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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
CAPSTAR RADIO BROADCASTING PARTNERS, INC.,
PATTERSON BROADCASTING, INC.
AND
SBI RADIO ACQUISITION CORPORATION
DATED AS OF
MAY 26, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Payments at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties Regarding the Company . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company and Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Negative Trade Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Environmental Site Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Broadcast Transmission Interruptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 5
ADDITIONAL AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS
5.1 No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Compliance With Station Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(i)
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PAGE
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5.4 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Resignations of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.8 Patterson Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6
COVENANTS OF BUYER
6.1 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 7
MUTUAL COVENANTS
7.1 Application for FCC Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Control of Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Other Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.2 Conditions to Obligation of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9
CLOSING
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Actions to Occur at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(ii)
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ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Defense of Third-Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 12
GENERAL PROVISIONS
12.1 Survival of Representations, Warranties, and Covenants . . . . . . . . . . . . . . . . . . . . . . . 33
12.2 No Waiver Relating to Claims for Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.4 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.7 Expenses and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.8 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.13 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.14 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.15 Director and Officer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.16 No Reversionary Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.17 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.18 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(iii)
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SCHEDULES:
Schedule I -- Stations
Schedule 3.1(b) -- Subsidiaries
Schedule 3.1(f)(i) -- Company Reports
Schedule 3.1(f)(ii) -- Financial Statements
Schedule 3.1(f)(iii) -- Certain Changes or Events
Schedule 3.1(g) -- Compliance with Laws; FCC Matters
Schedule 3.1(h) -- Litigation
Schedule 3.1(i) -- Insurance
Schedule 3.1(j) -- Owned Real Property
Schedule 3.1(k) -- Leased Real Property
Schedule 3.1(l) -- Personal Property
Schedule 3.1(m) -- Liens
Schedule 3.1(n) -- Environmental Matters
Schedule 3.1(o) -- Certain Agreements
Schedule 3.1(p) -- Labor
Schedule 3.1(q) -- Intellectual Property
Schedule 3.1(s) -- Benefit Plans
Schedule 3.2(c) -- Seller Conflicts
Schedule 3.3(c) -- Buyer Conflicts
(iv)
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of May 26, 1998, by and among Patterson Broadcasting, Inc., a Delaware
corporation (the "Company"), Capstar Radio Broadcasting Partners, Inc.
("Seller"), and SBI Acquisition Corporation, a Delaware corporation ("Buyer").
R E C I T A L S
A. Seller owns as of the date hereof 76,625.74 shares of the
Company's Class A Common Stock, par value $.01 per share (the "Company Common
Stock"), representing all of the issued and outstanding capital stock of the
Company as of the date of this Agreement, free and clear of all Liens.
B. Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the shares of Company Common Stock (collectively, the "Shares")
in consideration of the Purchase Price (hereinafter defined), upon the terms
and subject to the conditions set forth herein.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of the Company or its
subsidiaries to cash payment for the sale of advertising time by the Stations
and other amounts that would be classified as an account receivable on the
asset side of a consolidated balance sheet of the Company and its subsidiaries
prepared in accordance with GAAP, prior to 11:59 p.m. on the day immediately
preceding the Closing Date.
"Affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with such person.
For purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
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"Applicable Laws" means all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity having jurisdiction over the Company or its
subsidiaries or the businesses, operations or assets of the Company or its
subsidiaries, as they may be in effect on or prior to the Closing.
"Applications" has the meaning set forth in Section 7.1.
"Barter Time" means the value of time owed under any Trade
Deals to which any of the Stations is a party or by which any of them is bound.
"Benefit Plans" has the meaning set forth in Section 3.1(s).
"Business Day" means any day other than (i) a Saturday or
Sunday or (ii) a day on which commercial banks in New York, New York or Dallas,
Texas are authorized or required to be closed.
"Buyer" has the meaning set forth in the first paragraph of
this Agreement and includes its permitted successors and assigns.
"Buyer Indemnified Costs" means any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable legal fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of the
Buyer Indemnified Parties incurs and that arise out of any breach by the
Company or Seller of any of the covenants or agreements (other than breaches of
covenants to be performed by the Company after the Closing) of the Company or
Seller under this Agreement or any other Transaction Document executed in
connection herewith.
"Buyer Indemnified Parties" means Buyer and each officer,
director, employee, stockholder, and Affiliate of Buyer. After the Closing,
the Company and its subsidiaries shall be deemed to be Buyer Indemnified
Parties.
"CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Section 1.1.
"Certificate of Incorporation" means that certain Certificate
of Incorporation of the Company filed with the Secretary of State of Delaware,
as amended to date, including without limitation the Certificate of
Designations.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article 9.
"Closing Date" means the date of the Closing.
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"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Communications Act" means the Communication Act of 1934, as
amended, and all material rules, regulations, and written policies of the FCC
thereunder.
"Company" has the meaning set forth in the first paragraph of
this Agreement.
"Company Common Stock" has the meaning set forth in the
recitals.
"Company Reports" has the meaning set forth in Section 3.1(f).
"Consents" means all governmental consents and approvals,
including the FCC Consents, and all consents and approvals of third parties, in
each case that are necessary in order to transfer the Shares, or the control of
the Company and its subsidiaries and their properties and assets, to Buyer and
otherwise to consummate the transactions contemplated hereby.
"Contracts" means all agreements, contracts, or other binding
commitments, arrangements or plans, written or oral (including any amendments
and other modifications thereto), to which the Company or any of its
subsidiaries is a party or is otherwise bound.
"Cure Period" has the meaning set forth in Section 10.1(b)(i).
"DOJ" means the Department of Justice.
"Employees" means all individuals as to whom an
employer-employee relationship with the Company or its subsidiaries exists as
of the Closing Date.
"Environmental Costs or Liabilities" has the meaning set forth
in Section 3.1(n).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Emergency Planning and Community Right to Know Act, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean
Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil
Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations and decisional law of any
Governmental Authority, as each of the foregoing may be amended and in effect
on or prior to the Closing.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESA" means Phase I or Phase II environmental site
assessments.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing ESAs" means environmental site assessments conducted
on or before the date of this Agreement with respect to the Real Property
described on Schedule 3.1(j) and Schedule 3.1(k).
"FCC" means the Federal Communications Commission.
"FCC Consents" means actions by the FCC (including the Chief,
Mass Media Bureau, acting under delegated authority) granting its consent to
the transfer of the control of the FCC Licenses for the Stations to Buyer as
contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to the Company or its subsidiaries and used in
the business or operations of the Stations, including those listed on Schedule
3.1(g) and any additions thereto between the date hereof and the Closing Date.
"Financial Statements"has the meaning set forth in Section
3.1(f).
"Former Employees" means all individuals as to whom an
employer-employee relationship with the Company or its subsidiaries existed
prior to the Closing Date, but does not exist on the Closing Date, who remain
entitled to benefits under any applicable welfare or benefit plan or program.
"Former Stockholders" means the persons listed as "Selling
Stockholders" on Schedule I to the Patterson Agreement.
"FTC" shall mean the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in the
United States.
"Goods and Services Amount" means the value of goods and
services to be received under any Trade Deals to which any of the Stations is a
party or by which any of them is bound.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
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"Hazardous Substances" has the meaning set forth in Section
3.1(n).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"IRS" means the Internal Revenue Service of the United States.
"Indemnified Costs" means the Buyer Indemnified Costs or
Seller Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or
Seller Indemnified Parties, as the case may be.
"Indemnifying Party" means any person who is obligated to
provide indemnification hereunder.
"Initial Order" means the initial written action or order
issued by the FCC setting forth the FCC Consents and (a) which has not been
reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with
respect to which no requests have been filed for administrative or judicial
review, reconsideration, appeal, or stay.
"Intellectual Property" means all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration, Patents,
and all other intellectual property rights whether registered or not, licensed
to or owned by the Company or its subsidiaries relating to the business or
operations of any Station, including the call letters of each of the Stations
and the goodwill related to the foregoing.
"Interim Balance Sheet" has the meaning set forth in Section
3.1(f).
"Interim Balance Sheet Date" has the meaning set forth in
Section 3.1(f).
"IRS" means the Internal Revenue Service of the United States.
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information, and all other confidential or proprietary technical and
business information.
"Knowledge" means, with respect to a specified party hereto,
the actual knowledge of such party.
"Leased Real Property" means all of the Company's or its
subsidiaries' leasehold interests, easements, licenses, rights to access and
rights-of-way which are used or held for use in
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the business and operations of the Company or its subsidiaries, including those
interests which are identified and described in Schedule 3.1(k).
"Licenses" means the FCC Licenses and all Permits issued by
any Governmental Entity to the Company or its subsidiaries, including those
listed on Schedule 3.1(g).
"Liens" has the meaning set forth in Section 3.1(m).
"Material Adverse Effect" means a material adverse effect on
the business, operations, properties (taken as a whole), condition (financial
or otherwise), results of operations or assets (taken as a whole), or
liabilities of the Company and its subsidiaries, taken as a whole.
"Material Contract" has the meaning set forth in Section
3.1(o).
"Minimum Loss" has the meaning set forth in Section 11.5(a).
"Multiemployer Plan" has the meaning set forth in Section
3(37) or Section 4001(a)(3) of ERISA.
"Negative Trade Balance" means the amount by which Barter Time
exceeds the sum of the Goods and Services Amount.
"Non-Permitted Encumbrances" has the meaning set forth in
Section 3.1(j).
"Owned Real Property" means those parcels of real property
owned in fee and used or held for use by the Company or its subsidiaries as
described in Schedule 3.1(j), and all buildings, structures, improvements, and
fixtures thereon, together with all rights of way, easements, privileges, and
appurtenances pertaining or belonging thereto, including any right, title, and
interest of the Company or its subsidiaries in and to any street or other
property adjoining any portion of such property.
"Patents" means all patent and patent applications (including
all reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by the Company or its subsidiaries.
"Patterson Acquisition" means the transactions contemplated by
the Patterson Agreement.
"Patterson Agreement" means that certain Stock Purchase
Agreement, as amended, dated June 12, 1997, by and among Capstar Broadcasting
Partners, Inc., the Company and the former stockholders of the Company named
therein.
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"Patterson Warranties" means the representations and
warranties which the Former Stockholders gave Seller or any of its Affiliates
in the Patterson Agreement insofar as such representations and warranties
relate to the Stations.
"Permits" has the meaning set forth in Section 3.1(n).
"Permitted Encumbrances" means (a) statutory liens for
current Taxes not yet due and payable, or being contested in good faith by
appropriate proceedings, (b) mechanics', carriers', workers', repairers', and
other similar liens imposed by law arising or incurred in the ordinary course
of business for obligations which are not overdue for a period of more than 90
days or which are being contested in good faith by appropriate proceedings, (c)
in the case of leases of vehicles, rolling stock, and other personal property,
encumbrances, which do not, individually or in the aggregate, materially impair
the operation of the business at the facility at which such leased equipment or
other personal property is located, (d) other liens, charges, easements,
restrictions or other encumbrances incidental to the operation of the Stations
or the ownership of the material assets of the Company and its subsidiaries
which were not incurred in connection with the borrowing of money or the
advance of credit and which, in the aggregate, do not materially detract from
the value of the material assets of the Company and its subsidiaries or
materially interfere with the use thereof or the operation of the Stations, in
each case taken as a whole, (e) liens on leases of real property arising from
the provisions of such leases, including, in relation to leased real property,
any agreements and/or conditions imposed on the issuance of land use permits,
zoning, business licenses, use permits, or other entitlements of various types
issued by any Governmental Entity, necessary or beneficial to the continued use
and occupancy of the material assets of the Company and its subsidiaries or the
continuation of the operation of the Stations, (f) pledges or deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other social security legislation, (g) deposits to
secure the performance of bids, contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business,
(h) unviolated zoning regulations and restrictive covenants and easements of
record which do not detract from the value of the Real Property and do not
materially and adversely affect, impair or interfere with the use of any
property affected thereby, and (i) public utility easements of record, in
customary form, to serve the Real Property.
"Permitted Liens" has the meaning set forth in Section 3.1(m).
"person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization, or
other entity.
"Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, furnishings, leasehold
improvements, office equipment, inventories, supplies, plant, spare parts, and
other tangible property which is owned or leased by the Company or its
subsidiaries and which is
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used or held for use in their respective businesses or operations, together
with any additions thereto between the date hereof and the Closing Date less
any dispositions made in accordance with Section 4.1.
"Purchase Price" means the consideration payable by Buyer as
provided in Section 2.2 hereof.
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Schedules" means the Schedules attached hereto.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of
this Agreement and includes its permitted successors and assigns.
"Seller Date" means the date of the closing of the Patterson
Acquisition.
"Seller Indemnified Costs" means (i) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable legal fees and expenses incurred
in investigating and preparing for any litigation or proceeding) that any of
Seller Indemnified Parties incurs and that arise out of any breach or default
by Buyer of any of the representations or warranties under this Agreement or
any agreement or document executed in connection herewith, (ii) any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and reasonable legal fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that any of Seller Indemnified Parties incurs and that arise out of
any breach by Buyer of any of the covenants or agreements under this Agreement
or any other Transaction Documents and (iii) any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable legal fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of
Seller Indemnified Parties incurs and that arise out of any breach by the
Company or its subsidiaries of a covenant or agreement to be performed after
the Closing.
"Seller Indemnified Parties" means each of the Company and its
subsidiaries and Seller and each officer, director, employee, stockholder, and
Affiliate of Seller; provided, however, that the Company and its subsidiaries
will be deemed to be Seller Indemnified Parties only before the Closing Date.
"SFX Merger" means the transactions contemplated by that
certain Agreement and Plan of Merger dated August 24, 1997, as amended, by and
among SBI Holding Corporation, Buyer and SFX Broadcasting, Inc.
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"Shares" has the meaning set forth in the recitals.
"Station Licenses" has the meaning set forth in Section
3.1(g).
"Stations" means the full service radio broadcast stations and
FM translator stations owned by the Company as of the date of this Agreement,
which are listed on Schedule I, and any full service radio broadcast stations
and FM translator stations acquired by the Company or its subsidiaries prior to
the Closing.
"subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the capital stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
"Tax" (or "Taxes") means (i) any net income, alternative or
add-on minimum, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, license, withholding on amounts paid by
the Company or any of its subsidiaries, payroll, employment, excise,
production, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest and/or
any penalty, addition to tax or additional amount imposed by any taxing
authority, (ii) any liability of the Company or any of its subsidiaries for the
payment of any amounts of the type described in clause (i) as a result of being
a member of an affiliated or consolidated group or arrangement whereby
liability of the Company or any of its subsidiaries for the payment of such
amounts was determined or taken into account with reference to the liability of
any other person for any period and (iii) liability of the Company or any of
its subsidiaries with respect to the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other person.
"Tax Return" means all returns, declarations, reports,
estimates, information returns and statements required to be filed by or with
respect to the Company or any of its subsidiaries in respect of any Taxes,
including, without limitation, (i) any consolidated federal income Tax return
in which the Company or any of its subsidiaries is included and (ii) any state,
local or foreign income Tax returns filed on a consolidated, combined or
unitary basis (for purposes of determining tax liability) in which the Company
or any of its subsidiaries is included.
"Title Company" means a title insurance company selected by
Buyer.
"Trade Deals" means the exchanges by the Stations of their
advertising time for goods or services, other than in connection with the
licensing of programs and programming material.
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"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of the business of any Station, whether or
not registered, and any applications or registrations therefor and (b) any
associated goodwill incident thereto owned by the Company or its subsidiaries.
"Transaction Documents" means this Agreement and all other
documents to be executed by any of the Company, Seller, or Buyer in connection
with the consummation of the transactions contemplated in this Agreement.
"Voting Debt" has the meaning set forth in Section 3.1(c).
"Welfare Benefit Plans" has the meaning set forth in Section
3(1) of ERISA.
1.2 REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language contained
therein. The words "this Agreement," "herein," "hereby," "hereunder," and
"hereof," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section," "this subsection," and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "including"
(in its various forms) means "including without limitation." Pronouns in
masculine, feminine, or neuter genders shall be construed to state and include
any other gender and words, terms, and titles (including terms defined herein)
in the singular form shall be construed to include the plural and vice versa,
unless the context otherwise expressly requires. Unless the context otherwise
requires, all defined terms contained herein shall include the singular and
plural and the conjunctive and disjunctive forms of such defined terms.
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE. Upon the terms and subject to the
conditions of this Agreement, at the Closing (hereinafter defined), Seller
shall sell to Buyer, and Buyer shall purchase from such Seller, the Shares,
free and clear of all Liens.
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2.2 PURCHASE PRICE. The purchase price payable by Buyer to Seller
in consideration for the sale of the Shares shall be an amount equal to Two
Hundred Twenty Three Million Five Hundred Thousand Dollars ($223,500,000) (the
"Purchase Price").
2.3 PAYMENTS AT CLOSING. At the Closing, subject to the
satisfaction of the other terms and conditions of this Agreement, Buyer shall
pay or cause to be paid to Seller cash, via wire transfer of immediately
available funds to an account designated by Buyer, in an amount equal to the
Purchase Price;
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. The
Company and Seller, jointly and severally, represent and warrant to Buyer as of
the date hereof as follows (with the understanding that Buyer is relying on
such representations and warranties in entering into and performing this
Agreement); provided, however, that for purposes of this Agreement, (i) any
representations or warranties given pursuant to Sections 3.1(f) through 3.1(t)
shall be deemed made with respect to events, act or omissions occurring or
conditions coming into existence on or after the Seller Date, (ii) Seller shall
not be deemed to be in breach of this Agreement to the extent such
representations or warranties contained in Sections 3.1(f) through 3.1(t) are
inaccurate due to events, acts, or omissions occurring or existing or
conditions occurring or existing prior to the Seller Date that do not
constitute a material breach by Seller of any covenants in this Agreement,
(iii) the Schedules to this Agreement are based upon information provided to
Seller in connection with the Patterson Agreement, and (iv) Seller shall be
permitted to update any Schedule referred to in Sections 3.1(f) through 3.1(u)
to the extent any such Schedule is inaccurate under the circumstances described
in the foregoing clause (ii).
(a) Organization, Good Standing, Etc. The Company is a
corporation, validly existing and in good standing under the laws of the State
of Delaware, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is duly qualified and in good standing to do business in each state in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except to the extent that the failure to be so
qualified would not have a Material Adverse Effect. The Company has delivered
to Buyer true and complete copies of its Certificate of Incorporation and
Bylaws, as in effect at the date of this Agreement. The Company is not in
violation of any provisions of its Certificate of Incorporation or Bylaws.
(b) Subsidiaries of the Company. Schedule 3.1(b) sets
forth a true and complete list of all of the Company's subsidiaries, together
with the jurisdiction of incorporation of each subsidiary and the percentage of
each subsidiary's outstanding capital stock or other equity interests
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owned by the Company or another subsidiary of the Company. Except as set forth
in Schedule 3.1(b), all outstanding shares of capital stock of, or other
ownership interests in, each subsidiary of the Company have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly by
the Company, free and clear of all Liens. Except as disclosed on Schedule
3.1(b), the Company does not own, directly or indirectly, any subsidiaries or
own, or have the right, pursuant to a contract or otherwise, to acquire any
capital stock, equity interest or other similar investment in any corporation,
partnership, joint venture, association, limited liability company, trust or
other entity. Each subsidiary of the Company has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to
do business in each state in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary, except to the
extent that any failure to be so qualified would not have a Material Adverse
Effect.
(c) Capital Structure. The authorized capital stock of
the Company consists of 200,000 shares of Class A Common Stock, 200,000 shares
of Class B Common Stock and 100,000 shares of preferred stock, par value $1.00
per share ("Preferred Stock"), of which 25,000 shares are designated as Series
A Preferred Stock. As of the date of this Agreement, there are 76,625.74
shares of Class A Common Stock and no shares of Class B Common Stock issued and
outstanding and no shares of Common Stock are held by the Company in its
treasury. As of the date of this Agreement, there are no shares of Series A
Preferred Stock issued and outstanding. No shares of capital stock of the
Company are reserved for issuance for any other purpose other than shares of
Class B Common Stock reserved for issuance upon the conversion of such shares
into Class A Common Stock. All the issued and outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive or
similar rights. There are no bonds, debentures, notes or other indebtedness
issued or outstanding having the right to vote ("Voting Debt") on any matters
on which holders of Common Stock may vote, except as permitted under the
Certificate of Designations. There are no options, warrants, calls, rights,
commitments, or agreements of any character to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver, or sell, or cause to be, issued,
delivered or sold, additional shares of capital stock or any Voting Debt of the
Company or any of its subsidiaries, or obligating the Company or any of its
subsidiaries to grant, extend, or enter into any such option, warrant, call,
right, commitment, or agreement. There are no outstanding contractual
obligations of the Company to repurchase, redeem, or otherwise acquire any
shares of Common Stock or other capital stock of the Company. There are no
outstanding contractual obligations of any of the Company's subsidiaries to
purchase, redeem or otherwise acquire any shares of capital stock of such
subsidiaries. All the issued and outstanding shares of capital stock of each
subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive or
similar rights. Upon Buyer's acquisition of the Shares at the Closing pursuant
to the terms and conditions of this Agreement, Buyer will own 100% of the
issued and outstanding capital stock of the Company and all securities
convertible into, exercisable for or exchangeable into capital stock of the
Company,
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excluding any capital stock or other securities of the Company that Buyer or
any of its Affiliates causes to be issued at or after the Closing.
(d) Authority. The Company has all requisite corporate
power and authority to enter into this Agreement and each other Transaction
Document to which the Company is a party and to consummate the transactions
contemplated hereby or thereby. The execution and delivery of the Transaction
Documents to which the Company is a party and the consummation by the Company
of the transactions contemplated hereby or thereby have been duly authorized by
all necessary corporate action on the part of the Company. The Transaction
Documents to which the Company is a party have been, or upon execution and
delivery will be, duly executed and delivered and constitute, or upon execution
and delivery will constitute, the valid and binding obligations of the Company
enforceable against it in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents to which the Company is a
party do not and the performance by the Company of the transactions
contemplated hereby or thereby will not, subject to obtaining the consents,
approvals, authorizations and permits and making the filings described in this
Section 3.1(e) or on Schedule 3.1(o), violate, conflict with, or result in any
breach of any provision of the Company's Certificate of Incorporation or
Bylaws, violate, conflict with, or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of control of
the Company or otherwise) any obligation, or result in the loss of any benefit,
or give any person the right to require any security to be repurchased, or give
rise to the creation of any Lien upon any of the material assets of the Company
or any of its subsidiaries under any of the terms, conditions or provisions of
any loan or credit agreement, note, bond, mortgage, indenture, or deed of
trust, or any license, lease, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party or by which it or any
of the material assets of the Company or any of its subsidiaries is bound
except to the extent that such violation, conflict, breach, default,
termination, acceleration, loss of benefit, repurchase or creation of a Lien,
charge, security interest, or encumbrance would not have a Material Adverse
Effect, or violate any material order, writ, judgment, injunction, decree,
statute, law, rule, or regulation of any Governmental Entity applicable to the
Company or any of its subsidiaries or by which or to which any of the material
assets of the Company or any of its subsidiaries is bound or subject, except to
the extent that such violation would not have a Material Adverse Effect. No
Consent of or registration, declaration or filing with any Governmental Entity
is required by or with respect to the Company or any Affiliate thereof in
connection with the execution and delivery of any Transaction Documents by the
Company or the consummation of the transactions contemplated hereby or thereby,
except as set forth on Schedule 3.1(o) or for the filing of a premerger
notification report under the HSR Act, and the expiration or termination of any
waiting period in connection therewith and the FCC
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Consents (as contemplated by Section 7.1 hereof) and notification to the FCC
upon consummation of the transactions contemplated in this Agreement.
(f) Reports; Financial Statements; Absence of Certain
Changes or Events.
(i) Except as set forth on Schedule 3.1(f), all
material forms, reports, statements and other documents with respect to the
Stations that are required to be filed with the FCC or any and all other
Governmental Entities (the "Company Reports") have been duly filed, except for
failures to file that would not have a Material Adverse Effect. The Company
Reports were prepared in all material respects in accordance with the
requirements of applicable law.
(ii) The Company has delivered to Buyer copies of
its internally prepared unaudited consolidated balance sheet of the Company as
of December 31, 1997 and its internally prepared unaudited consolidated income
statement of the Company for the year then ended, together with copies of the
internally prepared unaudited consolidated balance sheet (the "Interim Balance
Sheet") of the Company as of March 31, 1998 (the "Interim Balance Sheet Date")
and its internally prepared unaudited consolidated statement of income of the
Company for the period then ended (the "Interim Income Statement")
(collectively, the "Financial Statements"). As of the date of this Agreement
to the Company's Knowledge, except as set forth on Schedule 3.1(f)(ii), the
Financial Statements present fairly, in all material respects, the financial
position and results of operations of the Stations as of December 31, 1997 and
March 31, 1998, as the case may be, and for the year or period then ended in
conformity with GAAP, except for the absence of footnotes and except that the
Interim Balance Sheet and the Interim Income Statement may not have been
prepared in accordance with GAAP and may not contain the disclosure required by
GAAP.
(iii) As of the date of this Agreement, to the
Company's Knowledge and except as set forth on Schedule 3.1(f)(iii), from the
Interim Balance Sheet Date to the date of this Agreement, there has been no:
(A) physical damage, destruction or loss
in an amount exceeding $1,117,500 in the aggregate affecting the material
assets of the Company and its subsidiaries which is not covered by insurance or
not remedied within 30 days;
(B) increase in compensation payable or
to become payable to any of the employees of the Company, or any material
change in insurance benefits or other compensation arrangements affecting the
employees of the Company (other than increases in wages and salaries or bonus
payments made pursuant to employment agreements or in the ordinary course of
business and consistent with past practice); or
(C) any waiver of any rights by the
Company under any Contract, which waiver has had a Material Adverse Effect.
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(g) Compliance with Applicable Laws: FCC Matters.
(i) Except as set forth on Schedule 3.1(g), the
business of the Company and its subsidiaries has been conducted in compliance
in all material respects with each Applicable Law except where the failure to
comply would not have a Material Adverse Effect. Without limiting the
generality of the foregoing, except as set forth on Schedule 3.1(g), the
Stations have been operated in compliance in all material respects with the
Communications Act of 1934, as amended, and all material rules, regulations and
written policies of the FCC thereunder (collectively, the "Communications
Act"), all material obligations with respect to equal employment opportunity
under Applicable Laws, and all material rules and regulations of the Federal
Aviation Administration applicable to each of the towers used or held for use
by a Station except where the failure to comply would not have a Material
Adverse Effect. The material required by 47 C.F.R. Section 73.3526 to be kept
in the public inspection files of each Station is in such files, except for
such materials the failure to include such would not have a Material Adverse
Effect.
(ii) Schedule 3.1(g) contains a true and complete
list of all of the FCC Licenses, including the expiration dates thereof, as of
the date of this Agreement and all other material licenses, permits, or
authorizations issued to the Company or any of its subsidiaries by any other
Governmental Entities and held by it as of the date of this Agreement. Such
FCC Licenses, and other material licenses, permits, and authorizations, and all
pending applications for modification, extension, or renewal thereof or for new
material licenses, permits, permissions or authorizations at the date of grant,
are collectively referred to herein as the "Station Licenses." Schedule 3.1(g)
accurately lists as of the date of this Agreement the legally authorized
holder(s) of the Station Licenses. The Station Licenses constitute all the
material licenses, permits, and authorizations required for the operation of
each of the Stations and the business of the Company and each of its
subsidiaries as of the date of this Agreement, and each of the Station Licenses
is in full force and effect. The business of the Company and each of its
subsidiaries have been operated in all material respects in accordance with the
terms of its Station Licenses and the Company and each of its subsidiaries is
otherwise in compliance with the terms of such Station Licenses in all material
respects. Except as set forth on Schedule 3.1(g), there are no proceedings
pending against the Company or any of its subsidiaries or, to the Knowledge of
the Company and Seller, threatened, with respect to the Company's or any of its
subsidiaries ownership or operation of any Station which has resulted in or
would result in the revocation, material adverse modification, non- renewal, or
suspension of any of the Station Licenses by reason of the actions or
qualifications of the Company or any of its subsidiaries, the denial of any
pending applications for any Station Licenses by reason of the actions or
qualifications of the Company or any of its subsidiaries, the issuance against
the Company or any of its Subsidiaries of any cease and desist order, or the
imposition of any administrative actions (which shall include the proposed
assessment of any fines or penalties) by the FCC or any other Governmental
Entity with respect to any Station Licenses, or which has materially adversely
affected or would materially adversely affect any Station's ability to operate
as operated on the date of this Agreement or Buyer's ability to obtain control
of any Station Licenses or to operate any Station. Except as set forth on
Schedule 3.1(g), to the Knowledge of the Company and
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Seller, no other broadcast station or radio communications facility is causing
material interference to any Station's transmissions beyond that which is
allowed by FCC rules and regulations and no Station is causing material
interference to any other broadcast station or radio communications facilities'
transmissions beyond that which is allowed by the FCC rules and regulations.
To the Knowledge of the Company and Seller, except as set forth on Schedule
3.1(g), there is no reason to believe that the FCC will not renew any of the
Station Licenses issued by the FCC in the ordinary course of business. To the
Knowledge of the Company and Seller, except as set forth on Schedule 3.1(g),
there are no facts relating to the Company or any of its subsidiaries under the
Communications Act that have disqualified or would disqualify the Company or
any of its subsidiaries from transferring control of any of the Station
Licenses pursuant to the terms of this Agreement or that would prevent the
consummation by the Company of the transactions contemplated by this Agreement.
(h) Absence of Litigation. Except as set forth on
Schedule 3.1(h), there is no material action, suit, investigation, judicial or
administrative proceeding, grievance or arbitration pending or, to the
Knowledge of the Company and Seller, threatened against the Company or any of
its subsidiaries or any of the material assets of the Company or any of its
subsidiaries by or before any arbitrator or Governmental Entity, in each case
that would have a Material Adverse Effect. Except as set forth in Schedule
3.1(h), there is no judgment, decree, injunction, order, determination, or
award of any Governmental Entity or arbitrator outstanding against the Company
or any of its subsidiaries or any of the material assets of the Company or any
of its subsidiaries. Except as set forth on Schedule 3.1(h), there is no
action, suit, judicial or administrative proceeding pending or, to the
Knowledge of the Company and Seller, threatened against the Company or any of
its subsidiaries relating to the transactions contemplated by this Agreement.
(i) Insurance. Except as set forth on Schedule 3.1(i),
the policies of general liability, malpractice liability, fire, theft, and
other insurance maintained with respect to the operations, assets or business
of the Company and each of its subsidiaries provide adequate coverage against
loss. Except as set forth on Schedule 3.1(i), to the Knowledge of the Company
and Seller, neither the Company nor any of its subsidiaries has taken actions
or failed to act in a manner, including the failure by the Company or any of
its subsidiaries to give any notice or information or the delivery of any
inaccurate or erroneous notice or information, which would limit or impair the
rights of the Company or any of its subsidiaries under any such insurance
policies in such a manner as would have a Material Adverse Effect.
(j) Owned Real Property. Schedule 3.1(j) contains a list
of all the Owned Real Property. Except as set forth on Schedule 3.1(j), the
Company has good and marketable, fee simple, title in and to the Owned Real
Property. Except as set forth on Schedule 3.1(j), the Company or a subsidiary
of the Company has sufficient title to such easements, rights of way, and other
rights appurtenant to each of the Owned Real Properties as are necessary to
permit ingress and egress to and from the Owned Real Property to a public way,
and the improvements on the Owned Real Property have access to such sewer,
water, gas, electric, telephone and other utilities as are necessary
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to allow the business of the Station(s) operated thereon to be operated in the
ordinary course. Neither the Company nor any of its subsidiaries has received
written notice of any pending condemnation or similar proceeding affecting the
Owned Real Property or any portion thereof, and to the Knowledge of the Company
and Seller, except as set forth on Schedule 3.1(j), no such action is
threatened. Except as set forth on Schedule 3.1(j), the material improvements
located on the Owned Real Property are in sufficiently good condition (except
for ordinary wear and tear) to allow the business of the Company and each of
its subsidiaries to be operated in the ordinary course. Except as set forth on
Schedule 3.1(j), there are no lessees or tenants at will in possession of any
portion of any of the Owned Real Property other than the Company or its
subsidiaries, whether as lessees, tenants at will, trespassers or otherwise.
Except as set forth on Schedule 3.1(j), the current use of the Owned Real
Property by the Company and its subsidiaries does not violate in any material
respect any restrictive covenants of record affecting any of the Owned Real
Property.
(k) Leased Real Property. Schedule 3.1(k) contains a
list of all the leasehold interests relating to the business and operations of
each of the Company and its subsidiaries as now conducted. Each lease
described in Schedule 3.1(k) is a valid and binding obligation of the Company
or a subsidiary of the Company and is in full force and effect without
amendment other than as described in Schedule 3.1(k). Except as otherwise
disclosed on Schedule 3.1(k), neither the Company nor any of its subsidiaries
is, and to the Knowledge of the Company and Seller, no other party is, in
default in any material respect under any lease described in Schedule 3.1(k).
(l) Personal Property. Except as set forth on Schedule
3.1(l), the Company or a subsidiary of the Company has good title to, or a
valid leasehold or license interest in, all material Personal Property. Except
as otherwise disclosed in Schedule 3.1(l), the Personal Property is in good
operating condition and repair (ordinary wear and tear excepted). EXCEPT AS
EXPRESSLY SET FORTH HEREIN, SELLER MAKES NO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
(m) Liens and Encumbrances. All of the material assets
of the Company and its subsidiaries are free and clear of all liens, pledges,
claims, security interests, restrictions, mortgages, tenancies, and other
possessory interests, conditional sale or other title retention agreements,
assessments, easements, rights of way, covenants, restrictions, rights of first
refusal, defects in title, encroachments and other burdens, options or
encumbrances of any kind (collectively, "Liens") except Permitted Encumbrances
and (ii) Liens set forth on Schedule 3.1(m) (the Liens referred to in clauses
(i) and (ii) being "Permitted Liens"). At the Closing, all of the Assets shall
be free and clear of all Liens other than Permitted Encumbrances.
(n) Environmental Matters. Except as set forth on
Schedule 3.1(n) or expressly disclosed in the Existing ESAs, to the Knowledge
of the Company:
(i) The Owned Real Property and the Leased Real
Property and the operations of the Company and its subsidiaries thereon comply
in all material respects with all
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applicable Environmental Laws, except to the extent that lack of such
compliance would not have a Material Adverse Effect;
(ii) No judicial proceedings are pending or, to
the Knowledge of the Company and Seller, threatened against the Company or any
of its subsidiaries alleging the violation of any Environmental Laws, and there
are no administrative proceedings pending or, to the Knowledge of the Company
and Seller, threatened against the Company or any of its subsidiaries, alleging
the violation of any Environmental Laws and no written notice from any
Governmental Entity or any private or public person has been received by the
Company or any of its subsidiaries claiming any violation of any Environmental
Laws in connection with any Owned Real Property or Leased Real Property by the
Company or any of its subsidiaries, or requiring any remediation, clean-up,
modification, repairs, work, construction, alterations or installations on or
in connection with any Owned Real Property or Leased Real Property by the
Company or any of its subsidiaries that are necessary to comply with any
Environmental Laws and that have not been complied with or otherwise resolved
to the satisfaction of the party giving such notice;
(iii) All material permits, registrations, licenses
and authorizations ("Permits") required to be obtained or filed by the Company
or any of its subsidiaries under any Environmental Laws in connection with the
operation of the Stations, including those activities relating to the
generation, use, storage, treatment, disposal, release or remediation of
Hazardous Substances (as such term is defined in Section 3.1(n)(iv) hereof),
have been duly obtained or filed, and the Company and its subsidiaries are in
full compliance in all material respects with the terms and conditions of all
such Permits, except to the extent that the failure to obtain or file any such
Permit would not have a Material Adverse Effect;
(iv) All Hazardous Substances used or generated by
the Company or any of its subsidiaries on, in or under any of the Owned Real
Property or Leased Real Property are generated, stored, used, treated, disposed
of and released by such persons or on their behalf in such manner as not to
result in any material Environmental Costs or Liabilities, other than those
Environmental Costs and Liabilities that would not have a Material Adverse
Effect. "Hazardous Substances" means any hazardous materials, hazardous
wastes, hazardous substances, toxic wastes and toxic substances as those or
similar terms are defined under any Environmental Laws; any asbestos or any
material which contains any hydrated mineral silicate, including chrysolite,
amosite, crocidolite, tremolite, anthophylite and/or actinolite, whether
friable or non-friable; PCBs, or PCB-containing materials, or fluids; radon;
any other hazardous, radioactive, toxic or noxious substance, material,
pollutant, contaminant, constituent or solid, liquid or gaseous waste regulated
under any Environmental Law; any petroleum, petroleum hydrocarbons, petroleum
products, crude oil and any fractions or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas, synthetic gas and any
mixtures thereof; any substance that, whether by its nature or its use, is
subject to regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Entity requires environmental investigation,
monitoring or remediation; and any underground storage tanks, dikes or
impoundments as defined under any Environmental Laws.
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"Environmental Costs or Liabilities" means any material losses, liabilities,
obligations, damages, fines, penalties, judgments, settlements, actions,
claims, costs and expenses (including, without limitation, reasonable fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants, and the costs of investigation or feasibility studies and
performance of remedial or removal actions and cleanup activities) in
connection with any violation of any Environmental Laws, order of, or
contract of the Company with, any Governmental Entity or any private or public
persons or a claim by any private or public person arising out of any exposure
of any person or property to Hazardous Substances;
(v) There are not any Hazardous Substances that
are in a condition or location that violates any Environmental Law or that has
required or would require remediation under any Environmental Laws or give rise
to a claim for damages or compensation by any affected person or to any
Environmental Costs or Liabilities, except for violations, required
remediation, damages or compensation that would not have a Material Adverse
Effect; and
(vi) Neither the Company nor any of its
subsidiaries has received any notification from any source advising the Company
or any of its subsidiaries that: it is a potentially responsible party under
CERCLA or any other Environmental Laws; any real property or facility
currently or previously owned, operated or leased by it is identified or
proposed for listing as a federal National Priorities List ("NPL") (or
state-equivalent) site or a Comprehensive Environmental Response, Compensation
and Liability Information System ("CERCLIS") list (or state- equivalent) site;
and any facility to which it has ever transported or otherwise arranged for
the disposal of Hazardous Substances is identified or proposed for listing as
an NPL (or state-equivalent) site or CERCLIS (or state-equivalent) site.
(o) Certain Agreements.
Schedule 3.1(o) hereto lists (excluding advertising
contracts or commitments for the sale of advertising time for cash
entered into in the ordinary course of business and Contracts referred
to in Schedule 3.1(o)) each (i) employment Contract (unless such
employment Contract is terminable without liability or penalty on 30
days or less notice), (ii) Contract under which any party thereto
remains obligated to provide goods or services having a value, or to
make payments aggregating, in excess of $50,000 per year, (iii) other
Contract that is material to the operation of the Stations or to the
Company's or its subsidiaries businesses, and (iv) Contracts set forth
on Schedule 3.1(k) (relating to leasehold interests) in any such case
to which the Company or any of its subsidiaries is a party or the
Company or any of its subsidiaries is bound (such Contracts listed or
required to be listed on Schedule 3.1(o) and 3.1(p), the "Material
Contracts"). Each Material Contract is a valid and binding obligation
of the Company and is in full force and effect. The Company and its
subsidiaries and, to the Knowledge of the Company and Seller, each
other party to such Material Contracts (with or without lapse of time
or the giving of notice, or both) is not in material breach or default
thereunder, except for breaches or defaults that would not have a
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Material Adverse Effect. Schedule 3.1(o) identifies, as to each such
Material Contract listed thereon, (A) (1) whether the consent of the
other party thereto is required and (2) whether notice must be
provided to any party thereto (and the length of such notice), in each
case in order for such Contract to continue in full force and effect
upon the consummation of the transactions contemplated hereby, (B)
whether such Contract will be an Assumed Contract and (C) whether such
Contract can be canceled by the other party without liability to such
other party due to the consummation of the transactions contemplated
hereby.
(p) Labor. Except as set forth on Schedule 3.1(p),
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement. Except as set forth on Schedule 3.1(p), the Company has
no written notice of any charges, complaints, or proceedings before the Equal
Employment Opportunity Commission, Department of Labor or any other
Governmental Entity responsible for regulating employment practices, pending,
or, to the Company's and Seller's Knowledge, threatened against it or any of
its subsidiaries.
(q) Intellectual Property. Schedule 3.1(q) is a true and
complete list of all of the Intellectual Property as of the date of this
Agreement. Except as set forth on Schedule 3.1(q), the Company owns or has the
unencumbered right to use pursuant to a valid, binding, and enforceable license
agreement or other contract or arrangement all such Intellectual Property.
Except as set forth on Schedule 3.1(q), to the Knowledge of the Company and
Seller, the Company is not infringing any such Intellectual Property, and the
Company is not aware of any infringement by others of any of the Intellectual
Property owned by the Company.
(r) Taxes.
(i) Returns and Reports. All Tax returns and
reports required to be filed by or for the Company prior to the date
hereof have been duly and timely filed, or extensions of time within
which to file such returns have been obtained.
(ii) Payment. The Company has paid or made
adequate provision for the payment of all material Taxes for which the
Company is liable for payment, insofar as such Taxes result from
operations or activities during periods ending on or prior to the date
hereof, (A) all Tax deficiencies assessed against the Company as a
result of any examination of Tax returns of the Company have been
paid, and (B) the Company is not, as of the date hereof, the subject
of any audit or other proceeding in which any deficiency in payment of
Taxes for which the Company may be directly or indirectly liable has
been proposed.
(iii) Extensions. No agreements, waivers, or other
arrangements exist providing for an extension of time with respect to
payment by, or assessment against, the Company of any Tax.
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(iv) Proceedings. No suits, actions, claims, or
proceedings have been asserted as of the date hereof against the
Company in respect of any Tax.
(v) Tax Liens. There are no Tax Liens as of the
date hereof upon any of the assets reflected on the latest balance
sheet included in the Financial Statements, except for statutory liens
for Taxes not yet due or delinquent.
(s) ERISA. Set forth on Schedule 3.1(s) hereto is a true
and complete list of: each employee benefit plan (within the meaning of
section 3(3) of ERISA) which is either (i) maintained by the Company or any of
its subsidiaries, or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions, and to which the Company or any of its subsidiaries is making or
accruing an obligation to make contributions as of the date of this Agreement
(collectively, the "Benefit Plans"). The terms of each of the Benefit Plans
that is intended to qualify under Section 401(a) of the Code, are in
substantial compliance with the qualifications requirements of the Code. To
the knowledge of the Company and Seller, neither the Company, any of its
subsidiaries, Seller, nor any officer of the Company, any of its subsidiaries,
or Seller, nor any Benefit Plan or trust created thereunder, has engaged in any
uncorrected "prohibited transaction," as defined in Code section 4975 or ERISA
section 406 which could reasonably be expected to result in material liability
to the Company or any of its subsidiaries. Except as disclosed on Schedule
3.1(s) hereto, the Company is not a contributing employer to any "multiemployer
plan," as defined in ERISA sections 3(37) or 4001(a)(3). There is no pending
or, to the Company's or Seller's knowledge, threatened litigation or claim
(other than a routine claim for benefits made in the ordinary course of plan
administration) relating to a Benefit Plan or fiduciary with respect to a
Benefit Plan in connection with such fiduciaries actions or omissions in
connection with such Benefit Plan. No Benefit Plan is a single-employer
defined benefit plan. With respect to all Benefit Plans, the Company is in
material compliance with the requirements of ERISA concerning the filing of
annual reports and the distribution of descriptions and the continuation
coverage requirements of COBRA set forth in ERISA sections 601-608 and Code
section 4980B(f).
The foregoing notwithstanding, all representations made by the
Company or Seller in this Section 3.1(s) with respect to any multi-employer
plan are made only to the extent of the Company's or the Seller's Knowledge.
(t) Accounts Receivable. All material Accounts
Receivable arose in the ordinary and usual course of business of the Company.
(u) Patterson Agreement. Except as set forth on Schedule
3.1(u), the Company has no Knowledge of the occurrences or failure to occur of
any event that has caused any Patterson Warranty to be untrue or inaccurate in
any material respect or the breach or nonperformance by any Former Stockholder
in any material respect of any covenant or agreement contained in the Patterson
Agreement which could reasonably be expected to have a Material Adverse Effect,
and neither the
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Company nor any of its Affiliates has executed any waivers in respect of any
such untruth, inaccuracy, breach or nonperformance.
3.2 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer as follows (with the understanding that Buyer is relying
on such representations and warranties in entering into and performing this
Agreement):
(a) Owner of Shares. As of the date of this Agreement,
Seller is the holder of record and owns beneficially all of the Shares, and, as
of the Closing Date, will be the holder of record and will own beneficially all
of the Shares, free and clear of all Liens. At the Closing, Buyer will receive
good and valid title to the Shares, free and clear of all Liens.
(b) Authority. Seller has full legal capacity to execute
and deliver this Agreement and the other Transaction Documents to which it is a
party and to perform its obligations hereunder and thereunder. This Agreement
and such Transaction Documents and the consummation by Seller of the
transactions contemplated hereby or thereby have been, or upon execution and
delivery will be, duly and validly executed and delivered by Seller and
constitute a valid and binding obligation of Seller, enforceable against Seller
in accordance with their respective terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement and the other Transaction Documents to
which it is a party by Seller do not, and the performance by Seller of the
transactions contemplated hereby or thereby will not, subject to obtaining the
consents, approvals, authorizations, and permits and making the filings
described in this Section or otherwise described on Schedule 3.2(c), (i)
violate, conflict with, or result in any breach of any provision of Seller's
Certificate of Incorporation or Bylaws, violate, conflict with, or result in a
violation or breach of, or constitute a default (with or without due notice or
lapse of time or both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate (whether as a result of a
change of control of Seller or otherwise) any obligation, or result in the loss
of any benefit, or give any person the right to require any security to be
repurchased, or give rise to the creation of any Lien upon any of the material
assets of the Company or any of its subsidiaries under any of the terms,
conditions or provisions of any loan or credit agreement, note, bond, mortgage,
indenture, or deed of trust, or any license, lease, agreement or other
instrument or obligation to which Seller is a party or by which it, the Company
or its subsidiaries or any of the material assets of the Company or any of its
subsidiaries is bound except to the extent that such violation, conflict,
breach, default, termination, acceleration, loss of benefit, repurchase or
creation of a Lien, charge, security interest or encumbrance would not have a
Material Adverse Effect, or (ii) violate any material order, writ, judgment,
injunction, decree, statute, law, rule or regulation of any Governmental Entity
applicable to Seller or by which or to which the Company or its subsidiaries or
any of the material assets of the Company or any of its subsidiaries is bound
or
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subject, except to the extent that such violation would not have a Material
Adverse Effect. No Consent of or registration, declaration, or filing with any
Governmental Entity is required by or with respect to Seller or any Affiliate
thereof in connection with the execution and delivery of any Transaction
Documents by Seller or the consummation of the transactions contemplated hereby
or thereby, except as set forth on Schedule 3.2(c) or for (A) the filing of a
premerger notification report under the HSR Act, and the expiration or
termination of any waiting period in connection therewith, (B) the FCC Consents
(as contemplated by Section 7.1 hereof) and notification to the FCC upon
consummation of the transactions contemplated in this Agreement and (C)
applicable requirements , if any, of the Securities Act and the Exchange Act
and state securities laws or "blue sky" laws.
3.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows (with the understanding that Seller is relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization, Standing and Power. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
(b) Authority. Buyer has all requisite corporate power
and authority to enter into this Agreement and the other Transaction Documents
to which it is a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents by Buyer and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Buyer. This Agreement and the other Transaction
Documents to which Buyer is a party have been, or upon execution and delivery
will be, duly executed and delivered and constitute, or upon execution and
delivery will constitute, the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms, subject,
as to enforceability, to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement and the other Transaction Documents to
which Buyer is a party do not, and the performance by Buyer of the transactions
contemplated hereby or thereby will not, subject to obtaining the consents,
approvals, authorizations, and permits and making the filings described in this
Section or otherwise described on Schedule 3.3(c), (i) violate, conflict with,
or result in any breach of any provisions of Buyer's Certificate of
Incorporation or Bylaws, (ii) violate, conflict with, or result in a violation
or breach of, or constitute a default (with or without due notice or lapse of
time or both) under, any of the terms, conditions, or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, or deed of trust, or any
license, lease, agreement, or other instrument or obligation to which Buyer is
a party or by which it or any of its assets is bound, or (iii) violate any
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order, writ, judgment, injunction, decree, statute, law, rule or regulation, of
any Governmental Entity binding upon Buyer or by which or to which any of its
assets is bound or subject. No Consent of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement or any Transaction
Documents by Buyer or the consummation by it of the transactions contemplated
hereby or thereby, except for (A) the FCC Consents (as contemplated by Section
7.1) and notification to the FCC upon consummation, (B) the filing of a
premerger notification report and any other filing required under the HSR Act
and the expiration or termination of any waiting period in connection
therewith, and (C) applicable requirements, if any, of the Securities Act and
the Exchange Act and state securities or blue sky laws.
(d) Litigation. There is no claim, action, suit,
inquiry, judicial or administrative proceeding pending or, to the Knowledge of
Buyer, threatened against it relating to the transactions contemplated by this
Agreement or any other Transaction Documents.
(e) FCC Matters. To the Knowledge of Buyer, there are no
facts relating to Buyer under the Communications Act that have disqualified or
reasonably may be expected to disqualify it from obtaining control of the
Stations' Licenses or that would prevent it from consummating the transactions
contemplated by this Agreement pursuant to the terms of this Agreement. Buyer
is able to certify on an FCC Form 315 that it is financially qualified.
(f) Investment Intent. The Shares to be acquired by
Buyer are being acquired for its own account, for investment and with no
intention of distributing or reselling such Shares or any part thereof or
interest therein in any transaction which would be a violation of the
securities laws of the United States of America or any state or any foreign
country or jurisdiction.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY AND SELLER. Except as contemplated
by or otherwise permitted under this Agreement or to the extent that Buyer
shall otherwise consent in writing, from the date of this Agreement until the
Closing, the Company and Seller, jointly and severally, covenant and agree with
Buyer that the Company shall not and shall cause its subsidiaries not to, and
Seller shall cause the Company or either of its subsidiaries not to:
(a) conduct its business in any manner except in the
ordinary course consistent with past practice of the Company and its
subsidiaries; or
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(b) fail to use its commercially reasonable efforts to
preserve intact the Company's and its subsidiaries' present business
organization and preserve its relationships with customers, suppliers and
others having business dealings with it; or
(c) fail to use commercially reasonable efforts to
maintain the material assets of the Company and its subsidiaries in their
current condition, except for ordinary wear and tear and damage by casualty,
confiscation, or condemnation governed by Section 7.5; or
(d) fail to use all commercially reasonable efforts to
maintain the present format of the Stations; or
(e) except for amendments, terminations, and renewals of
employment agreements in the ordinary course of business, materially amend,
terminate, or fail to use all commercially reasonable efforts to renew any
Material Contract (provided that the Company or its subsidiaries shall not be
required to renew any Material Contract on terms that are less favorable to the
Company or its subsidiaries), or default in any material respect under any
Material Contract; or
(f) merge or consolidate with or into any other legal
entity, dissolve, or liquidate; or
(g) except as required by law or by the terms and
provisions of written Contracts between the Company or its subsidiaries and an
employee thereof as in existence on March 31, 1998, establish, adopt or enter
into any Benefit Plan or collective bargaining agreement; or
(h) except as required by applicable law, amend or take
any other actions, including, but not limited to, acceleration of vesting and
waiver of performance criteria, with respect to any Benefit Plan; or
(i) sell (whether by merger, consolidation, or the sale
of an equity interest or assets), lease, or dispose of any material assets of
the Company or its subsidiaries except in the ordinary course of business and
consistent with past practice (other than sales of surplus or obsolete
equipment), whether in one or more transactions, in no event involving an asset
or assets having an aggregate fair market value in excess of $1,117,500; or
(j) mortgage, pledge, or subject to any material Lien,
other than Permitted Liens, any material assets of the Company or its
subsidiaries; or
(k) split, combine, divide, distribute, or reclassify any
shares of its capital stock, declare, pay, or set aside for payment any
dividend or other distribution in respect of its capital stock, or directly or
indirectly, redeem, purchase, or otherwise acquire any shares of its capital
stock or other securities; or
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(l) issue, sell, pledge, dispose of, encumber, or deliver
(whether through the issuance or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any securities convertible into or exercisable or exchangeable for
shares of stock of any class (other than the issuance of certificates in
replacement of lost certificates); or
(m) change or amend its charter documents or bylaws; or
(n) incur or assume any long-term debt (including
obligations in respect of capital leases and for interest), assume, guarantee,
endorse, or otherwise become liable or responsible (whether directly,
contingently, or otherwise) for the obligations of any other person (other than
endorsements of checks in the ordinary course) or make any loans, advances, or
capital contributions to, or investments in, any person (other than advances to
employees in the ordinary course of business); or
(o) make any settlement of or compromise any tax
liability, change any tax election or tax method of accounting or make any new
tax election or adopt any new tax method of accounting; or
(p) enter into, or enter into negotiations or discussions
with any person other than Buyer with respect to any local marketing agreement,
time brokerage agreement, joint sales agreement or any other similar agreement;
or
(q) agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement.
4.2 NEGATIVE TRADE BALANCE. The Company and its subsidiaries
shall use commercially reasonable efforts to ensure that the Negative Trade
Balance of the Stations does not exceed $1,125,000 in the aggregate at the
Closing Date.
4.3 ENVIRONMENTAL SITE ASSESSMENTS. If there is not an Existing
ESA with respect to any transmission site or other real properties and
facilities owned, operated or leased by the Company or its subsidiaries, or if
an Existing ESA is not current or satisfactory, in the reasonable judgment of
Buyer, then, upon written notice from Buyer to the Company identifying the
locations at which such ESAs are required, the Company and Seller shall cause
to be performed by a nationally recognized and duly qualified environmental
consultant reasonably acceptable to Buyer and the Company an ESA at each
identified transmission site owned, operated, or leased by the Company or its
subsidiaries and at such other identified real properties and facilities owned,
operated, or leased by the Company or its subsidiaries. The ESAs which are to
be conducted for the benefit of Buyer shall be performed in a manner that at a
minimum satisfies the requirements of ASTM Practice E 1527-94. The Company and
Seller covenant and agree that, upon receipt of the notice referred to above,
the Company shall diligently pursue the performance of the requisite ESAs to
their
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completion, with final copies of the Phase I ESA reports (and, if applicable,
Phase II ESA reports) made available to Buyer by no later than 45 days
following the date on which the Company receives the notice referred to above.
The cost of any Phase I or Phase II ESA shall be borne by Buyer.
4.4 BROADCAST TRANSMISSION INTERRUPTIONS. If before the Closing,
the regular broadcast transmission of any of the Stations is interrupted for a
period of 24 hours or more, excluding normal and routine maintenance, Seller
shall give prompt written notice thereof to Buyer.
ARTICLE 5
ADDITIONAL AGREEMENTS OF
THE COMPANY AND THE SELLING STOCKHOLDERS
5.1 NO SOLICITATION OF TRANSACTIONS. None of the Company, its
subsidiaries or Seller shall, nor shall they permit their respective
subsidiaries or Affiliates to (and Seller shall cause the Company and its
subsidiaries not to), directly or indirectly, through any officer, director,
stockholder, employee, agent, financial advisor, banker or other
representative, or otherwise, solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the assets of the Company or its subsidiaries
or any equity interest in the Company or its subsidiaries or any merger,
consolidation, share exchange, business combination, or other similar
transaction with the Company or its subsidiaries or participate in any
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist or participate
in, facilitate, or encourage, any effort or attempt by any other person to do
or seek any of the foregoing. The Company, its subsidiaries and each Seller
immediately shall, and Seller shall cause the Company and its subsidiaries to,
cease and cause to be terminated all existing discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
5.2 ACCESS AND INFORMATION. (a) Until the Closing, subject only
to applicable rules and regulations of the FCC and provided that Buyer shall
agree to be bound by any confidentiality provisions of any Material Contracts,
the Company shall, and Seller shall cause the Company to, afford to Buyer and
its representatives (including accountants and counsel) reasonable access
during normal business hours, upon reasonable prior notice and in such manner
as will not unreasonably interfere with the conduct of the business of the
Company and its subsidiaries, to all properties, books, records, and Tax
Returns of the Company and its subsidiaries and all other information with
respect to its business, together with the opportunity, at Buyer's sole cost
and expense, to make copies of such books, records, and other documents and to
discuss the business of the Company and its subsidiaries with such officers,
directors, station managerial personnel (including the Station Management),
accountants, consultants and counsel for the Company and its subsidiaries as
Buyer deems reasonably necessary or appropriate for the purposes of
familiarizing itself with the Company, its subsidiaries and the Stations,
including the right to visit the Stations.
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(b) Within 30 days after the end of each calendar month,
the Company shall, and Seller shall cause the Company to, deliver to Buyer for
each Station and for the Company and its subsidiaries monthly operating
statements (in a form consistent with the monthly operating statements
previously supplied to Buyer) prepared in the ordinary course of business for
internal purposes.
5.3 COMPLIANCE WITH STATION LICENSES. The Company and Seller
shall cause the Stations to be operated in accordance with their respective
Station Licenses and all applicable rules and regulations of the FCC and in
compliance with all other applicable laws, regulations, rules, and orders. The
Company, its subsidiaries and Seller shall use all commercially reasonable
efforts not to cause or permit any of the Station Licenses to expire or be
surrendered, adversely modified, or terminated. The Company shall, and Seller
shall cause the Company to, file or cause to be filed with the FCC all
applications (including license renewals) or other documents required to be
filed in connection with the operation of the Stations. Should the FCC
institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses or any forfeiture proceedings, the
Company shall, and Seller shall cause the Company to, use all commercially
reasonable efforts to promptly contest such proceedings and to seek to have
such proceedings terminated in a manner that is favorable to the Stations. The
Company shall, and Seller shall cause the Company to, use all commercially
reasonable efforts to maintain the FCC construction permits (if any) listed in
Schedule 3.1(g) in effect until the applicable construction projects are timely
completed and to diligently prosecute all pending FCC applications listed in
Schedule 3.1(g). If the Company (or its FCC counsel) receives an
administrative or other order or notification relating to any violation or
claimed violation by the Company or its subsidiaries of the rules and
regulations of the FCC, or of any other Governmental Entity, or should the
Company or Seller obtain Knowledge of any fact relating to the qualifications
of the Company or a Seller that reasonably could be expected to cause the FCC
to withhold its consent to the assignment of the FCC Licenses, the Company
shall, and Seller shall cause the Company to, promptly notify Buyer in writing
and use all commercially reasonable efforts to take such steps as may be
necessary to remove any such impediment to the transactions contemplated by
this Agreement.
5.4 NOTIFICATION OF CERTAIN MATTERS. The Company or Seller shall
give prompt written notice to Buyer of (a) the occurrence, or failure to occur,
of any event of which it has Knowledge that has caused or that would be likely
to cause any representation or warranty of the Company or Seller contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Closing Date, (b) the failure of the Company, its
subsidiaries or Seller or any officer, director, employee or agent of the
Company or its subsidiaries to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
hereunder and (c) any representation or warranty of the Former Stockholders
pertaining to the Stations contained in the Patterson Agreement to be untrue or
inaccurate in any material respect, or the breach or nonperformance by
Patterson of any covenant or agreement contained therein. No such notification
shall affect the representations or warranties of the parties or the conditions
to their respective obligations hereunder.
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5.5 THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, the Company shall, and Seller shall cause the Company to, use all
commercially reasonable efforts, including making any required payments, to
obtain the written consent from any party to a Material Contract or other
Contract that is required to permit the consummation of the transactions
contemplated hereby or that is required to prevent a breach of such Material
Contract or the creation of the right to terminate such Material Contract.
5.6 RESIGNATIONS OF DIRECTORS AND OFFICERS. If requested by
Buyer, the Company, its subsidiaries and Seller shall cause all directors and
officers of the Company and its subsidiaries to deliver their written
resignations to Buyer, which resignations shall be effective on or before the
Closing (assuming Buyer elects one or more duly qualified directors to replace
such resigning directors at the Closing) and shall be in form and substance
satisfactory to Buyer.
5.7 BANK ACCOUNTS. If requested by Buyer, the Company shall, and
Seller shall cause the Company to, take all actions necessary to remove the
existing signatories to all bank accounts of the Company and its subsidiaries
as of the Closing Date and to replace such signatories effective as of the
Closing Date with individuals to be designated at least two days prior to the
Closing Date by Buyer.
5.8 PATTERSON INDEMNIFICATION. If requested by Buyer, the Company
and Seller shall use commercially reasonable efforts to enforce its right to
indemnification with respect to the Stations under the Patterson Agreement.
Seller shall use commercially reasonable efforts to provide Buyer with the
benefit of the Patterson Warranties. Seller shall cooperate with Buyer in any
lawful and economically feasible arrangement to provide that Buyer shall
receive the benefits from any recovery under the Patterson Agreement with
respect to the Stations; provided, however, that Buyer shall undertake, in a
manner acceptable to Seller, to pay or satisfy any and all expenses, costs and
liabilities incurred by Seller in connection with its compliance with this
Section 5.8.
ARTICLE 6
COVENANTS OF BUYER
6.1 NOTIFICATION OF CERTAIN MATTERS. If Buyer (or its FCC
counsel) receives an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any Governmental Entity that could affect Buyer's ability to consummate the
transactions contemplated hereby, or should Buyer (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the transfer of control
of the Station Licenses, Buyer shall promptly notify the Company thereof and
shall use all commercially reasonable efforts to take such steps as are
necessary to remove any such impediment to the transactions contemplated by
this
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Agreement, provided, however, that Buyer shall not be required to divest
itself, or cause any Affiliate thereof to divest itself, of any media business
or interest therein. In addition, Buyer shall give to the Company prompt
written notice of (a) the occurrence, or failure to occur, of any event of
which it has Knowledge that has caused or that would be likely to cause any
representation or warranty of Buyer contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date, and (b) the
failure of Buyer or any officer, director, employee or agent of Buyer, to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
ARTICLE 7
MUTUAL COVENANTS
7.1 APPLICATION FOR FCC CONSENTS. The Company, Seller and Buyer
have filed with the FCC requesting the FCC's written consent to the transfer of
the FCC Licenses pursuant to this Agreement (the "Applications"). The parties
will take all proper steps reasonably necessary (a) to diligently prosecute the
Applications and (b) to obtain the FCC Consents. The failure by either party
to timely file or diligently prosecute its portion of any Application shall be
a material breach of this Agreement; provided, however, that Buyer shall not be
required pursuant to this Section 7.1 to divest itself or cause any Affiliate
thereof to divest itself of any media business or interest therein.
7.2 CONTROL OF STATIONS. Between the date of this Agreement and
the Closing Date, Buyer will not directly or indirectly control, supervise or
direct the operation of the Stations. Further, between the date of this
Agreement and the Closing Date, the Company shall, directly or indirectly,
supervise and control the operation of the Stations. Such operation shall be
the sole responsibility of the Company.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with this Agreement and shall
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such matters. Without limiting the foregoing,
promptly following the execution of this Agreement, the parties shall (a) file
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice the notifications and other information (if any) required to be
filed under the HSR Act with respect to the transactions contemplated hereby
and shall use their commercially reasonable efforts to cause all applicable
waiting periods under the HSR Act to expire or be terminated as of the earliest
possible date and (b) make all necessary filings and, thereafter, make any
other required submissions with respect to the transactions contemplated hereby
under the Securities Act and the rules and regulations thereunder and any other
applicable federal
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or state securities laws. Nothing in this Section 7.3 shall require Buyer to
divest itself or to cause any Affiliate thereof to divest itself of any media
business or interest therein.
7.4 BROKERS OR FINDERS. The Company and Seller represent and
warrant to Buyer that no agent, broker, investment banker, or other person
engaged by the Company or Seller, respectively, is or will be entitled to any
broker's or finder's fee or any other commission or similar fee payable by
Buyer or the Company in connection with any of the transactions contemplated by
this Agreement. Buyer represents and warrants to the Company and Seller that
Buyer has not engaged any broker, investment banker. or other person that will
be entitled to any broker's or finder's fee or any other commission or similar
fee from the Company or Seller in connection with any of the transactions
contemplated by this Agreement.
7.5 RISK OF LOSS. The risk of any material loss, damage,
impairment, confiscation, or condemnation of any of the material assets of the
Company or its subsidiaries from any cause whatsoever shall be borne by Seller
at all times prior to the Closing Date. In the event of any such material
loss, damage, impairment confiscation, or condemnation, whether or not covered
by insurance, Seller or the Company shall promptly notify Buyer of such loss,
damage, impairment, confiscation or condemnation, which notice shall provide an
estimate of the costs to repair, restore or replace such assets and shall state
whether Seller or the Company intends to repair, restore or replace such
assets, whether or not covered by insurance. If Seller, at its expense,
repairs, replaces or restores such assets to their prior condition to the
reasonable satisfaction of Buyer before the Closing, Seller shall be entitled
to all insurance proceeds and condemnation awards, if any, by reason of such
award or loss. If Seller does not or cannot restore or replace such lost,
damaged, impaired, confiscated or condemned assets or informs Buyer that it
does not intend to restore or replace such assets, then the parties shall
proceed to the Closing without Seller completing the restoration and
replacement of such assets, provided that Seller shall assign all rights under
applicable insurance policies and condemnation awards, if any, to Buyer. To
the extent that the repair or replacement cost of any such assets is not
covered by such insurance proceeds or condemnation awards, then Buyer and
Seller shall submit such matter to Broadcast Investment Analysts for an
appraisal and the amount of any such deficiency shall be a Buyer Indemnified
Cost (which shall be treated as an adjustment to the Purchase Price) and shall
be paid to Buyer by Seller within ten business days after the determination of
such deficiency. In such event, Seller shall have no further liability with
respect to such loss, damage, impairment, confiscation or condemnation.
7.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the Company, Seller and Buyer will use its commercially
reasonable efforts to do, or cause to be taken all action and to do, or cause
to be done, all things necessary, proper, or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. If at any time after the Closing Date, any further action
is necessary to comply with this Agreement, the parties to this Agreement or
their duly authorized representatives shall take all such action. Without
limiting the generality of the foregoing, if, after the Closing Date, Buyer
seeks indemnification or recovery from one or more other parties to a Contract
or otherwise seeks
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to enforce such Contract and, in order to obtain such indemnification, recovery
or enforcement, it is necessary for a Seller to participate in any enforcement
proceeding or otherwise provide assistance to Buyer, then, at the request, upon
reasonable prior notice, during normal business hours and without unreasonable
interruption of such person's business activities, and at the sole expense of
Buyer, each Seller shall take such action as Buyer may reasonably request in
connection with Buyer's efforts to obtain such indemnification, recovery or
enforcement.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Buyer, the Company and Seller to effect the transactions
contemplated hereby are subject to the satisfaction on or prior to the Closing
Date of the following conditions:
(a) Consents and Approvals. All authorizations,
consents, orders, or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred, or been obtained. The FCC Consents shall have been
granted by Initial Order.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations
and warranties of the Company and Seller set forth in this Agreement shall be
true and correct in all material respects (provided that any representation or
warranty of the Company or Seller contained herein that is qualified by a
materiality standard or a Material Adverse Effect qualification shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date except, with respect
to such representations and warranties, (i) for changes that are a result of
actions of the Company or Seller that are not prohibited by this Agreement or
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(ii) to the extent that any inaccuracies in such representations and warranties
that have not been waived by Buyer in the aggregate would not have a Material
Adverse Effect. Buyer shall have received a certificate to the foregoing
effect signed on behalf of the Company and each of its subsidiaries by the
chief executive officer or by the chief financial officer of the Company and by
Seller and, with respect to the Company's certificate, stating that the Shares
as of the Closing Date represent 100% of the issued and outstanding capital
stock of the Company and its subsidiaries.
(b) Performance of Obligations. The Company and Seller
shall have performed in all material respects (provided that any covenant or
agreement that is qualified by a materiality standard or Material Adverse
Effect qualification shall not be further qualified hereby) all obligations
required to be performed by it or them under this Agreement prior to the
Closing Date except, with respect to such obligations, to the extent that any
breaches of such performance that have not been waived by Buyer in the
aggregate would not have a Material Adverse Effect. Buyer shall have received
a certificate to such effect signed on behalf of the Company and each of its
subsidiaries by the chief executive officer or by the chief financial officer
of the Company and each of its subsidiaries and by Seller.
(c) Consents Under Agreements. Buyer shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each person that is a party to a Material Contract identified on
Schedule 8.2(c) and whose consent or approval shall be required in order to
permit the consummation of the transactions contemplated hereby.
(d) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by the Company and Seller
pursuant to Section 9.2 shall have been delivered.
8.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligation of Seller
to effect the transactions contemplated hereby is subject to the satisfaction
of the following conditions unless waived, in whole or in part, by Seller.
(a) Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Seller shall
have received a certificate to the foregoing effect signed on behalf of Buyer
by the chief executive officer or by the chief financial officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall
have performed in all material respects (provided that any covenant or
agreement that is qualified by a materiality standard shall not be further
qualified hereby) the obligations required to be performed by it under this
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Agreement prior to the Closing Date, and Seller shall have received a
certificate to such effect signed on behalf of Buyer by the chief executive
officer or by the chief financial officer of Buyer.
(c) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Buyer pursuant to
Section 9.2 shall have been delivered.
ARTICLE 9
CLOSING
9.1 CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article 8, the Closing will take place at the offices
of Vinson & Elkins L.L.P., Dallas, Texas, at 10:00 a.m., local time (a) on the
10th Business Day after the day on which the FCC Consents have been granted by
Initial Order or (b) at such other place and time as Buyer and Seller may agree
(the "Closing Date").
9.2 ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to Seller the
following:
(i) Purchase Price. An amount equal to the
Purchase Price to Seller by wire transfer of immediately available
funds; and
(ii) Certificates. The certificates referred to
in Sections 8.3(a) and 8.3(b);
(b) At the Closing, the Company and Seller shall deliver
to Buyer the following:
(i) Share Certificates. Certificates
representing the Shares, duly endorsed in blank or accompanied by
stock powers duly endorsed in blank, and otherwise in proper form for
transfer;
(ii) Certificates. The certificates described in
Sections 8.2(a) and 8.2(b);
(iii) Consents; Acknowledgments. The original of
each Consent, if any, pursuant to Section 8.2(c); and
(iv) Resignations. The resignations described in
Section 5.6, if requested.
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ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller:
(i) in the event of a breach by the other party
of any representation, warranty, covenant or agreement contained in
this Agreement which (A) would give rise to the failure of a condition
set forth in Section 8.2(a) or 8.2(b) or Section 8.3(a) or 8.3(b), as
applicable, and (B) cannot be or has not been cured within 20 days
(the "Cure Period") following receipt by the breaching party of
written notice of such breach;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or
taken any other action (which order, decree, or ruling Buyer and the
Company shall use their best efforts to lift), in each case
permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling, or other action shall have become final and nonappealable;
(iii) if, for any reason, the FCC denies or
dismisses any of the Applications and the time for reconsideration or
court review under the Communications Act with respect to such denial
or dismissal has expired and there is not pending with respect thereto
a timely filed petition for reconsideration or request for review;
(iv) if, for any reason, any of the Applications
is designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the
later of the date which is 12 months after the filing of the;
provided, however, that the right to terminate this Agreement under
this clause (v) shall not be available to any party whose breach of
this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary,
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a party that is in material breach of this Agreement shall not be entitled to
terminate this Agreement except, in the case of a default by the Company or any
Seller, with the consent of Buyer, or in the case of a default by Buyer, with
the consent of each Seller.
10.2 EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by
either Seller or Buyer as provided above, there shall be no liability on the
part of any of Seller, the Company or Buyer, except for liability arising out
of a breach of this Agreement. Articles 1, 11 and 12, and this Article 10
shall survive termination of this Agreement.
(b) The aggregate liability of Seller in connection with
a breach of any one or more representations, warranties, covenants or
agreements of Seller in this Agreement or any other Transaction Document in the
event that the Closing does not occur and this Agreement is terminated shall be
limited to $11,175,000.00 and in no event shall Seller be liable for punitive
damages.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION OF BUYER. Subject to the provisions of this
Article 11 and Section 12.2 below, the Company and each Seller, jointly and
severally, agree to indemnify and hold harmless the Buyer Indemnified Parties
from and against any and all Buyer Indemnified Costs.
11.2 INDEMNIFICATION OF SELLER. Subject to the provisions of this
Article 11 and Section 12.2 below, Buyer agrees to indemnify and hold harmless
each of Seller Indemnified Parties from and against any and all Seller
Indemnified Costs.
11.3 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall
give prompt written notice to any person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article 11
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third- party
action on such terms as it deems appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Parties shall pay
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the legal fees of the Indemnified Party if (i) the employment of separate
counsel shall have been authorized in writing by all Indemnifying Parties in
connection with the defense of such third-party action, (ii) the Indemnifying
Parties shall not have employed counsel reasonably satisfactory to the
Indemnified Party to have charge of such third-party action, (iii) the
Indemnified Party shall have reasonably concluded that there may be defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party, or (iv) the Indemnified Party's
counsel shall have advised the Indemnified Party in writing, with a copy
delivered to the Indemnifying Party, that there is a material conflict of
interest that could violate applicable standards of professional conduct to
have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party or if,
in the opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgment could have a material adverse effect on its
business;
(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such
third-party action; and
(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Party fails to assume the
defense within a reasonable length of time; or (ii) to the extent the
third-party action seeks an order, injunction, or other equitable relief
against the Indemnified Party which, if successful, would materially adversely
affect the business, operations, assets, or financial condition of the
Indemnified Party; provided, however, that the Indemnified Party shall make no
settlement, compromise, admission, or acknowledgment that would give rise to
liability on the part of any Indemnifying Party without the prior written
consent of such Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 11 and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4 DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which
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such Indemnified Party claims are subject to indemnification under the terms
hereof. Subject to the limitations set forth in Sections 11.5(b) and 12.2, the
failure of the Indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim unless the resulting delay
materially prejudices the position of the Indemnifying Party with respect to
such claim.
11.5 LIMITATIONS. Subject to Section 12.2 hereof, the following
provisions of this Section 11.5 shall be applicable after the time of the
Closing:
(a) Minimum Loss. No Indemnifying Party shall be
required to indemnify an Indemnified Party for Indemnified Costs unless and
until the aggregate amount of such Indemnified Costs for which the Indemnified
Party is otherwise entitled to indemnification pursuant to this Article 11
exceeds $1,117,500 (the "Minimum Loss"). After the Minimum Loss is exceeded,
the Indemnified Party shall be entitled to be paid the entire amount of its
Indemnified Costs in excess of (but not including) the Minimum Loss, subject to
the limitations on recovery and recourse set forth in this Section 11.5 below
and subject to the exception contained in Section 12.2.
(b) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Representation Costs pursuant to this Article 11
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the first anniversary of the Closing Date, except that
this time limitation shall not apply to any (i) claims for fraud pursuant to
Section 12.2; or (ii) claims for breaches of the representations and warranties
contained in Section 3.1(c) (relating to capital structure), and Section 3.1(r)
(relating to taxes) and Section 3.2(a) (relating to ownership of the Shares),
which representations and warranties shall survive until the expiration of the
applicable statute of limitations.
(c) No Contribution. Seller, and not the Company (which
will be released as of the Closing of its obligations under Section 11.1),
shall be liable for any Buyer Indemnified Costs sustained by any Buyer
Indemnified Parties subject to the terms, limitations and conditions of this
Article 11. In that event, Seller shall not be entitled to contribution or any
other payments from the Company for any Buyer Indemnified Costs that Seller is
obligated to pay. In addition, effective as of the Closing, Seller hereby
waives and releases any and all rights that it may have under this Agreement or
any other Transaction Document to assert claims of contribution against the
Company or its subsidiaries.
(d) Limited Recourse. The aggregate liability of Seller
and of Buyer pursuant to this Article 11 shall be limited to $11,175,000.00
each.
(e) Sole and Exclusive Remedy. Seller and Buyer each
acknowledge and agree that, after the Closing, notwithstanding any other
provision of this Agreement to the contrary, such party's sole and exclusive
remedy with respect to Indemnified Costs and any and all other claims relating
to the subject matter of this Agreement and the transactions contemplated
hereby and by any
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of the other Transaction Documents shall be in accordance with, and limited by,
the provisions set forth in this Article 11.
ARTICLE 12
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made in this Agreement or any other Transaction
Document shall survive the Closing except as provided below. The
representations and warranties set forth in this Agreement (other than the
representations and warranties contained in Section 3.1(c) (relating to capital
structure), and Section 3.1(r) (relating to taxes), which representations and
warranties shall survive until the expiration of the applicable statute of
limitations) or any other Transaction Document shall terminate on the first
anniversary of the Closing Date. Following the date of termination of a
representation or warranty, no claim can be brought with respect to a breach of
such representation or warranty, but no such termination shall affect any claim
for a breach of a representation or warranty that was asserted in writing
pursuant to Section 11.3 or Section 11.4 hereof before the date of termination.
To the extent that such are performable after the Closing, each of the
covenants and agreements contained in this Agreement and each other Transaction
Document, shall survive the Closing indefinitely.
12.2 NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article 11 shall be in addition to, and not exclusive of, any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Sections
11.5, shall be deemed a waiver by any party to this Agreement of any right or
remedy which such party may have at law or equity based on any other party's
fraudulent acts or omissions, nor shall any such provisions limit, or be deemed
to limit, (a) the amounts of recovery sought or awarded in any such claim for
fraud, (b) the time period during which a claim for fraud may be brought, or
(c) the recourse which any such party may seek against another party with
respect to a claim for fraud; provided, that with respect to such rights and
remedies at law or equity, the parties further acknowledge and agree that none
of the provisions of this Section 12.2, nor any reference to this Section 12.2
throughout this Agreement, shall be deemed a waiver of any defenses which may
be available in respect of actions or claims for fraud, including but not
limited to, defenses of statutes of limitations or limitations of damages.
12.3 AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto or by Buyer,
the Company and Seller.
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12.4 WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand,
or the Company or Seller, on the other hand, to comply with any obligation,
covenant, agreement, or condition contained herein may be waived only if set
forth in an instrument in writing signed by the party or parties to be bound by
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement, or condition shall not operate as a
waiver of, or estoppel with respect to, any other failure.
12.5 SPECIFIC PERFORMANCE. The parties recognize that in the event
the Company or Seller should refuse to perform under the provisions of this
Agreement, monetary damages alone will not be adequate. Buyer shall therefore
be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement specifically,
the Company and Seller hereby waive the defense that there is an adequate
remedy at law.
12.6 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
12.7 EXPENSES AND OBLIGATIONS. Except as otherwise expressly
provided in this Agreement or as provided by law, if the Closing does not
occur, all costs and expenses incurred by the parties hereto in connection with
the consummation of the transactions contemplated hereby shall be borne solely
and entirely by the party which has incurred such expenses. If the Closing
does occur, then, except as so provided, all costs and expenses incurred by the
Company and Seller, on the one hand, and Buyer, on the other, in connection
with such consummation shall be borne solely and entirely by Seller and Buyer,
respectively. Notwithstanding the foregoing, all sales, documentary or stamp
taxes arising out of the transactions contemplated by this Agreement shall be
paid one-half by Buyer and one-half by Seller; provided, however, that, in the
event of a dispute between the parties in connection with this Agreement and
the transactions contemplated hereby, each of the parties hereto hereby agrees
that the prevailing party shall be entitled to reimbursement by the other party
of reasonable legal fees and expenses incurred in connection with any action or
proceeding.
12.8 PARTIES IN INTEREST. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
(other than the Indemnified Parties as provided in Article 11) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
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12.9 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer, to:
SBI Radio Acquisition Corporation
600 Congress Avenue, Suite 400
Austin, Texas 78701
Attention: William S. Banowsky, Jr.
Facsimile: (512) 340-7890
(b) If to the Company or Seller, to:
Capstar Radio Broadcasting Partners, Inc.
600 Congress Avenue, Suite 400
Austin, Texas 78701
Attention: William S. Banowsky, Jr.
Facsimile: (512) 340-7890
(c) in either case, with copies to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
Facsimile: (214) 999-7732
Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Attention: Nathaniel F. Emmons
Facsimile: (202) 429-7049
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier.
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12.10 COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11 ENTIRE AGREEMENT. This Agreement (which term shall be deemed
to include the exhibits and schedules hereto and the other certificates,
documents and instruments delivered hereunder)constitutes the entire agreement
of the parties hereto and supersede all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.
12.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.
12.13 PUBLIC ANNOUNCEMENTS. The Company and Seller, on the one
hand, and Buyer, on the other, shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby, except for statements
required by law or by any listing agreements with any national securities
exchange or the National Association of Securities Dealers, Inc., or made in
disclosures filed pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934.
12.14 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that upon
notice to Seller and without releasing Buyer from any of its obligations or
liabilities hereunder, (a) Buyer may assign or delegate any or all of its
rights or obligations under this Agreement to any Affiliate thereof and (b)
nothing in this Agreement shall limit Buyer's ability to make a collateral
assignment of its rights under this Agreement to any institutional lender that
provides funds to Buyer without the consent of Seller or the Company. The
Company and Seller shall execute an acknowledgment of such collateral
assignments in such forms as Buyer's lenders may from time to time reasonably
request; provided, however, that unless written notice is given to the Company
and Seller that any such collateral assignment has been foreclosed upon, the
Company and Seller shall be entitled to deal exclusively with Buyer as to any
matters arising under this Agreement or any of the other agreements delivered
pursuant hereto. In the event of such an assignment, the provisions of this
Agreement shall inure to the benefit of and be binding on Buyer's assigns. Any
attempted assignment in violation of this Section 12.14 shall be null and void.
12.15 DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of the Company, Seller, Buyer and each of their respective
Affiliates shall not have any personal liability or obligation arising under
this Agreement other than as an assignee of this Agreement.
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12.16 NO REVERSIONARY INTEREST. The parties expressly agree,
pursuant to Section 73.1150 of the FCC's rules, that Seller does not retain any
right to reassignment of any of the FCC Licenses in the future, or to operate
or use the facilities of the Stations for any period beyond the Closing Date.
12.17 EMPLOYEE MATTERS. Subject to the provisions of the employment
contracts listed in Schedule 3.1(o), nothing contained in this Agreement shall
be deemed to give any employee of the Company the right to be retained in the
employ of the Company on or after the Closing Date, to retain the same salary,
job responsibility or job location, or to interfere with the right of the
Company to terminate any employee of the Company at any time.
12.18 HEADINGS. The headings of this Agreement are for convenience
of reference only and are not part of the substance of this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company, Seller, and Buyer have caused this
Agreement to be signed, all as of the date first written above.
THE COMPANY:
PATTERSON BROADCASTING, INC.
By: /s/
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Name:
-----------------------------------
Title:
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SELLER:
CAPSTAR RADIO BROADCASTING PARTNERS, INC.
By: /s/
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Name:
-----------------------------------
Title:
----------------------------------
BUYER:
SBI RADIO ACQUISITION CORPORATION
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
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