EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 2, 2003
AMONG
SPANISH BROADCASTING SYSTEM, INC.,
SPANISH BROADCASTING SYSTEM-SAN FRANCISCO, INC.,
KPTI LICENSING, INC.
AND
3 POINT MEDIA - SAN FRANCISCO, LLC
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................... 1
Section 1.1. Definitions...................................................................... 1
ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS..................................................... 8
Section 2.1. Purchase and Sale of Purchased Assets............................................ 8
Section 2.2. Excluded Assets.................................................................. 10
Section 2.3. Assumption of Liabilities........................................................ 11
Section 2.4. Closing Date..................................................................... 14
Section 2.5. Cash Advance..................................................................... 14
Section 2.6. Purchase Price................................................................... 14
Section 2.7. Payment of Purchase Price........................................................ 14
Section 2.8. Closing Date Deliveries.......................................................... 15
Section 2.9. Further Assurances............................................................... 16
Section 2.10. Allocation....................................................................... 16
Section 2.11. Prorations and Adjustments....................................................... 17
Section 2.12. Collection of Accounts Receivable................................................ 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SBS ENTITIES....................................... 19
Section 3.1. Organization..................................................................... 19
Section 3.2. Authority of the SBS Entities.................................................... 19
Section 3.3. Financial Statements............................................................. 20
Section 3.4. Operations....................................................................... 21
Section 3.5. No Undisclosed Liabilities....................................................... 23
Section 3.6. Taxes............................................................................ 23
Section 3.7. Sufficiency of Assets............................................................ 23
Section 3.8. Governmental Permits............................................................. 23
Section 3.9. FCC Licenses..................................................................... 24
Section 3.10. Real Property; Real Property Leases.............................................. 25
Section 3.11. Personal Property................................................................ 26
Section 3.12. Personal Property Leases......................................................... 26
Section 3.13. Intellectual Property............................................................ 26
Section 3.14. Title to Purchased Assets........................................................ 27
Section 3.15. Employees........................................................................ 27
Section 3.16. Employee Relations............................................................... 27
Section 3.17. Contracts........................................................................ 28
Section 3.18. Status of Contracts.............................................................. 28
Section 3.19. No Violation, Litigation or Regulatory Action.................................... 29
Section 3.20. Insurance........................................................................ 30
Section 3.21. Employee Plans; ERISA............................................................ 30
Section 3.22. Environmental Protection......................................................... 31
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TABLE OF CONTENTS
(continued)
PAGE
Section 3.23. Insolvency Proceedings........................................................... 32
Section 3.24. No Misleading Statements......................................................... 32
Section 3.25. Transactions with Affiliates..................................................... 32
Section 3.26. No Finder........................................................................ 33
REPRESENTATIONS AND WARRANTIES OF BUYER........................................................................ 33
Section 4.1. Organization..................................................................... 33
Section 4.2. Authority of Buyer............................................................... 33
Section 4.3. Litigation....................................................................... 34
Section 4.4. No Finder........................................................................ 34
Section 4.5. Qualifications as FCC Licensee................................................... 34
Section 4.6. Availability of Funds............................................................ 34
Section 4.7. No Misleading Statements......................................................... 34
Section 4.8. No Other Representations and Warranties.......................................... 35
ARTICLE V ACTIONS PRIOR TO THE CLOSING DATE......................................................... 35
Section 5.1. Investigation of the Business.................................................... 35
Section 5.2. Preserve Accuracy of Representations and Warranties.............................. 35
Section 5.3. FCC Consent; Other Consents and Approvals........................................ 36
Section 5.4. Operations of the Station Prior to the Closing Date.............................. 36
Section 5.5. Third Party Consents............................................................. 38
Section 5.6. Environmental Site Assessment.................................................... 39
Section 5.7. Public Announcement.............................................................. 40
Section 5.8. Interim Financial Statements..................................................... 40
Section 5.9. Administrative Violations........................................................ 40
Section 5.10. Bulk Sales Act................................................................... 41
Section 5.11. Adverse Developments............................................................. 41
Section 5.12. Additional Covenant.............................................................. 41
Section 5.13. No Solicitation Covenant......................................................... 41
Section 5.14. Copies of FCC Applications....................................................... 42
Section 5.15. Estoppel Certificates............................................................ 42
Section 5.16. Trade Agreements; Station Agreements............................................. 42
Section 5.17. Title Examination; Title Insurance; Surveys...................................... 42
ARTICLE VI ADDITIONAL AGREEMENTS..................................................................... 43
Section 6.1. Taxes; Sales, Use and Transfer Taxes............................................. 43
Section 6.2. Employees; Employee Benefit Plans................................................ 43
Section 6.3. Control of Operations Prior to Closing Date...................................... 44
Section 6.4. Non-Solicitation of Employees.................................................... 45
Section 6.5. Termination of Certain Arrangements.............................................. 45
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SBS ENTITIES.................................. 45
Section 7.1. No Misrepresentation or Breach of Covenants and Warranties....................... 45
Section 7.2. No Restraint or Litigation....................................................... 46
Section 7.3. FCC Consent...................................................................... 46
Section 7.4. Payment.......................................................................... 46
Section 7.5. Closing Documents................................................................ 46
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.............................................. 47
Section 8.1. No Misrepresentation or Breach of Covenants and Warranties....................... 47
Section 8.2. No Restraint or Litigation....................................................... 47
Section 8.3. FCC Consent...................................................................... 47
Section 8.4. FCC Licenses..................................................................... 48
Section 8.5. Closing Documents................................................................ 48
Section 8.6. Third Party Consents............................................................. 48
Section 8.7. Satisfactory Environmental Assessment............................................ 48
Section 8.8 Final Order Contingent Condition................................................. 48
ARTICLE IX INDEMNIFICATION........................................................................... 49
Section 9.1. Indemnification by the SBS Entities.............................................. 49
Section 9.2. Indemnification by Buyer......................................................... 50
Section 9.3. Notice of Claims................................................................. 52
Section 9.4. Third Person Claims.............................................................. 52
Section 9.5. Limitations...................................................................... 53
Section 9.6. Treatment of Indemnity Payments.................................................. 53
Section 9.7. Indemnification Sole Remedy...................................................... 54
ARTICLE X TERMINATION AND REMEDIES.................................................................. 54
Section 10.1. Termination...................................................................... 54
Section 10.2. SBS Entities' Remedies........................................................... 55
Section 10.3. Buyer's Remedies................................................................. 55
Section 10.4. Termination Notice............................................................... 56
ARTICLE XI GENERAL PROVISIONS........................................................................ 56
Section 11.1. Survival of Representations, Warranties and Obligations.......................... 56
Section 11.2. Confidential Nature of Information............................................... 56
Section 11.3. Governing Law; Venue............................................................. 57
Section 11.4. Notices.......................................................................... 57
Section 11.5. Assignment; Successors and Assigns............................................... 58
Section 11.6. Entire Agreement; Amendments..................................................... 59
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TABLE OF CONTENTS
(continued)
PAGE
Section 11.7. Interpretation................................................................... 59
Section 11.8. Waivers.......................................................................... 59
Section 11.9. Expenses......................................................................... 59
Section 11.10. Partial Invalidity............................................................... 59
Section 11.11. Execution in Counterparts........................................................ 59
Section 11.12. Risk of Loss; Damage to Facilities............................................... 60
Section 11.13. No Third Party Beneficiaries..................................................... 60
Section 11.14. Attorneys' Fees.................................................................. 60
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is entered
into as of October 2, 2003, by and among Spanish Broadcasting System, Inc., a
Delaware corporation ("SBS"), Spanish Broadcasting System-San Francisco, Inc., a
Delaware corporation ("SBS-San Francisco") and KPTI Licensing, Inc., a Delaware
corporation ("SBS Licensee" and together with SBS and SBS-San Francisco, the
"SBS Entities"), and 3 Point Media - San Francisco, LLC, an Illinois limited
liability company ("Buyer").
W I T N E S S E T H:
WHEREAS, the SBS Entities are engaged in the business of
owning and operating radio broadcast station KPTI(FM), licensed to Alameda,
California (the "Station");
WHEREAS, SBS Licensee holds the broadcast licenses issued by
the FCC and used in the operation of the Station; and
WHEREAS, the SBS Entities desire to sell to Buyer, and Buyer
desires to purchase from the SBS Entities, substantially all of the assets,
properties and business relating to the Station, all on the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among the SBS Entities and
Buyer as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, the
following terms have the meanings specified or referred to in this Section 1.1:
"ACCOUNTING FIRM" has the meaning specified in Section 2.11(a).
"ADJUSTMENT TIME" has the meaning specified in Section 2.11(a).
"ADMINISTRATIVE VIOLATION" has the meaning specified in Section 5.9.
"ADVERSE ENVIRONMENTAL CONDITIONS" has the meaning specified in Section
5.6.
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"APPRAISAL FIRM" has the meaning specified in Section 2.10.
"ASSET ALLOCATION" has the meaning specified in Section 2.10.
"ASSUMED LIABILITIES" has the meaning specified in Section 2.3(a).
"BALANCE SHEET DATE" has the meaning specified in Section 3.3(a).
"BARTER AGREEMENTS" shall mean contracts for the sale of time on the
Station in exchange for programming.
"BUSINESS" has the meaning specified in Section 2.1.
"BUYER" has the meaning specified in the introductory paragraph hereof.
"BUYER ANCILLARY AGREEMENTS" has the meaning specified in Section
4.2(a).
"BUYER GROUP MEMBER" means Buyer, its Affiliates, directors, officers,
members, employees, shareholders and agents and their respective successors and
assigns.
"BUYER LENDERS" means the lenders who are parties to the credit
agreements to be entered into by Buyer and such lenders in connection with the
consummation of the transactions contemplated by this Agreement.
"BUYER THRESHOLD AMOUNT" has the meaning specified in Section 9.2.
"CASH ADVANCE" has the meaning specified in Section 2.5.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601 et seq., any amendments thereto, any
successor statutes, and any regulations promulgated thereunder.
"CLAIM NOTICE" has the meaning specified in Section 9.3(a).
"CLOSING DATE" has the meaning specified in Section 2.4.
"CLOSING DATE ADJUSTMENTS" has the meaning specified in Section
2.11(a).
"CLOSING DATE TRADE REPORT" has the meaning specified in Section
2.11(b).
"CLOSING" has the meaning specified in Section 2.4.
"CLOSING EXTENSION DEADLINE" has the meaning specified in Section 8.8.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
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"COVENANTOR" has the meaning specified in Section 6.4.
"EMPLOYEE PLANS" has the meaning specified in Section 3.21(a).
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions on transfer, assignment or use
of any kind.
"ENVIRONMENTAL ASSESSMENT" has the meaning specified in Section 5.6.
"ENVIRONMENTAL CONDITIONS" means the state of the environment,
including soil, surface water, ground water, any drinking water supply,
subsurface strata or ambient air.
"ENVIRONMENTAL LAWS" means all applicable foreign, federal, state,
district and local laws, all applicable rules, policy statements and regulations
promulgated thereunder, and all applicable orders, consent decrees, judgments,
governmental notices, permits and governmental demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of Hazardous Materials into the environment and (ii) laws relating to
the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of Hazardous
Materials. Environmental Laws shall include, without limitation, CERCLA, as
amended, RCRA, as amended, the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Clean Water Act, as
amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended,
the Occupational Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any Governmental Body that are enacted and currently in
effect.
"ENVIRONMENTAL REPORTS" means any and all written analyses, summaries
or explanations, known by, and identified in the environmental records of, the
SBS Entities of (i) any Environmental Conditions in, on or about the Real
Property or (ii) the SBS Entities' compliance with, or liability under, any
Environmental Laws.
"ERISA AFFILIATE" means any Person which is (or at any relevant time
was) a member of a controlled group of corporations within the meaning of Code
Section 414(b), any trade or business which is under common control within the
meaning of Code Section 414(c), and any affiliated service group, within the
meaning of Code Section 414(m) or (o), of which any SBS Entity is (or at any
relevant time was) a member.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF LOSS" has the meaning specified in Section 11.12(a).
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"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning specified in Section 2.3(b).
"EXPENSE" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
assignment to Buyer (or Affiliates of Buyer if assigned as permitted pursuant to
Section 11.5) of the FCC Licenses as contemplated by this Agreement.
"FCC LICENSES" has the meaning specified in Section 3.9(a).
"FINAL ORDER" means an order or action of the FCC that, by reason of
expiration of time or exhaustion of remedies, is no longer subject to
administrative or judicial reconsideration or review.
"FINAL ORDER CLOSING REQUIREMENTS" has the meaning specified in Section
8.8.
"FINANCIAL STATEMENTS" has the meaning specified in Section 3.3(a).
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in Section 3.8.
"HAZARDOUS MATERIALS" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic,
infectious, radioactive or otherwise hazardous substances or materials (whether
solids, liquids or gases) subject to regulation, control or remediation under
Environmental Laws but excluding materials occurring naturally at or about any
facility. By way of example only, the term Hazardous Materials includes
petroleum, urea formaldehyde, flammable, explosive and radioactive materials,
PCBs, pesticides, herbicides, asbestos, acids, metals, solvents and waste
waters.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.3(a).
"INDEMNITOR" has the meaning specified in Section 9.3(a).
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"INTELLECTUAL PROPERTY" has the meaning specified in Section 3.13(a).
"IRS" means the Internal Revenue Service.
"LIABILITY" means any and all claims, debts, liabilities, obligations
and commitments of any nature whatsoever, whether known or unknown, asserted or
unasserted, fixed, absolute or contingent, matured or unmatured, accrued or
unaccrued, liquidated or unliquidated or due or to become due, whenever or
however arising (including those arising out of any contract or tort, whether
based on negligence, strict liability or otherwise) and whether or not the same
would be required by generally accepted accounting principles to be reflected as
a liability in financial statements or disclosed in the notes thereto.
"LOSS" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges (excluding, except in case of fraud or willful or
intentional misrepresentation, any and all incidental and special damages and
consequential damages that are not reasonably foreseeable).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
Purchased Assets, the operations of the Station, or on the ability of the SBS
Entities to consummate the transactions contemplated hereby, or any event or
condition which would reasonably be expected, with the passage of time, to
constitute such a "material adverse effect," other than (i) any effect resulting
from changes in conditions (including economic conditions, regulatory matters,
and legislative actions) that are generally applicable to the economy or the
radio broadcasting industry in general on a national, regional or state basis,
or (ii) any change in competition due solely to the actions of the owner of any
radio station, other than the Station, that is in the same market as the
Station.
"MATERIAL STATION AGREEMENTS" has the meaning specified in Section 5.5.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C. Sections
651 et seq., any amendment thereto, any successor statute, and any regulations
promulgated thereunder.
"PAYMENT DATE" has the meaning specified in Section 2.11(a).
"PERMITTED ENCUMBRANCE" means each of the following: (i) liens for
Taxes, assessments or other governmental charges which are not yet due and
payable or are being diligently contested in good faith; (ii) liens for
mechanics, materialmen's and similar encumbrances with respect to any amounts
not yet due and payable or being diligently contested in good faith; (iii) with
respect to leased Real Property, liens in favor of the lessor of such leased
Real Property; (iv) with respect to the owned and leased Real Property, leases,
easements, rights to access, rights-of-way, mineral rights or other similar
reservations and restrictions, defects of title, which are set forth in title
insurance policies, title commitments or surveys made available to Buyer, the
Schedules or in the applicable deeds or leases or which, either individually or
in the aggregate, do not materially and adversely affect or interfere with the
ownership or current use of the affected real property or leased premises in the
Business as presently conducted; (v) the right,
5
generally applicable with respect to similarly situated assets and properties,
reserved to any Governmental Body to regulate property or assets; (vi) any
generally applicable zoning law or ordinance or similar legal requirement; (vii)
any other Encumbrances that relate to liabilities and obligations that are to be
discharged in full at the Closing or that will be removed prior to or at the
Closing; (viii) restrictions on transfer or assignment contained in the Station
Agreements; and (ix) any Encumbrances created by or at the direction of Buyer.
"PERSON" means any person, employee, individual, corporation, limited
liability company, partnership, trust, or any other non-governmental entity or
any governmental or regulatory authority or body.
"PERSONAL PROPERTY LEASES" has the meaning specified in Section 3.12.
"PERSONAL PROPERTY" has the meaning specified in Section 3.11.
"PROPOSED ACQUISITION TRANSACTION" has the meaning specified in Section
5.13.
"PURCHASE PRICE" has the meaning specified in Section 2.6.
"PURCHASED ASSETS" has the meaning specified in Section 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq., and any successor statute, and any regulations
promulgated thereunder.
"REAL PROPERTY" has the meaning specified in Section 3.10(a).
"REAL PROPERTY LEASES" has the meaning specified in Section 3.10(c).
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or property.
"REMEDIATION CAP" has the meaning specified in Section 5.6.
"REQUIRED CONSENT" has the meaning specified in Section 8.6.
"REQUIREMENTS OF LAW" means any foreign, federal, state or local law,
rule or regulation, Governmental Permit or other binding determination of any
Governmental Body.
"SBS" has the meaning specified in the introductory paragraph hereof.
"SBS ENTITIES" has the meaning specified in the introductory paragraph
hereof.
"SBS ENTITIES ACCOUNTS RECEIVABLE" has the meaning specified in Section
2.12.
6
"SBS ENTITIES ANCILLARY AGREEMENTS" has the meaning specified in
Section 3.2(a).
"SBS LICENSEE" has the meaning specified in the introductory paragraph
hereof.
"SBS GROUP MEMBER" means each SBS Entity and its Affiliates, directors,
members, partners, officers, employees, shareholders and agents and their
respective successors and assigns.
"SBS-SAN FRANCISCO" has the meaning specified in the introductory
paragraph hereof.
"SBS THRESHOLD AMOUNT" has the meaning specified in Section 9.1.
"SPECIFIED EVENT" has the meaning specified in Section 11.12(b).
"STATION AGREEMENTS" has the meaning specified in Section 3.18(a).
"STATION" has the meaning specified in the first recital hereof.
"STATION LICENSES" has the meaning specified in Section 2.1(a).
"TAX" or "TAXES" means any federal, state, local or foreign, net or
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, personal property, real property, capital stock, profits, social
security (or similar), unemployment, disability, registration, value added,
estimated, alternative or add-on minimum taxes, customs duties or other taxes,
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
Governmental Body.
"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.
"TIME SALES AGREEMENTS" shall mean contracts for the sale of time on
the Station for cash that can be canceled by the Station without penalty or the
payment of any compensation upon no more than 30 days' notice.
"TITLE DEFECT" has the meaning specified in Section 5.17(a).
"TRADE AGREEMENTS" shall mean contracts for the sale of time on the
Station in exchange for merchandise or services used or useful for the benefit
of the Station, excluding Barter Agreements.
"TRADE PAYABLES" has the meaning specified in Section 2.11(b).
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"TRADE RECEIVABLES" has the meaning specified in Section 2.11(b).
"TRANSFER APPLICATION" has the meaning specified in Section 5.3(a).
"TRANSFERRED EMPLOYEES" has the meaning specified in Section 6.2(b).
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date, each
of SBS, SBS Licensee and SBS San-Francisco shall sell, transfer, assign, convey
and deliver to Buyer, and the Buyer shall purchase from SBS, SBS Licensee and
SBS San-Francisco, free and clear of all Encumbrances (except for Permitted
Encumbrances), all of the assets, properties and business (excepting only the
Excluded Assets) owned or held by it of every kind and description, wherever
located, real, personal or mixed, tangible or intangible, relating to the
Station, or the business of the Station (the "Business") as the Business shall
exist on the Closing Date (herein collectively referred to as the "Purchased
Assets"), including, without limitation, all right, title and interest of the
SBS Entities in, to and under:
(a) All licenses, permits and other authorizations issued
to the SBS Entities for the operation of the Station or the conduct of the
Business by the FCC or any other Governmental Body, including, but not limited
to, those listed on Schedule 3.9(a) (the "Station Licenses") and the right to
use the Station's call letters, and all applications for modification, extension
or renewal thereof, and any applications for any new licenses, permits or
authorizations pending on the Closing Date, including, but not limited to, those
listed on Schedule 3.9(a);
(b) Any option, right or contract to purchase, lease,
possess or occupy real property described in Schedule 3.10(c);
(c) All equipment (including computers and office
equipment), auxiliary and translator facilities, transmitting towers,
transmitters, broadcast equipment, antennae, supplies, inventory (including all
programs, records, tapes, recordings, compact discs, cassettes, spare parts and
equipment), advertising and promotional materials, engineering plans, records
and data, vehicles, furniture and other personal property owned by the SBS
Entities and used in or relating to the Station or the Business, including,
without limitation, the items listed or referred to in Schedule 3.11(a), but
excluding any such property disposed of or consumed by the SBS Entities between
the date hereof and the Closing Date in the ordinary course of the Business in
accordance with the terms of this Agreement;
(d) The Personal Property Leases and the personal
property leased thereunder listed in Schedule 3.12;
8
(e) The trademarks, trade names (including the right to
use the trade name "KPTI(FM)"), service marks and copyrights (and all goodwill
associated therewith), if any, registered or unregistered, relating to the
Station or the Business, and the applications for registration thereof and the
patents and applications therefor and the licenses relating to any of the
foregoing including, without limitation, the items listed in Schedule 3.13(a);
(f) (i) All contracts for the sale of broadcast time for
advertising on the Station made in the ordinary course of the Business and
consistent with past practice, (ii) the contracts, agreements or understandings
either listed or described in Schedule 3.17 and designated on such Schedule as
an "Assumed Contract" or, by the terms of Section 3.17, are not required to be
listed on Schedule 3.17, and (iii) any other contract, agreement or
understanding (evidenced in writing) entered into by any SBS Entity in respect
of the Business which (A) is entered into after the date hereof consistent with
the provisions of Sections 5.4(c) and 5.16 of this Agreement or (B) Buyer
expressly agrees to assume in writing;
(g) All advertising customer lists, mailing lists and
other proprietary or confidential information used in or relating to the
Business, the Purchased Assets or the Station;
(h) All rights, claims or causes of action of the SBS
Entities against third parties relating to the Purchased Assets, the Station or
the Business, to the extent they relate to the period after the Closing;
(i) All prepaid rentals and other prepaid expenses
(except for prepaid insurance) arising from payments made by any SBS Entity in
connection with the Business prior to the Closing Date for goods or services
(but only to the extent an appropriate adjustment is made to the Purchase Price
in favor of the SBS Entities pursuant to Section 2.11);
(j) All jingles, slogans, commercials and other
promotional materials used in or relating to the Station or the Business;
(k) All books and records (including all computer
programs used primarily in connection with the Business, the Purchased Assets or
the Station and copies of all records relating to Taxes that pertain to the
Station or the Purchased Assets to the extent they are in the possession of the
SBS Entities) of the SBS Entities relating to the assets, properties, business
and operations of the Business, the Purchased Assets, or the Station including,
without limitation, all files, logs, programming information and studies,
technical information and engineering data and personnel records of the
Transferred Employees, but excluding any books and records (including computer
programs) relating to a business of the SBS Entities unrelated to the Business,
the Purchased Assets, or the Station or otherwise described in Section 2.2; and
(l) Subject to the other provisions of this Agreement,
all other assets or properties not referred to above which are acquired by any
SBS Entity for use by the Station or in connection with the operation of the
Business in the ordinary course of the Business after the date of this Agreement
but prior to Closing, except (i) any such assets or properties disposed of after
the date of this Agreement in the ordinary course of the Business consistent
with the terms of this Agreement, and (ii) Excluded Assets.
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SECTION 2.2. EXCLUDED ASSETS. Notwithstanding the foregoing,
the Purchased Assets shall not include any of the following assets or properties
or any right, title or interest therein (herein referred to as the "Excluded
Assets"):
(a) All cash and cash equivalents (including any
marketable securities or certificates of deposit) of the SBS Entities;
(b) All claims, rights and interests of the SBS Entities
in and to (i) any refunds for Taxes paid in respect of the Station or the
Business for periods ending on or prior to the Closing Date (subject to claims
of Buyer for proration of property and other Taxes or fees of any nature
whatsoever under this Agreement) and (ii) any refunds for Taxes paid in respect
of the assets and properties described in Section 2.2(m) for all taxable
periods;
(c) Any rights, claims or causes of action of the SBS
Entities against third parties relating to the Business, the Purchased Assets or
the Station, to the extent they relate to the period prior to the Closing;
(d) All bonds, letters of credit, intercompany notes and
similar items, contracts or policies of insurance and prepaid insurance with
respect to such contracts or policies and any cash surrender value thereof and
any insurance proceeds or claims made by the SBS Entities relating to property
or equipment repaired, replaced or restored by the SBS Entities prior to the
Closing;
(e) Each SBS Entity's business and financial records,
minute books, organizational documents and such other books and records relating
to their organization, existence and capitalization and similar internal matters
as well as any other books and records relating to the SBS Entities generally
and not involving or relating to the Purchased Assets, or the operations of the
Station, Tax Returns and related documents and supporting work papers and any
other records and returns relating to Taxes, assessments and similar
governmental levies (other than real and personal property Taxes, assessments
and levies imposed on the Purchased Assets), any books and records that the SBS
Entities are required by law to retain, and the personnel records of those
employees who are not Transferred Employees;
(f) (i) The contracts, agreements or understandings of
the SBS Entities which are not listed on Schedule 3.17 that otherwise would be
required to be listed thereon if such contracts, agreements or understandings
were to be assigned to Buyer hereunder (provided that this Section 2.2(f)(i)
shall not relieve the SBS Entities of any obligation with respect to any
representation, warranty or covenant of the SBS Entities in Section 3.17) (ii)
the contracts, agreements or understandings of the SBS Entities listed in
Schedule 3.17 and designated on such Schedule as a "Contract Not Assumed," and
(iii) any contract, agreement or understanding either listed on Schedule 3.17 or
not required to be listed thereon which has expired prior to the Closing Date;
(g) Any trade name, trademarks, service marks or logos
using or incorporating the name "Spanish Broadcasting" or the SBS logo;
10
(h) All records and documents relating to Excluded Assets
or to liabilities, other than Assumed Liabilities, and not relating to the
Business, the Purchased Assets, the Station or the Assumed Liabilities;
(i) All trusts, trust assets, trust accounts, reserves,
insurance policies, or other assets, including, but not limited to, those listed
in Schedule 3.21 relating to employees or to funding the employee benefit plans,
agreements or arrangements sponsored, maintained, contributed to, or
administered by any SBS Entity (including, but not limited to, the Employee
Plans);
(j) Any rights of, or payment due to, any SBS Entity
under or pursuant to this Agreement, or any Buyer Ancillary Agreement;
(k) All accounts receivable arising out of the operation
of the Business for periods prior to the Adjustment Time;
(l) All tangible and intangible personal property
disposed of or consumed between the date of this Agreement and the Closing Date
in the ordinary course of the Business in accordance with this Agreement;
(m) All assets and properties owned, leased or held by
the SBS Entities that are not used or held for use in connection with the
operation of the Station and all rights, title and interest therein; and
(n) The assets and properties described on Schedule 2.2.
SECTION 2.3. ASSUMPTION OF LIABILITIES.
(a) Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, Buyer shall deliver to the SBS Entities an
undertaking and assumption, in a form reasonably acceptable to the SBS Entities
and Buyer, pursuant to which Buyer shall assume and be obligated for, and shall
agree to pay, perform and discharge in accordance with their terms, the
following obligations and liabilities of the SBS Entities (except to the extent
such obligations and liabilities constitute Excluded Liabilities):
(i) All liabilities and obligations that accrue
after the Closing under the Governmental Permits, Station
Licenses, Real Property Leases, Personal Property Leases,
Station Agreements, and the other Purchased Assets assigned
and transferred to Buyer at the Closing (subject, where
applicable under such Section, to the last sentence in Section
5.5);
(ii) All liabilities and obligations that arise
with respect to events occurring after the Closing relating to
operation of the Station, the Business and ownership of the
Purchased Assets; and
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(iii) All liabilities and obligations in respect
of which an adjustment is made to the Purchase Price in favor
of Buyer pursuant to Section 2.11, but only to the extent of
such adjustment.
All of the foregoing to be assumed by Buyer hereunder are
referred to herein as the "Assumed Liabilities."
(b) Buyer shall not assume or be obligated for any of,
and the SBS Entities shall solely retain, pay, perform, defend and discharge all
of, their respective liabilities or obligations of any and every kind
whatsoever, direct or indirect, known or unknown, absolute or contingent, not
expressly assumed by Buyer under Section 2.3(a) and, notwithstanding anything to
the contrary in Section 2.3(a), including, without limitation (herein referred
to as "Excluded Liabilities"):
(i) All liabilities and obligations arising
before the Closing in connection with the operation of the
Station, the Business or the ownership of the Purchased
Assets, other than any such liabilities and obligations in
respect of which, and only to the extent that, an adjustment
is made to the Purchase Price in favor of Buyer pursuant to
Section 2.11;
(ii) Any Taxes that arise from the operation of
the Station, the Business or the ownership of the Purchased
Assets for periods or portions of periods that end on or prior
to the Adjustment Time, other than any such liabilities and
obligations for Taxes in respect of which, and only to the
extent that, an adjustment is made to the Purchase Price in
favor of Buyer pursuant to Section 2.11;
(iii) Any liability or obligation in respect of
indebtedness for borrowed money or any intercompany payable of
any or all of the SBS Entities or any of their Affiliates;
(iv) Subject to the provisions of Section 5.6,
all liabilities and obligations under Environmental Laws
related to, associated with or arising out of (A) the
occupancy, operation, use or control of any of the Real
Property prior to the Closing or (B) the operation of the
Business prior to the Closing, including, without limitation,
any Release or storage of any Hazardous Materials prior to the
Closing on, at or from (1) any Real Property (including,
without limitation, all facilities, improvements, structures
and equipment thereon, surface water thereon or adjacent
thereto and soil or groundwater thereunder) or any conditions
whatsoever on, under or in the Real Property or (2) any real
property or facility owned by a third party to which Hazardous
Materials generated by the Business were sent prior to the
Closing;
(v) Any liabilities or obligations, whenever
arising (i) related to, associated with or arising out of any
pension, profit sharing, or welfare employee benefit plan or
other employee benefit plan, program or arrangement providing
12
any of the benefits described in 3(1) or 3(2) of ERISA, or
providing any employment, consulting, severance, vacation,
retirement, post-retirement, bonus, stay bonus, deferred
compensation, cash or stock based, incentive compensation,
stock ownership, stock options, stock appreciation rights,
stock purchase rights, phantom stock rights, insurance,
worker's compensation, disability, unemployment, medical, or
other benefit; and (ii) related to any current, former or
retired employees;
(vi) Any liabilities or obligations of any or all
of the SBS Entities arising out of or relating to the
employment of employees or independent contractors of the
Station or the Business through the Closing, including,
without limitation, accrued salary, payroll and wages, accrued
sick pay, accrued commissions, accrued "comp" time, accrued
vacation time, and the proper classification of individuals
providing services to any SBS Entity as independent
contractors or as employees, as the case may be;
(vii) Any obligations or liabilities relating to
or arising out of the employment and/or termination of
employees employed at the Station or in connection with the
Business through the Closing;
(viii) Any of any or all of the SBS Entities'
liabilities or obligations under this Agreement, or the SBS
Entities Ancillary Agreements;
(ix) Any liabilities or obligations of any or all
of the SBS Entities to be paid or performed after the Closing
in connection with the operation of the Station, the Business
and the ownership of the Purchased Assets, to the extent such
liabilities and obligations, but for a breach or default by
any SBS Entity, would have been paid, performed or otherwise
discharged prior to the Closing or to the extent the same
arise out of any such breach or default other than any such
liabilities and obligations in respect of which, and only to
the extent that, an adjustment is made to the Purchase Price
in favor of Buyer pursuant to Section 2.11;
(x) Any of any or all of the SBS Entities'
liabilities or obligations relating to the Excluded Assets;
(xi) Any costs and expenses incurred by any or
all of the SBS Entities incident to its negotiation and
preparation of this Agreement or the SBS Entities Ancillary
Agreements and its or their performance and compliance with
the agreements and conditions contained herein or therein;
(xii) Any obligations or liabilities relating to
or arising out of any claims, litigation proceedings or
Administrative Violations to the extent relating to actions of
the SBS Entities or the conduct of the Business on or prior to
the Closing; and
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(xiii) Any obligations or liabilities arising out
of or in connection with any contracts of any of the SBS
Entities not assumed by Buyer under this Agreement.
SECTION 2.4. CLOSING DATE. The purchase and sale of the
Purchased Assets provided for in Section 2.1 (the "Closing") shall be
consummated at 10:00 A.M., local time, on a date agreed upon by the SBS Entities
and Buyer, occurring within 10 days after the conditions set forth in Articles
VII and VIII are satisfied or, if permissible, waived (disregarding for this
purpose any such conditions to be satisfied by actions to be taken at the
Closing), or such other date as may be agreed upon by the SBS Entities and
Buyer, at the offices of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or at such other place or at such other
time as shall be agreed upon by the SBS Entities and Buyer (the actual day on
which the Closing occurs being hereinafter called the "Closing Date").
SECTION 2.5. CASH ADVANCE. Concurrently with the execution and
delivery of this Agreement, Buyer is delivering to Sellers a cash advance in the
amount of One Million Five Hundred Thousand Dollars ($1,500,000) (such cash
advance, as it may be increased pursuant to Section 8.8, the "Cash Advance").
(a) At the Closing, the entire amount of the Cash Advance
shall be credited to the Purchase Price.
(b) If this Agreement is terminated pursuant to Sections
10.1(a)(i), (iii), (iv), (v), (vi), (vii), or (viii), the entire amount of the
Cash Advance shall be returned to Buyer within three (3) business days following
the date of any such termination.
(c) If this Agreement is terminated pursuant to Sections
10.1(a)(ii) or 10.1(a)(ix), the SBS Entities shall retain the Cash Advance in
accordance with Section 10.2 of this Agreement.
SECTION 2.6. PURCHASE PRICE. The purchase price for the
Purchased Assets shall be Thirty Million Dollars ($30,000,000), as adjusted
pursuant to Sections 2.11 and 5.6 (the "Purchase Price").
SECTION 2.7. PAYMENT OF PURCHASE PRICE. The payment of the
Purchase Price shall be made at the Closing as follows: (a) the Cash Advance
shall be applied in Buyer's favor as a credit toward the Purchase Price in
accordance with Section 2.5; and (b) the balance shall be paid by bank wire
transfer of immediately available funds to such bank account or accounts
designated by the SBS Entities for such purpose not less than three (3) business
days before the Closing.
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SECTION 2.8. CLOSING DATE DELIVERIES.
(a) On the Closing Date, the SBS Entities shall execute
and deliver or cause to be delivered to Buyer:
(i) a ▇▇▇▇ of sale and assignments, in forms
reasonably acceptable to Buyer, conveying all of the Purchased
Assets,
(ii) all of the documents and instruments
required to be delivered by the SBS Entities pursuant to
Article VIII,
(iii) certificates of good standing of each of the
SBS Entities, each issued as of a recent date by the Secretary
of State of their state of incorporation and the Secretary of
State of California (SBS Licensee and SBS-San Francisco only)
and tax clearance certificates issued by the Department of
Revenue of the State of California for each SBS Entity,
(iv) a certificate of the secretary or assistant
secretary of each of the SBS Entities certifying the
resolutions of its directors and stockholders, where
applicable, as the case may be, authorizing the execution and
delivery of this Agreement and the transactions contemplated
hereby and the incumbency and signatures of each officer
executing this Agreement and any SBS Entities Ancillary
Agreement,
(v) The opinions of the SBS Entities' legal and
communications counsel substantially in the forms set forth in
Exhibit A, with such revisions as are reasonably acceptable to
Buyer and the SBS Entities,
(vi) a certification of non-foreign status, in
form and substance reasonably satisfactory to Buyer, in
accordance with Treas. Reg. Section 1.1445-2(b),
(vii) such documents and instruments as may be
reasonably necessary to evidence that the Purchased Assets at
Closing are free and clear of all Encumbrances other than
Permitted Encumbrances, and
(viii) the books and records included in the
Purchased Assets (provided that delivery of the foregoing will
be deemed made to the extent such books and records are then
located at any of the offices or premises included in the
Purchased Assets).
(b) On the Closing Date, Buyer shall deliver or cause to
be delivered to the SBS Entities the Purchase Price, payable in the manner
described in Section 2.7, and execute and deliver (i) all of the documents and
instruments required to be delivered by the Buyer pursuant to Article VII, (ii)
copies of the certificate of formation of Buyer, certified as of a recent date
by the Secretary of State of its state of organization, (iii) certificates of
good standing of Buyer, each issued as of a recent date by the Secretary of
State of the state of its organization and the
15
Secretary of State of California, (iv) a certificate of the secretary or
assistant secretary of Buyer certifying the resolutions of its members
authorizing the execution and delivery of this Agreement and the transactions
contemplated hereby and the incumbency and signatures of its officers executing
this Agreement and any Buyer Ancillary Agreements, and (v) the undertaking and
assumption described in Section 2.3(a).
SECTION 2.9. FURTHER ASSURANCES.
(a) On the Closing Date, the SBS Entities shall (i)
deliver to Buyer such other bills of sale, endorsements, assignments and other
good and sufficient instruments of conveyance and transfer as Buyer may
reasonably request or as may be otherwise reasonably necessary to vest in Buyer
all the right, title and interest of the SBS Entities in, to or under any or all
of the Purchased Assets in accordance with this Agreement and (ii) take all
steps as may be reasonably necessary to put Buyer in actual possession and
control of all the Purchased Assets. From time to time following the Closing,
the SBS Entities shall execute and deliver, or cause to be executed and
delivered, to Buyer such other instruments of conveyance and transfer as Buyer
may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to, and vest in, Buyer and put Buyer in possession of, any
part of the Purchased Assets in accordance with this Agreement. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any license, certificate, approval, authorization,
agreement, contract, lease, easement or other commitment included in the
Purchased Assets if an attempted assignment thereof without the consent of a
third party thereto would constitute a breach thereof.
(b) On the Closing Date, Buyer shall deliver to the SBS
Entities such other undertakings and assumptions and other good and sufficient
instruments of assumption as the SBS Entities may reasonably request or as may
be otherwise reasonably necessary to evidence Buyer's assumption of and
obligation to pay, perform and discharge the Assumed Liabilities. From time to
time following the Closing, Buyer shall execute and deliver, or cause to be
executed and delivered, to the SBS Entities such other undertakings and
assumptions as the SBS Entities may reasonably request or as may be otherwise
necessary to more effectively evidence Buyer's assumption of and obligation to
pay, perform and discharge the Assumed Liabilities.
SECTION 2.10. ALLOCATION. The Purchase Price shall be
allocated among the Purchased Assets as provided in this Section 2.10 (the
"Asset Allocation"). The SBS Entities and Buyer shall use good faith efforts to
agree upon, prior to Closing, an allocation of the balance of the Purchase Price
among the Purchased Assets which, if agreed upon prior to Closing, will be
incorporated in a schedule to be executed by the parties prior to or at Closing.
Buyer shall deliver its proposed Asset Allocation to the SBS Entities within
forty-five (45) days after the date hereof. If the SBS Entities and Buyer are
unable to so agree, the SBS Entities and Buyer shall then promptly retain Bond
and ▇▇▇▇▇▇ (the "Appraisal Firm") to appraise the classes of the Purchased
Assets. The Appraisal Firm shall be instructed to perform an appraisal of the
classes of Purchased Assets and to deliver a report to the SBS Entities and
Buyer as soon as reasonably practicable. Buyer and the SBS Entities shall bear
equally the fees, costs and expenses of the Appraisal Firm. Each party shall
prepare IRS Form
16
8594 allocating the Purchase Price in accordance with Section 1060 of the Code
and in accordance with the Asset Allocation. Buyer and the SBS Entities shall
each file with their respective Federal income Tax Return for the taxable year
in which the Closing occurs, IRS Form 8594 containing the information agreed
upon by the parties pursuant to the immediately preceding sentence. Buyer agrees
to report the purchase of the Purchased Assets, and the SBS Entities agree to
report the sale of the Purchased Assets on their respective Tax Returns in a
manner consistent with the information agreed upon by the parties pursuant to
this Section 2.10 and contained in its respective IRS Form 8594. Notwithstanding
anything to the contrary in this Agreement, the provisions of this Section 2.10
shall survive the Closing for the full period of any applicable statute of
limitations plus sixty (60) days.
SECTION 2.11. PRORATIONS AND ADJUSTMENTS.
(a) All income and normal operating expenses arising from
the conduct of the Business and operation of the Station, including, without
limitation, assumed liabilities and prepaid expenses, Taxes and assessments (but
excluding Taxes arising by reason of the sale of the Purchased Assets hereunder,
which shall be paid as set forth in Section 6.1(c)), annual regulatory fees
payable to the FCC, power and utilities charges, and rents and similar prepaid
and deferred items shall be prorated between the SBS Entities and Buyer in
accordance with GAAP to reflect the principle that the SBS Entities shall be
entitled to all income and be responsible for all expenses arising from the
conduct of the Business and operation of the Station through 11:59 p.m. on the
Closing Date (the "Adjustment Time") and Buyer shall be entitled to all income
and be responsible for all expenses arising from the conduct of the Business and
operation of the Station after the Adjustment Time. All special assessments and
similar charges or liens imposed against the Purchased Assets in respect of any
period of time through the Adjustment Time, whether payable in installments or
otherwise, shall be the responsibility of the SBS Entities, and amounts with
respect to such special assessments, charges or liens in respect of any period
of time after the Adjustment Time shall be the responsibility of Buyer, and such
charges shall be adjusted as required hereunder. The prorations and adjustments
to be made pursuant to this Section 2.11(a) are referred to as the "Closing Date
Adjustments." Three (3) business days prior to the Closing Date, the SBS
Entities shall estimate all Closing Date Adjustments pursuant to this Section
2.11(a) and shall deliver a statement of its estimates to the Buyer (which
statement shall set forth in reasonable detail the basis for those estimates).
At the Closing, the net amount due to the Buyer or the SBS Entities as a result
of the estimated Closing Date Adjustments (excluding any item that is in good
faith dispute) shall be applied as an adjustment to the Purchase Price as
appropriate. Within sixty (60) days after the Closing, Buyer shall deliver to
the SBS Entities a statement of any adjustments to SBS Entities' estimate of the
Closing Date Adjustments, and no later than the close of business on the 20th
day after the delivery to the SBS Entities of Buyer's statement (the "Payment
Date"), Buyer shall pay to the SBS Entities, or the SBS Entities shall pay to
Buyer, as the case may be, any amount due as a result of the adjustment (or, if
there is any good faith dispute, the undisputed amount), provided that at
Buyer's discretion, any amount due Buyer from the SBS Entities under this
Section (or, if there is any good faith dispute, the undisputed amount) or any
portion thereof may be reduced by any amounts due to the SBS Entities from Buyer
under Section 2.12. In the event that such reduction does not equal the total
amount due to Buyer under this Section (or, if there is any
17
good faith dispute, the undisputed amount), the SBS Entities shall pay the
remainder in accordance herewith. Except with respect to items that the SBS
Entities notify Buyer that they object to prior to the close of business on the
Payment Date, the adjustments set forth in Buyer's statement shall be final and
binding on the parties effective at the close of business on the Payment Date.
If the SBS Entities dispute Buyer's determinations, the parties shall confer
with regard to the matter and an appropriate adjustment and payment shall be
made as agreed upon by the parties within thirty (30) business days after such
agreement (or, if they are unable to resolve the matter, they shall select a
recognized firm of independent certified public accountants agreed to by Buyer
and the SBS Entities ("Accounting Firm") to resolve the matter, whose decision
on the matter shall be binding and whose fees and expenses shall be borne
equally by the parties, and an appropriate adjustment and payment shall be made
based on the resolution by the Accounting Firm within thirty (30) business days
after such resolution). If the amount of Taxes which are to be prorated pursuant
to this Section 2.11(a) is not known by sixty (60) days after the Closing Date,
then the amount of such Taxes will be estimated as of such date and once the
amount of such Taxes is known, Buyer shall promptly pay to the SBS Entities, or
the SBS Entities shall promptly pay to Buyer, as the case may be, the net amount
due as a result of the actual apportionment of such Taxes.
(b) Schedule 2.11(b) contains the SBS Entities' regularly
prepared Trade Receivable reports as of July 31, 2003 for the Station. Each such
report includes the amount of the net Trade Payable or Trade Receivable, as the
case may be, for each advertiser for the Station as of July 31, 2003. "Trade
Payable" means, as of any date of determination, the amount by which, if any,
the aggregate value of advertising time owed under the Trade Agreements in
respect of which the determination is being made exceeds the aggregate value of
goods and services to be received under such Trade Agreements, and "Trade
Receivable" means, as of any date of determination, the amount by which, if any,
the aggregate value of goods and services to be received pursuant to the Trade
Agreements in respect of which the determination is being made exceeds the
aggregate value of advertising time owed under such Trade Agreements. Three (3)
business days before the Closing Date, the SBS Entities shall deliver to Buyer
Trade Receivable reports for the Station estimating the Trade Payable or Trade
Receivable, as the case may be, for each advertiser as of the Closing Date (the
"Closing Date Trade Report").
(c) If the Trade Payables (in the aggregate under all
Trade Agreements for all advertisers for the Station) exceed the Trade
Receivables (in the aggregate under all Trade Agreements for all advertisers for
the Station) as reflected on the Closing Date Trade Report, and if such excess
is greater than $15,000, the Purchase Price shall be reduced by the amount by
which such excess is greater than $15,000. If the Trade Receivables (in the
aggregate under all Trade Agreements for all advertisers for the Station) exceed
the Trade Payables (in the aggregate under all Trade Agreements for all
advertisers for the Station) as reflected on the Closing Date Trade Report, and
if such excess is greater than $15,000, the Purchase Price shall be increased by
the amount by which such excess is greater than $15,000.
SECTION 2.12. COLLECTION OF ACCOUNTS RECEIVABLE. All accounts
receivable arising out of the conduct of the business and operations of the
Station prior to the Adjustment Time ("SBS Entities' Accounts Receivable") shall
be identified in a report to be provided by the
18
SBS Entities to Buyer as soon as practicable following the Closing. The SBS
Entities hereby assign to Buyer the SBS Entities' Accounts Receivable, effective
upon the Adjustment Time, solely for the collection thereof. For a period of 120
days after the Closing Date, Buyer shall use reasonable efforts to collect the
SBS Entities' Accounts Receivable in the normal and ordinary course of business.
Neither Buyer's authority nor obligation shall extend to the compromise of any
SBS Entities' Accounts Receivable or the institution of litigation, employment
of counsel or a collection agency or any other extraordinary means of collection
unless agreed upon by the SBS Entities and Buyer in writing. Buyer shall apply
all such amounts collected on the SBS Entities' Accounts Receivable to the
debtor's oldest invoice not in dispute first (except that any such amounts
collected by Buyer from persons who are also indebted to Buyer for the purchase
of advertising time on the Station may be applied to Buyer's account where there
is a pre-existing bona fide dispute between the SBS Entities and such account
debtor with respect to all of its invoices), and Buyer shall provide to the SBS
Entities an aging report and a collections report and shall pay the SBS Entities
the full amount collected on the SBS Entities' Accounts Receivable, net of
commissions, within fifteen (15) days after the end of each calendar month
during the above-mentioned 120 day period. Any of the SBS Entities' Accounts
Receivable remaining uncollected at the end of such 120 day period shall be
re-assigned to the SBS Entities for collection. All accounts receivable arising
out of the conduct of the business and operation of the Station after the
Adjustment Time shall be and remain the property of Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF
THE SBS ENTITIES
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the SBS Entities jointly and
severally make the following representations and warranties to the Buyer, all of
which are true and correct as of the date hereof:
SECTION 3.1. ORGANIZATION. Each of the SBS Entities is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of SBS Licensee and SBS-San Francisco is duly
qualified as a foreign corporation to do business in, and is in good standing
under, the laws of the State of California. The SBS Entities have the requisite
corporate power and authority to own or lease and to operate the Station, to use
the Purchased Assets in the operation of the Station and to carry on the
Business as conducted by it, as the case may be, and to enter into and perform
this Agreement.
SECTION 3.2. AUTHORITY OF THE SBS ENTITIES.
(a) The SBS Entities have the requisite corporate power
and authority to execute and deliver this Agreement and all of the other
agreements and instruments to be executed and delivered by any or all of the SBS
Entities pursuant hereto (collectively, the "SBS
19
Entities Ancillary Agreements"), to consummate the transactions contemplated
hereby and thereby and to comply with the terms, conditions and provisions
hereof and thereof.
(b) The execution, delivery and performance of this
Agreement and the SBS Entities Ancillary Agreements by each SBS Entity (to the
extent a party thereto) have been duly authorized and approved by all necessary
action of the SBS Entities and do not require any further authorization or
consent of the SBS Entities, or their respective stockholders, as the case may
be. This Agreement is, and each other SBS Entities Ancillary Agreement when
executed and delivered by each SBS Entity (to the extent a party thereto) and
the other parties thereto will be, a legal, valid and binding agreement of each
SBS Entity (to the extent a party thereto) enforceable in accordance with its
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(c) Except as set forth in Schedule 3.2(c), none of the
execution, delivery and performance by each SBS Entity of this Agreement or the
other SBS Entities Ancillary Agreements, or the consummation by each SBS Entity
of any of the transactions contemplated hereby or thereby or compliance by each
SBS Entity with or fulfillment by each SBS Entity of the terms, conditions and
provisions hereof or thereof will:
(i) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default,
an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights
under, or result in the creation or imposition of any
Encumbrance upon any of the Purchased Assets under, the
organizational documents of any SBS Entity, any Station
Agreement, any Station License, any Governmental Permit or any
judgment, order, award or decree to which any SBS Entity is a
party or any of the Purchased Assets, the Station or the
Business is subject or by which any SBS Entity is bound, or
any statute, other law or regulatory provision affecting any
SBS Entity or the Purchased Assets, the Station or the
Business; or
(ii) require the approval, consent, authorization
or act of, or the making by any SBS Entity of any declaration,
filing or registration with, any third party or any foreign,
federal, state or local court, governmental or regulatory
authority or body, except for such of the foregoing as are
necessary pursuant to the Communications Act and the rules and
regulations of the FCC.
SECTION 3.3. FINANCIAL STATEMENTS.
(a) Schedule 3.3 contains true and correct copies of (a)
the unaudited statement of revenues and expenses of the Station for the twelve
(12) months ended December 31, 2002, and the related unaudited statement of
revenues and expenses of the Station for the seven (7) month period ended July
31, 2003, and (b) the unaudited balance sheet of the
20
Station as of December 31, 2002 and the unaudited balance sheet of the Station
as of June 30, 2003 (the "Balance Sheet Date") (collectively, (a) and (b), the
"Financial Statements").
(b) The Financial Statements (i) have been prepared from
and are in accordance in all material respects with the books and records
regularly maintained by the SBS Entities, and (ii) present fairly and
accurately, in all material respects, the financial position and results of
operations of the Station and the Business as of their respective dates and for
the respective periods covered thereby (except for the omission of footnotes and
changes resulting from normal year-end adjustments).
(c) Except as reflected in the Financial Statements, no
event has occurred since the Balance Sheet Date that would make either such
balance sheets or such statements of revenues and expenses misleading in any
material respect for the respective periods covered thereby.
(d) The books and records of the SBS Entities from which
the Financial Statements were prepared accurately and fairly reflect, in all
material respects, in reasonable detail, the activities of the SBS Entities for
the respective periods covered thereby and have been made available to Buyer for
its inspection.
SECTION 3.4. OPERATIONS.
(a) Except as set forth in Schedule 3.4(a), during the
period from the Balance Sheet Date to the date hereof, inclusive, there has
been:
(i) no fact, event, change or effect having, or
which may reasonably be expected to have, a Material Adverse
Effect on the Purchased Assets or the Station; and
(ii) no damage, destruction, loss or claim
(whether or not covered by insurance) or condemnation or other
taking which materially adversely affects the Purchased Assets
or the Station.
(b) Except as set forth in Schedule 3.4(b), without
material exception, since the Balance Sheet Date, the operations of the Station
and the Business have been conducted only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, since the
Balance Sheet Date, except as set forth in such Schedule 3.4(b) the SBS Entities
have not, in respect of the Purchased Assets or the Station:
(i) sold, leased, transferred or otherwise
disposed of (including any transfers to any Affiliate of any
SBS Entity), or mortgaged or pledged, or imposed or suffered
to be imposed any Encumbrance (other than Permitted
Encumbrances) on, any of the Purchased Assets, other than
personal property having a value, in the aggregate, of less
than $10,000 sold or otherwise disposed of or consumed in the
ordinary course of the Business consistent with past practice;
21
(ii) canceled therefor any material debts owed to
or material claims held by any SBS Entity relating to the
Station (including the settlement of any claims or litigation)
or waived any right of significant value to any SBS Entity
relating to the Purchased Assets or the Station, other than in
the ordinary course of the Business consistent with past
practice;
(iii) created, incurred, guaranteed or assumed, or
agreed to create, incur, guarantee or assume, any indebtedness
for borrowed money except borrowings in the ordinary course of
the Business either that do not affect the Purchased Assets or
the Station or that will be repaid prior to or as of the
Closing;
(iv) entered into any capitalized leases;
(v) accelerated collection of accounts
receivable generated by the Business to a date prior to the
date such collection would have occurred in the ordinary
course of the Business;
(vi) delayed payment of any account payable or
other liability of the Business beyond its due date or the
date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;
(vii) granted or instituted any increase in any
manner any rate of salary or compensation or established,
contributed to or amended to increase benefits of any profit
sharing, bonus, incentive, severance pay, deferred
compensation, group insurance, pension, retirement, medical,
hospital, disability, welfare or other employee benefit plan
fund or similar arrangement or committed itself to amend any
of such plans, funds or similar arrangements, other than in
the ordinary course of the Business consistent with past
practices;
(viii) entered into any new employment, incentive
compensation, severance, bonus, consulting, or other
compensation agreement with any employee of any or all of the
SBS Entities in connection with the Business or the Station;
(ix) changed the accounting methods, principles,
or practices materially affecting the Purchased Assets, the
Station or the Business, except insofar as may have been
required by law or by a change in generally accepted
accounting principles;
(x) made any acquisition (by merger,
consolidation, acquisition of stock or assets or otherwise) of
any corporation, partnership or other business organization or
division thereof or interest therein; or
(xi) entered into any agreement or made any
commitment to take any action described in subparagraphs (i)
through (x) above.
22
SECTION 3.5. NO UNDISCLOSED LIABILITIES. Except as set forth
in Schedule 3.5, no SBS Entity is subject, with respect to the Purchased Assets,
the Station or the Business, to any liability, whether absolute, contingent or
accrued.
SECTION 3.6. TAXES. Except as set forth on Schedule 3.6, the
SBS Entities have (i) duly and timely filed all Tax Returns required to be filed
in respect of the Purchased Assets, (ii) paid in full or discharged all Taxes
owed by the SBS Entities relating to the Purchased Assets (whether or not such
Taxes are shown as due on any Tax Return), excepting such Taxes as will not be
due until after the Closing Date and that are to be prorated between Buyer and
the SBS Entities pursuant to Section 2.11 of this Agreement and (iii) paid in
full or discharged all Taxes the non-payment of which could result in an
Encumbrance on any of the Purchased Assets in the hands of the Buyer, excepting
such Taxes as will not be due until after the Closing Date and which are to be
prorated pursuant to Section 2.11 of this Agreement.
SECTION 3.7. SUFFICIENCY OF ASSETS. Except as set forth in
Schedule 3.7 and except for the Excluded Assets, the Purchased Assets constitute
all of the assets used in the conduct of the Business and the operation of the
Station as currently conducted, and the tangible assets included in the
Purchased Assets having an original cost of $1,000 or more are in such
satisfactory and serviceable condition and repair (subject to normal wear and
tear). Other than the SBS Entities, no SBS Group Member owns, leases or holds
any assets necessary for or used in the conduct of the Business or the operation
of the Station as currently conducted.
SECTION 3.8. GOVERNMENTAL PERMITS. The SBS Entities own, hold
or possess all licenses, franchises, permits, privileges, immunities, approvals
and other authorizations from a Governmental Body (other than the FCC Licenses)
that are necessary to entitle the SBS Entities to own or lease, operate and use
their assets and to carry on and conduct the Business substantially as conducted
immediately prior to the date of this Agreement, except for such Governmental
Permits as to which the failure to so own, hold or possess would not have a
Material Adverse Effect (herein collectively called "Governmental Permits").
Schedule 3.8 sets forth a list and brief description of each such Governmental
Permit held by the SBS Entities as of the date of this Agreement. Except as set
forth in Schedule 3.8, the SBS Entities have fulfilled and performed in all
material respects their obligations under each of the Governmental Permits, and
no event has occurred or condition or state of facts exists which constitutes
or, after notice or lapse of time or both, would constitute a material breach or
material default under any such Governmental Permit. No notice of cancellation,
of default or of any dispute concerning any such Governmental Permit, or of any
event, condition or state of facts described in the preceding sentence, has been
received by any SBS Entity. Except as set forth in Schedule 3.8, each such
Governmental Permit is valid, subsisting and in full force and effect (subject
to expiration or termination in accordance with its terms), and may be assigned
and transferred to the Buyer in accordance with this Agreement and at the time
of assignment or transfer of control to the Buyer will be in full force and
effect, in each case without (i) the occurrence of any breach, default or
forfeiture of rights thereunder or (ii) the consent, approval or act of, or the
making of any filing with, any Governmental Body or other party (except as
provided for herein).
23
SECTION 3.9. FCC LICENSES.
(a) Set forth on Schedule 3.9(a) is a list of the Station
Licenses issued by the FCC to SBS Licensee for the operation of the Station and
all applications for modification, extension or renewal thereof, and any
applications for any new licenses, permits, permissions or authorizations
pending on the date hereof (the "FCC Licenses").
(b) The FCC Licenses are all of the licenses, permits,
and other authorizations issued by the FCC and used to lawfully operate the
Station in the manner and to the full extent as the Station is now operated, and
the FCC Licenses are validly issued in the name of the SBS Licensee. SBS
Licensee has delivered to Buyer true and complete copies of the FCC Licenses,
including any and all amendments and other modifications thereto. Except as set
forth on Schedule 3.9(b), the FCC Licenses are in full force and effect, are
valid for the balance of the current license term applicable generally to radio
stations licensed to communities in the state where the Station is located, and
are free and clear of any restrictions that do, or could reasonably be expected
to, limit the full operation of the Station in the manner and to the full extent
that it is now operated (other than restrictions under the terms of the FCC
Licenses themselves or generally applicable under the rules and regulations of
the FCC). Except as set forth on Schedule 3.9(b), no SBS Entity has received any
notice of any violations of the FCC Licenses, the Communications Act or the
rules and regulations thereunder that remain pending and unresolved. Except as
set forth on Schedule 3.9(b), there is no action by or before the FCC currently
pending or, to the knowledge of the SBS Entities, threatened to revoke, cancel,
rescind, modify or refuse to renew in the ordinary course any of the FCC
Licenses. Except as set forth on Schedule 3.9(b), there are no applications,
proceedings, or complaints pending at the FCC or, to the knowledge of the SBS
Entities, threatened which may have an adverse effect on the Purchased Assets or
the operation of the Station (other than rulemaking proceedings that apply to
the radio broadcasting industry generally). No SBS Entity is aware of any reason
reasonably likely to result in the FCC Licenses not being renewed in the
ordinary course for a full term without material qualifications or of any reason
reasonably likely to result in any of the FCC Licenses being revoked. To the
knowledge of the SBS Entities, the Station is in compliance with the FCC's
policy on human exposure to radio frequency radiation. To the knowledge of the
SBS Entities, no renewal of any FCC License would constitute a major
environmental action under the rules and regulations of the FCC in existence as
of the date of this Agreement. To the knowledge of the SBS Entities, there are
no facts pertaining to the Station, SBS Licensee, or any persons or entities
affiliated therewith, which, under the Communications Act or the existing rules
and regulations of the FCC, would (i) disqualify SBS Licensee from assigning the
FCC Licenses to Buyer or from consummating the transactions contemplated herein,
or (ii) materially delay obtaining of the approvals required for the
transactions contemplated herein. SBS Licensee maintains an appropriate public
inspection file at the studios of the Station in accordance with FCC rules and
regulations in all material respects.
(c) All information provided by the SBS Entities, and to
the knowledge of the SBS Entities, all information provided by unaffiliated
third parties, contained in any pending applications for any new licenses,
permits, permissions or authorizations relating to the Station is true, complete
and accurate in all material respects.
24
(d) Schedule 3.9(d) specifies the antenna registration
numbers for each tower owned by each of the SBS Entities as of the date of this
Agreement that requires registration under the rules and regulations of the FCC
and that is included in the Purchased Assets (such towers the "Owned Towers").
SECTION 3.10. REAL PROPERTY; REAL PROPERTY LEASES.
(a) Schedule 3.10(a) contains a brief description of all
real property leased by the SBS Entities in connection with the operation of the
Station as of the date of this Agreement, as it is now operated and each option
held by the SBS Entities to acquire any real property (the "Real Property").
(b) No real property other than that listed on Schedule
3.10(a) is used in or held for use in connection with the conduct of the
business or operation of the Station as it is now operated (other than
easements, rights of access, and the like included in the Purchased Assets).
(c) Schedule 3.10(c) sets forth a list of each lease or
similar agreement under which any SBS Entity is lessee of, or holds or operates,
any Real Property owned by any third Person as of the date of this Agreement,
which are the sole and complete agreements concerning the SBS Entities' rights
and obligations with respect to the leased premises (the "Real Property
Leases"). Each Real Property Lease is legal, valid, binding, enforceable and in
full force and effect (subject to expiration or termination in accordance with
their terms). No SBS Entity nor, to the knowledge of the SBS Entities, any other
party is in default, violation or breach in any material respect under any Real
Property Lease, and no event has occurred and is continuing that constitutes or,
with notice or the passage of time or both, would (i) constitute a default,
violation or breach by the SBS Entities in any material respect thereunder, or
(ii) to the knowledge of the SBS Entities, constitute a default, violation or
breach by any other party in any material respect thereunder. No amount payable
under any Real Property Lease is past due (other than amounts being contested in
good faith through appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles
consistently applied on the balance sheets and statements of revenues and
expenses of the SBS Entities). No SBS Entity has received any notice of a
default, offset or counterclaim under any Real Property Lease or any other
communication asserting any material non-compliance with any Real Property
Lease. Subject to matters that constitute Permitted Encumbrances, the SBS
Entities have the exclusive right to use and occupy that portion of the premises
leased under each Real Property Lease. The SBS Entities enjoy peaceful and
undisturbed possession of that portion of the premises leased by the SBS
Entities under the Real Property Leases. Except as set forth on Schedule
3.10(c), the SBS Entities' interests under the Real Property Leases are free and
clear of all Encumbrances other than Permitted Encumbrances. The SBS Entities
have delivered to Buyer, true and complete copies of the Real Property Leases,
together, in the case of any subleases or similar occupancy agreements, with
copies of all other leases. Except as disclosed in Schedule 3.2(c), the SBS
Entities have full legal power and authority to assign their rights under the
Real Property Leases to Buyer in accordance with this Agreement on terms and
conditions no less favorable in any material respect (with respect to the Real
Property Leases
25
individually or in the aggregate) than those contained in the Real Property
Leases on the date hereof (as the Leases may be modified prior to the Closing in
accordance with the provisions of this Agreement), and such assignment will not
affect the validity, enforceability and continuity of any such lease.
(d) To the knowledge of the SBS Entities, all utilities
that are required for the use of the Real Property for the purposes for which
such properties are presently being used by the SBS Entities have been connected
and are in satisfactory working order (subject to normal wear and tear). By the
Closing Date, the SBS Entities will have paid all charges for such utilities,
including, without limitation, any "tie-in" charges or connection fees, except
for those charges that will not become due until after the Closing Date and that
are to be prorated between the SBS Entities and Buyer pursuant to Section 2.11.
SECTION 3.11. PERSONAL PROPERTY.
(a) Schedule 3.11(a) contains a list as of the date
indicated thereon of all machinery, equipment, vehicles, furniture and other
personal property owned or leased by the SBS Entities having an original cost of
$1,000 or more and relating to the Business (the "Personal Property").
(b) Except as set forth on Schedule 3.11(a), the Personal
Property required to be listed on Schedule 3.11(a) is in satisfactory operating
condition and repair (reasonable wear and tear excepted), is available for
immediate use and is otherwise sufficient to permit the Station to operate in
accordance with the FCC Licenses and the rules and regulations of the FCC in all
material respects. All Personal Property is type-approved or type-accepted where
such type-approval or type-acceptance is required.
SECTION 3.12. PERSONAL PROPERTY LEASES. Schedule 3.12 contains
a list of each lease or other agreement or right under which any SBS Entity is
lessee of, or holds or operates, any Personal Property owned by a third party
and relating to the Business as of the date of this Agreement, except those
which are terminable by the SBS Entity without penalty on 30 days' notice (the
"Personal Property Leases").
SECTION 3.13. INTELLECTUAL PROPERTY.
(a) Schedule 3.13(a) contains a list of (i) all call
signs, United States and foreign patents, pending patent applications, trademark
registrations, pending trademark applications, trade names, service marks,
copyrights, logos, domain names, and other similar intangible property rights,
issued to, licensed to, assigned to, filed by, or used to promote or identify
the Station, or otherwise used in connection with the Business, and (ii) all
agreements, contracts and understandings therefor (the "Intellectual Property").
(b) Except as disclosed in Schedule 3.13(b), the SBS
Entities either: (i) own the entire right, title and interest in and to the
Intellectual Property listed in Schedule 3.13(a), free and clear of Encumbrances
except for Permitted Encumbrances; or (ii) have the valid right
26
and license to use the Intellectual Property in the conduct of the Business and
the operation of the Station.
(c) Except as disclosed in Schedule 3.13(c), (i) all
patents and registrations identified in Schedule 3.13(a) are in force, and all
applications identified in Schedule 3.13(a) are pending without challenge (other
than office actions that may be pending before the Patent and Trademark Office
or its foreign equivalents); (ii) the Intellectual Property owned or licensed by
the SBS Entities and material to the conduct of the Business is valid and
enforceable; and (iii) the SBS Entities have the right to bring actions for
infringement or unauthorized use of the Intellectual Property owned or licensed
by the SBS Entities and material to the conduct of the Business.
(d) To the knowledge of the SBS Entities, the operation
of the Station does not infringe any copyright, patent, trademark, trade name,
service ▇▇▇▇, or other similar right of any third party. The SBS Entities have
not sold, licensed or otherwise disposed of any of the Intellectual Property to
any person or entity and the SBS Entities have not agreed to indemnify any
person or entity for any patent, trademark or copyright infringement.
SECTION 3.14. TITLE TO PURCHASED ASSETS. Except as disclosed
on Schedule 3.14, the SBS Entities have good and marketable title to all of the
Purchased Assets (or a valid leasehold or license interest, in the case of any
leased or licensed assets, as applicable, including, without limitation, a valid
leasehold interest under the Real Property Leases), free and clear of all
Encumbrances, except for Permitted Encumbrances. At Closing, the SBS Entities
shall convey to Buyer good and marketable title to the Purchased Assets (or a
valid leasehold or license interest, in the case of any leased or licensed
assets, as applicable), free and clear of all Encumbrances, except for Permitted
Encumbrances.
SECTION 3.15. EMPLOYEES. Schedule 3.15 contains a true and
accurate list setting forth: (i) the names of all individuals currently employed
(whether active or on leave of absence) in connection with the Business as of
the date hereof; (ii) the titles and positions of such employees; (iii) the
payroll register with respect to the Business as of July 31, 2003; (iv) the type
of employment of each employee (i.e., full-time or part-time) and (v) the
employment status of each employee (i.e., active or on specified leave by type).
To the knowledge of SBS Entities, each individual providing services relating to
the Business has been properly classified as an employee or independent
contractor of the SBS Entities.
SECTION 3.16. EMPLOYEE RELATIONS.
(a) Except as set forth on Schedule 3.16 or as otherwise
disclosed in Schedule 3.15 or Schedule 3.21, no SBS Group Member is a party to
any (i) labor collective bargaining union or similar agreement or (ii) any
employment, consulting, noncompete, severance, retention, compensation, deferred
compensation, stock or cash based incentive or other similar agreement,
arrangement, commitment or understanding (whether written or oral) with salaried
or non-salaried employees, in each case (i) or (ii), in connection with the
Business or the Station.
27
(b) Except as set forth on Schedule 3.16, (i) no union or
similar organization represents employees of the Station and, to the knowledge
of the SBS Group Member, no such organization is attempting to organize such
employees; (ii) there are no unfair labor practice charges pending or, to the
knowledge of the SBS Group Member, threatened against any of the SBS Group
Member relating to the Business or the Station; (iii) there is no pending or
threatened strike, slowdown, picket, work stoppage, or arbitration proceedings
involving labor matters or other labor disputes affecting the Business or the
Station; and (iv) no SBS Group Member has experienced any strike, work stoppage
or other significant labor difficulties of any nature at the Station during the
period that the SBS Entities have owned the Station.
(c) Except as set forth in Schedule 3.16, each SBS Group
Member is and has been in compliance in all material respects with all state and
federal laws, ordinances, rules, regulations and requirements relating to labor
and employment laws, any employment tax or withholding obligations, any
obligations arising under a collective bargaining agreement or any obligations
arising under employee benefit plans in each case with respect to the Business
or the Station.
SECTION 3.17. CONTRACTS. Set forth in Schedule 3.17 is a true
and complete list of each contract, agreement or lease relating to the Business,
the operation of the Station or the Purchased Assets to which any SBS Entity is
a party as of the date of this Agreement, except for Time Sales Agreements,
Trade Agreements, contracts that relate solely to Excluded Assets, contracts
that are designated as Excluded Assets in Section 2.2 or Schedule 2.2, and
contracts that could impose an obligation or liability on Buyer of less than
$1,000 individually and less than $10,000 in the aggregate. Schedule 3.17 also
indicates whether each contract, agreement or other instrument listed therein is
to be deemed an "Assumed Contract," a "Contract Not Assumed," and/or a Material
Station Agreement for purposes of this Agreement.
SECTION 3.18. STATUS OF CONTRACTS.
(a) Each of the leases, contracts and other agreements
listed in Schedules 3.10(a), 3.12 and 3.17, but excluding contracts and other
agreements that are designated as Excluded Assets in Section 2.2 or Schedule 2.2
(the "Station Agreements"), constitutes a valid and binding obligation of any or
all SBS Entities party thereto and, to the knowledge of the SBS Entities, the
other parties thereto (subject to bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of creditors' rights
generally), is in full force and effect (subject to expiration or termination in
accordance with its terms), and (except as set forth in Schedule 3.2(c) and
except for those Station Agreements which by their terms will expire prior to
the Closing Date or will be otherwise terminated prior to the Closing Date in
accordance with the provisions hereof or at the direction of Buyer) may be
transferred to the Buyer pursuant to this Agreement on terms and conditions no
less favorable in any material respect than those contained in the relevant
Station Agreement on the date hereof, and will not, by reason of assignment to
Buyer, increase the obligations or liabilities of Buyer under such lease,
contract or other agreement in any material respect, and will be in full force
and effect at the time of such transfer (subject to expiration or termination in
accordance with its terms), in each case without breaching the terms thereof or
resulting in the forfeiture or
28
impairment of any rights thereunder and without the consent, approval or act of,
or the making of any filing with, any other party.
(b) Each SBS Entity has fulfilled and performed in all
material respects its obligations under each of the Station Agreements to which
it is a party, and no SBS Entity is in, or alleged to be in, breach or default
under any of the Station Agreements in any material respect and, to the
knowledge of the SBS Entities, no other party to any of the Station Agreements
has breached or defaulted thereunder in any material respect that remains
uncured, and no event has occurred and no condition or state of facts exists
which, with the passage of time or the giving of notice or both, would
constitute such a default or breach in any material respect by any SBS Entity
or, to the knowledge of the SBS Entities, by any such other party. Except as
disclosed in Schedule 3.17, the SBS Entities have heretofore delivered or made
available to the Buyer complete and correct copies of each of the written
Station Agreements, together with all amendments thereto, and true and complete
memoranda describing the material terms of all oral Station Agreements, and all
material liabilities and obligations under such Station Agreements can be
ascertained from such copies or memoranda.
SECTION 3.19. NO VIOLATION, LITIGATION OR REGULATORY ACTION.
Except as set forth in Schedule 3.19 and for such matters as have been remedied
or cured, each SBS Entity has complied in all material respects with all laws,
regulations, rules, writs, injunctions, ordinances, franchises, decrees or
orders of any court or of any foreign, federal, state, municipal or other
Governmental Body which affect or are applicable to the Purchased Assets, the
Station or the Business, and, without limiting the generality of the foregoing,
except as set forth on Schedule 3.19:
(a) There are no unsatisfied judgments outstanding
against the SBS Entities or relating to the Purchased Assets, the Station or the
Business which might adversely affect the continued operation of the Station or
impair the value of the Purchased Assets or which might adversely affect the SBS
Entities' ability to perform in accordance with this Agreement;
(b) There are no suits, proceedings, claims or
investigations pending or, to the knowledge of the SBS Entities, threatened
against the SBS Entities or relating to the Purchased Assets, the Station or the
Business which might adversely affect the continued operation of the Station or
impair the value of the Purchased Assets or which might adversely affect the SBS
Entities' ability to perform in accordance with this Agreement (other than any
of the foregoing generally affecting similarly-situated companies and that are
not specific to the SBS Entities);
(c) There is no action, suit or proceeding pending or, to
the knowledge of the SBS Entities, threatened, which questions the legality or
propriety of the transactions contemplated by this Agreement;
(d) Except as described in Schedule 3.9(b), the Station's
transmitting and studio equipment is operating in accordance with the terms and
conditions of the FCC Licenses and all underlying construction permits, and the
rules, regulations and policies of the FCC in all material respects. To the
knowledge of the SBS Entities, the Station is not causing interference
29
in violation of FCC rules to the transmission of any other broadcast station or
communications facility. The SBS Entities have not received any written
complaints with respect to any such alleged interference, and, to the knowledge
of the SBS Entities, no other broadcast station or communications facility is
causing interference in violation of FCC rules to the Station's transmissions;
(e) Except as set forth on Schedule 3.19, no SBS Entity
has received any notification from the FCC that any SBS Entity's employment
practices fail to comply with FCC rules and policies that remains pending and
unresolved;
(f) All material ownership reports, employment reports
and other material documents required to be filed by any SBS Entity with the FCC
or other Governmental Body with respect to the Station or the Business have been
filed. Such items as are required to be placed in the Station's local public
inspection files have been placed in such files without material exception; and
(g) All towers and other structures on the Real Property
are painted and lighted in accordance with the requirements of the FCC Licenses,
the FCC, FAA and all applicable requirements of federal, state and local law in
all material respects. Except as set forth on Schedule 3.9(d), appropriate
notification to the FAA has been filed for such towers where required by the
FCC's rules and regulations.
SECTION 3.20. INSURANCE. Set forth on Schedule 3.20 is an
accurate and complete description of the policies of insurance that the SBS
Entities maintain as of the date of this Agreement in respect of the Purchased
Assets, the Station or the Business. All insurance policies listed on Schedule
3.20 are in full force and effect and there are no outstanding claims under any
insurance policy or default with respect to provisions in any such policy.
SECTION 3.21. EMPLOYEE PLANS; ERISA.
(a) Schedule 3.21 lists all compensation and benefit
plans, programs, arrangements, contracts, agreements, understandings,
commitments and policies sponsored, administered, maintained, or contributed to,
by or on behalf of the SBS Entities, any of their subsidiaries, any ERISA
Affiliate or any of its subsidiaries as of the date hereof (including "employee
benefit plans" within the meaning of Section 3(3) of ERISA, all pension, profit
sharing, savings and thrift, bonus, stock or cash based incentive, deferred
compensation, stock option, stock purchase, stock ownership, restricted stock,
stock appreciation, phantom stock, fringe benefits, vacation, retention, change
in control, workers' compensation, unemployment compensation, post-retirement,
severance pay and medical, disability, accident and life insurance plans)
relating to the Business or the Station for the benefit of any former or current
employees of any SBS Entity or their respective dependents (collectively, the
"Employee Plans"), and copies of such Employee Plans have been made available to
Buyer.
(b) Neither the SBS Entities nor any ERISA Affiliates has
ever administered, maintained, contributed to, been obligated to contribute to
any Employee Plan which is a defined benefit plan (as defined in Section 3(35)
of ERISA) or a multiemployer plan (as defined in
30
Section 3(37) of ERISA. Neither the SBS Entities nor any ERISA Affiliate has
withdrawn from a multiemployer plan within the meaning of Section 414(f) of the
Code.
(c) Each Employee Plan and each related trust agreement,
annuity contract or other funding instrument is and has been maintained in all
material respects in compliance, both as to form and operation, with their terms
and applicable law (including, where applicable, ERISA and the Code).
(d) There is no action, order, writ, injunction,
judgment, decree outstanding or, to the knowledge of the SBS Entities, any
claim, suit, litigation, proceeding, arbitral action, governmental audit or
investigation pending or threatened, relating to or seeking benefits under any
Employee Plan that is pending or threatened against (i) any SBS Entity, any
subsidiary of any SBS Entity, any ERISA Affiliate of any SBS Entity relating to
the Business or the Station; or (iii) any Employee Plan relating to the Business
or the Station, other than a routine claim for benefits.
SECTION 3.22. ENVIRONMENTAL PROTECTION. In respect of the
Business and the Purchased Assets, except as set forth in Schedule 3.22:
(a) The operation of the Business by the SBS Entities is
and has been in material compliance with all applicable Environmental Laws, the
SBS Entities hold all material Permits required under Environmental Laws for the
operation of the Business, and no modification or change to the operations of
the Business will be required upon the renewal of any such Permits other than
modifications or changes required due to changes in law occurring after the date
hereof.
(b) (i) No claims arising under Environmental Laws are
pending or, to the knowledge of the SBS Entities, threatened against the SBS
Entities, (ii) there are no writs, injunctions, decrees, orders or judgments
outstanding or, to the knowledge of the SBS Entities, threatened relating to
compliance with or liability under any Environmental Law, and (iii) the SBS
Entities do not have any material liability under any Environmental Law.
(c) There have been no Releases of Hazardous Materials by
the SBS Entities or by any of their Affiliates or, to the knowledge of the SBS
Entities, by third parties, in, on or under the Real Property that could result
in any material investigation or material remedial action by any Governmental
Body pursuant to any Environmental Law.
(d) No facility or property of the SBS Entities nor, to
the knowledge of the SBS Entities, any facility or property to which the SBS
Entities transported or arranged for the transportation of any Hazardous
Materials is listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA), or on any
similar federal or state list of sites requiring investigation or remediation.
(e) (i) There are no structures, improvements, equipment,
activities, fixtures or facilities on any Real Property that are constructed
with, use or otherwise contain radioactive materials, lead or urea formaldehyde
unless the same are in satisfactory condition, ordinary wear
31
and tear excepted, and in compliance in all material respects with Environmental
Laws, (ii) there are no asbestos-containing materials, polychlorinated
biphenyls, or underground storage tanks, or underground piping associated with
such tanks on the Real Property, except those that comply with applicable
Environmental Laws and are scheduled on Schedule 3.22(e), and (iii) there are no
abandoned underground storage tanks on the Real Property that have not been
either abandoned in place or removed pursuant to an Environmental Law (provided
that the representations and warranties made in this Section 3.22(e) are limited
to matters or conditions related to activities of the SBS Entities on the leased
Real Property or as to which the SBS Entities have knowledge).
(f) There are no liens, restrictive covenants or other
land use restrictions under Environmental Laws on any of the Real Property, and
no government actions have been taken, or, to the knowledge of the SBS Entities,
are in process that could subject any of such properties to such liens,
restrictive covenants or other land use restrictions, and the SBS Entities are
not required to place any notice or restriction relating to Hazardous Materials
in any deed to such property (provided that the representations and warranties
made in this Section 3.22(f) are limited to matters resulting from the operation
of the Business prior to the Closing and otherwise are limited to the knowledge
of the SBS Entities).
(g) Except for customary provisions relating to the
indemnification of the lessor by the lessee in respect of lessee's creation of
Environmental Conditions or violation of Environmental Laws that may be
contained in the Real Property Leases, the SBS Entities have not released any
person nor waived any rights or defenses with respect to any Environmental
Conditions or any claim arising under any Environmental Law.
(h) There is no Environmental Report in the possession or
control of the SBS Entities or any of their Affiliates relating to the Business,
the Station or the Purchased Assets, that has not been delivered or made
available to Buyer.
SECTION 3.23. INSOLVENCY PROCEEDINGS. Neither the SBS Entities
nor the Purchased Assets are the subject of any pending or threatened insolvency
proceedings of any character. No SBS Entity has made an assignment for the
benefit of creditors or taken any action in contemplation of or which would
constitute a valid basis for the institution of any such insolvency proceedings.
SECTION 3.24. NO MISLEADING STATEMENTS. No representation or
warranty made by any SBS Entity in this Agreement or in any document,
instrument, or certificate provided to Buyer pursuant to this Agreement,
contains any untrue statement of a material fact or omits a material fact
necessary in order to make such statements or information not misleading in any
material respect.
SECTION 3.25. TRANSACTIONS WITH AFFILIATES. Except as set
forth on Schedule 3.25, there are no agreements, contracts, leases or other
arrangements between any SBS Group Member and an SBS Entity affecting the
operation of the Purchased Assets or the Station.
32
SECTION 3.26. NO FINDER. Neither the SBS Entities, nor any
party acting on any SBS Entity's behalf, has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
As an inducement to the SBS Entities to enter into this Agreement and
to consummate the transactions contemplated hereby, Buyer makes the following
representations and warranties to the SBS Entities, all of which are true and
correct as of the date hereof:
SECTION 4.1. ORGANIZATION. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Illinois. Buyer is, or will be at Closing, duly qualified as a
foreign limited liability company to do business in, and is, or will be at
Closing, in good standing under, the laws of the States of California. Buyer has
the requisite limited liability company power and authority to own or lease and
to operate the properties and assets used in connection with its business as
currently being conducted or to be acquired pursuant hereto, and to enter into
and perform this Agreement.
SECTION 4.2. AUTHORITY OF BUYER.
(a) Buyer has the requisite limited liability company
power and authority to execute and deliver this Agreement and all of the other
agreements and instruments to be executed and delivered by Buyer pursuant hereto
(collectively, the "Buyer Ancillary Agreements"), to consummate the transactions
contemplated hereby and thereby and to comply with the terms, conditions and
provisions hereof and thereof.
(b) The execution, delivery and performance of this
Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized
and approved by all necessary action of Buyer and do not require any further
authorization or consent of Buyer or its members. This Agreement is, and each
other Buyer Ancillary Agreement when executed and delivered by Buyer and the
other parties thereto will be, a legal, valid and binding agreement of Buyer
enforceable in accordance with its respective terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization or other similar laws affecting or limiting the enforcement of
creditors' rights generally and except as such enforceability is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Except as set forth in Schedule 4.2, none of the
execution and delivery by Buyer of this Agreement and the other Buyer Ancillary
Agreements, the consummation by Buyer of any of the transactions contemplated
hereby or thereby or compliance by Buyer with or fulfillment by Buyer of the
terms, conditions and provisions hereof or thereof will:
33
(i) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default,
an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights
under, or result in the creation or imposition of any
Encumbrance upon any assets of Buyer under, the organizational
documents of Buyer, any indenture, note, mortgage, lease,
guaranty or material agreement, or any judgment, order, award
or decree, to which Buyer is a party or any of the assets of
Buyer is subject or by which Buyer is bound, or any statute,
other law or regulatory provision affecting Buyer or its
assets; or
(ii) require the approval, consent, authorization
or act of, or the making by Buyer of any declaration, filing
or registration with, any third party or any foreign, federal,
state or local court, governmental or regulatory authority or
body, except for such of the foregoing as are necessary
pursuant to the Communications Act and the rules and
regulations of the FCC.
SECTION 4.3. LITIGATION. Buyer is not a party to any action,
suit or proceeding pending or, to the knowledge of Buyer, threatened which, if
adversely determined, would reasonably be expected to materially restrict the
ability of Buyer to consummate the transactions contemplated by this Agreement.
There is no order to which Buyer is subject which would reasonably be expected
to restrict the ability of Buyer to consummate the transactions contemplated by
this Agreement.
SECTION 4.4. NO FINDER. Other than a commission payable to
Star Media by Buyer upon the Closing, neither Buyer nor any party acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
SECTION 4.5. QUALIFICATIONS AS FCC LICENSEE. Buyer knows of no
fact or circumstance which would, under the Communications Act or the rules and
regulations of the FCC, disqualify or preclude Buyer from becoming the licensee
of the Station or materially delay the obtaining of the approvals required for
the transactions contemplated by this Agreement. There are no proceedings,
complaints, notices of forfeiture, claims, or investigations pending or, to the
knowledge of Buyer, threatened against Buyer or any principal, officer, member,
or owner of Buyer that would materially impair the qualifications of Buyer to
become a licensee of the Station.
SECTION 4.6. AVAILABILITY OF FUNDS. Buyer will have available
sufficient funds to enable it to consummate the Closing on the date scheduled
for the Closing in accordance with this Agreement. Buyer acknowledges and agrees
that obtaining financing to enable it to consummate the Closing is not a
condition to its obligation to consummate the Closing in accordance with this
Agreement.
SECTION 4.7. NO MISLEADING STATEMENTS. No representation or
warranty made by the Buyer in this Agreement or in any document, instrument, or
certificate provided to the SBS
34
Entities pursuant to this Agreement, contains any untrue statement of a material
fact or omits a material fact necessary in order to make such statements or
information not misleading in any material respect.
SECTION 4.8. NO OTHER REPRESENTATIONS AND WARRANTIES. Buyer
acknowledges that it has not relied on or been induced to enter into this
Agreement by any representation or warranty other than those expressly set forth
in this Agreement and the SBS Entities make no representations or warranties
other than those expressly set forth in this Agreement.
ARTICLE V
ACTIONS PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
SECTION 5.1. INVESTIGATION OF THE BUSINESS. Upon the request
of Buyer, the SBS Entities shall afford to the officers, employees and
authorized representatives of Buyer (including, without limitation, independent
public accountants, attorneys and consultants) reasonable access during normal
business hours, and upon not less than 24-hours prior notice, to the offices,
properties, employees and business and financial records (including computer
files, retrieval programs and similar documentation) of the Business to the
extent Buyer shall reasonably deem necessary or desirable and shall furnish to
Buyer or its authorized representatives such additional information concerning
the Business as shall be reasonably requested; provided, however, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of the SBS Entities and, subject to any contact
with the SBS Entities' employees, personnel, officers, agents and customers
shall be coordinated through and subject to advance approval of the SBS
Entities, which approval shall not be unreasonably withheld. Buyer acknowledges
that the books and records of the SBS Entities are located in Coconut Grove,
Florida. It is expressly understood that, pursuant to this Section 5.1, Buyer,
at its sole expense, shall be entitled to make such engineering inspections of
the Station and such audits of the Station's financial records as Buyer may
desire, so long as the same do not unreasonably interfere with the operation of
the Station; provided, that, except as provided in Section 5.6, neither the
furnishing of such information to Buyer or its representatives nor any
investigation made heretofore or hereafter by Buyer shall affect Buyer's right
to rely upon any representation or warranty made by the SBS Entities in this
Agreement, each of which shall survive any furnishing of information to Buyer or
its agents, or any investigation by Buyer or its agents, subject to Section 11.1
hereof.
SECTION 5.2. PRESERVE ACCURACY OF REPRESENTATIONS AND
WARRANTIES. Each of the parties hereto shall refrain from taking any action
which would result in the conditions contained in Section 7.1(b) or Section
8.1(b) not being satisfied as of the Closing. The SBS Entities shall promptly
notify Buyer, and Buyer shall promptly notify the SBS Entities, of any lawsuit,
claim, proceeding or investigation that may be threatened, brought, asserted or
commenced against the other which would have been listed in Schedule 3.19 or
would be an
35
exception to Section 4.3 if such lawsuit, claim, proceeding or investigation had
arisen prior to the date hereof.
SECTION 5.3. FCC CONSENT; OTHER CONSENTS AND APPROVALS.
(a) As promptly as practicable after the date of this
Agreement, but in any event no later than five (5) business days thereafter, the
SBS Entities and Buyer shall file with the FCC an application requesting its
consent to the assignment of the FCC Licenses to Buyer from SBS Licensee (the
"Transfer Application"). The SBS Entities and Buyer will cooperate in the
preparation of the Transfer Application and will diligently take and will
cooperate in the taking of all reasonable steps necessary to prosecute
expeditiously the Transfer Application and will use their reasonable best
efforts to obtain promptly the FCC's consent and approval of the Transfer
Application. Any fees assessed by the FCC incident to the filing or grant of the
Transfer Application shall be borne equally by Buyer and the SBS Entities, with
each party responsible for one half of any such fees assessed; provided that
Buyer will reimburse the SBS Entities for Buyer's share of such fees paid by the
SBS Entities, and the SBS Entities will reimburse the Buyer for the SBS
Entities' share of such fees paid by the Buyer. Each of the SBS Entities and
Buyer shall make available to the other, promptly after the filing thereof,
copies of all amendments, pleadings and other documents filed by it or its
Affiliates with the FCC between the date hereof and the Closing Date in respect
of the Transfer Application.
(b) The SBS Entities and the Buyer shall each use
reasonable best efforts to obtain all consents, amendments or permits from
Governmental Bodies which are required by the terms thereof for the consummation
of the transactions contemplated by this Agreement, and shall jointly,
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such requests for approval or waiver and all
proceedings necessary to secure such approvals and waivers.
SECTION 5.4. OPERATIONS OF THE STATION PRIOR TO THE CLOSING
DATE.
(a) Prior to the Closing Date, the SBS Entities shall,
consistent with past practice, use their reasonable best efforts to (subject to,
and except as modified by, compliance with the other covenants contained in this
Agreement):
(i) continue to promote and advertise on behalf
of the Station and the Business at levels substantially
consistent with past practice;
(ii) maintain in all material respects the
business organization of the Station intact;
(iii) preserve the goodwill of landlords,
employees, customers and others having business relations with
the Business or the Station;
(iv) maintain the employment of each current
employee who, in the exercise of commercially reasonable
judgment, the SBS Entities deem necessary for the continued
operation of the Business or the Station as currently operated
36
(any voluntary departure of any employee between the date
hereof and the Closing excepted);and
(v) perform all Station Agreements without
material default and pay all of their respective trade
accounts payable in a timely manner; provided, however, that
the SBS Entities may dispute, in good faith, any of their
respective alleged obligations.
(b) Prior to the Closing Date, except as approved by
Buyer pursuant to Section 5.4(c) or as expressly required or permitted by this
Agreement, the SBS Entities shall:
(i) operate and carry on the operations of the
Station and conduct the Business only in the ordinary course
consistent with past practices (subject to, and except as
modified by, compliance with the other covenants contained in
this Agreement);
(ii) maintain the Purchased Assets in their
present condition (reasonable wear and tear in normal use
excepted);
(iii) maintain their respective books and records
in the usual and ordinary manner, on a basis consistent with
prior periods;
(iv) comply in all material respects with all
laws, rules, ordinances and regulations applicable to it, to
the Purchased Assets, the Business and the operation of the
Station;
(v) maintain the present format of the Station;
(vi) maintain all supplies, tubes, and spare
parts at levels consistent with the Station's prior practices
(the disposition or consumption of inventories in the ordinary
course of the Business consistent with past practice,
including with respect to replenishment and inventory level
maintenance, excepted); and
(vii) prepare and file all Tax Returns that
pertain to the Purchased Assets in a manner that is consistent
with past practices.
(c) Notwithstanding Section 5.4(a) and (b), and subject
to the Communications Act and the rules and regulations of the FCC, except as
expressly contemplated by this Agreement, without the express prior written
approval of the Buyer, which approval shall not be unreasonably withheld or
delayed, the SBS Entities in respect of the Station shall not:
(i) enter into any contract for the purchase of
real property or exercise any option to extend a lease listed
in Schedule 3.10(c);
(ii) sell, lease (as lessor), transfer or
otherwise dispose of (including any transfers to any
Affiliates of the SBS Entities), or mortgage or pledge, or
37
impose or suffer to be imposed any Encumbrance, which will not
be released at Closing, on any of the Purchased Assets, other
than Excluded Assets and other than inventory and personal
property sold or otherwise disposed of or consumed in the
ordinary course of the Business and other than Permitted
Encumbrances;
(iii) create, incur or assume, or agree to create,
incur or assume, any indebtedness for borrowed money (other
than money borrowed or advances from any other SBS Entity or
any Affiliate of any SBS Entity in the ordinary course of the
Business), except indebtedness incurred in the ordinary course
of the Business that will be repaid prior to or as of the
Closing;
(iv) institute any material increase in any
profit-sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital, disability,
welfare or other employee benefit plan with respect to its
employees, other than in the ordinary course of the Business
or as required by any such plan or Requirements of Law;
(v) make any material change in the compensation
of its employees, other than changes made in accordance with
normal salary adjustments and consistent with past
compensation practices;
(vi) enter into any employment agreement for
services to be performed on behalf of the Station or the
Business, except for those employment agreements that (i) are
for employees who replace former employees who resigned or who
have been terminated, on similar terms and conditions and at
comparable rates of compensation to those terms and conditions
and rates of compensation provided to the former employees,
and (ii) are terminable at will and without penalty; or
(vii) acquiesce in any infringement, unauthorized
use or impairment of the Intellectual Property or change the
Station's call sign.
SECTION 5.5. THIRD PARTY CONSENTS. Each SBS Entity shall use
its commercially reasonable efforts to obtain the consents of the other
contracting parties to the transactions contemplated hereby to the extent
required by the Station Agreements requiring such consent (including delivering
reasonable assignment and/or assumption agreements that may be requested by the
other contracting parties). The delivery of such consents with respect to the
Station Agreements that are identified on Schedule 3.17 to be material to the
operation of the Station ("Material Station Agreements") shall, pursuant to
Section 8.6, be a condition to Buyer's obligation to close. To the extent that
transfer or assignment hereunder by the SBS Entities to Buyer of any Station
Agreement or license is not permitted or is not permitted without the consent of
another Person, this Agreement shall not be deemed to constitute an undertaking
to assign the same if such consent is not given or if such an undertaking
otherwise would constitute a breach thereof or cause a loss of benefits
thereunder. If, other than with respect to the Material Station Agreements, any
such third party consent, approval or waiver is not obtained before the Closing,
for a period continuing until the earlier of the first anniversary of the
Closing Date or
38
such consent, approval or waiver is obtained, the parties shall use their
commercially reasonable efforts in good faith to cooperate, and to cause each of
their respective Affiliates to cooperate, in effecting any lawful arrangement to
provide to Buyer the economic benefits of the Station Agreements for which third
party consents, approvals, and waivers are being sought after Closing, and Buyer
shall, to the extent Buyer is provided with the benefits thereunder, assume and
discharge the obligations under the Station Agreements after the Closing Date.
SECTION 5.6. ENVIRONMENTAL SITE ASSESSMENT.
(a) If requested of Buyer by Buyer Lenders, within
forty-five (45) days of the execution of this Agreement, Buyer may engage at its
expense an environmental consulting firm that is reasonably acceptable to the
SBS Entities for the purpose of obtaining a Phase I Environmental Assessment for
the Real Property leased by the SBS Entities pursuant to the Real Property
Leases (the "Environmental Assessment"). In the event the Environmental
Assessment describes any Environmental Conditions that could reasonably be
expected to result in a liability of Buyer ("Adverse Environmental Conditions"),
then Buyer may conduct or have conducted at its expense additional testing to
confirm or negate the existence of any such Adverse Environmental Conditions.
The SBS Entities shall cooperate with Buyer and use their commercially
reasonable efforts to assist Buyer in obtaining the Environmental Assessment and
any such additional testing. Notwithstanding the foregoing, if and to the extent
a landlord under a Real Property Lease prohibits Buyer or its agent from
conducting an Environmental Assessment or any additional testing, Buyer shall
not be permitted to conduct such Environmental Assessment or additional testing.
(b) If any such Environmental Assessment or additional
testing reflects the existence of any such Adverse Environmental Conditions and
if such Adverse Environmental Conditions were caused by the actions or omissions
of the SBS Entities, the SBS Entities shall cause the Adverse Environmental
Conditions to be remedied prior to Closing such that no recognized Adverse
Environmental Conditions exist; provided, however, that if remediation cannot be
accomplished prior to the scheduled Closing Date, but can be accomplished within
sixty (60) days of such date, the SBS Entities may postpone the Closing in order
to accomplish such remediation for the number of days up to sixty (60) necessary
to accomplish such remediation; provided further, that no SBS Entity shall be
obligated to expend in the aggregate in excess of Seventy-Five Thousand Dollars
($75,000) (the "Remediation Cap") to effect such remediation prior to Closing.
In the event that the aggregate amount of the remediation cost with respect to
such Adverse Environmental Conditions that are identified prior to Closing
exceeds the Remediation Cap, the SBS Entities may elect not to take such
remedial action. In such event, Buyer may require the SBS Entities to proceed to
Closing, in which event Buyer shall receive a reduction in the Purchase Price at
Closing equal to the aggregate amount of the remediation cost with respect to
such Adverse Environmental Conditions, and the SBS Entities thereafter shall be
relieved of any liability to Buyer with respect to such costs (whether pursuant
to this Agreement or otherwise). Alternatively, Buyer may terminate this
Agreement by notice to the SBS Entities given within ninety (90) days after the
date of this Agreement (provided that in any event Buyer shall have twenty (20)
days after notification by the SBS Entities that no remedial action shall be
taken to terminate this Agreement).
39
(c) If any such Environmental Assessment or additional
testing reflects the existence of any Adverse Environmental Conditions and if
such Adverse Environmental Conditions were not caused by the actions or
omissions of the SBS Entities, the SBS Entities, at their election, may cause
such Adverse Environmental Conditions to be remedied prior to Closing such that
no recognized Adverse Environmental Conditions exist; provided, however, that if
remediation cannot be accomplished prior to the scheduled Closing Date, but can
be accomplished within sixty (60) days of such date, the SBS Entities may
postpone the Closing in order to accomplish such remediation for the number of
days up to sixty (60) necessary to accomplish such remediation. If the SBS
Entities elect not to take such remedial action and the aggregate amount of the
remediation cost with respect to such Adverse Environmental Conditions could
reasonably be expected to exceed Twenty-five Thousand Dollars ($25,000), Buyer
may terminate this Agreement by notice to the SBS Entities given within ninety
(90) days after the date of this Agreement (provided that in any event Buyer
shall have twenty (20) days after notification by the SBS Entities that no
remedial action shall be taken to terminate this Agreement).
(d) Subject to the other provisions of this Section 5.6,
the Environmental Assessment shall not relieve the SBS Entities of any
obligation with respect to any representation, warranty or covenant of the SBS
Entities in this Agreement or waive any condition to Buyer's obligations under
this Agreement.
SECTION 5.7. PUBLIC ANNOUNCEMENT. None of the SBS Entities,
Buyer or any of their Affiliates shall, without the approval of the other, make
any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law (including any filing to be made with the FCC) or
by the rules, regulations or policies of any national securities exchange or
association, in which case the other party shall be advised and the parties
shall use reasonable efforts to cause a mutually agreeable release or
announcement to be issued.
SECTION 5.8. INTERIM FINANCIAL STATEMENTS. The SBS Entities
shall prepare and deliver to Buyer, within five (5) business days of their
preparation, monthly statements of revenue and expenses and quarterly balance
sheets for the Station during the period from the date hereof through the
Closing, and shall deliver to Buyer copies of any other financial statements
related to the Business that may be prepared during such period. Such financial
statements shall fairly present, in all material respects (subject to the
addition of footnotes and customary adjustments), the financial position and
results of operations of the Station and the Business, as at the dates and for
the periods indicated (subject to customary adjustments), and shall be prepared
on a basis consistent and in accordance with the basis upon which the financial
statements included in Schedule 3.3 were prepared.
SECTION 5.9. ADMINISTRATIVE VIOLATIONS. If any SBS Entity
receives any finding, order, complaint, citation or notice prior to the Closing
Date which states that any aspect of the Station's operations violates any rule
or regulation of the FCC or of any other Governmental Body in any material
respect (an "Administrative Violation"), the SBS Entities shall (i) promptly
notify Buyer of the Administrative Violation, (ii) except to the extent
otherwise
40
addressed in Section 5.6, use their commercially reasonable efforts to remove or
correct the Administrative Violation (provided, however, that the SBS Entities
may dispute, in good faith, the findings of any Administrative Violation), and
(iii) be responsible for the payment of all costs associated therewith,
including any fines or back pay that may be assessed, to the extent they relate
to Administrative Violations occurring prior to the Closing; provided that
nothing in this Section shall relieve the SBS Entities of their obligations with
respect to the representations and warranties contained herein.
SECTION 5.10. BULK SALES ACT. If and to the extent applicable
to the transactions contemplated by this Agreement, the SBS Entities agree to
jointly and severally indemnify, defend, and hold Buyer harmless against any
claims, liabilities, costs, or expenses, including reasonable attorneys' fees,
that Buyer may incur as a result of the failure to comply with the bulk sales
provisions of the Uniform Commercial Code or similar laws with respect to the
transactions contemplated hereby.
SECTION 5.11. ADVERSE DEVELOPMENTS. Each of the SBS Entities
and Buyer shall promptly notify the other party of any materially adverse
developments that occur prior to Closing with respect to the Purchased Assets,
or the operation of the Station, or with respect to the Transfer Application;
provided, however, that compliance with the disclosure requirements of this
Section 5.11 shall not relieve the notifying party of any obligation with
respect to any representation, warranty or covenant of the notifying party in
this Agreement or waive any condition to the other party's obligations under
this Agreement.
SECTION 5.12. ADDITIONAL COVENANT. The SBS Entities and Buyer
shall make all commercially reasonable efforts to cause the consummation of the
transactions contemplated by this Agreement. The SBS Entities and Buyer shall
not take any action that is inconsistent with their obligations under this
Agreement in any material respect or that could reasonably be expected to
materially hinder or materially delay the consummation of the transactions
contemplated by this Agreement. The parties acknowledge that Buyer's election,
if any, pursuant to Section 8.8 shall not be a breach of this covenant.
SECTION 5.13. NO SOLICITATION COVENANT. Each SBS Entity shall
not, directly or indirectly, through any officer, director, member, partner,
agent or otherwise, enter into, solicit, initiate, conduct or continue any
discussions or negotiations with, or encourage or respond to any inquiries or
proposals or offers by, or provide any information to, or otherwise cooperate in
any other way with, any corporation, partnership, person or other entity or
group, other than the Buyer and its representatives and agents, concerning (i)
any sale of all or any portion of the Purchased Assets including without
limitation the Business and the Station, (ii) any merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving the Purchased Assets, the Business or the Station, or (iii) any
transaction that would have an effect similar to the transactions described in
(i) or (ii) (each such transaction being referred to herein as a "Proposed
Acquisition Transaction"); provided that communication solely of the negative
covenant in this Section 5.13 shall not be a violation hereof. Each SBS Entity
hereby represents that it is not engaged in discussions or negotiations with any
party other than Buyer with respect to any Proposed Acquisition Transaction
since August 20, 2003.
41
SECTION 5.14. COPIES OF FCC APPLICATIONS. The SBS Entities
shall promptly make available to Buyer copies of any applications filed with the
FCC with respect to the Station promptly after the filing of the same with the
FCC.
SECTION 5.15. ESTOPPEL CERTIFICATES. The SBS Entities shall
use commercially reasonable efforts to obtain executed versions of estoppel
certificates from the landlords under the Real Property Leases in a form
reasonably acceptable to Buyer.
SECTION 5.16. TRADE AGREEMENTS; STATION AGREEMENTS. From the
date of the Agreement through the Closing, the SBS Entities shall not modify or
amend any existing Trade Agreements or enter into any new Trade Agreements
(other than in the ordinary course of the Business or Trade Agreements that
provide for termination upon thirty (30) days notice without financial penalty)
without the prior written consent of the Buyer which shall not be unreasonably
withheld or delayed. Except as otherwise disclosed on Schedule 2.2 and except as
permitted by this Section 5.16, the Station Agreements will not be modified or
renewed without Buyer's written consent, which consent shall not be unreasonably
withheld or delayed, except the SBS Entities shall be permitted to renew any
Station Agreement that pursuant to its terms renews automatically on a
month-to-month basis.
SECTION 5.17. TITLE EXAMINATION; TITLE INSURANCE; SURVEYS.
(a) If requested of Buyer by Buyer Lenders, Buyer may, at
its expense, conduct a review and examination with respect to title of the Real
Property, and the SBS Entities shall cooperate as reasonably necessary in the
completion of such review and examination. If any such review and examination
reflects the existence of any defect, encumbrance, or other limitation with
respect to the SBS Entities interest in the Real Property which would cause a
material limitation or exclusion from any title insurance policy with respect to
the Real Property that Buyer may elect to obtain at Buyer's expense (other than
a Permitted Encumbrance) (a "Title Defect"), then Buyer shall notify the SBS
Entities of such Title Defect within sixty (60) days after the date of this
Agreement, and the SBS Entities shall at its sole cost and expense, cause such
Title Defect to be cleared or otherwise remedied as quickly as possible, and in
all events prior to Closing or, with the consent of Buyer, shall at its sole
cost and expense, cause the title insurance company to insure over any such
Title Defect prior to the Closing.
(b) Buyer may obtain surveys of the Real Property
sufficient to remove any "survey exception" from any title insurance policies
Buyer may elect to obtain with respect to the Real Property. The SBS Entities
shall cooperate with Buyer and use their commercially reasonable efforts to
assist Buyer in obtaining such surveys. Notwithstanding the foregoing, if and to
the extent a landlord under a Real Property Lease prohibits Buyer or its agent
from conducting such a survey, Buyer shall not be permitted to conduct such a
survey.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. TAXES; SALES, USE AND TRANSFER TAXES.
(a) To the extent that the amount of any adjustment made
to the Purchase Price in favor of Buyer pursuant to Section 2.11 in respect of
any Tax exceeds the amount actually payable with respect to the period covered
by such calculation, Buyer shall promptly reimburse the SBS Entities for the
full amount of such excess.
(b) Buyer and the SBS Entities shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of any Tax Return related to the Station or the Purchased Assets and
any audit, litigation or other proceeding with respect to Taxes that relates to
the Station or the Purchased Assets. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to the preparation of any Tax Return,
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.
(c) Any sales, use or other transfer Taxes payable by
reason of transfer and conveyance of the Business, the Station or the Purchased
Assets hereunder and any documentary stamp or transfer Taxes payable by reason
of the real estate or interests therein included in the Purchased Assets shall
be borne equally by Buyer and the SBS Entities, with each party responsible for
one half of any such Taxes; provided that Buyer will reimburse the SBS Entities
for Buyer's share of such Taxes paid by the SBS Entities, and the SBS Entities
will reimburse the Buyer for the SBS Entities' share of such Taxes paid by the
Buyer. All fees relating to any filing with any Governmental Body required for
transfer and conveyance of the Business, the Station or the Purchased Assets
hereunder, other than amounts (including Taxes) owing to any Governmental Body
as of the date hereof or with respect to events occurring prior to the date
hereof, shall be borne equally by Buyer and the SBS Entities.
SECTION 6.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS.
(a) Effective as of the Closing Date, Buyer shall extend
offers of employment to employees listed on Schedule 3.15 whom it desires to
offer employment on such terms and conditions that Buyer shall determine in its
own discretion (such employees who accept Buyer's offer of employment
hereinafter referred to as the "Transferred Employees"). Nothing in this
Agreement shall obligate Buyer to hire any such employees. SBS Licensee and/or
SBS-San Francisco shall terminate the employment of all employees who become
employees of Buyer effective upon the Closing Date and shall cooperate with, and
use all reasonable efforts to assist, and not interfere with or impede Buyer in
its efforts to secure satisfactory employment arrangements with the Transferred
Employees to whom Buyer makes offers of employment.
43
(b) The SBS Entities shall vest all Transferred Employees
in all benefits accrued through the Closing Date under any Employee Plan that is
intended to be qualified under Section 401(a) of the Code.
(c) The SBS Entities shall be solely responsible for the
Employee Plans or workers compensation arrangements and all obligations and
liabilities thereunder. Buyer shall not assume any of the Employee Plans or any
obligation or liability thereunder. The SBS Entities shall be solely responsible
for all obligations and liabilities associated with any employees of the SBS
Entities who are not Transferred Employees and for all obligations and
liabilities associated with any Transferred Employees that arise from or relate
to facts, circumstances or conduct of the SBS Entities, any of their
subsidiaries, any ERISA Affiliate of any of their Subsidiaries that occurred or
is deemed to occur on or prior to the Closing.
(d) The SBS Entities shall be responsible for all
liabilities or obligations under the Worker Adjustment and Retraining
Notification Act and any state law equivalent statutes resulting from their
actions contemplated by this Agreement.
(e) The SBS Entities shall retain full responsibility and
liability for offering and providing "continuation coverage" to any "covered
employee" and any "qualified beneficiary" who is covered by a "group health
plan" sponsored or contributed to by any of the SBS Entities whose coverage
under such group health plan was attributable to a covered employee's employment
performing services in connection with the Station and who has experienced a
qualifying event or is receiving continuation coverage on or prior to the
Closing. "Continuation coverage," "covered employee," "qualified beneficiary,
"qualifying event" and "group health plan" all shall have the meanings given
such terms under Section 4980B of the Code and Section 601 et seq. of ERISA.
(f) Each SBS Entity will remain responsible for (i) all
benefits payable to its employees who, as of the close of business on the day
immediately preceding the Closing Date, were determined to be disabled in
accordance with the applicable provisions of the health, accident, sickness,
salary continuation, or short-term or long-term disability benefit plans or
programs of such SBS Entity, (ii) all benefits payable to its employees, who as
of the close of business on the business day immediately preceding the Closing
Date, were receiving short-term disability benefits in accordance with the
applicable provisions of the short term disability benefit plans or programs of
such SBS Entity; and (iii) all benefits payable to employees of any SBS Entity
who, as of the close of business on the business day immediately preceding the
Closing Date, were on any type of leave other than vacation leave.
(g) Nothing contained herein, expressed or implied, is
intended to confer upon any Transferred Employee any right to continued
employment for any period of time by reason of this Agreement. Nothing contained
herein is intended to confer upon any Transferred Employee any particular term
or condition of employment.
SECTION 6.3. CONTROL OF OPERATIONS PRIOR TO CLOSING DATE.
Notwithstanding anything contained herein to the contrary, the Closing shall not
be consummated prior to the
44
grant by the FCC of the FCC Consent. The SBS Entities and Buyer acknowledge and
agree that at all times commencing on the date hereof and ending on the Closing
Date, neither Buyer nor any of its employees, agents or representatives,
directly or indirectly, shall, or have any right to, control, direct or
otherwise supervise, or attempt to control, direct or otherwise supervise the
management or operations of the Station, it being understood that the operation,
management, control and supervision of all programs, equipment, operations and
other activities of the Station shall be the sole responsibility, and at all
times prior to the Closing Date remain within the complete control and
discretion, of the SBS Entities, provided that this Section 6.3 shall not be
deemed to limit the SBS Entities' obligations under the terms of Section 5.4.
SECTION 6.4. NON-SOLICITATION OF EMPLOYEES. For two (2) years
hereafter, none of any SBS Entity, nor any of their respective Affiliates (each
a "Covenantor") shall directly or indirectly, for itself or on behalf of any
other individual or entity, hire or solicit any Transferred Employee who at the
time of solicitation is known to the Covenantor to be an employee of Buyer or
any of its Affiliates, or induce or attempt to induce through any form of direct
communication any such Transferred Employee to leave his or her employment with
any of the Buyer or any of its Affiliates who at the time of solicitation is
known to the Covenantor to be an employee of Buyer or any of its Affiliates;
provided, however, that this Section 6.4 shall not prohibit any Covenantor from
making a general, public solicitation or a general industry-specific
solicitation for employment.
SECTION 6.5. TERMINATION OF CERTAIN ARRANGEMENTS. Except as
otherwise may be agreed by the parties in this Agreement or otherwise, Buyer and
the SBS Entities acknowledge and agree that any and all services provided by the
SBS Entities or any of their Affiliates to the Station and any other
arrangements between the SBS Entities or their Affiliates and the Station shall
automatically be terminated effective as of the Closing without any additional
actions by the parties, and that the SBS Entities and their Affiliates, on the
one hand, and the Station, on the other, shall have no further obligations or
liabilities to each other from and after the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF
THE SBS ENTITIES
The obligations of the SBS Entities under this Agreement to consummate
the Closing shall, at the option of the SBS Entities, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
SECTION 7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES.
(a) There shall have been no material breach by Buyer in
the performance of any of its respective covenants and agreements contained
herein to be performed prior to the Closing that remains uncured as of the
Closing.
45
(b) Each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
(without regard to any materiality limitation contained in any representation or
warranty) on the Closing Date as though made on the Closing Date (except to the
extent that they expressly speak as of a specific date or time other than the
Closing Date, in which case they need only have been true and correct in all
material respects as of such specified date or time).
(c) Buyer shall have delivered to the SBS Entities
certificates, dated as of the Closing Date and signed on behalf of Buyer by its
President or any Vice President, certifying that the conditions described in
subsections (a) and (b) above have been satisfied.
SECTION 7.2. NO RESTRAINT OR LITIGATION.
(a) There shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a court of competent
jurisdiction or by a Governmental Body, no statute, rule, regulation or
executive order shall have been promulgated or enacted by a Governmental Body,
and there shall not be in effect any temporary restraining order of a court of
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any suit, action,
proceeding or investigation instigated by a Governmental Body before any court
or governmental agency or body to prohibit the transactions contemplated by this
Agreement; provided, however, that this condition may not be invoked by any SBS
Entity if any such action, suit, or proceeding was solicited or encouraged by,
or instituted as a result of any act or omission of, any SBS Entity in breach of
this Agreement.
SECTION 7.3. FCC CONSENT. The FCC Consent shall have been
granted, without any condition or qualification that is materially adverse to
the SBS Entities, except those that are customary in the assignment of FM
licenses and any condition imposed by reason of actions constituting a material
breach of the SBS Entities' representations, warranties, covenants and
obligations hereunder.
SECTION 7.4. PAYMENT. Buyer shall have delivered the Purchase
Price to the SBS Entities in accordance with Section 2.7.
SECTION 7.5. CLOSING DOCUMENTS. Buyer shall have delivered to
the SBS Entities all of the Closing documents specified in Section 2.8(b), all
of which documents shall be dated as of the Closing Date, duly executed, and in
a form customary in transactions of this type and reasonably acceptable to the
SBS Entities.
Notwithstanding the failure of any one or more of the foregoing
conditions, to the extent permitted by law, the SBS Entities may proceed with
the Closing without satisfaction, in whole or in part, of any one or more of
such conditions and without written waiver; provided, that Closing shall be
deemed a waiver of only such conditions.
46
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement to consummate the Closing
shall, at the option of Buyer, be subject to the satisfaction on or prior to the
Closing Date, of the following conditions:
SECTION 8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES.
(a) There shall have been no material breach by any or
all of the SBS Entities in the performance of any of any SBS Entity's respective
covenants and agreements contained herein to be performed prior to the Closing
that remains uncured as of the Closing.
(b) Each of the representations and warranties of each
SBS Entity contained in this Agreement shall be true and correct in all material
respects (without regard to any materiality limitation contained in any
representation or warranty) on the Closing Date as though made on the Closing
Date (except to the extent that they expressly speak as of a specific date or
time other than the Closing Date, in which case they need only have been true
and correct in all material respects as of such specified date or time).
(c) Each SBS Entity shall have delivered to Buyer
certificates, dated as of the Closing Date and signed on behalf of each SBS
Entity by its President or any Vice President, certifying that the conditions
described in subsections (a) and (b) above have been satisfied.
SECTION 8.2. NO RESTRAINT OR LITIGATION.
(a) There shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a court of competent
jurisdiction or by a Governmental Body, no statute, rule, regulation or
executive order shall have been promulgated or enacted by a Governmental Body,
and there shall not be in effect any temporary restraining order of a court of
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any suit, action,
proceeding or investigation instigated by a Governmental Body before any court
or governmental agency or body to prohibit the transactions contemplated by this
Agreement; provided, however, that this condition may not be invoked by Buyer if
any such action, suit, or proceeding was solicited or encouraged by, or
instituted as a result of any act or omission of, Buyer in breach of this
Agreement.
SECTION 8.3. FCC CONSENT. Subject to the terms of Section 8.8,
the FCC Consent shall have been granted without any condition or qualification
that is materially adverse to Buyer or to the operations of the Station, except
those that are customary in the assignment of FM licenses and any condition
imposed by reason of actions constituting a material breach of the Buyer's
representations, warranties, covenants and obligations hereunder.
47
SECTION 8.4. FCC LICENSES. On the Closing Date, SBS Licensee
shall be the lawful holder of the FCC Licenses, the FCC Licenses shall be in
full force and effect, in accordance with their terms, and the balance of the
current license term shall be that applicable generally to radio broadcast
stations licensed to communities in the state where the Station in question is
located.
SECTION 8.5. CLOSING DOCUMENTS. The SBS Entities shall have
delivered to Buyer all of the Closing documents specified in Section 2.8(a), all
of which documents shall be dated as of the Closing Date, duly executed, and in
a form customary in transactions of this type and reasonably acceptable to
Buyer.
SECTION 8.6. THIRD PARTY CONSENTS. The SBS Entities shall have
obtained all consents required under the Material Station Agreements in
connection with the consummation of the transactions contemplated by this
Agreement (a "Required Consent"), such that after the Closing the Buyer will
continue to enjoy all of its rights and privileges under the Material Station
Agreements, subject only to the same obligations as are binding thereunder, on
terms and conditions that are no less favorable in any material respect than
those contained in such Material Station Agreements on the date of this
Agreement (as it may be modified prior to the Closing in accordance with the
provisions of this Agreement).
SECTION 8.7. SATISFACTORY ENVIRONMENTAL ASSESSMENT. To the
extent that the Environmental Assessment or additional testing conducted
pursuant to Section 5.6 hereof reflects the existence of Environmental
Conditions contrary to any representation or warranty in this Agreement, either
(i) the SBS Entities shall have completed the remediation of such Environmental
Conditions in accordance with Section 5.6 hereof or (ii) Buyer shall have
provided notice to the SBS Entities of Buyer's election to proceed to Closing
with the adjustment to the Purchase Price specified in Section 5.6 hereof
(provided that Buyer shall be deemed to have provided such notice if it does not
exercise its right to terminate this Agreement in accordance with Section 5.6 by
the dates specified therein).
SECTION 8.8. FINAL ORDER CONTINGENT CONDITION. Notwithstanding
the condition in Section 8.3, if, as of the date that is five business days
following the date the FCC Consent shall have been granted (the "Closing
Extension Deadline"), (w) Buyer Lenders are requiring that the FCC Consent shall
have become a Final Order prior to providing Buyer with sufficient funds to
enable it to consummate the Closing, and (x) all of the conditions to Closing
set forth in this Article VIII have been satisfied (as of the Closing Extension
Deadline), Buyer may elect to postpone the Closing until the FCC Consent shall
become a Final Order by delivering to the SBS Entities no later than the second
business day following the Closing Extension Deadline (y) a written notice
setting forth such election and (z) an additional cash advance in the amount of
One Million Dollars ($1,000,000) (such election and the additional cash advance,
collectively, the "Final Order Closing Requirements"). If Buyer satisfies the
Final Order Closing Requirements, the obligations of Buyer under this Agreement
to consummate the Closing shall be subject to the satisfaction on or prior to
the Closing Date of the conditions in Article XIII and the FCC Consent becoming
a Final Order on or prior to the Closing Date. Pursuant to Section 2.5, the
additional cash advance, if any, delivered pursuant to this Section 8.8 shall be
treated as part of the Cash
48
Advance. The SBS Entities agree to provide Buyer with a written receipt
acknowledging such additional cash advance.
Notwithstanding the failure of any one or more of the
foregoing conditions, to the extent permitted by law, Buyer may proceed with the
Closing without satisfaction, in whole or in part, of any one or more of such
conditions and without written waiver; provided, that Closing shall be deemed a
waiver of any such conditions.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1. INDEMNIFICATION BY THE SBS ENTITIES. After the
Closing, each SBS Entity agrees jointly and severally to indemnify and hold
harmless each Buyer Group Member from and against any and all Loss and Expense
incurred by such Buyer Group Member in connection with or arising from:
(i) any breach by any SBS Entity of, or any
other failure of any SBS Entity to perform, any of its
covenants, agreements or obligations in this Agreement or in
any SBS Entities Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy
of any representation of any SBS Entity contained in this
Agreement (other than a breach of any warranty or the
inaccuracy of any representation contained in Sections 3.2 or
3.14) or any certificate delivered by or on behalf of any SBS
Entity pursuant hereto;
(iii) any breach of any warranty or the inaccuracy
of any representation of any SBS Entity contained in Sections
3.2 or 3.14;
(iv) any Encumbrances on the Purchased Assets
arising prior to the Closing except for Permitted
Encumbrances; and
(v) the failure of any SBS Entity to perform and
discharge any Excluded Liabilities;
provided, however, that the SBS Entities shall not be required to indemnify and
hold harmless pursuant to clause (i) or (ii) with respect to Loss and Expense
incurred by Buyer Group Members until the aggregate amount of all such Loss and
Expense exceeds Seventy-Five Thousand Dollars ($75,000) (the "SBS Threshold
Amount"); provided, further, that the SBS Entities shall be liable only to
extent such Loss and Expense exceeds the SBS Threshold Amount. The aggregate
amount that the SBS Entities shall be required to indemnify and hold harmless
pursuant to clauses (i) and (ii) with respect to Loss and Expense incurred by
Buyer Group Members shall not exceed Three Million Dollars ($3,000,000), and
Buyer hereby waives and releases any recourse against the SBS Entities for
indemnification hereunder above such amount). In determining whether the SBS
Entities shall be obligated to indemnify Buyer under this Section 9.1, each
49
representation and warranty and each covenant contained in this Agreement with
respect to which indemnity may be sought hereunder shall be read solely for
purposes of determining whether a breach of such representation, warranty or
covenant has occurred without regard to materiality qualifications (including
Material Adverse Effect) that may be contained therein. The foregoing indemnity
is intended by the SBS Entities to cover all acts, suits, proceedings, claims,
demands, assessments, adjustments, diminution in value, costs, and expenses with
respect to any and all of the specific matters in this indemnity set forth,
except that the SBS Entities shall not, except in cases of fraud, or willful or
intentional misrepresentation, be liable for any incidental or special damages
or consequential damages that are not reasonably foreseeable, and shall not be
liable for any Loss and Expense suffered or incurred by Buyer Group Members in
enforcing this indemnity (including costs of investigation, attorneys' fees,
etc.) if it is finally determined that Buyer Group Members are not entitled to
indemnification under this Section 9.1 (by agreement of the parties, by order of
a court of competent jurisdiction or otherwise). The indemnification provided
for in this Section 9.1 shall terminate fifteen (15) months after the Closing
Date (and no claims shall be made by any Buyer Group Members under this Section
9.1 thereafter), except that the indemnification by the SBS Entities shall
continue in any event as to:
(A) the covenants of the SBS Entities set forth in
Sections 2.9, 2.10, 6.1, 6.2, 11.2, or 11.9 as to all of which no time
limitation shall apply other than the full period of any applicable
statute of limitations plus sixty (60) days;
(B) any Loss or Expense incurred by any Buyer Group
Member in connection with, or arising out of the failure of the SBS
Entities to perform, any Excluded Liability, as to which no time
limitation shall apply; and
(C) any Loss or Expense of which any Buyer Group Member
has notified the SBS Entities in accordance with the requirements of
Section 9.3 on or prior to the date such indemnification would
otherwise terminate in accordance with this Section 9.1, as to which
the obligation of the SBS Entities shall continue until the liability
of the SBS Entities shall have been determined pursuant to this Article
IX, and the SBS Entities shall have reimbursed all Buyer Group Members
for the full amount of such Loss and Expense in accordance with this
Article IX;
(D) the representations and warranties of the SBS
Entities set forth in Sections 3.6, 3.21, or 3.22, as to all of which
no time limitation shall apply other than the full period of any
applicable statute of limitations plus sixty (60) days; and
(E) the representations and warranties of the SBS
Entities set forth in Sections 3.2, and 3.14, as to which no time
limitation shall apply.
SECTION 9.2. INDEMNIFICATION BY BUYER. After the Closing,
Buyer agrees to indemnify and hold harmless each SBS Group Member from and
against any and all Loss and Expense incurred by such SBS Group Member in
connection with or arising from:
50
(i) any breach by Buyer, or any other failure of
Buyer to perform, any of its covenants, agreements or
obligations in this Agreement or in any Buyer Ancillary
Agreement;
(ii) any breach of any warranty or the inaccuracy
of any representation of Buyer contained in this Agreement or
any certificate delivered by or on behalf of Buyer pursuant
hereto; and
(iii) the failure of Buyer to perform any of the
Assumed Liabilities, Buyer's (or any successor's or
assignee's) operation of the Station and conduct of the
Business and/or the ownership and/or use of the Purchased
Assets after the Closing.
provided, however, that Buyer shall not be required to indemnify and hold
harmless pursuant to clause (i) or (ii) with respect to Loss and Expense
incurred by SBS Group Members until the aggregate amount of all such Loss and
Expense exceeds Seventy-Five Thousand Dollars ($75,000) (the "Buyer Threshold
Amount"); provided, further, that Buyer shall be liable only to extent such Loss
and Expense exceeds the Buyer Threshold Amount. The aggregate amount that Buyer
shall be required to indemnify and hold harmless pursuant to clauses (i) and
(ii) with respect to Loss and Expense incurred by SBS Group Members shall not
exceed Three Million Dollars ($3,000,000). In determining whether Buyer shall be
obligated to indemnify the SBS Entities under this Section 9.2, each
representation and warranty and each covenant contained in this Agreement with
respect to which indemnity may be sought hereunder shall be read solely for
purposes of determining whether a breach of such representation, warranty or
covenant has occurred without regard to materiality qualifications that may be
contained therein. The foregoing indemnity is intended by Buyer to cover all
acts, suits, proceedings, claims, demands, assessments, adjustments, diminution
in value, costs, and expenses with respect to any and all of the specific
matters in this indemnity set forth, except that Buyer shall not, except in
cases of fraud, or willful or intentional misrepresentation, be liable for any
incidental or special damages or consequential damages that are not reasonably
foreseeable, and shall not be liable for any Loss and Expense suffered or
incurred by SBS Group Members in enforcing this indemnity (including costs of
investigation, attorneys' fees, etc.) if it is finally determined that SBS Group
Members are not entitled to indemnification under this Section 9.2 (by agreement
of the parties, by order of a court of competent jurisdiction or otherwise). The
indemnification provided for in this Section 9.2 shall terminate fifteen (15)
months after the Closing Date (and no claims shall be made by any SBS Group
Member under this Section 9.2 thereafter), except that the indemnification by
Buyer shall continue in any event as to:
(A) the covenants of Buyer set forth in Sections 2.9,
2.10, 6.1, 6.2, 11.2, or 11.9, as to all of which no time limitation
shall apply other than the full period of any applicable statute of
limitations plus sixty (60) days;
(B) any Loss or Expense incurred by any SBS Group Member
in connection with or arising out of the failure of Buyer to perform
any Assumed Liabilities or
51
otherwise arising from the matters described in clause (iii) of this
Section 9.2, as to which no time limitation shall apply;
(C) any Loss or Expense of which any SBS Group Member has
notified Buyer in accordance with the requirements of Section 9.3 on or
prior to the date such indemnification would otherwise terminate in
accordance with this Section 9.2, as to which the obligation of Buyer
shall continue until the liability of Buyer shall have been determined
pursuant to this Article IX, and Buyer shall have reimbursed all SBS
Group Members for the full amount of such Loss and Expense in
accordance with this Article IX; and
(D) the representations and warranties of Buyer set forth
in Section 4.2, as to which no time limitation shall apply.
SECTION 9.3. NOTICE OF CLAIMS.
(a) Any Buyer Group Member or SBS Group Member seeking
indemnification hereunder (the "Indemnified Party") shall give promptly to the
party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a written notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to the claim for indemnification hereunder and
shall include in such Claim Notice (if then known or estimable) the amount or
the method of computation of the amount of such claim, and a reference to the
provision of this Agreement or any other agreement, document or instrument
executed hereunder or in connection herewith upon which such claim is based. The
failure of any Indemnified Party to give the Claim Notice promptly as required
by this Section 9.3 shall not affect such Indemnified Party's rights under this
Article IX except to the extent such failure is actually prejudicial to the
rights and obligations of the Indemnitor.
(b) After the giving of any Claim Notice pursuant hereto,
the amount of indemnification to which an Indemnified Party shall be entitled
under this Article IX shall be determined: (i) by the written agreement between
the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of
any court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree in writing. The judgment or
decree of a court shall be deemed final when the time for appeal, if any, shall
have expired and no appeal shall have been taken or when all appeals taken shall
have been finally determined. The Indemnified Party shall have the burden of
proof in establishing the amount of Losses and Expenses suffered by it.
SECTION 9.4. THIRD PERSON CLAIMS.
(a) In order for a party to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand made by any third Person against the Indemnified
Party, such Indemnified Party must notify the Indemnitor in writing, and in
reasonable detail, of the third Person claim promptly after receipt by such
Indemnified Party of written notice of the third Person claim. Thereafter, the
Indemnified Party shall promptly deliver to the Indemnitor copies of all notices
and documents (including court
52
papers) received by the Indemnified Party relating to the third Person claim.
Notwithstanding the foregoing, should a party be physically served with a
complaint with regard to a third Person claim, the Indemnified Party must notify
the Indemnitor with a copy of the complaint within five (5) business days after
receipt thereof and shall deliver to the Indemnitor within seven (7) business
days after the receipt of such complaint copies of notices and documents
(including court papers) physically served upon the Indemnified Party relating
to the third Person claim. The failure of any Indemnified Party to give the
Claim Notice promptly (or in five (5) business days in the case of service of a
complaint upon the Indemnified Party) or to deliver copies of notices and
documents as required by this Section 9.4 shall not affect such Indemnified
Party's rights under this Article IX except to the extent such failure is
actually prejudicial to the rights and obligations of the Indemnitor.
(b) In the event of the initiation of any legal
proceeding against the Indemnified Party by a third Person, the Indemnitor shall
have the sole and absolute right after the receipt of notice, at its option and
at its own expense, to be represented by counsel of its choice and to control,
defend against, negotiate, settle or otherwise deal with any proceeding, claim,
or demand which relates to any loss, liability or damage indemnified against
hereunder; provided, however, that the Indemnified Party may participate in any
such proceeding with counsel of its choice and at its expense. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such legal proceeding, claim or demand. To the
extent the Indemnitor elects not to defend such proceeding, claim or demand, and
the Indemnified Party defends against or otherwise deals with any such
proceeding, claim or demand, the Indemnified Party may retain counsel,
reasonably acceptable to the Indemnitor, at the expense of the Indemnitor, and
control the defense of such proceeding. Neither the Indemnitor nor the
Indemnified Party may settle any such proceeding which settlement obligates the
other party to pay money, to perform obligations or to admit liability without
the consent of the other party, such consent not to be unreasonably withheld.
After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and the
time in which to appeal therefrom has expired, or a settlement shall have been
consummated, or the Indemnified Party and the Indemnitor shall arrive at a
mutually binding agreement with respect to each separate matter alleged to be
indemnified by the Indemnitor hereunder, the Indemnified Party shall forward to
the Indemnitor notice of any sums due and owing by it with respect to such
matter and the Indemnitor shall pay all of the sums so owing to the Indemnified
Party by wire transfer, certified or bank cashier's check within thirty (30)
days after the date of such notice.
SECTION 9.5. LIMITATIONS. In any case where an Indemnified
Party recovers from third Persons any amount in respect of a matter with respect
to which an Indemnitor has indemnified it pursuant to this Article IX, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such matter and (ii) any amount expended by the Indemnitor in
pursuing or defending any claim arising out of such matter. All Loss and
Expenses shall be computed net of any insurance
53
proceeds (less any increase in premiums, reasonably attributable to such Loss,
for the one-year period following such Loss) that reduce any damages that would
otherwise be sustained.
SECTION 9.6. TREATMENT OF INDEMNITY PAYMENTS. All payments
under this Article IX shall be treated for income tax purposes as adjustments to
the Purchase Price.
SECTION 9.7. INDEMNIFICATION SOLE REMEDY. Notwithstanding any
provision in this Agreement to the contrary, after the Closing the
indemnification provided in this Article IX is the sole and exclusive remedy of
a party for the matters described in clause (i) of Section 9.1 and 9.2
(excluding any breach or other failure to perform any covenant, agreement or
obligation to be performed after the Closing) and clause (ii) of Section 9.1 and
9.2, except in the case of fraud or willful misrepresentation.
ARTICLE X
TERMINATION AND REMEDIES
SECTION 10.1. TERMINATION.
(a) Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(i) by the mutual written consent of the SBS
Entities and Buyer;
(ii) provided that no SBS Entity is then in
material breach of this Agreement, by written notice from SBS
in the event of a material breach by Buyer of any of its
covenants, agreements, representations or warranties contained
in this Agreement or if any of the representations or
warranties of Buyer contained in this Agreement shall have
been inaccurate in any material respect when made, and the
failure of Buyer to cure such breach within thirty (30) days
after receipt of written notice from SBS requesting such
breach to be cured, and provided that the failure to cure such
breach would result in the conditions contained in Section 7.1
not being satisfied;
(iii) provided that Buyer is not then in material
breach of this Agreement, by written notice from Buyer in the
event of a material breach by any SBS Entity of any of its
respective covenants, agreements, representations or
warranties contained in this Agreement or if any of the
representations or warranties of any SBS Entity contained in
this Agreement shall have been inaccurate in any material
respect when made, and the failure of the SBS Entities, as the
case may be, to cure such breach within thirty (30) days after
receipt of written notice from Buyer requesting such breach to
be cured, and provided that the failure to cure such breach
would result in the conditions contained in Section 8.1 not
being satisfied;
54
(iv) by written notice from SBS or Buyer if any
court of competent jurisdiction in the United States or other
United States Governmental Body shall have issued a final and
non-appealable order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(v) by written notice from Buyer, pursuant to
the provisions of Section 5.6 hereof;
(vi) by written notice from Buyer, pursuant to
the provisions of Section 11.12(b) hereof;
(vii) by written notice from SBS or Buyer if, for
any reason, the Transfer Application is designated for hearing
by the FCC; provided, however, that notice of termination must
be given within twenty (20) days after release of the hearing
designation order and that the party giving such notice is not
in default and has otherwise complied with its obligations
under this Agreement;
(viii) by written notice from SBS or Buyer if the
Closing shall not have occurred on or before the first
anniversary of this Agreement (or such later date as may be
mutually agreed to by the SBS Entities and Buyer); provided,
however, that the right to terminate this Agreement under this
Section 10.1(a)(viii) shall not be available to any party
whose failure to fulfill any obligation under this Agreement
shall have been the cause of, or resulted in, the failure of
the Closing to occur prior to such date; and
(ix) provided that no SBS Entity is then in
material breach of this Agreement, by written notice from SBS
in the event all of the conditions contained in Article 8 of
the Agreement have been satisfied or waived in writing and
Buyer fails to deliver the Purchase Price at Closing in
accordance with Section 2.7.
(b) In the event that this Agreement shall be terminated
pursuant to this Article X, all further obligations of the parties under this
Agreement (other than the provisions of Sections 2.5, this Article X, and
Sections 11.2 and 11.9) shall be terminated without further liability of any
party to the other, except that notwithstanding the foregoing each party shall
remain liable to the other party hereto for any breach of its obligations under
this Agreement prior to such termination.
SECTION 10.2. SBS ENTITIES' REMEDIES. If this Agreement is
terminated by SBS and Section 2.5(c) applies, the SBS Entities shall retain the
entire amount of the Cash Advance, which shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered by the
SBS Entities. The SBS Entities and Buyer agree in advance that actual damages
would be difficult to ascertain and that the amount of the payment to be made
pursuant to this Section 10.2 is a fair and equitable amount to reimburse the
SBS Entities for damages sustained due to Buyer's breach of this Agreement.
Following the Closing, the SBS
55
Entities shall be entitled, in addition to any other remedies that may be
available and subject to Section 9.7, to seek specific performance of the terms
of this Agreement to be performed after the Closing.
SECTION 10.3. BUYER'S REMEDIES. The parties recognize that if,
prior to Closing, any SBS Entity breaches this Agreement and refuses to perform
under the provisions of this Agreement, monetary damages alone would not be
adequate to compensate Buyer for its injury. Buyer shall therefore be entitled,
in addition to any other remedies that may be available, to obtain specific
performance of the terms of this Agreement prior to Closing. If any action is
brought by Buyer to enforce this Agreement, whether prior to or following the
Closing (but subject to Section 9.7), the SBS Entities shall waive the defense
in any such action that there is an adequate remedy at law and interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy hereunder, and the SBS Entities agree that Buyer shall have the right to
seek specific performance. Following the Closing, Buyer shall be entitled, in
addition to any other remedies that may be available and subject to Section 9.7,
to seek specific performance of the terms of this Agreement to be performed
after the Closing.
SECTION 10.4. TERMINATION NOTICE. Each notice given by a party
pursuant to Section 10.1(a) to terminate this Agreement shall specify the
Subsection of Section 10.1(a) pursuant to which the notice is given.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS. All representations, warranties, covenants and obligations
contained in this Agreement shall survive the consummation of the transactions
contemplated by this Agreement; provided, however, that, except as otherwise
provided in Article IX, the representations and warranties contained in Articles
III and IV of this Agreement shall terminate fifteen (15) months after the
Closing Date. Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, (a) the representations and warranties contained in
Sections 3.6, 3.21, and 3.22 shall survive for the full period of any applicable
statute of limitations plus sixty (60) days, and (b) the representations and
warranties contained in Sections 3.2 and 3.14 and 4.2 shall survive without
limitation. Except as otherwise provided herein, no claim shall be made for the
breach of any representation or warranty contained in Article III or IV after
the date on which such representations and warranties terminate as set forth in
this Section 11.1.
SECTION 11.2. CONFIDENTIAL NATURE OF INFORMATION. Each party
agrees that it will treat in confidence all documents, materials and other
information which it shall have obtained regarding the other party during the
course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein, and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated, each party will return to the
other party all copies of nonpublic documents and
56
materials which have been furnished in connection therewith. Without limiting
the right of either party to pursue all other legal and equitable rights
available to it for violation of this Section 11.2 by the other party, it is
agreed that other remedies cannot fully compensate the aggrieved party for such
a violation of this Section 11.2 and that the aggrieved party shall be entitled
to injunctive relief to prevent a violation or continuing violation hereof.
SECTION 11.3. GOVERNING LAW; VENUE. This Agreement and the
transactions contemplated hereby shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
choice of law rules. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction (subject to the immediately following sentence) of the
United States District Court for the Northern District of Illinois for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties hereto agrees, to
the extent permitted under applicable laws and rules of procedure, to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Northern District of Illinois, or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Circuit Court of ▇▇▇▇ County of the State of Illinois. Each of the parties
hereto further agrees that service of any process, summons, notice or document
by U.S. registered mail to such party's respective address set forth below shall
be effective service of process for any action, suit or proceeding in either the
United States District Court for the Northern District of Illinois or the
Circuit Court of ▇▇▇▇ County of the State of Illinois with respect to any
matters to which it has submitted to jurisdiction in this Section 11.3. Each of
the parties hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the United States District Court
for the Northern District of Illinois or (ii) the Circuit Court of ▇▇▇▇ County
of the State of Illinois, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum. Notwithstanding the foregoing, judgments, orders or decrees resulting
from lawsuits or court actions brought in accordance with the foregoing
provisions of this Section 11.3 may be appealed to or enforced in any court of
competent jurisdiction.
SECTION 11.4. NOTICES. All notices or other communications
required or permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or by messenger or 72 hours after having
been sent by registered or certified mail or when delivered by private courier
addressed as follows:
If to any SBS Entity:
Spanish Broadcasting System, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
57
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇., ▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to Buyer, to:
▇ ▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇▇▇, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (312)
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
SECTION 11.5. ASSIGNMENT; SUCCESSORS AND ASSIGNS.
(a) The rights and obligations of any party under this
Agreement shall not be assignable or delegable by such party hereto without the
written consent of the other parties hereto. Notwithstanding the foregoing,
Buyer may, without the consent of the SBS Entities, (i) assign its rights under
this Agreement to any wholly-owned subsidiary of Buyer (provided Buyer can make
the representations and warranties set forth in Section 4.5 as to such
subsidiary) or (ii) make a collateral assignment of its rights under this
Agreement for the benefit of its lenders as security for loans used to fund the
Purchase Price, and the SBS Entities agree to execute acknowledgments of any
collateral assignment(s) pursuant to this Section 11.5 in such forms as Buyer or
Buyer's lender(s) may from time to time reasonably request; provided that no
such assignment or collateral assignment shall release Buyer from any of its
obligations hereunder or shall hinder or delay the consummation of the
transactions contemplated hereby.
58
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors and
assigns permitted by this Section 11.5 any right, remedy or claim under or by
reason of this Agreement.
SECTION 11.6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement,
the Exhibits and Schedules referred to herein, and the other documents delivered
pursuant hereto contain the entire understanding of the parties hereto with
regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or intents between or among any of the parties
hereto. The parties hereto, by mutual agreement in writing, may amend, modify
and supplement this Agreement.
SECTION 11.7. INTERPRETATION. Article titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. As used in this Agreement, the word "including" is not
limiting, and the word "or" is not exclusive.
SECTION 11.8. WAIVERS. Any term or provision of this Agreement
may be waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
SECTION 11.9. EXPENSES. Except as otherwise expressly provided
herein, each of the SBS Entities and Buyer will pay all of its own respective
costs and expenses incident to its negotiation and preparation of this Agreement
and to its performance and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, including the
fees, expenses and disbursements of its counsel and accountants.
SECTION 11.10. PARTIAL INVALIDITY. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but in case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
SECTION 11.11. EXECUTION IN COUNTERPARTS. This Agreement may
be executed in one or more counterparts, each of which shall be considered an
original instrument, but all of
59
which shall be considered one and the same agreement, and shall become binding
when one or more counterparts have been signed by each of the parties and
delivered to the SBS Entities and Buyer.
SECTION 11.12. RISK OF LOSS; DAMAGE TO FACILITIES.
(a) The risk of loss or damage to the Purchased Assets
shall be on the SBS Entities prior to the Closing and thereafter shall be on
Buyer.
(b) The SBS Entities shall give prompt written notice to
Buyer if a Specified Event occurs. If a Specified Event occurs, Buyer may, at
its option, terminate this Agreement by written notice given to the SBS Entities
not more than ten (10) days after receipt of the SBS Entities' notice. If Buyer
elects not to terminate this Agreement or fails to give written notice within
such ten (10) day period, Buyer shall have no further right to terminate this
Agreement in respect of such Specified Event and the remaining provisions of
this Agreement shall govern. A "Specified Event" means the interruption of the
broadcast transmission in the normal and usual manner of the Station for (i) a
period of three (3) or more consecutive days or (ii) seven (7) or more periods
of 24 consecutive hours.
SECTION 11.13. NO THIRD PARTY BENEFICIARIES. The SBS Entities
and Buyer do not intend by the execution, delivery or performance of this
Agreement to confer a benefit upon any Person not a party to this Agreement.
SECTION 11.14. ATTORNEYS' FEES. If either party initiates any
litigation against the other party involving this Agreement, the prevailing
party in such action shall be entitled to receive reimbursement from the other
party for all reasonable attorneys' fees and other costs and expenses incurred
by the prevailing party in respect of that litigation, including any appeal, and
such reimbursement may be included in the judgment or final order issued in that
proceeding.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: ________________________________
Name: _____________________________
Title: ______________________________
SPANISH BROADCASTING SYSTEM-SAN
FRANCISCO, INC.
By: ________________________________
Name: _____________________________
Title: ______________________________
KPTI LICENSING, INC.
By: ________________________________
Name: _____________________________
Title: ______________________________
3 POINT MEDIA - SAN FRANCISCO, LLC
By: ________________________________
Name: _____________________________
Title: ______________________________