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EXHIBIT 10.31.1
ASSET PURCHASE AGREEMENT
BETWEEN
KNIGHT RADIO, INC.
AND
CAPSTAR ACQUISITION COMPANY, INC.
DATED AS OF
JUNE 18, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.4. Adjustments and Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5. Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6. Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7. ▇▇▇▇▇▇▇ Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2. Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2. Environmental Site Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3. Broadcast Transmission Interruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
5.1. No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i)
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5.2. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4. Compliance With Station Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.5. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
COVENANTS OF BUYER
6.1. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3. Certain Legal Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.4. Seller's Access to Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for FCC Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2. Control of Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3. Other Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.4. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.5. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.6. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.7. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8. Balance Sheet Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Conditions to Obligation of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3. Conditions to Obligations of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX
CLOSING
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(ii)
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2. Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.5. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.6. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.7. Instructions to Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants . . . . . . . . . . . . . . . . . . . . . . . 47
12.2. Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.3. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.5. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.7. Expenses and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.13. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.15. Director and Officer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.16. No Reversionary Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.17. No Waiver Relating to Claims for Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Annexes:
Annex A -- The Stations
(iii)
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EXHIBITS:
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Exhibit A -- Deposit Escrow Agreement
Exhibit B -- Form of Non-Competition Agreements
Exhibit C -- Form of ▇▇▇▇ of Sale and Assignment
Exhibit D -- Form of Assumption Agreement
Exhibit E -- Form of Indemnification Escrow Agreement
Exhibit F -- Form of Opinions of Seller's Counsel
Exhibit G -- Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
Exhibit H -- Form of Release of Claims
Exhibit I -- Form of Studio/Tower Lease
SCHEDULES:
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Schedule 2.1(k) -- Choses in Action
Schedule 2.2(a) -- Excluded Real Property
Schedule 2.2(j) -- Excluded Personal Property
Schedule 2.4 -- Manchester Sales Agreement and Deposit Receipt
Schedule 2.5(b) -- Trade Deals
Schedule 2.6 -- Allocation of Purchase Price
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(e) -- Unrecorded Liabilities and Conduct of Business
Schedule 3.1(f) -- Licenses and Permits
Schedule 3.1(g) -- Litigation
Schedule 3.1(h) -- Insurance
Schedule 3.1(i) -- Owned Real Estate
Schedule 3.1(j) -- Leased Real Property
Schedule 3.1(k) -- Personal Property
Schedule 3.1(l) -- Liens and Encumbrances
Schedule 3.1(m) -- Environmental Matters
Schedule 3.1(o) -- Certain Agreements
Schedule 3.1(p) -- Employee Benefit Plans; Labor
Schedule 3.1(q) -- Patents, Trademarks; Etc.
Schedule 3.1(r) -- Contracts with Affiliates
Schedule 4.1(h) -- Sale, Lease or Disposition of Assets
Schedule 8.2(c) -- Required Consents
(iv)
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of June 18, 1997, between Knight Radio, Inc., a New Hampshire
corporation ("Seller"), and Capstar Acquisition Company, Inc., a Delaware
corporation ("Buyer").
R E C I T A L S
A. Seller is the licensee of and owns and operates each of the
radio stations listed on Annex A hereto (each referred to individually as a
"Station" and collectively, the "Stations") pursuant to licenses issued by the
Federal Communications Commission ("FCC").
B. Seller desires to sell and Buyer desires to buy substantially
all the assets used or held for use in the operation of each of the Stations,
both tangible and intangible, excluding the Excluded Assets (as hereinafter
defined), and by so doing to acquire the radio broadcast business presently
conducted by each of the Stations, upon the terms and conditions hereinafter
set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of Seller to cash
payment for the sale of advertising time by the Stations and other amounts
(other than entries reflecting barter transactions) that would be classified as
an account receivable on the asset side of a balance sheet of the Company
prepared in accordance with GAAP prior to 11:59 p.m. on the day prior to the
Closing Date.
"Affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with such person.
For purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
"Applicable Laws" means all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity having jurisdiction over the Assets or the business or
operations of each of the Stations, as may be in effect on or prior to the
Closing.
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"Applications" has the meaning set forth in Section 7.1.
"Assets" means all the tangible and intangible assets owned,
leased, or licensed by Seller that are used or held for use in connection with
the business or operations of any of the Stations, whether or not reflected on
the Financial Statements or Balance Sheet of Seller, but specifically excluding
therefrom the Excluded Assets.
"Assumed Contracts" means (a) those Contracts set forth on
Schedule 3.1(o) identified as being assumed by Buyer and all other contracts of
Seller entered into in the ordinary course of business prior to the date of
this Agreement that relate to the Assets or the business or operation of the
Assets or any part thereof, (b) all other non- trade advertising Contracts for
cash entered into by Seller for any of the Stations prior to the date of this
Agreement and which are terminable on not more than 30 days notice, (c) all
Contracts entered into by Seller on or after the date of this Agreement and
before the Closing in accordance with the applicable provisions of Section 4.1,
and (d) Trade Deals described in Section 2.5(b).
"Assumption Agreement" means the Assumption Agreement between
Buyer and Seller substantially in the form of Exhibit D.
"Balance Sheet" has the meaning set forth in Section 3.1(e).
"Balance Sheet Date" has the meaning set forth in Section
3.1(e).
"Banking Event" has the meaning set forth in Section 9.1.
"▇▇▇▇ of Sale and Assignment" means the ▇▇▇▇ of Sale and
Assignment between Buyer and Seller substantially in the form of Exhibit C.
"Brokerage Fee" has the meaning set forth in Section 12.7.
"Business Day" means any other day than (i) a Saturday or
Sunday or (ii) a day on which commercial banks in New York, New York, Dallas,
Texas or Boston, Massachusetts are authorized or required to be closed.
"Buyer" has the meaning set forth in the first paragraph of
this Agreement, and it includes its permitted successors and assigns.
"Buyer Indemnified Costs" means (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) that
any of the Buyer Indemnified Parties incurs and that arise out of any breach or
default by Seller of any of the representations or warranties under this
Agreement or any agreement or document executed in connection herewith
(collectively, "Buyer Indemnified Representation Costs"); (b) any
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and all losses, liabilities, or damages incurred by any of the Buyer
Indemnified Parties resulting from Seller's operation or control of any of the
Stations prior to the Closing Date, including any and all liabilities arising
under the FCC Licenses (including any stipulations or other obligations imposed
on Buyer in connection with the renewal of the Licenses in 1998) or the Assumed
Contracts which relate to events occurring prior to the Closing Date; (c) any
and all damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs, and expenses (including court costs and reasonable attorneys'
fees and expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Buyer Indemnified Parties incurs and that arise out
of any breach or default by Seller of any covenant or agreement under this
Agreement or any agreement or document executed in connection herewith; (d) any
and all obligations or liabilities of Seller under any contract or agreement
not expressly assumed by Buyer pursuant to the terms hereof; (e) the items
indemnified against pursuant to Section 7.5; and (f) any and all actions,
suits, proceedings, claims, demands, assessments, judgments, costs, and
expenses, including reasonable legal fees and expenses, incident to any of the
foregoing; provided, however, that insofar as the items in this clause (f)
relate to the items in clause (a) above, such items shall constitute Buyer
Indemnified Representation Costs; and provided further that Buyer Indemnified
Costs shall consist solely of damages actually suffered or sustained and shall
not include speculative damages in the nature of lost profits or diminution in
value.
"Buyer Indemnified Parties" means Buyer and each officer,
director, employee, consultant, stockholder, and Affiliate of Buyer.
"CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Section 1.1.
"Choses in Action" means a right to receive or recover
property, debt, or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The term shall include rights
to indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX.
"Closing Date" means the date of the Closing specified in
Article IX.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Communications Act" has the meaning set forth in Section
3.1(f).
"Company Reports" has the meaning set forth in Section 3.1(e).
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"Concurrent Transactions" means the transactions contemplated
by (a) that certain Asset Purchase Agreement of even date herewith by and
between Buyer and Knight Communications Corp., a Massachusetts corporation, and
(b) that certain Asset Purchase Agreement of even date herewith by and among
Buyer and Knight Broadcasting of New Hampshire, Inc., a New Hampshire
corporation.
"Conflict Event" has the meaning set forth in Section 9.1.
"Consents" means all governmental consents and approvals,
including the FCC Consents, and all consents and approvals of third parties, in
each case that are necessary in order to transfer the Assets to Buyer and
otherwise to consummate the transactions contemplated hereby.
"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and
other modifications thereto), to which Seller is a party or is otherwise bound
and which affect or relate to the Assets or the business or operations of each
of the Stations.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement
among Seller, Knight Communications Corp. and Knight Broadcasting of New
Hampshire, Inc., Buyer and Escrow Agent, a copy of which is attached hereto as
Exhibit A.
"Deposit Letter of Credit" means that certain original,
irrevocable letter of credit in favor of Seller, Knight Communications Corp.
and Knight Broadcasting of New Hampshire, Inc. and the Escrow Agent issued by
Bankers Trust Company or another lender reasonably acceptable to Seller for the
sum of $3,000,000 and held in accordance with the provisions of the Deposit
Escrow Agreement.
"Employee Benefit Plans" means any "employee benefit plan"
within the meaning of Section 3(3) of ERISA and any bonus, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, vacation, severance, disability, death benefit,
hospitalization or insurance plan providing benefits to any present or former
employee or contractor of Seller or any member of the ERISA Group maintained by
any such entity or as to which any such entity has any liability or obligation.
"Employee Pension Benefit Plan" has the meaning set forth in
Section 3(2) of ERISA.
"Environmental Costs or Liabilities" has the meaning set forth
in Section 3.1(m)(iv).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Emergency Planning and Community Right to Know Act and the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the
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Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990, the
Hazardous Materials Transportation Act, and any similar or analogous statutes,
regulations and decisional law of any Governmental Authority, as each of the
foregoing may be amended and in effect on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Group" has the meaning set forth in Section 3.1(p).
"ESA" means Phase I or Phase II environmental site
assessments.
"Escrow Agent" means U.S. Trust Company and includes its
successors and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Real Property" means the Owned Real Property set
forth on Schedule 2.2(a).
"FCC" has the meaning set forth in the first recital hereto.
"FCC Consents" means actions by the FCC granting its initial
consent to the assignment of the FCC Licenses for each of the Stations to Buyer
as contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to Seller and applications of Seller, if any,
to the FCC relating to or used in the business or operations of each of the
Stations, including those listed on Schedule 3.1(f) and any additions thereto
between the date hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC
setting forth the FCC Consents and (a) which has not been reversed, stayed,
enjoined, set aside, annulled, or suspended and (b) with respect to which (i)
no requests have been filed for administrative or judicial review,
reconsideration, appeal, or stay, and the time for filing any such requests and
for the FCC to set aside the action on its own motion has expired or (ii) in
the event of review, reconsideration, or appeal, such review, reconsideration,
or appeal has been denied and the time for further review, reconsideration, or
appeal has expired.
"Financial Statements" has the meaning set forth in Section
3.1(e).
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"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
"Hazardous Substances" has the meaning set forth in Section
3.1(m).
"Holdback Amount" has the meaning set forth in Section 11.5.
"HSR Act" has the meaning set forth in Section 3.1(d).
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Seller, Knight Communications Corp., Knight Broadcasting
of New Hampshire, Inc., Buyer, and Escrow Agent substantially in the form
attached hereto as Exhibit E.
"Indemnified Costs" means the Buyer Indemnified Costs or the
Seller Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or
the Seller Indemnified Parties, as the case may be.
"Indemnification Representation Costs" means the Buyer
Indemnified Representation Costs or the Seller Indemnified Representation
Costs, as the case may be.
"Indemnifying Party" means any person who is or may be
obligated to provide indemnification hereunder.
"Intellectual Property" means all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration, Patents
and all other intellectual property rights whether registered or not, licenses
to or owned by Seller relating to the business or operations of any Station,
including the call letters of each of the Stations and the goodwill related to
the foregoing.
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information and all other confidential or proprietary technical and
business information.
"Knowledge" means, with respect to Seller, the actual
knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇, N. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, and with respect to Buyer, the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., or ▇▇▇▇ ▇▇▇▇▇.
"Leased Real Property" means all of the Seller's leasehold
interests, easements, licenses, rights to access and rights-of-way which are
used or held for use in the business and
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operations of any Station, including those interests which are identified and
described in Schedule 3.1(j), as modified by any addition or permitted deletion
thereto between the date hereof and the Closing Date.
"Licenses" means the FCC Licenses and all Permits issued by
any Governmental Entity to Seller relating to or used or held for use in the
business and operations of any Station, including those listed on Schedule
3.1(f), with any additions thereto between the date hereof and the Closing
Date.
"Liens" has the meaning set forth in Section 3.1(l).
"Material Adverse Effect" means a material adverse effect on
the business, operations, properties (taken as a whole), condition, results of
operations, assets (taken as a whole), or liabilities of the Stations.
"Multiemployer Plan" has the meaning set forth in Section
3(37) or Section 4001(a)(3) of ERISA.
"Non-Competition Agreement" means the Non-Competition
Agreement between Buyer and Seller substantially in the form of Exhibit B.
"Owned Real Property" means those parcels of real property
owned in fee and used or held for use by Seller as described in Schedule
3.1(i), and all buildings, structures, improvements, and fixtures thereon,
together with all rights of way, easements, privileges, and appurtenances
pertaining or belonging thereto, including any right, title, and interest of
Seller in and to any street or other property adjoining any portion of such
property.
"Patents" means all patent and patent applications (including
all reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by Seller.
"Pension Plans" has the meaning set forth in Schedule 3.1(p).
"Permits" has the meaning set forth in Section 3.1(m).
"Permitted Encumbrances" means (a) statutory Liens for current
Taxes not yet due and payable, (b) mechanics', carriers', workers', repairers',
and other similar liens imposed by law arising or incurred in the ordinary
course of business for obligations not yet due, (c) in the case of leases of
vehicles, rolling stock, and other personal property, encumbrances, which do
not, individually or in the aggregate, materially impair the operation of the
business at the facility at which such leased equipment or other personal
property is located, (d) other liens, charges or encumbrances incidental to the
operation of the Stations or the ownership of the Assets which were not
incurred in connection with the borrowing of money or the advance of credit and
which, in the aggregate, do not materially detract from the value of the Assets
or materially interfere with the use
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thereof or the operation of the Stations, and (e) Liens on leases of real
property arising from the provisions of such leases or the actions of the
lessor thereunder, including, in relation to leased real property, any
agreements and/or conditions imposed on the issuance of land use permits,
zoning, business licenses, use permits, or other entitlements of various types
issued by any Governmental Entity, necessary or beneficial to the continued use
and occupancy of the Assets or the continuation of the operation of any
Station.
"Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization, or
other entity.
"Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, furnishings, leasehold
improvements, office equipment, inventories, supplies, plant, spare parts, and
other tangible or intangible personal property which are owned or leased by
Seller for any Station and which are used or held for use in the business or
operations of any Station, including the personal property which is listed on
Schedule 3.1(k) hereto, together with any additions thereto between the date
hereof and the Closing Date less any dispositions made in accordance with
Section 4.1. The term Personal Property shall not include any of the Excluded
Assets.
"Purchase Price" means the consideration payable by Buyer to
Seller as provided in Section 2.3 hereof.
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Release" means the Release of Claims between Buyer and Seller
substantially in the form of Exhibit H.
"Released Claims" has the meaning set forth in Section
10.2(b).
"Released Parties" has the meaning set forth in Section
10.2(b).
"Schedules" means the Schedules attached hereto.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of
this Agreement.
"Seller Indemnified Costs" means (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) that
any of the Seller Indemnified Parties incurs and that arise out of any breach
or default by Buyer of any of the representations, or warranties under this
Agreement or any agreement or document
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executed in connection herewith (collectively, "Seller Indemnified
Representation Costs"); (b) any and all losses, liabilities, or damages
incurred by any of the Seller Indemnified Parties resulting from Buyer's
operation or control of any of the Stations on and after the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Closing Date; (c) any and
all damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Seller Indemnified Parties incurs and that arise
out of any breach or default by Buyer of any covenant or agreement under this
Agreement or any agreement or document executed in connection herewith; (d) the
items indemnified against pursuant to Section 5.3; and (e) any and all actions,
suits, proceedings claims, demands, assessments, judgments, costs, and
expenses, including reasonable legal fees and expenses, incident to any of the
foregoing; provided, however, that insofar as the items in this clause (e)
relate to the items in clause (a) above, such items shall constitute Seller
Indemnified Representation Costs; and provided further that Seller Indemnified
Costs shall consist solely of damages actually suffered or sustained and shall
not include speculative damages in the nature of lost profits or diminution in
value.
"Seller Indemnified Parties" means Seller and each officer,
director, employee, consultant, stockholder, and Affiliate of Seller.
"Seller Negative Trade Balance" has the meaning set forth in
Section 4.2.
"Station Event" has the meaning set forth in Section 9.1.
"Station Licenses" has the meaning set forth in Section
3.1(f).
"Station Management" has the meaning set forth in Section
4.1(b).
"Studio/Tower Lease" means the real property lease
substantially in the form of Exhibit I to be entered into between Buyer and
Seller.
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
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"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.2(e).
"Title Company" means Republic Title Company or such other
title insurance company reasonably acceptable to Buyer and Seller.
"Trade Deals" means the exchanges by a Station of its
advertising time for goods or services, other than in connection with the
licensing of programs and programming material.
"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of the business of any Station, whether or
not registered, and any applications or registrations therefor and (b) any
associated goodwill incident thereto owned by Seller.
"Trading Event" has the meaning set forth in Section 9.1.
"Transaction Documents" has the meaning set forth in Section
3.1(c).
"Warranty Deed" means a special warranty deed in form and
substance reasonably acceptable to the Buyer and the Title Company pursuant to
which Seller conveys to Buyer the Owned Real Property (other than the Excluded
Real Property) at the Closing.
1.2. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language contained
therein. The words "this Agreement," "herein," "hereby," "hereunder," " and
"hereof," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section," "this subsection," and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
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ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. AGREEMENT TO SELL AND BUY. Subject to the terms and
conditions set forth in this Agreement and except for the Excluded Assets,
Seller shall sell, assign, transfer and deliver to Buyer on the Closing Date,
and Buyer shall purchase on the Closing Date, all of the Assets, free and clear
of any Liens or liabilities (except for Permitted Encumbrances and liabilities
assumed by Buyer in accordance with Section 2.5). The Assets to be assigned,
transferred and delivered by Seller hereunder shall include the following:
(a) All Personal Property;
(b) All Leased Real Property;
(c) The Owned Real Property (other than the Excluded Real
Property);
(d) All Licenses and Permits;
(e) All Assumed Contracts;
(f) All Intellectual Property;
(g) All Accounts Receivable;
(h) Each of the Station's technical information and data,
machinery and equipment warranties (to the extent such warranties are
assignable), if any, maps, plans, diagrams, blueprints and schematics
relating to such Station, if any, including filings with the FCC which
relate to such Station, and goodwill relating to the foregoing;
(i) All books and records relating to the business and
operation of any of the Stations (excluding those described in, or
relating to the assets described in, Section 2.2), including (i)
executed copies of the Assumed Contracts, or if no executed agreement
exists, summaries of each Assumed Contract transferred pursuant to
clause (e) above and (ii) all records required by the FCC to be kept
by each Station, subject to the right of Seller to request and receive
copies thereof and have such books and records made reasonably
available to Seller for tax and other legitimate organization purposes
for a period of six years after the Closing;
(j) To the extent assignable, all computer programs and
software, and all rights and interests of Seller in and to computer
programs and software used in connection with the business or
operations of any Station;
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(k) Except for claims relating to Taxes and all Choses in
Action described in Schedule 2.1(k), all Choses in Action of Seller;
and
(l) All intangible assets of Seller relating to any
Station or the business or operation of any Station not specifically
described above, including goodwill, and all other assets, other than
the Excluded Assets, used or held for use in connection with any
Station or the business of the Seller.
2.2. EXCLUDED ASSETS. The Excluded Assets shall consist of the
following:
(a) The Excluded Real Property described in Schedule
2.2(a);
(b) In each case determined as of 11:59 p.m. on the day
prior to the Closing Date, Seller's cash on hand as of the Closing
Date and all other cash in any of Seller's bank or savings accounts;
notes receivable, letters of credit or other similar items of Seller;
any stocks, bonds, certificates of deposit and similar investments of
Seller; and any other cash equivalents of Seller;
(c) Seller's books and records relating solely to
internal corporate, financial and tax matters and any other books and
records not related to any Station or the business or operations of
any Station;
(d) Any claims, rights and interest of Seller in and to
any (i) refunds of Taxes or fees of any nature whatsoever or (ii)
deposits or utility deposits, which, in each case, relate solely to
the period prior to the Closing Date;
(e) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by Seller
relating to property or equipment repaired, replaced or restored by
Seller prior to the Closing Date;
(f) All Employee Benefit Plans and all assets or funds
held in trust, or otherwise, associated with or used in connection
with the Employee Benefit Plans;
(g) All Choses in Action, if any, of Seller excluded from
Section 2.1(k);
(h) All tangible and intangible personal property
disposed of or consumed in the ordinary course of business between the
date of this Agreement and the Closing Date, or as otherwise permitted
under the terms hereof;
(i) Any collective bargaining agreement, any other
Contract not included in the Assumed Contracts, and all Contracts that
have terminated or expired prior to the Closing Date in the ordinary
course of business and as permitted hereunder; and
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(j) The personal effects and other personal property
identified on Schedule 2.2(j).
2.3. PURCHASE PRICE. Subject to the adjustments set forth in
Section 2.4 and 2.5(b), the Purchase Price for the Assets is Ten Million
Dollars ($10,000,000).
2.4. ADJUSTMENTS AND PRORATIONS.
(a) All revenues arising from the operation of the
Stations earned or accrued up until 11:59 p.m. on the day prior to the Closing
Date, and all expenses, costs and liabilities, arising therefrom incurred,
accrued or payable up until such time, including expenses arising under the
Assumed Contracts, tower rentals, business and license fees, utility charges,
real and personal property Taxes levied against the Assets, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, other Taxes, wages, salaries, vacation, sick and employee compensation
pay shall be prorated between Buyer and Seller in accordance with the principle
that (i) Seller shall receive all revenues, refunds and deposits of Seller held
by third parties, and shall be responsible for all expenses, costs and
liabilities incurred, payable or allocable to the conduct of the business and
operations of each Station for the period ending at 11:59 p.m. on the day prior
to the Closing Date and (ii) Buyer shall receive all revenues earned or accrued
and shall be responsible for all expenses, costs and liabilities incurred,
payable or allocable to the conduct of the business and operations of each
Station for the period commencing on and continuing after the Closing Date. An
adjustment of the Purchase Price and proration shall be made in favor of Buyer
to the extent that Buyer assumes any liability under any Assumed Contract to
refund (or to credit against payments otherwise due) any security deposit or
similar prepayment paid to Seller by any lessee or other third party which is
not otherwise credited to Buyer. Subject to Buyer's receipt of appropriate
estoppel certificates, an adjustment of the Purchase Price and proration shall
be made in favor of Seller to the extent that Seller has made (A) any security
deposit under any Assumed Contract whether or not there is a proration under
such Assumed Contract or (B) other prepayment under any Assumed Contracts for
which there is a proration. The Purchase Price shall be increased by an amount
equal to eighty percent of the face amount of Seller's Accounts Receivables.
Seller shall be liable for all of the costs of employee compensation relating
to each of the Stations properly attributable to or accruable on account of
service with the Seller through 11:59 p.m. on the date prior to the Closing
Date, including (1) all Taxes and related contributions, vacations and sick pay
and (2) all group medical, dental or death benefits for expenses incurred,
related to or arising from, events occurring on or prior to 11:59 p.m. on the
date prior to the Closing Date, or death or disability occurring on or prior to
11:59 p.m. on the date prior to the Closing Date, whether reported by the
Closing Date or thereafter; Buyer will be liable for all of the costs of
employee compensation relating to each of the Stations, properly attributable
or accruable thereafter on account of service with Buyer. Trade Deals shall
not be adjusted or prorated.
Seller has entered into a Sales Agreement and Deposit Receipt with
respect to certain real property located in Manchester, New Hampshire (the
"Manchester Tract"), a copy of which is set forth in Schedule 2.4. Subject to
Buyer's reasonable due diligence inspection which shall be completed by July 1,
1997, if Seller purchases the Manchester Tract prior to Closing, the Purchase
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Price shall be increased by an amount equal to the sum of (i) $85,900 plus (ii)
Seller's reasonable closing costs as set forth on the closing statement
delivered in connection with Seller's purchase of the Manchester Tract. If
Buyer reasonably rejects the Manchester Tract, it shall be deemed to be
Excluded Real Property and no adjustment shall be made to the Purchase Price in
respect thereof.
(b) Adjustments or prorations pursuant to this Section
2.4 will, insofar as feasible be determined and paid on the Closing Date based
upon Seller's good faith calculation delivered to Buyer five days prior to the
Closing Date, with final settlement and payment by the appropriate party
occurring no later than 60 days after the Closing Date. Within 60 days after
the Closing Date, Buyer shall submit to Seller its good faith determination of
the adjustments or prorations required by this Section 2.4. Except as
expressly provided in Section 2.4(a), Buyer's determination of the amount of
adjustment under this Section 2.4 shall be made in accordance with GAAP,
consistently applied. If Seller disagrees with the determination made by Buyer
of the adjustment, Seller shall give prompt written notice thereof, but in no
event later than 20 days after notice of Buyer's determination, specifying in
reasonable detail the nature and extent of the disagreement, and Buyer and
Seller shall have a period of 30 days in which to resolve the disagreement. If
the parties are unable to resolve the disagreement within the 30-day period,
the matter shall be submitted to an independent certified public accounting
firm selected by Buyer and Seller, which accounting firm shall be directed to
submit a final resolution within 30 days. The accounting firm's determination
shall be binding on Buyer and Seller. Each party shall bear the fees and
expenses of its own representatives, including its independent accountants, if
any, and shall share equally the fees and expenses of any such accounting firm,
if engaged, to resolve any disagreement between the parties. Within five
business days following a final determination hereunder, the party obligated to
make payment will make the payments determined to be due and owing in
accordance with this Section 2.4.
2.5. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. (a) As of the
Closing Date, Buyer shall assume and undertake to pay, discharge and perform
all the obligations and liabilities of Seller relating to each Station under
the Licenses and the Assumed Contracts assumed by Buyer relating to the time
period beginning on or arising out of events occurring on or after the Closing
Date, including those incurred prior to the Closing Date and performable in
accordance with their terms after the Closing Date. All other obligations and
liabilities of Seller, including (i) obligations or liabilities under any
contract not included in the Assumed Contracts, (ii) obligations or liabilities
under any Assumed Contract for which a Consent, if required, has not been
obtained as of the Closing, (iii) any obligations and liabilities arising under
the Assumed Contracts that relate to the time period prior to the Closing Date
or arise out of events occurring prior to the Closing Date and (iv) any
forfeiture, claim or pending litigation or proceeding relating to the business
or operations of any Station prior to the Closing Date (other than those to be
performed in accordance with their terms after the Closing Date), shall remain
and be the obligation and liability solely of Seller. Other than as specified
in the first sentence of this Section 2.5, Buyer, directly or indirectly, shall
assume no liabilities or obligations of Seller and shall not be liable
therefor.
(b) Schedule 2.5(b) contains a list of all of the Trade
Deals in effect as of March 31, 1997 and correctly sets forth the balance, in
dollar value, of either (i) Seller's obligations
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to the other party under such Trade Deals (denoted by a minus on Schedule
2.5(b)) or (ii) the amount due Seller under such Trade Deals (reflected as a
positive on Schedule 2.5(b)). On the Closing Date, Buyer shall assume Seller's
obligations under (i) the Trade Deals listed on Schedule 2.5(b) to the extent
that the goods or services to be provided by the advertisers pursuant to such
Trade Deals are solely used or useful in connection with the business or
operations of any Station and (ii) all Trade Deals entered into by Seller
between the date hereof and the Closing Date. The Trade Deals assumed by Buyer
pursuant to the terms of this Section 2.5(b) shall be considered Assumed
Contracts.
2.6. ALLOCATION. The parties hereto acknowledge that the
transactions contemplated hereby must be reported in accordance with Section
1060 of the Code. Accordingly, the parties shall report such transactions for
all purposes in accordance with the Purchase Price allocation set forth on
Schedule 2.6 hereto.
2.7. ▇▇▇▇▇▇▇ MONEY. (a) Concurrently with the execution of this
Agreement, Buyer shall deposit the Deposit Letter of Credit with the Escrow
Agent to be held in escrow in accordance with the Deposit Escrow Agreement.
(b) Subject to satisfaction of the conditions to the
obligations set forth in Article VIII, at the Closing, Seller shall instruct
the Escrow Agent to release and return the Deposit Letter of Credit to Buyer
for cancellation.
(c) If this Agreement is terminated as provided in
Section 10.1, Buyer and Seller shall instruct the Escrow Agent to release the
Deposit Letter of Credit to Buyer or to Seller, all as provided in Section
10.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying on such representations and warranties in entering into and
performing this Agreement).
(a) Organization, Good Standing, Etc. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to
do business in each state listed on Schedule 3.1(a), which states represent
every jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary. Seller has
delivered to Buyer true and complete copies of its Articles of Organization and
Bylaws, as in effect at the date of this Agreement. Seller is not in violation
of any provisions of its Articles of Organization or Bylaws.
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(b) Subsidiaries of Seller. Seller does not own,
directly or indirectly, any equity interest in, any other corporation,
partnership, or other person or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other similar
investment in any corporation, partnership, or other person.
(c) Authority. Seller has all requisite corporate power
and authority to enter into this Agreement, the Deposit Escrow Agreement, the
▇▇▇▇ of Sale and Assignment, the Assumption Agreement, the Indemnification
Escrow Agreement, the Non-Competition Agreement and each other agreement,
document, and instrument required to be executed by Seller in accordance
herewith (collectively, the "Transaction Documents") and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of the
Transaction Documents by Seller and the consummation by Seller of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary corporate action on the part of Seller, including, without
limitation, the requisite approval of the holders of the outstanding capital
stock of Seller entitled to vote thereon. The Transaction Documents have been,
or upon execution and delivery will be, duly executed and delivered and
constitute the valid and binding obligations of Seller enforceable against it
in accordance with their terms, subject as to enforceability to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(d) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents by Seller do not and the
performance by Seller of the transactions contemplated hereby or thereby will
not, subject to obtaining the consents, approvals, authorizations, and permits
and making the filings described in this Section 3.1(d), (i) violate, conflict
with, or result in any breach of any provision of Seller's Articles of
Organization and Bylaws, (ii) violate, conflict with, or result in a violation
or breach of, or constitute a default (with or without due notice or lapse of
time or both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate (whether as a result of a
change of control of Seller or otherwise) any material obligation, or result in
the loss of any material benefit, or give any person the right to require any
security to be repurchased, or give rise to the creation of any material lien,
charge, security interest, or encumbrance upon any of the Assets under any of
the terms, conditions, or provisions of any loan or credit agreement, note,
bond, mortgage, indenture, or deed of trust, or any license, lease, agreement,
or other instrument or obligation to which Seller is a party or by which it or
any of the Assets may be bound or subjected, or (iii) violate any order, writ,
judgment, injunction, decree, statute, law, rule, or regulation, of any
Governmental Entity applicable to Seller or by which or to which any material
Assets are bound or subject. No Consent of any Governmental Entity is required
by or with respect to the Seller in connection with the execution and delivery
of any Transaction Documents by Seller or the consummation of the transactions
contemplated hereby or thereby, except for (A) the filing of a premerger
notification report under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act") and (B) the FCC Consents (as contemplated by
Section 7.1 hereof).
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(e) Reports; Financial Statements; Absence of Certain
Changes or Events.
(i) Seller has filed all forms, reports,
statements, and other documents required to be filed with the FCC.
Seller has filed all forms, reports, statements, and other documents
required to be filed with any and all other Governmental Entities.
All such forms, reports, statements and other documents required to be
filed with the FCC or any other Governmental Entity are referred to
herein, collectively, as the "Company Reports". The Company Reports
were prepared in all material respects in accordance with the
requirements of applicable law.
(ii) Seller has delivered to Buyer copies of (A)
the reviewed balance sheets of Seller as of December 31, 1995 and
December 31, 1996, together with the reviewed statements of income and
cash flows of Seller for the periods then ended, and the notes
thereto, accompanied by the reports thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent public accountants (the "Reviewed Financial Statements"),
and (B) the internally prepared balance sheet of Seller as of March
31, 1997, together with the related unaudited statements of income for
the period then ended. The Reviewed Financial Statements, including
the notes thereto, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except to the
extent disclosed therein or required by changes in GAAP) and present
accurately the information purported to be presented therein as of
such dates and for the periods then ended.
(iii) Except as disclosed in Schedule 3.1(e), there
is no material liability or obligation of any kind, whether accrued,
absolute, fixed, contingent, or otherwise, of Seller that is not
reflected or reserved against in the balance sheet for the period
ended March 31, 1997 (the "Balance Sheet"), other than (A) liabilities
incurred in the ordinary course of business in a manner consistent
with past practice since March 31, 1997 (the "Balance Sheet Date"), or
(B) any such liability or obligation which would not be required to be
presented in financial statements or the notes thereto prepared in
conformity with GAAP applied, in a manner consistent with past
practice, in the preparation of the Financial Statements.
(iv) Except as disclosed in Schedule 3.1(e), since
the Balance Sheet Date, Seller has conducted its business only in the
ordinary course consistent with past practice and nothing has occurred
that would have been prohibited by Section 4.1 if the terms of such
section had been in effect as of and after the Balance Sheet Date.
Since the Balance Sheet Date, there has not occurred, and Seller has
not incurred or suffered, any event, circumstance, or fact that could
result in a Material Adverse Effect. Additionally, since the Balance
Sheet Date, there has not occurred, and Seller has not incurred or
suffered, any event, circumstance, or fact that materially impairs the
physical assets of any of the Stations.
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(f) Compliance with Applicable Laws: FCC Matters.
(i) The business of Seller has been conducted in
compliance in all material respects with each Applicable Law. No
investigation or review by any Governmental Entity with respect to
Seller is pending or, to the Knowledge of Seller, threatened. Without
limiting the generality of the foregoing, Seller has complied with the
Communications Act of 1934, as amended, and all material rules,
regulations and written policies of the FCC thereunder (collectively,
the "Communications Act"), all obligations with respect to equal
employment opportunity under Applicable Law, and all material rules
and regulations of the Federal Aviation Administration applicable to
each of the towers used or held for use by a Station. In addition,
Seller has duly filed, or caused to be so filed, with the FCC and
other appropriate Governmental Entities all reports, statements,
documents, registrations, filings, or submissions with respect to the
operation of each Station and the ownership thereof, including,
applications for renewal of authority required by Applicable Law to be
filed. All such FCC filings complied in all material respects with
Applicable Laws when made, and no deficiencies have been asserted with
respect to any such filings. The material required by 47 C.F.R.
Section 73.3526 to be kept in the public inspection files of each
Station is in such files and was placed in such files at the
appropriate times.
(ii) Schedule 3.1(f) is a true and complete list
of (A) all of the FCC Licenses, including the expiration dates
thereof, as of the date of this Agreement and (B) all other material
licenses, permits, or authorizations issued to Seller by any other
Governmental Entities and held by it as of the date of this Agreement.
Such FCC Licenses, licenses, permits, and authorizations, and all
pending applications for modification, extension, or renewal thereof
or for new licenses, permits, permissions, or authorizations, are
collectively referred to herein as the "Station Licenses." Schedule
3.1(f) accurately lists the legally authorized holder(s) of the
Station Licenses. The Station Licenses constitute all the licenses,
permits and authorizations required for the operation of each of the
Stations and the business of Seller, and each of the Station Licenses
is in full force and effect. Each of the Stations has been operated
in all material respects in accordance with the terms of its Station
Licenses and the Seller is otherwise in compliance with, and has
conducted its business so as to comply with, the terms of such Station
Licenses. There are no proceedings pending or, to the Knowledge of
Seller, threatened with respect to Seller's ownership or operation of
any Station which reasonably may be expected to result in the
revocation, material adverse modification, non- renewal, or suspension
of any of the Station Licenses, the denial of any pending applications
for any Station Licenses, the issuance against Seller of any cease and
desist order, or the imposition of any administrative actions by the
FCC, including the proposed assessment of fines or penalties, or any
other Governmental Entity with respect to any Station Licenses, or
which reasonably may be expected to adversely affect any Station's
ability to operate as currently operated or Buyer's ability to obtain
control of any Station Licenses or to operate any Station. To the
Knowledge of Seller, no other broadcast station or radio
communications facility is causing interference to any Station's
transmissions beyond that which is allowed by FCC rules and
regulations and no Station is causing
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interference to any other broadcast station or radio communications
facilities' transmissions beyond that which is allowed by the FCC
rules and regulations. To the Knowledge of Seller, there is no reason
to believe that the FCC will not renew any of the Station Licenses
issued by the FCC in the ordinary course of business. To the
Knowledge of Seller, there are no facts relating to Seller under the
Communications Act that reasonably may be expected to disqualify
Seller from transferring control of any of the Station Licenses
pursuant to the terms of this Agreement or that would prevent the
consummation by Seller of the transactions contemplated by this
Agreement.
(g) Absence of Litigation. Except as set forth on
Schedule 3.1(g), there is no claim, action, suit, inquiry, judicial, or
administrative proceeding, grievance, or arbitration pending or, to the
Knowledge of Seller, threatened against Seller or any of the Assets by or
before any arbitrator or Governmental Entity, nor are there any investigations
relating to Seller or any of the Assets pending or, to the Knowledge of Seller,
threatened by or before any arbitrator or Governmental Entity. Except as set
forth in Schedule 3.1(g), there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator outstanding against Seller or any of the Assets. There is
no action, suit, inquiry, judicial, or administrative proceeding pending or, to
the Knowledge of Seller, threatened against Seller relating to the transactions
contemplated by this Agreement.
(h) Insurance. Since January 1, 1994, Seller has been
insured against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. Schedule
3.1(h) lists all fire, general liability, malpractice liability, theft, and
other forms of insurance and all fidelity bonds held by or applicable to
Seller. Except as set forth on Schedule 3.1(h), the policies of general
liability, malpractice liability, fire, theft, and other insurance maintained
with respect to the operations, assets, or business of Seller provide adequate
coverage against loss. To the Knowledge of Seller, no event has occurred,
including the failure by Seller to give any notice or information or the
delivery of any inaccurate or erroneous notice or information, which limits or
impairs the rights of Seller under any such insurance policies in such a manner
as could have a Material Adverse Effect. Excluding insurance policies that
have expired and been replaced in the ordinary course of business, no insurance
policy has been canceled within the last two years prior to the date hereof.
(i) Owned Real Property. Schedule 3.1(i) contains an
accurate description of all the Owned Real Property. Except as set forth on
Schedule 3.1(j) and subject to any Permitted Encumbrances, Seller has good and
marketable, fee simple, absolute title in and to the Owned Real Property.
Seller has sufficient title to such easements, rights of way and other rights
appurtenant to each of the Owned Real Properties as are necessary to permit
ingress and egress to and from the Owned Real Property to a public way, and the
improvements on the Owned Real Property have access to such sewer, water, gas,
electric, telephone and other utilities as are necessary to allow the business
of the Seller operated thereon to be operated in the ordinary course. There is
no pending condemnation or similar proceeding affecting the Owned Real Property
or any portion thereof, and to the Knowledge of Seller, no such action is
threatened. Except as set forth on Schedule 3.1(i), the
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improvements located on the Owned Real Property are in sufficiently good
condition (except for ordinary wear and tear) to allow the business of the
Seller to be operated in the ordinary course and there has been no damage to
such improvements that affects the conduct of such business in any material
respect that has not been repaired or remedied. Except as set forth on
Schedule 3.1(i), there are no lessees or tenants at will in possession of any
portion of any of the Owned Real Property other than Seller, whether as
lessees, tenants at will, trespassers or otherwise. Except as set forth on
Schedule 3.1(i), no zoning, building or other federal, state or municipal law,
ordinance, regulation or restriction is violated in any material respect by the
continued maintenance, operation or use of the Owned Real Property or any tract
or portion thereof or interest therein in its present manner. The current use
of the Owned Real Property and all parts thereof does not violate any
restrictive covenants of record affecting any of the Owned Real Property. All
necessary Licenses by any Governmental Entity with respect to the Owned Real
Property have been obtained, have been validly issued and are in full force and
effect.
(j) Leased Real Property. Schedule 3.1(j) contains an
accurate description of all the leasehold interests relating to the business
and operations of each of the Stations as now conducted. Each lease described
in Schedule 3.1(j) is a valid and binding obligation of Seller and is in full
force and effect without amendment other than as described in Schedule 3.1(j).
Except as otherwise disclosed on Schedule 3.1(j), Seller is not, and to the
Knowledge of the Seller, no other party is, in default under any lease
described in Schedule 3.1(j). Subject to obtaining the Consents disclosed in
Schedule 3.1(j), Seller has the full legal power and authority to assign its
rights under the leases listed in Schedule 3.1(j) to Buyer. All leasehold
interests listed in Schedule 3.1(j) (including the improvements thereon) are
available for immediate use in the conduct of the business and operations of
each of the Stations as currently conducted.
(k) Personal Property. Schedule 3.1(k) contains a
description of the items of Personal Property (having a replacement cost of not
less than $25,000 for each item) which comprise all Personal Property used or
held for use in connection with the business and operations of each Station or
which permit the operation of each Station as now conducted. Except as set
forth on Schedule 3.1(k), Seller has good title to, or a valid leasehold or
license interest in, all Personal Property and none of the Personal Property is
subject to any Lien or other encumbrances, except for Permitted Encumbrances.
Seller is not, and to the Knowledge of the Seller, no other party is, in
default under any of the leases, licenses and other Contracts relating to the
Personal Property. Except as otherwise disclosed in Schedule 3.1(k), the
Personal Property (i) is in good operating condition and repair (ordinary wear
and tear excepted), (ii) is available for immediate use in the business and
operation of each of the Stations as currently conducted and (iii) permits each
of the Stations to operate in accordance with the terms of their respective FCC
Licenses, and the rules and regulations of the FCC, and with all other
applicable federal, state and local statutes, ordinances, rules and
regulations.
(l) Liens and Encumbrances. All of the Assets, including
leases, are free and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, tenancies, and other possessory interests, conditional
sale or other title retention agreements, assessments, easements,
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rights of way, covenants, restrictions, rights of first refusal, defects in
title, encroachments, and other burdens, options or encumbrances of any kind
(collectively, "Liens") except (i) Permitted Encumbrances and (ii) Liens set
forth on Schedule 3.1(l) (the Liens referred to in clauses (i) and (ii) being
"Permitted Liens"). At the Closing, all of the Assets shall be free and clear
of all Liens other than Permitted Encumbrances.
(m) Environmental Matters. Except as described on
Schedule 3.1(m),
(i) The real property and facilities owned,
operated, and leased by Seller and the operations of Seller thereon
comply and have at all times complied in all material respects with
all Applicable Laws and rules of common law pertaining to the
environment, natural resources, and public or employee health and
safety, including all Environmental Laws;
(ii) No judicial proceedings are pending or, to
the Knowledge of Seller, threatened against Seller alleging the
violation of any Environmental Laws, and there are no administrative
proceedings pending or, to the Knowledge of Seller, threatened against
Seller, alleging the violation of any Environmental Laws and no notice
from any Governmental Entity or any private or public person has been
received by Seller claiming any violation of any Environmental Laws in
connection with any real property or facility owned, operated or
leased by Seller, or requiring any remediation, clean-up,
modification, repairs, work, construction, alterations, or
installations on or in connection with any real property or facility
owned, operated or leased by Seller that are necessary to comply with
any Environmental Laws and that have not been complied with or
otherwise resolved to the satisfaction of the party giving notice;
(iii) All permits, registrations, licenses,
authorizations, and the like ("Permits") required to be obtained or
filed by Seller under any Environmental Laws in connection with
Seller's operations, including those activities relating to the
generation, use, storage, treatment, disposal, release, or remediation
of Hazardous Substances (as such term is defined in Section 3.1(m)(iv)
hereof), have been duly obtained or filed, and Seller is and has at
all times been in full compliance in all material respects with the
terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Seller or any of its predecessors on, in, or under any of the owned,
operated, or leased real property or facilities are and have at all
times been generated, stored, used, treated, disposed of, and released
by such persons or on their behalf in such manner as not to result in
any material Environmental Costs or Liabilities. "Hazardous
Substances" means (A) any hazardous materials, hazardous wastes,
hazardous substances, toxic wastes, and toxic substances as those or
similar terms are defined under any Environmental Laws; (B) any
asbestos or any material which contains any hydrated mineral silicate,
including chrysolite, amosite, crocidolite, tremolite, anthophylite
and/or actinolite, whether friable or non-friable; (C) PCBs, or
PCB-containing
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materials, or fluids; (D) radon; (E) any other hazardous, radioactive,
toxic or noxious substance, material, pollutant, contaminant,
constituent, or solid, liquid or gaseous waste; (F) any petroleum,
petroleum hydrocarbons, petroleum products, crude oil and any
fractions or derivatives thereof, any oil or gas exploration or
production waste, and any natural gas, synthetic gas and any mixtures
thereof; (G) any substance that, whether by its nature or its use, is
subject to regulation under any Environmental Laws or with respect to
which any Environmental Laws or Governmental Entity requires
environmental investigation, monitoring or remediation; and (H) any
underground storage tanks, dikes, or impoundments as defined under any
Environmental Laws. "Environmental Costs or Liabilities" means any
losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and the
costs of investigation or feasibility studies and performance of
remedial or removal actions and cleanup activities) in connection with
(1) any Environmental Laws, (2) order of, or contract of Seller with,
any Governmental Entity or any private or public persons or (3) any
exposure of any person or property to Hazardous Substances;
(v) There are not now, nor have there been in the
past, on, in or under any property or facilities when owned, leased,
or operated by Seller or, to the knowledge of the Seller, when owned,
leased, or operated by any of its predecessors, any Hazardous
Substances that are in a condition or location that violates any
Environmental Law or that reasonably could be expected to require
remediation under any Environmental Laws or give rise to a claim for
damages or compensation by any affected person or to any Environmental
Costs or Liabilities; and
(vi) Seller has not received, and to the Knowledge
of Seller, does not expect to receive, any notification from any
source advising Seller that: (A) it is a potentially responsible
party under CERCLA or any other Environmental Laws; (B) any real
property or facility currently or previously owned, operated, or
leased by it is identified or proposed for listing as a federal
National Priorities List ("NPL") (or state-equivalent) site or a
Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") list (or state-equivalent) site; and
(C) any facility to which it has ever transported or otherwise
arranged for the disposal of Hazardous Substances is identified or
proposed for listing as an NPL (or state-equivalent) site or CERCLIS
(or state-equivalent) site.
(n) Taxes. Seller has filed or caused to be filed all
Tax Returns affecting the Stations or the Assets which are required to be filed
by Seller, all such Tax Returns which have been filed are materially accurate
and complete, and Seller has timely paid all Taxes shown on such returns or on
any Tax assessment received by Seller to the extent that such Taxes have become
due or is contesting such Taxes or assessments. There are no Liens for Taxes
upon the Stations or the Assets except for the Permitted Encumbrances. Seller
has not received notice of any Tax deficiency or delinquency. No Internal
Revenue Service audit of Seller is pending or, to the Knowledge of
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Seller, threatened, and the results of any completed audits are properly
reflected in the Financial Statements. Substantially all monies required to be
withheld by Seller from employees or collected from customers for Taxes and the
portion of any Taxes to be paid by Seller to governmental agencies or set aside
in accounts for such purposes have been so paid or set aside, or such monies
have been reserved against and entered upon the books and are reflected in the
Balance Sheet. There are no legal, administrative, or tax proceedings pursuant
to which Seller is or could be made liable for any taxes, penalties, interest,
or other charges, the liability for which could extend to Buyer as transferee
of the business of the Stations.
(o) Certain Agreements.
(i) Schedule 3.1(o) hereto lists each (A)
employment or consulting Contract which is not terminable without
liability or penalty on 30 days or less notice, (B) Contract under
which any party thereto remains obligated to provide goods or services
having a value, or to make payments aggregating, in excess of $50,000
per year, and (C) other Contract that is material to the operation of
the Stations or to the Seller's business, in any such case to which
Seller is a party or Seller or the Assets is bound. Each such
Contract described in Schedule 3.1(o) or required to be so described
is a valid and binding obligation of Seller and is in full force and
effect without amendment. Except as set forth on Schedule 3.1(o),
Seller and, to the Knowledge of Seller, each other party to such
Contracts, has performed in all material respects the obligations
required to be performed by it under such Contracts and is not (with
or without lapse of time or the giving of notice, or both) in breach
or default thereunder. Schedule 3.1(o) identifies, as to each such
Contract listed thereon, whether the consent of the other party
thereto is required, and the extent of any payments required, in order
for such Contract to continue in full force and effect upon the
consummation of the transactions contemplated hereby or whether such
Contract can be canceled by the other party without liability to such
other party due to the consummation of the transactions contemplated
hereby. A complete copy of each written Contract and a description of
each oral Contract set forth in Schedule 3.1(o) has been provided to
Buyer prior to the date of this Agreement.
(ii) Except as set forth on Schedule 3.1(o),
Seller is not a party to any oral or written agreement, plan or
arrangement with any employee or other station or broadcast personnel
(whether an employee, consultant or an independent contractor) of
Seller (A) the benefits of which are contingent, or the terms of which
are materially altered, upon, or result from, the occurrence of a
transaction involving Seller of the nature of any of the transactions
contemplated by this Agreement, (B) providing severance benefits
longer than forty-five days or other benefits after the termination of
employment or other contractual relationship regardless of the reason
for such termination and regardless of whether such termination is
before or after a change of control, (C) under which any person may
receive payments subject to the tax imposed by Section 4999 of the
Code or (D) any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of
any of the benefits
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of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits
(vested and unvested) under all the Employee Pension Benefit Plans,
which Seller or any other trades or businesses under common control
within the meaning of Section 4001(b)(1) of ERISA with Seller
(collectively, the "ERISA Group") maintains, or to which Seller or any
member of the ERISA Group is or has been obligated to contribute (the
"Pension Plans"), did not, as of the respective last annual valuation
dates for such Pension Plans, exceed the value of the assets of such
Pension Plan allocable to such benefits. None of such Pension Plans
subject to Title IV of ERISA or any of their related trusts has been
terminated or partially terminated. Neither Seller or any member of
the ERISA Group has contributed or been obligated to contribute to any
Multiemployer Plan. Except as set forth on Schedule 3.1(p), neither
Seller nor any member of the ERISA Group has any Employee Benefit
Plans.
(ii) True, correct, and complete copies of each of
the Employee Benefit Plans, and related trusts, if applicable, have
been furnished to Buyer, along with the most recent report filed on
Form 5500 and summary plan description with respect to each Employee
Benefit Plan required to file Form 5500.
(iii) Seller is not a party to any collective
bargaining agreement. Seller has not agreed to recognize any union or
other collective bargaining representative, nor has any union or other
collective bargaining representative been certified as the exclusive
bargaining representative of any of its employees. Seller (A) is, and
has always been since January 1, 1995, in substantial compliance with
all applicable laws regarding labor, employment and employment
practices, terms and conditions of employment, equal employment
opportunity, employee benefits, affirmative action, wages and hours,
plant closing and mass layoff, occupational safety and health,
immigration, and workers' compensation, (B) is not engaged, nor has it
since January 1, 1995, engaged, in any unfair labor practices, and has
no, and has not had since January 1, 1995, any, unfair labor practice
charges or complaints before the National Labor Relations Board
pending or, to the Knowledge of Seller threatened against it, (C) has
no, and has not had since January 1, 1995, any, grievances,
arbitrations, or other proceedings arising or asserted to arise under
any collective bargaining agreement, pending or, to the Knowledge of
Seller threatened, against it and (D) has no, and has not had since
January 1, 1995, any, charges, complaints, or proceedings before the
Equal Employment Opportunity Commission, Department of Labor or any
other Governmental Entity responsible for regulating employment
practices, pending, or, to Seller's Knowledge, threatened against it.
There is no labor strike, slowdown, work stoppage or lockout pending
or, to the Knowledge of Seller, threatened against or affecting
Seller, and Seller has not experienced any labor strike, slowdown,
work stoppage or lockout since January 1, 1995. To
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the Knowledge of Seller no union organizational campaign or
representation petition is currently pending with respect to any of
the employees of Seller.
(q) Patents, Trademarks, Etc. Schedule 3.1(q) is a true
and complete list of all of the Intellectual Property. Except as set forth on
Schedule 3.1(q), Seller owns or has the unencumbered right to use pursuant to a
valid, binding, and enforceable license agreement or other contract or
arrangement all such Intellectual Property. To the Knowledge of Seller, Seller
is not infringing any such Intellectual Property, and Seller is not aware of
any infringement by others of any of the Intellectual Property owned by Seller.
(r) Affiliate Relationships. Except as set forth on
Schedule 3.1(r), there are no contracts or other arrangements involving Seller
in which any member, manager, officer, director, or Affiliate of Seller has a
financial interest, including indebtedness to Seller.
(s) Assets. The Assets and the Excluded Assets include
substantially all assets used or held for use in connection with the business
and operations of the Stations as currently conducted.
(t) No Dispositions. Since the Balance Sheet Date, there
has not occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of the assets of any Station other than any disposition of
(i) obsolete property,(ii) property in connection with the acquisition of
replacement property of equal value, or (iii) assets having, in the aggregate,
a value of less than $50,000 disposed of in the ordinary course of business and
consistent with past practices.
(u) No Knowledge of Buyer's Breach. Seller has no
Knowledge of any breach of representation or warranty by Buyer or of any other
condition or circumstance that would excuse Seller from its timely performance
of its obligations hereunder. Seller shall notify Buyer as promptly as
practicable if any such information comes to its attention prior to the Closing
Date.
3.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows (with the understanding that Seller is relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization Standing and Power. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
(b) Authority. Buyer has all requisite corporate power
and authority to enter into the Transaction Documents to which it will be a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of such Transaction Documents by Buyer and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Buyer.
The Transaction Documents
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to which Buyer will be a party have been, or upon execution and delivery will
be, duly executed and delivered and constitute the valid and binding
obligations of Buyer, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents to which Buyer will be a
party do not and the performance by Buyer of the transactions contemplated
hereby or thereby will not, subject to obtaining the consents, approvals,
authorizations, and permits and making the filings described in this Section
3.2(c), (A) violate, conflict with, or result in any breach of any provisions
of Buyer's Articles of Incorporation and Bylaws, (B) violate, conflict with, or
result in a violation or breach of, or constitute a default (with or without
due notice or lapse of time or both) under, or permit the termination of, or
result in the acceleration of, or entitle any party to accelerate (whether as a
result of a change of control of Buyer or otherwise) any obligation, or result
in the loss of any benefit, or give any person the right to require any
security to be repurchased, or give rise to the creation of any lien, charge,
security interest, or encumbrance upon any of the Assets under any of the
terms, conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which Buyer is a party or by which it or any
of the Assets may be bound or subjected, or (C) violate any order, writ,
judgment, injunction, decree, statute, law, rule or regulation, of any
Governmental Entity applicable to Buyer or by which or to which any of the
Assets is bound or subject. No Consent of any Governmental Entity is required
by or with respect to Buyer in connection with the execution and delivery of
any Transaction Documents by Buyer or the consummation by it of the
transactions contemplated hereby or thereby, except for (A) the filing of a
premerger notification report under the HSR Act and (B) the FCC Consents (as
contemplated by Section 7.1)
(d) Litigation. As of the date hereof, there is no
action, suit, inquiry, judicial or administrative proceeding pending or, to the
Knowledge of Buyer, threatened against it relating to the transactions
contemplated by this Agreement.
(e) FCC Matters. There are no facts relating to Buyer
under the Communications Act or otherwise that reasonably may be expected to
disqualify it from qualifying as an assignee of the Station Licenses or that
would prevent it from consummating the transactions contemplated by this
Agreement. Buyer hereby represents and warrants that it is able to certify on
an FCC Form 314 that it is financially qualified.
(f) No Knowledge of Seller's Breach. Buyer has no
Knowledge of any breach of representation or warranty by Seller or of any other
condition or circumstance that would excuse Buyer from its timely performance
of its obligations hereunder. Buyer shall notify Seller as promptly as
practicable if any such information comes to its attention prior to the Closing
Date.
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(g) No Assurance. Buyer is relying solely on the express
representations, warranties and covenants of Seller contained in this Agreement
and Transaction Documents, and upon no other representations or statements of
Seller or any of its Affiliates or their respective directors, officers,
employees, agents or representatives, and acknowledges and agrees that nothing
in this Agreement or the Transaction Documents shall be deemed to create any
additional implied duty, disclosure obligation or responsibility on the part of
Seller or its Affiliates.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. COVENANTS OF SELLER. Except as contemplated by this Agreement
or to the extent that Buyer shall otherwise consent in writing, from the date
of this Agreement until the Closing, Seller covenants and agrees that Seller
shall not:
(a) conduct its business in any manner except in the
ordinary course consistent with past practice, including, without limitation,
with respect to Trade Deals and other barter arrangements; or
(b) fail to use commercially reasonable efforts to
preserve intact Seller's business organization substantially as in effect as of
this date and to preserve its relationships with customers, suppliers and
others having business dealings with it substantially as in effect as of this
date; or
(c) fail to use commercially reasonable efforts to
maintain the Assets in their current condition except for ordinary wear and
tear and damage by casualty governed by Section 7.6; or
(d) fail to use all commercially reasonable efforts to
maintain the present programming of the Stations consistent with past
practices; or
(e) except for amendments, terminations (without payment
of penalty or damages), renewals, or failures to renew (without payment of
penalty or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with Buyer reasonably in advance thereof), materially amend or
terminate (i.e., a contract or agreement of the type required to be described
in Schedule 3.1(o)), or default in any material respect (or take or omit to
take any action that, with or without the giving notice or passage of time,
would constitute a material default) under any material Contract; or
(f) merge or consolidate with or into any other legal
entity, dissolve, or liquidate; or
(g) except as required by the terms and provisions of
written contracts between Seller and an employee thereof as in existence on
March 31, 1997 or in connection with any
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reasonable amendments required by the provider or underwriter of any Employee
Benefit Plan in connection with the annual renewal of such Employee Benefit
Plans, adopt or amend any Employee Benefit Plan or collective bargaining
agreement; or
(h) except as set forth in Schedule 4.1(h), sell (whether
by merger, consolidation, or the sale of an equity interest or assets), lease,
or dispose of any Assets except in the ordinary course of business and
consistent with past practice or, even if in the ordinary course of business
and consistent with past practices (other than sales of surplus or obsolete
equipment), whether in one or more transactions, in no event involving an Asset
or Assets having an aggregate fair market value in excess of $50,000; or
(i) mortgage, pledge, or subject to any material Lien
which will not be removed or released at or prior to Closing, other than
Permitted Encumbrances, any of the Assets; or
(j) except as required by GAAP, applicable law, or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(k) change in any material respect its existing practices
and procedures with respect to the collection of accounts receivable of the
Stations and, except with respect to good faith attempts consistent with past
practice to obtain payment of a past due receivable, or except in accordance
with existing practices, a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether to the
account debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(l) change any Station's advertising rates or policies,
procedures or methods in connection with the sale of advertising time in a
manner expected to accelerate the receipt of cash payments or fail to incur
annual advertising and promotional department expenses in cash and trade other
than as budgeted for 1997 (as such budget previously has been delivered to
Buyer); or
(m) enter into, or enter into negotiations or discussions
with any person other than Buyer with respect to any local marketing agreement
or any other similar agreement; or
(n) agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement.
4.2. ENVIRONMENTAL SITE ASSESSMENTS. If Buyer or its lenders or
other financing sources require Phase I or Phase II ESAs, Seller covenants and
agrees that, upon written notice from Buyer to Seller identifying the locations
at which such ESAs are required, Seller shall cooperate and permit Buyer to
cause to be performed by a nationally recognized and duly qualified
environmental consultant selected by Buyer, with the consent of Seller (which
consent shall not be unreasonably withheld), an ESA at each identified
transmission site owned, operated, or leased by Seller and at such other
identified real properties and facilities owned, operated, or leased by Seller.
The ESAs
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which are to be conducted for the benefit of Buyer shall be performed in a
manner that at a minimum satisfies the requirements of ASTM Practice E 1527-94.
The cost of any ESAs shall be borne by Buyer. Any site visits made by Buyer's
consultants shall be performed in collaboration with Seller's designees in
accordance with a schedule mutually agreed upon in advance. Buyer and/or its
contractors will be accompanied by the Seller's representatives at all times,
and no notification or discussions of environmental matters shall be initiated
with governmental agencies or third parties without the prior notice to and
agreement by Seller. If Buyer, based upon the conclusions in any Phase I
report, desires to perform intrusive testing, Buyer shall present such request
and the supporting written justification to Seller and both parties shall use
reasonable best efforts to mutually agree upon the scope and nature of any
such intrusive investigation. Any intrusive investigation shall be under the
supervision of Seller and all results of any intrusive investigation shall be
immediately shared with Seller.
4.3. BROADCAST TRANSMISSION INTERRUPTION. Seller shall give prompt
written notice to Buyer if before the Closing the regular broadcast
transmission of any of the Stations in the normal and usual manner is
interrupted for a period of two consecutive hours or more, excluding
interruptions for normal and routine maintenance.
ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
5.1. NO SOLICITATION OF TRANSACTIONS. Seller shall not, directly
or indirectly, through any officer, director, stockholder, employee, agent,
financial advisor, banker or other representative, or otherwise, solicit,
initiate, or encourage the submission of any proposal or offer from any person
relating to any acquisition or purchase of all or any material portion of the
Assets or any equity interest in Seller or any merger, consolidation, share
exchange, business combination, or other similar transaction with Seller or
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate, or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Seller shall immediately
communicate to Buyer the material terms of any such proposal (and the identity
of the party making such proposal) which it may receive and, if such proposal
is in writing, the Seller shall promptly deliver a copy of such proposal to
Buyer. Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which Seller is a
party. Seller immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2. ACCESS AND INFORMATION. (a) Until the Closing, subject only
to applicable rules and regulations of the FCC, Seller shall afford to ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇▇▇▇▇, Buyer's chief engineer, and
other employees and representatives of Buyer upon Buyer's reasonable
request(including accountants and counsel) full access, during normal business
hours, upon reasonable notice and in such manner as will not unreasonably
interfere with the conduct of the
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business of Seller, to all properties, books, records, and Tax Returns of
Seller and all other information reasonably requested with respect to its
business, together with the opportunity to make copies of such books, records,
and other documents and to discuss the business of Seller with such officers,
directors, station managerial personnel (including the Station Management of
each Station), accountants, consultants, and counsel for Seller as Buyer deems
reasonably necessary or appropriate for the purposes of familiarizing itself
with Seller and the Stations, including the right to visit the Stations. In
furtherance of the foregoing, Seller shall authorize and instruct its
independent public accountants to meet with Buyer and its representatives,
including Buyer's independent public accountants in Boston, Massachusetts, to
discuss the business and accounts of Seller and to make available (with the
opportunity to make copies) to Buyer and its representatives, including its
independent public accountants, all the work papers of its accountants related
to their audit of the consolidated financial statements and Tax Returns of
Seller.
(b) Within 30 days after the end of each calendar month,
Seller shall deliver to Buyer, for each of the Stations, and for Seller as a
whole, monthly operating statements (in a form consistent with the monthly
operating statements previously supplied to Buyer) prepared in the ordinary
course of business for internal purposes. In addition, within 45 days after
the end of each calendar quarter, Seller shall deliver to Buyer, for each of
the Stations, quarterly statements prepared in the ordinary course for internal
purposes. Seller shall deliver to Buyer the rating books and such other
ratings information subscribed to by Seller including, without limitation,
Arbitrends, Accuratings or any other written information reflective of the
quantitative or qualitative nature of the audiences of the Stations for each of
the Stations within ten days of receipt of the same by any officer or director
of Seller. Seller shall instruct the Station Management of each Station to
provide such information and reports to Buyer's corporate officers promptly
upon receipt by such Station Management. In addition, as soon as the same are
distributed to Seller's officers or directors by each Station, Seller will
provide Buyer with copies of each Station's monthly sales pacing reports.
(c) Without duplication of Section 5.2(b), at such time
as Seller provides the same to its lenders, Seller shall provide Buyer with
copies of the financial statements and other information delivered by Seller to
such lenders.
5.3. ASSISTANCE. If Buyer requests, Seller will cooperate, and
will cause its accountants to cooperate, in all reasonable respects with any
financing efforts of Buyer or its Affiliates (including providing assistance in
the preparation of one or more registration statements or other offering
documents relating to debt and/or equity financing) and any other filings that
may be made by Buyer or its Affiliates with the SEC, all at the sole expense of
Buyer. Seller (a) shall furnish to its independent accountants (or, if
requested by Buyer to Buyer's independent public accountants), such customary
management representation letters as its accountants may require of Seller as a
condition to its execution of any required accountants' consents necessary in
connection with the delivery of any "comfort" letters requested by financing
sources of Buyer or its Affiliates and (b) shall furnish to Buyer all financial
statements (audited and unaudited) and other information in the possession of
Seller or its representatives or agents as Buyer shall reasonably determine is
necessary or appropriate in connection with such financing. Buyer will
indemnify and hold harmless Seller and its, officers,
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directors, and controlling persons against any and all claims, losses,
liabilities, damages, costs, or expenses (including reasonable attorneys' fees
and expenses) that may arise out of or with respect to the financing efforts by
Buyer or its Affiliates, including any registration statement, prospectus,
offering documents, and other filings related thereto; provided, however, that
subject to the limitations and provisions of this Agreement, nothing herein
shall prevent Buyer from asserting any claim for breach of representation or
warranty under this Agreement.
5.4. COMPLIANCE WITH STATION LICENSES. Seller shall cause the
Stations to be operated in material accordance with the Station Licenses and
all applicable rules and regulations of the FCC and in material compliance with
all other applicable laws, regulations, rules, and orders. Seller shall use
all commercially reasonable efforts not to cause or permit any of the Station
Licenses to expire or be surrendered, adversely modified, or terminated.
Seller shall file or cause to be filed with the FCC all applications (including
license renewals) or other documents required to be filed in connection with
the operation of the Stations. In addition, if requested by Buyer and at
Buyer's sole expense, Seller shall file or cause to be filed with the FCC
modification applications that may be useful in connection with the operation
of the Stations. Should the FCC institute any proceedings for the suspension,
revocation or adverse modification of any of the Station Licenses or any
forfeiture proceedings, Seller will use all commercially reasonable efforts to
promptly contest such proceedings and to seek to have such proceedings
terminated in a manner that is favorable to the Stations. Seller will use all
commercially reasonable efforts to maintain the FCC construction permits (if
any) listed in Schedule 3.1(f) in effect until the applicable construction
projects are timely completed and to diligently prosecute all pending FCC
applications listed in Schedule 3.1(f). If Seller (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any other Governmental Entity, or should Seller (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, Seller shall promptly notify Buyer in writing and use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
5.5. NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt
written notice to Buyer of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of Seller contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date, (b) the failure of Seller, or any officer,
director, employee, or agent of Seller, to comply with or satisfy in any
material respect any covenant, condition, or agreement to be complied with or
satisfied by it hereunder, (c) the occurrence of a Station Event (as defined in
Section 9.1), and (d) the occurrence of any threat made to Seller by any of
Seller or any General Manager, Station Manager, General Sales Manager or
Programming Director of a Station to resign or otherwise terminate their
employment or independent contractor relationship with Seller. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
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5.6. THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, Seller shall use all commercially reasonable efforts, including making
any required payments, to obtain the written consent from any party to an
agreement or instrument identified in Schedule 3.1(o) or any other Assumed
Contract which is required to permit the consummation of the transactions
contemplated hereby.
ARTICLE VI
COVENANTS OF BUYER
6.1. NOTIFICATION OF CERTAIN MATTERS. If Buyer (or its FCC
counsel) receives an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any Governmental Entity, that could affect Buyer's ability to consummate the
transactions contemplated hereby, or should Buyer (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, Buyer shall promptly notify Seller thereof and shall use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the assignment of the FCC Licenses or the
completion of the transactions contemplated by this Agreement; provided,
however, that Buyer shall not be required pursuant to this Section 6.1 to
divest itself or cause any Affiliate thereof to divest itself of any media
business or interest therein. In addition, Buyer shall give to Seller prompt
written notice of (a) the occurrence, or failure to occur, of any event of
which it becomes aware that has caused or that would be likely to cause any
representation or warranty of Buyer contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date, and (b) the
failure of Buyer, or any officer, director, employee, or agent thereof, to
comply with or satisfy in any material respect any covenant, condition, or
agreement to be complied with or satisfied by it hereunder. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
6.2. EMPLOYEE MATTERS. Buyer will use its reasonable efforts to
determine at least ten days prior to the Closing Date those employees of Seller
whom it desires to extend offers of employment. Any offers so extended by
Buyer shall be on such terms and conditions that Buyer shall determine in its
sole discretion. Buyer will give Seller prompt notice of the names of any
employee of Seller who Buyer has determined not to extend an offer of
employment. Seller waives any claims against Buyer and any of Seller's
employees who are extended an offer of employment by Buyer arising from such
employment by Buyer including any claims arising under any employment agreement
or non-competition agreement between such person and Seller.
6.3. CERTAIN LEGAL QUALIFICATIONS. Buyer covenants that it has not
taken and, after the date of this Agreement, it shall not take any action that
could reasonably be expected to prevent the parties from obtaining the FCC
Consents or the consents of any other Governmental Entity necessary to
consummate the transactions contemplated hereby.
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6.4. SELLER'S ACCESS TO REAL PROPERTY. Seller shall have the right
following the Closing Date to have reasonable access, upon five days prior
written notice, to the Real Property for the purpose of complying with any
obligations under Environmental Laws.
ARTICLE VII
MUTUAL COVENANTS
7.1. APPLICATION FOR FCC CONSENTS. By the tenth business day after
the date hereof, Seller and Buyer will, and will cause all necessary persons or
entities to join in one or more applications filed with the FCC requesting the
FCC's written consent to the assignment of the FCC Licenses pursuant to this
Agreement (the "Applications"). The parties will take all proper steps
reasonably necessary (a) to diligently prosecute the Applications and (b) to
obtain the FCC Consents. The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material breach
of this Agreement; provided, however, that Buyer shall not be required pursuant
to this Section 7.1 to divest itself or cause any Affiliate thereof to divest
itself of any media business or interest therein. The failure by either party
to timely file or diligently prosecute its portion of any Application shall be
a material breach of this Agreement.
7.2. CONTROL OF STATIONS. This Agreement shall not be consummated
until after the FCC Consents with respect to the Applications referred to in
Section 7.1 are granted and have become Final Orders, unless such requirement
is waived pursuant to Section 8.1. Between the date of this Agreement and the
Closing Date, Buyer will not directly or indirectly control, supervise or
direct the operation of the Stations. Further, between the date of this
Agreement and the Closing Date, Seller shall, directly or indirectly, supervise
and control the operation of the Stations. Such operation shall be the sole
responsibility of Seller.
7.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with this Agreement and shall
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such matters. Without limiting the foregoing,
promptly following the execution of this Agreement, the parties shall (a) file
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice the notifications and other information (if any) required to be
filed under the HSR Act with respect to the transactions contemplated hereby
and shall use their commercially reasonable efforts to cause all applicable
waiting periods under the HSR Act to expire or be terminated as of the earliest
possible date and (b) make all necessary filings and, thereafter, make any
other required submissions with respect to the transactions contemplated hereby
under the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities laws. Nothing in this Section 7.3 shall
require Buyer to divest itself or to cause any Affiliate thereof to divest
itself of any media business or interest therein.
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7.4. BROKERS OR FINDERS. Seller represents and warrants to Buyer,
that no agent, broker, investment banker, or other or person engaged by Seller
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee payable by Buyer or Seller in connection with any of the
transactions contemplated by this Agreement. Except for the fee payable to
Media Venture Partners, which fee shall be paid in accordance with the
provisions of Section 12.7, Buyer represents and warrants to Seller that Buyer
has not engaged any broker, investment banker or other person that will be
entitled to any broker's or finder's fee or any other commissions or fee from
Seller in connection with any of the transactions contemplated by this
Agreement.
7.5. BULK SALES LAW. Buyer agrees to waive compliance by Seller
with the requirements of any bulk sales or fraudulent conveyance statute, and
Seller agrees to indemnify and hold Buyer harmless against any claim made
against Buyer by any creditor of Seller as a result of a failure to comply with
any such statute.
7.6. RISK OF LOSS.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing. In the event of any
such loss, damage, impairment, confiscation, or condemnation, whether or not
covered by insurance, Seller shall promptly notify Buyer of such loss, damage,
impairment, confiscation, or condemnation.
(b) If Seller, at its expense, repairs, replaces, or
restores such Assets to their prior condition to the reasonable satisfaction of
Buyer before the Closing, Seller shall be entitled to all insurance proceeds
and condemnation awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost,
damaged, impaired, confiscated or condemned Assets having a replacement cost in
excess of $50,000 in the aggregate or informs Buyer that it does not intend to
restore or replace such Assets, Buyer may at its option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement
without Seller completing the restoration and replacement of such
Assets, provided that Seller shall assign all rights under applicable
insurance policies and condemnation awards, if any, to Buyer; and in
such event, Seller shall have no further liability with respect to the
condition of the Assets directly attributable to the loss, damage,
impairment, confiscation, or condemnation.
(d) Buyer will notify Seller of a decision under the
options described in Section 7.6(c)(i) or (ii) above within ten business days
after Seller's notice to Buyer of the damage or destruction of Assets and the
estimate of the costs to repair or replace; provided, however, that if Seller
states that it intends to restore the damaged Assets and if Seller has not
restored such damaged
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Assets immediately prior to the Closing Date, notwithstanding Buyer's prior
delivery of a notice to proceed pursuant to this Section 7.6(d), Buyer shall
have the right to either postpone the Closing or terminate this Agreement by
notice forthwith.
7.7. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
to this Agreement and their duly authorized representatives shall take all such
action. Without limiting the generality of the foregoing, if, after the
Closing Date, Buyer seeks indemnification or recovery from one or more other
parties to an Assumed Contract or otherwise seeks to enforce such Assumed
Contract and, in order to obtain such indemnification, recovery or enforcement,
counsel to Buyer and Seller reasonably determine that it is necessary for
Seller to initiate a suit, participate in any enforcement proceeding or
otherwise provide assistance to Buyer, then, at the request and the sole
expense of Buyer, Seller shall take such action as Buyer may reasonably request
in connection with Buyer's efforts to obtain such indemnification, recovery or
enforcement.
7.8. BALANCE SHEET UPDATE. Upon the execution of this Agreement,
Seller agrees that it will promptly prepare and provide to Buyer revisions to
the Balance Sheet for the period from the Balance Sheet Date through May 31,
1997. Failure of Buyer to raise any objection thereto prior to 5:00 p.m.,
Boston time on the tenth business day after receipt thereof shall constitute
Buyer's agreement that, from the period commencing on the Balance Sheet Date
and ending upon the date of execution of this Agreement, there has not
occurred, and Seller has not incurred or suffered, any event, circumstance or
fact that could result in a Material Adverse Effect.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Buyer and Seller to effect the transactions contemplated hereby
are subject to the satisfaction (or, in the case of the condition specified in
the last sentence of Section 8.l(a), the waiver by Buyer and Seller) on or
prior to the Closing Date of the following conditions:
(a) Consents and Approvals. All authorizations,
consents, orders, or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred, or been obtained, other than any such
authorizations, consents, orders, approvals, authorizations, declarations or
filings that are ministerial in nature and which the failure to obtain would
not effect the transactions contemplated by this Agreement.
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(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
(d) Concurrent Transactions. The closing of the
Concurrent Transactions shall occur concurrently with the Closing.
8.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations
and warranties of Seller set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (other than the
representations and warranties set forth in the second and third sentences of
Section 3.1(e)(iv)), and Buyer shall have received a certificate to such effect
signed on behalf of Seller by the chief executive officer or by the chief
financial officer of Seller. For the purposes of this Section 8.2(a), the
representations and warranties of Seller shall be deemed to be true and correct
in all material respects unless the aggregate effect of any breaches thereof
could reasonably be expected to have a Material Adverse Effect.
(b) Performance of Obligations. Seller shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date, and Buyer shall have
received a certificate to such effect signed on behalf of Seller by the chief
executive officer or by the chief financial officer of Seller.
(c) Consents Under Agreements. Buyer shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each person that is a party to a Contract specifically identified
in Schedule 8.2(c) whose consent or approval shall be required as a condition
to Buyer's obligation to effect the transactions contemplated hereby and such
consent or approval shall be in form and substance satisfactory to Buyer.
(d) Legal Opinions. Buyer shall have received from ▇▇▇▇
and ▇▇▇▇ LLP, counsel to Seller, and Pepper & ▇▇▇▇▇▇▇▇▇ L.L.P., FCC counsel to
Seller, opinions dated the Closing Date, in substantially the forms attached as
Exhibit F hereto, which opinion, if requested by Buyer, shall expressly provide
that they may be relied upon by Buyer's lenders, underwriters, or other sources
of financing with respect to the transactions contemplated hereby.
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(e) Real Estate Title Commitment. Within 45 days after
the date of this Agreement, Buyer, at its sole cost and expense, shall have
obtained a preliminary report on title to the Owned Real Property (other than
the Excluded Real Property) covering a date subsequent to the date of this
Agreement, issued by the Title Company, which preliminary report shall contain
a commitment (the "Title Commitment") of the Title Company to issue an owner's
title insurance policy at Buyer's cost as Buyer may reasonably require (the
"Title Policy") insuring the fee simple absolute interest of Buyer in such
Owned Real Property on and after the Closing Date. The Title Commitment shall
be subject only to the standard printed exceptions and: (i) liens of current
state and local property taxes which are not delinquent or subject to penalty;
(ii) unviolated zoning regulations and restrictive covenants and easements of
record which do not detract from the value of such Owned Real Property and do
not materially and adversely affect, impair or interfere with the use of any
property affected thereby as heretofore used by Seller or the Stations; (iii)
public utility easements of record, in customary form, to serve such Owned Real
Property; and (iv) Permitted Encumbrances. The Title Policy shall be issued on
the Closing Date.
(f) Survey. If requested by Buyer, Seller, at Buyer's
sole cost and expense, shall have obtained a survey of the Owned Real Property
(other than the Excluded Real Property) as of a date subsequent to the date
hereof which shall: (i) be prepared by a registered land surveyor acceptable
to Buyer; (ii) be certified to the Title Company and to Buyer; and (iii) show
with respect to such Owned Real Property: (A) the legal description of such
Owned Real Property (which shall be the same as the Title Policy pertaining
thereto); (B) all buildings, structures and improvements thereon and all
restrictions of record and other restrictions that have been established by an
applicable zoning or building code or ordinance and all easements or rights of
way across or serving such Owned Real Property (including any off-site
easements affecting or appurtenant thereto); (C) no encroachments upon such
Owned Real Property or adjoining parcels by buildings, structures or
improvements and no other survey defects; (D) access to such parcel from a
public street; and (E) a flood certification reasonably satisfactory to Buyer
to the effect that no portion of such Owned Real Property is located within a
flood hazard area.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Seller pursuant to
Section 9.2 shall have been delivered.
8.3. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Seller.
(a) Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, and Seller shall have
received a certificate to such effect signed on behalf of Buyer by the chief
executive officer or by the chief financial officer of Buyer.
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(b) Performance of Obligations of Buyer. Buyer shall
have performed in all material respects the obligations required to be
performed by it under this Agreement prior to the Closing Date, and Seller
shall have received a certificate to such effect signed on behalf of Buyer by
the chief executive officer or by the chief financial officer of Buyer.
(c) Legal Opinion. Seller shall have received from
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel to Buyer, an opinion dated the Closing Date, in
substantially the form attached as Exhibit G hereto.
(d) Closing, Deliveries. All documents and instruments
required to be delivered by Buyer pursuant to Section 9.2 shall have been
delivered.
ARTICLE IX
CLOSING
9.1. CLOSING. (a) Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, or at such other place and time as Buyer
and Seller may agree, the Closing will take place at the offices of ▇▇▇▇ and
▇▇▇▇ LLP, Boston, Massachusetts, at 10:00 a.m., local time, on the later to
occur of (i) the fifth business day after Seller delivers to Buyer its
internally produced unaudited balance sheet as of December 31, 1997 and related
statement of income for the 12-month period then ended, and (ii) a date
selected by Buyer on five business days notice to Seller, which date shall be
on the 10th business day after the day on which the FCC Consents have been
granted by Final Order (the "Closing Date"). Notwithstanding the foregoing:
(b) In the case of a Trading Event, a Banking Event or a
Station Event (in each case as defined below), (i) if the Cessation Date (as
defined below) is less than 60 days after the Event Date (as defined below),
Buyer, in its discretion, may extend the Closing Date to a date not later than
the 30th day after the Cessation Date, (ii) if the Cessation Date is more than
60, but less than 90, days after the Event Date, Buyer, in its discretion, may
extend the Closing Date to the first to occur of the 10th business day after
the Cessation Date or the 90th day (or, if not a business day, the next
business day) after the Event Date. In the event of a Station Event, if the
Cessation Date has not occurred by the 120th day after the Event Date, then on
the 120th day (or, if not a business day, the next business day) after the
Event Date Buyer, in its discretion, shall elect to close the transactions
contemplated by this Agreement on the fifth business day thereafter or
terminate this Agreement;
(c) In the case of a Conflict Event, Buyer, in its
discretion, may extend the Closing Date to a date not to exceed the 90th day
after the Event Date;
(d) If all of the conditions to the obligations of Buyer
and Seller to effect the transactions contemplated by this Agreement have been
satisfied or waived prior to the Closing Date other than the conditions
specified in Section 8.2(a), with respect to Buyer, or Section 8.3(a), with
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respect to Seller, and the breaching party is diligently attempting to cure any
such breach as provided in Section 10.1, then the Closing Date shall be
postponed for up to an additional 20 days; and
(e) If the Closing does not occur within 80 days after
the date of the Final Order, the parties shall request approval from the FCC to
extend the Closing so that the Closing contemplated hereunder will not violate
any FCC rules or regulations.
For purposes of this Agreement, a "Trading Event" shall mean that
trading generally in securities on the New York Stock Exchange shall have been
suspended or materially limited; a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; a "Conflict Event" shall mean
the occurrence of any major armed conflict involving a substantial
participation by the armed forces of the United States of America; a "Station
Event" shall mean any act of nature (including fires, floods, earthquakes, and
storms), calamity, casualty or condemnation or the act or omission to act of
any state or federal regulatory agency having jurisdiction over the Stations
that has caused one or more Stations not to be operating in a manner
substantially consistent with the operations conducted before such act,
omission, calamity, casualty, condemnation or agency action occurred or not in
compliance with its or their respective Station License(s); an "Event Date"
shall mean the date on which a Trading Event, Banking Event, Conflict Event, or
a Station Event occurs; and a "Cessation Date" shall mean the date on which a
Trading Event, Banking Event, Conflict Event, or a Station Event ends. Pro
forma adjustments shall be made for purposes of calculating gross revenues for
the 12-month period specified in the definition of "Station Event" with respect
to any radio broadcast station acquired during such 12-month period, to assume
that such station was acquired at the beginning of such 12-month period and
include the gross revenues of such station for the full 12-month period.
9.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to Seller (or to
the Escrow Agent, as indicated) the following:
(i) Purchase Price. The Purchase Price (less the
Holdback Amount) by wire transfer of immediately available funds;
(ii) Holdback Amount. The Holdback Amount to the
Escrow Agent by wire transfer of immediately available funds;
(iii) Certificates. The certificates referred to
in Section 8.3(a) and (b);
(iv) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Buyer;
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(v) Indemnification Escrow Agreement. A
counterpart of the Indemnification Escrow Agreement executed by Buyer;
(vi) Non-Competition Agreement. A counterpart of
the Non-Competition Agreement executed by Buyer;
(vii) Legal Opinion. The opinion of counsel
referred to in Section 8.3(c); and
(viii) Studio/Tower Lease. A counterpart of the
Studio/Tower Lease executed by Buyer.
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) Certificates. The certificates described in
Section 8.2(a) and (b);
(ii) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Seller;
(iii) Indemnification Escrow Agreement. A
counterpart of the Indemnification Escrow Agreement executed by
Seller;
(iv) Non-Competition Agreement. A counterpart of
the Non-Competition Agreement between Buyer and Seller executed by
Seller;
(v) Legal Opinions. The opinions of counsel
referred to in Section 8.2(d);
(vi) Transfer Documents. The duly executed ▇▇▇▇
of Sale and Assignment, together with any other assignments and other
transfer documents as requested by Buyer;
(vii) Consents; Acknowledgments. The original of
each Consent;
(viii) Estoppel Certificates. Estoppel certificates
from the lessor(s) of the Leased Real Property in a form and substance
satisfactory to Buyer and its lenders or other financing sources;
(ix) Licenses, Contracts, Business Records, Etc.
To the extent they are in the possession of Seller, copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, statistics, engineering records and all files and
records used by Seller in connection with a Station's business and
operations, which copies shall be available at the Closing or at a
Station's principal business offices;
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(x) Warranty Deed. A Warranty Deed executed by
Seller conveying fee simple title to the Owned Real Property to Buyer,
subject only to the Permitted Encumbrances, in proper statutory form
for recording together with documentary stamps affixed thereto;
(xi) No-Lien Affidavit. A standard No-Lien
Affidavit executed by Seller, which shall be in the recordable form
and otherwise satisfactory to the Title Company in order to delete the
standard printed exceptions relating to mechanics' liens and
parties-in-possession;
(xii) GAP Affidavit. An affidavit, if requested by
the Title Company, as may be necessary to insure the gap between the
effective date of the Title Commitment to and through the date of the
recordation of the deed to the Owned Real Property;
(xiii) Title Requirements. Such other documents as
shall be reasonably required by the Title Company as called for or
required under the terms of any title policy obtained or issued to
Buyer; and
(xiv) Studio/Tower Leases. An executed counterpart
of the lease referred to at Sections 9.2(a)(viii).
(c) At the Closing, Seller and Buyer shall instruct the
Escrow Agent to deliver, and it shall deliver, the Deposit Letter of Credit to
Buyer.
(d) At the Closing, Buyer shall receive from the chief
executive officer or chief financial officer of Seller a non-foreign affidavit
within the meaning of section 1445(b)(2) of the Code.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Seller or Buyer;
(i) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or
taken any other action (which order, decree or ruling the parties
hereto shall use their best efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling, or
other action shall have become final and nonappealable;
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(ii) if, for any reason, the FCC denies or
dismisses any of the Applications and the time for reconsideration or
court review under the Communications Act with respect to such denial
or dismissal has expired and there is not pending with respect thereto
a timely filed petition for reconsideration or request for review;
(iii) if, for any reason, any of the Applications
is designated for an evidentiary hearing by the FCC; or
(iv) if the Closing shall not have occurred by the
later of the first anniversary of the date on which the Form 314
applications for the FCC Consents are filed, or the date to which the
Closing Date is extended pursuant to the second sentence of Section
9.1; provided, however, that the right to terminate this Agreement
under this clause (iv) shall not be available to any party whose
breach of this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date; or
(c) by Buyer:
(i) if there shall have been any breaches of the
representations, warranties, covenants or agreements of Seller set
forth in this Agreement (other, subject to the provisions of Section
7.8, than the representations and warranties set forth in the second
and third sentences of Section 3.1(e)(iv)) the aggregate effect of
which could reasonably be expected to have a Material Adverse Effect
or to materially and adversely affect the ability of the parties to
consummate the transactions contemplated hereby, which breaches Seller
cannot reasonably be expected to cure or which Seller is not
diligently attempting to cure following receipt by Seller of written
notice of such breach;
(ii) pursuant to the provisions of Section 7.7;
(iii) with respect to a Station Event, at its
option, as provided in the last sentence of Section 9.1(b); or
(iv) if the FCC grants any of the Applications
with any adverse conditions not generally imposed on grants of such
applications and the time for reconsideration or court review under
the Communications Act with respect to such adverse conditions has
expired and there is not pending with respect thereto a timely filed
petition for reconsideration or request for review; or
(d) by Seller:
(i) if there shall have been any material breach
of any representation, warranty, covenant or agreement of Buyer set
forth in this Agreement, which breach Buyer cannot reasonably be
expected to cure or which Buyer is not diligently attempting to cure
following receipt by Buyer of written notice of such breach; or
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(ii) if the FCC grants any of the Applications
with any adverse conditions affecting Seller that are not generally
imposed on grants of such applications and the time for
reconsideration or court review under the Communications Act with
respect to such adverse conditions has expired and there is not
pending with respect thereto a timely filed petition for
reconsideration or request for review.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other party.
10.2. EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by
either Seller or Buyer as provided above, there shall be no liability on the
part of either Buyer or Seller, except for liability arising out of a breach of
this Agreement. Articles I, XI, and XII, Section 7.6, and this Article X shall
survive the termination of this Agreement. If this Agreement is terminated by
Seller pursuant to Section 10.1(d), the parties agree and acknowledge that
Seller will suffer damages that are not practicable to ascertain. Accordingly,
in such event and if within 10 business days after termination of this
Agreement by Seller pursuant to Section 10.1(d), Seller delivers to Buyer a
written demand for liquidated damages, subject to Buyer's receipt of a
counterpart of the Release executed by Seller, Seller shall be entitled to the
sum of $550,000 as liquidated damages payable by Buyer within 10 business days
after receipt of Seller's written demand and payable in accordance with the
provisions of the Deposit Escrow Agreement. As security for payment thereof,
Buyer has, concurrently with the execution of this Agreement, entered into the
Deposit Escrow Agreement with Seller and the Escrow Agent as provided in
Section 2.7. The parties agree that the foregoing liquidated damages are
reasonable considering all the circumstances existing as of the date hereof and
constitute the parties' good faith estimate of the actual damages reasonably
expected to result from the termination of this Agreement by Seller pursuant to
Section 10.1(d). Seller agrees that, to the fullest extent permitted by law,
Seller's right to payment of such liquidated damages as provided in this
Section 10.2 shall be its sole and exclusive remedy if the Closing does not
occur with respect to any damages whatsoever that Seller may suffer or allege
to suffer as a result of any claim or cause of action asserted by Seller
relating to or arising from breaches of the representations, warranties or
covenants of Buyer contained in this Agreement and to be made or performed at
or prior to the Closing. If this Agreement is terminated by Seller pursuant to
Section 10.1(d), upon Buyer's receipt of a counterpart of the Release executed
by Seller, Buyer and Seller shall instruct the Escrow Agent to release the
Deposit Letter of Credit to Seller. If this Agreement is terminated either by
Buyer or Seller pursuant to any provision of Section 10.1 other than a
termination by Seller pursuant to Section 10.1(d), then, Buyer and Seller shall
instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer.
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(b) As a condition of payment, and upon receipt of the
liquidated damages under this Section 10.2, Seller hereby irrevocably and
unconditionally releases, acquits, and forever discharges Buyer and its
successors, assigns, officers, directors, employees, agents, stockholders,
subsidiaries, parent companies and other affiliates (corporate or otherwise)
(the "Released Parties") of and from any and all Released Claims, including,
without limitation, all Released Claims arising out of, based upon, resulting
from or relating to the negotiation, execution, performance, breach or
otherwise related to or arising out of the Transaction Documents or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses
or expenses (including attorneys' and other professional fees and expenses)
held by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or contingent,
direct or derivative.
ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION OF BUYER. Subject to the provisions of this
Article XI, Seller agrees to indemnify and hold harmless the Buyer Indemnified
Parties from and against any and all Buyer Indemnified Costs.
11.2. INDEMNIFICATION OF SELLER. Subject to the provisions of this
Article XI, Buyer agrees to indemnify and hold harmless the Seller Indemnified
Parties from and against any and all Seller Indemnified Costs.
11.3. DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall
give prompt written notice to Indemnifying Party of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder and the alleged basis therefor. Any
failure so to notify an Indemnifying Party shall not relieve such Indemnifying
Party from any liability that it may have to such Indemnified Party under this
Article XI unless the failure to give such notice materially and adversely
prejudices such Indemnifying Party. The Indemnifying Party shall have the
right to assume control of the defense of, settle, or otherwise dispose of such
third-party action on such terms as they deem appropriate; provided, however,
that:
(a) The Indemnified Party shall be entitled, at its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Parties shall pay the attorneys' fees of one
counsel to the Indemnified Party if (i) the employment of separate counsel
shall have been authorized in writing by any such Indemnifying Party in
connection with the defense of such third-party action, (ii) the Indemnifying
Parties shall not have employed counsel reasonably satisfactory to the
Indemnified Party to have charge of such third-party action, (iii) counsel to
the
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Indemnified Party shall have reasonably concluded that there may be defenses
available to the Indemnified Party that are different from or additional to
those available to the Indemnifying Party, or (iv) counsel to the Indemnified
Party and the Indemnifying Party shall have advised their respective clients in
writing, with a copy delivered to the other party, that there is a conflict of
interest that could make it inappropriate under applicable standards of
professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party or if,
in the opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgment could have an adverse effect on its business;
which approval shall not be unreasonably withheld or delayed (it shall not be
deemed unreasonable for Buyer to withhold consent to any settlement,
compromise, admission or acknowledgment if the amount of Buyer Indemnified
Costs resulting therefrom could reasonably be expected to exceed the remainder
of the Holdback Amount then held by the Escrow Agent pursuant to the terms of
the Indemnification Escrow Agreement (and not otherwise subject to pending
claims);
(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such
third-party action; and
(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Party fails to assume the
defense within a reasonable length of time or (ii) to the extent the
third-party action seeks an order, injunction, or other equitable relief
against the Indemnified Party which, if successful, would materially adversely
affect the business, operations, assets, or financial condition of the
Indemnified Party; provided, however, that the Indemnified Party shall make no
settlement, compromise, admission, or acknowledgment that would give rise to
liability on the part of any Indemnifying Party without the prior written
consent of such Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article XI and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4. DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the
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Indemnified Party shall notify the Indemnifying Party in writing of any
Indemnified Costs which such Indemnified Party claims are subject to
indemnification under the terms hereof. Subject to the limitations set forth
in Section 11.6(c), the failure of the Indemnified Party to exercise promptness
in such notification shall not amount to a waiver of such claim unless the
resulting delay materially prejudices the position of the Indemnifying Party
with respect to such claim.
11.5. ESCROW. On the Closing Date, Buyer and Seller will enter into
the Indemnification Escrow Agreement in accordance with which Buyer shall, at
Closing, deposit an amount of the Purchase Price equal to $180,000 (the
"Holdback Amount") with the Escrow Agent.
11.6. LIMITATIONS. Subject to Section 11.7 and Section 12.17
hereof, the following provisions of this Section 11.6 shall be applicable after
the time of the Closing:
(a) Minimum Loss. No Indemnifying Party shall be
required to indemnify an Indemnified Party for Indemnified Representation Costs
unless and until the aggregate amount of such Indemnified Representation Costs
for which the Indemnified Party is otherwise entitled to indemnification
pursuant to this Article XI exceeds $30,000 (the "Minimum Loss"). After the
Minimum Loss is exceeded, the Indemnified Party shall be entitled to be paid
the entire amount of its Indemnified Representation Costs in excess of (but not
including) the Minimum Loss, subject to the limitations on recovery and
recourse set forth in this Section 11.6 and in Section 11.7 below and subject
to the exception contained in Section 12.17. For purposes of determining the
aggregate amount of Minimum Loss suffered by an Indemnified Party, each
representation and warranty contained in this Agreement for which
indemnification can be or is sought hereunder shall be read (including for
purposes of determining whether a breach of such representation or warranty has
occurred) without regard to materiality (including Material Adverse Effect)
qualifications that may be contained therein. In addition, in determining
whether an Indemnifying Party shall be required to indemnify an Indemnified
Party under this Article XI, once the Minimum Loss requirement set forth in
this clause (a) has been satisfied, each representation and warranty contained
in this Agreement for which indemnification can be or is sought hereunder shall
be read (including for purposes of determining whether a breach of such
representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein.
(b) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Representation Costs pursuant to this Article XI
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the second anniversary of the Closing Date, except that
this time limitation shall not apply to any claims contemplated by Section
12.17.
(c) Recourse against Escrowed Funds. Subject to Section
12.17 hereof, a Buyer Indemnified Party shall be entitled to payment only out
of the Holdback Amount pursuant to the terms of this Article XI and the
Indemnification Escrow Agreement for all amounts due to a Buyer
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Indemnified Party with respect to any claim by a Buyer Indemnified Party
against Seller for Buyer Indemnified Representation Costs payable under this
Article XI.
(d) Other Indemnified Costs. The provisions of this
Section 11.6 shall only be applicable to Indemnified Representation Costs and
shall not be applicable to any other Indemnified Costs.
11.7. INSTRUCTIONS TO ESCROW AGENT. Seller hereby covenants and
agrees that at any ▇▇▇▇ ▇▇▇▇▇▇ is or becomes obligated to indemnify a Buyer
Indemnified Party for Buyer Indemnified Costs under this Article XI, Seller
will execute and deliver to the Escrow Agent written instructions to release to
the Buyer Indemnified Party such portion of the Holdback Amount as is necessary
to indemnify the Buyer Indemnified Party for such Buyer Indemnified Costs.
ARTICLE XII
GENERAL PROVISIONS
12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations and
warranties set forth in this Agreement shall terminate on the second
anniversary of the Closing Date. Following the date of termination of a
representation or warranty, no claim can be brought with respect to a breach of
such representation or warranty, but such termination shall not affect any
claim for a breach of a representation or warranty that was asserted before the
date of termination. To the extent that such are performable after the
Closing, each of the covenants and agreements contained in each of the
Transaction documents shall survive the Closing indefinitely.
12.2. FURTHER ACTIONS. After the Closing Date, Seller shall execute
and deliver such other certificates, agreements, conveyances, and other
documents, and take such other action, as may be reasonably requested by Buyer
in order to transfer and assign to, and vest in, Buyer the Assets pursuant to
the terms of this Agreement.
12.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
12.4. WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand,
or Seller, on the other hand, to comply with any obligation, covenant,
agreement, or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
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12.5. SPECIFIC PERFORMANCE. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be entitled,
in addition to any other remedies which may be available, including money
damages, to obtain specific performance of the terms of this Agreement. In the
event of any action to enforce this Agreement specifically, Seller hereby
waives the defense that there is an adequate remedy at law.
12.6. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
12.7. EXPENSES AND OBLIGATIONS. Except as otherwise expressly
provided in this Agreement or as provided by law, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. Notwithstanding the foregoing, (a) the
fee payable to the Escrow Agent shall be borne as provided in the
Indemnification Escrow Agreement and the Deposit Escrow Agreement, (b) the
brokerage fees payable to Media Venture Partners shall be borne by Buyer, (c)
responsibility for sales taxes arising out of the transactions contemplated by
this Agreement shall be shared equally by Seller and Buyer and (d) any filing
fees payable in connection with the transfer of the FCC Licenses shall be borne
by Seller. In the event of a dispute between the parties in connection with
this Agreement and the transactions contemplated hereby, each of the parties
hereto hereby agrees that the prevailing party shall be entitled to
reimbursement by the other party of reasonable legal fees and expenses incurred
in connection with any action or proceeding.
12.8. PARTIES IN INTEREST. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
(other than the Indemnified Parties as provided in Article XI) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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(a) If to Buyer, to
Capstar Acquisition Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
3700 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Capstar Broadcasting Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Seller, to
Knight Radio, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each
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of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed
to include the exhibits and schedules hereto and the other certificates,
documents and instruments delivered hereunder) constitutes the entire agreement
of the parties hereto and supersedes all prior agreements, letters of intent
and understandings, both written and oral, among the parties with respect to
the subject matter hereof. There are no representations or warranties,
agreements, or covenants other than those expressly set forth in this
Agreement.
12.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
12.13. PUBLIC ANNOUNCEMENTS. Seller and Buyer shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation. Prior to the Closing, Seller will not
issue any other press release or otherwise make any public statements regarding
its business, except as may be required by applicable law.
12.14. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Seller and without releasing Buyer from any of its obligations
or liabilities hereunder, Buyer may assign or delegate any or all of its rights
or obligations under this Agreement to any Affiliate thereof, and (b) nothing
in this Agreement shall limit Buyer's ability to make a collateral assignment
of its rights under this Agreement to any institutional lender that provides
funds to Buyer without the consent of Seller. Seller shall execute an
acknowledgment of such assignment(s) and collateral assignments in such forms
as Buyer or its institutional lenders may from time to time reasonably
request; provided, however, that unless written notice is given to Seller that
any such collateral assignment has been foreclosed upon, Seller shall be
entitled to deal exclusively with Buyer as to any matters arising under this
Agreement or any of the other agreements delivered pursuant hereto. In the
event of such an assignment, the provisions of this Agreement shall inure to
the benefit of and be binding on Buyer's assigns.
12.15. DIRECTOR AND OFFICER LIABILITY. Neither the directors,
officers or stockholders of Buyer or Seller nor their respective Affiliates
shall have any personal liability or obligation arising under this Agreement
(including any claims that any party may assert).
12.16. NO REVERSIONARY INTEREST. The parties expressly agree,
pursuant to Section 73.1150 of the FCC's rules, that Seller does not retain any
right to reassignment of any of the FCC Licenses in the future, or to operate
or use the facilities of the Stations for any period beyond the Closing Date.
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12.17. NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article XI shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section
11.6(a) (relating to Minimum Loss), 11.6(b) (relating to limitations on the
period of time during which a claim for indemnification may be brought), or
11.6(c) (relating to recourse against escrowed funds), shall be deemed a waiver
by any party to this Agreement of any right or remedy which such party may have
at law or equity based on any other party's fraudulent acts or omissions, nor
shall any such provisions limit, or be deemed to limit, (i) the amounts of
recovery sought or awarded in any such claim for fraud, (ii) the time period
during which a claim for fraud may be brought, or (iii) the recourse which any
such party may seek against another party with respect to a claim for fraud;
provided, that with respect to such rights and remedies at law or equity, the
parties further acknowledge and agree that none of the provisions of this
Section 12.17, nor any reference to this Section 12.17 throughout this
Agreement, shall be deemed a waiver of any defenses which may be available in
respect of actions or claims for fraud, including but not limited to, defenses
of statutes of limitations or limitations of damages.
12.18. USE OF NAME. Notwithstanding anything contained herein to the
contrary, the Seller and its stockholders shall not be prohibited from using
the name "Knight Quality Stations" in the Caribbean Basin.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed, all as of the date first written above.
SELLER:
KNIGHT RADIO, INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
BUYER:
CAPSTAR ACQUISITION COMPANY, INC.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
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Its: Vice President
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ANNEX A
THE STATIONS
WGIR-AM Manchester, New Hampshire
WGIR-FM Manchester, New Hampshire
WEZF-FM Burlington, Vermont