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EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇ ▇▇ ACQUISITION CORP.
AND
THE ADD RADIO GROUP, INC.
DATED AS OF DECEMBER 31, 1999
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TABLE OF CONTENTS
PAGE
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ASSET PURCHASE AGREEMENT..........................................................................................1
ARTICLE I. ASSETS TO BE CONVEYED..................................................................................1
1.1 Licenses and Authorizations.....................................................................1
1.2 Station Equipment...............................................................................1
1.3 Contracts.......................................................................................1
1.4 Real Property...................................................................................2
1.5 Call Signs, Promotional Materials and Intangibles...............................................2
1.6 Records.........................................................................................2
1.7 Accounts Receivable.............................................................................2
1.8 Non-Compete Agreement...........................................................................3
1.9 Excluded Assets.................................................................................3
ARTICLE II. ASSUMPTION OF LIABILITIES.............................................................................4
ARTICLE III. PURCHASE PRICE AND PAYMENT...........................................................................4
3.1 Purchase Price..................................................................................4
3.2 Allocation......................................................................................4
ARTICLE IV. PRORATIONS AND ADJUSTMENTS............................................................................5
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................5
5.1 Organization....................................................................................5
5.2 Authorization...................................................................................6
5.3 No Breach.......................................................................................6
5.4 Station Licenses................................................................................6
5.5 Station Applications............................................................................7
5.6 Title to Assets.................................................................................7
5.7 Condition of Equipment..........................................................................7
5.8 Condition of Real Property......................................................................7
5.9 Contracts.......................................................................................8
5.10 Employees.......................................................................................9
5.11 Employee Benefit Plans..........................................................................9
5.12 Litigation.....................................................................................10
5.13 Payment of Taxes...............................................................................10
5.14 Compliance With Laws...........................................................................10
5.15 Insolvency Proceedings.........................................................................11
5.16 Citizenship....................................................................................12
5.17 Patents, Trademarks, Copyrights................................................................12
5.18 Financial Statements...........................................................................12
5.19 Sufficiency of Assets..........................................................................13
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5.20 Year 2000 Compliance...........................................................................13
5.21 No Misleading Statements.......................................................................13
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................13
6.1 Organization...................................................................................13
6.2 Authorization..................................................................................13
6.3 No Breach......................................................................................13
6.4 Litigation.....................................................................................14
6.5 Qualification as Broadcast Licensee............................................................14
6.6 No Misleading Statements.......................................................................14
ARTICLE VII. ENVIRONMENTAL MATTERS...............................................................................14
7.1 Compliance with Law............................................................................14
7.2 Site Contamination.............................................................................14
7.3 Additional Provisions Regarding Hazardous or Toxic Materials...................................14
7.4 No Notice of Lack of Compliance with Environmental Statutes....................................14
ARTICLE VIII. PRE-CLOSING OBLIGATIONS............................................................................15
8.1 Application for Commission Consent.............................................................15
8.2 Other Governmental Consents....................................................................15
8.3 Financial Information..........................................................................15
8.4 Third Party Consents...........................................................................16
8.4.1 Third Party Consents in General.....................................................16
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8.4.2 Landlord Consent....................................................................16
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8.5 Environmental Site Assessment..................................................................16
8.6 Title Insurance................................................................................16
8.7 Surveys........................................................................................17
8.8 Confidentiality................................................................................17
8.9 Access.........................................................................................17
8.10 Employee Matters...............................................................................17
8.11 Operations Prior to Closing....................................................................18
8.12 Adverse Developments...........................................................................19
8.13 Administrative Violations......................................................................19
8.14 Bulk Sales Act.................................................................................19
8.15 Control of Station.............................................................................19
8.16 Buyer's Financing: Other Documents and Acts...................................................19
8.17 FCC Construction Permit........................................................................19
ARTICLE IX. CONDITIONS PRECEDENT.................................................................................19
9.1 Mutual Conditions..............................................................................19
9.1.1 Governmental Consents...............................................................20
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9.1.2 Absence of Litigation...............................................................20
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9.2 Conditions to Buyer's Obligation...............................................................20
9.2.1 Representations and Warranties......................................................20
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9.2.2 Compliance with Conditions..........................................................20
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9.2.3 No Material Adverse Development.....................................................20
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9.2.4 Title Commitment and Surveys........................................................20
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9.2.5 Validity of Station Licenses........................................................20
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9.2.6 Closing Documents...................................................................20
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9.2.7 Third Party Consents................................................................20
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9.2.8 Settlement of Claims................................................................21
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9.2.9 Finality............................................................................21
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9.2.10 Satisfactory Environmental Assessment...............................................21
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9.2.11 Estoppel Certificates...............................................................21
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9.3 Conditions to Seller's Obligation..............................................................21
9.3.1 Representations and Warranties......................................................21
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9.3.2 Compliance with Conditions..........................................................21
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9.3.3 Payment.............................................................................21
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9.3.4 Closing Documents...................................................................21
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ARTICLE X. CLOSING...............................................................................................22
10.1 Closing Date...................................................................................22
10.2 Performance at Closing.........................................................................22
10.2.1 Seller shall deliver to Buyer:......................................................22
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10.2.2 Buyer shall deliver to Seller:......................................................23
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10.2.3 Other Documents and Acts............................................................23
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ARTICLE XI. POST-CLOSING OBLIGATIONS.............................................................................23
11.1 Indemnification................................................................................23
11.1.1 Buyer's Right to Indemnification....................................................23
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11.1.2 Seller's Right to Indemnification...................................................24
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11.1.3 Conduct of Proceedings..............................................................24
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11.1.4 Indemnification Not Sole Remedy.....................................................24
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11.1.5 Limits on and Conditions of Indemnification; Threshold and Cap......................25
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11.2 Post-Closing Access............................................................................25
11.3 Contingent Payments............................................................................25
ARTICLE XII. DEFAULT AND REMEDIES................................................................................26
12.1 Termination by Seller Upon Buyer's Default.....................................................26
12.2 Termination by Buyer Upon Seller's Default.....................................................26
12.3 Letter of Credit...............................................................................26
12.4 Seller's Remedies..............................................................................27
12.5 Buyer's Remedies...............................................................................27
ARTICLE XIII. TERMINATION........................................................................................27
13.1 Absence of Commission Consent..................................................................27
13.2 Designation for Hearing........................................................................27
13.3 Damage.........................................................................................28
13.3.1 Risk of Loss........................................................................28
13.3.2 Failure of Broadcast Transmission...................................................28
13.3.3 Resolution of Disagreements.........................................................28
13.4 Legal Actions..................................................................................29
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ARTICLE XIV. POST-CLOSING OBLIGATIONS OF SELLER..................................................................29
ARTICLE XV. GENERAL PROVISIONS...................................................................................29
15.1 Brokerage......................................................................................29
15.2 Expenses.......................................................................................30
15.3 Notices........................................................................................30
15.4 Attorneys' Fees................................................................................31
15.5 Survival of Representations, Warranties and Indemnification Rights.............................31
15.6 Exclusive Dealings.............................................................................31
15.7 Waiver.........................................................................................31
15.8 Assignment.....................................................................................32
15.9 Entire Agreement...............................................................................32
15.10 Counterparts...................................................................................32
15.11 Construction...................................................................................32
15.12 Schedules and Exhibits.........................................................................32
15.13 Severability...................................................................................32
15.14 Choice of Law..................................................................................33
15.15 Counsel........................................................................................33
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and
entered on December 31, 1999 (the "Contract Date"), by and between ▇▇▇▇▇▇▇ ▇▇
ACQUISITION CORP., a Delaware corporation ("Buyer") and THE ADD RADIO GROUP,
INC., a New Hampshire corporation (the "Seller").
BACKGROUND:
Seller is the licensee, owner and operator of radio broadcast
Station WRCA-AM, 1330 kHz, Waltham, Massachusetts (the "Station"), pursuant to
certain authorizations issued by the Federal Communications Commission (the
"Commission" or "FCC"). Seller desires to sell and assign, and Buyer desires to
purchase and acquire, substantially all of the property and assets used or held
for use in the operation of the Station upon the terms set forth in this
Agreement (the "Transaction"). Accordingly, in consideration of the foregoing
and of the mutual promises, covenants, and conditions set forth below, the
parties agree as follows:
ARTICLE I.
ASSETS TO BE CONVEYED
On the Closing Date (as defined below), subject to and in
reliance upon the covenants, representations, warranties and agreements set
forth herein, and subject to the terms and conditions contained herein, Seller
shall sell, assign, transfer and deliver to Buyer and Buyer shall purchase from
Seller, all of the assets used or held for use in the operation of the Station,
other than Excluded Assets (as defined below), including without limitation, the
following (collectively, the "Assets"):
1.1 Licenses and Authorizations. All licenses, permits,
permissions and other authorizations issued to Seller for the operation of the
Station by the Commission or any other governmental agencies, including, but not
limited to, those listed on Schedule 1.1 and the right to use the Station's call
letters (the "Station Licenses"), and all applications for modification,
extension or renewal thereof, and any pending applications for any new licenses,
permits, permissions or authorizations pending on the Closing Date, including,
but not limited to, those listed on Schedule 1.1 (the "Station Applications").
1.2 Station Equipment. All the fixed and tangible personal
property used or held for use in the operation of the Station including, but not
limited to, the transmitters, towers, ground system and studio equipment listed
on Schedule 1.2 together with any replacements, improvements, or additions
thereto made between the Contract Date and the Closing Date (the "Station
Equipment").
1.3 Contracts. All rights of Seller for the benefit of the
Station including, without limitation, those rights under (a) all agreements,
contracts or leases described on Schedule 1.3(a); (b) such other contracts,
agreements or leases entered into (i) with the written consent of Buyer, or (ii)
in the ordinary course of business and consistent with past practice, between
the date hereof and the Closing Date, that do not, in the aggregate, impose
obligations in excess of Twenty
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Thousand Dollars ($20,000) on Buyer (the contracts, agreements and leases
described in clauses (a) and (b) are collectively referred to as the "Operating
Contracts"); (c) all contracts for the sale of time on the Station for cash (i)
at rates substantially in accordance with Station's past practices with a
remaining term at Closing of six (6) months or less, (ii) set forth on Schedule
1.3(c), or (iii) entered into with the written consent of Buyer ("Sales
Agreements"); (d) contracts for the sale of time on the Station in exchange for
merchandise or services used or useful for the benefit of the Station set forth
on Schedule 1.3(d) to the extent that such contracts (i) were entered into in
the ordinary course of business, (ii) are preemptable for cash time sales, and
(iii) obligate Buyer to provide advertising time only on a "run of schedule"
basis ("Trade Agreements"); and (e) contracts for the sale of time on the
Station in exchange for programming set forth on Schedule 1.3(e) or entered into
after the Contract Date with the written consent of Buyer ("Barter Agreements").
(The Operating Contracts, Sales Agreements, Trade Agreements, and Barter
Agreements are referred to collectively as the "Contracts.")
1.4 Real Property. All right, title and interest in the real
property used or held for use or necessary in the operation of the Station and
owned, leased, or licensed by Seller or its affiliates, as described in Schedule
1.4, or acquired for the benefit of the Station by Seller or its affiliates with
the written consent of Buyer between the Contract Date and Closing Date (the
"Real Property").
1.5 Call Signs, Promotional Materials and Intangibles. All of
Seller's or its affiliates' rights in the Station's call signs, copyrights,
patents, trademarks, trade names, slogans, logos, service marks, computer
software, magnetic media, data processing files, systems and programs, business
lists, trade secrets, sales and operating plans, all goodwill of the Station and
other similar intangible property rights used or held for use in the operation
of the Station, including but not limited to the intangible property identified
on Schedule 1.5 (the "Intangible Property").
1.6 Records. All records, including but not limited to all
books of account, customer lists, supplier lists, computer programs and
software, employee personnel files, local public inspection file materials,
engineering data, logs, programming records, consultants' reports, ratings
reports, budgets, marketing and demographic data, financial reports and
projections, lists of advertisers, promotional materials, and sales, operating
and business plans, relating to or used in the operation of the Station or
necessary or desirable to show compliance with any law or regulation applicable
to the Station or the operation of the Station and not pertaining solely to
Seller's internal corporate affairs or its other stations or interests (the
"Station Records").
1.7 Accounts Receivable. At the consummation of the
transaction contemplated by this Agreement on the Closing Date, Seller shall
assign to Buyer, for purpose of collection only, all of Seller's accounts
receivable outstanding as of the Closing Date arising from the operation of the
Station (the "Receivables"). For a period of one hundred twenty days (120) after
the Closing Date, Buyer will collect in the normal course of business the
Receivables for Seller's benefit. Seller will furnish Buyer with a complete list
of the Receivables at or as soon as is reasonably possible after the Closing.
Buyer will not adjust, compromise or settle any dispute concerning the
Receivables without prior written consent of Seller. Sixty-five (65),
ninety-five (95) and one hundred twenty five (125) days after the Closing Date,
Buyer shall pay to Seller all amounts collected on account of the Receivables
during the first sixty (60), ninety (90) and one hundred
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twenty (120) days following the Closing Date, respectively, provided, however,
that any payment received by Buyer during the one hundred thirty (130) day
period (described below) from any customer which continues to be serviced by
Buyer shall be applied to the invoice (if any) specified by the customer and,
failing specification by the customer, to the oldest accounts receivable
outstanding. The obligation of Buyer hereunder will be to collect such accounts
receivable in the ordinary and normal course of business and does not extend to
the institution of litigation, employment of counsel or a collection agency, or
any other extraordinary means of collection. Within one hundred thirty (130)
days of the Closing Date, Buyer will deliver to Seller the balance of amounts
collected on account of the Receivables. Buyer shall then reassign to Seller the
Receivables that remain uncollected.
1.8 Non-Compete Agreement. At Closing, Seller and Buyer shall
enter into a Non-Compete and Consulting Agreement in the form set forth in
Exhibit A (the "Covenant").
1.9 Excluded Assets. It is understood and agreed that the
following assets shall not be among the Assets purchased pursuant to this
Agreement:
(a) Seller's cash on hand as of the Closing and any of
Seller's interests in its bank accounts and all of Seller's other cash, cash
equivalents, security funds, securities, investments, deposits, prepayments
(including prepaid taxes and insurance), tax refunds and overpayments;
(b) Any insurance policies and proceeds thereof,
promissory notes, amounts due from employees, bonds, letters of credit,
certificates of deposits or other similar items and cash surrender value in
regard thereto;
(c) Any pension, profit-sharing, or employee benefit
plans, including all of Seller's interest in any Employee Plan (as defined in
Section 6.11), and any collective bargaining agreements;
(d) Any accounts receivable outstanding on the Closing
Date, subject to Section 1.7 hereof;
(e) Any agreements not included among the Contracts;
(f) All tax returns and supporting materials, all
original financial statements and supporting materials, all books and records
that Seller is required by law to retain, all corporate minutes and records, and
all records of Seller relating to the sale of the Assets; and
(g) Any interest in and to any refunds of federal,
state, or local franchise, income or other taxes for periods prior to the
Closing Date.
(h) All assets used or useful exclusively in the
operation of radio stations WJYT(AM), Attleboro, Massachusetts, WLYN(AM), Lynn,
Massachusetts, and WNTY(AM) Southington, Connecticut.
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ARTICLE II.
ASSUMPTION OF LIABILITIES
On the Closing Date, Buyer shall assume the liabilities, which
accrue under the Contracts after the closing of the transactions contemplated
herein (the "Closing"). Buyer shall not assume or undertake to pay, satisfy or
discharge any other liabilities, obligations, commitments or responsibilities of
Seller, including, without limitation, (i) any obligations or liabilities under
any contract, agreement or lease not included in the Contracts, (ii) any
obligations or liabilities under the Contracts relating to the period prior to
the Closing except for those obligations or liabilities arising out of the Trade
Agreements or Barter Agreements assumed by Buyer and subject to adjustment
pursuant to Article IV, (iii) any obligations or liabilities relating to or
arising out of any claims or pending litigation proceedings, (iv) any
obligations or liabilities of Seller under any agreement or arrangement, written
or oral, with salaried or non-salaried employees of the Station, (v) any
Employee Plan and (vi) any obligations or liabilities to any employee of the
Station for accrued commissions, vacation time or sick leave, and all such
obligations and liabilities shall remain and be the obligations and liabilities
of Seller. If any Contract requires the consent of third parties for assignment,
but (i) such consent has not been obtained as of the Closing Date, as required
by Section 10.2.7, and (ii) in the case of Material Contracts, Buyer waives such
condition precedent to the Closing in its sole discretion, then Buyer shall
assume Seller's obligations under such Contract only for the period after
Closing during which Buyer receives the benefits to which Seller is currently
entitled under such Contract (unless consent is subsequently obtained and such
delay has not prejudiced Buyer, and unless the failure of Buyer to receive
benefits under such Contract is due to Buyer's failure to perform Seller's
obligations thereunder after Closing).
ARTICLE III.
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. The purchase price for the Assets and the
Covenant shall be Six Million Dollars ($6,000,000) (the "Purchase Price"). At
Closing, Buyer will pay to Seller by wire transfer of federal funds (pursuant to
wire instructions that Seller shall deliver to Buyer at least three (3) days
prior to Closing) the Purchase Price plus or minus any adjustments, as set forth
in Article IV hereof or elsewhere in this Agreement.
3.2 Allocation. One Hundred Thousand Dollars ($100,000) of the
Purchase Price shall be allocated to the Covenant, and Five Million Nine Hundred
Thousand Dollars ($5,900,000) shall be allocated among the Assets in accordance
with an appraisal performed by either BIA or Bond & ▇▇▇▇▇▇ (the selection of
such appraiser to be by mutual agreement of Buyer and Seller) and paid for
one-half by Buyer and one-half by Seller. Each of Seller and Buyer agree (i) to
jointly complete and separately file Form 8594 with its federal income tax
return for the tax year in which the Closing occurs and (ii) that neither Seller
nor Buyer will take a position on any income, transfer or gains tax return
consistent with the values set forth in the appraisal and the requirements of
section 1060 of the Internal Revenue Code that is in any manner inconsistent
with the terms of any such allocation without the written consent of the other.
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ARTICLE IV.
PRORATIONS AND ADJUSTMENTS
Current real estate taxes, rent, utilities and all other
normal income and expense items related to the Assets shall be apportioned
between the parties to reflect the principal that all expenses and income
arising from the operation of the Assets up through 11:59 p.m. Eastern Standard
Time ("EST") of the day prior to the Closing Date (the "Adjustment Time") shall
be for the account of Seller, and all expenses and income arising from the
operation of the Assets acquired by Buyer after the Adjustment Time shall be for
the account of Buyer. All special assessments and similar charges or liens,
imposed against the Assets in respect of any period of time through the
Adjustment Time, whether payable in installments or otherwise, shall be the
responsibility of Seller, and amounts payable with respect to such special
assessments, charges or liens imposed after the Adjustment Time in respect of
any period of time after the Adjustment Time shall be the responsibility of
Buyer, and such charges shall be adjusted as required hereunder. Three (3) days
prior to the Closing Date Seller shall estimate all apportionments pursuant to
this Article IV and shall deliver a statement of its estimates to Buyer (which
statement shall set forth in reasonable detail the basis for those estimates).
To the extent that, as of the Closing Date, the value of the unfulfilled
obligations under Sales Agreements, Trade Agreements or Barter Agreements,
including any "time bank" provision thereof, exceeds the value of consideration
to be received by the Station (determined as of the Closing Date), Buyer shall
be entitled to a positive cash adjustment. At the Closing, Buyer shall pay to
Seller, or Seller shall pay to Buyer, as the case may be, the net amount due as
a result of the estimated apportionments (excluding any item that is in
dispute). Within sixty (60) days after the Closing (the "Payment Date"), Buyer
shall deliver to Seller a statement of any adjustments to Seller's estimate of
the apportionments, and Buyer shall pay to Seller, or Seller shall pay to Buyer,
as the case may be, any amount due as a result of the adjustment (or, if there
is any dispute, the undisputed amount). If Seller disputes Buyer's
determinations, or if at any time after delivery of Buyer's statement of
determinations, either party determines that any item included in the
apportionments is inaccurate, or that an additional item should be included in
the apportionments, the parties shall confer with regard to the matter and an
appropriate adjustment and payment shall be made as agreed upon by the parties
(or, if they are unable to resolve the matter, they shall select a firm of
independent certified public accountants to resolve the matter, whose decision
on the matter shall be binding and whose fees and expenses shall be borne
equally by the parties). All amounts due pursuant to this subsection that are
not paid on the Closing Date or the Payment Date, as applicable, shall bear
interest until paid at a rate per annum equal to the generally prevailing prime
interest rate (as reported by The Wall Street Journal) plus five percent (5%).
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties, all
of which have been relied upon by Buyer in entering into this Agreement and,
except as otherwise specifically provided, all of which shall be true and
correct at Closing.
5.1 Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Hampshire, is duly qualified to do business in, and is in good standing under,
the laws of the Commonwealth of Massachusetts. Seller has full
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power and authority to own, lease and operate its Assets and to conduct the
business and operations of the Station as currently conducted and proposed to be
conducted and to enter into and perform this Agreement. The address of each
Seller's chief executive offices, and the locations of all tangible personal
property included in the Assets are listed in Schedule 5.1. Except as set forth
in Schedule 5.1, during the past [four (4)] years, neither Seller has, nor to
the best of any of the Seller's knowledge, has any prior owner of any of the
Station been known by or used any corporate, partnership, fictitious or other
name in the conduct of the Station's business or in connection with the use or
operation of the Assets.
5.2 Authorization. The execution and delivery of this
Agreement by Seller has been duly authorized by all necessary corporate action.
Seller shall deliver evidence of such authorization to Buyer at Closing. This
Agreement has been duly executed by Seller and delivered to Buyer and
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights generally or equitable principles.
5.3 No Breach. None of (i) the execution, delivery and
performance of this Agreement by Seller, (ii) the consummation of this Agreement
and all other documents or instruments related thereto or executed in connection
therewith or in contemplation of the Transaction, or (iii) Seller's compliance
with the terms and conditions hereof will, with or without the giving of notice
or the lapse of time or both, conflict with, breach the terms and conditions of,
constitute a default under, or violate any of the Seller's certificates of
incorporation or bylaws, any judgment, decree, order, injunction, agreement,
lease or other instrument to which Seller is a party or by which Seller is
legally bound, or any law, rule, or regulation applicable to Seller or the
operation of the Station.
5.4 Station Licenses. The Station Licenses are all of the
licenses, permits, and other authorizations used or necessary to lawfully
operate the Station in the manner and to the full extent as it is now operated,
and the Station Licenses are validly issued in the name of Seller. Seller has
delivered to Buyer true and complete copies of the Station Licenses, including
any and all amendments and other modifications thereto. The Station Licenses are
in full force and effect, are valid for the balance of the current license term
applicable generally to radio stations licensed to communities in the state
where the Station is located, are unimpaired by any acts or omissions of Seller
or any of its affiliates, or the employees, agents, officers, directors, or
shareholders of Seller or any of its affiliates, and are free and clear of any
restrictions which might limit the full operation of the Station in the manner
and to the full extent as it is now operated (other than restrictions under the
terms of the licenses themselves). There are no applications, proceedings, or
complaints pending or, to the knowledge of Seller, threatened which may have an
adverse effect on the business or operation of the Station (other than
rulemaking proceedings that apply to the radio broadcasting industry generally).
Seller is not aware of any reason why those of the Station Licenses subject to
expiration might not be renewed in the ordinary course for a full term without
material qualifications or of any reason why any of the Station Licenses might
be revoked. The Station is in compliance with the Commission's policy on
exposure to radio frequency radiation. No renewal of any Station License would
constitute a major environmental action under the rules of the Commission. There
are no facts which, under the Communications Act of 1934, as amended, or the
existing rules of the Commission, would disqualify Seller from assigning the
Station Licenses or from consummating the
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transactions contemplated herein within the times contemplated herein. Seller
maintains an appropriate public inspection file at the Station's studio in
accordance with Commission rules. Access to the Station's transmission
facilities is restricted in accordance with the policies of the Commission.
5.5 Station Applications. All information contained in any
Station Application (as described on Schedule 1.1 hereto) pending with the
Commission is true, complete and accurate in all material respects.
5.6 Title to Assets. Except as set forth on Schedule 5.6(a),
Seller has good and marketable title to the Assets, in the case of owned Assets,
and a valid leasehold interest, in the case of leased Assets, in each case free
and clear of all debts, liens, charges, security interests, mortgages, deeds of
trust, pledges, judgments, trusts, adverse claims, liabilities, collateral
assignments, leases, easements, covenants, encumbrances and other impairments of
title ("Liens"), other than as set forth on Schedule 5.6(a). At Closing, Seller
shall convey to Buyer good and marketable title to the Assets free and clear of
all Liens other than those set forth on Schedule 5.6(b) ("Permitted Liens").
5.7 Condition of Equipment. The Station Equipment listed on
Schedule 1.2 constitutes all of the personal property that is used, held by the
Seller or others for use by the Station, or necessary to operate the Station as
it is now operated. The Station Equipment is in good operating condition and
repair (reasonable wear and tear excepted), is maintained in compliance with
good engineering practice, is performing satisfactorily, is not in need of
repair, has been properly maintained in accordance with the manufacturers'
recommendations and industry practices, is available for immediate use and is
otherwise sufficient to permit the Station to operate in accordance with the
Station Licenses and the rules and regulations of the Commission. All Station
Equipment is type-approved or type-accepted where such type-approval or
type-acceptance is required.
5.8 Condition of Real Property.
(a) The Real Property listed on Schedule 1.4
constitutes all the real property used by Seller or others in connection with
the operation of the Station as it is now operated.
(b) There are no encroachments upon the Real Property
by any buildings, structures, or improvements located on adjoining real estate.
None of the buildings, structures, or improvements (including without limitation
any ground radials, guy wires or guy anchors) constructed on the Real Property
encroach upon adjoining real estate, and all such buildings, structures, and
improvements are constructed in conformity with or are "grandfathered" with
respect to all "setback" lines, easements, and other restrictions, or rights of
record, or that have been established by any applicable building or safety code
or zoning ordinance. Such "grandfathered" approvals shall survive indefinitely
the transfer of the Real Property to Buyer. No utility lines serving the Real
Property pass over the lands of others except where appropriate easements have
been obtained. There are no pending or, to the best of Seller's knowledge,
threatened or contemplated condemnation or eminent domain proceedings that may
affect the Real Property. There exists no writ, injunction, decree, order
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or judgment, nor any litigation, pending, or to the best of Seller's knowledge,
threatened, relating to the ownership, use, lease, occupancy or operation of any
of the Real Property. Seller's use and occupancy of the Real Property complies
in all material respects with all regulations, codes, ordinances, and statutes
of all applicable governmental authorities, including without limitation all
environmental protection and sanitary laws and regulations, occupational safety
and health regulations, and electrical codes. There are no material structural
defects in the buildings, structures, and improvements located on the Real
Property. Roofs are in good condition and repair, and all plumbing equipment,
heating, ventilating and air conditioning equipment, electrical wiring, and
water and sewage systems are operating properly and are free of any material
defects. Seller's representations in this Section 5.8(b) shall be to the best of
Seller's knowledge.
(c) The leased premises are leased at the rates and for
terms ending on the dates shown on Schedule 1.4 pursuant to the agreements
described in Schedule 1.4 (the "Lease Agreements"), which are the sole and
complete agreements concerning Seller's use of the leased premises. Each Lease
Agreement is legal, valid, binding, enforceable and in full force and effect.
Neither Seller nor any other party is in default, violation or breach in any
respect under any Lease Agreement, and no event has occurred and is continuing
that constitutes or, with notice or the passage of time or both, would
constitute a default, violation or breach thereunder. No amount payable under
any Lease Agreement is past due. Seller has not received any notice of a
default, offset or counterclaim under any Lease Agreement or any other
communication asserting non-compliance with any Lease Agreement. Seller has the
exclusive right to use and occupy the premises leased under each Lease Agreement
as they are now currently being used and occupied and for the purposes necessary
to operate the Station. Seller enjoys peaceful and undisturbed possession of the
premises leased by Seller under the Lease Agreement. Except as set forth on
Schedule 5.8(c), the Lease Agreements are free and clear of all Liens, except
for lessors' interests in the leases. Seller has delivered to Buyer, true and
complete copies of the Lease Agreements, together, in the case of any subleases
or similar occupancy agreements, with copies of all overleases. Except as
disclosed in Schedule 5.8(c), Seller has full legal power and authority to
assign its rights under the Lease Agreements to Buyer in accordance with this
Agreement on terms and conditions no less favorable than those in effect on the
date hereof, and such assignment will not affect the validity, enforceability
and continuity of any such lease.
(d) All utilities that are required for the full and
complete occupancy and use of the Real Property for the purposes for which such
properties are presently being used by Seller, including without limitation
electric, water, sewer, telephone and similar services, have been connected and
are in good working order. By the Closing Date, Seller will have paid all
charges for such utilities, including without limitation any "tie-in" charges or
connection fees, except for those charges that will not become due until after
the Closing Date and that are to be prorated between Seller and Buyer pursuant
to Article IV.
5.9 Contracts. The Contracts are assignable to Buyer on terms
and conditions no less favorable than those in effect on the date hereof without
consent, or, if consent of the other contracting party to the assignment is
required, such consent will be secured at Seller's sole expense
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prior to the Closing Date. Each Contract is in full force and effect and is
unimpaired by any acts or omissions of Seller, Seller's employees, agents,
officers, directors or shareholders. Seller has complied in all material
respects will all Contracts to be assigned to Buyer hereunder, and there has not
occurred as to any Contract any default by Seller or any event that, with notice
or the lapse of time or otherwise, could become a default by Seller. Seller has
not granted or been granted any waiver or forbearance with respect to any of the
Contracts. To the best knowledge of Seller, there has not occurred as to any
Contract any default by any other party thereto or any event that, with notice
or the lapse of time or at the election of any person other than Seller, could
become a default by such party. Those Contracts whose stated duration extends
beyond the Closing Date will, at Closing, be in full force and effect and will
be unimpaired by any acts or omissions of Seller, Seller's agents, employees,
officers, directors or shareholders. Seller has provided to Buyer true and
correct copies of all written Contracts, as modified to date, or true and
complete memoranda describing the terms of all oral Contracts, and all
liabilities and obligations under such Contracts can be ascertained from such
copies or memoranda. The Contracts as amended through the date of this Agreement
will not be modified without Buyer's written consent, which consent shall not be
unreasonably withheld.
5.10 Employees.
(a) Schedule 5.10 contains a true and complete list of
all persons employed at the Station, each such person's compensation and bonus
arrangements and the Employee Plans listed in Schedule 5.11, if any, applicable
to each such person. Seller is not a party to any agreement or arrangement,
written or oral, with salaried or non-salaried employees except as described in
Schedules 5.10 and 5.11 or included among the Operating Contracts. Except as
described in Schedule 5.10, Seller has no knowledge that any employee identified
in Schedule 5.10 currently plans to terminate employment, whether by reason of
the transactions contemplated by this Agreement or otherwise.
(b) Except as disclosed in Schedule 5.10, Seller is not
a party to or subject to any contract with any labor organization, nor has
Seller agreed to recognize any union or other collective bargaining unit, nor
has any union or other collective bargaining unit been certified as representing
any of Seller's employees 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 at the Station. There are no
unfair labor practice charges pending or, to the best of Seller's knowledge,
threatened against Seller; there are no pending or threatened strikes,
arbitration proceedings involving labor matters or other labor disputes
affecting Seller or the Station; and Seller has not experienced any strikes,
work stoppages or other significant labor difficulties of any nature at the
Station in the past two (2) years.
5.11 Employee Benefit Plans. Schedule 5.11 sets forth a true
and complete list of each employee or retiree benefit or compensation plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or compensation, bonus, incentive, deferral,
equity based, severance, termination, retention, change in control, employment
or other similar program, agreement, arrangement, trust or other funding
arrangement, whether or not subject to the provisions of ERISA, to which Seller
is bound or that is or has been established or maintained or in respect of which
Seller has ever had any obligation to contribute
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(each, an "Employee Plan"). Except pursuant to an Employee Plan, Seller has no
fixed or contingent liability or obligation to or in respect of any person now
or formerly employed at the Station or any beneficiary or dependent of any such
person, including, without limitation, in respect of pension or thrift benefits
or payments, individual or supplemental pension benefits or payments or
compensation arrangements, contributions to hospitalization or other health,
life or other welfare benefits, incentive benefits or payments, bonus benefits
or payments or vacation, sick leave, disability and termination benefits or
payments, including workers' compensation. No trade or business (whether or not
incorporated) is or has been as of any date within the preceding six (6) years
treated as a single employer together with Seller pursuant to Section 414 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code"). Seller has not incurred or does not reasonably expect to incur (either
directly or indirectly, including as a result of any indemnification obligation)
any liability that could become a liability of Buyer or, following the Closing,
remain a liability of the Station under or pursuant to Title I or IV of ERISA or
the penalty, excise tax or joint and several liability provisions of the Code
relating to employee benefit plans and, to the best knowledge of Seller, no
event, transaction or condition has occurred or exists which could result in any
such liability. Each of the Employee Plans has been operated and administered in
all respects in accordance with all applicable laws, including but not limited
to ERISA and the Code. It is expressly understood that Buyer is not assuming any
obligation of Seller under or with respect to any Employee Plan.
5.12 Litigation. Except as set forth on Schedule 5.12, there
is no unsatisfied judgment outstanding and no litigation, proceeding, claim or
investigation of any nature pending or, to Seller's best knowledge, threatened
against Seller or any of the Assets which might adversely affect the continued
operation of the Station or impair the value of the Assets or which might
adversely affect Seller's ability to perform in accordance with the terms of
this Agreement. Seller has no knowledge of any facts that could reasonably
result in any such proceedings. With respect to each matter set forth therein,
Schedule 5.12 sets forth a description of the forum for the matter, the parties
thereto and the type and amount of relief sought.
5.13 Payment of Taxes. Seller has, or by the Closing Date will
have, duly filed all tax returns and forms required to be filed in respect of
the Station and paid in full or discharged all taxes, assessments, excises,
interest, penalties, deficiencies and other levies relating to the Assets or
that could give rise to a lien or other encumbrances on the Assets in the hands
of the Buyer, excepting such taxes, assessments, and other levies as will not be
due until after the Closing Date and that are to be prorated between Seller and
Buyer pursuant to Article IV. No event has occurred that could impose on Buyer
any liability for any taxes, penalties, or interest due or to become due from
Seller from any taxing authority.
5.14 Compliance With Laws. Seller has complied in all material
respects with, and is not in violation of any federal, state or local laws,
regulations or orders (including any applicable statutes, ordinances or codes
relating to zoning and land use, health and sanitation, environmental
protection, occupational safety, and the use of electrical power) affecting the
Assets, Seller's business, or the operation of the Station. Without limiting the
generality of the foregoing:
(a) The Station's transmitting and studio equipment is
operating in accordance with the terms and conditions of the Station Licenses,
and the rules, regulations
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and policies of the Commission, including without limitation all regulations
concerning equipment authorization and human exposure to radio frequency
radiation. To the best of Seller's knowledge, (i) the Station is not causing
interference in violation of Commission rules to the transmission of any other
broadcast station or communications facility and has not received any complaints
with respect thereto and (ii) no other broadcast station or communications
facility is causing interference in violation of Commission rules to the
Station's transmissions or the public's reception of such transmissions. There
are no outstanding construction permits.
(b) Seller has, in the conduct of the Station's
business, complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those concerning
wages, hours, equal employment opportunity, collective bargaining, pension and
welfare benefit plans, and the payment of Social Security and similar taxes, and
Seller is not liable for any arrearages of wages or any tax penalties due to any
failure to comply with any of the foregoing.
(c) Seller has received no notification from the
Commission that Seller's affirmative action program for the Station or Seller's
other employment practices fail to comply with Commission rules and policies.
(d) All ownership reports, employment reports, tax
returns and other documents required to be filed by Seller with the Commission
or other governmental authorities have been filed. Such items as are required to
be placed in each Station's local public inspection files have been placed in
such files. All proofs of performance and measurements that are required to be
made by Seller with respect to each Station's transmission facilities have been
completed and filed at the Station. All information contained in the foregoing
documents is true, complete and accurate in all material respects.
(e) The tower(s) used in the operation of the Station
are painted, obstruction marked and lighted to the extent required by, and in
accordance with the rules and regulations of the Federal Aviation Administration
(the "FAA"), the Commission and any other applicable requirements of law.
Appropriate notifications to the FAA have been filed for such towers where
required by the Commission's rules and regulations.
5.15 Insolvency Proceedings. Neither Seller nor the Assets are
the subject of any pending or threatened insolvency proceedings of any
character, including without limitation bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary. Seller has not made an assignment for the benefit of creditors or
taken any action in contemplation of or which would constitute a valid basis for
the institution of any such insolvency proceedings. After giving effect to the
Transaction, Seller (i) will have sufficient capital to carry on its business
and transactions, (ii) will be able to pay its debts as they mature or become
due, and (iii) will own assets the fair value of which will be greater than the
sum of all liabilities (including contingent liabilities) of Seller not
specifically assumed by Buyer pursuant to the terms of this Agreement. Seller is
not insolvent nor will it become insolvent as a result of entering into this
Transaction.
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5.16 Citizenship. Seller is not a "foreign person" as defined
in Section 1445(f)(3) of the Code. On the Closing Date, Seller will deliver to
Buyer an affidavit to that effect, verified as true and sworn to under penalty
of perjury by a duly-authorized officer of Seller. The Seller's affidavit shall
also set forth the Seller's name, address, taxpayer identification number, and
such additional information as may be required to exempt the Transaction from
the withholding provisions of Section 1445 of the Code. Buyer shall have the
right to furnish copies of the affidavit to the Internal Revenue Service.
5.17 Patents, Trademarks, Copyrights. The call signs and all
slogans, logos, copyrights, patents, trademarks, trade names, service marks, and
other similar intangible property rights, including registrations and
applications to register or renew the registrations of any of the foregoing,
currently used to promote or identify the Station, or otherwise used in
connection with the Station business, are listed or described on Schedule 1.5
(the "Promotional Rights"). The Promotional Rights are either owned or validly
licensed by Seller, and Schedule 1.5 identifies which Promotional Rights are so
owned and which are licensed, and if licensed, the royalties paid thereon and
the parties paid thereunder. Seller does not have any knowledge, nor has Seller
received any notice to the effect that its use of any of the Promotional Rights
may be or are claimed to infringe on the right of another. Seller has no
knowledge of any infringement or unlawful or unauthorized use of such
Promotional Rights, including without limitation the use of any call sign,
slogan or logo by any broadcast or cable station in the area that may be
confusingly similar to the call signs, slogans, and logos currently used by the
Station. The operations of the Station do not infringe any copyright, patent,
trademark, trade name, service ▇▇▇▇, or other similar right of any third party.
Seller has not sold, licensed or otherwise disposed of any Promotional Rights to
any person or entity and Seller has not agreed to indemnify any person or entity
for any patent, trademark or copyright infringement. Schedule 1.5 lists all of
the Promotional Rights which have been duly registered with, filed in or issued
by, as the case may be, the United States Patent and Trademark Office and United
States Copyright Office or other filing offices, domestic or foreign.
5.18 Financial Statements. Seller has furnished Buyer with the
financial statements listed or described on Schedule 6.18 (the "Financial
Statements"). The Financial Statements include (i) unaudited profit and loss
statements and balance sheets as of December 31, 1996, 1997 and 1998 for the
Station, (ii) an unaudited balance sheet as of November 30, 1999 of the Station,
(iii) unaudited statements of income of the Station for the ten (10) month
period ended November 30, 1999 and (iv) unaudited monthly financial statements
covering the period beginning January 1, 1999 and ending November 30, 1999. The
year-end Financial Statements: (i) have been prepared in accordance with United
States Generally Accepted Accounting Principles ("GAAP") on a consistent basis
throughout the periods involved and as compared with prior periods and (ii)
fairly and accurately reflect the financial condition and the results of
operations and cash flows of the Station as of the dates and for the periods
indicated. The monthly and other interim Financial Statements: (i) have been
prepared in accordance with GAAP on a consistent basis throughout the periods
involved (except to the extent noted thereon) and on a basis consistent with the
year-end Financial Statements, and (ii) fairly and accurately reflect the
financial condition and the results of operations of the Station as of the dates
and for the periods indicated in all material respects. Except as reflected in
the Financial Statements or otherwise disclosed to Buyer in writing, no event
has occurred since the preparation of the most recent Financial Statements that
would make such Financial Statements misleading in any material respect.
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5.19 Sufficiency of Assets. The Assets are sufficient to
operate the Station as it is now operated.
5.20 Year 2000 Compliance. To Seller's knowledge, the Assets
used by Seller in the conduct of its business as currently conducted, whether
owned by Seller or licensed from others, will perform its intended functions
without regard to any references to or computations based on calendar dates or
periods of elapsed time, including, but not limited to, any thereof with respect
to any date or dates in 1999 or 2000.
5.21 No Misleading Statements. To Seller's knowledge, no
statement made by Seller to Buyer and no information provided or to be provided
by Seller to Buyer pursuant to this Agreement or in connection with the
negotiations covering the transaction, contains or will contain any untrue
statement of a material fact or omits or will omit a material fact necessary in
order to make such statements or information not misleading.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties, all
of which have been relied upon by Seller in entering into this Agreement and,
except as otherwise specifically provided, all of which shall be true and
correct as of Closing.
6.1 Organization. Buyer is a corporation duly organized,
validly existing, and in good standing, under the laws of the State of Delaware.
Buyer is duly qualified to do business in and is in good standing under the laws
of the Commonwealth of Massachusetts.
6.2 Authorization. The execution and delivery of this
Agreement by Buyer has been duly authorized by all necessary corporate action on
its part. Buyer shall deliver evidence of such authorization at Closing. This
Agreement has been duly executed by Buyer and delivered to Seller and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights generally or equitable principles.
6.3 No Breach. Except for Buyer's obligations to comply with
certain requirements of that certain Credit Agreement, as amended, (the "Credit
Agreement") dated as of August 11, 1999 among Buyer, certain affiliates of
Buyer, the lenders named therein (the "Senior Lenders") and the Bank of
Montreal, Chicago Branch, as agent, including obtaining the consent of the
Senior Lenders, none of (i) the execution, delivery and performance of this
Agreement by Buyer, (ii) the consummation of this Agreement and all other
documents or instruments related thereto or executed in connection therewith if
in contemplation of the Transaction, or (iii) Buyer's compliance with the terms
and conditions hereof will, with or without the giving of notice or the lapse of
time or both, conflict with, breach the terms and conditions of, constitute a
default under, or violate Buyer's articles of incorporation, bylaws, any
judgment, decree, order, agreement, lease or other instrument to which Buyer is
a party or by which Buyer is legally bound, or any law, rule or regulation
applicable to Buyer.
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6.4 Litigation. There is no action, suit, investigation or
other proceedings pending or, to Buyer's best knowledge, threatened which may
adversely affect Buyer's ability to perform in accordance with the terms of this
Agreement, and Buyer is unaware of any facts which could reasonably result in
any such proceeding.
6.5 Qualification as Broadcast Licensee. Buyer is qualified
under the Communications Act of 1934, as amended, and the rules, regulations and
policies of the FCC to become the licensee of the Station. There are no
proceedings, complaints, notices of forfeiture, claims, investigations pending
or, to the knowledge of Buyer, threatened against any or in respect of any of
the broadcast stations licensed to Buyer or its affiliates that would materially
impair the qualifications of either Buyer or a license subsidiary of Buyer to
become a licensee of the Station.
6.6 No Misleading Statements. To Buyer's knowledge, no
statement made by Buyer to Seller and no information provided or to be provided
by Buyer to Seller pursuant to this Agreement or in connection with the
negotiations covering the purchase and sale contemplated herein contains or will
contain any untrue statement of a material fact or omits or will omit a material
fact necessary in order to make such statements or information not misleading.
ARTICLE VII.
ENVIRONMENTAL MATTERS
7.1 Compliance with Law. Except as listed and described on
Schedule 7.1 to this Agreement, all activities of Seller at or on the Real
Property and all operations of the Station by the Seller (whether or not
conducted at the Real Property), have been and are being conducted in compliance
with all applicable federal, state and local statutes, ordinances, rules,
regulations, permits, orders and policies concerning (i) manufacturing,
processing, handling, storage, treatment and/or disposal of any hazardous or
toxic materials or of any wastes, (ii) discharges or releases into the air,
ground, surface water or groundwater, and (iii) employee health and safety.
7.2 Site Contamination. Except as listed and described in
Schedule 7.2, Seller has no knowledge that any Hazardous Substance is present
at, on or under the Real Property or has been disposed of by Seller in such a
manner as may require remediation under any Environmental Statute. No claims
have been asserted or threatened against Seller relating to the presence or
disposal of such Hazardous Substances. "Hazardous substance" means any substance
regulated under any federal, state, or local statute, regulation, ordinance,
order, permit, or policy relating to environmental protection, environmental
pollution, liability for environmental contamination, or protection of worker
health and safety ("Environmental Statutes").
7.3 Additional Provisions Regarding Hazardous or Toxic
Materials. Except as listed and described on Schedule 7.3, Seller has no
knowledge that (i) any polychlorinated biphenyls or substances containing
polychlorinated biphenyls are present at, on or under the Real Property; (ii)
any asbestos or materials containing asbestos exist at, on or under the Real
Property; and (iii) any underground storage tanks exist or existed at, on or
under the Real Property.
7.4 No Notice of Lack of Compliance with Environmental
Statutes. Seller has not been notified by any governmental authority of any
violation of any Environmental Statute in
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connection with the operation of the Station or the conduct of any activities on
or at the Real Property. Seller has no knowledge of notices of violation of
Environmental Statutes, notices of noncompliance with Environmental Statutes or
environmental enforcement, response, removal or remediation actions issued for
or undertaken at the Real Property. Further, Seller has no knowledge of
investigations or inspections by governmental authorities into Seller's
compliance with Environmental Statutes. Schedule 7.4 includes a correct and
complete list of Seller's registrations with, licenses from, or permits issued
by governmental agencies or authorities pursuant to Environmental Statutes. All
such registrations, licenses or permits are in full force and effect.
ARTICLE VIII.
PRE-CLOSING OBLIGATIONS
The parties covenant and agree as follows with respect to the
period prior to the Closing Date:
8.1 Application for Commission Consent. Within fifteen (15)
business days after the date of this Agreement, Seller and Buyer shall join in
and file an application or applications requesting the Commission's written
consent to the assignment of the Station Licenses from Seller to Buyer (the
"Assignment Applications"), and they will diligently take all steps necessary or
desirable and proper to prosecute expeditiously the Assignment Applications and
to obtain the Commission's determination that approval of the Assignment
Applications will serve the public interest, convenience, and necessity,
including, without limitation, compliance with the public notice requirements of
the Communications Act of 1934, as amended. The failure by either party to
timely file or diligently prosecute its portion of the Assignment Applications
shall be deemed a material breach of this Agreement. Each party shall bear its
own expenses in connection with the preparation, filing and prosecution of the
Assignment Applications.
8.2 Other Governmental Consents. Promptly following the
execution of this Agreement, Seller and Buyer shall proceed to prepare and file
with the appropriate governmental authorities (other than the Commission) such
requests, if any, for approval or waiver as may be required from such
governmental authorities in connection with the Transaction, and shall jointly,
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such requests for approval or waiver and all
proceedings necessary to secure such approvals and waivers.
8.3 Financial Information. Between the date hereof and the
Closing Date, Seller shall furnish Buyer with monthly financial statements
within fifteen (15) days after the end of each calendar month, unaudited
financial statements for the twelve (12) months ended December 31, 1999 within
thirty (30) days after the end of that calendar year, and with such additional
data concerning the Station's financial condition as are prepared by Seller in
the ordinary course of business, in the same form as the Financial Statements
contained in Schedule 5.18. Such financial statements and additional data shall
be accompanied by a certificate executed by the president of Seller certifying
that such financial statements and data: (i) have been prepared on a consistent
basis throughout the periods involved (except to the extent noted thereon) and
on a basis consistent with the year-end Financial Statements, and (ii) fairly
and accurately reflect the financial condition and the results of operations and
cash flows of the Station as of the dates and for the periods indicated in all
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material respects. Between the date hereof and the Closing Date, the president
of Seller shall make himself available to Buyer, upon prior notice, to discuss
and explain the compilation and preparation of the Financial Statements and the
monthly financial statements and such other additional data provided pursuant to
this Section 8.4, and each of the constituent elements reflected thereon.
8.4 Third Party Consents.
8.4.1 Third Party Consents in General. Seller shall use
its best efforts to obtain the consents of the other contracting parties to the
assignment of the Contracts requiring such consent. The delivery of such
consents to the assignment of Contracts that are identified on Schedules 1.3(a),
1.3(c), 1.3(d) and 1.3(e) to be material to the operation of the Station
("Material Contracts") shall be a condition to Buyer's obligation to close under
Section 9.2.7.
8.4.2 Landlord Consent. Promptly following the
execution of this Agreement, Seller shall use its best efforts to obtain
executed landlord consent letters (the "Landlord Consents") substantially in the
form of Exhibit D for all Real Property leased or licensed by Seller or its
affiliates.
8.5 Environmental Site Assessment. Within sixty (60) days of
the execution of this Agreement, Buyer shall obtain a Phase I Environmental
Assessment for each of the parcels of the Real Property (the "Environmental
Assessment"). In the event the Environmental Assessment discloses any recognized
environmental conditions or any potential that such conditions may exist, then
Buyer may conduct or have conducted at its expense additional testing to confirm
or negate the existence of any such conditions. If any such Environmental
Assessment or additional testing reflects the existence of any such conditions,
Seller shall cause the conditions to be remedied as quickly as possible (and in
all events prior to Closing) such that no recognized environmental conditions
exist; provided, however, that Seller shall not be obligated to expend in the
aggregate in excess of Fifty Thousand Dollars ($50,000) to effect such
remediation. In the event that such remedial action(s) costs in the aggregate in
excess of Fifty Thousand Dollars ($50,000), Seller may elect not to take such
remedial action. In such event, Buyer may require Seller to proceed to Closing
and Buyer shall receive a proration at Closing, in the amount of Fifty Thousand
Dollars ($50,000). Alternatively, Buyer may terminate this Agreement and Seller
shall have no liability to Buyer as a result of such termination. Such
Environmental Assessment shall not relieve Seller of any obligation with respect
to any representation, warranty or covenant of Seller in this Agreement or waive
any condition to Buyer's obligations under this Agreement. The cost of
completing the Environmental Assessment shall be paid by Buyer.
8.6 Title Insurance. Within thirty (30) days of the date of
this Agreement, Seller shall deliver to Buyer any current title insurance
policies. Seller shall cooperate with Buyer in obtaining the commitment of a
title insurance company reasonably satisfactory to Buyer agreeing to issue to
Buyer, at standard rates, ALTA 1992 Form extended coverage title insurance
policies, insuring Buyer's interest in the Real Property (the "Title
Commitment"). The costs of the Title Commitment shall be paid by Buyer and the
policy to be issued pursuant to the Title Commitment shall be paid by Buyer.
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8.7 Surveys. At the request of Buyer, within sixty (60) days
of the date of this Agreement, Seller shall deliver to Buyer, at Buyer's
expense, surveys of the Real Property to be certified to Buyer and the Senior
Lenders and sufficient to remove any "survey exception" from the title insurance
policies to be issued pursuant to the Title Commitments.
8.8 Confidentiality. Each party agrees that any and all
information learned or obtained by it from the other (and that is not otherwise
public or known in the radio broadcast industry) shall be confidential and
agrees not to disclose any such information to any person whatsoever other than
as is necessary for the purpose of effecting the Transaction or as otherwise
required by law.
8.9 Access. Between the date hereof and the Closing Date,
Seller shall give, upon prior notice, Buyer or representatives of Buyer
(including lenders, consultants and accountants) reasonable access to the Assets
and to the books and records of Seller relating to the business and operation of
the Station. It is expressly understood that, pursuant to this Section, Buyer,
at its sole expense, shall be entitled to make such engineering inspections of
the Station, and such audits of the Station's financial records as Buyer may
desire, so long as the same do not unreasonably interfere with Seller's
operation of the Station.
8.10 Employee Matters.
(a) As set forth on Schedule 5.10, Seller has provided to
Buyer an accurate list of all current employees of the Station together with a
description of the terms and conditions of their respective employment and their
duties as of the date of this Agreement. Seller shall promptly notify Buyer of
any changes that occur prior to Closing with respect to such information.
(b) Buyer may extend offers of employment to those
employees of Seller whom it desires to hire (such employees are hereinafter
referred to as the "Hired Employees"), which offers shall be on terms and
conditions that Buyer shall determine in its sole discretion. Buyer shall
provide notice to Seller within thirty (30) days of the FCC's initial grant of
the Assignment Applications identifying those employees to whom Buyer intends to
extend offers of employment. Nothing contained in this Agreement shall obligate
Buyer to hire any employee of Seller. Seller waives any claims against Buyer or
any of the Hired Employees arising from such employment, including without
limitation any claims arising from any employment agreement or non-compete
agreement. On or prior to Closing, Seller shall compensate the Station's
employees for all accrued commissions, accrued vacations, sick leave and other
accrued benefits, or if Buyer assumes such obligations, such liabilities shall
be prorated between Seller and Buyer pursuant to Article IV. Seller shall
terminate the employment of all employees effective on the Closing Date and
shall cooperate with, and use its best efforts to assist, Buyer in its efforts
to secure satisfactory employment arrangements with the Hired Employees to whom
Buyer makes offers of employment.
(c) Nothing contained in this Agreement shall confer upon
any employee of Seller any right with respect to continued employment by Buyer,
nor shall
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anything herein interfere with the right of Buyer to terminate the employment of
any of the Hired Employees at any time, with or without cause.
8.11 Operations Prior to Closing. Between the date of this
Agreement and the Closing Date:
(a) Seller shall operate the Station in the normal and
usual manner, consistent with Seller's past practice and the rules, regulations,
and policies of the Commission, and shall conduct the Station's business only in
the ordinary course. To the extent consistent with such operations, Seller shall
use its best efforts to: (i) maintain the present character and entertainment
format of the Station and the quality of its programs; (ii) keep available for
Buyer the services and number of the Station's present employees reasonably
necessary for the operation of the Station; (iii) preserve the Station's present
customers and business relations; (iv) continue to make expenditures and engage
in activities designed to promote the Station; and (v) continue making capital
expenditures, in the case of both (iv) and (v) of this Section 8.12(a),
consistent with past practices of the Station.
(b) Seller shall: (i) subject to Section 13.3, maintain
the Assets in their present condition (reasonable wear and tear in normal use
excepted); and (ii) maintain all inventories of supplies, tubes, and spare parts
at levels consistent with the Station's prior practices.
(c) Seller shall maintain its books and records in the
usual and ordinary manner, on a basis consistent with prior periods.
(d) Seller shall comply with all laws, rules, ordinances
and regulations applicable to it, to the Assets and to the business and
operation of the Station.
(e) Seller shall perform all Contracts without default
and shall pay all of Seller's trade accounts payable in a timely manner;
provided, however, that Seller may dispute, in good faith, any alleged
obligation of Seller.
(f) Seller shall not, without the express written consent
of Buyer which shall not be unreasonably withheld, and which shall be deemed
given in the event Buyer has not responded to a written request therefor within
ten (10) days: (i) sell or agree to sell or otherwise dispose of any of the
Assets (A) other than in the ordinary course of business, and (B) unless such
Assets are replaced prior to Closing by assets of equal or greater worth,
quality and utility; (ii) acquiesce in any infringement, unauthorized use or
impairment of the Intangible Property or change the Station's call signs; (iii)
enter into any employment contract on behalf of the Station unless the same is
terminable at will and without penalty; or (iv) enter into any other contract,
lease or agreement that will be binding on Buyer after Closing unless Seller has
entered into such contract, lease or agreement in the ordinary course of
business and consistent with past practice and such contract, lease or agreement
does not, in the aggregate, impose obligations in excess of Twenty Thousand
Dollars ($20,000).
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(g) From the date hereof through the Closing Date, Seller
shall allocate and discharge the expenses set forth on Schedule 8.11(g) eighty
percent (80%) to the Station and twenty percent (20%) to the operations of
Seller other than the Station.
8.12 Adverse Developments. Seller shall promptly notify Buyer
of any unusual or materially adverse developments that occur prior to Closing
with respect to the Assets or the operation of the Station; provided, however,
that Seller's compliance with the disclosure requirements of this Section 8.13
shall not relieve Seller of any obligation with respect to any representation,
warranty or covenant of Seller in this Agreement or waive any condition to
Buyer's obligations under this Agreement.
8.13 Administrative Violations. If Seller receives any
finding, order, complaint, citation or notice prior to the Closing Date which
states that any aspect of the Station's operations violates any rule or
regulation of the Commission or of any other governmental authority (an
"Administrative Violation"), including without limitation any rule or regulation
concerning environmental protection, the employment of labor, or equal
employment opportunity, Seller shall promptly notify Buyer of the Administrative
Violation, remove or correct the Administrative Violation, and be responsible
for the payment of all costs associated therewith, including any fines or back
pay that may be assessed.
8.14 Bulk Sales Act. Seller agrees to indemnify, defend, and
hold Buyer harmless against any claims, liabilities, costs, or expenses,
including reasonable attorneys' fees, that Buyer may incur as a result of the
failure to comply with the bulk sales provisions of the Uniform Commercial Code
or similar laws.
8.15 Control of Station. This Agreement shall not be
consummated until after the Commission has given its written consent thereto,
and notwithstanding anything herein to the contrary, between the date of this
Agreement and the Closing Date, Buyer shall not directly or indirectly control,
supervise or direct, or attempt to control, supervise or direct the operation of
the Station. Such operations shall be the sole responsibility of Seller.
8.16 Buyer's Financing: Other Documents and Acts. Seller shall
execute such other documents and perform such other acts as may reasonably be
necessary with respect to Buyer's financing of this Transaction.
8.17 FCC Construction Permit. At its sole cost and expense,
Seller shall file with the FCC, between January 24, 2000 and January 28, 2000,
an application for construction permit to increase the authorized power of the
Station in accordance with Schedule 8.17 (the "Construction Permit") and shall
diligently prosecute such application in consultation with Buyer.
ARTICLE IX.
CONDITIONS PRECEDENT
9.1 Mutual Conditions. The obligation of both Seller and Buyer
to consummate this Agreement is subject to the satisfaction of each of the
following conditions:
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9.1.1 Governmental Consents. The Commission shall have
granted its consent to the Assignment Applications (the "FCC Consent").
9.1.2 Absence of Litigation. As of the Closing Date, no
action, claim, suit or proceeding seeking to enjoin, restrain, or prohibit the
consummation of the Transaction shall be pending before any court, the
Commission, or any other governmental authority; provided, however, that this
condition may not be invoked by a party if any such action, suit, or proceeding
was solicited or encouraged by, or instituted as a result of any act or omission
of, such party.
9.2 Conditions to Buyer's Obligation. In addition to
satisfaction of the mutual conditions contained in Section 9.1, the obligation
of Buyer to consummate this Agreement is subject to the satisfaction of each of
the following conditions:
9.2.1 Representations and Warranties. The representations
and warranties of Seller to Buyer shall be true, complete, and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
9.2.2 Compliance with Conditions. All of the terms,
conditions and covenants to be complied with or performed by Seller on or before
the Closing Date shall have been timely complied with and performed in all
material respects.
9.2.3 No Material Adverse Development. No material
adverse development shall have occurred with respect to the Station that results
in a significant impairment to the ability of the Station to operate as it is
currently operated or represents a substantial impairment of the aggregate value
of the Station or Assets being conveyed.
9.2.4 Title Commitment and Surveys. Buyer shall have
timely received the Title Commitment specified in Section 8.6 and surveys
specified in Section 8.7, which shall reveal nothing inconsistent with Seller's
representations and warranties hereunder.
9.2.5 Validity of Station Licenses. On the Closing Date,
Seller shall be the owner and holder of the Station Licenses to the extent that
such authorizations can be owned or held by Seller under the Communications Act
of 1934, as amended; the Station Licenses shall be in unconditional full force
and effect, valid for the balance of the current license term applicable
generally to radio stations licensed to communities in the state where the
Station is located; and the Station Licenses shall be unimpaired by any acts or
omissions of Seller or Seller's employees, agents, officers, directors or
shareholders.
9.2.6 Closing Documents. Seller shall deliver to Buyer
all of the closing documents specified in Section 10.2.1, all of which documents
shall be dated as of the Closing Date, duly executed, and in a form customary in
the state where the Assets are located and reasonably acceptable to Buyer.
9.2.7 Third Party Consents. Seller shall have obtained
all consents to the assignment of Material Contracts (a "Required Consent"),
such that Buyer will enjoy all of the rights and privileges of Seller under the
Contracts subject only to the same obligations as are binding on Seller
thereunder, pursuant to the present terms thereof. In the event Seller fails to
obtain any
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consent necessary to validly assign a Contract (other than a Required Consent),
such Contract shall not be assigned to Buyer at Closing; provided, however, that
Buyer may elect to require that Seller provide Buyer the benefits under such
Contract until such necessary consent is obtained and such Contract is then
assigned to Buyer; provided further, that Buyer shall reimburse Seller for
amounts paid by Seller pursuant to the terms of such Contracts to the extent
Buyer receives benefits thereunder.
9.2.8 Settlement of Claims. Seller shall have settled any
and all claims against Seller that affect or concern the Assets.
9.2.9 Finality. The FCC Consent shall have become a Final
Order. "Final Order" means an order or action of the Commission that, by reason
of expiration of time or exhaustion of remedies, is no longer subject to
administrative or judicial reconsideration or review.
9.2.10 Satisfactory Environmental Assessment. To the
extent that the Environmental Assessment or additional testing conducted
pursuant to Section 8.5 hereof reflects the existence of conditions contrary to
any representation or warranty in this Agreement, either (i) Seller shall have
completed the remediation of such conditions in accordance with Section 8.5
hereof or (ii) Buyer shall have provided notice to Seller of Buyer's election to
proceed to Closing with the proration to the Purchase Price specified in Section
8.5 hereof.
9.2.11 Estoppel Certificates. Seller shall have obtained
such fee owner's consents as are required for assignment of the Lease Agreements
for the leased premises and such non-disturbance agreements as are reasonably
requested by Buyer not less than thirty (30) days prior to the Closing Date.
9.3 Conditions to Seller's Obligation. In addition to
satisfaction of the mutual conditions contained in Section 9.1, the obligation
of Seller to consummate this Agreement is subject to satisfaction of each of the
following conditions:
9.3.1 Representations and Warranties. The representations
and warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
9.3.2 Compliance with Conditions. All of the terms,
conditions and covenants to be complied with or performed by Buyer on or before
the Closing Date shall have been timely complied with and performed in all
material respects.
9.3.3 Payment. Buyer shall have paid Seller the Purchase
Price as adjusted in accordance with Article III.
9.3.4 Closing Documents. Buyer shall deliver to Seller
all the closing documents specified in Section 10.2.2, all of which documents
shall be dated as of the Closing Date, duly executed, and in a form customary in
transactions of this type and reasonably satisfactory to Seller.
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ARTICLE X.
CLOSING
10.1 Closing Date. The Closing hereunder shall occur on a date
mutually agreeable to Buyer and Seller within ten (10) business days after the
date that the Commission's action granting its consent to the Assignment
Applications has become a Final Order, or, at the election of the Buyer, within
ten (10) business days after the date of the Commission's action granting its
consent (the "Closing Date"); provided, however, that the Closing shall occur no
later than November 30, 2000. The Closing shall be effective as of 12:00 a.m.
EST on the Closing Date. The Closing shall take place on the Closing Date at (i)
the offices of Buyer's counsel in Washington, D.C., commencing at 10:00 a.m. EST
or (ii) such other mutually acceptable time or place. If, as of the Closing
Date, any condition precedent described in Article IX has not been satisfied,
the party that is entitled to require that such condition be satisfied may (in
its sole discretion) notify the other party of the absence of such condition
precedent at or before the Closing and simultaneously therewith postpone the
Closing until a date ten (10) days after all such conditions have been (or are
able to be) performed, and such postponed date shall constitute the new Closing
Date for all purposes hereunder. Each of the parties shall use its reasonable
best efforts to obtain any FCC authority necessary to schedule the Closing Date
as contemplated in this Section.
10.2 Performance at Closing. The following documents shall be
executed and delivered at Closing:
10.2.1 Seller shall deliver to Buyer:
(a) A certificate executed by the Seller attesting to the
Seller's compliance with the matters set forth in Sections 9.2.1, 9.2.2 and
9.2.3 together with certified copies of (i) the Certificates of Incorporation of
the Seller and (ii) appropriate evidence of the Seller's authorization to enter
into and consummate this Agreement.
(b) One or more assignments transferring to Buyer all of
the interests of Seller in and to the Station Licenses, the Station
Applications, and all other licenses, permits, and authorizations issued by any
other governmental authorities that are used in or necessary for the lawful
operation of the Station.
(c) One or more bills of sale conveying to Buyer the
Station Equipment.
(d) One or more assignments, together with all required
consents assigning to Buyer all of the Contracts, the Station Records and the
Intangible Property.
(e) One or more assignments, general warranty deeds or
other appropriate instruments conveying to Buyer all rights of Seller in the
Real Property and all consents to such assignments (including without
limitation, the Landlord Consents) necessary for the legally enforceable
assignment of such interests.
(f) The Covenant.
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(g) An opinion of Seller's corporate and FCC Counsel,
dated the Closing Date, substantially in the form set forth in Exhibit B2,
subject to customary qualifications and addressed to Buyer.
(h) The affidavit described in Section 5.16.
10.2.2 Buyer shall deliver to Seller:
(a) A certificate executed by Buyer attesting to Buyer's
compliance with the matters set forth in Sections 9.3.1 and 9.3.2, together with
certified copies of (i) the Certificate of Incorporation of Buyer and (ii)
appropriate evidence of Buyer's authorization to enter into and consummate this
Agreement.
(b) The Purchase Price as adjusted in accordance with
Article III.
(c) Such assumption agreements and other instruments and
documents as are required to make, confirm, and evidence Buyer's assumption of
and obligation to pay, perform, or discharge Seller's obligations under the
Contracts to the extent the same are to be assumed by Buyer pursuant to the
terms of this Agreement.
(d) An opinion of Buyer's corporate Counsel, dated the
Closing Date, substantially in the form set forth in Exhibit B1, subject to
customary qualifications and addressed to Seller.
10.2.3 Other Documents and Acts. The parties will also
execute such other documents and perform such other acts, before and after the
Closing Date, as may be necessary for the complete implementation and
consummation of this Agreement.
ARTICLE XI.
POST-CLOSING OBLIGATIONS
The parties covenant and agree as follows with respect to the
period subsequent to the Closing Date:
11.1 Indemnification.
11.1.1 Buyer's Right to Indemnification. Seller
undertakes and agrees to jointly and severally indemnify, defend by counsel
reasonably acceptable to Buyer, and hold harmless Buyer, its parent,
subsidiaries, affiliates, successors and assigns and their respective directors,
officers, employees, shareholders, representatives and agents (hereinafter
referred to collectively as "Buyer Indemnitees") from and against and in respect
of any and all losses, costs, liabilities, claims, obligations, diminution in
value and expenses, including reasonable attorneys' fees, incurred or suffered
by a Buyer Indemnitee ("Losses") arising from (i) the claims of third parties
with respect to operation of the Station or ownership of the Assets prior to
Closing not expressly assumed by Buyer pursuant to this Agreement or otherwise
consented to by Buyer in writing; (ii) a breach, misrepresentation, or other
violation of any of Seller's covenants, warranties or representations contained
in this Agreement; (iii) all liabilities of Seller or the Station not expressly
assumed by
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Buyer pursuant to this Agreement or otherwise consented to by Buyer in writing;
(iv) all liens, charges, or encumbrances on any of the Assets which are not
expressly permitted by this Agreement or otherwise consented to by Buyer in
writing; (v) all Administrative Violations and alleged Administrative Violations
occurring prior to Closing; and (vi) any breach or default by Seller under any
Contract prior to Closing. The foregoing indemnity is intended by Seller to
cover all acts, suits, proceedings, claims, demands, assessments, adjustments,
diminution in value, costs, and expenses with respect to any and all of the
specific matters in this indemnity set forth.
11.1.2 Seller's Right to Indemnification. Buyer
undertakes and agrees to indemnify, defend by counsel reasonably acceptable to
Seller, and hold harmless Seller, its parent, subsidiaries, affiliates,
successors and assigns and their respective directors, officers, employees,
shareholders, representatives and agents (hereinafter referred to collectively
as "Seller Indemnitees") against any and all Losses incurred or suffered by a
Seller Indemnitee arising from (i) the claims of third parties with respect to
the operation of the Station or ownership of the Assets after Closing; (ii) a
breach, misrepresentation, or other violation of any of Buyer's covenants,
warranties or representations contained in this Agreement; (iii) all liabilities
under the Contracts to the extent specifically assumed by Buyer pursuant to this
Agreement; and (iv) any breach or default by Buyer under any Contract after
Closing. The foregoing indemnity is intended by Buyer to cover all acts, suits,
proceedings, claims, demands, assessments, adjustments, costs, and expenses with
respect to any and all of the specific matters in this indemnity set forth.
11.1.3 Conduct of Proceedings. If any claim or proceeding
covered by the foregoing agreements to indemnify and hold harmless shall arise,
the party who seeks indemnification (the "Indemnified Party") shall give written
notice thereof to the other party (the "Indemnitor") promptly after the
Indemnified Party learns of the existence of such claim or proceeding; provided,
however, that the Indemnified Party's failure to give the Indemnitor prompt
notice shall not bar the Indemnified Party's right to indemnification unless
such failure has materially prejudiced the Indemnitor's ability to defend the
claim or proceeding. The Indemnitor shall have the right to employ counsel
reasonably acceptable to the Indemnified Party to defend against any such claim
or proceeding, or to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor;
provided that the Indemnitor shall not have the right to control the defense of
any such claim or proceeding unless it has acknowledged in writing its
obligation to indemnify the Indemnified Party fully from all liabilities
incurred as a result of such claim or proceeding and then and periodically
thereafter provides the Indemnified Party with reasonably sufficient evidence of
the ability of the Indemnitor to satisfy any such liabilities. The parties will
fully cooperate in any such action, and shall make available to each other any
books or records useful for the defense of any such claim or proceeding. If the
Indemnitor fails to acknowledge in writing its obligation to defend against or
settle such claim or proceeding within twenty (20) days after receiving notice
thereof from the Indemnified Party (or such shorter time specified in the notice
as the circumstances of the matter may dictate), the Indemnified Party shall be
free to dispose of the matter, at the expense of the Indemnitor, in any way in
which the Indemnified Party deems to be in its best interest.
11.1.4 Indemnification Not Sole Remedy. The right to
indemnification hereunder shall not be the exclusive remedy of any party in
connection with any breach by another party of its representations, warranties,
or covenants, nor shall such indemnification be deemed to
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prejudice or operate as a waiver of any remedy to which any party may otherwise
be entitled as a result of any such breach.
11.1.5 Limits on and Conditions of Indemnification;
Threshold and Cap. Notwithstanding any other provision hereof, no Indemnified
Party shall be entitled to make a claim against an Indemnitor in respect of any
breach of this Agreement except to the extent that the aggregate amount of such
damages exceeds the amount of Twenty Five Thousand Dollars ($25,000); provided,
however, that once such aggregate has been exceeded, such Indemnitor shall be
liable for the full amount of such damages. Notwithstanding any other provision
of the Agreement, neither the indemnity obligation of Seller nor the indemnity
obligation of Buyer shall exceed Two Million Dollars ($2,000,000).
11.2 Post-Closing Access. Each party agrees that it will
cooperate with and make available to the other party, during normal business
hours and upon reasonable notice, all books and records which are necessary or
useful in connection with any tax inquiry, audit, investigation or dispute, any
litigation or investigation or any other matter requiring any such books and
records, information or employees for any reasonable business purpose. The party
requesting any such books and records, information or employees shall bear all
of the out-of-pocket costs and expenses reasonably incurred in connection with
providing such books and records, information or employees. All information
received pursuant to this Section 11.2 shall be kept confidential by the party
receiving it. If Buyer or Seller is required by legal process or operation of
law to disclose any confidential information, it shall provide the other party
with prompt written notice of such request so that such other party may seek an
appropriate protective order.
11.2.1 Contingent Payments. If, within twenty-four (24)
months after the Closing Date, (a) the Commission shall have granted the
Construction Permit, (b) such Commission consent shall have become a Final
Order, and (c) Seller shall have entered into or obtained, on terms reasonably
acceptable to Buyer, all leases, licenses, permits, zoning consents, permissions
and other authorizations necessary for Buyer to lawfully operate the Station
pursuant to the Construction Permit, then Buyer shall pay to Seller, within ten
(10) business days after the date on which all of the foregoing conditions have
been satisfied, one of the following amounts, as applicable, which results in
the greatest payment to Seller: (x) Five Hundred Thousand Dollars ($500,000) if
the Construction Permit granted by the Commission allows the Station to operate
with a power equal to or in excess of 10kw daytime and equal to or in excess of
10kw nighttime; (y) One Million Dollars ($1,000,000) if the Construction Permit
granted by the Commission allows the Station to operate with a power equal to or
in excess of 25kw daytime and equal to or in excess of 10kw nighttime; or (z)
Two Million Dollars ($2,000,000) if the Construction Permit granted by the
Commission allows the Station to operate with a power equal to or in excess of
50kw daytime and equal to or in excess of 10kw nighttime. After the Closing
Date, Buyer shall cooperate with Seller in the prosecution of the Construction
Permit application at the Commission.
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ARTICLE XII.
DEFAULT AND REMEDIES
12.1 Termination by Seller Upon Buyer's Default. This
Agreement may be terminated by Seller and the purchase and sale of the Station
abandoned, if Seller is not then in material default, upon written notice to
Buyer, upon the occurrence of any of the following:
(a) If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Seller set forth in
this Agreement have not been satisfied in all material respects or waived in
writing by Seller.
(b) If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree or order that would prevent
or make unlawful the Closing.
(c) If the Closing shall not have occurred by October 31,
2000.
(d) If there shall have been any material breach of any
representation, warranty, covenant or agreement made herein on the part of
Buyer.
12.2 Termination by Buyer Upon Seller's Default. This
Agreement may be terminated by Buyer and the purchase and sale of the Station
abandoned, if Buyer is not then in material default, upon written notice to
Seller, upon the occurrence of any of the following:
(a) If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Buyer set forth in
this Agreement have not been satisfied in all material respects or waived in
writing by Buyer.
(b) If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree or order that would prevent
or make unlawful the Closing.
(c) If the Closing shall not have occurred by October 31,
2000.
(d) If there shall have been any material breach of any
representation, warranty, covenant or agreement made herein on the part of
Seller.
12.3 Letter of Credit. Upon execution and delivery of this
Agreement, Buyer shall deliver an irrevocable letter of credit in the amount of
Three Hundred Thousand Dollars ($300,000) (the "Letter of Credit") to Allfirst
Bank (the "Escrow Agent") in accordance with an escrow agreement among Buyer,
Seller and the Escrow Agent (the "Escrow Agreement") attached hereto as Exhibit
C. The Letter of Credit shall be held and disbursed in accordance with the terms
of the Escrow Agreement and the following provisions:
(a) Upon Closing, Buyer and Seller shall jointly instruct
the Escrow Agent to return the Letter of Credit to Buyer.
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(b) If this Agreement is terminated pursuant to Section
8.5, 12.2 or Article XIII and Section 12.3(c) does not apply and Buyer is not in
material breach of this Agreement, Buyer and Seller shall jointly instruct the
Escrow Agent to return the Letter of Credit to Buyer.
(c) If this Agreement is terminated pursuant to Section
12.1 or otherwise on account of a breach by Buyer, and Seller is not in material
breach of this Agreement, then Buyer and Seller shall jointly instruct the
Escrow Agent to deliver the Letter of Credit to Seller.
12.4 Seller's Remedies. If this Agreement is terminated by
Seller and Section 12.3(c) applies, then the payment to Seller pursuant to
Section 12.3(c) shall be liquidated damages and shall constitute full payment
and the exclusive remedy for any damages suffered by Seller. Seller and Buyer
agree in advance that actual damages would be difficult to ascertain and that
the amount of the payment to be made to Seller pursuant to Section 12.3(c) is a
fair and equitable amount to reimburse Seller for damages sustained due to
Buyer's breach of this Agreement. Seller waives all claims to damages arising
from any termination of this Agreement except for liquidated damages under the
circumstances set forth in Section 12.3(c).
12.5 Buyer's Remedies. The parties recognize that if, prior to
Closing, Seller breaches this Agreement and refuses to perform under the
provisions of this Agreement, monetary damages alone would not be adequate to
compensate Buyer for its injury. Buyer shall therefore be entitled, in addition
to any other remedies that may be available (including but not limited to the
provisions of Section 11.1 (relating to Indemnification)), to obtain specific
performance of the terms of this Agreement prior to Closing. If any action is
brought by Buyer to enforce this Agreement prior to Closing, Seller shall waive
the defense that there is an adequate remedy at law. Following the Closing,
Buyer shall be entitled, in addition to any other remedies that may be
available, to seek specific performance of the terms of this Agreement if such
remedy is available at equity. In the event Buyer elects to terminate this
Agreement as a result of Seller's default instead of seeking specific
performance, Buyer shall be entitled to recover Buyer's damages.
ARTICLE XIII.
TERMINATION
13.1 Absence of Commission Consent. This Agreement may be
terminated at the option of either party upon notice to the other if the Closing
has not occurred by October 31, 2000; provided, however, that neither party may
terminate this Agreement if such party is in default hereunder. In the event of
termination pursuant to this Section, the parties shall be released and
discharged from any further obligation hereunder.
13.2 Designation for Hearing. Either party may terminate this
Agreement upon notice to the other, if, for any reason, the Assignment
Applications are designated for hearing by the Commission; provided, however,
that notice of termination must be given within twenty (20) days after release
of the hearing designation order and that the party giving such notice is not in
default and has otherwise complied with its obligations under this Agreement.
Upon termination
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pursuant to this Section 13.2, the parties shall be released and discharged from
any further obligation hereunder.
13.3 Damage.
13.3.1 Risk of Loss. The risk of loss or damage to the
Assets shall be upon Seller at all times prior to the Closing. In the event of
loss or damage, Seller shall promptly notify Buyer thereof and shall repair,
replace and restore the lost or damaged property to its former condition as soon
as possible. If such repair, replacement and restoration has not been completed
prior to the Closing Date, Buyer may, at its option:
(a) elect to terminate this Agreement, but only if the
failure to repair, replace and restore the lost or damaged property continues
for a period in excess of sixty (60) days from the date that would be the
Closing Date without consideration of this Section 14.3 and the loss or damage
materially impairs the ability of the Station to operate in the ordinary course
and consistent with past practice;
(b) elect to consummate the Transaction on the Closing
Date in which event Seller shall pay to Buyer the amount necessary to restore
the lost or damaged property to its former condition and against such obligation
shall assign to Buyer all of Seller's rights under any applicable insurance
policies; or
(c) elect to postpone the Closing Date, with prior
consent of the Commission if necessary, which consent both parties will use
their reasonable best efforts to obtain, until a date within fifteen (15)
business days after Seller gives written notice to Buyer of completion of the
repair, replacement and restoration of such lost or damaged property. If, after
the expiration of that extension period, the lost or damaged property has not
been adequately repaired, replaced or a restored, Buyer may terminate this
Agreement, and the parties shall be released and discharged from any further
obligation hereunder.
13.3.2 Failure of Broadcast Transmission. Seller shall give
prompt written notice to Buyer if either of the following (a "Specified Event")
shall occur: (i) the regular broadcast transmissions of the Station in the
normal and usual manner are interrupted or discontinued; or (ii) the Station
operated at less than ninety percent (90%) of its licensed power. If any
Specified Event persists for more than seventy-two (72) hours (or, in the event
of force majeure or utility failure affecting generally the markets served by
the Station, ninety-six (96) hours), whether or not consecutive, during any
period of thirty (30) consecutive days, then Buyer may, at its option: (i)
terminate this Agreement by written notice given to Seller not more than ten
(10) days after the expiration of such thirty (30) day period, or (ii) proceed
in the manner set forth in Section 13.3.1. In the event of termination of this
Agreement by Buyer pursuant to this Section, the parties shall be released and
discharged from any further obligation hereunder.
13.3.3 Resolution of Disagreements. If the parties are unable
to agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property, the adequacy of any repair, replacement,
or restoration of any lost or damaged property, or any other matter arising
under this Section 13.3, the disagreement shall be referred to a qualified
consulting
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communications engineer mutually acceptable to Seller and Buyer who is a member
of the Association of Federal Communications Consulting Engineers, whose
decision shall be final, binding upon and non-appealable by the parties, and
whose fees and expenses shall be paid one-half by Seller and one-half by Buyer.
13.4 Legal Actions. If, prior to the Closing Date, any action,
suit, or proceeding shall have been instituted by or before any court or other
governmental authority (other than the Commission) to enjoin, restrain, or
prohibit the consummation of the Transaction, the Closing may be adjourned at
the option of either party, with prior consent of the Commission if necessary,
which consent both parties will use their reasonable best efforts to obtain, for
a period of up to ninety (90) days, and if, at the end of such period, the
action, suit, or proceeding shall not have been favorably resolved, either party
may, by written notice to the other, terminate this Agreement; provided,
however, that if such action, suit, or proceeding shall have been solicited or
encouraged by, or instituted as a result of any act or omission of, Seller or
Buyer, then such party shall not have any right of adjournment or termination
pursuant to this Section. In the event of termination pursuant to this Section,
the parties shall be released and discharged from any further obligation
hereunder.
ARTICLE XIV.
POST-CLOSING OBLIGATIONS OF SELLER
Seller acknowledges that Buyer may use the financial
statements of Seller and other information regarding Seller in connection with
future financings by Buyer, including in an initial public offering prospectus
and a registration statement filed under the Securities Act of 1933, as amended
(the "Public Filings") to be issued or filed by Buyer. For a period of three (3)
years from the Closing Date, Seller shall cooperate in a commercially reasonable
manner with Buyer so that Buyer can obtain information sufficient for Buyer to
prepare an initial public offering prospectus and the Public Filings, in each
case at Buyer's sole expense. The foregoing cooperation of Seller shall include
(i) compiling the requisite financial information, including supplying financial
information for purposes of comfort letters to be issued in connection with
Public Filings, (ii) granting Buyer and its accountants full and complete access
to the books and records of Seller and to any personnel knowledgeable about such
books and records (including the Seller's accountants), in each case, to the
extent reasonably requested by Buyer and (iii) signing customary management
representation letters related to the financial statements and any comfort
letters.
ARTICLE XV.
GENERAL PROVISIONS
15.1 Brokerage. Each party represents and warrants to the
other that no agent, broker, investment banker, or other person or firm acting
on behalf of such party or any of its affiliates or under the authority of any
of them, other than ▇▇▇▇▇▇▇ & Co., is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with the
Transaction. Seller shall pay ________ Dollars ($_______) to ▇▇▇▇▇▇▇ & Co. and
an additional Twenty-Five Thousand Dollars ($25,000) to ▇▇▇▇▇▇▇ & Co. upon the
payment of a contingent payment by Buyer to Seller pursuant to Section 11.2.1,
representing all fees due and owing to ▇▇▇▇▇▇▇ & Co. Each party hereby agrees to
indemnify, save harmless and defend the other from and against all claims,
losses, liabilities and expenses, including reasonable attorney's fees, arising
out of any claim made by any broker, finder or other intermediary who claims to
have dealt
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with such party in connection with the transaction which is the subject of this
Agreement. The provisions of this Section 15.1 shall survive Closing hereunder.
15.2 Expenses. Except as otherwise provided herein, all
expenses involved in the preparation and consummation of this Agreement shall be
borne by the party incurring the same whether or not the Transaction is
consummated. All Commission filing fees for the Assignment Applications shall be
shared equally by Buyer and Seller. All recording costs for instruments of
transfer shall be paid by Buyer. All stamp, sales, use and transfer taxes shall
be paid by Seller.
15.3 Notices. All notices, requests, demands, and other
communications pertaining to this Agreement shall be in writing and shall be
deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized, reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such communication is intended, or three (3) business days after the
date mailed by certified or registered U.S. mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to Seller:
The ADD Radio Group, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Reddy, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(Counsel to Seller)
(b) If to Buyer:
▇▇▇▇▇▇▇ ▇▇ Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(Counsel to Buyer)
(c) If to Escrow Agent:
Allfirst Bank
Capital Markets
▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, D.C. 20005
Attn: ▇▇▇▇ ▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for notices by notice to the others given
pursuant to this Section.
15.4 Attorneys' Fees. If either party initiates any litigation
against the other party involving this Agreement, the prevailing party in such
action shall be entitled to receive reimbursement from the other party for all
reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
15.5 Survival of Representations, Warranties and
Indemnification Rights. The several representations and warranties of the
parties contained herein, and the parties respective indemnification rights
pursuant to Section 12.1, shall survive the Closing for a period of one (1)
year, at which time the same shall expire (except for claims asserted during
such eighteen (18) month period); provided, however, that representations and
warranties with respect to taxes, ERISA and environmental matters shall survive
for the period of the applicable statute of limitations plus ninety (90) days
and the representations and warranties with respect to title and authorization
shall survive in perpetuity.
15.6 Exclusive Dealings. For so long as this Agreement remains
in effect, neither Seller, its officers, directors, employees, nor any person
acting on Seller's behalf, shall, directly or indirectly, solicit or initiate
any offer from, or conduct any negotiations with, any person other than Buyer or
Buyer's assignee(s) concerning the acquisition of the Station.
15.7 Waiver. Unless otherwise specifically agreed in writing
to the contrary: (i) the failure of any party at any time to require performance
by any other of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (ii) no waiver by any party of any default
by any other shall be valid unless in writing and acknowledged by an
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authorized representative of the non-defaulting party, and no such waiver shall
be taken or held to be a waiver by such party of any other preceding or
subsequent default; and (iii) no extension of time granted by any party for the
performance of any obligation or act by any other party shall be deemed to be an
extension of time for the performance of any other obligation or act hereunder.
15.8 Assignment. No party may assign its rights or obligations
hereunder without the prior written consent of the other parties except: (i)
Buyer may assign all or a portion of its rights and obligations to a
corporation, partnership or other business entity that controls, is controlled
by, or is under common control with Buyer, including without limitation, the
assignment of the Station Licenses and Station Applications to an affiliate (a
"License Sub"), provided that any such assignment shall not release Buyer from
any of its obligations under this Agreement and (ii) Buyer may make a collateral
assignment of its rights under this Agreement to any lender that provides funds
to Buyer for the acquisition or operation of the Station. Seller agrees to
execute acknowledgments of any assignment(s) and collateral assignment(s)
pursuant to this Section 16.8 in such forms as Buyer or Buyer's lender(s) may
from time to time request. Subject to the foregoing, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the parties hereto
and their respective successors and assignees.
15.9 Entire Agreement. This Agreement and the Exhibits and
Schedules hereto (which are incorporated by reference herein) constitute the
entire agreement between the parties with respect to the subject matter hereof
and referenced herein, supersede and terminate any prior agreements between the
parties (written or oral). This Agreement may not be altered or amended except
by an instrument in writing signed by the party against whom enforcement of any
such change is sought.
15.10 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures on each such
counterpart were on the same instrument.
15.11 Construction. The Section headings of this Agreement are
for convenience only and in no way modify, interpret or construe the meaning of
specific provisions of the Agreement. As used herein, the neuter gender shall
also denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
15.12 Schedules and Exhibits. The Schedules and Exhibits to
this Agreement are a material part of this Agreement.
15.13 Severability. If any one or more of the provisions
contained in this Agreement should be found invalid, illegal or unenforceable in
any respect, the validity, legality, and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. Any illegal or unenforceable term shall be deemed to be void and of no
force and effect only to the minimum extent necessary to bring such term within
the provisions of applicable law and such term, as so modified, and the balance
of this Agreement shall then be fully enforceable.
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15.14 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without regard to the choice of law rules utilized in that jurisdiction.
15.15 Counsel. Each party has been represented by its own
counsel in connection with the negotiation and preparation of this Agreement
and, consequently, each party hereby waives the application of any rule of law
that would otherwise be applicable in connection with the interpretation of this
Agreement, including but not limited to any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the party
whose counsel drafted that provision.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by a respective duly authorized officer as of the date
first written above.
SELLER:
THE ADD RADIO GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
BUYER:
▇▇▇▇▇▇▇ ▇▇ ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Secretary