Exhibit 2.19
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of October 8, 1997, by and
between Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"),
Cumulus Licensing Corporation, a Nevada corporation ("Licensing"), Connor FM
Broadcasting Co., a Maryland corporation, Connor Broadcasting Corp., a Maryland
corporation, ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (as to real property on which
the WSBY-FM transmitter site is located only), both individual residents of
Delaware (collectively the "Sellers"). Broadcasting and Licensing are referred
to collectively herein as the "Buyers." The Buyers and the Sellers are referred
to collectively herein as the "Parties." Capitalized terms used in this
Agreement are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers hereby
agree to purchase substantially all of the assets (and assume certain of the
liabilities) of the Seller that are used or useful in the operation of radio
stations WSBY-FM, licensed to Connor FM Broadcasting Co. in Salisbury, Maryland,
and WJDY-AM, licensed to Connor Broadcasting Corp. in Salisbury, Maryland (the
"Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Licensing agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to Licensing, all of
the FCC Licenses listed in Section 2(j) 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 sales shall take place at the Closing for the
consideration specified below in this Section 1.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, the Buyers agree to assume and become responsible for all of
the Assumed Liabilities at the Closing. The Buyers will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Sellers not included within the definition of Assumed Liabilities and the
Sellers agree to pay and discharge all Liabilities and obligations of the
Sellers other than the Assumed Liabilities.
(c) Purchase Price. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the amount of One Million Three Hundred
Thousand Dollars ($1,300,000) (the "Purchase Price"). The Purchase Price shall
be payable as follows:
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(i) on the date of this Agreement, the Buyers will deposit with the
Escrow Agent the amount of One Hundred Five Thousand Dollars ($105,000) (which
amount, together with the sum of $25,000.00 previously deposited with the Escrow
Agent pursuant to a letter agreement among the parties dated September 15, 1997,
shall hereinafter be referred to as the "▇▇▇▇▇▇▇ Money Deposit") by wire
transfer or delivery of other immediately available funds; and
(ii) on the Closing Date, the Buyers shall pay to the Sellers the
amount of One Million One Hundred Sixty Thousand Dollars ($1,160,000.00), less
interest earned on the ▇▇▇▇▇▇▇ Money Deposit; and
(iii) on the Closing Date, the Buyers shall pay to the Sellers, on
behalf of all parties to the Postclosing Agreement, the amount of Ten Thousand
Dollars ($10,000).
The ▇▇▇▇▇▇▇ Money Deposit referenced in this Section 1(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 deposited by the Escrow Agent with a federally insured financial institution
in an interest bearing account. Interest earned on the ▇▇▇▇▇▇▇ Money Deposit
shall accrue to the benefit of Buyers, and, together with the principal amount
of the ▇▇▇▇▇▇▇ Money Deposit, shall be payable to the Sellers and credited
against the Purchase Price on the Closing Date. If this Agreement is terminated
without Closing of the transaction contemplated herein, the ▇▇▇▇▇▇▇ Money
Deposit and all accrued interest shall be paid to the Buyers or the Sellers as
provided in the ▇▇▇▇▇▇▇ Money Escrow Agreement.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a location to be mutually agreed,
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 Sellers 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 substantially 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
provided 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 Sellers (A) an assumption in the form
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attached hereto as Exhibit C and (B) such other instruments of assumption as the
Sellers and its counsel reasonably may request; and (v) the Buyers will deliver
to the Sellers the consideration specified in Section 1(c) above.
(f) Postclosing Agreement. On the Closing Date, the Sellers shall execute,
and shall cause shareholders ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, S.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, the "Seller Shareholders")
to execute, a Postclosing Agreement with the Buyers including covenants not to
compete with the Buyers in the markets served by the Stations (provided that the
Sellers shall be permitted pursuant to such Postclosing Agreement to continue to
own, operate and act on behalf of radio stations WSUX-FM and WJPY-AM, Seaford,
Delaware, as if such Postclosing Agreement did not exist) and agreements to
indemnify the Buyers 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
Sellers 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 Sellers. The Sellers represent
and warrant 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. Sellers are corporations duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Sellers do not have any Subsidiaries. The Sellers have the
power and authority to own or lease their properties and to carry on all
business activities now conducted by it. The shareholders of the Sellers are ▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, and S. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇.
(b) Authorization of Transaction. The Sellers have full 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 their
obligations hereunder and thereunder. Without limiting the generality of the
foregoing, the Boards of Directors of the Sellers, and the individual Seller
Shareholders, as the case may be, have duly authorized the execution, delivery,
and performance of this Agreement and the Ancillary Agreements by the Sellers.
This Agreement and the Ancillary Agreements constitute the valid and legally
binding obligation of the Sellers, enforceable in accordance with their
respective terms and conditions.
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(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
Sellers are subject or any provision of the charter or bylaws of the Sellers; or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice or third party consent under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other agreement, arrangement to which the Sellers are a party or by
which they are bound or to which any of their assets are 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 Sellers have good and marketable title to all of the Acquired
Assets, free and clear of any Security Interest or restriction on transfer.
(e) Tax Matters. The Sellers have timely and properly filed all Tax
Returns that they were required to file with respect to the Sellers' operations.
All such Tax Returns were correct and complete in all respects and properly
reflect the tax liability of the Sellers. The Sellers have not requested any
extension of time within which to file returns in respect of any Taxes with
respect to the Sellers' operations. No Tax deficiencies have been proposed or
assessed against the Sellers. There are no pending, or to the Sellers'
knowledge, threatened audits, investigations, or claims for or relating to any
liability in respect of Taxes with respect to the Sellers' operations. All Taxes
owed by the Sellers with respect to their operations (whether or not shown on
any Tax Return) have been paid. The Sellers have 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 Sellers
do 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
Sellers that arose in connection with any failure (or alleged failure) to pay
any Tax.
(f) Tangible Assets. Section 2(f) of the Disclosure Schedule sets forth a
listing of all transmitter and station equipment, vehicles and other tangible
personal property used in conducting the operation and business of the Station.
All such tangible assets are sold hereunder in AS IS condition WHERE IS.
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(g) Real Property. Section 2(g) of the Disclosure Schedule lists and
describes briefly all Owned Real Estate and real property leased to the Sellers
(including, without limitation, complete legal descriptions for all of the Real
Estate). The Sellers have delivered to the Buyer correct and complete copies of
the Leases. With respect to the Real Estate:
(i) the Sellers have 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(f) 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;
(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 Sellers' 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 Sellers' Knowledge, proposed special assessments with respect
to any of the Real Estate; (ii) pending or, to the Sellers' Knowledge,
threatened condemnation proceedings with respect to any of the Real Estate;
(iii) pending or, to the Sellers' 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 Sellers' Knowledge, threatened changed in any zoning laws or
ordinances which may affect any of the Real Estate or Sellers' use thereof;
(vii) all buildings and improvements on the Real Estate are in AS IS
condition WHERE IS;
(viii) the Sellers have not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the Leases or its rights
thereunder;
(ix) to the Sellers' Knowledge, all facilities on the Real Estate have
received all approvals of governmental authorities (including licenses, permits
and zoning approvals) required in
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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 Sellers' 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 Sellers' leasehold interest in each
Lease has priority over any other interest except for the fee interest therein
and Permitted Real Estate Encumbrances;
(h) Intellectual Property. The Sellers own or have 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
Sellers as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Sellers 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 Sellers have 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 Sellers have not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of third
parties, and the Sellers have never received any charge, complaint, claim, or
notice alleging any such interference, infringement, misappropriation, or
violation. To the Knowledge of the Sellers, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Sellers.
(ii) Section 2(h) of the Disclosure Schedule identifies each patent,
trademark or copyright registration which has been issued to the Sellers with
respect to any of its Intellectual Property and the call letters (current and
past) of the Stations, identifies each pending patent, trademark or copyright
application for registration which the Sellers have made with respect to any of
its Intellectual Property, and identifies each license, agreement, or other
permission which the Sellers have granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). The Sellers have
delivered to the Buyer correct and complete copies of all such patents,
trademarks or copyright registrations, applications, licenses, agreements, and
permissions (as amended to date) and have made available to the Buyer correct
and complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. With respect to each item of
Intellectual Property that the Sellers own:
(A) the Sellers possess all right, title, and interest in and to the
item and all registrations and applications are in full force and effect;
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(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
Sellers, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Sellers have 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(h) of the Disclosure Schedule also identifies each item of
Intellectual Property that any third party owns and that the Sellers use
pursuant to license, sublicense, agreement, or permission including, but not
limited to the call letters of the Stations. The Sellers have supplied the
Buyers with correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each such item
of used Intellectual Property:
(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
Sellers, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property;
(F) the Sellers have 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 Sellers have not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
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(iv) The Sellers have no Knowledge of any new products, inventions,
procedures, or methods of processing that any competitors or other third parties
have developed which reasonably could be expected to supersede or make obsolete
any product or process of the Sellers.
(i) Contracts. Section 2(i) 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(i) of the
Disclosure Schedule) to which the Sellers are 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 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 Sellers or the Stations;
(viii) any written arrangement concerning a guaranty by the Sellers
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 Sellers have delivered to the Buyers a correct and complete copy of each
written arrangement listed in Section 2(i) of the Disclosure Schedule (as
amended to date). With
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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
Sellers are 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(i) of the Disclosure Schedule under the terms of this Section 2(i). Except for
the Assumed Contracts, the Buyers shall not have any Liability or obligations
for or in respect of any of the contracts set forth in Section 2(i) of the
Disclosure Schedule or any other contracts or agreements of the Seller. No
advertiser of the Stations has indicated within the past year that it will stop,
or decrease the rate of, buying services from them.
(j) Commission Licenses and Compliance with Commission Requirements.
(i) All licenses, permits, authorizations, franchises, certificates of
compliance, and consents of governmental bodies, including, without limitation,
the FCC Licenses, used or useful in the operation of the Stations as they are
now being operated are (A) in full force and effect, (B) unimpaired by any acts
or omissions of the Sellers or the Sellers' employees or agents, (C) free and
clear of any restrictions which might limit the full operation of the Stations,
and (D) detailed in Section 2(j) of the Disclosure Schedule. With respect to the
licenses, permits, authorizations, franchises, certificates of compliance and
consents referenced in the preceding sentence, Section 2(j) 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(j) of the Disclosure Schedule, no condition
exists or event has occurred that permits, or after notice or lapse of time, or
both, would permit, the revocation or termination of any such license, permit,
consent, franchise, or authorization (other than pursuant to their express
expiration date) or the imposition of any material restriction or limitation
upon the operation of the Stations as now conducted. To the Knowledge of Seller,
there is no reason why the FCC licenses might not be renewed in the ordinary
course or revoked.
(ii) The Stations are each in compliance with the FCC's policy on exposure
to radio frequency radiation. No renewal of any FCC License would constitute a
major environmental action under the FCC's rules or policies. Access to the
Stations' transmission facilities is restricted in accordance with the policies
of the FCC.
(iii) Except as set forth in Section 2(j) of the Disclosure Schedule, to
the Sellers' Knowledge, the Sellers are not the subject of any FCC or other
governmental investigation or any notice of violation or order, or any material
complaint, objection, petition to deny, or opposition issued by or filed with
the FCC or any other governmental authority in connection with the operation of
or authorization for the Stations, and there are no proceedings (other than
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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(j) of the Disclosure Schedule.
(iv) The Sellers have filed with the FCC and all other governmental
authorities having jurisdiction over the Stations all material reports,
applications, documents, instruments, and other information required to be
filed, and will continue to make such filings through the Closing Date.
(v) The Sellers are not aware of any information concerning the Stations
that could cause the FCC or any other regulatory authority not to issue to the
Buyers all regulatory certificates and approvals necessary for the consummation
of the transactions contemplated hereunder or the Buyers' operation and/or
ownership of the Stations.
(k) Insurance. Section 2(k) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Sellers are a party, a named insured,
or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name
of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms through the Closing Date.
(l) Litigation. Section 2(l) of the Disclosure Schedule sets forth each
instance in which the Sellers: (i) is subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Sellers, 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(l) of the Disclosure Schedule could result in any
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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 Sellers have no reason to believe that any such
charge, complaint, action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Sellers.
(m) Employees. Section 2(m) 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 Stations of each employee of
the Seller. Section 2(m) of the Disclosure Schedule also sets forth a list of
all employee handbooks and/or manuals relating to the employees of the Sellers,
true and correct copies of which have been delivered to the Buyers. To the
Knowledge of the Sellers, no key employee or group of employees has any plans to
terminate employment with the Sellers. The Sellers are 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 Sellers including, but not limited to
any collective bargaining agreement, nor have they experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. The Sellers have 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 Sellers. The Sellers have not been subject to a strike,
slow down or other work stoppage during the five (5) year period immediately
preceding the date hereof and, to the Sellers' Knowledge, there are no strikes,
slow downs or work stoppages threatened against the Sellers. To the Sellers'
Knowledge, they have not committed any unfair labor practice. There is no basis
for any claim by any past or present employee of the Sellers that such employee
was subject to wrongful discharge or any employment discrimination by the
Sellers or their 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 Sellers, threatened claim by any such agency or other
person relating to labor or employment matters.
(n) Employee Benefits. Section 2(n) of the Disclosure Schedule lists all
Employee Benefit Plans that the Sellers maintain or to which the Sellers
contribute or are required to contribute for the benefit of any current or
former employee of the Sellers 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 Sellers do 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
Sellers. There are no pending or, to the Knowledge of the Sellers, 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
11
there been any Reportable Events or Prohibited Transactions with respect to any
Employee Benefit Plan.
(o) Environment, Health, and Safety.
(i) With respect to the operation of the Stations and the Real
Estate, the Sellers are, 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 Sellers' Knowledge (which Knowledge shall be defined for the
purposes of this Section 2(o) only as shall refer to actual knowledge
without inquiry), is threatened, against the Sellers 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 Stations and the Real
Estate, the Sellers have no Liability (and to Sellers' Knowledge there is
no Basis related to the past or present operations of the Sellers or their
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");
(iii) The Sellers have no Liability (and to Sellers' Knowledge there
is no Basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against the Sellers
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.
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(iv) The Sellers have 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 Sellers' Knowledge, all properties and equipment used in the
business of the Sellers have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(vi) To Sellers' 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 Sellers' Knowledge, none of the Acquired Assets are
required to be upgraded, modified or replaced to be in compliance with
Environmental Laws.
(viii) Section 2(o) of the Disclosure Schedule contains a copy of
all environmental claims, reports, studies, compliance actions or the like
of the Sellers or which are available to the Sellers with respect to any
of the Real Estate or any of the Acquired Assets.
(ix) To Sellers' Knowledge, no septic systems or ▇▇▇▇▇ exist on, in
or under any of the Real Estate. To Sellers' Knowledge, no above ground or
underground storage tanks have ever been located at, on or under the Real
Estate. To Sellers' Knowledge, none of the Real Estate is contaminated by
hazardous or toxic substances or waste, as defined under Environmental
Laws, originating from off-site sources.
(p) Legal Compliance.
(i) The Sellers have 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 Sellers' Knowledge, is threatened, against the
Sellers 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.
(ii) The Sellers have 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 Sellers'
13
Knowledge, they have possession of all records and documents they were required
to retain under all applicable laws (including rules and regulations
thereunder).
(q) Advertising Contracts. Section 2(q) of the Disclosure Schedule lists
all arrangements for the sale of air time or advertising on the Stations in
excess of $1000, and the amount to be paid to the Sellers therefor. The Sellers
have 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 Sellers to cease doing business or to reduce in any material respect the
business transacted with the Sellers or to terminate or modify any agreements
with the Sellers (whether as a result of consummation of the transactions
contemplated hereby or otherwise).
(r) Brokers' Fees. Other than the fee payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇, which
shall be the exclusive responsibility of Sellers, the Sellers 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.
(s) 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
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.
(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
14
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. 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 Sellers 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).
(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 Sellers 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 Sellers
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 Stations 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 Sellers and the Buyers shall jointly oppose any requests for
reconsideration or judicial review of FCC approval of the Assignment Application
and shall jointly request from the FCC extension of the effective period of FCC
approval of the Assignment Application if the Closing shall not have occurred
prior to the expiration of the original effective period of the FCC Consent.
Nothing in this Section 4(b) shall be construed to limit either party's right to
terminate this Agreement pursuant to Section 9 of this Agreement.
15
(c) Employment Offers. Upon notice to the Sellers, and at mutually
agreeable times, the Sellers 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 Sellers' employees effective on the Closing Date. From and after the
execution of this Agreement, the Sellers shall use their best efforts to assist
Buyers in retaining those employees of the Stations which the Buyers wish to
hire in connection with the operation of the Stations by the Buyers subsequent
to the Closing, and the Sellers will not take any action to preclude or
discourage any of the Sellers' employees from accepting any offer of employment
extended by the Buyers.
(d) Notices and Consents. The Sellers 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 Sellers
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 Sellers 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.
(f) Advertising Obligations. The Sellers 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 Ten Thousand Dollars ($10,000.00) worth of air time without the
Buyers' consent. On the Closing Date, the Sellers shall deliver to the Buyers a
schedule, certified by an officer of the Sellers, reflecting the aggregate
outstanding balances under all Barter Agreements in existence as of the Closing
Date.
(g) Operating Statements. The Sellers shall deliver to the Buyers, for the
Buyers' informational purposes only, monthly unaudited statements of operating
revenues and operating expenses of the Stations within ten (10) days after each
such statement is prepared by or for the Sellers.
(h) Contracts. The Sellers will not without the prior written consent of
the Buyers amend, change, or modify any of the contracts listed on Section 2(i)
of the Disclosure Schedule in any material respect. The Sellers will not without
prior written consent of the Buyers enter into any new contracts respecting the
Stations or their properties, except (i) contracts for the sale of time on the
Stations 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
16
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 Sellers shall operate the Stations in
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 Sellers
shall file with the FCC all material reports, applications, documents,
instruments and other information required to be filed in connection with the
operation of the Stations.
(j) Credit and Receivables. The Sellers will follow their usual and
customary policies with respect to extending credit for sales of air time and
advertising on the Stations and with respect to collecting accounts receivable
arising from such extension of credit.
(k) Preservation of Business. The Sellers will keep their 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 Stations, and the FCC
Licenses.
(l) Full Access and Consultation. The Sellers will permit representatives
of the Buyers to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Stations, to all
premises, properties, books, records, contracts, Tax records, and documents of
or pertaining to the Sellers for the purpose of permitting the Buyers to, among
other things: (a) conduct its due diligence review, (b) review financial
statements of the Sellers, (c) verify the accuracy of representations and
warranties of the Sellers contained in this Agreement, and (d) prepare for the
consummation of the transactions contemplated by this Agreement. The Sellers
will consult with the Buyers' management with a view to informing Buyer's
management as to the operations, management and business of the Stations.
(m) Notice of Developments. The Sellers 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 Sellers or the Stations. 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 Sellers 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 Seller; or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any person to do or seek
17
any of the foregoing. The Sellers 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. Sellers will
obtain, with respect to each parcel of Real Estate subject to the Leases, a
leasehold owner's policy issued by a title insurer reasonably satisfactory to
the Buyer, in an amount equal to the fair market value of such Real Estate
(including all improvements located thereon), insuring over the standard
pre-printed exceptions and insuring leasehold title to such Real Estate in the
Buyers as of the Closing subject only to the Permitted Real Estate Encumbrances,
together with such endorsements for zoning, contiguity, public access and
extended coverage as the Buyers or their lender reasonably requests, (ii) with
respect to each parcel of Owned Real Estate, an owner's policy of title
insurance by a title insurer reasonably satisfactory to the Buyer, in an amount
equal to the fair market value of such Real Estate (including all improvements
located thereon), insuring over the standard pre-printed exceptions and insuring
title to the Owned Real Estate to be vested in the Buyers as of the Closing free
and clear of all liens and encumbrances except Permitted Real Estate
Encumbrances, together with such endorsements for zoning, contiguity, public
access and extended coverage as the Buyer or its lender reasonably requests,
(iii) a current survey of each parcel of Real Estate certified to the Buyer and
its lender, prepared by a licensed surveyor and conforming to current ALTA
Minimum Detail Requirements for Land Title Surveys, disclosing the location of
all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Surveys") which shall not
disclose any survey defect or encroachment from or onto any of the Real Estate
which has not been cured or insured over prior to the Closing; and (iv) with
respect to each parcel of Real Estate, a current Phase I environmental site
assessment from an environmental consultant or engineer reasonably satisfactory
to the Buyers which does not indicate that the Sellers and the Real Estate are
not in compliance with any Environmental Law and which shall not disclose or
recommend any action with respect to any condition to be remediated or
investigated or any contamination on the site assessed. The Buyers will pay the
costs of these title policies, Surveys and environmental assessments.
(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 Stations, and such operation shall be the sole
responsibility of and in the control of the Sellers.
(q) Risk of Loss. The risk of loss, damage, or destruction to any of the
Acquired Assets shall remain with the Sellers until the Closing. In the event of
any such loss, damage, or destruction the Sellers will promptly notify the
Buyers of all particulars thereof, stating the cause thereof (if known) and the
extent to which the cost of restoration, replacement and repair of the Acquired
Assets lost, damaged or destroyed will be reimbursed under any insurance policy
with respect thereto. The Sellers will, at Sellers' expense, repair or replace
such
18
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 to permit
such repair or replacement. If repair or replacement cannot be accomplished
within sixty (60) days of the date of the Sellers' notice to the Buyers, and the
Buyers reasonably determine that the Sellers' 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 Stations:
(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 Sellers'
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 Sellers' 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 Sellers with respect
thereto plus an amount equal to the amount of any deductible or
self-insurance maintained by Sellers 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 Sellers shall have performed and complied with all of its
covenants hereunder in all respects through the Closing;
(iii) the Sellers 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;
19
(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 Buyers to own, operate, or control the Acquired Assets (and no
such judgment, order, decree, stipulation, injunction, or charge shall be in
effect);
(v) the Sellers shall have delivered to the Buyer a certificate (without
qualification as to knowledge or materiality or otherwise) to the effect that
each of the conditions specified above in Sections 5(a)(i) through (iv) is
satisfied in all respects and the statements contained in such certificate shall
be deemed a warranty of the Sellers which shall survive the Closing;
(vi) each of the Assignment Applications 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 Sellers 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
with subject matter and language of the opinion of counsel to be subject to good
faith negotiation;
(xi) all actions to be taken by the Sellers in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyers.
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 Sellers, 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, if such failure
shall be as a result of a breach of any provision of this Agreement by the
Sellers (including, without limitation, any breach arising as a result of the
failure of the Sellers 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.
20
(b) Conditions to Obligation of the Sellers. The obligation of the Sellers
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 Sellers a certificate (without
qualification as to knowledge or materiality or otherwise) to the effect that
each of the conditions specified above in Section 5(b)(i)-(iii) is satisfied in
all respects and the statements contained in such certificate shall be deemed a
warranty of the Buyers which shall survive the Closing;
(v) each of the Assignment Applications shall have been approved by a
Final Order of the FCC and the Buyers shall have received all governmental
approvals required to transfer all other authorizations, consents, and approvals
of governments and governmental agencies set forth in the Disclosure Schedule;
(vi) the relevant parties shall have entered into the Postclosing
Agreement; and
(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
Sellers.
In the event that any of the foregoing conditions to Closing shall not have been
satisfied, the Sellers 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 Sellers elect 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 Sellers may seek appropriate
21
remedies for any and all damages, costs and expenses incurred by the Sellers by
reason of such breach including, without limitation, indemnification pursuant to
Section 7, below. If the Closing does not occur as a result of Buyer's breach of
any covenant, term or condition of the Asset Purchase Agreement, the ▇▇▇▇▇▇▇
Money Deposit shall be paid to Sellers and shall constitute liquidated damages
and Sellers' exclusive remedy for such breach.
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 Stations, each of the other Parties will reasonably cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
(c) Adjustments. Operation of the Stations and the income and expenses
attributable thereto up through the close of business on the day before the
Closing Date shall be for the account of the Sellers 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 Sellers 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 Sellers (whether due
before or after Closing) shall be solely for the account and responsibility of
the Sellers. Contractual arrangements that do not reflect an equal rate of
compensation to a Stations over the term of the agreement shall be equitably
adjusted as of the Closing Date. The prorations and adjustments hereunder shall
be made and paid insofar as feasible on the Closing Date, with a final
settlement sixty (60) days after the Closing Date. In the event of any disputes
between the Parties as to such adjustments, the amounts not in dispute shall
nonetheless be paid at such time and such disputes shall be determined by an
independent accounting firm mutually acceptable to both
22
parties and the fees and expenses of such accounting firm shall be paid one-half
(1/2) by the Sellers and one-half (1/2) by the Buyer.
(d) Collection of Accounts Receivable. All accounts receivable of the
Stations shall remain the property of Sellers. In the event that Buyers receives
a payment from an advertiser in payment for advertisements that aired on any of
the Stations prior to the Closing Date, Buyer shall promptly pay over such
amounts to Sellers under such procedures as may be reasonably acceptable to
Buyers and Sellers.
(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 Sellers 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 Sellers will cooperate with Buyers in any lawful and
economically feasible arrangement to provide that the Buyers shall receive the
Sellers' interest in the benefits under any such Assumed Contract, including
performance by the Sellers 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 Sellers
contained in Section 2 of this Agreement (other than the representations and
warranties of the Sellers contained in Sections 2(a), 2(b), 2(c), 2(d), 2(g),
2(r) and 2(t) hereof or relating to the Sellers' title to the Acquired Assets)
shall survive the Closing and continue in full force and effect for a period
until 90 days after the applicable statute of limitations has expired with
respect to any claim by the Buyers based on a claim or action by a third party
and for a period of eighteen (18) months following Closing with respect to any
claim by the Buyers not based on a claim or action by a third party. All of the
other representations and warranties (including the representations and
warranties of the Sellers contained in Sections 2(a), 2(b), 2(c), 2(d), 2(g)
2(r) and 2(t) hereof or relating to the Sellers' title to the Acquired Assets)
and all covenants of the Buyers and the Sellers 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 Sellers agree 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:
23
(i) any misrepresentation or breach of any of the Sellers' representations
or warranties, and covenants contained in this Agreement or in any Ancillary
Agreement executed and/or delivered by the Sellers (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
Sellers contained herein or in any Ancillary Agreement;
(iii) any Liability of the Sellers 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.
The amounts for which an Indemnifying Party shall be liable hereunder shall be
net of any insurance proceeds received, or other third party recovery, by the
Indemnified Party in connection with the facts giving rise to the right of
indemnification (although this provision shall not require the Indemnified Party
to pursue insurance proceeds or third party recovery). The Buyers shall not have
the right to assert claims for indemnification under subsection (i) unless and
until the aggregate amount of any Adverse Consequences that the Buyers in total
may suffer or have suffered as a result of such breach exceeds Twenty-Five
Thousand ($25,000.00) and then only for the amounts in excess of such aggregate
amount. Notwithstanding the foregoing, the Sellers shall not be liable for
indemnification claims under subsection (i) in excess of an aggregate amount
equal to Two Hundred Fifty Thousand Dollars ($250,000.00).
(c) Indemnification Provisions for the Benefit of the Sellers. Except as
described below in Section 7(e) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Buyer agrees to indemnify the Sellers
from and against the entirety of any Adverse Consequences the Sellers 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 Sellers 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 seek an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to seek 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
24
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 Sellers 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 One Hundred Thirty Thousand Dollars ($130,000.00) as liquidated
damages 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 Sellers
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 Sellers prior to the Closing Date as a
result of a breach or default by the Buyers under this Agreement, the Sellers
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
25
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 Sellers, other than Retained Assets that are used or useful in
the operation of the Stations, wherever located, including but not limited to
all of its (a) leaseholds and other interests of any kind therein, improvements,
fixtures, and fittings thereon (such as towers and antennae), and easements,
rights-of-way, and other appurtenances thereto); (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,
vehicles, 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 (but excluding rights under the Broadcast Programming format as
described more particularly in Section 2(h) to the Disclosure Schedule); (f)
call letters of the Stations, jingles, logos, slogans, and business goodwill of
the Station (but excluding rights to the "Love 98" slogan); (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 Stations.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"Advertising Contracts" has the meaning set forth in Section 2(q), 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.
26
"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 Contracts either: (i) to furnish
services, and other non-Cash benefits to another party after the Closing; or
(ii) to pay for goods, services, and other non-Cash benefits that another party
will furnish to it after the Closing. The Assumed Liabilities shall not include
any Retained Liabilities.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyers" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 1(d) above.
"Closing Date" has the meaning set forth in Section 1(d) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of the Sellers.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
"▇▇▇▇▇▇▇ Money Deposit" has the meaning set forth in Section 1(c) above.
"▇▇▇▇▇▇▇ Money Escrow Agreement" has the meaning set forth in Section 1(c)
above.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
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).
27
"Environmental Laws" has the meaning set forth in Section 2(o), above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means __________________.
"Extremely Hazardous Substance" has the meaning set forth in Section 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC Licenses" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the 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.
"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(f) above.
"Indemnifying Party" has the meaning set forth in Section 7(f) 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).
28
"Knowledge" means actual knowledge after reasonable investigation and
inquiry, provided that solely for purposes of Section 2(o) above, "Knowledge"
shall mean actual knowledge without inquiry.
"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).
"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 in Eden,
Maryland and Salisbury, Maryland, as described in Section 2(g) 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(g), above.
"Post-Closing Agreement" means the Post-Closing Agreement with Seller's
owners in the form attached hereto as Exhibit D.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 1(c) above.
"Real Estate" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"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
29
of the Seller as a corporation; (ii) any of the rights of the Seller under this
Agreement (or under any side agreement between the Seller on the one hand and
the Buyers on the other hand entered into on or after the date of this
Agreement); (iii) accounts, notes and other receivables of the Seller; (iv)
rights to the "Love 98" slogan; (v) rights under the Seller's contract for the
Broadcast Programming format; and (vi) Cash.
"Retained Liabilities" means any other obligations or Liabilities of the
Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the 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.
"Stations" mean the radio broadcast station having the call letters
WSBY-FM and WJDY-AM, both licensed by the FCC to operate in Salisbury, Maryland.
"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.
30
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyers and the Sellers 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 Sellers at any time prior to the Closing in the event the Sellers are in
breach of any representation, warranty, or covenant contained in this Agreement;
provided, however, that if such breach is capable of being cured, such breach
also remains uncured for twenty (20) days after notice of breach is received by
the Sellers from the Buyers;
(iii) the Sellers may terminate this Agreement by giving written notice to
the Buyers at any time prior to the Closing in the event the Buyers are in
breach of any representation, warranty, or covenant contained in this Agreement;
provided, however that if such breach is capable being cured, such breach
remains uncured for twenty (20) days after notice of breach is received by the
Buyers from the Sellers;
(iv) the Buyers may terminate this Agreement by giving written notice to
the Sellers 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 Sellers 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 Sellers itself breaching any
representation, warranty, or covenant contained in this Agreement); or
(vi) the Buyers or the Sellers may terminate this Agreement if any
Assignment Application is denied by Final Order.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 9(a) above, all obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party (except for any Liability
of any Party then in breach).
31
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 Sellers' owners.
(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 Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
(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 Sellers 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 Sellers 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
32
by facsimile transmission actually received by the receiving equipment or three
(3) days after deposited in the United States mail, certified mail, postage
prepaid, return receipt requested, in each case addressed to the intended
recipient as set forth below:
If to the Seller:
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Law Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
c/o QUAESTUS Management Corp.
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Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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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.
(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
Maryland.
(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 Sellers. 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.
(l) Expenses. The Buyers and the Sellers, 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 Applications and as set forth in
Section 4(o) with respect to Surveys, title commitments and environmental
audits. The Sellers will pay all income taxes. The Sellers 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
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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.
(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 Maryland 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.
(p) Section 1031 Treatment. Notwithstanding anything herein to the
contrary, it is the intent of the parties that the Sellers, or any one of them,
may, at their option, pursuant to Section 1031 of the Code, exchange the real
property and improvement thereon which are the subject of this Agreement (the
"Property") for other replacement property to be identified and acquired
subsequent to the Closing of the transactions contemplated herein (the
"Exchange"). Accordingly, Buyers acknowledge and agree that Sellers may, at or
prior to such Closing, assign their rights hereunder to a "qualified
intermediary" (as defined in the Code) selected by Sellers subject to all of
Sellers' rights and obligations hereunder and shall promptly provide written
notice of such assignment to Buyers. Buyers shall cooperate with all reasonable
requests of the Sellers and/or the qualified intermediaries in arranging and
effecting the Exchange to ensure that the Exchange qualifies under Section 1031
of the Code. Without limiting the generality of the foregoing, if Sellers have
given notice of their intention to effect the Exchange, Buyers shall at the
Closing deliver the purchase price for the Property directly to the qualified
intermediary rather than to Sellers (which delivery shall discharge the
obligation of Buyers to pay the purchase price hereunder) and/or take such other
actions to facilitate the Exchange as Sellers may reasonably request. An
assignment to a qualified intermediary shall not relieve Sellers of any of their
duties or obligations hereunder.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
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CUMULUS BROADCASTING, INC.
By:
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(printed)
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Title:
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CUMULUS LICENSING CORPORATION
By:
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(printed)
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Title:
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"Buyers"
CONNOR FM BROADCASTING CO.
By:
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(printed)
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Title:
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CONNOR BROADCASTING CO.
By:
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(printed)
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Title:
----------------------------
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
"Sellers"
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LIST OF OMITTED SCHEDULES AND/OR EXHIBITS:
Escrow Agreement, dated as of October 8, 1997, by and among the Sellers,
Broadcasting, Licensing and Bank One ("Escrow Agent")
General Assignment, dated as of February 10, 1998, by and between Sellers and
Broadcasting
General Assignment, dated as of February 10. 1998, by and between Sellers and
Licensing
Instrument of Assumption, dated as of February 10, 1998, by and between
Broadcasting and Sellers
Post-Closing Agreement, dated as of February 10, 1998, by and between Sellers
and Broadcasting and Licensing
Warranty Deed, dated as of February 11, 1998, for the property situated in
the Salisbury Election District of Wicomico County, Maryland
Warranty Deed, dated as of February 11, 1998, for the property situated in
the Fruitland Election District of Wicomico County, Maryland
Articles of Sale and Transfer, dated as of February 11, 1998, by and between
Connor FM Broadcasting Co. and Broadcasting
Article of Sale and Transfer, dated as of February 11, 1998, by and between
Connor Broadcasting Corp. and Broadcasting
Certificate of Existence with Status in Good Standing for Cumulus
Broadcasting, Inc., dated as of February 6, 1998, from Nevada
Certificate of Existence with Status in Good Standing from Cumulus
Licensing Corp., dated as of February 6, 1998, from Nevada
Certificate for Good Standing for Cumulus Broadcasting, Inc., dated as of
February 9, 1998, from Maryland
Certificate for Good Standing for Connor Broadcasting Corporation, dated as
of January 21, 1998, from Maryland
Certificate for Good Standing for Connor FM Broadcasting Co., dated as of
January 22, 1998, from Maryland
Seller's Closing Compliance Certificate
Broadcasting and Licensing Closing Compliance Certificate
Side Letter Agreement regarding the Phase I Environmental Site Assessment and
indemnifing Broadcasting of any and all Adverse Consequences relating to
the property
Purchase Price Allocation Schedule
Closing Statement
Opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The preceding schedules and/or exhibits have been omitted from this
exhibit. The Company agrees to provide copies of such schedules and/or
exhibits to the Commission upon request.
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