EXHIBIT 10.13
ASSETS PURCHASE AGREEMENT
by and among
CITICASTERS CO.
and
AMERICAN RADIO SYSTEMS CORPORATION
and
AMERICAN RADIO SYSTEMS LICENSE CORP.
TABLE OF CONTENTS
Page
ARTICLE 1
PURCHASE OF ASSETS.......................................................................................1
1.1 Transfer of Assets..............................................................................1
1.2 Excluded Assets.................................................................................3
ARTICLE 2
ASSUMPTION OF OBLIGATIONS................................................................................4
2.1 Assumption of Obligations.......................................................................4
2.2 Retained Liabilities............................................................................4
ARTICLE 3
CONSIDERATION............................................................................................5
3.1 Delivery of Consideration.......................................................................5
3.2 Escrow Deposit..................................................................................5
3.3 Proration of Income and Expenses; Trade Agreements Adjustment...................................6
3.4 Allocation of Purchase Price....................................................................7
ARTICLE 4
CLOSING..................................................................................................7
4.1 Closing.........................................................................................7
4.2 Time Brokerage Agreement........................................................................7
ARTICLE 5
GOVERNMENTAL CONSENTS....................................................................................8
5.1 FCC Consent.....................................................................................8
5.2 FCC Application.................................................................................8
5.3 HSR Application.................................................................................8
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER..................................................................9
6.1 Organization and Standing.......................................................................9
6.2 Authorization and Binding Obligation............................................................9
6.3 Qualification...................................................................................9
6.4 Absence of Conflicting Agreements or Required Consents..........................................9
6.5 Litigation.....................................................................................10
6.6 Compliance With Laws...........................................................................10
6.7 Commissions or Finder's Fees...................................................................10
6.8 Availability of Funds..........................................................................10
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER................................................................10
7.1 Organization and Standing......................................................................10
7.2 Authorization and Binding Obligation...........................................................11
7.3 Absence of Conflicting Agreements or Required Consents.........................................11
7.4 Government Authorizations......................................................................11
7.5 Compliance with FCC Regulations................................................................13
7.6 Taxes..........................................................................................13
7.7 Personal Property..............................................................................13
7.8 Real Property..................................................................................14
7.9 Contracts......................................................................................15
7.10 Status of Contracts, etc.......................................................................15
7.11 Environmental..................................................................................15
7.12 Intellectual Property..........................................................................16
7.13 Financial Statements...........................................................................16
7.14 Personnel Information..........................................................................16
7.15 Litigation.....................................................................................17
7.16 Compliance With Laws...........................................................................17
7.17 Employee Benefit Plans.........................................................................18
7.18 Commissions or Finder's Fees...................................................................18
7.19 Conduct of Business in Ordinary Course: Adverse Change.........................................18
7.20 Instruments of Conveyance; Good Title..........................................................18
7.21 Undisclosed Liabilities........................................................................18
7.22 Full Disclosure................................................................................18
7.23 Insurance......................................................................................19
ARTICLE 8
COVENANTS OF BUYER......................................................................................19
8.1 Closing........................................................................................19
8.2 Notification...................................................................................19
8.3 No Inconsistent Action.........................................................................19
8.4 Accounts Receivable............................................................................19
ARTICLE 9
COVENANTS OF SELLER.....................................................................................20
9.1 Seller's Pre-Closing Covenants.................................................................20
9.2 Notification...................................................................................22
9.3 No Inconsistent Action.........................................................................23
9.4 Closing........................................................................................23
9.5 Other Items....................................................................................23
9.6 Exclusivity....................................................................................23
ARTICLE 10
JOINT COVENANTS.........................................................................................24
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10.1 Confidentiality................................................................................24
10.2 Cooperation....................................................................................25
10.3 Control of Station.............................................................................25
10.4 Consents to Assignment.........................................................................25
10.5 Filings........................................................................................25
10.6 Bulk Sales Laws................................................................................26
10.7 Employee Matters...............................................................................26
10.8 Tangible Personal Property.....................................................................27
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER..........................................................................28
11.1 Representations, Warranties and Covenants......................................................28
11.2 Governmental Consents..........................................................................28
11.3 Station Licenses Renewal.......................................................................28
11.4 Governmental Authorizations....................................................................28
11.5 Adverse Proceedings............................................................................29
11.6 Third-Party Consents...........................................................................29
11.7 Closing Documents..............................................................................29
11.8 Title Insurance................................................................................29
11.9 Real Estate....................................................................................29
11.10 Building and Mechanical Inspection.............................................................30
11.11 Pre-Merger Notification........................................................................30
11.12 No Adverse Change..............................................................................30
11.13 KSJO Tower Sublease and KUFX Studio Sublease...................................................30
11.14 Time Brokerage Agreement.......................................................................30
11.15 Tangible Personal Property.....................................................................30
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER.........................................................................31
12.1 Representations................................................................................31
12.2 Governmental Consents..........................................................................31
12.3 Adverse Proceedings............................................................................31
12.4 Pre-Merger Notification........................................................................31
12.5 Closing Documents..............................................................................31
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES.......................................................................32
13.1 Expenses.......................................................................................32
13.2 Transfer Taxes and Similar Charges.............................................................32
13.3 Governmental Filing or Grant Fees..............................................................32
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING....................................................................32
14.1 Seller's Documents.............................................................................32
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14.2 Buyer's Documents..............................................................................33
ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC..........................................................................34
15.1 Survival of Representations, Etc...............................................................34
15.2 Indemnification................................................................................35
15.3 Procedures: Third Party and Direct Indemnification Claims.....................................36
15.4 Indemnification; Sole and Exclusive Remedy.....................................................37
ARTICLE 16
TERMINATION RIGHTS......................................................................................37
16.1 Termination....................................................................................37
16.2 Liability......................................................................................38
16.3 Monetary Damages, Specific Performance and Other Remedies......................................38
16.4 Seller's Liquidated Damages....................................................................39
ARTICLE 17
MISCELLANEOUS PROVISIONS................................................................................39
17.1 Risk of Loss...................................................................................39
17.2 Certain Interpretive Matters and Definitions...................................................40
17.3 Further Assurances.............................................................................40
17.4 Benefit and Assignment.........................................................................40
17.5 Amendments.....................................................................................41
17.6 Headings.......................................................................................41
17.7 Governing Law..................................................................................41
17.8 Notices........................................................................................41
17.9 Counterparts...................................................................................42
17.10 No Third Party Beneficiaries...................................................................42
17.11 Severability...................................................................................42
17.12 Entire Agreement...............................................................................42
INDEX OF DEFINED TERMS............................................................................................I
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.2.8 Miscellaneous Excluded Assets
3.3.2 Trade Agreements
6.3 Buyer Qualifications
7.4 Station Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 (a) Contracts
7.9 (b) Material Contracts
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information; Employee Benefit Plans
7.15 Litigation
7.16 Compliance With Laws
9.1.5 Actions Pending Closing
10.7 Employees Not Hired
Exhibit
A Deposit Escrow Agreement
B Time Brokerage Agreement
C Assignment and Assumption Agreement
D Opinion of Seller's Counsel
E Opinion of Seller's FCC Counsel
F Opinion of Buyer's Counsel
G Form of Estoppel Certificate
H Form of Subordination and Non-Disturbance Agreement
I KSJO Tower Sublease
J KUFX Studio Sublease
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ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (this "Agreement") is made and entered
this 9th day of October, 1997, by and between CITICASTERS CO., an Ohio
corporation ("Buyer"), and AMERICAN RADIO SYSTEMS CORPORATION, a Delaware
corporation ("American"). and AMERICAN RADIO SYSTEMS LICENSE CORP., a Delaware
corporation ("American License", together with American, the "Seller").
RECITALS
WHEREAS, Seller owns and operates radio station KSJO(FM), licensed to
San Jose, California (the "Station") pursuant to licenses issued by the FCC; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operation of the Station, all on the terms and subject to the conditions set
forth herein; and
WHEREAS, in order to induce Buyer to enter into this Agreement, Seller
is willing to enter into this Agreement and make certain representations and
warranties to, and covenants and agreements with, Buyer.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to all of the assets, properties, interests and rights of Seller
of whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased (to the extent of Seller's leasehold interest) by Seller as the case
may be, wherever situated, which are used or held for use in the operation of
the Station (the "Station Assets"), including but not limited to all of Seller's
right, title and interest in and to the assets, properties, interests and rights
described in this Section 1.1:
1.1.1 all licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including without limitation
those issued by the FCC (the licenses, permits and authorizations issued by the
FCC are hereafter referred to as the "Station Licenses") used or useful in
connection with the operation of the Station, including but not limited to those
described in Schedule 7.4, along with renewals or modifications of such items
between the date hereof and the Closing Date;
1.1.2 all equipment, electrical devices, antennae, cables,
tools, hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and all other tangible personal property
of every kind and description, and Seller's rights therein, owned, leased (to
the extent of Seller's leasehold interest) or held by Seller and used or useful
in connection with the operation of the Station, including but not limited to
those items described or listed in Schedule 7.7, together with any replacements
thereof and additions thereto made between the date hereof and the Closing Date,
and less any retirements or dispositions thereof made between the date hereof
and the Closing Date in the ordinary course of business and consistent with past
practices of Seller; provided, however, Seller agrees that the value of all such
assets retired or disposed of and not replaced with an asset of like kind and
quality shall not exceed $10,000 in the aggregate;
1.1.3 all Time Sales Agreements (as defined in Section 2.1),
all Trade Agreements (as defined in Section 2.1), all Real Estate Contracts
listed on Schedule 7.8, and all contracts, agreements, leases and legally
binding contractual rights of any kind, written or oral, relating to the
operation of the Station listed on Schedule 7.9(a), and oral employment
agreements terminable at will without penalty or other obligation, together with
all contracts, agreements, leases and legally binding contractual rights entered
into or acquired by Seller between the date hereof and the Closing Date in the
ordinary course of business, consistent with past practices of Seller and in
accordance with this Agreement, which do not exceed $5,000 individually and
$25,000 in the aggregate and which are terminable on no more than sixty (60)
days notice without penalty or any other obligation (collectively, the
"Contracts");
1.1.4 all of Seller's rights in and to the call letters
"KSJO(FM)," as well as all of Seller's rights in and to all trademarks, trade
names, service marks, franchises, copyrights, including registrations and
applications for registration of any of them, computer software, programs and
programming material of whatever form or nature, jingles, slogans, the Station's
logos and all other logos or licenses to use same and all other intangible
property rights of Seller, which are used or useful in connection with the
operation of the Station, including but not limited to those listed in Schedule
7.12 (collectively, the "Intellectual Property") together with any associated
goodwill and any additions thereto between the date hereof and the Closing Date;
1.1.5 all programming materials and elements of whatever form
or nature owned by Seller, whether recorded on tape or other medium or intended
for live performance, and all copyrights owned by or licensed to Seller that are
used or useful in connection with the operation of the Station, including all
such programs, materials, elements and copyrights acquired by Seller between the
date hereof and the Closing Date;
1.1.6 all of Seller's rights in and to all the files,
documents, records, and books of account relating to the operation of the
Station or to the Station Assets, including, without limitation, local public
files, programming information and studies, blueprints, technical information
and engineering data, news and advertising studies or consulting reports,
marketing and demographic data, sales correspondence, lists of advertisers,
promotional materials, credit and sales reports and filings with the FCC
relating to the operation of the Station or to the Station Assets, all written
Contracts to be assigned hereunder, logs, software programs and books and
records relating to the
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Station's employees (copies only), financial, accounting and operation matters;
but excluding records relating solely to any Excluded Asset (as hereinafter
defined);
1.1.7 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Station Assets and all similar
rights against third parties relating to items included in the Station Assets;
1.1.8 all real property owned in fee by Seller used or useful
in connection with the operation of the Station together with all appurtenant
easements thereunto and all structures, fixtures and improvements located
thereon as more fully described in Schedule 7.8, together with any additions
thereto between the date hereof and the Closing Date;
1.1.9 except for Excluded Assets, such other assets,
properties, interests and rights owned by Seller that are used or useful in
connection with the operation of the Station or that are located as of the
Closing Date on the real property described on Schedule 7.8.
The Station Assets shall be transferred to Buyer free and
clear of all charges, conditions, community property interests, options,
hypothecations, attachments, conditional sales, title retentions, rights of
first refusal, debts, security interests, mortgages, trusts, claims, pledges or
other liens, liabilities, encumbrances or rights of third parties whatsoever
("Liens"), except for Permitted Liens. Except for the Station Assets listed on
the schedules to this Agreement, notwithstanding the foregoing, at or prior to
the Closing, Buyer may decide, in the exercise of its sole discretion, not to
purchase any one or more of the Station Assets (and, in such event, not to
assume any liability secured by, arising from the acquisition of, or otherwise
relating to, any such Asset); provided, that in no event shall such decision
reduce the Purchase Price.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Station Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or
in banks, including without limitation certificates of deposit, commercial
paper, treasury bills, marketable securities, asset or money market accounts and
all such similar accounts or investments;
1.2.2 all accounts receivable or notes receivable for services
performed by Seller in connection with the operation of the Station prior to the
Closing Date;
1.2.3 subject to the limitation set forth in Section 1.1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
1.2.4 all Contracts that have terminated or expired prior to
the Closing Date in the ordinary course of business consistent with the past
practices of Seller;
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1.2.5 Each of American's and American License's corporate
seal, minute books, charter documents, corporate stock record books and such
other books and records as pertain to the organization, existence or share
capitalization of American and American License and duplicate copies of such
records as are necessary to enable each of American and American License to file
its tax returns and reports as well as any other records or materials relating
to Seller generally and not involving or relating to the Station Assets or the
operation or operations of the Station;
1.2.6 contracts of insurance, and all insurance proceeds or
claims made by Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.8 any right, property or asset described in Schedule
1.2.8.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to such obligations as may have
already been assumed pursuant to the Time Brokerage Agreement (as hereinafter
defined) and subject to the provisions of this Section 2.1, Section 2.2 and
Section 3.3, on the Closing Date Buyer shall assume the obligations of Seller
arising or to be performed on and after the Closing Date (except to the extent
such obligations arise out of or are related to activities, events or
transactions occurring, or conditions existing, on or prior to the Closing Date)
(i) under the Contracts, including (a) all agreements for the sale of
advertising time on the Station for cash and at prices consistent with Seller's
ordinary course of business pricing policies for which no payment has been
received and which do not have more than twelve (12) months remaining in their
term ("Time Sales Agreements"); and (b) all agreements relating to the Station
which are for consideration other than cash, such as merchandise, services or
promotional consideration arising in the ordinary course of business consistent
with the past practices of Seller and listed on Schedule 3.3.2 hereto ("Trade
Agreements"), or (ii) to the extent that the Purchase Price has been reduced
pursuant to Section 3.3 as a result of the proration or adjustment of such
obligations and liabilities. All of the foregoing liabilities and obligations
shall be referred to herein collectively as the "Assumed Liabilities."
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities.
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Seller will retain and pay, satisfy, discharge and perform in accordance with
the terms thereof, all liabilities and obligations of the Seller, other than the
Assumed Liabilities, including but not limited to, the obligation to assume,
perform, satisfy or pay any liability, obligation, agreement, debt, charge,
claim, judgment or expense incurred by or asserted against Seller related to
taxes, environmental matters, pension or retirement plans or trusts,
profit-sharing plans, employment contracts, employee benefits, severance of
employees, product liability or warranty, negligence, contract breach or
default, or other obligations, claims or judgments asserted against Buyer as
successor in interest to Seller. All of such liabilities, obligations and
commitments of Seller described in this Section 2.2 shall be referred to herein
collectively as the "Retained Liabilities."
ARTICLE 3
CONSIDERATION
3.1 Delivery of Consideration. In consideration for the sale of the
Station Assets to Buyer, in addition to the assumption of certain obligations of
Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as
hereinafter defined), deliver to Seller Thirty Million Dollars ($30,000,000) by
wire transfer of immediately available funds, subject to adjustment pursuant to
the provisions of Sections 3.2 and 3.3 below (the "Purchase Price").
3.2 Escrow Deposit. (a) Simultaneously with the execution and delivery
of this Agreement, Buyer, Seller and The Fifth Third Bank, as Escrow Agent (the
"Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement in the form
of Exhibit A hereto (the "Deposit Escrow Agreement") pursuant to which Buyer
shall deposit, within one (1) business day following execution of this
Agreement, the amount described below as a deposit on the amount of the Purchase
Price. Such amounts held in escrow shall be applied as set forth herein and in
the Deposit Escrow Agreement.
(b) Buyer shall wire transfer One Million Five Hundred
Thousand Dollars ($1,500,000) to the Deposit Escrow Agent's trust account
pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"), and at the
Closing, the Escrow Deposit, plus interest, shall be applied to the Purchase
Price to be paid to Seller. As more fully described in the Deposit Escrow
Agreement: (a) in the event this Agreement is terminated solely because of
Buyer's material breach of this Agreement and Seller shall at such time not be
in material breach of this Agreement, the Escrow Deposit, plus interest, shall
be paid to Seller as liquidated damages as provided in Section 16.4 hereto for
Buyer's material breach of this Agreement (the payment of such sum to Seller
shall discharge any liability Buyer may have to Seller hereunder); and (b) in
the event this Agreement is terminated under any circumstances other than those
set forth in the immediately preceding clause (a), the Escrow Deposit and the
interest accrued thereon shall be paid to Buyer.
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3.3 Proration of Income and Expenses; Trade Agreements Adjustment.
3.3.1 Subject to such prorations as may have been already been
made pursuant to the Time Brokerage Agreement (as hereinafter defined) and
except as otherwise provided herein, all deposits, reserves and prepaid and
deferred income and expenses relating to the Station Assets or the Assumed
Liabilities and arising from the conduct of the business and operations of the
Station shall be prorated between Buyer and Seller in accordance with generally
accepted accounting principles as of 12:01 a.m., eastern time, on the Closing
Date. Such prorations shall include, without limitation, all ad valorem, real
estate and other property taxes (but excluding taxes arising by reason of the
transfer of the Station Assets as contemplated hereby which shall be paid as set
forth in Section 13.2), business and license fees, music and other license fees
(including any retroactive adjustments thereof, which retroactive adjustments
shall not be subject to the ninety-day limitation set forth in Section 3.3.3),
utility expenses, amounts due or to become due under Contracts, Trade Agreements
to the extent provided in Section 3.3.2 hereof, rents, lease payments and
similar prepaid and deferred items. Real estate taxes shall be apportioned on
the basis of taxes assessed for the preceding year, with a reapportionment, if
any, as soon as the new tax rate and valuation can be ascertained.
3.3.2 Schedule 3.3.2 lists all Trade Agreements included in
the Station Assets and the contract end date for each Trade Agreement together
with an itemized statement, determined in accordance with generally accepted
accounting principles, of the aggregate value of time owed ("Barter Payable")
pursuant to each of the Trade Agreements and the aggregate value of goods and
services to be received ("Barter Receivable") pursuant to each of the Trade
Agreements, in each case as of the date hereof. Seller agrees that it will not
enter into any other Trade Agreements or similar arrangements after the
execution of this Agreement which in the aggregate exceed $10,000 without first
obtaining Buyer's written consent. Within ten (10) calendar days of the earlier
to occur of the (i) date of the commencement of the Time Brokerage Agreement
(the "Effective Date") and the Closing Date, Seller shall deliver to Buyer a
report, dated as of the date of the Effective Date or the Closing Date, as
applicable (the "Trade Report"), which report lists all Trade Agreements
included in the Station Assets and the contract end date for each Trade
Agreement together with an itemized statement, determined in accordance with
generally accepted accounting principles, of the aggregate value of the Barter
Payable and Barter Receivable pursuant to each of the Trade Agreements. To the
extent that the aggregate value as reflected on the Trade Report of the
Station's Barter Payable is greater than the aggregate value as reflected on the
Trade Report of the Barter Receivable, Buyer shall be entitled to receive the
difference at Closing as a credit against the Purchase Price.
3.3.3 Subject to such prorations as may have been already been
made pursuant to the Time Brokerage Agreement (as hereinafter defined) and
except as otherwise provided herein, the prorations and adjustments contemplated
by this Section 3.3, to the extent practicable, shall be made on the Closing
Date. As to those prorations and adjustments not capable of being ascertained on
the Closing Date, an adjustment and proration shall be made within ninety (90)
calendar days of the Closing Date.
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3.3.4 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 3.3.3 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Seller and
one-half by Buyer. Notwithstanding the foregoing, if the aggregate amount in
dispute is $10,000 or less, the disputed amount shall be shared equally by Buyer
and Seller.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Station Assets based upon an appraisal prepared by an appraiser
selected by Seller, and such appraisal and allocation shall be completed within
thirty (30) days following Closing unless otherwise agreed to by the parties.
Seller and Buyer agree to use the allocations determined by Seller for all tax
purposes, including without limitation, those matters subject to Section 1060 of
the Internal Revenue Code of 1986, as amended.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within five (5) business days after the later to occur of: (a) the
satisfaction or waiver of each condition to closing contained herein (excluding
conditions that by their terms cannot be satisfied until the Closing Date), and
provided that each party hereto shall use its commercially reasonable efforts to
cause each condition to closing to be satisfied so that the Closing may occur at
the earliest possible date; and (b) the issuance of the Final Order (as defined
below), or such other date as may be mutually agreed by the parties hereto (the
"Closing Date"); provided, however, that Buyer may in its sole discretion waive
the requirement that a Final Order be issued and elect (subject to clause (a)
above) to close at any time (upon not less than five (5) business days' notice
to Seller) after the release of initial FCC approval on public notice that it
has consented to the transaction contemplated hereby (the "Initial Approval").
For purposes of the Agreement, "Final Order" (and "Final") means a grant,
consent or authorization by the FCC which is no longer subject to
reconsideration or review by the FCC or a court of competent jurisdiction, and
pursuant to which the FCC consents to the assignments of the FCC licenses
contemplated by this Agreement, each such grant, consent or authorization being
without the imposition of any conditions adverse to Buyer or any Affiliate (as
hereinafter defined) of Buyer with respect to the assignment of the FCC Licenses
to Buyer or the continued operation of the Station or the Station Assets. In the
event that the parties close before the Initial Approval has become a Final
Order, the parties shall negotiate in good faith to enter into an Unwind
Agreement. The Closing shall be held in the offices of ▇▇▇▇▇▇▇, Head & ▇▇▇▇▇▇▇,
1900 Fifth Third Center, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇, or at such place
and in such manner as the parties hereto may agree.
4.2 Time Brokerage Agreement. Buyer and Seller have entered into a Time
Brokerage Agreement, in the form of Exhibit B hereto (the "Time Brokerage
Agreement"), pursuant to which Seller has agreed to make available to Buyer the
broadcasting transmission facilities of the Station
7
and/or cause to be broadcast on the Station Buyer's programming from the
Effective Date (as defined in the Time Brokerage Agreement) through the Closing
Date.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that the Closing, the assignment of the Station Licenses and the transfer
of the Station Assets are expressly conditioned on and is subject to the prior
consent and approval of the FCC without the imposition of any conditions
materially adverse to Buyer or any Affiliate of Buyer (the "FCC Consent").
5.2 FCC Application. If the same has not already been filed as of the
time of the execution hereof, then within one (1) business day after the
execution of this Agreement, Buyer and Seller shall file an application with the
FCC for the FCC Consent (the "FCC Application"). Buyer and Seller shall
prosecute the FCC Application with all reasonable diligence and otherwise use
their commercially reasonable efforts to obtain the FCC Consent as expeditiously
as practicable, including the obligations set forth in the fourth sentence of
Section 17.4 (but neither Buyer nor Seller shall have any obligation to satisfy
complainants or the FCC by taking any steps which would have a material adverse
effect upon Buyer or Seller or upon any of their respective Affiliates). If the
FCC Consent imposes any condition on Buyer or Seller or any of their respective
Affiliates, such party shall use its commercially reasonable efforts to comply
with such condition; provided, however, that neither Buyer nor Seller shall be
required hereunder to comply with any condition that would have a material
adverse effect upon it or any of its Affiliates. If reconsideration or judicial
review is sought with respect to the FCC Consent, the party affected shall
vigorously oppose such efforts for reconsideration or judicial review; provided,
however, that nothing herein shall be construed to limit either party's right to
terminate this Agreement pursuant to Article 16 hereof.
5.3 HSR Application. Within ten (10) business days after the execution
of this Agreement, Buyer and Seller shall make any and all required governmental
filings pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act") with respect to the transactions contemplated hereby,
and shall use their commercially reasonable efforts to respond as promptly as
practicable to all inquiries received from the applicable governmental agencies
or committees for additional information or documentation. Buyer and Seller will
notify each other of all correspondence, filings or communications between such
party or its representatives, on the one hand, and the applicable governmental
agencies or committees, on the other hand, with respect to this Agreement and
the transaction contemplated hereby. Buyer and Seller will furnish each other
with such necessary information and reasonable assistance as such other parties
may request in connection with their preparation of all filings pursuant to the
HSR Act.
8
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing subject to the limitations provided for herein and shall be unaffected
by any investigation heretofore or hereafter made by Seller:
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio, and
on the Closing Date will be duly qualified to conduct business in each
jurisdiction in which such qualification is necessary for Buyer to own the
Station Assets and operate the Station.
6.2 Authorization and Binding Obligation. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Station Assets and to
carry on the business of the Station upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by American and American
License, this Agreement constitute the valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
6.3 Qualification. Except as set forth on Schedule 6.3, to Buyer's
knowledge Buyer is legally, financially and otherwise qualified to be the
licensee of, acquire, own and operate the Station under the Communications Act
of 1934, as amended, and the rules, regulations and policies of the FCC. Except
as set forth on Schedule 6.3, Buyer knows of no fact that would, under existing
law and the existing rules, regulations, policies and procedures of the FCC
disqualify Buyer as an assignee of the Station Licenses or as the owner and
operator of the Station. Except as set forth in Schedule 6.3, subject to the
provisions of Section 5.1 hereof, no waiver of any FCC rule or policy is
necessary to be obtained for the grant of the application for the assignment of
the Station Licenses to Buyer.
6.4 Absence of Conflicting Agreements or Required Consents. Except for
applicable requirements of the HSR Act and subject to the receipt of the FCC
Consent, the execution, delivery and performance by Buyer of this Agreement and
the documents contemplated hereby: (a) do not conflict with the provisions of
the articles of incorporation or code of regulations of Buyer; (b) do not
require the consent of any third party (including, without limitation, the
consent of any governmental, regulatory, administrative or similar authority);
(c) do not violate any applicable law, judgment, order, injunction, decree,
rule, regulation or ruling of any governmental authority to which Buyer is
bound; and (d) do not, either alone or with the giving of notice or the passage
of time, or both, conflict with, constitute grounds for termination of or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any agreement, instrument, license or permit to which Buyer is subject.
9
6.5 Litigation. Except for FCC rulemaking proceedings generally
affecting the radio broadcasting industry and not particular to Buyer, there is
no claim, litigation, proceeding or investigation pending or, to the best of
Buyer's knowledge, threatened against Buyer, which could reasonably be expected,
in any material respect, to impair or hinder Buyer's ability to perform its
obligations pursuant to this Agreement and the documents contemplated hereby.
6.6 Compliance With Laws. Buyer is in compliance with all federal,
state and local laws, rules, regulations and ordinances applicable to Buyer,
except for any noncompliance by Buyer that would not have a material adverse
effect on Buyer's ability to perform its obligations pursuant to this Agreement
and the documents contemplated hereby.
6.7 Commissions or Finder's Fees. Neither Buyer nor any person or
entity acting on behalf of Buyer has agreed to pay a commission, finder's fee or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity.
6.8 Availability of Funds. Buyer will have available on the Closing
Date sufficient funds to enable it to consummate the transactions contemplated
hereby.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of American and American License makes to Buyer the
representations and warranties as set forth below in this Article 7, each of
which is true and correct on the date hereof and shall survive the Closing
subject to the limitations provided for herein; provided however, that American,
American License and Buyer have entered into the Time Brokerage Agreement and
such parties understand that any (i) actions or omissions to act taken by Buyer
(or any assignee or Affiliate of Buyer), including actions or omissions arising
out of or related to the Time Brokerage Agreement; (ii) changes in market
conditions in the radio broadcasting industry in San Jose, California following
the Effective Date; (iii) factors affecting the radio broadcasting industry
generally following the Effective Date; or (iv) general, national, regional or
local economic or financial conditions following the Effective Date
(collectively, "TBA Events"); which would cause any of American's or American
License's representations and warranties to be untrue, shall not be deemed to
result in a breach or inaccuracy of such representations or warranties:
7.1 Organization and Standing. Each of American and American License is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, is authorized to conduct business within the
State of California and has the requisite corporate power and authority to own,
lease and operate the Station Assets and to carry on the business of the Station
as now being conducted and as proposed to be conducted between the date of this
Agreement and the Closing Date.
7.2 Authorization and Binding Obligation. Each of American and American
License has the requisite corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated hereby.
American's and American License's execution,
10
delivery and performance of this Agreement and the documents contemplated hereby
has been duly authorized by all necessary corporate action on the part of Seller
and, assuming the due authorization, execution and delivery of this Agreement by
Buyer, this Agreement constitutes the valid and binding obligation of each of
American and American License enforceable against each in accordance with its
terms, except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
by judicial discretion in the enforcement of equitable remedies.
7.3 Absence of Conflicting Agreements or Required Consents. Except for
applicable requirements of the HSR Act and subject to the receipt of the FCC
Consent, and except as set forth in Article 5 with respect to governmental
consents and in Schedule 7.8 or Schedule 7.9(a) with respect to consents
required in connection with the assignment of certain Contracts, the execution,
delivery and performance by Seller of this Agreement and the documents
contemplated hereby: (a) do not require the consent of any third party
(including, without limitation, the consent of any governmental, regulatory,
administrative or similar authority); (b) do not conflict in any material
respect with the provisions of each of American's and American License's
certificate of incorporation and bylaws (or other charter documents); (c) do not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Seller or any of the
Station Assets are bound; (d) do not either alone or with the giving of notice
or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any Contract, agreement, instrument, license or
permit to which Seller or any of the Station Assets is subject; and (e) other
than Permitted Liens, will not result in the creation of any Liens on any of the
Station Assets. For purposes of this Agreement, "Permitted Liens" means (a)
liens for taxes not yet due and payable; (b) statutory liens that were created
in the ordinary course of business for amounts not delinquent; (c) restrictions
or rights granted to governmental authorities under applicable law; (d) zoning,
building or similar restrictions relating to or affecting property; (e) all
matters of record disclosed on Schedule 7.8 as "continuing," including leasehold
interests in real property owned by others and operating leases for personal
property and leased interests in property leased to others; (f)(1) liens or
encumbrances on the real property listed in Schedule 7.8 currently of record
(excluding, however, any mortgage, deed to secure debt, deed of trust, security
agreement, judgment, lien or statutory claim of any nature, Seller hereby
agreeing to pay and satisfy of record any such title defect or exception) and
(2) other Liens on the real property listed in Schedule 7.8 that do not
materially affect the current use and enjoyment thereof in the operation of the
Station Assets as presently operated; and (g) the Assumed Liabilities.
7.4 Government Authorizations.
7.4.1 Schedule 7.4 hereto contains a true and complete list of
the Station Licenses and other licenses, permits or other authorizations from
governmental and regulatory authorities which are required for the lawful
conduct of the business and operations of the Station in the manner and to the
extent they are presently conducted (including, without limitation, auxiliary
licenses associated with the Station). Seller has delivered to Buyer true and
complete copies of the Station Licenses and the other licenses, permits and
authorizations listed in Schedule 7.4, including any and all amendments and
other modifications thereto.
11
7.4.2 American License is the authorized legal holder of the
Station Licenses and the other licenses, permits and authorizations listed in
Schedule 7.4, which are in full force and effect, and none of which is subject
to any restrictions or conditions which would be reasonably expected to limit
the operation of the Station as now operated.
7.4.3 Except as set forth in Schedule 7.4, and except for
investigations or other proceedings affecting the radio broadcasting industry
generally and not particular to Seller or the Station, there are no
applications, complaints, petitions or proceedings pending or, to Seller's
knowledge, threatened as of the date hereof before the FCC or any other
governmental or regulatory authority relating to the business or operations of
the Station that would reasonably be expected to (a) impair or hinder the
ability of Seller to perform its obligations under this Agreement or (b) affect
the business or operations of the Station. The operations of the Station are in
accordance with the Station Licenses and the underlying construction permits and
the other licenses, permits and authorizations listed in Schedule 7.4. Except as
set forth on Schedule 7.4, to Seller's knowledge, no proceedings are pending or
threatened, and there has not been any act or omission of Seller which may
reasonably be expected to result in the revocation, adverse modification,
non-renewal or suspension of the Station Licenses or the other licenses, permits
and authorizations listed in Schedule 7.4, the denial of any pending
applications, the issuance of any cease and desist order, the imposition of any
administrative actions by the FCC or any other governmental or regulatory
authority with respect to the Station Licenses or the other licenses, permits
and authorizations listed in Schedule 7.4 or which would reasonably be expected
to affect Buyer's ability to continue to operate the Station as it is currently
operated.
7.4.4 Except as set forth on Schedule 7.4, the Station is
licensed by the FCC to operate and is operating with the facilities designated
in its Station Licenses.
7.4.5 Except as set forth on Schedule 7.4, to Seller's knowledge the
Station is not causing objectionable interference to the transmissions of any
other broadcast station or communications facility nor has the Station received
any complaints with respect thereto. Except as set forth on Schedule 7.4, to
Seller's knowledge, no other broadcast station or communications facility is
causing objectionable interference to transmissions of the Station or the
public's reception of such transmissions.
7.4.6 All material reports, forms, and statements required to
be filed by Seller with the FCC with respect to the Station since the
acquisition of the Station by Seller have been filed and are substantially
complete and accurate.
7.4.7 Except as set forth on Schedule 7.4, to the knowledge of
Seller, there are no facts, conditions or events relating to Seller which, under
the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify American License as assignor of the
Station Licenses or cause the Station Licenses and the other licenses, permits
and authorizations listed in Schedule 7.4 not to be renewed in their ordinary
course.
12
7.4.8 The operation of the Station and all of the Station
Assets are in compliance in all respects with ANSI Radiation Standards C95.1 -
1992.
7.5 Compliance with FCC Regulations. The operation of the Station and
all of the Station Assets are in compliance with: (a) all applicable engineering
standards required to be met under applicable FCC rules; and (b) all other
applicable federal, state and local rules, regulations, requirements and
policies, including, but not limited to, equal employment opportunity policies
of the FCC, and all applicable painting and lighting requirements of the FCC and
the Federal Aviation Administration to the extent required to be met under
applicable FCC rules and regulations, and to the best of Seller's knowledge,
there are no existing claims to the contrary.
7.6 Taxes. Except where the failure to file, pay or accrue any taxes
does not result in a Lien on the Station Assets or in the imposition of
transferee or other liability on Buyer for the payment of taxes, Seller has
filed all federal, state, local and foreign income, franchise, sales, use,
property, excise, payroll and other tax returns required by law to be filed by
it and has properly accrued or paid in full all taxes, estimated taxes,
interest, assessments, and penalties due and payable by it. There are no present
disputes as to taxes of any nature payable by Seller which in any event could
adversely affect the Station Assets or the operation of the Station by Buyer,
and Seller has not been advised that any of its returns, federal, state, local
or foreign, have been or are being audited. Seller does not have any liability,
fixed or contingent, for any unpaid federal, state or local taxes or other
governmental or regulatory charges whatsoever (including without limitation
withholding and payroll taxes) which could result in any Liens on the Station
Assets after conveyance thereof to Buyer or in any other form of transferee
liability to Buyer, except for Permitted Liens.
7.7 Personal Property. Schedule 7.7 hereto contains a list of all
material items of tangible personal property included in the Station Assets
owned by Seller and used in the conduct of the business and operations of the
Station. Schedule 7.7 also separately lists any material tangible personal
property leased by Seller pursuant to leases included within the Contracts.
Except as disclosed in Schedule 7.7, Seller has good title to all of the Station
Assets (other than those subject to lease) and none of the Station Assets is
subject to any Liens or title defects, except for Permitted Liens. The
properties listed in Schedule 7.7, including those properties subject to lease
and included among the Contracts, constitute all tangible personal property
necessary to operate the Station as the same is now being operated. All items of
tangible personal property included in the Station Assets are in good operating
condition and repair, are free from all material defect and damage and are
suitable for the purposes for which they are now being used (given the age of
such property and the use to which such property is put, and ordinary wear and
tear excepted).
7.8 Real Property.
7.8.1 Schedule 7.8 hereto contains a complete and accurate
list and description of all real property (including without limitation, real
property relating to the towers, transmitters, studio sites and offices of the
Station) not owned by Seller and used by Seller in connection with the
operations of the Station pursuant to agreements, leases and other contracts
(the "Real Estate Con-
13
tracts"). Seller owns no real estate used or held for use in connection with the
operation of the Station.
7.8.2 Except as set forth on Schedule 7.8, the Real Estate
Contracts listed on Schedule 7.8 and Schedule 7.9(a) are in full force and
effect and are valid, binding and enforceable in accordance with their terms
subject, if Seller has no knowledge of the following, to: (a) the assumption
that the contracting parties (other than Seller) had the authority to enter into
the Real Estate Contracts, (b) relief resulting from bankruptcy or equitable
principles, or (c) unenforceability of non-material provisions contained in the
Real Estate Contracts. Seller enjoys quiet possession of all real property
subject to the Real Estate Contracts. Seller is not in default under any Real
Estate Contract nor, to Seller's knowledge, is any other party thereto, and
except as set forth in Schedule 7.8, there are no present disputes or claims
with respect to offsets or defenses by any party against the other under any of
the Real Estate Contracts. Seller has delivered to Buyer true and complete
copies of all Real Estate Contracts. Except as expressly set forth in Schedule
7.8 hereto, the assignment of the Real Estate Contracts to Buyer will not permit
the other party to accelerate the rent, cause the terms thereof to be
renegotiated or constitute a default thereunder, and will not require the
consent of any such party to the assignment thereof to Buyer.
7.8.3 Seller has previously delivered to Buyer: (a) a complete
and correct copy of each title insurance policy in Seller's possession, if any,
insuring title to the real estate subject to the Real Estate Contracts; and (b)
a true and correct copy of each survey in Seller's possession, if any, of the
real estate subject to the Real Estate Contracts.
7.8.4 Seller has full legal and practical access to all of the
real property described in Schedule 7.8 and, to Seller's knowledge, all
easements, rights of way, and real property licenses relating thereto have been
properly recorded in the appropriate public recording offices. The real estate
subject to the Real Estate Contracts includes all the real property, easements,
rights of way, and other real property interests necessary to conduct the
business and operations of the Station as now conducted. To Seller's knowledge,
none of the buildings, structures, improvements or fixtures constructed on any
real estate subject to the Real Estate Contracts, including, but not limited to,
all towers, guy wires and guy anchors and ground radials, encroach upon
adjoining real property, and all such buildings, structures, improvements and
fixtures are constructed and are operated and used in conformance with all "set
back" lines, easements, covenants, restrictions and all applicable building,
fire, zoning, health and safety laws and codes. To Seller's knowledge, no
utility lines serving the real estate subject to the Real Estate Contracts pass
over the lands of a third party except where appropriate easements have been
obtained. All buildings, structures, towers, antennae, improvements and fixtures
comprising part of the real properties leased by Seller and used by Seller in
the operation of the Station are in good operating condition, have no latent
structural mechanical or other defects of material significance, are reasonably
suitable for the purposes for which they are being used and each has adequate
rights of ingress and egress, utility service for water and sewer, telephone,
electric and/or gas, and sanitary service for the conduct of the business and
operations of the Station as presently conducted (ordinary wear and tear
excepted). There is no pending or, to the knowledge of Seller, threatened
condemnation or other legal proceeding or action of any kind relating to the
real estate subject to the Real Estate Contracts and/or title thereto.
14
7.9 Contracts. Schedule 7.9(a) lists all Contracts relating to the
Station or the Station Assets to which Seller is a party, or which are binding
on Seller, as of the date of this Agreement, except (a) Time Sales Agreements
and (b) oral employment contracts terminable at will without penalty or other
obligation. Those Contracts, if any, requiring the consent of a third party to
assignment are identified with an asterisk in Schedule 7.9(a). Except as
specifically described on Schedule 7.9(a), Seller has not entered into any
arrangements with ASCAP, BMI, radio representatives, vendors of goods and
services or any other entities pursuant to which Seller enjoys a significant
discount or other significant benefit. Those Contracts, if any, that Seller and
Buyer have agreed are material to the operation of the Station Assets and the
valid assignment of which is a condition to the consummation of the transactions
contemplated hereby (the "Material Contracts") are listed on Schedule 7.9(b).
7.10 Status of Contracts, etc. Seller has delivered to Buyer true and
complete copies of all written Contracts, and true and complete descriptions of
all oral Contracts (except oral employment contracts which are terminable at
will), and any and all amendments and other modifications thereto. All of the
Contracts are in full force and effect and are valid, binding and enforceable in
accordance with their respective terms, except as limited by laws affecting
creditors' rights or equitable principles generally. Seller has complied with
all written and oral Contracts, and is not in default beyond any applicable
grace periods under any thereof and, to Seller's knowledge, no other contracting
party is in default under any thereof.
7.11 Environmental. Except as set forth in Schedule 7.11, Seller has
complied with all federal, state and local environmental laws, rules and
regulations as in effect on the date hereof applicable to the Station and its
operations, including but not limited to the FCC's guidelines regarding RF
radiation. Except as set forth in Schedule 7.11, the technical equipment
included in the Station Assets does not contain a level of PCBs which would
result in the violation of any Environmental Laws. No hazardous or toxic waste,
substance, material or pollutant (as those or similar terms are defined under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. ▇▇.▇▇. 9601 et seq., Toxic Substances Control Act,
15 U.S.C. ▇▇.▇▇. 2601 et seq., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ▇▇.▇▇. 6901 et seq. or any other applicable federal, state and
local environmental law, statute, ordinance, order, judgment, rule or regulation
relating to the environment or the protection of human health ("Environmental
Laws")), including but not limited to, any asbestos or asbestos related
products, oils or petroleum-derived compounds, CFCs, PCBs, or underground
storage tanks, have been released, emitted or discharged by Seller or are
currently located in, on, under, or about the real property on which the Station
Assets are situated, including the transmitter sites, or contained in the
tangible personal property included in the Station Assets which would result in
the violation of any Environmental Laws. The Station Assets and Seller's use
thereof are not in violation of any Environmental Laws or any occupational,
safety and health or other applicable law now in effect.
7.12 Intellectual Property. Schedule 7.12 hereto is a true and complete
list of all Intellectual Property applied for, registered or issued to, and
owned by Seller or under which Seller is a licensee and which is used in the
conduct of the Seller's business and operations of the Station, and except as
set forth on Schedule 7.12: (a) Seller's right, title and interest in the
Intellectual
15
Property as owner or licensee, as applicable, is free and clear of all Liens,
except for Permitted Liens and, to the extent any of the Intellectual Property
is licensed to Seller, such interest is valid and uncontested by the licensor
thereof or any third party; (b) all computer software located at any of Seller's
premises or used in Seller's business or operations or the Station is properly
licensed to Seller, and all of Seller's uses of such computer software are
authorized under such licenses; (c) all of Seller's right, title and interest in
and to the Intellectual Property and computer software shall be assignable to
Buyer at Closing; and (d) are no infringements or unlawful use of such
Intellectual Property. Other than with respect to matters generally affecting
the radio broadcasting industry and not particular to Seller, except as set
forth on Schedule 7.12, Seller has not received any notice or demand alleging
that Seller is infringing upon any trademarks, trade names, service marks,
service names, copyrights or similar Intellectual Property owned by any third
party.
7.13 Financial Statements. Set forth in Schedule 7.13 are complete
copies unaudited (i) monthly profit and loss statements of the Station from
August 1, 1996 through August 31, 1997 ("Seller Financial Statements"), and the
financial statements in Seller's possession relating to all periods prior to
August 1, 1996 (the "Prior Financial Statements," together with the Seller
Financial Statements, the "Financial Statements"). The Seller Financial
Statements are (and the Interim Financial Statements (as hereinafter defined in
Section 9.1.8) provided pursuant to the terms hereof will be) true, correct and
complete and have been (and in the case of the Interim Financial Statements,
will be) prepared in accordance with the books and records of Seller. The Seller
Financial Statements present (and the Interim Financial Statements will present)
fairly the cash flow of the Station for the periods indicated. The financial
information within the Seller Financial Statements does not include (and the
financial information to be within the Interim Financial Statements will not
include) financial information unrelated to the operations of the Station. None
of the Seller Financial Statements understates (and none of the Interim
Financial Statements will understate) the true costs and expenses of conducting
the business and operations of the Station, fails (or will fail) to disclose any
material liability, or inflates (or will inflate) the revenues of the Station
for any reason. August 31, 1997 is hereinafter referred to as the "Financial
Statement Date."
7.14 Personnel Information.
7.14.1 Schedule 7.14 contains a true and complete list of all
persons employed at the Station, including date of hire, a description of
material compensation arrangements (other than employee benefit plans set forth
in Schedule 7.17) and a list of other terms of any and all agreements affecting
such persons and their employment by Seller. Seller has received no notice that,
and Seller is not aware of, any employee who shall or is likely to terminate his
or her employment relationship with the Station upon the execution of this
Agreement or after the Closing.
7.14.2 Seller is not a party to any contract or agreement with
any labor organization, nor has Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any employees of Seller employed at the
Station. Seller has no knowledge of any organizational effort currently being
made or threatened by or on behalf of any labor union with respect to employees
of Seller.
16
7.14.3 Except as disclosed in Schedule 7.14, Seller has
complied with all laws relating to the employment of labor at the Station,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
7.15 Litigation. Except as set forth in Schedule 7.15 and except for
any FCC rulemaking proceedings generally affecting the radio broadcasting
industry generally and not particular to Seller, the Station or the Station
Assets, Seller is not subject to any judgment, award, order, writ, injunction,
arbitration decision or decree relating to the conduct of the business or the
operation of the Station or any of the Station Assets. Except as set forth in
Schedule 7.15 and except for any FCC rulemaking proceedings generally affecting
the radio broadcasting industry generally and not particular to Seller, there is
no litigation, administrative action, arbitration, proceeding or investigation
pending or, to the knowledge of Seller, threatened against Seller, the Station
or the Station Assets in any federal, state or local court, or before any
administrative agency or arbitrator (including, without limitation, any
proceeding which seeks the forfeiture of, or opposes the renewal of, any of the
Station Licenses), or before any other tribunal duly authorized to resolve
disputes which would reasonably be expected to adversely impair the ability of
Seller to perform its obligations under this Agreement or the documents
contemplated hereby, or adversely affect the business or operations of the
Station.
7.16 Compliance With Laws. Except as set forth in Schedule 7.16, Seller
is in compliance with all federal, state and local laws, rules, regulations and
ordinances applicable to Seller, the Station and the Station Assets, except for
any noncompliance by Seller that would not have an adverse effect on Seller's
ability to perform its obligations pursuant to this Agreement or the documents
contemplated hereby. Except as set forth in Schedule 7.16, Seller has not
received any notice asserting any non-compliance by it in connection with the
operation of the Station or use or ownership of any of the Station Assets with,
any applicable statute, rule or regulation, whether federal, state or local.
Seller is not in default with respect to any judgment, order, injunction or
decree of any court, administrative agency or other governmental authority or
any other tribunal duly authorized to resolve disputes which relate to the
transactions contemplated hereby.
7.17 Employee Benefit Plans. Schedule 7.17 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Station. Seller does not maintain any
other employee benefit plan as the term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, applicable to the
employees of Seller employed at the Station.
7.18 Commissions or Finder's Fees. Neither Seller, nor any person or
entity acting on behalf of Seller, has agreed to pay a commission, finder's fee
or similar payment in connection with this Agreement or any matter related
hereto to any person or entity.
7.19 Conduct of Business in Ordinary Course: Adverse Change. Except as
set forth on Schedule 7.19, since the Financial Statement Date: (i) except as
otherwise permitted under this
17
Agreement, Seller has conducted the business of the Station only in the ordinary
course consistent with past practices; (ii) there has not been any material
adverse change in the business, assets, properties or condition (financial or
otherwise) of Seller or the Station unless caused due to the occurrence of any
TBA Events; (iii) no damage, destruction or loss of the Station Assets has
occurred that interferes in any material respect with the normal operation of
the Station except as contemplated by Section 17.1(b); and (iv) Seller has not
created, assumed, or suffered any Liens on any of the Station Assets, except for
those in existence on the date of this Agreement and disclosed in Schedule 7.7
or Schedule 7.8 and Permitted Liens.
7.20 Instruments of Conveyance; Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Station
Assets to Buyer, will transfer good title to the Station Assets free and clear
of all liabilities (absolute or contingent), Liens, except for liens
attributable to taxes not yet due and payable as of the Closing Date (and which
will be subject to the proration described in Section 3.3), Permitted Liens, and
the Assumed Liabilities.
7.21 Undisclosed Liabilities. No liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, relating to Seller, the
Station or the Station Assets exists which could, after the Closing result in
any form of transferee liability against Buyer or subject the Station Assets to
any Liens or otherwise affect the full, free and unencumbered use of the Station
Assets by Buyer, except for Permitted Liens.
7.22 Full Disclosure. No representation or warranty made by Seller
contained in this Agreement or any Exhibit or Schedule hereto or any other
document referenced in the representations and warranties of Seller hereunder as
having been provided to Buyer pursuant to such representations and warranties or
delivered pursuant to the covenants of Seller hereunder contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein, in
light of the circumstances under which they were made, not misleading. Seller is
not aware of any impending or contemplated event or occurrence that would cause
any of the foregoing representations not to be true and complete on the date of
such event or occurrence as if made on that date.
7.23 Insurance. Seller now has in force adequate fire and other risk
insurance covering the full replacement value of the Station Assets and shall
cause such insurance to be maintained in full force until the Closing Date.
Seller also shall maintain in full force until the Closing Date, adequate
general public liability insurance in amounts consistent with broadcasting
industry standards for similar stations. None of the Station Assets have been
materially and adversely affected in any way as a result of fire, explosion,
earthquake, accident, fraud, rain, storm, drought, riot, Act of God or public
enemy or any other casualty, whether or not covered by insurance.
********
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to Seller's knowledge, it shall mean to the best of
such party's actual knowledge after having made due inquiry of the directors,
officers, employees, representatives and agents of Seller
18
who would be expected to have knowledge of the matter, and with respect to the
condition of any Station Assets, records or other object, if such person
inspected it.
ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Station Assets from Seller as provided in Article 1 hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 Notification. Buyer will provide Seller prompt written notice of
any change in any of the information contained in the representations and
warranties made in Article 6. Buyer shall also notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any action which (i)
is materially inconsistent with its obligations under this Agreement, (ii) would
cause any representation or warranty of Buyer contained herein to be or become
false or invalid, or (iii) could unreasonably hinder or delay the consummation
of the transactions contemplated by this Agreement.
8.4 Accounts Receivable. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation of
the Station, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed prior to the Closing Date and
other broadcast revenues for services performed prior to the Closing Date, shall
remain the property of Seller (the "Seller Accounts Receivable") and that Buyer
shall not acquire any beneficial right or interest therein or responsibility
therefor. For a period of ninety (90) days from the Closing Date ("Collection
Period"), Buyer agrees to use commercially reasonable efforts to assist Seller
in collection of the Seller Accounts Receivable in the normal and ordinary
course of Buyer's business and will apply all such amounts collected to the
debtor's oldest account receivable first, except that any such accounts
collected by Buyer from persons who are also indebted to Buyer may be applied to
Buyer's account if so directed by the debtor if there is a bona fide dispute
between Seller and such account debtor with respect to such account and in which
case the Buyer shall notify the Seller of such dispute and after such
notification Seller shall have the right to pursue collection of such account
and to avail itself of all legal remedies available to it. Buyer's obligation
and authority shall not extend to the institution of litigation, employment of
counsel or a collection agency or any other extraordinary means of collection.
During the Collection Period, neither Seller, nor its agents, shall make any
direct solicitation of any account debtor for collection purposes or institute
litigation for the collection of amounts due. After the Collection Period, Buyer
agrees to reasonably cooperate with Seller, at Seller's expense, as to any
litigation or other collection efforts instituted by Seller to collect any
delinquent Seller Accounts Receivable. Any amounts relating to the Seller
Accounts Receivable that are paid directly to the Seller shall be retained by
the Seller (less any commissions and/or other expenses due thereon, which Seller
agrees to timely pay), but Seller shall provide Buyer with prompt notice of any
such payment. Every thirty (30) days
19
during the Collection Period, Buyer shall make a payment to Seller equal to the
amount of all collections of Seller Accounts Receivable during such thirty (30)
day period less any commissions and/or other expenses due thereon (which Buyer
is hereby directed to pay on Seller's behalf). Within fifteen (15) days after
the end of the 90-day collection period, any remaining Seller Accounts
Receivable shall be returned to Seller for collection.
ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Subject to Buyer's time brokering
of the Station pursuant to the Time Brokerage Agreement, Seller covenants and
agrees with respect to the Station that, between the date hereof and the Closing
Date, except as expressly permitted by this Agreement or with the prior written
consent of Buyer, Seller shall act in accordance with the following; provided
however, that American, American License and Buyer acknowledge that concurrent
with the execution of this Agreement Buyer, American and American License have
entered into the Time Brokerage Agreement and such parties understand that any
TBA Events which would cause any of American's or American License's covenants
and agreements to be breached by American or American License, shall not be
deemed to result in a breach or nonperformance of such covenants and agreements
by American or American License:
9.1.1 Seller shall conduct the business and operations of the
Station in the ordinary and prudent course of business consistent with past
practice and with the intent of preserving the ongoing operations and assets of
the Station, including but not limited to maintaining the independent identity
of the Station, retaining the current format and programming (including the
content thereof) of the Station and using its commercially reasonable efforts to
retain the services of all active employees, consultants and agents.
9.1.2 Seller shall use commercially reasonable efforts to
preserve the operation of the Station intact and use commercially reasonable
efforts to preserve the business of the Station's advertisers, customers,
suppliers and others having business relations with the Station and continue to
conduct financial operations of the Station, including their credit and
collection and pricing policies and practices, in the ordinary course of
business consistent with past practices.
9.1.3 Seller shall operate the Station in all respects in
accordance with FCC rules and regulations and the Station Licenses and with all
other laws, regulations, rules and orders, and shall not cause or permit by any
act, or failure to act, any of the Station Licenses listed in Schedule 7.4 to
expire, be surrendered, adversely modified, or otherwise terminated, or the FCC
to institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses, or fail to prosecute with due
diligence any pending applications to the FCC.
9.1.4 Should any fact relating to Seller which would cause the
FCC to deny its consent to the transactions contemplated by this Agreement come
to Seller's attention, Seller will promptly notify Buyer thereof and will use
its commercially reasonable efforts to take such steps
20
as may be necessary to remove any such impediment to the FCC's consent to the
transactions contemplated by this Agreement.
9.1.5 Except as set forth on Schedule 9.1.5 and in Section
10.7, Seller shall not: (a) sell, lease or dispose of or commit to sell, lease
or dispose of any of the Station Assets, except as permitted pursuant to Section
1.1.2 hereof and except in connection with any American Sale); (b) sell
broadcast time on a prepaid basis (other than in the course of existing credit
practices); (c) except as required by applicable law, grant or agree to grant
any general increases in the rates of salaries or compensation payable to
employees of the Station; (d) grant or agree to grant any specific bonus or
increase in compensation to any executive or management employee of the Station;
(e) provide for any new pension, retirement or other employment benefits for
employees of the Station or any increases in any existing benefits; (f) modify,
change or terminate any Contract; (g) change the advertising rates in effect as
of the date hereof except in accordance with ordinary course of business pricing
policies; (h) create, assume or permit to exist any Liens or rights affecting
any of the Station Assets, except for those in existence on the date of this
Agreement and disclosed in Schedule 7.7 or Schedule 7.8 which shall be released
at Closing, and Permitted Liens; (i) change the call letters of the Station; or
(j) take any action which would cause any representation or warranty contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.1.6 Except for changes resulting from the Time Brokerage
Agreement, Seller shall provide Buyer prompt written notice of any change in any
of the information contained in the representations and warranties made in
Article 7 or any Schedule.
9.1.7 In order that Buyer may have full opportunity to make
such investigation as it desires of the affairs of the Station, including the
right to audit the Financial Statements and Interim Financial Statements of
Seller, Seller shall give or cause the Station to give Buyer and Buyer's
counsel, accountants, engineers and other representatives, at Buyer's reasonable
request and upon reasonable notice, full and reasonable access during normal
business hours to all of Seller's personnel, properties, books, Contracts,
reports and records (including, without limitation, financial information and
tax returns relating to the Station, and environmental audits in existence with
respect to the Station Assets), real estate, buildings and equipment relating to
the Station and to the Station's employees, and to furnish Buyer with
information and copies of all documents and agreements relating to the Station
and the operation thereof (including but not limited to financial and operating
data and other information concerning the financial condition, results of
operations and business of the Station) that Buyer may reasonably request. The
rights of Buyer under this Section 9.1.7 shall not be exercised in such a manner
as to interfere unreasonably with the business of the Station. Any investigation
by Buyer in accordance with the foregoing shall not diminish or negate, in any
way, any of the representations or warranties of Seller set forth in this
Agreement or in connection herewith.
9.1.8 Until the Effective Date, within thirty (30) days of the
end of each calendar month, Seller shall deliver to Buyer profit and loss
statements of Seller for the month then ended (collectively, the "Interim
Financial Statements"). Seller shall also furnish to Buyer any and all
21
information customarily prepared by Seller concerning the financial condition
and results of operations of the Station.
9.1.9 Seller shall cooperate and shall permit Buyer's
independent accountants to prepare, at Buyer's expense, audited financial
statements for the Station for the most recently completed fiscal year-end.
9.1.10 Seller shall use its commercially reasonable efforts to
obtain (i) any third party consents necessary for the assignment of any Contract
(which shall not require any payment to any such third party except for such
amounts contemplated by the Contract to be assigned, any amount then owing by
Seller to such third party or the reasonable expenses incurred by such third
party in connection with such assignment), (ii) Estoppel Certificates, in the
form of Exhibit G, from any and all lessors who are party to the Real Estate
Contracts, and the tower lease by and between the County of Santa ▇▇▇▇▇, as
lessor, and Seller, as lessee (the "Tower Lease"), and (iii) Subordination and
Non-Disturbance Agreement, if any, in the form of Exhibit H, obtained from all
secured parties and/or mortgage holders with: (a) an interest in the real estate
subject to the Real Estate Contracts, or (b) an interest in the Real Estate
Contracts ("SNDA");.
9.1.11 Seller shall use its commercially reasonable efforts to
transfer to Buyer any discounts or other benefits which it enjoys under any
arrangement as described in Section 7.9 of this Agreement.
9.2 Notification. Seller agrees to notify Buyer, and Buyer
agrees to notify Seller, of any litigation, arbitration or administrative
proceeding pending or, to the best of its knowledge, threatened, which
challenges the transactions contemplated hereby. Seller shall promptly notify
Buyer if any of the normal broadcast transmissions of the Station are
interrupted, interfered with or in any way impaired, and shall provide Buyer
with prompt written notice of the problem and the measures being taken to
correct such problem. Notwithstanding anything else contained in this Agreement,
if the Station is not restored so that operation is resumed to full licensed
power and antenna height within five (5) days of such event, or if more than
five (5) such events occur within any thirty (30) day period, or the Station
shall be off the air for more than seventy-two (72) consecutive hours, then
Buyer shall have the right to terminate this Agreement, unless such interruption
or impairment of the Station's normal broadcast transmissions is a result of a
TBA Event.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement, or take any
action which would cause any representation or warranty of Seller contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Station Assets and the
Assumed Liabilities as provided in Articles 1 and 2 of this Agreement.
22
9.5 Other Items. Except as otherwise specifically contemplated by this
Agreement, until the Closing Date, Seller shall not: (a) waive or release any
right relating to the business or operations of the Station, except for
adjustments or settlements made in the ordinary course of business consistent
with past practices; (b) transfer or grant any material rights under any of the
Station Licenses; (c) enter into any commitment for capital expenditures for
which Buyer would become liable after the Closing Date; (d) subject to the
rights and obligations of the parties set forth in, and actions taken by the
parties pursuant to the Time Brokerage Agreement, introduce any material changes
in the broadcast hours or in the format of the Station or any other material
change in the Station's programming policies; and (e) enter into any transaction
or make or enter into any contract or commitment with respect to the Station or
the Station Assets which by reason of its size or otherwise is not in the
ordinary course of business consistent with past practices.
9.6 Exclusivity. Except for the execution and/or consummation of that
certain Agreement and Plan of Merger (the "American Sale Agreement") by and
among American, Westinghouse Electric Corporation and R Acquisition Corp., dated
as of September 19, 1997 (the "American Sale"), Seller agrees that, commencing
on the date hereof through the Closing or earlier termination of this Agreement,
Buyer shall have the exclusive right to consummate the transactions contemplated
herein, and during such exclusive period, Seller agrees that neither Seller, nor
any officer, employee or other representative or agent of Seller: (a) will
initiate, solicit or encourage, directly or indirectly, any inquiries, or the
making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
all or any portion of the Station Assets (any such inquiry, proposal or offer
being hereinafter referred to as an "Acquisition Proposal" and any such
transaction being hereinafter referred to as an "Acquisition"); (b) will engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; or (c) will continue any existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal or Acquisition and will take the necessary steps to inform
the individuals or entities referred to above of the obligations undertaken by
them in this Section 9.6.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller hereby covenant and agree that between the date hereof
and the Closing Date, each shall act in accordance with the following:
10.1 Confidentiality.
10.1.1 Subject to the requirements of applicable law, Buyer
and Seller shall each keep confidential all information obtained by it with
respect to the other parties hereto in connection with this Agreement and the
negotiations preceding this Agreement ("Confidential Information"); provided
that, the parties hereto may furnish such Confidential Information to its
employees, agents
23
and representatives who need to know such Confidential Information (including
its financial and legal advisers, its banks and other lenders) (collectively,
"Representatives"). Each party hereto shall, and shall cause each of such
party's Representatives to, use the Confidential Information solely in
connection with the transactions contemplated by this Agreement. If the
transactions contemplated hereby are not consummated for any reason, each party
shall return to such other party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such other party
in connection with this Agreement and the transactions contemplated hereby.
10.1.2 Notwithstanding anything contained in Section 10.1.1,
no party shall be required to keep confidential or return any Confidential
Information which: (a) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party; (b) is or
becomes publicly known through no fault of the receiving party or its agents;
(c) is required to be disclosed pursuant to an order or request of a judicial or
governmental authority (provided the disclosing party is given reasonable prior
notice of the order or request and the purpose of the disclosure); or (d) is
developed by the receiving party independently of the disclosure by the
disclosing party.
10.1.3 Notwithstanding anything to the contrary in this
Agreement, Buyer and its Affiliates shall, and Seller and its Affiliates shall,
in accordance with their respective legal obligations, including but not limited
to filings permitted or required by the Securities Act of 1933 and the
Securities and Exchange Act of 1934, the NASDAQ National Market and other
similar regulatory bodies, make (i) such press releases and other public
statements and announcements ("Releases") as such parties deem necessary and
appropriate in connection with this Agreement and the transactions contemplated
hereby, and (ii) any and all statements such parties deem to be necessary and
appropriate in any and all filings, prospectuses and other similar documents.
Each party shall use commercially reasonable efforts to provide the other party
with a copy of any Releases before any publication of same. The other party may
make comments to the party seeking to make the Release, provided however, that
the party seeking to make the release is not required to incorporate any such
comments into the Release.
10.1.4 Notwithstanding anything contained in this Agreement to
the contrary, any disclosures of Confidential Information in connection with any
American Sale shall not constitute a violation by Seller and its Affiliates of
the provisions of this Agreement.
10.2 Cooperation. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the satisfaction of any condition to
closing set forth herein.
10.3 Control of Station. Subject to the Time Brokerage Agreement, Buyer
shall not, directly or indirectly, control, supervise or direct the operations
of the Station prior to the Closing.
24
Such operations, including complete control and supervision of all Station
programs, employees and policies, shall be the sole responsibility of Seller.
10.4 Consents to Assignment. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, transfer, delivery or sublease thereof. Subject to the
provisions of Section 11.6, in those cases where consents, assignments, releases
and/or waivers have not been obtained at or prior to the Closing to the transfer
and assignment to Buyer of the Contracts, this Agreement and any assignment
executed pursuant hereto, to the extent permitted by law, shall constitute an
equitable assignment by Seller to Buyer of all of Seller's rights, benefits,
title and interest in and to the Contracts, and where necessary or appropriate,
Buyer shall be deemed to be Seller's agent for the purpose of completing,
fulfilling and discharging all of Seller's rights and liabilities arising after
the Closing Date under such Contracts. Seller shall use its commercially
reasonable efforts to provide Buyer with the financial and business benefits of
such Contracts (including, without limitation, permitting Buyer to enforce any
rights of Seller arising under such Contracts), and Buyer shall, to the extent
Buyer is provided with the benefits of such Contracts, assume, perform and in
due course pay and discharge all debts, obligations and liabilities of Seller
under such Contracts to the extent that Buyer was to assume those obligations
pursuant to the terms hereof.
10.5 Filings. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller each shall use its commercially reasonable efforts
to obtain, and to cooperate with each other in obtaining, all authorizations,
consents, orders and approvals of any governmental authority that may be or
become necessary in connection with the consummation of the transactions
contemplated by this Agreement, and to take all reasonable actions to avoid the
entry of any order or decree by any governmental authority prohibiting the
consummation of the transactions contemplated hereby, including without
limitation, any reports or notifications that may be required to be filed with
the FCC or to be filed under the HSR Act with the Federal Trade Commission and
the Antitrust Division of the Department of Justice, and each shall furnish to
one another all such information in its possession as may be necessary for the
completion of the reports or notifications to be filed by the other.
10.6 Bulk Sales Laws. Buyer hereby waives compliance by Seller with the
provisions of the "bulk sales" or similar laws of any state. Seller agrees to
indemnify Buyer and hold it harmless from any and all loss, cost, damage and
expense (including but not limited to, reasonable attorney's fees) sustained by
Buyer as a result of any failure of Seller to comply with any "bulk sales" or
similar laws.
10.7 Employee Matters. The parties acknowledge and agree that this
Section 10.7 shall be subject to the rights and obligations of the parties set
forth in, and any prior actions taken by the
25
parties pursuant to, the Time Brokerage Agreement. On the earlier to occur of
the Effective Date and the Closing Date, other than employees listed on Schedule
10.7, Buyer shall offer employment to all of the Station's employees listed on
Schedule 7.14, for job responsibilities and compensation generally comparable to
the employees' current positions as set forth on Schedule 7.14 (the "Hired
Employees"). In the event the Effective Date occurs prior to the Closing Date,
Seller shall continue to employ those persons necessary for Seller to comply
with the terms of the Time Brokerage Agreement ("Licensee Employees"), and
Seller shall terminate all other Hired Employees as of the Effective Date.
Seller shall provide Buyer access to its personnel records and personnel files,
and shall provide such other information regarding Seller's employees as Buyer
may reasonably request prior to the Effective Date of the Time Brokerage
Agreement or the Closing Date, as applicable. Seller shall be responsible for
the payment of all compensation and accrued employee benefits (except that the
liability with respect to vacation days accrued in calendar year 1997 only which
remain unused as of the last day of employment with Seller ("Accrued 1997
Vacation"), shall be the responsibility of Buyer and Buyer shall receive a
credit to the Purchase Price for such Accrued 1997 Vacation when determining
prorations pursuant to Section 3.3.1 hereof) payable to all Hired Employees
through the earlier to occur of the Effective Date and the Closing Date. Seller
also shall be responsible for providing any notice required by the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. ss.2101 et seq., or any
state statute requiring notice to any terminated or laid off employees, whether
such notice is required to be given before or after the Closing Date. All Hired
Employees shall be considered terminated employees of Seller and shall not be
entitled to receive from Buyer credit for any accrued vacation days, sick days,
personal days, paid time off or other such days; provided however, that (i) all
Hired Employees shall receive prior years' service credit for purposes of
entitlement to vacation, sick days and other similar days under Buyer's employee
benefit plans, and (ii) all Hired Employees who have 1997 Accrued Vacation shall
be entitled to receive, in Buyer's sole discretion in order to preserve the
orderly operations of the Station following the Closing: (a) payment for all
1997 Accrued Vacation, (b) days off in calendar year 1997 for such 1997 Accrued
Vacation, or (c) a combination of (a) and (b). With respect to group health
coverage, any Hired Employee and his or her dependents who are presently
participating in Seller's group health plan shall be entitled to immediately
participate in Buyer's health plan as of the earlier of the Effective Date and
the Closing Date without regard to preexisting conditions. However, Hired
Employees who are not currently participating in Seller's health plan who wish
to join Buyer's health plan, are subject to the terms and conditions under
Buyer's plan with regard to participation, including limits, if any, on coverage
for preexisting conditions. Seller acknowledges and agrees that it, and not
Buyer is, and after the earlier to occur of the Effective Date and the Closing
Date shall remain, solely responsible for any and all wages, compensation,
commission, bonuses, severance pay, insurance, supplemental pension, deferred
compensation, retirement and any other benefits, premiums and claims (other than
1997 Accrued Vacation to the extent Buyer receives a credit to the Purchase
Price for such accrued vacation), due, to become due, committed, accrued or
otherwise promised to any person who, as of the Effective Date (or the Closing
Date, as applicable), is a retiree, former employee or current employee of
Seller, relating to the period up to and including the Effective Date (or the
Closing Date, as applicable). Buyer, as purchaser of the Station Assets, shall
assume no employee benefit plans, programs, policies, or practices, whether or
not set forth in writing, maintained by Seller at any time. Seller shall be
permitted to (i) enter into "stay bonus" arrangements and agreements with
employees, provided that,
26
Buyer assumes no liability for such arrangements, and (ii) grant any
compensation increases to Station employees not exceeding 5% of each employee's
current base compensation. Except as set forth on Schedule 10.7 and if the
Effective Date occurs prior to the Closing Date, as of the Closing Buyer shall
offer employment to the Licensee Employees, and such Licensee Employees shall,
as of and following the Closing, be treated in all respects as Hired Employees
pursuant to this Section 10.7. If the Closing Date occurs prior to the Effective
Date, all employees other than those set forth on Schedule 10.7 shall be treated
as Hired Employees for purposes of this Section 10.7.
10.8 Tangible Personal Property. Notwithstanding anything contained in
this Agreement to the contrary, the parties acknowledge that Schedule 7.7,
Schedule 1.2.8, Schedule 7.9(a) and Schedule 10.7 have not been finalized as of
the date of the execution of this Agreement. Within twenty (20) days immediately
following the date of this Agreement, the engineers of Seller and Buyer (or
their designated representatives), respectively, shall, acting reasonably and in
good faith, use commercially reasonable efforts to mutually determine and
designate the tangible personal property to be included in the Station Assets
and listed on Schedule 7.7, and the tangible personal property which shall be
excluded from the Station Assets and listed on Schedule 1.2.8; provided that, in
making such determinations and designations, Buyer shall be entitled to (i) all
tangible personal property currently used exclusively with respect to the
Station and (ii) pursuant to arrangements reasonably satisfactory to the
parties, all other tangible personal property necessary in order to operate the
Station as the Station is currently being operated or tangible personal property
which is comparable in nature and quality.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date or such earlier date as
specifically provided below, of each of the following conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes (i) expressly permitted or contemplated by the terms of this
Agreement, or (ii) occurring after the date of this Agreement which do not have
a material adverse effect on the Station or the Station Assets.
11.1.2 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to the Closing Date shall have
been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of
the Closing Date, from each of American and American License, executed by the
President and Chief Financial Officer of
27
Seller, to the effect that: (a) except for changes expressly permitted or
contemplated by the terms of this Agreement or occurring as a result of Buyer's
actions under the Time Brokerage Agreement, the representations and warranties
of Seller contained in this Agreement are true and complete in all material
respects on and as of the Closing Date as if made on and as of that date; and
(b) Seller has complied with or performed in all material respects all terms,
covenants and conditions to be complied with or performed by it on or prior to
the Closing Date.
11.2 Governmental Consents. The FCC Consent shall have been obtained
and, subject to the provisions of Section 4.1 hereof, shall have become a Final
Order.
11.3 Station Licenses Renewal. The renewal shall have been granted by
the FCC of the Station Licenses for a full term to end no earlier than December
1, 2005, without condition materially adverse to Buyer or any of their
respective Affiliates.
11.4 Governmental Authorizations. American License shall be the holder
of the Station Licenses and all other licenses, permits and other authorizations
listed in Schedule 7.4, and there shall not have been any adverse modification
of any of such licenses, permits and other authorizations which has an adverse
effect on the Station or the operations thereof. No proceeding shall be pending
which reasonably could be expected to result in the revocation, cancellation,
failure to renew, suspension or adverse modification of the Station Licenses or
any other licenses, permits or other authorizations listed in Schedule 7.4.
11.5 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered against, any party hereto which could reasonably be expected to result
in: (a) rendering it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms; (b)
questioning the validity or legality of any transaction contemplated hereby; (c)
seeking to enjoin any transaction contemplated hereby; (d) seeking material
damages on account of the consummation of any transaction contemplated hereby;
or (e) a petition of bankruptcy by or against Seller, an assignment by Seller
for the benefit of its creditors, or other similar proceeding.
11.6 Third-Party Consents. All Material Contracts shall be in full
force and effect on the Closing Date. Seller shall have obtained and shall have
delivered to Buyer all third-party consents to the assignment of the Material
Contracts.
11.7 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Station Assets to Buyer, including, without
limitation, each of the documents required to be delivered by them pursuant to
Article 14.
11.8 Title Insurance and Surveys. Within fifteen (15) days of the date
of this Agreement, Seller shall provide Buyer with access to all buildings,
structures, improvements and fixtures
28
comprising part of the real estate subject to the Real Estate Contracts, and
within thirty (30) days following the date Buyer is given such access Buyer
shall have received (at Buyer's expense): (a) commitments for ALTA title
insurance policies with respect to the real property subject to the Real Estate
Contracts which are in all material respects acceptable to Buyer in Buyer's
judgment reasonably exercised, subject to Permitted Liens (the "Titles"); and
(b) staked-on-ground boundary surveys of the real estate subject to the Real
Estate Contracts, certified current as of the date of delivery thereof, prepared
by a duly licensed and registered land surveyor, and which are in all material
respects acceptable to Buyer in Buyer's judgment reasonably exercised, subject
to Permitted Liens (the "Surveys"). The Titles and the Surveys will be ordered
by the Buyer, and shall in all material respects be acceptable to Buyer in
Buyer's judgment reasonably exercised. Buyer shall pay all costs and expenses of
obtaining the Titles and the Surveys, including without limitation, all title
insurance premiums associated therewith. The Surveys shall be made and prepared
in accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, jointly established and adopted by ALTA and ACSM in 1986.
Notwithstanding the above, if Buyer does not notify Seller within thirty-five
(35) days following the date Buyer is given access to the real estate subject to
the Real Estate Contracts that the Titles and/or Surveys are not in all material
respects acceptable to Buyer in Buyer's judgment reasonably exercised, then this
condition shall be deemed waived by Buyer.
11.9 Real Estate. Within fifteen (15) days of the date of this
Agreement, Seller shall provide Buyer with access to all buildings, structures,
improvements and fixtures comprising part of the real estate subject to the Real
Estate Contracts, and Buyer shall have determined, in its judgment reasonably
exercised, that services for utilities, including without limitation, for water
and sewer service, telephone service, electric and/or gas service, and sanitary
services are sufficient in all material respects to service the current use of
the real property subject to the Real Estate Contracts. Notwithstanding the
above, if Buyer does not notify Seller within ten (10) days following the date
Buyer is given access to the real estate subject to the Real Estate Contracts
that this condition has not been satisfied, then this condition shall be deemed
waived by Buyer.
11.10 Building and Mechanical Inspection. Within fifteen (15) days of
the date of this Agreement, Seller shall provide Buyer with access to all
buildings, structures, improvements and fixtures comprising part of the real
estate subject to the Real Estate Contracts, and subsequently Buyer shall have
ordered and received an inspection report from a reputable engineer, at Buyer's
sole expense and in Buyer's sole discretion, indicating that all buildings,
structures, improvements and fixtures comprising part of the real estate subject
to the Real Estate Contracts are (i) in all material respects in good operating
condition, (ii) have no latent structural, mechanical or other defects of
material significance, (iii) are reasonably suitable for the purposes for which
they are being used, and (iv) have reasonably adequate rights of ingress and
egress. Notwithstanding the above, if Buyer does not notify Seller within ten
(10) days following the date Buyer is given access to the real estate subject to
the Real Estate Contracts that the inspection report does not meet the standards
set forth in (i) through (iv) above, then this condition shall be deemed waived
by Buyer.
11.11 Pre-Merger Notification. If applicable, any waiting period under
the HSR Act with respect to the transactions contemplated by this Agreement
shall have elapsed or been terminated.
29
11.12 No Adverse Change. No material adverse change in condition or
status of the Station or Station Assets shall have occurred, or be threatened or
be reasonably likely to occur, unless caused due to the occurrence of any TBA
Events.
11.13 KSJO Tower Sublease and KUFX Studio Sublease. Buyer and a
subsidiary of Seller shall have executed and delivered a sublease for tower
space for the Station in the form of Exhibit I ("KSJO Tower Sublease"), and
Buyer and Seller shall have executed and delivered a sublease for studio space
for KUFX(FM) in the form of Exhibit J ("KUFX Studio Sublease").
11.14 Time Brokerage Agreement. From the date hereof through the
Closing Date, the Time Brokerage Agreement shall not have been terminated by
Buyer as permitted by the Time Brokerage Agreement as a result of Seller's
material noncompliance with its obligations under the Time Brokerage Agreement.
11.15 Tangible Personal Property. Buyer and Seller shall have agreed on
the determination and designation of tangible personal property to be included
in, and excluded from, the Station Assets in accordance with Section 10.8.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
12.1.2 All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by an officer of Buyer, to the effect that: (a) the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date; and (b) that Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consent shall have been obtained
and, subject to the provisions of Section 4.1 hereof, shall have become a Final
Order.
30
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other decree or judgment of any
court, agency or other governmental authority shall have been rendered (and
remain in effect) against, any party hereto which: (a) would render it unlawful,
as of the Closing Date, to effect the transactions contemplated by this
Agreement in accordance with its terms; (b) questions the validity or legality
of any transaction contemplated hereby; (c) seeks to enjoin any transaction
contemplated hereby; (d) seeks material damages on account of the consummation
of any transaction contemplated hereby; or (e) is a petition of bankruptcy by or
against Buyer, an assignment by Buyer for the benefit of its creditors, or other
similar proceeding.
12.4 Pre-Merger Notification. If applicable, any waiting period under
the HSR Act with respect to the transactions contemplated by this Agreement
shall have elapsed or been terminated.
12.5 Closing Documents. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, each of the documents and Purchase
Price required to be delivered by it pursuant to Article 14.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
13.1 Expenses. Except as set forth in Section 13.2 and 13.3 hereof or
otherwise expressly set forth in this Agreement, each party hereto shall be
solely responsible for all costs and expenses incurred by it in connection with
the negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to the costs and expenses incurred
pursuant to Article 5 hereof and the fees and disbursements of counsel and other
advisors.
13.2 Transfer Taxes and Similar Charges. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be paid according to local customs.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any govern mental authority the consent of which or the filing with
which is required for the consummation of the transactions contemplated hereby
shall be paid equally by Buyer and Seller.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
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14.1.1 Certified resolutions of American and American License
approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.1.2 A certificate of American and American License, dated
the Closing Date, in the form described in Section 11.1.3;
14.1.3 Governmental certificates showing that American and
American License are each duly organized and in good standing in the State of
Delaware, and authorized to do business in the State of California, each
certified as of a date not more than ten (10) business days before the Closing
Date;
14.1.4 Such certificates, bills of sale, assignments, general
warranty deeds, documents of title and other instruments of conveyance,
assignment and transfer (including without limitation any necessary consents to
conveyance, assignment or transfer), and Lien releases, all in form reasonably
satisfactory to Buyer and Buyer's counsel, as shall be effective to vest in
Buyer good title in and to the Station Assets, free, clear and unencumbered,
except for Permitted Liens.
14.1.5 An Assignment and Assumption Agreement in the form of
Exhibit C effectuating the assignment and assumption of the Assumed Liabilities
(the "Assignment and Assumption Agreement").
14.1.6 At the time and place of Closing, originals and all
copies of all program, operations, transmission or maintenance logs and all
other records required to be maintained by the FCC with respect to the Station,
including the public files of the Station, shall be left at the Station and
thereby delivered to Buyer;
14.1.7 A written opinion of Seller's General Counsel in the
form of Exhibit D, dated as of the Closing Date;
14.1.8 A written opinion of Seller's FCC counsel in the form
of Exhibit E, dated as of the Closing Date;
14.1.9 Estoppel certificates, if any, substantially in the
form of Exhibit G obtained from the lessors under the Real Estate Contracts and
under the Tower Lease;
14.1.10 SNDA's, if any, in the form of Exhibit H;
14.1.11 The KSJO Tower Sublease, in the form attached hereto
as Exhibit I
14.1.12 The KUFX Studio Sublease, in the form attached hereto
as Exhibit J; and
14.1.13 Such additional information, materials, agreements,
documents and instruments as Buyer and its counsel may reasonably request in
order to consummate the Closing.
32
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the
form described in Section 12.1.3.
14.2.3 The Assignment and Assumption Agreement;
14.2.4 A written opinion of Buyer's counsel in the form of
Exhibit F, dated as of the Closing Date;
14.2.5 The KSJO Tower Sublease;
14.2.6 The KUFX Studio Sublease;
14.2.7 The Purchase Price in accordance with Section 3.1
hereof;
14.2.8 Such additional information, materials, agreement,
documents and instruments as Seller and its counsel may reasonably request in
order to consummate the Closing.
ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC.
15.1 Survival of Representations, Etc. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) as follows:
15.1.1 The Agreements shall survive the Closing for a period
from the Closing Date equal to the statute of limitations for written contracts
in California.
15.1.2 The Warranties in Sections 6.2, 6.6, 7.2, the third
sentence of 7.7, and 7.11 shall survive the Closing without limitation.
15.1.3 The Warranties in Section 7.6 or otherwise relating to
the federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
33
15.1.4 All other Warranties shall survive for a period of
eighteen (18) months from the Closing Date.
15.1.5 The right of any party to recover Damages (as defined
in Section 15.2.1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.6 Notwithstanding any provision hereof to the contrary,
there shall be no contractual time limit in which Buyer or Seller may bring any
action for actual fraud (a "Fraud Action"), regardless of whether such actual
fraud also included a breach of any Agreement or Warranty; provided, however,
that any Fraud Action must be brought within the period of the applicable
statute of limitations plus any extensions or waivers granted or imposed with
respect thereto.
15.2 Indemnification.
15.2.1 Seller shall defend, indemnify and hold harmless Buyer
from and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer
arising out of or related to: (a) any breach of the Agreements or Warranties
given or made by Seller in this Agreement; (b) the Retained Liabilities; (c)
creditors' claims with respect to noncompliance with any bulk sales law, except
to the extent such claims are Assumed Liabilities; (d) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of the Station Assets prior to the Closing Date; and (e) the Norve vs.
Laguna Seca Raceway, et al. and ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇ Seca Raceway, et. al.
litigation matters set forth on Schedule 7.15.
15.2.2 Buyer shall defend, indemnify and hold harmless Seller
from and against any and all Damages incurred by Seller arising out of or
related to: (a) any breach of the Agreements and Warranties given or made by
Buyer in this Agreement; (b) the Assumed Liabilities; and (c) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of any of the Station Assets on or after the Closing Date.
15.2.3 Notwithstanding the foregoing, the rights of Buyer and
Seller to obtain indemnification under this Article 15 shall be subject to the
following provisions:
(a) Seller shall not be obligated to indemnify Buyer for
Damages pursuant to Section 15.2.1 unless the aggregate amount owed by Seller to
Buyer pursuant to Section 15.2.1 exceeds $100,000 ("Seller's Threshold"), in
which event Seller shall be required to indemnify Buyer for the entire amount
owed; provided that Seller's maximum liability for the entire amount owed
pursuant to Section 15.2.1 is $3,000,000 (the "Seller's Cap").
34
(b) Buyer shall not be obligated to indemnify Seller for
Damages pursuant to Section 15.2.2 unless the aggregate amount owed by Buyer to
Seller pursuant to Section 15.2.2 exceeds $100,000 ("Buyer's Threshold"), in
which event Buyer shall be required to indemnify Sellers for the entire amount
owed; provided that Buyer's maximum liability pursuant to Section 13.2.2 is
$3,000,000 ("Buyer's Cap").
(c) Notwithstanding anything contained in this Section 15.2.3,
any claims by Buyer against Seller for damages resulting from (i) a breach of
any Warranties of the Seller set forth in Section 7.2 and the third sentence of
7.7, and (ii) a breach of any Agreements of Seller, shall not be subject to the
Seller's Threshold or the Seller's Cap, as applicable.
(d) Notwithstanding anything contained in this Section 15.2.3,
any claims by Seller against Buyer for damages resulting from (i) a breach of
any Warranties of the Buyer set forth in Section 6.2, and (ii) a breach of any
Agreements of Buyer, shall not be subject to the Buyer's Threshold or the
Buyer's Cap, as applicable.
15.3 Procedures: Third Party and Direct Indemnification Claims. The
indemnified party agrees to give written notice within a reasonable time to the
indemnifying party of any demand, suit, claim or assertion of liability by third
parties or other circumstances that could give rise to an indemnification
obligation hereunder against the indemnifying party (hereinafter collectively
"Claims," and individually a "Claim"), it being understood that the failure to
give such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as set
forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced. The parties also agree that any claim for Damages arising
directly between the parties relating to this Agreement may be brought at any
time within the period specified in Section 15.1, and that the only notice
required with respect thereto shall be as specified in Section 15.1.5.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.3.2 In the event that the indemnifying party shall elect
not to undertake such defense or opposition, or within ten days after notice of
any such Claim from the indemnified party shall fail to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of its own choosing, on behalf
of and for the account and risk of the indemnifying party (subject to the right
of the indemnifying party to assume defense of or opposition to such Claim at
any time prior to settlement, compromise or final determination thereof).
35
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim; and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim, the indemnified party,
by counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such Claim.
15.3.4 The parties agree that all claims not disputed by the
indemnifying party shall be paid by the indemnifying party within thirty (30)
days after receiving notice of the Claim. "Disputed Claims" shall mean claims
for Damages by an indemnified party which the indemnifying party objects to in
writing within thirty (30) days after receiving notice of the Claim. In the
event there is a Disputed Claim with respect to any Damages, the indemnifying
party shall be required to pay the indemnified party the amount of such Damages
for which the indemnifying party has, pursuant to a final determination, been
found liable within ten (10) days after there is a final determination with
respect to such Disputed Claim. As used in this Section 15.3.4, a final
determination of a Disputed Claim shall be (i) a judgment of any court
determining the validity of a Disputed Claim, if no appeal is pending from such
judgment and if the time to appeal therefrom has elapsed; (ii) an award of any
arbitration determining the validity of such disputed claim, if there is not
pending any motion to set aside such award and if the time within which to move
to set aside such award has elapsed; (iii) a written termination of the dispute
with respect to such claim signed by all of the parties thereto or their
attorneys; (iv) a written acknowledgment of the indemnifying party that it no
longer disputes the validity of such claim; or (v) such other evidence of final
determination of a disputed claim as shall be acceptable to the parties.
15.3.5 No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
15.4 Indemnification; Sole and Exclusive Remedy. Following the Closing,
the sole and exclusive remedy for Buyer or Seller for any Claim for a breach of
any Agreement or Warranty, or any other claim which would also be a breach of an
Agreement or Warranty (whether such Claim is framed in tort, contract or
otherwise; but excluding any Fraud Action and any action arising out of Seller's
or Buyer's willful misconduct or gross negligence, as the case may be), shall be
a claim for indemnification pursuant to this Article 15. Anything in this
Agreement or any applicable law to the contrary notwithstanding, it is
understood and agreed by Buyer and Seller that no shareholder, director,
officer, employee, agent or Affiliate of Seller or Buyer, as the case may be,
shall have (i) any personal liability to the other party as a result of the
breach of any Agreement or Warranty contained herein, or any other claim which
would also be a breach of an Agreement or Warranty,
36
or (ii) any personal obligation to indemnify the other party for any of such
party's claims pursuant to Section 15.2, and such party waives and releases and
shall have no recourse against any of such parties described in this Section
15.4 as a result of the breach of any Agreement or Warranty contained herein, or
any other claim which would also be a breach of an Agreement or Warranty.
ARTICLE 16
TERMINATION RIGHTS
16.1 Termination. This Agreement may be terminated at any time prior to
Closing as follows:
16.1.1 Upon the mutual written consent of Buyer and Seller,
this Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; or
16.1.4 By written notice of Buyer to Seller, or by Seller to
Buyer, if the FCC denies the FCC Application or designates it for a trial-type
hearing; or
16.1.5 By written notice of Buyer to Seller, or by Seller to
Buyer, if any court of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
16.1.6 By written notice of Buyer to Seller, or by Seller to
Buyer, if the Closing shall not have been consummated on or before the later of
(i) July 1, 1998, and (ii) sixty (60) days following the FCC's grant of the
renewal of each of the Station Licenses without condition materially adverse to
Seller or Buyer or any of their respective Affiliates, but in no event later
than December 31, 1998 ("the Drop Dead Date"); or
16.1.7 By written notice of Buyer to Seller under the
conditions set forth in Section 9.2 hereof. Notwithstanding the foregoing, no
party hereto may effect a termination hereof if such party is in material
default or breach of this Agreement.
37
16.2 Liability. Except as set forth in Section 16.4 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of a default by Seller which
results in the filing of a lawsuit for damages, specific performance, or other
remedy, Buyer shall be entitled to reimbursement by Seller of reasonable legal
fees and expenses incurred by Buyer; provided that Buyer prevails in such
lawsuit.
16.4 Seller's Liquidated Damages. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due solely to Buyer's material
breach of this Agreement, and Seller is not at that time in material breach
hereof, then Seller shall be entitled to retain the Escrow Deposit, plus
interest, which amount shall constitute liquidated damages. It is understood and
agreed that such liquidated damages amount represents Buyer's and Seller's
reasonable estimate of actual damages and does not constitute a penalty.
Recovery of liquidated damages shall be the sole and exclusive remedy of Seller
against Buyer for failing to consummate this Agreement as a result of Buyer's
material breach hereof and shall be applicable regardless of the actual amount
of damages sustained and all other remedies are deemed waived by Seller. In the
event of a default by Buyer which results in the filing of a lawsuit to recover
the Escrow Deposit as liquidated damages, Seller shall be entitled to
reimbursement by Buyer of reasonable legal fees and expenses incurred by Seller;
provided that Seller prevails in such lawsuit.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Risk of Loss. (a) The risk of loss, damage or impairment of any of
the Station Assets prior to the Closing Date from any cause whatsoever shall be
upon Seller. In the event of any loss, damage or impairment, confiscation or
condemnation, the proceeds of any claim for loss payable under any insurance
policy, judgment or award with respect thereto shall be applied to repair,
replace or restore such Station Assets to their prior condition as soon as
practicable after such loss, impairment, condemnation or confiscation.
(b) In the event of any damage or destruction of the Station Assets
that interferes in a material respect with the normal operation of the Station,
if such Station Assets have not been repaired, restored or replaced in all
material respects by the Closing Date: (i) Buyer may elect, at its option, to
close this Agreement and complete the restoration, repair or replacement of such
damaged Station Assets after the Closing Date, in which event (a) Seller shall
deliver to Buyer the amount of any deductible and all remaining insurance
proceeds received, to the extent not already
38
expended by Seller in connection with such damage or destruction of the Station
Assets, (b) there shall be no adjustment to the Purchase Price, and (c) Buyer
shall bear any additional costs or expenses incurred by Buyer, in excess of such
deductible, if any, and such insurance proceeds, in completing such repair,
restoration or replacement; or (ii) if Buyer does not so elect the preceding
option (i), either Buyer or Seller may elect, at its option, to postpone the
Closing for up to ninety (90) days to permit Seller to repair, restore or
replace such Station Assets in all material respects; provided that it is
understood and agreed that Seller shall have no obligation to make any repairs,
restoration or replacements if Seller concludes that such repairs, restoration
or replacements are not commercially reasonable; or (iii) if neither Buyer nor
Seller shall so elect any of the preceding options, either Buyer or Seller may
elect, at its option, to terminate this Agreement forthwith, without any further
obligation of either party hereunder (other than return of the Escrow Deposit,
plus interest), by written notice to the other party hereto. If the Closing is
postponed pursuant to this paragraph, the date of the closing shall be mutually
agreed to by Seller and Buyer after completion of restoration, replacement or
repair.
17.2 Certain Interpretive Matters and Definitions. Unless the context
otherwise requires: (a) all references to Sections, Articles, Schedules or
Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement; (b) each term defined in this Agreement has the meaning assigned to
it; (c) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect on the date hereof; (d) "or" is disjunctive but not
necessarily exclusive; (e) words in the singular include the plural and vice
versa; (f) the term "Affiliate" has the meaning given it in Rule 12b-2 of
Regulation 12B under the Securities Exchange Act of 1934, as amended; and (g)
all references to "$" or dollar amounts will be to lawful currency of the United
States of America.
17.3 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order more effectively to
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Station Assets being transferred hereunder, free, clear
and unencumbered, and Buyer shall from time to time, at the request of and
without further cost or expense to Seller, execute and deliver such other
instruments and take such other actions as may reasonably be requested in order
more effectively to relieve Seller of any obligations being assumed by Buyer
hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of Buyer;
provided that, the occurrence of the American Sale shall not constitute a
violation by Seller hereunder. Upon the consummation of the American Sale, the
successor or assignee of Seller pursuant to such American Sale shall be bound by
the terms of this Agreement and the Time Brokerage Agreement. In light of the
American Sale Agreement, Buyer shall take, at Seller's expense, actions that may
be reasonably requested by Seller in order to file a new FCC Application or
amend the existing FCC Application to reflect that the "Seller" hereunder may
become a different party from the current Seller or that a change of control of
Seller may occur as a result of the
39
American Sale. The failure to obtain the FCC Consent or any other required
consent or approval by the Drop Dead Date resulting solely from a delay in the
closing of the American Sale shall not constitute a breach by Seller of this
Agreement. Buyer shall have the right to assign and/or delegate all or any
portion of its rights under this Agreement as collateral. In the event Buyer
finds it necessary or is required to provide to a third party such collateral
assignment of the Buyer's interest in this Agreement and/or any related
documents, Seller shall cooperate with the Buyer and any third party requesting
such assignment including but not limited to Seller signing a consent and
acknowledgment of such assignment. All covenants, agreements, statements,
representations, warranties and indemnities in this Agreement by and on behalf
of any of the parties hereto shall bind and inure to the benefit of their
respective successors and permitted assigns of the parties hereto.
17.5 Amendments. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.6 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.7 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of California without giving effect
to the choice of law provisions thereof. Any action, suit or proceeding brought
by any party to this Agreement relating to or arising out of this Agreement or
any other agreement, instrument, certificate or other document delivered
pursuant hereto (or the enforcement hereof or thereof) must be brought and
prosecuted as to all parties in, and each of the parties hereby consents to
service of process, personal jurisdiction and venue in, the state and Federal
courts of general jurisdiction located in Santa ▇▇▇▇▇ County, California.
17.8 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch) and
shall be addressed to the following addresses, or to such other address as any
party may request, in the case of Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
40
To Buyer: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Citicasters Co.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇▇, Head & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Seller: American Radio Systems Corporation
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief
Executive Officer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
17.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
17.10 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.11 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.12 Entire Agreement. This Agreement, the exhibits and the schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein.
41
[SIGNATURES ON FOLLOWING PAGE]
42
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
CITICASTERS CO.
By: _________________________________________
Name: _________________________________________
Title: _________________________________________
AMERICAN RADIO SYSTEMS CORPORATION
By: _________________________________________
Name: _________________________________________
Title: _________________________________________
AMERICAN RADIO SYSTEMS LICENSE CORP.
By: _________________________________________
Name: _________________________________________
Title: _________________________________________
43
INDEX OF DEFINED TERMS
$ ..........................................................40
Accrued 1997 Vacation.......................................................26
Acquisition ..........................................................23
Acquisition Proposal........................................................23
Affiliate ..........................................................40
Agreement ...........................................................1
Agreements ..........................................................34
American ...........................................................1
American License ...........................................................1
American Sale ..........................................................23
American Sale Agreement.....................................................23
Assignment and Assumption Agreement.........................................33
Assumed Liabilities..........................................................4
Barter Payable ...........................................................6
Barter Receivable ...........................................................6
Buyer ...........................................................1
Buyer's Cap ..........................................................35
Buyer's Threshold ..........................................................35
Claim ..........................................................36
Claims ..........................................................36
Closing ...........................................................7
Closing Date ...........................................................7
Collection Period ..........................................................19
Confidential Information....................................................24
Contracts ...........................................................2
Damages ..........................................................35
Deposit Escrow Agent.........................................................5
Deposit Escrow Agreement.....................................................5
Disputed Claims ..........................................................37
Drop Dead Date ..........................................................38
Effective Date ...........................................................6
Environmental laws..........................................................15
ERISA ..........................................................17
Escrow Deposit ...........................................................5
Excluded Assets ...........................................................3
FCC Application ...........................................................8
FCC Consent ...........................................................8
Final ...........................................................7
Final Order ...........................................................7
Financial Statement Date....................................................16
Financial Statements........................................................16
I
Fraud Action ..........................................................34
Hired Employees ..........................................................26
HSR Act ...........................................................8
Initial Approval ...........................................................7
Intellectual Property........................................................2
Interim Financial Statements................................................22
KSJO Tower Sublease.........................................................30
KUFX Studio Sublease........................................................30
Licensee Employees..........................................................26
Liens ...........................................................3
Material Contracts..........................................................15
Prior Financial Statements..................................................16
Purchase Price ...........................................................5
Real Estate Contracts.......................................................14
Releases ..........................................................24
Representatives ..........................................................24
Retained Liabilities.........................................................5
Seller ...........................................................1
Seller Accounts Receivable..................................................19
Seller Financial Statements.................................................16
Seller's Cap ..........................................................35
Seller's Threshold..........................................................35
SNDA ..........................................................22
Station ...........................................................1
Station Assets ...........................................................1
Station Licenses ...........................................................1
Surveys ..........................................................29
TBA Events ..........................................................10
Time Brokerage Agreement.....................................................7
Time Sales Agreements........................................................4
Titles ..........................................................29
Tower Lease ..........................................................22
Trade Agreements ...........................................................4
Trade Report ...........................................................6
Warranties ..........................................................34
II