ASSETS PURCHASE AGREEMENT
by and among
AMERICAN RADIO SYSTEMS CORPORATION
WGRR LIMITED PARTNERSHIP,
and
THE ▇▇▇▇▇▇ GROUP, INC.
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE OF ASSETS 1
1.1 Transfer of Assets 1
1.2 Excluded Assets 3
ARTICLE 2 ASSUMPTION OF OBLIGATIONS 3
2.1 Assumption of Obligations 3
2.2 Retained Liabilities 4
ARTICLE 3 CONSIDERATION 4
3.1 Delivery of Consideration 4
3.2 Escrow Deposit 4
3.3 Proration of Income and Expenses; Trade Agreements
Adjustment 5
3.4 Allocation of Purchase Price 5
ARTICLE 4 CLOSING 6
4.1 Closing 6
ARTICLE 5 GOVERNMENTAL CONSENTS 6
5.1 FCC Consent 6
5.2 FCC Application 6
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER 7
6.1 Organization and Standing 7
6.2 Authorization and Binding Obligation 7
6.3 Qualification 7
6.4 Financial Capability; No Financing Condition 7
6.5 Absence of Conflicting Agreements or Required Consents 7
6.6 Commissions or Finder's Fees 8
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER 8
7.1 Organization and Standing 8
7.2 Authorization and Binding Obligation 8
7.3 Absence of Conflicting Agreements or Required Consents 8
7.4 Government Authorizations 8
7.5 Compliance with FCC Regulations 10
7.6 Taxes 10
7.7 Personal Property 10
7.8 Contracts 10
7.9 Status of Contracts 10
7.10 Environmental 11
7.11 Intellectual Property 11
7.12 Financial Statements 11
7.13 Personnel Information 12
7.14 Litigation 12
7.15 Compliance With Laws 12
7.16 Employee Benefit Plans 13
7.17 Commissions or Finder's Fees 13
7.18 Material Adverse Change 13
7.19 Instruments of Conveyance; Good Title 13
7.20 Special Arrangements 13
7.21 Undisclosed Liabilities 13
7.22 Full Disclosure 14
ARTICLE 8 COVENANTS OF BUYER 14
8.1 Closing 14
8.2 Notification 14
8.3 No Inconsistent Action 14
8.4 Accounts Receivable 14
8.5 Pre-Closing Obligations 15
ARTICLE 9 COVENANTS OF SELLER 15
9.1 Seller's Pre-Closing Covenants 15
9.2 Notification 17
9.3 No Inconsistent Action 17
9.4 Closing 17
9.5 Other Items 17
9.6 Exclusivity 17
ARTICLE 10 JOINT COVENANTS 18
10.1 Confidentiality 18
10.2 Cooperation 18
10.3 Control of Station 18
10.4 Consents to Assignment 18
10.5 Filings 19
10.6 Bulk Sales Laws 19
10.7 Employee Matters 19
ARTICLE 11 CONDITIONS OF CLOSING BY BUYER 20
11.1 Representations, Warranties and Covenants 20
11.2 Governmental Consents 20
11.3 Station License Renewal Application 20
11.4 Governmental Authorizations 20
11.5 Adverse Proceedings 20
11.6 Third-Party Consents 21
11.7 Closing Documents 21
11.8 Pre-Merger Notification 21
11.9 Noncompetition Agreement 21
11.10 No Material Adverse Change 21
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ARTICLE 12 CONDITIONS OF CLOSING BY SELLER 21
12.1 Representations, Warranties and Covenants 21
12.2 Governmental Consents 22
12.3 Adverse Proceedings 22
12.4 Closing Documents 22
12.5 Noncompetition Agreement 22
ARTICLE 13 TRANSFER TAXES; FEES AND EXPENSES 22
13.1 Expenses 22
13.2 Transfer Taxes and Similar Charges 22
13.3 Governmental Filing or Grant Fees 22
ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING 23
14.1 Seller's Documents 23
14.2 Buyer's Documents 23
ARTICLE 15 SURVIVAL; INDEMNIFICATION; ETC. 24
15.1 Survival of Representations, Etc 24
15.2 Indemnification 25
15.3 Procedures: Third Party and Direct Indemnification Claims 25
15.4 Limitations 26
15.5 Indemnification Procedures Agreement 26
ARTICLE 16 TERMINATION RIGHTS 26
16.1 Termination 26
16.2 Liability 27
16.3 Monetary Damages, Specific Performance and Other Remedies 27
16.4 Disbursement of Escrow Deposit; Seller's Liquidated
Damages 27
ARTICLE 17 MISCELLANEOUS PROVISIONS 28
17.1 Risk of Loss 28
17.2 Certain Interpretive Matters and Definitions 28
17.3 Further Assurances 28
17.4 Benefit and Assignment 29
17.5 Amendments 29
17.6 Headings 29
17.7 Arbitration 29
17.8 Governing Law 30
17.9 Notices 30
17.10 Counterparts 31
17.11 No Third Party Beneficiaries 31
17.12 Severability 31
17.13 Entire Agreement 31
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.2.8 Miscellaneous Excluded Assets
3.3.2 Trade Agreements
7.4 Station Licenses
7.7 Tangible Personal Property
7.8 Contracts
7.10 Environmental Matters
7.11 Intellectual Property
7.12 Financial Statements
7.13 Personnel Information
7.14 Litigation
7.15 Compliance With Laws
7.16 Employee Benefit Plans
Exhibit A Escrow Agreement
B Reversal Agreement
C Noncompetition Agreement
D Assignment and Assumption Agreement
E Opinion of Seller's Counsel
F Opinion of Buyer's Counsel
G Indemnification Procedures Agreement
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AMENDED AND RESTATED
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (this "Agreement") is made and entered
this 22nd day of January, 1997 by and among AMERICAN RADIO SYSTEMS CORPORATION.,
a Delaware corporation ("Buyer"), WGRR LIMITED PARTNERSHIP, a limited
partnership organized under the laws of Delaware ("Seller"), and THE ▇▇▇▇▇▇
GROUP, INC, a Delaware corporation and the general partner of Seller ("DGI").
RECITALS
WHEREAS, Seller owns and operates Radio Station WGRR(FM) in Hamilton,
Ohio (the "Station") pursuant to authorizations issued by the Federal
Communications Commission ("FCC");
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operations of the Station, all on the terms and subject to the conditions set
forth herein; and
WHEREAS, in order to induce Buyer to enter into this Agreement, the
Seller and DGI are willing to make certain representations and warranties to,
and covenants and agreements with, Buyer; and
WHEREAS, Seller, DGI and Buyer's predecessor by merger, Tsunami
Communications Inc. had entered into an Assets Purchase Agreement dated August
29, 1996 which is hereby amended and restated by this agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to those assets, properties, interests and rights of Seller of
whatsoever kind and nature, real and personal, tangible and intangible, owned by
Seller as the case may be, wherever situated, which are used or held for use in
the operation of the Station (the "Station Assets"), including Seller's right,
title and interest in and to the assets, properties, interests and rights
described in this Section 1.1:
1.1.1 the licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including those issued by the
FCC (the licenses, permits and authorizations issued by the FCC are hereafter
referred to as the "Station Licenses") used in connection with the operation of
the Station, as described in Schedule 7.4, along with renewals of such items
between the date hereof and the Closing Date;
1.1.2 the equipment, office furniture and fixtures, office
materials and supplies, spare parts, if any, and all other tangible personal
property of every kind and description, and Seller's rights therein, owned or
held by Seller and used in connection with the operations of the Station, as
described or listed in Schedule 7.7, together with any replacements thereof and
additions thereto, made between the date hereof and the Closing Date, and less
any retirements or dispositions thereof made between the date hereof and the
Closing Date in the ordinary course of business and consistent with past
practices of Seller; provided, however, Seller agrees that the value of all such
assets retired or disposed of in the ordinary course of business and not
replaced with an asset of like kind and quality shall not exceed $20,000 in the
aggregate without the written consent of Buyer;
1.1.3(a) all Time Sales Agreements (as defined in Section
2.1), all Trade Agreements (as defined in Section 2.1), and all other contracts,
agreements, leases and legally binding contractual rights of any kind, written
or oral, relating to the operation of the Station and which are listed in
Schedule 7.8, and (b) all contracts, agreements, leases and legal binding
contractual rights entered into or acquired by Seller between the date hereof
and the Closing Date in the ordinary course of business relating to the
operation of the Station, consistent with past practices of Seller and in
accordance with this Agreement and with respect to which Buyer specifically
agrees, in the exercise of its sole discretion, in writing to assume
(collectively, the "Contracts");
1.1.4(a) all of Seller's rights in and to the call letters
"WGRR" and all trademarks, trade names, service marks, franchises, copyrights,
including registrations and applications for registration of any of them,
computer software, programs and programming material of whatever form or nature
which are used in connection with the operation of the Station, (b) licenses to
use all jingles, slogans, and logos which are used in connection with the
operation of the Station, and (c) all other intangible property rights of Seller
which are used in connection with the operation of the Station, all as listed in
Schedule 7.11 (collectively, the "Intellectual Property"), together with any
associated goodwill and any additions thereto between the date hereof and the
Closing Date;
1.1.5 all of Seller's rights in and to the Station's local
public files, programming information and studies, technical information and
engineering data, news and advertising studies or consulting reports, marketing
and demographic data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports and filings with the FCC, all written
Contracts to be assigned hereunder, logs,
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software programs and books and records relating to employees, financial,
accounting and operation matters; but excluding records relating solely to any
Excluded Assets (as hereinafter defined);
1.1.6 all of Seller's rights, if any, under manufacturers' and
vendors' warranties relating to items included in the Station Assets and all
similar rights, if any, against third parties relating to items included in the
Station Assets; and
1.1.7 except for Excluded Assets, such other assets,
properties, interests and rights owned by Seller that are used in connection
with the operation of the Station.
The Station Assets shall be transferred to Buyer free
and clear of all debts, security interests, mortgages, trusts, claims, pledges
or other liens, liabilities, encumbrances or rights of third parties
whatsoever, other than those disclosed in this Agreement and the Schedules
attached hereto, and except for liens for taxes not yet due and payable and
statutory liens of landlords (collectively, the "Permitted Liens").
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Station Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or
in banks;
1.2.2 all accounts receivable or notes receivable for services
performed by Seller in connection with the operation of the Station prior to the
Closing Date;
1.2.3 subject to the limitation set forth in Section 1.1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
1.2.4 all Time Sales Agreements, Trade Agreements and
Contracts that have terminated or expired prior to the Closing Date in the
ordinary course of business consistent with the past practices of Seller;
1.2.5 Seller's internal documents relating to the organization
and structure of the company and the business of the Station, record books and
such other books and records as pertain to the organization, existence or
capitalization of Seller and duplicate copies of such records as are necessary
to enable Seller to file its tax returns and reports as well as any other
records or materials relating to Seller generally and not involving or relating
to the Station Assets or the operation or operations of the Station;
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1.2.6 contracts of insurance, 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;
1.2.7 all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.8 any right, property or asset described in Schedule 1.2.8
(including without limitation any assets personally owned by the stockholders or
employees of Seller and listed on said Schedule).
ARTICLE 2
ASSUMPTIONS OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this
Section 2.1, Section 2.2 and Section 3.3, on the Closing Date, Buyer shall
assume and perform in a timely manner the obligations of Seller arising or to be
performed on or after the Closing Date under: (a) the Contracts; (b) all
agreements for the sale of advertising time on the Station for cash which do not
have more than twelve (12) months remaining in their term ("Time Sales
Agreements"); and (c) subject to the limitations of Section 3.3 hereof, all
contracts (i) which are for consideration other than cash, such as merchandise,
services or promotional consideration ("Trade Agreements"), (ii) which arise in
the ordinary course of business consistent with the past practices of Seller,
and (iii) the consideration for which is for the benefit of the Station. All of
the foregoing liabilities and obligations shall be referred to herein
collectively as the "Assumed Liabilities."
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities. All of such liabilities, obligations and commitments of Seller
described in this Section 2.2 shall be referred to herein collectively as the
"Retained Liabilities."
ARTICLE 3
CONSIDERATION
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3.1 Delivery of Consideration. In consideration for the sale of the
Station Assets to Buyer and the assumption of certain obligations of Seller
pursuant to Section 2.1 above, Buyer shall, at the Closing (as hereinafter
defined) deliver to Seller Thirty Million Dollars ($30,000,000) by wire transfer
of immediately available funds, subject to adjustment pursuant to the provisions
of Sections 3.2 and 3.3 below (the "Purchase Price").
3.2 Escrow Deposit. (a) Concurrently with the execution and delivery of
this Agreement, Buyer, Seller and Media Venture Partners, Ltd., as Escrow Agent
(the "Escrow Agent"), shall enter into an Escrow Agreement in the form of
Exhibit A hereto (the "Escrow Agreement") pursuant to which Buyer shall deposit
the amount described below as a deposit on the amount of the Purchase Price.
Such amounts held in escrow shall be applied as set forth herein and in the
Escrow Agreement.
(b) Pursuant to the terms of the Escrow Agreement, Buyer shall
wire transfer Three Million Dollars ($3,000,000) to an escrow account
established pursuant to the Escrow Agreement (the "Escrow Deposit"). At the
Closing, the Escrow Deposit shall be applied to the Purchase Price to be paid to
Seller and the interest accrued thereon shall be paid to Buyer. If this
Agreement is not consummated, the Escrow Deposit shall be paid as provided in
Section 16.4 hereof.
3.3 Proration of Income and Expenses; Trade Agreements Adjustment.
3.3.1 Except as otherwise provided herein, all prepaid and
deferred income and expenses relating to the Station Assets or the Assumed
Liabilities and arising from the conduct of the business and operations of the
Station shall be prorated between Buyer and Seller in accordance with generally
accepted accounting principles as of 11:59 pm. Eastern time, on the date
immediately preceding the Closing Date. Such prorations shall include, without
limitation, all ad valorem, real estate and other property taxes (but excluding
taxes arising by reason of the transfer of the Station Assets as contemplated
hereby which shall be paid as set forth in Section 13.2), business and license
fees, music and other license fees (including any retroactive adjustments
thereof, which retroactive adjustments shall not be subject to the ninety-day
limitation set forth in Section 3.3.3), utility expenses, Time Sales Agreements,
amounts due under Contracts, Trade Agreements to the extent provided in Section
3.3.2 hereof, rents and similar prepaid and deferred items. Real estate taxes
shall be apportioned on the basis of taxes assessed for the preceding year, with
a reapportionment as soon as the new tax rate and valuation can be ascertained.
3.3.2 Schedule 3.3.2 lists all Trade Agreements included in
the Station Assets and the contract end date for each Trade Agreement together
with an itemized statement of the aggregate value of time owed ("Barter
Payable") pursuant to each of the Trade Agreements and the aggregate value of
goods and services to be received ("Barter Receivable") pursuant to each of the
Trade Agreements, in each case as of the end of the month immediately preceding
the date hereof. Within ten (10) calendar days after the Closing Date, Seller
shall deliver to Buyer a report, dated as of the
5
Closing Date (the "Closing Date Trade Report"), which report lists all Trade
Agreements included in the Station Assets and the contract end date for each
Trade Agreement together with an itemized statement of the aggregate value of
the Barter Payable and Barter Receivable pursuant to each of the Trade
Agreements. To the extent that the aggregate value as reflected on the Closing
Date Trade Report of the Station's Barter Payable is greater than the aggregate
value as reflected on the Closing Date Trade Report of the Barter Receivable by
an amount in excess of Ten Thousand Dollars ($10,000), Buyer shall be entitled
to receive the difference and Seller shall pay such difference to Buyer upon
delivery of the Closing Date Trade Report.
3.3.3 Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 3.3, to the extent practicable, shall
be made on the Closing Date. As to those prorations and adjustments not capable
of being ascertained on the Closing Date, an adjustment and proration shall be
made within ninety (90) calendar days of the Closing Date.
3.3.4 In the event of any disputes between the parties as to
such adjustments contemplated by this Section 3.3, the amounts not in dispute
shall nonetheless be paid at the time provided in Section 3.3.3 and such
disputes shall be determined by an independent certified public accountant
mutually acceptable to the parties, and the fees and expenses of such accountant
shall be paid one-half by Seller and one-half by Buyer.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Station Assets in a manner mutually agreeable to both Buyer and
Seller, and such allocation shall be completed prior to Closing unless otherwise
agreed to by the parties. Seller and Buyer agree to use the allocations
determined by Buyer for all tax purposes, including without limitation, those
matters subject to Section 1060 of the Internal Revenue Code of 1986, as
amended.
ARTICLE 4
CLOSING
4.1. Closing. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within ten (10) business days after the later to occur of (a) the
satisfaction or waiver of each condition to closing contained herein, and (b)
the date that grant of the FCC Consent as defined in Section 5.1 has become a
Final Order (as defined below) (the "Closing Date"); provided, that Buyer (upon
not less than five (5) business days' notice to Seller of its intention to so
proceed) may in its sole discretion waive the requirement that the FCC Consent
be a Final Order and elect (subject to clause (a) above) to close at any time on
or after the date on which the grant of the FCC Consent becomes effective under
the FCC's rules; provided further, however, that the Closing shall not occur
prior to January 2, 1997, unless the Seller so consents in writing. In the event
that the Closing Date occurs before the FCC Consent has become a Final Order,
the parties shall on the Closing Date enter into a "Reversal Agreement" in the
form of
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Exhibit B hereto. For purposes of this Agreement, "Final Order" (and "Final")
means an FCC Consent which is no longer subject to reconsideration or review by
the FCC or a court of competent jurisdiction. The Closing shall be held in the
offices of Buyer, or at such place and in such manner as the parties hereto may
agree.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that the Closing and the assignment of the Station Licenses and the
transfer of the Station Assets is expressly conditioned on and is subject to the
prior consent and approval of the FCC of the transaction contemplated hereby
without the imposition of any conditions materially adverse to Buyer or any
Affiliate of Buyer (an Affiliate being a company or entity owned by Buyer, or
which has a majority of its ownership held by the same individuals who own a
majority of the ownership interest in Buyer, as such ownership has been reported
to the FCC) (the "FCC Consent").
5.2 FCC Application. On or before January 17, 1997 Buyer and Seller
shall withdraw the assignment application filed with the FCC and given File No.
▇▇▇▇-▇▇▇▇▇▇▇▇, and shall file an application with the FCC for the FCC Consent
(the "FCC Application"). Buyer and Seller shall prosecute the FCC Application
with all reasonable diligence and otherwise use all reasonable efforts to obtain
the FCC Consent as expeditiously as practicable (but neither Buyer nor Seller
shall have any obligation to satisfy complainants or the FCC by taking any steps
which would have a material adverse effect upon Buyer or Seller or upon any of
their Affiliates). If the FCC Consent imposes any condition on Buyer or Seller
or any of their respective Affiliates, such party shall use all reasonable
efforts to comply with such condition; provided, however, that neither Buyer nor
Seller shall be required hereunder to comply with any condition that would have
a material adverse effect upon it or any of its Affiliates. If reconsideration
or judicial review is sought with respect to the FCC Consent, the party affected
shall oppose such efforts for reconsideration or judicial review so long as this
Agreement is in effect; provided, however, that nothing herein shall be
construed to limit either party's right to terminate this Agreement pursuant to
Article 16 hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing and shall be unaffected by any investigation heretofore or hereafter
made by Seller:
6.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business in the State of Ohio.
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6.2 Authorization and Binding Obligation. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Station Assets and to
carry on the business of the Station upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement will constitute the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
6.3 Qualification. To the best of Buyer's knowledge, there are no facts
which, under the Communications Act of 1934, as amended, or the existing rules
and regulations of the FCC, would disqualify Buyer as an assignee of the Station
Licenses, and Buyer is otherwise financially qualified under the Communications
Act of 1934, as amended, and all other applicable federal, state and local laws,
rules and regulations, to acquire the Station Assets from Seller.
6.4 Financial Capability; No Financing Condition. The Buyer has
available committed funds sufficient to pay the Purchase Price. The Buyer
understands that its obligations to effect the transactions contemplated hereby
are not subject to the availability to Buyer of financing sufficient to pay the
Purchase Price.
6.5 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
require the consent of any third party not affiliated with Buyer; (b) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Buyer is a party or
conflict with the Articles of Incorporation or By-Laws of Buyer; and (c) will
not, either alone, with the giving of notice or the passage of time, or both, or
with the receipt of any necessary consent of a third party as specified in (a)
above, conflict with, constitute grounds for termination of or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any agreement, instrument, license or permit to which Buyer is now subject.
6.6 Commissions or Finder's Fees. Neither Buyer nor any person or
entity acting on behalf of Buyer has agreed to pay a commission, finder's fee or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity, other than to Media Venture Partners. Ltd., whose fees
will be paid by Buyer. To the extent that Buyer may have engaged any other
person or entity to whom a commission, finder's fee or similar payment may be
due, Buyer agrees to pay any and all such obligations and to hold Seller
harmless.
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer,
each of which is true and correct on the date hereof and shall survive the
Closing for the period specified herein:
7.1 Organization and Standing. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own, lease and operate the
Station Assets and to carry on the business of the Station as now being
conducted and as proposed to be conducted between the date hereof and the
Closing Date.
7.2 Authorization and Binding Obligation. Seller has the power and
authority, and has taken all necessary and proper action, corporate and
otherwise, to enter into and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Seller and, assuming the due authorization, execution
and delivery of this Agreement by Buyer, constitutes the valid and binding
obligation of Seller enforceable against it in accordance with its terms, except
as limited by laws affecting the enforcement of creditor's rights or equitable
principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 with respect to governmental consents and in Schedule 7.8
with respect to consents required in connection with the assignment of certain
Contracts, the execution, delivery and performance of this Agreement by Seller:
(a) do not require the consent of any third party (including, without
limitation, the consent of any governmental, regulatory, administrative or
similar authority); (b) will not conflict with, result in a breach of, or
constitute a violation of or default under, the provisions of Seller's articles
of organization, by-laws or other governance documents or any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Seller or any owner of Seller is a party or by
which Seller, any owner of Seller or any of the Station Assets are bound; (c)
will not, either alone or with the giving of notice or the passage of time, or
both, conflict with, constitute grounds for termination of or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
Contract, Trade Agreement, Time Sales Agreement, agreement, instrument, license
or permit to which Seller or any of the Station Assets is now subject; and (d)
will not result in the creation of any lien, charge or encumbrance on any of the
Station Assets.
7.4 Government Authorizations.
7.4.1 Schedule 7.4 hereto contains a true and complete list of
the Station Licenses and other licenses, permits or other authorizations from
governmental and regulatory authorities which are required for the lawful
conduct of the business and operations of the Station in the manner and to the
full extent they are presently
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conducted. Seller has delivered to Buyer true and complete copies of the Station
Licenses and the other licenses, permits and authorizations listed in Schedule
7.4, including any and all amendments and other modifications thereto.
7.4.2 Seller is the authorized legal holder of the Station
Licenses and other licenses, permits and authorizations listed in Schedule 7.4,
none of which is subject to any restrictions or conditions which would limit in
any respect the full operation of the Station as now operated.
7.4.3 Except as set forth in Schedule 7.4, there are no
applications, and to the best of Seller's knowledge, complaints, petitions or
proceedings pending or threatened before the FCC or any other governmental or
regulatory authority relating to the business or operations of the Station. The
Station Licenses and the other licenses, permits and authorizations listed in
Schedule 7.4 are in good standing, are in full force and effect and, to the best
of Seller's knowledge, and are unimpaired by any act or omission of Seller or
its owners, officers, directors or employees. The operations of the Station are
in accordance with the Station Licenses and the underlying construction permits
and the other licenses, permits and authorizations listed in Schedule 7.4 in all
material respects. No proceedings are pending or, to the best of Seller's
knowledge, threatened, and there has not been any act or omission of Seller or
any of it owners, officers, directors or employees, which may result in the
revocation, modification, non-renewal or suspension of any of the Station
Licenses or the other licenses, permits and authorizations listed in Schedule
7.4, the denial of any pending applications, the issuance of any cease and
desist order, the imposition of any administrative actions by the FCC or any
other governmental or regulatory authority with respect to the Station Licenses
or the other licenses, permits and authorizations listed in Schedule 7.4 or
which may affect Buyer's ability to continue to operate the Station as it is now
being operated.
7.4.4 The Station is licensed by the FCC to operate with the
facilities set forth in its license.
7.4.5 To Seller's knowledge, the Station is not causing
material objectionable interference to the transmissions of any other broadcast
station or communications facility nor has the Station received any complaints
with respect thereto. To Seller's knowledge, no other broadcast station or
communications facility is causing material objectionable interference to
respective transmissions of the Station or the public's reception of such
transmissions.
7.4.6 Seller has no reason to believe that the Station
Licenses and the other licenses, permits authorizations listed in Schedule 7.4
will not be renewed in their ordinary course.
7.4.7 All reports, forms and statements required to be filed
by Seller with the FCC with respect to the Station during Seller's ownership
have been timely
10
filed and are substantially complete and accurate, unless a failure to timely
file would have no material adverse effect on the assets to be conveyed
hereunder.
7.4.8 To the best knowledge of Seller, there are no facts
which, under the Communications Act of 1934, as amended, or the existing rules
and regulations of the FCC, would disqualify Seller as assignor of the Station
Licenses.
7.5 Compliance with FCC Regulations. The operation of the Station and
all of the Station Assets are in compliance in all material respects with: (a)
all applicable FCC rules; and (b) all other applicable federal, state and local
rules, regulations, requirements and policies, including, but not limited to,
equal employment opportunity policies of the FCC, all applicable painting and
lighting requirements of the FCC and the Federal Aviation Administration and
ANSI Radiation Standards C95.1 - 1992 to the extent required to be met under
applicable FCC rules and regulations, and to the best of Seller's knowledge,
there are no existing claims to the contrary.
7.6 Taxes. There are no present disputes as to taxes of any nature
payable by Seller which in any event could adversely affect any of the Station
Assets or the operation of the Station by Buyer. Seller does not and will not in
the future have any liability, fixed or contingent, for any unpaid federal,
state or local taxes or other governmental or regulatory charges whatsoever
(including without limitation withholding and payroll taxes) which could result
in a lien on the Station Assets after conveyance thereof to Buyer or, except for
Permitted Liens, in any other form of transferee liability to Buyer.
7.7 Personal Property Schedule 7.7 hereto contains a list of all
material items of tangible personal property owned by Seller and used or useful
in the conduct of the business and operations of the Station. Schedule 7.7 also
separately lists any material tangible personal property leased by Seller
pursuant to leases included within the Contracts. Except as disclosed in
Schedule 7.7, Seller has, and following the Closing, Buyer will have, good and
marketable title to all of the Station Assets (other than those subject to
lease) and, except for Permitted Liens, none of the Station Assets owned by
Seller at the Closing will be, subject to any security interest, mortgage,
pledge, lease, license, lien, encumbrance, title defect or other charge. The
properties listed in Schedule 7.7, including those properties subject to lease
and included among the Contracts, list all material tangible personal property
necessary to operate the Station as it is now being operated. All material items
of tangible personal property included in the Station Assets are in good
operating condition and repair (ordinary wear and tear excepted), are suitable
for the purposes for which they are now being used.
7.8 Contracts. Schedule 7.8 lists all Contracts to which Seller is a
party, or which are binding on Seller, as of the date of this Agreement. Those
Contracts requiring the consent of a third party to assignment to Buyer are
identified by an asterisk in Schedule 7.8. Those Contracts that Seller and Buyer
have agreed are material to the operation of the Station Assets and the valid
assignment of which to Buyer is a condition to the consummation of the
transactions contemplated hereby
11
(the "Material Contracts") are listed on Schedule 7.8 under the heading
"Material Contracts."
7.9 Status of Contracts. Seller has made available to Buyer for
inspection true and complete copies of all written Contracts and true and
complete memoranda or other description of the terms of all oral Contracts,
including any and all amendments and other modifications to such Contracts. All
of the Contracts are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally. Seller has
complied in all respects with all such Contracts and is not in default under any
of such Contracts, and, to its knowledge, no other contracting party is in
default under any of such Contracts.
7.10 Environmental. Except as set forth in Schedule 7.10, Seller has
complied with all federal, state and local environmental laws, rules and
regulations as in effect on the date hereof applicable to the Station and its
operations, including but not limited to the FCC's guidelines regarding RF
radiation. To the best of Seller's knowledge, the technical equipment included
in the Station Assets does not contain any PCBs. To the best of Seller's
knowledge, no hazardous or toxic waste, substance, material or pollutant (as
those or similar terms are defined under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. ▇▇.▇▇.
9601 et seq., Toxic Substances Control Act, 15 U.S.C. ▇▇.▇▇. 2601 et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. ▇▇.▇▇. 6901 et seq. or
any other applicable federal, state and local environmental law, statute,
ordinance, order, judgment, rule or regulation relating to the environment or
the protection of human health ("Environmental Laws")), including but not
limited to, any asbestos or asbestos related products, oils or petroleum-derived
compounds, CFCs, PCBs, or underground storage tanks, have been released, emitted
or discharged or are currently located in, on, under, or about the real property
on which the Station Assets are situated including the transmitter sites or
contained in the tangible personal property included in the Station Assets. To
the best of Seller's knowledge, the Station Assets and Seller's use thereof are
not in violation of any Environmental Laws or any occupational, safety and
health or other applicable law now in effect. Seller shall be, as of the Closing
Date and thereafter, solely responsible for all environmental liabilities, of
whatsoever kind and nature, arising out of or attributable to the operation or
ownership of the Station Assets prior to the Closing Date.
7.11 Intellectual Property. Schedule 7.11 hereto is a list of all
Intellectual Property to be assigned to Buyer which is applied for, issued to or
owned by Seller or under which Seller is a licensee and used in the conduct of
the business and operations of the Station. Except as set forth in Schedule
7.11: (a) all of the Intellectual Property is issued or licensed to or owned by
Seller; (b) all computer software located at the Station or used in the
operation of the Station is properly licensed and authorized; and (c) all of
Seller's right, title and interest in and to the Intellectual Property shall be
assignable to Buyer on the Closing Date. To the extent any of the Intellectual
Property is licensed to Seller, such interest is valid and uncontested. Seller
has not
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received written notice of any infringements or unlawful use of such
Intellectual Property in connection with the operation of the Station.
7.12 Financial Statements. Seller has provided to Buyer complete copies
of the balance sheets, income statements and statements of cash flow of the
Seller as of and for the fiscal year ended December 31, 1995, together with the
balance sheets, income statements and statements of cash flow of the Seller as
of and for the end of the month immediately preceding the date hereof
(collectively, the "Financial Statements"). The Financial Statements are (and
the Interim Financial Statements (as hereinafter defined in Section 9.1.8)
provided pursuant to the terms hereof will be) true, correct and complete in all
material respects and have been (and in the case of the Interim Financial
Statements, will be) prepared in accordance with the books and records of Seller
and in accordance with generally accepted accounting principles consistently
applied and maintained throughout the periods indicated, except as has been
disclosed in Schedule 7.12. The Financial Statements present (and the Interim
Financial Statements will present) fairly the financial condition, results of
operations and cash flow of the Seller (and particularly the Station) for the
periods indicated. The financial information within the Financial Statements
does not include (and the financial information to be within the Interim
Financial Statements will not include) financial information unrelated to the
operations of the Station. None of the Financial Statements understates (and
none of the Interim Financial Statements will understate) the true costs and
expenses of conducting the business and operations of the Station, fails (or
will fail) to disclose any material liability, or inflates (or will inflate) the
revenues of the Station for any reason. December 31, 1995 is hereinafter
referred to as the "Financial Statement Date."
7.13 Personnel Information.
7.13.14 Schedule 7.13 contains a true and complete list of all
persons employed at the Station, including date of hire, a description of
material compensation arrangements (other than employee benefit plans set forth
in Schedule 7.16) and a list of other terms of any and all agreements affecting
such persons and their employment by Seller.
7.13.15 Seller is not a party to any contract or agreement
with any labor organization, nor has Seller agreed to recognize any union or
other collective bargaining unit, nor has, any union or other collective
bargaining unit been certified as representing any of employees of Seller.
Seller has no knowledge of any organizational effort currently being made by or
on behalf of any labor union with respect to employees of Seller.
7.13.16 Except as disclosed in Schedule 7.13, Seller, to its
knowledge, has complied in all material respects with all laws relating to the
employment of labor, including, without limitation, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and those laws relating to
wages, hours, collective bargaining,
13
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes.
7.14 Litigation. Except as set forth in Schedule 7.14, Seller is not
subject to any judgment, award, order, writ, injunction, arbitration decision or
decree relating to the conduct of the business or the operation of the Station
or any of the Station Assets, and there is no litigation, administrative action,
arbitration, proceeding or investigation pending or, to Seller's knowledge,
threatened against Seller or the Station in any federal, state or local court,
or before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the renewal
of, any of the Station Licenses), or before any other tribunal duly authorized
to resolve disputes. In particular, but without limiting the generality of the
foregoing, there are no applications, complaints or proceedings pending or, to
Seller's knowledge, threatened before the FCC or any other governmental
organization with respect to the business or operations of the Station.
7.15 Compliance With Laws. Except as set forth in Schedule 7.15, Seller
is not in violation of, and has not received any notice asserting any
non-compliance by it in connection with the operation of the Station or use or
ownership of any of the Station Assets with, any applicable statute, rule or
regulation, whether federal, state or local, in any material respect. Seller is
not in default in any material respect with respect to any judgment, order,
injunction or decree of any court, administrative agency or other governmental
authority or any other tribunal duly authorized to resolve disputes which
relates to the transactions contemplated hereby. Seller is in full compliance in
all material respects with all laws, regulations and governmental orders
applicable to the conduct of the business and operations of the Station, and its
present use of the Station Assets does not violate any of such laws, regulations
or orders in any material respect. The provisions of Section 7.10 shall prevail
over the provisions of this Section 7.15 to the extent of any inconsistency
between them.
7.16 Employee Benefit Plans. Schedule 7.16 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Station, and a brief description
thereof. Seller does not maintain any other employee benefit plan as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended, applicable to the employees of Seller employed at the Station.
7.17 Commissions or Finder's Fees. Neither Seller, its owners nor any
person or entity acting on behalf of Seller has agreed to pay a commission,
finder's fee or similar payment in connection with this Agreement or any matter
related hereto to any person. To the extent that Seller may have engaged any
person or entity to whom a commission, finder's fee or similar payment may be
due, Seller agrees to pay any and all such obligations and to hold Buyer
harmless.
7.18 Material Adverse Change. Since the Financial Statement Date there
has been no Material Adverse Change, which shall mean that: (a) Seller has
conducted
14
the business of the Station only in the ordinary course consistent with past
practices; (b) Seller has continued all practices, policies, procedures and
operations relating to the Station in substantially the same manner as
previously, including without limitation, sales, promotions, advertising,
bookkeeping and record keeping practices and policies, consistent with the
Station's budget provided to Buyer by Seller; (c) there has been no damage,
destruction, or loss affecting any of the Station Assets not repaired pursuant
to the provisions of Section 17.1 hereof; and (d) Seller has not created,
assumed, or suffered any default in any debt of the Station.
7.19 Instruments of Conveyance; Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Station
Assets to Buyer, will transfer good and marketable title to the Assets free and
clear of all liabilities (absolute or contingent), security interests,
mortgages, pledges, liens, obligations and encumbrances, except those
obligations disclosed in this Agreement or in the schedules attached hereto.
7.20 Special Arrangements. Seller has disclosed to Buyer any and all
arrangements with ASCAP, BMI, radio representatives, vendors of goods and
services and all other entities under which Seller enjoys a discount or other
benefit.
7.21 Undisclosed Liabilities. To Seller's knowledge, no liability or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
relating to Seller, the Station or the Station Assets exists which is not
otherwise disclosed herein and which could, after the Closing result in any form
of transferee liability against Buyer or subject the Station Assets to any lien,
encumbrance, claim, charge, security interest or imposition whatsoever or
otherwise affect the full, free and unencumbered use of the Station Assets by
Buyer.
7.22 Full Disclosure. No representation or warranty made by Seller
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading. Seller is not aware of any impending or contemplated event or
occurrence that would cause any of the foregoing representations not to be true
and complete on the date of such event or occurrence as if made on that date.
********
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to Seller's knowledge, it shall mean to the best of
such party's actual knowledge after having made due inquiry of the directors,
officers, owners, attorneys, accountants and agents of Seller who would be
expected to have knowledge of the matter, and with respect to the condition of
any Station Assets, records or other objects, after having inspected it.
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ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Station Assets from Seller as provided in Article 1 hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 Notification. Buyer shall notify Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any other action which
is materially inconsistent with its obligations under this Agreement or take any
action which would cause any representation or warranty of Buyer contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
8.4 Accounts Receivable. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation of
the Station, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed prior to the Closing Date and
other broadcast revenues for services performed prior to the Closing Date, shall
remain the property of Seller (the "Seller Accounts Receivable") and that Buyer
shall not acquire any beneficial right or interest therein or responsibility
therefor. For a period of ninety (90) days from the Closing Date ("Collection
Period"), Buyer agrees to use reasonable efforts, as Seller's agent, to collect
on behalf of Seller in accordance with Buyer's business practices the Seller
Accounts Receivable in the normal and ordinary course of business and will apply
all such amounts collected by Buyer to the debtor's oldest account receivable
first, except that any such accounts collected by Buyer from persons who are
also indebted to Buyer may be applied to Buyer's account if under circumstances
in which there is a bona fide dispute between Seller and such account debtor
with respect to such account and Buyer reassigns to Seller such account for
resolution. Buyer's obligation and authority shall not extend to the institution
of litigation, employment of counsel or a collection agency or any other
extraordinary means of collection. Provided Buyer is in compliance with its
obligations hereunder, during the Collection Period, neither Seller nor any of
its agents shall make any direct solicitation of any account debtor for
collection purposes or institute litigation for the collection of amounts due.
Any amounts relating to the Seller Accounts Receivable that are paid directly to
the Seller shall be retained by the Seller, but Seller shall provide Buyer with
prompt notice of any such payment. Every thirty (30) days during the Collection
Period, Buyer shall make a payment to Seller, without set off of any kind, equal
to the amount of all collections by Buyer of Seller Accounts Receivable during
such thirty (30) day period less any commissions due thereon and furnish Seller
with a collections report.
16
8.5 Pre-Closing Obligations. Buyer covenants and agrees that, between
the date hereof and the Closing Date, except as expressly permitted by this
Agreement or with the prior written consent of Seller, Buyer shall act in
accordance with the following:
8.5.1 Buyer will provide Seller prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Article 6 or in any Schedule
8.5.2 Buyer will cooperate with Seller and provide any
information reasonably necessary to assist Seller in obtaining third party
consents to the assignment of any Contract.
8.5.3 Buyer will notify Seller of any litigation, arbitration
or administrative proceeding pending or, to the best of its knowledge,
threatened, which challenges the transaction contemplated by the Agreement.
ARTICLE 9
COVENANTS OF SELLER
9.1 Seller's Pre-Closing Covenants. Seller covenants and agrees that,
between the date hereof and the Closing Date, except as expressly permitted by
this Agreement or with the prior written consent of Buyer, Seller shall act in
accordance with the following:
9.1.1 Seller shall conduct the business and operations of the
Station in the ordinary and prudent course of business consistent with past
practice and with the intent of preserving the ongoing operations and assets of
the Station, including but not limited to maintaining the independent identity
of the Station.
9.1.2 Seller shall use its best efforts to preserve the
operation of the Station intact and preserve the business of the Station's
advertisers, customers, suppliers and others having business relations with the
Station and continue to conduct financial operations of the Station, including
its credit and collection and pricing policies and practices, in the ordinary
course of business consistent with past practices.
9.1.3 Seller shall operate the Station in all material
respects in accordance with FCC rules and regulations and the Station Licenses
and with all other laws, regulations, rules and orders, and shall not cause or
permit by any act, or failure to act, any of the Station Licenses or other
licenses, permits or authorizations listed in Schedule 7.4 to expire, be
surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse modification
of any of the Station Licenses, or fail to prosecute with due diligence any
pending applications to the FCC.
17
9.1.4 Seller shall not: (a) sell, lease or dispose of or
commit to sell, lease or dispose of any of the Station Assets except in the
ordinary course of business and subject to the provisions of Section 1.1.2
hereof; (b) sell broadcast time on a prepaid basis (other than in the course of
existing credit practices); (c) grant or agree to grant any increases in the
rates of salaries or compensation payable to employees of the Station other than
scheduled salary increases; (d) grant or agree to grant any bonus to any
employee of the Station which will not be paid in full by Seller prior to the
Closing; (e) provide for any new pension, retirement or other employment
benefits for employees of the Station or any increases in any existing benefits;
(f) modify, change or terminate any Contract without prior written permission of
the Buyer; (g) change the advertising rates in effect as of the date hereof
except in accordance with ordinary course of business pricing policies; (h)
create, assume or permit to exist any mortgage, pledge, lien, or other charge or
encumbrance or rights affecting any of the Station Assets, except for those in
existence on the date of this Agreement and disclosed herein or in the Schedules
attached hereto; (i) change the call letters of the Station; or (j) take any
action which would cause any representation or warranty contained herein to be
or become false or invalid or which could hinder or delay the consummation of
the transactions contemplated by this Agreement.
9.1.5 Seller will provide Buyer prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Article 7 or any Schedule.
9.1.6 In order that Buyer may have full opportunity to make
such investigation as it desires of the affairs of the Station, Seller shall
give or cause the Station to give Buyer and Buyer's counsel, accountants and
engineers reasonable access to all of Seller's properties, books, Contracts,
Trade Agreements, Time Sales Agreements, reports and records (including, without
limitation, financial information and tax returns relating to the Station), real
estate, buildings and equipment relating to the Station and to the Station's
employees, and to furnish Buyer with information and copies of all documents and
agreements relating to the Station and the operation thereof (including but not
limited to financial and operating data and other information concerning the
financial condition, results of operations and business of the Station) that
Buyer may reasonably request. The rights of Buyer under this Section 9.1 shall
not be exercised in such a manner as to interfere directly or indirectly with
the business of the Station.
9.1.7 Within twenty-five (25) days of the end of each month,
Seller shall deliver to Buyer an unaudited statement of revenue and expenses of
Seller and a balance sheet for the month then ended (collectively, the "Interim
Financial Statements"). Seller shall also furnish to Buyer any and all
information customarily prepared by Seller concerning the financial condition
and results of operations of the Station that Buyer may request.
9.1.8 Seller shall use all reasonable efforts to obtain any
third party consents necessary for the assignment of any Contract.
18
9.1.9 Seller shall use all reasonable efforts to transfer to
Buyer any discounts or other benefits which it enjoys under any arrangement as
described in Section 7.20 of this Agreement.
9.2 Notification. Seller agrees to notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to the best of its
knowledge, threatened, which challenges the transactions contemplated hereby.
Seller shall promptly notify Buyer if any of the normal broadcast transmissions
of the Station are interrupted, interfered with or in any way impaired, and
shall provide Buyer with prompt written notice of the problem and the measures
being taken to correct such problem. If the Station is not restored so that
operation is resumed within five (5) days, or restored to full licensed power
and antenna height within fifteen (15) days of such event, or if more than five
(5) such events occur within any thirty (30) day period, then Buyer shall have
the right to terminate this Agreement.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with their obligations under this Agreement.
9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Station Assets and the
Assumed Liabilities as provided in Articles 1 and 2 of this Agreement.
9.5 Other Items. Except as otherwise specifically contemplated by this
Agreement, until the Closing Date, Seller shall not: (a) cancel or compromise
any debt or claim or waive or release any right relating to the business or
operations of the Station, except for adjustments or settlements made in the
ordinary course of business consistent with past practices; (b) transfer or
grant any material rights under any of the Station Licenses; (c) enter into any
commitment for capital expenditures for which Buyer would become liable after
the Closing Date; (d) introduce any material changes in the broadcast hours or
in the format of the Station or any other material change in the Station's
programming policies and (e) enter into any transaction or make or enter into
any contract or commitment with respect to either the Station or the Station
Assets which by reason of its size or otherwise is not in the ordinary course of
business consistent with past practices.
9.6 Exclusivity. Seller agrees that, commencing on the date hereof
through the Closing or earlier termination of this Agreement, Buyer shall have
the exclusive right to consummate the transactions contemplated herein, and
during such exclusive period, Seller agrees that neither Seller, any owner, the
Station Manager, or any representative acting with Seller's authorization: (a)
will initiate, solicit or encourage, directly or indirectly, any inquiries, or
the making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
all or any portion of the Station Assets or any securities of Seller (any such
inquiry, proposal or offer being hereinafter referred to as an "Acquisition
Proposal" and any such transaction being hereinafter referred to as an
19
"Acquisition"); (b) will engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal or Acquisition; or (c) will
continue any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal or Acquisition and
will take the necessary steps to inform the individuals or entities referred to
above of the obligations undertaken by them in this Section 9.6.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
10.1 Confidentiality. Subject to the requirements of applicable law,
Buyer and Seller shall each keep confidential all information obtained by them
with respect to the other parties hereto in connection with this Agreement and
the negotiations preceding this Agreement, and will use such information solely
in connection with the transactions contemplated by this Agreement, and if the
transactions contemplated hereby are not consummated for any reason, each shall
return to each other party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such other party
in connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, no party shall be required to keep confidential
or return any information which: (a) is known or available through other lawful
sources, not bound by a confidentiality agreement with the disclosing party; (b)
is or becomes publicly known through no fault of the receiving party or its
agents; (c) is required to be disclosed pursuant to an order or request of a
judicial or governmental authority (provided the disclosing party is given
reasonable prior notice of the order or request and the purpose of the
disclosure); or (d) is developed by the receiving party independently of the
disclosure by the disclosing party; or (e) is required to be disclosed by
applicable securities laws. Neither party hereto nor any of their respective
agents shall make any public announcement with respect to the transactions
contemplated by this Agreement before the filing of the FCC Application, without
the prior written consent of the other party hereto.
10.2 Cooperation. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking any
actions, including actions to obtain the required consent of any governmental
instrumentality or any third party necessary or helpful to accomplish the
transactions contemplated by this Agreement, including but not limited to the
satisfaction of any condition to closing set forth herein.
10.3 Control of Station. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Station prior to the Closing.
Such operations,
20
including complete control and supervision of all Station programs, employees
and policies, shall be the sole responsibility of Seller.
10.4 Consents to Assignment. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, transfer, delivery or sublease thereof. Subject to the
provisions of Section 11.6, in those cases where consents, assignments, releases
and/or waivers have not been obtained at or prior to the Closing Date to the
transfer and assignment to Buyer of the Contracts, this Agreement and any
assignment executed pursuant hereto, to the extent permitted by law, shall
constitute an equitable assignment by Seller to Buyer of all of Seller's rights,
benefits, title and interest in and to and all liabilities under the Contracts,
and where necessary or appropriate, Buyer shall be deemed to be Seller's agent
for the purpose of completing, fulfilling and discharging all of Seller's rights
and liabilities arising after the Closing Date under such Contracts. Seller
shall use all reasonable efforts to provide Buyer with the financial and
business benefits of such Contracts (including, without limitation, permitting
Buyer to enforce any rights of Seller arising under such Contracts), and Buyer
shall, to the extent Buyer is provided with the benefits of such Contracts,
assume, perform and in due course pay and discharge all debts, obligations and
liabilities of Seller under such Contracts to the extent that Buyer was to
assume those obligations pursuant to the terms hereof.
10.5 Filings. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their reasonable efforts to obtain, and to
cooperate with each other in obtaining, all authorizations, consents, orders and
approvals of any governmental authority that may be or become necessary in
connection with the consummation of the transactions contemplated by this
Agreement, and to take all reasonable actions to avoid the entry of any order or
decree by any governmental authority prohibiting the consummation of the
transactions contemplated hereby, including without limitation, any reports or
notifications that may be required to be filed by it under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") with the Federal Trade
Commission and the Antitrust Division of the Department of Justice, and each
shall furnish to one another all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other.
10.6 Bulk Sales Laws. Seller agrees to indemnify Buyer and hold it
harmless from any and all loss, cost, damage and expense (including but not
limited to, reasonable attorney's fees) sustained by Buyer as a result of any
failure of Seller to comply with any "bulk sales" or similar laws.
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10.7 Employee Matters. Seller shall be responsible for the payment of
all compensation and accrued employee benefits payable to all employees through
the Closing Date. Seller acknowledges and agrees that it, and not Buyer, is and
shall after the Closing remain solely responsible for any and all insurance,
supplemental pension, deferred compensation, retirement and any other benefits,
and related costs, premiums and claims, due, to become due, committed or
otherwise promised to any person who, as of the Closing Date, is a retiree,
former employee, or current employee of Seller, relating to the period up to and
including the Closing Date. Buyer, as a purchaser of the Station Assets, shall
assume no employee benefit plans, programs or practices, whether or not set
forth in writing, maintained by Seller at any time. Seller agrees to cooperate
with Buyer in the prompt rollover of any pension, profit sharing or cash or
deferred (Section 401(K)) plans and trusts and any other employee benefit plan
or arrangement, provided that any such rollovers are permitted and made in
accordance with the applicable provisions of Buyer's benefit plans.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants All representations and
warranties of Seller made in this Agreement or in any Exhibit, Schedule or
document delivered pursuant hereto, shall be true and complete in all material
respects as of the date hereof and on and as of the Closing Date as if made on
and as of that date, except for changes expressly permitted or contemplated by
the terms of this Agreement.
11.1.1 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to the Closing Date shall have
been complied with or performed in all material respects.
11.1.2 Buyer shall have received a certificate, dated as of
the Closing Date, from Seller, executed by the president of Seller's general
partner, to the effect that: (a) the representations and warranties of Seller
contained in this Agreement are true and complete in all material respects on
and as of the Closing Date as if made on and as of that date; and (b) Seller has
complied with or performed in all material respects all terms, covenants and
conditions to be complied with or performed by it on or prior to the Closing
Date.
11.2 Governmental Consents. The FCC Consent shall have been obtained.
11.3 Station License Renewal Application. No petition to deny the
Seller's license renewal application (if any) for the Station shall be pending.
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11.4 Governmental Authorizations. Seller shall be the holder of the
Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 7.4, and there shall not have been any
modification of any of such licenses, permits and other authorizations which has
a material adverse effect on the Station or the operations thereof. No
proceeding shall be pending which seeks or the effect of which reasonably could
be to revoke, cancel, fail to renew, suspend or adversely modify the Station
Licenses or any other licenses, permits or other authorizations listed in
Schedule 7.4.
11.5 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which: (a) would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms; (b) questions the validity or legality of any transaction contemplated
hereby; (c) seeks to enjoin any transaction contemplated hereby; (d) seeks
material damages on account of the consummation of any transaction contemplated
hereby; or (e) is a petition of bankruptcy by or against Seller, an assignment
by Seller for the benefit of its creditors, or other similar proceeding.
11.6 Third-Party Consents. All Contracts and Real Estate Contracts
shall be in full force and effect on the Closing Date. Seller shall have
obtained and shall have delivered to Buyer all third-party consents to the
assignment of the Material Contracts and Real Estate Contracts.
11.7 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all deeds, bills of sale, endorsements,
assignments and other instruments of conveyance and transfer reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Station Assets to Buyer, including, without
limitation, each of the documents required to be delivered by it pursuant to
Article 14.
11.8 Pre-Merger Notification. If applicable, any waiting period under
the HSR Act with respect to the transactions contemplated by this Agreement
shall have elapsed.
11.9 Noncompetition Agreement. The Buyer shall have entered into a
noncompetition agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ in the form of
Exhibit C hereto (the "Noncompetition Agreement").
11.10 No Material Adverse Change. No Material Adverse Change as defined
by Section 7.18 hereof shall have occurred.
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ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
12.1.2 All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by the president of Buyer, to the effect that: (a)
the representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date; and (b) that Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Consent shall have been obtained.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.4 Closing Documents. Buyer shall have delivered or caused to be
delivered to Buyer, on the Closing Date, each of the documents required to be
delivered by it pursuant to Article 14.
12.5 Noncompetition Agreement. The Buyer shall have entered into the
Noncompetition Agreement.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
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13.1 Expenses. Except as set forth in Section 13.2 and 13.3 hereof or
otherwise expressly set forth in this Agreement, each party hereto shall be
solely responsible for all costs and expense incurred by it in connection with
the negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to the costs and expenses incurred
pursuant to Article 5 hereof.
13.2 Transfer Taxes and Similar Charges. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use taxes,
shall be paid one-half by Buyer and one-half by Seller.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by the FCC, the consent of which or the filing with which is required
for the consummation of the transactions contemplated hereby, any fees imposed
in complying with Title II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, ("HSR") as amended, and the rules and regulations thereunder shall be
paid by Buyer. Further, Buyer shall reimburse Seller for all expenses, including
reasonable attorneys' fees, incurred by Seller in connection with the
preparation of, or requests for information in response to the HSR Pre-Merger
Notification filed with respect to this Agreement.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
14.1.1 Certified resolutions of the Seller approving the
execution and delivery of this Agreement and authorizing the consummation of the
transactions contemplated hereby;
14.1.2 A certificate of Seller, dated the Closing Date, in the
form described in Section 11.1.3;
14.1.3 Governmental certificates, certified as of a date not
more than thirty (30) business days before the Closing Date, showing that Seller
is duly incorporated and in good standing in the State of Delaware and qualified
to do business and in good standing in the State of Ohio, and;
14.1.4 Such certificates, bills of sale, general warranty
deeds, assignments, documents of title and other instruments of conveyance,
assignment and transfer (including without limitation any necessary consents to
conveyance, assignment or transfer), and lien releases, all in form satisfactory
to Buyer and Buyer's counsel, as shall be effective to vest in Buyer good,
marketable and insurable title in and to the Station Assets, free, clear and
unencumbered;
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14.1.5 An Assignment and Assumption Agreement in the form of
Exhibit D effectuating the assignment and assumption of the Assumed Liabilities
(the "Assignment and Assumption Agreement");
14.1.6 The Noncompetition Agreement;
14.1.7 At the time and place of Closing, originals and all
copies of all program, operations, transmission or maintenance logs and all
other records required to be maintained by the FCC with respect to the Station,
including the public files of the Station, shall be left at the Station and
thereby delivered to Buyer;
14.1.8 A written opinion of Seller's counsel in the form of
Exhibit E, dated as of the Closing Date; and
14.1.9 Such additional information, materials, agreement,
documents and instruments as Buyer and its counsel may reasonably request.
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the
form described in Section 12.1.3.
14.2.3 The Assignment and Assumption Agreement;
14.2.4 The Noncompetition Agreement;
14.2.5 A written opinion of Buyer's counsel in the form of
Exhibit F, dated as of the Closing Date;
14.2.6 The Purchase Price in accordance with Section 3.1
hereof; and
14.2.7 Such additional information, materials, agreement,
documents and instruments as Seller and its counsel may reasonably request.
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ARTICLE 15
SURVIVAL; INDEMNIFICATION; ETC.
15.1. Survival of Representations, Etc. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) for a period of one (1) year
following Closing:
15.1.1 The Warranties in Section 7.6 or otherwise relating to
the federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
15.1.2 All other Warranties shall survive for a period of one
(1) year from the Closing Date.
15.1.3 The right of any party to recover Damages (as defined
in Section 15.2.1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.4 Notwithstanding any provision hereof to the contrary,
there shall be no contractual time limit in which Buyer or Seller may bring any
action for actual fraud in respect of this Agreement or the transactions
contemplated hereby (a "Fraud Action"), regardless of whether such actual fraud
also included a breach of any Agreement or Warranty; provided, however, that any
Fraud Action must be brought within the period of the applicable statute of
limitations plus any extensions or waivers granted or imposed with respect
thereto.
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15.2 Indemnification.
15.2.1 Seller and DGI shall defend, indemnify and hold
harmless Buyer from and against any and all losses, costs, damages, liabilities
and expenses, including reasonable attorneys' fees and expenses ("Damages")
incurred by Buyer arising out of or related to: (a) any breach of the Agreements
or Warranties given or made by Seller in this Agreement; (b) the Retained
Liabilities; (c) any failure of the parties to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby; and (d) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of any of the Station Assets prior to the Closing Date.
15.2.2 Buyer shall defend, indemnify and hold harmless Seller
from and against any and all Damages incurred by the Seller arising out of or
related to: (a) any breach of the Agreements and Warranties given or made by
Buyer in this Agreement; (b) the Assumed Liabilities; and (c) the conduct of the
business and operations of the Station or any portion thereof or the use or
ownership of any of the Station Assets on or after the Closing Date.
15.3 Procedures: Third Party and Direct Indemnification Claims. Any
indemnified party hereunder agrees to give written notice within a reasonable
time to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party (herein
after collectively "Claims," and individually a "Claim"), it being understood
that the failure to give such notice shall not affect the indemnified party's
right to indemnification and the indemnifying party's obligation to indemnify as
set forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced. The parties also agree that any claim for Damages arising
directly between the parties relating to this Agreement may be brought at any
time within the period specified in Section 15.1 and that the only notice
required with respect thereto shall be as specified in Section 15.1.3.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.3.2 In the event that the indemnifying party shall elect
not to undertake such defense or opposition, or within ten (10) days after
notice of any such Claim from the indemnified party shall fail to defend or
oppose, the indemnified party (upon further written notice to the indemnifying
party) shall have the right to undertake the defense, opposition, compromise or
settlement of such Claim, by
28
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the indemnifying party (subject to the right of the
indemnifying party to assume defense of or opposition to such Claim at any time
prior to settlement, compromise or final determination thereof).
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim; and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim, the indemnified party,
by counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such Claim.
15.3.4 No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
15.4 Limitations. Notwithstanding any other provision of this Article
15, Seller and DGI shall have no liability to Buyer hereunder for breach of any
warranty, representation or covenant under this Agreement or any other agreement
between the parties relating to the subject matter hereof, unless the total
liability of Seller or DGI to Buyer hereunder shall exceed the sum of
Twenty-Five Thousand Dollars ($25,000).
15.5 Indemnification Procedures Agreement. On the Closing Date, Buyer
and DGI shall enter into the indemnification procedures agreement (the
"Indemnification Procedures Agreement") in the form of Exhibit G. Neither the
exercise nor the failure to exercise the rights provided for in the
Indemnification Procedures Agreement will constitute an election of remedies by
Buyer or limit Buyer in any manner in the enforcement of any other remedies that
may be available to it. If Buyer's claims for indemnification exceed the
indemnification fund, if any, created pursuant to the Indemnification Procedures
Agreement, Seller and DGI shall remain liable for any such excess.
ARTICLE 16
TERMINATION RIGHTS
16.1. Termination. This Agreement may be terminated at any time prior
to Closing as follows:
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16.1.1 Upon the mutual written consent of Buyer and Seller,
this Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Seller; or
16.1.4 By written notice of Buyer to Seller, or by Seller to
Buyer, if the FCC denies the FCC Application or designates it for a trial-type
hearing; or
16.1.5 By written notice of Buyer to Seller, or by Seller to
Buyer, if any court of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement.
16.1.6 By written notice of Buyer to Seller, or by Seller to
Buyer, if the Closing shall not have been consummated on or before December 31,
1997.
Notwithstanding the foregoing, no party hereto may effect a termination
hereof if such party is at that time in material default or breach of this
Agreement.
16.2 Liability. Except as set forth in Section 17.1 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of the filing of a lawsuit for
damages, specific performance, or other remedy, the prevailing party shall be
entitled to reimbursement for reasonable legal fees and expenses.
16.4 Disbursement of Escrow Deposit; Seller's Liquidated Damages. (a)
If the parties hereto shall fail to consummate this Agreement by August 31,
1997, and Seller
30
is not at that time in material breach hereof, the sum of Two Million Dollars
($2,000,000) shall be remitted to Seller from the Escrow Deposit on September 1,
1997. Such sum shall be applied toward the Purchase Price if the parties later
consummate this Agreement.
(b) If the parties hereto shall fail to consummate this Agreement by
December 31, 1997, due solely to Buyer's material breach hereof or Buyer's
failure to satisfy the FCC or other governmental authority of its qualifications
to hold the Station Licenses, and if either party terminates this Agreement
pursuant to Section 16.1.6, the remaining One Million Dollars ($1,000,000) of
the Escrow Deposit, plus accrued interest on the Escrow Deposit, shall be
remitted to Seller upon termination of the Agreement.
(c) If the parties hereto shall fail to consummate this Agreement by
December 31, 1997, for reasons other than those specified in paragraph (b)
above, and if either party terminates this Agreement pursuant to Section 16.1.6,
then the remaining One Million Dollars ($1,000,000) of the Escrow Deposit, plus
accrued interest on the Escrow Deposit, shall be remitted to Buyer upon
termination of the Agreement.
(d) It is understood and agreed that any portion of the Escrow Deposit
remitted to Seller pursuant to paragraph (a) or (b) shall constitute liquidated
damages. Such liquidated damages represent Buyer's and Seller's reasonable
estimate of actual damages and do not constitute a penalty. Recovery of
liquidated damages shall be the sole and exclusive remedy of Seller against
Buyer for failing to consummate this Agreement on the Closing Date and shall be
applicable regardless of the actual amount of damages sustained and all other
remedies are deemed waived by Seller. In the event of the filing of a lawsuit
for damages, specific performance, or other remedy, the prevailing party shall
be entitled to reimbursement for reasonable legal fees and expenses.
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ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Risk of Loss. The risk of loss or damage to any of the Station
Assets prior to the Closing Date shall be upon Seller. Seller shall repair,
replace and restore any such damaged or lost Station Asset to its prior
condition as soon as possible and in no event later than thirty (30) days
following the loss or damage; provided, however, that in the event any loss or
damage of the Station Assets exists on the Closing Date, the Buyer at its option
may (a) extend the Closing Date until such time as Seller shall have repaired,
replaced and restored any such damaged or lost Station Asset to its prior
condition, or (b) terminate the Agreement if repairs sufficient to restore the
Station Asset to its prior condition are not completed within thirty (30) days
of the damage or loss.
17.2 Certain Interpretive Matters and Definitions. Unless the context
otherwise requires: (a) all references to Sections, Articles, Schedules or
Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement; (b) each term defined in this Agreement has the meaning assigned to
it; (c) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect on the date hereof; (d) "or" is disjunctive but not
necessarily exclusive; (e) words in the singular include the plural and vice
versa; and (f) all references to "$" or dollar amounts will be to lawful
currency of the United States of America.
17.3 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Station Assets being transferred hereunder, free, clear
and unencumbered, and Buyer shall from time to time, at the request of and
without further cost or expense to Seller, execute and deliver such other
instruments and take such other actions as may reasonably be requested in order
to more effectively relieve Seller of any obligations being assumed by Buyer
hereunder.
17.4 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of the Buyer.
Buyer shall have the right to assign and/or delegate its rights and obligations
under this Agreement only upon the written consent of Seller, which shall not be
withheld if the proposed assignee, in the reasonable opinion of Seller, meets
all of the qualifications of the FCC and any other regulatory authority having
jurisdiction over the transaction.
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17.5 Amendments. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.6 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.7 Arbitration. Except as provided below, any and all disputes
arising under or related to this Agreement which cannot be resolved through
negotiations between the parties shall be submitted to binding arbitration. If
the parties fail to reach a settlement of their dispute within fifteen (15) days
after the earliest date upon which one of the parties notified the other(s) of
its desire to attempt to resolve the dispute, then the dispute shall be promptly
submitted to arbitration by a single arbitrator through the Judicial Arbiter
Group, any successor of the Judicial Arbiter Group, or any similar arbitration
provider who can provide a former judge to conduct such arbitration if JAG is no
longer in existence ("JAG"). The arbiter shall be selected by JAG on the basis,
if possible, of his or her expertise in the subject matter(s) of the dispute.
The decision of the arbitrator shall be final, nonappealable and binding upon
the parties, and it may be entered in any court of competent jurisdiction. The
arbitration shall take place in Cincinnati, Ohio. The arbitrator shall be bound
by the laws of the State of Ohio applicable to the issues involved in the
arbitration and all Ohio rules relating to the admissibility of evidence,
including, without limitation, all relevant privileges and the attorney work
product doctrine. All discovery shall be completed in accordance with the time
limitations prescribed in the Ohio rules of civil procedure, unless otherwise
agreed by the parties or ordered by the arbitrator on the basis of strict
necessity adequately demonstrated by the party requesting an extension of time.
The arbitrator shall have the power to grant equitable relief where applicable
under Ohio law, and shall be entitled to make an award of punitive damages when
applicable under Ohio law. The arbitrator shall issue a written opinion setting
forth his or her decision and the reasons therefor within thirty (30) days after
the arbitration proceeding is concluded. The obligation of the parties to submit
any dispute arising under or related to this Agreement to arbitration as
provided in this Section shall survive the expiration or earlier termination of
this Agreement. Notwithstanding the foregoing, either party may seek and obtain
an injunction or other appropriate relief from a court to preserve or protect
trade names, copyrights, patents, trade secrets or other intellectual property
or proprietary information or to preserve the status quo with respect to any
matter pending conclusion of the arbitration proceeding, but no such application
to a court shall in any way be permitted to stay or otherwise impede the
progress of the arbitration proceeding.
In the event of any arbitration or litigation being filed or instituted
between the parties concerning this Agreement, the prevailing party will be
entitled to receive from the other party or parties its attorneys' fees, witness
fees, costs and expenses, court
33
costs and other reasonable expenses, whether or not such controversy, claim or
action is prosecuted to judgment or other form of relief.
17.8 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Ohio without giving effect to the
choice of law provisions thereof. Subject to the provisions of Section 17.7: (a)
any action, suit or proceeding brought by Buyer relating to or arising out of
this Agreement or any other agreement, instrument, certificate or other document
delivered pursuant hereto (or the enforcement hereof or thereof), shall be
brought and prosecuted as to all parties in, and each of the parties hereby
consent to service of process, personal jurisdiction and venue in, the state and
Federal courts of general jurisdiction located in ▇▇▇▇▇▇▇▇ County, Ohio or the
Federal District Court in Cincinnati, Ohio; and (b) any action, suit or
proceeding brought by Seller relating to or arising out of this Agreement or any
other agreement, instrument, certificate or other document delivered pursuant
hereto (or the enforcement hereof or thereof), shall be brought and prosecuted
as to all parties in, and each of the parties hereby consent to service of
process, personal jurisdiction and venue in, the state and Federal courts of
general jurisdiction located in ▇▇▇▇▇▇▇▇ County, Ohio or the Federal District
Court in Cincinnati, Ohio.
17.9 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, including by
facsimile, and shall be deemed to have been duly delivered and received on the
date of personal delivery, on the third day after deposit in the U.S. mail if
mailed by registered or certified mail, postage prepaid and return receipt
requested, on the day after delivery to a nationally recognized overnight
courier service if sent by an overnight delivery service for next morning
delivery or when dispatched by facsimile transmission (with the facsimile
transmission confirmation being deemed conclusive evidence of such dispatch) and
shall be addressed to the following addresses, or to such other address as any
party may request, in the case of Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
To Buyer: American Radio Systems Corporation
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
American Radio Systems Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
34
To Seller or DGI: WGRR Limited Partnership
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
17.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the signatories.
17.11 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
17.12 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.13 Entire Agreement. This Agreement and the exhibits hereto embody
the entire agreement and understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein.
[The remainder of this page intentionally left blank]
35
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
AMERICAN RADIO SYSTEMS CORPORATION
By: ___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
CO-Chief Operating Officer
WGRR LIMITED PARTNERSHIP
By: ___________________________________
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
President, The ▇▇▇▇▇▇ Group, Inc.
General Partner
THE ▇▇▇▇▇▇ GROUP, INC.
By: ___________________________________
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
President
36
SCHEDULE 1.2.8
Miscellaneous Excluded Assets
None
37
SCHEDULE 3.3.2
Trade Agreements
March 1996 report attached hereto
(Updated report to follow execution of Agreement)
38
SCHEDULE 7.4
Station Licenses
I. FCC Licenses, Permits and Authorizations:
1. ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇▇▇▇▇ (covering Permit No.
BPH-891204ID, as modified by Permit No. ▇▇▇▇-▇▇▇▇▇▇▇▇).
2. Auxiliary Facilities:
a. WDT-916
b. WLD-901
II. Pending Applications:
1. License Renewal Application BRH-960524ZF
39
SCHEDULE 7.7
Tangible Personal Property
1. Attached schedule of inventory dated January 1992
2. Attached schedule of equipment from depreciation schedule
dated January 1992
(Updated schedules to follow execution of Agreement)
40
SCHEDULE 7.8
Contracts
("*" denotes third party consent to assignment of contract required)
* 1. Lease Agreement dated August 30, 1990, with River City
Capital, L.P. (formerly NKA Hyde Park, Inc.) (office/studio
space)
* 2. Lease Agreement dated May 29, 1992, with River City Capital,
L.P. (formerly NKA Hyde Park, Inc.) (first floor space at
▇▇▇▇▇▇▇ road)
3. Local Station Blanket Radio License dated November 25, 1991,
with American Society of Composers, Authors and Publishers
(expired on December 31, 1995, term extended for negotiation,
negotiation assigned to Radio Music License Committee)
* 4. Station License dated September 23, 1993, with The Arbitron
Company
* 5. Agreement dated November 21, 1990, with The Associated Press
* 6. Broadcast Station Licensing Agreement (Drake 88) dated January
29, 1990, with Axcess Broadcast Services, Inc.
* 7. Broadcast Station Licensing Agreement (Oldies Package) dated
April 7, 1992, with Axcess Broadcast Services, Inc.
8. License Agreement dated January 10, 1994, with Broadcast
Music, Inc.
* 9. Program License and Service Agreement (traffic/billing system)
dated November 12, 1991, with Custom Business Systems, Inc.
10. Lease Agreement (copier) dated March 18, 1996, and Copier
Maintenance Agreement dated June 19, 1996, with ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Inc.
11. Consulting Agreement dated December 27, 1995, with E. ▇▇▇▇▇
▇▇▇▇▇ & Associates, Inc.
* 12. Interactive Voice Response System Agreement dated January 26,
1996 with Fairwest Direct, Inc.
41
* 13. Licensing Agreement dated November 1, 1995, with FirstCom
Broadcast Services
* 14. Consulting Agreement dated November 1, 1995, with Global Sales
Development Company
* 15. Agreement (shared usage of RPU system) dated August 2, 1995,
with Heritage Media Corporation
* 16. Equipment Lease with Imperial Business Credit (equipment for
Fairwest Direct Marketing)
17. National Radio Sales Representation Agreement dated April 25,
1994, with McGavren Guild, Inc.
18. Subscriber Agreement dated April 26, 1995, with International
Demographics, Inc.
19. Membership Agreement dated May 1, 1989, with Radio Advertising
Bureau, Inc.
* 20. License Agreement (Selector) dated January 7, 1988, with Radio
Computing Services, Inc.
* 21. Broadcasting Performance License dated January 4, 1982, with
SESAC, Inc.
* 22. License Agreement (tower space for antenna) dated November 28,
1992, with Cincinnati TV 64 Limited Partnership
23. Emergency Power Generator Agreement dated July 27, 1993, with
Cincinnati TV 64 Limited Partnership
24. Quali-Tap Contract dated January 1, 1993, with Tapscan
Incorporated
25. Network Affiliate Agreement dated December 12, 1988, with
Traffic Watch, Inc.
* 26. Management Employment Agreement dated August 19, 1996, with
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
27. Employment Agreement dated March 1, 1995, with ▇▇▇▇▇ ▇▇▇▇▇▇▇
28. Employment Agreement dated August 30, 1993, as amended on
December 26, 1994, with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
42
29. Employment Agreement dated June 26, 1995, as amended on
May 31, 1996, with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
30. Employment Agreement dated June 12, 1995, as amended on
May 31, 1996, with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
31. Employment Agreement dated January 1, 1996, with ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
32. Employment Agreement dated June 13, 1994, as amended on
March 6, 1995, with ▇▇▇▇▇ ▇▇▇▇▇▇
33. Employment Agreement dated August 24, 1992, as amended on
March 15, 1993, and February 23, 1995, with ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
34. Employment Agreement dated December 31, 1990, as amended on
March 15, 1993, and February 23, 1995, with ▇▇▇▇▇ ▇. ▇▇▇▇▇
35. Employment Agreement dated April 18, 1996, with N. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
36. Employment Agreement dated October 1, 1995, with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇
37. Employment Agreement dated March 4, 1996, with ▇▇▇▇▇ ▇▇▇▇▇▇▇
38. Employment Agreement dated March 4, 1996, with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
39. Employment Agreement dated April 1, 1996, with ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
40. Employment Agreement dated March 4, 1996, with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
41. Employment Agreement dated March 4, 1996, with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇
42. Employment Agreement dated March 4, 1996, with ▇▇▇▇▇ ▇. ▇▇▇▇▇
Material Contracts
1. Lease Agreement dated August 30, 1990, with River City
Capital, L.P. (formerly NKA Hyde Park, Inc.) (office/studio
space)
2. Lease Agreement dated May 29, 1992, with River City Capital,
L.P. (formerly NKA Hyde Park, Inc.) (first floor space at
▇▇▇▇▇▇▇ road)
3. Agreement (shared usage of RPU system) dated August 2, 1995,
with Heritage Media Corporation
43
4. License Agreement (tower space for antenna) dated November 28,
1992, with Cincinnati TV 64 Limited Partnership
5. Emergency Power Generator Agreement dated July 27, 1993, with
Cincinnati TV 64 Limited Partnership
44
SCHEDULE 7.10
Exceptions to Environmental Compliance
None
45
SCHEDULE 7.11
Intellectual Property
Ohio Service Marks
(Other items to be supplied after execution of Agreement)
46
SCHEDULE 7.12
Financial Statements
1. Balance Sheet as of June 30, 1996
2. Income Statement June 1 - June 30, 1996
3. Income Statement December 1 - December 31, 1995
4. Income Statement December 1 - December 31, 1994
47
SCHEDULE 7.13
Station Personnel
List attached hereto
48
SCHEDULE 7.14
Litigation
None
49
SCHEDULE 7.15
Compliance With Laws
None
50
SCHEDULE 7.16
Employee Benefit Plans
1. 401(k) Plan
The ▇▇▇▇▇▇ Group, Inc. Savings Plan with investments handled
by The Guardian Insurance and Annuity Company. Approximately
25 WGRR employees participate. There are no Company
Contributions.
2. Health Insurance/Life Insurance
Health Insurance through Nationwide Health Plans.
Approximately 30 employees participate, eight of which are
family plans. The Company pays approximately 90% of individual
employee health insurance costs, and all of the costs for Life
Insurance.
3. Disability Insurance
Insurance through Mutual of Omaha. Company pays 100% of the
cost for approximately 22 employees.
51
