Exhibit 2.63
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of March 30, 1998, by and
between Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"),
Cumulus Licensing Corporation, a Nevada corporation ("Licensing"), and Mountain
Wireless, Inc. (the "Seller"). Broadcasting and Licensing are referred to
collectively herein as the "Buyers." The Buyers and the Seller are referred to
collectively herein as the "Parties." Capitalized terms used in this Agreement
are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers hereby
agree to purchase substantially all of the assets (and assume certain of the
liabilities) of the Seller that are used or useful in the operation of radio
station WTOS-FM, licensed to Skowhegan, Maine (the "Station") in return for
cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and conditions
of this Agreement, Licensing agrees to purchase from the Seller, and the Seller
agrees to sell, transfer, convey, and deliver to Licensing, all of the FCC
Licenses listed in Section 2(l) of the Disclosure Schedule. In addition,
Broadcasting agrees to purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to Broadcasting, all of the Acquired Assets other
than the FCC Licenses. Both such sales shall take place at the Closing for the
consideration specified below in this Section 1.
(b) Assumption of Liabilities. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to assume and become responsible for all of the
Assumed Liabilities at the Closing. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Seller not included within the definition of Assumed Liabilities and the
Seller agrees to pay and discharge all Liabilities and obligations of the Seller
other than the Assumed Liabilities.
(c) Purchase Price. The Buyers agree to pay to the Seller, as consideration
for the Acquired Assets, the amount of Two Million Two Hundred Thousand Dollars
($2,200,000.00) (the "Purchase Price"). The Purchase Price shall be payable as
follows:
(i) on the date of this Agreement, the Buyers will deposit with the
Escrow Agent an irrevocable letter of credit in favor of Escrow Agent in the
amount of One Hundred Ten Thousand Dollars ($110,000.00)(the "▇▇▇▇▇▇▇ Money
Deposit") by wire transfer or delivery of other immediately available funds; and
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(ii) on the Closing Date, the Buyers shall pay to the Seller the amount
of Two Million Two Hundred Thousand Dollars ($2,200,000.00), less interest
earned on the ▇▇▇▇▇▇▇ Money Deposit, if any; and
The ▇▇▇▇▇▇▇ Money Deposit referenced in this Section l(c) shall be placed in
escrow with the Escrow Agent pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the "▇▇▇▇▇▇▇ Money Escrow Agreement"), and the
Escrow Agency shall cancel, draw upon, or take other action with respect to the
irrevocable letter of credit representing the ▇▇▇▇▇▇▇ Money Deposit pursuant to
the terms of the ▇▇▇▇▇▇▇ Money Escrow Agreement.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Station in
Skowhegan, Maine, or at such other location as the parties may mutually
determine, commencing at 9:00 a.m. local time on the date set by the Buyers not
earlier than the fifth business day or later than the tenth business day after
the FCC approval of the Assignment Application becomes a Final Order, by which
date all other conditions to the obligations of the Parties to consummate the
transactions contemplated hereby will have been satisfied or such other date as
the Parties may mutually determine (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) the Seller will deliver
to the Buyers the various certificates, instruments, and documents referred to
in Section 5(a) below; (ii) the Buyers will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 5(b) below;
(iii) the Seller will execute, acknowledge (if appropriate), and deliver to the
Buyers (A) assignments (including Lease and other Assumed Contract assignments
and Intellectual Property transfer documents) and bills of sale in the forms
attached hereto as Exhibits B-1 through B-2, (B) such affidavits, transfer tax
returns, memorandums of lease, and other additional documents as may be
necessary to convey title to the Real Estate to the Buyers in the condition
required herein or provide public notice of existence of the Leases, and (C)
such other instruments of sale, transfer, conveyance, and assignment as the
Buyers and their counsel reasonably may request; (iv) the Buyers will execute,
acknowledge (if appropriate), and deliver to the Seller (A) an assumption in the
form attached hereto as Exhibit C and (B) such other instruments of assumption
as the Seller and its counsel reasonably may request; and (v) the Buyers will
deliver to the Seller the consideration specified in Section l(c) above.
(f) The Parties agree to allocate the Purchase Price (and all other
capitalizable costs) among the Acquired Assets for all purposes (including
financial accounting and tax purposes) in accordance with an allocation schedule
to be agreed upon within thirty (30) days of the Closing.
(g) At the Closing, the Seller and Buyers shall execute the Transitional
Services Agreement attached hereto as Exhibit E.
2. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyers that the statements contained in this Section 2 are
correct and complete as of the date of this Agreement, except as set forth in
the lettered and numbered paragraphs
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contained in the disclosure schedule accompanying this Agreement and initialed
by the Parties (the "Disclosure Schedule") corresponding to the lettered and
numbered sections of this Section 2.
(a) Organization of the Seller. The Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Seller does not have any Subsidiaries. The Seller has the
power and authority to own or lease its properties and to carry on all business
activities now conducted by it.
(b) Authorization of Transaction. The Seller has full power and authority to
execute and deliver this Agreement and all agreements and instruments to be
executed and delivered by such Party pursuant to this Agreement (collectively,
the "Ancillary Agreements") and to perform its obligations hereunder and
thereunder. Without limiting the generality of the foregoing, the Board of
Directors of the Seller has duly authorized the execution, delivery, and
performance of this Agreement and the Ancillary Agreements by the Seller. This
Agreement and the Ancillary Agreements constitute the valid and legally binding
obligation of the Seller, enforceable in accordance with their respective terms
and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) above), will (i) violate any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which the Seller
is subject or any provision of the charter or bylaws of the Seller; or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or third party consent under any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest, or
other agreement, arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to the
Assignment Application described in Section 4(b) and as disclosed in Section
2(c) of the Disclosure Schedule, the Seller does not need to give any notice to,
make any filing with, or obtain any Licenses, consent, or approval of any court
or government or governmental agency in order for the Parties to enter into this
agreement or the Ancillary Agreements or to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements (including the
assignments and assumptions referred to in Section 1(e) above).
(d) Title to Acquired Assets. Other than the Security Interests set forth on
Section 2(d) of the Disclosure Schedule (which shall be released at or before
the Closing) the Seller has good and marketable title to all of the Acquired
Assets, free and clear of any Security Interest or restriction on transfer.
(e) Financial Statements. Included in Section 2(e) of the Disclosure
Schedule are the following financial statements (collectively the "Financial
Statements"): (i) statements of income, and cash flow as of and for the fiscal
years ended December 31, 1993, December 31, 1994, December 31, 1995 and December
31, 1996, for the Station; and (ii) statements of income, as of
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and for each month during 1996 and each month ending December 31 in 1997 for the
Station. The Financial Statements have been prepared in accordance with GAAP
(except to the extent that footnotes are not included) applied on a consistent
basis throughout the periods covered thereby, are correct and complete in all
material respects, fairly represent the financial condition of the Station on
such dates and the results of operations for the periods designated therein, and
are consistent with the books and records of the Seller (which books and records
are correct and complete in all material respects).
(f) Events Subsequent to January 1, 1997. Since January 1, 1997, except as
set forth in Section 2(f) of the Disclosure Schedule, there has not been any
material adverse change in the assets, Liabilities, business condition of the
Station. For the purposes of this Agreement a "material adverse change" shall
not apply to or include any change in the ratings of the Station and/or any
decline of less than Ten Thousand Dollars ($10,000) in the Station's cash flow
for the period January 1, 1998-April 26, 1998 when compared to the same period
in 1997. Without limiting the generality of the foregoing and solely with
respect to operation of the Station since that date:
(i) the Seller has not sold, leased, transferred, or assigned any of
its material assets, tangible or intangible;
(ii) other than this Agreement, the Seller has not entered into any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and sublicenses)
outside the Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and sublicenses)
involving more than $5,000 to which the Seller is a party or by which it or any
of its assets are bound;
(iv) no Security Interest has been imposed upon any of Seller's assets,
tangible or intangible;
(v) the Seller has not made any capital expenditure (or series of
related capital expenditures) outside the Ordinary Course of Business;
(vi) the Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of any other person (or series of
related capital investments, loans, and acquisitions);
(vii) the Seller has not created, incurred, assumed, or guaranteed any
indebtedness (including capitalized lease obligations) outside the Ordinary
Course of Business;
(viii) the Seller has not delayed or postponed (beyond its normal
practice in the Ordinary Course of Business) the payment of accounts payable and
other Liabilities;
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(ix) the Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
(x) the Seller has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(xi) the Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of its property or any action
adversely affecting the FCC Licenses;
(xii) the Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees giving rise to
any claim or right on its part against the person or on the part of the person
against it;
(xiii) the Seller has not entered into any employment contract,
consulting contract or severance agreement or collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or
agreement;
(xiv) the Seller has not granted any increase (outside routine salary
and wage increases in the Ordinary Course of Business) in the rate of
compensation, commissions, bonus or other remuneration payable, or granted any
severance or termination pay to, any of its directors, officers, and employees;
(xv) Except as set forth in Section 2(f) of the Disclosure Schedule,
the Seller has not adopted any (A) bonus, (B) profit-sharing, (C) incentive
compensation, (D) pension, (E) retirement, (F) medical, hospitalization, life,
or other insurance, (G) severance, or (H) other plan, contract, or commitment
for any of its directors, officers, and employees, or modified or terminated any
existing such plan, contract, or commitment;
(xvi) the Seller has not made any other change in employment terms for
any of its directors, officers, and employees;
(xvii) the Seller has not made or pledged to make any charitable or
other capital contribution;
(xviii) the Seller has not altered its credit and collection policies
or its accounting policies;
(xix) the Seller has not materially altered the programming, format or
call letters of the Station, or its promotional and marketing activities;
(xx) the Seller has not applied to the FCC for any modification of the
FCC Licenses or failed to take any action necessary to preserve the FCC Licenses
and has operated the Station in compliance therewith and with all FCC rules and
regulations; or
(xxi) the Seller has not committed to any of the foregoing.
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(g) Tax Matters. The Seller has timely and properly filed all Tax Returns
that it was required to file with respect to the Station's operations. All such
Tax Returns were correct and complete in all material respects and properly
reflect the tax liability of the Seller. The Seller has not requested any
extension of time within which to file returns in respect of any Taxes with
respect to the Seller's operations. No Tax deficiencies have been proposed or
assessed against the Seller. There are no pending, or to the Seller's knowledge,
threatened audits, investigations, or claims for or relating to any liability in
respect of Taxes with respect to the Seller's operations. All Taxes owed by the
Seller with respect to its operations (whether or not shown on any Tax Return)
have been paid. The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. There are no Security
Interests on any of the assets of the Seller that arose in connection with any
failure (or alleged failure) to pay any Tax.
(h) Tangible Assets. Section 2(h) of the Disclosure Schedule sets forth a
listing of all transmitter and station equipment, vehicles and other tangible
personal property used in conducting the operation and business of the Station,
which are to be conveyed by Seller to Buyers pursuant to this Agreement. The
Seller owns or leases all tangible assets necessary for the conduct of the
operation and business of the Station as presently conducted and as presently
proposed to be conducted and all leased assets are specifically identified as
such in Section 2(h) of the Disclosure Schedule. Each such tangible asset is
free from defects (patent and latent), has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used. Any leased personal property included within the tangible personal
property is in the condition required of such property by the terms of the lease
applicable thereto during the term of the lease and upon the expiration thereof.
All of the equipment utilized in the operation of the Station is in substantial
compliance with all FCC and FAA requirements and is sufficient to satisfy the
intended needs of the normal customary operations of the Station at all times of
the year and all such equipment is in substantial compliance with all applicable
laws.
(i) Real Property. Section 2(i) of the Disclosure Schedule lists and
describes briefly all Owned Real Estate and real property leased to the Seller
(including, without limitation, complete legal descriptions for all of the Real
Estate) in connection with the operation of the Station. The Seller has
delivered to the Buyer correct and complete copies of the Leases. With respect
to the Real Estate:
(i) the Seller has good and marketable title to all of the Owned Real
Estate free and clear of all liens, charges, mortgages, security interests,
easements, restrictions or other encumbrances of any nature whatsoever except
real estate taxes for the year of Closing and municipal and zoning ordinances
and recorded utility easements which do not impair the current use, occupancy or
value or the marketability of title of the property and which are disclosed in
Section 2(i) of the Disclosure Schedule (collectively, the "Permitted Real
Estate Encumbrances");
(ii) the Leases are and, following the Closing will continue to be,
legal, valid, binding, enforceable, and in full force and effect;
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(iii) no party to any Lease is in breach or default (or has repudiated
any provision thereof), and no event has occurred which, with notice or lapse of
time, would constitute a breach or default thereunder or permit termination,
modification, or acceleration thereunder;
(iv) there are no disputes, oral agreements, or forbearance programs in
effect as to any Lease;
(v) none of the Owned Real Estate and to the Seller's Knowledge, none
of the properties subject to the Leases is subject to any lease (other than
Leases), option to purchase or rights of first refusal;
(vi) except for Permitted Real Estate Encumbrances, there are no (i)
actual or, to the Seller's Knowledge, proposed special assessments with respect
to any of the Real Estate; (ii) pending or, to the Seller's Knowledge,
threatened condemnation proceedings with respect to any of the Real Estate;
(iii) pending or, to the Seller's Knowledge, threatened litigation or
administrative actions with respect to any of the Real Estate; (iv) mechanic's
or materialmens' liens with respect to the Owned Real Estate; (v) structural or
mechanical defects in any of the buildings or improvements located in the Real
Estate; (vi) planned or commenced improvements which will result in an
assessment or otherwise affect the Real Estate; (vii) governmental agency or
court orders requiring the repair, alteration or correction of any existing
condition with respect to the Real Estate or any portion thereof; or (viii) any
pending or, to the Seller's Knowledge, threatened changed in any zoning laws or
ordinances which may affect any of the Real Estate or Seller's use thereof;
(vii) all buildings and improvements on the Real estate are in good
operating condition and repair, normal wear and tear excepted;
(viii) the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the Leases or its rights
thereunder;
(ix) to the Seller's Knowledge, all facilities on the Real Estate have
received all approvals of governmental authorities (including licenses, permits
and zoning approvals) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws, rules, and
regulations;
(x) all facilities on the Real Estate are supplied with utilities and
other services necessary for the operation of said facilities; and
(xi) to the Seller's Knowledge, the owner of each leased facility has
good and marketable title to the underlying parcel of real property, free and
clear of any Security Interest, easement, covenant, or other restriction, except
for Permitted Real Estate Encumbrances and Seller's leasehold interest in each
Lease has priority over any other interest except for the fee interest therein
and Permitted Real Estate Encumbrances;
(j) Intellectual Property. The Seller owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for or currently used in the operation of the
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Station as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Seller in connection with
operation of the Station immediately prior to the Closing hereunder will be
owned or available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder. To the Seller's knowledge, with
respect to such Intellectual Property used in the operation of the Station:
(i) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and the Seller has never received any charge,
complaint, claim, or notice alleging any such interference, infringement,
misappropriation, or violation. To the Knowledge of the Seller, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Seller.
(ii) Section 2(j) of the Disclosure Schedule identifies each patent,
trademark or copyright registration which has been issued to the Seller with
respect to any of its Intellectual Property and the call letters (current and
past) of the Station, identifies each pending patent, trademark or copyright
application for registration which the Seller has made with respect to any of
its Intellectual Property, and identifies each license, agreement, or other
permission which the Seller has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). The Seller has
delivered to the Buyer correct and complete copies of all such patents,
trademarks or copyright registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer correct and
complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. With respect to each item of
Intellectual Property used in the operation of the Station that the Seller owns:
(A) the Seller possesses all right, title, and interest in and to
the item and all registrations and applications are in full force and
effect;
(B) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction, or charge;
(C) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Seller has not ever agreed to indemnify any person or
entity for or against any interference, infringement, misappropriation,
or other conflict with respect to the item.
(iii) Section 2(j) of the Disclosure Schedule also identifies each item
of Intellectual Property that any third party owns and that the Seller uses in
connection with operation of the Station pursuant to license, sublicense,
agreement, or permission including, but not limited to the call letters of the
Station. The Seller has supplied the Buyer with correct and complete copies of
all such licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each such item of used Intellectual Property used in the
operation of the Station:
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(A) the license, sublicense, agreement, or permission covering the
item is, and following the Closing will continue to be on identical
terms, legal, valid, binding, enforceable, and in full force and
effect;
(B) no party to the license, sublicense, agreement, or permission
is in breach or default (or has repudiated any provision thereof), and
no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(C) with respect to each sublicense, the representations and
warranties set forth in subsections (A) and (B) above are true and
correct with respect to the underlying license;
(D) the underlying item of Intellectual Property is not subject to
any outstanding judgment, order, decree, stipulation, injunction, or
charge;
(E) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending, or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property;
(F) the Seller has not agreed to indemnify any person or entity
for or against any interference, infringement, misappropriation, or
other conflict with respect to the underlying item of Intellectual
Property; and
(G) the Seller has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(k) Contracts. Section 2(k) of the Disclosure Schedule lists the following
contracts, agreements, and other written arrangements (other than with
advertisers for the sale of air time which are listed in Section 2(s) of the
Disclosure Schedule) in connection with operation of the Station to which the
Seller is a party:
(i) any written arrangement (or group of related written arrangements)
for the lease of personal property from or to third parties providing for lease
payments in excess of $1,000 per year;
(ii) any written arrangement (or group of related written arrangements)
for the purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services which either calls for performance
over a period of more than one year or involves more than the sum of $1,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than $1,000 or under
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which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(v) any written arrangement concerning confidentiality or
noncompetition;
(vi) any written arrangement with any of its employees in the nature of
a collective bargaining agreement, consulting agreement, compensation agreement,
employment agreement, commission agreement, or severance agreement;
(vii) any written arrangement under which the consequences of a default
or termination could have an adverse effect on the assets, Liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Seller or the Station;
(viii) any written arrangement concerning a guaranty by the Seller of
the obligations of any other party; or
(ix) any other written arrangement (or group of related written
arrangements) either involving more than $5,000 or not entered into in the
Ordinary Course of Business.
The Seller has delivered to the Buyer a correct and complete copy of each
written arrangement listed in Section 2(k) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed which
constitutes an Assumed Contract: (A) the written arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the written arrangement
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing (if the arrangement has not
expired according to its terms); (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration, under the
written arrangement; and (D) no party has repudiated any provision of the
written arrangement. The Seller is not a party to any verbal contract,
agreement, or other arrangement which, if reduced to written form, would be
required to be listed in Section 2(k) of the Disclosure Schedule under the terms
of this Section 2(k). Except for the Assumed Contracts, the Buyer shall not have
any Liability or obligations for or in respect of any of the contracts set forth
in Section 2(k) of the Disclosure Schedule or any other contracts or agreements
of the Seller. No advertiser of the Station has indicated within the past year
that it will stop, or decrease the rate of, buying services from them.
(l) Commission Licenses and Compliance with Commission Requirements.
(i) All licenses, permits, authorizations, franchises, certificates of
compliance, and consents of governmental bodies, including, without limitation,
the FCC Licenses, used or useful in the operation of the Station as they are now
being operated are (A) in full force and effect, (B) unimpaired by any acts or
omissions of the Seller or the Seller's employees or agents, (C) free and clear
of any restrictions which might limit the full operation of the Station, and (D)
detailed in Section 2(1) of the Disclosure Schedule. With respect to the
licenses, permits,
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authorizations, franchises, certificates of compliance and consents referenced
in the preceding sentence, Section 2(1) of the Disclosure Schedule also sets
forth, without limitation, the date of the last renewal, the expiration date
thereof, and any conditions or contingencies related thereto. Except as set
forth in Section 2(1) of the Disclosure Schedule, no condition exists or event
has occurred that permits, or after notice or lapse of time, or both, would
permit, the revocation or termination of any such license, permit, consent,
franchise, or authorization (other than pursuant to their express expiration
date) or the imposition of any material restriction or limitation upon the
operation of the Station as now conducted. Except as set forth in Section 2(1)
of the Disclosure Schedule, the Seller is not aware of any reason why the FCC
licenses might not be renewed in the ordinary course or revoked. For the
purposes of this Agreement, the imposition by the FCC of reporting conditions
and/or a fine in connection with the operation of the Station shall not be
considered a material restriction on the FCC licenses.
(ii) Except as disclosed in Schedule 2(l), the Station is in compliance
with the FCC's policy on exposure to radio frequency radiation, no renewal of
any FCC License would constitute a major environmental action under the FCC's
rules or policies and access to the Station's transmission facilities is
restricted in accordance with the policies of the FCC.
(iii) Except as set forth in Section 2(1) of the Disclosure Schedule,
to the Seller's Knowledge, the Seller is not the subject of any FCC or other
governmental investigation or any notice of violation or order, or any material
complaint, objection, petition to deny, or opposition issued by or filed with
the FCC or any other governmental authority in connection with the operation of
or authorization for the Station, and there are no proceedings (other than rule
making proceedings of general applicability) before the FCC or any other
governmental authority that could adversely affect any of the FCC Licenses or
the authorizations listed in Section 2(1) of the Disclosure Schedule.
(iv) The Seller has filed with the FCC and all other governmental
authorities having jurisdiction over the Station all material reports,
applications, documents, instruments, and other information required to be
filed, and will continue to make such filings through the Closing Date.
(v) The Seller is not aware of any information concerning the Station
that could cause the FCC or any other regulatory authority not to issue to the
Buyer all regulatory certificates and approvals necessary for the consummation
of the transactions contemplated hereunder or the Buyer's operation and/or
ownership of the Station.
(m) Insurance. Section 2(m) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) in connection with operation of the Station to
which the Seller is a party, a named insured, or otherwise the beneficiary of
coverage:
(i) the name, address, and telephone number of the agent;
11
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms through the Closing Date.
(n) Litigation. With respect to operation of the Station, Section 2(n) of
the Disclosure Schedule sets forth each instance in which the Seller: (i) is
subject to any unsatisfied judgment, order, decree, stipulation, injunction, or
charge; or (ii) is a party or, to the Knowledge of the Seller, is threatened to
be made a party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator.
None of the charges, complaints, actions, suits, proceedings, hearings, and
investigations set forth in Section 2(n) of the Disclosure Schedule could result
in any material adverse change in the assets, Liabilities, business, financial
condition, operations, results of operations, or future prospects of the Seller
or the Station taken as a whole. The Seller has no reason to believe that any
such charge, complaint, action, suit, proceeding, hearing, or investigation may
be brought or threatened against the Seller.
(o) Employees. Section 2(o) of the Disclosure Schedule sets forth a listing
of the names, positions, job descriptions, salary or wage rates and all other
forms of compensation paid for work at the Station of each employee of the
Seller employed in connection with the Station. Section 2(o) of the Disclosure
Schedule also sets forth a list of all employee handbooks and/or manuals
relating to the Station employees of the Seller, true and correct copies of
which have been delivered to the Buyer. To the Knowledge of the Seller, no key
Station employee or group of Station employees has any plans to terminate
employment with the Seller. The Seller is not a party to or bound by any
understanding (whether written or oral), agreement or contract with any union,
labor organization, employee group or other entity or individual which affects
the employment of Station employees of the Seller including, but not limited to
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. The Seller has no Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
Station employees of the Seller. The Seller has not been subject to a strike,
slow down or other work stoppage during the five (5) year period immediately
preceding the date hereof and, to the Seller's Knowledge, there are no strikes,
slow downs or work stoppages
12
threatened against the Seller. To the Seller's Knowledge, it has not committed
any unfair labor practice. To the Seller's Knowledge, there is no basis for any
claim by any past or present Station employee of the Seller that such employee
was subject to wrongful discharge or any employment discrimination by the Seller
or its management arising out of or relating to the employee's race, sex, age,
religion, national origin, ethnicity, handicap or any other protected
characteristic under applicable law. No proceedings are pending before any
court, governmental agency or instrumentality or arbitrator relating to labor
matters, and there is no pending investigation by any governmental agency or, to
the Knowledge of the Seller, threatened claim by any such agency or other person
relating to labor or employment matters.
(p) Employee Benefits. Section 2(p) of the Disclosure Schedule lists all
Employee Benefit Plans that the Seller maintains or to which the Seller
contributes or is required to contribute for the benefit of any current or
former Station employee of the Seller and true and correct copies of each such
Employee Benefit Plan have been delivered to the Buyers. Each Employee Benefit
Plan (and each related trust or insurance contract) complies and at all times
has complied in form and in operation in all respects with the applicable
requirements of ERISA and the Code. The Seller does not have any commitment to
create any additional Employee Benefit Plan or modify or change any existing
Employee Benefit Plan that would affect any employee or terminated Station
employee of the Seller. There are no pending or, to the Knowledge of the Seller,
threatened claims under, by or on behalf of any of the Employee Benefit Plans,
by any Station employee or beneficiary covered by any such Employee Benefit
Plan, or otherwise involving any such Employee Benefit Plan (other than routine
claims for benefits), nor have there been any Reportable Events or Prohibited
Transactions with respect to any Employee Benefit Plan.
(q) Environment, Health, and Safety. To the Seller's Knowledge:
(i) With respect to the operation of the Station and the Real Estate by
the Seller, the Seller is, and at all times in the past has been, in compliance
in all material respects with all Environmental Laws and all laws (including
rules and regulations thereunder) of federal, state, and local governments (and
all agencies thereof) concerning employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has ever been filed or commenced or, to the Seller's Knowledge, is
threatened, against the Seller alleging any failure to comply with any such
Environmental Law or laws concerning employee health and safety.
(ii) With respect to the operation of the Station and the Real Estate
by the Seller, the Seller has no Liability (and to Seller's Knowledge there is
no Basis related to the past or present operations of the Seller for any present
or future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against the Seller giving rise to any Liability) under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, the Federal Water Pollution
Control Act of 1972, the Clean Air Act of 1970, the Safe Drinking Water Act of
1974, the Toxic Substances Control Act of 1976, the Refuse Act of 1899, or the
Emergency Planning and Community Right-to-Know Act of
13
1986 (each as amended), or any other law of any federal, state, local, or
foreign government or agency thereof (including rules, regulations, codes,
plans, judgments, orders, decrees, stipulations, injunctions, and charges
thereunder) relating to public health and safety, or pollution or protection of
the environment, including, without limitation, laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes ("Environmental Laws");
(iii) With respect to operation of the Station by the Seller, the
Seller has no Liability (and to Seller's Knowledge there is no Basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Seller giving rise to any Liability)
under the Occupational Safety and Health Act, as amended, or any other law (or
rule or regulation thereunder) of any federal, state, local, or foreign
government (or agency thereof) concerning employee health and safety, or for any
illness of or personal injury to any Station employee.
(iv) With respect to operation of the Station by the Seller, the Seller
has obtained and at all times has been in compliance in all material respects
with all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all Environmental
Laws or law of any federal, state, or local or foreign government relating to
worker health and safety.
(v) To the Seller's knowledge, all properties and equipment used in the
business of the Seller are free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1, 2-trans- dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
(vi) To the Seller's knowledge, no pollutant, contaminant, or chemical,
industrial, hazardous, or toxic material or waste is buried, stored, spilled,
leaked, discharged, emitted, or released on any of the Real Estate.
(vii) None of the Acquired Assets are required to be upgraded, modified
or replaced to be in compliance with Environmental Laws.
(viii) Section 2(q) of the Disclosure Schedule contains a copy of all
environmental claims, reports, studies, compliance actions or the like of the
Seller or which are available to the Seller with respect to any of the Real
Estate or any of the Acquired Assets.
(ix) To the Seller's knowledge, no septic systems or ▇▇▇▇▇ exist on, in
or under any of the Real Estate, no above ground or underground storage tanks
are located at, on
14
or under the Real Estate, and none of the Real Estate is contaminated by
hazardous or toxic substances or waste, as defined under Environmental Laws,
originating from off-site sources.
(r) Legal Compliance.
(i) In connection with operation of the Station, the Seller has
complied in all material respects with all laws (including rules and regulations
thereunder) of federal, state, local and foreign governments (and all agencies
thereof) no charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced or, to the Seller's
Knowledge, is threatened, against the Seller alleging any failure to comply with
any such law or regulation, including those relating to the employment of labor,
employee civil rights, and equal employment opportunities and relating to
antitrust matters.
(ii) In connection with operation of the Station, the Seller has filed
in a timely manner all reports, documents, and other materials it was required
to file (and the information contained therein was correct and complete in all
material respects) under all applicable laws (including rules and regulations
thereunder) of federal state, local and foreign governments (and all agencies
thereof). To the Seller's Knowledge, it has possession of all records and
documents it was required to retain under all applicable laws (including rules
and regulations thereunder).
(s) Advertising Contracts. Section 2(s) of the Disclosure Schedule lists all
arrangements for the sale of air time or advertising on the Station in excess of
$1000, and the amount to be paid to the Seller therefor. In connection with
operation of the Station, the Seller has no reason to believe and has not
received a notice or indication of the intention of any of the advertisers or
third parties to material contracts of the Seller to cease doing business or to
reduce in any material respect the business transacted with the Seller or to
terminate or modify any agreements with the Seller (whether as a result of
consummation of the transactions contemplated hereby or otherwise).
(t) Brokers' Fees. The Seller has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(u) Undisclosed Commitments or Liabilities. There are no commitments,
liabilities or obligations relating to the Station, whether accrued, absolute,
contingent or otherwise including, without limitation, guaranties by the Seller
of the liabilities of third parties, for which specific and adequate provisions
have not been made on the Financial Statements except those incurred in or as a
result of the Ordinary Course of Business since January 1, 1997 (none of which
Ordinary Course of Business obligations have had or will have a material adverse
effect on the Station).
(v) Disclosure. The representations and warranties contained in this Section
2 do not contain any untrue statement of a fact or omit to state any fact
necessary in order to make the statements and information contained in this
Section 2 not misleading.
15
3. Representations and Warranties of the Buyer. Buyers represent and warrant
to the Seller that the statements contained in this Section 3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3), except as
set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.
(a) Organization of the Buyers. Broadcasting and Licensing are corporations
duly organized, validly existing, and in good standing under the laws of Nevada.
(b) Authorization of Transaction. Buyers have full power and authority to
execute and deliver this Agreement and the Ancillary Agreements and to perform
their obligations hereunder and thereunder. This Agreement and the Ancillary
Agreements constitute the valid and legally binding obligation of the Buyers,
enforceable against the Buyers in accordance with their respective terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) above), will (i) violate any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which the Buyers
are subject or any provision of their articles of organization or other charter
documents, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1(e) above).
(d) Brokers' Fees. Other than fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Associates,
which shall be the exclusive responsibility of the Buyers, Buyers have no
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
the Seller could become liable or obligated.
(e) Qualifications. The Buyers are legally, technically, financially and
otherwise qualified under the Communications Act of 1934, as amended, and under
the rules and regulations of the FCC to become the holder of the Station's FCC
Licenses.
16
4. Pre-Closing Covenants. The Parties agree as follows with respect to
operation of the Station during the period between the execution of this
Agreement and the Closing:
(a) General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable to
consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
(b) Assignment Application. The Seller and the Buyers have jointly filed
with the FCC an application for assignment of the FCC Licenses, permits and
authorizations pertaining to the Station from the Seller to Licensing (the
"Assignment Application"). The costs of the FCC filing fees in connection with
the Assignment Application shall be divided equally between the Parties. Each
party shall pay its own attorneys' fees. The Seller and the Buyers shall
thereafter prosecute the Assignment Application with all reasonable diligence
and otherwise use the commercially reasonable efforts to obtain the grant of the
Assignment Application as expeditiously as practicable (but neither the Seller
nor the Buyers shall have any obligation to satisfy complainants or the FCC by
taking any steps which would have material adverse effect upon the Station or
upon any Affiliate or impose significant costs on such party). If the FCC
imposes any condition on either party to the Assignment Application, such party
shall use commercially reasonable efforts to comply with such condition,
provided, that neither party shall be required hereunder to comply with any
condition that would have a material adverse effect upon the Station or any
Affiliate. The Seller and the Buyers shall jointly oppose any requests for
reconsideration or judicial review of FCC approval of the Assignment Application
and shall jointly request from the FCC extension of the effective period of FCC
approval of the Assignment Application if the Closing shall not have occurred
prior to the expiration of the original effective period of the FCC Consent.
Nothing in this Section 4(b) shall be construed to limit either party's right to
terminate this Agreement pursuant to Section 9 of this Agreement.
(c) Employment Offers. Upon notice to the Seller, and at mutually agreeable
times, the Seller will permit the Buyers to meet with its Station employees
listed on Section 2(o) of the Disclosure Schedule and designated as exclusive
employees of the Station prior to the Closing Date. Not earlier than one (1)
week prior to the Closing, the Buyers may, at their option, extend offers of
employment to all or any of the Seller's Station employees listed on Schedule
2(o) of the Disclosure Schedule and designated as exclusive employees of the
Station effective on the Closing Date. From and after the execution of this
Agreement, the Seller shall use its best efforts to assist Buyers in retaining
those employees of the Station which the Buyers wish to hire in connection with
the operation of the Station by the Buyers subsequent to the Closing, and the
Seller will not take any action to preclude or discourage any of the Seller's
Station employees from accepting any offer of employment extended by the Buyers.
(d) Notices and Consents. The Seller will give all notices to third parties
and shall have obtained all third party consents, that the Buyers reasonably may
request in connection with the matters pertaining to the Seller disclosed or
required to be disclosed in the Disclosure Schedule (including, without
limitation, consents to assignment of the Leases and other Assumed Contracts).
Each of the Parties will take any additional action that may be necessary,
proper,
17
or advisable in connection with any other notices to, filings with, and
authorizations, consents, and approvals of governments, governmental agencies,
and third parties that it may be required to give, make, or obtain.
(e) Operation of Business. The Seller will not engage in any practice, take
any action, embark on any course of inaction, or enter into any transaction in
connection with operation of the Station outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Seller will not
engage in any practice, take any action, embark on any course of inaction, or
enter into any transaction of the sort described in Section 2(f) above in
connection with operation of the Station.
(f) Advertising Obligations. The Seller shall satisfy its air time
obligations under its agreements for sale of air time and advertising on the
Station for goods or services ("Barter Agreements") such that the outstanding
aggregate balance owing under all Barter Agreements as of the Closing Date shall
not exceed Five Thousand Dollars ($5,000.00) worth of air time without the
Buyers' consent. On the Closing Date, the Seller shall deliver to the Buyers a
schedule, certified by an officer of the Seller, reflecting the aggregate
outstanding balances under all Barter Agreements in existence as of the Closing
Date.
(g) Operating Statements. The Seller shall deliver to the Buyers, for the
Buyers' informational purposes only, monthly unaudited statements of operating
revenues and operating expenses of the Station within ten (10) days after each
such statement is prepared by or for the Seller.
(h) Contracts. The Seller will not without the prior written consent of the
Buyers amend, change, or modify any of the contracts listed on Section 2(k) of
the Disclosure Schedule in any material respect. The Seller will not without
prior written consent of the Buyers enter into any new contracts respecting the
Station or their properties, except (i) contracts for the sale of time on the
Station for cash, goods or services which are entered into in the Ordinary
Course of Business and comply with Sections 4(f) and 4(j) hereof, (ii) contracts
entered into in the Ordinary Course of Business which are cancelable on not more
than thirty-one (31) days' notice without penalty or premium, and (iii)
contracts entered into in the Ordinary Course of Business each of which does not
involve more than Five Thousand Dollars ($5,000) or all of which do not involve
more than Ten Thousand Dollars ($10,000) in the aggregate.
(i) Operation of Station. The Seller shall operate the Station in
substantial compliance with the FCC Licenses and the rules and regulations of
the FCC, and the FCC Licenses shall at all times remain in full force and
effect. The Seller shall file with the FCC all material reports, applications,
documents, instruments and other information required to be filed in connection
with the operation of the Station.
(j) Credit and Receivables. The Seller will follow its usual and customary
policies with respect to extending credit for sales of air time and advertising
on the Station and with respect to collecting accounts receivable arising from
such extension of credit.
18
(k) Preservation of Business. The Seller will use its best efforts to keep
the Station's business and properties substantially intact, including its
present operations, physical facilities, working conditions, relationships with
lessors, licensors, advertisers, suppliers, customers, and employees, all of the
Confidential Information, call letters and trade secrets of the Station, and the
FCC Licenses.
(l) Full Access and Consultation. The Seller will permit representatives of
the Buyers to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Station, to all
premises, properties, books, records, contracts, Tax records, and documents of
or pertaining to the Seller in connection with operation of the Station for the
purpose of permitting the Buyer to, among other things: (a) conduct its due
diligence review, (b) review financial statements of the Station (c) verify the
accuracy of representations and warranties of the Seller contained in this
Agreement, and (d) prepare for the consummation of the transactions contemplated
by this Agreement. The Seller will consult with the Buyers' management with a
view to informing Buyer's management as to the operations, management and
business of the Station. Without limiting the foregoing, the parties acknowledge
and agree that no investigation of the Station or the Seller's business by Buyer
shall create any obligation on the part of Seller or shall limit the Buyers'
obligations under this Agreement, except to the extent that Buyer discovers
circumstances which constitute a breach of a representation, warranty or
covenant of Seller made in this Agreement, or the failure of any such
representation or warranty to be true and correct in all material respects.
(m) Notice of Developments. The Seller will give prompt written notice to
the Buyers of any material development affecting the assets, Liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Station. Each Party will give prompt written notice to the
other of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by any
Party pursuant to this Section 4(m), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(n) Exclusivity. For as long as this Agreement is in effect, the Seller will
not (i) solicit, initiate, or encourage the submission of any proposal or offer
from any person relating to any (A) liquidation, dissolution, or
recapitalization, (B) merger or consolidation, (C) acquisition or purchase of
securities or assets, or (D) similar transaction or business combination
involving the Seller; or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person to do or seek
any of the foregoing. The Seller will notify the Buyers immediately if any
person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
(o) Title Insurance, Surveys and Environmental Assessments. The Buyers at
their option and at their sole cost and expense may obtain such title insurance,
surveys and environmental assessments as they deem necessary or advisable in
connection with the consummation of transactions contemplated by this Agreement.
19
(p) Control of Station. The transactions contemplated by this Agreement
shall not be consummated until after the FCC has given its consent and approval
to the Assignment Application. Between the date of this Agreement and the
Closing Date, the Buyers and their employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Station, and such operation shall be the sole
responsibility of and in the control of the Seller.
(q) Risk of Loss. The risk of loss, damage, or destruction to any of the
Acquired Assets shall remain with the Seller until the Closing. In the event of
any such loss, damage, or destruction the Seller will promptly notify the Buyer
of all particulars thereof, stating the cause thereof (if known) and the extent
to which the cost of restoration, replacement and repair of the Acquired Assets
lost, damaged or destroyed will be reimbursed under any insurance policy with
respect thereto. The Seller will, at Seller's expense, repair or replace such
Acquired Assets to their former condition as soon as possible after loss, damage
or destruction thereof and shall use its best efforts to restore as promptly as
possible transmissions as authorized in the FCC Licenses. The Closing Date shall
be extended (with FCC consent, if necessary) for up to sixty (60) days to permit
such repair or replacement. If repair or replacement cannot be accomplished
within sixty (60) days of the date of the Seller's notice to the Buyers, and the
Buyers determine that the Seller's failure to repair or replace, alone or in the
aggregate with any other then existing factors, would have a material adverse
effect on the operation of the Station:
(a) the Buyers may elect to terminate this Agreement; or
(b) the Buyers may postpone the Closing Date until such time as the
property has been repaired, replaced or restored in a manner and to an
extent reasonably satisfactory to the Buyers, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Seller's
notice to the Buyers, in which case either party may terminate this
Agreement; or
(c) the Buyers may choose to accept the Acquired Asset in their "then"
condition, together with the Seller's assignment to the Buyers of all rights
under any insurance claims covering the loss, damage or destruction and
payment over to the Buyers of any proceeds under any such insurance
policies, previously received by the Seller with respect thereto plus an
amount equal to the amount of any deductible or self-insurance maintained by
Seller on such Acquired Assets.
In the event the Closing Date is postponed pursuant to this Section 4(q),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyers. The obligation of the Buyers to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
20
(i) the representations and warranties set forth in Section 2 above
shall be true and correct in all respects at and as of the Closing Date as
though made on and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all respects through the Closing;
(iii) the Seller shall have procured all of the third party consents
specified in Section 4(d) above, including but not limited to those relating to
transmitter and studio leases;
(iv) no action, suit, investigation, inquiry or other proceeding shall
be pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement or impose damages or penalties upon any of the parties if such
transactions are consummated, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (C) affect adversely
the right of the Buyer to own, operate, or control the Acquired Assets (and no
such judgment, order, decree, stipulation, injunction, or charge shall be in
effect);
(v) the Seller shall have delivered to the Buyer a certificate (without
qualification as to knowledge or materiality or otherwise) to the effect that
each of the conditions specified above in Sections 5(a)(i) through (iv) is
satisfied in all respects and the statements contained in such certificate shall
be deemed a warranty of the Seller which shall survive the Closing;
(vi) each of the Assignment Applications shall have been approved by a
Final Order of the FCC and the Buyer shall have received all governmental
approvals required to transfer all other authorizations, consents, and approvals
of governments and governmental agencies set forth in the Disclosure Schedule;
(vii) the parties shall have entered into the Transitional Services
Agreement;
(viii) the Buyers shall have received from counsel to the Seller an
opinion with respect to the matters set forth in Exhibit F attached hereto,
addressed to the Buyers and its lender and dated as of the Closing Date; and
(ix) all actions to be taken by the Seller in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyer.
In the event that any of the foregoing conditions to Closing shall not have been
satisfied in all material respects, the Buyers may elect to (i) terminate this
Agreement without liability to the Seller, or (ii) consummate the transactions
contemplated herein despite such failure. Regardless of whether the Buyers elect
to terminate this Agreement or consummate the transactions
21
described herein, if such failure shall be as a result of a breach of any
provision of this Agreement by the Seller (including, without limitation, any
breach arising as a result of the failure of the Seller to execute and/or
deliver any item described in this Section 5(a), the Buyers may seek appropriate
remedies for any and all damages, costs and expenses incurred by the Buyers by
reason of such breach including, without limitation, indemnification pursuant to
Section 7, below, subject, however, to the dollar limitation on damages set
forth in Section 7(e) hereof.
(b) Conditions to Obligation of the Seller. The obligation of the Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 above
shall be true and correct in all respects at and as of the Closing Date as
though made on and as of the Closing Date;
(ii) the Buyers shall have performed and complied with all of their
covenants hereunder in all respects through the Closing;
(iii) no action, suit, investigation, inquiry or other proceeding shall
be pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement or impose damages or penalties upon any of the Parties if such
transactions are consummated, or (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Seller a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified above in Section 5(b)(i)-(iii) is
satisfied in all respects and the statements contained in such certificate shall
be deemed a warranty of the Buyers which shall survive the Closing;
(v) each of the Assignment Applications shall have been approved by a
Final Order of the FCC and the Buyers shall have received all governmental
approvals required to transfer all other authorizations, consents, and approvals
of governments and governmental agencies set forth in the Disclosure Schedule;
(vi) the parties shall have entered into the Transitional Services
Agreement; and
(vii) all actions to be taken by the Buyers in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Seller.
22
In the event that any of the foregoing conditions to Closing shall not have been
satisfied in all material respects, the Seller may elect to (i) terminate this
Agreement without liability to the Buyers, or (ii) consummate the transactions
contemplated herein despite such failure. Regardless of whether the Seller
elects to terminate this Agreement or consummate the transactions described
herein, if such failure shall be as a result of a material breach of any
provision of this Agreement by the Buyers (including, without limitation, any
breach arising as a result of the failure of the Buyers to execute and/or
deliver any item described in this Section 5(a)), the Seller may seek
appropriate remedies for any and all damages, costs and expenses incurred by the
Seller by reason of such breach including, without limitation, indemnification
pursuant to Section 7, below.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 7 below).
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Station, each of the other Parties will reasonably cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
(c) Adjustments. Operation of the Station and the income and expenses
attributable thereto up through the close of business on the day before the
Closing Date shall be for the account of the Seller and thereafter for the
account of the Buyers. Such items as employee salaries, vacation, sick day and
personal time accruals, and fringe benefits, power and utilities charges,
insurance, real and personal property taxes, prepaid expenses, deposits, music
license fees, and rents and payments pertaining to the Assumed Contracts
(including any contracts for the sale of time for cash, trade or barter so
assigned) shall be prorated between the Seller and the Buyers as of the Closing
Date in accordance with the foregoing principle. In addition, all commissions
payable with respect to the accounts receivable of the Seller (whether due
before or after Closing) shall be solely for the account and responsibility of
the Seller. Contractual arrangements that do not reflect an equal rate of
compensation to a Station over the term of the agreement shall be equitably
adjusted as of the Closing Date. The prorations and adjustments
23
hereunder shall be made and paid insofar as feasible on the Closing Date, with a
final settlement sixty (60) days after the Closing Date. In the event of any
disputes between the Parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at such time and such disputes shall be determined by
an independent accounting firm mutually acceptable to both parties and the fees
and expenses of such accounting firm shall be paid one-half (1/2) by the Seller
and one-half (1/2) by the Buyer.
(d) Collection of Accounts Receivable. At the Closing, the Seller will turn
over to the Buyers, for collection only, the accounts receivable of the Station
owing to the Seller as of the close of business on the Closing Date. A schedule
of such accounts receivable will be delivered by the Seller to the Buyers on the
Closing Date or as soon thereafter as possible. The Buyers agree to use
commercially reasonable efforts in the ordinary course of business (but without
responsibility to institute legal or collection proceedings) to collect such
accounts receivable during the 120-day period following the Closing Date, and
will remit all payments received on such accounts during each calendar month
during this 120-day period on the one hundred twentieth (120th) day together
with an accounting of all payments received within such period. The Buyers shall
have the sole right to collect such accounts receivable during such one hundred
twenty (120) day period. In the event the Buyers receive monies during the
120-day period following the Closing Date from an advertiser who, after the
Closing Date, is advertising over any of the Station, and that advertiser was
included among the accounts receivable as of the Closing Date, the Buyer shall
apply said monies to the oldest outstanding balance due on the particular
account, except in the case of a "disputed" account receivable. For purposes of
this Section 6(d), a "disputed" account receivable means one which the account
debtor refuses to pay because he asserts that the money is not owed or the
amount is incorrect. In the case of such a disputed account, the Buyers shall
immediately return the account to the Seller prior to expiration of the 120-day
period following the Closing Date. If the Buyers return a disputed account to
the Seller, the Buyers shall have no further responsibility for its collection
and may accept payment from the account debtor for advertising carried on any of
the Station after the Closing Date. At the end of the 120-day period following
the Closing Date, the Buyers will turn back to the Seller all of the accounts
receivable of the Station as of the Closing Date owing to the Seller which have
not yet been collected, and the Buyers will thereafter have no further
responsibility with respect to the collection of such receivables. During the
120-day period following the Closing Date, the Buyers shall afford the Seller
reasonable access to the accounts receivable "aging list." The Seller
acknowledges and agrees that the Buyers are acting as its collection agent
hereunder for the sole benefit of the Seller and that Buyers have accepted such
responsibility for the accommodation of the Seller. The Buyer shall not have any
duty to inquire as to the form, manner of execution or validity of any item,
document, instrument or notice deposited, received or delivered in connection
with such collection efforts, nor shall the Buyers have any duty to inquire as
to the identity, authority or rights of the persons who executed the same. The
Seller shall indemnify Buyers and hold them harmless from and against any
judgments, expenses (including attorney's fees) costs or liabilities which the
Buyers may incur or sustain as a result of or by reason of such collection
efforts.
(f) Consents. In the event any of the Assumed Contracts are not assignable
or any consent to such assignment is not obtained on or prior to the Closing
Date, and the Buyers elect
24
to consummate the transactions contemplated herein despite such failure or
inability to obtain such consent, the Seller shall continue to use commercially
reasonable efforts to obtain any such assignment or consent after the Closing
Date. Until such time as such assignment or approval has been obtained, the
Seller will cooperate with Buyers in any lawful and economically feasible
arrangement to provide that the Buyer shall receive the Seller's interest in the
benefits under any such Assumed Contract, including performance by the Seller as
agent, if economically feasible; provided, however, that the Buyers shall
undertake to pay or satisfy the corresponding liabilities for the enjoyment of
such benefit to the extent that Buyers would have been responsible therefor if
such consent or assignment had been obtained.
7. Remedies for Breaches of this Agreement.
(a) Survival. All of the representations and warranties of the Seller
contained in Section 2 of this Agreement shall survive the Closing and continue
in full force and effect for a period until 90 days after the applicable statute
of limitations has expired with respect to any claim by the Buyers based on a
claim or action by a third party and for a period of three (3) years following
Closing with respect to any claim by the Buyers not based on a claim or action
by a third party.
(b) Indemnification Provisions for the Benefit of the Buyers.
Except as described below in Section 7(e) with respect to a breach of a
warranty or covenant prior to the Closing Date, the Seller agrees to indemnify
the Buyers from and against the entirety of any Adverse Consequences the Buyers
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by:
(i) any misrepresentation or breach of any of the Seller's
representations or warranties, and covenants contained in this Agreement or in
any Ancillary Agreement executed and/or delivered by the Seller (so long as the
Buyers make a written claim for indemnification within the applicable survival
period);
(ii) any breach or nonfulfillment of any agreement or covenant of the
Seller contained herein or in any Ancillary Agreement;
(iii) any Liability of the Seller which is not an Assumed Liability;
and/or
(iv) any Liability of the Buyers arising by operation of law (including
under any bulk transfer law of any jurisdiction or under any common law doctrine
of defacto merger or successor liability) which is not an Assumed Liability.
(c) Indemnification Provisions for the Benefit of the Seller. Except as
described below in Section 7(e) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Buyer agrees to indemnify the Seller
from and against the entirety of any Adverse Consequences the Seller may suffer
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any misrepresentation or breach of any of the Buyers' representations or
warranties contained
25
in this Agreement or in any Ancillary Agreement executed and/or delivered by the
Buyers (so long as the Seller makes a written claim for indemnification within
the applicable survival period) or (ii) any breach or nonfulfillment of any
agreement or covenant of the Buyers contained herein or in any Ancillary
Agreement, or (iii) any Assumed Liability.
(d) Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are materially breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 10(o)
below), in addition to any other remedy to which it may be entitled, at law or
in equity. Each of the Parties acknowledges and agrees that not withstanding the
provision in Section 7(e) with respect to the remedy of liquidated damages upon
a material breach of a warranty or covenant of this Agreement prior to the
Closing, money damages would not be an adequate remedy for a material breach of
any provision of this Agreement.
(e) Liquidated Damages. The Buyer and the Seller acknowledge that in the
event that the transactions contemplated by this Agreement are not closed
because of a default by either Party, the Adverse Consequences as a result of
such default may be difficult, if not impossible, to ascertain. Accordingly, in
lieu of indemnification pursuant to Section 7(b) or 7(c), the nondefaulting
Party shall be entitled to receive from the defaulting Party for such default
the sum of Two Hundred Fifty Thousand Dollars ($250,000) as liquidated damages
without the need for proof of damages, subject only to successfully proving in a
court of competent jurisdiction that the other Party has materially breached
this Agreement and that the transactions contemplated thereby have not occurred;
provided however, that the Buyers shall retain the option to receive, pursuant
to Section 7(d), and in lieu of receiving the liquidated damages provided in
this Section 7(e), the remedy of specific performance with respect to a breach
of this Agreement prior to the Closing. The Buyers and the Seller agree to pay
said sum of liquidated damages within ten (10) days of the date that the
non-defaulting party obtains such a judgment, and agree that in the event this
Agreement is terminated by the Seller prior to the Closing Date as a result of a
breach or default by the Buyers under this Agreement, the Seller shall proceed
against the ▇▇▇▇▇▇▇ Money as partial satisfaction of liquidated damages owed by
Buyers.
(f) Matters Involving Third Parties. If any third party shall notify any
Party (the "Indemnified Party") with respect to any matter which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 7, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is damaged as a result
of such failure. In the event any Indemnifying Party notifies the Indemnified
Party within 15 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, (i)
26
the Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified Party within 15 days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, however, and/or in the event the
Indemnifying Party shall fail to defend such claim actively and in good faith,
then the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
(g) Retention of Assets. Seller agrees that in the event Seller sells or
otherwise divests substantially all of its assets prior to the expiration of the
survival of warranties provision of Section 7(a) hereof, Seller will deposit in
escrow Fifty Thousand Dollars ($50,000) for the purpose of satisfying any claims
by Buyers for indemnification made pursuant to this Agreement. This sum shall
remain in escrow until the expiration of the survival of warranties provision of
Section 7(a) hereof.
8. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of the
assets of the Station listed in Section 2(h) of the Disclosure Schedule, other
than Retained Assets that are used or useful in the operation of the Station,
which are also listed in Section 2(h) of the Disclosure Schedule , wherever
located, including but not limited to all of its (a) leaseholds and other
interests of any kind therein, improvements, fixtures, and fittings thereon
(such as towers and antennae), and easements, rights-of-way, and other
appurtenances thereto); (b) tangible personal property (such as fixed assets,
computers, data processing equipment, electrical devices, monitoring equipment,
test equipment, switching, terminal and studio equipment, transmitters,
transformers, receivers, broadcast facilities, furniture, furnishings,
inventories of compact disks, records, tapes and other supplies, vehicles, and
all assignable warranties with respect thereto; (c) Intellectual Property,
goodwill associated therewith, licenses and sublicenses granted and obtained
with respect thereto, and rights thereunder, remedies against infringements
thereof, and rights to protection of interests therein under the laws of all
jurisdictions; (d) rights under orders and agreements (including those Barter
Agreements and Advertising Contracts identified on the Disclosure Schedule) now
existing or entered into in the Ordinary Course of Business for the sale of
advertising time on the Station; (e) Assumed Contracts, indentures, Security
Interests, guaranties, other similar arrangements, and rights thereunder; (f)
call letters
27
of the Station, jingles, logos, slogans, and business goodwill of the Station;
(g) claims, deposits, prepayments, refunds, causes of action, choses in action,
rights of recovery (including rights under policies of insurance), rights of set
off, and rights of recoupment; (h) Licenses and similar rights obtained from
governments and governmental agencies; and (i) FCC logs and records and all
other books, records, ledgers, logs, files, documents, correspondence,
advertiser lists, all other lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising and promotional materials,
program production materials, studies, reports, and other printed or written
materials; and (j) goodwill of the Station.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"Advertising Contracts" has the meaning set forth in Section 2(s), above.
"Affiliate" means with reference to any person or entity, another person or
entity controlled by, under the control of or under common control with that
person or entity.
"Assignment Application" has the meaning set forth in Section 4(b) above.
"Assumed Contracts" means the Leases, the Barter Agreements, the Advertising
Contracts and those contracts listed on Exhibit G attached hereto.
"Assumed Liabilities" means obligations of the Seller which accrue after the
Closing Date under the Assumed Contract either: (i) to furnish services, and
other non-Cash benefits to another party after the Closing; or (ii) to pay for
goods, services, and other non-Cash benefits that another party will furnish to
it after the Closing. The Assumed Liabilities shall not include any Retained
Liabilities.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyers" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section l(d) above.
"Closing Date" has the meaning set forth in Section l(d) above.
"Code" means the Internal Revenue Code of 1986, as amended.
28
"Confidential Information" means any information concerning the businesses
and affairs of the Seller.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
"▇▇▇▇▇▇▇ Money Deposit" has the meaning set forth in Section l(c) above.
"▇▇▇▇▇▇▇ Money Escrow Agreement" has the meaning set forth in Section l(c)
above.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental Laws" has the meaning set forth in Section 2(q), above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Associates.
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC Licenses" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Station.
"Final Order" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
29
"Financial Statements" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 7(d) above.
"Indemnifying Party" has the meaning set forth in Section 7(d) above.
"Intellectual Property" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and registrations
and applications for registration thereof, (c) all programs, programming
materials, copyrights and registrations and applications for registration
thereof, (d) mask works and registrations and applications for registration
thereof, (e) computer software, data, and documentation, (f) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, market and other research information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (b) copies and tangible embodiments thereof (in whatever
form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Leases" means those real estate leases to which Seller is a party governing
the Station's FM tower site, as described in Section 2(i) of the Disclosure
Schedule.
"Liability" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Licenses" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Station and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Estate" means the real property owned by the Seller in
connection with operation of the Station as described in Section 2(i) of the
Disclosure Schedule and all buildings, fixtures, and improvements located
thereon.
30
"Party" has the meaning set forth in the preface above.
"Permitted Real Estate Encumbrances" shall have the meaning set forth in
Section 2(i), above.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"Purchase Price" has the meaning set forth in Section l(c) above.
"Real Estate" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Retained Assets" means (i) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation; (ii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyers on
the other hand entered into on or after the date of this Agreement); (iii)
accounts, notes and other receivables of the Seller; (iv) Cash; and (v) assets
that are used and useful in the operation of the Station which are listed as
Retained Assets in Section 2(h) of the Disclosure Schedule.
"Retained Liabilities" means any other obligations or Liabilities of the
Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Station prior to the Closing; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(i) relating to Surveys, title commitments and environmental audits and
Section 4(b) with regard to the Assignment Application; or (iv) any Liability or
obligation of the Seller under this Agreement (or under any side agreement
between the Seller on the one hand and the Buyers on the other hand entered into
on or after the date of this Agreement).
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"Seller" has the meaning set forth in the preface above.
"Station" means the radio broadcast station having the call letters WTOS-FM,
licensed by the FCC to operate in Skowhegan, Maine.
31
"Subsidiary," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"Surveys" has the meaning set forth in Section 4(o) above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transitional Services Agreement" means the agreement between the parties in
the form attached here as Exhibit E.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyers and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyers may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing in the event the Seller is in
material breach of any representation, warranty, or covenant contained in this
Agreement; provided, however, that if such breach is capable of being cured,
such breach also remains uncured for twenty (20) days after notice of breach is
received by the Seller from the Buyers;
(iii) the Seller may terminate this Agreement by giving written notice
to the Buyers at any time prior to the Closing in the event the Buyers are in
material breach of any representation, warranty, or covenant contained in this
Agreement; provided, however that if such breach is capable of being cured, such
breach remains uncured for twenty (20) days after notice of breach is received
by the Buyers from the Seller;
32
(iv) the Buyers may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing if the Closing shall not have
occurred on or before the 270th day following the date of this Agreement by
reason of the failure of any condition precedent under Section 5(a) hereof
(unless the failure results primarily from the Buyers themselves materially
breaching any representation, warranty, or covenant contained in this
Agreement);
(v) the Seller may terminate this Agreement by giving written notice to
the Buyers at any time prior to the Closing if the Closing shall not have
occurred on or before the 270th day following the date of this Agreement by
reason of the failure of any condition precedent under Section 5(b) hereof
(unless the failure results primarily from the Seller itself materially
breaching any representation, warranty, or covenant contained in this
Agreement); or
(vi) the Buyers or the Seller may terminate this Agreement if any
Assignment Application is denied by Final Order.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 9(a) above, all obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party (except for any Liability
of any Party then in breach).
10. Miscellaneous.
(a) Survival. All of the representations, warranties, and covenants of the
Parties contained in this Agreement shall survive the Closing hereunder as and
to the extent provided in Section 7(a) hereof.
(b) Press Releases and Announcements. No Party shall issue any press release
or announcement relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party, provided that (i) the Buyers may assign all of their right,
title and interest in, to and under this Agreement to one or more
33
Affiliates (provided that the Buyers hereby guarantee performance by such entity
of the Buyers' obligations hereunder), who shall then, subject to the terms and
conditions of this Agreement, have the right to receive the Acquired Assets,
assume the Assumed Liabilities, and to pay to the Seller the Purchase Price
therefor or to any successor to the Buyers in the event of any sale, merger or
consolidation of the Buyers, and (ii) Buyers may assign their indemnification
claims and their rights under the warranties and representations of the Sellers
to the financial institution(s) providing financing to the Buyers in connection
with this transaction.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be considered to be given
and received in all respects when hand delivered, when delivered via prepaid
express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Seller:
Copy to:
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
c/o QUAESTUS Management Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
34
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy (which shall not constitute notice to Buyer) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Maine.
(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyers and
the Seller. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
35
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(1) Expenses. The Buyers and the Seller, will each bear their own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby, other than as set forth in
Section 4(b) with regard to the Assignment Applications and as set forth in
Section 4(o) with respect to Surveys, title commitments and environmental
audits. The Seller will pay all income taxes. The Seller and the Buyers will
each pay one-half (1/2) of any transfer or sales taxes and other recording or
similar fees necessary to vest title to each of the Acquired Assets in the
Buyers.
(m) Construction. The language used in this Agreement will be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied against any Party. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Portland, Maine, in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto. Any Party may make service on the other
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
10(h) above. Nothing in this Section 10(o), however, shall affect the right of
any Party to serve legal process in any other manner permitted by law. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of
the date first above written.
CUMULUS BROADCASTING, INC.
By:
-------------------------
(printed)
-------------------------
Title:
----------------------
CUMULUS LICENSING CORPORATION
By:
-------------------------
(printed)
-------------------------
Title:
----------------------
MOUNTAIN WIRELESS, INC.
By:
-------------------------
(printed)
-------------------------
Title:
----------------------
37
LIST OF OMITTED SCHEDULES AND/OR EXHIBITS
Excrow Agreement by and among Cumulus Broadcasting, Cumulus Licensing,
Mountain Wireless Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, dated as of ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇. B-1 - Form of General Assignment
Ex. B-2 - Form of ▇▇▇▇ of Sale
Ex. C - Instrument of Assumption
Ex. E - Transitional Services Agreement
Ex. F - Form of Opinion of Seller's Counsel
Ex. G - Form of Assumed Contracts
Disclosure Schedules
The preceding schedules and/or exhibits have been omitted from this exhibit.
The Company agrees to provide copies of such schedules and/or exhibits to the
Commission upon request.
38