller. No advertiser of the Station has indicated within the past year
that it will stop, or decrease the rate of, buying services from them.
(l) 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 Station 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 Station, and (D)
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detailed in Section 2(1) of the Disclosure Schedule. With respect to the
licenses, permits, authorizations, franchises, certificates of compliance and
consents referenced in the preceding sentence, Section 2(1) 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(1) 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 Station as now conducted. Except as set forth in
Section 2(1) 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 Station is 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
Station' transmission facilities is restricted in accordance with the policies
of the FCC.
(iii) Except as set forth in Section 2(1) 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 Station, 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(1) of the Disclosure Schedule.
(iv) The Seller has filed with the FCC and all other governmental
authorities having jurisdiction over the Station 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 Station that
could cause the FCC or any other regulatory authority not to issue to the Buyer
all regulatory certificates and approvals necessary for the consummation of the
transactions contemplated hereunder or the Buyer's operation and/or ownership of
the Station. Although Seller has not investigated the matter, Seller is not
aware of any pending FCC applications which, if approved, would allow for the
operation of a new radio station with a signal reaching the signal area of the
Station and, in addition, Seller is not aware of any plans or proposals by
existing radio Station with a signal reaching the signal area of the Station to
alter or change their format to a format similar to that of the Station.
(m) Insurance. Section 2(m) of the Disclosure Schedule sets forth a true
and accurate copy of each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which the Seller is a
11
party, a named insured, or otherwise the beneficiary of 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 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 quasi-judicial 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 could result in any adverse change in
the assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Seller or the Station taken as a whole.
The Seller has no reason to believe that any such charge, complaint, action,
suit, proceeding, hearing, or investigation may be brought or threatened against
the Seller.
(o) Employees. Section 2(o) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Station of each employee of the
Seller. Section 2(o) of the Disclosure Schedule also sets forth a list of all
employee handbooks and/or manuals relating to the employees of the Seller, true
and correct copies of which have been delivered to the Buyer. To the Knowledge
of the Seller, 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
understanding (whether written or oral), agreement or contract with any union,
labor organization, employee group or other entity or individual which affects
the employment of employees of the Seller including, but not limited to any
collective bargaining 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 employees of any
of the Seller. The Seller has not been subject to a strike, slow down or other
work stoppage during the three (3) year period immediately preceding the date
hereof and, to the Seller's Knowledge, there are no strikes, slow downs or work
stoppages threatened against the Seller. To the Seller's Knowledge, it has not
committed any unfair labor practice. There is no basis for any claim by any past
or present employee of the Seller that such employee was subject to wrongful
discharge or any employment discrimination by the Seller or its management
arising out of or relating to the employee's race, sex, age, religion, national
origin, ethnicity, handicap or any other protected characteristic under
applicable law. No proceedings are pending before any court, governmental agency
or instrumentality or arbitrator relating to labor matters, and there is no
pending investigation by any governmental agency or, to the Knowledge of the
Seller, threatened claim by any such agency or other person relating to labor or
employment matters.
(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
12
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 Station and the Real
Estate, 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 no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has ever been filed or commenced
or, to the Seller's Knowledge, is threatened, against the Seller alleging
any failure to comply with any such Environmental Law or laws concerning
employee health and safety.
(ii) With respect to the operation of the Station and the Real
Estate, 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 charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against the Seller
giving rise to any Liability) under 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 ("Environmental Laws");
13
(iii) 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.
(iv) 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.
(v) To Seller's Knowledge, all properties and equipment used in the
business of the Seller have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(vi) 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.
(vii) To Seller's Knowledge, none of the Acquired Assets are
required to be upgraded, modified or replaced to be in compliance with
Environmental Laws.
(viii) Section 2(q) of the Disclosure Schedule contains a 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.
(ix) No septic systems or ▇▇▇▇▇ exist on, in or under any of the
Real Estate. No above ground or underground storage tanks have ever been
located at, on or under the Real Estate. None of the Real Estate is
contaminated by hazardous or toxic substances or waste, as defined under
Environmental Laws, originating from off-site sources.
(r) Legal Compliance.
(i) 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, and no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, demand, or notice has been
filed or commenced or, to the Seller's Knowledge, is threatened, against the
Seller alleging any failure to comply with any such law or regulation, including
those relating to the employment of labor, employee civil rights, and equal
employment opportunities and relating to antitrust matters.
14
(ii) 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
(including rules and regulations thereunder) of federal state, local and foreign
governments (and all agencies thereof). To the Seller's Knowledge, it has
possession of all records and documents it was required to retain under all
applicable laws (including rules and regulations thereunder).
(s) Advertising Contracts. Section 2(s) of the Disclosure Schedule lists
all arrangements for the sale of air time or advertising on the Station and the
amount to be paid to the Seller therefore, in the form of aging accounts
receivable for each month through October 31 in 1997, and a report of the
billing for each such month by each sales person. This information is correct
and complete, fairly represents the financial condition of the Seller on such
dates and the results of operations for the periods designated therein, and are
consistent with the books and records of the Seller (which books and records are
correct and complete). 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), although Seller cannot and
does not guarantee the amount of future advertising on the Station.
(t) Brokers' Fees. Other than the fee payable to ▇▇▇▇▇▇▇▇▇▇▇ & Perry Inc.,
which shall be the exclusive responsibility of Seller, 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 commitments,
liabilities or obligations relating to the Station, 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 (none of which
Ordinary Course of Business obligations have had or will have a material adverse
effect on the Station).
(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 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 and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
15
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
(a) Organization of the Buyers. Broadcasting and Licensing are
corporations duly organized, validly existing, and in good standing under the
laws of Nevada, and Broadcasting is qualified to do business in the state of
Texas.
(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 the valid and legally binding obligation 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 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. Other than fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates,
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.
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).
16
(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 Station 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 the 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 material adverse effect upon the Station or
upon any Affiliate 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 the Station or any
Affiliate. The Seller and the Buyers shall jointly oppose any petition to deny,
informal objection to the assignment application, or request 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. Not earlier than one (1) week prior to the Closing,
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 its best efforts to assist
Buyers in retaining those employees of the Station which the Buyers wish to hire
in connection with the operation of the Station 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 shall have obtained all third party consents, that the Buyers
reasonably may request in connection with the matters pertaining to the Seller
disclosed or required to be disclosed in the Disclosure Schedule (including,
without limitation, consents to assignment of the Leases and other Assumed
Contracts). 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) Operation of Business. The Seller will not engage in any practice,
take any action, embark on any course of inaction, or enter into any transaction
outside the Ordinary Course of Business, with respect to the Station. Without
limiting the generality of the foregoing, the Seller
17
will not engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction of the sort described in Section 2(f)
above.
(f) Advertising Obligations. The Seller shall satisfy its air time
obligations under its agreements for sale of air time and advertising on the
Station for goods or services ("Barter Agreements") such that the outstanding
aggregate balance owing under all Barter Agreements as of the Closing Date shall
not exceed Five Thousand Dollars ($5,000.00) worth of air time without the
Buyers' consent. On the Closing Date, the Seller shall deliver to the Buyers a
schedule, certified by an officer of the Seller, reflecting the aggregate
outstanding balances under all Barter Agreements in existence as of the Closing
Date.
(g) Operating Statements. The Seller shall deliver to the Buyers, for the
Buyers' informational purposes only, monthly unaudited statements of operating
revenues and operating expenses of the Station within ten (10) days after each
such statement is prepared by or for the Seller.
(h) Contracts. The Seller will not without the prior written consent of
the Buyers 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 new contracts respecting the
Station or their properties, except (i) contracts for the sale of time on the
Station for cash, goods or services which are entered into in the Ordinary
Course of Business and comply with Sections 4(f) and 4(j) hereof, (ii) contracts
entered into in the Ordinary Course of Business which are cancelable on not more
than thirty-one (31) days' notice without penalty or premium, and (iii)
contracts entered into in the Ordinary Course of Business each of which does not
involve more than Five Thousand Dollars ($5,000) or all of which do not involve
more than Ten Thousand Dollars ($10,000) in the aggregate.
(i) Operation of Station. The Seller shall operate the Station in
substantial 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 Station.
(j) 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 Station and with respect to collecting accounts receivable arising from
such extension of credit.
(k) Preservation of Business. The Seller will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, relationships with lessors, licensors,
advertisers, suppliers, customers, and employees, all of the Confidential
Information, call letters and trade secrets of the Station, and the FCC
Licenses.
(l) 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
18
business operations of the Station, to all premises, properties, books, records,
contracts, Tax records, and documents of or pertaining to the Seller for the
purpose of permitting the Buyer to, among other things: (a) conduct its review,
(b) review financial statements of the Seller, (c) verify the accuracy of
representations and warranties of the Seller contained in this Agreement, and
(d) prepare for the consummation of the transactions contemplated by this
Agreement. The Seller will consult with the Buyers' management with a view to
informing Buyer's management as to the operations, management and business of
the Station.
(m) Notice of Developments. The Seller will give prompt written notice to
the Buyers of any material development affecting the assets, Liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Seller or the Station. Each Party will give prompt written
notice to the other of any material development affecting the ability of the
Parties to consummate the transactions contemplated by this Agreement. No
disclosure by any Party pursuant to this Section 4(m), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(n) Exclusivity. The Seller will not (i) solicit, initiate, or encourage
the submission of any proposal or offer from any person relating to any (A)
liquidation, dissolution, or recapitalization, (B) merger or consolidation, (C)
acquisition or purchase of securities or assets, or (D) similar transaction or
business combination involving the Station; 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.
(o) Title Insurance, Surveys and Environmental Assessments.
(i) The Seller will obtain, with respect to the Owned Real Estate, an
Owner's Title Insurance Policy issued by a title insurer, reasonably
satisfactory to the buyer, in an amount equal to the fair market value of the
Real Estate (including all improvements thereon) contained in the promulgated
form of title policy insuring fee simple title subject to the standard
pre-printed exceptions (with exceptions 2 and 7 deleted) and subject to the
Permitted Real Estate Encumbrances. The fair market value of the real estate is
Fifty Thousand Dollars ($50,000.00). Within twenty (20) days after the Title
Company receives a copy of this contract Seller shall furnish Buyers with a
commitment for title insurance (the "Commitment") including copies of recorded
documents evidencing title exceptions and the survey. Seller authorizes the
title company to deliver the Commitment and related documents to Buyers at
Buyers' address. Buyers shall have 15 days after receive of the Commitment and
legible copies of documents evidencing title exceptiosn and the survey required
by this contract to object in writing to matters disclosed in the Commitments
other than the standard printed exceptions as described or limited in this
paragraph and any matter disclosed in the survey.
19
(ii) Seller will provide a Landlord's Estoppel Certificate and Consent to
Assignment for the Real Estate subject to the Leasehold Estate at ▇▇▇▇▇▇▇ Plaza,
Ltd., the form and substance of which Certificate is included as Section 2(o) of
the Disclosure Schedule hereto.
(iii) A current survey for Owned Real Estate described above, certified by
the surveyor to Buyers, Buyers' mortgagee if any and the title company. The
survey required shall be made by a Registered Professional Land Surveyor
acceptable to Buyer and the title company. The survey shall:
(a) identify the Property by metes and bounds or platted lot
description;
(b) show that the survey was made and taked on the ground with
corners permanently markets;
(c) set forth the dimensions and total area of the property;
(d) show the location of all improvements, highways, streets, roads,
railroads, rivers, creeks, or other waterways, fences, easements, and rights of
way on the Property with all easements and rights of way referenced to their
recording information;
(e) show any discrepancies or conflicts in boundaries, any visible
encroachments, and any portion of the Property lying within the 100-year
floodplain as shown on the current Federal Emergency Management Agency map; and
(f) contain the surveyor's certificate that the survey is true and
correct.
(iv) A current Phase I Environmental Site Assessment from an environmental
consultant or engineer reasonably satisfactory to the Buyers which indicates
that the Seller is in compliance with any environmental laws and which discloses
or recommends any action with respect to conditions to be remediated or invested
or any contamination on the site.
(v) Buyers and Seller shall divide equally the cost of the Owner's Title
Insurance Policy and the survey. Cost of the environmental assessment shall be
paid by Buyers.
(p) Control of Station. 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 Station, and such operation shall be the sole
responsibility of and in the control of the Seller.
(q) 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 Buyer
of all particulars thereof, stating the cause
20
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, repair or replace such Acquired Assets to their former condition as
soon as possible after loss, damage or destruction thereof and shall use its
best 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 after such loss, damage or destruction to
permit such repair or replacement. If repair or replacement cannot be
accomplished within sixty (60) days of such loss, damage or destruction, and the
Buyers determine that the Seller's failure to repair or replace, alone or in the
aggregate with any other then existing factors, would have a material adverse
effect on the operation of the Station:
(a) the Buyers may elect to terminate this Agreement; or
(b) 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
(c) the Buyers may choose to accept the Acquired Asset in their
"then" condition, 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(q),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyers. The obligation of the 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 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 respects through the Closing;
21
(iii) the Seller shall have procured all of the third party consents
specified in Section 4(d) above, including but not limited to those relating to
transmitter and studio leases, and all of the title insurance commitments (and
endorsements), Surveys and environmental site assessments described in Section
4(o) above;
(iv) 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, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (C) affect adversely
the right of the Buyer 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 Buyer a certificate (without
qualification as to knowledge or materiality or otherwise except as specifically
provided in a particular representation in Section 2 above) to the effect that
each of the conditions specified above in Sections 5(a)(i) through (iv) is
satisfied in all respects and the statements contained in such certificate shall
be deemed a warranty of the Seller which shall survive the Closing;
(vi) the Assignment Application shall have been approved by a Final Order
of the FCC and the Buyer 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 Postclosing
Agreement;
(viii) the Buyers shall have received from counsel to the Seller an
opinion with respect to the matters set forth in Exhibit F attached hereto,
addressed to the Buyers and its lender and dated as of the Closing Date; and
(ix) 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
Buyer;
(x) the Seller shall have conveyed to Buyers the Acquired Assets as
described in Section 1.
In the event that any of the foregoing conditions to Closing shall not have been
satisfied, the Buyers may elect to (i) terminate this Agreement without
liability to the Seller, or (ii) consummate the transactions contemplated herein
despite such failure. Regardless of whether the Buyers elect to terminate this
Agreement or consummate the transactions described herein,
22
if such failure shall be as a result of a breach of any provision of this
Agreement by the Seller (including, without limitation, any breach arising as a
result of the failure of the Seller to execute and/or deliver any item described
in this Section 5(a), the Buyers may seek appropriate remedies for any and all
damages, costs and expenses incurred by the Buyers by reason of such breach
including, without limitation, indemnification pursuant to Section 7, below.
(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 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 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 or materiality or otherwise except as specifically
provided in a particular representation in Section 3 above) 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) the Assignment Application 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
(viii) 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; and
23
(ix) the Buyers shall have paid the Purchase Price as described in Section
1.
In the event that any of the foregoing conditions to Closing shall not have been
satisfied, the Seller may elect to (i) terminate this Agreement without
liability to the Buyers, or (ii) consummate the transactions contemplated herein
despite such failure. Regardless of whether the Seller elects to terminate this
Agreement or consummate the transactions described herein, if such failure shall
be as a result of a breach of any provision of this Agreement by the Buyers
(including, without limitation, any breach arising as a result of the failure of
the Buyers to execute and/or deliver any item described in this Section 5(a),
the Seller may seek appropriate remedies for any and all damages, costs and
expenses incurred by the Seller by reason of such breach including, without
limitation, indemnification pursuant to Section 7, below.
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 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 Station, 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. Subject to and consistent with the LMA Agreement,
operation of the Station 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 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
24
the account and responsibility of the Seller. Contractual arrangements that do
not reflect an equal rate of compensation to a Station 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.
(d) Collection of Accounts Receivable. Subject to and consistent with the
LMA Agreement, at the Closing, the Seller will turn over to the Buyers, for
collection only, the accounts receivable of the Station owing to the Seller as
of the close of business on 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 each calendar month during this
120-day period 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 over any of the Station, and that
advertiser was included among the accounts receivable as of the Closing Date,
the Buyer 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 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 advertising
carried on any of the Station 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 Station 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 its collection agent
hereunder for the sole benefit of the Seller and that Buyers have accepted such
responsibility for the accommodation of the Seller. The Buyer 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 (including legal fees, expenses, costs, or
25
liabilities respecting such judgments) which the Buyers may incur or sustain as
a result of or by reason of such collection efforts.
(e) Severance Obligations. In the event an offer of employment is extended
by the Buyers to and accepted by an employee of the Seller pursuant to Section
4(c) and such subsequent employment by the Buyers is terminated within sixty
(60) days from the Closing Date, the Seller shall be responsible for, and shall
pay to such accepting employee, all severance benefits (if any, pursuant to the
Seller's practices as in effect on the Closing Date) that may be due and owing
such employee by reason of his or her employment with either the Seller or the
Buyers
(f) 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 Buyer 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.
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), 2(d), 2(g),
2(r) and 2(t) 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 three (3) years 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 of
the Seller contained in Sections 2(a), 2(b), 2(c), 2(d), 2(g) 2(r) and 2(t)
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:
26
(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 agrees 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 other Party 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 other
Party 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 to the Closing, money damages would
not be an adequate remedy 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 either Party, the Adverse Consequences as a result of
such default may be difficult, if not impossible, to ascertain. Accordingly, in
lieu of indemnification pursuant to Section 7(b) or 7(c), the non defaulting
Party shall be entitled to receive from the defaulting Party for such default
the sum of Thirty-Three Thousand Seven Hundred Fifty Dollars ($33,750.00) as
liquidated damages
27
without the need for proof of damages, subject only to successfully proving in a
court of competent jurisdiction that the other Party has materially breached
this Agreement and that the transactions contemplated thereby have not occurred;
provided however, that the Buyers shall retain the option to receive, pursuant
to Section 7(d), and in lieu of receiving the liquidated damages provided in
this Section 7(e), the remedy of specific performance with respect to a breach
of this Agreement prior to the Closing. The Buyers and the Seller agree to pay
said sum of liquidated damages within ten (10) days of the date that the
non-defaulting party obtains such a judgment, and agree that in the event this
Agreement is terminated by the Seller prior to the Closing Date as a result of a
breach or default by the Buyers under this Agreement, the Seller shall proceed
against the ▇▇▇▇▇▇▇ Money as satisfaction of liquidated damages owed by 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 indemnifica tion 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.
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 Station, wherever located, including but not limited to all
of its (a) leaseholds and other interests of any kind therein, improvements,
fixtures, and fittings thereon (such as towers and antennae), and
28
easements, rights-of-way, and other appurtenances thereto); (b) 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, and all assignable warranties with respect thereto; (c)
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; (d) 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 Station; (e) Assumed Contracts,
indentures, Security Interests, guaranties, other similar arrangements, and
rights thereunder; (f) call letters of the Station, jingles, logos, slogans, and
business goodwill of the Station; (g) 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; (h)
Licenses and similar rights obtained from governments and governmental agencies;
and (i) 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 (j) goodwill of the
Station.
"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.
"Assumed Contracts" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts listed on Exhibit G attached hereto.
"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.
29
"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 l(d) above.
"Closing Date" has the meaning set forth in Section l(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 2 above.
"▇▇▇▇▇▇▇ Money Deposit" has the meaning set forth in Section l(c) above.
"▇▇▇▇▇▇▇ Money Escrow Agreement" has the meaning set forth in Section l(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
Multiemployer 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).
"Environmental Laws" has the meaning set forth in Section 2(q), above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
"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.
30
"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 Station.
"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.
"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 (b) copies and tangible embodiments thereof (in whatever
form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"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.
31
"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 Station and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Noncompetition Agreement" means the Noncompetition Agreement with ▇▇▇▇▇
▇▇▇▇▇▇▇▇ in the form attached hereto as Exhibit D.
"Ordinary Course of Business" means the ordinary course of business
consistent with 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.
"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 l(c) above.
"Real Estate" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"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; and (iv) Cash.
32
"Retained Liabilities" means any other obligations or Liabilities of the
Seller not assumed by Buyers, including but not limited to: (i) any Liability
relating to the ownership or operation of the Station 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.
"Station" means the radio broadcast station having the call letters
KARX-FM, licensed by the FCC to operate in Claude, Texas.
"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.
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9. Termination.
(a) Termination of Agreement. Seller and Buyers 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
material breach of any representation, warranty, or covenant contained in this
Agreement; provided, however, that (if such breach is capable of being cured)
such breach 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
material 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;
(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); or
(vi) the Buyers or the Seller may terminate this Agreement if the
Assignment Application is set for hearing or 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) Survival. All of the representations, warranties, and covenants of the
Parties contained in this Agreement shall survive the Closing hereunder as and
to the extent provided in Section 7(a) hereof and the Post-Closing Agreement
with respect to Seller's owners.
34
(b) Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the filing of the Assignment Application 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).
(c) 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.
(d) 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.
(e) 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 its right,
title and interest in, to and under this Agreement to one or more Affiliates,
who shall then, subject to the terms and conditions of this Agreement, have the
right to receive the Acquired Assets, assume the Assumed Liabilities, and to pay
to the Seller the Purchase Price therefor or to any successor to the Buyers in
the event of any sale, merger or consolidation of the Buyers, and (ii) Buyers
may assign their indemnification claims and their rights under the warranties
and representations of the Seller to the financial institution(s) providing
financing to the Buyers in connection with this transaction.
(f) 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.
(g) 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.
(h) 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:
35
If to the Seller:
▇▇▇▇ ▇▇▇▇▇▇ Management, Inc.
▇/▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
.
Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
fax: (▇▇▇) ▇▇▇-▇▇▇▇
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
c/o QUAESTUS Management Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
36
(i) 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
Texas.
(j) 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.
(k) 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.
(1) 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 Assignment Application and as set forth in
Section 4(o) with respect to Surveys, title commitments and environmental
audits. The Seller will pay all 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.
(m) 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.
37
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Amarillo, Texas 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(h) above. Nothing in this Section 10(o), 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.
38
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:_______________________
▇▇▇▇ ▇▇▇▇▇▇ MANAGEMENT, INC.
By:__________________________
(printed)
_____________________________
Title:_______________________
SCHEDULE A
Purchase Price. The Buyers agree to pay to the Seller, as consideration
for the Acquired Assets, the amount of Six Hundred Seventy-Five Thousand Dollars
($675,000.00) (the "Purchase Price"), payable as follows:
(i) on the date of this Agreement, the Buyers will deposit with the
Escrow Agent the amount of Thirty-Three Thousand Seven Hundred Fifty Dollars
($33,750) (the "▇▇▇▇▇▇▇ Money Deposit") in the form of an irrevocable letter of
credit from NationsBank; and
(ii) on the Closing Date, the Buyers shall pay to the Seller the
amount of Six Hundred Sixty Five Thousand Dollars ($665,000.00), with
adjustments as provided in this Agreement; and
(iii) on the Closing Date, the Buyer shall pay to the Seller, on
behalf of all parties to the Postclosing Agreement, the amount of Ten Thousand
Dollars ($10,000).
The ▇▇▇▇▇▇▇ Money Deposit referenced in this Section l(c) 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.
40
LIST OF OMITTED SCHEDULES AND/OR EXHIBITS:
Disclosure Schedules
Local Marketing Agreement by and between Sovereign and Broadcasting,
dated as of December 31, 1997
Escrow Agreement by and among Sovereign, Broadcasting, and ▇▇▇▇▇▇
▇▇▇▇▇▇ and Associates, dated as of December 30, 1997
General Assignment by and between Sovereign and Broadcasting,
dated March 31, 1998
General Assignment by and between Sovereign and Licensing,
dated as of March 31, 1998
Instrument of Assumption by and between Broadcasting and Sovereign,
dated as of March 31, 1998
Post Closing Agreement by and among Broadcasting, Licensing, Sovereign
and United Heritage Corporation, dated as of March 31, 1998
Assignment of Lease for property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Assignment of Lease for property located at Deer Creek Unit No. 2
Warranty Deed for property located in ▇▇▇▇▇▇▇ County, Texas
Opinion of ▇▇▇▇▇ & Holland, L.L.P.
The preceding schedules and/or exhibits have been omitted from
this exhibit. The company agrees to provide copies of such exhibits and/or
schedules to the Commission upon request.
41