Exhibit 10.47
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ASSET PURCHASE AGREEMENT
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by and between
▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
for the sale and purchase of
Station WDYL-FM
Dated as of February 10, 1999
TABLE OF CONTENTS
Page
1.0 RULES OF CONSTRUCTION..................................... 1
1.1. Defined Terms..................................... 1
1.2. Other Definitions................................. 4
1.3. Number and Gender................................. 5
1.4. Headings and Cross-References..................... 5
1.5. Computation of Time............................... 5
2.0 ASSETS TO BE CONVEYED..................................... 5
2.1. Purchased Assets.................................... 5
(a) Licenses..................................... 5
(b) Equipment.................................... 5
(c) Contracts and Agreements..................... 5
(d) Programming Materials........................ 6
(e) Intellectual Property........................ 6
(f) Intangible Property.......................... 6
(g) Business Records............................. 7
(h) Station Records.............................. 7
2.2. Excluded Assets..................................... 7
(a) Receivables................................... 7
(b) Cash and Investments.......................... 7
(c) Insurance..................................... 7
(d) Employee Benefit Assets....................... 7
(e) Contracts..................................... 7
(f) Tax items..................................... 7
(g) Corporate Records............................. 8
(h) Real Property ................................ 8
(i) Book Store Assets............................. 8
3.0 INITIAL ESCROW DEPOSIT.................................... 8
4.0 PURCHASE PRICE AND METHOD OF PAYMENT..................... 8
4.1. Consideration..................................... 8
4.2. Payment at Closing................................ 8
4.3. Allocation........................................ 8
1
4.4. Seller's Liabilities.............................. 9
5.0 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇......................................... 9
6.0 SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS........ 9
6.1. Existence, Power and Identity...................... 9
6.2. Binding Effect..................................... 9
6.3. No Violation....................................... 10
6.4. Conveyance of Assets............................... 10
6.5. Governmental Authorizations........................ 10
6.6. Equipment.......................................... 11
6.7. Contracts.......................................... 11
6.8. Promotional Rights................................. 11
6.9. Insurance.......................................... 12
6.10. Financial Statements............................... 12
6.11. Employees.......................................... 13
6.12. Employee Benefit Plans............................. 13
6.13 Real Property...................................... 14
6.14. Environmental Protection........................... 14
6.15. Compliance with Law................................ 15
6.16. Litigation......................................... 16
6.17. Insolvency Proceedings............................. 16
6.18. Sales Agreements................................... 17
6.19. Liabilities........................................ 17
6.20. Sufficiency of Assets.............................. 17
6.21. Related Parties.................................... 18
6.22. Taxes.............................................. 18
6.23. No Misleading Statements........................... 18
7. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS......... 18
7.1. Existence and Power............................... 18
7.2. Binding Effect.................................... 19
7.3. No Violation...................................... 19
7.4. Litigation........................................ 19
7.5. Licensee Qualifications........................... 19
8. PRE-CLOSING OBLIGATIONS.................................... 19
8.1. Application for Commission Consent............ 19
8.2. Access........................................ 20
8.3. Operations Prior to Closing................... 20
8.4. Damage........................................ 21
2
(a) Risk of Loss.................................. 21
(b) Failure of Broadcast Transmissions............ 22
(c) Resolution of Disagreements................... 22
8.5. Administrative Violations..................... 23
8.6. Bulk Sales Act................................ 23
8.7. Control of Station............................ 23
8.8. Audit......................................... 23
8.9. Time Brokerage and Operating Agreement........ 23
8.10. Closing Obligations........................... 23
9. STATUS OF EMPLOYEES....................................... 23
9.1. Employment Relationship............................ 23
9.2. Buyer's Right to Employ............................ 24
10. CONDITIONS PRECEDENT..................................... 24
10.1. Mutual Conditions................................. 24
(a) Approval of Assignment Application.......... 24
(b) Absence of Litigation....................... 24
(c) Consulting Agreement........................ 24
(d) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇........................... 24
(e) Noncompetition Agreement.................... 24
10.2. Additional Conditions to Buyer's Obligation...... 24
(a) Representations and Warranties.............. 24
(b) Compliance with Conditions.................. 25
(c) Discharge of Liens.......................... 25
(d) Third-Party Consents........................ 25
(e) Estoppel Certificates....................... 25
(g) Opinion of Seller's Counsel................. 25
(h) Final Order................................. 27
(i) Closing Documents........................... 27
10.3. Additional Conditions to Seller's Obligation..... 27
(a) Representations and Warranties............. 27
(b) Compliance with Conditions................. 27
(c) Opinion of Buyer's Counsel................. 27
(d) Assumption of Liabilities.................. 28
(e) Payment.................................... 28
(f) Closing Documents.......................... 28
3
11. CLOSING................................................ 28
12. PRORATIONS............................................. 29
12.1. Apportionment of Expenses....................... 29
12.2. Determination and Payment....................... 29
13. POST-CLOSING OBLIGATIONS............................... 29
13.1. Collection of Accounts Receivable.............. 29
13.2. Indemnification................................ 30
(a) Buyer's Right to Indemnification............ 30
(b) Seller's Right to Indemnification........... 30
(c) Procedure for Indemnification............... 30
(d) Assignment of Claims........................ 31
(e) Indemnification Not Sole Remedy............. 31
(f) De minimis Amount........................... 32
13.3. Liabilities...................................... 32
14. DEFAULT AND REMEDIES.................................... 32
14.1. Opportunity to Cure............................ 32
14.2. Seller's Remedies.............................. 32
14.3. Buyer's Remedies.... .......................... 32
15. CANCELLATION OF AGREEMENT............................... 33
15.1. Failure to Close.................................. 33
15.2. Designation for Hearing........................... 33
16. GENERAL PROVISIONS....................................... 34
16.1. Brokerage......................................... 34
16.2. Fees.............................................. 34
16.3. Notices........................................... 34
16.4. Assignment........................................ 35
16.5. Exclusive Dealings................................ 35
16.6. Third Parties..................................... 35
16.7. Indulgences....................................... 35
16.8. Survival of Representations and Warranties..... 36
16.9. Prior Negotiations................................ 36
4
16.10. Exhibits and Appendices............................ 36
16.11. Entire Agreement; Amendment........................ 36
16.12. Counsel............................................ 36
16.13. Governing Law, Jurisdiction........................ 36
16.14. Severability....................................... 37
16.15. Counterparts....................................... 37
16.16. Further Assurances................................. 37
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TABLE OF EXHIBITS
EXHIBIT 1 -- Initial Escrow Agreement
EXHIBIT 2 -- Lease for Studio Site
EXHIBIT 3 -- Lease for Transmitter Site
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TABLE OF SCHEDULES
SCHEDULE 2.1(c)(1) Contracts
SCHEDULE 2.2 Excluded Assets
SCHEDULE 6.1 Seller's Places of Business
SCHEDULE 6.3 Litigation
SCHEDULE 6.4 Permitted Encumbrances
SCHEDULE 6.5 FCC Licenses
SCHEDULE 6.6 Equipment
SCHEDULE 6.8 Intellectual Property
SCHEDULE 6.9 Insurance
SCHEDULE 6.10 Financial Statements
SCHEDULE 6.11 Employees
SCHEDULE 6.12 Employment and Benefits Agreements
SCHEDULE 6.13 Real Property Leases
SCHEDULE 6.14 Environmental
SCHEDULE 6.21 Related Parties
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ASSET PURCHASE AGREEMENT
This Agreement, made and entered into as of this 10th day of February,
1999, by and between ▇▇▇▇▇▇▇ Communications, Inc., a Virginia corporation
("Seller"), and Radio One, Inc., a Delaware corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the licensee of Station WDYL-FM, 101.1 MHz, Chester,
Virginia (the "Station"); and
WHEREAS, the parties desire that Buyer purchase certain assets used or held
for use in the operation of the Station and acquire the authorizations issued by
the Federal Communications Commission (the "Commission") for the operation of
the Station; and
WHEREAS, the authorizations issued by the Commission may not be assigned to
Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1.0 RULES OF CONSTRUCTION.
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1.1. Defined Terms.
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As used in this Agreement, the following terms shall have the
following meanings:
"Accounts Receivable" means the cash accounts receivable of Seller arising
from Seller's operation of the Station prior to and immediately before the
Closing.
"Administrative Violation" means those violations described in Section 8.6
hereof.
"Assignment Application" means the application on FCC Form 314 that Seller
and Buyer shall join in and file with the Commission requesting its consent to
the assignment of the FCC Licenses (as hereinafter defined) from Seller to
Buyer.
"Business Records" means all business records of Seller (including logs,
public file materials and engineering records) relating to or used in the
operation of the Station and not relating solely to Seller's internal corporate
affairs.
"Buyer" means Radio One, Inc., a Delaware corporation.
"Buyer Documents" means those documents, agreements and instruments to be
executed and delivered by Buyer in connection with this Agreement as described
in Section 7.2.
"Closing" means the consummation of the Transaction (as hereinafter
defined).
"Closing Date" means the date on which the Closing takes place, as
determined by Section 11.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Collection Period" means the 90-day period following the Closing Date
during which Buyer shall collect the Accounts Receivable of Seller, subject to
the provisions of Section 13.1.
"Commission" means the Federal Communications Commission.
"Communications Act" shall mean the Communications Act of 1934, as amended.
"Contracts" means those contracts, leases and other agreements listed or
described in Schedule 2.1(c)(1) which are in effect on the date hereof and which
Buyer has agreed to assume, but not including Sales Agreements and Trade
Agreements (as hereinafter defined).
"Environmental Law" means any law, rule, order, decree or regulation of any
Governmental Authority relating to pollution or protection of human health and
the environment, including any law or regulation relating to emissions,
discharges, releases or threatened releases of Hazardous Substances (as
hereinafter defined) into ambient air, surface water, groundwater, land or other
environmental media, and including without limitation all laws, regulations,
orders and rules pertaining to occupational health and safety.
"Equipment" means all tangible personal property and fixtures used or
useful in the operation of the Station as described in Section 2.1(b).
"Excluded Assets" means those assets excluded from the Purchased Assets and
retained by the Seller, to the extent in existence on the Closing Date, as
specifically described in Section 2.2.
"FCC Licenses" means all licenses, pending applications, permits and other
authorizations issued by the Commission for the operation of the Station listed
on Schedule 6.5.
"Final Order" means any action that shall have been taken by the Commission
(including action duly taken by the Commission's staff, pursuant to delegated
authority) which shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended; with respect to which no timely request for stay,
petition for rehearing, appeal or certiorari or sua sponte action of the
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Commission with comparable effect shall be pending; and as to which the time for
filing any such request, petition, appeal, certiorari or for the taking of any
such sua sponte action by the Commission shall have expired or otherwise
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terminated.
"Financial Statements" means Seller's unaudited financial statements as
described in Section 6.10.
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"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any agency, court or other entity that
exercises executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Substances" means any hazardous, dangerous or toxic waste,
substance or material, as those or similar terms are defined in or for purposes
of any applicable federal, state or local Environmental Law, and including
without limitation any asbestos or asbestos-related products, oils, petroleum or
petroleum-derived compounds, CFCS, or PCBs.
"Initial Escrow Agent" means Media Venture Partners.
"Initial Escrow Agreement" means the escrow agreement described in Section
3, the form of which is attached as Exhibit 1.
"Initial Escrow Deposit" means the monies deposited with the Initial Escrow
Agent described in Section 3.
"Intangible Property" means all of Seller's right, title and interest in
and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station as described in Section 2.1(f).
"Intellectual Property" means all Seller's right, title and interest in and
to the trademarks, tradenames, service marks, patents, franchises, copyrights,
including registrations and applications for registration of any of them,
slogans, jingles, logos, computer programs and software, trade secrets and
similar materials and rights relating to the Station as listed on Schedule 6.8.
"Knowledge of Buyer" means the actual knowledge, after reasonable inquiry
of Buyer's senior management, and the books and records of Buyer.
"Knowledge of Seller" means the actual knowledge, after reasonable inquiry
of Seller's senior management, the books and records of the Station, and the
actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
"Material Contracts" means those leases, contracts and agreements
specifically designated in Schedule 2.1(c)(1) as being "Material Contracts."
"Permitted Encumbrances" means those permitted liens or encumbrances to the
Purchased Assets described in Section 6.4 and set forth on Schedule 6.4.
"Purchase Price" shall mean the total consideration for the Purchased
Assets as described in Section 4.1.
"Purchased Assets" means those assets which are the subject matter of this
Agreement that Seller shall sell, assign, transfer, convey and deliver to Buyer
at Closing as described in Section 2.1.
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"Sales Agreements" means agreements entered into by Seller for the sale of
time on the Station for cash, as described in Section 2.1(c)(2).
"Seller" means ▇▇▇▇▇▇▇ Communications, Inc., a Virginia corporation.
"Seller Documents" means those documents, agreements and instruments to be
executed and delivered by Seller in connection with this Agreement as described
in Section 6.1.
"Specified Event" means those broadcast transmission failures described in
Section 8.5(b).
"Station" means WDYL-FM, 101.1 MHz, Chester, Virginia, but shall not be
interpreted to mean WGGM-AM or WGCV-AM also owned or operated by Seller.
"Studio Site" means the 1,872 square feet of offices and broadcast
facilities located at Chester, Virginia as more particularly described in
Schedule 6.13.
"Trade Agreements" means agreements entered into by Seller for the sale of
time on the Station in exchange for merchandise or services, including those
listed on Schedule 2.1(c)(1).
"Trade Balance" means the difference between the aggregate value of time
owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, as computed in
accordance with the Station's customary bookkeeping practices. The Trade
Balance is "negative" if the value of time owed as of Closing exceeds the value
of goods and services to be received. The Trade Balance is "positive" if the
value of time owed as of Closing is less than the value of goods and services to
be received.
"Transaction" means the sale and purchase and assignments and assumptions
contemplated by this Agreement and the respective obligations of Seller and
Buyer set forth herein.
"Transmitter Site" means the real estate located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ that is
currently used as the Station's transmitter site.
1.2. Other Definitions. Other capitalized terms used in this Agreement
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shall have the meanings ascribed to them herein.
1.3. Number and Gender. Whenever the context so requires, words used in
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the singular shall be construed to mean or include the plural and vice versa,
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and pronouns of any gender shall be construed to mean or include any other
gender or genders.
1.4. Headings and Cross-References. The headings of the Sections and
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Paragraphs hereof, the Table of Contents, the Table of Exhibits, and the Table
of Schedules have been included for convenience of reference only, and shall in
no way limit or affect the meaning or interpretation of the specific provisions
of this Agreement. All cross-references to Sections or Paragraphs herein
4
shall mean the Sections or Paragraphs of this Agreement unless otherwise stated
or clearly required by the context. All references to Schedules herein shall
mean the Schedules to this Agreement. Words such as "herein" and "hereof" shall
be deemed to refer to this Agreement as a whole and not to any particular
provision of this Agreement unless otherwise stated or clearly required by the
context. The term "including" means "including without limitation."
1.5. Computation of Time. Whenever any time period provided for in this
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Agreement is measured in "business days" there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the Commission's offices are closed and are not reopened
prior to 5:30 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
2.0 ASSETS TO BE CONVEYED.
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2.1. Purchased Assets. On the Closing Date, Seller shall sell, assign,
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transfer, convey and deliver to Buyer free of all liens, encumbrances,
mortgages, security interests of any kind or type whatsoever, all of Seller's
assets used exclusively in the conduct of the business and operations of the
Station (collectively referred to as the "Purchased Assets"), including, but not
limited to, the following;
(a) Licenses. The FCC Licenses, and all other transferrable
licenses, permits and authorizations issued by any other Governmental Authority
that are used in or necessary for the lawful operation of the Station as
currently operated by Seller.
(b) Equipment. All tangible personal property and fixtures used or
held for the exclusive use in the operation of the Station, including the
property and assets listed or described in Schedule 6.6, together with supplies,
inventory, spare parts and replacements thereof and improvements and additions
thereto made between the date hereof and the Closing Date (the "Equipment").
(c) Contracts and Agreements. The Contracts, Sales Agreements and
Trade Agreements, subject to the following:
(1) Buyer shall be obligated to assume only those Contracts that
are listed in Schedule 2.1(c)(1) or that have been or will have been entered
into in the ordinary course of the Station's business and in accordance with the
terms of this Agreement, between the date hereof and the Closing Date, provided
that --------
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unless otherwise approved in writing by Buyer, the obligations of the Station or
Seller under such Contracts entered into in the ordinary course of business
after the date of this Agreement which do not exceed Five Thousand Dollars
($5,000) per annum per Contract or Twenty-five Thousand Dollars ($25,000) per
annum in the aggregate or are terminable by the Station or Seller on not more
than 30 days' notice.
(2) Buyer shall be obligated to assume only those Sales
Agreements that have been or will have been entered into in the ordinary course
of business and in accordance with the terms of this Agreement at commercially
reasonable rates and with terms of no longer than ten
5
(10) weeks, or if containing terms of longer than 10 weeks, are terminable by
the Station on not more than 15 days' notice.
(3) Buyer shall be obligated to assume only those Trade
Agreements that are listed in Schedule 2.1(c)(1) or that have been or will have
been entered into in the ordinary course of business and in accordance with the
terms of this Agreement, between the date hereof and the Closing Date, and are
(i) immediately preemptible for cash time sales trade; (ii) require the
provision of air time only on a "run of schedule" basis; and (iii) inure or will
inure to the benefit of the Station. Notwithstanding the foregoing, Buyer shall
not be obligated to assume Trade Agreements (including both those Trade
Agreements listed on Schedule 2.1(c)(1) and those entered into in the ordinary
course of business) that have an aggregate negative Trade Balance exceeding Five
Thousand Dollars ($5,000).
(4) Notwithstanding any provision of this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
Contract or other agreement, undertaking or obligation if (i) an attempted
assignment, without the consent required for such assignment, may constitute a
breach thereof or may in any way have a material adverse effect on Seller's
rights thereunder prior to Closing or Buyer's rights thereunder after Closing
and (ii) such consent is notunless otherwise approved in writing by Buyer, the
obligations of the obtained by Seller prior to Closing, provided, however, that
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Seller will use its best efforts at its own expense to obtain all such consents
prior to Closing.
(d) Programming Materials. All programs, programming material, and
music libraries in whatever form or nature owned by Seller and used or intended
for use in the operation of the Station.
(e) Intellectual Property. All Seller's right, title and interest
in and to the Intellectual Property used in the operation of the Station.
(f) Intangible Property. All of Seller's right, title and interest
in and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station, including all customer lists, and sales plans.
(g) Business Records. All business records of Seller (including
logs, public file materials and engineering records) relating to or used in the
operation of the Station and not relating solely to Seller's internal corporate
affairs.
(h) Station Records. All of the Station's proprietary information,
technical information and data, machinery and equipment warranties (to the
extent such warranties are assignable), maps, plans, diagrams, blueprints,
schematics, files, records, studies, data, lists, general accounting records,
books of account, in whatever form, used or held for use for the business or
operation of the Station, including filings with the FCC which relate to the
Station.
(i) Real Property Leases. Seller currently holds title to the Real
Property described in Schedule 6.13 which is used as the Station's Studio Site
and Transmitter Site. At Closing, Seller shall, at Buyer's option, lease the
Studio Site to Buyer under a short-term
6
arrangement and lease the Transmitter Site to Buyer under a long-term
arrangement, pursuant to the terms of the leases attached hereto as Exhibits 2
and 3.
2.2. Excluded Assets. There shall be excluded from the Purchased Assets
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and retained by the Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets"):
(a) Receivables. All Accounts Receivable, except to the extent
they are assigned on a limited basis pursuant to Section 13.
(b) Cash and Investments. All cash and cash equivalents on hand or
in bank accounts and other cash items and investment securities of Seller on the
Closing Date.
(c) Insurance. All contracts of insurance (including any cash
surrender value thereof) and all insurance proceeds of settlement and insurance
claims made by Seller on or before the Closing Date.
(d) Employee Benefit Assets. All pension, profit sharing and
savings plans and trusts, and any assets thereof, except that any employee
account balances under any plan qualified under Section 401(k) of the Code shall
be promptly transferred to a plan qualified under Section 401(k) and, at Buyer's
request, made available by or on behalf of Buyer if such employee is hired by
Buyer, to the extent allowed under each such plan and applicable law.
(e) Contracts. All contracts that will have terminated or expired
prior to Closing by their terms and all contracts, agreements, instruments,
undertakings and obligations not expressly assumed by Buyer hereunder.
(f) Tax items. All claims, rights and interest in and to any
refunds for federal, state or local taxes to which Seller is entitled for
periods prior to the Closing Date.
(g) Corporate Records. Seller's corporate minute books and other
books and records relating to internal corporate minutes.
(h) Real Property. Title to Seller's Real Property described in
Schedule 6.13 and Seller's other real property and leases.
(i) Book Store Assets. All of Seller's assets used in the conduct of
its business under the tradename of "New Life Christian Bookstore", accounts
receivable, business records, intangible property (including trademarks and
goodwill) and intellectual property.
3.0 INITIAL ESCROW DEPOSIT. Simultaneously with the execution and delivery
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of this Agreement by both parties, Buyer has deposited with Media Venture
Partners ("Initial Escrow Agent"), a cash deposit of Two Hundred Thousand
Dollars ($200,000) (the "Initial Escrow Deposit"). The Initial Escrow Deposit
shall be held in an interest-bearing account and disbursed by Initial Escrow
Agent pursuant to the terms of an escrow agreement in the form attached hereto
as
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Exhibit 1 (the "Initial Escrow Agreement"), which Initial Escrow Agreement has
been entered into by Seller, Buyer and Initial Escrow Agent simultaneously
herewith.
4.0 PURCHASE PRICE AND METHOD OF PAYMENT.
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4.1. Consideration. The total consideration for the Purchased Assets
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(the "Purchase Price") shall be Four Million Six Hundred Thousand Dollars
($4,600,000), payable as set forth in this Section 4.
4.2. Payment at Closing. At Closing, Buyer shall pay:
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(a) Four Million Four Hundred Thousand Dollars ($4,400,000) (as
adjusted pursuant to Sections 8.5 and 12.1) to Seller by wire transfer of same
day funds pursuant to wire transfer instructions which shall be delivered by
Seller to Buyer at least five business days prior to Closing.
(b) Two Hundred Thousand Dollars ($200,000) to Seller by causing the
Initial Escrow Agent to release the Initial Escrow Deposit to Seller by wire
transfer of same day funds, with all interest earned on the Initial Escrow
Deposit remitted to Buyer.
4.3. Allocation. The Purchase Price shall be allocated to the Purchased
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Assets in accordance with an allocation schedule prepared by Buyer pursuant to
Section 1060 of the Code and mutually agreed upon by Seller and Buyer. Seller
and Buyer shall use such allocation for tax accounting (including preparation of
IRS Form 8594), and all other purposes. If Seller and Buyer have not agreed
upon the allocation prior to the Closing Date, Closing shall take place as
scheduled and any dispute shall be resolved by a qualified media appraiser
mutually acceptable to Seller and Buyer, whose decision shall be final and whose
fees and expenses shall be paid one-half by Seller and one-half by Buyer. If
the allocation must be determined by a media appraiser, Seller and Buyer agree
to cooperate in good faith so that such appraisal may be completed
expeditiously.
4.4. Seller's Liabilities. Buyer does not and shall not assume or be
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deemed to assume, pursuant to this Agreement or otherwise, any agreements,
liabilities, undertakings, obligations or commitments of Seller or the Station
of any nature whatsoever except: (i) liabilities accruing after Closing under
the Contracts, Sales Agreements and Trade Agreements listed in Schedule
2.1(c)(1) or otherwise expressly assumed by Buyer pursuant to, and subject to,
Section 2.1(c), provided, that, Buyer shall not assume liability for any
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breaches, violations or defaults under the Contracts, Sales Agreements and Trade
Agreements that occurred prior to Closing; and (ii) prorated items that are to
be paid by Buyer after Closing pursuant to Section 12.1.
5.0 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. As promptly as practicable and no later than ten (10)
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days following the execution of this Agreement, Seller and Buyer shall complete
any filing that may be required pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, or shall mutually agree that no such
filing is required. Seller and Buyer shall diligently take all necessary and
proper steps and provide any additional information reasonably requested in
order to comply with the requirements of such Act.
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6.0 SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller hereby makes
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to and for the benefit of Buyer, the following representations, warranties and
covenants:
6.1. Existence, Power and Identity. Seller is a corporation duly
-----------------------------
organized and validly existing under the laws of the State of Virginia with full
corporate power and authority (a) to own, lease and use the Purchased Assets as
currently owned, leased and used, (b) to conduct the business and operation of
the Station as currently conducted and (c) to execute and deliver this Agreement
and each other document, agreement and instrument to be executed and delivered
by Seller in connection with this Agreement (collectively, the "Seller
Documents"), and to perform and comply with all of the terms, obligations and
covenants to be performed and complied with by Seller hereunder and thereunder.
The addresses of Seller's chief executive office and all of Seller's additional
places of business, and all places where any of the tangible personal property
included in the Purchased Assets is now located, or has been located during the
past 180 days, are correctly listed in Schedule 6.1. Except as set forth in
Schedule 6.1, during the past five years, Seller has not been known by or used,
nor, to the best of Seller's knowledge, has any prior owner 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 ownership, use or
operation of the Purchased Assets.
6.2. Binding Effect. The execution, delivery and performance by Seller
--------------
of this Agreement has been and the Seller Documents will be duly authorized by
all necessary corporate action, and copies of those authorizing resolutions,
certified by Seller's Secretary shall be delivered to Buyer at Closing. No
other corporate action by Seller is required for Seller's execution, delivery
and performance of this Agreement. This Agreement has been duly and validly
executed and delivered by Seller to Buyer and constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject to bankruptcy, reorganization, fraudulent conveyance, insolvency,
moratorium and similar laws relating to or affecting creditors, and other
obligees' rights generally and the exercise of judicial discretion in accordance
with general equitable principles.
6.3. No Violation. Except as set forth on Schedule 6.3, none of (i) the
------------
execution, delivery and performance by Seller of this Agreement or any of the
Seller Documents, (ii) the consummation of the Transaction, or (iii) Seller's
compliance with the terms or conditions hereof will, with or without the giving
of notice or the lapse of time or both, conflict with, breach the terms or
conditions of, constitute a default under, or violate (x) Seller's articles of
incorporation or bylaws, (y) any judgment, decree, order, consent, agreement,
lease or other instrument (including any Contract, Sales Agreement or Trade
Agreement) to which Seller is a party or by which Seller or any of its assets
(including the Purchased Assets) or the Station is or may be legally bound or
affected, or (z) any law, rule, regulation or ordinance of any Governmental
Authority applicable to Seller or any of its assets (including the Purchased
Assets) or the operation of the Station.
6.4. Conveyance of Assets. At Closing, Seller shall convey to Buyer
--------------------
good and marketable title to all the Purchased Assets, free and clear of all
liens, pledges, collateral assignments, security interests, capital or financing
leases, covenants, restrictions and encumbrances or other defects of title
except: (i) the inchoate lien for current taxes or other governmental charges
9
not yet due and payable and that will be prorated between Seller and Buyer
pursuant to Section 12.1; and (ii) the Permitted Encumbrances.
6.5. Governmental Authorizations. Except for the FCC Licenses, no
---------------------------
licenses, permits, or authorizations from any Governmental Authority are
required to own, use or operate the Purchased Assets, to operate the Station or
to conduct Seller's business as currently operated and conducted by Seller. The
FCC Licenses are all the Commission authorizations held by Seller with respect
to the Station, and are all the Commission authorizations used in or necessary
for the lawful operation of the Station as currently operated by Seller. The
FCC Licenses are in full force and effect, are subject to no conditions or
restrictions other than those which appear on their face and are unimpaired by
any acts or omissions of Seller, Seller's officers, employees or agents. Seller
has delivered true and complete copies of all FCC Licenses to Buyer. There is
not pending or, to the Knowledge of Seller, threatened, any action by or before
the Commission or any other Governmental Authority to revoke, cancel, rescind or
modify any of the FCC Licenses (other than proceedings to amend Commission rules
of general applicability or otherwise affecting the broadcast industry
generally), and there is not now issued, outstanding or pending or, to the
Knowledge of Seller, threatened, by or before the Commission or any other
Governmental Authority, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against Seller or
otherwise with respect to the Station. The Station is operating in compliance
with all FCC Licenses, the Communications Act of 1934, as amended (the
"Communications Act"), and the current rules, regulations, policies and
practices of the Commission. The Commission's most recent renewals of the FCC
Licenses were not challenged by any petition to deny or any competing
application. Seller has no knowledge of any facts relating to it that, under
the Communications Act or the current rules, regulations, policies and practices
of the Commission may cause the Commission to deny Commission renewal of the FCC
Licenses or deny Commission consent to the Transaction.
6.6. Equipment. Seller has good and marketable title, both legal and
---------
equitable, to the Equipment. The Equipment, together with any improvements and
additions thereto and replacements thereof less any retirements or other
dispositions as permitted by this Agreement between the date hereof and the
Closing Date, will, at Closing, be all the tangible personal property delivered
at Closing by Seller. Except as specifically indicated to the contrary in
Schedule 6.6, all Equipment is serviceable, in good operating condition
(reasonable wear and tear excepted), and is not in imminent need of repair or
replacement. All items of transmitting and studio equipment included in the
Equipment (i) have been maintained in a manner consistent with generally
accepted standards of good engineering practice and (ii) will permit the Station
to operate in accordance with the terms of the FCC Licenses.
6.7. Contracts. Seller has made available to Buyer or its
---------
representatives complete and correct copies of all Contracts and Trade
Agreements listed on Schedule 2.1(c)(1) hereto. The list of Trade Agreements on
Schedule 2.1(c)(1) is accurate and complete. Except for Sales Agreements and
Trade Agreements that comply with the terms of this Agreement, Schedule
2.1(c)(1) includes all the contracts, leases, and agreements to which Seller is
a party and which Buyer has agreed to assume, other than those contracts that
will be performed in full prior to the Closing. To the Knowledge of Seller,
each Contract is in full force and effect and is unimpaired by any acts or
10
omissions of Seller, Seller's employees or agents, or Seller's officers. Except
as set forth on Schedule 2.1(c)(1), there has not occurred as to any Contract
any event of default by Seller or any event that, with notice, the lapse of time
or otherwise, could become an event of default by Seller. There has not
occurred as to any Contract any default by any other party thereto or any event
that, with notice, the lapse of time or otherwise, or at the election of any
person other than Seller, could become an event of default by such party. Those
Contracts whose stated duration extends beyond the Closing Date will, at
Closing, be in full force and effect, unimpaired by any acts or omissions of
Seller, Seller's employees or agents, or Seller's officers. If any Contract
requires the consent of any third party in order for Seller to assign that
Contract to Buyer, Seller shall use its best efforts to obtain at its own
expense such consent prior to Closing.
6.8. Promotional Rights. The Intellectual Property set forth on Schedule
------------------
6.8 includes all call signs and trademarks that Seller is transferring to Buyer,
used to promote or identify the Station. Except as set forth on Schedule 6.8,
the Intellectual Property is in good standing and uncontested by any third
party. Except as set forth on Schedule 6.8, Seller has no Knowledge of any
infringement or unlawful or unauthorized use of those promotional rights,
including the use of any call sign, slogan or logo by any broadcast or cable
station in the Richmond metropolitan area that may be confusingly similar to
those currently used by the Station. Except as set forth on Schedule 6.8, to
the Knowledge of Seller, the operations of the Station do not infringe, and no
one has asserted to Seller that such operations infringe, any copyright,
trademark, tradename, service ▇▇▇▇ or other similar right of any other party.
6.9. Insurance. Schedule 6.9 lists all insurance policies held by
---------
Seller with respect to the Purchased Assets and the business and operation of
the Station. Such insurance policies are in full force and effect, all premiums
with respect thereto are currently paid and Seller is in compliance with the
terms thereof. Seller has not received any notice from any issuer of any such
policies of its intention to cancel, terminate, or refuse to renew any policy
issued by it. Seller will maintain the insurance policies listed on Schedule
6.9 in full force and effect through the Closing Date.
6.10. Financial Statements.
--------------------
(a) Seller has furnished Buyer with unaudited financial statements
used by Seller in the preparation of its Federal tax returns and copies of its
filed Federal tax returns ("Financial Statements") for fiscal years 1995, 1996,
and 1997 as well as unaudited Financial Statements for September 30, 1998 and
most recently available. The Financial Statements : (i) have been prepared on
a consistent basis throughout the periods involved and as compared with prior
periods; and (ii) fairly present Seller's financial position, income, expenses,
assets, liabilities, and the results of operations of the Station as of the
dates and for the periods indicated. Since December 31, 1997, there has been no
material adverse change in the business, assets, properties or condition
(financial or otherwise) of the business since the preparation of the most
recent annual Financial Statement. No event has occurred and, Seller has no
knowledge that prior to Closing, any event will have occurred that would make
such Financial Statements misleading in any respect.
(b) Except as reflected in the most recently available balance sheets,
including the notes thereto or otherwise disclosed in this Agreement or the
Schedules hereto, and except for the current
11
liabilities and obligations incurred in the ordinary course of business of the
Station (not including for this purpose any tort-like liabilities or breach of
contract) since the date of the most recently available balance sheets, there
exist no liabilities or obligations of Seller, contingent or absolute, matured
or unmatured, known or unknown. Except as set forth on Schedule 6.10(b) since
the date of the most recently available balance sheets, (i) Seller has not made
any contract, agreement or commitment or incurred any obligation or liability
(contingent or otherwise), except in the ordinary course of business and
consistent with past business practices, (ii) there has not been any discharge
or satisfaction of any obligation or liability owed by Seller, which is not in
the ordinary course of business or which is inconsistent with past business
practices, (iii) there has not occurred any sale of or loss or material injury
to the business, or any material adverse change in the business or in the
condition (financial or otherwise) of the Station, (iv) Seller has operated the
business in the ordinary course and (v) Seller has not increased the salaries or
any other compensation of any of its employees or agreed to the payment of any
bonuses. The monthly balance sheets (i) have been prepared on a consistent basis
throughout the periods involved and as compared with prior periods; and (ii)
fairly present Company's financial position, income, expenses, assets,
liabilities, and the results of operations of the Station as of the dates and
for the periods indicated, subject to year end adjustments which do not
materially affect the operations of Seller.
6.11. Employees. Except as otherwise listed on Schedule 6.11, (i) no
---------
employee of the Station is represented by a union or other collective bargaining
unit, no application for recognition as a collective bargaining unit has been
filed with the National Labor Relations Board, and, to the Knowledge of Seller,
there has been no concerted effort to unionize any of the Station's employees
and (ii) Seller has no other written or oral employment agreement or arrangement
with any Station employee, and no written or oral agreement concerning bonus,
termination, hospitalization or vacation. Seller has delivered to Buyer a list
of all persons currently employed at the Station together with an accurate
description of the terms and conditions of their respective employment as of the
date of this Agreement. Seller will promptly advise Buyer of any changes that
occur prior to Closing with respect to such information.
6.12. Employee Benefit Plans.
----------------------
(1) Except as described in Schedule 6.12, neither Seller nor any
Affiliates (as defined below) have at any time established, sponsored,
maintained, or made any contributions to, or been parties to any contract or
other arrangement or been subject to any statute or rule requiring them to
establish, maintain, sponsor, or make any contribution to, (i) any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, and regulations thereunder ("ERISA"))
("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) ("Welfare Plan"); or (iii) any deferred compensation,
bonus, stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement ("Other Plan"). Seller and the Affiliates have no
obligations or liabilities (whether accrued, absolute, contingent, or
unliquidated, whether or not known, and whether due or to become due) with
respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA), or
Other Plan that is not listed in Schedule 6.12. For purposes of this Section
6.12, the term "Affiliate" shall include all persons under common control with
Seller within the meaning
12
of Sections 4001(a)(14) or (b)(1) of ERISA or any regulations promulgated
thereunder, or Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code").
(2) Each plan or arrangement listed in Schedule 6.12 (and any related
trust or insurance contract pursuant to which benefits under such plans or
arrangements are funded or paid) has been administered in all material respects
in compliance with its terms and in both form and operation is in compliance
with applicable provisions of ERISA, the Code, the Consolidated Omnibus Budget
Reconciliation Act of 1986 and regulations thereunder, and other applicable law.
Each Pension Plan listed in Schedule 6.12 has been determined by the Internal
Revenue Service to be qualified under Section 401(a) and, if applicable, Section
401(k) of the Code, and nothing has occurred or been omitted since the date of
the last such determination that resulted or could result in the revocation of
such determination. Seller and the Affiliates have made all required
contributions or payments to or under each plan or arrangement listed in
Schedule 6.12 on a timely basis and have made adequate provision for reserves to
meet contributions and payments under such plans or arrangements that have not
been made because they are not yet due.
(3) The consummation of this Agreement (and the employment by Buyer of
former employees of Seller or any employees of an Affiliate) will not result in
any carryover liability to Buyer for taxes, penalties, interest or any other
claims resulting from any employee benefit plan (as defined in Section 3(3) of
ERISA) or Other Plan. In addition, Seller and each Affiliate make the following
representations (i) as to all of their Pension Plans: (A) neither Seller nor
any Affiliate has become liable to the PBGC under ERISA under which a lien could
attach to the assets of Seller or an Affiliate; (B) Seller and each Affiliate
has not ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA; and (C) Seller and each Affiliate has
not made a complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as defined in
Section 4201 of ERISA, and (ii) all group health plans maintained by the Seller
and each Affiliate have been operated in material compliance with Section
4980B(f) of the Code.
(4) The parties agree that Buyer does not and will not assume the
sponsorship of, or the responsibility for contributions to, or any liability in
connection with, any Pension Plan, any Welfare Plan, or Other Plan maintained by
Seller or an Affiliate for its employees, former employees, retirees, their
beneficiaries or any other person. In addition and not as a limitation of the
foregoing, the parties agree that Seller and such Affiliate shall be liable for
any continuation coverage (including any penalties, excise taxes or interest
resulting from the failure to provide continuation coverage) required by Section
4980B of the Code due to qualifying events that occur after the Closing Date
resulting from the transaction contemplated by this Agreement.
6.13. Real Property. Seller holds title to the real property described in
-------------
Schedule 6.13 (hereinafter "Real Property") which is used as the Station's
Studio Site and Transmitter Site. Except as listed on Schedule 6.13, all of the
improvements, and all heating and air conditioning equipment, plumbing,
electrical and other mechanical facilities, and the roof, walls and other
structural components which are part of, or located in, such improvements, are
in good operating condition and repair, comply in all material respects with
applicable zoning laws and the building, health, fire and environmental
protection codes of all applicable governmental jurisdictions, and do not
require any
13
repairs other than normal routing maintenance to maintain them in good condition
and repair. None of the improvements have any structural defects. No portion of
the Real Property described in Schedule 6.13 is the subject of any condemnation
or eminent domain proceedings currently instituted or pending, and to the
Knowledge of Seller, no such proceedings are threatened. There are no
condemnation, zoning or other land use regulations proceedings instituted or, to
the Knowledge of Seller, planned to be instituted, which would materially affect
the use and operations of the Real Property for any lawful purpose, and Seller
has not received notice of any special assessment proceedings materially
affecting the Real Property. The Real Property has direct and unobstructed
access to all public utilities necessary for the uses to which the Real Property
is currently devoted by Seller in the operation of the Station.
6.14. Environmental Protection. Except as set forth on Schedule 6.14,
------------------------
(i) no Hazardous Substances have been treated, stored, used, released or
disposed of on the Studio Site or Transmitter Site in any manner that would
cause Buyer to incur material liability under any Environmental Laws; (ii)
Seller is not liable for cleanup or response costs with respect to any present
or past emission, discharge, or release of any Hazardous Substances; (iii) no
"underground storage tank" (as that term is defined in regulations promulgated
by the federal Environmental Protection Agency) is used in the operation of the
Station or is located on the Studio Site or the Transmitter Site; (iv) there are
no pending actions, suits, claims, legal proceedings or any other proceedings
based on environmental conditions or noncompliance at the Studio Site or
Transmitter Site, or any part thereof, or otherwise arising from Seller's
activities involving Hazardous Substances; (v) there are no conditions,
facilities, procedures or any other facts or circumstances at the Studio Site or
Transmitter Site which constitute noncompliance with environmental laws or
regulations; and (vi) there are no structures, improvements, equipment,
activities, fixtures or facilities at the Studio Site or Transmitter Site which
are constructed with, use or otherwise contain Hazardous Substances, including,
but without limitation, asbestos or polychlorinated biphenyls.
6.15. Compliance with Law. There is no outstanding complaint, citation,
-------------------
or notice issued by any Governmental Authority asserting that Seller is in
violation of any law, regulation, rule, ordinance, order, decree or other
material requirement of any Governmental Authority (including any applicable
statutes, ordinances or codes relating to zoning and land use, health and
sanitation, environmental protection, occupational safety and the use of
electric power) affecting the Purchased Assets or the business or operations of
the Station, and Seller is in material compliance with all such laws,
regulations, rules, ordinances, decrees, orders and requirements. Without
limiting the foregoing:
(a) The Station's transmitting and studio equipment is in material
respects operating in accordance with the terms and conditions of the FCC
Licenses, all underlying construction permits, and the rules, regulations,
practices and policies of the Commission, including all requirements concerning
equipment authorization and human exposure to radio frequency radiation.
(b) Seller has, in the conduct of the Station's business, materially
complied 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
14
benefit plans, and the payment of Social Security and similar taxes, and Seller
is not liable for any arrears of wages or any tax penalties due to any failure
to comply with any of the foregoing.
(c) All ownership reports, employment reports, tax returns and other
material documents required to be filed by Seller with the Commission or other
Governmental Authority have been filed; such reports and filings are accurate
and complete in all material respects; such items as are required to be placed
in the Station's local public records file have been placed in such file; all
proofs of performance and measurements that are required to be made by Seller
with respect to the Station's transmission facilities have been completed and
filed at the Station; and all information contained in the foregoing documents
is true, complete and accurate.
(d) The location of the Station's main studio complies with the FCC's
rules.
(e) Seller has paid to the Commission the regulatory fees due for the
Station for the years 1994-98.
6.16. Litigation. Except for proceedings affecting radio broadcasters
----------
generally and except as set forth on Schedule 6.3, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Seller, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the business or operations of the Station or to the Purchased Assets. Except as
set forth on Schedule 6.3, there is no other litigation, action, suit,
complaint, claim, investigation or proceeding pending, or to the Knowledge of
Seller, threatened that may give rise to any claim against any of the Purchased
Assets or adversely affect Seller's ability to consummate the Transaction as
provided herein. Seller is not aware of any facts that could reasonably result
in any such proceedings.
6.17. Insolvency Proceedings. No insolvency proceedings of any
----------------------
character, including bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Station Assets or the Purchased Assets are pending or, to the Knowledge of
Seller, threatened. Seller has not made an assignment for the benefit of
creditors.
6.18. Sales Agreements. The Sales Agreements in existence on the date
----------------
hereof have been entered into in the ordinary course of the Station's business,
at rates consistent with Seller's usual past practices and each Sales Agreement
is for a term no longer than 10 weeks or, if longer, is terminable by the
Station upon not more than 15 days notice.
6.19. Liabilities. There are no known liabilities or obligations of
-----------
Seller relating to the Station, whether related to tax or non-tax matters, due
or not yet due, except as and to the extent set forth on the most recent
Financial Statements described in Section 6.10.
6.20. Sufficiency of Assets. The Purchased Assets in conjunction with
---------------------
the leases referred to in Section 2.1(i) are and, on the Closing Date will be,
sufficient to conduct the operation and business of the Station in the manner in
which it is currently being conducted.
15
6.21. Related Parties. Except as disclosed in Schedule 6.21 neither
---------------
Seller nor any shareholder, officer or director of Seller has any interest
whatsoever in any corporation, firm, partnership or other business enterprise
which has had any business transactions with Seller relating to the Purchased
Assets or the Station, and no shareholder, officer or director of Seller has
entered into any transactions with Seller relating to the Purchased Assets or
the Station.
6.22. Taxes. The Seller has timely filed with all appropriate
-----
Governmental Authority all federal, state, commonwealth, local, and other tax or
information returns and tax reports (including, but not limited to, all income
tax, unemployment compensation, social security, payroll, sales and use, profit,
excise, privilege, occupation, property, ad valorem, franchise, license, school
and any other tax under the laws of the United States or of any state or any
commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof.
Seller has paid in full all federal, state, commonwealth, foreign, local and
other governmental taxes, estimated taxes, interest, penalties, assessments and
deficiencies (collectively, "Taxes") which have become due pursuant to such
returns or without returns or pursuant to any assessments received by Seller.
Such returns and forms are true, correct and complete in all material respects,
and Seller has no liability for any Taxes in excess of the Taxes shown on such
returns. Seller is not a party to any pending action or proceeding and, to the
Knowledge of Seller, there is no action or proceeding threatened by any
Governmental Authority against Seller for assessment or collection of any Taxes,
and no unresolved claim for assessment or collection of any Taxes has been
asserted against Seller.
6.23. No Misleading Statements. No provision of this Agreement relating
------------------------
to Seller, the Station or the Purchased Assets or any other document, Schedule,
Exhibit or other information furnished by Seller to Buyer in connection with the
execution, delivery and performance of this Agreement, or the consummation of
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated in order to make the statement, in light of the
circumstances in which it is made, not misleading. In connection with the
preparation of this Agreement and the documents, descriptions, opinions,
certificates, Exhibits, Schedules or written material prepared by Seller and
appended hereto or delivered or to be delivered hereunder, Seller represents and
warrants that it has disclosed, and agrees it will continue to disclose to
Buyer, any fact that Seller is obligated to disclose to assure the continuing
accuracy of the representations and warranties contained in this Section 6. All
Exhibits and Schedules attached hereto are materially accurate and complete as
of the date hereof.
7.0 BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby makes to
-------------------------------------------------
and for the benefit of Seller, the following representations, warranties and
covenants:
7.1. Existence and Power. Buyer is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to assume and perform this Agreement,
and as of the Closing Date will be authorized to do business in the State of
Virginia.
7.2. Binding Effect. The execution, delivery and performance by Buyer
--------------
of this Agreement, and each other document, agreement and instrument to be
executed and delivered by
16
Buyer in connection with this Agreement (collectively, the "Buyer Documents")
has been or will be duly authorized by all necessary corporate action, and
copies of those authorizing resolutions, certified by Buyer's Secretary shall be
delivered to Seller at Closing. This Agreement has been, and each of the Buyer
Documents will be, duly and validly executed and delivered by Buyer to Seller
and constitutes a legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, subject to bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium and similar laws relating to or affecting
creditors' and other obligees' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
7.3. No Violation. None of (i) the execution, delivery and performance
------------
by Buyer of this Agreement or any of the Buyer Documents, (ii) the consummation
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 or conditions of, constitute a default under, or
violate (x) Buyer's articles of incorporation or by-laws or (y) any judgment,
decree, order, consent agreement, lease or other instrument to which Buyer is a
party or by which Buyer is legally bound.
7.4. Litigation. There is no litigation, action, suit, complaint,
----------
proceeding or investigation, pending or, to the Knowledge of Buyer, threatened
that may adversely affect Buyer's ability to consummate the Transaction as
provided herein.
7.5. Licensee Qualifications. To the Knowledge of Buyer there is no
-----------------------
fact that would, under the rules and regulations of the Commission, disqualify
Buyer from being the assignee of the FCC Licenses or the owner and operator of
the Station. Should Buyer become aware of any such fact, it will so inform
Seller, and Buyer will use commercially reasonable efforts to remove any such
disqualification.
8.0 PRE-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
-----------------------
respect to the period prior to Closing:
8.1. Application for Commission Consent. Within five (5) business days
----------------------------------
from the date of this Agreement, Seller and Buyer shall join in and file the
Assignment Application, and they shall diligently take all steps necessary or
desirable and proper expeditiously to prosecute the Assignment Application and
to obtain the Commission's determination that grant of the Assignment
Application will serve the public interest, convenience and necessity. The
failure by either party to timely file or diligently prosecute its portion of
the Assignment Application shall be deemed a material breach of this Agreement.
Each party shall promptly provide the other with a copy of any pleading, order
or other document served on the other relating to the Assignment Application.
In the event that Closing occurs prior to a Final Order, then each party's
obligations hereunder shall survive the Closing.
8.2. Access. Between the date hereof and the Closing Date, Seller shall
------
give Buyer and representatives of Buyer reasonable access to the Purchased
Assets, the Station, the employees of Seller and the Station and the books and
records of Seller relating to the business and operations of the Station. It is
expressly understood that, pursuant to this Section, Buyer, at its expense,
shall be entitled to conduct such engineering inspections of the Station, such
environmental assessments and
17
surveys of the Studio Site and the Transmitter Site, and such reviews 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. No inspection or
investigation made by or on behalf of Buyer, or Buyer's failure to make any
inspection or investigation, shall affect Seller's representations, warranties
and covenants hereunder or be deemed to constitute a waiver of any of those
representations, warranties and covenants.
8.3. Material Adverse Changes; Financial Statements. Through the Closing
-----------------------------------------------
Date:
(a) Seller shall promptly notify Buyer of any event of which Seller
obtains knowledge which has caused or is likely to cause a material adverse
change to the financial condition or operation of the Station.
(b) Seller shall furnish to Buyer (i) monthly Financial Statements for
Seller and (ii) such other reports as Buyer may reasonably request relating to
Seller. Each of the Financial Statements delivered pursuant to this Section
8.3(b) has been prepared consistently during the periods covered (except as
disclosed therein).
8.4. Operations Prior to Closing. Between the date of this Agreement
---------------------------
and the Closing Date:
(a) Seller shall operate the Station in a manner consistent with
Seller's and the Station's past practice and in compliance with all applicable
laws, regulations, rules, decrees, ordinances, orders and requirements of the
Commission and all other Governmental Authority. Seller shall promptly notify
Buyer of any actions or proceedings that from the date hereof are commenced
against Seller or the Station or, to the Knowledge of Seller, against any
officer, director, employee, consultant, agent or other representative of Seller
with respect to the business of the Station or the Purchased Assets.
(b) Seller shall: (i) use the Purchased Assets only for the operation
of the Station; (ii) maintain the Purchased Assets in substantially their
present condition (reasonable wear and tear in normal use and damage due to
unavoidable casualty excepted); (iii) replace and/or repair the Purchased Assets
as necessary in the ordinary course of business; (iv) maintain all inventories
of supplies, tubes and spare parts at levels at least equivalent to those
existing on the date of this Agreement; and (v) promptly give Buyer written
notice of any unusual or materially adverse developments with respect to the
Purchased Assets or the business or operations of the Station.
(c) Seller shall maintain the Station's Business Records in the usual,
regular and ordinary manner, on a basis consistent with prior periods.
(d) Seller shall not: (i) sell, lease, encumber or otherwise dispose
of any Purchased Assets or any interest therein except in the ordinary course of
business and only if any property disposed of is replaced by property of like or
better value, quality and utility prior to Closing; (ii) cancel, terminate,
modify, amend or renew any of the Contracts without Buyer's express prior
written consent; (iii) increase the compensation payable or to become payable to
any employee
18
of the Station; or (iv) except to the extent expressly permitted in Section
2.1(c), enter into any Contract or other agreement, undertaking or obligation or
assume any liability that may impose any obligation on Buyer after Closing,
whether Seller is acting within or outside of the ordinary course of the
Station's business, without Buyer's prior written consent.
(e) Seller and the Station will enter into Sales Agreements only in
the ordinary course of the Station's business at commercially reasonable rates
and each such Sales Agreement shall have a term not longer than 10 weeks or, if
longer, shall be terminable by the Station upon not more than 15 days notice.
(f) Seller and the Station will enter into Trade Agreements only in
the ordinary course of the Station's business and only if such Trade Agreements
are (i) immediately preemptible for cash time sales trade; (ii) require the
provision of air time only on a "run of schedule", basis; and (iii) inure or
will inure to the benefit of the Station.
(g) Seller shall use its best efforts to preserve the operations,
organization and reputation of the Station intact, by continuing to make
expenditures and engage in activities designed to promote the Station and
encourage the purchase of advertising time on the Station in a manner consistent
with Seller's past practices. Seller shall use its best efforts to preserve the
goodwill and business of the Station's advertisers, suppliers and others having
business relations with the Station, and to continue to conduct financial
operations of the Station, including credit and collection policies, with no
less effort, as in the prior conduct of the business of the Station.
(h) Seller shall not issue, sell or deliver any shares of stock of
Seller or grant any options, warrants or other rights to acquire the stock of
Seller.
(i) Seller shall not make or agree to any material amendment to any
FCC License relating to the Station.
(j) except as required by law, adopt any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, severance or other
employee benefit plan, payment or arrangement or enter into any employment,
consulting or management contract.
(k) merge or consolidate with any other corporation, acquire control
of any other corporation or business entity, or take any steps incident to, or
in furtherance of, any of such actions, whether by entering into an agreement
providing therefore or otherwise.
(l) solicit, either directly or indirectly, initiate, encourage or
accept any offer for the purchase or acquisition of the Purchased Assets by any
party other than Buyer.
(m) terminate without comparable replacement or fail to renew any
insurance coverage applicable to the assets or properties of Seller.
(n) take any action or fail to take any action that would cause the
Seller to breach the representations, warranties and covenants contained in this
Agreement.
19
8.5. Damage.
------
(a) Risk of Loss. The risk of loss or damage, confiscation or
condemnation of the Purchased Assets shall be borne by Seller at all times prior
to Closing. In the event of material loss or damage, Seller shall promptly
notify Buyer thereof and use its best efforts to repair, replace or restore the
lost or damaged property to its former condition as soon as possible. If the
cost of repairing, replacing or restoring any lost or damaged property is Twenty
Thousand Dollars ($20,000) or less, and Seller has not repaired, replaced or
restored such property prior to the Closing Date, Closing shall occur as
scheduled and Buyer may deduct from the Purchase Price paid at Closing the
amount necessary to restore the lost or damaged property to its former
condition. If the cost to repair, replace, or restore the lost or damaged
property exceeds Twenty Thousands Dollars ($20,000), and Seller has not
repaired, replaced or restored such property prior to the Closing Date to the
satisfaction of Buyer, Buyer may, at its option:
(1) elect to consummate the Closing in which event Buyer may deduct
from the Purchase Price paid at Closing the amount necessary to restore the lost
or damaged property to its former condition in which event Seller shall be
entitled to all proceeds under any applicable insurance policies with respect to
such claim; or
(2) elect to postpone the Closing, with prior consent of the
Commission if necessary, for such reasonable period of time (not to exceed
ninety (90) days) as is necessary for Seller to repair, replace or restore the
lost or damaged property to its former condition.
If, after the expiration of such extension period the lost or damaged
property has not been fully repaired, replaced or restored to Buyer's
satisfaction, Buyer may terminate this Agreement, in which event the Initial
Escrow Deposit and all interest earned thereon shall be returned to Buyer and
the parties shall be released and discharged from any further obligation
hereunder.
(b) Failure of Broadcast Transmissions . Seller shall give prompt
written notice to Buyer if any of the following (a "Specified Event") shall
occur and continue for a period of more than four (4) consecutive hours: (i) the
transmission of the regular broadcast programming of the Station in the normal
and usual manner is interrupted or discontinued; or (ii) the Station is operated
at less than its licensed antenna height above average terrain or at less than
eighty percent (80%) of its licensed effective radiated power. If, prior to
Closing, the Station is not operated at its licensed operating parameters for
more than thirty-six (36) hours (or, in the event of force majeure or utility
----- -------
failure affecting generally the market served by the Station, ninety-six (96)
hours), whether or not consecutive, during any period of thirty (30) consecutive
days, or if there are three (3) or more Specified Events each lasting more than
four (4) consecutive hours, then Buyer may, at its option: (i) terminate this
Agreement, or (ii) proceed in the manner set forth in Paragraph 8.5(a)(1) or
8.5(a)(2). In the event of termination of this Agreement by Buyer pursuant to
this Section, the Initial
20
Escrow Deposit together with all interest accrued thereon shall be returned to
Buyer and the parties shall be released and discharged from any further
obligation hereunder.
(c) 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, the disagreement shall be referred promptly to a qualified
consulting 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, and whose fees and expenses shall be paid one-
half each by Seller and Buyer.
8.6. Administrative Violations. If Seller receives any finding, order,
-------------------------
complaint, citation or notice prior to Closing which states that any aspect of
the Station's operation violates or may violate any rule, regulation or order of
the Commission or of any other Governmental Authority (an "Administrative
Violation"), including, any rule, regulation or order concerning environmental
protection, the employment of labor or equal employment opportunity, Seller
shall promptly notify Buyer of the Administrative Violation, use its best
efforts to remove or correct the Administrative Violation, and be responsible
prior to Closing for the payment of all costs associated therewith, including
any fines or back pay that may be assessed.
8.7. Bulk Sales Act. Seller shall be responsible for compliance with
--------------
the provisions of any bulk sales statute applicable to the Transaction, and
shall indemnify and hold Buyer harmless from and against any claims, actions,
liabilities and all costs and expenses, including reasonable legal fees,
incurred or suffered by Buyer as a result of the failure to comply with any such
statute.
8.8. Control of Station. The Transaction shall not be consummated until
------------------
after the Commission has given its written consent thereto and between the date
of this Agreement and the Closing Date, Seller shall control, supervise and
direct the operation of the Station.
8.9. Cooperation with Respect to Financial and Tax Matters. Between the
-----------------------------------------------------
date hereof and the Closing Date, Seller, its shareholders, officers, directors
and employees shall cooperate and Seller shall cause its accountant to cooperate
with Buyer for the purpose of preparing Financial Statements reviewed by Buyer's
independent accountants for purposes of including such statements in any reports
filed by Buyer with any Governmental Authority. Buyer shall be permitted to
disclose the unaudited Financial Statements for 1995, 1996, 1997 and 1998 as
well as unaudited Financial Statements for any period subsequent to 1998
available prior to Closing in any reports filed by the Buyer with any
Governmental Authority.
8.10. Closing Obligations. Seller and Buyer shall make commercially
-------------------
reasonable efforts to satisfy the conditions precedent to Closing.
9.0 STATUS OF EMPLOYEES. All Station employees shall be and remain
-------------------
Seller's employees, with Seller having full authority and control over their
actions, and Buyer shall not assume the status of an employer or a joint
employer of, or incur or be subject to any liability or obligation of an
employer with respect to, any such employees unless and until actually hired by
21
Buyer. Seller shall be solely responsible for any and all liabilities and
obligations Seller may have to its employees, including, compensation, severance
pay and accrued vacation time and sick leave. Seller shall be solely responsible
for any and all liabilities, penalties, fines or other sanctions that may be
assessed or otherwise due under such laws on account of the Transaction and the
dismissal or termination of any of Seller's employees.
10.0 CONDITIONS PRECEDENT.
--------------------
10.1. Mutual Conditions. The respective obligations of both Buyer and
-----------------
Seller to consummate the Transaction are subject to the satisfaction of each of
the following conditions:
(a) Approval of Assignment Application. The Commission shall have
granted the Assignment Application, and such grant shall be in full force and
effect on the Closing Date.
(b) Absence of Litigation. As of the Closing Date, no litigation,
action, suit or proceeding enjoining, restraining or prohibiting the
consummation of the Transaction shall be pending before any court, the
Commission or any other Governmental Authority or arbitrator; provided, however,
-------- -------
that this Section may not be invoked by a party if any such litigation, action,
suit or proceeding was solicited or encouraged by, or instituted as a result of
any act or omission of, such party.
(c) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All applicable waiting periods under the
-----------------
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, shall have
expired.
10.2. Additional Conditions to Buyer's Obligation. In addition to the
-------------------------------------------
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Buyer to consummate the Transaction is subject, at Buyer's option, to the
satisfaction or waiver by Buyer of each of the following conditions:
(a) 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.
(b) Compliance with Conditions. All of the terms, conditions and
covenants to be complied with or performed by Seller on or before the Closing
Date under this Agreement and the Seller Documents shall have been duly complied
with and performed in all material respects.
(c) Discharge of Liens. Buyer shall have obtained, at Buyer's
expense, at least 10 days prior to Closing, a report prepared by C.T.
Corporation System (or similar firm reasonably acceptable to Buyer) showing the
results of searches of lien, tax, judgment and litigation records, demonstrating
that the Purchased Assets are being conveyed to Buyer free and clear of all
liens, security interests and encumbrances except for Permitted Encumbrances or
otherwise consented to by Buyer in writing. The record searches described in
the report shall have taken place no more than 15 days prior to the Closing
Date.
22
(d) Third-Party Consents. - Seller shall have obtained (i) all
required third-party consents to Buyer's assumption of the Material Contracts,
such that Buyer will, after Closing, enjoy all the rights and privileges of
Seller under the Material Contracts subject only to the same obligations as are
binding on Seller pursuant to the Material Contracts' current terms; and (ii)
all other requisite third-party consents and approvals which may be necessary to
consummate the Transaction.
(e) Estoppel Certificates. At Closing, Seller shall deliver to
Buyer a certificate executed by the other party to each Material Contract, dated
no more than 15 days prior to the Closing Date, stating (i) that such Contract
is in full force and effect and has not been amended or modified; and (ii) that
Seller is not in breach or default under such Material Contract, and that no
event has occurred that, with notice or the passage of time or both, would
constitute a breach or default thereunder by Seller.
(f) No Material Adverse Change. Neither the Station nor the Purchased
Assets shall have suffered a material adverse change since the date of this
Agreement, and there shall have been no changes since the date of this Agreement
in the business, operations, condition (financial or otherwise), properties,
assets or liabilities of Seller, of the Station or of the Purchased Assets,
except changes contemplated by this Agreement and changes which are not (either
individually or in the aggregate) materially adverse to the Station.
(g) Opinion of Seller's Counsel. At Closing, Seller shall deliver
to Buyer the written opinion or opinions of Seller's counsel, dated the Closing
Date, in scope and form satisfactory to Buyer, to the following effect:
(1) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Virginia, with all requisite
corporate power and authority to enter into and perform this Agreement.
(2) This Agreement has been duly executed and delivered by Seller and
such action has been duly authorized by all necessary corporate action. This
Agreement constitutes the legal, valid, and binding obligation of Seller,
enforceable against Seller in accordance with its terms subject to bankruptcy,
reorganization, fraudulent conveyance, insolvency, moratorium and similar laws
relating to or affecting creditors' and other obligees' rights generally and the
exercise of judicial discretion in accordance with general equitable principles.
(3) None of (i) the execution and delivery of this Agreement, (ii) the
consummation of the Transaction, or (iii) compliance with the terms and
conditions of this Agreement will, with or without the giving of notice or lapse
of time or both, conflict with, breach the terms and conditions of, constitute a
default under, or violate Seller's articles of incorporation or bylaws, any law,
rule, regulation or other requirement of any Governmental Authority, or any
judgment, decree, order, agreement, lease or other instrument to which Seller is
a party or by which Seller, the Station or any of the Seller's assets, including
the Purchased Assets, may be bound or affected.
23
(4) To such counsel's knowledge, based on a search of court dockets as
shall be reasonably satisfactory to Buyer's counsel, no suit, action, claim or
proceeding is pending or threatened that questions or may affect the validity of
any action to be taken by Seller pursuant to this Agreement or that seeks to
enjoin, restrain or prohibit Seller from carrying out the Transaction.
(5) To such counsel's knowledge, based on a search of court dockets as
shall be reasonably satisfactory to Buyer's counsel, there is no outstanding
judgment, or any suit, action, claim or proceeding pending, threatened or deemed
by Seller's counsel to be probable of assertion, or any governmental proceeding
or investigation in progress (other than proceedings affecting radio
broadcasters generally) that could reasonably be expected to have an adverse
effect upon the Purchased Assets or upon the business or operations of the
Station after Closing.
(6) Seller is the authorized legal holder of the FCC Licenses, the FCC
Licenses are in full force and effect, and the FCC Licenses are not the subject
of any pending license renewal application. To counsel's knowledge, there are
no applications pending before the Commission with respect to the Station.
(7) The Commission has consented to the assignment of the FCC Licenses
to Buyer and that consent has become a Final Order, unless the requirement for a
Final Order is waived by Buyer.
(8) To counsel's knowledge, there is no Commission investigation,
notice of apparent liability or order of forfeiture, pending or outstanding
against the Station, or any complaint, petition to deny or proceeding against or
involving the Station pending before the Commission, except for rule making
proceedings of general applicability to the broadcast industry.
The foregoing opinions shall be for the benefit of and may be relied on by
Buyer and Buyer's lenders. In rendering such opinions, Seller's counsel may
rely upon such corporate records of Seller and such certificates of public
officials and officers of Seller.
(h) Final Order . The Commission's action granting the Assignment
Application shall have become a Final Order.
(i) Financial Statements. The financial information set forth in the
Station's Financial Statements for the year ending December 31, 1998, and for
the period ending thirty (30) days prior to the Closing Date fairly and
accurately reflect the financial performance and results of operation of the
Station for those periods.
24
(j) Trade Balance. The Trade Balance, if negative, will not exceed
Five Thousand Dollars ($5,000).
(k) Compensation. Seller shall have satisfied all amounts due
employees for compensation, whether pursuant to the terms of a written agreement
or otherwise, including bonuses, vacation and sick pay and reimbursement of
expenses, that have accrued as of the Closing.
(l) Studio Site Lease. At Buyer's sole option, Seller, the owner of
the Studio Site, shall have entered into a written lease substantially in the
form of Exhibit 2 attached hereto for the real property described in Section
6.13 for a minimum six-month period.
(m) Transmitter Site Lease. Seller, the owner of the Transmitter
Site, shall have entered into a written lease substantially in the form of
Exhibit 3 attached hereto for the real property described in Section 6.13 and
any equipment associated with the operation of the Station at that site for a
minimum of fifteen (15) years, with options to renew.
(n) License Application. The pending license application (File No.
▇▇▇▇-▇▇▇▇▇▇▇▇) shall have been granted.
(o) Closing Documents. At the Closing Seller shall deliver to
Buyer (i) such assignments, bills of sale and other instruments of conveyance as
are necessary to vest in Buyer title to the Purchased Assets, all of which
documents shall be dated as of the Closing Date, duly executed by Seller and in
form reasonably acceptable to Buyer; (ii) a certificate, dated the Closing Date,
executed by Seller's President certifying as to those matters set forth in
Section 10.2(a) and (b); and (iii) copies of Seller's corporate resolutions
authorizing the Transaction, each certified as to accuracy and completeness by
Seller's Secretary.
10.3. Additional Conditions to Seller's Obligation. In addition to
--------------------------------------------
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Seller to consummate the Transaction is subject, at Seller's option, to the
satisfaction or waiver by Seller of each of the following conditions:
(a) 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.
(b) Compliance with Conditions. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the Closing
Date under this Agreement shall have been duly complied with and performed in
all material respects.
(c) Assumption of Liabilities. Buyer shall assume and agree to
pay, perform and discharge Seller's obligations under the Contracts, Sales
Agreements and Trade Agreements to the extent Buyer has expressly agreed to
assume such obligations pursuant to Section 4.4.
25
(d) Payment. Buyer shall pay Seller the Purchase Price due at
Closing, as provided in Section 4.2.
(e) Closing Documents. Buyer shall deliver to Seller at the
Closing (i) copies of Buyer's corporate resolutions authorizing the Transaction
certified as to accuracy and completeness by Buyer's Secretary; and (ii) a
certificate, dated the Closing Date, executed by Buyer's President certifying as
to those matters set forth in Section 10.3(a) and (b).
11.0. CLOSING. The Closing Date shall be on or before the tenth day after the
-------
date on which the Commission grant of the Assignment Application becomes a Final
Order, or, at Buyer's option, if finality is waived, within fifteen (15) days
after grant of the Assignment Application or such other time as Seller and Buyer
shall mutually agree. Closing shall take place at 10:00 a.m. on the Closing
Date at the offices of Buyer's counsel, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
12.0. PRORATIONS.
----------
12.1. Apportionment of Expenses. Seller shall be responsible for all
-------------------------
expenses arising out of the business of the Station until 11:59 p.m. on the
Closing Date, and Buyer shall be responsible for all expenses arising out of the
business of the Station after 11:59 p.m. on the Closing Date to the extent such
expenses relate to liabilities assumed by Buyer pursuant to Section 4.4. All
overlapping expenses shall be prorated or reimbursed, as the case may be, as of
11:59 p.m. on the Closing Date.
12.2. Determination and Payment. Prorations shall be made, insofar as
-------------------------
feasible, at Closing and shall be paid by way of adjustment to the Purchase
Price. As to the prorations that cannot be made at Closing, the parties shall,
within ninety (90) days after the Closing Date, make and pay all such
prorations. If the parties are unable to agree upon all such prorations within
that 90-day period, then any disputed items shall be referred to a firm of
independent certified public accountants, mutually acceptable to Seller and
Buyer, whose decision shall be final, and whose fees and expenses shall be
allocated between and paid by Seller and Buyer, respectively, to the extent that
such party does not prevail on the disputed matters decided by the accountants.
13.0. POST-CLOSING OBLIGATIONS. - The parties covenant and agree as follows
------------------------ -
with respect to the period subsequent to Closing:
13.1. Collection of Accounts Receivable. At Closing, Seller shall assign
---------------------------------
to Buyer, for purposes of collection only, all of the Accounts Receivable that
are outstanding and unpaid on the Closing Date, except for those Accounts
Receivable which Seller has instituted litigation to collect as of the date of
this Agreement and which are identified on Schedule 6.3. Buyer shall use such
efforts as are reasonable and in the ordinary course of business to collect
those Accounts Receivable for a period of ninety (90) days following the Closing
Date (the "Collection Period"). This obligation, however, shall not extend to
the institution of litigation, employment of counsel or any other extraordinary
means of collection. So long as those Accounts Receivable are in Buyer's
possession, neither Seller nor its agents shall make any solicitation of them
for collection purposes or institute litigation for the collection of any
amounts due thereunder. All payments received by
26
Buyer during the Collection Period from any person obligated with respect to
any Accounts Receivable shall be applied first to Seller's account, and only
after full satisfaction thereof, to Buyer's account; provided, however, that if
-------- -------
that if that customer instructs Buyer to apply such payment to amounts owed by
such customer to Buyer or the amount paid correlates to the amount of Buyer's
invoice to such customer, Buyer may apply such payments to its own invoices
without first applying any of such amount to Seller's account; and provided
--------
further that if, during the Collection Period, and provide any account debtor
--------
contests the validity of its obligation with respect to any Account Receivable,
then Buyer shall return that Account Receivable to Seller after which Seller
shall be solely responsible for the collection thereof. Buyer shall not have the
right to compromise, settle, or adjust the amounts of any of the Accounts
Receivable without Seller's prior written consent. One hundred (100) days after
the Closing Date, Buyer shall furnish Seller with a list of Accounts Receivable
collected during the applicable period accompanied by a payment equal to the
amount of such collections, less any salesperson's, agency, and representative
commissions applicable thereto that are deducted and paid by Buyer from the
proceeds of such collections. Any Accounts Receivable that are not collected
during the Collection Period shall be reassigned to Seller after which Buyer
shall have no further obligation to Seller with respect to the Accounts
provided, however, that all funds subsequently received by Buyer (without time
-------- -------
limitation) that can be specifically identified, whether by accompanying invoice
or otherwise, as a payment on the Accounts Receivable shall be paid over or
forwarded to Seller.
13.2. Indemnification.
---------------
(a) Buyer's Right to Indemnification. Seller hereby indemnifies
and holds Buyer, its officers, directors, shareholders and assigns harmless from
and against (i) any breach, misrepresentation, or violation of any of Seller's
representations, warranties, covenants, or other obligations contained in this
Agreement or in any Seller Document; (ii) all obligations and liabilities of
Seller and/or the Station not expressly assumed by Buyer pursuant to Section
4.4; and (iii) all claims by third parties (including employees) against Buyer
attributable to the operation of the Station and/or the use or ownership of the
Purchased Assets prior to Closing. This indemnity is intended by Seller to
cover all actions, suits, proceedings, claims, demands, assessments,
adjustments, interest, penalties, costs and expenses (including, reasonable fees
and expenses of counsel), whether suit is instituted or not and, if instituted,
whether at the trial or appellate level, with respect to any and all of the
specific matters set forth in this indemnity.
(b) Seller's Right to Indemnification. Buyer hereby indemnifies
and holds Seller, its officers, directors, shareholders and assigns harmless
from and against (i) any breach, misrepresentation or violation of any of
Buyer's representations, warranties, covenants or obligations contained in this
Agreement; (ii) all obligations and liabilities expressly assumed by Buyer
hereunder pursuant to Section 4.4; and (iii) all claims by third parties against
Seller attributable to Buyer's operation of the Station after Closing. This
indemnity is intended by Buyer to cover all actions, suits, proceedings, claims,
demands, assessments, adjustments, interest, penalties, costs and expenses
(including reasonable fees and expenses of counsel), whether suit is instituted
or not and, if instituted, whether at the trial or appellate level, with respect
to any and all of the specific matters set forth in this indemnity.
27
(c) Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(1) The party claiming indemnification (the "Claimant") shall give
written notice to the party from which indemnification is sought (the
"Indemnitor") promptly after the Claimant learns of any claim or proceeding
covered by the foregoing agreements to indemnify and hold harmless and failure
to provide prompt notice shall not be deemed to jeopardize Claimant's right to
demand indemnification, provided, that, Indemnitor is not prejudiced by the
-------- ----
delay in receiving notice.
(2) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have 15 days to make
any investigation of the claim that the Indemnitor deems necessary or desirable,
or such lesser time if a 15-day period would jeopardize any rights of Claimant
to oppose or protest the claim. For the purpose of this investigation, the
Claimant agrees to make available to the Indemnitor and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within the 15-day period, or lesser period if required by
this section (or any mutually agreed upon extension hereof) the Claimant may
seek appropriate legal remedies.
(3) The Indemnitor shall have the right to undertake, by counsel or
other representatives of its own choosing, the defense of such claim, provided,
--------
that, Indemnitor acknowledges in writing to Claimant that Indemnitor would
----
assume responsibility for and demonstrates its financial ability to satisfy the
claim should the party asserting the claim prevail. In the event that the
Indemnitor shall not satisfy the requirements of the preceding sentence or shall
elect not to undertake such defense, or within 15 days after notice of any such
claim from the Claimant shall fail to defend, the Claimant shall have the right
to undertake the defense, compromise or settlement of such claim, by counsel or
other representatives of its own choosing, on behalf of and for the account and
risk of the Indemnitor. Anything in this Section 13.2(c)(3) to the contrary
notwithstanding, (i) if there is a reasonable probability that a claim may
materially and adversely affect the Claimant other than as a result of money
damages or other money payments, the Claimant shall have the right, at its own
cost and expense, to participate in the defense, compromise or settlement of the
claim, (ii) the Indemnitor shall not, without the Claimant's written consent,
settle or compromise any claim or consent to entry of any judgment which does
not include as an unconditional term thereof the giving by the plaintiff to the
Claimant of a release from all liability in respect of such claim, and (iii) in
the event that the Indemnitor undertakes defense of any claim consistent with
this Section, the Claimant, by counsel or other representative of its own
choosing and at its sole cost and expense, shall have the right to consult with
the Indemnitor and its counsel or other representatives concerning such claim
and the Indemnitor and the Claimant and their respective counsel or other
representatives shall cooperate with respect to such claim.
(d) Assignment of Claims. If any payment is made pursuant to this
Section 13.2, the Indemnitor shall be subrogated to the extent of such payment
to all of the rights of recovery of Claimant, and Claimant shall assign to
Indemnitor, for its use and benefit, any and all claims, causes of actions, and
demands of whatever kind and nature that Claimant may have against
28
the person, firm, corporation or entity giving rise to the loss for which
payment was made. Claimant agrees to reasonably cooperate in any efforts by
Indemnitor to recover such loss from any person, firm, corporation or entity.
(e) Indemnification Not Sole Remedy. The right to indemnification
provided for in this Section shall not be the exclusive remedy of either party
in connection with any breach by the other party of its representations,
warranties, covenants or other obligations hereunder, nor shall such
indemnification be deemed to prejudice or operate as a waiver of any right or
remedy to which either party may otherwise be entitled as a result of any such
breach by the other party.
(f) Threshold Concerning Sections 13.2(a) and (b). Notwithstanding
anything to the contrary in Sections 13.2(a) and (b), the parties shall not be
entitled to indemnity under Sections 13.2(a) and (b) unless the aggregate loss
indemnified against thereunder exceeds $25,000 (in which case, the Claimant
shall be entitled to recovery from the Indemnitor of the full amount of the
loss).
13.3 Cooperation with Respect to Financial and Tax Matters. From the date
------------------------------------------------------
of Closing and for a period of three (3) years thereafter, Seller shall provide
Buyer with such cooperation and information as Buyer shall reasonably request in
Buyer's: (i) analysis and review of the Financial Statements or (ii) preparation
of documentation to fulfill any reporting requirements of Buyer including
reports that may be filed with the Securities and Exchange Commission. Seller
shall make its accountant available, including its opinions and Financial
Statements for the Seller, to provide explanations of any documents or
information provided hereunder and to permit disclosure by Buyer, including
disclosure to any Governmental Authority.
13.4. Liabilities. Following the Closing Date, Seller shall pay
-----------
promptly when due all of the debts and liabilities of Seller relating to the
Station, other than liabilities specifically assumed by Buyer hereunder.
14. DEFAULT AND REMEDIES.
--------------------
14.1. Opportunity to Cure. If either party believes the other to be in
-------------------
breach or in default hereunder, the former party shall provide the other with
written notice specifying in reasonable detail the nature of such default. If
the default has not been cured by the earlier of: (i) the Closing Date, or (ii)
within 10 days after delivery of that notice (or such additional reasonable time
as the circumstances may warrant provided the party in default undertakes
diligent, good faith efforts to cure the default within such 10-day period and
continues such efforts thereafter), then the party giving such notice may
exercise the remedies available to such party pursuant to this Section, subject
to the right of the other party to contest the alleged default through
appropriate proceedings.
14.2. Seller's Remedies. Buyer recognizes that if the Transaction is
-----------------
not consummated as a result of Buyer's default, Seller would be entitled to
compensation, the extent of which is extremely difficult and impractical to
ascertain. To avoid this problem, the parties agree that if the Transaction is
not consummated due to the default of Buyer, Seller, provided that Seller is not
in default and has otherwise complied with its obligations under this Agreement,
shall be entitled to the Initial Escrow
29
Deposit, with interest earned thereon. The parties agree that this sum shall
constitute liquidated damages and shall be in lieu of any other relief to which
Seller might otherwise be entitled due to Buyer's failure to consummate the
Transaction as a result of a default by Buyer.
14.3. Buyer's Remedies. Seller agrees that the Purchased Assets include
----------------
unique property that cannot be readily obtained on the open market and that
Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall have the right specifically to enforce
Seller's performance under this Agreement, and Seller agrees (i) to waive the
defense in any such suit that Buyer has an adequate remedy at law and (ii) to
interpose no opposition, legal or otherwise, as to the propriety of specific
performance as a remedy. If Buyer elects to terminate this Agreement as a
result of Seller's default instead of seeking specific performance, Buyer shall
be entitled to the return of the Initial Escrow Deposit together with all
interest earned thereon, and in addition thereto, to initiate a suit for damages
with such damages not to exceed $200,000. The parties agree that this sum shall
be the maximum amount to which Buyer might otherwise be entitled due to Seller's
failure to consummate the Transaction as a result of a default by Seller.
15.0. TERMINATION OF AGREEMENT.
------------------------
15.1. Failure to Close. This Agreement may be terminated at the option
----------------
of either party upon written notice to the other if the Commission has not
granted the Assignment Application within nine (9) months after the Commission
accepts the Assignment Application for filing or may be terminated by Buyer if
the Commission's action granting the Assignment Application has not become a
Final Order within twelve (12) months after the Commission accepts the
Assignment Application for filing; provided, however, that a party may not
-------- -------
terminate this Agreement if such party is in default hereunder, or if a delay in
any decision or determination by the Commission respecting the Assignment
Application has been caused or materially contributed to (i) by any failure of
such party to furnish, file or make available to the Commission information
within its control; (ii) by the willful furnishing by such party of incorrect,
inaccurate or incomplete information to the Commission; or (iii) by any other
action taken by such party for the purpose of delaying the Commission's decision
or determination respecting the Assignment Application. This Agreement may also
be terminated upon the mutual agreement of Buyer and Seller. In the event of
termination pursuant to this Section, the Initial Escrow Deposit, together with
all interest earned thereon, shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder unless the failure
to consummate the Transaction is attributable to Buyer's default, and Seller is
not in default and has otherwise complied with its obligations under this
Agreement, in which case the Initial Escrow Deposit plus interest earned thereon
shall be released to Seller as liquidated damages pursuant to Section 14.2.
15.2. Designation for Hearing. The time for approval provided in
-----------------------
Section 15.1 notwithstanding, either party may terminate this Agreement upon
written notice to the other, if, for any reason, the Assignment Application is
designated for hearing by the Commission, provided, however, that written notice
-------- -------
of termination must be given within 10 days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section, the Initial Escrow Deposit together with
all interest earned thereon shall be returned to Buyer and the parties
30
shall be released and discharged from any further obligation hereunder,provided,
--------
however, that if the designation for hearing is predicated upon breach by either
-------
party of a representation, warranty or covenant contained in this Agreement, the
nonbreaching party may, in addition to termination, pursue the remedies
available to such non-breaching party provided in Sections 14.2 and 14.3.
16.0. GENERAL PROVISIONS.
------------------
16.1. Brokerage. Seller and Buyer represent to each other that neither
---------
party has dealt with a broker in connection with the Transaction, except that
Seller has retained Media Venture Partners. No finders fee is due to any person
or entity in connection with the Transaction except for Media Venture Partners
and such fee shall be paid by Seller at Closing.
16.2. Fees. All Commission filing fees for the Assignment Application,
----
and all recording costs, transfer taxes, sales tax, document stamps and other
similar charges shall be paid one-half by Seller and one-half by Buyer. Except
as otherwise provided herein, all other expenses incurred in connection with
this Agreement or the Transaction shall be paid by the party incurring those
expenses whether or not the Transaction is consummated.
16.3. Notices. All notices, requests, demands and other communications
-------
pertaining to this Agreement shall be in writing and shall be deemed duly given
when (i) delivered personally (which shall include delivery by Federal Express
or other recognized overnight courier service that issues a receipt or other
confirmation of delivery) to the party for whom such communication is intended,
(ii) delivered by facsimile transmission or (iii) three business days after the
date mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Seller:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
▇▇▇▇▇▇▇ Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to Buyer:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change its address for notices by written notice to the other
given pursuant to this Section. Any notice purportedly given by a means other
than as set forth in this Section shall be deemed ineffective.
16.4. Assignment. Neither party may assign this Agreement without the
----------
other party's express prior written consent, provided, however, Buyer may assign
-------- -------
its rights and obligations pursuant to this Agreement without Seller's consent
prior to closing to (i) an entity which is a subsidiary or parent of Buyer or to
an entity owned or controlled by Buyer or its principals or (ii) to Buyer's
lenders as collateral for any indebtedness incurred by Buyer; and subsequent to
closing to (x) any entity which acquires all or substantially all of the
Purchased Assets or (y) to Buyer's lenders as collateral for any indebtedness
incurred by Buyer. Subject to the foregoing, this Agreement shall be binding
on, inure to the benefit of, and be enforceable by the original parties hereto
and their respective successors and permitted assignees.
16.5. Exclusive Dealings. For so long as this Agreement remains in
------------------
effect, neither Seller 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 or entity concerning the acquisition of all or any interest in
any of the Purchased Assets or the Station, other than Buyer or Buyer's
permitted assignees.
16.6. Third Parties. Nothing in this Agreement, whether express or
-------------
implied, is intended to: (i) confer any rights or remedies on any person other
than Seller, Buyer and their respective successors and permitted assignees; (ii)
relieve or discharge the obligations or liability of any third party; or (iii)
give any third party any right of subrogation or action against either Seller or
Buyer.
16.7. Indulgences. Unless otherwise specifically agreed in writing to
-----------
the contrary: (i) the failure of either party at any time to require performance
by the other of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (ii) no waiver by either
32
party of any default by the other 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 either party for the performance of any obligation or act by the
other party shall be deemed to be an extension of time for the performance of
any other obligation or act hereunder.
16.8. Survival of Representations and Warranties. The
---------------------------------------------
representations, warranties, and indemnification obligations of Buyer and the
representations, warranties and indemnification obligations of Seller contained
in Section 6.5, but only to the extent such section represents that the Station
is operating in compliance with the FCC Licenses, Communications Act and FCC
rules; Section 6.6, but only to the extent such section represents that all
Equipment is serviceable, in good operating condition and is not in imminent
need of repair; Section 6.13, but only to the extent such section represents
that all mechanical and structural components are in good operating condition
and repair; and Section 6.15 (a) and (b) shall survive for nine (9) months after
the Closing Date except that claims properly asserted within the nine (9) month
period shall survive until finally and fully resolved; provided, however, that
-------- -------
Seller's representations and warranties in all other sections and Sections 6.5,
6.6, 6.13 and 6.15 to the extent not limited above and Buyer's indemnification
rights with respect thereto and with respect to Section 13.2(a)(ii) shall
survive the Closing until the end of the applicable statute of limitations
period.
16.9. Prior Negotiations. This Agreement supersedes in all respects all
------------------
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All
of such prior and contemporaneous negotiations, understandings and agreements
are merged herein and superseded hereby.
16.10. Exhibits and Schedules. The Exhibits and Schedules attached hereto
----------------------
or referred to herein are a material part of this Agreement, as if set forth in
full herein.
16.11. Entire Agreement; Amendment. This Agreement, the Exhibits and
---------------------------
Schedules to this Agreement set forth the entire understanding between the
parties in connection with the Transaction, and there are no terms, conditions,
warranties or representations other than those contained, referred to or
provided for herein and therein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an instrument
in writing signed by each of the parties hereto.
16.12. Counsel/Interpretation. Each party has been represented by its own
----------------------
counsel in connection with the negotiation and preparation of this Agreement.
This Agreement shall be fairly interpreted in accordance with its terms and, in
the event of any ambiguities, no inferences shall be drawn against either party.
16.13. Governing Law, Jurisdiction. This Agreement shall be governed by,
---------------------------
and construed and enforced in accordance with the laws of the State of Virginia
without regard to the choice of law rules utilized in that jurisdiction. Buyer
and Seller each (a) hereby irrevocably submit to the jurisdiction of the courts
of that state and (b) hereby waive, and agree not to assert, by way of motion,
as a defense, or otherwise, in any such suit, action or proceeding, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or
33
immune from attachment or execution, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter hereof may
not be enforced in or by such court. Buyer and Seller each hereby consent to
service of process by registered mail at the address to which notices are to be
given. Each of Buyer and Seller agrees that its submission to jurisdiction and
its consent to service of process by mail is made for the express benefit of the
other party hereto. Final judgment against Buyer or Seller in any such action,
suit or proceeding may be enforced in other jurisdictions by suit, action or
proceeding on the judgment, or in any other manner provided by or pursuant to
the laws of such other jurisdiction; provided,however that any party may at its
-------- -------
option bring suit, or institute other proceedings, in any state or federal court
of the United States or of any country or place where the other party or its
assets, may be found.
16.14. Severability. If any term of this Agreement is illegal or
------------
unenforceable at law or in equity, 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.
16.15. Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument. Each fully executed set of counterparts shall be
deemed to be an original, and all of the signed counterparts together shall be
deemed to be one and the same instrument.
16.16. Further Assurances. Seller shall at any time and from time to time
------------------
after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may request to vest and
confirm in Buyer (or its assignee) the title and rights to and in all the
Purchased Assets to be and intended to be transferred, assigned and conveyed
hereunder.
34
IN WITNESS WHEREOF, and to evidence their assent to the foregoing, Seller
and Buyer have executed this Asset Purchase Agreement under seal as of the date
first written above.
SELLER:
▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
BUYER:
RADIO ONE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
35