EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and entered into as of September
30, 1997 by and among Missouri Sports Radio, L.L.C., a Missouri limited
liability company, ("Buyer"), Professional Broadcasting, Incorporated
("Professional"), a Virginia corporation, and EZ St. Louis, Inc., a Virginia
corporation ("EZ," and together with Professional, individually a "Seller" and
collectively the "Sellers").
RECITALS
WHEREAS, EZ holds a license from the Federal Communications Commission
(the "FCC") to operate AM radio broadcast station KFNS in Wood River, Illinois
(the "Station").
WHEREAS, EZ is a wholly owned subsidiary of Professional, and
Professional owns many of the other assets used or useful in the operation of
the Station.
NOW, THEREFORE, Sellers desire to sell, and Buyer wishes to buy,
certain of Sellers' assets used or useful in the operation of the Station for
the price and on the terms and conditions hereafter set forth.
AGREEMENT
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Sellers agree as follows:
ARTICLE 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1. "Accounts Receivable" means the rights of Sellers to
payment for the sale of advertising time or talent on the Station for cash by
Sellers prior to the Closing Date as reflected on the billing records of Sellers
relating to the Station.
1.2. "Assets" means the specific tangible and intangible
assets owned and used or useful in connection with the conduct of the business
or the operations of the Station, which assets are being sold, transferred, or
otherwise conveyed to Buyer hereunder, as specified in detail in Section 2.1.
1.3. "Assumed Contracts" means (i) all Contracts listed in
Schedule 3.6 hereto, and (ii) any Contracts entered into by Sellers in the
ordinary course of business between the date hereof and the Closing Date which
would have been listed on Schedule 3.6 had they been in existence on the date
hereof.
1.4. "Closing" means the consummation of the transaction
contemplated by this Agreement in accordance with the provisions of Article 8
hereof.
1.5. "Closing Date" means the date of the Closing specified in
Section 8.1 hereof.
1.6. "Consents" means all of the consents, permits, or
approvals of government authorities and other third parties necessary in order
to transfer the Assets to Buyer or otherwise to consummate the transaction
contemplated hereby, including without limitation the consents of the parties to
those Contracts designated in Schedule 3.6 hereto with an asterisk.
1.7. "Contracts" means all material contracts, agreements, and
leases, written or oral (including any amendments and other modifications
thereto) to which any Seller is a party or which are binding upon any Seller and
relate to the assets or the business or the operations of the Station, and (i)
which are in effect on the date hereof, or (ii) which are entered into by any
Seller in the ordinary course of business between the date hereof and the
Closing Date.
1.8. "Escrow Deposit" shall mean the sum of Three Hundred
Seventy-Five Thousand Dollars ($375,000.00) held by The ▇▇▇▇▇▇ ▇▇▇▇▇ Bank as
Escrow Agent pursuant to an Escrow Agreement of even date herewith by and among
Buyer, Sellers, and Escrow Agent in the form of Schedule 1.8 hereto.
1.9. "Excluded Assets" shall mean those assets described or
set forth in Section 2.2 hereof and on Schedule 2.2 hereto.
1.10. "FCC Consent" means action by the FCC granting its
consent to the assignment of the FCC licenses to Buyer as contemplated by this
Agreement.
1.11. "FCC Licenses" means all of the licenses, permits, and
other authorizations issued by the FCC to Sellers in connection with the conduct
of the business or the operations of the Station.
1.12. "Final Order" means a written action, order, or public
notice issued by the FCC setting forth the FCC Consent (a) which shall not have
been reversed, stayed, enjoined, set aside, annulled, or suspended, and (b) with
respect to which (i) no request shall have been filed for administrative or
judicial review, reconsideration, rehearing, appeal, or stay, and with respect
to which the time for filing any such requests and for the FCC to have reviewed
the action on its own motion shall have expired, or (ii) in the event of review,
reconsideration, rehearing, or appeal that does not result in the FCC consent
being reversed, stayed, enjoined, set aside, annulled, or suspended, the time
for further review, reconsideration, rehearing, or appeal shall have expired.
1.13. "Lease Agreement" means the Communications Site Lease
Agreement entered into by and between Seller and Buyer in substantially the form
set forth in Schedule 6.4 hereto.
1.14 "Licenses" means all of the licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration (the "FAA"), and any other federal, state, or local
governmental authorities to Sellers in connection with the conduct of the
business or the operations of the Station.
1.15. "Knowledge" in the case of any Seller for purposes of
this Agreement, the
2
Schedules attached hereto, and the representations and warranties made herein,
means the actual knowledge of such Seller's officers, directors, principals or
agents after having made a good faith effort to ascertain the fact(s) in
question by inquiry to such officers or employees of such Seller as would be
reasonably likely to have the information relating to the fact(s) in question.
1.16. "Personal Property" means all of the machinery,
equipment, tools, vehicles, furniture, leasehold improvements, office equipment,
plant, spare parts, and other tangible personal property which are owned or
leased by any of the Sellers and used or useful as of the date hereof in the
conduct of the business or the operations of the Station, including without
limitation the towers, transmission lines, phasing equipment, ground system,
studio transmitter link antennas, guy anchors and transmitter building, and are
identified on Schedule 3.5, plus such additions thereto and deletions therefrom
arising in the ordinary course of business between the date hereof and the
Closing Date.
1.17. "Purchase Price" means the purchase price specified in
Section 2.3 hereof.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Sellers hereby agree to transfer and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of the
Assets, free and clear of any claims, liabilities, mortgages, liens, pledges,
conditions, charges or encumbrances of any nature whatsoever (except for those
permitted in accordance with Sections 2.5 or 3.5, hereof), more specifically
described as follows:
(a) The Personal Property;
(b) The Licenses;
(c) The Assumed Contracts;
(d) All trademarks, trade names, service marks, and all other
intellectual property and similar intangible assets relating to the Station,
listed in Schedule 3.8 hereto;
(e) All of Sellers' proprietary information which relates to
the Station, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, schematics, and filings with the FCC which relate to the
Station, if any;
(f) All choses in action and rights under warranties of
Sellers relating to the Station or the Assets, if any;
(g) All books and records relating to the business or the
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept, subject to the right of Sellers
to have such books and records made available to Sellers for a reasonable
period, not to exceed three (3) years after the Closing; and
(h) All intangible assets of Sellers relating to the Station
not specifically
3
described above.
2.2. Excluded Assets. The Assets shall exclude the following
assets, in addition to those listed on Schedule 2.2 hereto:
(a) Sellers' cash on hand as of the Closing Date and all other
cash in any of Sellers' bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items, and any cash surrender
value in regard thereto; and any stocks, bonds, certificates of deposit, and
similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Sellers, other than those
provided for in Section 2.1(g) hereof, subject to the right of Buyer to have
reasonable access thereto during normal business hours and to copy therefrom for
a period of three (3) years from the Closing Date, and Sellers' corporate
records and other books and records related to internal corporate matters of
Sellers and financial relationships with Sellers' lenders;
(d) Any claims, rights, and interests in and to any refund of
federal, state, or local franchise, income, or other taxes or fees of any nature
whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing, or employee benefit plans,
and any employment or collective bargaining agreement, except to the extent that
any of the same shall be specifically assumed by Buyer pursuant to Sections 2.4,
2.5, or 6.9 hereof;
The Accounts Receivable;
Any real estate owned by Sellers; and
(h) Any other asset of Sellers not located at either the
studios and offices or at the transmitter site of Sellers.
2.3. Purchase Price. The Purchase Price shall be Three Million
Seven Hundred Fifty Thousand Dollars ($3,750,000.00) in cash or in immediately
available funds. The Purchase Price shall be adjusted to reflect any adjustments
or prorations made and agreed to as of the Closing Date as provided in Section
2.4 hereof.
2.4. Adjustments and Prorations.
(a) All revenues arising from the business and the operations
of the Station up until midnight on the day prior to the Closing Date, and all
expenses arising from the business and the operations of the Station up until
midnight on the day prior to the Closing Date, including business and licenses
fees (including any retroactive adjustments thereto), utility charges, real and
personal property taxes and assessments levied against the Assets, accrued
employee benefits such as vacation time and sick leave, property and equipment
rentals, applicable copyright or other fees, sales and service charges, taxes
(except for taxes arising from the transfer of the Assets hereunder), deposits,
and similar prepaid and deferred items, shall be prorated between Buyer and
Sellers in
4
accordance with the principle that Sellers shall receive all revenues, all
refunds, and all returns of deposits held by third parties, and Sellers shall be
responsible for all expenses, costs, and liabilities allocable to the conduct of
the business or the operations of the Station for the period prior to the
Closing Date, and Buyer shall receive all revenues and shall be responsible for
all expenses, costs, and obligations allocable to the conduct of the business or
the operations of the Station on the Closing Date and for the period thereafter.
Buyer shall receive credit to the extent of the value (as calculated in Sellers'
financial statements consistent with past practice) of any and all advertising
time to be broadcasted following the Closing Date for which consideration in
cash, goods, or services shall have been received by Sellers prior to the
Closing Date.
(b) Notwithstanding the foregoing, there shall be no
adjustment for, and Sellers shall remain solely liable with respect to, any
Contracts not included in the Assumed Contracts, any and all employee benefits
including, without limitation, vacation time and sick leave, and any other
obligation or liability not being expressly assumed by Buyer in accordance with
Section 2.5 hereof.
(c) Any adjustment or prorations will be determined and paid
in accordance with the procedures set forth in Section 2.4 (d) hereof.
(d) Within sixty (60) days after the Closing Date, Buyer shall
deliver to Sellers a certificate (the "Adjustment Certificate"), signed by a
senior officer of Buyer after due inquiry by such officer, but without any
personal liability on the part of such officer, providing a compilation of the
adjustments and prorations to be made pursuant to this Section 2.4, including
any adjustments and prorations made at the Closing Date, together with a copy of
any working papers relating to such Adjustment Certificate and such other
supporting evidence as Sellers may reasonably request. If Sellers shall conclude
that the Adjustment Certificate does not accurately reflect the adjustments and
prorations to be made pursuant to this Section 2.4, Sellers shall, within thirty
(30) days after its receipt of the Adjustment Certificate, provide to Buyer its
written statement of any discrepancies believed to exist (the "Sellers'
Discrepancy Statement"). ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, C.P.A. on behalf of Buyer, and
▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of Sellers, or their respective designees, shall attempt
jointly to resolve the discrepancies within fifteen (15) days after Buyer's
receipt of Sellers' Discrepancy Statement, which resolution, if achieved, shall
be binding upon all parties to this Agreement and not subject to dispute or
review. If the above-named representatives or their designees shall not have
resolved the discrepancies in the Sellers' Discrepancy Statement to their common
satisfaction within such fifteen (15) day period, Buyer and Sellers shall,
within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained in order to review the
Adjustment Certificate together with Sellers' Discrepancy Statement and any
other relevant documents. The cost of retaining such independent public
accounting firm shall be borne equally by Buyer and Sellers. Such independent
public accounting firm shall report its conclusions as to adjustments pursuant
to this Section 2.4, which report shall be conclusive on all parties to this
Agreement and not subject to dispute or review. If, after adjustment as
appropriate with respect to the amount of the aforesaid adjustments paid or
credited at the Closing Date, Buyer shall be determined to owe an amount to
Sellers, Buyer shall pay such amount to Sellers forthwith in cash, and if
Sellers shall be determined to owe an amount to Buyer, Sellers shall pay such
amount to Buyer forthwith in cash.
2.5. Assumption of Liabilities and Obligations. As of the
Closing Date, Buyer shall pay, discharge, and perform (i) all of the obligations
and liabilities of Sellers under the Licenses and the Assumed Contracts insofar
as they relate to the time period on and after the Closing
5
Date, and arising out of events occurring on or after the Closing Date, (ii) all
obligations and liabilities arising out of events occurring on or after the
Closing Date related to Buyer's ownership of the Assets or its conduct of the
business or the operations of the Station on or after the Closing Date, and
(iii) all obligations and liabilities for which Buyer receives a proration
adjustment hereunder. All other obligations and liabilities of Sellers,
including (i) any obligations under any Contract not included in the Assumed
Contract, (ii) any obligations under the Assumed Contracts relating to the time
period prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the business or the operations of the Station prior to
the Closing Date, and (iv) any claims or pending litigation or proceedings
related to employees as set forth in Section 6.9 hereof, shall remain and shall
be the obligations and liabilities solely of Sellers.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1. Organization, Standing and Authority.
(a) Professional is a corporation duly incorporated, validly
existing, and in good standing under the laws of the Commonwealth of Virginia.
Professional has all requisite corporate power and authority (i) to own, lease,
and use the Assets as presently owned, leased, and used, and (ii) to conduct the
business or the operations of the Station as presently conducted. Professional
has all requisite corporate power and authority to execute and deliver this
Agreement and the documents and instruments contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by Professional hereunder and thereunder. Professional is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Station's business or operations or with respect
to the Assets.
(b) EZ is a corporation duly incorporated, validly existing,
and in good standing under the laws of the Commonwealth of Virginia. EZ has all
requisite corporate power and authority (i) to own, lease, and use the Assets as
presently owned, leased, and used, and (ii) to conduct the business or the
operations of the Station as presently conducted. EZ has all requisite corporate
power and authority to execute and deliver this Agreement and the documents and
instruments contemplated hereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by EZ
hereunder and thereunder. EZ is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
Station's business or operations or with respect to the Assets.
3.2. Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by each Seller has been duly
authorized by all necessary corporate action on the part of each Seller. This
Agreement has been duly executed and delivered by each Seller and constitutes
the legal, valid, and binding obligation of each Seller, enforceable against
each Seller in accordance with its terms, except to the extent that the
enforceability hereof may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, or by court-applied equitable principles.
3.3. Absence of Conflicting Agreements. Except as set forth in
Schedule 3.3, subject to obtaining the Consents, the execution, delivery, and
performance of this Agreement and
6
of the instruments and documents contemplated hereby by Sellers (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with any provision of the
Articles of Incorporation or By-Laws of any Seller; (iii) will not conflict
with, result in a breach of, or constitute a default under, any law, judgment,
order, ordinance, decree, rule, regulation, or ruling of any court or
governmental instrumentality which is applicable to any Seller; (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any material agreement, instrument,
license, or permit to which any Seller is a party or by which any Seller or any
substantial portion of any Seller's property may be bound; or (iv) will not
create any claim, liability, mortgage, lien, pledge, condition, charge or,
encumbrance of any nature whatsoever upon the Assets.
3.4. Licenses. Schedule 3.4 hereto include a true and complete
list of the Licenses. Sellers shall deliver to Buyer true and complete copies of
the Licenses (including any and all amendments and other modifications thereto).
The Licenses are valid and issued with EZ, with Sellers being the authorized
legal holder thereof. The Licenses comprise all of the licenses, permits, and
other authorizations required from any governmental or regulatory authority for
the lawful conduct of the business or the operations of the Station as presently
operated.
3.5. Title to and Condition of Personal Property. Schedule 3.5
hereto identifies all of the Personal Property, which comprises all personal
property necessary to conduct the business or the operations of the Station as
now and heretofore conducted. Sellers own and have good title to all Personal
Property. None of the Personal Property owned by Sellers is subject to any
security interest, mortgage, pledge, conditional sales agreement, or other lien
or encumbrance, except for (i) liens for current taxes not yet due and payable,
and (ii) any other claims or encumbrances described in Schedule 3.5 that will be
removed prior to or at Closing. Except as shown in Schedule 3.5, the Personal
Property is in good operating condition and repair in all material respects
(ordinary wear and tear excepted) and is available for immediate use in the
business or the operations of the Station, and the transmitting and studio
equipment included in the Personal Property (i) has been maintained in all
material respects consistent with FCC rules and regulations, and (ii) will
permit the Station and any auxiliary broadcasting facilities associated with the
Station to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC, and with all other applicable federal, state,
and local statutes, ordinances, rules, and regulations.
3.6. Contracts. Schedule 3.6 identifies all the Contracts,
including Contracts separately identified as the Assumed Contracts, except (i)
contracts with advertisers for the sale of advertising the time or talent on the
Station for cash and substantially at Sellers' established rates for the sale of
such time or talent, which are not prepaid, and which may be canceled by the
Station without penalty upon not more than thirty (30) days notice, (ii)
employment contracts and miscellaneous service contracts terminable at will
without penalty, and (iii) other contracts not involving either aggregate
liabilities under all such contracts exceeding Five Thousand Dollars ($5,000.00)
or any material non-monetary obligation. Sellers shall deliver to Buyer true and
complete copies of all written Contracts and true and complete memoranda of all
oral Contracts (including any and all amendments and other modifications to such
Contracts). Other than the Assumed Contracts, the Sellers require no contract or
agreement to enable Sellers to carry on the business or operations of the
Station in all material respects as presently and heretofore conducted. All of
the Assumed Contracts are in full force and effect, and are valid, binding, and
enforceable in accordance with their terms, except to the extent that the
enforceability thereof may be affected by
7
bankruptcy, insolvency, or similar laws affecting creditors' rights generally or
by court-applied equitable principles. Sellers are not in material breach, nor
to the knowledge of any Seller is any other party in material breach, of the
terms of any such Assumed Contracts. Except as expressly set forth in Schedule
3.6, no Seller is aware of any intention by any party to any Assumed Contract
(i) to terminate such contract or amend the terms thereof, (ii) to refuse to
renew the same upon expiration of its term, or (iii) to renew the same upon
expiration only on terms and conditions which are more onerous than those
pertaining to such existing contract. Except for the Consents, Sellers have full
legal power and authority to assign their respective rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and such assignment will
not affect the validity, enforceability, and continuation of any of the Assumed
Contracts.
3.7. Consents. Except for the FCC Consent provided for in
Section 6.1 hereof and the other Consents described in Schedules 3.6 or 3.7
hereto, no consent, approval, permit, or authorization of, or declaration to or
filing with, any governmental or regulatory authority or any other third party
is required in order (i) for Sellers to consummate this Agreement and the
transaction contemplated hereby, or (ii) to permit Sellers to assign or transfer
the Assets and Licenses to Buyer.
3.8. Trademarks, Trade Names, and Copyrights. Schedule 3.8
hereto identifies all material copyrights, trademarks, trade names, licenses,
patents, permits, jingles, privileges, and other similar intangible property
rights and interests (exclusive of those required to be listed in Schedule 3.4
hereto) applied for, issued to, or owned by Sellers, or under which Sellers are
licensed or franchised, and used or useful in the conduct of the business or the
operations of the Station, all of which are valid and in good standing and
uncontested. Sellers shall deliver to Buyer copies of all documents establishing
such rights, licenses, or other authority. To the knowledge of each Seller,
neither Seller is infringing upon or otherwise acting adversely to any
trademarks, trade names, copyrights, patents, patent applications, knowhow,
methods, or processes owned by any other person or persons, and there is no
claim or action pending, or to the knowledge of any Seller, threatened, with
respect thereto.
3.9. Financial Statements. Attached hereto are certain
financial statements (collectively the "Financial Statements"). The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of each Seller as of such dates and the
results of operations of each Seller for such periods, are correct and complete,
and are consistent with the books and records of each Seller (which books and
records are correct and complete).
3.10. Insurance. All of the tangible property included in the
Assets is insured against loss or damage in amounts generally customary in the
broadcast industry. Schedule 3.10 hereto identifies all insurance policies of
Sellers which insure any part of the Assets. All policies of insurance listed in
Schedule 3.10 are in full force and effect. During the threeyear period ending
on the date hereof, no insurance policy of any Seller covering the Assets or the
Station has been canceled by the insurer, and no application on the part of any
Seller for insurance relating to the Assets or the Station has been rejected by
any insurer.
3.11. Reports. All returns, reports, and statements which any
Seller is currently required to file in connection with the business or the
operations of the Station, with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
8
governmental authorities having jurisdiction over Sellers, the Station, or the
Assets have been materially complied with; all of such reports, returns, and
statements are substantially complete and correct as filed; and the Station's
public inspection file is located in its community of license and is in material
compliance with the FCC's rules and regulations.
3.12. Employee Benefit Plans. Schedules 3.6 or 3.12 hereto
identifies all employee benefit plans or arrangements applicable to the
employees of Sellers at the Station, and all material fixed or contingent
liabilities or obligations of Sellers with respect to any person now or formerly
employed by Sellers at the Station, including pension or thrift plans,
individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance programs,
incentive plans, bonus arrangements, and vacation, sick leave, disability, and
termination arrangements or policies, including workers' compensation policies.
Sellers shall furnish or make available to Buyer true and complete copies of all
written documents or information with respect to employee matters and
arrangements at the Station, including without limitation all employee
handbooks, rules, policies, plan documents, trust agreements, employment
agreements, summary plan descriptions, and descriptions of any unwritten plans
identified in Schedule 3.12. Any employee benefits and welfare plans or
arrangements identified in Schedule 3.12 were established and have been
executed, managed, and administered without material exception in accordance
with all applicable requirements of the Internal Revenue Code of 1986, as
amended, and the Employee Retirement Income Security Act of 1974, as amended,
and other applicable laws. There is no governmental audit or examination of any
of such plans or arrangements pending, nor, to the knowledge of any Seller,
threatened. There exists no action, suit, or claim (other than routine claims
for benefits) with respect to any of such plans or arrangements pending, or, to
the knowledge of any Seller, threatened, against any of such plans or
arrangements, and no Seller knows of any facts which could give rise to any such
action, suit, or claim.
3.13. Labor Relations. No Seller is a party to or subject to
any collective bargaining agreement with respect to the Station. No Seller has
any written or oral contracts of employment with any employee of the Station,
other than those listed in Schedule 3.6. Sellers shall provide Buyer with true
and complete copies of all such written contracts of employment and true and
complete memoranda of any such oral contracts. Each Seller, in the operation of
the Station, has complied in all material respects with all applicable laws,
rules, and regulations relating to the employment of labor, including those
related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payrollrelated
taxes, and no Seller has received any notice alleging that it has failed to
comply in any material respect with any such laws, rules, us regulations. No
material controversies, disputes, or proceedings are pending, or, to the best of
each Seller's knowledge, threatened, involving any employee or the employees
(collectively) of the Station. No labor union or other collective bargaining
unit represents any of the employees of the Station. To the best of each
Seller's knowledge there is no union campaign being conducted to solicit cards
from employees in order to authorize a union to request a National Labor
Relations Board certification election with respect to any employees of any
Seller at the Station.
3.14. Taxes. Except where the failure to do so would not have
a material adverse effect on the business or operations of the Station, each
Seller has filed or caused to be filed all federal income tax returns and all
other federal, state, county, local, or city tax returns which are required to
be filed, and each Seller has paid or caused to be paid all taxes shown on said
returns or on any tax assessment received by such Seller to the extent that such
taxes have become due, or has
9
set aside on its books reserves (segregated to the extent required by sound
accounting practice) that are adequate with respect thereto. No events have
occurred which could impose upon Buyer any transferee liability for any taxes,
penalties, or interest due or to become due from any Seller.
3.15. Claims, Legal Actions. Except as set forth in Schedule
3.15 hereto, and except for any investigations and rule making proceedings
generally affecting the broadcasting industry, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to the knowledge of any Seller, threatened, against or
relating to any Seller, the Assets, or the business or the operations of the
Station, nor does any Seller know of any basis for the same. In particular,
except as set forth in Schedule 3.15, but without limiting the generality of the
foregoing, there are no applications, complaints, or proceedings pending, or, to
the best of each Seller's knowledge, threatened, (i) before the FCC relating to
the business or the operations of the Station, other than applications,
complaints, or proceedings which affect the broadcasting industry generally,
(ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal, state, or other employment laws
or regulations, or (iii) against any Seller or the Station before any federal,
state, or local agency involving environmental or zoning laws or regulations.
3.16. Compliance with Laws. Each Seller has complied in all
material respects with (i) the Licenses, and (ii) all applicable federal, state,
and local laws, rules, regulations, and ordinances relating to the Station.
Neither the ownership or use, nor the conduct of the business or the operations
of the Station conflicts with the rights of any other person, firm, or
corporation in any material respect.
3.17. Conduct of Business in Ordinary Course. Since the date
of the most recent Financial Statements, Sellers have conducted the business and
the operations of the Station only in the ordinary course and have not:
(a) Suffered any material adverse change in the business
assets or properties or condition (financial or otherwise) of Sellers or of the
Station, including without limitation any damage, destruction, or loss affecting
the Assets and any material decreases in operating cash flow;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of any Seller, or any bonus payment made
or promised to any employee of any Seller, or any material change in personnel
policies, employee benefits, or other compensation arrangements affecting the
employees of any Seller; or
(c) Made any sale, assignment, lease, or other transfer of any
of the properties of any Seller relating to the Station, other than in the
normal and usual course of business with suitable replacements being obtained
therefor.
(d) Reduced the advertising rates or provided any "bonus"
spots without Buyer's prior written consent.
3.18. Full Disclosure. No representation or warranty made by
any Seller herein, nor in any certificate, document, or other instrument
furnished or to be furnished by any Seller pursuant hereto, contains or will
contain any untrue statement of a material fact or omits or will omit
10
to state any material fact known to any Seller and required to make the
statements herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1. Organization, Standing and Authority. Buyer is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Missouri. Buyer has all requisite power and authority
to execute and deliver this Agreement and the documents and instruments
contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Buyer hereunder and
thereunder.
4.2. Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except to the extent that the enforceability hereof may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
or by courtapplied equitable principles.
4.3. Absence of Conflicting Agreements. Except as set forth on
Schedule 4.3, subject to obtaining the Consents, the execution, delivery, and
performance of this Agreement and the documents and instruments contemplated
hereby by Buyer (with or without the giving of notice, the lapse of time, or
both): (i) does not require the consent of any third party; (ii) will not
conflict with the organizational documents of Buyer; (iii) to the best of
Buyer's knowledge will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance, decree, rule or regulation,
or ruling of any court or governmental instrumentality which is applicable to
Buyer; will not conflict with, constitute grounds for termination of, result in
a breach of, constitute a default under or accelerate or permit the acceleration
of any performance required by the terms of, any material agreement, instrument,
license, or permit to which Buyer is a party or by which Buyer may be bound.
4.4. FCC Qualification. Buyer has no knowledge of any facts
which would, under present law (including the Communications Act of 1934, as
amended) and the present rules, regulations, and policies of the FCC, disqualify
Buyer as an assignee of the FCC Licenses listed on Schedule 3.4 hereto, or as an
owner and operator of the Station's Assets, and Buyer will not take, nor
unreasonably fail to take, any action which Buyer knows or has reason to know
would cause such disqualification (it being understood that Buyer has an active
duty to attempt to ascertain what would cause such disqualification). Should
Buyer become aware of any such facts, it will promptly notify Sellers in writing
thereof and use its best efforts to prevent or remove any such disqualification,
as the case may be. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions, and undertakings contemplated by this
Agreement.
4.5. Condition of Assets. Buyer acknowledges that it has been
given full opportunity to examine the condition of the Assets, and Buyer accepts
all assets in their current condition, except as otherwise set forth on Schedule
4.5.
11
ARTICLE 5
COVENANTS OF SELLERS
5.1. Pre-Closing Covenants. Except as contemplated by this
Agreement or with the prior written consent of Buyer, which consent may be
withheld in Buyer's sole discretion, between the date hereof and the Closing
Date, Sellers shall operate the Station in the ordinary course of business in
material accordance with Sellers' past practices (except where such would
conflict with the following covenants or with Sellers' other express obligations
hereunder), and shall abide by the following negative and affirmative covenants:
A. Negative Covenants. No Seller shall do any of the
following:
(1) Compensation. Increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or the operations of the
Station, except in accordance with past practices;
(2) Contracts. Enter into any new Contracts, except
in the ordinary course of business and in accordance with past
practices, or with prior notice to Buyer;
(3) Disposition of Assets. Sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except (i) for
assets consumed or disposed of in the ordinary course of business, or
(ii) where such assets are no longer used or useful in the business or
the operations of the Station, and, in the event of either (i) or (ii),
in connection with the acquisition by Sellers of replacement property
of equivalent kind and value.
(4) Encumbrances. Create, assume, or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i)
those in existence on the date of this Agreement disclosed in Schedule
3.5 hereto, (ii) those permitted by Sections 2.5 or 3.5, hereof, and
(iii) mechanics' liens and other similar liens which will be removed
prior to the Closing Date;
(5) Licenses. Do any act or fail to do any act which
might result in the expiration, revocation, suspension, or adverse
modification of any of the Licenses, or fail to prosecute with due
diligence any applications to any governmental authority in connection
with the operation of the Station;
(6) Rights. Waive any material right relating to the
Station or the Assets; or
(7) No Inconsistent Action. Take any action which is
inconsistent with any Seller's obligations hereunder or which could
hinder or delay the consummation of the transaction contemplated by
this Agreement.
B. Affirmative Covenants. Sellers shall do the following:
(1) Access to Information. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at mutually
agreeable times at Buyer's expense during normal business hours to the
Assets and to all other properties, equipment, books,
12
records, Contracts, and documents relating to the Station for the
purpose of audit and inspection, and furnish or cause to be furnished
to Buyer or to its authorized representatives all information with
respect to the affairs and business of the Station as Buyer may
reasonably request, it being understood that the rights of Buyer
hereunder shall not be exercised in such a manner as to interfere with
the operations of the business of Sellers; provided that neither the
furnishing of such information to Buyer or its representatives, nor any
investigation made heretofore or hereafter by Buyer, shall affect
Buyer's rights to rely on any representation or warranty made by any
Seller in this Agreement, each of which shall survive any furnishing of
information or any investigation;
(2) Maintenance of Assets. Maintain all of the Assets or
replacements thereof and improvements thereon in their current
condition (ordinary wear and tear excepted), and use, operate, and
maintain all of the Assets in a reasonable manner, with inventories of
spare parts and expendable supplies being maintained at levels
consistent with past practices;
(3) Insurance. Maintain the existing insurance policies on the
Station and the Assets;
(4) Consents. Use its best efforts to obtain the Consents;
(5) Notification. Promptly notify Buyer in writing of any
unusual or material developments with respect to the Assets or the
Station, and of any material change in any of the information contained
in Sellers' representations and warranties contained in Article 3
hereof or in the schedules hereto, provided that such notification
shall not relieve Sellers of any obligations hereunder;
(6) Contracts. Prior to the Closing Date, deliver to Buyer a
list of all Contracts entered into between the date hereof and the
Closing Date of the type required to be listed is Schedule 3.6 hereto,
together with the copies of such Contracts;
(7) Compliance with Laws. Comply in all material respects with
all rules and regulations of the FCC, and all other laws, rules, and
regulations to which any Seller, the Station, and the Assets are
subject;
5.2. Post-Closing Covenants. After the Closing, Sellers will
take such actions, and execute and deliver to Buyer such further deeds, bills of
sale, or other transfer documents as, in the reasonable opinion of counsel for
Buyer, may be necessary to ensure, complete, and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
6.1. FCC Consent.
(a) The assignment of the FCC Licenses as contemplated by this
Agreement is subject to the prior consent and approval of the FCC. Within twenty
(20) business days after the execution of this Agreement, Buyer and Sellers
shall file with the FCC an appropriate application for the FCC Consent approving
the assignment of the FCC Licenses from Sellers to Buyer. The
13
parties shall prosecute said application with all reasonable diligence and
otherwise use their commercially reasonable best efforts to obtain the grant of
such application by the FCC as expeditiously as practicable. If the FCC Consent
shall impose any condition on any party hereto, such party shall use its best
efforts to comply with such condition, unless compliance would be unduly
burdensome or would have a material adverse effect upon such party. If
reconsideration or judicial review is sought with respect to the FCC Consent,
Buyer and Sellers shall oppose such reconsideration or judicial review (but
nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Article 9 of this Agreement).
(b) The consummation of this Agreement and the transfer of the
Assets and Licenses hereunder is expressly conditioned upon (i) the grant of the
FCC Consent without any materially adverse conditions on Sellers or Buyer, (ii)
compliance by the parties hereto with the conditions (if any) imposed in the FCC
Consent, and (iii) the FCC Consent, through the passage of time or otherwise,
having become a Final Order; provided, however, that the condition that the FCC
Consent shall have become a Final Order may be waived by Buyer, in its sole
discretion.
6.2. Taxes, Fees, and Expenses. Sellers, on the one hand, and
Buyer, on the other, shall each pay onehalf of all sales, transfer, documentary,
recording, and similar taxes and fees, if any, arising out of the transfer of
the Assets pursuant to this Agreement. All filing fees required by the FCC shall
be paid onehalf by Sellers, on the one hand, and onehalf by Buyer, on the other.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and other representatives.
6.3. Brokers. Buyer, on the one hand, and Sellers, on the
other, each represents and warrants to the other that neither such warrantor,
nor any person or entity acting on its behalf, has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement, except for Sunbelt Media, Inc., whose fee shall
be solely the responsibility of Buyer.
6.4. Lease Agreement. Concurrently with the Closing, Buyer and
Sellers shall enter into a Tower Site Lease Agreement, substantially in the form
set forth in Schedule 6.4 hereto, providing for the lease by Buyer from Sellers
of the use of the land on which the Station's towers, guy anchors and related
equipment, and transmitter building are located.
6.5. Confidentiality. Except as necessary for the consummation
of the transaction contemplated hereby, including Buyer's obtaining financing in
any form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby, and will not divulge such information to any third party, except
pursuant to subpoena and thereupon only after providing written notice to the
other party and allowing the other party seven (7) business days to quash the
subpoena or obtain other appropriate judicial remedy. In the event that this
Agreement shall be terminated and the purchase and sale contemplated hereby
shall be abandoned, each party will return to the other party all documents,
work papers, and other written material obtained by it in connection with the
transaction contemplated hereby.
14
6.6. Cooperation. Buyer and Sellers shall cooperate fully with
each other and with their respective counsel and accountants in connection with
any actions required to be taken as a part of their respective obligations under
this Agreement, and Buyer and Sellers shall execute such other documents and
instruments as may be necessary and desirable to the implementation and
consummation of the transaction contemplated in this Agreement, and shall
otherwise use their best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations hereunder. Notwithstanding the
foregoing, except as otherwise set forth herein, Buyer shall have no obligation
(i) to expend funds in order to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract in order to obtain a Consent
required with respect thereto.
6.7. Risk of Loss.
(a) The risk of loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Sellers at all times prior to the completion of the Closing.
(b) In the event that any damage or destruction of the Assets
or any other event shall occur which shall prevent signal transmission by the
Station in the normal and usual manner, and if Sellers shall not have restored
or replaced the Assets so damaged or destroyed such that the condition of damage
and destruction shall have been cured and the normal and usual signal
transmission by the Station shall have been resumed prior to the Closing Date,
the Closing Date shall be postponed for a period of up to one hundred and twenty
(120) days, in order to permit the repair or replacement of the damage or loss
and the restoration of the normal and usual signal transmission by the Station.
(c) In the event of any damage or destruction of the Assets
described above, if such Assets shall not have been restored or replaced and the
Station's normal and usual signal transmission resumed within the one hundred
and twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder (except for liability for any
pre-termination breaches of this Agreement on the part of Buyer), by delivering
written notice thereof to Sellers, in which event the Escrow Deposit plus all
interest or other proceeds from the investment thereof shall be immediately
returned to Buyer. Alternatively, Buyer may, at its option, proceed to close the
transaction contemplated by this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event
Sellers shall deliver to Buyer all insurance proceeds received by any Seller in
connection with such damage or destruction, to the extent not already expended
by Sellers toward such restoration and replacement.
(d) Notwithstanding the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder, except for
liability for any pre-termination breaches of this Agreement on the part of
Buyer, by delivering written notice thereof to Sellers, if any event occurs
which shall prevent signal transmission by the Station in a manner generally
equivalent to the Station's current signal transmission for a consecutive period
of five (5) days or for a cumulative period of fourteen (14) days after the date
hereof, in which event the Escrow Deposit plus all interest or other proceeds
from the investment thereof shall be immediately returned to Buyer.
6.8. Employee Matters.
15
(a) Sellers shall provide to Buyer an accurate list of all
current employees of the Station, together with a description of the terms and
conditions of their employment (including salary, bonus, and other benefit
arrangements) and their duties as of the date of this Agreement. Sellers shall
promptly notify Buyer of any material changes that occur prior to Closing with
respect to such information.
(b) Nothing contained in this Agreement shall confer upon any
employee of any Seller any right with respect to continued employment by Buyer,
nor shall anything herein interfere with any right the Buyer may have after
Closing Date to (i) terminate the employment of any of the employees of any
Seller at the Station at any time, with or without cause, or (ii) establish or
modify any of the terms and conditions of the employment of the employees of
Sellers at the Station, in the exercise of Buyer's independent business
judgment.
(c) Except as otherwise set forth herein, Buyer will not incur
any liability on account of any Seller's employees in connection with the
transaction contemplated by this Agreement, including without limitation, any
liability on account of unemployment insurance contributions, termination
payments, retirement, pension, profitsharing, bonus, severance pay, disability,
health, accrued vacation, accrued sick leave or other employee benefit plans,
practices, agreements, or understandings. It is hereby expressly agreed and
understood that Sellers shall be solely responsible for payments to their
respective employees relating to vacation and sick leave and that there shall be
no pro-rated adjustment with respect to such items.
6.9. Accounts Receivable. At Closing, Sellers shall assign to
Buyer, for collection purposes only, all Accounts Receivable. Sellers shall
deliver to Buyer on or as soon as practicable after Closing a complete and
detailed statement showing the name, amount, and age of each Account Receivable.
Subject to and limited by the following, collections of the Accounts Receivable
by Buyer following Closing will be for the account of Sellers. Buyer shall
endeavor in the ordinary course of business to collect the Accounts Receivable
for a period of ninety (90) days after Closing (the "Collection Period"). Any
payment received by Buyer during the Collection Period from any customer with an
account which is an Account Receivable shall first be applied in reduction of
the Account Receivable, unless the customer otherwise directs in writing. During
the Collection Period, on a monthly basis, Buyer shall furnish Sellers with a
list of, and shall pay over to Sellers, the amounts collected during the
preceding month with respect to the Accounts Receivable. Buyer shall provide
Sellers with a final accounting on or before the fifteenth (15th) day following
the end of the Collection Period. Upon the request of either party at and after
such time, Buyer and Sellers shall meet to analyze in good faith any uncollected
Account Receivable in order to determine if the same, in their reasonable
business judgment, is deemed to be collectible and if Buyer desires to retain a
business relationship with the customer carrying such Account Receivable. As to
each such customer carrying an Account Receivable with whom Buyer, in its sole
discretion, elects to retain a business relationship, Buyer and Sellers shall
negotiate a goodfaith value of the Account Receivable, which Buyer shall pay to
Sellers. Sellers shall retain the right to collect any Account Receivable as to
which the parties are unable to reach agreement as to a goodfaith value, and
Buyer agrees to turn over to Sellers any payments received against any such
Account Receivable. As Sellers' agent, Buyer shall not be obligated to use any
extraordinary efforts or expend any sums to collect any of the Accounts
Receivable assigned to it for collection hereunder or to refer any of such
Accounts Receivable to a collection agency or to any attorney for collection,
and Buyer shall not make any such referral, nor compromise, settle, or adjust
the amount of any such Account Receivable, except with the approval of Sellers.
Buyer shall incur no liability to Sellers for any
16
uncollected Account Receivable, unless Buyer shall have engaged in willful
misconduct or gross negligence in the collection of such Account Receivable.
During and after the Collection Period, without specific agreement with Buyer to
the contrary, no Seller nor any agent of any Seller shall make any direct
contact for purposes of collection with any customer carrying an Account
Receivable, except for Accounts Receivable retained by any Seller after the
Collection Period.
6.10. Audit Cooperation. Sellers agree to cooperate fully, and
to use reasonable efforts to cause its accounting firm to cooperate fully, with
Buyer and at Buyer's expense, to the extent required for Buyer to prepare
audited financial statements for the Station for the period of Sellers'
ownership thereof.
6.11. Allocation of Purchase Price. On or before the Closing,
Buyer and Sellers will endeavor in good faith to agree to an allocation of the
Purchase Price paid by Buyer to Sellers for the Assets, in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended by Temporary
Treasury Regulation Section 1.1060-1T. Such allocation shall include allocation
of Seven Hundred Fifty Thousand Dollars ($750,000.00) of the Purchase Price to a
pre-paid consultancy agreement. Buyer and Sellers further agree to file with
their respective Federal income tax returns an initial asset acquisition
statement and any supplemental statement on Internal Revenue Service Form 8594
required by Temporary Treasury Regulation Section 1.1060-1T, all in accordance
with and accurately reflecting any agreed upon allocation of the Purchase Price
as described above.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1. Conditions to Obligations of Buyer. All obligations of
Buyer at the Closing hereunder are subject to the fulfillment as of the Closing
Date of each of the following conditions, any of which may be waived by Buyer in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of each Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement as though such representations and warranties were made at and
as of the Closing Date.
B. Covenants and Conditions. Each Seller shall have in all
material respects performed and complied with the covenants, agreements, and
conditions required by this Agreement to have been performed or complied with by
such Seller prior to or on the Closing Date.
C. Consents. Each of the Consents marked as "material" on
Schedule 3.6 hereto shall have been duly obtained and delivered to Buyer, with
no material adverse change to the terms of the License or Assumed Contract with
respect to which such Consent shall have been obtained.
D. Licenses. Sellers shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which shall
have a material adverse effect on the Station or on the conduct of its business
or its operations. No proceeding shall be pending, the effect of which would be
to revoke, cancel, fail to renew, suspend, or modify adversely any of the
Licenses.
17
E. Deliveries. Sellers shall have made, or shall stand ready,
willing, and able to make, all of the deliveries to Buyer set forth in Section
8.2 hereof.
F. Approval of Documents. Sellers shall have delivered to
Buyer for inspection all documents, statements and information required to be
delivered pursuant to this Agreement, and Buyer shall have approved in form and
content such documents, statements and information, which approval shall not be
unreasonably withheld.
G. No Material Change. No material adverse change shall have
occurred (whether or not covered by insurance) in the assets, financial
condition or prospects of the business and operations of the Station.
H. No Suit. No suit, action or other proceeding or
investigation shall, to the knowledge of any party to this Agreement, be
threatened or pending before or by any governmental agency or by any third party
questioning the legality of this Agreement or the consummation of the
transactions contemplated hereby in whole or in part.
I. Final Order. The FCC shall have issued its Final Order
evidencing final approval of the transfer of the Licenses from Sellers to Buyer.
J. Easements. In the event any of Sellers' ground system (i.e.
as set forth in the definition of Personal Property above), extends beyond the
boundaries of Sellers' real property pursuant to the Lease Agreement ("Leased
Premises"), then in such case, Sellers shall provide Buyer with any and all
easements and/or other agreements allowing for the encroachment of said ground
system onto to property adjoining said Leased Premises.
7.2. Conditions to Obligations of Sellers. The obligations of
Sellers at the Closing hereunder are subject to the fulfillment as of the
Closing Date of each of the following conditions, any of which may be waived by
Sellers in whole or in part in their sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date, except for changes
contemplated by this Agreement as though such representations and warranties
were made at and as of the Closing Date.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to have been performed or complied with by Buyer
prior to or on the Closing Date.
C. Deliveries. Buyer shall have made, or shall stand ready,
willing, and able to make, all of the deliveries set forth in Section 8.3
hereof.
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1. Closing. The Closing shall take place on a date to be set
by Buyer, upon five (5) days' advance written notice to Sellers, no later than
ten (10) days following the date upon which the FCC Consent shall have become a
Final Order (the "Closing Date"); provided, however, that
18
Buyer may waive the requirement for a Final Order and may schedule the Closing
Date, upon five (5) days' advance written notice to Sellers, at any time after
the receipt of the FCC Consent. Notwithstanding the foregoing, Seller may, at
its sole option, delay Closing until January 5, 1998. Closing shall be conducted
by facsimile and wire transmission, and shall be coordinated from the offices of
Sellers' attorneys at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or from such
other place as shall be agreed to by Buyer and Sellers.
8.2. Deliveries By Sellers. On the Closing Date, Sellers shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
A. Transfer Documents. Duly executed bills of sale, motor
vehicle titles, assignments, and other transfer documents which shall be
sufficient to vest good and marketable title to the Assets in the name of Buyer
or its permitted assigns, free and clear of any claims, liabilities, mortgages,
liens, pledges, conditions, charges, or encumbrances of any nature whatsoever
(except for those permitted in accordance with Sections 2.5 or 3.5, hereof);
B. Consents. The original of each Consent marked as "material"
on Schedule 3 .6 hereto;
C. Officer's Certificate. A certificate, dated as of the
Closing Date, executed by a duly authorized officer of each Seller, certifying:
(i) that the representations and warranties of such Seller contained in this
Agreement are true and complete in all material respects as of the Closing Date,
except for changes contemplated by this Agreement as though made on and as of
such date, and (ii) that such Seller has, in all material respects, performed
its obligations and complied with its covenants set forth in this Agreement to
have been performed and complied with prior to or on the Closing Date;
D. Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by each Seller's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by such Seller's
Board of Directors and shareholders, authorizing, ratifying, and approving the
execution and delivery of this Agreement by such Seller and the consummation of
the transaction contemplated hereby, and that such resolutions remain in full
force and effect, and (ii) providing, as attachments thereto, a certificate of
good standing certified by an appropriate state official of the state of such
Seller's incorporation, as of a date not more than fifteen (15) days prior to
the Closing Date, and further certified by such Seller's Secretary as of the
Closing Date, and a copy of such Seller's Articles and By-Laws as in effect on
the date thereof, certified by such Seller's Secretary as of the Closing Date;
E. Tax, Lien, and Judgment Searches. A report on the results
of a search for Uniform Commercial Code financing statements, tax liens,
judgment liens, and similar filings in the Secretary of State's records for the
State of Missouri and in the records of those jurisdictions where the Assets are
located, such searches having been made no earlier than fifteen (15) days prior
to the Closing Date;
F. Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, statistics, engineering records, and all material files and records
used by Sellers in connection with the business and the operations of the
Station;
19
G. Reserved
H. Opinions of Counsel. Opinions of Sellers' counsel and of
Sellers' special federal communications legal and regulatory counsel, dated as
of the Closing Date, addressed to Buyer and, at Buyer's directions, to Buyer's
lenders, substantially in the form of Schedule 8.2(h) hereto;
I. Escrow Instructions. Joint instructions with Buyer to
Escrow Agent with respect to the payment of the Escrow Deposit to Sellers as a
portion of the Purchase Price.
8.3. Deliveries by Buyer. Prior to or on the Closing Date,
Buyer shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
A. Purchase Price. The Purchase Price as provided in Section
2.3 hereof, reduced by the amount of the Escrow Deposit, by wire transfer of
same day funds to an account designated in writing by Sellers.
B. Assumption Agreement. An Assumption Agreement, pursuant to
which Buyer shall assume and undertake to perform Sellers' obligations under the
Licenses and the Assumed Contracts arising on or after the Closing Date;
C. Officer's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Managing Member, (i) certifying that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date, except for changes
contemplated by this Agreement, as though made on and as of such date, (ii)
certifying that Buyer has, in all material respects, performed its obligations
and complied with its covenants set forth in this Agreement to have been
performed or complied with on or prior to the Closing Date, (iii) a resolution,
duly adopted by Buyer authorizing, ratifying, and approving the execution and
delivery of this Agreement and the consummation of the transaction contemplated
hereby, and that such resolution remains in full force and effect, and (iv)
providing a copy of the Articles of Organization and Operating Agreement of
Buyer as in effect on the date thereof, certified as of the Closing Date;
D. Opinion of Counsel. An opinion of Buyer's counsel and of
Buyer's FCC counsel dated as of the Closing Date, substantially in the form of
Schedule 8.3(d) hereto; and
E. Escrow Instructions. Joint instructions with Sellers to
Escrow Agent with respect to the payment of the Escrow Deposit to Sellers as a
portion of the Purchase Price.
ARTICLE 9
RIGHTS OF BUYER AND SELLERS UPON TERMINATION OR BREACH
9.1. Termination Right
(a) This Agreement may be terminated by either Buyer or
Sellers, if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
20
(1) If on the Closing Date, (i) any of the conditions
precedent to the obligations of the terminating party set forth in
Article 7 of this Agreement shall not have been materially satisfied,
and (ii) satisfaction of such condition(s) shall not have been waived
by the terminating party;
(2) If the application for the FCC Consent shall be
designated for an evidentiary hearing by the FCC for any reason;
If the Closing shall not have occurred on or
before May 31, 1998;
If the nonterminating party shall have
breached any of its representations or
warranties, or shall have defaulted with
respect to its or their covenants,
obligations, or required undertakings set
forth in this Agreement, and if such
nonterminating party shall have failed to
cure such breach or default within fifteen
(15) days after having received notice of
such breach or default from the terminating
party.
(b) Upon termination: (i) if neither party hereto shall be in
breach of any material provision of this Agreement, the parties hereto shall not
have any further liability to each other, except as set forth in Sections 6.2
and 6.6 hereof; (ii) if any Seller shall be in breach of any material provision
of this Agreement, Buyer shall have the rights and remedies provided in Section
9.3 hereof; and (iii) if Buyer shall be in breach of any material provision of
this Agreement, Sellers shall be entitled only to liquidated damages as provided
in Section 9.2 hereof. If, upon termination, Buyer shall not be in breach of any
material provision of this Agreement, the Escrow Deposit, plus all interest or
other proceeds from the investment thereof shall be paid to Buyer.
9.2. Liquidated Damages. In the event that this Agreement
shall be terminated by Sellers due to a material breach by Buyer of its
representations, warranties, covenants, or other obligations under this
Agreement then the Escrow Deposit shall be paid to Sellers as liquidated damages
and as Sellers' sole and exclusive remedy for such breach, it being agreed that
actual damages to Sellers on account of such breach would be difficult if not
impossible to ascertain and that the amount of the Escrow Deposit is a fair and
equitable amount to reimburse Sellers for any injury sustained by Sellers due to
Buyer's breach of its obligations under this Agreement. All interest or other
proceeds from the investment of the Escrow Deposit shall be paid to Sellers.
9.3. Specific Performance. The parties recognize that in the
event that Sellers should breach or refuse to perform its material obligations
under the provisions of this Agreement, monetary damages alone would not be
adequate to compensate Buyer for Buyer's injury sustained as a result of such
breach or refusal, inasmuch as the Assets and the Station are unique and there
are no readily available substitutes for such Assets and for such Station that
Buyer could purchase on the open market. Buyer shall therefore be entitled, in
addition to any other remedies which may be available by statute, at law, or in
equity, to obtain a decree of specific performance of the terms of this
Agreement from a court of competent jurisdiction. In the event of any action to
enforce this Agreement, Sellers hereby waive the defense that there is an
adequate remedy at law.
9.4. Expenses Upon Default. In the event of a default by a
party hereto (the "Defaulting Party") which results in the filing of a lawsuit
for damages, specific performance, or
21
other remedy, the other party (the "Nondefaulting Party") shall be entitled to
reimbursement by the Defaulting Party of any and all reasonable legal fees and
expenses incurred by the Nondefaulting Party in the event that the Nondefaulting
Party shall prevail in such lawsuit.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
AND INDEMNIFICATION
10.1. Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties, and together with the covenants contained
herein, shall survive the Closing Date for a period of twelve (12) months after
the Closing Date (the "Survival Period"). No claim for indemnification may be
made under this Article 10 (except for claims under Section 10.3(b)) after the
expiration of the Survival Period. Any investigations by or on behalf of a party
hereto shall not constitute a waiver of such party's right to enforce any
representation or warranty by the other party contained herein, unless a party
shall have actual knowledge of any misrepresentation or breach of warranty at
the Closing on the part of the other party, and such knowledge shall be
documented in writing at the Closing, in which case the party having such
knowledge shall be deemed to have waived such misrepresentation or breach.
10.2. Indemnification by Sellers. Sellers, jointly and
severally, shall indemnify and hold Buyer harmless against and with respect to,
and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenants by any Seller contained herein or in any certificate delivered to
Buyer hereunder;
(b) Any and all obligations of any Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities, or damages resulting from
Sellers' operation or ownership of the Station prior to Closing, including any
and all liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring or conditions existing prior to Closing; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses incident to any of the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof.
10.3. Indemnification by Buyer. Buyer shall indemnify and hold
Sellers harmless against and with respect to, and shall reimburse Sellers for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to Sellers
hereunder;
(b) Any and all losses, liabilities, or damages resulting from
Buyer's operation or ownership of the Station on or after Closing, including any
and all liabilities or obligations arising under the Licenses or the Assumed
Contracts which relate to events occurring or conditions existing
22
on or after Closing or otherwise assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof.
10.4. Procedures for Indemnification. The procedures for
indemnification shall be as follows:
(a) The party claiming the indemnification (the "Indemnified
Party") shall promptly give notice to the party from whom the indemnification is
claimed (the "Indemnifying Party") of any claim, whether between the parties or
brought by a third party against the Indemnified Party, specifying (i) the
factual basis for such claim, and (ii) the amount of the claim. If the claim
relates to an action, suit, or proceeding filed by a third party against the
Indemnified Party such notice shall be given by the Indemnified Party to the
Indemnifying Party within five (5) days after written notice of such action,
suit, or proceeding shall have been given to the Indemnified Party.
(b) Following receipt of notice from the Indemnified Party of
a claim, the Indemnifying Party shall have thirty (30) days in which to make
such investigation of the claim as the Indemnifying Party shall deem necessary
or desirable. For the purposes of such investigation, the Indemnified Party
agrees to make available to the Indemnifying Party and/or its authorized
representative(s) the information relied upon by the Indemnified Party to
substantiate the claim. If the Indemnified Party and the Indemnifying Party
agree at or prior to the expiration of said thirty (30) day period (or any
agreed upon extension thereof) to the validity and amount of such claim, or if
the Indemnifying Party does not respond to such notice, the Indemnifying Party
shall immediately pay to the Indemnified Party the full amount of the claim.
Buyer shall be entitled to apply any or all of the Accounts Receivable collected
on behalf of Sellers to a claim as to which Buyer is entitled to indemnification
hereunder. If the Indemnified Party and the Indemnifying Party do not agree
within said period (or within any agreedupon extension thereof), the Indemnified
Party may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the
Indemnified Party is entitled to indemnification hereunder, the Indemnifying
Party shall have the right at its own expense to participate in or to assume
control of the defense of such claim, and the Indemnified Party shall cooperate
fully with the Indemnifying Party, subject to reimbursement for reasonable
actual out-of-pocket expense incurred by the Indemnified Party as the result of
a request by the Indemnifying Party to so cooperate. If the Indemnifying Party
elects to assume control of the defense of any third-party claim, the
Indemnified Party shall have the right to participate in the defense of such
claim at its own expense.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
(e) If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third-party claim, the
Indemnifying Party shall be bound by the results obtained in good faith by the
Indemnified Party with respect to such claim.
23
(f) The indemnification rights provided in Sections 10.2 and
10.3 hereof shall extend to the shareholders, directors, officers, members,
partners, agents, employees, and representatives of the Indemnified Party,
although for the purpose of the procedures set forth in this Section 10.4, any
indemnification claims by such parties shall be made by and through the
Indemnified Party.
10.5. Limitation on Indemnification. Notwithstanding the
foregoing, no Indemnifying Party shall have any indemnification payment
obligations hereunder unless and until all such obligations exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate, at which point all amounts to be
paid hereunder shall be due and owing. Each Indemnifying Party's indemnification
obligations hereunder shall be limited to in the aggregate, One Million Eight
Hundred Seventy-Five Thousand Dollars ($1,875,000.00). The foregoing limitation
shall not apply to indemnification obligations arising from fraudulent or
willful misrepresentations.
ARTICLE 11
MISCELLANEOUS
11.1. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) delivered by personal delivery, or sent by a nationally recognized
commercial delivery service, or by registered or certified U.S. mail, return
receipt requested, or by facsimile transmission, with receipt confirmation,
(iii) deemed to have been given on the date of personal delivery, the date set
forth in the records of the delivery service for delivery to the addressee, the
date set forth on the return receipt, or the date set forth on the facsimile
transmission confirmation, and (iv) addressed as follows:
If to Sellers: Professional Broadcasting, Incorporated
c/o American Radio Systems Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice to Sellers):
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Hunton & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
24
If to Buyer: Missouri Sports Radio, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tele. (▇▇▇) ▇▇▇-▇▇▇▇
Fax. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to (which shall not constitute notice to Buyer):
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, C.P.A.
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ & Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tele. (▇▇▇) ▇▇▇-▇▇▇▇
Fax. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2. Benefit and Binding Effect. Neither party hereto may
assign its rights or delegate its duties under this Agreement without the prior
written consent of the other party hereto, except that Buyer may assign its
rights and delegate its duties under this Agreement to any affiliated or
unaffiliated entity; provided, however, that following such assignment, Buyer
shall remain liable to Sellers for all of Buyer's obligations hereunder; and
provided further, that no such assignment shall cause a material delay in the
Closing Date. Upon such assignment, Buyer shall give notice thereof in writing
to Sellers, and Buyer's assignee shall provide to Sellers a certificate in
writing of such assignee, acknowledging such assignee's receipt of true,
correct, and complete copies of this Agreement, all Schedules, Exhibits, and
Appendices hereto and thereto, and agreeing to be bound hereby and thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
11.3. Governing Law. This Agreement shall be governed,
construed, and enforced in accordance with the laws of the State of Missouri
with respect to contracts made in, and to be performed entirely within, such
State, without reference to the choiceoflaw principles of such State.
11.4. Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.5. Gender and Number. Words used herein, regardless of the
gender and number
25
specifically used, shall be deemed and construed to include any other gender,
masculine, feminine, or neuter, and any other number, singular or plural, as the
context may require.
11.6. Entire Agreement. This Agreement, all Schedules,
Exhibits, and Appendices hereto and thereto, and all documents and certificates
specifically referred to herein and therein collectively represent the entire
understanding and agreement between Buyer and Sellers with respect to the
subject matter hereof and thereof. All Schedules, Exhibits, and Appendices
attached to this Agreement shall be deemed to be a part of this Agreement and
shall be deemed to be incorporated herein as if fully set forth herein. This
Agreement supersedes all prior negotiations between Buyer and Sellers, and all
letters of intent and other writings related to such negotiations, and cannot be
amended, supplemented, augmented, or modified except by an instrument in writing
which makes specific reference to this Agreement and which is signed by the
party against whom enforcement of any such amendment, supplement, augmentation,
or modification is sought.
11.7. Waiver of Compliance: Consents. Except as otherwise
provided in this Agreement, any failure on the part of any party at any time to
comply with any obligation, representation, warranty, covenant, agreement, or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver shall not operate as a waiver of, or an estoppel with respect to, any
subsequent or other failure on the part of the other party. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.7.
11.8. Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts, with the same effect as if the
execution of each such counterpart were upon the same instrument. If this
Agreement is executed and transmitted by facsimile, the original signature page
shall thereupon be provided to all parties by regular mail.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Sellers as of the date first above written.
SELLERS: PROFESSIONAL BROADCASTING, INCORPORATED
By:
Print Name:
Title:
EZ ST. LOUIS, INC.
28
By:
Print Name:
Title:
BUYER: MISSOURI SPORTS RADIO, L.L.C.
By:
Print Name:
Title:
29
SCHEDULES TO KFNS ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.2 Excluded Assets
3.3 Conflicting Agreements of Sellers
3.4 Licenses
3.5 Personal Property
3.6 Contracts
3.7 Consents
3.8 Trademarks, Trade Names and Copyrights
3.9 Financial Statements
3.10 Insurance
3.12 Employee Benefit Plans
3.13 Labor Relations
3.15 Claims, Legal Actions
4.3 Conflicting Agreements of Buyer
4.5 Condition of Assets
6.4 Lease Agreement
8.2(h) Legal Opinions of Sellers' Counsel
8.3(d) Legal Opinion of Buyer's Counsel
30