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Exhibit 2 (d)
ASSET PURCHASE AGREEMENT
by and between
CONTINENTAL RADIO BROADCASTING, L.L.C.
and
REGENT BROADCASTING OF KINGMAN, INC.
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TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE OF ASSETS........................................1
1.1 Transfer of Assets............................................1
1.2 Excluded Assets...............................................3
ARTICLE 2 ASSUMPTION OF OBLIGATIONS.................................4
2.1 Assumption of Obligations.....................................4
2.2 Retained Liabilities..........................................4
ARTICLE 3 CONSIDERATION.............................................5
3.1 Delivery of Consideration.....................................5
3.2 Escrow Deposit................................................5
3.3 Proration of Income and Expenses..............................6
3.4 Allocation of Purchase Price..................................6
3.5 Adjustment for Barter.........................................6
3.6 Accounts Receivable...........................................7
ARTICLE 4 CLOSING...................................................7
4.1 Closing.......................................................7
ARTICLE 5 GOVERNMENTAL CONSENTS.....................................8
5.1 FCC Consent...................................................8
5.2 FCC Application...............................................8
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER...................8
6.1 Organization and Standing.....................................9
6.2 Authorization and Binding Obligation..........................9
6.3 Qualification As Assignee.....................................9
6.4 Absence of Conflicting Agreements or Required Consents........9
6.5 Commissions or Finder's Fees..................................9
6.6 Litigation....................................................9
6.7 Full Disclosure...............................................9
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ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER..................10
7.1 Organization and Standing.....................................10
7.2 Authorization and Binding Obligation..........................10
7.3 Absence of Conflicting Agreements or Required Consents........10
7.4 Government Authorizations.....................................11
7.5 Compliance with FCC Regulations...............................12
7.6 Taxes.........................................................12
7.7 Personal Property.............................................12
7.8 Real Property.................................................13
7.9 Contracts.....................................................14
7.10 Status of Contracts, etc......................................14
7.11 Environmental.................................................14
7.12 Intellectual Property.........................................14
7.13 Financial Statements..........................................15
7.14 Personnel Information.........................................15
7.15 Litigation....................................................16
7.16 Compliance With Laws..........................................16
7.17 Employee Benefit Plans........................................16
7.18 Commissions or Finder's Fees..................................16
7.19 Conduct of Business in Ordinary Course: Adverse Change........16
7.20 Instruments of Conveyance; Good Title.........................17
7.21 Undisclosed Liabilities.......................................17
7.22 Full Disclosure...............................................17
ARTICLE 8 COVENANTS OF BUYER........................................17
8.1 Closing.......................................................17
8.2 Notification..................................................17
8.3 No Inconsistent Action........................................17
8.4 Removal of Impediments........................................18
8.5 Offer to Existing Employees...................................18
ARTICLE 9 COVENANTS OF SELLER...........................................18
9.1 Pre-Closing Covenants...........................................18
9.2 Notification....................................................20
9.3 No Inconsistent Action..........................................20
9.4 Closing.........................................................20
9.5 Other Items.....................................................20
9.5 Exclusivity.....................................................20
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ARTICLE 10 JOINT COVENANTS...........................................21
10.1 Confidentiality...............................................21
10.2 Cooperation...................................................22
10.3 Control of Stations...........................................22
10.4 Consents to Assignment........................................22
10.5 Filings.......................................................22
10.6 Bulk Sales Laws...............................................23
10.7 Employee Matters..............................................23
ARTICLE 11 CONDITIONS OF CLOSING BY BUYER............................23
11.1 Representations, Warranties and Covenants.....................23
11.2 Governmental Consents.........................................23
11.3 Governmental Authorizations...................................24
11.4 Adverse Proceedings...........................................24
11.5 Third-Party Consents..........................................24
11.6 Closing Documents.............................................24
11.7 No Adverse Change.............................................24
ARTICLE 12 CONDITIONS OF CLOSING BY SELLER...........................24
12.1 Representations, Warranties and Covenants.....................25
12.2 Governmental Consents.........................................25
12.3 Adverse Proceedings...........................................25
12.4 Closing Documents.............................................25
ARTICLE 13 TRANSFER TAXES; FEES AND EXPENSES.........................25
13.1 Expenses......................................................25
13.2 Specific Charges..............................................25
ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING......................26
14.1 Seller's Documents............................................26
14.2 Buyer's Documents.............................................27
ARTICLE 15 SURVIVAL, INDEMNIFICATION, ETC............................27
15.1 Survival of Representations, Etc..............................27
15.2 Indemnification...............................................28
15.3 Procedures: Third Party and Direct Indemnification Claims.....28
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ARTICLE 16 TERMINATION RIGHTS........................................30
16.1 Termination...................................................30
16.2 Liability.....................................................31
16.3 Monetary Damages, Specific Performance and Other Remedies.....31
16.4 Seller's Liquidated Damages...................................31
ARTICLE 17 MISCELLANEOUS PROVISIONS..................................31
17.1 Risk of Loss..................................................31
17.2 Certain Interpretive Matters and Definitions..................32
17.3 Further Assurances............................................32
17.4 Preservation of Records.......................................32
17.5 Benefit and Assignment........................................32
17.6 Amendments....................................................33
17.7 Headings......................................................33
17.8 Governing Law.................................................33
17.9 Notices.......................................................33
17.10 Counterparts..................................................34
17.11 No Third Party Beneficiaries..................................34
17.12 Severability..................................................34
17.13 Entire Agreement..............................................34
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.2.9 Miscellaneous Excluded Assets
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification of Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
Exhibit A Indemnification Escrow Agreement
B Deposit Escrow Agreement
C Agreement re Allocation of Purchase Price
D Assignment and Assumption Agreement
E Opinion of Seller's Corporate Counsel
F Opinion of Seller's FCC Counsel
G Opinion of Buyer's Counsel
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
this 9th day of December, 1997 by and between CONTINENTAL RADIO BROADCASTING,
L.L.C., an Arizona limited liability company (hereinafter referred to as
"Seller") and REGENT BROADCASTING OF KINGMAN, INC., a Delaware corporation
("Buyer").
RECITALS
WHEREAS, Seller owns and operates radio stations KFLG-AM and KFLG-FM
licensed to Bullhead City, Arizona (together the "Stations" and each
individually, a "Station") pursuant to licenses issued by the Federal
Communications Commission ("FCC"), and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operation of the Stations, all on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to all of the assets, properties, interests and rights of Seller
of whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased (to the extent of Seller's leasehold interest) by Seller as the case
may be, wherever situated, which are used or held for use in the operation of
the Stations (the "Stations Assets"), including but not limited to all of
Seller's right, title and interest in and to the assets, properties, interests
and rights described in this Section 1. 1:
1.1.1 all licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including without limitation
those issued by the FCC (the licenses, permits and authorizations issued by the
FCC are hereafter referred to as the "Stations Licenses") used or useful in
connection with the operation of the Stations, including but not limited to
those described in Schedule 7.4, along with renewals or modifications of such
items between the date hereof and the Closing Date;
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1.1.2 all equipment, electrical devices, antennae, cables,
tools, hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and all other tangible personal property
of every kind and description, and Seller's rights therein, owned, leased (to
the extent of Seller's leasehold interest) or held by Seller and used or useful
in connection with the operations of the Stations, including but not limited to
those items described or listed in Schedule 7.7, together with any replacements
thereof and additions thereto, made between the date hereof and the Closing
Date, and less any retirements or dispositions thereof made between the date
hereof and the Closing Date in the ordinary course of business and consistent
with past practices of Seller; provided, however, Seller agrees that the value
of all such assets retired or disposed of and not replaced with an asset of like
kind and quality shall not exceed $5,000 in the aggregate unless Seller has
obtained the prior written approval of Buyer which shall not be unreasonably
withheld;
1.1.3 all time sales agreements and Trade Agreements (time
sales agreements for consideration other than cash), and all other contracts,
agreements, leases and legally binding contractual rights of any kind, written
or oral, relating to the operation of the Stations and which are listed in
Schedule 7.8 and Schedule 7.9, together with (a) all contracts, agreements,
leases and legal binding contractual rights entered into or acquired by Seller
between the date hereof and the Closing Date in the ordinary course of business,
consistent with past practices of Seller; and (b) contracts, agreements, leases
and legal binding contractual rights entered into or acquired by Seller between
the date hereof and the Closing Date, which are not in the ordinary course of
business and with respect to which the Buyer specifically agrees at Closing to
assume (collectively (i) and (ii) above are referred to herein as the
"Contracts"); for the purpose of this Agreement, Contracts shall be deemed in
the ordinary course of business if they are: (x) marked with the number one (1)
on Schedule 7.9 or (y) have a term not greater than twelve (12) months and
payment obligations on behalf of the Seller that do not exceed $25,000 in the
aggregate.
1.1.4 all of Seller's rights in and to the call letters KFLG, as
well as all of Seller's rights in and to all trademarks, trade names, service
marks, franchises, copyrights, including registrations and applications for
registration of any of them, computer software, programs and programming
material of whatever form or nature, jingles, slogans, the Stations' logos and
all other logos or licenses to use same and all other intangible property rights
of Seller, which are used or useful in connection with the operation of the
Stations, including but not limited to those listed in Schedule 7.12
(collectively, the "Intellectual Property") together with any associated
goodwill and any additions thereto between the date hereof and the Closing Date;
1.1.5 all programming materials and elements of whatever form
or nature owned by Seller, whether recorded on tape or other medium or intended
for live performance, and all copyrights owned by or licensed to Seller that are
used or useful in connection with the operation of the Stations, including all
such programs, materials, elements and copyrights acquired by Seller between the
date hereof and the Closing Date;
1.1.6 all of Seller's rights in and to all the files, documents,
records, and books of account relating to the operation of the Stations or to
the Stations Assets, including, without limitation, the Stations' local public
files, programming information and studies, blueprints, technical information
and engineering data, news and advertising studies or consulting reports,
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marketing and demographic data, sales correspondence, lists of advertisers,
promotional materials, credit and sales reports and filings with the FCC and all
written Contracts to be assigned hereunder, logs, software programs and books
and records relating to employees, financial, accounting and operation matters,
but excluding records relating solely to any Excluded Asset (as hereinafter
defined);
1.1.7 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Stations Assets and all similar
rights against third parties relating to items included in the Stations Assets;
1.1.8 the leasehold interests in the real property and fixtures
thereon described in Section 7.8; and
1.1.9 except for Excluded Assets, such other assets, properties,
interests and rights owned by Seller that are located at the Station's
facilities and used or useful in connection with the operation of the Stations.
The Stations Assets shall be transferred to Buyer free and clear of all
debts, security interests, mortgages, trusts, claims, pledges or other liens,
liabilities, encumbrances or rights of third parties whatsoever
("Encumbrances"), except as set forth in Schedule 7.7 and Schedule 7.8.
Notwithstanding the foregoing, Buyer may, at or prior to the Closing, decide, in
the exercise of its sole discretion, not to purchase any one or more of such
Stations Assets (and, in such event, not to assume any liability secured by,
arising from the acquisition of, or otherwise relating to any such Asset);
provided, that in no event shall such decision reduce the Purchase Price.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Stations Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or in
banks, including without limitation certificates of deposit, commercial paper,
treasury bills, marketable securities, asset or money market accounts and all
such similar accounts or investments;
1.2.2 all investment securities and accounts receivable or notes
receivable for services performed by Seller in connection with the operation of
the Stations prior to the Closing Date;
1.2.3 all real property owned by Seller and all tangible and
intangible personal property of Seller not located at the Stations' facilities
and not used by Seller in connection with the operation of the Stations;
1.2.4 subject to the limitation set forth in Section 1. 1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
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1.2.5 all Contracts that have terminated or expired prior to the
Closing Date in the ordinary course of business consistent with the past
practices of Seller;
1.2.6 Seller's corporate minute books and records, corporate
stock record books and such other books and records as pertain to the
organization, existence or share capitalization of Seller and duplicate copies
of such records as are necessary to enable Seller to file its tax returns and
reports, as well as any other records or materials relating to Seller generally
and not involving or relating to the Stations Assets or the operation or
operations of the Stations;
1.2.7 contracts of insurance, and any insurance proceeds or
claims made by, Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.8 all pension, profit sharing or cash or deferred (Section
401 (k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.9 any right, property or asset described in Schedule 1.2.9.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this Section
2. 1, Section 2.2 and Section 3.3, on the Closing Date, Buyer shall assume the
obligations of Seller arising or to be performed on and after the Closing Date
(except to the extent such obligations represent liabilities for activities,
events or transactions occurring, or conditions existing, on or prior to the
Closing Date) under: (a) the Contracts; (b) all property taxes and other
governmental charges on the Stations Assets; and (c) all Time Sales Agreements.
All of the foregoing liabilities and obligations shall be referred to herein
collectively as the "Assumed Liabilities. "
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities. Seller will retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations of the
Seller, other than the Assumed Liabilities, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Seller related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, or other obligations, claims or judgments asserted against
Buyer as successor in interest to Seller. All of such liabilities,
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obligations and commitments of Seller described in this Section 2.2 shall be
referred to herein collectively as the "Retained Liabilities."
ARTICLE 3
CONSIDERATION
3.1 Delivery of Consideration. In consideration for the sale of the
Stations Assets to Buyer, in addition to the assumption of certain obligations
of Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as
hereinafter defined), deliver to Seller Three Million Six Hundred Thousand
Dollars ($3,600,000) by wire transfer of immediately available funds, subject to
adjustment pursuant to the provisions of Sections 3.2 and 3.3 below (the
"Purchase Price"). Notwithstanding the foregoing, the parties agree that at the
Closing, Buyer, Seller and Star Media, as Escrow Agent (the "Indemnification
Escrow Agent"), shall enter into an Indemnification Escrow Agreement in the form
of Exhibit A hereto (the "Indemnification Escrow Agreement") pursuant to which
Seller shall deposit with the Indemnification Escrow Agent One Hundred
Seventy-Five Thousand Dollars ($175,000), which funds shall be held in escrow
for a period of at least twelve (12) months from the Closing Date and will be
used to satisfy indemnification claims of Buyer pursuant to Section 15.2.1
hereof, and which funds shall otherwise be administered and released as
specifically provided for in the Indemnification Escrow Agreement.
3.2 Escrow Deposit. (a) Within ten business days of the execution and
delivery of this Agreement, Buyer, Seller and Star Media, as Escrow Agent (the
"Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement in the form
of Exhibit B hereto (the "Deposit Escrow Agreement") pursuant to which Buyer
shall deposit the amount described below as a deposit on the amount of the
Purchase Price. Such amounts held in escrow shall be applied as set forth herein
and in the Deposit Escrow Agreement.
(b) Pursuant to the terms of the Deposit Escrow Agreement, Buyer
shall wire transfer One Hundred Seventy-Five Thousand Dollars ($175,000), or
alternatively, deliver an irrevocable, stand-by letter of credit for such amount
in form and substance acceptable to Seller, to an escrow account established
pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"). At the Closing,
the Escrow Deposit, if in the form of cash, shall be applied to the Purchase
Price to be paid to Seller and the interest accrued thereon shall be paid to
Buyer, or if in the form of a letter of credit, shall be returned to Buyer. As
more fully described in the Deposit Escrow Agreement: (a) in the event this
Agreement is terminated because of Buyer's material breach of this Agreement and
all other conditions to Closing are at such time satisfied or waived (other than
such conditions as can reasonably be expected to be satisfied by the Closing),
the Escrow Deposit shall be paid to or delivered for draw thereon to Seller as
liquidated damages as provided in Section 16.4 hereto for Buyer's material
breach of this Agreement (the payment of such sum to Seller shall discharge any
liability Buyer may have to Seller), and the interest accrued on the Escrow
Deposit shall be paid to Buyer; and (b) in the event this Agreement is
terminated under any circumstances other than those set forth in the immediately
preceding
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clause (a), the Escrow Deposit and the interest accrued thereon shall be paid or
returned to Buyer.
3.3 Proration of Income and Expenses.
3.3.1 Except as otherwise provided herein, all deposits,
reserves and prepaid and deferred income and expenses relating to the Stations
Assets or the Assumed Liabilities and arising from the conduct of the business
and operations of the Stations shall be prorated between Buyer and Seller in
accordance with generally accepted accounting principles as of 11:59 p.m.
Pacific time, on the date immediately preceding the Closing Date. Such
prorations shall include, without limitation, all ad valorem, real estate,
property taxes and other governmental charges on the Stations Assets (but
excluding taxes arising by reason of the transfer of the Stations Assets as
contemplated hereby which shall be paid as set forth in Section 13.2), business
and license fees, frequency discounts, music and other license fees (including
any retroactive adjustments thereof, which retroactive adjustments shall not be
subject to the sixty-day limitation set forth in Section 3.3.2), utility
expenses, vacation pay, amounts due or to become due under Contracts, rents and
similar prepaid and deferred items.
3.3.2 Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 3.3, to the extent practicable, shall
be made on the Closing Date. As to those prorations and adjustments not capable
of being ascertained on the Closing Date, an adjustment and proration shall be
made within sixty (60) calendar days after the Closing Date.
3.3.3 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 3.3.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Seller and
one-half by Buyer.
3.4 Allocation of Purchase Price. The parties have agreed upon an
allocation of the Purchase Price among the Stations Assets, a copy of which is
attached to this Agreement as Exhibit C. Seller and Buyer agree to use the
agreed upon allocation, if any, for all tax purposes, including without
limitation, those matters subject to Section 1060 of the Internal Revenue Code
of 1986, as amended.
3.5 Adjustment for Barter. As of the Closing Date, Buyer shall be
entitled to a credit against the Purchase Price, for the amount, if any, by
which the aggregate net value of the Stations' Barter Payable (as defined below)
as of the Closing Date exceeds by more than $25,000 the aggregate net value of
the Stations' Barter Receivable (as defined below) as of the Closing Date.
"Barter Payable" means the aggregate value of time owed pursuant to
each of the Trade Agreements. "Barter Receivable" means the aggregate value of
goods and services to be received pursuant to each of the Trade Agreements.
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3.6 Accounts Receivable. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation of
the Stations, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed on the Stations prior to the
Closing Date and other broadcast revenues for services performed prior to the
Closing Date, shall remain the property of Seller ("Seller Accounts Receivable")
and that Buyer shall not acquire any beneficial right or interest therein or
responsibility therefor under this Agreement. For a period of one hundred fifty
(150) days following the Closing Date ("Collection Period"), Buyer agrees to use
substantially the same efforts to collect the Seller Accounts Receivable as
Buyer uses to collect Buyer's own accounts receivable in the normal and ordinary
course of business, and Buyer will apply all such amounts collected in
connection with the Seller Accounts Receivable to the debtor's oldest account
receivable first, except that any such accounts collected by Buyer from persons
who are also indebted to Buyer may be applied to Buyer's account if so directed
by the debtor or under circumstances in which there is a bona fide dispute
between Seller and such account debtor with respect to such account. Buyer's
obligation and authority shall not extend to the institution of litigation,
employment of counsel or a collection agency or any other extraordinary means of
collection. Buyer agrees to reasonably cooperate with Seller, at Seller's
expense, as to any litigation or other collection efforts instituted by Seller
to collect any delinquent Seller Accounts Receivable. During the Collection
Period, neither Seller nor its agents shall make any direct solicitation of any
account debtor for collection purposes or institute litigation for the
collection of amounts due. Any amounts relating to the Seller Accounts
Receivable that are paid directly to Seller shall be retained by Seller, but
Seller shall provide Buyer with prompt notice of any such payment. Every thirty
(30) days during the Collection Period, Buyer shall make a payment to Seller
equal to the amount of all collections of Seller Accounts Receivable during such
thirty (30) day period. At the end of the 150-day Collection Period, any
remaining Seller Accounts Receivable shall be returned to Seller for collection.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within ten (10) business days after the later to occur of (a) the
satisfaction or waiver of each condition to closing contained herein, other than
such conditions as are reasonably anticipated to be satisfied at Closing
(provided that each party hereto shall use its reasonable best efforts to cause
each condition to closing to be satisfied so that the Closing may occur at the
earliest possible date); and (b) the issuance of the Final Order (as defined
below), or such other date as may be mutually agreed by the parties hereto (the
"Closing Date"); provided, however, that Buyer may in its sole discretion waive
the requirement that a Final Order be issued and elect (subject to clause (a)
above) to close at any time (upon not less than ten (10) business days' notice
to Seller) after the release of initial FCC approval on public notice that it
has consented to the transaction contemplated hereby (the "Initial Approval").
For purposes of this Agreement, "Final Order" (and "Final") means an order or
grant by the FCC which is no longer subject to reconsideration or review by the
FCC or a court of competent jurisdiction and pursuant to which the FCC
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consents, as the case may be, to the assignments of the FCC Licenses
contemplated by this Agreement or to the renewal of the FCC Licenses, each such
order or grant being without the imposition of any conditions adverse to Buyer
or any Affiliate (as hereinafter defined) of Buyer with respect to the
assignment of the FCC Licenses to Buyer or the continued operation by Buyer of
the Stations or the Stations Assets; provided, however, that the Closing shall
not occur prior to January 1, 1998. In the event that the parties close before
the Initial Approval has become a Final Order, the parties shall enter into an
Unwind Agreement mutually acceptable to the parties and their respective senior
lenders. The Closing shall be held in the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A., ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, Arizona, or at such place and in such
manner as the parties hereto may agree.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that the Closing and the assignment of the Stations Licenses and the
transfer of the Stations Assets are expressly conditioned on and are subject to
the prior consent and approval of the FCC without the imposition of any
conditions adverse to Buyer or any Affiliate of Buyer (the "FCC Consent").
5.2 FCC Application. Within five (5) business days after the execution
of this Agreement, Buyer and Seller shall file an application with the FCC for
the FCC Consent (the "FCC Application"). Buyer and Seller shall prosecute the
FCC Application with all reasonable diligence and otherwise use their best
efforts to obtain the FCC Consent as expeditiously as practicable (but neither
Buyer nor Seller shall have any obligation to satisfy complainants or the FCC by
taking any steps which would have a material adverse effect upon Buyer or Seller
or upon any of their respective Affiliates). If the FCC Consent imposes any
condition on Buyer or Seller or any of their respective Affiliates, such party
shall use its best efforts to comply with such condition; provided, however,
that neither Buyer nor Seller shall be required hereunder to comply with any
condition that would have a material adverse effect upon it or any of its
Affiliates. If reconsideration or judicial review is sought with respect to the
FCC Consent, the party affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein shall
be construed to limit either party's right to terminate this Agreement pursuant
to Article 16 hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing and shall be unaffected by any investigation heretofore or hereafter
made by Seller:
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14
6.1 Organization and Standing. Buyer is a corporation duly organized
validly existing and in good standing under the laws of the State of Delaware,
and by the Closing Date will be authorized to conduct business within the State
of Arizona.
6.2 Authorization and Binding Obligations. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Stations Assets and to
carry on the business of the Stations upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement will constitute the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
6.3 Qualification As Assignee. To the best of Buyer's knowledge, there
are no facts which, under the Communications Act of 1934, as amended, or the
existing rules and regulations of the FCC, would disqualify Buyer as an assignee
of the Stations Licenses.
6.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
conflict with the provisions of the articles of incorporation or by-laws of
Buyer; (b) do not require the consent of any third party not affiliated with
Buyer; (c) will not violate any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which Buyer
or any of its affiliates is a party; and (d) will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any agreement, instrument, license
or permit to which Buyer is now subject.
6.5 Commissions or Finder's Fees. Except for Buyer's obligation to pay a
commission to Star Media for acting as Buyer's broker in connection with this
transaction, which Buyer shall satisfy in full at or prior to the Closing,
neither Buyer nor any person or entity acting on behalf of Buyer has agreed to
pay a commission, finder's fee or similar payment in connection with this
Agreement or any matter related hereto to any person or entity.
6.6 Litigation. Buyer is not subject to any judgment, award, order, writ,
injunction, arbitration decision or decree prohibiting the consummation of the
transactions contemplated by this Agreement, and there are no suits, legal
proceedings or investigations of any nature pending, or to the best knowledge of
Buyer, threatened against or affecting Buyer that would affect Buyer's ability
to carry out the transactions contemplated by this Agreement.
6.7 Full Disclosure. No representation or warranty made by Buyer
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or shall omit to state any
material fact required to make any statement contained herein or therein not
misleading. To the best of Buyer's knowledge, there is no impending or
contemplated event
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15
or occurrence that would cause any of the foregoing representations not to be
true and complete on the date of such event or occurrence as if made on that
date.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer, each
of which is true and correct on the date hereof, shall survive the Closing and
shall be unaffected by any investigation heretofore or hereafter made by Buyer:
7.1 Organization and Standing. Seller is a limited liability company
duly organized, validly existing under the laws of the State of Arizona, is
authorized to conduct business within the State of Arizona, and has the
requisite power and authority to own, lease and operate the Stations Assets
owned or leased by it and to carry on the business of the Stations as now being
conducted by it and as proposed to be conducted by it between the date hereof
and the Closing Date.
7.2 Authorization and Binding Obligation. Seller has the power and
authority, and has taken all necessary and proper action to enter into and
perform this Agreement and to consummate the actions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by Seller and,
assuming the due authorization, execution and delivery of this Agreement by
Buyer, constitutes the legal, valid and binding obligation of Seller enforceable
against it in accordance with its terms, except as limited by laws affecting the
enforcement of creditors' rights or equitable principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 with respect to governmental consents and in Schedule 7.9
with respect to consents required in connection with the assignment of certain
Contracts, the execution, delivery and performance of this Agreement by Seller:
(a) do not require the consent of any third party (including, without
limitation, the consent of any governmental, regulatory, administrative or
similar authority); (b) will not conflict with, result in a breach of, or
constitute a violation of or default under, the provisions of Seller's articles
of organization or operating agreement (or other charter or organizational
documents), or any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Seller is a party or
by which Seller or any of the Stations Assets are bound; (c) will not either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract,
agreement, instrument, license or permit to which Seller or any of the Stations
Assets is now subject; and (d) will not result in the creation of any lien,
charge or encumbrance on any of the Stations Assets.
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7.4 Government Authorizations.
7.4.1 Schedule 7.4 hereto contains a true and complete list of the
Stations Licenses and other licenses, permits or other authorizations from
governmental and regulatory authorities which are required for the lawful
conduct of the business and operations of the Stations in the manner and to the
full extent they are presently conducted (including, without limitation,
auxiliary licenses associated with each Station), except for such licenses,
permits and authorizations the failure of which to obtain would not have a
material adverse effect on Buyer or the Stations. Seller has delivered to Buyer
true and complete copies of the Stations Licenses and the other licenses,
permits and authorizations listed in Schedule 7.4, including any and all
amendments and other modifications thereto.
7.4.2 Seller is the authorized legal holder of the Stations Licenses
and other licenses, permits and authorizations listed in Schedule 7.4. Except as
set forth Schedule 7.4, none of the Stations Licenses and other licenses,
permits and authorizations listed in Schedule 7.4 is subject to any restrictions
or conditions which would materially limit the full operation of the Stations as
now operated.
7.4.3 Except as set forth in Schedule 7.4, and except for matters
affecting the radio broadcast industry generally, there are no complaints,
petitions or proceedings pending or, to the best of Seller's knowledge,
threatened as of the date hereof before the FCC or any other governmental or
regulatory authority relating to the business or operations of the Stations.
Except as set forth on Schedule 7.4, there are no applications pending by Seller
before the FCC. Except as set forth in Schedule 7.4, the Stations Licenses and
the other licenses, permits and authorizations listed in Schedule 7.4 are in
good standing, are in full force and effect and are unimpaired by any act or
omission of Seller or its members, managers, officers, or employees. The
operations of the Stations are in accordance with the Stations Licenses and the
other licenses, permits and authorizations listed in Schedule 7.4. No
proceedings are pending or, to the best of Seller's knowledge, threatened, and
to the best of Seller's knowledge there has not been any act or omission of
Seller or any of its members, managers, officers, or employees, which may result
in the revocation, modification, non-renewal or suspension of any of the
Stations Licenses or the other licenses, permits and authorizations listed in
Schedule 7.4, the denial of any pending applications, the issuance of any cease
and desist order, the imposition of any administrative actions by the FCC or any
other governmental or regulatory authority with respect to the Stations Licenses
or the other licenses, permits and authorizations listed in Schedule 7.4 or
which may affect Buyer's ability to continue to operate the Stations as they are
currently operated.
7.4.4 Except as set forth on Schedule 7.4, each Station is operating
with the maximum facilities specified in the respective Station License.
7.4.5 To the best of Seller's knowledge: (i) neither of the Stations
is causing objectionable interference to the transmissions of any other
broadcast station or communications facility nor has either of the Stations
received any complaints with respect thereto; and (ii) no other broadcast
station or communications facility is causing objectionable interference to
respective transmissions of either Station.
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17
7.4.6 Seller has no reason to believe that the Stations Licenses and
the other licenses, permits, or authorizations listed in Schedule 7.4 will not
be renewed in their ordinary course.
7.4.7 All reports, forms, and statements required to be filed by
Seller with the FCC with respect to the Stations since the grant of the last
renewal of the Stations Licenses have been filed and are substantially complete
and accurate.
7.4.8 To the best knowledge of Seller, there are no facts which,
under the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify Seller as assignor of the Stations
Licenses or cause the Stations Licenses and the other licenses, permits and
authorizations listed in Schedule 7.4 not to be renewed in their ordinary
course.
7.4.9 As if the Closing Date, the operation of the Stations and all
of the Stations Assets will be in compliance in all respects with ANSI Radiation
Standards C95.1-1992.
7.5 Compliance with FCC Regulations. Except as specified in Schedule
7.4, the operation of the Stations and all of the Stations Assets are in
compliance in all material respects with: (a) all applicable engineering
standards required to be met under applicable FCC rules; and (b) all other
applicable federal, state and local rules, regulations, requirements and
policies, including, but not limited to, equal employment opportunity policies
of the FCC, and all applicable painting and lighting requirements of the FCC and
the Federal Aviation Administration to the extent required to be met under
applicable FCC rules and regulations, and to the best of Seller's knowledge,
there are no filed claims to the contrary.
7.6 Taxes. Seller has filed all federal, state, local and foreign
income, franchise, sales, use, property, excise, payroll and other tax returns
required by law to be filed by it and has paid in full all taxes, estimated
taxes, interest, assessments, and penalties due and payable by it. All returns
and forms which have been filed have been true and correct in all material
respects and no tax or other payment in an amount other than as shown on such
returns and forms is required to be paid by Seller and has not been paid by
Seller. There are no present disputes as to taxes of any nature payable by
Seller which in any event could adversely affect any of the Stations Assets or
the operation of the Stations by Buyer. Seller has not been advised that any of
its tax returns, federal, state, local or foreign, have been or are being
audited. Seller does not and will not in the future have any liability, fixed or
contingent, for any unpaid federal, state or local taxes or other governmental
or regulatory charges whatsoever (including without limitation withholding and
payroll taxes) which could result in a lien on the Stations Assets after
conveyance thereof to Buyer or in any other form of transferee liability to
Buyer.
7.7 Personal Property. Schedule 7.7 hereto contains a list of all
material items of tangible personal property owned by Seller and used in the
conduct of the business and operations of the Stations. Schedule 7.7 also
separately lists any material tangible personal property leased by Seller
pursuant to leases included within the Contracts. Except as disclosed in
Schedule 7.7, Seller has, and following the Closing, Buyer will have, good and
marketable title
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to all of the items of tangible personal property which are included in the
Stations Assets (other than those subject to lease) and, except as set forth in
Schedule 7.7, all of which will be paid at or prior to Closing, none of such
Stations Assets is, or at the Closing will be, subject to any security interest,
mortgage, pledge, lease, license, lien, encumbrance, title defect or other
charge, except for liens for taxes not yet due and payable, and except for the
Assumed Liabilities. The properties listed in Schedule 7.7, along with those
properties subject to lease and included among the Contracts, constitute all
material tangible personal property necessary to operate the Stations as the
same are now being operated. Except as set forth in Schedule 7.7, all items of
tangible personal property included in the Stations' Assets are in good
operating condition and repair (ordinary wear and tear excepted), are fee from
all material defect and damage, are suitable for the purposes for which they are
now being used, and have been properly maintained in a manner consistent with
generally accepted standards of good engineering practice.
7.8 Real Property .
7.8.1 Seller owns no real property. Schedule 7.8 hereto contains a
complete and accurate list and description of all real property (including
without limitation, real property relating to the towers, transmitters, studio
sites and offices of the Stations) leased by Seller and used by Seller in
connection with the operations of the Stations (the "Leased Real Estate").
7.8.2 Seller enjoys quiet possession of all Leased Real Estate.
There are no present disputes or claims with respect to offsets or defenses by
any party against the other under any of the Contracts relating to the Leased
Real Estate. Seller has delivered to Buyer true and complete copies of all
Contracts relating to the Leased Real Estate. Except as set forth in Schedule
7.9 hereto, the assignment of the Contracts relating to the Leased Real Estate
to Buyer will not permit the other party to accelerate the rent, cause the terms
thereof to be renegotiated or constitute a default thereunder, and will not
require the consent of any such party to the assignment thereof to Buyer.
7.8.3 Except as described in Schedule 7.8, to the best of Seller's
knowledge none of the buildings, structures, improvements or fixtures
constructed on any Leased Real Estate, in connection with the operation of the
Stations, including, but not limited to, all towers, guy wires and guy anchors
and ground radials, encroach upon adjoining real property, and all such
buildings, structures, improvements and fixtures are constructed and are
operated and used in conformance with all "set back" lines, easements,
covenants, restrictions and all applicable building, fire, zoning, health and
safety laws and codes. To the best of Seller's knowledge, no utility lines
serving such Leased Real Estate pass over the lands of a third party except
where appropriate easements have been obtained. To the best of Seller's
knowledge, except as described in Schedule 7.8, all buildings, structures,
towers, antennae, improvements and fixtures situated on the Leased Real Estate
are in good and technically sound operating condition, ordinary wear and tear
excepted, have no latent structural mechanical or other defects of material
significance, are reasonably suitable for the purposes for which they are being
used and each has adequate rights of ingress and egress, utility service for
water and sewer, telephone, electric and/or gas, and sanitary service for the
conduct of the business and operations of the Stations as presently conducted.
There is no pending or, to the best knowledge of Seller, threatened condemnation
or other legal proceeding or action of any kind relating to such real property
and/or title thereto.
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7.9 Contracts. Schedule 7.9 lists all Contracts to which Seller is a
party, or which are binding on Seller, as of the date of this Agreement. Those
Contracts listed on Schedule 7.9, if any, requiring the consent of a third party
to assignment are identified by an asterisk in the left margin of Schedule 7.9.
Those Contracts, if any, that Seller and Buyer have agreed are material to the
operation of the Stations Assets and the valid assignment of which and receipt
by Buyer of consents thereto (along with appropriate estoppel certificates for
the leases related to the Leased Real Estate) is a condition to the consummation
of the transactions contemplated hereby (the "Fundamental Contracts") are
identified by an "F" in the left margin of Schedule 7.9.
7.10 Status of Contracts, etc. Seller has delivered to Buyer true and
complete copies of all material written Contracts and true and complete
memoranda of all material oral Contracts, including any and all amendments and
other modifications thereto. All of such material Contracts are in full force
and effect and are valid, binding and enforceable in accordance with their
respective terms, except as limited by laws affecting creditors' rights or
equitable principles generally. Seller has complied in all respects with all
Contracts and is not in default beyond any applicable grace periods under any
thereof and, to the best of Seller's knowledge, no other contracting party is in
default under any thereof.
7.11 Environmental. To the best of Seller's knowledge, except as set
forth in Schedule 7.11, Seller has complied with all federal, state and local
environmental laws, rules and regulations as in effect on the date hereof
applicable to each of the Stations and its operations, including but not limited
to the FCC's guidelines regarding RF radiation. To the best of the Seller's
knowledge, the technical equipment included in the Stations Assets does not
contain any PCBs. To the best of Seller's knowledge, no hazardous or toxic
waste, substance, material or pollutant (as those or similar terms are defined
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. Sections 9601 et seq., Toxic Substances Control
Act. 15 U. S. C. Sections 2601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Sections 6901 et seq. or any other applicable federal,
state and local environmental law, statute, ordinance, order, judgment rule or
regulation relating to the environment or the protection of human health
("Environmental Laws")), including but not limited to, any asbestos or
asbestos-related products, oils, or petroleum-derived compounds, CFCs, PCBs, or
underground storage tanks (collectively Hazardous Materials"), have been
released, emitted or discharged by Seller or any predecessor of Seller in
violation of applicable laws or regulations, or are currently located in
quantities in violation of applicable laws and regulations in, on, or under or
about the real property on which the Stations Assets are situated, including
without limitation the transmitter sites, or contained in the tangible personal
property included in the Stations Assets which were placed there by Seller or
any predecessor of Seller. To the best of Seller's knowledge, the Stations
Assets and Seller's use thereof are not in violation of any Environmental Laws
or any occupational, safety and health or other applicable law now in effect.
With respect to Buyer, Seller shall be as of the Closing Date and thereafter
solely responsible for all environmental liabilities, of whatsoever kind and
nature, arising out of or attributable to the operation or ownership of the
Stations Assets prior to the Closing Date.
7.12 Intellectual Property. Schedule 7.12 hereto is a true and complete
list of all material Intellectual Property applied for, registered or issued to,
and owned by Seller or under which Seller
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is a licensee and which is used in the conduct of Seller's business and
operations, except for computer software licensed for use by the Stations.
Except as set forth on Schedule 7.12, to the best of Seller's knowledge: (a)
Seller's right, title and interest in the Intellectual Property as owner or
licensee, as applicable, is free and clear of all liens, claims, encumbrances,
rights, or equities whatsoever of any third party and, to the extent any of the
Intellectual Property is licensed to Seller, such interest is valid and
uncontested by the licensor thereof or any third party; (b) all computer
software located at the Stations' facilities or used in the Stations' business
or operations is properly licensed to Seller, and all of Seller's uses of such
computer software are authorized under such licenses; (c) all of Seller's right,
title and interest in and to the Intellectual Property and computer software
shall be assignable to Buyer at Closing, and upon such assignment, Buyer shall
receive complete and exclusive right, title, and interest in and to all tangible
and intangible property rights existing in the Intellectual Property; and (d)
there are no infringements or unlawful use of such Intellectual Property by
Seller in connection with Seller's business or operations.
7.13 Financial Statements. Set forth in Schedule 7.13 are complete
copies of the financial statements of Seller relating to the Stations for the
month ended December 31, 1996, together with monthly income statements for the
Stations for each month ended after January 1, 1997 (collectively, the
"Financial Statements"). The Financial Statements were prepared in accordance
with the books and records of Seller and in accordance with generally accepted
accounting principles consistently applied and maintained throughout the periods
indicated except as has been disclosed in Schedule 7.13. The Financial
Statements present fairly the financial condition, results of operations and
cash flow of the Stations for the periods indicated. None of the Financial
Statements understates the true costs and expenses of conducting the business
and operations of the Stations, fails to disclose any material liability, or
inflates (or will inflate) the revenues of the Stations for any reason.
7.14 Personnel Information.
7.14.1 Schedule 7.14 contains a true and complete list of all
persons employed at the Stations, including date of hire, a description of
material compensation arrangements (other than employee benefit plans set forth
in Schedule 7.17) and a list of other material terms of any and all agreements
affecting such persons and their employment by Seller. Seller has received no
notice that, and Seller is not aware of, any individual employee who shall or is
likely to terminate his or her employment relationship with the Stations upon
the execution of this Agreement or after the Closing.
7.14.2 Seller, with respect to the Stations, is not a party to any
contract or agreement with any labor organization, nor has Seller agreed to
recognize any union or other collective bargaining unit, nor has any union or
other collective bargaining unit been certified as representing any employees of
Seller at the Stations. Seller has no knowledge of any organization effort
currently being made or threatened by or on behalf of any labor union with
respect to employees of Seller at the Stations.
7.14.3 To the best of Seller's knowledge, except as disclosed in
Schedule 7.14, Seller, with respect to the Stations, has complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, the Employee Retirement Income
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21
Security Act of 1974, as amended ("ERISA"), and those laws relating to wages,
hours, collective bargaining, unemployment insurance, workers' compensation,
equal employment opportunity and payment and withholding of taxes.
7.15 Litigation. Except as set forth in Schedule 7.15, Seller is not
subject to any judgment, award, order, writ, injunction, arbitration decision or
decree relating to the conduct of the business or the operation of the Stations
or any of the Stations Assets, and there is no litigation, administrative
action, arbitration, proceeding or investigation pending or, to the best
knowledge of Seller, threatened against Seller with respect to, related to or in
connection with the operation of the Stations in any federal, state or local
court, or before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the renewal
of, any of the Stations Licenses), or before any other tribunal duly authorized
to resolve disputes. In particular, but without limiting the generality of the
foregoing, to the best knowledge of Seller, there are no applications,
complaints or proceedings pending or threatened before the FCC or any other
governmental organization with respect to the business or operations of the
Stations.
7.16 Compliance With Laws. To the best of Seller's knowledge and except
as set forth in Schedule 7.16: (i) Seller is not in material violation of, nor
has Seller received any notice asserting any non-compliance by it in connection
with the operation of the Stations or use or ownership of any of the Stations
Assets with, any applicable statute, rule or regulation, whether federal, state
or local; (ii) Seller is not in default with respect to any judgment, order,
injunction or decree of any court administrative agency or other governmental
authority or any other tribunal duly authorized to resolve disputes which
relates to the transactions contemplated hereby; and (iii) Seller is in material
compliance with all laws, regulations and governmental orders applicable to the
conduct of the business and operations of the Stations.
7.17 Employee Benefit Plans. Schedule 7.17 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Stations, and a brief description
thereof. Seller does not maintain any other employee benefit plan as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended, applicable to the employees of Seller employed at the Stations.
7.18 Commissions or Finder's Fees. Neither Seller nor any person or
entity acting on behalf of Seller has agreed to pay a commission, finder's fee
or similar payment in connection with this Agreement or any matter related
hereto to any person or entity.
7.19 Conduct of Business in Ordinary Course: Adverse Changes. Since
September 1, 1997, (a) Seller has conducted the business of the Stations only in
the ordinary course consistent with Seller's past practices; (b) there has not
been any material adverse change in the business, assets, properties, prospects
or condition (financial or otherwise) of the Stations, or any damage,
destruction, or loss affecting any of the Stations Assets; and (c) Seller has
not created, assumed, or suffered any mortgage, pledge, lien or encumbrance on
any of the Stations Assets.
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7.20 Instruments of Conveyance: Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Stations
Assets to Buyer, will transfer good and marketable title to the Assets free and
clear of all liabilities (absolute or contingent), security interests,
mortgages, pledges, liens, obligations and encumbrances, except for Permitted
Encumbrances and except as set forth in Schedule 7.7 and Schedule 7.8 hereto and
those obligations referred to in the first sentence of Section 2.1 hereof.
7.21 Undisclosed Liabilities. Excepting only for the Assumed
Liabilities, no liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, relating to Seller, the Stations or the
Stations Assets exists which could, after discharging any indebtedness therefor
at or prior to the Closing, result in any form of transferee liability against
Buyer or subject the Stations Assets to any lien, encumbrance, claim, charge,
security interest or imposition whatsoever or otherwise affect the full, free
and unencumbered use of the Stations Assets by Buyer.
7.22 Full Disclosure. No representation or warranty made by Seller
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or shall omit to state any
material fact required to make any statement contained herein or therein not
misleading. To the best of Seller's knowledge, there is no impending or
contemplated event or occurrence that would cause any of the foregoing
representations not to be true and complete on the date of such event or
occurrence as if made on that date.
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to the best of Seller's knowledge (or similar terms),
it shall mean to the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, after having made due
inquiry of the employees, representatives and agents of Seller who would be
expected to have knowledge of the matter, and with respect to the condition of
any Stations Assets, records or other object, after having inspected it.
ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Stations Assets from Seller as provided in Article I hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 Notification. Buyer will provide Seller prompt written notice of any
change in any of the information contained in the representations and warranties
made in Article 6. Buyer shall also notify Seller of any litigation, arbitration
or administrative proceeding pending or, to its knowledge, threatened against
Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any action which is
materially inconsistent with its obligations under this Agreement or take any
action which would cause any
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representation or warranty of Buyer contained herein to be or become false or
invalid or which could hinder or delay the consummation of the transactions
contemplated by this Agreement.
8.4 Removal of Impediments. Should any fact relating to Buyer which
would cause the FCC to deny its consent to the transactions contemplated by this
Agreement come to Buyer's attention, Buyer will promptly notify Seller thereof
and will use its reasonable efforts to take such steps as may be necessary to
remove any such impediment to the FCC's consent to the transactions contemplated
by this Agreement.
8.5 Offer to Existing Employees. On the Closing Date, Buyer shall offer
employment to each of the employees of Seller listed on Schedule 7.14 hereto on
terms and conditions determined by Buyer but at salary levels and with such
benefits that are, taken as a whole package, not materially less than those
currently provided to such employees by Seller, provided, however, that Buyer
may elect not to offer employment to any individual listed on Schedule 7.14 if
Buyer determines, in its sole discretion, that any action taken or failed to be
taken by such individual, or any condition or circumstance which exists or
existed, would be just cause for termination of such individual's employment had
the action or failure to act occurred or the condition or circumstance existed
during such individual's employment with Buyer. Buyer will have no
responsibility for any severance or similar obligations Seller may have to its
employees.
ARTICLE 9
COVENANTS OF SELLER
9.1 Pre-Closing Covenants. Seller covenants and agrees with respect to
the Stations that, between the date hereof and the Closing Date or the earlier
termination of this Agreement in accordance with its terms, except as expressly
permitted by this Agreement or with the prior written consent of Buyer, Seller
shall act in accordance with the following:
9.1.1 Seller shall use its reasonable best efforts to conduct the
business and operations of the Stations in the ordinary and prudent course of
business consistent with past practice and with the intent of preserving the
ongoing operations and assets of the Stations, including but not limited to
maintaining the independent identity of the Stations, retaining the current
format and programming (including the content thereof) of the Stations,
continuing at historical levels and frequencies spending for promotions,
advertising, and survey testing, and using its reasonable best efforts to retain
at the Stations the services of all active employees, consultants and agents of
the Stations.
9.1.2 Seller shall use its reasonable best efforts to: (i) preserve
the operation of the Stations intact; (ii) preserve the business of the
Stations' advertisers, customers, suppliers and others having business relations
with the Stations; and (iii) continue to conduct financial operations of the
Stations, including without limitation, their credit and collection and pricing
policies and practices, all in the ordinary course of business consistent with
past practices.
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9.1.3 Seller shall operate the Stations in all respects in
accordance with FCC rules and regulations and the Stations Licenses and with all
other laws, regulations, rules and orders, and shall not cause or permit by any
act, or failure to act, any of the Stations Licenses or other licenses, permits
or authorizations listed in Schedule 7.4 to expire, be surrendered, adversely
modified, or otherwise terminated, or the FCC to institute any proceedings for
the suspension, revocation or adverse modification of any of the Stations
Licenses, or fail to prosecute with due diligence any pending applications to
the FCC.
9.1.4 Should any fact relating to Seller which would cause the FCC
to deny its consent to the transactions contemplated by this Agreement come to
Seller's attention, Seller will promptly notify Buyer thereof and will use its
reasonable best efforts to take such steps as may be necessary to remove any
such impediment to the FCC's consent to the transactions contemplated by this
Agreement.
9.1.5 Except for changes or actions in the ordinary course of
business consistent with past practices, Seller shall not: (a) sell broadcast
time on a prepaid basis (other than in the course of existing credit practices);
(b) except as set forth on Schedule 7.14, or as required by applicable law or
written agreements currently in effect, grant or agree to grant any general
increases in the rates of salaries or compensation payable to employees of the
Stations (provided that no such increases to any employee shall in the aggregate
exceed 6 % of such employee's compensation as set forth on Schedule 7.14 hereto)
unless such increase is as a result of increased commissions payable to
employees on account of increased advertising sales; (c) except as required by
written agreements currently in effect, grant or agree to grant any specific
bonus or increase in compensation to any executive management employee of the
Stations (provided that no such increases to any employee shall in the aggregate
exceed 6 % of such employee's compensation as set forth on Schedule 7.14 hereto)
unless such increase is as a result of increased commissions payable to
employees on account of increased advertising sales; (d) provide for any new
pension, retirement or other employment benefits for employees of the Stations
or any increases in any existing benefits, (e) modify, change or terminate any
Contract other than in the ordinary course of business; or (f) change the
advertising rates in effect as of the date hereof other than in the ordinary
course of business.
9.1.6 Seller shall give or cause the Stations to give Buyer and
Buyer's counsel, accountants, engineers and other representatives, at Buyer's
reasonable request and upon reasonable notice, full and reasonable access during
normal business hours to all of Seller's personnel, properties, books,
Contracts, reports and records (including, without limitation, financial
information and tax returns relating to the Stations, and environmental audits
in existence with respect to the Stations Assets), real estate, buildings and
equipment relating to the Stations and to the Stations' employees, and to
furnish Buyer with information and copies of all documents and agreements
relating to the Stations and the operation thereof (including but not limited to
financial and operating data and other information concerning the financial
condition, results of operations and business of the Stations) that Buyer may
reasonably request. The rights of Buyer under this Section 9.1.6 shall not be
exercised in such a manner as to interfere unreasonably with the business of the
Stations.
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9.1.7 Seller shall use its reasonable best efforts to obtain any
third party consents necessary for the assignment of any Contract (which shall
not require any payment to any such third party except for such amounts
contemplated by the Contract to be assigned, and any amount then owing by Seller
to such third party).
9.2 Notification. Seller will provide Buyer prompt written notice of any
change in any of the information contained in the representations and warranties
made in Article 7 or any Schedule. Seller agrees to notify Buyer of any
litigation, arbitration or administrative proceeding pending or, to the best of
its knowledge, threatened, which challenges the transactions contemplated
hereby. Seller shall promptly notify Buyer if any of the normal broadcast
transmissions of either Station are interrupted, interfered with or in any way
impaired, and shall provide Buyer with prompt written notice of the problem and
the measures being taken to correct such problem. If such Station is not
restored so that operation is resumed to the power at which it was operated
prior to the interruption and full licensed antenna height within five (5) days
of such event, or if more than five (5) such events occur within any thirty (30)
day period, or if either of the Stations shall be off the air for more than
seventy-two (72) consecutive hours more than twice in any thirty (30) day
period, then Buyer shall have the right to terminate this Agreement.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement nor take any
action which would cause any representation or warranty of Seller contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Stations Assets and the
Assumed Liabilities as provided in Articles 1 and 2 and Section 7.20 of this
Agreement.
9.5 Other Items. Until the Closing Date or the earlier termination of
this Agreement in accordance with the terms hereof, except with Buyer's prior
written consent, Seller shall not: (a) waive or release any right relating to
the business or operations of the Stations, except for adjustments or
settlements made in the ordinary course of business consistent with its past
practices; (b) transfer or grant any rights under any of the Stations Licenses;
(c) enter into any commitment for capital expenditures for which Buyer would
become liable after the Closing Date; (d) introduce any material changes in the
broadcast hours or in the format of the Stations (except for the format change
previously instituted by Seller as set forth on Schedule 9.5) or any other
material change in the Station's programming policies; (e) change the call
letters of either Station; and (f) enter into any transaction or make or enter
into any contract or commitment with respect to either of the Stations or the
Stations Assets which by reason of its size or otherwise is not in the ordinary
course of business consistent with past practices, other than in connection with
the format change referred to on Schedule 9.5.
9.6 Exclusivity. Seller agrees that, commencing on the date hereof
through the Closing or earlier termination of this Agreement, Buyer shall have
the exclusive right to consummate the transactions contemplated herein, and
during such exclusive period, Seller
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agrees that neither Seller, nor any director, officer, employee or other
representative of Seller: (a) will initiate, solicit or encourage, directly or
indirectly, any inquiries, or the making or implementation of any proposal or
offer with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of, all or any portion of the Stations
Assets (any such inquiry, proposal or offer being hereinafter referred to as an
"Acquisition Proposal" and any such transaction being hereinafter referred to as
an "Acquisition"); (b) will engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; or (c) will continue
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal or Acquisition and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken by them in this Section 9.6. Notwithstanding the
foregoing, in the event that Buyer defaults in any material respect in the
observance or in the due and timely performance of any of its covenant or
agreements herein contained and such default shall not be cured within ten (10)
business days of notice of default served by Seller, Seller's obligations under
this Section 9.6 shall be null and void.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller each covenant and agree that between the date hereof
and the Closing Date, they shall act in accordance with the following:
10.1 Confidentiality. Subject to the requirements of applicable law,
Buyer and Seller shall each keep confidential all information obtained by it
with respect to the other parties hereto in connection with this Agreement and
the negotiations preceding this Agreement, and will use such information solely
in connection with the transactions contemplated by this Agreement, and if the
transactions contemplated hereby are not consummated for any reason, each shall
return to each other party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such other party
in connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, no party shall be required to keep confidential
or return any information which: (a) is known or available through other lawful
sources, not bound by a confidentiality agreement with the disclosing party; (b)
is or becomes publicly known through no fault of the receiving party or its
agents; (c) is required to be disclosed pursuant to an order or request of a
judicial or governmental authority (provided the disclosing party is given
reasonable prior notice of the order or request and the purpose of the
disclosure); or (d) is developed by the receiving party independently of the
disclosure by the disclosing party. Notwithstanding anything to the contrary
herein, either party may in accordance with its legal obligations, including but
not limited to filings permitted or required by the Securities Act of 1933 and
the Securities and Exchange Act of 1934, make such press releases and other
public statements and announcements as it deems necessary and appropriate in
connection with this Agreement and the transactions contemplated hereby;
provided, however, that prior to making any such unilateral press release or
announcement, such party shall first communicate the same in writing to the
other.
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10.2 Cooperation. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the satisfaction of any condition to
closing set forth herein.
10.3 Control of Stations. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Stations prior to the
Closing. Such operations, including complete control and supervision of all
Station programs, employees and policies, shall be the sole responsibility of
Seller.
10.4 Consents to Assignment. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, offer, delivery or sublease thereof. Subject to the provisions
of Section 11.5, in those cases where consents, assignments, releases and/or
waivers have not been obtained at or prior to the Closing relating to the
assignment to Buyer of the Contracts, this Agreement and any assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by Seller to Buyer of all of Seller's rights, benefits, title and
interest in and to the Contracts, and where necessary or appropriate, Buyer
shall be deemed to be Seller's agent for the purpose of completing, fulfilling
and discharging all of Seller's rights and liabilities arising after the Closing
Date under such Contracts. Seller shall use its reasonable best efforts to
provide Buyer with the financial and business benefits of such Contracts
(including, without limitation, permitting Buyer to enforce any rights of Seller
arising under such Contracts), and Buyer shall, to the extent Buyer is provided
with the benefits of such Contracts, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Seller under such Contracts
to the extent that Buyer was to assume those obligations pursuant to the terms
hereof.
10.5 Filings. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their reasonable best efforts to obtain,
and to cooperate with each other in obtaining, all authorizations, consents,
orders and approvals of any governmental authority that may be or become
necessary in connection with the consummation of the transactions contemplated
by this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any governmental authority prohibiting the consummation of
the transactions contemplated hereby, including without limitation, any reports
or notifications that may be required to be filed with the FCC, and each shall
furnish to one another all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other.
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10.6 Bulk Sales Laws. Buyer hereby waives compliance by Seller with the
provisions of the "bulk sales" or similar laws of any state. Seller agrees to
indemnify Buyer and hold it harmless from any and all loss, cost, damage and
expense (including but not limited to, reasonable attorney's fees) sustained by
Buyer as a result of any failure of Seller to comply with any "bulk sales" or
similar laws.
10.7 Employee Matters. Seller shall be responsible for the payment of
all compensation and accrued employee benefits payable to all employees up to
the Closing Date. Seller acknowledges and agrees that it, and not Buyer, is and
shall be solely responsible for any and all insurance, supplemental pension,
deferred compensation, retirement and any other benefits, and related costs,
premiums and claims, due, to become due, committed or otherwise promised to any
person who, as of the Closing Date, is a retiree, former employee, or current
employee of Seller, relating to the period up to the Closing Date. Buyer, as a
purchaser of the Stations Assets, shall assume no employee benefit plans,
programs or practices, whether or not set forth in writing, maintained by Seller
at any time.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all respects as of the date hereof and on and as
of the Closing Date as if made on and as of that date, except for changes (a)
expressly permitted or contemplated by the terms of this Agreement; or (b) in
the ordinary course of business which are not, either individually or in the
aggregate, material and adverse.
11.1.2 All of the terms, covenants and conditions set forth in this
Agreement to be complied with and performed by Seller on or prior to the Closing
Date shall have been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of the
Closing Date, from Seller, executed by the Manager of Seller to the effect that:
(a) the representations and warranties of Seller contained in this Agreement are
true and complete in all material respects on and as of the Closing Date as if
made on and as of that date; and (b) Seller has complied with or performed in
all material respects all terms, covenants and conditions set forth in this
Agreement to be complied with or performed by it on or prior to the Closing
Date.
11.2 Governmental Consents. The FCC Initial Approval shall have been
obtained.
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11.3 Governmental Authorizations. Seller shall be the holder of the
Stations Licenses and all other licenses, permits and other authorizations
listed in Schedule 7.4, and there shall not have been any modification of any of
such licenses, permits and other authorizations which has a material adverse
effect on either of the Stations or the operations thereof. No application shall
be pending for the renewal of any of the Stations Licenses. No proceeding shall
be pending which seeks, or the effect of which reasonably could be, to revoke,
cancel, fail to renew, suspend or adversely modify any of the Stations Licenses
or any other licenses, permits or other authorizations listed in Schedule 7.4.
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; (d) seeks material damages on account of
the consummation of any transaction contemplated hereby; or (e) is a petition of
bankruptcy by or against Seller, an assignment by Seller for the benefit of its
creditors, or other similar proceeding.
11.5 Third-Party Consents. All Material Contracts shall be in full force
and effect on the Closing Date, and Seller shall have obtained and shall have
delivered to Buyer all appropriate third-party consents in form and substance
acceptable to Buyer (including estoppel certificates for the leases related to
the Leased Real Estate) in connection with the assignment of the Material
Contracts to Buyer.
11.6 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all bills of sale, general warranty
deeds, endorsements, assignments and other instruments of conveyance reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Stations Assets to Buyer, including, without
limitation, each of the documents required to be delivered by it pursuant to
Article 14.
11.7 No Adverse Change. No material adverse change in condition or
status of the Stations or the Stations Assets, which change is caused by or
arises out of any breach by Seller of any of its representations, warranties,
covenants or agreements hereunder shall have occurred, be threatened or be
reasonably likely to occur.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
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12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in this Agreement or in
any Exhibit, Schedule or document delivered pursuant hereto, shall be true and
complete in all material respects as of the date hereof and on and as of the
Closing Date as if made on and as of that date, except for changes expressly
permitted or contemplated by the terms of this Agreement.
12.1.2 All the terms, covenants and conditions set forth in this
Agreement to be complied with and performed by Buyer on or prior to the Closing
Date shall have been complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of the
Closing Date, executed by the President of Buyer, to the effect that: (a) the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date; and (b) Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Initial Approval shall have been
obtained.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no other decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; or (d) seeks material damages on account of
the consummation of any transaction contemplated hereby.
12.4 Closing Documents. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, the Purchase Price and each of the
documents required to be delivered by it pursuant to Article 14.
ARTICLE 13
TRANSFER TAXES: FEES AND EXPENSES
13.1 Expenses. Except as set forth in Section 13.2 hereof or otherwise
expressly set forth in this Agreement, each party hereto shall be solely
responsible for all costs and expenses incurred by it in connection with the
negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to, the costs and expenses incurred
pursuant to Article 5 hereof and the fees and disbursements of counsel and other
advisors.
13.2 Specific Charges. All costs of transferring the Stations Assets in
accordance with this Agreement, including recordation, transfer and documentary
taxes and fees, and any excise,
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sales or use taxes, shall be shall be paid by Seller. Each party shall pay any
filing or grant fees imposed upon it by any governmental authority the consent
of which or the filing with which is required for the consummation of the
transactions contemplated hereby, with the exception of filing fees of the FCC
which shall be shared equally by Buyer and Seller.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
14.1.1 Certified resolutions of the members of Seller approving the
execution and delivery of this Agreement and authorizing the consummation of the
transactions contemplated hereby;
14.1.2 A certificate of Seller, dated the Closing Date, in the form
described in Section 11.1.3;
14.1.3 Governmental certificates showing that Seller: (a) is duly
organized and existing in the State of Arizona; and (b) has filed all returns,
paid all taxes due thereon and is currently subject to no assessment, each
certified as of a date not more than thirty (30) days before the Closing Date;
14.1.4 Such certificates, bills of sale, general warranty deeds,
assignments, documents of title and other instruments of conveyance, assignment
and transfer (including without limitation any necessary consents to conveyance,
assignment or transfer required to be delivered hereunder), and lien releases,
all in form satisfactory to Buyer and Buyer's counsel, as shall be effective to
vest in Buyer good and marketable title in and to the Stations Assets, free,
clear and unencumbered except for Permitted Encumbrances, if any, as set forth
on Schedule 7.7 and Schedule 7.8.
14.1.5 An Assignment and Assumption Agreement in the form of Exhibit
D effectuating the assignment and assumption of the Assumed Liabilities (the
"Assignment and Assumption Agreement");
14.1.6 The Indemnification Escrow Agreement;
14.1.7 At the time and place of Closing, originals and all copies of
all program, operations, transmission or maintenance logs and all other records
required to be maintained by the FCC with respect to the Stations, including the
public files of the Stations, shall be left at the Stations and thereby
delivered to Buyer;
14.1.8 A written opinion of Seller's corporate counsel in the form
attached as Exhibit E, dated as of the Closing Date;
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14.1.9 A written opinion of Seller's FCC counsel in the form
attached as Exhibit F, dated as of the Closing Date; and
14.1.10 Such additional information, materials, agreements,
documents and instruments as Buyer and its counsel may reasonably request in
order to consummate the Closing.
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of Buyer
approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the form
described in Section 12.1.3;
14.2.3 The Assignment and Assumption Agreement;
14.2.4 The Indemnification Escrow Agreement;
14.2.5 A written opinion of Buyer's counsel in the form attached as
Exhibit G, dated as of the Closing Date;
14.2.6 The Purchase Price in accordance with Section 3. 1 hereof;
and
14.2.7 Such additional information, materials, agreement, documents
and instruments as Seller and its counsel may reasonably request in order to
consummate the Closing.
ARTICLE 15
SURVIVAL, INDEMNIFICATION, ETC.
15.1 Survival of Representations, Etc. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) as follows:
15.1.1 The Agreements shall survive the Closing for a period from
the Closing Date equal to the statute of limitations for written contracts in
Arizona.
15.1.2 The Warranties in Sections 6.2, 6.5, 7.2, the third sentence
of 7.7, 7.18 and 7.20 shall survive the Closing without limitation.
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15.1.3 The Warranties in Section 7.6 or otherwise relating to the
federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
15.1.4 All other Warranties shall survive for a period of twelve
(12) months from the Closing Date.
15.1.5 The right of any party to recover Damages (as defined in
Section 15.2. 1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.6 Notwithstanding any provision hereof to the contrary, there
shall be no contractual time limit in which Buyer or Seller may bring any action
for actual fraud (a "Fraud Action"), regardless of whether such actual fraud
also included a breach of any Agreement or Warranty; provided, however, that any
Fraud Action must be brought within the period of the applicable statute of
limitations plus any extensions or waivers granted or imposed with respect
thereto.
15.2 Indemnification.
15.2.1 Seller shall defend, indemnify and hold harmless Buyer from
and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer
arising out of or related to: (a) any breach of the Warranties given or made by
Seller in this Agreement; (b) any breach of the Agreements made by Seller in
this Agreement; (c) the Retained Liabilities; and (d) any failure of the parties
to comply with any "bulk sales" laws applicable to the transactions contemplated
hereby.
15.2.2 Buyer shall defend, indemnify and hold harmless Seller from
and against any and all Damages incurred by Seller arising out of or related to:
(a) any breach of the Warranties given or made by Buyer in this Agreement; (b)
any breach of the Agreements made by Buyer in this Agreement, and (c) the
Assumed Liabilities.
15.3 Procedures: Third Party and Direct Indemnification Claims. The
indemnified party agrees to give written notice, within thirty (30) days
following its discovery thereof, to the indemnifying party of any demand, suit,
claim or assertion of liability by third parties or other circumstances that
could give rise to an indemnification obligation hereunder against the
indemnifying party (hereinafter collectively "Claims," and individually a
"Claim"), it being understood that the failure to give such notice shall not
affect the indemnified party's right to indemnification and the indemnifying
party's obligation to indemnify as set forth in this Agreement, unless the
indemnifying party's ability to contest, defend or settle with respect to such
Claim is thereby demonstrably and materially prejudiced. The parties also agree
that any claim for Damages arising directly between the parties relating to this
Agreement may be
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brought at any time within the applicable survival period specified in Section
15. 1, and that the only notice required with respect thereto shall be as
specified in Section 15.1.5.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense or opposition
to such Claim.
15.3.2 In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or within (10) days after notice of any
such Claim from the indemnified party shall fail to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of its own choosing, on behalf
of and for the account and risk of the indemnifying party (subject to the right
of the indemnifying party to assume defense of or opposition to such Claim at
any time prior to settlement, compromise or final determination thereof).
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim, and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim the indemnified party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party, and their respective counsel or other
representatives, shall cooperate in good faith with respect to such Claim.
15.3.4 No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to the party
claiming indemnification with respect to the Claim at issue or other similar
Claims.
15.3.5 No indemnified party shall be entitled to assert a claim for
indemnification under Section 15.2.1(a) or Section 15.2.2(a) unless and then
only to the extent that the aggregate damages for all such claims exceed
$25,000, and the maximum liability of either party for indemnification under
such Subsections shall be $1,000,000, except with respect to claims relating to
title, taxes, License revocation, and environmental matters (which shall not be
so limited) or as otherwise set forth in Sections 16.2, 16.3 and 16.4 hereof.
15.3.6 If at any ▇▇▇▇ ▇▇▇▇▇▇ makes a distribution of assets to its
members in respect of their ownership or membership interests pursuant to the
terms of Seller's Operating Agreement, in liquidation or otherwise, and Seller
is thereafter financially unable to indemnify
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Buyer in accordance with Article 15 hereof, then the members of Seller, on
behalf of Seller, shall severally indemnify Buyer in accordance with Article 15
hereof, but only to the extent of the amount of the distribution of assets
previously made to them.
ARTICLE 16
TERMINATION RIGHTS
16.1 Termination. This Agreement may be terminated at any time prior to
Closing as follows:
16.1.1 Upon the mutual written consent of Buyer and Seller, this
Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller breaches in
any material respect any of its representations or warranties or defaults in any
material respect in the observance or in the due and timely performance of any
of its covenants or agreements herein contained and such breach or default shall
not be cured within thirty (30) days of the date of notice of breach or default
served by Buyer; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches in any
material respect any of its representations or warranties or defaults in any
material respect in the observance or in the due and timely performance of any
of its covenants or agreements herein contained and such breach or default shall
not be cured within thirty (30) days of the date of notice of breach or default
served by Seller; or
16.1.4 By written notice of Buyer to Seller or by Seller to Buyer if
the FCC denies the FCC Application under circumstances in which Seller is not
entitled to the Escrow Deposit;
16.1.5 By written notice of Buyer to Seller, or by Seller to Buyer,
if any court of competent jurisdiction shall have issued an order, decree or
ruling (which then remains in effect) or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, or by Buyer, if any court, legislative body or governmental or
regulatory authority has taken, or is reasonably expected to take, action that
would make the consummation of the transactions contemplated hereby inadvisable
or undesirable as determined by Buyer in its sole discretion reasonably
exercised; or
16.1.6 By written notice of Buyer to Seller, or by Seller to Buyer,
if the Closing shall not have been consummated on or before October 31, 1998.
16.1.7 By written notice of Buyer to Seller if it shall become
apparent in both Seller's and Buyer's judgment reasonably exercised that any
condition to Buyer's obligation to close as set forth in Article 11 hereof will
not be satisfied on or before October 31, 1998.
16.1.8 By written notice of Buyer to Seller under the conditions set
forth in Section 9.2 hereof.
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Notwithstanding the foregoing, no party hereto may effect a termination
hereof if such party is in material default or breach of this Agreement.
16.2 Liability. Except as set forth in Section 16.4 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of a default by Seller, which
results in the filing of a lawsuit for damages, specific performance, or other
remedy, Buyer shall be entitled to reimbursement by Seller of reasonable legal
fees and expenses incurred by Buyer.
16.4 Seller's Liquidated Damages. As more fully described in the
Deposit Escrow Agreement, in the event this Agreement is terminated because of
Buyer's material breach of this Agreement, and all other conditions to Closing
are at such time satisfied or waived (other than such conditions as can
reasonably be satisfied by Closing), then the Escrow Deposit shall be delivered
to Seller, and the proceeds thereof shall constitute liquidated damages. It is
understood and agreed that such liquidated damages amount represents Buyer's and
Seller's reasonable estimate of actual damages and does not constitute a
penalty. Recovery of liquidated damages shall be the sole and exclusive remedy
of Seller against Buyer for failing to consummate this Agreement as a result of
Buyer's material breach hereof, and shall be applicable regardless of the actual
amount of damages sustained and all other remedies are deemed waived by Seller.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Risk of Loss. The risk of loss or damage to any of the Stations
Assets prior to the Closing Date, shall be upon Seller. Seller shall repair,
replace and restore any such damaged or lost Stations Asset to its prior
condition as soon as possible and in no event later than forty-five (45) days
following the loss or damage; provided, however, that in the event any such loss
or damage of the Stations Assets exists on the Closing Date, then
notwithstanding any other provision hereto, Buyer at its option may extend the
Closing Date for a period of up to sixty (60) days until such time as Seller
shall have repaired, replaced and restored any such damaged or lost Stations
Asset to its prior condition or deduct from the Purchase Price that amount which
Buyer and Seller reasonably determine to be sufficient to cover any such loss or
damage and close the transaction on the Closing Date.
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17.2 Certain Interpretive Matters and Definitions. Unless the context
otherwise requires:
(a) all references to Sections, Articles, Schedules or Exhibits are
to Sections, Articles, Schedules or Exhibits of or to this Agreement; (b) each
term defined in this Agreement has the meaning assigned to it; (c) each
accounting term not otherwise defined in this Agreement has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
on the date hereof, (d) "or" is disjunctive but not necessarily exclusive; (e)
words in the singular include the plural and vice versa; (f) the term
"Affiliate" has the meaning given it in Rule 12b-2 of Regulation 12B under the
Securities Exchange Act of 1934, as amended; and (g) all references to "$" or
dollar amounts will be to lawful currency of the United States of America.
17.3 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order more effectively to
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Stations Assets being transferred hereunder in
accordance with the terms hereof, and Buyer shall from time to time, at the
request of and without further cost or expense to Seller, execute and deliver
such other instruments and take such other actions as may reasonably be
requested in order more effectively to relieve Seller of any obligations being
assumed by Buyer hereunder.
17.4 Preservation of Records. Subject to Section 10.1 hereof, Buyer
hereby agrees that it will preserve and make available to Seller and its
attorneys and accountants (including the right to inspect and copy at Seller's
cost), during normal business hours and upon reasonable advance notice, for
three (3) years after the Closing Date, such of the books, records, files,
correspondence, memoranda and other documents referred pursuant to this
Agreement as Seller may reasonably require for the preparation of tax reports
and returns, the preparation of financial statements, or the preparation of a
response to any claim by a third party against Seller.
17.5 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of Buyer. Buyer
shall have the right to assign and/or delegate all or any portion of its rights
and obligations under this Agreement to a party qualified to be a FCC licensee,
including without limitation, assignments as collateral, provided that no such
assignment and/or delegation shall relieve Buyer of its obligations hereunder in
the event that its assignee fails to perform the obligations delegated and
further provided that no such assignment and/or delegation extends or delays FCC
approval of the assignment of the FCC Licenses as contemplated hereunder. All
covenants, agreements, statements, representations, warranties and indemnities
in this Agreement by and on behalf of any of the parties hereto shall bind and
inure to the benefit of their respective successors and permitted assigns of the
parties hereto. In the event Buyer finds it necessary or is required to provide
to a third party a collateral assignment of the Buyer's interest in this
Agreement and/or any related documents, Seller shall cooperate with the Buyer
and any third party requesting such assignment including but not limited to
signing a consent and acknowledgment of such assignment.
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17.6 Amendments. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.7 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.8 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Arizona, without giving effect to
the choice of law provisions thereof.
17.9 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch) and
shall be addressed to the following addresses, or to such other address as any
party may request, in the case of Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
To Seller: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Member
Continental Radio Broadcasting, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
Regent Broadcasting of
Kingman, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇
2100 PNC Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
17.10 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which will be deemed an original and all
of which together will constitute one and the same instrument.
17.11 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the par-ties hereto and their successors or permitted assigns any
rights or remedies under or by reason of this Agreement.
17.12 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.13 Entire Agreement. This Agreement and the schedules and exhibits
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
REGENT BROADCASTING OF
KINGMAN, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CONTINENTAL RADIO BROADCASTING,
L.L.C.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
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AGREEMENT OF MEMBERS OF SELLER
The undersigned, constituting all of the Members of Seller, by their
signatures below, do acknowledge, confirm and evidence their agreement with the
provisions of Section 15.3.6 of this Agreement.
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
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