_______________________________________________________
__ __
ASSETS PURCHASE AGREEMENT
dated as of August 31, 1995
by and between
KNELLER BROADCASTING OF CHARLOTTE COUNTY, INC.
(Seller)
and
OSBORN COMMUNICATIONS CORPORATION
(Buyer)
________________________________________________________
__ _
Page i
TABLE OF CONTENTS
Page
ARTICLE I - PURCHASE AND SALE OF ASSETS
1.1 Transfer of
Assets...........................
1
1.2 Excluded
Assets..............................
4
1.3 Liabilities to be
Assumed....................
5
1.4
Consideration................................
5
1.5 WKII (AM)
Liability..........................
5
1.6 Proration of Income and
Expenses.............
5
1.7 Allocation of Purchase
Price.................
7
1.8 Escrow
Deposit...............................
7
ARTICLE II - CLOSING, TERMINATION, RISK OF LOSS AND LMA
OPERATION
2.1
Closing......................................
7
2.2 Transactions at the
Closing..................
8
2.3
Termination..................................
10
2.4 Operation of Station pursuant to the
LMA.....
12
2.5 Risk of
Loss.................................
12
2.6 Interruption of Broadcast
Transmissions......
13
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due
Incorporation............................
13
3.2 Authority; No
Conflict.......................
13
3.3 Government
Authorizations....................
14
3.4 Compliance with
Regulations..................
15
3.5
Taxes........................................
15
3.6 Personal
Property............................
16
3.7 Real
Property................................
16
3.8
Consents.....................................
18
3.9
Contracts....................................
18
3.10
Environmental................................
19
3.11 Intellectual
Property........................
19
3.12 Financial
Statements.........................
20
3.13 Personnel Information; Labor
Contracts.......
20
3.14 Employee Benefit
Plans.......................
21
3.15
Litigation...................................
21
3.16 Compliance with
Laws.........................
21
3.17
Insurance....................................
22
3.18 Undisclosed
Liabilities......................
22
3.19 Instruments of Conveyance; Good
Title........
22
3.20 Absence of Certain
Changes...................
23
3.21 Insolvency
Proceedings.......................
24
Page ii
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due
Incorporation............................
24
4.2 Authority; No
Conflict.......................
24
4.3
Consents.....................................
25
4.4
Litigation...................................
25
4.5 Compliance with
Laws.........................
25
4.6
Qualification................................
25
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of
Station...............
26
5.2 Financial
Obligations........................
26
5.3 Reasonable
Access............................
26
5.4 Maintenance of
Assets........................
26
5.5 Notification of
Developments.................
27
5.6 Payment of
Taxes.............................
27
5.7 Third Party
Consents.........................
27
5.8
Encumbrances.................................
27
5.9 Assignment of
Assets.........................
27
5.10 Commission Licenses and
Authorizations.......
27
5.11 Technical
Equipment..........................
28
5.12 Compensation
Increases.......................
28
5.13 Sale of Broadcast
Time.......................
28
5.14
Insurance....................................
28
5.15 Negotiations with Third
Parties..............
28
5.16 Covenant Not to
Compete......................
28
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment
Application.......................
29
6.2
Performance..................................
29
6.3
Conditions...................................
29
6.4
Confidentiality..............................
30
6.5
Cooperation..................................
30
6.6 Environmental
Reports........................
30
6.7 Consents to
Assignment.......................
31
6.8 Employee
Matters.............................
31
6.9
Survey.......................................
32
6.10 Relocation
Application.......................
32
6.11 Escrow
Agreement.............................
33
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission
Approvals.........................
33
7.2
Performance..................................
33
7.3 Representations and
Warranties...............
33
7.4
Consents.....................................
34
7.5 No
Litigation................................
34
7.6 No Adverse
Change............................
34
7.7
Documents....................................
34
Page iii
7.8 Opinions of
Counsel..........................
34
7.9
Financing....................................
34
7.10
Survey.......................................
34
7.11 Ancillary
Agreements.........................
34
7.12
Guarantee....................................
34
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1
Performance..................................
35
8.2 Representations and
Warranties...............
35
8.3 Government
Approvals.........................
35
8.4
Documents....................................
35
8.5 Opinion of
Counsel...........................
35
8.6 Consulting
Agreement.........................
35
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by
Seller....................
35
9.2 Indemnification by
Buyer.....................
36
9.3 Notification of
Claims.......................
37
ARTICLE X - MISCELLANEOUS
10.1
Assignment...................................
38
10.2 Survival of Indemnification..................
38
10.3 Brokerage....................................
39
10.4 Expenses of the Parties......................
39
10.5 Entire Agreement.............................
39
10.6 Headings.....................................
39
10.7 Governing Law................................
39
10.8 Counterparts.................................
40
10.9 Notices......................................
40
10.10 Specific Performance.........................
41
10.11 Consent to Jurisdiction......................
41
10.12 Further Assurances...........................
41
10.13 Public Announcements.........................
41
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT is entered into this 31st
day of August, 1995 by and between KNELLER BROADCASTING OF CHARLOTTE
COUNTY, INC., a corporation formed under the laws of the State of
Florida ("Seller"), and OSBORN COMMUNICATIONS CORPORATION, a
corporation formed under the laws of the State of Delaware
("Buyer").
R E C I T A L S
WHEREAS, Seller owns and operates and has been duly
licensed by the Federal Communications Commission (the "FCC" or the
"Commission") to operate radio station WEEJ(FM)/WKII(AM), Port
Charlotte, Florida (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase, the assets utilized in connection with the operation of
the Station, and Seller and Buyer further desire that Seller assign
to Buyer the licenses and other authorizations issued to Seller by
the Commission for the purpose of operating the Station; and
WHEREAS, simultaneously with the execution of this
Agreement, Seller and Buyer have entered into a Lease Management
Agreement ("LMA") effective as of the 1st day of September 1995;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE
I
PURCHASE AND SALE OF ASSETS
1.1 TRANSFER OF ASSETS. Seller agrees to assign,
transfer, convey and deliver to Buyer and Buyer agrees to acquire,
accept and receive from Seller, on the Closing Date, all of Seller's
right, title and interest in and to the following assets relating to
the Station (the "Station Assets") free and clear of all liens and
encumbrances; PROVIDED, HOWEVER, that notwithstanding anything to the
contrary in this Agreement, Buyer shall take the Station Assets
subject to (i) that certain Secured Term Loan Note dated December 29,
1992 (as amended on January 1, 1995) in favor of Chambersburg
Broadcasting Co. and executed by Seller and
(ii) that certain Equipment Lease Agreement
Page 2
between Seller and Priority Leasing Corporation dated August 14,
1994.
(a) LICENSES AND AUTHORIZATIONS. All licenses,
permits and other authorizations issued by the FCC or any other state
or federal regulatory agency pertaining to the Station, including,
without limitation, those licenses, permits or authorizations listed
in Section 1.1(a) of the disclosure schedule delivered by Seller to
Buyer and dated of even date herewith (the "Disclosure Schedule"),
together with any renewals, extensions or modifications thereof and
additions thereto made between the date of this Agreement and the
Closing Date (the "Licenses").
The Licenses include the right to use the call letters of the
Station, including but not limited to the call letters WKII(AM) and
WEEJ(FM).
(b) TANGIBLE PERSONAL PROPERTY. All of the tangible
personal property owned by Seller and used or useable in the
operation of the Station, including but not limited to the items of
personal property listed in Section 1.1(b) of the Disclosure
Schedule, together with all additions, modifications or replacements
thereto made in the ordinary course of business between the date of
this Agreement and the Closing Date, as hereafter defined (the
"Personal Property").
(c) REAL ESTATE CONTRACTS. All of the leasehold
interests in real property leased by Seller and used by the Station,
including all agreements, leases, and contracts of Seller relating to
the tower, transmitter, studio site, and offices of the Station (the
"Real Estate Contracts"), including all security or other deposits
made with respect to such Real Estate Contracts, all as described in
Section 1.1(d) of the Disclosure Schedule (the land, buildings and
other improvements covered by the Real Property Contracts being
herein called the "Leased Real Property." The Buyer shall assume,
pay and perform all obligations under such Real Estate Contracts
accruing after the Closing Date to the extent such obligations relate
to the period after the Closing Date.
(d) REAL ESTATE ASSETS. All of Seller's interest in
the real property owned by Seller and listed in Section 1.1(d) of the
Disclosure Schedule and all of the buildings, structures and other
improvements located thereon (collectively, the "Owned Real
Property"). The Owned Real Property and the Leased Real Property are
collectively referred to herein as the Real Property.
(e) INTELLECTUAL PROPERTY. All of Seller's trade
names, copyrights, trademarks, service marks, patents, patent
applications or other similar rights relating to the
Page 3
operation of the Station including, but not limited to, those listed
in Section 1.1(e) of the Disclosure Schedule, together with any
necessary additions or modifications thereto between the date hereof
and the Closing Date (the "Intellectual Property").
(f) LEASES AND CONTRACTS. All leases, contracts,
agreements and franchises relating to the operation of the Station
(other than contracts for the sale of broadcast time and leases for
real property) listed and identified in Section 1.1(f) of the
Disclosure Schedule and those leases, contracts, agreements and
franchises described in Section 1.1(i) of this Agreement (the
"Contracts"). Buyer shall assume, pay and perform all obligations
under such Contracts accruing after the Closing Date.
(g) CONTRACTS FOR SALE OF BROADCAST TIME. All
contracts for sale of broadcast time on the Station that provide for
payment by the customer solely on a cash basis and that are to be in
effect on the Closing Date listed and identified in Section 1.1(g) of
the Disclosure Schedule (the "Broadcast Agreements"). Buyer shall
assume, pay and perform all obligations under the Broadcast
Agreements arising after the Closing Date, PROVIDED, HOWEVER, Buyer
will not assume any contract for the sale of time entered into prior
to the date of this Agreement pursuant to which payment is to be
received in whole or in part in services, merchandise or other non-
cash considerations ("Trade Agreements"), except as agreed to by
Buyer and set forth in Section 1.1(g) of the Disclosure Schedule, and
Buyer will not assume any contract for the sale of time pursuant to
such a Trade Agreement entered into subsequent to the date of this
Agreement unless Buyer has consented in writing to the execution of
such contract.
(h) OPERATING AND BUSINESS RECORDS. All files,
records,
logs and program materials pertaining to the operation of the Station
required to be maintained and kept under the rules of the Commission
and such other files and records as Buyer shall reasonably require
for the continuing business and operation of the Station. Seller
shall have the right to reasonable access to such business records
that Seller delivers to Buyer under this Section 1.1(h) upon Seller's
request for five years after the Closing Date.
(i) FUTURE CONTRACTS. All leases, contracts,
agreements and franchises entered into between the date hereof and
the Closing Date in the usual and ordinary course of business, except
that those exceeding two months in duration or $5,000.00 in amount
will not be assumed by Buyer unless consented to by Buyer in advance
in writing and set forth in Section 1.1(i) of the Disclosure
Schedule.
Page 4
(j) INVENTORY AND COMPUTER SOFTWARE. All of Seller's
items of inventory related to the business of the Station, including,
without limitation, broadcast programs, as well as all computer
software used or useable by the Station.
(k) OTHER RIGHTS AND PRIVILEGES. Any and all other
franchises, materials, supplies, easements, rights-of-way, licenses,
and other rights and privileges of Seller relating to and used,
useable or necessary in the operation of the Station.
1.2 EXCLUDED ASSETS. There shall be excluded from the
sale transaction described herein the following assets relating to
the Station:
(a) CASH AND DEPOSITS. Cash-on-hand or in banks (or
their equivalents) and other investments belonging to Seller and
relating to the operation of the Station as of the Closing Date.
(b) ACCOUNTS RECEIVABLE. All accounts receivable of
the Seller with regard to the operation of the Station prior to the
Commencement date of the LMA (as that term is defined therein).
(c) PROPERTY CONSUMED. All property of the Station
disposed of or consumed (including ordinary wear and tear) in the
ordinary course of business between the date hereof and the Closing
Date.
(d) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(f), (g) and (i) to the Disclosure
Schedule that are terminated or will have expired prior to the
Closing Date in the ordinary course of business.
(e) PENSION AND PROFIT-SHARING PLANS. All pension
and profit-sharing plans, trusts established thereunder and assets
thereof, if any, of Seller.
(f) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(g) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS.
All employment agreements and collective bargaining agreements of
Seller.
(h) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(h) of the Disclosure Schedule.
Page 5
1.3 LIABILITIES TO BE ASSUMED. (a) Except as otherwise
provided herein, Buyer assumes no liabilities or obligations of
Seller of any nature whatsoever, contingent or otherwise, except for
postclosing obligations related to Real Estate Contracts, Contracts,
Broadcasting
Agreements and Trade Agreements (the "Assumed Contracts") assigned to
and specifically assumed by Buyer.
(b) Buyer shall assume as of the Closing Date, all of
Seller's outstanding obligations to Chambersburg Broadcasting Co. as
of the Closing Date and as set forth in Section 1.3(b) of the
Disclosure Schedule.
1.4 CONSIDERATION. In consideration of Seller's
performance of this Agreement and the sale, assignment, transfer,
conveyance and delivery of the Station Assets to Buyer free and clear
of all liens and encumbrances, Buyer shall:
(a) pay to Seller on the Closing Date, by wire
transfer, the sum of One Million Four Hundred Thousand Dollars
($1,400,000.00) (the "Cash Payment");
(b) assume the liabilities specified in Section
1.3(b); (c) subject to the successful filing of a
License
Application Form 302 with the Commission in respect of the relocation
of the Station to a tower located in Pine Island, Florida, within
five (5) days of such filing pay an amount equal to Seven Hundred
Fifty Thousand Dollars ($750,000.00).
1.5 WKII (AM) LIABILITY. Buyer and Seller agree that in
the event the License for WKII (AM) suffers an adverse condition
including, without limitation, revocation, modification, Commission
order to reduce power, Commission order to change WKII (AM)'s
frequency or any costs associated therewith, Seller shall be liable
for up to Four Hundred Thousand Dollars ($400,000.00) of any costs,
damages or claims associated with such adverse change for the four-
year period immediately following the Closing; PROVIDED, HOWEVER,
that such liability shall be reduced at a rate of One Hundred
Thousand Dollars per year ($100,000.00) beginning in the fifth year
following the Closing so that at the end of the eighth year following
the Closing, Seller's potential liability shall be reduced to zero.
Notwithstanding the provisions of this paragraph 1.5, Seller shall
have no liability hereunder (i) in the event WKII(AM) suffers an
adverse condition due solely to the failure of Buyer to timely file
with the Commission or any other applicable governmental authority
any material application or other document required to be filed by
Buyer in
Page 6
connection with WKII(AM)'s License and (ii) unless Seller has
received or is entitled to receive the $750,000.00 referenced in
paragraph 1.4(c) above.
1.6 PRORATION OF INCOME AND EXPENSES. Except as otherwise
provided herein or in the LMA, all income and expenses 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 p.m., Eastern time, on the
date immediately preceding the Closing Date. Such prorations shall
include, without limitation, all AD VALOREM and other property taxes
(but excluding taxes arising by reason of the transfer of Station
Assets as contemplated hereby, which shall be paid as set forth in
Section 10.4 of this Agreement), 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 1.5(b)), wages and salaries of
employees hired by Buyer, including accruals up to the Closing Date
for bonuses, commissions, vacation and sick pay, and related payroll
taxes, utility expenses, time sales agreements, Trade Agreements to
the extent provided in Section 1.5(a) hereof, rents and similar
prepaid deferred items attributable to the ownership and operation of
the Station.
(a) TRADE AGREEMENTS. To the extent that the
aggregate value by which the Station's obligations as of the
Commencement Date of the LMA are reflected on Seller's monthly
Station Trade Report under Trade Agreements assumed by Buyer for the
sale of advertising time is greater or less than the aggregate value
as reflected on Seller's monthly Station Trade Report of the goods,
services or other items to be received by the Station after the
Commencement Date of the LMA, Buyer or Seller, as the case may be,
shall be entitled to receive the difference.
(b) TIME FOR PAYMENT. The prorations and adjustments
contemplated by this Section 1.5, 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 90 days of the Closing Date.
(c) DISPUTE RESOLUTION. In the event of any disputes
between the parties as to such adjustments, the amounts not in
dispute shall nonetheless be paid at the time provided in Section
1.5(b) and such disputes shall be determined by an independent
certified public accountant mutually acceptable to the parties whose
determination shall be final, and the fees and expenses of such
accountant shall be paid onehalf by Seller and one-half by Buyer.
Page 7
1.7 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree
that the Purchase Price shall be allocated among the Station Assets
in a manner to be determined by Buyer. Buyer and Seller agree to use
such allocation in completing and filing Internal Revenue Service
Form 8594 for federal income tax purposes. Buyer and Seller further
agree that they shall not take any position inconsistent with such
allocation upon examination of any return, in any refund claim, in
any litigation, or otherwise.
1.8 ESCROW DEPOSIT. (a) As security for any amounts which
may become payable by Seller pursuant to Section 1.5 herein, and (b)
as security for Buyer's failure to Close and for Seller to perform
its obligations hereunder, Buyer shall deposit with Doyle Hadden,
Hadden & Associates, 1385 Ayerswood Ct., Winter Springs, FL 32708
(the "Escrow Agent"), a sum equal to five percent (5%) of the
Purchase Price (the "Escrow Deposit"). The Escrow Deposit shall be
held and disbursed by the Escrow Agent as follows: (i) in the event
prior to the Release Date (defined below) any amounts become payable
by Seller pursuant to clause (a) above, the Escrow Agent shall
disburse such amounts to the extent required to fulfill Seller's
obligations thereunder; (ii) six (6) months following the Closing
(the "Release Date"), the Escrow Deposit shall be delivered to Seller
in partial satisfaction of the Purchase Price; PROVIDED, HOWEVER,
that (iii) in the event this Agreement is terminated pursuant to
Sections 2.3(a)(ii), (iii) or (iv)
(other than with respect to Section 7.9 hereof which shall not apply
in this case) of this Agreement and in each such case Buyer is not in
default hereunder, the Escrow Deposit shall be returned to Buyer;
(iv) in the event this Agreement is terminated pursuant to Sections
2.3(a)(ii), (iii) or (v) and in each such case Seller is not in
default hereunder, the Escrow Deposit shall be delivered to Seller;
and (v) in the event the Closing does not occur before June 30, 1996
and neither Buyer nor Seller is at fault, the Escrow Deposit shall be
returned to Buyer. If the Closing occurs, all accrued interest on
the Escrow Deposit up to and including the Closing Date shall be
payable to Buyer and all accrued interest on the Escrow Deposit up to
and including the Release Date shall be payable to Seller.
ARTICLE II
CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION
2.1 CLOSING. The purchase and sale of the Station Assets
contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. on a mutually agreed
Page 8
upon day five (5) days after the latter of (a) the Commission's
approval of the Assignment Application, as defined in Section
6.1 below, becomes a Final Order, or (b) the grant of Seller's
renewal application in respect of the Licenses or such other time and
place as shall be mutually agreed upon by the parties (the "Closing
Date"). For purposes of this Agreement, a "Final Order" shall mean
any action of the Commission which has not been reversed, stayed,
enjoined, set aside, annulled or suspended and with respect to which
no requests are pending for administrative or judicial review,
reconsideration, appeal or stay, and the time for filing any such
requests and the time for the Commission to set aside the action on
its own motion shall have expired. Buyer may, at its sole election,
waive the requirement that the Commission's approval of the Assignment
Application shall have become a Final Order.
2.2 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer the
following:
(i) assignments of the Licenses and other
pertinent authorizations transferring the same to the Buyer in
customary form and substance;
(ii) the certificates contemplated by Sections 7.2
and 7.3;
(iii) a copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and
performance of this Agreement and the agreements and documents
listed in Section 2.2 of the Disclosure Schedule (the "Ancillary
Agreements"), and the consummation of the transactions
contemplated hereby and thereby, together with a certificate of
the Secretary of Seller, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect;
(iv) A special warranty deed (or its equivalent in
the State of Florida), in proper statutory form for recording,
conveying each parcel of Owned Real Property;
(v) An owner's extended coverage policy of title
insurance with respect to each parcel of Real Property, in each
case issued on the date of Closing by a title insurance company
acceptable to counsel for Buyer (the "Title Company"). Each such
title insurance policy shall be in an amount designated by Buyer
and shall insure Buyer's ownership of fee title with respect to
the Owned Real Property without any of the Scheduled B standard
pre printed exceptions (other
Page 9
than taxes not yet due and payable) and free and clear
of title defects and other exceptions to or
exclusions from coverage other than Permitted Owned Real Property
Exceptions (as hereinafter defined in Section 3.7(a)).
(vi) All real property transfer tax returns and
other similar filings required by law in connection with the
transactions contemplated hereby, all duly executed and
acknowledged by Seller. Seller shall also have executed such
affidavits in connection with such filings as shall have been
required by law or reasonably requested by Buyer.
(vii) Affidavit of an officer of Seller, sworn to
under penalty of perjury, setting forth Seller's name, address
and Federal tax identification number and stating that Seller is
not a "foreign person" within the meaning of Section 1445 of the
Internal Revenue Code of 1986 (the "Code"). If, on or before the
Closing Date, Buyer shall not have received such affidavit, Buyer
may withhold from the Purchase Price payable at Closing to Seller
pursuant hereto such sums as are required to be withheld
therefrom under Section 1445 of the Code.
(viii) a bill of sale and all other appropriate
documents and instruments assigning to Buyer good and marketable
title to the Station Assets free and clear of any security
interests, mortgages, liens, pledges, attachments, conditional
sales contracts, claims, charges or encumbrances of any kind
whatsoever;
(ix) the Ancillary Agreements, duly executed by
Seller as appropriate;
(x) written consents of the respective lessors,
landowners, and any other persons or entities whose consents may
be required to permit Buyer to assume the liabilities, contracts,
leases, licenses, understandings and agreements constituting the
Real Estate Contracts and the Contracts;
(xi) evidence satisfactory to Buyer's counsel that
no financing statements are outstanding on the Station Assets;
(xii) all files, records, logs, and program
materials relating to the Station;
(xiii) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.8;
Page 10
(xiv) assignments to Buyer of all the Contracts and
Real Estate Contracts in form satisfactory to Buyer; and
(xv) a current estoppel certificate from the
Landlord under each Real Property Contract in form satisfactory
to counsel to Buyer.
(xvi) such other documents and instruments as Buyer
may
reasonably request to consummate the transactions contemplated hereby.
(b) At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
(i) the Purchase Price less the Escrow Deposit;
(ii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby,
together with a certificate of the Secretary of Buyer dated as of
Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(iii) the certificates contemplated by Sections 8.1
and 8.2;
(iv) the Ancillary Agreements, duly executed by Buyer
as appropriate;
(v) the opinion of counsel for Buyer, dated the
Closing Date, as described in Section 8.5; and
(vi) such other documents and instruments as Seller
may reasonably request to consummate the transactions contemplated
hereby.
2.3 TERMINATION.
(a) Notwithstanding anything to the contrary contained
in this Agreement, this Agreement may be terminated at any time by:
(i) the mutual written consent of the parties
hereto;
(ii) either Buyer or Seller if the Closing does not
occur before June 30, 1996, provided, however, that the party
seeking termination under this
Page 11
Section 2.3(a)(ii) shall not have prevented the Closing from
occurring;
(iii) either Buyer or Seller if the Assignment
Application is not granted within nine (9) months from the date the
Form 314 is placed on Commission's public notice (through no fault
of the terminating party) or is denied by the Commission by a Final
Order or is at any time set by the Commission for a formal hearing;
PROVIDED, HOWEVER, that in the event of termination due solely to
the Commission's designation of the Assignment Application for a
formal hearing, the provisions of Section 2.3(c) shall apply;
(iv) Buyer, if any of the conditions set forth in
Article VII shall have become incapable of fulfillment, and shall
not have been waived by Buyer, or if Seller shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing; or
(v) Seller, if any of the conditions set forth in
Article VIII shall have become incapable of fulfillment, and shall
not have been waived by Seller, or if Buyer shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing.
(b) In the event of the termination of this Agreement
by Buyer or Seller pursuant to this Section 2.3, written notice
thereof shall promptly be given to the other party and, except as
otherwise
provided herein, the transactions contemplated by this Agreement shall
be terminated, without further action by any party. Nothing in this
Section
2.3 shall be deemed to release any party from any liability for any breach
by such party of the terms and provisions of this Agreement or to impair
the right of Buyer to compel specific performance of Seller of its
obligations under this Agreement.
(c) The time for Commission approval provided in
Section 2.3(a)(iii) notwithstanding, either party may terminate this
Agreement upon written notice to the other, if, for any reason, the
Assignment Application is designated for hearing by the Commission,
PROVIDED, HOWEVER, that written notice of termination must be given
within
twenty (20) days after release of the Hearing Designation Order and
that the party giving such notice is not in default and has otherwise
complied with its obligations under this Agreement. Upon termination
Page 12
pursuant to this Section, the parties shall be released and
discharged from any further obligation hereunder and the Escrow
Deposit shall be
returned to the Buyer.
(d) It is further PROVIDED, HOWEVER, that no party
may terminate this Agreement if such party is in default hereunder,
or if a delay in any decision or determination by the Commission
respecting the Assignment Application has been caused or materially
contributed to (i) by any failure of such party to furnish, file or
make available to the Commission information within its control; (ii)
by the willful furnishing by such party of incorrect, inaccurate or
incomplete information to the Commission; and (iii) by any other
action taken by such party for the purpose of delaying the
Commission's decision or determination respecting the Assignment
Application. Upon such termination for failure of the Commission to
act, the parties shall be released and discharged from any further
obligation hereunder.
(e) A party shall be deemed to be in default under
this Agreement only if such party has materially breached or failed
to perform its obligations hereunder, and non-material breaches or
failures shall not be grounds for declaring a party to be in default,
postponing the Closing, or terminating this Agreement.
(f) If the Closing occurs, the Escrow Deposit shall
be applied to the Purchase Price at Closing.
2.4 OPERATION OF STATION PURSUANT TO THE LMA.
Notwithstanding any provision to the contrary in this Agreement:
(a) As of September 1, 1995 (the "Commencement
Date"), the business and operation of the Station shall be conducted
pursuant to the terms of the LMA;
(b) All LMA Liabilities shall be assumed by Buyer as
of the Commencement Date.
2.5 RISK OF LOSS. The risk of any loss, damage or
destruction to any of the Station Assets from fire or other casualty
or cause shall be borne by Seller at all times prior to the Closing
Date hereunder. Upon the occurrence of any loss or damage to any of
the Station Assets as a result of fire, casualty, accident or other
causes prior to the Closing Date, Seller shall notify Buyer of same
in writing immediately stating with particularity the extent of loss
or damage incurred, the cause thereof if known and the extent to
which restoration, replacement and repair of the Station Assets lost
or destroyed will be
Page 13
reimbursed under any insurance policy with respect thereto. In the
event the loss exceeds $50,000 and the Station Assets cannot
be substantially repaired or restored within forty-five (45) days
after such loss, Buyer shall have the option, exercisable within ten
(10) days after receipt of written notice from Seller, to: (i)
terminate this Agreement; (ii) postpone the
Closing until such time as the property has been completely repaired,
replaced or restored to the satisfaction of Buyer, unless the same
cannot be reasonably effected within thirty (30) days of
notification; or (iii) elect to consummate the Closing and accept the
property in its damaged condition, in which event Seller shall assign
to Buyer all rights under any insurance claim covering the loss and
pay over to Buyer any proceeds under any such insurance policy
thereto received by
Seller with respect thereto.
2.6 INTERRUPTION OF BROADCAST TRANSMISSIONS.
Notwithstanding any other provision hereof, if prior to the Closing
any event occurs which prevents the broadcast transmission by the
Station with substantially full licensed power and antenna height as
described in the applicable FCC Licenses and in the manner it has
heretofore been operating for periods of time in excess of six (6)
hours, the Seller will
give prompt written notice thereof to Buyer. If such facilities are
not restored so that operation is resumed with substantially full
licensed power within three (3) days of such event, or, in the case
of more than one event, the aggregate number of days preceding such
restorations from all such events is more than six (6) days, or if
the Station is off the air more than three (3) times for a period in
each case exceeding six (6) hours, Buyer shall have the right, by
giving written notice to Seller of its election to do so, to
terminate this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE INCORPORATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Florida, and is duly qualified to do business in and is
in good standing in the State of Florida. Seller has the corporate
power and authority to own and to operate the Station and the Station
Assets.
3.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements
Page 14
have been duly and validly authorized and approved by
the board of directors of Seller, and Seller has the corporate
power and authority to execute, deliver and perform
this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. Neither such
execution, delivery or performance nor compliance by Seller with the
terms and provisions hereof, or with respect to the Ancillary
Agreements, will (assuming receipt of all necessary approvals from
the Commission) conflict with or result in a breach of any of the
terms, conditions or provisions of (a) the Certificate of
Incorporation or Bylaws of Seller, (b) any judgment, order,
injunction, decree, regulation or ruling of any court or other
governmental authority to which Seller is subject, or (c) any
material agreement, lease or contract, written or oral, to which
Seller is subject. This Agreement shall constitute the valid and
binding obligation of Seller with respect to the terms hereof,
subject to Commission approval of the transactions contemplated
hereby.
3.3 GOVERNMENT AUTHORIZATIONS.
(a) Section 1.1(a) of the Disclosure Schedule contains
a true and complete list of all the Licenses, which Licenses are
sufficient for the lawful conduct of the business and operation of
the Station in the manner and to the full extent they are currently
conducted. Seller is the authorized legal holder of the Licenses,
none of which is subject to any restriction or condition which would
limit in any material respect the full operation of the Station as
now operated. There are no applications, complaints or proceedings
pending or, to the best of Seller's knowledge, threatened as of the
date hereof before the Commission or any other governmental authority
relating to the business or operations of the Station, other than
applications, complaints or proceedings which generally affect the
broadcasting
industry as a whole, and other than reports and forms filed in the
ordinary course of the Station's business. Seller has delivered to
Buyer true and complete copies of the Licenses, including any and all
additions, amendments and other modifications thereto. The Licenses
are in good standing, are in full force and effect and are unimpaired
by any act or omission of Seller or its officers, directors or
employees; and the operation of the Station is in accordance with the
Licenses and the underlying construction permits. No proceedings are
pending or, to the knowledge of Seller, are threatened which may
result in the revocation, modification, non-renewal
or suspension of any of the Licenses, the denial of any pending
applications, the issuance of any cease and desist order, the
imposition of any administrative actions by the Commission with
respect to the Licenses or which may affect Buyer's ability to
continue to operate the Station
Page 15
as it is currently operated. Seller has taken no action which,
to its knowledge, could lead to revocation or non-renewal of the
Licenses, nor omitted to take any action which, by reason of its
omission, could lead to revocation of the Licenses. All material
reports, forms and statements required to be filed with the
Commission with respect to the Station since the grant of the last
renewal of the Licenses have been filed and are complete and
accurate. To the knowledge of Seller, there are no facts which,
under the Communications Act of 1934, as amended, or the existing
rules and regulations of the Commission, would disqualify Seller as
assignor, and Buyer as assignee, in connection with the Assignment
Application.
(b) The Seller has disclosed and the Buyer
acknowledges and agrees that WKII(AM) is not operating under a
Federal Communications Commission License, but rather a Special
Temporary Authority (the "STA") granted initially on August5, 1991,
and subsequently extended through November 10, 1995, in increments of
six months or one year (at the Commission's discretion). This STA
permits WKII(AM) to operate as if licensed, but is subject to
revision, suspension or termination at the sole discretion of the
Commission. Therefore, Buyer understands and agrees that,
notwithstanding anything to the contrary contained in this Agreement,
Seller makes no representations that said STA shall remain in effect
beyond the date of closing.
3.4 COMPLIANCE WITH REGULATIONS. The operation of the
Station is in compliance in all material respects with (i) all
applicable engineering standards required to be met under Commission
rules, and (ii) all other applicable rules, regulations, requirements
and policies of the Commission and all other applicable governmental
authorities, including, but not limited to, ANSI Radiation Standards,
to the extent required to be met under applicable Commission rules
and regulations; and there are no existing claims known to Seller to
the contrary.
3.5 TAXES. Seller has timely filed all federal, state,
local and foreign income, franchise, sales, use, property, excise,
payroll and other tax returns required by law and has paid in full
all taxes, estimated taxes, interest, assessments, and penalties due
and payable as shown thereon. All returns and forms which have been
filed have been true and correct in all material respects and no tax
or other payment in a material amount other than as shown on such
returns and forms are required to be paid or have been paid by
Seller. There are no present disputes as to taxes of any nature
payable by Seller which in any event could materially adversely
affect the Station Assets or operation of the Station. Each of the
parcels included in
Page 16
the Owned Real Property is assured for real estate purposes as a
wholly
independent tax lot, separate from any adjoining load or improvements
not constituting a part of such parcel.
3.6 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure
Schedule contains a true and complete list of all the Personal
Property. Except for those assets designated on Section 1.1(b) of the
Disclosure Schedule as being subject to lease agreements, Seller owns
and has, and will have on the Closing Date, good and marketable title
to such Personal Property, and none of such Personal Property on the
Closing Date will be subject to any security interest, mortgage,
pledge, conditional sales agreement or other lien or encumbrance.
All items of Personal Property are in all material respects in good
operating condition, ordinary wear
and tear excepted, and are available for immediate use in the conduct
of the business and operation of the Station. The technical
equipment, including, without limitation, all transmitters and studio
equipment, constituting part of the Personal Property, has been
maintained in accordance with industry practice and is in good
operating condition, ordinary wear and tear excepted, (except as
noted in Section 1.1(b) of the Disclosure Schedule) and complies in
all material respects with all applicable rules and regulations of
the Commission and the terms of the Licenses. The Personal Property
includes all such items and equipment necessary to conduct in all
material respects the business and operations of the Station as now
conducted.
3.7 REAL PROPERTY.
(a) Seller is the owner of good, marketable and
insurable fee title to the real property described on Section 1.1(d)
of the Disclosed Schedule and to all of the buildings, structures and
other improvements located thereon (collectively, the "Owned Real
Property") free and clear of all Title Defects (as hereinafter
defined) except for the matters listed on Section 3.7 of the
Disclosure Schedule and encumbrances of a minor nature that do not,
in the reasonable opinion of Buyer's counsel, individually or in the
aggregate (i) interfere in any material respect with the use,
occupancy or operation of the Owned Real Property or (ii) materially
reduce the fair market value of the Owned Real Property below the
fair market value the Owned Real Property would have had but for such
encumbrances (collectively, the "Permitted Owned Real Property
Exceptions"). The Owned Real Property constitutes all of the real
property owned by Seller on the date hereof in connection with the
operation of the Station. There are no leases/subleases or other
agreements granting to any person other than Seller any right to the
possession, use or
Page 17
occupancy of the Owned Real Property. As used in this
Agreement, "Title Defects" shall mean and include any mortgage, deed
of trust, lien, pledge, security interest, claim, lease, charge,
option, right of first refusal, easement, restrictive covenant,
encroachment or other survey defect, encumbrance or other restriction
or limitation whatsoever.
(b) Section 1.1(d) of the Disclosure Schedule
contains a true and complete list and summary of all the Real Estate
Contracts. Seller holds the leasehold interest under each Real
Property Contract free and clear of all Title Defects. The Real
Estate Contracts constitute valid and binding obligations of Seller
and, to the best of Seller's knowledge, of all other persons
purported to be parties thereto, and are in full force and effect as
of the date hereof, and will on the Closing Date constitute valid and
binding obligations of Buyer and, to the best of Seller's knowledge,
of all other persons purported to be parties thereto. As of the date
hereof, Seller is not in default under any of the Real Estate
Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto and will not
have received any such notice at or
prior to the Closing Date. Seller shall use reasonable efforts to
obtain valid and binding third-party consents, if any are necessary,
from all required third parties to the Real Estate Contracts to be
conveyed and assigned to Buyer as part of the Station Assets.
Subject to any required third-party consents, Seller will have full
legal power and authority to assign its rights under the Real Estate
Contracts of Buyer in accordance with this Agreement on terms and
conditions no less favorable than those in effect on the date hereof,
and such assignment shall not affect the validity, enforce ability
and continuity of any of the Real Estate Contracts.
(c) Entire Premise. All of the land, buildings,
structures and other improvements used by Seller in the conduct of
the Business or involved in the Real Property.
(d) No Options. Seller does not own or hold, and is
not obligated under or a party to, any option, right of first refusal
or other contractual right to purchase, acquire, sell or dispose of
the Real Property or any portion thereof or interest therein.
(e) Condition and Operation of Improvements. All
components of all buildings, structures and other improvements
included within the Real Property (the "Improvements") are in good
working order and repair. All water, gas, electrical, steam,
compressed air,
Page 18
telecommunication, sanitary and storm sewage lines and systems and
other similar systems serving the Real Property are installed and
operating and are sufficient to enable the Real Property to continue
to be used and operated in the manner currently being used and
operated, and any socalled hook-up fees or other associated charges
have been fully paid.
(f) Real Property Permits and Insurance. All
certificates of occupancy, permits, licenses, franchises, approvals
and authorizations (collectively, "Real Property Permits") of all
governmental authorities having jurisdiction over the Real Property,
required or appropriate to have been issued to Seller to enable the
Real Property to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used have been
lawfully issued and are, as of the date hereof, in full force and
effect.
(g) Condemnation. Seller has not received notice
and has no knowledge of any pending, threatened or contemplated
condemnation proceeding affecting the Real Property or any part
thereof or of any sale or other disposition of the Owned Real
Property or any part thereof in lieu of condemnation.
(h) Casualty. No portion of the Real Property has
suffered any material damage by fire or other casualty which has not
heretofore been completely repaired and restored to its original
condition. No portion of the Real Property is located in a special
flood hazard area as designated by Federal governmental authorities.
3.8 CONSENTS. No consent, approval, authorization or
order of, or registration, qualification or filing with, any court,
regulatory authority or other governmental body is required for the
execution, delivery and performance by Seller of this Agreement or
the Ancillary Agreements to which it is a party, other than approval
by the Commission of the Assignment Application as contemplated
hereby. Except as set forth in Section 3.8 of the Disclosure
Schedule, no consent of any other party (including, without
limitation, any party to any Real Estate Contract or Contract) is
required for the execution, delivery and performance by Seller of
this Agreement or the Ancillary Agreements to which it is a party.
3.9 CONTRACTS. Section 1.1(f) of the Disclosure Schedule
contains a true and complete list of all Contracts, and Section
1.1(g) contains a true and complete list of all Broadcast Agreements
and Trade Agreements. Seller has delivered to Buyer true and
complete copies of all written Contracts, Broadcast Agreements and
Trade
Page 19
agreements in the, possession of Seller, including any
and all amendments and other modifications to same. All such
Contracts, Broadcast Agreements and Trade Agreements are valid,
binding and enforceable by Seller in
accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
Seller has complied in all material respects with all such Contracts,
Broadcast Agreements and Trade Agreements, and Seller is not in
default beyond any
applicable grace periods under any of same, and no other contracting
party is in material default under any of same. Seller has full
legal power and authority to assign its respective rights under such
Contracts, Broadcast Agreements and Trade Agreements to Buyer in
accordance with this Agreement on terms and conditions no less
favorable than those in effect on the date hereof, and such
assignment will not materially affect the validity, enforceability
and continuity of any such Contracts, Broadcast Agreements and Trade
Agreements.
3.10 ENVIRONMENTAL. Seller has not unlawfully disposed of
any Hazardous Waste in a manner which has caused, or could cause,
Buyer to incur a material liability under applicable law in
connection therewith; and Seller warrants that the technical
equipment included in the Personal Property does not contain any
Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs")
that are required by law to be removed, or if any equipment does
contain Hazardous Waste, including any PCBs, that such equipment is
stored and maintained in compliance with applicable law. Seller has
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the Station
and its operations, including but not limited to the Commission's
guidelines regarding RF radiation. No Hazardous Waste has been
disposed of by Seller, and to the best of Seller's knowledge, no
Hazardous Waste has been disposed of by any other person on the
property subject to Real Estate Contracts. As used herein, the term
"Hazardous Waste" shall mean all materials regulated by any federal,
state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata). If Seller learns between the date of this Agreement and the
Closing Date that Seller is in breach of the representation and
warranty set forth in this Section 3.10, Seller shall begin remedial
action promptly and shall use reasonable best efforts to complete
such remedial action to the satisfaction of Buyer before the Closing
Date.
3.11 INTELLECTUAL PROPERTY. Section 3.11 of the
Disclosure Schedule is a true and complete list of all the
Intellectual Property. The Intellectual Property has been
Page 20
duly registered in, filed with, or
issued by the appropriate offices within all jurisdictions where such
registration, filing or issuance is necessary to protect such
Intellectual Property from infringement, including, without
limitation, the United States Copyright Office and the United States
Patent and Trademark Office. Seller has not granted any license or
other rights with respect to the Intellectual Property. Seller has
not received any written notice of any infringement or unlawful use
of the Intellectual Property and Seller has not violated or infringed
any patent, trademark, trade secret or copyright held by others or
any license,
authorization or permit held by it.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure
Schedule contains complete unaudited copies of the statements of
income, and the related balance sheets for Seller for the period
after Seller acquired the Station (the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally
accepted accounting principles and in accordance with the policies
and procedures of the Corporation applicable thereto, consistently
applied. The Financial Statements present fairly the financial
condition and results of operations of the Station for the periods
indicated.
3.13 PERSONNEL INFORMATION; LABOR CONTRACTS.
(a)Section 3.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Station,
including the date of hire, a description of material compensation
arrangements
(other than employee benefit plans set forth in Section 3.15 of the
Disclosure Schedule) and a list of other terms of any and all
material agreements affecting such persons.
(b) Seller is not a party to any contract 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
Seller's employees. Seller has no knowledge of any organizational
effort currently being made or threatened by or on behalf of any
labor union with respect to employees of the Station. During the
past two years, Seller has not experienced any strikes, work
stoppages, grievance proceedings, claims of unfair labor practices
filed, or other significant labor difficulties of any nature.
(c) Seller 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
Page 21
those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and the payment and withholding of taxes.
3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the
Disclosure Schedule contains a true and complete list and summary, as
of the date of this Agreement, of all employee benefit plans (as that
term is defined in Section 3(3) of ERISA) applicable to the employees
of Seller. Seller maintains no other employee benefit plan. Each of
Seller's employee benefit plans has been operated and administered in
all material respects in accordance with its terms and applicable
law, including, without limitation, ERISA and the Internal Revenue
Code.
3.15 LITIGATION. Except as set forth in Section 3.15 of
the Disclosure Schedule, Seller is not subject to any judgment,
award, order, writ, injunction, arbitration decision or decree, and
there is no litigation, proceeding or investigation pending or, to
the best of 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 Licenses), or before any other tribunal duly
authorized to resolve disputes, which would reasonably be expected to
have any material adverse effect upon the business, property, assets
or condition (financial or otherwise) of the Station or which seeks
to enjoin or prohibit, or otherwise questions the validity of, any
action taken or to be taken pursuant to or in connection with this
Agreement. In particular, but without
limiting the generality of the foregoing, except as set forth in
Section 3.15 of the Disclosure Schedule, there are no applications,
complaints or proceedings pending or, to the best of Seller's
knowledge, threatened before the Commission or any other governmental
organization with respect to the business or operation of the
Station, other than applications, complaints or proceedings which
affect the broadcast industry generally.
3.16 COMPLIANCE WITH LAWS. Seller has not received any
notice asserting any non-compliance with any applicable statute, rule
or regulation (federal, state or local) whether or not related to the
business or operation of the Station or the Real Property. Seller is
not in default with respect to any judgment, order, injunction or
decree of any court, administrative agency or other governmental
authority or to any other tribunal duly authorized to resolve
disputes in any respect material to the transactions contemplated
hereby. Seller is in compliance in all material respects with all
laws,
Page 22
regulations and governmental orders whether or not applicable to the
conduct of the business and operation of the Station and any other
business or operations conducted by Seller. The Owned Real Property
is in full compliance with all applicable building, zoning,
subdivision, environmental and other
land use and similar laws, codes, ordinances, rules, regulations and
orders of governmental authorities (collectively, "Real Property
Laws"), and Seller has not received any notice of
violation or claimed violation of any Real Property Law. Seller has
no knowledge of any pending change in any Real Property Law which
would have a material adverse effect upon the ownership or use of the
Owned Real Property.
3.17 INSURANCE. Seller has in full force and effect
insurance on all of the Real Property, Personal Property, and all
other Station Assets pursuant to insurance policies, a true and
complete copy of which is contained in Section 3.17 of the Disclosure
Schedule. Seller shall continue to maintain such insurance in full
force and effect up to the Closing Date or shall have obtained prior
to the Closing Date other insurance policies with limits and coverage
comparable to the current policies after prior notice to, and upon
written consent of the Buyer, which consent shall not be unreasonably
withheld.
3.18 UNDISCLOSED LIABILITIES. Except as to, and to the
extent of, the amounts specifically reflected or reserved against in
Seller's balance sheets for the period ending December 31, 1994 (the
"Balance Sheet Date"), and except for liabilities and obligations
incurred since the Balance Sheet Date in the ordinary and usual
course of business, Seller has no material liabilities or obligations
of any nature whether accrued, absolute, contingent or otherwise and
whether due or to become due, and, to the best of Seller's knowledge,
there is no basis for the assertion against Seller of any such
liability or obligations. No representation or warranty made by
Seller in this Agreement, and no statement made in any exhibit or
schedule hereto or any certificate or document delivered by Seller
pursuant to the terms of this Agreement, contain or will contain any
untrue statement of a material fact or omit or will omit to state any
material fact necessary to make such representation or warranty or
any such statement not misleading.
3.19 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The
instruments to be executed by Seller and delivered to Buyer at
Closing, conveying the Station Assets, including without limitation
the Owned Real Property, to Buyer, will be in a form sufficient to
transfer good and marketable title to the Station Assets, including
without limitation the Owned
Page 23
Real Property, free and clear of all liabilities, obligations and
encumbrances, except as provided herein.
3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.20 of the Disclosure Schedule, between the Balance Sheet
Date and the date of this Agreement there has not been:
(a) Any material adverse change in the working
capital, financial condition, business, results of operations, assets
or liabilities of Seller;
(b) Any change in the manner in which Seller
conducts
its business and operations other than changes in the ordinary and
usual course of business consistent with past practice;
(c) Any amendment to the Certificate of
Incorporation
or Bylaws of Seller;
(d) Any contract or commitment, to which Seller is a
party, entered into, modified or terminated, except in the ordinary
and usual course of business;
(e) Any creation or assumption of any mortgage,
pledge
or other lien or encumbrance upon any of the Station Assets except in
the ordinary and usual course of business;
(f) Any sale, assignment, lease, transfer, or other
disposition of any of the Station Assets, except in the ordinary and
usual course of business;
(g) The incurring of any liabilities or obligations,
except items incurred in the ordinary and usual course of business;
(h) The write-off or determination to write off as
uncollectible any accounts receivable or portion thereof, except for
write-offs in the ordinary course of business consistent with past
practice at a rate no greater than during the twelve months prior to
the Balance Sheet Date;
(i) The cancellation of any debts or claims, or
waiver
of any rights, having an aggregate value in excess of $10,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
(k) The increase or promise to increase the rate of
commissions, fixed salary or wages, draw, bonus or
Page 24
other compensation payable to any employee of Seller, except in the
ordinary and usual course of business consistent with past practice;
(l) The issuance of, or authorization to issue, any
additional shares of capital stock of Seller, or rights, warrants or
options to acquire, any such shares, or convertible securities;
(m) Any default under any contract or lease to which
Seller is a party;
(n) Any change in any method of accounting or
accounting
practice used by Seller; or
(o) Any other event or condition of any character
materially and adversely affecting the business or properties of
Seller
or the Station.
3.21 INSOLVENCY PROCEEDINGS. No insolvency proceedings of
any character including, without limitation, bankruptcy,
receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, affecting Seller or the Station
Assets are pending or, to Seller's knowledge, threatened, and Seller
has made no assignment for the benefit of creditors, nor taken any
action with a view to, or which would constitute the basis for, the
institution of any such insolvency proceedings.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 DUE INCORPORATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, and as of the Closing Date shall be duly
qualified to do business in and be in good standing in the State of
Florida.
4.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and
validly authorized and approved by the board of directors of Buyer,
and Buyer has the corporate power and authority to execute, deliver
and perform this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery, performance hereof, and compliance by Buyer with
the terms and provisions hereof, or with respect to the Ancillary
Agreements, thereof, will not (assuming
Page 25
receipt of all necessary approvals from the Commission) conflict with
or result in a breach of any of the terms, conditions or provisions
of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any
judgment, order, injunction, decree, regulation or ruling of any
court or other governmental authority to which Buyer is subject, or
(c) any material agreement, lease or contract, written or oral, to
which Buyer is subject. This Agreement will constitute the valid and
binding obligation of Buyer with respect to the terms hereof, subject
to Commission approval of the transactions contemplated hereby.
4.3 CONSENTS. No consent, approval, authorization or
order of, or registration, qualification or filing with, any court,
regulatory authority or other governmental body is required for the
execution, delivery and performance by Buyer of this Agreement or the
Ancillary Agreements to which it is a party, other than the approval
by the Commission of the Assignment Application as contemplated
hereby. Except as set forth in Section 4.3 of the Disclosure
Schedule, no
consent of any
other party is required for the execution, delivery and performance
by Buyer of this Agreement or the Ancillary Agreements to which it is
a party.
4.4 LITIGATION. There is no litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge,
threatened against Buyer in any federal, state or local court, or
before any administrative agency or arbitrator, or before any other
tribunal duly authorized to resolve disputes, that would reasonably
be expected to have any material adverse effect upon the ability of
Buyer to perform its obligations hereunder, or that seeks to enjoin
or prohibit, or otherwise questions the validity of, any action taken
or to be taken pursuant to or in connection with this Agreement.
4.5 COMPLIANCE WITH LAWS. Buyer is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or of any other
tribunal duly authorized to resolve disputes in any respect material
to the transactions contemplated hereby. Buyer is not in violation
of any law, regulation or governmental order, the violation of which
would have a material adverse effect on Buyer or its ability to
perform its obligations pursuant to this Agreement.
4.6 QUALIFICATION. To the best of Buyer's knowledge,
Buyer is legally, technically and financially qualified to be the
assignee of the Licenses and the other Station Assets, and, prior to
the Closing Date, Buyer will exercise its best efforts to refrain
from doing any act
Page 26
which would disqualify Buyer from being the assignee of the Licenses
and the other Station Assets.
ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing Date,
Seller
shall have complete control of the Station and its operations, and
Seller covenants as follows with respect to such period:
5.1 CONTINUED OPERATION OF STATION. Subject to the LMA,
Seller shall continue to operate the Station under the terms of the
Licenses in the manner in which the Station has been operated
heretofore, in the usual and ordinary course of business, in
conformity with all material applicable laws, ordinances,
regulations, rules and orders, and in a manner so as to preserve and
foster the goodwill and business relationships of the Station and
Seller, including, without limitation, relationships with
advertisers, suppliers, customers, and employees. Seller shall file
with the Commission and any other applicable governmental authority
all applications and other documents required to be filed in
connection with the continued operation of the Station.
5.2 FINANCIAL OBLIGATIONS. Subject to the LMA, Seller
shall continue to conduct the financial operations of the Station,
including its credit and collection policies, in the ordinary course
of business with the same effort, to the same extent, and in the same
manner, as in the prior conduct of the business of the Station; and
shall continue to pay and satisfy all expenses, liabilities and
obligations arising in the ordinary course of business in accordance
with past accounting practices. Seller shall not enter into or amend
any contracts or commitments involving expenditures by Seller in an
aggregate amount in excess of $10,000 without the prior written
consent of Buyer.
5.3 REASONABLE ACCESS. Seller shall provide Buyer, and
representatives of Buyer, with reasonable access during normal
business hours to the Station and shall furnish such additional
information concerning the Station as Buyer from time to time may
reasonably request.
5.4 MAINTENANCE OF ASSETS. Seller shall maintain the Real
Property, the Personal Property and all other tangible assets in
their present good operating condition, repair and order, reasonable
wear and tear in ordinary usage excepted. Seller shall not waive or
cancel any
Page 27
claims or rights of substantial value, transfer or otherwise dispose
of the Real Property, any Personal Property, or permit to lapse or
dispose of any right to the use of any Intellectual Property.
5.5 NOTIFICATION OF DEVELOPMENTS. Seller shall notify
Buyer
of any problems or developments with respect to the Station Assets or
operation of the Station; and provide Buyer with prompt written
notice of any change in any of the information contained in the
representations and warranties made herein or in the Disclosure
Schedule or any other documents delivered in connection with this
Agreement.
5.6 PAYMENT OF TAXES. Seller shall pay or cause to be
paid
all property and all other taxes relating to the Station, the Real
Property and the assets and employees of the Station required to be
paid to city, county, state, federal and other governmental units
through the Closing Date.
5.7 THIRD PARTY CONSENTS. Seller shall use commercially
reasonable efforts to obtain from any third party waivers, permits,
licenses, approvals, authorizations, qualifications, orders and
consents necessary for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements,
including, without limitation, approval from the Commission of the
Assignment Application contemplated hereby.
5.8 ENCUMBRANCES. Seller shall not suffer or permit the
creation of any mortgage, conditional sales agreement, security
interest, lease, lien, hypothecation, deed of trust or pledge,
encumbrance, restriction, liability, charge, or imperfection of title
with respect to
the Station Assets.
5.9 ASSIGNMENT OF ASSETS. Seller shall not sell, assign,
lease or otherwise transfer or dispose of any Station Assets, whether
now owned or hereafter acquired, except for retirements in the normal
and usual course of business or in connection with the acquisition of
similar property or assets, as provided for herein.
5.10 COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall
not
by any act or omission surrender, modify adversely, forfeit or fail
to renew under regular terms the Licenses, cause the Commission or
any other governmental authority to institute any proceeding for the
revocation, suspension or modification of any such License, or fail
to prosecute with due diligence any pending applications with
Page 28
respect to the Licenses at the Commission or any other applicable
governmental authority.
5.11 TECHNICAL EQUIPMENT. Seller shall not fail to
repair,
maintain or replace the technical equipment transferred hereunder in
accordance with the normal standards of maintenance applicable in the
broadcast industry.
5.12 COMPENSATION INCREASES. Seller shall not permit any
increase in the rate of commissions, fixed salary or wages, draw or
other compensation payable to any employees of Seller.
5.13 SALE OF BROADCAST TIME. Seller shall not enter into,
extend or renew any Broadcast Agreement not consistent with the usual
and ordinary course of business, provided, however, that Seller shall
not enter into, extend or renew any Broadcast Agreement exceeding
$10,000 in amount unless such Broadcast Agreement is terminable on
30days' notice. Seller shall not enter into any Trade Agreement
without the prior written consent of Buyer.
5.14 INSURANCE. Seller shall maintain at all times
between
the date hereof and the Closing Date, those insurance policies listed
in Section 3.17 of the Disclosure Schedule.
5.15 NEGOTIATIONS WITH THIRD PARTIES. Seller shall not,
before Closing or the termination of this Agreement, enter into
discussions with respect to any sale or offer of the Station, any
Station Assets or any stock of Seller to any third party, nor shall
Seller offer the Station, any Station Assets or any stock of Seller
to any third party.
6.16 COVENANT NOT TO COMPETE.
(a) Seller agrees not to compete with Buyer for a
period of five (5) years from the Closing Date. Seller shall not
directly or indirectly own, manage, operate, control or be employed
by any radio station with a transmission tower or City of License
within the Fort Myers/Naples Total Survey Area as defined by
Arbitron Company (the "NonCompete Area"). For the purposes of this
Section 5.16, the term "Seller" shall include Kneller Broadcasting
Corporation and its principal shareholders, HaroldM. Kneller, Jr.
and JanetG. Kneller.
(b) Technical projects for stations within the
scope
of the Non-Compete Area will be permitted under this Agreement provided
that such projects do not create a competitive improvement (determined
in Buyer's reasonable
Page 29
discretion) of the broadcast facility (i.e. a power or class increase).
(c) Such technical projects shall not create an
employment relationship or be of duration beyond thirty (30) days per
each such project.
(d) Seller's project of a non-commercial, educational
nature for radio stations within the Non-Compete Area will be permitted
hereunder.
(e) Any project which could be considered to be in a
"grey" area within this covenant, shall be submitted in writing via
letter or facsimile, to the Buyer for authorization and written approval
at Buyer's sole discretion prior to the commencement of such project.
Such approval or denial will be timely given via letter or facsimile.
(f) The consideration for this covenant not to compete
shall be $50,000 payable at Closing.
ARTICLE VI
JOINT COVENANTS OF BUYER AND SELLER
Buyer and Seller covenant and agree that between the date
hereof and the Closing Date, they shall act in accordance with the
following:
6.1 ASSIGNMENT APPLICATION. As promptly as practicable after
the date of this Agreement, and in no event later than ten (10) days
after execution of this Agreement, Seller and Buyer shall join in and
file an application on FCC Form 314 with the Commission requesting its
consent to the assignment of the Licenses from Seller to Buyer (the
"Assignment Application"). Seller and Buyer agree to prosecute the
Assignment Application with all reasonable diligence and to use their
best efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission.
6.2 PERFORMANCE. Buyer and Seller shall perform all acts
required of them under this Agreement and refrain from taking or
omitting to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing Date.
6.3 CONDITIONS. If any event should occur, either within or
without the control of any party hereto, which would prevent fulfillment
of the conditions placed upon the obligations of any party hereto to
consummate the
Page 30
transactions contemplated by this Agreement, the parties
hereto shall use their best efforts to cure the event as expeditiously
as possible.
6.4 CONFIDENTIALITY. Buyer and Seller shall each keep
confidential all information they obtain with respect to any other party
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. If the transactions
contemplated hereby are not consummated for any reason, each party
hereto shall return to the party so providing, without retaining a copy
thereof, any schedules, documents or other written information obtained
from the party so providing such information 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 (i) is known or available through other lawful
sources, (ii) is or becomes publicly known through no fault of the
receiving party or its agents, (iii) 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), or
(iv) is developed by the receiving party independently of the disclosure
by the disclosing party.
6.5 COOPERATION. Buyer and Seller shall cooperate fully and
with each other in taking any 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; PROVIDED,
HOWEVER, that no party shall be required to take any action which would
have a material adverse effect upon it or any entity affiliated with it.
6.6 ENVIRONMENTAL REPORTS. If desired by Buyer, Seller and
Buyer agree to arrange for the preparation of, at the expense of Buyer,
appropriate environmental reports for the real property subject to Real
Estate Contracts. Such environmental reports shall conclude that:
(i) the real property subject to Real Estate Contracts is not in any way
contaminated with any Hazardous Waste requiring remediation, clean-up or
removal under applicable laws relating to Hazardous Waste; (ii) the real
property subject to Real Estate Contracts is not subject to any federal,
state or local "superfund" or "Act307" lien, proceeding, claim,
liability or action, or the threat or likelihood thereof, for the clean
up, removal or remediation of any Hazardous Waste from same; (iii) there
is no asbestos located in the buildings situated on the real property
subject to Real Estate Contracts requiring remediation, encapsulation or
removal under applicable laws relating to
Page 31
asbestos clean-up; and (iv) there are no underground storage tanks
located at the real property subject to Real Estate Contracts requiring
remediation, clean-up or removal under applicable laws relating to
Hazardous Waste, and if any have previously been removed, such removal
was done in accordance with all applicable laws, rules and regulations.
The environmental review to be conducted shall initially be a PhaseI
review. Any further investigations recommended in the environmental
reports obtained pursuant to this Section 6.6 shall be conducted with
the cost to
be shared equally by Seller and Buyer.
6.7 CONSENTS TO ASSIGNMENT. To the extent that any Contract,
Broadcast Agreement, Trade Agreement, Real Estate Contract or other
contract identified in the Disclosure Schedule that is to be assigned
under this Agreement is not capable of being sold, assigned,
transferred, delivered or subleased without the waiver or consent of any
third person withholding same (including a government or governmental
unit), or if such sale, assignment, transfer, delivery or sublease or
attempted sale, 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. 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 such contracts, Buyer may in its sole discretion elect to
have this Agreement and any assignments executed pursuant hereto, to the
extent permitted by law, constitute an equitable assignment by Seller to
Buyer of all of Seller's rights, benefits, title and interest in and to
such contracts, and where necessary or appropriate, Buyer shall be
deemed to be Seller's agent for the purpose of completing, fulfilling
and discharging all of Seller's rights and liabilities arising after the
Closing Date under such contracts. Seller shall use its reasonable best
efforts to provide Buyer with the 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.
6.8 EMPLOYEE MATTERS. While under no obligation to hire any
employees of the Station, Buyer shall make reasonable efforts to offer
employment at will to certain employees of the Station. Upon review of
a full list of employees and salaries, Buyer shall notify Seller of (i)
those employees to whom it will so offer employment as
Page 32
soon as practicable and (ii) those employees that Buyer intends to
discharge not less than thirty (30) days prior to the Closing Date.
Seller shall be responsible for all salary and benefits of the employees
of the Station who do not accept, or are not offered, employment with
Buyer. Seller shall be responsible for all salary and other compensation
due to be paid for work for Seller for employees of the Station who
become employees of Buyer and Buyer shall be responsible for the salary
and other compensation due to be paid for work for Buyer on or after the
date of hire by Buyer for such employees. Seller shall be responsible
for severance payments which may be applicable under its employee
benefit plans to any employees not so offered employment and hired by
Buyer.
6.9 SURVEY. Buyer and Seller shall obtain, at Seller's
expense, a survey of each parcel of Real Property certified to Buyer or
its permitted assigns and the Title Company. The certification shall
be by a Registered Land Surveyor and shall be made on the ground in
accordance with the minimum technical standards of land surveying in
Florida. The survey shall be delivered to Buyer at least fifteen
(15) days prior to the Closing Date. If the survey shows: (i) the
Real Property does not have access to an abutting public road, (ii)
easements exist that are not approved by Buyer, (iii) violations of
restrictions or governmental zoning or building regulations, (iv)
buildings, structures or other improvements are constructed over any
easement; provided that unless the construction of a building,
structure or other improvement over an easement constitutes a
violation of an easement it shall not constitute a defect or
encroachment, (v) any building, structure or other improvement is not
entirely within the boundaries of the applicable parcel of Real
Property, (vi) any drainage facilities are not entirely within the
applicable parcel of Real Property or appropriate public or private
easements, or (vii) there are other material encroachments, gaps or
overlaps rendering title to the Real Property unmarketable; then
Buyer shall within seven (7) days of receipt of the survey notify
Seller in writing specifying the defects and encroachments reflected
by the survey, and Seller shall have ten (10) days within which to
remove such defects and encroachments.
6.10 RELOCATION APPLICATION. Upon execution of the
Agreement herein, Buyer shall prepare, at its sole cost and expense,
an FCC application and all required exhibits to move the WEEJ
transmitter from its present location to the former WOLZ site on Pine
Island, Florida. Said application will be forwarded to and filed by
Seller as the Licensee. Buyer shall timely reimburse Seller for all
reasonable
costs and fees for the tendering of the application to the FCC. All
costs incurred in order to
Page 33
move the WEEJ transmitter facility shall be Buyer's responsibility.
6.11 ESCROW AGREEMENT. Seller and Buyer shall enter into
an Escrow Agreement substantially in the form attached hereto as
Exhibit D.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The performance of the obligations of the Buyer hereunder
is subject, at the election of the Buyer, to the following conditions
precedent:
7.1 COMMISSION APPROVALS. Notwithstanding anything herein
to
the contrary, the consummation of this Agreement is conditioned upon
(a) a grant by the Commission of the Assignment Application, and
(b) compliance by the parties with the conditions, if any, imposed by
the Commission in connection with the grant of the Assignment
Application (provided that neither party shall be required to accept
or comply with any condition which would be unreasonably burdensome
or which would have a materially adverse effect upon it). All
required governmental filings shall have been made, and all requisite
governmental approvals for the consummation of the transactions
contemplated hereby shall have been granted. Subject to the
provisions regarding the STA as set forth above the Licenses shall be
in unconditional full force and effect, shall be valid, as of March,
1996, for the license term applicable generally to radio stations
licensed to communities located in the State of Florida, and shall be
unimpaired by any acts or omissions of Seller's employees or agents,
or Seller.
7.2 PERFORMANCE. The Station Assets shall have been
transferred to Buyer by Seller, and all of the terms, conditions and
covenants to be complied with or performed by Seller on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Buyer shall have received from Seller a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
7.3 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller to Buyer shall be true, complete and correct
in all material respects as of the Closing Date with the same force
and effect as if then made, and Buyer shall have received from Seller
a certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
Page 34
7.4 CONSENTS. Seller shall have received all consents
(including landlords' consents for the studio and tower sites)
specified in Section 3.8 of the Disclosure Schedule.
7.5 NO LITIGATION. No litigation, proceeding, or
investigation of any kind shall have been instituted or, to Seller's
knowledge, threatened which would materially adversely affect the
ability of Seller to comply with the provisions of this Agreement or
would materially adversely affect the operation of the Station.
7.6 NO ADVERSE CHANGE. No material adverse change shall
have
occurred with respect to the operation of the Station.
7.7 DOCUMENTS. Seller shall have obtained, executed,
where necessary, and delivered, to Buyer where applicable, all of the
documents, reports, orders and statements required of it herein, as
well as any other documents (including collateral assignments)
required by any entity providing financing for the transactions
contemplated by this Agreement and the Ancillary Agreements.
7.8 OPINIONS OF COUNSEL. Seller shall have delivered to
Buyer
an opinion of Farr, Farr, Emerich, Sifrit, Hackett & Carr, P.A.,
counsel to Seller, addressed to Buyer and in the form attached hereto
as Exhibit A. In addition, Seller shall have delivered to Buyer a
written opinion of Seller's FCC counsel, dated as of the Closing
Date, addressed to Buyer and in the form attached hereto as Exhibit
B.
7.9 FINANCING. Buyer shall have obtained financing for
the transactions contemplated by this Agreement on terms and
conditions satisfactory to Buyer in Buyer's sole discretion.
7.10 SURVEY. Buyer shall have received the survey of the
Real
Property in accordance with Section 6.9 herein.
7.11 ANCILLARY AGREEMENTS. Buyer and Seller shall have
entered into the Ancillary Agreements on terms and conditions
satisfactory to Buyer.
7.12 GUARANTEE. As of the date hereof Harold M. Kneller,
Jr. shall have delivered to Buyer a Guaranty in the form attached
hereto as Exhibit E.
Page 35
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of Seller hereunder is
subject, at the election of Seller, to the following conditions
precedent:
8.1 PERFORMANCE. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Seller shall have received from Buyer a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Seller.
8.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer to Seller shall be true, complete and correct
in all material respects as of the Closing Date with the same force
and effect as if then made, and Seller shall have received from Buyer
a certificate or certificates to such effect, in form and substance
reasonably satisfactory to Seller.
8.3 GOVERNMENT APPROVALS. All required governmental
filings shall have been made and all requisite governmental approvals
for the consummation of the transactions contemplated hereby shall
have been granted.
8.4 DOCUMENTS. Buyer shall have obtained, executed, where
necessary, and delivered to Seller where applicable, all of the
documents, reports, orders and statements required of it herein.
8.5 OPINION OF COUNSEL. Buyer shall have delivered to
Seller an opinion of Paul, Weiss, Rifkind, Wharton & Garrison,
counsel to Buyer, addressed to Seller and in the form attached hereto
as Exhibit C.
8.6 CONSULTING AGREEMENT. As of the Closing Date, Buyer
and Seller shall have entered into a two-year Two Hundred Thousand
Dollar ($200,000.00) consulting agreement substantially in the form
attached hereto as Exhibit F.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller agrees to and shall jointly and severally indemnify,
defend and hold Buyer harmless, and
Page 36
shall reimburse Buyer for and against any
and all actions, losses, expenses, damages, liabilities, taxes,
penalties or assessments, judgments and costs (including reasonable
legal expenses related thereto) resulting from or arising out of:
(a) Any breach by Seller of any representation, or
warranty contained in this Agreement, any Ancillary Agreement or in
any certificate, exhibit, schedule, or other document furnished to or
to be furnished pursuant hereto or in connection with the
transactions contemplated hereby;
(b) Any non-fulfillment or breach by Seller of any
covenant, agreement, term or condition contained in this Agreement,
any Ancillary Agreement or in any certificate, exhibit, schedule, or
other document furnished or to be furnished pursuant hereto or in
connection with the transactions contemplated hereby;
(c) Any material inaccuracy in any covenant,
representation, agreement or warranty by Seller including all
material statements or figures contained in the Financial Statements
heretofore furnished to Buyer; and
(d) Any liabilities of any kind or nature, absolute
or
contingent not assumed by Buyer including, without limitation, any
liabilities relating to or arising from the business and operation of
the Station by Seller prior to the Closing Date.
Notwithstanding any other provision contained herein,
Seller shall be solely responsible for any fine or forfeiture imposed
by the Commission relating to the operation of the Station prior to
the Closing Date.
9.2 INDEMNIFICATION BY BUYER. From and after the Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller for and against any and all
actions, losses, expenses, damages, liabilities, taxes, penalties or
assessments, judgments and costs (including reasonable legal expenses
related thereto), resulting from or arising out of:
(a) Any breach by Buyer of any covenant, agreement,
term, condition, representation, or warranty contained in this
Agreement, any Ancillary Agreement or in any certificate, exhibit,
schedule, or any other document furnished or to be furnished pursuant
hereto or in connection with the transactions contemplated hereby;
(b) Any non-fulfillment by Buyer of any covenant
contained in this Agreement, any Ancillary
Page 37
Agreement or in any certificate, exhibit, schedule, or
other document furnished or to be furnished pursuant hereto
or in connection with the transactions contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute
or
contingent, relating to or arising from the business and operation of
the Station subsequent to the Closing Date.
9.3 NOTIFICATION OF CLAIMS.
(a) A party entitled to be indemnified pursuant to
Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing
of any claim or demand which the Indemnified Party has determined has
given or could give rise to a right of indemnification under this
Agreement. Subject to the Indemnifying Party's right to defend in
good faith third party claims as hereinafter provided, the
Indemnifying Party shall satisfy its obligations under this Article
IX within thirty (30) days after the receipt of a written notice
thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section 9.3(a),
and
if such claim or demand relates to a claim or demand asserted by a
third party against the Indemnified Party which the Indemnifying
Party acknowledges is a claim or demand for which it must indemnify
or hold harmless the Indemnified Party under Sections 9.1 or 9.2, the
Indemnifying Party shall have the right to employ counsel acceptable
to the Indemnified Party to defend any such claim or demand asserted
against the Indemnified Party. The Indemnified Party shall have the
right to participate in the defense of any such claim or demand. The
Indemnifying Party shall notify the Indemnified Party in writing, as
promptly as possible (but in any case before the due date for the
answer or response to a claim) after the date of the notice of claim
given by the Indemnified Party to the Indemnifying Party under
Section 9.3(a) of its election to defend in good faith any such third
party claim or demand. So long as the Indemnifying Party is defending
in good faith any such claim or demand asserted by a third party
against the Indemnified Party, the Indemnified Party shall not settle
or compromise such claim or demand. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably
required by it for its use in contesting any third party claim or
demand. Whether or not the Indemnifying Party elects to defend any
such claim or demand, the Indemnified Party shall have no
Page 38
obligations to do so. Upon payment of any claim or demand
pursuant to this Article IX, the Indemnifying Party shall, to the
extent of payment, be subrogated to all rights of the Indemnified
Party.
ARTICLE X
MISCELLANEOUS
10.1 ASSIGNMENT.
(a) This Agreement shall not be assigned or conveyed
by either party hereto to any other person or entity without the
prior written consent of the other parties hereto; PROVIDED, HOWEVER,
that Buyer may assign this Agreement without Seller's prior consent
to one or more corporations or other entities controlled by Buyer;
PROVIDED, FURTHER, that Seller shall have recourse to Buyer in the
event Buyer's assignee defaults hereunder. Subject to the foregoing,
this Agreement shall be binding and shall inure to the benefit of the
parties hereto, their successors and assigns.
(b) Notwithstanding anything to the contrary set
forth herein, Buyer may assign and transfer to any entity providing
financing for the transactions contemplated by this Agreement (or any
refinancing of such financing) as security for such financing all of
the interest,
rights and remedies of Buyer with respect to this Agreement and the
Ancillary Agreements, and Seller shall expressly consent to such
assignment. Any such assignment will be made for collateral security
purposes only and will not release or discharge Buyer from any
obligations it may have pursuant to this Agreement. Notwithstanding
anything to the contrary set forth herein, Buyer may (i) authorize
and empower such financing sources to assert, either directly or on
behalf of Buyer, any claims Buyer may have against Seller under this
Agreement and (ii) make, constitute and appoint one agent bank in
respect of such financing (and all officers, employees and agents
designated by such agent) as the true and lawful attorney and agent-
in-fact of Buyer for the purpose of enabling the financing sources to
assert and collect any such claims.
10.2 SURVIVAL OF INDEMNIFICATION. The indemnification
obligations of Seller contained in this Agreement including, without
limitation, Section 1.5 shall survive indefinitely, except that any
indemnification arising under Section 9.1(a) hereof (other than any
indemnification required as a result of Seller's breach of Sections
3.1, 3.2 or 3.3 hereof, which indemnification shall survive
indefinitely) shall be binding for a period
Page 39
of three (3) years following the date hereof. The representations
and warranties contained in this Agreement and in the Ancillary
Agreements shall survive.
10.3 BROKERAGE. Seller and Buyer warrant and represent to
one
another that, with the exception of Doyle Hadden, broker for the
Seller, there has been no broker in any way involved in the
transactions contemplated hereby and that no one other than Doyle
Hadden is or will be entitled to any fee or other compensation in the
nature of a brokerage fee or finder's fee as a result of the Closing
hereunder. Seller shall be wholly responsible for any brokerage or
other fee due to Doyle Hadden.
10.4 EXPENSES OF THE PARTIES. It is expressly understood
and
agreed that all expenses of preparing this Agreement and of preparing
and prosecuting the Assignment Application with the Commission, and
all other expenses, whether or not the transactions contemplated
hereby are consummated, shall be borne solely by the party who shall
have incurred the same and the other party shall have no liability in
respect thereto, except as otherwise provided herein. 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 borne equally by Seller and
Buyer. Any filing or grant fees imposed by any governmental authority
the consent of which is required for the transactions contemplated
hereby shall be borne equally by Seller and Buyer.
10.5 ENTIRE AGREEMENT. This Agreement, together with any
related Schedules or Exhibits, contains all the terms agreed upon by
the parties with respect to the subject matter herein, and supersedes
all prior agreements and understandings among the parties and may not
be changed or terminated orally. No attempted change, termination or
waiver of any of the provisions hereof shall be binding unless in
writing and signed by the party against whom the same is sought to be
enforced.
10.6 HEADINGS. The headings set forth in this Agreement
have
been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any manner, or be deemed to interpret in whole
or
in part, any of the terms or provisions of this Agreement. Unless
otherwise specified herein, the section references contained herein
refer to sections of this Agreement.
10.7 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New
York.
Page 40
10.8 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of such shall constitute one and the same
instrument.
10.9 NOTICES. Any notices or other communications shall
be
in
writing and shall be considered to have been duly given when
deposited into first class, certified mail, postage prepaid, return
receipt requested, delivered personally (which shall include delivery
by Federal Express or other recognized overnight courier service that
issues a receipt or other confirmation of delivery) or delivered via
facsimile machine;
IF TO SELLER:
Harold M. Kneller, Jr.
President
Kneller Broadcasting of
Charlotte County, Inc.
3151 Cooper Street
Suite 56
Punta Gorda, FL 33950
Fax: (941) 637-6187
Phone: (941) 639-1112
With a copy to:
Charles T. Boyle
Farr, Farr, Emerich,
Sifrit, Hackett and
Carr, P.A.
115 West Olympia Avenue
P.O. Drawer 1447
Punta Gorda, Florida
33951
IF TO BUYER:
Mr. Frank D. Osborn
Osborn Communications
Corp. 130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy to:
Robert M. Hirsh
Paul, Weiss, Rifkind, Wharton &
Garrison 1285 Avenue of the
Americas
New York, NY 10019-6064
Fax: (212) 757-3990 Phone: (212) 373-3108
Page 41
Any party may at any time change the place of receiving
notice by giving notice of such change to the other as provided
herein.
10.10 SPECIFIC PERFORMANCE. Seller acknowledges that the
Station is of a special, unique and extraordinary character and that
damages are inadequate to compensate Buyer for Seller's breach of
this Agreement. Accordingly, in the event of a material breach by
Seller of its representations, warranties, covenants and agreements
under this Agreement, Buyer may sue at law for damages or, at Buyer's
sole election in addition to any other remedy available to it, Buyer
may also seek a decree of specific performance requiring Seller to
fulfill its obligations under this Agreement, and Seller agrees to
waive its defense that an adequate remedy at law exists.
10.11 CONSENT TO JURISDICTION. Seller and Buyer hereby
submit to the nonexclusive jurisdiction of the courts of the State of
NewYork and the federal courts of the United States of America
located in such state solely in respect of the interpretation and
enforcement of the provisions hereof and of the documents referred to
herein, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement
hereof or of any such document, that they are not subject thereto or
that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that this Agreement or any of such
documents may not be enforced in or by said courts or that the
Station property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, or that the
venue of the suit, action or proceeding is improper.
10.12 FURTHER ASSURANCES. Seller and Buyer agree to
execute all such documents and take all such actions after the
Closing Date as any other party shall reasonably request in
connection with carrying out and effectuating the intent and purpose
hereof and all transactions and things contemplated by this
Agreement, including, without limitation, the execution and delivery
of any and all confirmatory and other documents in addition to those
to be delivered on the Closing Date and all actions which may
reasonably be necessary or desirable to complete the transactions
contemplated hereby.
10.13 PUBLIC ANNOUNCEMENTS. No public announcement
(including an announcement to employees) or press release concerning
the transactions provided for herein and in the LMA shall be made by
either party without the prior approval of the other party, except as
required by law.
Page 42
1 IN WITNESS WHEREOF, the parties hereto have executed or
have
caused this Agreement to be executed by a duly authorized officer on
the day and year first above written.
SELLER
KNELLER BROADCASTING OF CHARLOTTE COUNTY, INC.
BY: Harold M. Kneller, Jr.
TITLE: President
BUYER
OSBORN COMMUNICATIONS
CORPORATION
BY: Frank D. Osborn
TITLE: President