___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of December 31, 1995
by and between
EBE COMMUNICATIONS LIMITED PARTNERSHIP
(Seller)
and
BREADBASKET BROADCASTING CORPORATION
(Buyer)
___________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF ASSETS
1.1 Transfer of Assets.............................1
1.2 Excluded Assets................................4
1.3 Liabilities to be Assumed......................5
1.4 Consideration..................................5
1.5 Proration of Income and Expenses...............6
1.6 Allocation of Purchase Price...................6
1.7 Guaranty.......................................7
ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION
2.1 Closing........................................7
2.2 Transactions at the Closing....................7
2.3 Termination...................................11
2.4 Default Payment...............................12
2.5 Operation of Station pursuant to the LMA......13
2.6 Risk of Loss..................................13
2.7 Interruption of Broadcast Transmissions.......13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Organization..............................14
3.2 Authority; No Conflict........................14
3.3 Government Authorizations.....................14
3.4 Compliance with Regulations...................15
3.5 Taxes.........................................15
3.6 Personal Property.............................16
3.7 Real Property.................................16
3.8 Consents......................................18
3.9 Contracts.....................................19
3.10 Environmental.................................19
3.11 Intellectual Property.........................20
3.12 Financial Statements..........................20
3.13 Personnel Information; Labor Contracts........20
3.14 Employee Benefit Plans........................21
3.15 Litigation....................................21
3.16 Compliance with Laws..........................21
3.17 Insurance.....................................22
3.18 Undisclosed Liabilities.......................22
3.19 Instruments of Conveyance; Good Title.........23
3.20 Absence of Certain Changes....................23
3.21 Insolvency Proceedings........................24
3.22 Material Adverse Change.......................24
3.23 Investment Intent of Seller...................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation.............................25
4.2 Authority; No Conflict........................25
4.3 Consents......................................26
4.4 Litigation....................................26
4.5 Compliance with Laws..........................26
4.6 Qualification.................................26
4.7 Stock.........................................26
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station................27
5.2 Financial Obligations.........................27
5.3 Reasonable Access.............................27
5.4 Maintenance of Assets.........................27
5.5 Notification of Developments..................28
5.6 Payment of Taxes..............................28
5.7 Third Party Consents..........................28
5.8 Encumbrances..................................28
5.9 Assignment of Assets..........................28
5.10 Commission Licenses and Authorizations........28
5.11 Technical Equipment...........................29
5.12 Compensation Increases........................29
5.13 Sale of Broadcast Time........................29
5.14 Insurance.....................................29
5.15 Negotiations with Third Parties...............29
ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application........................29
6.2 Performance...................................30
6.3 Conditions....................................30
6.4 Confidentiality...............................30
6.5 Cooperation...................................30
6.6 Environmental Reports.........................30
6.7 Consents to Assignment........................31
6.8 Bulk Sales Laws...............................32
6.9 Employee Matters..............................32
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals..........................33
7.2 Assets of Station.............................33
7.3 Performance...................................35
7.4 Failure of Transfer...........................35
7.5 Representations and Warranties................35
7.6 Consents......................................35
7.7 No Litigation.................................35
7.8 Documents.....................................35
7.9 Disclosure Schedule...........................35
7.10 Opinions of Counsel...........................36
7.11 Ancillary Agreements..........................36
7.12 Simultaneous Closing..........................36
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance...................................36
8.2 Representations and Warranties................36
8.3 Government Approvals..........................36
8.4 Documents.....................................36
8.5 Opinion of Counsel............................37
ARTICLE IX INDEMNIFICATION
9.1 Indemnification by Seller.....................37
9.2 Indemnification by Buyer......................38
9.3 Notification of Claims........................38
ARTICLE X MISCELLANEOUS
10.1 Assignment....................................39
10.2 Survival of Indemnification...................40
10.3 No Right of Reversion.........................40
10.4 Brokerage.....................................40
10.5 Expenses of the Parties.......................41
10.6 Entire Agreement..............................41
10.7 Headings......................................41
10.8 Governing Law.................................41
10.9 Counterparts..................................41
10.10 Notices.......................................41
10.11 Specific Performance..........................42
10.12 Consent to Jurisdiction.......................43
10.13 Further Assurances............................43
10.14 Public Announcements..........................43
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of this 31st
day of December, 1995 by and between EBE COMMUNICATIONS LIMITED
PARTNERSHIP, a Delaware limited partnership ("Seller"), and BREADBASKET
BROADCASTING CORPORATION, a corporation formed under the laws of the
State of Delaware ("Buyer").
R E C I T A L S
WHEREAS, Seller owns and operates and has been duly licensed by
the Federal Communications Commission (the "FCC" or the "Commission") to
operate radio station KNAX(FM), Fresno, California (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase, the assets utilized in connection with the operation of the
Station, and Seller and Buyer further desire that Seller assign to Buyer
the licenses and other authorizations issued to Seller by the Commission
for the purpose of operating the Station; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Buyer have entered into a Local Marketing Agreement ("LMA")
effective as of the 1st day of January 1996;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 TRANSFER OF ASSETS. Seller agrees to assign, transfer,
convey and deliver to Buyer and Buyer agrees to acquire, accept and
receive from Seller, on the Closing Date (as defined herein), all of
Seller's right, title and interest in and to the following assets
relating to the Station (the "Station Assets") free and clear of all
liens and encumbrances.
(a) LICENSES AND AUTHORIZATIONS. All licenses, permits
and other authorizations issued by the FCC or any other state or federal
regulatory agency pertaining to the Station, including, without
limitation, those licenses, permits or authorizations listed in Section
1.1(a) of the disclosure schedule delivered by Seller to Buyer and
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dated of even date herewith (the "Disclosure Schedule"), together with any
renewals, extensions or modifications thereof and additions thereto made
between the date of this Agreement and the Closing Date (the "Licenses").
The Licenses include the right to use the call letters of the Station,
including but not limited to the call letters KNAX(FM).
(b) TANGIBLE PERSONAL PROPERTY. All of the tangible
personal property owned by Seller and used or useable in the operation of
the Station, including but not limited to the items of personal property
listed in Section 1.1(b) of the Disclosure Schedule, together with all
additions, modifications or replacements thereto made in the ordinary
course of business between the date of this Agreement and the Closing
Date, as hereafter defined (the "Personal Property").
(c) REAL ESTATE CONTRACTS. All of the leasehold
interests and easement interests in real property leased by Seller and
used by the Station, including all agreements, leases, grants of
easements and contracts of Seller relating to the tower, transmitter,
studio site, and offices of the Station (the "Real Estate Contracts"),
including all security or other deposits made with respect to such Real
Estate Contracts, all as described in Section 1.1(d) of the Disclosure
Schedule (the land, buildings and other improvements covered by the Real
Property Contracts being herein called the "Leased Real Property.") The
Buyer shall assume, pay and perform all obligations under such Real
Estate Contracts accruing after the Closing Date to the extent such
obligations relate to the period after the Closing Date.
(d) REAL ESTATE ASSETS. All of Seller's interest in the
real property owned by Seller and listed in Section 1.1(d) of the
Disclosure Schedule and the Meadow Lakes Property as more particularly
described in Section 7.2 hereof and all of the buildings, structures and
other improvements located thereon (collectively, the "Owned Real
Property"). The Owned Real Property and the Leased Real Property are
collectively referred to herein as the Real Property.
(e) INTELLECTUAL PROPERTY. All of Seller's trade names,
copyrights, trademarks, service marks, patents, patent applications or
other similar rights relating to the operation of the Station including,
but not limited to, those listed in Section 1.1(e) of the Disclosure
Schedule, together with any necessary additions or modifications thereto
between the date hereof and the Closing Date (the "Intellectual
Property").
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(f) LEASES AND CONTRACTS. All leases, contracts,
agreements and franchises relating to the operation of the Station (other
than contracts for the sale of broadcast time and leases for real
property) listed and identified in Section 1.1(f) of the Disclosure
Schedule and those leases, contracts, agreements and franchises described
in Section 1.1(i) of this Agreement (the "Contracts"). Buyer shall
assume, pay and perform all obligations under such Contracts accruing
after the Closing Date.
(g) CONTRACTS FOR SALE OF BROADCAST TIME. All contracts
for sale of broadcast time on the Station that provide for payment by the
customer solely on a cash basis and that are to be in effect on the
Closing Date listed and identified in Section 1.1(g) of the Disclosure
Schedule (the "Broadcast Agreements"). Buyer shall assume, pay and
perform all obligations under the Broadcast Agreements arising after the
Closing Date, PROVIDED, HOWEVER, Buyer will not assume any contract for
the sale of time entered into prior to the date of this Agreement
pursuant to which payment is to be received in whole or in part in
services, merchandise or other non-cash considerations ("Trade
Agreements"), except as agreed to by Buyer and set forth in Section
1.1(g) of the Disclosure Schedule.
(h) OPERATING AND BUSINESS RECORDS. All files, records,
logs and program materials pertaining to the operation of the Station
required to be maintained and kept under the rules of the Commission and
such other files and records as Buyer shall reasonably require for the
continuing business and operation of the Station. Seller shall have the
right to reasonable access to such business records that Seller delivers
to Buyer under this Section 1.1(h) upon Seller's request for five years
after the Closing Date.
(i) FUTURE CONTRACTS. All leases, contracts, agreements
and franchises entered into between the date hereof and the Closing Date
in the usual and ordinary course of business, except that those exceeding
two months in duration or $5,000.00 in amount will not be assumed by
Buyer unless consented to by Buyer in advance in writing and set forth in
Section 1.1(i) of the Disclosure Schedule.
(j) INVENTORY AND COMPUTER SOFTWARE. All of Seller's
items of inventory related to the business of the Station, including,
without limitation, broadcast programs, as well as all computer software
used or useable by the Station.
(k) ACCOUNTS RECEIVABLE. All accounts receivable of the
Seller through the date hereof with regard to the operation of the
Station prior to the Commencement Date of the LMA (as that term is
defined herein). Seller
Page 4
shall list its accounts receivable as of November 30, 1995 in Section 1.1(k)
of the Disclosure Schedule.
Buyer agrees to use commercially reasonable efforts to collect
Seller's accounts receivable with respect to radio station KFRE(AM) in
the ordinary and normal course of business for a period of one hundred
twenty (120) days after the date hereof (the "Collection Period") as
listed on Section 1.1(k) of the Disclosure Schedule, but shall not be
required to employ counsel or any collection agency or to initiate any
litigation or use any extraordinary means of collection. During the
Collection Period, amounts collected by Buyer for the account of Seller
shall be remitted to Seller within fifteen (15) days following the end of
each calendar month.
(l) OTHER RIGHTS AND PRIVILEGES. Any and all other
franchises, materials, supplies, easements, rights-of-way, licenses, and
other rights and privileges of Seller relating to and used, useable or
necessary in the operation of the Station.
1.2 EXCLUDED ASSETS. There shall be excluded from the sale
transaction described herein the following assets relating to the
Station:
(a) CASH AND DEPOSITS. Cash-on-hand or in banks (or
their equivalents) and other investments belonging to Seller and relating
to the operation of the Station as of the Closing Date.
(b) PROPERTY CONSUMED. All property of the Station
disposed of or consumed (including ordinary wear and tear) in the
ordinary course of business between the date hereof and the Closing Date.
(c) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(f), (g) and (i) of the Disclosure
Schedule that are terminated or will have expired prior to the Closing
Date in the ordinary course of business.
(d) PENSION AND PROFIT-SHARING PLANS. All pension and
profit-sharing plans, trusts established thereunder and assets thereof,
if any, of Seller.
(e) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(f) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All
employment agreements and collective bargaining agreements of Seller.
Page 5
(g) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(g) of the Disclosure Schedule.
1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided
in this Section 1.3, Buyer assumes no liabilities or obligations of
Seller of any nature whatsoever, contingent or otherwise, except for (i)
amounts in respect of Seller's accounts payable with regard to the
Station as of the date hereof, (ii) Seller's trade liabilities as of the
date hereof, (iii) Seller's negative trade commitments as of the date
hereof and (iv) post-closing obligations related to Real Estate
Contracts, Contracts, Broadcasting Agreements and Trade Agreements (the
"Assumed Contracts") assigned to and specifically assumed by Buyer.
Seller shall provide (w) a calculation of the amount of its working
capital in Section 1.3 of the Disclosure Schedule, (x) a list of its
accounts payable through December 22, 1995 in Section 1.3(a) of the
Disclosure Schedule, (y) a list of its trade liabilities through December
22, 1995 in Section 1.3(b) of the Disclosure Schedule and (z) a list of
its negative trade commitments through December 22, 1995 in Schedule
1.3(c) of the Disclosure Schedule. On or prior to the Closing Date
Seller shall pay or else retain all debts, liabilities and other
obligations of Seller arising prior to the Closing Date and not assigned
to and specifically assumed by Buyer.
1.4 CONSIDERATION. In consideration of Seller's performance
of this Agreement and the sale, assignment, transfer, conveyance and
delivery of the Station Assets to Buyer free and clear of all liens and
encumbrances, Buyer shall:
(i) pay to Seller on the Closing Date, by wire transfer,
the sum of Four Million Dollars ($4,000,000.00) (the "Cash
Payment");
(ii) deliver certificates representing One Hundred Twenty
Thousand (120,000) Shares of Common Stock of ▇▇▇▇▇▇
Communications Corporation ("▇▇▇▇▇▇"), the parent of Buyer (the
"▇▇▇▇▇▇ Shares") (the ▇▇▇▇▇▇ Shares and the Cash Payment are
collectively referred to herein as the "Purchase Price");
(iii) grant an option to Seller to purchase Common Stock of
the Buyer at an exercise price of Eight Dollars ($8) per share
(the "Option"), exercisable on the third anniversary of the
Closing Date (or earlier in the event of the sale of the
Station by Buyer) (the Exercise Date"). The number of shares
that Seller is entitled to purchase may be calculated by
multiplying cash flow on the Exercise Date by ten and subtracting
Page 6
eight million from the product and then multiplying
five percent by the difference and dividing by eight, as
follows: cash flow x 10 - 8 million x .05 [divided by] 8 = number
of shares underlying the Option.
1.5 PRORATION OF INCOME AND EXPENSES. Except as otherwise
provided herein or in the LMA, all income and expenses arising from the
conduct of the business and operations of the Station shall be prorated
between Buyer and Seller in accordance with generally accepted accounting
principles as of 11:59 p.m., Eastern time, on the date immediately
preceding the Closing Date. Such prorations shall include, without
limitation, all AD VALOREM and other property taxes (but excluding taxes
arising by reason of the transfer of Station Assets as contemplated
hereby, which shall be paid as set forth in Section 10.5 of this
Agreement), business and license fees, music and other license fees
(including any retroactive adjustments thereof, which retroactive
adjustments shall not be subject to the ninety day limitation set forth
in Section 1.5(a)), wages and salaries of employees hired by Buyer,
including accruals up to the Closing Date for bonuses, commissions,
vacation and sick pay, and related payroll taxes, utility expenses, time
sales agreements, rents and similar prepaid deferred items attributable
to the ownership and operation of the Station.
(a) TIME FOR PAYMENT. The prorations and adjustments
contemplated by this Section 1.5, to the extent practicable, shall be
made on the Closing Date. As to those prorations and adjustments not
capable of being ascertained on the Closing Date, an adjustment and
proration shall be made within 90 days of the Closing Date.
(b) DISPUTE RESOLUTION. In the event of any disputes
between the parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at the time provided in Section 1.5(a) and such
disputes shall be determined by an independent certified public
accountant mutually acceptable to the parties whose determination shall
be final, and the fees and expenses of such accountant shall be paid one-
half by Seller and one-half by Buyer.
1.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that
the Purchase Price shall be allocated among the Station Assets in a
manner to be determined by an independent appraiser selected by Buyer.
Buyer and Seller agree to use such allocation in completing and filing
Internal Revenue Service Form 8594 for federal income tax purposes.
Buyer and Seller further agree that they shall not take any position
inconsistent with such allocation upon examination of any return, in any
refund claim, in any litigation, or otherwise. Buyer and Seller shall
agree that
Page 7
the Purchase Price shall not be attributed to the transfer of
the Real Estate Contracts.
1.7 GUARANTY. In order to secure the obligations and
agreements of Buyer hereunder, ▇▇▇▇▇▇ hereby unconditionally, irrevocably
and absolutely guarantees to the Seller and its successors and assigns
for a period of two (2) years the full and punctual payment when due of
all amounts payable to the Seller by the Buyer in connection with the
indemnification, the Default Payment (as defined in Section 2.4) and
other obligations arising under this Agreement (the "Guaranteed
Obligations"), whether by default or otherwise. Upon failure by the
Buyer to pay when due any amount of the Guaranteed Obligations in
accordance with the terms of this Agreement, ▇▇▇▇▇▇ shall pay or cause to
be paid, on demand by the Seller, the amount not so paid at the place and
in the manner specified in this Agreement. ▇▇▇▇▇▇ agrees that this
Guaranty is a guaranty of payment and performance, and not of collection
only, and that ▇▇▇▇▇▇'▇ obligations under this Guaranty shall be primary,
absolute and unconditional.
ARTICLE II
CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION
2.1 CLOSING. The purchase and sale of the Station Assets
contemplated by this Agreement (the "Closing") shall take place at the
offices of Paul, Weiss, Rifkind ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on a mutually agreed
upon day five (5) days after the latter of (a) the Commission's approval
of the Assignment Application, as defined in Section 6.1 below, becomes a
Final Order, or (b) the grant of Seller's renewal application in respect
of the Licenses or such other time and place as shall be mutually agreed
upon by the parties (the "Closing Date"). For purposes of this
Agreement, a "Final Order" shall mean any action of the Commission which
has not been reversed, stayed, enjoined, set aside, annulled or suspended
and with respect to which no requests are pending for administrative or
judicial review, reconsideration, appeal or stay, and the time for filing
any such requests and the time for the Commission to set aside the action
on its own motion shall have expired. Buyer may, at its sole election,
waive the requirement that the Commission's approval of the Assignment
Application shall have become a Final Order.
2.2 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer the
following:
Page 8
(i) assignments of the Licenses and other pertinent
authorizations transferring the same to the Buyer in customary form
and substance;
(ii) the certificates contemplated by Sections 7.2,
7.3 and 7.5;
(iii) a copy of the resolutions of the board of
directors of Seller's General Partner authorizing the execution,
delivery and performance of this Agreement and the agreements and
documents listed in Section 2.2 of the Disclosure Schedule, if any
(the "Ancillary Agreements"), and the consummation of the
transactions contemplated hereby and thereby, together with a
certificate of the Secretary of Seller's General Partner, dated as
of the Closing Date, that such resolutions were duly adopted and are
in full force and effect;
(iv) A special warranty deed (or its equivalent in the
State of California), in proper statutory form for recording,
conveying each parcel of Owned Real Property;
(v) Buyer and Seller shall obtain, at Buyer's expense,
an owner's extended coverage policy of title insurance with respect
to each parcel of Real Property, in each case issued on the date of
Closing by a title insurance company acceptable to counsel for Buyer
(the "Title Company"). Each such title insurance policy shall be in
an amount designated by Buyer and shall insure Buyer's ownership of
fee title with respect to the Owned Real Property without any of the
Scheduled B standard pre-printed exceptions (other than taxes not
yet due and payable) and free and clear of title defects and other
exceptions to or exclusions from coverage other than those Title
Defects (as hereinafter defined in Section 3.7(a)) which, in the
reasonable opinion of Buyer's counsel, individually or in the
aggregate (i) interfere in any material respect with the use,
occupancy or operation of the Owned Real Property or (ii) materially
reduce the fair market value of the Owned Real Property below the
fair market value the Owned Real Property would have had but for
such encumbrances (collectively, the "Permitted Owned Real Property
Exceptions").
(vi) At Buyer's expense, a survey of each parcel of
Owned Real Property certified to Buyer or its permitted assigns and
the Title Company. The certification shall be by a Registered Land
Surveyor and shall be made in accordance with the minimum technical
standards of land surveying in California. The survey shall be
prepared in accordance with the
Page 9
Minimum Detail Standards for Land Title Survey of 1992 of the American
Title Association and American Congress on Surveying and Mapping. Each
such survey shall show (i) the courses and distances of all boundary
lines of such parcel (including, appurtenant easements), (ii) the location
of all Improvements situated on or above such parcel and on or above any
easements or rights of way affecting said parcel, (iii) all
encroachments of adjoining properties or improvements onto such
parcel, (iv) all encroachments of Improvements onto any adjoining
property, (v) the location of all easements and other rights
burdening such parcel and all encroachments of Improvements onto the
areas of such easements, (vi) the location of all roadways, alleys,
rights of way and the like affecting such parcel, (vii) all access
ways from such parcel to public streets and (viii) such other facts
and conditions affecting such parcel as are appropriate, or as may
have been reasonably requested by Buyer, to be shown on such survey.
Each such survey shall otherwise be in form satisfactory to counsel
for Buyer.
(vii) all real property transfer tax returns and other
similar filings and all associated transfer tax costs required by
law in connection with the transactions contemplated hereby, all
duly executed and acknowledged by Seller. Seller shall also have
executed such affidavits in connection with such filings as shall
have been required by law or reasonably requested by Buyer.
(viii) affidavit of an officer of Seller, sworn to under
penalty of perjury, setting forth Seller's name, address and Federal
tax identification number and stating that Seller is not a "foreign
person" within the meaning of Section 1445 of the Internal Revenue
Code of 1986 (the "Code"). If, on or before the Closing Date, Buyer
shall not have received such affidavit, Buyer may withhold from the
Purchase Price payable at Closing to Seller pursuant hereto such
sums as are required to be withheld therefrom under Section 1445 of
the Code.
(ix) a ▇▇▇▇ of sale and all other appropriate
documents and instruments assigning to Buyer good and marketable
title to the Station Assets free and clear of any security
interests, mortgages, liens, pledges, attachments, conditional sales
contracts, claims, charges or encumbrances of any kind whatsoever;
(x) the Ancillary Agreements, duly executed by Seller
as appropriate;
Page 10
(xi) the originals of all written consents of the
respective lessors, landowners, grantors and any other persons or
entities whose consents may be required to permit Buyer to assume
the liabilities, contracts, leases, licenses, understandings and
agreements constituting the Real Estate Contracts and the Contracts;
(xii) evidence satisfactory to Buyer's counsel that no
financing statements are outstanding on the Station Assets;
(xiii) all files, records, logs, and program materials
relating to the Station;
(xiv) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.10;
(xv) assignments to Buyer of all the Contracts and
Real Estate Contracts in form satisfactory to Buyer;
(xvi) a current estoppel certificate from the Landlord
under each Real Property Contract in form satisfactory to counsel to
Buyer; and
(xvii) such other documents and instruments as Buyer may
reasonably request to consummate the transactions contemplated hereby.
(b) At the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i) the Purchase Price;
(ii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby,
together with a certificate of the Secretary of Buyer dated as of
Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(iii) the certificates contemplated by Sections 8.1 and
8.2;
(iv) the Ancillary Agreements, duly executed by Buyer
as appropriate;
(v) the opinion of counsel for Buyer, dated the
Closing Date, as described in Section 8.5; and
Page 11
(vi) an Agreement of Assumption of Liabilities and
such other documents and instruments as Seller may reasonably
request to consummate the transactions contemplated hereby.
2.3 TERMINATION.
(a) Notwithstanding anything to the contrary contained in
this Agreement, this Agreement may be terminated at any time by:
(i) the mutual written consent of the parties hereto;
(ii) either Buyer or Seller if the Closing does not
occur before June 30, 1996, provided, however, that the party
seeking termination under this Section 2.3(a)(ii) shall not have
prevented the Closing from occurring;
(iii) either Buyer or Seller if the Assignment
Application is not granted within six (6) months from the date the
notice of filing of the Form 314 is placed on Commission's public
notice (through no fault of the terminating party) or is denied by
the Commission by a Final Order or is at any time set by the
Commission for a formal hearing; PROVIDED, HOWEVER, that in the
event of termination due solely to the Commission's designation of
the Assignment Application for a formal hearing, the provisions of
Section 2.3(c) shall apply;
(iv) Buyer, if any of the conditions set forth in
Article VII shall have become incapable of fulfillment, and shall
not have been waived by Buyer, or if Seller shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing; or
(v) Seller, if any of the conditions set forth in
Article VIII shall have become incapable of fulfillment, and shall
not have been waived by Seller, or if Buyer shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing.
(b) In the event of the termination of this Agreement by
Buyer or Seller pursuant to this Section 2.3, written notice thereof
shall promptly be given to the other party and, except as otherwise
provided herein, the transactions contemplated by this Agreement shall be
Page 12
terminated, without further action by any party. Nothing in this Section
2.3 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or to
impair the right of Buyer to compel specific performance of Seller of its
obligations under this Agreement.
(c) The time for Commission approval provided in Section
2.3(a)(iii) notwithstanding, either party may terminate this Agreement
upon written notice to the other, if, for any reason, the Assignment
Application is designated for hearing by the Commission; PROVIDED,
HOWEVER, that written notice of termination must be given within twenty
(20) days after release of the Hearing Designation Order and that the
party giving such notice is not in default and has otherwise complied
with its obligations under this Agreement. Upon termination pursuant to
this Section, the parties shall be released and discharged from any
further obligation hereunder.
(d) It is further PROVIDED, HOWEVER, that no party may
terminate this Agreement if such party is in default hereunder, or if a
delay in any decision or determination by the Commission respecting the
Assignment Application has been caused or materially contributed to (i)
by any failure of such party to furnish, file or make available to the
Commission information within its control; (ii) by the willful furnishing
by such party of incorrect, inaccurate or incomplete information to the
Commission; and (iii) by any other action taken by such party for the
purpose of delaying the Commission's decision or determination respecting
the Assignment Application. Upon such termination for failure of the
Commission to act, the parties shall be released and discharged from any
further obligation hereunder.
(e) A party shall be deemed to be in default under this
Agreement only if such party has materially breached or failed to perform
its obligations hereunder, and non-material breaches or failures shall
not be grounds for declaring a party to be in default, postponing the
Closing, or terminating this Agreement.
2.4 DEFAULT PAYMENT. In the event this Agreement is
terminated due to Buyer's default or failure to close, Buyer shall pay
Seller an amount (the "Default Payment") equal to all accrued interest
payable in respect of that certain Amended and Restated Loan Agreement
between Seller and State Street Bank and Trust Company dated as of
November 3, 1989, as amended by a First Amendment dated as of August 4,
1992, a Forbearance Agreement dated as of March 13, 1995 and an Amended
and Restated Forbearance Agreement dated as of October 24, 1995
(collectively, the "Loan Agreement"), for the LMA Term (as defined in Section
Page 13
2.5(a) herein); PROVIDED, HOWEVER, that such amount shall not
exceed the value of six months of accrued interest payable under the Loan
Agreement.
2.5 OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding
any provision to the contrary in this Agreement:
(a) As of January 1, 1996 (the "Commencement Date"), and
until the consummation of the transactions contemplated by, or the
termination of, this Agreement (the "LMA Term") the business and
operation of the Station shall be conducted pursuant to the terms of the
LMA;
(b) All LMA Liabilities shall be assumed by Buyer as of
the Commencement Date.
2.6 RISK OF LOSS. The risk of any loss, damage or destruction
to any of the Station Assets from fire or other casualty or cause shall
be borne by Seller at all times prior to the Closing Date hereunder.
Upon the occurrence of any loss or damage to any of the Station Assets as
a result of fire, casualty, accident or other causes prior to the Closing
Date, Seller shall notify Buyer of same in writing immediately stating
with particularity the extent of loss or damage incurred, the cause
thereof if known and the extent to which restoration, replacement and
repair of the Station Assets lost or destroyed will be reimbursed under
any insurance policy with respect thereto. In the event the loss exceeds
$50,000 and the Station Assets cannot be substantially repaired or
restored within forty-five (45) days after such loss, Buyer shall have
the option, exercisable within ten (10) days after receipt of written
notice from Seller, to: (i) terminate this Agreement; (ii) postpone the
Closing until such time as the property has been completely repaired,
replaced or restored to the satisfaction of Buyer, unless the same cannot
be reasonably effected within thirty (30) days of notification; or (iii)
elect to consummate the Closing and accept the property in its damaged
condition, in which event Seller shall assign to Buyer all rights under
any insurance claim covering the loss and pay over to Buyer any proceeds
under any such insurance policy thereto received by Seller with respect
thereto.
2.7 INTERRUPTION OF BROADCAST TRANSMISSIONS. Notwithstanding
any other provision hereof, if prior to the Closing any event occurs
which prevents the broadcast transmission by the Station with substantially
full licensed power and antenna height as described in the applicable FCC
Licenses and in the manner it has heretofore been operating for periods of time
in excess of six (6) hours, the Seller will give prompt written notice thereof
to Buyer. If such facilities are not restored so that
Page 14
operation is resumed with substantially full licensed
power within three (3) days of such event, or, in the case of more than
one event, the aggregate number of days preceding such restorations from
all such events is more than six (6) days, or if the Station is off the
air more than three (3) times for a period in each case exceeding six (6)
hours, Buyer shall have the right, by giving written notice to Seller of
its election to do so, to terminate this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE ORGANIZATION. Seller is a limited partnership duly
organized and in good standing under the laws of the State of Delaware,
and is duly qualified to do business in the State of California. The
Seller's general partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly qualified to do business in the State of California. Seller has
the power and authority to own and operate the Station and the Station
Assets.
3.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and validly
authorized and approved by all necessary partnership action by Seller.
Neither such execution, delivery or performance nor compliance by Seller
with the terms and provisions hereof, or with respect to the Ancillary
Agreements, will (assuming receipt of all necessary approvals from the
Commission) conflict with or result in a breach of any of the terms,
conditions or provisions of (a) the Partnership Agreement or Certificate
of Limited Partnership of Seller,(b) any judgment, order, injunction,
decree, regulation or ruling of any court or other governmental authority
to which Seller is subject, or (c) any material agreement, lease or
contract, written or oral, to which Seller is subject. This Agreement
shall constitute the valid and binding obligation of Seller with respect
to the terms hereof, subject to Commission approval of the transactions
contemplated hereby.
3.3 GOVERNMENT AUTHORIZATIONS. Section 1.1(a) of the
Disclosure Schedule contains a true and complete list of all the
Licenses, which Licenses are sufficient for the lawful conduct of the
business and operation of the Station in the manner and to the full
extent they are currently conducted. Seller is the authorized legal
holder of the Licenses, none of which is subject to any restriction
Page 15
or condition which would limit in any material respect the full operation of
the Station as now operated. There are no applications, complaints or
proceedings pending or, to the best of Seller's knowledge, threatened as
of the date hereof before the Commission or any other governmental
authority relating to the business or operations of the Station, other
than applications, complaints or proceedings which generally affect the
broadcasting industry as a whole, and other than reports and forms filed
in the ordinary course of the Station's business. Seller has delivered
to Buyer true and complete copies of the Licenses, including any and all
additions, amendments and other modifications thereto. The Licenses are
in good standing, are in full force and effect and are unimpaired by any
act or omission of Seller or its officers, directors or employees; and
the operation of the Station is in accordance with the Licenses and the
underlying construction permits. No proceedings are pending or, to the
knowledge of Seller, are threatened which may result in the revocation,
modification, non-renewal or suspension of any of the Licenses, the
denial of any pending applications, the issuance of any cease and desist
order, the imposition of any administrative actions by the Commission
with respect to the Licenses or which may affect Buyer's ability to
continue to operate the Station as it is currently operated. Seller has
taken no action which, to its knowledge, could lead to revocation or non-
renewal of the Licenses, nor omitted to take any action which, by reason
of its omission, could lead to revocation of the Licenses. All material
reports, forms and statements required to be filed with the Commission
with respect to the Station since the grant of the last renewal of the
Licenses have been filed and are complete and accurate. To the knowledge
of Seller, there are no facts which, under the Communications Act of
1934, as amended, or the existing rules, regulations, requirements,
policies and orders of the Commission, would disqualify Seller as
assignor, and Buyer as assignee, in connection with the Assignment
Application.
3.4 COMPLIANCE WITH REGULATIONS. The operation of the Station
is in compliance in all material respects with (i) all applicable
engineering standards required to be met under Commission rules and (ii)
all other applicable rules, regulations, requirements, policies and
orders of the Commission and all other applicable governmental
authorities, including, but not limited to, ANSI Radiation Standards, to
the extent required to be met under applicable Commission rules and
regulations; and there are no existing claims known to Seller to the
contrary.
3.5 TAXES. Seller has timely filed all federal, state, local
and foreign income, franchise, sales, use, property, excise, payroll and other
tax returns required by law and has paid in full all taxes, estimated taxes,
Page 16
interest, assessments, and penalties due and payable as
shown thereon. All returns and forms which have been filed have been
true and correct in all material respects and no tax or other payment in
a material amount other than as shown on such returns and forms are
required to be paid or have been paid by Seller. There are no present
disputes as to taxes of any nature payable by Seller which in any event
could materially adversely affect the Station Assets or operation of the
Station. Each of the parcels included in the Owned Real Property is
assessed for real estate purposes as a wholly independent tax lot,
separate from any adjoining load or improvements not constituting a part
of such parcel.
3.6 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure
Schedule contains a true and complete list of all the Personal Property.
Except for those assets designated on Section 1.1(b) of the Disclosure
Schedule as being subject to lease agreements, Seller owns and has, and
will have on the Closing Date, good and marketable title to such Personal
Property, and none of such Personal Property on the Closing Date will be
subject to any security interest, mortgage, pledge, conditional sales
agreement or other lien or encumbrance. All items of Personal Property
are in all material respects in good operating condition, ordinary wear
and tear excepted, and are available for immediate use in the conduct of
the business and operation of the Station. The technical equipment,
including, without limitation, all transmitters and studio equipment,
constituting part of the Personal Property, has been maintained in
accordance with industry practice and is in good operating condition,
ordinary wear and tear excepted, (except as noted in Section 1.1(b) of
the Disclosure Schedule) and complies in all material respects with all
applicable rules and regulations of the Commission and the terms of the
Licenses. The Personal Property includes all such items and equipment
necessary to conduct in all material respects the business and operations
of the Station as now conducted.
3.7 REAL PROPERTY.
(a) As of the date hereof, Seller does not own any fee
title to real property as described on Section 1.1(d) of the Disclosure
Schedule (hereinafter the "Owned Real Property"). As used in this
Agreement, "Title Defects" shall mean and include any mortgage, deed of
trust, lien, pledge, security interest, claim, lease, charge, option,
right of first refusal, easement, restrictive covenant, encroachment or
other survey defect, encumbrance or other restriction or limitation
whatsoever.
(b) Section 1.1(d) of the Disclosure Schedule contains a
true and complete list and summary of
Page 17
all the Real Estate Contracts. Seller holds the leasehold interest and or the
grantee interest, as applicable, under each Real Property Contract free and
clear of all Title Defects. The Real Estate Contracts constitute valid and
binding obligations of Seller and, to the best of Seller's knowledge, of all
other persons purported to be parties thereto, and are in full force and
effect as of the date hereof, and will on the Closing Date constitute
valid and binding obligations of Buyer and, to the best of Seller's
knowledge, of all other persons purported to be parties thereto. As of
the date hereof, Seller is not in default under any of the Real Estate
Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto and will not have
received any such notice at or prior to the Closing Date and Seller has
no knowledge of any present disputes or claims with respect to offsets or
defenses by either landlord or tenant against the other under any such
Real Estate Contract. Seller shall use best efforts to obtain valid and
binding third-party consents from all required third parties to the Real
Estate Contracts to be conveyed and assigned to Buyer as part of the
Station Assets. Subject to any required third-party consents, Seller
will have full legal power and authority to assign its rights under the
Real Estate Contracts of Buyer in accordance with this Agreement on terms
and conditions no less favorable than those in effect on the date hereof,
and such assignment shall not affect the validity, enforceability and
continuity of any of the Real Estate Contracts. To the
best of Seller's knowledge, Seller is in compliance with all its
obligations under the Real Estate Contracts.
(c) Entire Premises. All of the land, buildings,
structures and other improvements used by Seller in the conduct of the
Business are included in the Real Estate Contracts.
(d) No Options. Seller does not own or hold, and is not
obligated under or a party to, any option, right of first refusal or
other contractual right to purchase, acquire, sell or dispose of the Real
Property or any portion thereof or interest therein.
(e) Condition and Operation of Improvements.All
components of all buildings, structures and other improvements included
within the Real Property (the "Improvements") are free of structural
defects and are in good working order and repair. All water, gas,
electrical, steam, compressed air, telecommunication, sanitary and storm
sewage lines and systems and other similar systems serving the Real
Property are installed and operating and are sufficient to enable the
Real Property to continue to be used and operated in the manner currently
being used and operated, and any so-called hook-up fees or
Page 18
other associated charges have been fully paid, ordinary wear and tear excepted.
(f) Real Property Permits and Insurance. All
certificates of occupancy, permits, licenses, franchises, approvals and
authorizations (collectively, "Real Property Permits") of all
governmental authorities having jurisdiction over the Real Property,
required or appropriate to have been issued to Seller to enable the Real
Property to be lawfully occupied and used for all of the purposes for
which it is currently occupied and used have been lawfully issued and
are, as of the date hereof, in full force and effect.
(g) Condemnation. Seller has not received notice and
has no knowledge of any pending, threatened or contemplated condemnation
proceeding affecting the Real Property or any part thereof or of any sale
or other disposition of the Owned Real Property or any part thereof in
lieu of condemnation.
(h) Casualty. No portion of the Real Property has
suffered any material damage by fire or other casualty which has not
heretofore been completely repaired and restored to its original
condition. No portion of the Real Property is located in a special flood
hazard area as designated by Federal governmental authorities.
(i) Encroachments. There are no encroachments or other
facts or conditions affecting any parcel of Real Property which would,
individually or in the aggregate, (i) interfere in any material respect
with, or materially increase the cost of, the use, occupancy or operation
thereof as currently used, occupied and operated or as intended to be
used, occupied and operated, (ii) materially reduce the fair market value
thereof below the fair market value such parcel would have had but for
such encroachment or other fact or condition. To the best of Seller's
knowledge, no portion of any Improvement encroaches upon any property not
included within the Real Property or upon the area of any easement
affecting the Real Property.
3.8 CONSENTS. No consent, approval, authorization or order
of, or registration, qualification or filing with, any court, regulatory
authority or other governmental body is required for the execution,
delivery and performance by Seller of this Agreement or the Ancillary
Agreements to which it is a party, other than approval by the Commission
of the Assignment Application as contemplated hereby. Except as set
forth in Section 3.8 of the Disclosure Schedule, no consent of any other
party (including, without limitation, any party to any Real Estate
Contract or Contract) is required for the execution,
Page 19
delivery and performance by Seller of this Agreement or the Ancillary
Agreements to which it is a party.
3.9 CONTRACTS. Section 1.1(f) of the Disclosure Schedule
contains a true and complete list of all Contracts, and Section 1.1(g) of
the Disclosure Schedule contains a true and complete list of all
Broadcast Agreements and Trade Agreements. Seller has delivered to Buyer
true and complete copies of all written Contracts, Broadcast Agreements
and Trade agreements in the possession of Seller, including any and all
amendments and other modifications to same. All such Contracts,
Broadcast Agreements and Trade Agreements are valid, binding and
enforceable by Seller in accordance with their respective terms, except
as limited by laws affecting creditors' rights or equitable principles
generally. Seller has complied in all material respects with all such
Contracts, Broadcast Agreements and Trade Agreements, and Seller is not
in default beyond any applicable grace periods under any of same, and no
other contracting party is in material default under any of same.
Subject to obtaining any required consents, Seller has full legal power
and authority to assign its respective rights under such Contracts,
Broadcast Agreements and Trade Agreements to Buyer in accordance with
this Agreement on terms and conditions no less favorable than those in
effect on the date hereof, and such assignment will not materially affect
the validity, enforceability and continuity of any such Contracts,
Broadcast Agreements and Trade Agreements.
3.10 ENVIRONMENTAL. Seller has not unlawfully disposed of any
Hazardous Waste in a manner which has caused, or could cause, Buyer to
incur a material liability under applicable law in connection therewith;
and Seller warrants that the technical equipment included in the Personal
Property does not contain any Hazardous Waste, including any
Polychlorinated Biphenyls ("PCBs") that are required by law to be
removed, or if any equipment does contain Hazardous Waste, including any
PCBs, that such equipment is stored and maintained in compliance with
applicable law. Seller has complied in all material respects with all
federal, state and local environmental laws, rules and regulations
applicable to the Station and its operations, including but not limited
to the Commission's guidelines regarding RF radiation. No Hazardous
Waste has been disposed of by Seller, and to the best of Seller's
knowledge, no Hazardous Waste has been disposed of by any other person on
the property subject to Real Estate Contracts. As used herein, the term
"Hazardous Waste" shall mean all materials regulated by any federal,
state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata). If Seller
Page 20
learns between the date of this Agreement and the Closing Date
that Seller is in breach of the representation and warranty set forth in
this Section 3.10, Seller shall begin remedial action promptly and shall
use reasonable best efforts to complete such remedial action to the
satisfaction of Buyer before the Closing Date.
3.11 INTELLECTUAL PROPERTY. Section 1.1(e) of the Disclosure
Schedule is a true and complete list of all the Intellectual Property.
The Intellectual Property has been duly registered in, filed with, or
issued by the appropriate offices within all jurisdictions where such
registration, filing or issuance is necessary to protect such
Intellectual Property from infringement, including, without limitation,
the United States Copyright Office and the United States Patent and
Trademark Office. Seller has not granted any license or other rights
with respect to the Intellectual Property. Seller has not received any
written notice of any infringement or unlawful use of the Intellectual
Property and Seller has not violated or infringed any patent, trademark,
trade secret or copyright held by others or any license, authorization or
permit held by it.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure
Schedule contains complete unaudited copies of the statements of income,
and the related balance sheets for Seller applicable to the Station for
the period after Seller acquired the Station (the "Financial
Statements"). The Financial Statements have been prepared in accordance
with generally accepted accounting principles and in accordance with the
policies and procedures of the Seller applicable thereto, consistently
applied. The Financial Statements present fairly the financial condition
and results of operations of the Station for the periods indicated.
3.13 PERSONNEL INFORMATION; LABOR CONTRACTS.
(a) Section 3.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Station, including
the date of hire, a description of material compensation arrangements
(other than employee benefit plans set forth in Section 3.14 of the
Disclosure Schedule) and a list of other terms of any and all material
agreements affecting such persons.
(b) Seller is not a party to any contract with any labor
organization, nor has Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of Seller's employees.
Seller has no knowledge of any organizational effort currently being made
or threatened by or on behalf of any
Page 21
labor union with respect to employees of the Station. During the past two
years, Seller has not experienced any strikes, work stoppages, grievance
proceedings, claims of unfair labor practices filed, or other significant
labor difficulties of any nature.
(c) Seller has complied in all material respects with
all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and the payment and withholding of taxes.
3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the Disclosure
Schedule contains a true and complete list and summary, as of the date of
this Agreement, of all employee benefit plans (as that term is defined in
Section 3(3) of ERISA) applicable to the employees of Seller. Seller
maintains no other employee benefit plan. Each of Seller's employee
benefit plans has been operated and administered in all material respects
in accordance with its terms and applicable law, including, without
limitation, ERISA and the Internal Revenue Code.
3.15 LITIGATION. Except as set forth in Section 3.15 of the
Disclosure Schedule, Seller is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree, and there is no
litigation, proceeding or investigation pending or, to the best of
Seller's knowledge, threatened against Seller or the Station in any
federal, state or local court, or before any administrative agency or
arbitrator (including, without limitation, any proceeding which seeks the
forfeiture of, or opposes the renewal of, any of the Licenses), or before
any other tribunal duly authorized to resolve disputes, which would
reasonably be expected to have any material adverse effect upon the
business, property, assets or condition (financial or otherwise) of the
Station or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection
with this Agreement. In particular, but without limiting the generality
of the foregoing, except as set forth in Section 3.15 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending
or, to the best of Seller's knowledge, threatened before the Commission
or any other governmental organization with respect to the business or
operation of the Station, other than applications, complaints or
proceedings which affect the broadcast industry generally.
3.16 COMPLIANCE WITH LAWS. Seller has not received any notice
asserting any non-compliance with any
Page 22
applicable statute, rule, regulation, requirement, policy or order (federal,
state or local) whether or not related to the business or operation of the
Station or the Real Property. Seller is not in default with respect to any
judgment, order, injunction or decree of any court, administrative agency or
other governmental authority or to any other tribunal duly authorized to
resolve disputes in any respect material to the transactions contemplated
hereby. Seller is in compliance in all material respects with all laws,
regulations and governmental orders whether or not applicable to the
conduct of the business and operation of the Station and any other
business or operations conducted by Seller. The Real Property is in full
compliance with all applicable building, zoning, subdivision,
environmental and other land use and similar laws, codes, ordinances,
rules, regulations and orders of governmental authorities (collectively,
"Real Property Laws"), and Seller has not received any notice of
violation or claimed violation of any Real Property Law. Seller has no
knowledge of any pending change in any Real Property Law which would have
a material adverse effect upon the ownership or use of the Real Property.
3.17 INSURANCE. Seller has in full force and effect insurance
on all of the Real Property, Personal Property, and all other Station
Assets pursuant to insurance policies, a true and complete copy of which
is contained in Section 3.17 of the Disclosure Schedule. Seller shall
continue to maintain such insurance in full force and effect up to the
Closing Date or shall have obtained prior to the Closing Date other
insurance policies with limits and coverage comparable to the current
policies after prior notice to, and upon written consent of the Buyer,
which consent shall not be unreasonably withheld.
3.18 UNDISCLOSED LIABILITIES. Except as to, and to the extent
of, the amounts specifically reflected or reserved against in Seller's
balance sheets for the period ending December 31, 1994 (the "Balance
Sheet Date"), and except for liabilities and obligations incurred since
the Balance Sheet Date in the ordinary and usual course of business,
Seller has no material liabilities or obligations of any nature whether
accrued, absolute, contingent or otherwise and whether due or to become
due, and, to the best of Seller's knowledge, there is no basis for the
assertion against Seller of any such liability or obligations. No
representation or warranty made by Seller in this Agreement, and no
statement made in any exhibit or schedule hereto or any certificate or
document delivered by Seller pursuant to the terms of this Agreement,
contain or will contain any untrue statement of a material fact or omit
or will omit to state any material fact necessary to make such
representation or warranty or any such statement not misleading.
Page 23
3.19 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The instruments to
be executed by Seller and delivered to Buyer at Closing, conveying the
Station Assets, to Buyer, will be in a form sufficient to transfer good
and marketable title to the Station Assets, free and clear of all
liabilities, obligations and encumbrances, except as provided herein.
3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.20 of the Disclosure Schedule, between the Balance Sheet Date
and the date of this Agreement there has not been:
(a) Any material adverse change in the working capital,
financial condition, business, results of operations, assets or
liabilities of Seller;
(b) Any change in the manner in which Seller conducts
its business and operations other than changes in the ordinary and usual
course of business consistent with past practice;
(c) Any amendment to the Certificate of Incorporation or
Bylaws of Seller;
(d) Any contract or commitment, to which Seller is a
party, entered into, modified or terminated, except in the ordinary and
usual course of business;
(e) Any creation or assumption of any mortgage, pledge
or other lien or encumbrance upon any of the Station Assets except in the
ordinary and usual course of business;
(f) Any sale, assignment, lease, transfer, or other
disposition of any of the Station Assets, except in the ordinary and
usual course of business;
(g) The incurring of any liabilities or obligations,
except items incurred in the ordinary and usual course of business;
(h) The write-off or determination to write off as
uncollectible any accounts receivable or portion thereof, except for
write-offs in the ordinary course of business consistent with past
practice at a rate no greater than during the twelve months prior to the
Balance Sheet Date;
(i) The cancellation of any debts or claims, or waiver
of any rights, having an aggregate value in excess of $5,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
Page 24
(k) The increase or promise to increase the rate of
commissions, fixed salary or wages, draw, bonus or other compensation
payable to any employee of Seller, except in the ordinary and usual
course of business consistent with past practice;
(l) The issuance of, or authorization to issue, any
additional shares of capital stock of Seller, or rights, warrants or
options to acquire, any such shares, or convertible securities;
(m) Any default under any contract or lease to which
Seller is a party; or
(n) Any change in any method of accounting or accounting
practice used by Seller.
3.21 INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character including, without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting Seller or the Station Assets are pending or, to
Seller's knowledge, threatened, and Seller has made no assignment for the
benefit of creditors, nor taken any action with a view to, or which would
constitute the basis for, the institution of any such insolvency
proceedings.
3.22 MATERIAL ADVERSE CHANGE. (a) Between November 30, 1995
and the date hereof there has been no change in the manner in which
Seller conducts its business with respect to working capital and there
has not been a material adverse change in the assets of Seller other than
changes in the ordinary and usual course of business consistent with past
practice.
(b) Between December 22, 1995 and the date hereof there
has not been a material adverse change in the liabilities of Seller other
than changes in the ordinary and usual course of business consistent with
past practice.
3.23 INVESTMENT INTENT OF SELLER. Seller acknowledges that it
understands that the ▇▇▇▇▇▇ Shares to be purchased by it hereunder will
not be registered under the Securities Act of 1933 (the "Securities Act")
in reliance upon the exemption afforded by Section 4(2) thereof for
transactions by an issuer not involving any public offering, and will not
be registered or qualified under any applicable state securities laws.
Seller represents that (i) it is acquiring the ▇▇▇▇▇▇ Shares for
investment only and without any view toward distribution thereof, and it
will not sell or otherwise dispose of such ▇▇▇▇▇▇ Shares except in
compliance with the registration requirements or exemption provisions of
the Securities Act and any applicable state securities laws, (ii) its economic
Page 25
circumstances are such that it is able to bear all risks of the
investment in the ▇▇▇▇▇▇ Shares for an indefinite period of time,
including the risk of a complete loss of its investment in the ▇▇▇▇▇▇
Shares, (iii) it has knowledge and experience in financial and business
matters sufficient to evaluate the merits and risks of investment in the
▇▇▇▇▇▇ Shares and has had access to, or has been furnished with, all such
information as it has considered necessary, (iv) it has consulted with
its own counsel and tax advisor, to the extent deemed necessary by it, as
to all legal and taxation matters covered by this Agreement and has not
relied upon Buyer for any explanation of the application of the various
United States or state securities laws or tax laws with regard to its
acquisition of the ▇▇▇▇▇▇ Shares and (v) in making any subsequent
offering or sale of the securities the undersigned will be acting only
for itself and not as part of a sale or planned distribution that would
be in violation of the Securities Act. Seller further acknowledges and
represents that it has made its own independent investigation of ▇▇▇▇▇▇
and the business conducted by ▇▇▇▇▇▇. Seller is an "accredited investor"
as that term is defined in Regulation D promulgated under the Securities
Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 DUE INCORPORATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and as of the Closing Date shall be duly qualified to do
business in and be in good standing in the State of California.
4.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and validly
authorized and approved by the board of directors of Buyer, and Buyer has
the corporate power and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, performance
hereof, and compliance by Buyer with the terms and provisions hereof, or
with respect to the Ancillary Agreements, thereof, will not (assuming
receipt of all necessary approvals from the Commission) conflict with or
result in a breach of any of the terms, conditions or provisions of (a)
the Certificate of Incorporation or Bylaws of Buyer, (b) any judgment,
order, injunction, decree, regulation or ruling of any court or other
governmental authority to which Buyer is subject, or
Page 26
(c) any material agreement, lease or contract, written or oral, to which Buyer
is subject. This Agreement will constitute the valid and binding obligation of
Buyer with respect to the terms hereof, subject to Commission approval of the
transactions contemplated hereby.
4.3 CONSENTS. No consent, approval, authorization or order
of, or registration, qualification or filing with, any court, regulatory
authority or other governmental body is required for the execution,
delivery and performance by Buyer of this Agreement or the Ancillary
Agreements to which it is a party, other than the approval by the
Commission of the Assignment Application as contemplated hereby. Except
as set forth in Section 4.3 of the Disclosure Schedule, no consent of any
other party is required for the execution, delivery and performance by
Buyer of this Agreement, the Ancillary Agreements to which it is a party
or any of the agreements or actions contemplated thereby.
4.4 LITIGATION. There is no litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened
against Buyer in any federal, state or local court, or before any
administrative agency or arbitrator, or before any other tribunal duly
authorized to resolve disputes, that would reasonably be expected to have
any material adverse effect upon the ability of Buyer to perform its
obligations hereunder, or that seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or
in connection with this Agreement.
4.5 COMPLIANCE WITH LAWS. Buyer is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or of any other
tribunal duly authorized to resolve disputes in any respect material to
the transactions contemplated hereby. Buyer is not in violation of any
law, regulation or governmental order, the violation of which would have
a material adverse effect on Buyer or its ability to perform its
obligations pursuant to this Agreement.
4.6 QUALIFICATION. To the best of Buyer's knowledge, Buyer is
legally, technically and financially qualified to be the assignee of the
Licenses and the other Station Assets, and, prior to the Closing Date,
Buyer will exercise its best efforts to refrain from doing any act which
would disqualify Buyer from being the assignee of the Licenses and the
other Station Assets.
4.7 STOCK. The ▇▇▇▇▇▇ Shares to be delivered by Buyer on the
Closing Date consists of shares of Common Stock which have been duly
authorized and validly issued
Page 27
and are fully paid and non-assessable. Said shares are not subject to
preemptive rights of any shareholder and shall be issued or transferred
to Seller free of adverse claim.
ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing Date, Seller
shall have complete control of the Station and its operations, and Seller
covenants as follows with respect to such period:
5.1 CONTINUED OPERATION OF STATION. Subject to the LMA,
Seller shall continue to operate the Station under the terms of the
Licenses in the manner in which the Station has been operated heretofore,
in the usual and ordinary course of business, in conformity with all
material applicable laws, ordinances, regulations, rules and orders, and
in a manner so as to preserve and ▇▇▇▇▇▇ the goodwill and business
relationships of the Station and Seller, including, without limitation,
relationships with advertisers, suppliers, customers, and employees.
Seller shall file with the Commission and any other applicable
governmental authority all applications and other documents required to
be filed in connection with the continued operation of the Station.
5.2 FINANCIAL OBLIGATIONS. Subject to the LMA, Seller shall
continue to conduct the financial operations of the Station, including
its credit and collection policies, in the ordinary course of business
with the same effort, to the same extent, and in the same manner, as in
the prior conduct of the business of the Station; and shall continue to
pay and satisfy all expenses, liabilities and obligations arising in the
ordinary course of business in accordance with past accounting practices.
Seller shall not enter into or amend any contracts or commitments
involving expenditures by Seller in an aggregate amount in excess of
$5,000 without the prior written consent of Buyer.
5.3 REASONABLE ACCESS. Seller shall provide Buyer, and
representatives of Buyer, with reasonable access during normal business
hours to the Station and shall furnish such additional information
concerning the Station as Buyer from time to time may reasonably request.
5.4 MAINTENANCE OF ASSETS. Seller shall maintain the Real
Property, the Personal Property and all other tangible assets in their
present good operating condition, repair and order, reasonable wear and
tear in ordinary usage excepted. Seller shall not waive or cancel any
Page 28
claims or rights of substantial value, transfer or otherwise dispose of
the Real Property, any Personal Property, or permit to lapse or dispose
of any right to the use of any Intellectual Property.
5.5 NOTIFICATION OF DEVELOPMENTS. Seller shall notify Buyer
of any problems or developments with respect to the Station Assets or
operation of the Station; and provide Buyer with prompt written notice of
any change in any of the information contained in the representations and
warranties made herein or in the Disclosure Schedule or any other
documents delivered in connection with this Agreement.
5.6 PAYMENT OF TAXES. Seller shall pay or cause to be paid
all property and all other taxes relating to the Station, the Real
Property and the assets and employees of the Station required to be paid
to city, county, state, federal and other governmental units through the
Closing Date.
5.7 THIRD PARTY CONSENTS. Seller shall use commercially
reasonable efforts to obtain from any third party waivers, permits,
licenses, approvals, authorizations, qualifications, orders and consents
necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, including, without limitation,
approval from the Commission of the Assignment Application contemplated
hereby.
5.8 ENCUMBRANCES. Seller shall not suffer or permit the
creation of any mortgage, conditional sales agreement, security interest,
lease, lien, hypothecation, deed of trust or pledge, encumbrance,
restriction, liability, charge, or imperfection of title with respect to
the Station Assets, including the Real Property.
5.9 ASSIGNMENT OF ASSETS. Seller shall not sell, assign,
lease or otherwise transfer or dispose of any Station Assets, whether now
owned or hereafter acquired, except for retirements in the normal and
usual course of business or in connection with the acquisition of similar
property or assets, as provided for herein.
5.10 COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall not
by any act or omission surrender, modify adversely, forfeit or fail to
renew under regular terms the Licenses, cause the Commission or any other
governmental authority to institute any proceeding for the revocation,
suspension or modification of any such License, or fail to prosecute with
due diligence any pending applications with respect to the Licenses at
the Commission or any other applicable governmental authority.
Page 29
5.11 TECHNICAL EQUIPMENT. Seller shall not fail to repair,
maintain or replace the technical equipment transferred hereunder in
accordance with the normal standards of maintenance applicable in the
broadcast industry.
5.12 COMPENSATION INCREASES. Seller shall not permit any
increase in the rate of commissions, fixed salary or wages, draw or other
compensation payable to any employees of Seller.
5.13 SALE OF BROADCAST TIME. Seller shall not enter into,
extend or renew any Broadcast Agreement not consistent with the usual and
ordinary course of business, provided, however, that Seller shall not
enter into, extend or renew any Broadcast Agreement exceeding $10,000 in
amount unless such Broadcast Agreement is terminable on 30 days' notice.
Seller shall not enter into any Trade Agreement without the prior written
consent of Buyer.
5.14 INSURANCE. Seller shall maintain at all times between the
date hereof and the Closing Date, those insurance policies listed in
Section 3.17 of the Disclosure Schedule.
5.15 NEGOTIATIONS WITH THIRD PARTIES. Seller shall not, before
Closing or the termination of this Agreement, enter into discussions with
respect to any sale or offer of the Station, any Station Assets or any
stock of Seller to any third party, nor shall Seller offer the Station,
any Station Assets or any stock of Seller to any third party.
ARTICLE VI
JOINT COVENANTS OF BUYER AND SELLER
Buyer and Seller covenant and agree that between the date
hereof and the Closing Date, they shall act in accordance with the
following:
6.1 ASSIGNMENT APPLICATION. As promptly as practicable after
the date of this Agreement, and in no event later than ten (10) days
after execution of this Agreement, Seller and Buyer shall join in and
file an application on FCC Form 314 with the Commission requesting its
consent to the assignment of the Licenses from Seller to Buyer (the
"Assignment Application"). Seller and Buyer agree to prosecute the
Assignment Application with all reasonable diligence and to use their
best efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission.
Page 30
6.2 PERFORMANCE. Buyer and Seller shall perform all acts
required of them under this Agreement and refrain from taking or omitting
to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing Date.
6.3 CONDITIONS. If any event should occur, either within or
without the control of any party hereto, which would prevent fulfillment
of the conditions placed upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, the parties
hereto shall use their best efforts to cure the event as expeditiously as
possible.
6.4 CONFIDENTIALITY. Buyer and Seller shall each keep
confidential all information they obtain with respect to any other party
hereto in connection with this Agreement and the negotiations preceding
this Agreement, and will use such information solely in connection with
the transactions contemplated by this Agreement. If the transactions
contemplated hereby are not consummated for any reason, each party hereto
shall return to the party so providing, without retaining a copy thereof,
any schedules, documents or other written information obtained from the
party so providing such information in connection with this Agreement and
the transactions contemplated hereby. Notwithstanding the foregoing, no
party shall be required to keep confidential or return any information
which (i) is known or available through other lawful sources, (ii) is or
becomes publicly known through no fault of the receiving party or its
agents, (iii) is required to be disclosed pursuant to an order or request
of a judicial or governmental authority (provided the disclosing party is
given reasonable prior notice), or (iv) is developed by the receiving
party independently of the disclosure by the disclosing party.
6.5 COOPERATION. Buyer and Seller shall cooperate fully and
with each other in taking any actions to obtain the required consent of
any governmental instrumentality or any third party necessary or helpful
to accomplish the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that no party shall be required to take any action which would
have a material adverse effect upon it or any entity affiliated with it.
6.6 ENVIRONMENTAL REPORTS. If desired by Buyer, Seller and
Buyer agree to arrange for the preparation of, at the expense of Buyer,
appropriate environmental reports for the real property subject to Real
Estate Contracts. Such environmental reports shall conclude that: (i)
the real property subject to Real Estate Contracts is not in any way
contaminated with any Hazardous Waste requiring remediation, clean-up or
removal under applicable laws
Page 31
relating to Hazardous Waste; (ii) the real property subject to Real Estate
Contracts is not subject to any federal, state or local "superfund" or "Act
307" lien, proceeding, claim, liability or action, or the threat or likelihood
thereof, for the clean-up, removal or remediation of any Hazardous Waste from
same; (iii) there is no asbestos located in the buildings situated on the real
property subject to Real Estate Contracts requiring remediation,
encapsulation or removal under applicable laws relating to asbestos
clean-up; and (iv) there are no underground storage tanks located at the
real property subject to Real Estate Contracts requiring remediation,
clean-up or removal under applicable laws relating to Hazardous Waste,
and if any have previously been removed, such removal was done in
accordance with all applicable laws, rules and regulations. The
environmental review to be conducted shall initially be a Phase I review.
Any further investigations recommended in the environmental reports
obtained pursuant to this Section 6.6 shall be conducted with the cost to
be shared equally by Seller and Buyer.
6.7 CONSENTS TO ASSIGNMENT. Except for the Real Estate
Contracts, to the extent that any Contract, Broadcast Agreement, Trade
Agreement or other contract identified in the Disclosure Schedule that is
to be assigned under this Agreement is not capable of being sold,
assigned, transferred, delivered or subleased without the waiver or
consent of any third person withholding same (including a government or
governmental unit), or if such sale, assignment, transfer, delivery or
sublease or attempted sale, transfer, delivery or sublease would
constitute a breach thereof or a violation of any law or regulation, this
Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an
attempted sale, assignment, transfer, delivery or sublease thereof.
Except for any consents required pursuant to a Real Estate Contract, in
those cases where consents, assignments, releases and/or waivers have not
been obtained at or prior to the Closing Date to the transfer and
assignment to Buyer of such contracts, Buyer may in its sole discretion
elect to have this Agreement and any assignments executed pursuant
hereto, to the extent permitted by law, constitute an equitable
assignment by Seller to Buyer of all of Seller's rights, benefits, title
and interest in and to such contracts, and where necessary or
appropriate, Buyer shall be deemed to be Seller's agent for the purpose
of completing, fulfilling and discharging all of Seller's rights and
liabilities arising after the Closing Date under such contracts. Seller
shall use its reasonable best efforts to provide Buyer with the benefits
of such contracts (including, without limitation, permitting Buyer to
enforce any rights of Seller arising under such contracts), and Buyer
shall, to the extent Buyer is
Page 32
provided with the benefits of such contracts, assume, perform and in due
course pay and discharge all debts, obligations and liabilities of Seller
under such contracts.
6.8 BULK SALES LAWS. Buyer hereby waives compliance by Seller
with the provisions of the "bulk sales" or similar laws of any state.
Seller agrees to indemnify Buyer and hold it harmless against any and all
claims, losses, damages, liabilities, costs and expenses incurred by
Buyer or any affiliate as a result of any failure to comply with any
"bulk sales" or similar laws.
6.9 EMPLOYEE MATTERS.
(a) While under no obligation to hire any employees of
the Station, Buyer shall make reasonable efforts to offer employment at
will to certain employees of the Station. Upon review of a full list of
employees and salaries, Buyer shall notify Seller of (i) those employees
to whom it will so offer employment as soon as practicable and (ii) those
employees that Buyer intends to discharge not less than thirty (30) days
prior to the Closing Date. Seller shall be responsible for all salary
and benefits of the employees of the Station who do not accept, or are
not offered, employment with Buyer. Seller shall be responsible for all
salary and other compensation due to be paid for work for Seller for
employees of the Station who become employees of Buyer and Buyer shall be
responsible for the salary and other compensation due to be paid for work
for Buyer on or after the date of hire by Buyer for such employees.
Seller shall be responsible for severance payments which may be
applicable under its employee benefit plans to any employees not so
offered employment and hired by Buyer. Except as expressly provided in
paragraph (b) below, Buyer shall assume no liability under an employment
agreement or severance agreement entered into or maintained by Seller
with respect to current or former employees of the Station. Except as
otherwise required by applicable law, employees of the Station who become
employees of Buyer shall cease to participate in the employees benefit
plans of Seller as of the date of hire by Buyer and Buyer shall have no
liability with respect thereto.
(b) Notwithstanding the foregoing, in the event Buyer
terminates the employment of ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇ during the LMA
Term, Buyer shall be responsible for the severance payments due to each
such person under the terms of the employment agreements, dated August
14, 1995, between Seller and ▇▇▇▇ ▇▇▇▇▇ and Seller and ▇▇▇▇▇ ▇▇▇▇▇,
respectively; PROVIDED, HOWEVER, that the Cash Payment shall be reduced
by the amount of any such payments made by Buyer. In the event Buyer
terminates the employment of the persons listed in Section 3.13 of the
Page 33
Disclosure Schedule during the LMA Term, other than ▇▇. ▇▇▇▇▇ and ▇▇.
▇▇▇▇▇, Buyer shall be responsible for the severance payments due to each
such person under the terms of the employment agreements entered into
between Seller and each such employee, attached to Section 3.13 of the
Disclosure Schedule, and no adjustment to the Cash Payment shall be made.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The performance of the obligations of the Buyer hereunder is
subject, at the election of the Buyer, to the following conditions
precedent:
7.1 COMMISSION APPROVALS. Notwithstanding anything herein to
the contrary, the consummation of this Agreement is conditioned upon (a)
a grant by the Commission of the Assignment Application, and (b)
compliance by the parties with the conditions, if any, imposed by the
Commission in connection with the grant of the Assignment Application
(provided that neither party shall be required to accept or comply with
any condition which would be unreasonably burdensome or which would have
a materially adverse effect upon it). All required governmental filings
shall have been made, and all requisite governmental approvals for the
consummation of the transactions contemplated hereby shall have been
granted and become Final Orders. The Licenses shall be in unconditional
full force and effect, shall be valid for the balance of the current
License term applicable generally to radio stations licensed to
communities located in the State of California, and shall be unimpaired
by any acts or omissions of Seller or Seller's employees or agents.
7.2 ASSETS OF STATION.
(a) The transmitter building, FM tower, transmitter
equipment and telephone equipment shall have been transferred to Seller
by ▇▇▇▇▇▇▇▇ Leasing II and Meadow Lakes Tower Company, Inc. and
including, without limitation, that property leased by Meadow Lakes Tower
Company, Inc., as lessor, to Seller, as lessee, pursuant to that certain
lease dated April 1, 1992 (the "Meadow Lakes Property") and ▇▇▇▇▇▇▇▇
Leasing II, and all terms, conditions and covenants to be complied with
or performed by Seller and Meadow Lakes Tower Company, Inc. and ▇▇▇▇▇▇▇▇
Leasing II in respect thereof on or before the Closing Date shall have
been duly complied with and performed in all material respects, and Buyer
shall have received from Seller a certificate or certificates to such
effect, in form and substance reasonably satisfactory to Buyer.
Page 34
(b) A special warranty deed (or its equivalent in the
State of California), in proper statutory form for recording, conveying
each parcel of Owned Real Property to Buyer;
(c) Buyer and Seller shall obtain, at Buyer's expense,
an owner's extended coverage policy of title insurance with respect to
each parcel of Real Property, in each case issued on the date of Closing
by the Title Company. Each such title insurance policy shall be in an
amount designated by Buyer and shall insure Buyer's ownership of fee
title with respect to the Owned Real Property without any of the Schedule
B standard pre-printed exceptions (other than taxes not yet due and
payable) and free and clear of title defects and other exceptions to or
exclusions from coverage other than the Permitted Owned Real Property
Exceptions.
(d) Buyer and Seller shall obtain, at Buyer's expense, a
survey of each parcel of Owned Real Property certified to Buyer or its
permitted assigns and the Title Company. The certification shall be by a
Registered Land Surveyor and shall be made in accordance with the minimum
technical standards of land surveying in California. The survey shall be
prepared in accordance with the Minimum Detail Standards for Land Title
Survey of 1992 of the American Title Association and American Congress on
Surveying and Mapping. Each such survey shall show (i) the courses and
distances of all boundary lines of such parcel (including, appurtenant
easements), (ii) the location of all Improvements situated on or above
such parcel and on or above any easements or rights of way affecting said
parcel, (iii) all encroachments of adjoining properties or improvements
onto such parcel, (iv) all encroachments of Improvements onto any
adjoining property, (v) the location of all easements and other rights
burdening such parcel and all encroachments of Improvements onto the
areas of such easements, (vi) the location of all roadways, alleys,
rights of way and the like affecting such parcel, (vii) all access ways
from such parcel to public streets and (viii) such other facts and
conditions affecting such parcel as are appropriate, or as may have been
reasonably requested by Buyer, to be shown on such survey. Each such
survey shall otherwise be in form satisfactory to counsel for Buyer. The
survey shall be delivered to Buyer at least thirty (30) days prior to the
Closing Date. Buyer shall within fourteen (14) days of receipt of the
survey notify Seller in writing specifying the defects and encroachments
reflected by the survey, and Seller shall have ten (10) days within which
to remove such defects and encroachments. If Seller does not remove such
defects, Buyer may elect to terminate this Agreement.
Page 35
7.3 PERFORMANCE. The Station Assets shall have been
transferred to Buyer by Seller, and all of the terms, conditions and
covenants to be complied with or performed by Seller on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Buyer shall have received from Seller a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
7.4 FAILURE OF TRANSFER. Notwithstanding any other provision
in this Agreement to the contrary, in the event that any law, regulation
or official policy prevents the transfer or assignment of the Station
Assets from Seller to Buyer or any Buyer affiliate, the parties shall
have amended this Agreement and/or executed such supplemental agreements,
as necessary, to achieve for both Buyer and Seller, to the maximum extent
possible, the benefits of the transactions contemplated by this Agreement
and the Ancillary Agreements in a manner consistent with applicable law.
7.5 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller to Buyer shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect
as if then made, and Buyer shall have received from Seller a certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Buyer.
7.6 CONSENTS. Seller shall have received all consents
(including landlord and grantor consents for the studio and tower sites)
specified in Section 3.8 of the Disclosure Schedule.
7.7 NO LITIGATION. No litigation, proceeding, or
investigation of any kind shall have been instituted or, to Seller's
knowledge, threatened which would materially adversely affect the ability
of Seller to comply with the provisions of this Agreement or would
materially adversely affect the operation of the Station.
7.8 DOCUMENTS. Seller shall have obtained, executed, where
necessary, and delivered, to Buyer where applicable, all of the
documents, reports, orders and statements required of it herein, as well
as any other documents (including collateral assignments) required by any
entity providing financing for the transactions contemplated by this
Agreement and the Ancillary Agreements.
7.9 DISCLOSURE SCHEDULE. Seller shall have delivered to Buyer
each Section of the Disclosure Schedule required of it herein and the
information contained therein
Page 36
shall be in form and content reasonably satisfactory to Buyer.
7.10 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer
an opinion of Moses & Singer, counsel to Seller, addressed to Buyer and
substantially in the form attached hereto as Exhibit A. In addition,
Seller shall have delivered to Buyer a written opinion of Seller's FCC
counsel, dated as of the Closing Date, addressed to Buyer and
substantially in the form attached hereto as Exhibit B.
7.11 ANCILLARY AGREEMENTS. Buyer and Seller shall have entered
into the Ancillary Agreements, if any, on terms and conditions
satisfactory to Buyer.
7.12 SIMULTANEOUS CLOSING. The Closing shall occur
simultaneously with the closing of the transactions contemplated by that
certain Asset Purchase Agreement by and between EBE Broadcasting L.P. and
Buyer dated of even date herewith.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of Seller hereunder is
subject, at the election of Seller, to the following conditions
precedent:
8.1 PERFORMANCE. All of the terms, conditions and covenants
to be complied with or performed by Buyer on or before the Closing Date
shall have been duly complied with and performed in all material
respects, and Seller shall have received from Buyer a certificate or
certificates to such effect, in form and substance reasonably
satisfactory to Seller.
8.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect
as if then made, and Seller shall have received from Buyer a certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Seller.
8.3 GOVERNMENT APPROVALS. All required governmental filings
shall have been made and all requisite governmental approvals for the
consummation of the transactions contemplated hereby shall have been
granted.
8.4 DOCUMENTS. Buyer shall have obtained, executed, where
necessary, and delivered to Seller where
Page 37
applicable, all of the documents, reports, orders and statements required of
it herein.
8.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller
an opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to Buyer,
addressed to Seller and substantially in the form attached hereto as
Exhibit C.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller agrees to and shall indemnify, defend and hold Buyer
harmless, and shall reimburse Buyer for and against any and all actions,
losses, expenses, damages, liabilities, taxes, penalties or assessments,
judgments and costs (including reasonable legal expenses related thereto)
resulting from or arising out of:
(a) Any breach by Seller of any representation, or
warranty contained in this Agreement, any Ancillary Agreement or in any
certificate, exhibit, schedule, or other document furnished to or to be
furnished pursuant hereto or in connection with the transactions
contemplated hereby;
(b) Any non-fulfillment or breach by Seller of any
covenant, agreement, term or condition contained in this Agreement, any
Ancillary Agreement or in any certificate, exhibit, schedule, or other
document furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby;
(c) Any material inaccuracy in any covenant,
representation, agreement or warranty by Seller including all material
statements or figures contained in the Financial Statements heretofore
furnished to Buyer; and
(d) Any liabilities of any kind or nature, absolute or
contingent not assumed by Buyer including, without limitation, any
liabilities relating to or arising from the business and operation of the
Station by Seller prior to the Closing Date.
Notwithstanding any other provision contained herein, Seller
shall be solely responsible for any fine or forfeiture imposed by the
Commission relating to the operation of the Station prior to the Closing
Date.
Anything in this Section 9.1 to the contrary notwithstanding,
Buyer shall be entitled to indemnity only
Page 38
to the extent that all damages exceed an aggregate of $25,000.
9.2 INDEMNIFICATION BY BUYER. From and after the Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller for and against any and all actions,
losses, expenses, damages, liabilities, taxes, penalties or assessments,
judgments and costs (including reasonable legal expenses related
thereto), resulting from or arising out of:
(a) Any breach by Buyer of any covenant, agreement,
term, condition, representation, or warranty contained in this Agreement,
any Ancillary Agreement or in any certificate, exhibit, schedule, or any
other document furnished or to be furnished pursuant hereto or in
connection with the transactions contemplated hereby;
(b) Any non-fulfillment by Buyer of any covenant
contained in this Agreement, any Ancillary Agreement or in any
certificate, exhibit, schedule, or other document furnished or to be
furnished pursuant hereto or in connection with the transactions
contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute or
contingent, relating to or arising from the business and operation of the
Station subsequent to the Closing Date.
Anything in this Section 9.2 to the contrary notwithstanding,
Seller shall be entitled to indemnity only to the extent that all damages
exceed an aggregate of $25,000.
9.3 NOTIFICATION OF CLAIMS.
(a) A party entitled to be indemnified pursuant to
Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of
any claim or demand which the Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement.
Subject to the Indemnifying Party's right to defend in good faith third
party claims as hereinafter provided, the Indemnifying Party shall
satisfy its obligations under this Article IX within thirty (30) days
after the receipt of a written notice thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section 9.3(a), and
if such claim or demand relates to a claim or demand asserted by a third
party against the
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Indemnified Party which the Indemnifying Party acknowledges is a claim or
demand for which it must indemnify or hold harmless the Indemnified Party
under Sections 9.1 or 9.2, the Indemnifying Party shall have the right to
assume the defense of such third party claim or demand and to employ counsel
reasonably acceptable to the Indemnified Party to defend any such claim or
demand asserted against the Indemnified Party. The Indemnified Party shall
have the right to participate in the defense of any such claim or demand at
its own expense. Notwithstanding the foregoing, the Indemnified Party shall
have the right to employ separate counsel at the Indemnifying Party's
expense and to control its own defense if in the reasonable opinion of
counsel to such Indemnified Party a conflict or potential conflict exists
between the Indemnifying Party and such Indemnified Party that would make
such separate representation necessary. The Indemnifying Party shall
notify the Indemnified Party in writing, as promptly as possible (but in
any case before the due date for the answer or response to a claim) after
the date of the notice of claim given by the Indemnified Party to the
Indemnifying Party under Section 9.3(a) of its election to defend in good
faith any such third party claim or demand. So long as the Indemnifying
Party is defending in good faith any such claim or demand asserted by a
third party against the Indemnified Party, the Indemnified Party shall
not settle or compromise such claim or demand. The Indemnifying Party
shall not settle or compromise such claim or demand with respect to the
Indemnified Party without the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld). The Indemnified Party
shall make available to the Indemnifying Party or its agents all records
and other materials in the Indemnified Party's possession reasonably
required by it for its use in contesting any third party claim or demand.
Whether or not the Indemnifying Party elects to defend any such claim or
demand, the Indemnified Party shall have no obligations to do so. Upon
payment of any claim or demand pursuant to this Article IX, the
Indemnifying Party shall, to the extent of payment, be subrogated to all
rights of the Indemnified Party.
ARTICLE X
MISCELLANEOUS
10.1 ASSIGNMENT.
(a) This Agreement shall not be assigned or conveyed by
either party hereto to any other person or entity without the prior
written consent of the other parties hereto; PROVIDED, HOWEVER, that
Buyer may assign this Agreement without Seller's prior consent to one or
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more corporations or other entities controlled by Buyer; PROVIDED,
FURTHER, that Seller shall have recourse to Buyer in the event Buyer's
assignee defaults hereunder PROVIDED, FURTHER, that Seller may assign its
right to the Default Payment under Section 2.4 hereunder to State Street
Bank and Trust Company when, as, and if such payment becomes due.
Subject to the foregoing, this Agreement shall be binding and shall inure
to the benefit of the parties hereto, their successors and assigns.
(b) Notwithstanding anything to the contrary set forth
herein, Buyer may assign and transfer to any entity providing financing
for the transactions contemplated by this Agreement (or any refinancing
of such financing) as security for such financing all of the interest,
rights and remedies of Buyer with respect to this Agreement and the
Ancillary Agreements, and Seller shall expressly consent to such
assignment. Any such assignment will be made for collateral security
purposes only and will not release or discharge Buyer from any
obligations it may have pursuant to this Agreement. Notwithstanding
anything to the contrary set forth herein, Buyer may (i) authorize and
empower such financing sources to assert, either directly or on behalf of
Buyer, any claims Buyer may have against Seller under this Agreement and
(ii) make, constitute and appoint one agent bank in respect of such
financing (and all officers, employees and agents designated by such
agent) as the true and lawful attorney and agent-in-fact of Buyer for the
purpose of enabling the financing sources to assert and collect any such
claims.
10.2 SURVIVAL OF INDEMNIFICATION. The indemnification
obligations of Seller contained in this Agreement (other than any
indemnification required as a result of Seller's breach of Sections 3.1,
3.2 or 3.3 hereof, which indemnification shall survive indefinitely)
shall be binding for a period of three (3) years following the date
hereof.
10.3 NO RIGHT OF REVERSION. Buyer and Seller represent and
warrant to each other that upon the consummation of the transactions
contemplated herein and the assignment to Buyer of the Licenses and
authorizations, Seller shall retain no right of reversion of the Licenses
and authorizations, no right to a reassignment of the Licenses and
authorizations in the future, and reserve no right to use the facilities
of the Station for any period whatsoever.
10.4 BROKERAGE. Seller and Buyer warrant and represent to one
another that, with the exception of ▇▇▇▇▇▇ Media Broker Consultants
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇) broker for the Seller, there has been no broker in any way
involved in the transactions contemplated hereby and that no one other than
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▇▇▇▇▇▇ Media Broker Consultants (▇▇▇▇▇▇▇ ▇▇▇▇▇▇) is or will be
entitled to any fee or other compensation in the nature of a brokerage
fee or finder's fee as a result of the Closing hereunder. Seller shall
be wholly responsible for any brokerage or other fee due to ▇▇▇▇▇▇ Media
Broker Consultants (▇▇▇▇▇▇▇ ▇▇▇▇▇▇).
10.5 EXPENSES OF THE PARTIES. It is expressly understood and
agreed that all expenses of preparing this Agreement and of preparing and
prosecuting the Assignment Application with the Commission, and all other
expenses, whether or not the transactions contemplated hereby are
consummated, shall be borne solely by the party who shall have incurred
the same and the other party shall have no liability in respect thereto,
except as otherwise provided herein. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use
taxes, shall be borne equally by Seller and Buyer. Any filing or grant
fees imposed by any governmental authority the consent of which is
required for the transactions contemplated hereby shall be borne equally
by Seller and Buyer.
10.6 ENTIRE AGREEMENT. This Agreement, together with any
related Schedules or Exhibits, contains all the terms agreed upon by the
parties with respect to the subject matter herein, and supersedes all
prior agreements and understandings among the parties and may not be
changed or terminated orally. No attempted change, termination or waiver
of any of the provisions hereof shall be binding unless in writing and
signed by the party against whom the same is sought to be enforced.
10.7 HEADINGS. The headings set forth in this Agreement have
been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any manner, or be deemed to interpret in whole or in
part, any of the terms or provisions of this Agreement. Unless otherwise
specified herein, the section references contained herein refer to
sections of this Agreement.
10.8 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New York.
10.9 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of such shall constitute one and the same
instrument.
10.10 NOTICES. Any notices or other communications shall be in
writing and shall be considered to have been duly given when deposited
into first class,
Page 42
certified mail, postage prepaid, return receipt requested, delivered personally
(which shall include delivery by Federal Express or other recognized overnight
courier service that issues a receipt or other confirmation of delivery) or
delivered via facsimile machine;
IF TO SELLER:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
Vice President
EBE Communications Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ & Singer LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
IF TO BUYER:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ Communications Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may at any time change the place of receiving notice
by giving notice of such change to the other as provided herein.
10.11 SPECIFIC PERFORMANCE. Seller acknowledges that the
Station is of a special, unique and extraordinary character and that
damages are inadequate to compensate Buyer for Seller's breach of this
Agreement. Accordingly, in the event of a material breach by Seller of
its representations, warranties, covenants and agreements under this
Agreement, Buyer may ▇▇▇ at law for damages or, at Buyer's
Page 43
sole election in addition to any other remedy available to it, Buyer may also
seek a decree of specific performance requiring Seller to fulfill its
obligations under this Agreement, and Seller agrees to waive its defense
that an adequate remedy at law exists.
10.12 CONSENT TO JURISDICTION. Seller and Buyer hereby submit
to the nonexclusive jurisdiction of the courts of the State of New York
and the federal courts of the United States of America located in such
state solely in respect of the interpretation and enforcement of the
provisions hereof and of the documents referred to herein, and hereby
waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that they are not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or
that this Agreement or any of such documents may not be enforced in or by
said courts or that the Station property is exempt or immune from
execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding
is improper.
10.13 FURTHER ASSURANCES. Seller and Buyer agree to execute
all such documents and take all such actions after the Closing Date as
any other party shall reasonably request in connection with carrying out
and effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including, without limitation, the
execution and delivery of any and all confirmatory and other documents in
addition to those to be delivered on the Closing Date and all actions
which may reasonably be necessary or desirable to complete the
transactions contemplated hereby.
10.14 PUBLIC ANNOUNCEMENTS. No public announcement (including
an announcement to employees) or press release concerning the
transactions provided for herein and in the LMA shall be made by either
party without the prior approval of the other party, except as required
by law.
Page 44
IN WITNESS WHEREOF, the parties hereto have executed or have
caused this Agreement to be executed by a duly authorized officer on the
day and year first above written.
SELLER
EBE COMMUNICATIONS LIMITED PARTNERSHIP
By: Guild Radio Corporation, Inc.,
General Partner
By:
Name:
Title:
BUYER
BREADBASKET BROADCASTING CORPORATION
By:
Name:
Title:
IN WITNESS WHEREOF, ▇▇▇▇▇▇ Communications Corporation has
caused this Agreement to be executed by a duly authorized officer on the
day and year first above written for the sole purpose of being bound by
the provisions of Section 1.7 hereof.
▇▇▇▇▇▇ COMMUNICATIONS CORPORATION
By:
Name:
Title: