EXHIBIT 10.52
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ASSET PURCHASE AGREEMENT
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by and between
KJI BROADCASTING, LLC
and
RADIO ONE, INC.
for the sale and purchase of
Station WCAV-FM
Dated as of May 24, 1999
TABLE OF EXHIBITS
EXHIBIT 1 -- Escrow Agreement
EXHIBIT 2 -- Time Brokerage Agreement
EXHIBIT 3 -- Cooperation Agreement
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TABLE OF SCHEDULES
SCHEDULE 2.1(c)(1) Contracts
SCHEDULE 6.1 Seller's Places of Business
SCHEDULE 6.3 Litigation
SCHEDULE 6.4 Permitted Encumbrances
SCHEDULE 6.5 FCC Licenses
SCHEDULE 6.6 Equipment
SCHEDULE 6.8 Intellectual Property
SCHEDULE 6.9 Insurance
SCHEDULE 6.10 Financial Statements
SCHEDULE 6.11 Employees
SCHEDULE 6.12 Employment and Benefits Agreements
SCHEDULE 6.13 Real Property
SCHEDULE 6.14 Environmental
SCHEDULE 6.18 Sales Agreements
SCHEDULE 6.21 Related Parties
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ASSET PURCHASE AGREEMENT
This Agreement, made and entered into as of this 24th day of May, 1999,
by and between KJI Broadcasting, LLC, a Massachusetts limited liability company
("Seller"), and Radio One, Inc., a Delaware corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the licensee of Station WCAV-FM, 97.7 MHz, Brockton,
Massachusetts (the "Station"); and
WHEREAS, the parties desire that Buyer purchase certain assets used or
held for use in the operation of the Station and acquire the authorizations
issued by the Federal Communications Commission (the "Commission") for the
operation of the Station; and
WHEREAS, the authorizations issued by the Commission may not be
assigned to Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties, intending to be legally bound, agree as follows:
1.0 RULES OF CONSTRUCTION.
1.1. DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ACCOUNTS RECEIVABLE" means the cash accounts receivable of Seller
arising from Seller's operation of the Station prior to and immediately before
the Closing.
"ADMINISTRATIVE VIOLATION" means those violations described in Section
8.6 hereof.
"ASSIGNMENT APPLICATION" means the application on FCC Form 314 that
Seller and Buyer shall join in and file with the Commission requesting its
consent to the assignment of the FCC Licenses (as hereinafter defined) from
Seller to Buyer.
"BUSINESS RECORDS" means all business records of Seller (including
logs, public file materials and engineering records) relating to or used in the
operation of the Station and not relating solely to Seller's internal corporate
affairs.
"BUYER" means Radio One, Inc., a Delaware corporation.
"BUYER DOCUMENTS" means those documents, agreements and instruments to
be executed and delivered by Buyer in connection with this Agreement as
described in Section 7.2.
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"CLOSING" means the consummation of the Transaction (as hereinafter
defined).
"CLOSING DATE" means the date on which the Closing takes place, as
determined by Section 11.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMMISSION" means the Federal Communications Commission.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended.
"CONTRACTS" means those contracts, leases and other agreements listed
or described in Schedule 2.1(c)(1) which are in effect on the date hereof and
which Buyer has agreed to assume.
"ENVIRONMENTAL LAW" means any law, rule, order, decree or regulation of
any Governmental Authority relating to pollution or protection of human health
and the environment, including any law or regulation relating to emissions,
discharges, releases or threatened releases of Hazardous Substances (as
hereinafter defined) into ambient air, surface water, groundwater, land or other
environmental media, and including without limitation all laws, regulations,
orders and rules pertaining to occupational health and safety.
"EQUIPMENT" means all tangible personal property and fixtures used or
useful in the operation of the Station as described in Section 2.1(b).
"ESCROW AGENT" means Media Services Group, Inc.
"ESCROW AGREEMENT" means the escrow agreement described in Section 3,
the form of which is attached as Exhibit 1.
"ESCROW DEPOSIT" means the monies deposited with the Escrow Agent
described in Section 3.2.
"EXCLUDED ASSETS" means those assets excluded from the Purchased Assets
and retained by the Seller, to the extent in existence on the Closing Date, as
specifically described in Section 2.2.
"FCC LICENSES" means all licenses, pending applications, permits and
other authorizations issued by the Commission for the operation of the Station
listed on Schedule 6.5.
"FINAL ORDER" means any action that shall have been taken by the
Commission (including action duly taken by the Commission's staff, pursuant to
delegated authority) which shall not have been reversed, stayed, enjoined, set
aside, annulled or suspended; with respect to which no timely request for stay,
petition for rehearing, appeal or certiorari or sua sponte action of the
Commission with comparable effect shall be pending; and as to which the time for
filing
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any such request, petition, appeal, certiorari or for the taking of any such sua
sponte action by the Commission shall have expired or otherwise terminated.
"FINANCIAL STATEMENTS" means Seller's audited and unaudited financial
statements as described in Section 6.10.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any agency, court or other entity that
exercises executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" means any hazardous, dangerous or toxic waste,
substance or material, as those or similar terms are defined in or for purposes
of any applicable federal, state or local Environmental Law, and including
without limitation any asbestos or asbestos-related products, oils, petroleum or
petroleum-derived compounds, CFCS, or PCBs.
"INCENTIVE PAYMENT" means any additional consideration paid to Seller
consistent with the terms described in Section 4.3 hereof.
"INTANGIBLE PROPERTY" means all of Seller's right, title and interest
in and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station as described in Section 2.1(f).
"INTELLECTUAL PROPERTY" means all Seller's right, title and interest in
and to the trademarks, tradenames, service marks, patents, franchises,
copyrights, including registrations and applications for registration of any of
them, slogans, jingles, logos, computer programs and software, trade secrets and
similar materials and rights relating to the Station as listed on Schedule 6.8.
"KNOWLEDGE OF BUYER" means the actual knowledge, after reasonable
inquiry of Buyer's senior management, and the books and records of Buyer.
"KNOWLEDGE OF SELLER" means the actual knowledge, after reasonable
inquiry of Seller's senior management, and the books and records of the Station.
"MATERIAL CONTRACTS" means those leases, contracts and agreements
specifically designated in Schedule 2.1(c)(1) as being "Material Contracts."
"NEW TOWER SITE" means the antenna location described in a construction
permit issued on January 29, 1999, pursuant to FCC File No. BPH-981020IB.
"PERMITTED ENCUMBRANCES" means those permitted liens or encumbrances to
the Purchased Assets described in Section 6.4 and set forth on Schedule 6.4.
"PURCHASE PRICE" shall mean the total consideration for the Purchased
Assets as described in Section 4.1.
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"PURCHASED ASSETS" means those assets which are the subject matter of
this Agreement that Seller shall sell, assign, transfer, convey and deliver to
Buyer at Closing as described in Section 2.1.
"RELOCATION PERIOD" means the three (3) year time period beginning on
the Closing Date, during which Buyer may potentially relocate the Station's
antenna as described in Section 4.3 hereof.
"RELOCATION SITE" means any tower site proposed by Buyer for the
relocation of the Station's antenna as described in Section 4.3 hereof.
"SALES AGREEMENTS" means agreements entered into by Seller for the sale
of time on the Station for cash, as described in Section 2.1(c)(2).
"SELLER" means KJI Broadcasting, LLC, a Massachusetts limited liability
corporation.
"SELLER DOCUMENTS" means those documents, agreements and instruments to
be executed and delivered by Seller in connection with this Agreement as
described in Section 6.1.
"SPECIFIED EVENT" means those broadcast transmission failures described
in Section 8.5(b).
"STUDIO SITE" means the real estate located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, that is currently used as the Station's studio
and office facilities.
"TRADE AGREEMENTS" means agreements entered into by Seller for the sale
of time on the Station in exchange for merchandise or services, including those
listed on Schedule 2.1(c)(1).
"TRADE BALANCE" means the difference between the aggregate value of
time owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, as computed in
accordance with the Station's customary bookkeeping practices. The Trade Balance
is "negative" if the value of time owed as of Closing exceeds the value of goods
and services to be received. The Trade Balance is "positive" if the value of
time owed as of Closing is less than the value of goods and services to be
received.
"TRANSACTION" means the sale and purchase and assignments and
assumptions contemplated by this Agreement and the respective obligations of
Seller and Buyer set forth herein.
"TRANSMITTER SITE" means the real estate located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ that will be used as the New Tower Site.
1.2. OTHER DEFINITIONS. Other capitalized terms used in this Agreement
shall have the meanings ascribed to them herein.
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1.3. NUMBER AND GENDER. Whenever the context so requires, words used in
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be construed to mean or include any other
gender or genders.
1.4. HEADINGS AND CROSS-REFERENCES. The headings of the Sections and
Paragraphs hereof, the Table of Exhibits, and the Table of Schedules have been
included for convenience of reference only, and shall in no way limit or affect
the meaning or interpretation of the specific provisions of this Agreement. All
cross-references to Sections or Paragraphs herein shall mean the Sections or
Paragraphs of this Agreement unless otherwise stated or clearly required by the
context. All references to Schedules herein shall mean the Schedules to this
Agreement. Words such as "herein" and "hereof" shall be deemed to refer to this
Agreement as a whole and not to any particular provision of this Agreement
unless otherwise stated or clearly required by the context. The term "including"
means "including without limitation."
1.5. COMPUTATION OF TIME. Whenever any time period provided for in this
Agreement is measured in "business days" there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the Commission's offices are closed and are not reopened
prior to 7:00 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
2.0 ASSETS TO BE CONVEYED.
2.1. PURCHASED ASSETS. On the Closing Date, Seller shall sell, assign,
transfer, convey and deliver to Buyer free of all liens, encumbrances,
mortgages, security interests of any kind or type whatsoever, all of Seller's
assets used in the conduct of the business and operations of the Station
(collectively referred to as the "Purchased Assets"), including, but not limited
to, the following:
(A) LICENSES. The FCC Licenses, including all of the rights in
and to the call letters of the Station, and all other transferable licenses,
permits and authorizations issued by any other Governmental Authority that are
used in or necessary for the lawful operation of the Station as currently
operated by Seller.
(B) EQUIPMENT. All tangible personal property and fixtures
described in Schedule 6.6, together with supplies, inventory, spare parts and
replacements thereof and improvements and additions thereto made between the
date hereof and the Closing Date (the "Equipment").
(C) CONTRACTS AND AGREEMENTS. The Contracts, Sales Agreements
and Trade Agreements, subject to the following:
(1) Buyer shall be obligated to assume only those
Contracts that are listed in Schedule 2.1(c)(1) or that have been or will have
been entered into in the ordinary course of the Station's business and in
accordance with the terms of this Agreement, between the
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date hereof and the Closing Date, provided that, unless otherwise approved in
writing by Buyer, the obligations of the Station or Buyer under such Contracts
entered into in the ordinary course of business do not exceed Five Thousand
Dollars ($5,000) per annum per Contract or Twenty-five Thousand Dollars
($25,000) per annum in the aggregate or are terminable by the Station on not
more than 30 days' notice.
(2) Buyer shall be obligated to assume only those
Sales Agreements that have been or will have been entered into in the ordinary
course of business, consistent with past practice and in accordance with Section
6.18.
(3) Buyer shall be obligated to assume only those
Trade Agreements that are disclosed at Closing and that are (i) immediately
preemptible for cash time sales; (ii) require the provision of air time only on
a "run of schedule" basis; and (iii) inure or will inure to the benefit of the
Station. Notwithstanding the foregoing, Buyer shall not be obligated to assume
Trade Agreements (including those entered into in the ordinary course of
business) that have an aggregate negative Trade Balance exceeding Twenty
Thousand Dollars ($20,000).
(4) Notwithstanding any provision of this Agreement
to the contrary, this Agreement shall not constitute an agreement to assign any
Contract or other agreement, undertaking or obligation if (i) an attempted
assignment, without the consent required for such assignment, may constitute a
breach thereof or may in any way have a material adverse effect on Seller's
rights thereunder prior to Closing or Buyer's rights thereunder after Closing
and (ii) such consent is not obtained by Seller prior to Closing, provided,
however, that Seller will use its best efforts at its own expense to obtain all
such consents prior to Closing.
(D) PROGRAMMING MATERIALS. All programs, programming material,
and music libraries in whatever form or nature owned by Seller and used or
intended for use in the operation of the Station.
(E) INTELLECTUAL PROPERTY. All Seller's right, title and
interest in and to the Intellectual Property used in the operation of the
Station.
(F) INTANGIBLE PROPERTY. All of Seller's right, title and
interest in and to the goodwill and other intangible assets used or useful in or
arising from the business of the Station, including all customer lists, and
sales plans.
(G) BUSINESS RECORDS. All business records of Seller
(including logs, public file materials and engineering records) relating to or
used in the operation of the Station and not relating solely to Seller's
internal corporate affairs.
(H) STATION RECORDS. All of the Station's proprietary
information, technical information and data, machinery and equipment warranties
(to the extent such warranties are assignable), maps, plans, diagrams,
blueprints, schematics, files, records, studies, data, lists, general accounting
records, books of account, in whatever form, used or held for use for the
business or operation of the Station, including filings with the FCC which
relate to the Station.
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(I) REAL PROPERTY SITE LICENSE. Seller currently holds a
license to use the Real Property described in Schedule 6.13 which is used as the
Station's Transmitter Site.
2.2. EXCLUDED ASSETS. There shall be excluded from the Purchased Assets
and retained by the Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets"):
(A) RECEIVABLES. All Accounts Receivable.
(B) CASH AND INVESTMENTS. All cash and cash equivalents on
hand or in bank accounts and other cash items and investment securities of
Seller on the Closing Date.
(C) INSURANCE. All contracts of insurance (including any cash
surrender value thereof) and all insurance proceeds of settlement and insurance
claims made by Seller on or before the Closing Date.
(D) EMPLOYEE BENEFIT ASSETS. All pension, profit sharing and
savings plans and trusts, and any assets thereof, except that any employee
account balances under any plan qualified under Section 401(k) of the Code shall
be promptly transferred to a plan qualified under Section 401(k) and, at Buyer's
request, made available by or on behalf of Buyer if such employee is hired by
Buyer, to the extent allowed under each such plan and applicable law.
(E) CONTRACTS. All contracts that will have terminated or
expired prior to Closing by their terms and all contracts, agreements,
instruments, undertakings and obligations not expressly assumed by Buyer
hereunder.
(F) TAX ITEMS. All claims, rights and interest in and to any
refunds for federal, state or local taxes to which Seller is entitled for
periods prior to the Closing Date.
(G) CORPORATE RECORDS. Seller's corporate minute books and
other books and records relating to internal corporate minutes.
(H) OTHER ASSETS. All other assets not described in Section
2.1.
3.0 ESCROW ARRANGEMENTS.
3.1 ESCROW DEPOSIT. Simultaneous with the execution of this Agreement,
Buyer shall deposit with Media Services Group, Inc., a cash deposit of Five
Hundred Thousand Dollars ($500,000) (the "Escrow Deposit"). The Escrow Deposit
shall be held in an interest-bearing account and disbursed by Escrow Agent
pursuant to the terms of an escrow agreement in the form attached hereto as
Exhibit 1 (the "Escrow Agreement"). The Escrow Agreement shall be entered into
by Seller, Buyer and Escrow Agent simultaneously with the execution of this
Agreement.
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4.0 PURCHASE PRICE AND METHOD OF PAYMENT.
4.1. CONSIDERATION. The total consideration for the Purchased Assets
(the "Purchase Price") shall be Ten Million Dollars ($10,000,000), payable as
set forth in this Section 4.
4.2. PAYMENT AT CLOSING. At Closing, Buyer shall pay:
(a) Nine Million Five Hundred Thousand Dollars ($9,500,000)
(as adjusted pursuant to Sections 8.5 and 12.1) to Seller by check or wire
transfer of same day funds pursuant to wire transfer instructions which shall be
delivered by Seller to Buyer at least five business days prior to Closing.
(b) Five Hundred Thousand Dollars ($500,000) to Seller by
causing the Escrow Agent to release the Escrow Deposit to Seller, with all
interest earned on the Escrow Deposit remitted to Buyer.
4.3 ADDITIONAL CONSIDERATION. On or before the third anniversary of the
Closing Date (the "Relocation Period"), additional consideration (the "Incentive
Payment"), in an amount to be determined in accordance with subsection (a) of
this Section 4.3, and not to exceed a cumulative total of One Million Dollars
($1,000,000), shall be paid to Seller, provided that the Buyer relocates the
Station's antenna from the New Tower Site to any other tower site that is north
of the New Tower Site and the total population served by the Station's 60 dbU
contour (as calculated pursuant to the FCC's Rules) (the "Relocation Site"),
increases from the population within the 60 dbU contour of the New Tower Site
and the Station commences program test authority from the Relocation Site.
(A) The amount of the Incentive Payment shall be determined as
follows:
Distance from Incentive
New Tower Site Payment
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less than or equal to 1 mile $ 100,000
less than or equal to 2 miles $ 400,000
less than or equal to 3 miles $ 750,000
greater than 3 miles $1,000,000
(B) The distance of the Relocation Site from the New Tower
Site shall be determined by using a computer program used to calculate the
spacing between tower sites for purposes of complying with Section 73.208 of the
FCC's rules.
(C) If Buyer relocates the Station's antenna from the New
Tower Site consistent with this Section 4.3 through successive relocations
during the Relocation Period, then Seller shall be entitled to successive, but
cumulative, Incentive Payments. However, any successive Incentive Payment made
to Seller shall be reduced by the amount of any Incentive
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Payment previously paid to Seller so that the total Incentive Payment made to
Seller shall not exceed $1,000,000.
(D) If any Incentive Payment shall be required to be paid
during the Relocation Period, such payment shall be due sixty (60) days after
the date that Buyer commences program test authority for the Station at the
Relocation Site.
4.4. ALLOCATION. The Purchase Price shall be allocated to the Purchased
Assets in accordance with an allocation schedule to be prepared by Buyer
pursuant to Section 1060 of the Code and mutually agreed upon by Seller and
Buyer. Seller and Buyer shall use such allocation for tax accounting (including
preparation of IRS Form 8594), and all other purposes. If Seller and Buyer have
not agreed upon the allocation prior to the Closing Date, Closing shall take
place as scheduled and any dispute shall be resolved by a qualified media
appraiser mutually acceptable to Seller and Buyer, whose decision shall be final
and whose fees and expenses shall be paid one-half by Seller and one-half by
Buyer. If the allocation must be determined by a media appraiser, Seller and
Buyer agree to cooperate in good faith so that such appraisal may be completed
expeditiously.
4.5. SELLER'S LIABILITIES. Buyer does not and shall not assume or be
deemed to assume, pursuant to this Agreement or otherwise, any agreements,
liabilities, undertakings, obligations or commitments of Seller or the Station
of any nature whatsoever except: (i) liabilities accruing after Closing under
the Contracts, Sales Agreements and Trade Agreements listed in Schedule
2.1(c)(1) or otherwise expressly assumed by Buyer pursuant to, and subject to,
Sections 2.1(c), 6.18 and 10.2(j) provided, that, Buyer shall not assume
liability for any breaches, violations or defaults under the Contracts, Sales
Agreements and Trade Agreements that occurred prior to Closing; and (ii)
prorated items that are to be paid by Buyer after Closing pursuant to Section
12.1.
5.0. [SECTION INTENTIONALLY OMITTED]
6.0. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller hereby makes to
and for the benefit of Buyer, the following representations, warranties and
covenants:
6.1. EXISTENCE, POWER AND IDENTITY. Seller is a limited liability
corporation duly organized and validly existing under the laws of The
Commonwealth of Massachusetts with corporate power and authority as a limited
liability company (a) to own, lease and use the Purchased Assets as currently
owned, leased and used, (b) to conduct the business and operation of the Station
as currently conducted and (c) to execute and deliver this Agreement and each
other document, agreement and instrument to be executed and delivered by Seller
in connection with this Agreement (collectively, the "Seller Documents"), and to
perform and comply with all of the terms, obligations and covenants to be
performed and complied with by Seller hereunder and thereunder. The addresses of
Seller's chief executive office and all of Seller's additional places of
business, and all places where any of the tangible personal property included in
the Purchased Assets is now located, or has been located during the past 180
days, are correctly
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listed in Schedule 6.1. Except as set forth in Schedule 6.1, since June 1, 1998,
Seller has not been known by or used, nor, to the best of Seller's knowledge,
has any prior owner of the Station been known by or used, any corporate,
partnership, fictitious or other name in the conduct of the Station's business
or in connection with the ownership, use or operation of the Purchased Assets.
6.2. BINDING EFFECT. The execution, delivery and performance by Seller
of this Agreement has been and the Seller Documents will be duly authorized by
all necessary limited liability corporate action, and copies of those
authorizing resolutions, certified by an officer, member or manager of Seller,
shall be delivered to Buyer at Closing. No other limited liability corporate
action by Seller is required for Seller's execution, delivery and performance of
this Agreement. This Agreement has been duly and validly executed and delivered
by Seller to Buyer and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject to
bankruptcy, reorganization, fraudulent conveyance, insolvency, moratorium and
similar laws relating to or affecting creditors, and other obligees' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles.
6.3. NO VIOLATION. Except as set forth on Schedule 6.3, none of (i) the
execution, delivery and performance by Seller of this Agreement or any of the
Seller Documents, (ii) the consummation of the Transaction, or (iii) Seller's
compliance with the terms or conditions hereof will, with or without the giving
of notice or the lapse of time or both, conflict with, breach the terms or
conditions of, constitute a default under, or violate (x) Seller's articles of
incorporation or operating agreement, (y) any judgment, decree, order, consent,
agreement, lease or other instrument (including any Contract, Sales Agreement or
Trade Agreement) to which Seller is a party or by which Seller or any of its
assets (including the Purchased Assets) or the Station is or may be legally
bound or affected, or (z) any law, rule, regulation or ordinance of any
Governmental Authority applicable to Seller or any of its assets (including the
Purchased Assets) or the operation of the Station.
6.4. CONVEYANCE OF ASSETS. At Closing, Seller shall convey to Buyer
good and marketable title to all the Purchased Assets, free and clear of all
liens, pledges, collateral assignments, security interests, capital or financing
leases, easements, covenants, restrictions and encumbrances or other defects of
title except: (i) the inchoate lien for current taxes or other governmental
charges not yet due and payable and that will be prorated between Seller and
Buyer pursuant to Section 12.1; and (ii) the Permitted Encumbrances.
6.5. GOVERNMENTAL AUTHORIZATIONS. Except for the FCC Licenses, no
licenses, permits, or authorizations from any Governmental Authority are
required to own, use or operate the Purchased Assets, to operate the Station or
to conduct Seller's business as currently operated and conducted by Seller. The
FCC Licenses are all the Commission authorizations held by Seller with respect
to the Station, and are all the Commission authorizations used in or necessary
for the lawful operation of the Station as currently operated by Seller. The FCC
Licenses are in full force and effect, are subject to no conditions or
restrictions other than those which appear on their face and are unimpaired by
any acts or omissions of Seller, Seller's officers, employees or agents. Seller
has delivered true and complete copies of all FCC Licenses to Buyer. There is
not
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pending or, to the Knowledge of Seller, threatened, any action by or before the
Commission or any other Governmental Authority to revoke, cancel, rescind or
modify any of the FCC Licenses (other than proceedings to amend Commission rules
of general applicability or otherwise affecting the broadcast industry
generally), and there is not now issued, outstanding or pending or, to the
Knowledge of Seller, threatened, by or before the Commission or any other
Governmental Authority, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against Seller or
otherwise with respect to the Station. The Station is operating in compliance
with all FCC Licenses, the Communications Act of 1934, as amended (the
"Communications Act"), and the current rules, regulations, policies and
practices of the Commission. Except as otherwise set forth in Schedule 6.5, the
Commission's most recent renewals of the FCC Licenses were not challenged by any
petition to deny or any competing application. Seller has no knowledge of any
facts relating to it that, under the Communications Act or the current rules,
regulations, policies and practices of the Commission may cause the Commission
to deny Commission renewal of the FCC Licenses or deny Commission consent to the
Transaction.
6.6. EQUIPMENT. Seller has good and marketable title, both legal and
equitable, to the Equipment. The Equipment, together with any improvements and
additions thereto and replacements thereof less any retirements or other
dispositions as permitted by this Agreement between the date hereof and the
Closing Date, will, at Closing, be all the tangible personal property used or
useful in the lawful operation of the Station as currently operated by Seller.
Except as specifically indicated to the contrary in Schedule 6.6, all Equipment
is serviceable, in good operating condition (reasonable wear and tear excepted).
All items of transmitting and studio equipment included in the Equipment (i)
have been maintained in a manner consistent with generally accepted standards of
good engineering practice and (ii) will permit the Station to operate in
accordance with the terms of the FCC Licenses.
6.7. CONTRACTS. Seller has made available to Buyer or its
representatives complete and correct copies of all Contracts and Trade
Agreements listed on Schedule 2.1(c)(1) hereto. The list of Trade Agreements on
Schedule 2.1(c)(1) is accurate and complete. Except for Sales Agreements and
Trade Agreements that comply with the terms of this Agreement, Schedule
2.1(c)(1) includes all the contracts, leases, and agreements to which Seller is
a party and which Buyer has agreed to assume, other than those contracts that
will be performed in full prior to the Closing. To the Knowledge of Seller, each
Contract is in full force and effect and is unimpaired by any acts or omissions
of Seller, Seller's employees or agents, or Seller's officers. Except as set
forth on Schedule 2.1(c)(1), there has not occurred as to any Contract any event
of default by Seller or any event that, with notice, the lapse of time or
otherwise, could become an event of default by Seller. To the Knowledge of
Seller, there has not occurred as to any Contract any default by any other party
thereto or any event that, with notice, the lapse of time or otherwise, or at
the election of any person other than Seller, could become an event of default
by such party. Those Contracts whose stated duration extends beyond the Closing
Date will, at Closing, be in full force and effect, unimpaired by any acts or
omissions of Seller, Seller's employees or agents, or Seller's officers. If any
Contract requires the consent of any third party in order for Seller to assign
that Contract to Buyer, Seller shall use its best efforts to obtain at its own
expense such consent prior to Closing.
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6.8. PROMOTIONAL RIGHTS. The Intellectual Property set forth on
Schedule 6.8 includes all call signs and trademarks that Seller is transferring
to Buyer, used to promote or identify the Station. Except as set forth on
Schedule 6.8, the Intellectual Property is in good standing and uncontested by
any third party. Except as set forth on Schedule 6.8, to the Knowledge of Seller
there is no infringement or unlawful or unauthorized use of those promotional
rights, including the use of any call sign, slogan or logo by any broadcast or
cable station in the Boston metropolitan area that may be confusingly similar to
those currently used by the Station. Except as set forth on Schedule 6.8, to the
Knowledge of Seller, the operations of the Station do not infringe, and no one
has asserted to Seller that such operations infringe, any copyright, trademark,
tradename, service ▇▇▇▇ or other similar right of any other party.
6.9. INSURANCE. Schedule 6.9 lists all insurance policies held by
Seller with respect to the Purchased Assets and the business and operation of
the Station. Such insurance policies are in full force and effect, all premiums
with respect thereto are currently paid and Seller is in compliance with the
terms thereof. Seller has not received any notice from any issuer of any such
policies of its intention to cancel, terminate, or refuse to renew any policy
issued by it. Seller will maintain the insurance policies listed on Schedule 6.9
in full force and effect through the Closing Date.
6.10. FINANCIAL STATEMENTS.
(a) Seller has furnished Buyer with the audited Financial
Statements for the fiscal year ending December 31, 1998, and will furnish Buyer
with unaudited Financial Statements for the period ending not more than thirty
(30) days prior to the Closing Date. The Financial Statements : (i) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved and as compared with prior
periods; and (ii) fairly present Seller's financial position, income, expenses,
assets, liabilities, shareholder's equity and the results of operations of the
Station as of the dates and for the periods indicated. Since December 31, 1998,
there has been no material adverse change in the business, assets, properties or
condition (financial or otherwise) of the business since the preparation of the
most recent annual Financial Statement. No event has occurred and, Seller has no
knowledge that prior to Closing, any event will have occurred that would make
such Financial Statements misleading in any material respect.
(b) Except as reflected in the most recently available balance
sheets, including the notes thereto or otherwise disclosed in this Agreement or
the Schedules hereto, and except for the current liabilities and obligations
incurred in the ordinary course of business of the Station (not including for
this purpose any tort-like liabilities or breach of contract) since the date of
the most recently available balance sheets, there exist no liabilities or
obligations of Seller, contingent or absolute, matured or unmatured, known or
unknown. Except as set forth on Schedule 6.10(b) since the date of the most
recently available balance sheets, (i) Seller has not made any contract,
agreement or commitment or incurred any obligation or liability (contingent or
otherwise), except in the ordinary course of business and consistent with past
business practices, (ii) there has not been any discharge or satisfaction of any
obligation or liability owed
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by Seller, which is not in the ordinary course of business or which is
inconsistent with past business practices, (iii) there has not occurred any sale
of or loss or material injury to the business, or any material adverse change in
the business or in the condition (financial or otherwise) of the Station, (iv)
Seller has operated the business in the ordinary course and (v) Seller has not
increased the salaries or any other compensation of any of its employees or
agreed to the payment of any bonuses. The monthly balance sheets (i) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved and as compared with prior
periods; and (ii) fairly present Company's financial position, income, expenses,
assets, liabilities, members' equity and the results of operations of the
Station as of the dates and for the periods indicated, subject to year end
adjustments which do not materially affect the operations of Seller.
6.11. EMPLOYEES. Seller has no written or oral employment agreements or
any other arrangement with any employee which would in any respect obligate or
cause any liability to Buyer at any time.
6.12. EMPLOYEE BENEFIT PLANS. Seller has no obligations or liabilities
(whether accrued, absolute, contingent or unliquidated, whether or not known,
and whether due or to become due) with respect to (i) any "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, and regulations thereunder ("ERISA"))
("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) ("Welfare Plan"); (iii) any deferred compensation, bonus,
stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement ("Other Plan") or any (iv) "employee benefit plan"
(as defined in Section 3(3) of ERISA), which would in any respect obligate or
cause any liability to Buyer at any time.
6.13. REAL PROPERTY. Seller holds a license to use the real property
described in Schedule 6.13 which is used as the Station's Transmitter Site.
Except as listed on Schedule 6.13, all of the improvements, and all heating and
air conditioning equipment, plumbing, electrical and other mechanical
facilities, and the roof, walls and other structural components which are part
of, or located in, such improvements, are in good operating condition and
repair, comply in all material respects with applicable zoning laws and the
building, health, fire and environmental protection codes of all applicable
governmental jurisdictions, and do not require any repairs other than normal
routine maintenance to maintain them in good condition and repair. None of the
improvements have any structural defects to the Knowledge of Seller. No portion
of the real property described in Schedule 6.13 is the subject of any
condemnation or eminent domain proceedings currently instituted or pending, and
to the Knowledge of Seller, no such proceedings are threatened. There are no
condemnation, zoning or other land use regulations proceedings instituted or, to
the Knowledge of Seller, planned to be instituted, which would materially affect
the use and operations of the real property for any lawful purpose, and Seller
has not received notice of any special assessment proceedings materially
affecting the real property. The real property has direct and unobstructed
access to all public utilities necessary for the operation of the Station.
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6.14. ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 6.14
and to the Knowledge of Seller, (i) no Hazardous Substances have been treated,
stored, used, released or disposed of on the Transmitter Site in any manner that
would cause Buyer to incur material liability under any Environmental Laws; (ii)
Seller is not liable for cleanup or response costs with respect to any present
or past emission, discharge, or release of any Hazardous Substances; (iii) no
"underground storage tank" (as that term is defined in regulations promulgated
by the federal Environmental Protection Agency) is used in the operation of the
Station or is located on the Transmitter Site; (iv) there are no pending
actions, suits, claims, legal proceedings or any other proceedings based on
environmental conditions or noncompliance at the Transmitter Site, or any part
thereof, or otherwise arising from Seller's activities involving Hazardous
Substances; (v) there are no conditions, facilities, procedures or any other
facts or circumstances at the Transmitter Site which constitute noncompliance
with Environmental Laws or regulations; and (vi) there are no structures,
improvements, equipment, activities, fixtures or facilities at the Transmitter
Site which are constructed with, use or otherwise contain Hazardous Substances,
including, but without limitation, asbestos or polychlorinated biphenyls.
6.15. COMPLIANCE WITH LAW. There is no outstanding complaint, citation,
or notice issued by any Governmental Authority asserting that Seller is in
violation of any law, regulation, rule, ordinance, order, decree or other
material requirement of any Governmental Authority (including any applicable
statutes, ordinances or codes relating to zoning and land use, health and
sanitation, environmental protection, occupational safety and the use of
electric power) affecting the Purchased Assets or the business or operations of
the Station, and Seller is in material compliance with all such laws,
regulations, rules, ordinances, decrees, orders and requirements. Without
limiting the foregoing:
(a) The Station's transmitting and studio equipment is in
material respects operating in accordance with the terms and conditions of the
FCC Licenses, all underlying construction permits, and the rules, regulations,
practices and policies of the Commission, including all requirements concerning
equipment authorization and human exposure to radio frequency radiation.
(b) All ownership reports, employment reports, tax returns and
other material documents required to be filed by Seller with the Commission or
other Governmental Authority have been filed; such reports and filings are
accurate and complete in all material respects; such items as are required to be
placed in the Station's local public records file have been placed in such file;
all proofs of performance and measurements that are required to be made by
Seller with respect to the Station's transmission facilities have been completed
and filed at the Station; and all information contained in the foregoing
documents is true, complete and accurate.
(c) The location of the Station's main studio complies with
the FCC's rules.
(d) Seller has paid to the Commission the regulatory fees due
for the Station for the years 1994-98.
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6.16. LITIGATION. Except for proceedings affecting radio broadcasters
generally and except as set forth on Schedule 6.3, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Seller, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the business or operations of the Station or to the Purchased Assets. Except as
set forth on Schedule 6.3, there is no other litigation, action, suit,
complaint, claim, investigation or proceeding pending, or to the Knowledge of
Seller, threatened that may give rise to any claim against any of the Purchased
Assets or adversely affect Seller's ability to consummate the Transaction as
provided herein. Seller is not aware of any facts that could reasonably result
in any such proceedings.
6.17. INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character, including bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Station Assets or the Purchased Assets are pending or, to the Knowledge of
Seller, threatened. Seller has not made an assignment for the benefit of
creditors.
6.18. SALES AGREEMENTS. Except as disclosed in Schedule 6.18, the Sales
Agreements in existence on the date hereof have been entered into in the
ordinary course of the Station's business, at rates consistent with Seller's
usual past practices. Such Sales Agreements, in certain cases, cover advertising
with respect to both the Station as well as its affiliated Station WBET-AM
and/or may be for a term longer than 10 weeks and not cancelable on 15 days or
less notice. With respect to such Sales Agreements described herein, the Seller
shall exercise its best reasonable efforts consistent with Buyer's request at
Closing to: (a) amend such Sales Agreements such that, as of the Closing Date,
remaining broadcasting time otherwise attributable to the Station after the
Closing Date will be moved to WBET-AM; (b) terminate such Sales Agreements; or
(c) assign such Sales Agreements to Buyer. With respect to any Sales Agreements
entered into on or after the date of this Agreement, Seller shall not enter into
any contract for a term longer than 10 weeks, or if longer, not terminable by
the Station upon not more than 15 days notice without the prior written consent
of Buyer. Such consent of Buyer shall not be unreasonably withheld.
6.19. LIABILITIES. There are no known liabilities or obligations of
Seller relating to the Station, whether related to tax or non-tax matters, due
or not yet due, except as and to the extent set forth on the most recent
Financial Statements described in Section 6.10.
6.20. SUFFICIENCY OF ASSETS. At the time of Closing, the Purchased
Assets in conjunction with the site license referred to in Section 2.1(i) will
be sufficient to transmit signals under the Station's applicable FCC License
with respect to the modified station facilities for the Station at the New Tower
Site.
6.21. RELATED PARTIES. Except as disclosed in Schedule 6.21 neither
Seller nor any member, officer or director of Seller has any interest whatsoever
in any corporation, firm, partnership or other business enterprise which has had
any business transactions with Seller relating to the Purchased Assets or the
Station, and no shareholder, officer or director of Seller has entered into any
transactions with Seller relating to the Purchased Assets or the Station.
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6.22. TAXES. The Seller has timely filed with all appropriate
Governmental Authority all federal, state, commonwealth, local, and other tax or
information returns and tax reports (including, but not limited to, all income
tax, unemployment compensation, social security, payroll, sales and use, profit,
excise, privilege, occupation, property, ad valorem, franchise, license, school
and any other tax under the laws of the United States or of any state or any
commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof. Seller
has paid in full all federal, state, commonwealth, foreign, local and other
governmental taxes, estimated taxes, interest, penalties, assessments and
deficiencies (collectively, "Taxes") which have become due pursuant to such
returns or without returns or pursuant to any assessments received by Seller. To
the Knowledge of Seller, such returns and forms are true, correct and complete
in all material respects, and Seller has no liability for any Taxes in excess of
the Taxes shown on such returns. Seller is not a party to any pending action or
proceeding and, to the Knowledge of Seller, there is no action or proceeding
threatened by any Governmental Authority against Seller for assessment or
collection of any Taxes, and no unresolved claim for assessment or collection of
any Taxes has been asserted against Seller.
6.23. NO MISLEADING STATEMENTS. This Agreement, and any disclosures
made pursuant hereto will not contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated in order to
make the statement, in light of the circumstances in which it is made, not
misleading. Seller represents and warrants that it will continue to disclose to
Buyer, any fact that Seller is obligated to disclose to assure the continuing
accuracy of the representations and warranties contained in this Section 6.
7.0 BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby makes to and
for the benefit of Seller, the following representations, warranties and
covenants:
7.1. EXISTENCE AND POWER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to assume and perform this Agreement,
and as of the Closing Date will be authorized to do business in The Commonwealth
of Massachusetts.
7.2. BINDING EFFECT. The execution, delivery and performance by Buyer
of this Agreement has been, and each other document, agreement and instrument to
be executed and delivered by Buyer in connection with this Agreement
(collectively, the "Buyer Documents") will be duly authorized by all necessary
corporate action, and copies of those authorizing resolutions, certified by
Buyer's Secretary shall be delivered to Seller at Closing. This Agreement has
been, and each of the Buyer Documents will be, duly and validly executed and
delivered by Buyer to Seller and constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms, subject to
bankruptcy, reorganization, fraudulent conveyance, insolvency, moratorium and
similar laws relating to or affecting creditors' and other obligees' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles.
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7.3. NO VIOLATION. None of (i) the execution, delivery and performance
by Buyer of this Agreement or any of the Buyer Documents, (ii) the consummation
of the Transaction, or (iii) Buyer's compliance with the terms and conditions
hereof will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms or conditions of, constitute a default under, or
violate (x) Buyer's articles of incorporation or by-laws or (y) any judgment,
decree, order, consent agreement, lease or other instrument to which Buyer is a
party or by which Buyer is legally bound.
7.4. LITIGATION. There is no litigation, action, suit, complaint,
proceeding or investigation, pending or, to the Knowledge of Buyer, threatened
that may adversely affect Buyer's ability to consummate the Transaction as
provided herein.
7.5. LICENSEE QUALIFICATIONS. To the Knowledge of Buyer there is no
fact that would, under the rules and regulations of the Commission, disqualify
Buyer from being the assignee of the FCC Licenses or the owner and operator of
the Station. Should Buyer become aware of any such fact, it will so inform
Seller, and Buyer will use commercially reasonable efforts to remove any such
disqualification.
8.0 PRE-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
respect to the period prior to Closing:
8.1. APPLICATION FOR COMMISSION CONSENT. Within five (5) business days
from the date of this Agreement, Seller and Buyer shall join in and file the
Assignment Application, and they shall diligently take all steps necessary or
desirable and proper expeditiously to prosecute the Assignment Application and
to obtain the Commission's determination that grant of the Assignment
Application will serve the public interest, convenience and necessity. The
failure by either party to timely file or diligently prosecute its portion of
the Assignment Application shall be deemed a material breach of this Agreement.
Each party shall promptly provide the other with a copy of any pleading, order
or other document served on the other relating to the Assignment Application. In
the event that Closing occurs prior to a Final Order, then each party's
obligations hereunder shall survive the Closing.
8.2. ACCESS. Between the date hereof and the Closing Date, Seller
shall, in consultation with Buyer, give Buyer and representatives of Buyer
reasonable access during normal business hours to the Purchased Assets, the
Station, the employees of Seller and the Station and the books and records of
Seller relating to the business and operations of the Station. It is expressly
understood that, pursuant to this Section, Buyer, at its expense, shall be
entitled to conduct such engineering inspections of the Station, such
environmental assessments and surveys of the Transmitter Site, and such reviews
of the Station's financial records as Buyer may desire, so long as the same do
not unreasonably interfere with Seller's operation of the Station. No inspection
or investigation made by or on behalf of Buyer, or Buyer's failure to make any
inspection or investigation, shall affect Seller's representations, warranties
and covenants hereunder or be deemed to constitute a waiver of any of those
representations, warranties and covenants.
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8.3. MATERIAL ADVERSE CHANGES; FINANCIAL STATEMENTS. Through the
Closing Date:
(a) Seller shall promptly notify Buyer of any event of which
Seller obtains knowledge which has caused or is likely to cause a material
adverse change to the operations of the Station.
(b) Seller shall furnish to Buyer (i) monthly Financial
Statements for Seller and (ii) such other reports as Buyer may reasonably
request relating to Seller. Each of the Financial Statements delivered pursuant
to this Section 8.3(b) shall be prepared in accordance with GAAP consistently
applied during the periods covered (except as disclosed therein).
8.4. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement
and the Closing Date:
(a) Seller shall operate the Station in a manner consistent
with Seller's and the Station's past practice and in material compliance with
all applicable laws, regulations, rules, decrees, ordinances, orders and
requirements of the Commission and all other Governmental Authority. Seller
shall promptly notify Buyer of any actions or proceedings that from the date
hereof are commenced against Seller or the Station or, to the Knowledge of
Seller, against any officer, director, employee, consultant, agent or other
representative of Seller with respect to the business of the Station or the
Purchased Assets.
(b) Seller shall: (i) use the Purchased Assets only for the
operation of the Station; (ii) maintain the Purchased Assets in substantially
their present condition (reasonable wear and tear in normal use and damage due
to unavoidable casualty excepted); (iii) replace and/or repair the Purchased
Assets as necessary in the ordinary course of business; (iv) maintain all
inventories of supplies, tubes and spare parts at levels at least equivalent to
those existing on the date of this Agreement; and (v) promptly give Buyer
written notice of any unusual or materially adverse developments with respect to
the Purchased Assets or the business or operations of the Station.
(c) Seller shall maintain the Station's Business Records in
the usual, regular and ordinary manner, on a basis consistent with prior
periods.
(d) Seller shall not: (i) sell, lease, encumber or otherwise
dispose of any Purchased Assets or any interest therein except in the ordinary
course of business and only if any property disposed of is replaced by property
of like or better value, quality and utility prior to Closing; (ii) cancel,
terminate, modify, amend or renew any of the Contracts without Buyer's express
prior written consent; or (iii) except to the extent expressly permitted in
Section 2.1(c), enter into any Contract or other agreement, undertaking or
obligation or assume any liability that may impose any obligation on Buyer after
Closing, whether Seller is acting within or outside of the ordinary course of
the Station's business, without Buyer's prior written consent.
(e) Seller and the Station will enter into Sales Agreements
only in the ordinary course of the Station's business at commercially reasonable
rates and each such Sales Agreement
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shall have a term not longer than 10 weeks or, if longer, shall be terminable by
the Station upon not more than 15 days notice.
(f) Seller and the Station will enter into Trade Agreements
only in the ordinary course of the Station's business and only if such Trade
Agreements are (i) immediately preemptible for cash time sales trade; (ii)
require the provision of air time only on a "run of schedule", basis; and (iii)
inure or will inure to the benefit of the Station.
(g) Seller shall use its best efforts to preserve the goodwill
and business of the Station's advertisers, suppliers and others having business
relations with the Station, and to continue to conduct financial operations of
the Station, including credit and collection policies, with no less effort, as
in the prior conduct of the business of the Station.
(h) Seller shall not issue, sell or deliver any shares of
stock of Seller or grant any options, warrants or other rights to acquire the
stock of Seller.
(i) Seller shall not make or agree to any material amendment
to any FCC License relating to the Station.
(j) merge or consolidate with any other corporation, acquire
control of any other corporation or business entity, or take any steps incident
to, or in furtherance of, any of such actions, whether by entering into an
agreement providing therefore or otherwise.
(k) solicit, either directly or indirectly, initiate,
encourage or accept any offer for the purchase or acquisition of the Purchased
Assets by any party other than Buyer.
(l) terminate without comparable replacement or fail to renew
any insurance coverage applicable to the assets or properties of Seller.
(m) take any action or fail to take any action that would
cause the Seller to breach the representations, warranties and covenants
contained in this Agreement.
(n) Seller shall promptly respond to any complaints of
blanketing interference caused by operation from the modified Station facilities
at the New Tower Site.
8.5. DAMAGE.
(A) RISK OF LOSS. The risk of loss or damage, confiscation or
condemnation of the Purchased Assets shall be borne by Seller at all times prior
to Closing. In the event of material loss or damage, Seller shall promptly
notify Buyer thereof and use its best efforts to repair, replace or restore the
lost or damaged property to its former condition as soon as possible. If the
cost of repairing, replacing or restoring any lost or damaged property is Fifty
Thousand Dollars ($50,000) or less, and Seller has not repaired, replaced or
restored such property prior to the Closing Date, Closing shall occur as
scheduled and Buyer may deduct from the Purchase Price paid at Closing the
amount necessary to restore the lost or damaged property to its former
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condition. If the cost to repair, replace, or restore the lost or damaged
property exceeds Fifty Thousands Dollars ($50,000), and Seller has not repaired,
replaced or restored such property prior to the Closing Date to the satisfaction
of Buyer, Buyer may, at its option:
(1) elect to consummate the Closing in which event
Buyer may deduct from the Purchase Price paid at Closing the amount necessary to
restore the lost or damaged property to its former condition in which event
Seller shall be entitled to all proceeds under any applicable insurance policies
with respect to such claim; or
(2) elect to postpone the Closing, with prior consent
of the Commission if necessary, for such reasonable period of time (not to
exceed ninety (90) days) as is necessary for Seller to repair, replace or
restore the lost or damaged property to its former condition.
If, after the expiration of such extension period the lost or damaged
property has not been fully repaired, replaced or restored to Buyer's
satisfaction, Buyer may terminate this Agreement, in which event the Escrow
Deposit and all interest earned thereon shall be returned to Buyer and the
parties shall be released and discharged from any further obligation hereunder.
(B) FAILURE OF BROADCAST TRANSMISSIONS. Seller shall give
prompt written notice to Buyer if any of the following (a "Specified Event")
shall occur and continue for a period of more than eight (8) consecutive hours:
(i) the transmission of the regular broadcast programming of the Station in the
normal and usual manner is interrupted or discontinued; or (ii) the Station is
operated at less than its licensed antenna height above average terrain or at
less than eighty percent (80%) of its licensed effective radiated power. If,
prior to Closing, the Station is not operated at its licensed operating
parameters for more than thirty six (36) hours (or, in the event of force
majeure or utility failure affecting generally the market served by the Station,
ninety-six (96) hours), whether or not consecutive, during any period of thirty
(30) consecutive days, or if there are five (5) or more Specified Events each
lasting more than eight (8) consecutive hours, then Buyer may, at its option:
(i) terminate this Agreement, or (ii) proceed in the manner set forth in
Paragraph 8.5(a)(1) or 8.5(a)(2). In the event of termination of this Agreement
by Buyer pursuant to this Section, the Escrow Deposit together with all interest
accrued thereon shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
(C) RESOLUTION OF DISAGREEMENTS. If the parties are unable to
agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property, the adequacy of any repair, replacement,
or restoration of any lost or damaged property, or any other matter arising
under this Section, the disagreement shall be referred promptly to a qualified
consulting communications engineer mutually acceptable to Seller and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, and whose fees and expenses shall be paid
one-half each by Seller and Buyer.
8.6. ADMINISTRATIVE VIOLATIONS. If Seller receives any finding, order,
complaint, citation or notice prior to Closing which states that any aspect of
the Station's operation violates
-20-
or may violate any rule, regulation or order of the Commission or of any other
Governmental Authority (an "Administrative Violation"), including, any rule,
regulation or order concerning environmental protection, Seller shall promptly
notify Buyer of the Administrative Violation, use its best efforts to remove or
correct the Administrative Violation, and be responsible prior to Closing for
the payment of all costs associated therewith, including any fines or back pay
that may be assessed.
8.7. BULK SALES ACT. Seller shall be responsible for compliance with
the provisions of any bulk sales statute applicable to the Transaction, and
shall indemnify and hold Buyer harmless from and against any claims, actions,
liabilities and all costs and expenses, including reasonable legal fees,
incurred or suffered by Buyer as a result of the failure to comply with any such
statute.
8.8. CONTROL OF STATION. The Transaction shall not be consummated until
after the Commission has given its written consent thereto and between the date
of this Agreement and the Closing Date, Seller shall control, supervise and
direct the operation of the Station.
8.9. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. Between the
date hereof and the Closing Date, Seller, its members, officers, directors and
employees shall cooperate and Seller shall cause its independent accounting firm
to cooperate with Buyer for the purpose of preparing Financial Statements
reviewed by Buyer's independent accountants for purposes of including such
statements in any reports filed by Buyer with any Governmental Authority. Buyer
shall be permitted to disclose the audited Financial Statements for 1998 as well
as unaudited Financial Statements for any period subsequent to 1998 available
prior to Closing and this Agreement in any filings submitted by the Buyer to any
Governmental Authority.
8.10. TIME BROKERAGE AGREEMENT. Simultaneously with the execution of
this Agreement, Seller and Buyer shall enter into a Time Brokerage Agreement
("TBA") in the form attached hereto as Exhibit 2. Failure by Buyer to commence
operations under the terms of the TBA shall not be deemed a breach of this
Agreement.
8.11. STUDIO TRANSMITTER LINK. Seller shall apply with the Commission
for a license for a studio transmitter link should the Station's operation from
the Transmitter Site so require.
8.12. CLOSING OBLIGATIONS. Seller and Buyer shall make commercially
reasonable efforts to satisfy the conditions precedent to Closing.
9.0 STATUS OF EMPLOYEES. All Station employees shall be and remain Seller's
employees, with Seller having full authority and control over their actions, and
Buyer shall not assume the status of an employer or a joint employer of, or
incur or be subject to any liability or obligation of an employer with respect
to, any such employees unless and until actually hired by Buyer. Seller shall be
solely responsible for any and all liabilities and obligations Seller may have
to its employees, including, compensation, severance pay and accrued vacation
time and sick leave. Seller shall be solely responsible for any and all
liabilities, penalties, fines or other
-21-
sanctions that may be assessed or otherwise due under such laws on account of
the Transaction and the dismissal or termination of any of Seller's employees.
10.0 CONDITIONS PRECEDENT.
10.1. MUTUAL CONDITIONS. The respective obligations of both Buyer and
Seller to consummate the Transaction are subject to the satisfaction of each of
the following conditions:
(A) APPROVAL OF ASSIGNMENT APPLICATION. The Commission shall
have granted the Assignment Application, and such grant shall be in full force
and effect on the Closing Date.
(B) ABSENCE OF LITIGATION. As of the Closing Date, no
litigation, action, suit or proceeding enjoining, restraining or prohibiting the
consummation of the Transaction shall be pending before any court, the
Commission or any other Governmental Authority or arbitrator; provided, however,
that this Section may not be invoked by a party if any such litigation, action,
suit or proceeding was solicited or encouraged by, or instituted as a result of
any act or omission of, such party.
10.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION. In addition to the
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Buyer to consummate the Transaction is subject, at Buyer's option, to the
satisfaction or waiver by Buyer of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller to Buyer shall be true, complete, and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
(B) COMPLIANCE WITH CONDITIONS. All of the terms, conditions
and covenants to be complied with or performed by Seller on or before the
Closing Date under this Agreement and the Seller Documents shall have been duly
complied with and performed in all material respects.
(C) DISCHARGE OF LIENS. Seller shall have obtained and
delivered to Buyer, at Seller's expense, at least 10 days prior to Closing, a
report prepared by C.T. Corporation System (or similar firm reasonably
acceptable to Buyer) showing the results of searches of lien, tax, judgment and
litigation records, demonstrating that the Purchased Assets are being conveyed
to Buyer free and clear of all liens, security interests and encumbrances except
for Permitted Encumbrances or otherwise consented to by Buyer in writing. The
record searches described in the report shall have taken place no more than 15
days prior to the Closing Date.
(D) THIRD-PARTY CONSENTS. Seller shall have obtained (i) all
required third-party consents to Buyer's assumption of the Material Contracts,
such that Buyer will, after Closing, enjoy all the rights and privileges of
Seller under the Material Contracts subject only to the same obligations as are
binding on Seller pursuant to the Material Contracts' current terms;
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and (ii) all other requisite third-party consents and approvals which may be
necessary to consummate the Transaction.
(E) ESTOPPEL CERTIFICATES. At Closing, Seller shall deliver to
Buyer a certificate executed by the other party to each Material Contract,
including the licensor under the license for the Transmitter Site, dated no more
than 15 days prior to the Closing Date, stating (i) that such Contract is in
full force and effect and has not been amended or modified; (ii) the date to
which all rent and/or other payments due thereunder have been paid; and (iii)
that Seller is not in breach or default under such Material Contract, and that
no event has occurred that, with notice or the passage of time or both, would
constitute a breach or default thereunder by Seller.
(F) NO MATERIAL ADVERSE CHANGE. The Purchased Assets shall not
have suffered a material adverse change since the date of this Agreement, and
there shall have been no changes since the date of this Agreement in the
business, operations, condition (financial or otherwise), properties, assets or
liabilities of Seller, of the Station or of the Purchased Assets, except changes
contemplated by this Agreement and changes which are not (either individually or
in the aggregate) materially adverse to the Station.
(G) OPINION OF SELLER'S COUNSEL. At Closing, Seller shall
deliver to Buyer the written opinion or opinions of Seller's counsel, dated the
Closing Date, in scope and form satisfactory to Buyer, to the following effect:
(1) Seller is a limited liability corporation duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts with all requisite corporate power and authority
to enter into and perform this Agreement.
(2) This Agreement has been duly executed and
delivered by Seller and such action has been duly authorized by all necessary
corporate action. This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
subject to bankruptcy, reorganization, fraudulent conveyance, insolvency,
moratorium and similar laws relating to or affecting creditors' and other
obligees' rights generally and the exercise of judicial discretion in accordance
with general equitable principles.
(3) None of (i) the execution and delivery of this
Agreement, (ii) the consummation of the Transaction, or (iii) compliance with
the terms and conditions of this Agreement will, with or without the giving of
notice or lapse of time or both, conflict with, breach the terms and conditions
of, constitute a default under, or violate Seller's articles of incorporation or
bylaws, any law, rule, regulation or other requirement of any Governmental
Authority, or any judgment, decree, order, agreement, lease or other instrument
to which Seller is a party or by which Seller, the Station or any of the
Seller's assets, including the Purchased Assets, may be bound or affected and of
which counsel has knowledge.
(4) To such counsel's knowledge, based on a search of
court dockets as shall be reasonably satisfactory to Buyer's counsel, no suit,
action, claim or proceeding is pending
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or threatened that questions or may affect the validity of any action to be
taken by Seller pursuant to this Agreement or that seeks to enjoin, restrain or
prohibit Seller from carrying out the Transaction.
(5) To such counsel's knowledge, based on a search of
court dockets as shall be reasonably satisfactory to Buyer's counsel, there is
no outstanding judgment, or any suit, action, claim or proceeding pending, or
any governmental proceeding or investigation in progress (other than proceedings
affecting radio broadcasters generally).
(6) Seller is the authorized legal holder of the FCC
Licenses, the FCC Licenses are in full force and effect, and the FCC Licenses
are not the subject of any pending license renewal application. The FCC Licenses
set forth on Schedule 6.5 constitute all FCC licenses and authorizations issued
in connection with the operation of the Station and are the only such licenses
and authorizations required for the operation of the Station, as currently
operated. There are no applications pending before the Commission with respect
to the Station.
(7) The Commission has consented to the assignment of
the FCC Licenses to Buyer and that consent has become a Final Order, unless the
requirement for a Final Order is waived by Buyer.
(8) To the best of such counsel's knowledge, there is
no Commission investigation, notice of apparent liability or order of
forfeiture, pending or outstanding against the Station, or any complaint,
petition to deny or proceeding against or involving the Station pending before
the Commission.
The foregoing opinions shall be for the benefit of and may be relied on
by Buyer and Buyer's lenders. In rendering such opinions, Seller's counsel may
rely upon such corporate records of Seller and such certificates of public
officials and officers of Seller.
(H) FINAL ORDER. The Commission's action granting the
Assignment Application shall have become a Final Order.
(I) FINANCIAL STATEMENTS. The financial information set forth
in the Station's Financial Statements for the year ending December 31, 1998, and
for the period ending thirty (30) days prior to the Closing Date fairly and
accurately reflect the financial performance and results of operation of the
Station for those periods.
(J) TRADE BALANCE. The Trade Balance, if negative, will not
exceed Twenty Thousand Dollars ($20,000).
(K) MODIFICATION APPLICATION FOR NEW TOWER SITE. The FCC's
grant of the application to relocate the Station's antenna to the ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
(▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇-▇▇▇▇▇▇▇▇), shall have become a Final Order.
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(L) STUDIO SITE LEASE. At Closing, Seller shall permit Buyer
to use the Studio Site for operations of the Station for a period of one year at
a cost of $500.00 per month.
(M) SITE LICENSE. At Closing, Seller shall deliver and assign
to Buyer its license to use the real property used as the Transmitter Site,
subject only to the same obligations as are binding on Seller pursuant to the
current terms of the lease.
(N) COOPERATION AGREEMENT. Seller and Buyer shall have entered
into an agreement whereby Seller agrees to cooperate in effectuating technical
changes to Station WINQ(FM), Winchendon, Massachusetts in accordance with the
provisions of Section 13.4.
(O) CLOSING DOCUMENTS. At the Closing Seller shall deliver to
Buyer (i) such assignments, bills of sale and other instruments of conveyance as
are necessary to vest in Buyer title to the Purchased Assets, all of which
documents shall be dated as of the Closing Date, duly executed by Seller and in
form reasonably acceptable to Buyer; (ii) a certificate, dated the Closing Date,
executed by Seller's President certifying as to those matters set forth in
Section 10.2(a) and (b); and (iii) copies of Seller's corporate resolutions
authorizing the Transaction, each certified as to accuracy and completeness by
Seller's Secretary.
(P) LICENSE APPLICATION. Seller shall have filed a license
application with the FCC seeking permanent authority to operate the Station from
the New Tower Site in accordance with the construction permit issued January 29,
1999.
(Q) LIST OF SALE AGREEMENTS. At least forty-five days prior to
Closing, Seller will provide a list of Sales Agreements to Buyer in accordance
with Section 6.18 so that Buyer may determine those Sales Agreements that it
will assume at Closing.
10.3. ADDITIONAL CONDITIONS TO SELLER'S OBLIGATION. In addition to
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Seller to consummate the Transaction is subject, at Seller's option, to the
satisfaction or waiver by Seller of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
(B) COMPLIANCE WITH CONDITIONS. All of the terms, conditions
and covenants to be complied with or performed by Buyer on or before the Closing
Date under this Agreement shall have been duly complied with and performed in
all material respects.
(C) ASSUMPTION OF LIABILITIES. Buyer shall assume and agree to
pay, perform and discharge Seller's obligations under the Contracts, Sales
Agreements and Trade Agreements to the extent Buyer has expressly agreed to
assume such obligations pursuant to Section 4.5.
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(D) PAYMENT. Buyer shall pay Seller the Purchase Price due at
Closing, as provided in Section 4.2.
(E) CLOSING DOCUMENTS. Buyer shall deliver to Seller at the
Closing (i) copies of Buyer's corporate resolutions authorizing the Transaction
certified as to accuracy and completeness by Buyer's Secretary; and (ii) a
certificate, dated the Closing Date, executed by Buyer's President certifying as
to those matters set forth in Section 10.3(a) and (b).
11.0. CLOSING. The Closing Date shall be on or before the tenth day after the
date on which the Commission grant of the Assignment Application becomes a Final
Order and all other preconditions to Closing set forth in Article 10 hereof
shall have been satisfied or waived, or at Buyer's option, if finality is waived
and all other preconditions to Closing set forth in Article 10 hereof have been
satisfied or waived, within fifteen (15) days after grant of the Assignment
Application, or such other time as Seller and Buyer may agree. Notwithstanding
the foregoing, if all of the preconditions to Closing set forth in Article 10
hereof have not been satisfied or waived, the parties agree that Closing shall
be delayed until the tenth day after the date of satisfaction of all conditions,
provided however, that Buyer shall not be obligated to consummate the
transaction contemplated herein if Closing shall not have occurred on or before
the date that is twelve (12) months following the date on which the Commission
accepts the Assignment Application for filing. At the conclusion of the
twelve-month period referred to in the preceding sentence, Buyer may terminate
this Agreement, and have the Escrow Deposit returned to it, or waive any
preconditions that have not been satisfied, or defer Closing until the
preconditions have been satisfied or waived. If Buyer chooses to defer Closing
until the tenth day after the date of satisfaction of all conditions, then if
all of the preconditions to Closing set forth in Article 10 hereof have not been
satisfied or waived by the date that is twenty-four (24) months following the
date on which the Commission accepts the Assignment Application for filing, then
either party may terminate this Agreement. Closing shall take place at 10:00
a.m. on the Closing Date at the office of Buyer's counsel, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
12.0. PRORATIONS.
12.1. APPORTIONMENT OF EXPENSES. Seller shall be responsible for all
expenses arising out of the business of the Station until 11:59 p.m. on the
Closing Date, and Buyer shall be responsible for all expenses arising out of the
business of the Station after 11:59 p.m. on the Closing Date to the extent such
expenses relate to liabilities assumed by Buyer pursuant to Section 4.5. All
overlapping expenses shall be prorated or reimbursed, as the case may be, as of
11:59 p.m. on the Closing Date, provided however, that Seller shall be
responsible for the payment of any and all regulatory fees for Fiscal Year 1999,
owing to the Commission.
12.2. DETERMINATION AND PAYMENT. Prorations shall be made, insofar as
feasible, at Closing and shall be paid by way of adjustment to the Purchase
Price. As to the prorations that cannot be made at Closing, the parties shall,
within ninety (90) days after the Closing Date, make and pay all such
prorations. If the parties are unable to agree upon all such prorations within
that 90-day period, then any disputed items shall be referred to a firm of
independent certified public
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accountants, mutually acceptable to Seller and Buyer, whose decision shall be
final, and whose fees and expenses shall be allocated between and paid by Seller
and Buyer, respectively, to the extent that such party does not prevail on the
disputed matters decided by the accountants. Notwithstanding anything herein to
the contrary, if the dispute is equal to $5,000 or less, then the parties shall
each pay one half of the liability.
13.0. POST-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
respect to the period subsequent to Closing:
13.1. INDEMNIFICATION.
(A) BUYER'S RIGHT TO INDEMNIFICATION. Seller hereby
indemnifies and holds Buyer, its officers, directors, shareholders and assigns
harmless from and against (i) any breach, misrepresentation, or violation of any
of Seller's representations, warranties, covenants, or other obligations
contained in this Agreement or in any Seller Document; (ii) all obligations and
liabilities of Seller and/or the Station not expressly assumed by Buyer pursuant
to Section 4.5; (iii) all claims by third parties (including employees) against
Buyer attributable to the operation of the Station and/or the use or ownership
of the Purchased Assets prior to Closing and (iv) any Employee Benefit Plan,
Pension Plan, Welfare Plan, or Other Plan (as defined in Section 6.12) that the
Seller may establish. This indemnity is intended by Seller to cover all actions,
suits, proceedings, claims, demands, assessments, adjustments, interest,
penalties, costs and expenses (including, reasonable fees and expenses of
counsel), whether suit is instituted or not and, if instituted, whether at the
trial or appellate level, with respect to any and all of the specific matters
set forth in this indemnity.
(B) SELLER'S RIGHT TO INDEMNIFICATION. Buyer hereby
indemnifies and holds Seller, its officers, directors, members and assigns
harmless from and against (i) any breach, misrepresentation or violation of any
of Buyer's representations, warranties, covenants or obligations contained in
this Agreement; (ii) all obligations and liabilities expressly assumed by Buyer
hereunder pursuant to Section 4.5; and (iii) all claims by third parties against
Seller attributable to Buyer's operation of the Station after Closing. This
indemnity is intended by Buyer to cover all actions, suits, proceedings, claims,
demands, assessments, adjustments, interest, penalties, costs and expenses
(including reasonable fees and expenses of counsel), whether suit is instituted
or not and, if instituted, whether at the trial or appellate level, with respect
to any and all of the specific matters set forth in this indemnity.
(C) PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(1) The party claiming indemnification (the
"Claimant") shall give written notice to the party from which indemnification is
sought (the "Indemnitor") promptly after the Claimant learns of any claim or
proceeding covered by the foregoing agreements to indemnify and hold harmless
and failure to provide prompt notice shall not be deemed to jeopardize
Claimant's right to demand indemnification, provided, that, Indemnitor is not
prejudiced by the delay in receiving notice.
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(2) With respect to claims between the parties,
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have 30 days to make any investigation of the claim that the Indemnitor deems
necessary or desirable, or such lesser time if a 30-day period would jeopardize
any rights of Claimant to oppose or protest the claim. For the purpose of this
investigation, the Claimant agrees to make available to the Indemnitor and its
authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within the 30-day period, or lesser period
if required by this section (or any mutually agreed upon extension hereof) the
Claimant may seek appropriate legal remedies.
(3) The Indemnitor shall have the right to undertake,
by counsel or other representatives of its own choosing, the defense of such
claim, provided, that, Indemnitor acknowledges in writing to Claimant that
Indemnitor would assume responsibility for and demonstrates its financial
ability to satisfy the claim should the party asserting the claim prevail. In
the event that the Indemnitor shall not satisfy the requirements of the
preceding sentence or shall elect not to undertake such defense, or within 30
days after notice of any such claim from the Claimant, or such lesser period as
required by Section 13.1(c)(2), shall fail to defend, the Claimant shall have
the right to undertake the defense, compromise or settlement of such claim, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnitor. Anything in this Section 13.1(c)(3) to the
contrary notwithstanding, (i) if there is a reasonable probability that a claim
may materially and adversely affect the Claimant other than as a result of money
damages or other money payments, the Claimant shall have the right, at its own
cost and expense, to participate in the defense, compromise or settlement of the
claim, (ii) the Indemnitor shall not, without the Claimant's written consent,
settle or compromise any claim or consent to entry of any judgment which does
not include as an unconditional term thereof the giving by the plaintiff to the
Claimant of a release from all liability in respect of such claim, and (iii) in
the event that the Indemnitor undertakes defense of any claim consistent with
this Section, the Claimant, by counsel or other representative of its own
choosing and at its sole cost and expense, shall have the right to consult with
the Indemnitor and its counsel or other representatives concerning such claim
and the Indemnitor and the Claimant and their respective counsel or other
representatives shall cooperate with respect to such claim.
(D) ASSIGNMENT OF CLAIMS. If any payment is made pursuant to
this Section 13.1, the Indemnitor shall be subrogated to the extent of such
payment to all of the rights of recovery of Claimant, and Claimant shall assign
to Indemnitor, for its use and benefit, any and all claims, causes of actions,
and demands of whatever kind and nature that Claimant may have against the
person, firm, corporation or entity giving rise to the loss for which payment
was made. Claimant agrees to reasonably cooperate in any efforts by Indemnitor
to recover such loss from any person, firm, corporation or entity.
(E) INDEMNIFICATION NOT SOLE REMEDY. The right to
indemnification provided for in this Section shall not be the exclusive remedy
of either party in connection with any breach by the other party of its
representations, warranties, covenants or other obligations hereunder, nor shall
such indemnification be deemed to prejudice or operate as a waiver of any
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right or remedy to which either party may otherwise be entitled as a result of
any such breach by the other party.
(F) THRESHOLD CONCERNING SECTIONS 13.1(a) AND (b).
Notwithstanding anything to the contrary in Sections 13.1(a) and (b), the
parties shall not be entitled to indemnity under Sections 13.1(a) and (b) unless
the aggregate loss indemnified against thereunder exceeds $50,000 (in which
case, the Claimant shall be entitled to recovery from the Indemnitor of the full
amount of the loss).
13.2. COOPERATION WITH RESPECT TO FINANCIAL AND TAX MATTERS. From the
date of Closing and for a period of two (2) years thereafter, Seller shall
provide Buyer with such cooperation and information as Buyer shall reasonably
request in Buyer's: (i) analysis and review of the Financial Statements or (ii)
preparation of documentation to fulfill any reporting requirements of Buyer
including reports that may be filed with the Securities and Exchange Commission.
Seller shall make its independent accounting firm available, the cost of said
firm to be paid by the Buyer, and the information relied upon by that firm,
including its opinions and Financial Statements for the Seller, to provide
explanations of any documents or information provided hereunder and to permit
disclosure by Buyer, including disclosure to and filing with any Governmental
Authority.
13.3. LIABILITIES. Following the Closing Date, Seller shall pay
promptly when due all of the debts and liabilities of Seller relating to the
Station, other than liabilities specifically assumed by Buyer hereunder.
13.4. ACQUISITION AND MODIFICATION OF WINQ(FM). On or after the Closing
Date, Buyer may demand that Seller satisfy its obligations pursuant to the
Cooperation Agreement referred to in Section 10.2(n) and entered into as of
Closing.
13.5. REIMBURSEMENT TO CENTRAL BROADCASTING CORPORATION. If as of the
Closing Date the amount due Central Broadcasting Corporation pursuant to a
Station Reimbursement Agreement dated October 14, 1998 should be outstanding,
Seller shall assume sole responsibility for and promptly satisfy the amount due.
13.6. RESPONSIBILITY TO DEFEND CONSTRUCTION PERMIT. The parties
acknowledge that an appeal has been filed of the FCC's action granting the
application to relocate the Station's antenna to the New Tower Site. In the
event that the FCC's action has not become a Final Order as of the Closing Date,
then Seller agrees at all times after the Closing to bear the responsibility of
any and all expenses incurred to defend and/or resolve the appeal in an effort
to obtain a Final Order. Seller will diligently take all steps that are
necessary, proper or desirable to defend the application and to expedite the
resolution of the appeal in an effort to obtain a Final Order. Buyer will, at
Seller's expense, cooperate with Seller in preparing and executing any documents
necessary to defend the grant of the application.
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14. DEFAULT AND REMEDIES.
14.1. OPPORTUNITY TO CURE. If either party believes the other to be in
breach or in default hereunder, the former party shall provide the other with
written notice specifying in reasonable detail the nature of such default. If
the default has not been cured by the earlier of: (i) the Closing Date, or (ii)
within 10 days after delivery of that notice (or such additional reasonable time
as the circumstances may warrant provided the party in default undertakes
diligent, good faith efforts to cure the default within such 10-day period and
continues such efforts thereafter), then the party giving such notice may
exercise the remedies available to such party pursuant to this Section, subject
to the right of the other party to contest the alleged default through
appropriate proceedings.
14.2. SELLER'S REMEDIES. Buyer recognizes that if the Transaction is
not consummated as a result of Buyer's default, Seller would be entitled to
compensation, the extent of which is extremely difficult and impractical to
ascertain. To avoid this problem, the parties agree that if the Transaction is
not consummated due to the default of Buyer, Seller, provided that Seller is not
in default and has otherwise complied with its obligations under this Agreement,
shall be entitled to terminate this Agreement and demand (i) the Escrow Deposit,
with interest earned thereon, and (ii) an additional Five Hundred Thousand
Dollars ($500,000). The parties agree that this sum of One Million Dollars
($1,000,000) shall constitute liquidated damages and shall be in lieu of any
other relief to which Seller might otherwise be entitled due to Buyer's failure
to consummate the Transaction as a result of a default by Buyer.
14.3. BUYER'S REMEDIES. Seller agrees that the Purchased Assets include
unique property that cannot be readily obtained on the open market and that
Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall have the right specifically to enforce Seller's
performance under this Agreement, and Seller agrees (i) to waive the defense in
any such suit that Buyer has an adequate remedy at law and (ii) to interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy. If Buyer elects to terminate this Agreement as a result of Seller's
default instead of seeking specific performance, Buyer shall be entitled to the
return of the Escrow Deposit together with all interest earned thereon, and in
addition thereto, to initiate a suit for damages.
14.4. RECOVERY OF COSTS. If any party pursues its remedies under either
Section 14.2 or 14.3, the non-prevailing party, as determined by an arbitrator,
mediator or judge, shall pay all of the reasonable costs and expenses (including
reasonable attorneys' fees) of the prevailing party associated therewith. Any
settlement between the parties shall result in each party's payment of its own
reasonable costs and expenses.
15.0. TERMINATION OF AGREEMENT.
15.1. FAILURE TO CLOSE. This Agreement may be terminated (a) at the
option of either party upon written notice to the other if the Commission has
not granted the Assignment Application within nine (9) months after the
Commission accepts the Assignment Application for filing or (b) by Buyer if the
Commission's action granting the Assignment Application has not
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become a Final Order within twelve (12) months after the Commission accepts the
Assignment Application for filing; or (c) by Buyer if all of the preconditions
to Closing as set forth in Article 10 hereof have not been satisfied or waived
and Closing has not occurred on or before the date that is twelve (12) months
after the date the Commission accepts the Assignment Application for filing; or
(d) by Buyer or Seller if Buyer has not terminated this Agreement pursuant to
Section 15.1(c) and all of the preconditions to Closing as set forth in Article
10 hereof have not been satisfied or waived and Closing has not occurred on or
before the date that is twenty-four (24) months after the date the Commission
accepts the Assignment Application for filing provided, however, that a party
may not terminate this Agreement if such party is in default hereunder, or if a
delay in any decision or determination by the Commission respecting the
Assignment Application or the modification application referenced in Section
10.2(k) hereof (the "Modification Application") has been caused or materially
contributed to (i) by any failure of such party to furnish, file or make
available to the Commission information within its control; (ii) by the willful
furnishing by such party of incorrect, inaccurate or incomplete information to
the Commission; or (iii) by any other action taken by such party for the purpose
of delaying the Commission's decision or determination respecting the Assignment
Application or the Modification Application. This Agreement may also be
terminated upon the mutual agreement of Buyer and Seller. In the event of
termination pursuant to this Section, the Escrow Deposit, together with all
interest earned thereon, shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder unless the failure
to consummate the Transaction is attributable to Buyer's default, and Seller is
not in default and has otherwise complied with its obligations under this
Agreement, in which case the Escrow Deposit plus interest earned thereon shall
be released to Seller as liquidated damages pursuant to Section 14.2.
15.2. DESIGNATION FOR HEARING. The time for approval provided in
Section 15.1 notwithstanding, either party may terminate this Agreement upon
written notice to the other, if, for any reason, the Assignment Application is
designated for hearing by the Commission, provided, however, that written notice
of termination must be given within 10 days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section, the Escrow Deposit together with all
interest earned thereon shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder, provided,
however, that if the designation for hearing is predicated upon breach by either
party of a representation, warranty or covenant contained in this Agreement, the
nonbreaching party may pursue the remedies available to such non-breaching party
provided in Sections 14.2 and 14.3.
15.3. FAILURE TO PAY TIME BROKERAGE AGREEMENT FEES. If there is an
Event of Default (as defined in the Time Brokerage Agreement) for failure to pay
the fee or the expenses described in Schedule II of the Time Brokerage
Agreement, then Seller may terminate this Agreement.
16. GENERAL PROVISIONS.
16.1. BROKERAGE. Seller and Buyer represent to each other that neither
party has dealt with a broker in connection with the Transaction, except that
Seller has retained Media Services
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Group, Inc.. No finders fee is due to any person or entity in connection with
the Transaction except for Media Services Group, Inc. and such fee shall be paid
by Seller at Closing.
16.2. FEES. All Commission filing fees for the Assignment Application,
and all recording costs, transfer taxes, sales tax, document stamps and other
similar charges shall be paid one-half by Seller and one-half by Buyer. Except
as otherwise provided herein, all other expenses incurred in connection with
this Agreement or the Transaction shall be paid by the party incurring those
expenses whether or not the Transaction is consummated.
16.3. NOTICES. All notices, requests, demands and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when (i) delivered personally (which shall include delivery by Federal Express
or other recognized overnight courier service that issues a receipt or other
confirmation of delivery) to the party for whom such communication is intended,
(ii) delivered by facsimile transmission or (iii) three business days after the
date mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Seller:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Managing Member
KJI Broadcasting, LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
E. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Cameron & ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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with copies (which shall not constitute notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Radio One, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change its address for notices by written notice to the other
given pursuant to this Section. Any notice purportedly given by a means other
than as set forth in this Section shall be deemed ineffective.
16.4. ASSIGNMENT. Neither party may assign this Agreement without the
other party's express prior written consent, provided, however, Buyer may assign
its rights and obligations pursuant to this Agreement without Seller's consent
prior to closing to (i) an entity which is a subsidiary or parent of Buyer or to
an entity owned or controlled by Buyer or its principals, provided that Buyer
remains obligated to pay the Purchase Price, or (ii) to Buyer's lenders as
collateral for any indebtedness incurred by Buyer; and subsequent to closing to
(x) any entity which acquires all or substantially all of the Purchased Assets
or (y) to Buyer's lenders as collateral for any indebtedness incurred by Buyer.
Subject to the foregoing, this Agreement shall be binding on, inure to the
benefit of, and be enforceable by the original parties hereto and their
respective successors and permitted assignees.
16.5. EXCLUSIVE DEALINGS. For so long as this Agreement remains in
effect, neither Seller nor any person acting on Seller's behalf shall, directly
or indirectly, solicit or initiate any offer from, or conduct any negotiations
with, any person or entity concerning the acquisition of all or any interest in
any of the Purchased Assets or the Station, other than Buyer or Buyer's
permitted assignees.
16.6. THIRD PARTIES. Nothing in this Agreement, whether express or
implied, is intended to: (i) confer any rights or remedies on any person other
than Seller, Buyer and their respective successors and permitted assignees; (ii)
relieve or discharge the obligations or liability of any third party; or (iii)
give any third party any right of subrogation or action against either Seller or
Buyer.
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16.7. INDULGENCES. Unless otherwise specifically agreed in writing to
the contrary: (i) the failure of either party at any time to require performance
by the other of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (ii) no waiver by either party of any
default by the other shall be taken or held to be a waiver by such party of any
other preceding or subsequent default; and (iii) no extension of time granted by
either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
16.8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, and indemnification obligations of the parties contained herein
shall survive for twelve (12) months after the Closing Date except that claims
properly asserted within the twelve (12) month period shall survive until
finally and fully resolved; provided, however, that Seller's representations and
warranties in Sections 6.2, 6.4, 6.5, 6.6, 6.10, 6.12 and 6.21 and Buyer's
indemnification rights with respect thereto and with respect to Section
13.1(a)(ii) shall survive the Closing until the end of the applicable statute of
limitations period.
16.9. PRIOR NEGOTIATIONS. This Agreement supersedes in all respects all
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All of
such prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
16.10. EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached
hereto or referred to herein are a material part of this Agreement, as if set
forth in full herein.
16.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits and
Schedules to this Agreement set forth the entire understanding between the
parties in connection with the Transaction, and there are no terms, conditions,
warranties or representations other than those contained, referred to or
provided for herein and therein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an instrument
in writing signed by each of the parties hereto.
16.12. COUNSEL/INTERPRETATION. Each party has been represented by its
own counsel in connection with the negotiation and preparation of this
Agreement. This Agreement shall be fairly interpreted in accordance with its
terms and, in the event of any ambiguities, no inferences shall be drawn against
either party.
16.13. GOVERNING LAW, JURISDICTION. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of The Commonwealth
of Massachusetts without regard to the choice of law rules utilized in that
jurisdiction. Buyer and Seller each (a) hereby irrevocably submit to the
jurisdiction of the courts of that state and (b) hereby waive, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced
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in or by such court. Buyer and Seller each hereby consent to service of process
by registered mail at the address to which notices are to be given. Each of
Buyer and Seller agrees that its submission to jurisdiction and its consent to
service of process by mail is made for the express benefit of the other party
hereto. Final judgment against Buyer or Seller in any such action, suit or
proceeding may be enforced in other jurisdictions by suit, action or proceeding
on the judgment, or in any other manner provided by or pursuant to the laws of
such other jurisdiction; provided, however, that any party may at its option
bring suit, or institute other judicial proceedings, in any state or federal
court of the United States or of any country or place where the other party or
its assets, may be found.
16.14. SEVERABILITY. If any term of this Agreement is illegal or
unenforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of applicable law and such term, as so modified, and
the balance of this Agreement shall then be fully enforceable.
16.15. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument. Each fully executed set of counterparts shall be
deemed to be an original, and all of the signed counterparts together shall be
deemed to be one and the same instrument.
16.16. FURTHER ASSURANCES. Seller shall at any time and from time to
time after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may request to vest and
confirm in Buyer (or its assignee) the title and rights to and in all the
Purchased Assets to be and intended to be transferred, assigned and conveyed
hereunder.
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IN WITNESS WHEREOF, and to evidence their assent to the foregoing,
Seller and Buyer have executed this Asset Purchase Agreement under seal as of
the date first written above.
SELLER:
KJI BROADCASTING, LLC
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Managing Member
BUYER:
RADIO ONE, INC.
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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