Exhibit 10.06.04.01
ASSET PURCHASE AGREEMENT
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(WHK-AM, CLEVELAND, OHIO)
This AGREEMENT (the "Agreement") is dated as of April 23, 1996 by and
between OMNIAMERICA GROUP ("Omni Group") and WHK LICENSE PARTNERSHIP ("WHK LP")
(Omni Group and WHK LP shall collectively be referred to herein as "Seller") and
INSPIRATION MEDIA OF OHIO, INC. ("Buyer").
RECITALS:
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1. Seller owns and operates radio station WHK(AM) licensed to
Cleveland, Ohio (the "Station"), and holds the licenses and authorizations
issued by the FCC for the operation of the Station.
2. Buyer desires to acquire substantially all the assets of the
Station, and Seller is willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of
the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, Seller and Buyer hereby agree as follows:
ARTICLE 1
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TERMINOLOGY
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1.1 ACT. The Communications Act of 1934, as amended.
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1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by
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which Buyer's account is to be credited or charged, as reflected on the
Adjustment List.
1.3 ADJUSTMENT LIST. As provided in Section 2.7 (b), an itemized
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list of all sums to be credited or charged against the account of Buyer, with a
brief explanation in reasonable detail of the credits or charges.
1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined
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in Section 2.3.
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1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and
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Sundays, on which federally chartered banks in the city of Cleveland, Ohio, are
regularly open for business.
1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3 (b),
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the threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify
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Buyer. The Buyer's Threshold Limitation shall be (a) Twenty Five Thousand
Dollars ($25,000) for all claims, liabilities, damages, losses, costs and
expenses; and (b) Ten Thousand Dollars ($10,000) for any individual claim,
liability, damage, loss, cost or expense.
1.7 CLOSING. The closing with respect to the transactions
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contemplated by this Agreement.
1.8 CLOSING DATE. The date determined as the Closing Date as
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provided in Section 8.1.
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1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules
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hereto, and each other agreement, certificate, or instrument delivered pursuant
to or in connection with this Agreement, including amendments thereto that are
expressly permitted under the terms of this Agreement.
1.10 EARNEST MONEY. The amount of Three Hundred Twenty Five Thousand
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Dollars ($325,000).
1.11 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning
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defined in Section 5.10.
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1.12 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response
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Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.13 ESCROW AGENT. Gary Stevens & Co., Incorporated.
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1.14 ESCROW AGREEMENT. The Escrow Agreement in the form attached
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as Exhibit A which Seller, Buyer and the Escrow Agent have entered into
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concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
1.15 EXCLUDED ASSETS. Such term shall have the meaning defined in
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Section 2.2.
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1.16 FCC. Federal Communications Commission.
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1.17 FCC LICENSES. The licenses, permits and authorizations of the
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FCC for the operation of the Station as listed on Schedule 3.8.
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1.18 FCC ORDER. An order or decisions of the FCC granting its
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consent to the assignment of the FCC Licenses to Buyer.
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1.19 FINAL ACTION. An action of the FCC that has not been reversed,
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stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
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sponte action of the FCC with comparable effect is pending and as to which the
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time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
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1.20 KNOWLEDGE. As used herein, "knowledge" shall refer to the
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actual knowledge of Carl E. Hirsch, Anthony S. Ocepek, or H. Dean Thacker.
1.21 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes,
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hazardous substances, pollutants or contaminants, asbestos or asbestos-related
products, PCB's, petroleum, crude oil or any fraction or distillate thereof (as
such terms are defined in any applicable federal, state or local laws,
ordinances, rules and regulations, and including any other terms which are or
maybe used in any applicable environmental laws to define prohibited or
regulated substances).
1.22 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or
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9.4(a) against which any claim or liability may be asserted by a third party
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which would give rise to a claim for indemnification under the provisions of
this Agreement by such party.
1.23 INDEMNIFYING PARTY. The party to the Agreement (not the
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Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.24 LIEN. Any mortgage, deed of trust, pledge, hypothecation,
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security interest, encumbrance, lien, lease or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
assets or property, including any written or oral agreement to give or grant any
of the foregoing, any conditional sale or other title retention agreement, and
the filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.25 MATERIAL ADVERSE CONDITION. A condition which would materially
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restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that the Station be operated in accordance with a
condition similar to those contained in the present FCC licenses issued for
operation of the Station shall not be deemed a Material Adverse Condition.
1.26 OSHA LAWS. The Occupational Safety and Health Act of 1970, as
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amended, and all other federal, state or local laws or ordinances, including
orders, rules
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and regulations thereunder, regulating or otherwise affecting health and safety
of the workplace.
1.27 PERMITTED LIEN. Any statutory lien which secures a payment not
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yet due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way, encroachment or similar
imperfection in the Seller's title to its assets or properties that,
individually and in the aggregate, are not material in character or amount and
do not and are not reasonably expected to materially impair the value or
materially interfere with the use of any asset or property of the Seller
material to the operation of its business as it has been and is now conducted.
1.28 PURCHASE PRICE. The consideration to be paid by Buyer to
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Seller for purchase of the Sale Assets in an amount equal to Six Million Five
Hundred Thousand Dollars ($6,500,000).
1.29 REAL PROPERTY. Such term shall have the meaning defined in
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Section 3.7.
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1.30 RULES AND REGULATIONS. The rules of the FCC as set forth in
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Volume 47 of the Code of Federal Regulations, as well as such other written
policies of the Commission, whether contained in the Code of Federal
Regulations, or not, that apply to the Station.
1.31 SALE ASSETS. All of the tangible and intangible assets to be
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transferred by Seller to Buyer as set forth in Section 2.1.
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1.32 STATION AGREEMENTS. The agreements, commitments, contracts,
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leases and other items described in Section 2.1(d) which relate to operation of
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the Station.
1.33 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b),
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the threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be (a)
Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages,
losses, costs and expenses; and (b) Ten Thousand Dollars ($10,000) for any
individual claim, liability, damage, loss, cost or expense.
1.34 SURVIVAL PERIOD. The term following the Closing Date during
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which all representations, warranties, covenants and agreements of the parties
under this Agreement shall survive. The term shall be twelve (12) months.
1.35 TANGIBLE PERSONAL PROPERTY. The personal property described in
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Section 2.1(a).
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ARTICLE II
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PURCHASE AND SALE
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2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer, assign
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and convey to Buyer, and Buyer will purchase from Seller, free and clear of all
Liens, except Permitted Liens and other Liens expressly accepted by Buyer, all
of Seller's right, title and interest, legal and equitable, in and to all
tangible and intangible assets (except Excluded Assets) used in the operation of
the Station as it is now operated, including the following:
(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
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furniture, fixtures and other tangible personal property now or hereafter owned
by Seller and used in the operation of the Station as it is now operated,
including but not limited to the items listed on Schedule 3.6, together with
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such modifications, replacements, improvements and additional items, and subject
to such deletions therefrom, made or acquired between the date hereof and the
Closing Date in accordance with the terms and provisions of this Agreement.
(b) REAL PROPERTY. Seller's interests in the Real Property and any
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other real estate or interests therein acquired by Seller solely in connection
with the Station between the date hereof and the Closing Date in accordance with
the terms and provisions of this Agreement.
(c) LICENSES AND PERMITS. The FCC Licenses and all other assignable
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or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter obtained by Seller between the date hereof and the Closing Date, to
the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Station.
(d) STATION AGREEMENTS. All agreements which Seller is a party to or
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bound by which are listed on Schedule 3.9 as agreements which Buyer is electing
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to assume; any renewals, extensions, amendments or modifications of those
agreements being assumed which are made in the ordinary course of Seller's
operation of the Station and in accordance with the terms and provisions of this
Agreement; and any additional such agreements, contracts, leases, commitments or
orders (and any renewals, extensions, amendments or modifications thereof) made
or entered into between the date hereof and the Closing Date in accordance with
the terms and provisions of this Agreement and which Buyer elects to assume in
writing.
(e) RECORDS. True and complete copies of all of the books, records,
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accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Station
(other than corporate records).
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(f) MISCELLANEOUS ASSETS. Any other tangible or intangible assets,
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properties or rights of any kind or nature not otherwise described above in this
Section 2.1 and now or hereafter owned or used by Seller in the operation of the
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Station, including but not limited to all goodwill of the Station.
2.2 EXCLUDED ASSETS. Notwithstanding any provision of this Agreement to
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the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
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Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
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included as part of the Sale Assets).
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
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(j) Any assets used in the operation of WMMS-FM (Cleveland, Ohio) and
WMJI-FM (Cleveland, Ohio) and any assets used in the operation of the corporate
offices of Seller.
2.3 ASSUMPTION OF LIABILITIES.
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(a) At the Closing, Buyer shall assume and agree to perform the
following liabilities and obligations of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
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(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(iii) Liabilities and obligations as the landlord under the
tower space lease for the WMMS-FM antenna substantially in the form of Exhibit
"B".
(b) Except for the Assumed Obligations, Buyer shall not assume or in
any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
2.4 EARNEST MONEY.
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(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under
the terms of the Escrow Agreement in trust for the benefit of the parties
hereto. Interest and other earnings on the Earnest Money shall be distributed
by the Escrow Agent to Buyer from time to time upon the request of Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered
to Seller or returned to Buyer in accordance with Section 10.2, and if Closing
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does occur, the Earnest Money shall be applied to payment of the Purchase Price
at Closing as provided in Section 2.5.
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2.5 PAYMENT OF PURCHASE PRICE.
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(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery by Seller of the closing documents described in Section
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8.2,
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become the property of Seller and shall, pursuant to the Escrow Agreement, be
disbursed to Seller by cashier's check or wire transfer of immediately available
funds.
(ii) The Purchase Price, less the amount of the Earnest Money
disbursed to Seller, shall be paid to Seller, at the option of Seller, either:
(A) At Closing by wire transfer of immediately available
funds; or
(B) At Closing by delivery of Buyer's promissory note
payable to Seller with a payment date of January 15, 1997, and a letter of
credit securing payment of the promissory note, in each case in form and
substance reasonably satisfactory to the parties, in which case Seller shall
reimburse Buyer for all costs associated with procuring the letter of credit.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
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2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and Seller
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shall agree to an allocation of the Purchase Price. Buyer and Seller shall use
such allocation for all reporting purposes in connection with federal, state and
local income and, to the extent permitted under applicable law, franchise taxes.
Buyer and Seller agree to report such allocation to the Internal Revenue Service
in the form required by Treasury Regulation (S) 1.1060-1T.
2.7 ADJUSTMENT OF PURCHASE PRICE.
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(a) All operating income and operating expenses of the Station shall
be adjusted and allocated between Seller and Buyer, and an adjustment in the
Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the Closing Date shall
be for the account of Seller, and all income and expenses attributable to the
operation of the Station after the closing Date shall be for the account of
Buyer.
(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
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in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this Section,
Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30)
days following the Closing Date, or such earlier or later date as shall be
mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the
Adjustment Amount. If the Adjustment Amount is a credit to the account of
Buyer, unless disputed, Seller shall pay such amount to Buyer, and if the
Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such
amount to Seller. In the event Seller disagrees with the Adjustment Amount
determined by Buyer or with any other matter arising out of this subsection, and
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Buyer and Seller cannot within sixty (60) days resolve the disagreement
themselves, the parties will refer the disagreement to a firm of independent
certified public accountants, mutually acceptable to Seller and Buyer, whose
decision shall be final and whose fees and expenses shall be allocated between
and paid by Seller and Buyer, respectively, to the extent that such party does
not prevail on the disputed matters decided by the accountants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Omni Group is a general
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partnership duly organized and validly existing under the laws of Massachusetts.
WHK LP is a general partnership duly organized and validly existing under the
laws of Ohio. Seller has all requisite power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted until the Closing.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
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delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary action on the part of Seller. Seller has the power
and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Seller enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
3.3 ABSENCE OF CONFLICTS. Assuming all the consents described in
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Section 3.4 are obtained, the execution and delivery of, and the performance of
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its obligations under, this Agreement and each of the other Documents by Seller,
and the consummation by Seller of the transactions contemplated hereby and
thereby:
(a) do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
Lien other than a Permitted Lien on any of the Sale Assets under), any provision
of law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Seller;
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(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration,
where such conflict, breach, termination, default or right would have a material
adverse effect on the Sale Assets or the operation of the Station, under charter
documents of Seller or pursuant to any lease, agreement, commitment or other
instrument which Seller is a party to, or bound by, or by which any of the Sale
Assets may be bound, or result in the creation of any Lien, other than a
Permitted Lien, upon any of the Sale Assets.
3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as
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set forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, and to Seller's actual
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knowledge, the execution and delivery of, and the performance of its obligations
under, this Agreement and each of the other Documents by Seller, and the
consummation by Seller of the transactions contemplated hereby and thereby, do
not require the consent, waiver, approval, permit, license, clearance or
authorization of, or any declaration of filing with, any court or public agency
or other authority, or the consent of any person under any agreement,
arrangement or commitment of a nature which Seller is a party to or bound or by
which the Sale Assets are bound by or subject to, the failure of which to obtain
would have a material adverse effect on the Sale Assets or the operation of the
Station.
3.5 SALE ASSETS. The Sale Assets include all of the assets,
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properties and rights of every type and description, real, personal and mixed,
tangible and intangible, that are used to a material extent in the conduct of
the business of owning and operating the Station in the manner in which that
business is now conducted, with the exception of the Excluded Assets.
3.6 TANGIBLE PERSONAL PROPERTY. Except for supplies and other
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incidental items which in the aggregate are not of material value, the list of
Tangible Personal Property set forth on Schedule 3.6 is a complete and correct
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list of all of the items of tangible personal property (other than Excluded
Assets) used to a material extent in the operation of the Station in the manner
in which it is now operated. Except as set forth on Schedule 3.6:
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(a) Seller has good, marketable and valid title to all of the
items of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.
(b) The Tangible Personal Property is in working order.
3.7 REAL PROPERTY.
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(a) The real property described on Schedule 3.7 constitutes a
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complete and correct summary description in all material respects of all of the
interests in real estate (other than any real property leased by Seller pursuant
to a lease described in Schedule 3.9) used to any extent in the operation of the
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Station in the manner in which it is now operated. Said real property,
together with all improvements affixed thereto, is herein defined as the "Real
Property."
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(b) Seller does not owe any money to any architect, contractor,
subcontractor or material man for labor or materials performed, rendered or
supplied to or in connection with the Real Property within the past four (4)
months which shall not be paid in full on or before Closing. Except as set
forth on Schedule 3.7, there is no work being done at or materials being
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supplied to the Real Property at the date hereof other than routine maintenance
projects having an aggregate cost through completion thereof of no more than Ten
Thousand Dollars ($10,000).
(c) To Seller's actual knowledge the present use of the Real Property
is in compliance with all applicable zoning codes in effect as of the date
hereof, and Seller has not received any notices of uncorrected violations of the
applicable housing, building, safety or fire ordinances. To Seller's actual
knowledge the Real Property is served by electricity and water in capacities
adequate for the present use of the Real Property and improvements thereon.
Except as set forth on Section 3.7, Seller has not made any other agreement for
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the sale or lease of, or given any other person an option to purchase or lease
or a right of first refusal to purchase or lease, all or any part of the Real
Property, and except as set forth on Schedule 3.7, Seller has not subjected the
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Real Property to any Liens (other than Permitted Liens), easements, rights,
duties, obligations, convenants, conditions, restrictions, limitations or
agreements not of record.
(d) To Seller's actual knowledge no portion of the Real Property or
improvements thereon is the subject of any condemnation or eminent domain
proceeding presently instituted or, to Seller's actual knowledge, pending, and
Seller has not received notice from any condemning authority that such
proceedings are threatened.
3.8 FCC LICENSES. Seller is the holder of the FCC Licenses listed on
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Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are
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valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station as now
operated, and (ii) constitute all the licenses and authorizations issued by the
FCC to Seller for or in connection with the current operation of the Station.
Seller has no knowledge of any condition imposed by the FCC as part of any FCC
License which is neither set forth on the face thereof as issued by the FCC nor
contained in the Rules and Regulations applicable generally to stations of the
type, nature, class or location of the Station. Except as disclosed on Schedule
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3.8, the Station is being operated at full authorized power, in accordance with
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the terms and conditions of the FCC Licenses applicable to it and in accordance
with the Rules and Regulations. Except as set forth on Schedule 3.8, no
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proceedings are pending or, to the knowledge of the Seller, are threatened which
may result in the revocation, modification, non-renewal or suspension of any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
Seller has complied in all material respects with all requirements to file
reports, applications and other documents with the FCC with respect to the
Station, and all such reports, applications and
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documents are complete and correct in all material respects. Seller has no
knowledge of any matters (i) which could reasonably be expected to result in the
suspension or revocation of or the refusal to renew any of the FCC Licenses or
the imposition of any fines or forfeitures by the FCC, or (ii) against Seller
which could reasonably be expected to result in the FCC's refusal to grant
approval of the assignment to Buyer of the FCC Licenses or the imposition of any
Material Adverse Condition in connection with approval of such assignment. There
are not any unsatisfied or otherwise outstanding citations issued by the FCC
with respect to the Station or its operation. Complete and accurate copies of
all FCC Licenses are attached as a part of Schedule 3.8. The "Public Inspection
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File" of the Station is in substantial and material compliance with Section
73.3526 of the Rules and Regulations.
3.9 STATION AGREEMENTS.
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(a) Schedule 3.9 sets forth an accurate and complete list of all
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material agreements, contracts, arrangements or commitments in effect as of the
date hereof, including all amendments, modifications and supplements thereto
which the Station or its assets or properties are bound by, except (A) employee
benefit plans and employment contracts, (B) contracts for the sale of time on
the Station, and (C) contracts which are cancelable by Seller or its assignee
without breach or penalty on not more than sixty (60) days' notice. Complete
and correct copies of all such agreements, contracts, arrangements or
commitments that are in writing, including all amendments, modifications and
supplements thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, and with respect to all
material Station Agreements being assumed by Buyer, (i) all Station Agreements
are legal, valid and enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material breach of or in material default
under any material Station Agreements; (iii) to the knowledge of Seller, there
has not occurred any event which, after the giving of notice or the lapse of
time or both, would constitute a material default under, or result in the
material breach of, any Station Agreements which are, individually or in the
aggregate, material to the operation of the Station; and (iv) Seller holds the
right to enforce and receive the benefits under all of the material Station
Agreements, free and clear of all Liens (other than Permitted Liens) but subject
to the terms and provision of each such agreement.
(c) Schedule 3.9 indicates, for each Station Agreement listed thereon
------------
which is being assumed by Buyer, whether consent or approval by any party
thereto is required thereunder for consummation of the transactions contemplated
hereby.
3.10 LITIGATION. Except as disclosed on Schedule 3.10, there are no
----------- -------------
claims, investigations or administrative, arbitration or other proceedings
(collectively referred to herein as "Litigation") pending or, to the actual
knowledge of Seller, threatened against
12
Seller which would, individually or in the aggregate if adversely determined,
have an adverse effect on the Sale Assets or the operation of the Station, or
which would give any third party the right to enjoin the transactions
contemplated by this Agreement. To the actual knowledge of Seller, there is no
basis for any such claim, investigation, action, suit or proceeding which would,
individually or in the aggregate if adversely determined, have an adverse effect
on the Sale Assets or operation of the Station. There are no existing or, to the
actual knowledge of Seller, pending orders, judgments or decrees of any court or
governmental agency affecting Seller, the Station or any of the Sale Assets.
Notwithstanding the disclosure of Litigation of Seller to Buyer pursuant to this
Section, Buyer shall not assume any liability, damages, cost or expense of
Seller relating to or arising out of any Litigation.
3.11 LABOR MATTERS.
--------------
(a) Seller is not a party to any collective bargaining agreement, and
there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.
(b) Except as disclosed on Schedule 3.11:
-------------
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the knowledge of Seller, threatened against the Station;
(ii) There are neither pending nor, to the actual knowledge of
Seller threatened, any suits, actions, administrative proceedings, union
organizing activities, arbitrations, grievances or other proceedings between
Seller and any employees of the Station or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Station which have had or are
reasonably likely to have a material adverse effect on the operation of the
Station;
(iii) With respect to the Station, (A) Seller is in compliance in
all material respects with all laws, rules and regulations relating to the
employment of labor and all employment contractual obligations, including those
relating to wages, hours, collective bargaining, affirmative action,
discrimination, sexual harassment, wrongful discharge and the withholding and
payment of taxes and contributions; (B) Seller has withheld all amounts required
by law or agreement to be withheld from the wages or salaries of its employees;
and (C) Seller is not liable to any present or former employees or any
governmental authority for damages, arrears of wages or any tax or penalty for
failure to comply with the foregoing;
(iv) Buyer's consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.
13
3.12 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the
-----------------------
transactions contemplated by this Agreement in accordance with the terms hereof
shall not, as a result of or in connection with the transactions contemplated
hereby, impose upon Buyer any obligation under any benefit plan, contract or
arrangement (regardless of whether they are written or unwritten and funded or
unfunded) covering employees or former employees of Seller in connection with
their employment by Seller. For purposes of the Agreement, "benefit plans"
shall include without limitation employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.13 COMPLIANCE WITH LAW. The operation of the Station complies in
--------------------
all material respects with the applicable rules and regulations of the FCC.
3.14 ENVIRONMENTAL MATTERS; OSHA.
----------------------------
(a) Seller has obtained all environmental, health and safety
permits, the failure of which to obtain would have a material adverse effect on
either the operation of the Station or the ownership of the Real Property and
all such permits are in full force and effect and Seller is in material
compliance with all terms and conditions of such permits.
(b) To Seller's actual knowledge on the date hereof, there is
no proceeding pending or threatened which may result in the reversal,
rescission, termination, modification or suspension of any environmental or
health or safety permits necessary for the operation of the Station or the
ownership of the Real Property.
(c) Except as set forth on the Phase I Environmental Site
Assessment dated April 21, 1994 attached hereto as Schedule 3.14 ("the 1994
-------------
Assessment"), with respect to the Station and the ownership of the Real
Property, Seller is in compliance in all material respects with the provisions
of Environmental Laws.
(d) During Seller's occupancy of the Real Property, Seller has
not, and to Seller's actual knowledge on the date hereof, no other person or
entity has caused or permitted materials to be generated, released, stored,
treated, recycled, disposed of on, under or at such parcels, which materials, if
known to be present, would require clean up, removal or other remedial or
responsive action under Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and /or stored
appropriately in the buildings or improvements on the Real Property). Seller has
not caused the migration of any materials from the Real Property onto or under
any property adjacent to the Real Property which materials, if known to be
present, would require cleanup, removal or other remedial or responsive action
under Environmental Laws. To Seller's actual knowledge on the date hereof,
except as disclosed on the 1994 Assessment, there are no underground storage
tanks and no polychlorinated biphenyls ("PCB") or friable asbestos on such
property.
14
(e) To Seller's actual knowledge Seller is not subject to any
judgment, decree, order or citation with respect to the Station or the Real
Property related to or arising out of Environmental Laws, and Seller has not
received notice that it has been named or listed as a potentially responsible
party by any person or governmental body or agency in any matter arising under
Environmental Laws.
(f) Seller has not discharged or disposed of any petroleum product or
solid waste on the Real Property or on the property adjacent to the Real
Property owned by third parties, which may form the basis for any present or
future claim based upon the Environmental Laws or any demand or action seeking
clean-up of any site, location, body of water, surface or subsurface, under any
Environmental Laws or otherwise, or which may subject the owner of the Real
Property to claims by third parties (except to the extent third party liability
can be established) for damages.
(g) Except as otherwise disclosed on the 1994 Assessment no portion
of the Real Property has ever been used by Seller, nor, to the actual knowledge
of Seller as of the date hereof, any previous occupant of the Real Property, in
material violation of Environmental Laws or as a landfill, dump site or any
other use which involves the disposal or storage of Hazardous Materials on-site
or in any manner which may adversely affect the value of the Real Property.
(h) No pesticides, herbicides, fertilizers or other materials have
been used on, applied to or disposed of by Seller on the Real Property in
material violation of any Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and/or stored
appropriately in the buildings or improvements on the Real Property.
(i) With respect to the Station or the Real Property, Seller has
disposed of all waste in material compliance with all Environmental Laws and, to
the actual knowledge of Seller on the date hereof, there is no existing
condition that may form the basis of any present or future material claim,
demand or action seeking clean up of any facility, site, location or body of
water, surface or subsurface, for which the Buyer could be liable or responsible
solely as a result of the disposal of waste at such site by a prior owner of the
Real Property.
(j) Seller is in material compliance with all OSHA Laws.
3.15 FILING OF TAX RETURNS. To the extent the failure to file or pay
----------------------
would result in a Lien on the Sale Assets, Seller has filed all Federal, State
and local tax returns which are required to be filed and has paid all taxes and
all assessments to the extent that such taxes and assessments have become due.
3.16 ABSENCE OF INSOLVENCY. Except as set forth on Schedule 3.16, no
---------------------- -------------
insolvency proceedings of any character including without limitation,
bankruptcy, receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, affecting the Seller or any of the Sale
Assets, are pending or, to the best
15
knowledge of Seller, 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.
3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule
-------------------------- --------
3.17, no agent, broker, investment banker or other person or firm acting on
- ----
behalf of or under the authority of Seller or any affiliate of Seller is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee, directly or indirectly, in connection with the transactions contemplated by
this Agreement.
3.18 INSURANCE. There is now in full force and effect with reputable
----------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has all requisite corporate power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution
----------------------------------------------
and delivery of, and the performance of its obligations under, this Agreement
and each of the other Documents, and the consummation by Buyer of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Buyer. This Agreement
and each of the other Documents to be executed by Buyer have been, or at or
prior to the Closing will be, duly executed by Buyer. The Documents, when
executed and delivered by the parties hereto, will constitute the valid and
legally binding agreement of Buyer, enforceable against Buyer in accordance with
their terms, except as may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights generally, and
except as may be limited by general principles of equity (regardless of whether
such enforceability is sought in a proceeding in equity or at law).
4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of Buyer
under) any provision of law, rule
16
or regulation or any order, judgment, injunction, decree or ruling applicable to
Buyer in any manner which would have a material adverse effect on the assets,
business, operation or financial condition or results of operations of Buyer;
(b) Do not (with or without the giving of notice or the passage
of time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for
----------------------------------------------------
the required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature which Buyer is a party to or
bound by, the failure of which to obtain would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer.
4.5 QUALIFICATION.
--------------
(a) Buyer has no knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the Rules and Regulations, would (i) disqualify Buyer
from being the holder of the FCC Licenses, the owner of the Sale Assets or the
operator of the Station upon consummation of the transactions contemplated by
this Agreement, or (ii) raise a substantial and material question of fact
(within the meaning of Section 309(e) of the Act) respecting Buyer's
qualifications.
(b) Without limiting the foregoing Subsection (a), Buyer shall
--------------
make the affirmative certifications provided in Section III of FCC Form 314 at
the time of filing of such form with the FCC as contemplated by Section 5.2.
-----------
4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17,
-------------------------- -------------
no agent, broker, investment banker, or other person or firm acting on behalf of
or under the authority or Buyer or any affiliate of Buyer is or will be entitled
to any broker's or finder's fee or any other commission or similar fee, directly
or indirectly, in connection with transactions contemplated by this Agreement.
4.7 LITIGATION. There are no legal, administrative, arbitration or
-----------
other proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
17
ARTICLE V
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE.
------------------------------------------------------------
Seller covenants and agrees with Buyer that between the date hereof and the
Closing Date, unless the Buyer otherwise agrees in writing (which agreement
shall not be unreasonably withheld), Seller shall:
(a) Use reasonable efforts to operate the Station in substantially
the same manner in which it is currently being operated:
(b) Use reasonable commercial efforts to maintain insurance upon all
of the tangible Sale Assets in such amounts and of such kind comparable to that
in effect on the date hereof with respect to such Sale Assets and with respect
to the operation of the Station, with insurers of substantially the same or
better financial condition;
(c) Operate the Station and otherwise conduct its business in
accordance with the terms or conditions of its FCC Licenses, the Rules and
Regulations, the Act and use reasonable efforts to conduct its business in
accordance with all other rules and regulations, statutes, ordinances and orders
of all governmental authorities having jurisdiction over any aspect of the
operation of the Station, except where the failure to so operate the Station
would not have a material adverse effect on the Sale Assets or the operation of
the Station or on the ability of Seller to consummate the transactions
contemplated hereby;
(d) Maintain the books and records of the Station in Seller's
customary manner on a basis consistent with prior years;
(e) Comply in all material respects with all Station Agreements now
or hereafter existing which are material, individually or in the aggregate, to
the operation of the Station;
(f) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute a
material default under such Station Agreements;
(g) Not mortgage, pledge or subject to any Lien (except in the
ordinary course of business) any of the Sale Assets;
(h) Not sell, lease or otherwise dispose of, nor agree to sell, lease
or otherwise dispose of, any of the Sale Assets, except for dispositions in the
ordinary course of business;
18
(i) Not acquire or lease any goods or services or enter into, amend
or terminate any license, lease of real or personal property or any other
Station Agreement, other than in the ordinary course of business;
(j) Not introduce any material change with respect to the operation
of the Station including, without limitation, any material changes in the
broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;
(k) Notify Buyer of any material litigation pending or threatened
against Station or Seller or any material damage to or destruction of any assets
included or to be included in the Sale Assets;
5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC,
----------------------
within five (5) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer
shall take all commercially reasonable steps necessary to prosecute such filings
with diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable.
Buyer shall not knowingly take, and Seller covenants that Seller shall not
knowingly take, any action that party knows or has reason to know would
materially and adversely affect or materially delay issuance of the FCC Order or
materially and adversely affect or materially delay its becoming a Final Action
without a Material Adverse Condition, unless such action is requested or
required by the FCC, its staff or the Rules and Regulations. Should Buyer or
Seller become aware of any facts which could reasonably be expected to
materially and adversely affect or materially delay issuance of the FCC Order
without a Material Adverse Condition (including but not limited to, in the case
of Buyer, any facts which would reasonably be expected to disqualify Buyer from
controlling the Station), such party shall promptly notify the other party
thereof in writing and both parties shall cooperate to take all steps necessary
or desirable to resolve the matter expeditiously and to obtain the FCC's
approval of matters pending before it.
5.3 OTHER CONSENTS. Seller shall use commercially reasonable efforts to
---------------
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
5.4 TAX RETURNS AND PAYMENTS. To the extent the failure to file any
-------------------------
return, estimate, or report or pay any taxes would result in a Lien on the Sale
Assets:
(a) All tax returns, estimates, and reports required to be filed by
Seller prior to the Closing Date or relating to periods prior to the Closing
Date will be timely
19
filed with the appropriate governmental agencies unless valid extensions
therefor shall have been obtained.
(b) All taxes pertaining to ownership of the Sale Assets or operation
of the Station prior to the Closing Date will be timely paid; provided that
Seller shall not be required to pay any such tax so long as the validity thereof
shall be contested in good faith by appropriate proceedings and Seller shall
have set aside adequate reserves with respect to any such tax.
5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its
---------------------------------
representatives may make such reasonable investigation of the assets and
business of the Station as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station, provided that (i) Buyer shall give Seller reasonable advance notice
of each date on which Buyer or any such other person or entity desires such
access, (ii) each person (other than an officer of Buyer) shall, if requested by
Seller, be accompanied by an officer or their representative of Buyer approved
by Seller, which approval shall not be unreasonably withheld, (iii) the
investigations at the offices of Seller shall be reasonable in number and
frequency, and (iv) all investigations shall be conducted in such a manner as
not to physically damage any property or constitute a disruption of the
operation of the Station or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of the Station as Buyer may reasonably request.
5.6 CONFIDENTIALITY; PRESS RELEASE. All information, data and materials
-------------------------------
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with a high degree of care to
prevent the disclosure thereof; and (c) if, for any reason, this transaction is
not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available to
any person any of such information, data or material concerning the other party,
except as may be necessary or appropriate in connection with the operation of
the Station by Buyer. Each party shall use its reasonable efforts to prevent the
violation of any of the foregoing confidentiality provisions by its respective
representatives. Notwithstanding the foregoing, nothing contained herein shall
prohibit Buyer or Seller from:
(i) using such information, data and materials in connection with any
action or proceeding brought or any claim asserted by Buyer or Seller in respect
of any breach by the other of any representation, warranty or covenant made in
or pursuant to this Agreement; or
20
(ii) supplying or filing such information, data or materials to or
with the FCC or any other valid governmental or court authority to the extent
reasonably necessary to obtain any consent, waiver, amendment, modification,
approval, authorization, permit or license which may be necessary to effectuate
this Agreement, and to consummate the transaction contemplated herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.
5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
------------------------
this Agreement, each of the parties hereto will use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
satisfy any condition to the parties' obligations hereunder in its power to
satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement.
5.8 FCC REPORTS. Seller shall continue to file, on a current basis
------------
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Station. Seller shall provide Buyer with copies of all
such filings within five business days of the filing with the FCC.
5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
-----------------------------------
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets and properties as security for payment of
loans and other obligations or judgments and of any other Liens on the Sale
Assets. At the closing, Seller shall transfer and convey to Buyer all of the
Sale Assets free and clear of all Liens except Permitted Liens.
5.10 ENVIRONMENTAL ASSESSMENT. Not later than forty-five (45) days
-------------------------
after execution of this Agreement, Buyer shall obtain a Phase I environmental
assessment of the Real Property by an environmental engineer selected by Buyer
(the "Environmental Assessment"). Buyer shall commission and pay the cost of
such Environmental Assessment and shall provide a copy to Seller within ten (10)
days of its receipt by Buyer. The Environmental Assessment shall be subject to
the confidentiality provisions of Section 5.6. If, after appropriate inquiry
-----------
into the previous ownership of and uses of the Real Property consistent with
good commercial or customary practice, the engineer concludes, as set forth in
the Environmental Assessment, that environmental conditions exist on, under or
affecting such properties that would constitute a violation or breach of
Seller's representations and warranties contained in Section 3.14 of this
------------
Agreement or cause the condition contained in Section 6.9 to not be satisfied,
------------
then notwithstanding any other provisions of this Agreement to the contrary, but
subject to the following sentence, Seller shall at its sole cost and expense (up
to a maximum amount of Fifty Thousand Dollars ($50,000)) remove, correct or
remedy any condition or conditions which constitute a violation or breach of
Seller's representations and warranties contained in Section 3.14 prior to the
------------
Closing Date and provide to Buyer at Closing a certificate from
21
an environmental abatement firm reasonably acceptable to Buyer that such
removal, correction or remedy has been completed so that Seller's
representations and warranties contained in Section 3.14 will be true as of the
------------
Closing Date and the condition contained in Section 6.9 will be satisfied as of
-----------
the Closing Date. In the event the cost of removal, correction or remedy of the
environmental conditions exceeds Fifty Thousand Dollars ($50,000), Buyer may
elect to proceed with the Closing but shall not be obligated to close under any
circumstances which would require Buyer to assume ownership of the Station under
conditions where there exist any uncured violations of warranties,
representations or covenants with respect to environmental matters.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless waived by Buyer in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
----------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole, and except as follows:
(i) as to Section 3.14(d), (f), (g), (h) or (i) the accuracy
--------------------------------------
or inaccuracy of this representation as of the date of this Agreement or as of
the Closing Date shall not be a condition to Closing if (A) the item is removed
on or before Closing, all costs associated with such removal, clean up or other
action have been paid in full by Seller and all required certificates of removal
or completion or other certificates demonstrating that all required action under
Section 5.10 has been completed have been received from applicable regulatory
- ------------
authorities, or (B) the removal, clean up or other action cannot be completed
and/or governmental or regulatory certificates cannot be obtained prior to
Closing (which Closing may be delayed by Seller or Buyer by not more than thirty
(30) days if either party reasonably determines that any necessary action can be
completed during such delay period), a portion of the Purchase Price equal to
the estimated costs of completion and/or certification (to be determined by an
independent consulting engineer but in no event exceeding Fifty Thousand Dollars
($50,000) without the prior consent of Seller) is escrowed under an agreement
negotiated in good faith by the parties and the amount so escrowed is used to
pay all costs of completion; provided, however, that in no event shall Buyer be
required to consummate the Agreement if (A) the removal, clean up or other
action would likely result in a disruption of Buyer's ability to broadcast at
substantially full power from its transmitter site for material periods of
22
time or (B) the estimated cost of completion and/or certification exceeds the
amount escrowed pursuant to this Section.
(ii) as to Section 3.14(j), the accuracy or inaccuracy of this
---------------
representation shall not be a condition to Closing if the noncompliance is cured
on or before Closing or if the Seller remains liable for the noncompliance after
the Closing; and
(iii) as to Sections 3.6 and 3.7, the accuracy or inaccuracy
--------------------
of the representations(s) shall not be a condition to Closing if the amount to
cure or repair the matter is reasonably estimated at less than One Hundred
Thousand Dollars ($100,000) in the aggregate and the Purchase Price is reduced
accordingly (if the amount can be accurately determined) or a reasonable reserve
is placed into escrow pending cure or repair or Buyer and Seller make other
arrangements which are reasonable under the circumstances. In addition, Seller
may elect to delay Closing for a period not to exceed thirty (30) days if Seller
reasonably determines that any action necessary to cure or repair can be
completed during such delay period; provided that the reduction or escrow
described in the preceding sentence shall apply to the extent any cure or repair
is not completed within such delay period.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date, and
-----------
further except that as to Section 6.2, non-satisfaction of the condition(s)
-----------
shall not be a condition to Closing if the amount to cure or repair the matter
is reasonably estimated at less than One Hundred Thousand Dollars ($100,000) in
the aggregate and the Purchase Price is reduced accordingly (if the amount can
be accurately determined) or a reasonable reserve is placed into escrow pending
cure or repair or Buyer and Seller make other arrangements which are reasonable
under the circumstances. In addition, Seller may elect to delay Closing for a
period not to exceed thirty (30) days if Seller reasonably determines that any
action necessary to cure or repair can be completed during such delay period;
provided that the reduction or escrow described in the preceding sentence shall
apply to the extent any cure or repair is not completed within such delay
period.
6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall
have become a Final Action without any Material Adverse Condition.
23
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied prior to transfer of the FCC Licenses to
Buyer shall have been satisfied by Seller.
(c) All other material authorizations, consents, approvals and
clearances of federal, state or local governmental agencies required to permit
the consummation by Buyer of the transactions contemplated by this Agreement
shall have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have a material adverse effect on the operations of the Station.
6.4 ADVERSE PROCEEDINGS. Buyer shall not be subject to any ruling,
-------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting (i) the consummation of the transactions contemplated hereby or (ii)
its participation in the operation, management, ownership or control of the
Station; and no litigation, proceeding or other action seeking to obtain any
such ruling, decree, order or injunction shall be pending or shall have been
threatened in writing and have a reasonable likelihood of success. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transaction contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from
--------------------------------
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed on Schedule 3.8 are valid, in good
------------
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Station in the manner in which the Station is currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Station.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the
24
Station or its operation, other than proceedings affecting the radio
broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon
Seller's representations and warranties in this Agreement and to limit its
inquiry to its files and such FCC files and records as are available to it as of
10:00 o'clock A.M. Eastern time the business day immediately preceding the
Closing Date. Counsel may state that, as to any factual matters embodied in, or
forming a basis for any legal opinion expressed in, such opinion, counsel's
knowledge is based solely on such inquiry.
6.6 OTHER CONSENTS. Seller shall have obtained in writing and
---------------
provided to Buyer on or before the Closing Date, without any condition
materially adverse to Buyer or the Station, the consents or waivers to the
transactions contemplated by this Agreement required under those Station
Agreements which Buyer has elected to assume.
6.7 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or
------------------------------
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.
-----------
6.8 NO CESSATION OF BROADCASTING.
----------------------------
(a) Between the date hereof and the Closing Date, the Station
shall not have for a period of more than ten (10) days in the aggregate (i)
ceased broadcasting on its authorized frequency, (ii) lost substantially all of
its normal broadcasting capability or (iii) been broadcasting at a power level
of 50% or less of its FCC authorized level. Seller shall promptly notify Buyer
of the occurrence of any one or more of the foregoing events or conditions, and
the non-fulfillment of the condition precedent set forth in this Subsection
caused by the occurrence of the events specified in Seller's notice shall be
deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Seller's written notice, Buyer notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding
the Closing Date, the Station shall have been operating continuously with
substantially all of its normal broadcasting capability except for cessation or
reductions for insignificant periods of time resulting from occurrences (such as
lightning strikes) over which Seller has no control. Seller or Buyer shall have
the right to delay Closing for a period not to exceed thirty (30) days if Seller
or Buyer reasonably determines that any action to restore the Station
substantially all of its normal broadcasting capability can be completed during
such delay period.
6.9 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained
-------------------------
by Buyer pursuant to Section 5.10 hereof shall not have disclosed any material
------------
violation of any Environmental Law at the Real Property which is not removed or
cured by Seller prior to Closing.
25
6.10 TITLE INSURANCE COMMITMENT. Title to the Real Property shall be
---------------------------
in fee simple, good and marketable and insurable at regular rates by Surety
Title Agency, Inc., licensed in the State of Ohio, pursuant to the standard
stipulations and conditions of the ALTA policy of owner's title insurance
prescribed by the applicable regulatory authorities for the State of Ohio, free
and clear of all liens and encumbrances except Permitted Encumbrances, as
hereinafter defined. For purposes hereof, "Permitted Encumbrances" shall mean
(i) easements, restrictions, and other similar matters which will not adversely
affect the use of the Real Property in the ordinary course of business; (ii)
liens for taxes not due and payable or, that are being contested in good faith
by appropriate proceedings; (iii) mechanics, materialmen's, carriers',
warehousemen's, landlords' or other similar liens in the ordinary course of
business for sums not yet due or being contested in good faith by appropriate
proceedings; (iv) deposits or pledges to secure the performance of bids,
tenders, contracts (other than for borrowed money), leases, statutory
obligations, surety or appeal bonds or other deposits or pledges for purposes of
a like general nature made or given in the ordinary course of business: and (v)
liens or mortgages that will be released at Closing; (vi) zoning ordinances and
regulations, including statutes and ordinances relating to the liens of streets
and to other municipal improvements, which will not adversely affect the use of
the Real Property in the ordinary course of business. All costs associated with
obtaining the standard ALTA policy of title insurance shall be shared equally by
Seller and Buyer.
6.11 SURVEY. Within ten (10) business days after execution of this
-------
Agreement, Seller shall provide Buyer with the originals or readable copies of
any surveys of the Real Property in Seller's possession. All costs associated
with updating such survey or preparing new surveys shall be paid by Buyer.
6.12 DISCLAIMER OF CONDITION PRECEDENT. Provided that Seller
----------------------------------
continues after the date of this Agreement to operate the Station in the
ordinary course of business and in compliance with the provisions of this
Agreement, then notwithstanding anything contained herein to the contrary,
Buyer's obligation to close hereunder shall not be conditioned upon the absence,
between the date hereof and the Closing Date, of a material adverse change in
the Station's revenues, ratings, financial condition, assets, properties or
prospects and such a material adverse change shall not relieve Buyer of its
obligations to close hereunder; provided that nothing contained herein shall in
any way diminish or affect any specific warranties and representations made by
Seller in Article III.
-----------
ARTICLE VII
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
-----------------------------
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:
26
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
-----------
are satisfied as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3. FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall
have become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or
decree of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other material authorizations, consents, approvals and
clearances of all Federal, state and local governmental agencies required to
permit the consummation by Seller of the transactions contemplated by this
Agreement shall have been obtained; all statutory and regulatory requirements
for such consummation shall have been fulfilled; and no such authorizations,
consents, approvals or clearances shall contain any conditions that individually
or in the aggregate would have any material adverse effect on Seller.
7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling,
--------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby; and no
litigation, proceeding or other action seeking to obtain any such ruling,
decrees, order or injunction shall be pending or shall have been threatened in
writing and have a reasonable likelihood of success. No governmental authority
having jurisdiction shall have notified any party to this Agreement that
consummation of the transactions contemplated hereby would constitute a
violation of the laws of the United States or of any state or political
subdivision or that it intends to commence proceedings to restrain such
consummation or to force divestiture, unless such governmental authority shall
have withdrawn such
27
notice. No governmental authority having jurisdiction shall have commenced any
such proceeding.
7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall
-------------------------------------------------
have delivered or caused to be delivered to Seller on the Closing Date each of
the Documents required to be delivered pursuant to Section 8.3, and Seller shall
-----------
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
-----------
ARTICLE VIII
CLOSING
-------
8.1 TIME AND PLACE. The Closing shall take place at the offices of
---------------
Seller's counsel in Cleveland, Ohio, or at such other place as the parties
agree, at 10:00 A.M. Eastern Time on the fifth business day following the last
to occur of the following dates (the "Closing Date") (i) the date on which
issuance of the FCC Order without any Material Adverse condition has become a
Final Action; (ii) the date on which the FCC's grant of Seller's application for
renewal of the FCC Licenses has become a Final Action; provided, however, that
Buyer, at its sole option, may elect to close at any time after the expiration
of any time period allowed for petitions to deny or other public comment with
respect to Seller's application for renewal of the FCC Licenses.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing,
---------------------------------------------
Seller shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of the Board of Directors of the
Managing General Partner of WHK LP and the Omni Group approving the execution
and delivery of this Agreement and each of the other documents and authorizing
the consummation of the transactions contemplated hereby and thereby.
(b) The certificate required by Section 6.1(b).
--------------
(c) A bill of sale and other instruments of transfer and
conveyance transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) Limited warranty deeds and any other required instruments of
transfer and conveyance transferring to Buyer the Real Property.
(f) Executed mortgage satisfactions and any other documents
required by the title insurance company under Section 6.10 as a condition to
------------
issuing the title insurance policy in the form required by Section 6.10.
------------
28
(g) An instrument or instruments assigning to Buyer all right, title
and interest of Seller in and to all Station Agreements being assumed by Buyer.
(h) An instrument assigning to Buyer all right, title and interest of
Seller in the FCC Licenses, all pending applications relating to the station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(i) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.
------------
(j) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all material
consents and approvals required as a condition to Buyer's obligation to close
hereunder have been obtained.
8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing,
---------------------------------------------
Buyer shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of the Board of Directors of Buyer and
Salem Communications Corporation approving the execution and delivery of this
Agreement and each of the other Documents and authorizing the consummation of
the transaction contemplated hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
-----------
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
--------------
(e) Such additional information and materials as Seller shall have
reasonably requested.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
------------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day
29
of the Survival Period. In the event such a notice is so given, the right to
indemnification with respect thereto under this Article shall survive the
Survival Period until such claim is finally resolved and any obligations with
respect thereto are fully satisfied. Notwithstanding the foregoing, the
provisions for survival and the making of claims shall not apply to the
agreements whereby Buyer assumes the obligations under Subsection 8.3(c), each
-----------------
of which agreements shall be governed by its own terms.
9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the
---------------------------
rights to indemnification and to be held harmless set forth in this Agreement
shall, as between the parties hereto and their respective successors and
assigns, be exclusive of all rights to indemnification and to be held harmless
that such party (or its successors or assigns) would otherwise have by statute,
common law or otherwise.
9.3 INDEMNIFICATION BY SELLER.
--------------------------
(a) Subject to the provisions of Subsection (b) below and
--------------
Section 10.2 below, Seller shall indemnify and hold harmless Buyer and any
- ------------
officer, director, agent, employee and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses, including reasonable attorneys' fees,
(collectively referred to herein or "Losses") relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or
(ii) The ownership or operation by Seller of the Station or the
Sale Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller other than
the Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby.
(b) Notwithstanding anything contained herein to the contrary,
if Closing occurs, Seller shall not be obligated until the aggregate amount of
Losses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be
entitled to indemnification of the entire amount in excess of Buyer's Threshold
Limitation, provided that any amounts owed by Seller to Buyer under Subsection
----------
(a) (iv) above and Section 2.7 shall not be counted in determining whether
- -------- -----------
Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation. Notwithstanding
anything contained herein to the contrary, if Closing occurs, Seller shall not
be obligated to pay any amounts pursuant to this Section 9.3 in excess of the
Purchase Price.
30
9.4 INDEMNIFICATION BY BUYER.
-------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Buyer shall indemnify and hold harmless Seller and any officer,
- ----
director, agent, employee and affiliate thereof with respect to any and all
Losses relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station after the
Closing Date; or
(iii) The Assumed Obligations and all other liabilities or
obligations of Buyer.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to
Subsection (a) above unless and until the aggregate amount of such Losses
- --------------
exceeds Seller's Threshold Limitation, in which case Seller shall then be
entitled to indemnification of the entire amount in excess of Seller's Threshold
Limitation, provided that any payment owed by Buyer to Seller under Section 2.7
-----------
shall not be counted in determining whether Seller's Threshold Limitation is
satisfied, and Seller shall have the right to recover any such payment without
regard to any such limitation. Notwithstanding anything contained herein to the
contrary, if Closing occurs, Buyer shall not be obligated to pay any amounts
pursuant to this Section 9.4 in excess of the Purchase Price.
9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party
---------------------------
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
----------
compromise, or defend such a claim without prejudice to any right it may have
hereunder.
{THIS SPACE INTENTIONALLY LEFT BLANK.}
31
ARTICLE X
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 TERMINATION. If Closing shall not have previously occurred,
------------
this Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:
(i) Seller gives such termination notice and is not at
such time in material default hereunder, or Buyer gives such termination notice
and Buyer is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties
contained herein of Buyer (if such termination notice is given by Seller), or of
Seller (if such termination notice is given by Buyer), are inaccurate in any
respect and materially adverse to the party giving such termination notice
unless the inaccuracy has been induced by or is the result of actions or
omissions of the party giving such termination notice or unless the accuracy of
such representation or warranty is not a condition to closing; or
(B) Any material obligation to be performed by Buyer
(if such termination notice is given by Seller) or by Seller (if such
termination notice is given by Buyer) is not timely performed in any material
respect unless the lack of timely performance has been induced by or is the
result of actions or omissions of the party giving such termination notice; or
(C) Any material condition (other than those
referred to in foregoing Clauses (A) and (B)) to the obligation to close the
----------- ---
transaction contemplated herein of the party giving such termination notice
has not been timely satisfied, unless the failure of said condition to be
satisfied was induced by the party giving such termination notice with the
intended result of terminating the Agreement pursuant to this Clause (C); and
----------
(iii) any such inaccuracy, failure to perform or non-
satisfaction of a condition neither has been cured nor satisfied within twenty
(20) days after written notice thereof from the party giving such termination
notice nor waived in writing by the party giving such termination notice.
(b) Written notice from Seller to Buyer, or from Buyer to Seller, at
any time after March 31, 1997 provided that termination shall not occur upon the
giving of
32
such termination notice by Seller if Seller is at such time in material default
hereunder or upon the giving of such termination notice by Buyer if Buyer is at
such time in material default hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to Seller, at
any time following a determination by the FCC that the application for consent
to assignment of the FCC Licenses has been designated for hearing if Seller or
Buyer reasonably determine that approval to the assignment can not be obtained
prior to March 31, 1997, even with diligent efforts; provided, however, only the
party whose qualifications are not in issue may terminate this Agreement under
this provision and only if such party has given the other sixty (60) days' prior
written notice and the requirement for such hearing has not been set aside
within that period.
(d) The written election by Buyer under Article XI.
----------
10.2 OBLIGATIONS UPON TERMINATION.
----------------------------
(a) In the event this Agreement is terminated pursuant to Section
-------
10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder
- -------------- ---
shall be limited as provided in Subsections (c) and (e), below and the aggregate
-----------------------
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
- -----------------------
any other reason, neither party shall have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled to
the return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b), (c) or (d) , or (ii) if such
------------------------------------
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is
----------------------------------------------
entitled to the return of the Earnest Money, Seller shall cooperate with Buyer
in taking such action as is required under the Escrow Agreement in order to
effect such return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid
written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer
--------------------------------
agrees that (i) Buyer shall pay Seller upon such termination, as liquidated
damages and not as penalty, the sum ("Liquidated Damage Amount") of (A) Six
Hundred Seventy Five Thousand Dollars ($675,000), plus (B) the amount of the
Earnest Money; (ii) Seller shall be entitled to collect the Liquidated Damage
Amount by receiving a disbursement from the Escrow Agent under the Escrow
Agreement equal to the Earnest Money; and (iii) Seller shall be entitled to
pursue any other remedy available to Seller at law or in equity to recover the
full amount of the Liquidated Damage Amount from Buyer provided that the total
monetary damages (including any amount received from the Escrow Agent under the
Escrow Agreement) to which Seller shall be entitled shall not exceed the
Liquidated Damage Amount. SELLER'S RECEIPT OF THE LIQUIDATED DAMAGE AMOUNT
SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER
33
AND NOT A PENALTY, AND, EXCEPT AS PROVIDED IN SECTION 13.4, SHALL BE SELLER'S
------------
SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT
OCCUR. EXCEPT AS PROVIDED IN SECTION 13.4, BUYER AND SELLER EACH ACKNOWLEDGE AND
------------
AGREE THAT THE LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE
ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE
DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE
OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED
HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the contrary,
but subject to the provisions of the following sentences, if this Agreement is
terminated by Buyer's giving of written notice to Seller pursuant to Subsection
----------
10.1(a), Buyer shall not be entitled to damages or indemnification from Seller.
- -------
Subject to the following sentence, if Seller attempts to terminate this
Agreement under circumstances where it is not entitled to do so, or if Seller,
by its own action, causes a breach of warranty or fails to satisfy a condition
(including without limitation a refusal to consummate the transaction after
Buyer has satisfied all conditions to Seller's obligation to close and Buyer has
demonstrated its willingness and ability to close on the terms set forth in this
Agreement and Buyer is not in default hereunder) with the intent of creating a
situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does
---------------
so elect to terminate, the monetary damages, if any, to which Buyer shall be
entitled shall be limited to direct and actual damages and shall in no event
exceed Three Hundred Thousand Dollars ($300,000) in the aggregate. If a
circumstance described in the preceding sentence should arise and if Buyer
establishes that the action of Seller described therein was taken intentionally
in order to allow Seller to sell or enter into negotiations to sell the Station
to another party, the damages to which Buyer shall be entitled shall not be
limited to direct and actual damages.
(e) In any dispute between Buyer and Seller as to which party is
entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 TERMINATION NOTICE. Each notice given by a party pursuant
-------------------
to Section 10.1 to terminate this Agreement shall specify the Subsection (and
------------
clause or clauses thereof) of Section 10.1 pursuant to which such notice is
------------
given.
ARTICLE XI
----------
CASUALTY
--------
Upon the occurrence of any casualty loss, damage or destruction
material to the operation of the Station prior to the Closing, Seller shall
promptly give Buyer written
34
notice setting forth in detail the extent of such loss, damage or destruction
and the cause thereof if known. Seller shall use its reasonable efforts to
promptly commence and thereafter to diligently proceed to repair or replace any
such lost, damaged or destroyed property. In the event that such repair or
replacement is not fully completed prior to the Closing Date, Buyer may elect to
postpone the Closing until Seller's repairs have been fully completed or to
consummate the transactions contemplated hereby on the Closing Date, in which
event Seller shall assign to Buyer the portion of the insurance proceeds (less
all reasonable costs and expenses, including without limitation attorney's fees,
expenses and court costs incurred by Seller to collect such amounts), if any,
not previously expended by Seller to repair or replace the damaged or destroyed
property (such assignment of proceeds to take place regardless of whether the
parties close on the scheduled or deferred Closing Date) and Buyer shall accept
the damaged Sale Assets in their damaged condition. In the event the loss,
damage or destruction causes or will cause the Station to be off the air for
more than seven (7) consecutive days or fifteen (15) total days, whether or not
consecutive, then Buyer may elect either (i) to consummate the transactions
contemplated hereby on the Closing Date, in which event Seller shall assign to
Buyer the portion of the insurance proceeds (less all reasonable costs and
expenses, including without limitation attorney's fees, expenses and court
costs, incurred by Seller to collect such amounts), if any, not previously
expended by Seller to repair or replace the damaged or destroyed property, and
Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii)
to terminate this Agreement.
ARTICLE XII
CONTROL OF STATION
------------------
Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Station or conduct of its
business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.
ARTICLE XIII
MISCELLANEOUS
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13.1 FURTHER ACTIONS. From time to time before, at and after the
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Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a
------------------------------
period of twelve (12) months, Buyer shall provide Seller, Seller's counsel,
accountants and other representatives with reasonable access during normal
business hours to the books, records, property, personnel, contracts,
commitments and documents of the Station pertaining to transactions occurring
prior to the Closing Date when requested by Seller, and Buyer shall retain such
books and records for the normal document retention period
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of Buyer. At the request and expense of Seller, Buyer shall deliver copies of
any such books and records to Seller .
13.3 PAYMENT OF EXPENSES.
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(a) Any fees assessed by the FCC in connection with the
filings contemplated by Section 5.2(a) or consummation of the transactions
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contemplated hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant
and other similar taxes payable in connection with consummation of the
transactions contemplated hereby shall be shared equally between Buyer and
Seller.
(c) Except as otherwise expressly provided in this Agreement,
each of the parties shall bear its own expenses, including the fees of any
attorneys and accountants engaged by such party, in connection with this
Agreement and the consummation of the transactions contemplated herein.
13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a
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special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. Buyer acknowledges that certain transactions
that Seller may enter into may be premised upon the consummation of the
transaction contemplated by this Agreement and if Buyer breaches its obligations
under this Agreement, the value of the Station to Seller could be adversely
affected in an amount exceeding the Liquidated Damages Amount. Therefore, at
Sellers option, in lieu of receiving the Liquidated Damages Amount as provided
in Section 10.2(c), Seller shall be entitled to seek enforcement of this
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Agreement by decree of specific performance or injunctive relief requiring Buyer
to fulfill its obligations under this Agreement. In any action to equitably
enforce the provisions of this Agreement, the other party shall waive the
defense that there is an adequate remedy at law or equity and agrees that the
party seeking equitable relief shall have the right to obtain specific
performance of the terms of this Agreement without being required to prove
actual damages, post bond or furnish other security.
13.5 NOTICES. All notices, demands or other communications given
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hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile machine or similar written means of
communication, addressed as follows:
THIS SPACE INTENTIONALLY LEFT BLANK.
36
(a) if to Seller, to:
OmniAmerica Communications, Inc.
11111 Santa Monica Blvd., Suite 220
Los Angeles, California 90025
Attn: Carl Hirsch, CEO
Copy to:
Howard Mandel, Esq.
Thompson, Hine & Flory
3900 Society Center
127 Public Square
Cleveland, Ohio 44114
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date mailed, and
(ii) if personally delivered or otherwise sent as provided above, on the date
received.
13.5 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
-----------------
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, understandings or
arrangements between the parties with respect to the subject matter hereof.
13.6 BINDING EFFECT; BENEFITS. Except as otherwise provided herein,
-------------------------
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or assigns. Except to the extent
specified herein, nothing in this Agreement, express or implied, shall confer on
any person other than the parties hereto and their respective successors or
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
13.7 ASSIGNMENT. This Agreement and any rights hereunder shall not
-----------
be assignable by either party hereto without the prior written consent of the
other party,
37
which consent shall not be unreasonably withheld; provided, however, that Buyer
may, at its own expense, without Seller's prior written consent, assign its
rights and obligations to acquire the Real Property to Edward G. Atsinger III
and Stuart W. Epperson, or trusts or limited partnerships created for their
benefit and/or the benefit of their spouses and their issue, so long as (i) no
delay results in the Closing Date (ii) no extra expense results to Seller, and
(iii) Buyer remains liable for indemnification of Seller in respect of all
Assumed Obligations in respect of the Real Property.
13.8 GOVERNING LAW. This Agreement shall in all respects be
--------------
governed by and construed in accordance with the laws of the State of Ohio,
including all matters of construction, validity and performance.
13.9 BULK SALES. Buyer hereby waives compliance by Seller with the
-----------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
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Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.10 AMENDMENTS AND WAIVERS. No term or provision of this Agreement
-----------------------
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against whom the enforcement of such
amendment, waiver, discharge or termination is sought. Any waiver shall be
effective only in accordance with its express terms and conditions.
13.11 SEVERABILITY. Any provision of this Agreement which is
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
13.12 HEADINGS. The captions in this Agreement are for convenience
---------
of reference only and shall not define or limit any of the terms or provisions
hereof.
13.13 COUNTERPARTS. This Agreement may be executed in any number of
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counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.14 REFERENCES. All references in this Agreement to Articles and
-----------
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.15 SCHEDULES AND EXHIBITS. Unless otherwise specified herein,
-----------------------
each Schedule and Exhibit referred to in this Agreement is attached hereto, and
each such Schedule and Exhibit is hereby incorporated by reference and made a
part hereof as if fully set forth herein.
38
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first written.
"SELLER" "BUYER "
OMNIAMERICA GROUP INSPIRATION MEDIA OF OHIO, INC.
By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson
---------------------------- ----------------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
WHK LICENSE PARTNERSHIP
By: /s/ Carl Hirsch
----------------------------
Carl Hirsch
Chief Executive Officer
39
GUARANTY
Salem Communications Corporation ("Guarantor") hereby absolutely and
unconditionally guarantees the following (the "Guaranteed Obligations"):
(a) the punctual and full payment when due of all the obligations of
Buyer in connection with the Documents; it being the intention of Guarantor that
this guaranty be an absolute and unconditional guarantee of payment; and
(b) the performance and observance by Buyer of all its obligations
and covenants under the Documents.
Guarantor further agrees that the guaranty will not be discharged or affected by
the fact that the Guaranteed Obligations or any of them shall be invalid or
unenforceable for any reason. The guaranty shall be liberally construed in
favor of Seller. Guarantor hereby waives any right to require payment of the
Guaranteed Obligations by Buyer, or to require Seller to proceed against any
collateral or escrow for the Guaranteed Obligations, or to require any action or
proceeding against Buyer on the Guaranteed Obligations, or otherwise to require
Seller to exhaust any and all remedies against Buyer or any other person before
proceeding against Guarantor on the guaranty.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
-------------------------
Eric H. Halvorson
Executive Vice President
40