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EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of September 6,
2000 among Cumulus Broadcasting, Inc., a Nevada corporation ("CBI"), Cumulus
Licensing Corp., a Nevada corporation ("CLC"), Cumulus Wireless Services, Inc.,
a Nevada corporation ("CWS") (CBI, CLC and CWS, collectively, "Seller"), Clear
Channel Broadcasting, Inc., a Nevada corporation ("CCB") and Clear Channel
Broadcasting Licenses, Inc., a Nevada corporation ("CCBL") (CCB and CCBL,
collectively, "Buyer").
Recitals
A. Seller owns and operates the following radio broadcast stations the
("Cumulus Stations") pursuant to certain licenses, permits and authorizations
issued by the Federal Communications Commission (the "FCC"):
Columbus, Georgia: WVRK(FM), Columbus, GA
WMLF(AM), Columbus, GA
WPNX(AM), Columbus, GA
WAGH(FM), Fort Mitchell, AL
WGSY(FM), Phenix City, AL
WBFA(FM), Smiths, AL
Mankato/New Ulm, Minnesota: KXLP(FM), New Ulm, MN
KNSG(FM), Springfield, MN
KYSM(AM), Mankato, MN
KYSM-FM, Mankato, MN
KNUJ-FM, Sleepy Eye, MN
KNUJ(AM), New Ulm, MN
Rochester, Minnesota: KWEB(AM), Rochester, MN
KRCH(FM), Rochester, MN
KMFX-FM, Lake City, MN
KMFX(AM), Wabasha, MN
KNFX(AM), Austin, MN
Mason City, Iowa: KWMM(FM), Osage, IA
KLKK(FM), Clear Lake, IA
KIAI(FM), Mason City, IA
KCZE(FM), New Hampton, IA
KCHA-FM, Charles City, IA
KCHA(AM), Charles City, IA
KGLO(AM), Mason City, IA
B. Seller supplies programming and marketing services to, and is
acquiring, the following radio broadcast stations (the "Evansville Stations")
from Connoisseur Communications of Evansville, L.P. and its affiliates
("Connoisseur") pursuant to an Asset
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Purchase Agreement (the "Evansville APA") and a Local Market Agreement (the
"Evansville LMA"), both dated November 29, 1999:
Evansville, Indiana: WGBF-FM, Henderson, KY
WGBF-AM, Henderson, KY
WTRI-FM, Mount Carmel, IL
WYNG-FM, Evansville, IN
C. Seller supplies programming and marketing services to, and is acquiring,
the following radio broadcast stations (the "Columbus Stations") from Solar
Broadcasting Co., Inc. ("Solar") pursuant to an Asset Purchase Agreement (the
"Columbus APA") and a Local Marketing Agreement (the "Columbus LMA"), both dated
December 17, 1998:
Columbus, Georgia: WSTH-FM, Alexander City, AL
WDAK(AM), Columbus, GA
D. Seller has an option to acquire the following radio broadcast station
(the "CP Station") from Signature Broadcasting, Ltd. ("Signature") pursuant to a
Memorandum of Understanding (the "MOU") dated January 23, 1998, in the event
Signature is the successful applicant for a permit to construct the CP Station:
Columbus, Georgia: Channel 279A, Cusseta, GA
E. As used herein, (i) "Stations" means the Cumulus Stations, the Evansville
Stations, the Columbus Stations, and the CP Station, (ii) "Selling Companies"
means Solar, Connoisseur and Signature, (iii) "Selling Company Acquisition
Documents" means the Evansville APA, the Evansville LMA, the Columbus APA, the
Columbus LMA, and the MOU, and (iv) "Cumulus Closing" means consummation of the
acquisition by Seller of the Evansville Stations, the Columbus Stations or the
CP Station (as the context requires) pursuant to the Selling Company Acquisition
Documents.
F. Subject to the terms and conditions set forth herein, (i) Seller desires
to assign to CCBL, and CCBL desires to acquire from Seller, the FCC
Authorizations and (ii) Seller desires to convey to CCB, and CCB desires to
acquire from Seller, the other tangible and intangible assets and properties
used or held for use in the operation of the Stations.
Agreement
NOW, THEREFORE, taking the foregoing into account, and in consideration of
the mutual covenants and agreements set forth herein, the parties, intending to
be legally bound, hereby agree as follows:
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ARTICLE 1: SALE AND PURCHASE
1.1 Station Assets. Subject to and in reliance upon the representations,
warranties and agreements herein set forth, and subject to the terms and
conditions herein contained, Seller shall grant, convey, sell, assign, transfer
and deliver to Buyer on the Closing Date (as hereinafter defined) all interests
of Seller in all properties, assets, privileges, rights, interests and claims,
real and personal, tangible and intangible, of every type and description,
wherever located, including its business and goodwill (except for Excluded
Assets as defined in Section 1.2) used or held for use in the business and
operations of the Stations (collectively, the "Station Assets"). Without
limiting the foregoing, the Station Assets shall include the following:
(a) Licenses and Authorizations. All licenses, permits and
authorizations issued by the FCC with respect to the Stations (the "FCC
Authorizations"), including without limitation all rights in and to the
Stations' call letters and any variations thereof, and all of those FCC
Authorizations listed and described on Schedule 1.1(a) attached hereto, and all
applications therefor, together with any renewals or extensions thereof and
additions thereto.
(b) Tangible Personal Property. All interests of Seller as of the date
of this Agreement in all equipment, electrical devices, antennas, cables,
vehicles, furniture, fixtures, towers, office materials and supplies, hardware,
tools, spare parts, and other tangible personal property of every kind and
description, used or held for use in connection with the business and operations
of the Stations, including without limitation those listed and described on
Schedule 1.1(b) attached hereto, and any additions and improvements thereto
between the date of this Agreement and the Closing Date (collectively, the
"Tangible Personal Property").
(c) Real Property. All interests of Seller as of the date of this
Agreement in all land, leaseholds, licenses, rights-of-way and other interests
of every kind and description in and to all of the real property and buildings
thereon, used or held for use in the business and operations of the Stations,
including without limitation those listed and described on Schedule 1.1(c)
attached hereto, and any additions and improvements thereto between the date of
this Agreement and the Closing Date (collectively, the "Real Property").
(d) Time Sales Agreements. All orders and agreements entered into in
the ordinary course of business for the sale of advertising time on the Stations
for cash that are cancelable without penalty that exist on the Closing Date.
(e) Contracts. Those contracts and agreements used in connection with
the business and operations of the Stations that are not made with an Affiliate
of Seller and that are listed and described on Schedule 1.1(e) attached hereto.
(f) Intangible Property. All interests of Seller as of the date of this
Agreement in all trademarks, trade names, service marks, franchises, patents,
jingles, slogans, logotypes and other intangible rights, used or held for use in
connection with the business and operations of the Stations, including without
limitation all right, title and interest in and to the marks consisting of the
Stations' call letters and any and all variations thereof, and all of those
listed and described
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on Schedule 1.1(f) attached hereto, and those acquired by Seller between the
date hereof and the Closing Date (collectively, the "Intangible Property").
(g) Programming and Copyrights. All interests of Seller as of the date
of this Agreement in all programs and programming materials and elements of
whatever form or nature used or held for use in the business and operations of
the Stations, whether recorded on tape or any other substance or intended for
live performance, and whether completed or in production, and all related
common-law and statutory copyrights used or held for use in the business and
operations of the Stations, together with all such programs, materials, elements
and copyrights acquired by Seller in the business and operations of the Stations
between the date hereof and the Closing Date.
(h) Files and Records. All FCC logs and other records that relate to
the operation of the Stations, and all files and other records of Seller
relating to the business and operations of the Stations (other than duplicate
copies of such files ("Duplicate Records")), including without limitation all
schematics, blueprints, engineering data, customer lists, reports,
specifications, projections, statistics, promotional graphics, original art
work, mats, plates, negatives and other advertising, marketing or related
materials, and all other technical and financial information concerning the
Stations and the Station Assets.
(i) Claims. Any and all claims and rights against third parties if and
to the extent that they relate to the Station Assets, including, without
limitation, all rights under manufacturers' and vendors' warranties.
(j) Prepaid Items. All deposits, reserves and prepaid expenses relating
to the Stations and prepaid taxes relating to the Stations or the Station
Assets.
(k) Goodwill. All of Seller's goodwill in, and going concern value of,
the Stations.
(l) Internet Websites. Without limiting the foregoing, all interests of
Seller in all internet web sites relating primarily to the Stations, including
without limitation all internet Domain leases and Domain names of the Station,
the unrestricted right to the use of HTML content located and publicly
accessible from those Domain names, and the "visitor" email database for those
sites.
1.2 Excluded Assets. There shall be excluded from the Station Assets and
retained by Seller, to the extent in existence on the Closing Date, all cash,
cash equivalents, publicly traded securities, insurance policies, pension,
profit sharing and all other employee benefit plans, all accounts receivable and
any notes or written obligations reflecting accounts receivable of Seller
relating to the Stations as of the Closing Date (the "Receivables") and any
Duplicate Records (the "Excluded Assets").
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1.3 Liabilities.
(a) The Station Assets shall be sold and conveyed to Buyer free and
clear of all mortgages, liens, deeds of trust, security interests, pledges,
restrictions, prior assignments, charges, claims, defects in title and
encumbrances of any kind or type whatsoever (collectively, "Liens") except: (i)
liens for real estate taxes not yet due and payable for which Buyer receives a
Purchase Price adjustment under Section 1.5; (ii) the post-Closing obligations
of Seller which CCB will assume under leases and contracts assigned to CCB that
are not made with an Affiliate of Seller and that are listed on Schedules 1.1(c)
and 1.1(e); and (iii) easements, rights of way and other minor title defects
that do not result in liability to the owner of the Station Assets or materially
and adversely affect the Station Assets ("Permitted Encumbrances").
(b) Except as otherwise specifically provided herein, Buyer shall not
assume or be liable for, and does not undertake to assume or discharge: (i) any
liability or obligation of Seller arising out of or relating to any contract,
lease agreement, or instrument; (ii) any liability or obligation of Seller
arising out of or relating to any employee benefit plan otherwise relating to
employment (all employment obligations shall be brought current by Seller as of
the Closing Date, including the payment of all accrued benefits and severance
pay and all bonuses, whether or not such benefits or bonuses are due as of the
Closing Date); (iii) any liability or obligation of Seller arising out of or
relating to any litigation, proceeding or claim (whether or not such litigation,
proceeding or claim is pending, threatened or asserted before, on or after the
Closing Date); (iv) any other liabilities, obligations, debts or commitments of
Seller whatsoever, whether accrued now or hereafter, whether fixed or
contingent, whether known or unknown; or (v) any claims asserted against the
Stations or any of the Station Assets relating to any event (whether act or
omission) prior to the Closing Date, including without limitation, the payment
of all taxes.
(c) Seller retains and shall hereafter pay, satisfy, discharge, perform
and fulfill all obligations and liabilities not expressly assumed by Buyer
hereunder as they become due, without any charge or cost to Buyer, and Seller
agrees to indemnify and hold Buyer and its successors and assigns harmless from
and against any and all such liabilities in accordance with the terms of Article
9 below.
1.4 Purchase Price.
(a) Purchase Price. The purchase price to be paid for the Station
Assets will be the amount set forth on Exhibit A as adjusted pursuant to Section
1.5 hereof (the "Purchase Price").
(b) Method of Payment. Upon Closing, the Purchase Price shall be paid
by Buyer in immediately available funds pursuant to written instructions of the
Seller to be delivered by Seller to Buyer at least two (2) business days prior
to Closing.
(c) Allocation of Purchase Price. Buyer and Seller will allocate the
Purchase Price in accordance with the respective fair market values of the
Station Assets and the goodwill being purchased and sold in accordance with the
requirements of Section 1060 of the Internal
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Revenue Code of 1986, as amended (the "Code"). The allocation shall be
determined by mutual agreement of the parties. Buyer and Seller each further
agrees to file its federal income tax returns and its other tax returns
reflecting such allocation.
1.5 Adjustments.
(a) The operation of the Stations and the income and normal operating
expenses attributable thereto through the date preceding the Closing Date (the
"Adjustment Date") shall be for the account of Seller and thereafter for the
account of Buyer, and, if any income or expense is properly allocable or
credited, then it shall be allocated, charged or prorated accordingly. Expenses
for goods or services received both before and after the Adjustment Date, power
and utilities charges, frequency discounts, prepaid time sales agreements, and
rents and similar prepaid and deferred items shall be prorated between Seller
and Buyer as of the Adjustment Date in accordance with generally accepted
accounting principles. All special assessments and similar charges or liens
imposed against the Real Property and Tangible Personal Property in respect of
any period of time through the Adjustment Date, whether payable in installments
or otherwise, shall be the responsibility of Seller, and amounts payable with
respect to such special assessments, charges or liens in respect of any period
of time after the Adjustment Date shall be the responsibility of Buyer, and such
charges shall be adjusted as required hereunder. To the extent that any of the
foregoing prorations and adjustments cannot be determined as of the Closing
Date, Buyer and Seller shall conduct a final accounting and make any further
payments, as required on a date mutually agreed upon, within ninety (90) days
after the Closing.
(b) With respect to trade, barter or similar agreements for the sale of
time for goods or services ("Barter Agreements") assumed by Buyer pursuant to
Section 1.1(e), if any, if there exists on the date of assumption an aggregate
negative barter balance (i.e., the amount by which the value of air time (based
upon the Stations' then prevailing rates) to be provided exceeds the fair market
value of goods or services to be received therefor), then such excess will be
treated as prepaid time sales and adjusted for as a proration in Buyer's favor.
If, however, there exists on such date an aggregate positive barter balance
(i.e., the amount by which the value of airtime (based upon the Stations' then
prevailing rates) to be provided is less than the fair market value of goods or
services to be received therefor) with respect to Barter Agreements assumed by
Buyer, there shall be no proration in Seller's favor.
1.6 Closing.
(a) The consummation of the sale and purchase of the Station Assets
provided for in this Agreement (the "Closing") shall take place at a date and
time designated by Buyer within ten (10) business days after the date of the FCC
Consent (as defined in Section 4.4) with respect to the Cumulus Stations
pursuant to the FCC's initial order, subject to the satisfaction or waiver of
the last of the conditions required to be satisfied or waived pursuant to
Articles 6 or 7 below (other than those requiring a delivery of a certificate or
other document, or the taking of other action, at the Closing), provided,
however, that if the FCC Consent with respect to the Cumulus Stations is granted
fewer than ten (10) business days prior to October 2, 2000, the
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Closing shall be held on or before October 2, 2000 (but not sooner than five (5)
business days after the grant of such FCC Consent). Alternatively, the Closing
may take place at such other place, time or date as the parties may mutually
agree upon in writing. The date on which the Closing is to occur is referred to
herein as the "Closing Date."
(b) Buyer may elect to consummate the sale and purchase of the Station
Assets in any number of separate Closings (each a "Partial Closing") in the
following events. In the event Seller has not acquired the Evansville Stations
prior to or simultaneously with Closing, Buyer, at its option, may terminate the
purchase of the Evansville Stations and the Purchase Price shall be reduced by
the amount allocated to the Evansville Stations on Exhibit A, or Buyer may
postpone the Closing of the Evansville Stations until they are acquired by
Seller. If Seller has not purchased the Columbus Stations prior to or
simultaneously with Closing, Seller shall assign, and Buyer shall purchase, at
Closing, all of Seller's rights and obligations under the Columbus APA and the
Columbus LMA (subject to the termination or expiration of any applicable
Hart-Scott-Rodino waiting period) in lieu of the Columbus Stations themselves,
and following such assignment, Seller shall remain liable for any obligations
that arise, or relate to the period, prior to Closing, and Buyer shall be liable
for any obligations that arise, or relate to the period, on and after Closing.
In such event, Seller shall assign to Buyer all of Seller's right, title and
interest to the deposit made pursuant to the Columbus APA, and Buyer shall
reimburse Seller therefor at Closing. If the FCC Consent for the sale of the
Cumulus Stations in the Columbus, Georgia, market (the "Columbus Owned
Stations") is not granted by Closing, the parties shall close the acquisition of
the other Stations and postpone the closing for the Columbus Owned Stations. At
closing of the other Stations, (i) Seller shall assign to Buyer substantially
all the assets (except for the FCC authorizations) for the Columbus Owned
Stations, (ii) Seller and Buyer shall (subject to the termination or expiration
of any applicable Hart-Scott-Rodino waiting period) enter into a local marketing
agreement (with reimbursement of expenses but no other monthly payment) on
reasonable and customary terms pursuant to which Buyer shall provide programming
and marketing services to the Columbus Owned Stations for a period of eight
years (with a renewal term of eight years), or until any earlier sale of the
Columbus Owned Stations to Buyer, and equipment leasing arrangements pursuant to
which Seller shall have the right to lease any equipment sold to Buyer so that
Seller can operate the Columbus Owned Stations, and (iii) Buyer shall pre-pay
Seller eighty percent (80%) of the Purchase Price for the Columbus Owned
Stations calculated in accordance with clause (iii) of Exhibit A with the
remainder of the Purchase Price for the Columbus Owned Stations to be paid at
Closing on the Columbus Owned Stations. With respect to each market identified
in Recital A and Recital B above (each a "Market"), if FCC Consent with respect
to all the Cumulus Stations in one or more of the Markets, or all the Evansville
Stations in the Evansville Market, is granted but FCC Consent for assignment of
all of the Stations in any other such Markets has not been granted at that time,
the parties shall close the acquisition of the Stations in the Markets for which
FCC Consent has been granted for all Stations in such Markets and postpone the
Closing of the Stations in the Markets for which FCC Consent has not been
granted for all Stations in such Markets. In the event of such multiple
closings: (v) the Purchase Price shall be allocated as set forth on Exhibit A;
(w) the terms "Closing" and the "Closing Date" as used herein shall mean, and
refer separately to, each Partial Closing and the date on which such Partial
Closing occurs, as the context requires; (x) the covenants set forth in Articles
4 and 5 and the other provisions of this Agreement that apply prior
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to Closing (or prior to the Closing Date) shall continue in effect with respect
to the Stations subject to the subsequent Closings (but not the Stations subject
to the Closing except with respect to obligations that expressly survive the
Closing and except that neither party shall be relieved of liability for a
failure to comply with such covenants prior to Closing); (y) the conditions set
forth in Article 6 and 7, and the deliveries to be made pursuant to Article 8,
that relate to the Stations or the Station Assets generally, shall apply, and
shall be made, only with respect to the Stations and Station Assets subject to
the Closing; and (z) the provisions of Section 9 and the other provisions of
this Agreement that apply after Closing (or after the Closing Date) shall apply
with respect to each Station only from and after the Closing with respect to
such Station.
1.7 Noncompete. On the Closing Date, Seller (on behalf of it and all of its
Affiliates (defined below)) shall enter into a one year Non-Competition
Agreement in the form of Exhibit B attached hereto (the "Noncompetition
Agreement"), for consideration determined pursuant to the final sentence of this
Section 1.7. Seller shall also assign to, and enforce for the benefit of, Buyer
any noncompetition agreements or rights in Seller's favor under any of the
Selling Company Acquisition Documents. In connection with the allocation under
Section 1.4(c), a portion of the Purchase Price shall be allocated as
consideration for the Noncompetition Agreement.
1.8 LMA/JSA. If requested by Buyer at any time prior to Closing (and subject
to the termination or expiration of any Hart-Scott-Rodino waiting period), Buyer
and Seller shall negotiate in good faith to reach terms pursuant to which Seller
shall assign to Buyer all of Seller's rights and interests under the Evansville
LMA or the Columbus LMA or both to the extent assignable, subject to assignment
back to Seller if this Agreement is terminated as to such stations. In addition,
with respect to each Station, if permitted by FCC rules and if requested by
Buyer at any time prior to Closing (and subject to the termination or expiration
of any Hart-Scott-Rodino waiting period), Buyer and Seller shall negotiate in
good faith to reach agreement on either of the following agreements (as
designated by Buyer): (i) a Local Programming and Marketing Agreement (an "LMA")
providing that Buyer will provide the programming for, and be entitled to
receive the revenues from the sale of advertising on, such Station, and
containing customary terms (including, without limitation, reimbursement of
Seller's expenses) reasonably satisfactory to Buyer and Seller, or (ii) an
Agreement for the Sale of Commercial Time (a "JSA") providing that Buyer shall
be entitled to all of the time available for commercial spot announcements on
the Station for resale to advertisers, and Buyer shall be entitled to receive
the revenues from the sale of advertising on the Station, and containing
customary terms (including, without limitation, reimbursement of Seller's
expenses) reasonably satisfactory to Buyer and Seller; provided, however, that
the term of any LMA or JSA shall not commence (x) with respect to the Evansville
Stations, prior to the Cumulus Closing with respect thereto, (y) with respect to
the Columbus Stations, prior to the Cumulus Closing with respect thereto, and
(z) with respect to each Station, prior to satisfaction of the Closing condition
described in Section 6.4 and 7.4 of this Agreement. With respect to each
Station, if Buyer and Seller enter into an LMA or JSA, and if requested by Buyer
(and if permitted by FCC rules), Seller shall convert any JSA to an LMA or
convert any LMA to a JSA, as the case may be. Buyer's rights under this section
may be exercised from time to time separately with respect to each Station. In
the event that an
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Application with respect to a Station subject to a LMA or a JSA is contested and
pursuant to Section 7.3 Buyer elects to Close the purchase thereof after the FCC
Consent has become Final, the applicable LMA or JSA shall be amended to provide
for the payment to Seller of a mutually agreeable fee in addition to the
reimbursement of Seller's expenses.
1.9 WZNY Downgrade. Seller acknowledges that Buyer is entering this
Agreement based upon Seller's agreement to, upon Buyer's written request,
permanently downgrade the signal of WZNY(FM), Augusta, Georgia ("WZNY"), from
Class C to Class C-2 by promptly after such request applying to the FCC for,
diligently prosecuting, and promptly implementing such downgrade; provided,
however, that Seller shall not be under any obligation to implement the
downgrade until the transactions contemplated by this Agreement, and the
assignment of the FCC authorization for station KBED (FM), Shreveport, Louisiana
("KBED") to Seller as contemplated by the Asset Exchange Agreement dated March
5, 2000 (as amended to date) between certain AMFM, Inc. companies and Seller,
have been consummated. If Seller proposes to Buyer a reasonable coordinate
change that would limit the necessary downgrade to Class C-1 and such change
does not adversely affect Buyer, then Buyer will cooperate with such change, and
Seller shall only be required to downgrade the signal of WZNY from Class C to
Class C-1 and shall amend any pending application with the FCC to downgrade to
Class C-2 accordingly. Provided that the downgrade is requested by Buyer, in
consideration for Seller's agreement to downgrade the signal of WZNY, Buyer
agrees to pay to Seller, in immediately available funds upon completion of the
downgrade, the sum of, (i) if the downgrade is to Class C-2, $10,000,000, and
(ii) if the downgrade is to Class C-1, $5,000,000. Seller, its successors and
assigns shall not thereafter restore or attempt to restore WZNY to Class C
status. In the event that this Agreement is terminated for any reason (other
than due to a breach by Seller), this paragraph 1.9 shall terminate and be of no
further force or effect, and Seller shall be under no further obligation to
Buyer to downgrade the signal of WZNY from Class C.
ARTICLE 2: REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.1 Status. Seller is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization (as first set forth
above). Seller is or prior to the Closing Date will be duly qualified to do
business and is in good standing in such states in which the failure to so
qualify would have a material adverse effect on the business of the Stations.
Seller has or will have the requisite power to carry on the business of the
Stations as now being conducted and to own and operate the Stations, and Seller
has the requisite power to enter into and complete the transactions contemplated
by this Agreement. Neither Seller nor any of the Selling Companies use any name
in the operation of the Stations other than the names as set forth above and the
Stations' call letters.
2.2 Authority. All corporate actions necessary to be taken by or on the part
of Seller in connection with the transactions contemplated by this Agreement
have been duly and validly taken, and this Agreement has been duly and validly
authorized, executed, and delivered by Seller and constitutes the legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms.
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2.3 No Conflict. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (a)
conflict with or violate any of the organizational documents of Seller; (b)
assuming the consents listed on Schedule 2.11 are obtained, conflict with or
violate or result in any breach of or any default under, result in any
termination or modification of, or cause any acceleration of any obligation
under, any Contract (defined below) to which Seller is a party or by which it is
bound, or by which the Stations or any of the Station Assets may be affected, or
result in the creation of any Lien upon any of the Station Assets; or (c)
violate any judgment, decree, order, statute, law, rule or regulation applicable
to Seller, the Stations or any of the Station Assets.
2.4 Commitments. Neither Seller nor any of the Selling Companies is a party
to or bound by any written, oral or implied contract, agreement, lease or
instrument or other commitment (each a "Contract"), including but not limited to
any indenture, mortgage, guaranty, surety arrangement, or any contract or
agreement for the purchase or sale of merchandise, programming or advertising
time on the Stations or for the rendition of services, except for agreements for
the sale of time on the Stations described in Section 1.1(d), the Real Property
leases and the Contracts listed on Schedules 1.1(c) and 1.1(e), and except for:
(a) any written contract terminable without penalty or involving a commitment of
less than $1,000 individually or $25,000 in the aggregate for the purchase or
sale of goods, supplies, equipment, capital assets, products or services; and
(b) any written contracts involving less than $1,000 individually or $25,000 in
the aggregate (when combined with all those described in clause (a) above)
entered into in the ordinary and usual course of business from the date hereof
until the Closing Date. Seller has delivered to Buyer true and complete copies
of all Real Property leases and Contracts listed Schedules 1.1(c) and 1.1(e).
2.5 No Breach. Neither Seller nor the Selling Companies nor the Stations is
in material violation or breach of any of the terms, conditions or provisions of
any Contract, court order, judgment, arbitration award, or decree relating to or
affecting the Stations or the Station Assets.
2.6 Financial Statements. Attached as Schedule 2.6 hereto are copies of (i)
the unaudited balance sheets of the Stations as of December 31, 1998 (to the
extent available to Seller), December 31, 1999, and June 30, 2000 (the "Balance
Sheet Date"), and (ii) the unaudited statements of income of the Stations for
the calendar years December 31, 1998 (to the extent available to Seller) and
December 31, 1999, and for the six month period ended June 30, 2000 (the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects, have been prepared from the books and records regularly
maintained by the Seller and the Selling Companies, as the case may be, and
present fairly, and in all material respects, the financial position of the
Stations as of the dates thereof and the results of the Stations' operations for
the periods indicated thereby, in accordance with generally accepted accounting
principles. Buyer may conduct an audit of Seller's brooks and records at any
time upon reasonable prior notice to Seller.
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2.7 Taxes. Seller and the Selling Companies have filed all applicable
federal, state, local and foreign tax returns required to be filed, in
accordance with provisions of law pertaining thereto, and has paid all taxes,
interest, penalties and assessments (including without limitation income,
withholding, excise, unemployment, Social Security, occupation, transfer,
franchise, property, sales and use taxes, import duties or charges, and all
penalties and interest in respect thereof) required to have been paid with
respect to or involving the Stations or the Station Assets. Neither Seller nor
the Selling Companies has been advised that any of its returns, federal, state,
local or foreign, have been or are being audited.
2.8 Licenses. Seller and the Selling Companies are, and, with respect to
each Station, upon each Cumulus Closing, Seller will be, the holder(s) of the
FCC Authorizations listed and described on Schedule 1.1(a). Such FCC
Authorizations constitute all of the licenses and authorizations required under
the Communications Act of 1934, as amended (the "Communications Act"), or the
rules, regulations and policies of the FCC for, and used in the operation of,
the Stations. The FCC Authorizations are in full force and effect and have not
been revoked, suspended, canceled, rescinded or terminated and have not expired.
There is not pending or, to Seller's knowledge, threatened any action by or
before the FCC to revoke, suspend, cancel, rescind or modify any of the FCC
Authorizations (other than proceedings to amend FCC rules of general
applicability), and there is not now issued or outstanding or pending or, to
Seller's knowledge, threatened, by or before the FCC, any order to show cause,
notice of violation, notice of apparent liability, or notice of forfeiture or
complaint against Selling Companies, Seller or any Station. Each Station is
operating in compliance in all material respects with the FCC Authorizations,
the Communications Act, and the rules, regulations and policies of the FCC.
2.9 Additional FCC Matters.
(a) All material reports and filings required to be filed with the FCC
with respect to the Stations (including without limitation all required equal
employment opportunity reports) have been timely filed. All such reports and
filings are accurate and complete in all material respects. Public files are
maintained for the Stations as required by FCC rules. With respect to FCC
licenses, permits and authorizations, the Selling Companies are operating, and
Seller is operating and will operate, only those facilities for which an
appropriate FCC Authorization has been obtained and is in effect, and the
Selling Companies are meeting, and Seller will meet, in all material respects,
the conditions of each such FCC Authorization.
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(b) Seller is aware of no facts indicating that Seller, the Selling
Companies or the Stations are not in compliance in all material respects with
all requirements of the FCC, the Communications Act, or any other applicable
federal, state and local statutes, regulations and ordinances. Seller is aware
of no facts and neither Seller nor any of the Selling Companies have received
any notice or communication, formal or informal, indicating that the FCC is
considering revoking, suspending, canceling, rescinding or terminating any FCC
Authorization.
(c) The operation of the Stations does not cause or result in exposure
of workers or the general public to levels of radio frequency radiation in
excess of the "Radio Frequency Protection Guides" recommended in "American
National Standard Safety Levels with Respect to Human Exposure to Radio
Frequency Electromagnetic Fields 3 kHz to 300 GHz" (ANSI/IEEE C95.1-1992),
issued by the American National Standards Institute, and renewal of the FCC
Authorizations would not constitute a "major action" within the meaning of
Section 1.1301, et seq., of the FCC's rules.
2.10 Approvals and Consents. Except as described in Schedule 2.11 hereto,
the execution, delivery and performance by the Seller of this Agreement and the
consummation by it of the transactions contemplated hereby will not require any
consent, permit, license or approval of, or filing with or notice to, any
person, entity or governmental or regulatory authority under any provision of
law applicable to the Stations, Seller or any Contract or Real Property lease to
which Seller is a party, except as contemplated by Sections 4.4 (FCC
Authorization) and 4.8 (Hart-Scott-Rodino).
2.11 Station Assets. The Station Assets constitute all of the assets
necessary to conduct the present operations of the Stations. Schedule 1.1(b)
contains a description of all items of Tangible Personal Property having an
original cost in excess of $1,000. The Selling Companies have, and, with respect
to each Station, upon each Cumulus Closing, Seller will have, good, valid and
marketable title to all of the Station Assets, free and clear of Liens (other
than Permitted Encumbrances). All items of Tangible Personal Property, including
without limitation equipment and electrical devices, are in good operating
condition and repair (reasonable wear and tear in ordinary usage excepted), are
free from material defect and damage, are functioning in the manner and for the
purposes for which it was intended, have been maintained in accordance with
industry standards in all material respects, and do not require any repairs
other than normal routine maintenance.
2.12 Real Property.
(a) Schedule 1.1(c) contains descriptions of all real property owned or
leased and used or held for use in connection with the business and operations
of the Stations and leases or licenses or other rights to possession of any real
property so used or held.
(b) The Selling Companies have, and, with respect to each Station, upon
each Cumulus Closing, Seller has and will have, fee simple title to the Real
Property so described by metes and bounds on Schedule 1.1(c) as being so owned
(the "Owned Property"). The Owned
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Property constitutes all the owned Real Property of any of the Selling
Companies, the Seller or any Affiliate of the Selling Companies or Seller and
which are required or useful in the conduct of the business of the Stations. As
to the Owned Property, the Selling Companies have, and, with respect to each
Station, upon each Cumulus Closing, Seller has and will have, good, valid and
marketable fee simple title to such premises and all buildings, towers,
antennas, free of any Liens (other than Permitted Encumbrances). The Owned
Property includes sufficient access to the Stations' facilities without need to
obtain any other access rights. The Real Property and all of the buildings,
towers, antennae, fixtures and improvements, and all heating and air
conditioning equipment, plumbing, electrical and other mechanical facilities,
and the roof, walls and other structural components of the Real Property which
are part of, or located in, such buildings, towers, antennae or improvements,
are in good operating condition and repair (reasonable wear and tear excepted),
comply in all material respects with applicable zoning laws and the building,
health, fire and environmental protection codes of all applicable governmental
jurisdictions, have no material structural defects, and do not require any
repairs other than normal routine maintenance to maintain them in good condition
and repair. Seller shall deliver to Buyer within thirty (30) days after the date
hereof copies of all title insurance policies in its possession that are
applicable to the Real Property.
(c) The Selling Companies lease, and, with respect to each Station,
upon each Cumulus Closing, the Seller leases and will lease, as a tenant, the
premises described on Schedule 1.1(c) as being so leased. The leases listed in
Schedule 1.1(c) hereto constitute all the Real Property leases to which any of
the Selling Companies, Seller or any Affiliate of the Selling Companies or
Seller is a party (either as lessor or lessee) and which are required or useful
in the conduct of the business of the Stations. Within thirty (30) days after
the date hereof, Seller shall deliver to Buyer true and complete copies of such
leases. All buildings, structures, improvements, fixtures, and appurtenances are
in good maintenance, operating condition, and repair (reasonable wear and tear
in ordinary usage excepted); are adequate and suitable for the purposes for
which they are presently being used; and conform to all applicable laws,
ordinances, and regulations.
(d) With respect to the leases of Real Property listed in Schedule
1.1(c) hereto, the Selling Companies have, and, with respect to each Station,
upon each Cumulus Closing, Seller has and will have, good title to its interest
in such Real Property, free and clear of all Liens (other than Permitted
Encumbrances). With respect to each such lease, (i) each such lease is in full
force and effect, and is valid, binding and enforceable in accordance with its
terms, (ii) all accrued and currently payable rents and other payments required
thereunder have been paid, (iii) each such lease was entered into in the
ordinary course of business and has provided for peaceable possession since the
beginning of the original term thereof, (iv) Seller and the Selling Companies,
and to Seller's knowledge each other party thereto, has complied with all
respective material covenants and provisions of thereof, (v) neither Seller nor
the Selling Companies, nor to Seller's knowledge any other party thereto, is in
material default in any respect thereunder, (vi) no party has asserted any
defense, set off or counterclaim thereunder, (vii) no waiver, indulgence, or
postponement of any obligations thereunder has been granted by any party, (viii)
no notice of default or termination has been given or received, no event of
default has occurred, and no condition exists and no event has occurred that,
with the giving of notice, the
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lapse of time, or the happening of any further event would become a default or
permit early termination thereunder, (ix) neither Seller nor the Selling
Companies, nor to Seller's knowledge any other party thereto, has violated any
material term or condition thereunder, and (x) assuming the consents set forth
on Schedule 2.11 are obtained, the validity or enforceability thereof will in no
way be affected by the sale of the Station Assets as contemplated herein. Each
such lease provides sufficient access to the Stations' facilities without need
to obtain any other access rights. Except as set forth in Schedule 2.11 hereto,
no third-party consent or approval is required for the assignment of any such
lease to Buyer, or for the consummation of the transactions contemplated herein.
2.13 Environmental Matters.
(a) As used herein, (i) the term "Environmental Laws" shall mean any
and all state, federal, and local statutes, regulations and ordinances relating
to the protection of human health and the environment, and (ii) the term
"Hazardous Material" shall mean any hazardous or toxic substance, material, or
waste, including, but not limited to those substances, materials, pollutants,
contaminants and wastes listed in the United States Department of Transportation
Hazardous Materials Table (49 C.F.R. ss. 172.101) or by the United States
Environmental Protection Agency as hazardous substances (40 C.F.R. Part 302 and
amendments thereto), petroleum products (as defined in Title I to the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6991-6991(i)) and their
derivatives, and such other substances, materials, pollutants, contaminants and
wastes as become regulated or subject to cleanup authority under any
Environmental Laws.
(b) Seller represents and warrants that, except as set forth on
Schedule 2.14:
(i) all activities of the Selling Companies and Seller with
respect to the Stations and the Real Property have been and are being conducted
in all material respects in compliance with all federal, state and local
statutes, ordinances, rules, regulations and orders, as well as all requirements
of common law concerning those activities, repairs or construction of any
improvements, manufacturing processing and/or handling of any materials, and
discharges to the air, soil, surface water or groundwater;
(ii) Seller has no knowledge of (x) the presence of any asbestos
on or in the Real Property, or (y) the release or presence of any Hazardous
Material on, in, from or onto the Real Property which release or presence
constitutes a violation of any Environmental Law;
(iii) neither Seller nor the Selling Companies has generated,
manufactured, refined, transported, stored, handled, disposed of or released any
Hazardous Material on the Real Property, nor has Seller or the Selling Companies
or the Stations permitted the foregoing in violation of any Environmental Law;
(iv) the Stations have obtained all approvals and caused all
notifications to be made as required by Environmental Laws;
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(v) Seller has delivered to Buyer a true and complete list of all
of the registrations with, licenses from, or permits issued by governmental
agencies or authorities relating to the Stations pursuant to environmental,
health and safety laws, and all such registrations, licenses or permits are in
full force and effect;
(vi) Seller has not received any notice of any violation of any
Environmental Laws;
(vii) no action has been commenced or, to Seller's knowledge,
threatened regarding the Stations' compliance with any Environmental Laws;
(viii) no tanks used for the storage of any Hazardous Material
above or below ground are present or were at any time present on or about the
Real Property;
(ix) no action has been commenced or, to Seller's knowledge,
threatened regarding the presence of any Hazardous Material on or about the Real
Property;
(x) no Hazardous Materials are present in any medium in the
operations of the Stations (or of Seller or the Selling Companies with respect
to the Stations) and/or at the Real Property in such a manner as may require
investigation or remediation under any applicable law;
(xi) no polychlorinated biphenyls or substances containing
polychlorinated biphenyls are present on the Real Property; and
(xii) no friable asbestos is present in the operations of the
Stations and/or on the Real Property.
(c) Seller has not and will not release or waive the liability of any
previous owner, lessee, or operator of the Real Property or any party who may be
potentially responsible for the presence or removal of Hazardous Material on or
about the Real Property. Neither Seller nor the Selling Companies has any
indemnification obligation relating to the Stations regarding Hazardous Material
to any party, except pursuant to the Selling Company Acquisition Documents.
(d) Buyer shall have the right to conduct a review of the Real Property
and take soil and water samples (including groundwater samples) from the Real
Property, and to test and analyze those samples to determine the extent of any
contamination of the soils and water (including groundwater) on or about the
Real Property. If, based on the results of those inspections and/or tests, Buyer
reasonably determines that its ownership of the Real Property would expose Buyer
to undue risks of government intervention, legal liability, clean up or
remediation liability or third-party liability, the parties shall negotiate in
good faith to reach mutually satisfactory arrangements to protect Buyer from any
liability. If the parties are unable to so agree, Buyer may, without any
liability owing to Seller, cancel the purchase of the Real Property (in which
event the Purchase Price shall be reduced by an amount equal to the
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replacement and relocation cost as agreed by the parties) or terminate this
Agreement as to the Stations involved, and the Purchase Price shall be adjusted
as set forth in Exhibit A.
2.14 Compliance with Law. The Stations, the Station Assets and Seller and
the Selling Companies with respect to the Stations and the Station Assets are,
in all material respects, in compliance with all requirements of law, federal,
state and local, and all requirements of all governmental bodies or agencies
having jurisdiction over any of them, the operation of the Stations, the use of
its properties and assets (including the Station Assets), and the Real Property.
Without limiting the foregoing, Seller and the Selling Companies have paid all
monies and obtained all licenses, permits, certificates and authorizations
needed or required for the operation of the Stations and the use of the Real
Property. Seller and the Selling Companies have properly filed all material
reports and other documents required to be filed with any federal, state, local
or foreign government or subdivision or agency thereof. Neither Seller nor the
Selling Companies have received any notice, not heretofore complied with, from
any federal, state or municipal authority or any insurance or inspection body
that any of its properties, facilities, equipment or business procedures or
practices fails to comply with any applicable law, ordinance, regulation,
building or zoning law, or requirement of any public authority or body.
2.15 Insurance. Seller and the Selling Companies maintain insurance policies
relating to the Stations bearing the policy numbers, for the terms, with the
companies, in the amounts, providing the general coverage set forth on Schedule
2.16 hereto. All of such policies are in full force and effect and neither
Seller nor the Selling Companies is in default of any material provision
thereof. Neither Seller nor the Selling Companies has received notice from any
issuer of any such policies of its intention to cancel, terminate or refuse to
renew any policy issued by it. With respect to each Station, upon each Cumulus
Closing, Seller will maintain in full force and effect, and without default, not
less than listed on Schedule 2.16 hereto such insurance coverage with respect to
the Stations.
2.16 Employment Matters.
(a) There are no collective bargaining agreements, or written or oral
agreements relating to the terms and conditions of employment or termination of
employment, covering any employees, consultants or agents of the Stations,
except as listed and described in Schedule 2.17 hereto. Except as listed and
described in Schedule 2.17, none of the employees of the Stations have written
employment contracts. The Stations are not engaged in any unfair labor practice
or other unlawful employment practice, and there are no unfair labor practice
charges or other employee related complaints, grievances or arbitrations,
against Seller or the Selling Companies pending before the National Labor
Relations Board, the Equal Employment Opportunity Commission, the Occupational
Safety and Health Administration, the Department of Labor, any arbitration
tribunal or any other federal, state, local or other governmental authority by
or concerning the Stations' employees. There is no strike, picketing, slowdown
or work stoppage by or concerning such employees pending against or involving
the Stations. No representation question is pending or threatened respecting any
of the Stations' employees. Seller has delivered to Buyer copies of all letters,
memoranda of understanding, past practices, assurances or other agreements
modifying such collective bargaining agreements and other similar employee
agreements.
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(b) All handbooks, policies and procedures relating to all aspects of
employment, including but not limited to compensation, benefits, equal
employment opportunity and safety are listed and described in Schedule 2.17
attached hereto.
(c) The Stations, and Seller and the Selling Companies with respect to
the Stations, have complied with in the past and are now in compliance, in all
material respects, with all labor and employment laws, including without
limitation federal, state, local and other applicable laws, rules, regulations,
ordinances, order and decrees concerning collective bargaining, unfair labor
practices, payments of employment taxes, occupational safety and health,
worker's compensation, the payment of wages and overtime, and equal employment
opportunity. The Stations and Seller and the Selling Companies with respect to
the Stations, are not liable for any arrears or wages, benefits, taxes, damages
or penalties for failing to comply with any law, rule, regulation, ordinance,
order or decree relating in any way to labor or employment.
(d) Buyer shall have no obligation or liability due to or because of
any past service liability, vested benefits, retirement plan insolvencies or
other retirement plan or past employment obligation (except as provided herein)
under local, state or federal law (including the Employee Retirement Income
Security Act of 1974, as amended), resulting from the purchase of the Stations
or from former employees of Seller or the Selling Companies becoming employees
of Buyer.
(e) Seller has provided to Buyer the names of all present employees of
the Stations and the positions, total annual compensation and accrued vacation
and sick time of each.
2.17 Litigation. There are no suits, arbitrations, administrative charges or
other legal proceedings, claims or governmental investigations pending against,
or, to Seller's knowledge, threatened against, the Stations, Seller or the
Selling Companies relating to or affecting the Stations nor, to the best of the
knowledge of Seller, is there any basis for any such suit, arbitration,
administrative charge or other legal proceeding, claim or governmental
investigation. Neither Seller nor the Selling Companies has been operating under
or subject to, or in default with respect to, any judgment, order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental department, commission, board, agency or instrumentality, foreign
or domestic.
2.18 Intangible Property. The Selling Companies have, and, with respect to
each Station, upon each Cumulus Closing, Seller will have, all right, title and
interest in and to all Intangible Property necessary to the conduct of the
Stations as presently operated. Schedule 1.1(f) contains a description of all
material Intangible Property. Neither Seller nor any of the Selling Companies
has received notice of any claim that any Intangible Property or the use thereof
conflicts with, or infringes upon, any rights of any third party (and there is
no basis for any such claim of conflict). The Stations have the sole and
exclusive right to use the Intangible Property. No service provided by the
Stations or any programming or other material used, broadcast or disseminated by
the Stations infringes upon any copyright, patent or trademark of any other
party.
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2.19 Bulk Sales. Neither the sale and transfer of the Station Assets
pursuant to this Agreement, nor Buyer's possession and use thereof from and
after Closing because of such sale and transfer, will be subject to any law
pertaining to bulk sales or transfers or imposing liability upon Buyer for
appraisal or liability owing to Seller.
2.20 Brokers. There is no broker or finder or other person entitled to a
commission or brokerage fee or payment in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement of, or action
taken by, Seller.
2.21 Absence of Material Change. Since the Balance Sheet Date:
(i) there has not been any material adverse change in the
financial condition, business or affairs of Seller or the Selling Companies
relating to the Stations or any material physical damage or loss to any of the
Station Assets (whether or not such damage or loss is covered by insurance);
(ii) neither Seller nor the Selling Companies have taken any
action with respect to the Stations outside of the ordinary and usual course of
business, except as related to the transactions contemplated hereby;
(iii) Seller and the Selling Companies have with respect to the
Stations paid all of their liabilities and obligations as they became due;
(iv) neither Seller nor the Selling Companies have with respect to
the Stations waived any right of substantial value;
(v) Seller and the Selling Companies have maintained their books,
accounts and records with respect to the Stations in the usual, customary and
ordinary manner; and
(vi) Seller and the Selling Companies have with respect to the
Stations preserved their business organizations intact, kept available the
services of their employees, and preserved their relationships with their
customers, suppliers and others with whom they deal.
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2.22 FAA Compliance. The Stations and the Station Assets are in material
compliance with all rules and regulations of the Federal Aviation Administration
applicable to the Stations.
2.23 Affiliates. No Affiliate of Seller or the Selling Companies has an
interest in any of the Station Assets or any property used in the operation of
the Stations. Except as set forth on Schedule 2.24, neither Seller nor the
Selling Companies nor any Affiliate of Seller or the Selling Companies, has any
financial interest in any supplier, advertiser or customer of the Stations or in
any other business with which any Station does business or competes. For
purposes of this Agreement, an "Affiliate" of an entity means any person (or any
relative of any person) or entity that owns or controls, is owned or controlled
by, or under common control with, such entity.
2.24 Selling Company Agreements. The Selling Company Acquisition Documents,
as filed with the FCC, are in full force and effect and have not been amended or
modified. No breach or default has occurred under the Selling Company
Acquisition Documents and no event has occurred or condition exists that with
notice or time or both would result in a breach or default thereunder.
2.25 Disclosure. No provision or information contained in this Agreement
relating to Seller, the Selling Companies, the Stations or the Station Assets,
or in any Schedule or Exhibit hereto, or the information to be provided to Buyer
pursuant to Exhibit A hereto, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated in order to make the statement, in light of the circumstances in which it
is made, not misleading. Except for facts affecting the radio industry
generally, there is no adverse fact now known to Seller relating to the
Stations, the Station Assets or the Selling Company Acquisition Documents which
would have a material adverse impact on the Station Assets or the operation of
the Stations after the Closing which has not been disclosed to Buyer.
2.26 Limitation of Representations Regarding Selling Companies.
Notwithstanding any other provision of this Agreement to the contrary, the
representations and warranties contained in this Article 2 made with respect to
the Selling Companies, and with respect to the Stations and the Station Assets
to the extent such representations and warranties relate to the period prior to
Seller's acquisition of such Stations and Station Assets in the Cumulus
Closings, shall be deemed limited to Sellers' knowledge.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller:
3.1 Status. Each Buyer is a Nevada corporation which is duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Buyer has the requisite power to enter into and complete the transactions
contemplated by this Agreement.
3.2 Authority. All corporate actions necessary to be taken by or on the part
of Buyer in connection with the transactions contemplated by this Agreement have
been duly and validly
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taken, and this Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with and subject to its terms.
3.3 No Conflicts. Neither the execution, delivery and performance by Buyer
of this Agreement nor the consummation by Buyer of the transactions contemplated
hereby will: (a) conflict with or violate the certificate of incorporation or
bylaws of Buyer; (b) conflict with or violate or result in any breach of or any
default under, any agreement to which Buyer is a party; or (c) violate any
judgment, decree, order, statute, rule or regulation applicable to Buyer.
3.4 Brokers. There is no broker or finder or other person entitled to a
commission or brokerage fee or payment in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement of or action taken
by Buyer.
3.5 Qualification. Except for existing matters related to market
concentration issues in the Stations' markets, CCBL is qualified under the
Communications Act and the existing rules, regulations and written policies of
the FCC to hold the FCC Authorizations.
ARTICLE 4: COVENANTS OF SELLER
Seller covenants and agrees that from the date hereof until the completion
of the Closing:
4.1 Operation of the Business.
(a) Seller shall continue to carry on the business of the Cumulus
Stations and keep its books and accounts, records and files in the usual and
ordinary manner in which the business has been conducted in the past. Seller
shall operate the Cumulus Stations and the Evansville Stations and Columbus
Stations after they are acquired by Seller in accordance with the terms of the
FCC Authorizations and in compliance in all material respects with all
applicable laws, rules and regulations and all applicable FCC rules and
regulations. Seller shall maintain the FCC Authorizations in full force and
effect and shall timely file and prosecute any necessary applications for
renewal of the FCC Authorizations.
(b) Seller shall provide Buyer with copies of the regular monthly
internal operating statements relating to the Stations for the monthly
accounting periods between the date of this Agreement and the Closing Date by
the 20th day of each calendar month for the preceding calendar month, which
statements shall present fairly, and in all material respects, the financial
position of the Stations as of the dates thereof and the results of the
Stations' operations for the periods indicated therein, in accordance with
generally accepted accounting principles.
(c) Seller shall make all reasonable efforts to preserve the business
organization of the Cumulus Stations, and the Evansville Stations and Columbus
Stations after they are acquired by Seller, intact, retain substantially as at
present the Stations' employees, consultants and agents, and preserve the
goodwill of the Cumulus Stations', and the Evansville
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Stations' and Columbus Stations' after they are acquired by Seller, suppliers,
advertisers, customers and others having business relations with them.
(d) Nothing contained in this Agreement shall give Buyer any right to
control the programming, operations or any other matter relating to the Stations
prior to the Closing Date, and Seller and/or the Selling Companies shall have
complete control of the programming, operations and all other matters relating
to the Stations up to the Closing Date.
(e) Seller shall keep all Tangible Personal Property and Real Property
in good operating condition (ordinary wear and tear excepted) and repair and
maintain adequate and usual supplies of inventory, office supplies, spare parts
and other materials as have been customarily maintained in the past. Seller
shall preserve intact the Station Assets and maintain in effect its current
casualty and liability insurance on the Station Assets.
(f) Seller shall use commercially reasonable efforts to prevent any of
the representations and warranties set forth in Article 2 from becoming untrue
or incorrect, to cause the conditions to Closing set forth in Article 7 below to
be satisfied, and to ensure that the transactions contemplated hereby shall be
consummated as set forth herein.
(g) Prior to the Closing Date, Seller shall not, without the prior
written consent of Buyer:
(i) sell, lease, transfer, or agree to sell, lease or transfer,
any Station Assets except for non-material sales or leases, in the ordinary
course of business of items which are being replaced by assets of comparable or
superior kind, condition and value;
(ii) except as may be required by applicable law or by contracts
listed on Schedule 2.17, grant any raises to employees of the Stations, pay any
substantial bonuses or enter into any contract of employment with any employee
or employees of the Stations, except in the ordinary course of business;
(iii) renew, renegotiate, modify, amend or terminate any existing
time sales contracts with respect to the Stations except in the ordinary course
of business;
(iv) enter into, renew or amend any other Contract with respect to
the Stations except in the ordinary course of business;
(v) apply to the FCC for any construction permit that would
restrict the present operations of the Cumulus Stations, and the Evansville
Stations and Columbus Stations after they are acquired by Seller, or make any
change in any of the buildings, leasehold improvements or fixtures of the
Stations, except in the ordinary course of business; or
(vi) enter into any barter or trade contracts that are prepaid, or
any contract with an Affiliate of Seller or the Selling Companies.
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4.2 Access to Facilities, Files and Records. At the request of Buyer, Seller
shall from time to time give or cause to be given to the officers, employees,
accountants, counsel, agents, consultants and representatives of Buyer: (a) full
access during normal business hours to all facilities, properties, accounts,
books, deeds, title papers, insurance policies, licenses, agreements, contracts,
commitments, records and files of every character, equipment, machinery,
fixtures, furniture, vehicles of Seller with respect to the Stations; and (b)
all such other information concerning the affairs of the Stations as Buyer may
reasonably request. Any investigation or examination by Buyer shall not in any
way diminish or obviate any representations or warranties of Seller made in this
Agreement or in connection herewith. Seller shall cause its accountants and any
agent of Seller in possession of Seller's books and records to cooperate with
Buyer's requests for information pursuant to this Agreement.
4.3 Representations and Warranties. Seller shall give detailed written
notice to Buyer promptly upon learning of the occurrence of any event that would
cause or constitute a breach, or that would have caused a breach had such event
occurred or been known to Seller prior to the date hereof, of any of Seller's
representations or warranties contained in this Agreement.
4.4 Application for FCC Consent. Seller and Buyer have filed applications
with the FCC ("Application") requesting the FCC's written consent to the
assignment of the FCC Authorizations to CCBL and for the consummation of the
transactions contemplated by this Agreement. Seller shall diligently take all
steps that are necessary, proper or desirable to expedite the prosecution of the
Application to a favorable conclusion. Seller shall promptly provide Buyer with
a copy of any pleading, order or other document served on Seller relating to the
Application. Seller shall furnish all information required by the FCC and shall
be represented at all meetings or hearings scheduled to consider such
Application. The FCC's written consent to the Application is referred to herein
as the "FCC Consent." In the event that Closing occurs hereunder prior to a
Final FCC Consent, then Seller's obligations under this Section 4.4 shall
survive the Closing. For purposes of this Agreement, the term "Final" shall mean
that action shall have been taken by the FCC (including action duly taken by the
FCC's staff, pursuant to delegated authority) which shall not have been
reversed, stayed, enjoined, set aside, annulled or suspended; with respect to
which no timely request for stay, petition for rehearing, appeal or certiorari
or sua sponte action of the FCC with comparable effect shall be pending; and as
to which the time for filing any such request, petition, appeal, certiorari or
for the taking of any such sua sponte action by the FCC shall have expired or
otherwise terminated. If the Closing occurs prior to a Final FCC Consent, and
prior to becoming Final the FCC Consent is reversed or otherwise set aside, and
there is a Final order of the FCC (or court of competent jurisdiction) requiring
the re-assignment of the FCC Authorizations to Seller, then the purchase and
sale of the Station Assets shall be rescinded. In such event, Buyer shall
reconvey to Seller the Station Assets, and Seller shall repay to Buyer the
Purchase Price and reassume the contracts and leases assigned and assumed at
Closing. Any such rescission shall be consummated on a mutually agreeable date
within thirty days of such Final order (or, if earlier, within the time required
by such order). In connection therewith, Buyer and Seller shall each execute
such documents (including execution by Buyer of instruments of conveyance of the
Station Assets to Seller and execution by Seller of instruments of assumption of
the contracts and leases assigned and
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assumed at Closing) and make such payments (including repayment by Seller to
Buyer of the Purchase Price) as are necessary to give effect to such rescission.
4.5 Consents. Seller shall use its commercially reasonable efforts to obtain
all of the consents noted on Schedule 2.11 hereto. If Seller does not obtain a
consent required to assign a contract or lease hereunder, Buyer shall not be
required to assume such contract or lease. Marked with an asterisk on Schedule
2.11 are those consents the receipt of which is a condition precedent to Buyer's
obligation to close under this Agreement (the "Required Consents").
4.6 Notice of Proceedings. Seller will promptly notify Buyer in writing
upon: (a) becoming aware of any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this Agreement or
the transactions contemplated hereunder; or (b) receiving any notice from any
governmental department, court, agency or commission of its intention (i) to
institute an investigation into, or institute a suit or proceeding to restrain
or enjoin, the consummation of this Agreement or such transactions, or (ii) to
nullify or render ineffective this Agreement or such transactions if
consummated.
4.7 Consummation of Agreement. Subject to the provisions of Section 10.1 of
this Agreement: (a) Seller shall fulfill and perform all conditions and
obligations on its part to be fulfilled and performed under this Agreement, and
cause the transactions contemplated by this Agreement to be fully carried out;
and (b) Seller shall not take any action that would make the consummation of
this Agreement contrary to the Communications Act or the rules, regulations or
policies of the FCC. Seller shall comply with the terms of the Selling Company
Acquisition Documents, shall maintain the Selling Company Acquisition Documents
in full force and effect, and shall not terminate, amend, modify or waive any of
Seller's rights or the Selling Companies' obligations under, the Selling Company
Acquisition Documents, without the prior written consent of Buyer.
4.8 Hart-Scott-Rodino. As soon as possible (but in no event later than seven
calendar days after the date of this Agreement), if necessary, Seller shall
prepare and file all documents with the Federal Trade Commission and the United
States Department of Justice as are required to comply with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart-Scott-Rodino
Act"), request early termination of the waiting period, and shall thereafter
furnish promptly all materials thereafter requested by any of the regulatory
agencies having jurisdiction over such filings.
4.9 Confidentiality. Any and all information, disclosures, knowledge or
facts regarding Buyer or its business or properties to which Seller is exposed
as a result of the negotiation, preparation or performance of this Agreement
shall be confidential and shall not be divulged, disclosed or communicated to
any other person, firm, corporation or entity, except for Seller's employees,
attorneys, accountants, investment bankers, investors and lenders, and their
respective attorneys, on a need-to-know basis for the purpose of consummating
the transactions contemplated by this Agreement.
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4.10 Estoppel Certificates; Title Insurance; Liens. Seller, at Seller's
expense, will use commercially reasonable efforts to obtain and deliver to Buyer
(i) written estoppel certificates (the "Estoppel Certificates") duly executed by
the lessors under the leases of Real Property described on Schedule 1.1(c), in
form and substance reasonably satisfactory to Buyer, (ii) commitments from a
title company acceptable to Buyer to issue to Buyer at standard rates ALTA
extended coverage owner's and leasehold title insurance policies with respect to
the owned and leased Real Property with no exceptions other than Permitted
Encumbrances (the "Title Commitments") and (iii) UCC, judgment and state and
federal tax lien search reports (showing searches in the name of Seller and the
call letters of each Station) necessary to assure that no Liens are filed or
recorded against the Station Assets in the public records of any jurisdiction
where the Station Assets are located (the "Lien Search Reports").
4.11 Employee Matters.
(a) Buyer may offer employment to any of Seller's employees of the
Stations (each an "Employee") who is available for work on the Closing Date. Any
such offer shall be for employment at will by Buyer as new employees of Buyer
(subject to any applicable probation period not prohibited by law) to occupy
positions designated by Buyer and pursuant to the terms and conditions
determined by Buyer in it sole discretion.
(b) Seller agrees to make available to Buyer, to the fullest extent
permitted by law, all information and materials requested by Buyer from the
personnel files of each employee of Seller who shall have elected to accept
employment with Buyer.
(c) Buyer assumes no obligation to continue or assume any compensation
arrangements or liabilities of Seller (including, but not limited to, any
salary, bonuses, fringe benefits, insurance plans, or pension or retirement
benefits under any compensation or retirement plan maintained by Seller) to any
such Employee.
(d) Seller agrees to remain responsible for the payment of all accrued
benefits in accordance with the terms of Seller's retirement plans, including
any retiree medical, dental and life insurance plan. Buyer shall not at any time
assume any liability under Seller's retirement plans for the payment of benefits
to any active or any terminated, vested or retired participants in Seller's
retirement plans.
(e) Seller shall retain the responsibility for payment of all medical,
dental, health and disability claims incurred by any Employee prior to the
Closing Date, and Buyer shall not assume any liability with respect to such
claims. Seller also agrees to retain responsibility for disability payments to
employees on medial or disability leave at the Closing Date until such time as
such Employee is offered employment by Buyer, in its sole discretion, or as
otherwise required under applicable law or regulation. Except as provided in the
immediately preceding sentence, Buyer shall assume responsibility for payment of
all medical, dental, health and disability claims incurred by Employees in its
employ on or after the Closing Date, which are covered under Buyer's benefit
plans and in which the Employee is a participant.
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(f) Seller agrees that it shall retain, consistent with its normal
employment practices, all liabilities and obligations, if any (including,
without limitation, the liability and obligation for all wages, salary, vacation
pay and unemployment, medical, dental, health and disability benefits), for
those former employees of Seller who retired or terminated employment prior to
the Closing Date or otherwise do not become employees of Buyer.
(g) Seller, with respect to the Employees, will timely give all notices
required to be given under the Worker Adjustment and Retraining Notification Act
of 1988 or similar statutes or regulation of any jurisdiction relating to any
plant closing or mass lay off or as otherwise required by law and shall fully
indemnify and hold harmless Buyer with respect to any liability that may arise
with respect thereto relating to the Employees.
(h) Any Employee who becomes an employee of Buyer on the Closing Date
and who was eligible to participate in Seller's 401(k) Plan shall become
eligible to participate in Buyer's 401(k) Savings Plan without regard to the
eligibility requirements contained therein.
ARTICLE 5: COVENANTS OF BUYER
Buyer covenants and agrees that from the date hereof until the completion of
the Closing:
5.1 Representations and Warranties. Buyer shall give detailed written notice
to Seller promptly upon learning of the occurrence of any event that would cause
or constitute a breach or would have caused a breach had such event occurred or
been known to Buyer prior to the date hereof, of any of the representations and
warranties of Buyer contained in this Agreement.
5.2 Application for FCC Consent. Buyer will diligently take, or cooperate in
the taking of, all steps that are necessary, proper or desirable to expedite the
prosecution of the Application to a favorable conclusion. Buyer will promptly
provide Seller with copies of any pleading, order or other document served on it
relating to the Application. Buyer shall furnish all information required by the
FCC and shall be represented at all meetings or hearings scheduled to consider
such Application. In the event that Closing occurs prior to a Final FCC Consent,
then Buyer's obligations under Section 4.4 and this Section 5.2 shall survive
the Closing.
5.3 Consummation of Agreement. Subject to the provisions of Section 10.1 of
this Agreement: (a) Buyer shall fulfill and perform all conditions and
obligations on its part to be fulfilled and performed under this Agreement, and
to cause the transactions contemplated by this Agreement to be fully carried
out, and (b) Buyer shall not take any action that would make the consummation of
this Agreement contrary to the Communications Act or the rules, regulations or
policies of the FCC. Buyer shall use commercially reasonable efforts to prevent
any of the representations and warranties set forth in Article 3 from becoming
untrue or incorrect, to cause the conditions to Closing set forth in Article 6
below to be satisfied, and to ensure that the transactions contemplated hereby
shall be consummated as set forth herein.
5.4 Notice of Proceedings. Buyer will promptly notify Seller in writing
upon: (a) becoming aware of any order or decree or any complaint praying for an
order or decree
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restraining or enjoining the consummation of this Agreement or the transactions
contemplated hereunder; or (b) receiving any notice from any governmental
department, court, agency or commission of its intention (i) to institute an
investigation into, or institute a suit or proceeding to restrain or enjoin, the
consummation of this Agreement or such transactions, or (ii) to nullify or
render ineffective this Agreement or such transactions if consummated.
5.5 Hart-Scott-Rodino. As soon as possible (but in no event later than seven
calendar days after the date of this Agreement), if necessary, Buyer shall
prepare and file all documents with the Federal Trade Commission and the United
States Department of Justice as are required to comply with the
Hart-Scott-Rodino Act, request early termination of the waiting period thereof,
and shall thereafter furnish promptly all materials thereafter requested by any
of the regulatory agencies having jurisdiction over such filings.
5.6 Confidentiality. Any and all information, disclosures, knowledge or
facts regarding Seller, the Stations and their operation and properties derived
from or resulting from Buyer's acts or conduct (including without limitation
acts or conduct of Buyer's officers, employees, accountants, counsel, agents,
consultants or representatives, or any of them) under the provisions of Section
4.2 hereof shall be confidential and shall not be divulged, disclosed or
communicated to any other person, firm, corporation or entity, except for
Buyer's attorneys, accountants, investment bankers, investors and lenders, and
their respective attorneys for the purpose of consummating the transactions
contemplated by this Agreement. In the event this Agreement is terminated prior
to Closing, Buyer shall, and shall cause its representatives to, destroy or
return to Seller all such information in its possession.
ARTICLE 6: CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at its option, subject
to the fulfillment of the following conditions prior to or on the Closing Date:
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6.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Buyer contained in
this Agreement (without regard to any materiality qualifications contained
therein) shall have been true and correct in all material respects as of the
date when made and shall be deemed to be made again on and as of the Closing
Date and shall then be true and correct in all material respects, except to the
extent changes are permitted or contemplated pursuant to this Agreement.
(b) Buyer shall have performed and complied in all material respects
with each and every covenant and agreement required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Buyer shall have furnished Seller with a certificate, dated the
Closing Date and duly executed by an officer authorized on behalf of Buyer to
give such a certificate, to the effect that the conditions set forth in Sections
6.1(a) and (b) have been satisfied.
6.2 Proceedings.
(a) Neither Seller nor Buyer shall be subject to any restraining order
or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.
(b) In the event such a restraining order or injunction is in effect,
this Agreement may not be abandoned by Seller pursuant to this Section 6.2 prior
to the Final Closing Date (defined below), but the Closing shall be delayed
during such period. This Agreement may be abandoned after the Final Closing Date
(defined below) if such restraining order or injunction remains in effect.
6.3 FCC Authorization. The assignment of the FCC Authorizations to CCBL
shall have been initially approved without any conditions materially adverse to
Seller.
6.4 Hart-Scott-Rodino. If applicable, the waiting period under the
Hart-Scott-Rodino Act shall have expired or been terminated.
6.5 Deliveries. Buyer shall have complied with each and every one of its
obligations set forth in Section 8.2.
ARTICLE 7: CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its option, subject to
the fulfillment of the following conditions prior to or on the Closing Date:
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7.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Seller contained in
this Agreement (without regard to any materiality qualifications contained
therein) shall have been true and correct in all material respects as of the
date when made and shall be deemed to be made again on and as of the Closing
Date and shall then be true and correct in all material respects except to the
extent changes are permitted or contemplated pursuant to this Agreement.
(b) Seller shall have performed and complied in all material respects
with each and every covenant and agreement required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Seller shall have furnished Buyer with a certificate, dated the
Closing Date and duly executed by an officer authorized on behalf of Seller to
give such a certificate, to the effect that the conditions set forth in Sections
7.1(a) and (b) have been satisfied.
7.2 Proceedings.
(a) Neither Seller nor Buyer shall be subject to any restraining order
or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby.
(b) In the event such a restraining order or injunction is in effect,
this Agreement may not be abandoned by Buyer pursuant to this Section 7.2 prior
to the Final Closing Date (defined below), but the Closing shall be delayed
during such period. This Agreement may be abandoned after such date if such
restraining order or injunction remains in effect.
7.3 FCC Authorization. The assignment of the FCC Authorizations to CCBL
shall have been initially approved by the FCC (and in the event the Application
is contested in any respect, at Buyer's option, such FCC Consent shall have
become Final), without any conditions materially adverse to Buyer.
7.4 Hart-Scott-Rodino. If applicable, the waiting period under the
Hart-Scott-Rodino Act shall have expired or been terminated.
7.5 Deliveries. Seller shall have complied with each and every one of its
obligations set forth in Section 8.1.
7.6 Required Consents. Seller shall have obtained all of the Required
Consents.
7.7 No Material Change. Seller's business shall not have been materially and
adversely affected as of the Closing Date. No change shall be considered
"materially adverse" if it arises out of or is related to the terms hereof or
the transactions contemplated hereby.
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ARTICLE 8: ITEMS TO BE DELIVERED AT THE CLOSING
8.1 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer duly
executed by Seller or such other signatory as may be required by the nature of
the document:
(a) bills of sale, certificates of title, endorsements, assignments,
general warranty deeds and other good and sufficient instruments of sale,
conveyance, transfer and assignment, in form and substance satisfactory to
Buyer, sufficient to sell, convey, transfer and assign the FCC Authorizations to
CCBL and the other Station Assets to CCB free and clear of any Liens (other than
Permitted Encumbrances) and to quiet Buyer's title thereto;
(b) the consent of the FCC referred to in Sections 4.4 and 5.2 and
evidence of compliance by Seller with its obligations, and the Required Consents
under Section 4.5 and any other Consents obtained by Seller;
(c) certified copies of appropriate resolutions, duly adopted, which
shall be in full force and effect at the time of the Closing, authorizing the
execution, delivery and performance by Seller of this Agreement, and the
consummation of the transactions contemplated hereby;
(d) the certificate referred to in Section 7.1(c);
(e) an opinion of Seller's counsel in the form and substance
satisfactory to Buyer;
(f) the Estoppel Certificates, Title Commitments and the Lien Search
Reports; and
(g) the Noncompetition Agreement duly executed by Seller.
8.2 Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller:
(a) the Purchase Price, which shall be paid in the manner specified in
Section 1.4;
(b) an instrument or instruments of assumption of the Contracts and
Real Property leases to be assumed by CCB pursuant to this Agreement;
(c) certified copies of resolutions, duly adopted by the Boards of
Directors of each Buyer, which shall be in full force and effect at the time of
the Closing, authorizing the execution, delivery and performance by each Buyer
of this Agreement and the consummation of the transactions contemplated hereby;
and
(d) the certificate referred to in Section 6.1(c).
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ARTICLE 9: SURVIVAL; INDEMNIFICATION
9.1 Survival. All representations, warranties, covenants and agreements
contained in this Agreement, or in any certificate, agreement, or other document
or instrument, delivered pursuant hereto, shall survive (and not be affected in
any respect by) the Closing for a period of 18 months after Closing, and shall
not be affected by any investigation conducted by any party hereto and any
information which any party may receive.
9.2 Basic Provision.
(a) From and after Closing, Seller (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Buyer, the directors, officers and
employees of Buyer and all persons which directly or indirectly, through one or
more intermediaries, control, are controlled by, or are under common control
with Buyer, and their respective successors and assigns (collectively, the
"Buyer Indemnitees") from, against and in respect of, and to reimburse the Buyer
Indemnitees for, the amount of any and all Deficiencies (as defined in Section
9.3(a)).
(b) From and after Closing, Buyer (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Seller, the directors, officers and
employees of Seller and all persons which directly or indirectly, through one or
more intermediaries, control, are controlled by, or are under common control
with Seller, and their respective successors and assigns (collectively, the
"Seller Indemnitees") from, against and in respect of, and to reimburse the
Seller Indemnitees for, the amount of any and all Deficiencies (as defined in
Section 9.3(b)).
9.3 Definition of "Deficiencies".
(a) As used in this Article 9, the term "Deficiencies" when asserted by
Buyer Indemnitees or arising out of a third party claim against Buyer
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Buyer Indemnitees and arising out of, based upon or resulting
from:
(i) any misrepresentation, breach of warranty, or any
non-fulfillment of any representation, warranty, covenant, obligation or
agreement on the part of Seller contained in or made pursuant to this Agreement;
(ii) any failure by Seller to pay or perform any obligation
relating to the Stations that is not expressly assumed by Buyer pursuant to the
provisions of this Agreement;
(iii) any litigation, proceeding or claim by any third party
relating to the business or operations of the Stations prior to the Closing
Date;
(iv) any severance pay or other payment required to be paid with
respect to employees of the Stations (relating to such employees' employment
prior to Closing if they are hired by Buyer);
(v) the ownership and operation of the Stations prior to Closing;
and
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(vi) any and all acts, suits, proceedings, demands, assessments
and judgments, and all fees, costs and expenses of any kind, related or incident
to any of the foregoing (including, without limitation, any and all Legal
Expenses (as defined in Section 9.6 below)).
(b) As used in this Article 9, the term "Deficiencies" when asserted by
Seller Indemnitees or arising out of a third party claim against Seller
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Seller Indemnitees and arising out of, based upon or resulting
from:
(i) any misrepresentation, breach of warranty, or any
non-fulfillment of any representation, warranty, covenant, obligation or
agreement on the part of Buyer contained in or made pursuant to this Agreement;
(ii) any failure by Buyer to pay or perform any obligation or
liability relating to the Stations that is expressly assumed by Buyer pursuant
to the provisions of this Agreement;
(iii) any litigation, proceeding or claim by any third party to
the extent relating to the business or operations of the Stations after the
Closing Date;
(iv) the ownership and operation of Stations after Closing; and
(v) any and all acts, suits, proceedings, demands, assessments and
judgments, and all fees, costs and expenses of any kind, related or incident to
any of the foregoing (including, without limitation, any and all Legal Expenses
(as defined in Section 9.6 below)).
9.4 Procedures.
(a) In the event that any claim shall be asserted by any third party
against the Buyer Indemnitees or Seller Indemnitees (Buyer Indemnitees or Seller
Indemnitees, as the case may be, hereinafter, the "Indemnitees"), which, if
sustained, would result in a Deficiency, then the Indemnitees, as promptly as
practicable after learning of such claim, shall notify the Indemnifying Party of
such claim, and shall extend to the Indemnifying Party a reasonable opportunity
to defend against such claim, at the Indemnifying Party's sole expense and
through legal counsel acceptable to the Indemnitees, provided that the
Indemnifying Party proceeds in good faith, expeditiously and diligently. The
Indemnitees shall, at their option and expense, have the right to participate in
any defense undertaken by the Indemnifying Party with legal counsel of their own
selection. No settlement or compromise of any claim which may result in a
Deficiency may be made by the Indemnifying Party without the prior written
consent of the Indemnitees unless: (A) prior to such settlement or compromise
the Indemnifying Party acknowledges in writing its obligation to pay in full the
amount of the settlement or compromise and all associated expenses; and (B) the
Indemnitees are furnished with a full release.
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(b) In the event that the Indemnitees assert the existence of any
Deficiency against the Indemnifying Party, they shall give written notice to the
Indemnifying Party of the nature and amount of the Deficiency asserted. If the
Indemnifying Party within a period of thirty (30) days after the giving of the
Indemnitees' notice, shall not give written notice to the Indemnitees announcing
its intent to contest such assertion of the Indemnitees (such notice by the
Indemnifying Party being hereinafter referred to as the "Contest Notice"), such
assertion of the Indemnitees shall be deemed accepted and the amount of the
Deficiency shall be deemed established. In the event, however, that a Contest
Notice is given to the Indemnitees within said 30-day period, then the contested
assertion of a Deficiency shall be settled by arbitration to be held in San
Antonio, Texas in accordance with the Commercial Rules of the American
Arbitration Association then existing. The determination of the arbitrator shall
be delivered in writing to the Indemnifying Party and the Indemnitees and shall
be final, binding and conclusive upon all of the parties hereto, and the amount
of the Deficiency, if any, determined to exist, shall be deemed established.
(c) The Indemnitees and the Indemnifying Party may agree in writing, at
any time, as to the existence and amount of a Deficiency, and, upon the
execution of such agreement such Deficiency shall be deemed established.
9.5 Payment of Deficiencies. The Indemnifying Party hereby agrees to pay the
amount of established Deficiencies within 15 days after the establishment
thereof. The amount of established Deficiencies shall be paid in cash. At the
option of the Indemnitees, the Indemnitees may offset any Deficiency or any
portion thereof that has not been paid by the Indemnifying Party to the
Indemnitees against any obligation the Indemnitees, or any of them, may have to
the Indemnifying Party.
9.6 Legal Expenses. As used in this Article 9, the term "Legal Expenses"
shall mean any and all fees (whether of attorneys, accountants or other
professionals), costs and expenses of any kind reasonably incurred by any person
identified herein and its counsel in investigating, preparing for, defending
against, or providing evidence, producing documents or taking other action with
respect to any threatened or asserted claim.
9.7 Limitations on Indemnification. Notwithstanding any other provision of
this Article 9: (a) no Indemnifying Party shall be liable for indemnification
under this Article 9 unless and until the total amount of claims for
indemnification shall aggregate $50,000 (in which event the Indemnifying Party
shall be liable for all such claims), and (b) no Indemnifying Party shall be
liable for indemnification in an aggregate amount in excess of $15,000,000.
Subject to Section 10.2 and 10.10, and except as otherwise provided in this
Agreement, the indemnification provided in this Article 9 shall be the exclusive
remedy of Buyer and Seller for all claims for Deficiencies brought under this
Agreement after the Closing Date.
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ARTICLE 10: MISCELLANEOUS
10.1 Termination. This Agreement may be terminated at any time prior to
Closing: (a) by the mutual consent of Seller and Buyer; (b) by any party hereto
if the FCC has denied the approvals contemplated by this Agreement in an order
which has become Final; (c) by Buyer under the provisions of Section 2.14
(Environmental Matters); (d) by Buyer as provided in Section 10.8 (Broadcast
Transmission Interruption); (e) by Buyer as provided in Section 10.9 (Risk of
Loss); (f) by Buyer or Seller if the first of the Closings has not taken place
by July 12, 2001 (the "Final Closing Date"); (g) by Buyer, if on the Closing
Date Seller has failed to satisfy the conditions set forth in Section 7.1, 7.5,
7.6 or 7.7; (h) by Buyer if Seller has failed to cure a material breach of any
of its representations, warranties or covenants under this Agreement within
thirty (30) calendar days after it receives notice from Buyer of such breach;
(i) by Seller, if on the Closing Date Buyer has failed to satisfy the conditions
set forth in Section 6.1 or 6.5; (j) by Seller if Buyer has failed to cure a
material breach of any of its representations, warranties or covenants under
this Agreement within thirty (30) calendar days after it receives notice from
Seller of such breach; or (k) by Buyer if the Asset Purchase Agreement and the
Asset Exchange Agreement made as of March 5, 2000 (as amended to date) between
Seller and certain AMFM, Inc. companies are terminated. A termination pursuant
to this Section 10.1 shall not relieve any party of any liability it would
otherwise have for a breach of this Agreement. Notwithstanding anything
contained to the contrary in this Agreement, in the event of a breach of a
representation or warranty, or any failure to comply with or perform a covenant
or agreement, on the part of Seller under this Agreement, the Purchase Price
shall be reduced (in lieu of termination by Buyer) in the amount required to
cure any such breach or failure that is susceptible of being cured by such a
reduction.
10.2 Specific Performance. In the event of a breach or threatened breach by
Seller of any representation, warranty, covenant or agreement under this
Agreement, at Buyer's election, in addition to any other remedy available to it,
Buyer shall be entitled to an injunction restraining any such breach or
threatened breach and, subject to obtaining any requisite approval of the FCC,
to enforcement of this Agreement by a decree of specific performance requiring
Seller to fulfill its obligations under this Agreement, in each case without the
necessity of showing economic loss or other actual damage and without any bond
or other security being required.
10.3 Expenses. Each party hereto shall bear all of its expenses incurred in
connection with the transactions contemplated by this Agreement, including
without limitation, accounting and legal fees incurred in connection herewith;
provided, however, that: (i) Seller and Buyer shall each pay one-half of the FCC
filing fees required to be paid in connection with the Application referred to
in Sections 4.4 and 5.2 hereof; (ii) Seller shall be exclusively responsible
for, and Buyer shall not have any liability or responsibility for any sales or
transfer taxes (including without limitation any real estate transfer taxes),
arising from the transfer of the Station Assets to Buyer; and (iii) Seller and
Buyer shall each pay one-half of any Hart-Scott-Rodino Act filing fees, if
applicable.
10.4 Bulk Sales Laws. Seller agrees to indemnify and hold Buyer harmless, in
the manner and to the extent provided in Article 9 above, from all claims made
by creditors with respect to non-compliance with any bulk sales law. Buyer and
Seller hereby waive compliance with applicable laws under Article 6 of the
Uniform Commercial Code of any state, or any
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similar law, relating to the sale of assets in bulk that may apply to the
transactions contemplated by this Agreement.
10.5 Remedies Cumulative. The remedies provided in this Agreement shall be
cumulative and shall not preclude the assertion by any party hereto of any other
rights or the seeking of any other remedies against the other party hereto.
10.6 Further Assurances. From time to time prior to, on and after the
Closing Date, each party hereto will execute all such instruments and take all
such actions as any other party shall reasonably request, without payment of
further consideration, in connection with carrying out and effectuating the
intent and purpose hereof and all transactions contemplated by this Agreement,
including without limitation the execution and delivery of any and all
confirmatory and other instruments in addition to those to be delivered on the
Closing Date, and any and all actions which may reasonably be necessary to
complete the transactions contemplated hereby. The parties shall cooperate fully
with each other and with their respective counsel and accountants in connection
with any steps required to be taken as part of their respective obligations
under this Agreement.
10.7 Public Announcements. Prior to the Closing Date, no party shall,
without the approval of the other party hereto, make any press release or other
public announcement concerning the transactions contemplated by this Agreement,
except (i) to announce it has been entered into, (ii) in accordance with FCC
rules, and (iii) as and to the extent that such party shall be so obligated by
law, in which case such party shall give advance notice to the other party and
the parties shall use their best efforts to cause a mutually agreeable release
or announcement to be issued.
10.8 Broadcast Transmission Interruption. If before the Closing the regular
broadcast transmission of any Station in the normal and usual manner is
interrupted for a period of two consecutive hours or more, Seller shall give the
prompt written notice thereof to Buyer. Buyer shall then have the right, by
giving written notice to Seller, to postpone (and if necessary re-postpone) the
Closing until transmission has been re-established.
10.9 Risk of Loss. The risk of loss, damage or destruction to any of the
Station Assets shall be borne by Seller at all times up to 12:01 a.m. local time
on the Closing Date, and it shall be the responsibility of Seller to repair or
cause to be repaired and to restore the property to its condition prior to any
such loss, damage, or destruction. In the event of any such loss, damage, or
destruction, the proceeds of any claim for any loss, payable under any insurance
policy with respect thereto, shall be used to repair, replace, or restore any
such property to its former condition, subject to the conditions stated below.
In the event of any material loss or damage to any of the Station Assets, Seller
shall notify Buyer thereof in writing immediately. Such notice shall specify
with particularity the loss or damage incurred, the cause thereof (if known or
reasonably ascertainable), and the insurance coverage. In the event that the
property is not completely repaired, replaced or restored on or before the
scheduled Closing Date, Buyer at its option: (a) may elect to postpone Closing
until such time as the property has been completely repaired, replaced or
restored (and, if necessary, Seller shall join Buyer in requesting from the
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FCC any extensions of time in which to consummate the Closing that may be
required in order to complete such repairs); or (b) may elect to consummate the
Closing and accept the property in its then condition, in which event Seller
shall pay to Buyer all proceeds of insurance and assign to Buyer the right to
any unpaid proceeds.
10.10 Arbitration. In case any disagreement shall arise on or before the
Closing Date between the parties hereto in relation to this Agreement, whether
as to the construction or operation hereof or the respective rights and
liabilities hereunder, such disagreement shall be decided by arbitration.
Arbitration shall be initiated by either party giving written notice to
arbitrate to the other party, stating the question to be arbitrated and the name
of the arbitrator selected by that party. Within fifteen (15) days of the date
of said notice to arbitrate certificate, the other party shall select and give
written notice of its arbitrator to the initiating party. The two arbitrators so
selected shall select a third arbitrator and give written notice within five (5)
days after the third arbitrator is chosen. The arbitration shall be conducted
solely by the third arbitrator, who shall hear evidence and make an award as
promptly as practicable after the notice of selection of the third arbitrator is
given to the parties, which award, when signed by the third arbitrator, shall be
final. If either party shall refuse or neglect to appoint an arbitrator within
fifteen (15) days after the other shall have appointed an arbitrator and given
written notice to arbitrate to the other, requiring such party to appoint an
arbitrator, then the arbitrator so appointed by the first party shall have power
to proceed to arbitrate and determine the matters of disagreement as if he were
an arbitrator appointed by both the parties hereto for that purpose, and his
award in writing signed by him shall be final. The party against which such
award is made shall pay all costs and expenses of the arbitration. The Closing
Date shall be automatically postponed during any such arbitration, but not
beyond the Final Closing Date. Nothing herein shall prevent Buyer from obtaining
an injunction, decree of specific performance or other equitable relief from any
court.
ARTICLE 11: GENERAL PROVISIONS
11.1 Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective representatives, successors and assigns. Seller may
not assign this Agreement or any part hereof without the prior written consent
of Buyer, and any attempted assignment without such consent shall be void. Buyer
may assign this Agreement without Seller's consent (a) in whole or in part to an
Affiliate of Buyer, and (b) in part (including without limitation separate
assignments with respect to one or more of the Stations), provided that any such
assignee shall be legally qualified to be an FCC broadcast licensee and such
assignment shall not unduly delay the Closing.
11.2 Amendments; Waivers. The terms, covenants, representations, warranties
and conditions of this Agreement may be changed, amended, modified, waived, or
terminated only by a written instrument executed by the party waiving
compliance. The failure of any party at any time or times to require performance
of any provision of this Agreement shall in no manner affect the right of such
party at a later date to enforce the same. No waiver by any party of any
condition or the breach of any provision, term, covenant, representation or
warranty contained in
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this Agreement, whether by conduct or otherwise, in any one or more instances
shall be deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
11.3 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by Federal
Express or a similar overnight courier service, expenses prepaid, or, if sent by
telex, graphic scanning or other facsimile communications equipment, delivered
by such equipment, addressed as set forth below:
(a) if to Seller, then to: Cumulus Broadcasting, Inc.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53211
Attention: Terrence J. Leahy
Facsimile: (414) 615-2880
with a copy (which shall
not constitute notice) to: Paul, Hastings, Janofsky & Walker
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: David D. Burns
Facsimile: (202) 508-9700
(b) if to Buyer, then to: Clear Channel Broadcasting, Inc.
200 E. Basse Road
San Antonio, Texas 78209
Attention: President
Facsimile: (210) 822-2299
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with a copy (which shall not
constitute notice) to: Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Attention: Richard J. Bodorff
Facsimile: (202) 429-7209
Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section providing for the giving of notice.
11.4 Captions. The captions of Articles and Sections of this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any of the provisions of this Agreement.
11.5 Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to principles of conflicts of laws.
11.6 Entire Agreement. This Agreement and the Exhibits and Schedules hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof, and supersede all prior agreements,
understandings, inducements or conditions, express or implied, oral or written,
relating to the subject matter hereof, including without limitation the Binding
Agreement for Purchase of Radio Stations dated July 17, 2000, among the parties.
The express terms hereof control and supersede any course of performance and/or
usage of trade inconsistent with any of the terms hereof. This Agreement has
been prepared by all of the parties hereto, and no inference of ambiguity
against the drafter of a document therefore applies against any party hereto.
Each plural and singular term used herein (including without limitation the
terms "Seller," "Stations," "Selling Companies," "Selling Company Acquisition
Documents," and "Cumulus Closing") shall be construed case by case to mean any
one or some or all of the constituent elements of such terms, as the context
requires, to enable Buyer to obtain the fullest benefit of this Agreement.
11.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
11.8 Like-Kind Exchange. To facilitate the transfer of the Station Assets as
part of a like-kind exchange under Section 1031 of the Internal Revenue Code,
Buyer may assign its rights under this Agreement (in whole or in part) to a
"qualified intermediary" under section 1.1031(k)-1(g)(4) of the treasury
regulations (but such assignment shall not relieve it of its obligations under
this Agreement). If Buyer gives notice of such assignment, Seller shall provide
Buyer with a written acknowledgment of such notice prior to Closing and convey
the Station Assets (or such
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portion thereof as is designated in writing by the qualified intermediary) to or
on behalf of the qualified intermediary at Closing and otherwise cooperate
therewith.
11.9 Schedules. This Agreement is being executed prior to delivery of the
Schedules hereto, and is subject to and contingent upon delivery of all such
Schedules by Seller in form and substance reasonably satisfactory to Buyer (the
"Schedule Condition") within thirty calendar days of the date of this Agreement.
If the Schedule Condition is not satisfied by such date, Buyer may terminate
this Agreement by written notice to Seller.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
BUYER: CLEAR CHANNEL BROADCASTING, INC.
CLEAR CHANNEL BROADCASTING LICENSES, INC.
By:
--------------------------------------
Name:
Title:
SELLER: CUMULUS BROADCASTING, INC.
CUMULUS LICENSING CORP.
CUMULUS WIRELESS SERVICES, INC.
By:
--------------------------------------
Name:
Title:
40
Schedules
1.1(a) - Licenses and Authorizations
1.1(b) - Tangible Personal Property
1.1(c) - Real Property
1.1(e) - Contracts
1.1(f) - Intangible Property
2.6 - Financial Statements
2.11 - Consents
2.16 - Insurance Policies
2.17 - Employment Matters
Exhibits
A - Purchase Price
B - Noncompetition Agreement
41
Exhibit A
The Purchase Price shall be the sum of the following (but not exceeding the
amount for each market set forth below):
(i) an amount equal to a multiple of 15x calendar year 1999 broadcast cash
flow for the Cumulus Stations in Mason City, Rochester and Mankato/New Ulm;
(ii) $9,390,000 for the Evansville Stations; and
(iii) the purchase price paid by Seller to acquire the Columbus Owned
Stations, the Columbus Stations and the CP Station (including any pre-paid
purchase price or portion of pre-paid LMA fees attributable to the post-Closing
period) plus any amounts that, in accordance with GAAP, constitute capital
expenditures made by Seller to improve the Columbus Stations (the "Columbus
Price").
The Purchase Prices for the Stations shall not exceed the following:
Evansville Stations $ 9,390,000
Cumulus Stations in:
Mason City $15,420,000
Rochester $10,185,000
Mankato/New Ulm $20,310,000
Columbus Owned Stations, $22,254,000
Columbus Stations and
CP Stations
Seller shall promptly provide Buyer: (a) evidence to confirm the amount of
the Columbus Price and a detailed breakdown thereof and backup therefor, and (b)
to the extent not already provided to Buyer, statements of income for calendar
year 1999 and the first five months of calendar year 2000 and sales projections
for the third calendar quarter for all Stations (which, in the case of the
statements of income, shall have been prepared in accordance with GAAP and
fairly present the Stations' results of operations). As used herein, "broadcast
cash flow" means net cash income from the sale of advertising time (before
interest, income tax, depreciation and amortization).