ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of October 29, 1997, by
and between Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"),
Cumulus Licensing Corp., a Nevada corporation ("Licensing"), and Arbor Radio,
L.P., a Delaware limited partnership (the "Seller"). Broadcasting and Licensing
are referred to collectively herein as the "Buyers." The Buyers and the Seller
are referred to collectively herein as the "Parties." Capitalized terms used in
this Agreement are defined in Section 8 hereof.
This Agreement contemplates a transaction in which the Buyers will
purchase substantially all of the assets (and assume certain of the liabilities)
of the Seller that are used or useful in the operation of radio stations
WIQB-FM, WQKL-FM and WTKA-AM, licensed to operate in Ann Arbor, Michigan and
radio station WDEO-AM, licensed to operate in Saline, Michigan (collectively,
the "Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Licensing agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to Licensing, all of
the FCC Licenses listed in Section 2(l) of the Disclosure Schedule. In addition,
Broadcasting agrees to purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to Broadcasting, all of the Acquired Assets other
than the FCC Licenses. Both such sales shall take place at the Closing for the
consideration specified below in this Section 1.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, the Buyers agree to assume and become responsible for all of
the Assumed Liabilities at the Closing. The Buyers will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Seller not included within the definition of Assumed Liabilities and the
Seller agrees to pay and discharge all Liabilities and obligations of the Seller
other than the Assumed Liabilities.
(c) Purchase Price. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the amount of Fourteen Million Nine
Hundred Seventy-Five Thousand Dollars ($14,975,000) (the "Purchase Price"). The
Purchase Price shall be payable as follows:
1
(i) on the date of this Agreement, the Buyers will deposit with the
Escrow Agent an irrevocable letter of credit in favor of the Escrow Agent
in the amount of Seven Hundred Fifty Thousand Dollars ($750,000) (the
"▇▇▇▇▇▇▇ Money Deposit"); and
(ii) on the Closing Date, the Buyers shall pay to the Seller the
amount of Fourteen Million Four Hundred Seventy-Five Thousand Dollars
($14,475,000), less the amount, if any, distributed by the Escrow Agent to
the Seller at the Closing pursuant to Section 3(A) of the Escrow
Agreement, by wire transfer or delivery of other immediately available
funds; and
(iii) on the Closing Date, the Buyers shall deposit with the Escrow
Agent the amount of Four Hundred Thousand Dollars ($400,000) which shall
constitute the Post-Closing Escrow described below; and
(iv) on the Closing Date, the Buyers shall pay to the Seller, on
behalf of all parties to the Post-Closing Agreement, the amount of One
Hundred Thousand Dollars ($100,000).
The ▇▇▇▇▇▇▇ Money Deposit referenced in this Section l(c) shall be placed in
escrow with the Escrow Agent pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the "Escrow Agreement") and shall be disbursed in
accordance with the terms thereof. The Four Hundred Thousand Dollars ($400,000)
deposited by Buyers with the Escrow Agent at the Closing under Section 1(c)(iii)
(the "Post-Closing Escrow") shall be credited against the Purchase Price on the
Closing Date but shall remain in escrow, in whole or in part, from and after the
Closing Date with the Escrow Agent for a period of fourteen (14) months from the
Closing Date (or such longer period as provided in the Escrow Agreement if an
indemnification claim is submitted during such fourteen (14) month period)
pursuant to the Escrow Agreement. The Post-Closing Escrow shall be invested by
Escrow Agent in accordance with the instructions of Seller, and all interest
earned thereon shall be the property of Seller, payable to Seller upon demand.
If this Agreement is terminated without Closing of the transaction contemplated
herein, the ▇▇▇▇▇▇▇ Money Deposit and all accrued interest (if any) shall be
paid to the Buyers or the Seller as provided in the Escrow Agreement.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a mutually agreeable location
commencing at 9:00 a.m. local time on either (i) a date mutually agreeable to
the Buyers and Seller not earlier than the fifth business day or later than the
tenth business day after the FCC approval of the Assignment Application becomes
a Final Order, by which date all other conditions to the obligations of the
Parties to consummate the transactions contemplated hereby will have been
satisfied, or (ii) such other date as the Parties may mutually determine (with
either date being referred to as the "Closing Date"); provided that in no event
shall the Closing occur before January 5, 1998.
2
(e) Deliveries at the Closing. At the Closing, (i) the Seller will deliver
to the Buyers the various certificates, instruments, and documents referred to
in Section 5(a) below; (ii) the Buyers will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 5(b) below;
(iii) the Seller will execute, acknowledge (if appropriate), and deliver to the
Buyers (A) assignments (including Lease and other Assumed Contract assignments
and Intellectual Property transfer documents), bills of sale and warranty deeds
in the forms attached hereto as Exhibits B-1 through B-3, (B) such affidavits,
transfer tax returns, memorandums of lease, and other additional documents as
may be required by the terms of the title insurance commitments described in
Section 4(o) hereof, as necessary for Buyer to obtain title insurance as
required by such section or as may be necessary to convey title to the Real
Estate to the Buyers in the condition required herein or provided public notice
of the existence of the Leases, and (C) such other instruments of sale,
transfer, conveyance, and assignment as the Buyers and their counsel reasonably
may request; (iv) the Buyers will execute, acknowledge (if appropriate), and
deliver to the Seller (A) an assumption in the form attached hereto as Exhibit
C, and (B) such other instruments of assumption as the Seller and its counsel
reasonably may request; and (v) the Buyers will deliver to the Seller the
consideration specified in Section 1(c) above.
(f) Post-Closing Agreement. On the Closing Date, the Seller shall execute,
and shall cause ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ to execute, a Post-Closing Agreement
with the Buyers including covenants not to compete with the Buyers in the
markets served by the Stations in the form of Exhibit D attached hereto. A
portion of the Purchase Price equal to One Hundred Thousand Dollars ($100,000)
shall be paid to the Seller, on behalf of all parties other than the Buyers, on
the Closing Date as consideration for the agreements set forth in the
Post-Closing Agreement.
(g) Allocation. The Parties agree to jointly complete and separately file
Form 8594 with their federal income tax return for the tax year in which the
Closing occurs. If after good faith negotiations, the Parties cannot reach
agreement on the allocation in connection with jointly completing Form 8594, the
Parties agree that there will be no further obligation on the part of either
party to jointly complete the application and the Parties may file Form 8594
without any input from the other Party.
2. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyers that the statements contained in this Section 2 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 2),
except as set forth in the lettered and numbered paragraphs contained in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule") corresponding to the lettered and numbered sections
of this Section 2 and except for the last sentence of Section 2(s) which is
being given only as of the date of this Agreement.
3
(a) Organization of the Seller. The Seller is a limited partnership duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Seller has the power and authority to own
or lease its properties and to carry on the business operations of the Stations
as now conducted by it. The Seller does not have any Subsidiaries. The general
partner of the Seller is American Media Management, Inc., and the limited
partners of the Seller are ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) Authorization of Transaction. The Seller has full power and authority
(including full partnership power and authority) to execute and deliver this
Agreement and all agreements and instruments to be executed and delivered by
such Party pursuant to this Agreement (collectively, the "Ancillary Agreements")
and to perform its obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the partners of the Seller have or shall have at or
before Closing duly authorized the execution, delivery, and performance of this
Agreement and the Ancillary Agreements by the Seller. This Agreement and the
Ancillary Agreements constitute the valid and legally binding obligation of the
Seller, enforceable against the Seller in accordance with their respective terms
and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) above), will (i) violate any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which the Seller
is subject or any provision of the partnership agreement or other charter
documents of the Seller; or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice or
third party consent under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest, or other agreement or arrangement
to which the Seller is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets) other than Seller's agreements with its lenders holding Security
Interests set forth in Section 2(d) of the Disclosure Schedule (which agreements
are not Assumed Contracts and will be terminated at or before Closing). Other
than with respect to the Assignment Application described in Section 4(b) and
filings, consents or approvals required as a result of matters specific to
Buyer's status, the Seller does not need to give any notice to, make any filing
with, or obtain any Licenses, consent, or approval of any court or government or
governmental agency in order for the Parties to enter into this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements (including the assignments and assumptions
referred to in Section 1(e) above).
(d) Title to Acquired Assets. Other than the Security Interests set forth
on Section 2(d) of the Disclosure Schedule (which shall be released at or before
the Closing) the Seller has good and
4
marketable title to all of the Acquired Assets, free and clear of any Security
Interest or restriction on transfer.
(e) Financial Statements. Included in Section 2(e) of the Disclosure
Schedule are the following financial statements (collectively, the "Financial
Statements"): (i) audited balance sheets and statements of income and cash flow
as of and for the fiscal years ended December 31, 1995 and December 31, 1996,
for the Seller; and (ii) unaudited balance sheets and statements of income, as
of and for each month during 1997 through September 1997 for the Seller. The
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, are correct and
complete, fairly represent the financial condition of the Seller on such dates
and the results of operations for the periods designated therein and are
consistent with the books and records of the Seller (which books and records are
correct and complete).
(f) Events Subsequent to September 30, 1997. Since September 30, 1997,
except as set forth in Section 2(f) of the Disclosure Schedule, there has not
been any Material adverse change in the assets, Liabilities, business, financial
condition or operations of the Seller with respect to the operation of the
Stations taken as a whole. Without limiting the generality of the foregoing and
with respect to the operation of the Stations since that date:
(i) the Seller has not sold, leased, transferred, or assigned, or
agreed to sell, lease, transfer or assign, any of its Material assets,
tangible or intangible;
(ii) other than this Agreement, the Seller has not entered into any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and
sublicenses) outside the Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified, or canceled
any Assumed Contract involving more than $5,000 which would have a
Material effect on Buyer;
(iv) the Seller has not created, incurred, assumed, or guaranteed
any indebtedness (including capitalized lease obligations) outside the
Ordinary Course of Business which would have a Material effect on Buyer;
(v) the Seller has not delayed or postponed or agreed to delay or
postpone (beyond its normal practice in the Ordinary Course of Business)
the payment of accounts payable or other Liabilities outside the Ordinary
Course of Business such that such delay or postponement would have a
Material effect on Buyer;
(vi) the Seller has not granted or agreed to grant any license or
sublicense of any rights under or with respect to any Intellectual
Property;
5
(vii) the Seller has not made or agreed to make any loan to, or
entered or agreed to enter into any other transaction (other than for
employment) with any of its employees giving rise to any claim or right on
its part against the person or on the part of the person against it;
(viii) the Seller has not (a) entered into any employment contract,
consulting contract or severance agreement or collective bargaining
agreement, written or oral, outside the Ordinary Course of Business or
which would constitute an Assumed Contract hereunder, or (b) modified the
terms of any existing such contract or agreement which constitutes an
Assumed Contract hereunder;
(ix) except as disclosed in Section 2(f) of the Disclosure Schedule,
the Seller has not granted any increase (outside routine salary and wage
increases in the Ordinary Course of Business) in the rate of compensation,
commissions, bonus or other remuneration payable, or granted any severance
or termination pay to, any of its directors, officers, and employees;
(x) except as disclosed in Section 2(f) of the Disclosure Schedule,
the Seller has not adopted any (A) bonus, (B) profit-sharing, (C)
incentive compensation, (D) pension, (E) retirement, (F) medical,
hospitalization, life, or other insurance, (G) severance, or (H) other
plan, contract, or commitment for any of its directors, officers, and
employees, or modified or terminated any existing such plan, contract, or
commitment;
(xi) except as disclosed in Section 2(f) of the Disclosure Schedule,
the Seller has not made any other change in employment terms for any of
its directors, officers, and employees;
(xii) the Seller has not Materially altered its credit and
collection policies or its accounting policies;
(xiii) the Seller has not Materially altered the programming, format
or call letters of the Stations; or
(xiv) the Seller has not applied to the FCC for any modification of
the FCC Licenses or failed to take any action necessary to preserve the
FCC Licenses and has operated the Stations in Material compliance
therewith and with all FCC rules and regulations.
Nothing contained in this Section 2(f) shall be deemed a warranty or
representation by the Seller with respect to trends or conditions affecting the
radio industry generally or the Ann Arbor, Michigan radio market generally and
Seller shall not be in breach of the provisions of this Section 2(f) as a result
of such general trends or conditions.
(g) [Intentionally omitted.]
6
(h) Tangible Assets. Section 2(h) of the Disclosure Schedule sets forth a
listing of all or substantially all transmitter and station equipment, vehicles
and other tangible personal property used in conducting the operation and
business of the Stations. The Seller owns or leases all tangible assets
necessary for the conduct of the operation and business of the Stations as
presently conducted and as presently proposed to be conducted and all leased
assets are specifically identified as such in Section 2(h) of the Disclosure
Schedule. Except as otherwise set forth in this Agreement, all of the tangible
personal property included in the Acquired Assets are sold to Buyers WHERE IS
AND AS IS, without any implied warranty of merchantability or fitness for a
particular purpose. The equipment included in the Acquired Assets permits the
Stations to be operated in Material compliance with all FCC and FAA
requirements. No partner of the Seller has any interest in any right, property
or asset used or required by the Seller in the operation of the Stations.
(i) Real Property. Section 2(i) of the Disclosure Schedule lists and
describes briefly all Owned Real Estate and all real property leased to the
Seller (including, without limitation, complete legal descriptions for all of
the Real Estate). The Seller has delivered to the Buyers correct and complete
copies of the Leases. With respect to the Real Estate:
(i) the Seller has or will have at or before Closing good and
marketable title to all of the Owned Real Estate free and clear of all
liens, charges, mortgages, security interests, easements, restrictions,
options to purchase, rights of first refusal or other encumbrances of any
nature whatsoever except real estate taxes for the year of Closing and
municipal and zoning ordinances and easements which do not impair the
current use, occupancy or value or the marketability of title of the
property and which are disclosed in Section 2(i) of the Disclosure
Schedule (collectively, the "Permitted Real Estate Encumbrances");
(ii) the Leases are and, following the Closing, to the Seller's
Knowledge, will continue to be, legal, valid, binding, enforceable, and in
full force and effect;
(iii) the Seller is not in breach or default of any Lease (or has
repudiated any provision thereof), and to the Seller's Knowledge, no event
has occurred which, with notice or lapse of time, would constitute a
breach or default thereunder or permit termination, modification, or
acceleration thereunder;
(iv) to the Seller's Knowledge, there are no disputes, oral
agreements, or forbearance programs in effect as to any Lease;
(v) except for Permitted Real Estate Encumbrances, there are no (i)
actual or, to the Seller's Knowledge, proposed special assessments with
respect to any of the Real Estate; (ii) pending or, to the Seller's
Knowledge, threatened condemnation proceedings with respect to any of the
Real Estate; (iii) pending or, to the Seller's Knowledge, threatened
litigation or administrative actions with respect to any of the Real
Estate; (iv) mechanic's or
7
materialmens' liens with respect to the Owned Real Estate; (v) to the
Seller's Knowledge, structural or mechanical defects in any of the
buildings or improvements located in the Real Estate; (vi) to Seller's
Knowledge, planned or commenced improvements which will result in an
assessment or otherwise affect the Real Estate; (vii) governmental agency
or court orders requiring the repair, alteration or correction of any
existing condition with respect to the Real Estate or any portion thereof;
or (viii) any pending or, to the Seller's Knowledge, threatened changes in
any zoning laws or ordinances which may affect any of the Real Estate or
Seller's use thereof;
(vi) to the Seller's Knowledge, all buildings and improvements on
the Real Estate are in good condition and repair, normal wear and tear
excepted;
(vii) the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the Leases or its rights
thereunder; and
(viii) to the Seller's Knowledge, the owner of each leased facility
has good and marketable title to the underlying parcel of real property,
free and clear of any Security Interest, easement, covenant, or other
restriction, except for Permitted Real Estate Encumbrances and Seller's
leasehold interest in each Lease has priority over any other interest
except for the fee interest therein and Permitted Real Estate
Encumbrances.
(j) Intellectual Property. The Seller owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for or currently used in the operation of the business of the
Seller as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Seller immediately prior to
the Closing hereunder will be owned or available for use by the Buyers on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Seller has taken all necessary or desirable action to protect each item of
Intellectual Property that it owns or uses. With respect to such Intellectual
Property:
(i) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and the Seller has never received any
charge, complaint, claim, or notice alleging any such interference,
infringement, misappropriation, or violation. To the Knowledge of the
Seller, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Seller.
(ii) Section 2(j) of the Disclosure Schedule identifies each patent,
trademark or copyright registration which has been issued to the Seller
with respect to any of its Intellectual Property and the call letters
(current and past) of the Stations, identifies each pending patent,
trademark or copyright application for registration which the Seller has
made
8
with respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which the Seller has granted to
any third party with respect to any of its Intellectual Property (together
with any exceptions). The Seller has delivered to the Buyers correct and
complete copies of all such patents, trademarks or copyright
registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyers correct and complete
copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. With respect to each item
of Intellectual Property that the Seller owns:
(A) the Seller possesses all right, title, and interest in and
to the item and all registrations and applications are in full force
and effect;
(B) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(C) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the Knowledge of
the Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Seller has not ever agreed to indemnify any person or
entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iii) Section 2(j) of the Disclosure Schedule also identifies each
item of Intellectual Property that any third party owns and that the
Seller uses pursuant to license, sublicense, agreement, or permission
including, but not limited to the call letters of the Stations. The Seller
has supplied the Buyers with correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each such item of used Intellectual Property:
(A) the license, sublicense, agreement, or permission covering
the item is, and following the Closing will continue to be on
identical terms, legal, valid, binding, enforceable, and in full
force and effect;
(B) no party to the license, sublicense, agreement, or
permission is in breach or default (or has repudiated any provision
thereof), and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
9
(C) with respect to each sublicense, the representations and
warranties set forth in subsections (A) and (B) above are true and
correct with respect to the underlying license;
(D) to the Seller's Knowledge, the underlying item of
Intellectual Property is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(E) to the Seller's Knowledge, no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand is
pending, or, to the Knowledge of the Seller, is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property;
(F) the Seller has not agreed to indemnify any person or
entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the underlying
item of Intellectual Property; and
(G) the Seller has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(k) Contracts. Section 2(k) of the Disclosure Schedule lists the following
contracts, agreements, and other written arrangements (other than with
advertisers for the sale of air time which are listed in Section 2(s) of the
Disclosure Schedule) to which the Seller is a party:
(i) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of $1,000 per year;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of supplies, products, or other
personal property or for the furnishing or receipt of services which
either calls for performance over a period of more than one year or
involves more than the sum of $1,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or guaranteed
(or may create, incur, assume, or guarantee) indebtedness (including
capitalized lease obligations) involving more than $1,000 or under which
it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
10
(v) any written arrangement concerning confidentiality or
noncompetition;
(vi) any written arrangement with any of its employees in the nature
of a collective bargaining agreement, consulting agreement, compensation
agreement, employment agreement, commission agreement or severance
agreement;
(vii) any written arrangement under which the consequences of a
default or termination could have an adverse effect on the assets,
Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Seller or the Stations;
(viii) any written arrangement concerning a guaranty by the Seller
of the obligations of any other party;
(ix) any other written arrangement (or group of related written
arrangements) either involving more than $5,000 or not entered into in the
Ordinary Course of Business; and
(x) any written arrangement involving the lease of furniture or
equipment.
The Seller has delivered to the Buyers a correct and complete copy of each
written arrangement listed in Section 2(k) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed which
constitutes an Assumed Contract: (A) the written arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the written arrangement
will, assuming any necessary consents to assignment have been obtained, continue
to be legal, valid, binding, and enforceable and in full force and effect on
identical terms following the Closing; (C) no party is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or acceleration, under
the written arrangement; and (D) no party has repudiated any provision of the
written arrangement. The Seller is not bound by any verbal contract, agreement,
or other arrangement which, if reduced to written form, would be required to be
listed in Section 2(k) of the Disclosure Schedule under the terms of this
Section 2(k). Except for the Assumed Contracts, the Buyers shall not have any
Liability or obligations for or in respect of any of the contracts set forth in
Section 2(k) of the Disclosure Schedule or any other contracts or agreements of
the Seller.
11
(l) Commission Licenses and Compliance with Commission Requirements.
(i) All licenses, permits, authorizations, franchises, certificates
of compliance, and consents of governmental bodies, including, without
limitation, the FCC Licenses, used or useful in the operation of the
Stations as they are now being operated are (A) in full force and effect,
(B) unimpaired by any acts or omissions of the Seller or the Seller's
employees or agents, (C) free and clear of any restrictions which might
limit the full operation of the Stations, and (D) detailed in Section 2(1)
of the Disclosure Schedule. With respect to the licenses, permits,
authorizations, franchises, certificates of compliance and consents
referenced in the preceding sentence, Section 2(1) of the Disclosure
Schedule also sets forth, without limitation, the date of the last
renewal, the expiration date thereof, and any conditions or contingencies
related thereto. Except as set forth in Section 2(1) of the Disclosure
Schedule, no condition exists or event has occurred that permits, or after
notice or lapse of time, or both, would permit, the revocation or
termination of any such license, permit, consent, franchise, or
authorization (other than pursuant to their express expiration date) or
the imposition of any Material restriction or limitation upon the
operation of the Stations as now conducted. Except as set forth in Section
2(1) of the Disclosure Schedule, the Seller is not aware of any reason why
the FCC licenses might not be renewed in the ordinary course or revoked.
(ii) The Stations are each in compliance with the FCC's policy on
exposure to radio frequency radiation. No renewal of any FCC License would
constitute a major environmental action under the FCC's rules or policies.
Access to the Stations' transmission facilities is restricted in
accordance with the policies of the FCC.
(iii) Except as set forth in Section 2(1) of the Disclosure
Schedule, to the Seller's Knowledge, the Seller is not the subject of any
FCC or other governmental investigation or any notice of violation or
order, or any Material complaint, objection, petition to deny, or
opposition issued by or filed with the FCC or any other governmental
authority in connection with the operation of or authorization for the
Stations, and there are no proceedings (other than rule making proceedings
of general applicability) before the FCC or any other governmental
authority that could adversely affect any of the FCC Licenses or the
authorizations listed in Section 2(1) of the Disclosure Schedule.
(iv) The Seller has filed with the FCC and all other governmental
authorities having jurisdiction over the Stations all Material reports,
applications, documents, instruments, and other information required to be
filed, and will continue to make such filings through the Closing Date.
(v) The Seller is not aware of any information concerning the
Stations that could cause the FCC or any other regulatory authority not to
issue to the Buyers all regulatory
12
certificates and approvals necessary for the consummation of the
transactions contemplated hereunder or the Buyers' operation and/or
ownership of the Stations. Seller is not aware of any pending FCC
applications which, if approved, would allow for the operation of a new
radio station with a signal reaching the signal area of the Stations and,
in addition, Seller is not aware of any plans or proposals by existing
radio stations with a signal reaching the signal area of the Stations to
alter or change their format to a format similar to that of the Stations.
(m) Insurance. Section 2(m) of the Disclosure Schedule sets forth each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) to which
the Seller is a party, a named insured, or otherwise the beneficiary of
coverage.
(n) Litigation. Section 2(n) of the Disclosure Schedule sets forth each
instance in which the Seller: (i) is subject to any unsatisfied judgment, order,
decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
(o) Employees. Section 2(o) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates,
severance benefits and all other forms of compensation paid for work at the
Stations of each employee of the Seller. Section 2(o) of the Disclosure Schedule
also sets forth a list of all employee handbooks and/or manuals relating to the
employees of the Seller, true and correct copies of which have been delivered to
the Buyers. To the Knowledge of the Seller, no key employee or group of
employees has any plans to terminate employment with the Seller. The Seller is
not a party to or bound by any understanding (whether written or oral),
agreement or contract with any union, labor organization, employee group or
other entity or individual which affects the employment of employees of the
Seller including, but not limited to, any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of any of the Seller. The Seller has not
been subject to a strike, slow down or other work stoppage during its operation
of the Stations and, to the Seller's Knowledge, there are no strikes, slow downs
or work stoppages threatened against the Seller. No proceedings are pending
before any court, governmental agency or instrumentality or arbitrator relating
to labor matters, and there is no pending investigation by any governmental
agency or, to the Knowledge of the Seller, threatened claim by any such agency
or other person relating to labor or employment matters.
(p) Employee Benefits. Section 2(p) of the Disclosure Schedule lists all
Employee Benefit Plans that the Seller maintains or to which the Seller
contributes or is required to contribute for the
13
benefit of any current or former employee of the Seller and true and correct
copies of each such Employee Benefit Plan have been delivered to the Buyers.
Each Employee Benefit Plan (and each related trust or insurance contract)
complies and at all times has complied in form and in operation in all respects
with the applicable requirements of ERISA and the Code. The Seller does not have
any commitment to create any additional Employee Benefit Plan or modify or
change any existing the Employee Benefit Plan that would affect any employee or
terminated employee of the Seller. There are no pending or, to the Knowledge of
the Seller, threatened claims under, by or on behalf of any of the Employee
Benefit Plans, by any employee or beneficiary covered by any such Employee
Benefit Plan, or otherwise involving any such Employee Benefit Plan (other than
routine claims for benefits), nor have there been any Reportable Events or
Prohibited Transactions with respect to any Employee Benefit Plan.
(q) Environment, Health, and Safety. Except as identified in the
environmental reports set forth in Section 2(q) of the Disclosure Schedule:
(i) To Seller's Knowledge, with respect to the operation of the
Stations and the Real Estate, the Seller is, and at all times in the past
has been, in compliance with all Environmental Laws and all laws
(including rules and regulations thereunder) of federal, state, and local
governments (and all agencies thereof) concerning employee health and
safety, and no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has ever been filed or commenced
or, is threatened, against the Seller alleging any failure to comply with
any such Environmental Law or laws concerning employee health and safety.
(ii) To Seller's Knowledge, with respect to the operation of the
Stations and the Real Estate, the Seller has no Liability (and there is no
Basis related to the past or present operations of the Seller or its
predecessors for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against the Seller
giving rise to any Liability) under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Federal Water Pollution Control
Act of 1972, the Clean Air Act of 1970, the Safe Drinking Water Act of
1974, the Toxic Substances Control Act of 1976, the Refuse Act of 1899, or
the Emergency Planning and Community Right-to-Know Act of 1986 (each as
amended), or any other law of any federal, state, local, or foreign
government or agency thereof (including rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges
thereunder) relating to public health and safety, or pollution or
protection of the environment, including, without limitation, laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal,
14
transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes ("Environmental
Laws").
(iii) To the Seller's Knowledge, the Seller has no Liability (and
there is no Basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against the
Seller giving rise to any Liability) under the Occupational Safety and
Health Act, as amended, or any other law (or rule or regulation
thereunder) of any federal, state, local, or foreign government (or agency
thereof) concerning employee health and safety, or for any illness of or
personal injury to any employee.
(iv) To the Seller's Knowledge, the Seller has obtained and at all
times has been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental Laws or laws of any
federal, state, or local or foreign government relating to worker health
and safety.
(v) To the Seller's Knowledge, all properties and equipment used in
the business of the Seller have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(vi) To the Seller's Knowledge, no pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or waste ever has been
buried, stored, spilled, leaked, discharged, emitted, or released on any
of the Real Estate.
(vii) To the Seller's Knowledge, none of the Acquired Assets are
required to be upgraded, modified or replaced to be in compliance with
Environmental Laws. (viii) Section 2(q) of the Disclosure Schedule
contains a copy of all environmental claims, reports, studies, compliance
actions or the like of the Seller or which are available to the Seller
with respect to any of the Real Estate or any of the Acquired Assets.
(ix) To the Seller's Knowledge, no septic systems or ▇▇▇▇▇ exist on,
in or under any of the Real Estate. To the Seller's Knowledge, no above
ground or underground storage tanks have ever been located at, on or under
the Real Estate. To the Seller's Knowledge, none of the Real Estate is
contaminated by hazardous or toxic substances or waste, as defined under
Environmental Laws, originating from off-site sources.
(r) Legal Compliance. The Seller has complied with all laws (including
rules and regulations thereunder) of federal, state, local and foreign
governments (and all agencies thereof), and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice
15
has been filed or commenced or, to the Seller's Knowledge, is threatened,
against the Seller alleging any failure to comply with any such law or
regulation, including those relating to the employment of labor, employee civil
rights, and equal employment opportunities and relating to antitrust matters.
(s) Advertising Contracts. The Seller has no reason to believe and has not
received a notice or indication of the intention of any third parties to
Material contracts of the Seller to cease doing business or to reduce in any
Material respect the business transacted with the Seller or to terminate or
modify any agreements with the Seller (whether as a result of consummation of
the transactions contemplated hereby or otherwise). As of the date of this
Agreement, Seller has no reason to believe and has not received a notice or
indication of the intention of any advertiser of the Seller to cease doing
business or to reduce in any respect the business transacted with the Seller
which would have a Material Adverse Effect.
(t) Brokers' Fees. The Seller has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(u) Undisclosed Commitments or Liabilities. There are no commitments,
liabilities or obligations relating to any of the Stations, whether accrued,
absolute, contingent or otherwise including, without limitation, guaranties by
the Seller of the liabilities of third parties, for which specific and adequate
provisions have not been made on the Financial Statements except those incurred
in or as a result of the Ordinary Course of Business on or after October 1, 1997
(none of which Ordinary Course of Business obligations are Material).
(v) Disclosure. The representations and warranties contained in this
Section 2 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 2 not misleading.
3. Representations and Warranties of the Buyers. The Buyers represent and
warrant to the Seller that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
(a) Organization of the Buyers. Broadcasting and Licensing are
corporations duly organized, validly existing, and in good standing under the
laws of Nevada.
(b) Authorization of Transaction. Buyers have full power and authority to
execute and deliver this Agreement and the Ancillary Agreements and to perform
their obligations hereunder and thereunder. Without limiting the generality of
the foregoing, the Buyers have or will have at or before Closing duly authorized
the execution, delivery and performance of this Agreement and the
16
Ancillary Agreements by the Buyers. This Agreement and the Ancillary Agreements
constitute the valid and legally binding obligation of the Buyers, enforceable
against the Buyers in accordance with their respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) above), will (i) violate any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which the Buyers
are subject or any provision of their articles of organization or other charter
documents, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1(e) above).
(d) Brokers' Fees. Except for the broker's fee to be paid by the Buyers as
set forth in Section 10(1) below, the Buyers have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
4. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable to
consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
(b) Assignment Applications. Within ten (10) business days after the
execution of this Agreement, the Seller and the Buyers shall jointly file with
the FCC an application for assignment of the FCC Licenses from the Seller to the
Buyers (the "Assignment Application"). The costs of the FCC filing fees in
connection with the Assignment Application shall be divided equally between the
Parties. Each party shall pay its own attorneys' fees. The Seller and the Buyers
shall thereafter prosecute the Assignment Application with all reasonable
diligence and otherwise use commercially reasonable efforts to obtain the grant
of the Assignment Application as expeditiously as practicable
17
(but neither the Seller nor the Buyers shall have any obligation to satisfy
complainants or the FCC by taking any steps which would have Material effect
upon the Stations or any Affiliate or impose significant costs on such party).
If the FCC imposes any condition on either party to the Assignment Application,
such party shall use commercially reasonable efforts to comply with such
condition, provided, that neither party shall be required hereunder to comply
with any condition that would have a Material effect upon the Stations or any
Affiliate or impose significant costs on such party. The Seller and the Buyers
shall jointly oppose any requests for reconsideration or judicial review of FCC
approval of the Assignment Application and shall jointly request from the FCC
extension of the effective period of FCC approval of the Assignment Application
if the Closing shall not have occurred prior to the expiration of the original
effective period of the FCC Consent. Nothing in this Section 4(b) shall be
construed to limit either party's right to terminate this Agreement pursuant to
Section 9 of this Agreement.
(c) Employment Offers. Upon notice to the Seller, and at mutually
agreeable times, the Seller will permit the Buyers to meet with its employees
prior to the Closing Date. Not earlier than one (1) week prior to the Closing,
the Buyers will extend offers of employment to all of the Seller's employees
effective on the Closing Date on substantially the same employment terms with
respect to job descriptions, positions, salaries and wage rates as specified in
Section 2(o) of the Disclosure Schedule. From and after the execution of this
Agreement, the Seller shall use its best efforts to assist Buyers in retaining
all employees of the Stations and Seller will not take any action to preclude or
discourage any of the Seller's employees from accepting any offer of employment
extended by the Buyers.
(d) Notices and Consents. The Seller will use its reasonable best efforts
to obtain the consents necessary to assign the Assumed Contracts to the Buyers.
The absence of any such consent shall not be a breach hereof unless the contract
is designated as "material" on Section 4(d) of the Disclosure Schedule. Each of
the Parties will use its reasonable best efforts to take any additional action
that may be necessary, proper, or advisable in connection with any other notices
to, filings with, and authorizations, consents, and approvals of governments or
governmental agencies that it may be required to give, make, or obtain.
(e) Operation of Business. Except as described in Section 4(e) of the
Disclosure Schedule, the Seller will not engage in any practice, take any
action, embark on any course of inaction, or enter into any transaction outside
the Ordinary Course of Business.
(f) Advertising Obligations. The Seller shall satisfy its air time
obligations under its agreements for sale of air time and advertising on the
Stations in exchange for goods or services ("Barter Agreements") in a manner
consistent with its past practices and procedures. On the Closing Date, the
Seller shall deliver to the Buyers a schedule, certified by an officer of the
Seller, reflecting the aggregate outstanding balances of the air time owed by
the Seller and the goods and services owed to the Seller under the Barter
Agreements in existence as of the Closing Date. If the net
18
aggregate balance owed by or to the Seller under the Barter Agreements as of the
Closing Date exceeds Twenty-Five Thousand Dollars ($25,000), the Purchase Price
hereunder shall, as the case may be, be reduced by the amount by which the net
aggregate balance owed by the Seller under the Barter Agreements exceeds
Twenty-Five Thousand Dollars ($25,000) or increased by the amount by which the
net aggregate balance owed to the Seller under the Barter Agreements exceeds
Twenty-Five Thousand Dollars ($25,000).
(g) Operating Statements. The Seller shall deliver to the Buyers, for the
Buyers' informational purposes only, monthly unaudited statements of operating
revenues and operating expenses of the Stations within fifteen (15) days after
each such statement is prepared by or for the Seller.
(h) Contracts. The Seller will not without the prior written consent of
the Buyers amend, change, or modify any of the contracts listed on Section 2(k)
of the Disclosure Schedule in any Material respect other than amendments,
changes, and modifications entered into in the Ordinary Course of Business.
Notwithstanding the foregoing sentence, the Seller will not without the prior
written consent of the Buyers amend, change, or modify any of the Assumed
Contracts in any Material respect. The Seller will not without prior written
consent of the Buyers enter into any new contracts respecting the Stations or
their properties, except (i) contracts for the sale of time on the Stations for
cash, goods or services which are entered into in the Ordinary Course of
Business and comply with Sections 4(f) and 4(j) hereof, (ii) contracts entered
into in the Ordinary Course of Business which are cancelable on not more than
thirty-one (31) days' notice without penalty or premium, and (iii) contracts
entered into in the Ordinary Course of Business each of which does not involve
more than Twenty Thousand Dollars ($20,000) or all of which do not involve more
than Sixty-Three Thousand Dollars ($63,000) in the aggregate. Seller shall
promptly provide Buyer with copies of all amendments, modifications, changes and
new contracts entered into in accordance with this Section 4(h).
(i) Operation of Stations. The Seller shall operate the Stations in
compliance with the FCC Licenses and the rules and regulations of the FCC, and
the FCC Licenses shall at all times remain in full force and effect. The Seller
shall file with the FCC all Material reports, applications, documents,
instruments and other information required to be filed in connection with the
operation of the Stations.
(j) Credit and Receivables. The Seller will follow its usual and customary
policies with respect to extending credit for sales of air time and advertising
on the Stations and with respect to collecting accounts receivable arising from
such extension of credit.
(k) Preservation of Business. The Seller will use commercially reasonable
efforts to keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, relationships with
lessors, licensers, advertisers, suppliers, customers, and
19
employees, all of the Confidential Information, call letters and trade secrets
of the Stations, and the FCC Licenses; provided, however, that the foregoing
shall not be deemed to constitute an assurance by the Seller of the future
performance of the Stations.
(l) Full Access and Consultation. The Seller will permit representatives
of the Buyers to have full access at all reasonable times (which times shall be
mutually agreed upon in advance), and in a manner so as not to interfere with
the normal business operations of the Stations, to all premises, properties,
books, records, contracts, Tax records, and documents of or pertaining to the
Seller for the purpose of permitting the Buyers to, among other things: (a)
conduct its due diligence review, (b) review financial statements of the Seller,
(c) verify the accuracy of representations and warranties of the Seller
contained in this Agreement, and (d) prepare for the consummation of the
transactions contemplated by this Agreement. The Seller will consult with the
Buyers' management with a view to informing Buyers' management as to the
operations, management and business of the Stations. Without limiting the
foregoing, the Seller will permit the Buyers and its accountants to have access
during normal business hours to examine and make copies of all work papers and
schedules of the Seller and its accountants relating to the Stations and to
discuss the business affairs and financial statements of the Seller relating to
the Stations with the Seller's accountants. Without limiting the foregoing,
Seller acknowledges and agrees that it will provide the Buyers and its
representatives with such access to the properties, books, records, documents
and operations of the Seller as contemplated herein in a manner which will
permit the Buyers to fully complete its due diligence review within the thirty
(30) day period referenced in Section 5(a)(ix), below.
(m) Notice of Developments; Effect of Supplemental Disclosure. The Seller
will (i) give prompt written notice to the Buyers of any Material development
affecting the Stations, and (ii) any matter arising or discovered after the date
of this Agreement which, if existing or known on the date of this Agreement,
would have been required to be disclosed in the Disclosure Schedule or this
Agreement. Each Party will give prompt written notice to the other of any
Material development affecting the ability of the Parties to consummate the
transactions contemplated by this Agreement. No disclosure by any Party pursuant
to this Section 4(m), however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant or limit a Party's right to seek indemnification
for such misrepresentation or breach; provided, however, that a Party's right to
terminate this Agreement as a result of such breach or misrepresentation shall
be governed by Section 9 hereof.
(n) Exclusivity. The Seller will notify the Buyers immediately if any
person or entity makes any proposal, offer, inquiry, or contact regarding a
merger, business combination, purchase of assets or securities, or similar
transaction involving the Seller.
(o) Title Insurance and Surveys. The Buyers will have received (i) with
respect to each parcel of Real Estate subject to the Leases, a leasehold owner's
policy issued by a title insurer reasonably satisfactory to the Buyers, in an
amount equal to the fair market value of such Real Estate
20
(including all improvements located thereon), insuring over the standard
pre-printed exceptions and insuring leasehold title to such Real Estate in the
Buyers as of the Closing subject only to the Permitted Real Estate Encumbrances,
together with such endorsements for zoning, contiguity, public access and
extended coverage as the Buyers or its lender reasonably requests, (ii) with
respect to each parcel of Owned Real Estate, an owner's policy of title
insurance by a title insurer reasonably satisfactory to the Buyers, in an amount
equal to the fair market value of such Real Estate (including all improvements
located thereon), insuring over the standard pre-printed exceptions and insuring
title to the Owned Real Estate to be vested in the Buyers as of the Closing free
and clear of all liens and encumbrances except Permitted Real Estate
Encumbrances, together with such endorsements for zoning, contiguity, public
access and extended coverage as the Buyers or its lender reasonably requests,
and (iii) a current survey of each parcel of Real Estate certified to the Buyers
and its lender, prepared by a licensed surveyor and conforming to current ALTA
Minimum Detail Requirements for Land Title Surveys, disclosing the location of
all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Surveys") which shall not
disclose any survey defect or encroachment from or onto any of the Real Estate
which has not been cured or insured over prior to the Closing. The Buyers and
the Seller will each pay one-half (1/2) of the costs of these title policies and
Surveys, provided that Seller's responsibility for such costs shall not exceed
Five Thousand Dollars ($5,000).
(p) Control of Stations. The transactions contemplated by this Agreement
shall not be consummated until after the FCC has given its consent and approval
to the Assignment Application. Between the date of this Agreement and the
Closing Date, the Buyers and their employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Seller.
(q) Risk of Loss. The risk of loss, damage, or destruction to any of the
Acquired Assets shall remain with the Seller until the Closing. In the event of
any such loss, damage, or destruction the Seller will promptly notify the Buyers
of all particulars thereof, stating the cause thereof (if known) and the extent
to which the cost of restoration, replacement and repair of the Acquired Assets
lost, damaged or destroyed will be reimbursed under any insurance policy with
respect thereto. The Seller will, at Seller's expense, repair or replace such
Acquired Assets to their former condition as soon as possible after loss, damage
or destruction thereof and shall use its best efforts to restore as promptly as
possible transmissions as authorized in the FCC Licenses. The Closing Date shall
be extended (with FCC consent, if necessary) for up to sixty (60) days to permit
such repair or replacement. If repair or replacement cannot be accomplished
within sixty (60) days of the date of the Seller's notice to the Buyers, and the
Buyers determine that the Seller's failure to repair or replace, alone or in the
aggregate with any other then existing factors, would have a Material effect on
the operation of the Stations:
21
(a) the Buyers may elect to terminate this Agreement; or
(b) the Buyers may postpone the Closing Date until such time as the
property has been repaired, replaced or restored in a manner and to an
extent reasonably satisfactory to the Buyers, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Seller's
notice to the Buyers, in which case either party may terminate this
Agreement; or
(c) the Buyers may choose to accept the Acquired Asset in their
"then" condition, together with the Seller's assignment to the Buyers of
all rights under any insurance claims covering the loss, damage or
destruction and payment over to the Buyers of any proceeds under any such
insurance policies previously received by the Seller with respect thereto
plus an amount equal to the amount of any deductible or self-insurance
maintained by Seller on such Acquired Assets.
In the event the Closing Date is postponed pursuant to this Section 4(q), the
parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
(r) Environmental Assessments. Provided that the Buyer is provided with
adequate access to each parcel of Real Estate and permitted to conduct all
requested testing, the Buyers will provide to the Seller, within forty-five (45)
days hereof, the results of its environmental assessments for each such parcel
of Real Estate. Buyer acknowledges that Seller's obligation to provide access to
each leased parcel of Real Estate is limited to its reasonable efforts to obtain
Landlord's consent and cooperation with respect to such access. The results
submitted to Seller under this Section 4(r) shall identify any violations of
Environmental Law and any condition to be remedied and the actions or
remediation required to bring the property into compliance with Environmental
Laws. If the Buyers' Phase I environmental assessment recommends additional
testing and Buyer begins such testing but such testing cannot be completed and
reported to Seller within the forty-five (45) day period provided for herein,
the period shall be extended as reasonably required to complete such additional
testing and reporting to the Seller. The Seller will have ten (10) days after
the Buyers notify the Seller that it has received all of the environmental
assessments and that such assessments indicate that the property is not in
compliance with Environmental Laws to determine and notify the Buyers in writing
if it elects to immediately terminate this Agreement or take any and all actions
at its sole expense to remedy the violations identified with respect to an
assessed site; provided, however, that the Seller may not terminate this
Agreement and must take any and all actions to remedy the violations identified
if the aggregate cost of such actions would not exceed Seventy-Five Thousand
Dollars ($75,000). If aggregate cost of such actions would exceed Seventy-Five
Thousand Dollars ($75,000) and the Seller does not provide timely notice
hereunder, stating its intent to remedy all such violations, Buyers may elect to
(i) terminate this Agreement, (ii) extend the time in which the Seller must
respond in writing, or (iii) elect to accept the environmental conditions and
consummate
22
the transaction contemplated hereby; provided, however, that the Buyers shall
forfeit their right to terminate this Agreement pursuant to this Section 4(r) if
they fail to make an election within ten (10) days of the expiration of the
Seller's ten (10) day election period or within ten (10) days after the
expiration of the Seller's election period as extended by the Buyers hereunder.
If the Seller elects or is required under the terms hereof to take all actions
to remediate each site and Seller does not proceed with reasonable diligence to
take such actions or such actions cannot be or are not fully accomplished on or
before the 270th day following the date of this Agreement, Buyers may elect to
terminate this Agreement or postpone the Closing Date until such time as all of
the actions necessary to remedy the violations identified have been fully
performed in a manner and to the extent necessary to satisfy the Seller's
obligations. In the event the Closing Date is postponed pursuant to this Section
4(r), the Parties will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC. The Buyers may elect to
terminate this Agreement if they or their environmental consultants and agents
are not granted adequate access to each parcel of Real Estate to conduct the
environmental testing contemplated in this Section 4(r); provided, however, that
the Buyers shall forfeit their right to terminate this Agreement as a result of
insufficient access to any parcel of Real Estate if they fail to make such
election within forty-five (45) days after the date hereof. The Buyers shall pay
all of the costs of the environmental assessments performed by the Buyers
pursuant to this Agreement.
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyers. The obligation of the Buyers
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 2 above
shall be true and correct in all respects at and as of the Closing Date as
though made on and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all respects through the Closing;
(iii) the Seller shall have procured all of the third party consents
required by Section 4(d), above, and the Buyer shall have received the
title insurance commitments (and endorsements) and Surveys described in
Section 4(o), above;
(iv) no action, suit, investigation, inquiry or other proceeding
shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or impose damages or penalties
upon any of the parties if
23
such transactions are consummated, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(C) Materially affect the right of the Buyers to own, operate, or control
the Acquired Assets (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyers a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified above in Sections 5(a)(i) and
5(a)(ii) are satisfied in all respects and the statements contained in
such certificate shall be deemed a warranty of the Seller which shall
survive the Closing;
(vi) each of the Assignment Applications shall have been approved by
a Final Order of the FCC and the Buyers shall have received all
governmental approvals required to transfer all other authorizations,
consents, and approvals of governments and governmental agencies set forth
in the Disclosure Schedule;
(vii) the relevant parties shall have entered into the Post-Closing
Agreement;
(viii) the Buyers shall have received from counsel to the Seller an
opinion with respect to the matters set forth in Exhibit F attached
hereto, addressed to the Buyers and its lender and dated as of the Closing
Date;
(ix) the Buyers shall, within thirty (30) days after the date
hereof, be satisfied that their examination and due diligence review
referred to in Section 4(l) hereof does not reveal any conditions which
were not disclosed in this Agreement and may result in a Material Adverse
Effect. If, within thirty (30) days after the date hereof, Buyers do not
deliver to Seller a written notice terminating this Agreement in regard to
the contingency described in this Section 5(a)(ix), then the contingency
set forth in this Section 5(a)(ix) shall be deemed waived by Buyers;
(x) the Seller shall have delivered to the Buyers all items required
to be delivered thereby under Section 1(e), above; and
(xi) the Buyers shall have received a landlord estoppel, consent and
waiver letter for each parcel of Real Estate subject to a Lease, duly
executed by the owner of the Real Estate, in a form satisfactory to the
Buyers' lenders which are financing the transaction contemplated hereby.
In the event that any of the conditions set forth in subsections 5(a)(i) or (ii)
or (iv), above, are not satisfied and such failure does not or is not reasonably
likely to have a Material Adverse Effect, Buyers acknowledge and agree that,
notwithstanding the introductory sentence of this Section 5(a), they shall be
required to consummate the transactions contemplated herein despite such
failure;
24
provided, however, that Buyers may still seek indemnification pursuant to
Section 7, below, as hereinafter described. In the event that (i) any of the
conditions set forth in subsections 5(a)(i) or (ii) or (iv) above, are not
satisfied and such failure has or is reasonably likely to have a Material
Adverse Effect, or (ii) any of the other conditions set forth in this Section
5(a) are not satisfied, the Buyers may elect to (i) terminate this Agreement
without liability to the Buyers, or (ii) consummate the transactions
contemplated herein despite such failure. If any of the conditions to Closing
set forth in this Section 5(a) are not satisfied and the Buyers elect or are
required to consummate the transactions described herein, and if such failure
(regardless of whether such failure is Material or has or is reasonably likely
to have a Material Adverse Effect), shall be as a result of a breach of any
representation, warranty, covenant or provision of this Agreement by the Seller
(including, without limitation, any breach arising as a result of the failure of
the Seller to execute and/or deliver any item described in this Section 5(a)),
the Buyers may seek appropriate remedies for any and all damages, costs and
expenses incurred by the Buyers by reason of such breach, including, without
limitation, indemnification pursuant to Section 7, below. In the event that any
of the conditions set forth in Sections 5(a)(iv), (vi), (ix) or (xi) are not
satisfied and the transactions described herein are consummated, the failure of
such condition shall not give rise to an indemnification claim by Buyer pursuant
to Section 7, below, unless and to the extent that the event or the condition
giving rise to such failure also constitutes a breach of a representation,
warranty or covenant of the Seller set forth in Sections 2 or 4 hereof.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 above
shall be true and correct in all respects at and as of the Closing Date as
though made on and as of the Closing Date;
(ii) the Buyers shall have performed and complied with all of their
covenants hereunder in all respects through the Closing;
(iii) no action, suit, investigation, inquiry or other proceeding
shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or impose damages or penalties
upon any of the Parties if such transactions are consummated, or (B) cause
any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
25
(iv) the Buyers shall have delivered to the Seller a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified above in Sections 5(b)(i) and
5(b)(ii) are satisfied in all respects and the statements contained in
such certificate shall be deemed a warranty of the Buyers which shall
survive the Closing;
(v) each of the Assignment Applications shall have been approved by
a Final Order of the FCC and the Buyers shall have received all
governmental approvals required to transfer all other authorizations,
consents, and approvals of governments and governmental agencies set forth
in the Disclosure Schedule;
(vi) the relevant parties shall have entered into the Post-Closing
Agreement; and
(vii) the Buyers shall have delivered to the Seller all items
required to be delivered thereby under Section 1(e), above.
In the event that any of the conditions set forth in subsections 5(b)(i) or (ii)
or (iii), above, are not satisfied and such failure does not have or is not
reasonably likely to have a Material Adverse Effect, Seller acknowledges and
agrees that, notwithstanding the introductory sentence of this Section 5(b),
Seller shall be required to consummate the transactions contemplated herein
despite such failure; provided, however, that Seller may still seek
indemnification pursuant to Section 7, below, as hereinafter described. In the
event that (i) any of the conditions set forth in subsections 5(b)(i) or (ii) or
(iii) above, are not satisfied and such failure has or is reasonably likely to
have a Material Adverse Effect, or (ii) any of the other conditions set forth in
this Section 5(b) are not satisfied, the Seller may elect to (i) terminate this
Agreement without liability to the Seller, or (ii) consummate the transactions
contemplated herein despite such failure. If any of the conditions to Closing
set forth in this Section 5(b) are not satisfied and the Seller elects or is
required to consummate the transactions described herein, and if such failure
(regardless of whether such failure is Material or has or is reasonably likely
to have a Material Adverse Effect) shall be as a result of a breach of any
provision of this Agreement by the Buyers (including, without limitation, any
breach arising as a result of the failure of the Buyers to execute and/or
deliver any item described in this Section 5(b)), the Seller may seek
appropriate remedies for any and all damages, costs and expenses incurred by the
Seller by reason of such breach including, without limitation, indemnification
pursuant to Section 7, below. In the event that any of the conditions set forth
in Sections 5(a)(iii) or (v) are not satisfied and the transactions described
herein are consummated, the failure of such condition shall not give rise to an
indemnification claim by Seller pursuant to Section 7, below, unless and to the
extent that the event or condition giving rise to such failure also constitutes
a breach of a representation, warranty or covenant of the Buyers set forth in
Sections 3 or 4 hereof.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing:
26
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 7 below).
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Stations, each of the other Parties will reasonably cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
(c) Adjustments.
(i) Operation of the Stations and the income and expenses
attributable thereto up through the close of business on the day before
the Closing Date shall be for the account of the Seller and thereafter for
the account of the Buyers. Such items as employee salaries, vacation, sick
day and personal time accruals, and fringe benefits, power and utilities
charges, insurance, real and personal property taxes, prepaid expenses,
deposits, music license fees, and rents and payments pertaining to the
Assumed Contracts (including any contracts for the sale of time for cash,
trade or barter so assigned) shall be prorated between the Seller and the
Buyers as of the Closing Date in accordance with the foregoing principle;
provided, however, that Buyer shall assume those obligations of Seller as
set forth in Section 6(c)(ii), below, and shall reduce the Purchase Price
accordingly. In addition, all commissions payable with respect to the
accounts receivable of Seller (whether due before or after Closing) shall
be solely for the account and responsibility of the Seller. Contractual
arrangements that do not reflect an equal rate of compensation to a
Station over the term of the agreement shall be equitably adjusted as of
the Closing Date. The prorations and adjustments hereunder shall be made
and paid insofar as feasible on the Closing Date, with a final settlement
sixty (60) days after the Closing Date. In the event of any disputes
between the Parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at such time and such disputes shall be
determined by an independent accounting firm mutually acceptable to both
parties and the fees and expenses of such accounting firm shall be paid
one-half (1/2) by the Seller and one-half (1/2) by the Buyers.
27
(ii) At the Closing, the Seller will provide a schedule that sets
forth in reasonable detail the amount of (i) accrued vacation time, sick
pay and personal time of all employees of the Seller hired by the Buyers
as of the Closing Date and (ii) real estate taxes, occupancy taxes, water
taxes and other taxes, if any, on or with respect to the Stations (the
"Assumed Accruals"). The prorations of such taxes will be effected with
respect to all of such taxes paid as of the close of business on the
Closing Date to the extent such taxes relate to any time period subsequent
to the Closing Date or, if not paid as of the Closing Date, to the extent
such taxes relate to any time period prior to the Closing Date, which
proration shall be based upon taxes assessed in the most recent year. Upon
the consent of the Buyers, the aggregate amount of the accruals for the
Assumed Accruals shall be deducted from the Purchase Price and the Buyers
shall be responsible for the payment and/or satisfaction of such accruals.
(d) Collection of Accounts Receivable. At the Closing, the Seller will
turn over to the Buyers, for collection only, the accounts receivable of the
Stations owing to the Seller as of the close of business on the Closing Date. A
schedule of such accounts receivable will be delivered by the Seller to the
Buyers on the Closing Date or as soon thereafter as possible. The Buyers agree
to use commercially reasonable efforts in the ordinary course of business (but
without responsibility to institute legal or collection proceedings) to collect
such accounts receivable during the 120-day period following the Closing Date,
and will provide the Seller with a monthly accounting of all payments received
during the previous calendar month and remit all payments received on such
accounts during each calendar month during this 120-day period on the sixtieth
(60th) and one hundred twentieth (120th) day. The Buyers shall have the sole
right to collect such accounts receivable during such one hundred twenty (120)
day period. In the event the Buyers receive monies during the 120-day period
following the Closing Date from an advertiser who, after the Closing Date, is
advertising over any of the Stations, and that advertiser was included among the
accounts receivable as of the Closing Date, the Buyers shall apply said monies
to the oldest outstanding balance due on the particular account, except in the
case of a "disputed" account receivable. For purposes of this Section 6(d), a
"disputed" account receivable means one which the account debtor refuses to pay
because he asserts that the money is not owed or the amount is incorrect. In the
case of such a disputed account, the Buyers shall immediately return the account
to the Seller prior to expiration of the 120-day period following the Closing
Date. If the Buyers return a disputed account to the Seller, the Buyers shall
have no further responsibility for its collection and may accept payment from
the account debtor for advertising carried on any of the Stations after the
Closing Date. At the end of the 120-day period following the Closing Date, the
Buyers will turn back to the Seller all of the accounts receivable of the
Stations as of the Closing Date owing to the Seller which have not yet been
collected, and the Buyers will thereafter have no further responsibility with
respect to the collection of such receivables. During the 120-day period
following the Closing Date, the Buyers shall afford the Seller reasonable access
to the accounts receivable "aging list." The Seller acknowledges and agrees that
the Buyers are acting as its collection agent hereunder for the sole benefit of
the Seller and that Buyers have accepted such responsibility for the
accommodation of the Seller. The Buyers shall not have any duty to inquire as to
the form, manner of execution or validity
28
of any item, document, instrument or notice deposited, received or delivered in
connection with such collection efforts, nor shall the Buyers have any duty to
inquire as to the identity, authority or rights of the persons who executed the
same. The Seller shall indemnify Buyers and hold them harmless from and against
any judgments, expenses (including attorneys' fees) costs or liabilities which
the Buyers may incur or sustain as a result of or by reason of such collection
efforts.
(e) Consents. In the event any of the Assumed Contracts are not assignable
or any consent to such assignment is not obtained on or prior to the Closing
Date, and the Buyers elect to consummate the transactions contemplated herein
despite such failure or inability to obtain such consent, the Seller shall
continue to use commercially reasonably efforts to obtain any such assignment or
consent after the Closing Date. Until such time as such assignment or approval
has been obtained, the Seller will cooperate with the Buyers in any lawful and
economically feasible arrangement to provide that the Buyers shall receive the
Seller's interest in the benefits under any such Assumed Contract, including
performance by the Seller as agent, if economically feasible; provided, however,
that the Buyers shall undertake to pay or satisfy the corresponding liabilities
for the enjoyment of such benefit to the extent that Buyers would have been
responsible therefor if such consent or assignment had been obtained.
7. Remedies for Breaches of this Agreement.
(a) Survival. All of the representations and warranties of the Seller
contained in Section 2 of this Agreement and all of the representations and
warranties of the Buyer contained in Section 3 of this Agreement shall survive
the Closing and shall continue in full force and effect for a period of fourteen
(14) months following Closing.
(b) Indemnification Provisions for the Benefit of the Buyers. The Seller
agrees to indemnify the Buyers from and against any Adverse Consequences the
Buyers may suffer resulting from, arising out of, relating to, in the nature of,
or caused by:
(i) any misrepresentation or breach of any of the Seller's
representations or warranties contained in this Agreement or in any
Ancillary Agreement executed and/or delivered by the Seller (so long as
the Buyers make a written claim for indemnification within the applicable
survival period);
(ii) any breach or nonfulfillment of any agreement or covenant of
the Seller contained herein or in any Ancillary Agreement;
(iii) any Liability of the Seller which is not an Assumed Liability;
29
(iv) any Liability of the Buyers arising by operation of law
(including under any bulk transfer law of any jurisdiction or under any
common law doctrine of defacto merger or successor liability) which is not
an Assumed Liability; and/or
(v) any Tax Liabilities of the Seller or its partners with respect
to the operation of the Stations or the business of the Seller at any time
prior to the Closing Date.
The Buyers shall not have the right to assert claims for indemnification under
subsection (i) unless and until the aggregate amount of any Adverse Consequences
that the Buyers in total may suffer or have suffered as a result of such breach
exceeds Seventy-Five Thousand Dollars ($75,000), and then only for the amounts
in excess of such Seventy-Five Thousand Dollar ($75,000) aggregate amount.
Notwithstanding the foregoing, the Seller shall not be liable for
indemnification claims under subsection (i) in excess of an aggregate amount
equal to the Purchase Price; provided, however, that no such limit shall apply
to or include Adverse Consequences based on a claim of fraud.
(c) Indemnification Provisions for the Benefit of the Seller. Except as
described below in Section 7(e) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Buyers agree to indemnify the Seller
from and against any Adverse Consequences the Seller may suffer resulting from,
arising out of, relating to, in the nature of, or caused by (i) any
misrepresentation or breach of any of the Buyers' representations or warranties
contained in this Agreement or in any Ancillary Agreement executed and/or
delivered by the Buyers (so long as the Seller makes a written claim for
indemnification within the applicable survival period), (ii) any breach or
nonfulfillment of any agreement or covenant of the Buyers contained herein or in
any Ancillary Agreement, or (iii) any Assumed Liability.
(d) Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 10(o) below), in addition
to any other remedy to which it may be entitled, at law or in equity.
(e) Liquidated Damages. The Buyers and the Seller acknowledge that in the
event that the transactions contemplated by this Agreement are not closed
because of a default by the Buyers, the Adverse Consequences as a result of such
default may be difficult, if not impossible, to ascertain. Accordingly, in lieu
of indemnification pursuant to Section 7(c), the Seller shall be entitled to
receive from the Buyers for such default the sum of Seven Hundred Fifty Thousand
Dollars ($750,000) as liquidated damages without the need for proof of damages,
subject only to successfully proving in a court of competent jurisdiction that
the Buyers have materially breached
30
this Agreement and that the transactions contemplated thereby have not occurred.
The Buyers and the Seller agree to pay said sum of liquidated damages within ten
(10) days of the date that the non-defaulting party obtains such a judgment.
Notwithstanding anything contained herein to the contrary, the Seller
acknowledges and agrees that in the event this Agreement is terminated by the
Seller prior to the Closing Date as a result of a breach or default by Buyers
under this Agreement, the Seller's sole and exclusive remedy with respect to
such default shall be to proceed against the ▇▇▇▇▇▇▇ Money Deposit as liquidated
damages.
(f) Matters Involving Third Parties. If any third party shall notify any
Party (the "Indemnified Party") with respect to any matter which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 7, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is damaged as a result
of such failure. In the event any Indemnifying Party notifies the Indemnified
Party within 15 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified Party within 15 days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof and/or in the event the Indemnifying Party
shall fail to defend such claim actively and in good faith, then the Indemnified
Party may defend against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate.
31
8. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of
the assets of the Seller, other than Retained Assets, that are used or useful in
the operation of the Stations, wherever located, including but not limited to
all of its (a) real property, leaseholds and other interests of any kind
therein, improvements, fixtures, and fittings thereon (such as towers and
antennae), and easements, rights-of-way, and other appurtenances thereto); (b)
tangible personal property (such as fixed assets, computers, data processing
equipment, electrical devices, monitoring equipment, test equipment, switching,
terminal and studio equipment, transmitters, transformers, receivers, broadcast
facilities, furniture, furnishings, inventories of compact disks, records, tapes
and other supplies, vehicles, and all assignable warranties with respect
thereto; (c) Intellectual Property, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions; (d) rights under orders and
agreements (including those Barter Agreements and Advertising Contracts
identified on the Disclosure Schedule) now existing or entered into in the
Ordinary Course of Business for the sale of advertising time on the Stations;
(e) Assumed Contracts, indentures, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (f) call letters of the Stations, jingles,
logos, slogans, and business goodwill of the Stations; (g) claims, deposits,
prepayments, refunds, causes of action, choses in action, rights of recovery
(including rights under policies of insurance), rights of set off, and rights of
recoupment; (h) Licenses and similar rights obtained from governments and
governmental agencies; and (i) FCC logs and records and all other books,
records, ledgers, logs, files, documents, correspondence, advertiser lists, all
other lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, program production materials,
studies, reports, and other printed or written materials; and (j) goodwill of
the Stations.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"Advertising Contracts" has the meaning set forth in Section 2(s), above.
"Affiliate" means with reference to any person or entity, another person
or entity controlled by, under the control of or under common control with that
person or entity.
"Ancillary Agreements" have the meaning set forth in Section 2(b) above.
"Assignment Application" has the meaning set forth in Section 4(b) above.
"Assumed Accruals" has the meaning set forth in Section 6(c) above.
32
"Assumed Contracts" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts listed on Exhibit G attached hereto.
"Assumed Liabilities" means (a) obligations of the Seller under the
Assumed Contracts which accrue after the Closing Date either: (i) to furnish
services, and other non-Cash benefits to another party after the Closing; or
(ii) to pay for goods, services, and other non-Cash benefits that another party
will furnish to it after the Closing; and (b) the obligations of the Seller
assumed under Section 6(c)(ii). The Assumed Liabilities shall not include (i)
any Retained Liabilities, or (ii) certain obligations under the Employment
Agreements assumed by Buyers which have been retained by Seller as detailed
under the "General Contracts" section of Exhibit G.
"Barter Agreements" has the meaning set forth in Section 4(f) above.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyers" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 1(d) above.
"Closing Date" has the meaning set forth in Section 1(d) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of the Seller.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
"▇▇▇▇▇▇▇ Money Deposit" has the meaning set forth in Section 1(c) above.
"Escrow Agreement" has the meaning set forth in Section 1(c) above.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined
33
benefit retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental Laws" has the meaning set forth in Section 2(q), above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First National Bank of Maryland in Washington, D.C.
"Extremely Hazardous Substance" has the meaning set forth in Section 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communication Commission of the United States.
"FCC Licenses" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"Final Order" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"Financial Statements" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 7(d) above.
"Indemnifying Party" has the meaning set forth in Section 7(d) above.
34
"Intellectual Property" means all of the following used or useful in the
operation of the Stations: (a) patents, patent applications, patent disclosures,
and improvements thereto, (b) trademarks, service marks, trade dress, call
letters, logos, trade names, and corporate names and registrations and
applications for registration thereof, (c) all programs, programming materials,
copyrights and registrations and applications for registration thereof, (d) mask
works and registrations and applications for registration thereof, (e) computer
software, data, and documentation, (f) trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
market and other research information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information), (g) other proprietary rights, and
(b) copies and tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge of ▇▇▇▇ ▇. ▇▇▇▇ after investigation and
inquiry of Station's management.
"Leases" means those real estate leases to which Seller is a party
covering Seller's studios and FM tower sites in Ann Arbor, Michigan, as
described in Section 2(i) of the Disclosure Schedule.
"Liability" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"Licenses" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"Material" or "Materially" means an event, condition, circumstance, act,
omission or effect which, individually or in the aggregate with other similar
events, conditions, circumstances, acts, omissions or effects, (i) is, in the
opinion of a reasonably prudent buyer, likely to have a material effect on the
transactions contemplated hereby or the operation or condition of the Stations
taken as a whole, or (ii) has or will have a financial consequence of
Seventy-Five Thousand Dollars ($75,000) or more.
"Material Adverse Effect" means an event, condition, circumstance, act,
omission or effect which, individually or in the aggregate with other similar
events, conditions, circumstances, acts, omissions or effects, is, in the
opinion of a reasonably prudent buyer, likely to have a material effect on the
transactions contemplated hereby or the operation or condition of the Stations
taken as a whole; provided, however, that for purposes of Sections 5(b) and
9(a)(iii), "Material Adverse Effect"
35
means an event, condition, circumstance, act, omission or effect which,
individually or in the aggregate with other similar events, conditions,
circumstances, acts, omissions or effects, is, in the opinion of a reasonably
prudent seller, likely to have a material effect on the transactions
contemplated hereby. Nothing in the definition of "Material" or "Materially"
shall be considered to define the term "Material Adverse Effect."
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Estate" means the real property owned by the Seller in York,
Michigan and Saline, Michigan as described in Section 2(i) of the Disclosure
Schedule and all buildings, fixtures and improvements located thereon.
"Party" has the meaning set forth in the preface above.
"Permitted Real Estate Encumbrances" shall have the meaning set forth in
Section 2(i), above.
"Post-Closing Agreement" means the Post-Closing Agreement with ▇▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ in the form attached hereto as Exhibit D.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 1(c) above.
"Real Estate" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Retained Assets" means (i) the partnership charter, qualifications to
conduct business as a foreign entity, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, and other documents relating to the organization,
maintenance, and existence of the Seller as a limited partnership; (ii) any of
the rights of the Seller under this Agreement (or under any side agreement
between the Seller on the one hand and the Buyers on the other hand entered into
on or after the date of this Agreement); (iii) accounts, notes and other
receivables of the Seller; and (iv) Cash.
36
"Retained Liabilities" means any other obligations or Liabilities of the
Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the Closing; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(o) and Section 4(r) relating to Surveys, title commitments and
environmental audits and Section 4(b) with regard to the Assignment
Application); or (iv) any Liability or obligation of the Seller under this
Agreement (or under any side agreement between the Seller on the one hand and
the Buyers on the other hand entered into on or after the date of this
Agreement).
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"Seller" has the meaning set forth in the preface above.
"Stations" means the radio broadcast stations having the call letters
WIQB-FM, WQKL-FM, and WTKA-AM, licensed by the FCC to operate in Ann Arbor,
Michigan and the radio broadcast station having the call letters WDEO-AM,
licensed by the FCC to operate in Saline, Michigan.
"Subsidiary," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"Surveys" has the meaning set forth in Section 4(o) above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
37
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyers and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyers may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event the
Seller is in breach of any representation, warranty, or covenant contained
in this Agreement and such breach has or is likely to have a Material
Adverse Effect; provided, however, that if such breach is capable of being
cured, such breach also remains uncured for twenty (20) days after notice
of breach is received by the Seller from the Buyers;
(iii) the Seller may terminate this Agreement by giving written
notice to the Buyers at any time prior to the Closing in the event the
Buyers are in breach of any representation, warranty, or covenant
contained in this Agreement and such breach has or is likely to have a
Material Adverse Effect; provided, however, that if such breach is capable
of being cured, such breach also remains uncured for ten (10) days after
notice of breach is received by the Buyers from the Seller;
(iv) the Buyers may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under
Section 5(a) hereof giving the Buyer the right to terminate in accordance
with the provisions of said Section 5(a) (unless the failure results
primarily from the Buyers themselves breaching any representation,
warranty, or covenant contained in this Agreement);
(v) the Seller may terminate this Agreement by giving written notice
to the Buyers at any time prior to the Closing if the Closing shall not
have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under
Section 5(b) hereof giving the Seller the right to terminate in accordance
with provisions of said Section 5(b) (unless the failure results primarily
from the Seller itself breaching any representation, warranty, or covenant
contained in this Agreement);
(vi) the Buyers or the Seller may terminate this Agreement if any
Assignment Application is denied by Final Order; or
38
(vii) the Buyers may terminate this Agreement as provided in Section
4(r), 4(q) and 5(a)(ix).
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 9(a), above, all obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party (except for any Liability
of any Party then in breach).
10. Miscellaneous.
(a) Survival. All of the representations, warranties, and covenants of the
Parties contained in this Agreement shall survive the Closing hereunder as and
to the extent provided in Section 7(a) hereof.
(b) Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
39
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party, provided that (i) the Buyers may assign all of its right,
title and interest in, to and under this Agreement to one or more Affiliates who
shall then, subject to the terms and conditions of this Agreement, have the
right to receive the Acquired Assets, assume the Assumed Liabilities, and to pay
to the Seller the Purchase Price therefor or to any successor to the Buyers in
the event of any sale, merger or consolidation of the Buyers, (ii) Buyers may
assign its indemnification claims and its rights under the warranties and
representations of the Seller to the financial institution(s) providing
financing to the Buyers in connection with this transaction; and (iii) the
Seller may assign its rights to receive the Purchase Price hereunder in
accordance with Section 10(p), below.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be considered to be given
and received in all respects when hand delivered, when delivered via prepaid
express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient at its address set
forth below:
If to the Seller:
Arbor Radio, L.P.
c/o ▇▇▇▇ ▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
40
▇▇▇▇ ▇. ▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(which copy shall not constitute notice to the Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
c/o QUAESTUS Management Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇▇▇▇ & ▇▇▇▇, S.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(Neither of which copies shall constitute notice to Buyers)
41
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Michigan.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyers and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(l) Expenses. The Buyers and the Seller will each bear their own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby, other than (i) as set forth
in Section 4(b) with regard to the Assignment Applications, (ii) as set forth in
Section 4(o) with respect to Surveys, title commitments, and (iii) the broker's
fee payable to ▇▇▇▇▇▇▇ & Co. in the amount of One Hundred Seventy-Five Thousand
Dollars ($175,000) which fee shall be paid by the Buyers. The Buyer will pay for
all environmental audits performed under Section 4(r) hereof. The Seller will
pay all income taxes. The Seller and the Buyers will each pay one-half (1/2) of
any transfer or sales taxes and other recording or similar fees necessary to
vest title to each of the Acquired Assets in the Buyers.
(m) Construction. The language used in this Agreement will be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied
42
against any Party. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The Parties
acknowledge and agree that neither Party believes that a filing under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act is required in connection with the transactions
contemplated hereby; however, nothing contained in the last sentence of Section
2(c) or the last sentence of Section 3(c) shall be deemed a warranty or
representation by Seller or Buyer regarding consents or approvals that may be
required under such Act. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The
disclosure of an exception to one representation or warranty shall be deemed to
constitute disclosure with respect to such other representations and warranties
for which the same is fairly applicable. The Disclosure Schedule shall not vary,
change or alter the literal meaning of the representations and warranties of the
Seller contained in this Agreement, other than creating exceptions thereto which
are fairly applicable to the language of the warranty and representation
contained in this Agreement.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state court sitting in Ann Arbor, Michigan and the Federal
District Court for the Eastern District of Michigan, Southern Division, in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto. Any Party may make service on the other
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
10(h) above. Nothing in this Section 10(o), however, shall affect the right of
any Party to serve legal process in any other manner permitted by law. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
(p) Like-Kind Exchange. Seller may at any time at or prior to Closing
assign solely its right to collect the Purchase Price (or any portion thereof)
to a "qualified intermediary" as defined in Treasury Reg. Section
1.1031(k)-1(g)(4), provided that such assignment does not affect Seller's and
Buyers' rights and obligations hereunder. Seller shall promptly provide written
notice to Buyers of a proposed assignment along with all agreements and
documents to be executed and/or delivered in connection with the assignment.
Buyers shall cooperate with all reasonable requests of Seller and such qualified
intermediary in arranging and effecting an exchange which qualifies under
Section
43
1031 of the Code; provided, however, that (i) Buyer shall not incur any
out-of-pocket expense as a result of its cooperation, (ii) such assignment shall
be effected in a manner that does not delay the Closing, and (iii) the
assignment, in the reasonable opinion of Buyers' legal counsel, does not
adversely affect the rights, powers or remedies of the Buyers under this
Agreement.
44
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS BROADCASTING, INC.
By:
--------------------------------
(printed)
----------------------------------------
Title:
-------------------------
CUMULUS LICENSING CORP.
By:
--------------------------------
(printed)
----------------------------------------
Title:
-------------------------
ARBOR RADIO, L.P.
By:
--------------------------------
(printed)
----------------------------------------
Title:
-------------------------
45
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B-1 Form of Assignment
Exhibit B-2 Form of Warranty ▇▇▇▇ of Sale
Exhibit B-3 Form of Warranty Deeds
Exhibit C Form of Assumption Agreement
Exhibit D Form of Post-Closing Agreement
Exhibit E Intentionally Deleted
Exhibit F Form of Opinion
Exhibit G Assumed Contracts
46