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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of March 9, 1999 by and
between CUMULUS BROADCASTING, INC., a Nevada corporation ("Broadcasting"),
CUMULUS LICENSING CORP., a Nevada corporation ("Licensing), CUMULUS WIRELESS
SERVICES INC., a Nevada corporation ("Wireless"), HMH BROADCASTING INC., a
Kentucky corporation ("HMH"), and HMH REALTY, LLC, a Kentucky limited liability
company ("HMH Realty"). Broadcasting, Licensing, and Wireless are referred to
collectively herein as the "Buyers." HMH and HMH Realty are referred to
collectively as the "Sellers." The Buyers and the Seller are referred to
individually as the "Party" or collectively as the "Parties." Capitalized terms
used in this Agreement are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers
hereby agree to purchase substantially all of the assets (and assume certain of
the liabilities) of the Seller that are used or useful in the operation of radio
stations WLRO-FM licensed to Richmond, KY; WLTO-FM licensed to Nicholasville,
KY; WVLK-FM and WVLK-AM licensed to Lexington, KY; and WXZZ-FM licensed to
Georgetown, KY (the "Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. BASIC TRANSACTION.
A. PURCHASE AND SALE OF ASSETS. On and subject to the terms
and conditions of this Agreement, (i) the Seller agrees to sell, transfer,
convey and deliver to Licensing, and Licensing agrees to purchase from the
Seller, all of the FCC Licenses listed in Section 2(k) of the disclosure
schedule ("Disclosure Schedule"); and (ii) Seller agrees to sell, transfer
convey and deliver to Broadcasting , and Broadcasting agrees to purchase from
the Seller, all of the Acquired Assets other than the FCC Licenses and the Tower
Properties listed in Section 2(i) of the Disclosure Schedule; and (iii) Seller
agrees to sell, transfer, convey and deliver to Wireless, and Wireless agrees to
purchase from the Seller, all of the Tower Properties. All of these sales,
except for the sales effected previously pursuant to the TBA, shall take place
at the Closing for the consideration specified below in this Section 1.
B. ASSUMPTION OF LIABILITIES. On and subject to the terms
and conditions of this Agreement, Broadcasting agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing, except as
otherwise provided in the TBA and as set forth below. The Buyers will not assume
or have any responsibility, however, with respect to any other obligation or
Liability of the Seller not included within the definition of Assumed
Liabilities and assumed by Broadcasting, and the Seller agrees to pay and
discharge all Liabilities and obligations of the Seller other than the Assumed
Liabilities.
Buyer and Seller agree as follows with respect to certain Assumed
Liabilities:
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(i) With respect to the three Radio Programming Lease
Agreements between Broadcast Programming and HMH listed on
Section IIA of Exhibit G, Seller agrees that it will
negotiate in good faith to terminate these agreements prior
to the TBA Date. In the event that Broadcast Programming
does not agree to terminate these agreements without
liability, Buyer and Seller agree that each will pay fifty
percent (50%) of the termination liability for each
contract, with Seller paying its portion in cash and Buyers
paying their portion under a barter arrangement with
Broadcast Programming.
(ii) With respect to the Employment Agreement dated 11/30/98
between James F. Barnhart and Seller (the "Barnhart
Contract"), and notwithstanding any provision of this
Section to the contrary, Buyers agree to honor the terms and
conditions of the Barnhart Contract for the full term of
such contract. With respect to each of the other labor and
employment contracts listed in Section III of Exhibit G
attached hereto, Buyers agree to honor the terms and
conditions of each such contract for the duration of the
term of the TBA. On the expiration of the TBA, Buyers shall
not assume and shall not be held to the terms and conditions
of such labor and employment contract, except as provided
below. In the event that there are labor and employment
contracts which Buyers do not assume and which entitle such
employees to severance pay, the severance pay shall be paid
as follows. First, Buyers shall make such severance payments
as may be consistent with their then-current policies and as
may be negotiated with such employees. Second, Seller shall
pay any additional severance pay owed to such employees, up
to one hundred twenty-five thousand dollars ($125,000) in
the aggregate, which shall be Seller's sole and exclusive
severance liability with respect to such employee(s). Third,
any severance liability still remaining shall be the
responsibility of Buyers, who shall reimburse Seller by
means of an adjustment to the Purchase Price at Closing or
by means of a post-Closing adjustment, but Buyers shall have
no other obligations with respect to such labor and
employment contracts.
C. PURCHASE PRICE. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the amount of Forty-Four Million Five
Hundred Thousand and no/100 Dollars ($44,500,000.00) (the "Purchase Price"),
payable as follows:
(i) on the date of this Agreement, the Buyers will deposit with
the Escrow Agent an irrevocable letter of credit in favor of
the Escrow Agent in the amount of Two Million Two Hundred
Twenty-Five Thousand and no/100 Dollars ($2,225,000.00) (the
"Earnest Money Deposit"); and
(ii) on the Closing Date, the Buyers shall deposit with the
Escrow Agent the amount of One Million One Hundred Twelve
Thousand Five Hundred and no/100 Dollars ($1,112,500.00),
which shall constitute the Post-Closing Escrow described
below;
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(iii) on the Closing Date, the Buyers shall pay the Seller the
amount of Forty-Three Million Two Hundred Eighty-Seven
Thousand Five Hundred and no/100 Dollars ($43,287,500.00),
less (a) the amount, if any, distributed by the Escrow Agent
to the Seller at the closing pursuant to Section 3(A) of the
Escrow Agreement, by wire transfer or delivery of other
immediately available funds, and (b) any Purchase Price
Adjustment;
(iv) on the Closing Date, the Buyers shall pay to the Seller, on
behalf of Ralph E. Hacker pursuant to the Post-Closing
Agreement, the amount of One Hundred Thousand and no/100
Dollars ($100,000).
The Earnest Money Deposit referenced in this Section 1(c) shall be placed in
escrow with the Escrow Agent pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the "Escrow Agreement") and shall be disbursed in
accordance with the terms thereof. The Escrow Agreement shall provide that, in
the event Seller makes a claim against the Earnest Money Deposit, Seller shall
be entitled to the interest on such Earnest Money Deposit from the date Seller
makes such claim until the date Seller receives damages as a result of the
claim. The Escrow Agreement shall further provide that if the letter of credit
has not been replaced by a new letter of credit more than thirty (30) days
before the expiration date of the letter of credit, then the Escrow Agent shall
present the letter of credit to Seller who shall draw down the letter of the
credit and hold the proceeds as a cash escrow. The One Million One Hundred
Twelve Thousand Five Hundred Dollars ($1,112,500.00) deposited by Buyers with
the Escrow Agent at the Closing under Section 1(c)(ii) (the "Post-Closing
Escrow") shall be credited against the Purchase Price on the Closing Date but
shall remain in escrow, in whole or in part, from and after the Closing Date
with the Escrow Agent for a period of twelve (12) months from the Closing Date
(or such longer period as provided in the Escrow Agreement if an indemnification
claim is submitted during such twelve (12) month period) pursuant to the Escrow
Agreement. The Post-Closing Escrow shall be invested by Escrow Agent in
accordance with the instructions of Seller, and all interest earned thereon
shall be the property of Seller, payable to Seller upon demand. If this
Agreement is terminated without Closing of the transaction contemplated herein,
the Earnest Money deposit and all accrued interest (if any) shall be paid to the
Buyers or the Seller as provided in the Escrow Agreement.
D. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at a mutually agreed location,
commencing at 9:00 a.m. local time on either (i) a date mutually agreeable to
the Buyers and Seller not earlier than the fifth business day or later than
tenth business day after the FCC approval of the Assignment Application becomes
a Final Order, by which date all other conditions to the obligations of the
Parties to consummate the transactions contemplated hereby will have been
satisfied, or (ii) such other date as the Parties may mutually determine (with
either date being referred to as the "Closing Date").
E. DELIVERIES AT THE CLOSING. At the Closing, unless
previously delivered to the Buyer or the Seller, as the case may be, pursuant to
the TBA (i) the Seller will deliver to the Buyers the various certificates,
instruments, and documents referred to in Section 5(a) below; (ii)
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the Buyers will deliver to the Seller the various certificates, instruments, and
documents referred to in Section 5(b) below; (iii) the Seller will execute,
acknowledge (if appropriate), and deliver to the Buyers (A) assignments
(including Lease and other Assumed Contract assignments and Intellectual
Property transfer documents), bills of sale and warranty deeds in form
reasonably acceptable to the Buyers, (B) such affidavits, transfer tax returns,
memorandums of lease, and other additional documents as may be required by the
terms of the title insurance commitments described in Section 4(n) hereof, as
necessary for Buyer to obtain title insurance as required by such section or as
may be necessary to convey title to the Real Estate to the Buyers in the
condition required herein or provide public notice of existence of the Leases,
and (C) such other instruments of sale, transfer, conveyance, and assignment as
the Buyers and their counsel reasonably may request; (iv) the Buyers will
execute, acknowledge (if appropriate), and deliver to the Seller (A) an
assumption in the form attached hereto as Exhibit B and (B) such other
instruments of assumption as the Seller and its counsel reasonably may request;
and (v) the Buyers will deliver to the Seller the consideration specified in
Section 1(c) above.
F. POST-CLOSING AGREEMENT. On the Closing Date, the Seller
shall execute, and shall cause Ralph E. Hacker to execute, a Post-Closing
Agreement with the Buyers including covenants not to compete with the Buyers in
the markets served by the Stations in the form of Exhibit C attached hereto. A
portion of the Purchase Price equal to One Hundred Thousand Dollars ($100,000)
shall be paid to Ralph E. Hacker by the Buyers on the Closing Date as
consideration for the agreements set forth in the Post-Closing Agreement.
G. ALLOCATION. The Parties agree to jointly complete and
separately file Form 8594 with their federal income tax return for the tax year
in which the Closing occurs. If after good faith negotiations, the Parties
cannot reach agreement on the allocation in connection with jointly completing
Form 8594, the Parties agree that there will be no further obligation on the
part of either party to jointly complete the application and the Parties may
file Form 8594 without any input from the other Party.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyers that the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete in all material respects as of the
Closing Date (as though made then and as though the Closing Date or the TBA
Date, as specified, were substituted for the date of this Agreement throughout
this Section 2), (i) except as set forth in the lettered and numbered paragraphs
contained in the disclosure schedule accompanying this Agreement and initialed
by the Parties (the "Disclosure Schedule") corresponding to the lettered and
numbered sections of this Section 2, (ii) except for the last sentence of
Section 2(s) which is being given only as of the date of this Agreement, and
(iii) except as set forth in Section 4(r).
A. ORGANIZATION OF THE SELLER. The Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Except as set forth in Section 2(a) of the
Disclosure Schedule, the Seller does not have any
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Subsidiaries. The Seller has the power and authority to own or lease its
properties and to carry on all business activities now conducted by it.
B. AUTHORIZATION OF TRANSACTION. Subject to the approval of
the shareholders of Seller as described below, the Seller has full power and
authority to execute and deliver this Agreement, the TBA, and all agreements and
instruments to be executed and delivered by Seller pursuant to this Agreement
(collectively, the "Ancillary Agreements") and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
Board of Directors of the Seller and the requisite number of shareholders of
Seller have, or shall have at or before Closing, duly authorized the execution,
delivery, and performance of this Agreement and the Ancillary Agreements by the
Seller. This Agreement and the Ancillary Agreements constitute the valid and
legally binding obligations of the Seller, enforceable in accordance with their
respective terms and conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Seller is subject or any provision of the charter or bylaws of the Seller; or
(ii) except as set forth in Section 2(c) of the Disclosure Schedule, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or third party consent under any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest, or
other agreement, arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to the
Assignment Application described in Section 4(b) the Seller does not need to
give any notice to, make any filing with, or obtain any Licenses, consent, or
approval of any court or government or governmental agency in order for the
Parties to enter into this agreement or the Ancillary Agreements or to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements (including the assignments and assumptions referred to in Section
1(e) above).
D. TITLE TO ACQUIRED ASSETS. Other than the Security
Interests set forth on Section 2(d) of the Disclosure Schedule (which shall be
released at or before the Closing) the Seller has good and marketable title to
all of the Acquired Assets, free and clear of any Security Interest or
restriction on transfer.
E. FINANCIAL STATEMENTS. Included in Section 2(e) of the
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements"): (i) reviewed balance sheets and statements of income,
and cash flow as of and for the fiscal years ended December 31, 1996, December
31, 1997 and December 31, 1998 for the Seller; and (ii) reviewed balance sheets
and statements of income, as of and for each month in 1998 and to date in 1999
for the Seller. Ending with the last calendar month before the TBA Date, the
Financial Statements have been, or by the TBA Date will have been, prepared in
conformity with the
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Seller's normal accounting policies, practices and procedures applied on a
consistent basis, throughout the periods covered thereby, are correct and
complete, fairly present the financial condition of the Seller and the results
of operation of Seller at the dates and for the periods indicated, and are
consistent with the books and records of the Seller (which books and records are
correct and complete). The Financial Statements accurately state the revenues of
the Stations for the period indicated therein and include an accurate breakout
of cash and trade revenues.
F. EVENTS SUBSEQUENT TO DECEMBER 31, 1998. Since December
31, 1998, except as set forth in Section 2(f) of the Disclosure Schedule, the
following statements are correct and complete as of the date hereof, and will be
correct and complete in all material respects as of the TBA Date (except for
Section 2(f)(viii) which will be correct and complete in all material respects
as of the Closing Date):
(i) other than this Agreement, the Seller has not
entered into any agreement, contract, lease, sublease, license, or
sublicense (or series of related agreements, contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course
of Business;
(ii) the Seller has not delayed or postponed (beyond
its normal practice in the Ordinary Course of Business) the
payment of accounts payable and other Liabilities;
(iii) the Seller has not altered its credit and
collection policies or its accounting policies;
(iv) except as set forth in Section 2(f)(iv) of the
Disclosure Schedule, the Seller has not entered into or terminated
any employment arrangement, employment contract, consulting
contract or severance agreement or collective bargaining
agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(v) except as set forth in Section 2(f)(v) of the
Disclosure Schedule, there have been no changes and, to Seller's
Knowledge, any threatened changes in employment terms for any of
its directors, officers, and employees;
(vi) except as set forth in Section 2(f)(vi) of the
Disclosure Schedule, there has not been any other occurrence,
event, incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving the Seller;
(vii) the Seller has not materially altered the
programming, format or call letters of the Stations, or its
promotional and marketing activities;
(viii) the Seller has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action
necessary to preserve the FCC Licenses and has operated the
Stations in compliance therewith and with all FCC rules and
regulations;
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(ix) the Seller has not terminated or received notice
of termination for any syndicated programming; and
(x) the Seller has not committed to any of the
foregoing.
Nothing in this Section 2(f) shall be deemed a warranty or
representation by the Seller with respect to trends or conditions
affecting the radio industry generally or the Lexington, Kentucky
market generally and Seller shall not be in breach of the
provisions of this Section 2(f) as a result of such general trends
or conditions.
G. TAX MATTERS. The Seller has timely and properly filed all
Tax Returns that it was required to file with respect to the Seller's
operations. All such Tax Returns were correct and complete and properly reflect
the tax liability of the Seller. Except as set forth in Section 2(g) of the
Disclosure Schedule, no Tax deficiencies have been proposed or assessed against
the Seller. The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. To the Seller's
Knowledge, no claim has ever been made by any authority in any jurisdiction
where the Seller does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction.
H. TANGIBLE ASSETS. Section 2(h) of the Disclosure Schedule
sets forth a listing of all transmitter and station equipment, vehicles and
other tangible personal property (having a replacement cost of not less than
$10,000 for each item) used in conducting the operation and business of the
Stations. The Seller owns or leases, and until the TBA Date will own or lease,
all tangible assets necessary for the conduct of the operation and business of
the Stations as presently conducted and as presently proposed to be conducted
and all leased assets are specifically identified as such in Section 2(h) of the
Disclosure Schedule. The equipment included in the Acquired Assets permits the
Stations to be operated in material compliance with all requirements. Except as
set forth in Section 2(h) of the Disclosure Schedule, no shareholder of the
Seller has any interest in any right, property or asset used or required by the
Seller in the operation of the Stations.
I. REAL PROPERTY. Section 2(i) of the Disclosure Schedule
lists and describes briefly all Owned Real Estate and real property leased to
the Seller (including, without limitation, complete legal descriptions for all
of the Real Estate). The Seller has delivered to the Buyers correct and complete
copies of the Leases. With respect to the Real Estate:
(i) HMH Realty has good and marketable title to
all of the Owned Real Estate free and clear of all liens, charges,
mortgages, security interests, easements, restrictions or other
encumbrances of any nature whatsoever except real estate taxes for
the year of Closing and municipal and zoning ordinances and
recorded utility easements which do not impair the current use,
occupancy or value or the marketability of title of the property
and which are disclosed in Section 2(i) of the Disclosure Schedule
(collectively, the "Permitted Real Estate Encumbrances");
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(ii) the Leases are and, following the Closing, to
the Seller's Knowledge, will continue to be, legal, valid,
binding, enforceable, and in full force and effect;
(iii) the Seller is not in breach or default (or has
repudiated any provision thereof), and to the Seller's Knowledge,
no event has occurred which, with notice or lapse of time, would
constitute a breach or default thereunder or permit termination,
modification, or acceleration thereunder;
(iv) there are no material disputes, oral
agreements, or forbearance programs in effect as to any Lease;
(v) none of the Owned Real Estate and to the
Seller's Knowledge, none of the properties subject to the Leases
is subject to any lease (other than Leases), option to purchase or
rights of first refusal;
(vi) except for Permitted Real Estate Encumbrances,
there are no (i) actual or, to the Seller's Knowledge, proposed
special assessments with respect to any of the Real Estate; (ii)
pending or, to the Seller's Knowledge, threatened condemnation
proceedings with respect to any of the Real Estate; (iii)
structural or mechanical defects in any of the buildings or
improvements located on the Real Estate; (iv) any pending or, to
the Seller's Knowledge, threatened changes in any zoning laws or
ordinances which may affect any of the Real Estate or Seller's use
thereof;
(vii) except as set forth in Section 2(f)(vii) of
the Disclosure Schedule, the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the Leases or its rights thereunder;
(viii) to the Seller's Knowledge, all facilities on
the Real Estate have received all approvals of governmental
authorities (including licenses, permits and zoning approvals)
required in connection with the operation thereof and have been
materially operated and maintained in accordance with applicable
laws, rules, and regulations, and all buildings and improvements
on the Real Estate are in good condition and repair, normal wear
and tear excepted; and
(ix) to the Seller's Knowledge, the owner of each
leased facility has good and marketable title to the underlying
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for Permitted
Real Estate Encumbrances and Seller's leasehold interest in each
Lease has priority over any other interest except for the fee
interest therein and Permitted Real Estate Encumbrances.
J. CONTRACTS. Section 2(j) of the Disclosure Schedule lists
any written arrangement (or group of related written arrangements) either
involving more than $5,000 or not entered into in the Ordinary Course of
Business. The Seller has delivered to the Buyers a correct and complete copy of
each written arrangement listed in Section 2(j) of the Disclosure Schedule
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(as amended to date). With respect to each written arrangement so listed which
constitutes an Assumed Contract: (A) the written arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the written arrangement
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the TBA Date (if the arrangement has not
expired according to its terms) and upon obtaining the required consents, if
needed; (C) except as set forth in Section 2(j) of the Disclosure Schedule,
Seller is not in breach or default, and to Seller's Knowledge no other party is
in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination, modification,
or acceleration, under the written arrangement; and (D) no party has repudiated
any provision of the written arrangement. Except as set forth in Section 2(j) of
the Disclosure Schedule, the Seller is not a party to any verbal contract,
agreement, or other arrangement which, if reduced to written form, would be
required to be listed in Section 2(j) of the Disclosure Schedule under the terms
of this Section 2(j). Except for the Assumed Contracts, the Buyers shall not
have any Liability or obligations for or in respect of any of the contracts set
forth in Section 2(j) of the Disclosure Schedule or any other contracts or
agreements of the Seller.
K. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION
REQUIREMENTS.
(i) All licenses, permits, authorizations,
franchises, certificates of compliance, tower registrations, and
consents of governmental bodies, including, without limitation,
the FCC Licenses, used or useful in the operation of the Stations
as they are now being operated are (A) in full force and effect,
(B) unimpaired by any acts or omissions of the Seller or the
Seller's employees or agents, (C) free and clear of any
restrictions which might limit the full operation of the Stations,
and (D) detailed in Section 2(k) of the Disclosure Schedule. With
respect to the licenses, permits, authorizations, franchises,
certificates of compliance, tower registrations, and consents
referenced in the preceding sentence, Section 2(k) of the
Disclosure Schedule also sets forth, without limitation, the date
of the last renewal, the expiration date thereof, and any
conditions or contingencies related thereto. Except as set forth
in Section 2(k) of the Disclosure Schedule, no condition exists or
event has occurred that permits, or after notice or lapse of time,
or both, would permit, the revocation or termination of any such
license, permit, consent, franchise, or authorization (other than
pursuant to their express expiration date) or the imposition of
any material restriction or limitation upon the operation of the
Stations as now conducted. Except as set forth in Section 2(k) of
the Disclosure Schedule, the Seller is not aware of any reason why
the FCC licenses might not be renewed in the ordinary course or
revoked.
(ii) The Stations are in material compliance with
the FCC's policy on exposure to radio frequency radiation. No
renewal of any FCC License would constitute a major environmental
action under the FCC's rules or policies. Access to the Stations
transmission facilities is restricted in accordance with the
policies of the FCC.
(iii) Except as set forth in Section 2(k) of the
Disclosure Schedule, the Seller is not the subject of any FCC or
other governmental investigation or any notice of
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violation or order, or any material complaint, objection, petition
to deny, or opposition issued by or filed with the FCC or any
other governmental authority in connection with the operation of
or authorization for the Stations, and there are no proceedings
(other than rule making proceedings of general applicability)
before the FCC or any other governmental authority that could
adversely affect any of the FCC Licenses or the authorizations
listed in Section 2(k) of the Disclosure Schedule.
(iv) The Seller has filed with the FCC and all
other governmental authorities having jurisdiction over the
Stations all material reports, applications, documents,
instruments, and other information required to be filed, and will
continue to make such filings through the Closing Date.
(v) Except as set forth in Section 4(d)
below, the Seller is not aware of any information concerning the
Stations that could cause the FCC or any other regulatory
authority not to issue to the Buyers all regulatory certificates
and approvals necessary for the consummation of the transactions
contemplated hereunder or the Buyer's operation and/or ownership
of the Stations. Except as set forth in Section 2(k)(v) of the
Disclosure Schedule, Seller is not aware of any pending FCC
applications which, if approved, would allow for the operation of
a new radio station with a signal reaching the signal area of the
Stations and, in addition, Seller is not aware of any plans or
proposals by any existing radio stations with a signal reaching
the signal area of the Stations to alter or change their format to
a format similar to that of the Stations.
L. INTELLECTUAL PROPERTY. The Seller owns or has the right
to use pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the businesses of the Seller as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Seller immediately prior to the TBA
Date hereunder is set forth on Section 2(l) of the Disclosure Schedule and each
item listed will be owned or available for use by the Buyers on identical terms
and conditions immediately subsequent to the TBA Date hereunder. The Seller has
not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and the Seller
has never received any charge, complaint, or notice alleging any such
interference, infringement, misappropriation, or violation. To the Knowledge of
the Seller, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of the
Seller.
M. INSURANCE. Section 2(m) of the Disclosure Schedule sets
forth a complete and accurate description of all Seller's insurance coverage.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms through the Closing Date, except to the extent
otherwise provided in the TBA.
N. LITIGATION. Section 2(n) of the Disclosure Schedule sets
forth each instance in which the Seller: (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge; or (ii) is a party
or, to the Knowledge of the Seller, is threatened to be made a party to
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any charge, complaint, action, suit, proceeding, hearing, or investigation of or
in any court or quasijudicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. None of the charges,
complaints, actions, suits, proceedings, hearings, and investigations set forth
in Section 2(n) of the Disclosure Schedule could result in any materially
adverse change in the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Seller or the
Stations taken as a whole. The Seller has no Knowledge of any Basis for any such
charge, complaint, action, suit, proceeding, hearing, or investigation against
the Seller.
O. EMPLOYEES. Section 2(o) of the Disclosure Schedule sets
forth a listing of the names, positions, job descriptions, salary or wage rates
and all other forms of compensation paid for work at the Stations of each
employee. Except as set forth in Section 2(o) of the Disclosure Schedule, to the
Knowledge of the Seller, no key employee or group of employees has any plans to
terminate employment with the Seller. The Seller is not a party to or bound by
any collective bargaining or similar agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to the employees of the Seller. The Seller has no Knowledge of any Basis
for any claim by past or current employees of the Seller or applicants for
employment that the Seller or its management has discriminated based on each
individuals race, sex, national origin, religion, ethnicity, handicap or any
other protected characteristic under applicable law.
P. EMPLOYEE BENEFITS. Section 2(p) of the Disclosure
Schedule lists all Employee Benefit Plans that the Seller maintains or to which
the Seller contributes or is required to contribute for the benefit of any
current or former employee of the Seller and true and correct copies of each
such Employee Benefit Plan have been delivered to the Buyers. Each Employee
Benefit Plan (and each related trust or insurance contract) complies and at all
times has complied in form and in operation in all respects with the applicable
requirements of ERISA and the Code. The Seller does not have any commitment to
create any additional Employee Benefit Plan or modify or change any existing
Employee Benefit Plan that would affect any employee or terminated employee of
the Seller. There are no pending or, to the Knowledge of the Seller, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
Q. ENVIRONMENT, HEALTH, AND SAFETY.
(i) To Seller's Knowledge, with respect to the
operation of the Stations and the Real Estate, the Seller is in
compliance in all material respects with all Environmental Laws
and all laws (including rules and regulations thereunder) of
federal, state, and local governments (and all agencies thereof)
concerning employee health and safety, and the Seller has no
Liability (and to Seller's Knowledge there is no Basis related to
the present operations of the Seller for any Liability) under any
Environmental Law.
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(ii) To the Seller's Knowledge, the Seller has
obtained and at all times has been in compliance in all material
respects with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental Laws.
(iii) To the Seller's Knowledge, all properties
and equipment used in the Stations and the Acquired Assets are
free of asbestos, PCB's, methylene chloride, trichloroethylene, 1,
2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances. To the Seller's Knowledge, no pollutant,
contaminant, or chemical, industrial, hazardous, or toxic material
or waste is buried, stored, spilled, leaked, discharged, emitted,
or released on any of the Real Estate. To the Seller's Knowledge,
no above ground or underground storage tanks are located at, on or
under the Real Estate. The Seller has delivered to the Buyers a
complete copy of all environmental claims, reports, studies,
compliance actions or the like of the Seller or which are
available to the Seller with respect to any of the Real Estate or
any of the Acquired Assets.
R. LEGAL COMPLIANCE. The Seller has materially complied
with all material laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof. The Seller has
filed in a timely manner all material reports, documents, and other materials
it was required to file (and the information contained therein was correct and
complete in all material respects) under all applicable laws.
S. UNDISCLOSED COMMITMENTS OR LIABILITIES. There are no
material commitments, liabilities or obligations relating to the Stations,
whether accrued, absolute, contingent or otherwise including, without
limitation, guaranties by the Seller of the liabilities of third parties, for
which specific and adequate provisions have not been made on the Financial
Statements except those incurred in or as a result of the Ordinary Course of
Business since December 31, 1998.
T. DISCLOSURE. The representations and warranties contained
in this Section 2 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information contained in
this Section 2 not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyers represent and warrant to the Seller that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3).
A. ORGANIZATION OF THE BUYERS. Broadcasting, Licensing, and
Wireless are corporations duly organized, validly existing, and in good standing
under the laws of Nevada.
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B. AUTHORIZATION OF TRANSACTION. Buyers have full power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform their obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the Buyers have or will have at or before Closing
duly authorized the execution, delivery and performance of this Agreement and
the Ancillary Agreements by Buyers. This Agreement and the Ancillary Agreements
constitute legally binding obligations of the Buyers, enforceable against the
Buyers in accordance with their respective terms and conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Buyers are subject or any provision of their articles of organization or other
charter documents, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1(e) above).
D. BROKER'S FEES. Except for the brokers' fee to be paid by
Buyers to Media Services Group, Inc., which shall be the exclusive
responsibility of the Buyers, the Buyers have no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
E. QUALIFICATION AS BROADCAST LICENSEE. Licensing is
legally, technically and otherwise qualified under the Communications Act of
1934, as amended, and all material rules, regulations and written policies of
the FCC thereunder, to become the licensee of the Stations and to consummate the
transactions contemplated by this Agreement. There are no proceedings,
complaints, notices of forfeiture, claims or investigations pending or, to the
Knowledge of Buyer threatened, against any or in respect of any of the broadcast
stations licensed to Licensing or its Affiliates that reasonably may be expected
to impair materially the qualifications of Licensing to become a licensee of the
Stations or that could prevent it from consummating the transactions
contemplated by this Agreement.
F. FINANCIAL CAPACITY. Buyer has the financial capacity to
satisfy all of Buyer's obligations under this Agreement and the documents to be
executed and exchanged at the Closing, and to perform all of Buyer's obligations
at the Closing.
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G. LITIGATION. There is no action, suit, inquiry,
investigation, judicial or administrative proceeding pending or, to the Buyer's
Knowledge, threatened against it that could adversely affect Buyer's ability to
perform in accordance with the terms of this Agreement, and Buyer is unaware of
any facts that could reasonably result in any such proceeding.
4. PRE-CLOSING COVENANTS.
Subject to the commencement of the TBA as set forth in
Section 4(r), the Parties agree as follows with respect to the period between
the execution of this Agreement and the Closing:
A. GENERAL. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
B. ASSIGNMENT APPLICATIONS. Within thirty (30) business days
after the execution of this Agreement, the Seller and the Buyers shall jointly
file with the FCC an application for assignment of the FCC Licenses, permits and
authorizations pertaining to the Stations from the Seller to Licensing (the
"Assignment Application"). The Parties shall use their respective best efforts
to keep this Agreement and the transaction contemplated herein confidential
until the date of the filing of the Assignment Application, unless both Parties
have agreed to begin the TBA prior to that date or unless the Buyers elect to
permit an announcement prior to that date. The costs of the FCC filing fees in
connection with the Assignment Application shall be divided equally between the
Parties. Each party shall pay its own attorneys' fees. The Seller and the Buyers
shall thereafter prosecute the Assignment Application with all reasonable
diligence and otherwise use commercially reasonable efforts to obtain the grant
of the Assignment Application as expeditiously as practicable (but neither the
Seller nor the Buyers shall have any obligation to satisfy complainants or the
FCC by taking any steps which would have a material adverse effect upon the
Stations or impose significant costs on such party). If the FCC imposes any
condition on either party to the Assignment Application, such party shall use
commercially reasonable efforts to comply with such condition, provided, that
neither party shall be required hereunder to comply with any condition that
would have a material adverse effect upon the Stations or any Affiliate. The
Seller and the Buyers shall jointly oppose any requests for reconsideration or
judicial review of FCC approval of the Assignment Application and shall jointly
request from the FCC extension of the effective period of FCC approval of the
Assignment Application if the Closing shall not have occurred prior to the
expiration of the original effective period of the FCC Consent. Nothing in this
Section 4(b) shall be construed to limit either party's right to terminate this
Agreement pursuant to Section 9 of this Agreement.
C. EMPLOYMENT OFFERS. Upon notice to the Seller, and at
mutually agreeable times, the Seller will permit the Buyers to meet with its
employees prior to the Closing Date. The Buyers may, at their option, extend
offers of employment to all or any of the Seller's employees effective on the
TBA Date. From and after the execution of this Agreement, the Seller shall use
its best efforts to assist Buyers in retaining those employees of the Stations
which
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the Buyers wish to hire in connection with the operation of the Stations by the
Buyers subsequent to the TBA Date, and the Seller will not take any action to
preclude or discourage any of the Seller's employees from accepting any offer of
employment extended by the Buyers.
D. NOTICES AND CONSENTS. The Seller will give all notices to
third parties and will use its commercially reasonable efforts to obtain all
third party consents that the Buyers reasonably may request. The absence of any
such consent shall not be a breach hereof unless the contract is designated as
"material" on Section 4(d) of the Disclosure Schedule. Buyer acknowledges that
it has been fully apprised of the CID and that it has had full opportunity to
conduct due diligence with respect thereto. Buyer accepts all risks, costs,
liabilities and consequences that may arise from compliance with the CID or
filings under the Hart-Scott-Rodino Act, or both, following the Closing Date.
Each of the Parties shall cooperate in preparing and filing any necessary
notification and report forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Act, and each of the
Parties shall split equally the filing fees associated with such filings. Each
of the Parties will use its best efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper or advisable. In the event the FCC, the Federal
Trade Commission, or the Antitrust Division of the Department of Justice
challenges the transaction contemplated by this Agreement, Buyers will agree to
divest promptly such station assets as may be required in order for regulatory
authorities to approve the transaction without requiring a second request or
further administrative or judicial action. Buyer shall assume all risks and
responsibility for such divestitures, and the Purchase Price shall not be
adjusted because of any such required divestiture(s). Notwithstanding the
foregoing, Seller and its counsel shall use best efforts to cooperate with
Buyers to dissuade regulatory authorities form pursuing any investigation of the
transaction proposed herein, with each Party to bear its own expenses in such
effort. Each of the Parties will use its reasonable best efforts to take any
additional action that may be necessary, proper, or advisable in connection with
any other notices to, filings with, and authorizations, consents, and approvals
of governments, governmental agencies, and third parties that it may be required
to give, make, or obtain.
E. MAINTENANCE OF QUALIFICATIONS. Buyer shall take no action
that could reasonably be expected to (i) cause the FCC to deny its Assignment
Application or to delay the FCC's processing or consideration thereof, (ii)
require any waiver of the rules, regulations or policies of the FCC, or (iii) in
any way diminish or render less certain Buyer's qualifications to be the
licensee of the Stations.
F. OPERATING STATEMENTS. Until the TBA Date, the Seller
shall deliver to the Buyer, for the Buyer's informational purposes only, monthly
reviewed statements of operating revenues and operating expenses of the Stations
with ten (10) days after each such statement is prepared by or for the Company
or the Seller. The Seller shall provide to the Buyer such written or oral sales,
inventory, and pacing reports as Seller may have available and Buyer may
reasonably request.
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G. CONTRACTS. Except as otherwise provided by the TBA, the
Seller will not without the prior written consent of the Buyers (i) amend,
change, or modify any of the contracts listed on Section 2(k) of the Disclosure
Schedule in any material respect, or (ii) enter into any contract outside the
Ordinary Course of Business which involves more than Ten Thousand Dollars
($10,000).
H. OPERATION OF STATIONS. The Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. The Seller shall operate the Stations in compliance with the
FCC Licenses and the rules and regulations of the FCC, and the FCC Licenses
shall at all times remain in full force and effect. The Seller shall file with
the FCC all material reports, applications, documents, instruments and other
information required to be filed in connection with the operation of the
Stations.
I. CREDIT AND RECEIVABLES. Through the TBA Date, the Seller
will follow its usual and customary policies with respect to extending credit
for sales of air time and advertising on the Stations and with respect to
collecting accounts receivable arising from such extension of credit.
J. PRESERVATION OF STATIONS AND THE ACQUIRED ASSETS. Through
the TBA Date, the Seller will use commercially reasonable efforts to keep its
Stations and the Acquired Assets and properties substantially intact, including
its present operations, physical facilities, working conditions, relationships
with lessors, licensors, advertisers, suppliers, customers, and employees, all
of the Confidential Information, call letters and trade secrets of the Stations,
and the FCC Licenses.
K. FULL ACCESS AND CONSULTATION. Without limiting in any way
the rights and obligations of the Parties under the TBA, the Seller will permit
representatives of the Buyers to have reasonable access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
the Stations, to all premises, properties, books, records, contracts, Tax
records, and documents of or pertaining to the Seller for the purpose of
permitting the Buyers, among other things, to: (a) conduct its due diligence
review, (b) review financial statements of the Seller, (c) verify the accuracy
of representations and warranties of the Seller contained in this Agreement, and
(d) prepare for the consummation of the transactions contemplated by this
Agreement. The Seller will consult with the Buyers' management with a view to
informing Buyers' management as to the operations, management and business of
the Stations.
L. NOTICE OF DEVELOPMENTS. The Seller will give prompt
written notice to the Buyers of any material development affecting business,
operations or prospects of the Stations or the Acquired Assets or the ability of
the Seller to perform hereunder.
M. EXCLUSIVITY. The Seller will not (i) solicit, initiate,
or encourage the submission of any proposal or offer from any person relating to
any (A) merger or consolidation, (B) acquisition or purchase of securities or
assets, or (C) similar transaction or business combination involving the Seller,
or (ii) participate in any discussions or negotiations regarding,
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furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing. The Seller will notify the Buyers immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
N. CONTROL OF STATIONS. The transactions contemplated by
this Agreement shall not be consummated until after the FCC has given its
consent and approval to the Assignment Application. Without in any way limiting
the rights and obligations of the Parties under the TBA, between the date of
this Agreement and the Closing Date, the Buyers and their employees or agents
shall not directly or indirectly control, supervise, or direct, or attempt to
control, supervise, or direct, the operation of the Stations, and such operation
shall be the sole responsibility of and in the control of the Seller.
O. ENVIRONMENTAL ASSESSMENTS. Provided that the Buyers are
provided with adequate access to each parcel of Real Estate and permitted to
conduct all requested testing, the Buyers will provide to the Seller, within
forty-five (45) days hereof, the results of its environmental assessments for
each such parcel of Real Estate. The results submitted to Seller under this
Section 4(o) shall identify any violations of Environmental Law and any
condition to be remedied and the actions or remediation required to bring the
property into compliance with Environmental Laws. If the Buyers' Phase I
environmental assessment recommends additional testing and Buyers begin such
testing but such testing cannot be completed and reported to Seller within the
forty-five (45) day period provided for herein, the period shall be extended as
reasonably required to complete such additional testing and reporting to the
Seller. The Seller will have ten (10) days after the Buyers notify the Seller
that it has received all of the environmental assessments and that such
assessments indicate that the property is not in compliance with Environmental
Laws to determine and notify the Buyers in writing if it elects to immediately
terminate this Agreement or take any and all actions at its sole expense to
remedy the violations identified with respect to an assessed site; provided,
however, that the Seller may not terminate this Agreement and must take any and
all actions to remedy the violations identified if the aggregate cost of such
actions would not exceed Two Hundred Thousand Dollars ($200,000). If the
aggregate cost of such actions would exceed Two Hundred Thousand Dollars
($200,000) and the Seller does not provide timely notice hereunder, stating its
intent to remedy all such violations, Buyer may elect to (i) terminate this
Agreement, (ii) extend the time in which the Seller must respond in writing, or
(iii) elect to accept the environmental conditions and consummate the
transaction contemplated hereby; provided, however, that the Buyers shall
forfeit their right to terminate this Agreement pursuant to this Section 4(o) if
they fail to make an election within ten (10) days after the expiration of the
Seller's election period as extended by the Buyers hereunder. If the Seller
elects or is required under the terms hereof to take all actions to remediate
each site and Seller does not proceed with reasonable diligence to take such
actions or such actions cannot be or are not fully accomplished on or before the
360th day following the date of this Agreement, Buyers may elect to terminate
this Agreement or postpone the Closing Date until such time as all of the
actions necessary to remedy the violations identified have been fully performed
in a manner and to the extent necessary to satisfy the Seller's obligations. In
the event the Closing Date is postponed pursuant to this Section 4(o), the
Parties will cooperate to extend the time during which this Agreement must be
closed as specified in the consent of the
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FCC. The Buyers may elect to terminate this Agreement if they or their
environmental consultants and agents are not granted adequate access to each
parcel of Real Estate to conduct the environmental testing contemplated in this
Section 4(o); provided, however, that the Buyers shall forfeit their right to
terminate this Agreement as a result of insufficient access to any parcel of
Real Estate if they fail to make such election within forty-five (45) days after
the date hereof. The Buyers shall pay all of the costs of the environmental
assessments performed by the Buyers pursuant to this Agreement. Notwithstanding
any provisions of this Agreement to the contrary, the terms and provisions of
this Section 4(o) constitute Buyer's sole and exclusive remedy with respect to
environmental claims.
P. RISK OF LOSS. The risk of loss, damage, or destruction to
any of the Acquired Assets shall remain with the Seller until the TBA Date,
except in the case of transmission equipment, with respect to which such risk of
loss shall remain with the Seller until the Closing. In the event of any such
loss, damage, or destruction the Seller will promptly notify the Buyers of all
particulars thereof, stating the cause thereof (if known) and the extent to
which the cost of restoration, replacement and repair of the Acquired Assets
lost, damaged or destroyed will be reimbursed under any insurance policy with
respect thereto. The Seller will, at Seller's expense, repair or replace such
Acquired Assets to their former condition as soon as possible after loss, damage
or destruction thereof and shall use its best efforts to restore as promptly as
possible transmissions as authorized in the FCC Licenses. The Closing Date shall
be extended (with FCC consent, if necessary) for up to sixty (60) days to permit
such repair or replacement. If repair or replacement cannot be accomplished
within sixty (60) days of the date of the Seller's notice to the Buyers and the
Buyers determine that the Seller's failure to repair or replace would have a
material adverse effect on the operation of the Stations:
(i) the Buyers may elect to terminate this
Agreement; or
(ii) the Buyers may postpone the Closing Date until
such time as the property has been repaired, replaced or restored
in a manner and to an extent reasonably satisfactory to the
Buyers, unless the same cannot be reasonably effected within
ninety (90) days of the date of the Seller's notice to the Buyers,
in which case either party may terminate this Agreement; or
(iii) the Buyers may choose to accept the Acquired
Asset in their "then" condition, together with the Seller's
assignment to the Buyers of all rights under any insurance claims
covering the loss, damage or destruction and payment over to the
Buyers of any proceeds under any such insurance policies,
previously received by the Seller with respect thereto plus an
amount equal to the amount of any deductible or self-insurance
maintained by Seller on such Acquired Assets. In the event the
Closing Date is postponed pursuant to this Section 4(p), the
parties hereto will cooperate to extend the time during which this
Agreement must be closed as specified in the consent of the FCC.
Q. TBA. The Parties acknowledge and agree that the Parties
intend, if appropriate at the time the Hart-Scott-Rodino waiting period has
expired or been terminated, to begin operating under a time brokerage agreement
(the "TBA"), attached as Exhibit D hereto,
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with respect to the Stations. Anything in this Agreement to the contrary
notwithstanding, including, without limitation any provision of Sections 2, 3,
5(a) and 5(b): (i) Seller shall not be liable in any respect to the extent any
of the representations and warranties contained in Section 2 are not true and
correct in any material respect on and as of the Closing Date due to the
existence and operation of the TBA; (ii) the conditions set forth in Sections
5(a)(i) and 5(a)(ii) shall not be deemed to be not satisfied as a result of any
action or failure to act of Buyer pursuant to the TBA; and (iii) the
certificates to be delivered to Buyer pursuant to Section 5(a)(v) shall not be
required to address any of such representations and warranties that are not true
and correct in any material respect on and as of the Closing Date due to the
existence and operation of the TBA.
5. CONDITIONS TO OBLIGATION TO CLOSE.
A. Conditions to Obligation of the Buyers. Subject to
Section 4(r), the obligation of Buyers to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(i) the representations and warranties set forth
in Section 2 above shall be true and correct in all material
respects at and as of the Closing Date as though made on and as of
the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all respects through the
Closing;
(iii) the Seller shall have procured all of the
"material" third party consents specified in Section 4(d) above
and shall have delivered good title to the Real Estate without
conditions that could materially interfere with the operation of
the Real Estate for the purpose of radio broadcasting;
(iv) except for the CID and/or any inquiry
under the Hart-Scott-Rodino Act, no action, suit, investigation,
inquiry or other proceeding shall be pending or threatened before
any court or quasijudicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or impose damages or penalties upon
any of the parties if such transactions are consummated, (B) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (C) affect materially and
adversely the right of the Buyers to own, operate, or control the
Acquired Assets (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyers
a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the
conditions specified above in Sections 5(a)(i) and 5(a)(ii) are
satisfied in all respects;
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(vi) each of the Assignment Applications shall have
been approved by a Final Order of the FCC, all applicable waiting
periods and any extensions thereof) under the Hart-Scott-Rodino
Act shall have expired or been terminated, and the Buyers shall
have received all governmental approvals required to transfer all
other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(vii) the relevant parties shall have entered into
the Post-Closing Agreement;
(viii) the Buyers shall have received from counsel to
the Seller an opinion with respect to the matters set forth in
Exhibit E attached hereto, addressed to the Buyers and its lender
and dated as of the Closing Date;
(ix) the Seller shall have delivered to the Buyers
all items required to be delivered thereby under Section 1(e)
above; and
(x) the Buyers shall have received a landlord
estoppel, consent and waiver letter for each parcel of Real Estate
subject to a Lease, duly executed by the owner of the Real Estate,
in a form reasonably satisfactory to the Buyers' lenders which are
financing the transaction contemplated hereby.
In the event that any of the conditions set forth in subsections
5(a)(i), (ii), (iv), (v), (ix) or (x) above are not satisfied and
such failure does not or is not reasonably likely to have a
Material Adverse Effect, Buyers acknowledge and agree that,
notwithstanding the introductory sentence of this Section 5(a),
they shall be required to consummate the transactions contemplated
herein despite such failure; provided, however, that Buyers may
still seek indemnification pursuant to Section 7, below, as
hereinafter described. In the event that (i) any of the conditions
set forth in subsections 5(a)(i), (ii), (iv), (v), (ix) or (x)
above, are not satisfied and such failure has or is reasonably
likely to have a Material Adverse Effect, or (ii) any of the other
conditions set forth in this Section 5(a) are not satisfied, the
Buyers may elect to (i) terminate this Agreement without liability
to the Buyers, or (ii) consummate the transactions contemplated
herein despite such failure. If any of the conditions to Closing
set forth in this Section 5(a) are not satisfied and the Buyers
elect or are required to consummate the transactions described
herein, and if such failure (regardless of whether such failure is
material or has or is reasonably likely to have a Material Adverse
Effect), shall be as a result of a breach of any representation,
warranty, covenant or provision of this Agreement by the Seller
(including, without limitation, any breach arising as a result of
the failure of the Seller to execute and/or deliver any item
described in this Section 5(a)), the Buyers may seek appropriate
remedies for any and all damages, costs and expenses incurred by
the Buyers by reason of such breach, including, without
limitation, indemnification pursuant to Section 7, below, unless
and to the extent that the event or the condition giving rise to
such failure also constitutes a breach of a representation,
warranty or covenant of the Seller set forth in Sections 2 or 4
hereof.
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B. CONDITIONS TO OBLIGATION OF THE SELLER. The obligation
of the Seller to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 3 above shall be true and correct in all respects at
and as of the Closing Date as though made on and as of the Closing
Date;
(ii) the Buyers shall have performed and complied
with all of their covenants hereunder in all respects through the
Closing;
(iii) except for the CID and/or any inquiry
under the Hart-Scott-Rodino Act, no action, suit, investigation,
inquiry or other proceeding shall be pending or threatened before
any court or quasi judicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or impose damages or penalties upon
any of the Parties if such transactions are consummated, or (B)
cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such judgment, order,
decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Seller
a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the
conditions specified above in Sections 5(b)(i) and 5(b)(ii) is
satisfied in all respects and the statements contained in such
certificate shall be deemed a warranty of the Buyers which shall
survive the Closing;
(v) each of the Assignment Applications shall have
been approved by a Final Order of the FCC and the Buyers shall
have received all governmental approvals required to transfer all
other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(vi) the relevant parties shall have entered into
the Post-Closing Agreement and the Seller shall have received from
counsel to the Buyers an opinion with respect to the matters set
forth in Exhibit F attached hereto, addressed to the Seller and
dated as of the Closing Date; and
(vii) the Buyers shall have delivered to the Seller
all items required to be delivered thereby under Section 1(e)
above.
In the event that any of the conditions set forth in subsections
5(b)(i), (ii), (iii), (iv), or (vii) above are not satisfied and
such failure does not or is not reasonably likely to have a
Material Adverse Effect, Seller acknowledges and agrees that,
notwithstanding the introductory sentence of this Section 5(b),
Seller shall be required to consummate the
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transactions contemplated herein despite such failure; provided,
however, that Seller may still seek indemnification pursuant to
Section 7, below, as hereinafter described. In the event that (i)
any of the conditions set forth in subsections 5(b)(i), (ii),
(iii), (iv) or (vii) above, are not satisfied and such failure has
or is reasonably likely to have a Material Adverse Effect, or (ii)
any of the other conditions set forth in this Section 5(b) are not
satisfied, the Seller may elect to (i) terminate this Agreement
without liability to the Seller, or (ii) consummate the
transactions contemplated herein despite such failure. If any of
the conditions to Closing set forth in this Section 5(b) are not
satisfied and the Seller elects or is required to consummate the
transactions described herein, and if such failure (regardless of
whether such failure is Material or has or is reasonably likely to
have a Material Adverse Effect), shall be as a result of a breach
of any representation, warranty, covenant or provision of this
Agreement by the Buyer (including, without limitation, any breach
arising as a result of the failure of the Buyer to execute and/or
deliver any item described in this Section 5(a)), the Seller may
seek appropriate remedies for any and all damages, costs and
expenses incurred by the Seller by reason of such breach,
including, without limitation, indemnification pursuant to Section
7, below, unless and at to the extent that the event or the
condition giving rise to such failure also constitutes a breach of
a representation, warranty or covenant of the Buyer set forth in
Sections 3 or 4 hereof.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period
following the Closing:
A. GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 7 below).
B. LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Stations, each of the other Parties will
reasonably cooperate with the contesting or defending Party and its counsel in
the contest or defense, make available his or its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 7 below); provided, however,
that such access and cooperation does not unreasonably disrupt the normal
operations of the cooperating party.
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C. ADJUSTMENTS. Operation of the Stations and the income and
expenses attributable thereto up through the close of business on the day before
the TBA Date shall be for the account of the Seller and thereafter for the
account of the Buyers. Such items as employee salaries, sick day and personal
time accruals, and fringe benefits, power and utilities charges, insurance, real
and personal property taxes, prepaid expenses, deposits, music license fees, and
rents and payments pertaining to the Assumed Contracts (including any contracts
for the sale of time for cash, trade or barter so assigned) shall be prorated
between the Seller and the Buyers as of the TBA Date in accordance with the
foregoing principle. In addition, all commissions payable with respect to the
accounts receivable of the Seller (whether due before or after TBA Date) shall
be solely for the account and responsibility of the Seller. Employees' vacation
day accruals will be rolled over as a non-cash item and assumed by Buyers as a
non-cash liability. Contractual arrangements that do not reflect an equal rate
of compensation to the Stations over the term of the agreement shall be
equitably adjusted as of the TBA Date. The prorations and adjustments hereunder
shall be made and paid insofar as feasible on the TBA Date, with a final
settlement sixty (60) days after the TBA Date. In the event of any disputes
between the Parties as to such adjustments, the amounts not in dispute shall
nonetheless be paid at such time and such disputes shall be determined by an
independent accounting firm mutually acceptable to both parties and the fees and
expenses of such accounting firm shall be paid one-half (1/2) by the Seller and
one-half (1/2) by the Buyer.
D. COLLECTION OF ACCOUNTS RECEIVABLE. At the TBA Date, the
Seller will turn over to the Buyers, for collection only, the accounts
receivable of the Stations owing to the Seller as of the close of business on
the day before the TBA Date. A schedule of such accounts receivable will be
delivered by the Seller to the Buyers on the TBA Date or as soon thereafter as
possible. The Buyers agree to use commercially reasonable efforts in the
ordinary course of business (but without responsibility to institute legal or
collection proceedings) to collect such accounts receivable during the one
hundred eighty (180) day period following the TBA Date, and will remit all
payments received within ten (10) days of the end of the month in which the
payments were received, together with an accounting of all payments received
within such period. The Buyers shall have the sole right to collect such
accounts receivable during such 180-day period. In the event the Buyers receive
monies during the 180-day period following the TBA Date from an advertiser who,
after the TBA Date, is advertising on the Stations, and that advertiser was
included among the accounts receivable as of the TBA Date, the Buyers shall
apply said monies to the oldest outstanding balance due on the particular
account, except in the case of a "disputed" account receivable. For purposes of
this Section 6(d), a "disputed" account receivable means one which the account
debtor refuses to pay because he asserts that the money is not owed or the
amount is incorrect. In the case of such a disputed account, the Buyers shall
immediately return the account to the Seller prior to expiration of the 180-day
period following the TBA Date. If the Buyers return a disputed account to the
Seller, the Buyers shall have no further responsibility for its collection and
may accept payment from the account debtor for advertising carried on the
Stations after the TBA Date. At the end of the 180-day period following the TBA
Date, the Buyers will turn back to the Seller all of the accounts receivable of
the Stations as of the TBA Date owing to the Seller which have not yet been
collected, and the Buyers will thereafter have no further responsibility with
respect to the collection of such receivables. During the 180-day period
following the TBA Date, the Buyers shall afford the
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Seller reasonable access to the accounts receivable "aging list." The Seller
acknowledges and agrees that the Buyers are acting as collection agent hereunder
for the sole benefit of the Seller and that Buyers have accepted such
responsibility for the accommodation of the Seller. The Buyers shall not have
any duty to inquire as to the form, manner of execution or validity of any item,
document, instrument or notice deposited, received or delivered in connection
with such collection efforts, nor shall the Buyers have any duty to inquire as
to the identity, authority or rights of the persons who executed the same. The
Seller shall indemnify Buyers and hold them harmless from and against any
judgments, expenses (including attorney's fees) costs or liabilities which the
Buyers may incur or sustain as a result of or by reason of such collection
efforts.
E. CONSENTS. In the event any of the Assumed Contracts are
not assignable or any consent to such assignment is not obtained on or prior to
the Closing Date, and the Buyers elect to consummate the transactions
contemplated herein despite such failure or inability to obtain such consent,
the Seller shall continue to use commercially reasonable efforts to obtain any
such assignment or consent after the Closing Date. Until such time as such
assignment or approval has been obtained, the Seller will cooperate with Buyers
in any lawful and economically feasible arrangement to provide that the Buyers
shall receive the Seller's interest in the benefits under any such Assumed
Contract, including performance by the Seller as agent, if economically
feasible; provided, however, that the Buyers shall undertake to pay or satisfy
the corresponding liabilities for the enjoyment of such benefit to the extent
that Buyers would have been responsible therefor if such consent or assignment
had been obtained.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
A. SURVIVAL. Except with respect to the obligations and
liabilities assumed pursuant to the Assumed Contracts, and except as otherwise
contemplated by Section 4(q), all of the representations and warranties of the
Seller contained in Section 2 and all of the representations and warranties of
the Buyers contained in Section 3 of this Agreement shall survive the Closing
and continue in full force and effect for a period of one (1) year following the
Closing.
B. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYERS.
The Seller agrees to indemnify the Buyers from and against the entirety of any
Adverse Consequences the Buyers may suffer resulting from, arising out of,
relating to, in the nature of, or caused by:
(i) any misrepresentation or breach of any of the
Seller's representations or warranties, and covenants contained in
this Agreement or in any Ancillary Agreement executed and/or
delivered by the Seller (so long as the Buyers make a written
claim for indemnification within the applicable survival period);
(ii) any breach or nonfulfillment of any agreement
or covenant of the Seller contained herein or in any Ancillary
Agreement;
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(iii) any Liability of the Seller which is not an
Assumed Liability; and/or
(iv) any Liability of the Buyers arising by
operation of law (including under any bulk transfer law of any
jurisdiction or under any common law doctrine of defacto merger or
successor liability) which is not an Assumed Liability; and/or
(v) any Tax Liabilities of the Seller with respect
to the operation of the Stations or the business of the Seller at
any time prior to the Closing Date.
The Buyers shall not have the right to assert claims for
indemnification under subsection (i) unless and until the
aggregate amount of any Adverse Consequences that the Buyers in
total may suffer or have suffered as a result of such breach
exceeds Seventy-Five Thousand Dollars ($75,000), and then only for
the amounts in excess of such Seventy-Five Thousand Dollars
($75,000) aggregate amount. As Buyer's sole and exclusive remedy
pursuant to this Section 7(b), Buyers shall be entitled to payment
only out of the Post-Closing Escrow pursuant to the terms of this
Section 7(b) and the Escrow Agreement for all amounts due to the
Buyers with respect to such claims, whether direct or indirect.
C. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLER.
Except as described below in Section 7(e) with respect to a breach of a warranty
or covenant prior to the Closing Date, the Buyers agree to indemnify the Seller
from and against the entirety of any Adverse Consequences the Seller may suffer
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any misrepresentation or breach of any of the Buyers' representations or
warranties contained in this Agreement or in any Ancillary Agreement executed
and/or delivered by the Buyers (so long as the Seller makes a written claim for
indemnification within the applicable survival period) or (ii) any breach or
nonfulfillment of any agreement or covenant of the Buyers contained herein or in
any Ancillary Agreement, or (iii) any Assumed Liability, or (iv) any operation
of the Stations from and after the TBA Date except with respect to claims
related to Seller's activities as Licensee, or (v) any operation of the Stations
after the Closing.
D. SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 10(o)
below), in addition to any other remedy to which it may be entitled, at law or
in equity.
E. LIQUIDATED DAMAGES. The Buyers and the Seller acknowledge
that in the event that the transactions contemplated by this Agreement are not
closed because of a default by the Buyers, the Adverse Consequences to the
Seller as a result of such default may be difficult, if
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not impossible, to ascertain. Accordingly, in the event of a breach by Buyers
prior to Closing, the Seller shall be entitled to receive from the Buyers for
such default (i) the Earnest Money Deposit and (ii) interest on such Earnest
Money Deposit from the date Seller makes a written claim for damages until the
date Seller receives payment therefor, as liquidated damages without the need
for proof of damages, subject only to successfully proving in a court of
competent jurisdiction that the Buyers have materially breached this Agreement
and that the transactions contemplated thereby have not occurred. The Buyers
agree to pay said sum of liquidated damages within ten (10) days of the date
that the Seller obtains such a judgment. Notwithstanding anything contained
herein to the contrary, the Seller acknowledges and agrees that in the event
this Agreement is terminated by the Seller prior to the Closing Date as a result
of a breach or default by Buyers under this Agreement, the Seller's sole and
exclusive remedy with respect to such default shall be to proceed against the
Earnest Money Deposit as liquidated damages.
F. MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 7, then the Indemnified Party shall
notify the Indemnifying Party thereof promptly; provided, however, that no delay
on the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any liability or obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is damaged as a
result of such failure. In the event any Indemnifying Party notifies the
Indemnified Party within 15 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified Party within 15 days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, however, and/or in the event the
Indemnifying Party shall fail to defend such claim actively and in good faith,
then the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
8. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of
the assets of the Seller, other than Retained Assets, that are used or useful in
the operation of the Stations,
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wherever located, including but not limited to all of its (a) real property,
leaseholds and other interests of any kind therein, improvements, fixtures, and
fittings thereon (such as towers and antennae), and easements, rights-of-way,
and other appurtenances thereto; (b) tangible personal property (such as fixed
assets, computers, data processing equipment, electrical devices, monitoring
equipment, test equipment, switching, terminal and studio equipment,
transmitters, transformers, receivers, broadcast facilities, furniture,
furnishings, inventories of compact disks, records, tapes and other supplies,
vehicles) and all assignable warranties with respect thereto; (c) Intellectual
Property, goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions; (d) rights under orders and agreements (including
those Barter Agreements and Advertising Contracts identified on the Disclosure
Schedule) now existing or entered into in the Ordinary Course of Business for
the sale of advertising time on the Stations; (e) Assumed Contracts, indentures,
Security Interests, guaranties, other similar arrangements, and rights
thereunder; (f) call letters of the Stations, jingles, logos, slogans, and
business goodwill of the Stations; (g) claims, deposits, prepayments, refunds,
causes of action, chooses in action, rights of recovery (including rights under
policies of insurance), rights of set off, and rights of recoupment; (h)
Licenses and similar rights obtained from governments and governmental agencies;
and (i) FCC logs and records and all other books, records, ledgers, logs, files,
documents, correspondence, advertiser lists, all other lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, program production materials, studies,
reports, and other printed or written materials; and (j) goodwill of the
Stations.
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"ADVERTISING CONTRACTS" has the meaning set forth in Section 2(s),
above.
"AFFILIATE" means with reference to any person or entity, another
person or entity controlled by, under the control of or under common control
with that person or entity.
"ANCILLARY AGREEMENTS" has the meaning set forth in Section 2(b) above.
"ASSIGNMENT APPLICATION" has the meaning set forth in Section 4(b)
above.
"ASSUMED CONTRACTS" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts listed on Exhibit G attached hereto.
"ASSUMED LIABILITIES" means (a) obligations of the Seller under the
Assumed Contracts which accrue after the TBA Date under the Assumed Contracts
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"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BUYERS" has the meaning set forth in the preface above.
"CASH" means cash and cash equivalents determined in accordance with
GAAP applied on a basis consistent with the preparation of the Financial
Statements.
"CID" means that certain Civil Investigative Demand No. 17490 dated
December 30, 1997, issued to HMH Broadcasting, Inc. pursuant to the Antitrust
Civil Process Act. 15 U.S.C. Sections 1311 et al.
"CLOSING" has the meaning set forth in Section 1(d) above.
"CLOSING DATE" has the meaning set forth in Section 1(d) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Seller.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 2 above.
"EARNEST MONEY DEPOSIT" has the meaning set forth in Section 1(c)
above.
"ESCROW AGREEMENT" has the meaning set forth in Section 1(c) above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control Act
of 1976, the Refuse Act of 1899, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other law of any federal,
state, local, or foreign government or agency thereof (including rules,
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regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means the First National Bank of Maryland in Washington,
D.C.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC LICENSES" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"FINAL ORDER" means an action by the FCC as to which: (a) no request
for stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7(d) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7(d) above.
"INTELLECTUAL PROPERTY" means all of the following used or useful in
the operation of the Stations: (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and
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registrations and applications for registration thereof, (c) all programs,
programming materials, copyrights and registrations and applications for
registration thereof, (d) mask works and registrations and applications for
registration thereof, (e) computer software, data, and documentation, (f) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, market and other research information, drawings,
specifications, designs, plans proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
"KNOWLEDGE" means actual knowledge of Ralph E. Hacker after reasonable
investigation.
"LEASES" means those real estate leases to which Seller is a party
governing Seller's studios and FM tower sites, as described in Section 2(i) of
the Disclosure Schedule.
"LIABILITY" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"MATERIAL" or "MATERIALLY" means an event, condition, circumstance,
act, omission or effect, which, individually or in the aggregate with other
similar events, conditions, circumstances, acts, omissions or effects, is, in
the opinion of a reasonably prudent buyer, likely to have a material effect on
the transactions contemplated hereby or the operation or condition of the
Stations taken as a whole.
"MATERIAL ADVERSE EFFECT" means an event, condition, circumstance, act,
omission or effect which, individually or in the aggregate with other similar
events, conditions, circumstances, acts, omission or effects, is, in the opinion
of a reasonably prudent buyer, likely to have a material adverse effect on the
transactions contemplated hereby or condition of the Stations taken as a whole;
provided, however, that the following shall not constitute a Material Adverse
Effect: changes in (i) Seller's cash flow, (ii) the economy, (iii) the radio
industry generally or locally or (iv) the Stations' Arbitron ratings; provided
however, that a decline in the revenues of the Stations shall not be considered
a Material Adverse Effect but shall result in an adjustment if and to the extent
permitted under the procedure in the definition of "Purchase Price Adjustment"
set forth below.
"MULTI-EMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
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"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNED REAL ESTATE" means the real property owned by HMH Realty, LLC,
as described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon.
"PARTY" has the meaning set forth in the preface above.
"PERMITTED REAL ESTATE ENCUMBRANCES" shall have the meaning set forth
in Section 2(i), above.
"POST-CLOSING AGREEMENT" means the Post-Closing Agreement with Seller's
president in the form attached hereto as Exhibit D.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"PURCHASE PRICE " has the meaning set forth in Section 1(c) above.
"PURCHASE PRICE ADJUSTMENT" shall have the following meaning. If gross
revenues for the twelve-month period ending on the last day of the month before
the Closing Date (the "Trailing Revenues") are less than the gross revenues for
the twelve-month period ending December 31, 1998 (the "Benchmark Revenues") by
more than ten (10) percent of the Benchmark Revenues, there shall be an
adjustment to the purchase price (the "Base Purchase Price") as follows: For
every percentage decline in the Trailing Revenues compared to the Benchmark
Revenues beyond ten percent, there shall be a corresponding percentage reduction
in the Base Purchase Price (the "Purchase Price Adjustment"). By way of example,
if Trailing Revenues are eleven percent less than Benchmark Revenues, the
Purchase Price Adjustment shall be one percent of the Base Purchase Price, or
Four Hundred Forty-Five Thousand Dollars ($445,000.00); similarly, if Trailing
Revenues are fifteen percent less than Benchmark Revenues, the Purchase Price
Adjustment shall be Two Million Two Hundred Twenty-Five Thousand Dollars
($2,225,000.00); and so on.
"REAL ESTATE" means the Owned Real Estate and the real estate,
building, fixtures and improvements which are the subject of the Leases.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAINED ASSETS" means (i) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation; (ii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyers on
the other hand entered into
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on or after the date of this Agreement); (iii) accounts, notes and other
receivables of the Seller; and (iv) Cash.
"RETAINED LIABILITIES" means any other obligations or Liabilities of
the Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the TBA Date; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(n) relating to Surveys and title commitments and Section 4(b) with
regard to the Assignment Application); or (iv) any Liability or obligation of
the Seller under this Agreement (or under any side agreement between the Seller
on the one hand and the Buyers on the other hand entered into on or after the
date of this Agreement).
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"SELLER" has the meaning set forth in the preface above.
"STATIONS" means the radio broadcast Stations WLRO-FM licensed to
Richmond, KY; WLTO-FM licensed to Nicholasville, KY; WVLK-FM and WVLK-AM
licensed to Lexington, KY; and WXZZ-FM licensed to Georgetown, KY.
"SUBSIDIARY," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"SURVEYS" has the meaning set forth in Section 4(o) above.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TBA" has the meaning set forth in Section 4(q) above.
"TBA DATE" means the date on which operations under the TBA shall
become effective.
9. TERMINATION.
a. TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Buyers and the Seller may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyers may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing in the event the Seller is in material breach of any
representation, warranty, or covenant contained in this Agreement
and such breach is likely to create a Material Adverse Effect;
provided, however, that if such breach is capable of being cured,
such breach also remains uncured for twenty (20) days after notice
of breach is received by the Seller from the Buyers;
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyers at any time prior to the
Closing in the event the Buyers are in material breach of any
representation, warranty, or covenant contained in this Agreement
and such breach if likely to create a Material Adverse Effect;
provided, however that if such breach is capable being cured, such
breach remains uncured for ten (10) days after notice of breach is
received by the Buyers from the Seller;
(iv) the Buyers may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing if the Closing shall not have occurred on or before the
360th day following the date of this Agreement by reason of the
failure of any condition precedent under Section 5(a) hereof
(unless the failure results primarily from the Buyers themselves
breaching any representation, warranty, or covenant contained in
this Agreement);
(v) the Seller may terminate this Agreement by
giving written notice to the Buyers at any time prior to the
Closing if the Closing shall not have occurred on or before the
360th day following the date of this Agreement by reason of the
failure of any condition precedent under Section 5(b) hereof
(unless the failure results primarily from the Seller itself
breaching any representation, warranty, or covenant contained in
this Agreement);
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(vi) the Buyers may terminate this Agreement as
provided in Sections 4(p) and 4(q);
(vii) the Buyers or the Seller may terminate this
Agreement if any Assignment Application is denied by Final Order.
b. EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 9(a) above, all obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. MISCELLANEOUS.
a. PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue
any press release or announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by law or regulation (in which case the
disclosing Party will advise the other Party prior to making the disclosure).
b. NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
c. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
d. SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party, provided that (i) the Buyers may
assign all of their right, title and interest in, to and under this Agreement to
one or more Affiliates, who shall then, subject to the terms and conditions of
this Agreement, have the right to receive the Acquired Assets, assume the
Assumed Liabilities, and to pay to the Seller the Purchase Price therefor or to
any successor to the Buyers in the event of any sale, merger or consolidation of
the Buyers, and (ii) Buyers may assign their indemnification claims and their
rights under the warranties and representations of the Seller to the financial
institution(s) providing financing to the Buyers in connection with this
transaction.
e. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
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f. HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
g. NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing and shall be considered to be
given and received in all respects when hand delivered, when delivered via
prepaid express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Seller:
HMH Broadcasting, Inc.
300 West Vine Street
Lexington, Kentucky 40507
Attn: Ralph E. Hacker
Phone: (606) 253-5900
Fax: (606) 253-5903
Copy to:
Latham & Watkins
1001 Pennsylvania Avenue, NW
Suite 1300
Washington, DC 20004
Attn: Eric Bernthal
Phone: (202) 637-2200
Fax: (202) 637-2201
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53202
Attn: Terrence J. Leahy
Phone: (414) 615-2800
Fax: (414) 615-2880
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
875 N. Michigan Avenue
Suite 3650
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Chicago, Illinois 60611
Attn: Richard J. Bonick
Phone: (312) 867-0091
Fax: (312) 867-0098
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
H. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Kentucky.
I. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyers and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
J. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
K. EXPENSES. The Buyers and the Seller, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 4(b) with regard to the Assignment Applications. The Buyer will
pay for all environmental audits performed under Section 4(p) hereof. The Seller
and the Buyers will each pay one-half (1/2) of any transfer or sales taxes and
other recording or similar fees necessary to vest title to each of the Acquired
Assets in the Buyers.
L. CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction
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shall be applied against any Party. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
M. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
N. SUBMISSION TO JURISDICTION. Each of the Parties submits to
the jurisdiction of any state or federal court sitting in Lexington, Kentucky in
any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on the other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 10(g) above. Nothing in this Section 10(n),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.
CUMULUS BROADCASTING, INC.
By: /s/ Richard W. Weening
-------------------------------
Richard Weening
Executive Chairman
CUMULUS LICENSING CORP.
By: /s/ Richard W. Weening
-------------------------------
Richard Weening
Executive Chairman
CUMULUS WIRELESS SERVICES INC.
By: /s/ Richard W. Weening
-------------------------------
Richard Weening
Executive Chairman
HMH BROADCASTING, INC.
By: /s/ Ralph E. Hacker
-------------------------------
Ralph E. Hacker
President and Chairman
Solely as to Section 2(i)(i):
HMH REALTY, LLC
By: /s/ Ralph E. Hacker
-------------------------------
Ralph E. Hacker
General Partner
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