ASSET PURCHASE AGREEMENT
(KMPS, Seattle, Washington)
This AGREEMENT (the "Agreement") is dated as of December 12, 1996 by and
between PROFESSIONAL BROADCASTING INCORPORATED ("PBI"), EZ SEATTLE, INC. ("EZ"
and together with PBI, "Seller") and INSPIRATION MEDIA, INC. ("Buyer").
RECITALS:
1. Seller owns and operates radio station KMPS(AM) licensed to Seattle,
Washington (the "Station"), and holds the licenses and authorizations issued by
the FCC for the operation of the Station (including certain licenses to be
reassociated with radio station KPMS-FM).
2. Buyer desires to acquire substantially all the assets of the Station,
and Seller is willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Buyer hereby agree as follows:
ARTICLE 1
TERMINOLOGY
1.1 Act. The Communications Act of 1934, as amended.
1.2 Adjustment Amount. As provided in Section 2.7(b), the amount by which
Buyer's account is to be credited or charged, as reflected on the Adjustment
List.
1.3 Adjustment List. As provided in Section 2.7 (b), an itemized list of
all sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.
1.4 Assumed Obligations. Such term shall have the meaning defined in
Section 2.3.
1.5 Business Day. Any calendar day, excluding Saturdays and Sundays, on
which federally chartered banks in the city of Camarillo, California, are
regularly open for business.
1
1.6 Buyer's Threshold Limitation. As provided in Section 9.3 (b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.7 Closing. The closing with respect to the transactions contemplated by
this Agreement.
1.8 Closing Date. The date determined as the Closing Date as provided in
Section 8.1.
1.9 Conditional Payment. The amount of Two Hundred Fifty Thousand Dollars
($250,000).
1.10 Documents. This Agreement and all Exhibits and Schedules hereto, and
each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.
1.11 Earnest Money. The amount of One Hundred Thousand Dollars ($100,000).
1.12 Environmental Assessment. Such term shall have the meaning defined in
Section 5.10.
1.13 Environmental Laws. The Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.14 Escrow Agent. Gary Stevens & Co., Incorporated.
1.15 Escrow Agreement. The Escrow Agreement in the form attached as
Exhibit A which Seller, Buyer and the Escrow Agent have entered into
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
1.16 Excluded Assets. Such term shall have the meaning defined in Section
2.2.
1.17 FCC. Federal Communications Commission.
2
1.18 FCC Licenses. The licenses, permits and authorizations of the FCC for
the operation of the Station as listed on Schedule 3.8.
1.19 FCC Order. An action, order or decision of the FCC granting its
consent to the assignment of the FCC Licenses to Buyer.
1.20 Final Action. An action of the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
sponte action of the FCC with comparable effect is pending and as to which the
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
1.21 Hazardous Materials. Toxic materials, hazardous wastes, hazardous
substances, pollutants or contaminants, asbestos or asbestos-related products,
PCB's, petroleum, crude oil or any fraction or distillate thereof (as such terms
are defined in any applicable federal, state or local laws, ordinances, rules
and regulations, and including any other terms which are or may be used in any
applicable environmental laws to define prohibited or regulated substances).
1.22 Indemnified Party. Any party described in Section 9.3(a) or 9.4(a)
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.23 Indemnifying Party. The party to the Agreement (not the Indemnified
Party) that, in the event of a claim or liability asserted by a third party
against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.24 Lien. Any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.25 Material Adverse Condition. A condition which would materially
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that the Station be operated in accordance with a
condition similar to those contained in
3
the present FCC licenses issued for operation of the Station shall not be deemed
a Material Adverse Condition.
1.26 OSHA Laws. The Occupational Safety and Health Act of 1970, as
amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.
1.27 Permitted Encumbrances. For purposes hereof, "Permitted Encumbrances"
shall mean (i) easements, restrictions, and other similar matters which will not
adversely affect the use of the Real Property in the ordinary course of
business; (ii) liens for taxes not due and payable or, that are being contested
in good faith by appropriate proceedings; (iii) mechanics, materialmen's,
carriers', warehousemen's, landlords' or other similar liens in the ordinary
course of business for sums not yet due or being contested in good faith by
appropriate proceedings; (iv) deposits or pledges to secure the performance of
bids, tenders, contracts (other than for borrowed money), leases, statutory
obligations, surety or appeal bonds or other deposits or pledges for purposes of
a like general nature made or given in the ordinary course of business: and (v)
liens or mortgages that will be released at Closing; (vi) zoning ordinances and
regulations, including statutes and ordinances relating to the liens of streets
and to other municipal improvements, which will not adversely affect the use of
the Real Property in the ordinary course of business.
1.28 Permitted Lien. Any statutory lien which secures a payment not yet
due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way or similar imperfection in the
Seller's title to its assets or properties that, individually and in the
aggregate, are not material in character or amount and do not and are not
reasonably expected to materially impair the value or materially interfere with
the use of any asset or property of the Seller material to the operation of its
business as it has been and is now conducted.
1.29 Proceedings. The eminent domain proceedings relative to the Harbor
Island Tower site.
1.30 Purchase Price. The consideration to be paid by Buyer to Seller for
purchase of the Sale Assets in an amount equal to One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000).
1.31 Real Property. Such term shall have the meaning defined in Section
3.7.
1.32 Rules and Regulations. The rules of the FCC as set forth in Volume 47
of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Station.
4
1.33 Sale Assets. All of the tangible and intangible assets to be
transferred by Seller to Buyer as set forth in Section 2.1.
1.34 Station Agreements. The agreements, commitments, contracts, leases
and other items described in Section 2.1(d) which relate to operation of the
Station.
1.35 Seller's Threshold Limitation. As provided in Section 9.4(b), the
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.36 Survival Period. The term following the Closing Date during which all
representations, warranties, covenants and agreements of the parties under this
Agreement shall survive. The term shall be twelve (12) months.
1.37 Tangible Personal Property. The personal property described in
Section 2.1(a).
ARTICLE II
PURCHASE AND SALE
2.1 Sale Assets. On the Closing Date, Seller will sell, transfer, assign
and convey to Buyer, and Buyer will purchase from Seller, free and clear of all
Liens, except Permitted Liens, all of Seller's right, title and interest, legal
and equitable, in and to all tangible and intangible assets (except Excluded
Assets) used or useful in the operation of the Station as it has been and is now
operated, including the following:
(a) Tangible Personal Property. The tangible personal property
listed on Schedules 3.6, together with such modifications, replacements,
improvements and additional items, and subject to such deletions therefrom, made
or acquired between the date hereof and the Closing Date in accordance with the
terms and provisions of this Agreement;
(b) Real Property. Except as provided on Schedule 3.7, seller's
interests in the Real Property and any other real estate or interests therein
acquired by Seller between the date hereof and the Closing Date in accordance
with the terms and provisions of this Agreement including, without limitation,
all right, title and interest of Seller in and to the Station's transmitting
facilities on Harbor Island, Washington and the Proceedings or any award or
damages arising out of the Proceedings.
(c) Licenses and Permits. The FCC Licenses and all other assignable
or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter
5
obtained by Seller between the date hereof and the Closing Date, to the extent
such other permits, licenses and authorizations pertain to or are used in the
operation of the Station.
(d) Station Agreements. All agreements to which Seller is a party or
by which it is bound and which are listed on Schedule 3.9 as agreements which
Buyer is electing to assume; any renewals, extensions, amendments or
modifications of those agreements being assumed which are made in the ordinary
course of Seller's operation of the Station and in accordance with the terms and
provisions of this Agreement; and any additional such agreements, contracts,
leases, commitments or orders (and any renewals, extensions, amendments or
modifications thereof) made or entered into between the date hereof and the
Closing Date in accordance with the terms and provisions of this Agreement and
which Buyer elects to assume in writing including, without limitation, Seller's
rights to enter into an agreement with Bellevue Radio, Inc. to diplex the
Station with radio station KIXI(AM), Seattle, Washington ("KIXI").
(e) Records. True and complete copies of all of the books, records,
accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Station
(other than corporate records).
(f) Miscellaneous Assets. Any other tangible or intangible assets,
properties or rights of any kind or nature not otherwise described above in this
Section 2.1 and now or hereafter owned or used by Seller in the operation of the
Station, including but not limited to all goodwill of the Station.
2.2 Excluded Assets. Notwithstanding any provision of this Agreement to
the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
included as part of the Sale Assets).
6
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
(j) Any assets jointly owned by Seller and any other entity not
necessary to the conduct of owning and operating the Station.
2.3 Assumption of Liabilities.
(a) At the Closing, Buyer shall assume and agree to perform, without
duplication of Seller's performance, the following liabilities and obligations
of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(b) Except for the Assumed Obligations, Buyer shall not assume or in
any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
7
2.4 Earnest Money.
(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under
the terms of the Escrow Agreement in trust for the benefit of the parties
hereto. Interest and other earnings on the Earnest Money shall be distributed by
the Escrow Agent to Buyer from time to time upon the request of Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered
to Seller or returned to Buyer in accordance with Section 10.2, and if Closing
does occur, the Earnest Money shall be applied to payment of the Purchase Price
at Closing as provided in Section 2.5.
2.5 Payments.
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed
to Seller by cashier's check or wire transfer of immediately available funds.
(ii) At the Closing the Purchase Price, less the amount of the
Earnest Money disbursed to Seller, shall be paid to Seller at Closing by wire
transfer of immediately available funds.
(b) In the event Closing occurs and each of the following, within
Twenty Four (24) months of Closing, also occurs: (i) Buyer, in its sole and
absolute discretion, enters into an agreement with Bellevue Radio, Inc., and
(ii) the Station shall have received all necessary approvals of the FCC to so
diplex, and (iii) the Station shall thereafter diplex with KIXI in accordance
with the maximum authorized facilities permitted by the FCC pursuant to the
Station's FCC License then, and only then, shall the conditions precedent to
Buyer's obligation to pay the Conditional Payment be satisfied. Within thirty
(30) days after the satisfaction of the conditions precedent to Buyer's
obligation to pay the Conditional Payment, Buyer shall pay the Conditional
Payment to Seller.
(c) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
2.6 Allocation of the Purchase Price. Prior to Closing, Buyer and Seller
shall agree to an allocation of the Purchase Price. Buyer and Seller shall use
such allocation for all reporting purposes in connection with federal, state and
local income
8
and, to the extent permitted under applicable law, franchise taxes.
Buyer and Seller agree to report such allocation to the Internal Revenue Service
in the form required by Treasury Regulation ss. 1.1060-1T. Seller and Buyer
acknowledge that the allocation will be the result of arms length bargaining
regarding the fair value of the Sale Assets.
2.7 Adjustment of Purchase Price.
(a) All operating income and operating expenses of the Station shall
be adjusted and allocated between Seller and Buyer, and an adjustment in the
Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the Closing Date shall
be for the account of Seller, and all income and expenses attributable to the
operation of the Station after the closing Date shall be for the account of
Buyer.
(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this Section,
Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30)
days following the Closing Date, or such earlier or later date as shall be
mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the
Adjustment Amount. If the Adjustment Amount is a credit to the account of Buyer,
Seller shall pay such amount to Buyer, and if the Adjustment Amount is a charge
to the account of Buyer, Buyer shall pay such amount to Seller. In the event
Seller disagrees with the Adjustment Amount determined by Buyer or with any
other matter arising out of this subsection, and Buyer and Seller cannot within
sixty (60) days resolve the disagreement themselves, the parties will refer the
disagreement to a firm of independent certified public accountants, mutually
acceptable to Seller and Buyer, whose decision shall be final and whose fees and
expenses shall be allocated between and paid by Seller and Buyer, respectively,
to the extent that such party does not prevail on the disputed matters decided
by the accountants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization and Good Standing. Seller is a corporation, validly
existing and in good standing under the laws of the Commonwealth of Virginia,
and is qualified to do business and in good
9
standing under the laws of the State of Washington and all other jurisdictions
where the failure to be qualified to do business and in good standing would have
a material adverse effect on the Station. Seller has all requisite power to own,
operate and lease its properties and carry on its business as it is now being
conducted and as the same will be conducted until the Closing.
3.2 Authorization and Binding Effect of Documents. The execution and
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Seller. Seller has the
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Seller enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
3.3 Absence of Conflicts. The execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby:
(a) do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
Lien other than a Permitted Lien on any of the Sale Assets under), any provision
of law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Seller;
(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under the Articles of Incorporation or Bylaws of Seller or pursuant to any
lease, agreement, commitment or other instrument which Seller is a party to, or
bound by, or by which any of the Sale Assets may be bound, or result in the
creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets.
3.4 Governmental Consents and Consents of Third Parties. Except as set
forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, and to Seller's actual
knowledge, the execution and delivery of, and the performance of its obligations
under, this Agreement and each of the other Documents by Seller, and the
consummation by Seller of the transactions contemplated hereby and thereby, do
not require the consent, waiver, approval, permit, license, clearance or
authorization of, or any declaration of filing with,
10
any court or public agency or other authority, or the consent of any person
under any agreement, arrangement or commitment of a nature to which Seller is a
party or by which it is bound or by which the Sale Assets are bound or to which
they are subject to, the failure of which to obtain would have a material
adverse effect on the Sale Assets or the operation of the Station.
3.5 Sale Assets. The Sale Assets include all of the assets, properties and
rights of every type and description, real, personal and mixed, tangible and
intangible, that are used to a material extent in the conduct of the business of
owning and operating the Station in the manner in which that business has been
and is now conducted in all material respects, with the exception of the
Excluded Assets.
3.6 Tangible Personal Property. Except for supplies and other incidental
items which in the aggregate are not of material value, the list of Tangible
Personal Property set forth on Schedule 3.6 is a complete and correct list of
all of the items of tangible personal property (other than Excluded Assets) used
to a material extent in the operation of the Station in the manner in which it
has been and is now operated. Except as set forth on Schedule 3.6:
(a) Seller has good, marketable and valid title to all of the items
of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.
(b) The Tangible Personal Property has, subject to the information
contained in Subsection 3.6(e), been maintained in accordance with industry
practices and is in good operating condition subject to ordinary wear and tear.
(c) The Tangible Personal Property complies with applicable rules
and regulations of the FCC and the terms of the FCC Licenses.
(d) Seller has no knowledge of any defect in the condition or
operation of any item of the Tangible Personal Property which is reasonably
likely to have a material adverse effect on the operation of the Station.
(e) The parties acknowledge that the Station's Harbor Island
transmitter facilities were destroyed by fire, including the Station's main and
auxiliary transmitter, commercial power lines, directional antenna phasing
equipment, and remote control and audio processing equipment. The Harbor Island
transmitter facilities are being rebuilt following the fire.
3.7 Real Property.
(a) The real property described on Schedule 3.7 constitutes a
complete and correct summary description in all material respects of all of the
interests in real
11
estate (other than any real property leased by Seller pursuant to a lease
described in Schedule 3.9) used to any extent in the operation of the Station in
the manner in which it has been and is now operated. Said real property,
together with all improvements affixed thereto, is herein defined as the "Real
Property."
(b) Seller does not owe any money to any architect, contractor,
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with the Real Property within the past four (4)
months which shall not be paid in full on or before Closing. Except as set forth
on Schedule 3.7, there is no work being done at or materials being supplied to
the Real Property at the date hereof other than routine maintenance projects
having an aggregate cost through completion thereof of no more than Ten Thousand
Dollars ($10,000).
(c) To the best of Seller's knowledge the present use of the Real
Property is in compliance with all applicable zoning codes in effect as of the
date hereof, and Seller has not received any notices of uncorrected violations
of the applicable housing, building, safety or fire ordinances. The Real
Property is served by electricity and water in capacities adequate for the
present use of the Real Property and improvements thereon. Except as set forth
on Section 3.7, Seller has not made any other agreement for the sale or lease
of, or given any other person an option to purchase or lease or a right of first
refusal to purchase or lease, all or any part of the Real Property, and except
as set forth on Schedule 3.7, Seller has not subjected the Real Property to any
liens (other than Permitted Liens), easements, rights, duties, obligations,
convenants, conditions, restrictions, limitations or agreements not of record.
(d) Buyer expressly acknowledges that the tower site of the Station
is subject to condemnation proceedings by the local port authority. Seller makes
no representations or warranties as to the outcome of such proceedings or the
amount to be paid to Buyer as a result of such proceedings.
3.8 FCC Licenses. Seller is the holder of the FCC Licenses listed on
Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station in all
material respects as now operated, and (ii) constitute all the current licenses
and authorizations issued by the FCC to Seller for or in connection with the
current operation of the Station. Seller has no knowledge of any condition
imposed by the FCC as part of any FCC License which is neither set forth on the
face thereof as issued by the FCC nor contained in the Rules and Regulations
applicable generally to stations of the type, nature, class or location of the
Station. Except as disclosed on Schedule 3.8, the Station is being operated at
full authorized power, in accordance with the terms and conditions of the FCC
Licenses applicable to it and in accordance with the Rules and Regulations.
Except as set forth on Schedule 3.8, no proceedings are pending or, to the
knowledge of the Seller, are threatened which may
12
result in the revocation, modification, non-renewal or suspension of any of the
FCC Licenses, the denial of any pending applications, the issuance of any cease
and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
Seller has complied in all material respects with all requirements to file
reports, applications and other documents with the FCC with respect to the
Station, and all such reports, applications and documents are complete and
correct in all material respects. Seller has no knowledge of any matters (i)
which could reasonably be expected to result in the suspension or revocation of
or the refusal to renew any of the FCC Licenses or the imposition of any fines
or forfeitures by the FCC, or (ii) against Seller which could reasonably be
expected to result in the FCC's refusal to grant approval of the assignment to
Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in
connection with approval of such assignment. There are not any unsatisfied or
otherwise outstanding citations issued by the FCC with respect to the Station or
its operation. Complete and accurate copies of all FCC Licenses are attached as
a part of Schedule 3.8. The "Public Inspection File" of the Station is complete
and in substantial and material compliance with Section 73.3526 of the Rules and
Regulations.
3.9 Station Agreements.
(a) Schedule 3.9 sets forth an accurate and complete list of all
material agreements, contracts, arrangements or commitments in effect as of the
date hereof, including all amendments, modifications and supplements thereto
which the Station or its assets or properties are bound by, except (A) employee
benefit plans and employment contracts, (B) contracts for the sale of time on
the Station, and (C) contracts which are cancelable by Seller or its assignee
without breach or penalty on not more than sixty (60) days' notice. Complete and
correct copies of all such agreements, contracts, arrangements or commitments
that are in writing, including all amendments, modifications and supplements
thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, and with respect to all
Station Agreements being assumed by Buyer, (i) all Station Agreements are legal,
valid and enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material breach of or in material default
under any Station Agreements; (iii) to the knowledge of Seller, there has not
occurred any event which, after the giving of notice or the lapse of time or
both, would constitute a material default under, or result in the material
breach of, any Station Agreements which are, individually or in the aggregate,
material to the operation of the Station; and (iv) Seller holds the right to
enforce and receive the benefits under all of the Station
13
Agreements, free and clear of all Liens (other than Permitted Liens) but subject
to the terms and provision of each such agreement.
(c) Schedule 3.9 indicates, for each Station Agreement listed
thereon which is being assumed by Buyer, whether consent or approval by any
party thereto is required thereunder for consummation of the transactions
contemplated hereby.
3.10 Litigation. There are no claims, investigations or administrative,
arbitration or other proceedings pending or, to the actual knowledge of Seller,
threatened against Seller which would, individually or in the aggregate if
adversely determined, have a material adverse effect on the Sale Assets or the
operation of the Station, or which would give any third party the right to
enjoin the transactions contemplated by this Agreement. To the actual knowledge
of Seller, there is no basis for any such claim, investigation, action, suit or
proceeding which would, individually or in the aggregate if adversely
determined, have a material adverse effect on the Sale Assets or operation of
the Station. There are no existing or, to the actual knowledge of Seller,
pending orders, judgments or decrees of any court or governmental agency
affecting Seller, the Station or any of the Sale Assets.
3.11 Labor Matters.
(a) Seller is not a party to any collective bargaining agreement,
and there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.
(b) Except as disclosed on Schedule 3.11:
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the knowledge of Seller, threatened against the Station;
(ii) There are neither pending nor, to the actual knowledge of
Seller threatened, any suits, actions, administrative proceedings, union
organizing activities, arbitrations, grievances or other proceedings between
Seller and any employees of the Station or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Station which have had or are
reasonably likely to have a material adverse effect on the operation of the
Station;
(iii) With respect to the Station, (A) Seller is in compliance
in all material respects with all laws, rules and regulations relating to the
employment of labor and all employment contractual obligations, including those
relating to wages, hours, collective bargaining, affirmative action,
discrimination, sexual harassment, wrongful discharge and the withholding and
payment of taxes and contributions except for such non-compliance which
individually or in the aggregate would not have a material adverse
14
effect on the business or financial condition of the Station; (B) Seller has
withheld all amounts required by law or agreement to be withheld from the wages
or salaries of its employees; and (C) Seller is not liable to any present or
former employees or any governmental authority for damages, arrears of wages or
any tax or penalty for failure to comply with the foregoing except for such
liability which individually or in the aggregate would not have a material
adverse effect on the business or financial condition of the Station;
(iv) Buyer's consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.
3.12 Employee Benefit Plans. Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer any obligation under any benefit plan, contract or arrangement
(regardless of whether they are written or unwritten and funded or unfunded)
covering employees or former employees of Seller in connection with their
employment by Seller. For purposes of the Agreement, "benefit plans" shall
include without limitation employee benefit plans within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.13 Compliance with Law. Except as set forth on Schedule 3.13, the
operation of the Station complies in all material respects with the applicable
rules and regulations of the FCC and all federal, state, local or other laws,
statutes, ordinances, regulations, and any applicable order, writ, injunction or
decree of any court, commission, board, agency or other instrumentality.
3.14 Environmental Matters; OSHA.
(a) Except as set forth on Schedule 3.14, Seller has obtained all
material, environmental, health and safety permits necessary or required for
either the operation of the Station as currently operated or the ownership of
the Real Property and all such permits are in full force and effect and Seller
is in compliance with all material terms and conditions of such permits.
(b) There is no proceeding pending or, to Seller's actual knowledge,
threatened which may result in the reversal, rescission, termination,
modification or suspension of any environmental or health or safety permits
necessary for the operation of the Station as currently conducted or the
ownership of the Real Property.
15
(c) With respect to the Station and the ownership of the Real
Property, Seller is in compliance in all material respects with the provisions
of Environmental Laws.
(d) During Seller's occupancy of the Real Property, Seller has not,
and to Seller's actual knowledge, no other person or entity has caused or
permitted materials to be generated, released, stored, treated, recycled,
disposed of on, under or at such parcels, which materials, if known to be
present, would require clean up, removal or other remedial or responsive action
under Environmental Laws (other than normal office, cleaning and maintenance
supplies in reasonable quantities used and /or stored appropriately in the
buildings or improvements on the Real Property). Seller has not caused the
migration of any materials from the Real Property onto or under any property
adjacent to the Real Property which materials, if known to be present, would
require cleanup, removal or other remedial or responsive action under
Environmental Laws. There are no underground storage tanks and no
polychlorinated biphenyls ("PCB") or friable asbestos on such property.
(e) Except as set forth on Schedule 3.14, Seller is not subject to
any judgment, decree, order or citation with respect to the Station or the Real
Property related to or arising out of Environmental Laws, and Seller has not
received notice that it has been named or listed as a potentially responsible
party by any person or governmental body or agency in any matter arising under
Environmental Laws.
(f) Seller has not discharged or disposed of any petroleum product
or solid waste on the Real Property or on the property adjacent to the Real
Property owned by third parties, which, to the best of Seller's knowledge, may
form the basis for any present or future claim based upon the Environmental Laws
in existence on the date hereof or as of the Closing, or any demand or action
seeking clean-up of any site, location, body of water, surface or subsurface,
under any Environmental Laws or otherwise, or which may subject the owner of the
Real Property to claims by third parties (except to the extent third party
liability can be established) for damages.
(g) No portion of the Real Property has ever been used by Seller,
nor, to the best of Seller's knowledge, by any previous occupant of the Real
Property, in material violation of Environmental Laws or as a landfill, dump
site or any other use which involves the disposal or storage of Hazardous
Materials on-site or in any manner which may materially adversely affect the
value of the Real Property.
(h) No pesticides, herbicides, fertilizers or other materials have
been used on, applied to or disposed of by Seller on the Real Property in
material violation of any Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and/or stored
appropriately in the buildings or improvements on the Real Property).
16
(i) With respect to the Station or the Real Property, Seller has
disposed of all waste in full compliance with all Environmental Laws and, to the
best of Seller's knowledge, there is no existing condition that may form the
basis of any present or future claim, demand or action seeking clean up of any
facility, site, location or body of water, surface or subsurface, for which the
Buyer could be liable or responsible solely as a result of the disposal of waste
at such site by a prior owner of the Real Property.
(j) Seller is in material compliance with all OSHA Laws applicable
to the Real Property and the operations of the Station.
3.15 Site Survey. Seller will cooperate with Buyer in obtaining a site
survey of tower coordinates, to be paid for by Buyer.
3.16 Filing of Tax Returns. Seller has filed all Federal, State and local
tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due, other
than such returns, taxes and assessments, the failure to file or pay would not,
individually or in the aggregate, have a material adverse effect on Buyer.
3.17 Absence of Insolvency. No insolvency proceedings of any character
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale Assets, are pending or, to the best knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.
3.18 Broker's or Finder's Fees. Except as set forth in Schedule 3.18, no
agent, broker, investment banker or other person or firm acting on behalf of or
under the authority of Seller or any affiliate of Seller is or will be entitled
to any broker's or finder's fee or any other commission or similar fee, directly
or indirectly, in connection with the transactions contemplated by this
Agreement.
3.19 Insurance. There is now in full force and effect with reputable
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
17
Washington. Buyer has all requisite corporate power to own, operate and lease
its properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 Authorization and Binding Effect of Documents. Buyer's execution and
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents, and the consummation by Buyer of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all
necessary corporate action on the part of Buyer. This Agreement and each of the
other Documents to be executed by Buyer have been, or at or prior to the Closing
will be, duly executed by Buyer. The Documents, when executed and delivered by
the parties hereto, will constitute the valid and legally binding agreement of
Buyer, enforceable against Buyer in accordance with their terms, except as may
be limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally, and except as may be limited by
general principles of equity (regardless of whether such enforceability is
sought in a proceeding in equity or at law).
4.3 Absence of Conflicts. Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of Buyer
under) any provision of law, rule or regulation or any order, judgment,
injunction, decree or ruling applicable to Buyer in any manner which would have
a material adverse effect on the assets, business, operation or financial
condition or results of operations of Buyer;
(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 Governmental Consents and Consents of Third Parties. Except for the
required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature to which Buyer is a party or
by which it is bound, the failure of which to obtain would have a material
adverse effect on the assets, business, operation or financial condition or
results of operations of Buyer.
18
4.5 Qualification.
(a) Buyer has no knowledge after due inquiry of any facts concerning
Buyer or any other person with an attributable interest in Buyer (as such term
is defined under the Rules and Regulations) which, under present law (including
the Act) and the Rules and Regulations, would (i) disqualify Buyer from being
the holder of the FCC Licenses, the owner of the Sale Assets or the operator of
the Station upon consummation of the transactions contemplated by this
Agreement, or (ii) raise a substantial and material question of fact (within the
meaning of Section 309(e) of the Act) respecting Buyer's qualifications.
(b) Without limiting the foregoing Subsection (a), Buyer shall make
the affirmative certifications provided in Section III of FCC Form 314 at the
time of filing of such form with the FCC as contemplated by Section 5.2.
4.6 Broker's or Finder's Fees. Except as set forth in Schedule 3.18, no
agent, broker, investment banker, or other person or firm acting on behalf of or
under the authority or Buyer or any affiliate of Buyer is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with transactions contemplated by this Agreement.
4.7 Litigation. There are no legal, administrative, arbitration or other
proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
TRANSACTIONS PRIOR TO THE CLOSING DATE
5.1 Conduct of the Station's Business Prior to the Closing Date. Seller
covenants and agrees with Buyer that between the date hereof and the Closing
Date, unless the Buyer otherwise agrees in writing (which agreement shall not be
unreasonably withheld), Seller shall:
(a) Use reasonable efforts to operate the Station in substantially
the same manner in which it is currently being operated:
(b) Use reasonable commercial efforts to maintain insurance upon all
of the tangible Sale Assets in such amounts and of such kind comparable to that
in effect on the date hereof with respect to such Sale Assets and with respect
to the operation of the Station, with insurers of substantially the same or
better financial condition;
19
(c) Operate the Station and otherwise conduct its business in all
material respects in accordance with the terms or conditions of its FCC
Licenses, the Rules and Regulations, the Act and all other rules and
regulations, statutes, ordinances and orders of all governmental authorities
having jurisdiction over any aspect of the operation of the Station, except
where the failure to so operate the Station would not have a material adverse
effect on the Sale Assets or the operation of the Station or on the ability of
Seller to consummate the transactions contemplated hereby;
(d) Maintain the books and records of the Station in Seller's
customary manner on a basis consistent in all material respects with prior
years;
(e) Comply in all material respects with all Station Agreements now
or hereafter existing which are material, individually or in the aggregate, to
the operation of the Station;
(f) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute an
event of default under such Station Agreements;
(g) Not mortgage, pledge or subject to any Lien other than a
Permitted Lien (except in the ordinary course of business) any of the Sale
Assets;
(h) Not sell, lease or otherwise dispose of, nor agree to sell,
lease or otherwise dispose of, any of the Sale Assets, except for dispositions
in the ordinary course of business;
(i) Not acquire or lease any goods or services or enter into, amend
or terminate any license, lease of real or personal property or any other
Station Agreement, other than in the ordinary course of business;
(j) Not introduce any material change with respect to the operation
of the Station including, without limitation, any material changes in the
broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;
(k) Notify Buyer of any material litigation pending or threatened
against Station or Seller or any material damage to or destruction of any assets
included or to be included in the Sale Assets of which Seller receives actual
knowledge;
(l) Shall file with the FCC, such applications and other documents
in the name of Buyer and/or Seller as may be necessary or advisable to obtain
any extension,
20
assignment or modification of any construction permits, special temporary
authorizations, or any other permits, license or authorizations of the FCC
applicable to the Station ("FCC Authorizations"), reasonably requested by Buyer.
Buyer shall pay the filing fees, if any, of any extension, assignment of
modification of any FCC Authorization. Notwithstanding the foregoing, nothing
contained herein shall be deemed to require Seller to return the Station to the
air in the event of forfeitures of the Harbor Island tower site by eminent
domain proceedings prior to Closing. All proceeds received from any such
proceedings shall be the property of Buyer and Buyer shall bear sole
responsibility, with the reasonable cooperation of Seller, for relocating the
tower.
(m) Promptly notify Buyer of any communication or action by any
entity or person relating to the Proceedings. Seller shall take no action or
make no communication relating to the Proceedings with any entity or person
except as authorized in advance by Buyer or Buyer's representatives.
5.2 Governmental Consents. Seller and Buyer shall file with the FCC,
within five (5) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall
take all commercially reasonable steps necessary to prosecute such filings with
diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable;
provided, however, that in the event the application for assignment of the FCC
Licenses has been designated for hearing, either Buyer or Seller may elect to
terminate this Agreement pursuant to Section 10.1(c). Buyer shall not knowingly
take, and Seller covenants that Seller shall not knowingly take, any action that
party knows or has reason to know would materially and adversely affect or
materially delay issuance of the FCC Order or materially and adversely affect or
materially delay its becoming a Final Action without a Material Adverse
Condition, unless such action is requested or required by the FCC, its staff or
the Rules and Regulations. Should Buyer or Seller become aware of any facts
which could reasonably be expected to materially and adversely affect or
materially delay issuance of the FCC Order without a Material Adverse Condition
(including but not limited to, in the case of Buyer, any facts which would
reasonably be expected to disqualify Buyer from controlling the Station), such
party shall promptly notify the other party thereof in writing and both parties
shall cooperate to take all steps necessary or desirable to resolve the matter
expeditiously and to obtain the FCC's approval of matters pending before it.
5.3 Other Consents. Seller shall use its reasonable best efforts to obtain
the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
21
5.4 Tax Returns and Payments.
(a) All tax returns, estimates, and reports required to be filed by
Seller prior to the Closing Date or relating to periods prior to the Closing
Date will be timely filed with the appropriate governmental agencies unless
valid extensions therefor shall have been obtained.
(b) All taxes pertaining to ownership of the Sale Assets or
operation of the Station prior to the Closing Date will be timely paid; provided
that Seller shall not be required to pay any such tax so long as the validity
thereof shall be contested in good faith by appropriate proceedings and Seller
shall have set aside adequate reserves with respect to any such tax.
5.5 Access Prior to the Closing Date. Prior to the Closing, Buyer and its
representatives may make such reasonable investigation of the assets and
business of Seller as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station, provided that (i) Buyer shall give Seller reasonable advance notice
of each date on which Buyer or any such other person or entity desires such
access, (ii) each person (other than an officer of Buyer) shall, if requested by
Seller, be accompanied by an officer or their representative of Buyer approved
by Seller, which approval shall not be unreasonably withheld, (iii) the
investigations at the offices of Seller shall be reasonable in number and
frequency, and (iv) all investigations shall be conducted in such a manner as
not to physically damage any property or constitute a disruption of the
operation of the Station or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of Seller and the Station as Buyer may reasonably request.
5.6 Confidentiality; Press Release. All information, data and materials
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with a high degree of care to
prevent the disclosure thereof; and (c) if, for any reason, this transaction is
not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available to
any person any of such information, data or material concerning the other party,
except as may be necessary or appropriate in connection with the operation of
the Station by Buyer. Each party shall use its reasonable efforts to prevent the
violation of any of the foregoing confidentiality provisions by its respective
representatives. Notwithstanding the foregoing, nothing contained herein shall
prohibit Buyer or Seller from:
22
(i) using such information, data and materials in connection
with any action or proceeding brought or any claim asserted by Buyer or Seller
in respect of any breach by the other of any representation, warranty or
covenant made in or pursuant to this Agreement; or
(ii) supplying or filing such information, data or materials
to or with the FCC or any other valid governmental or court authority to the
extent reasonably necessary to obtain any consent, waiver, amendment,
modification, approval, authorization, permit or license which may be necessary
to effectuate this Agreement, and to consummate the transaction contemplated
herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.
5.7 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its reasonable best efforts to
take all action and to do all things necessary, proper or advisable to satisfy
any condition to the parties' obligations hereunder in its power to satisfy and
to consummate and make effective as soon as practicable the transactions
contemplated by this Agreement.
5.8 FCC Reports. Seller shall continue to file, on a current basis until
the Closing Date, all reports and documents required to be filed with the FCC
with respect to the Station. Seller shall provide Buyer with copies of all such
filings within five business days of the filing with the FCC.
5.9 Conveyance Free and Clear of Liens. At or prior to the Closing, Seller
shall obtain executed releases, in suitable form for filing and otherwise in
form and substance reasonably satisfactory to Buyer, of any security interests
granted in the Sale Assets and properties as security for payment of loans and
other obligations or judgments and of any other Liens on the Sale Assets. At the
closing, Seller shall transfer and convey to Buyer all of the Sale Assets free
and clear of all Liens except Permitted Liens.
5.10 Environmental Assessment. Not later than forty-five (45) days after
execution of this Agreement, Buyer may obtain a Phase I ("the Phase I")
environmental assessment of the Real Property by an environmental engineer
selected by Buyer. Within fourteen (14) days after Buyer's receipt of the Phase
I, Buyer shall be entitled to obtain a Phase II ("the Phase II") environmental
assessment of the Real Property, or any portion thereof. (The Phase I and the
Phase II, if obtained, shall be referred to herein as the "Environmental
Assessment"). Buyer shall commission and pay the cost of such Environmental
Assessment and shall provide a copy to Seller. The Environmental Assessment
shall be subject to the confidentiality provisions of Section 5.6. If after
appropriate inquiry into the previous ownership of and uses of the Real Property
23
consistent with good commercial or customary practice, the engineer concludes
that environmental conditions exist on, under or affecting such properties that
would constitute a violation or breach of Seller's representations and
warranties contained in Section 3.14 of this Agreement or cause the condition
contained in Section 6.9 to not be satisfied, then notwithstanding any other
provisions of this Agreement to the contrary Seller shall reimburse Buyer for
the cost of the Phase II, and, subject to the following sentence, Seller shall
at its sole cost and expense (up to a maximum amount of Fifty Thousand Dollars
($50,000)) remove, correct or remedy any condition or conditions which
constitute a violation or breach of Seller's representations and warranties
contained in Section 3.14 prior to the Closing Date and provide to Buyer at
Closing a certificate from an environmental abatement firm reasonably acceptable
to Buyer that such removal, correction or remedy has been completed so that
Seller's representations and warranties contained in Section 3.14 will be true
as of the Closing Date and the condition contained in Section 6.9 will be
satisfied as of the Closing Date. In the event the cost of removal, correction
or remedy of the environmental conditions exceeds Fifty Thousand Dollars
($50,000), Buyer may elect to proceed with the Closing but shall not be
obligated to close under any circumstances which would require Buyer to assume
ownership of the Station under conditions where there exist any uncured
violations of warranties, representations or covenants with respect to
environmental matters.
If Seller is required under this Section 5.10 to remedy any violation at a
site for which a person other than Seller, such as the tenant or any other
occupant of any real property is primarily responsible under applicable law,
Buyer and Seller shall cooperate in seeking to enforce any right of contribution
or other remedy they may have against such person. Seller shall not be obligated
under this Section 5.10 to undertake any remediation unless Buyer shall have
notified Seller of the existence of the condition requiring remediation within
30 days after Buyer's receipt of the Environmental Assessment in its final form.
ARTICLE VI
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
Buyer's obligation to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless waived by Buyer in writing:
6.1 Accuracy of Representations and Warranties; Closing Certificate.
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at
24
such time except for changes that are not materially adverse to the Station or
the Sale Assets taken as a whole, and except as follows:
(i) as to Section 3.14(d), (f), (g), (h) or (i) the accuracy
or inaccuracy of this representation as of the date of this Agreement or as of
the Closing Date shall not be a condition to Closing if (A) the item is removed
on or before Closing, all costs associated with such removal, clean up or other
action have been paid in full by Seller and all required certificates of removal
or completion or other certificates demonstrating that all required action under
Section 5.10 has been completed have been received from applicable regulatory
authorities, or (B) to the extent removal, clean up or other action cannot be
completed and/or governmental or regulatory certificates obtained prior to
Closing (which Closing may be delayed by Seller by not more than thirty (30)
days if Seller reasonably determines that any necessary action can be completed
during such delay period), a portion of the Purchase Price equal to the
estimated costs of completion and/or certification (to be determined by an
independent consulting engineer) is escrowed under an agreement negotiated in
good faith by the parties and the amount so escrowed is used to pay all costs of
completion; provided, however, that in no event shall Buyer be required to
consummate the Agreement if the removal, clean up or other action would likely
result in a disruption of Buyer's ability to broadcast at substantially full
power from its transmitter site for material periods of time;
(ii) as to Section 3.14(j), the accuracy or inaccuracy of this
representation shall not be a condition to Closing if the noncompliance is cured
on or before Closing or if the Seller remains liable for the noncompliance after
the Closing; and
(iii) as to Sections 3.6 and 3.7, the accuracy or inaccuracy
of the representations(s) shall not be a condition to Closing if the amount to
cure or repair the matter is reasonably estimated at less than Fifty Thousand
Dollars ($50,000) in the aggregate and the Purchase Price is reduced accordingly
(if the amount can be accurately determined) or a reasonable reserve is placed
into escrow pending cure or repair or Buyer and Seller make other arrangements
which are reasonable under the circumstances. In addition, Seller may elect to
delay Closing for a period not to exceed thirty (30) days if Seller reasonably
determines that any action necessary to cure or repair can be completed during
such delay period; provided that the reduction or escrow described in the
preceding sentence shall apply to the extent any cure or repair is not completed
within such delay period.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date, and
further except that as to Section 6.2, non-satisfaction of the condition(s)
shall not be a condition to Closing if the amount to cure or repair the matter
is reasonably
25
estimated at less than Fifty Thousand Dollars ($50,000) in the aggregate and the
Purchase Price is reduced accordingly (if the amount can be accurately
determined) or a reasonable reserve is placed into escrow pending cure or repair
or Buyer and Seller make other arrangements which are reasonable under the
circumstances. In addition, Seller may elect to delay Closing for a period not
to exceed thirty (30) days if Seller reasonably determines that any action
necessary to cure or repair can be completed during such delay period; provided
that the reduction or escrow described in the preceding sentence shall apply to
the extent any cure or repair is not completed within such delay period.
6.2 Performance of Agreements. Seller shall have performed in all material
respects all of its covenants, agreements and obligations required by this
Agreement and each of the other Documents to be performed or complied with by it
prior to or upon the Closing Date.
6.3 FCC and Other Consents.
(a) The FCC Order shall have been issued by the FCC and shall have
become a Final Action without any Material Adverse Condition.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied by Seller prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Seller.
(c) All other authorizations, consents, approvals and clearances of
federal, state or local governmental agencies required to permit the
consummation by Buyer of the transactions contemplated by this Agreement
including, without limitation, the assignment of any FCC Authorization requested
by Buyer, shall have been obtained; all statutory and regulatory requirements
for such consummation shall have been fulfilled; and no such authorizations,
consents, approvals or clearances shall contain any conditions that individually
or in the aggregate would have a material adverse effect on the operations of
the Station.
(d) The parties acknowledge that the Station was granted a
construction permit ("CP") to move its transmitter and antenna site, and
acknowledge the possibility that assignment of the CP will not be approved by
the FCC.
6.4 Adverse Proceedings. Neither Buyer nor any affiliate of Buyer shall be
subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending or shall have been threatened in writing. No governmental authority
having jurisdiction shall have notified any party to this
26
Agreement that consummation of the transaction contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
6.5 Opinion of Seller's FCC Counsel. Buyer shall have received from
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) With the exception of the auxiliary licenses, which are not
being sold, the FCC Licenses listed on Schedule 3.8 are valid, in good standing
and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Station in the manner in which the Station is currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by the FCC
as part of any FCC License which is not set forth on the face thereof as issued
by the FCC or contained in the Rules and Regulations applicable generally to
stations of the type, nature, class or location of the Station.
(c) Except as set forth herein or in the schedules hereto, no
proceedings are pending or, to counsel's knowledge, are threatened which may
result in the revocation, modification, non-renewal of, suspension of, or the
imposition of a Material Adverse Condition upon, any of the FCC Licenses, the
denial of any pending applications, the issuance of any cease and desist order
or the imposition of any fines, forfeitures or other administrative actions by
the FCC with respect to the Station or its operation, other than proceedings
affecting the radio broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon Seller's
representations and warranties in this Agreement and to limit its inquiry to its
files and such FCC files and records as are available to it as of 10:00 o'clock
A.M. Eastern time the business day immediately preceding the Closing Date.
Counsel may state that, as to any factual matters embodied in, or forming a
basis for any legal opinion expressed in, such opinion, counsel's knowledge is
based solely on such inquiry.
6.6 Other Consents. Seller shall have obtained in writing and provided to
Buyer on or before the Closing Date, without any condition materially adverse to
Buyer or the Station, the consents or waivers to the transactions contemplated
by this Agreement required under those Station Agreements which Buyer has
elected to assume.
6.7 Delivery of Closing Documents. Seller shall have delivered or caused
to be delivered to Buyer on the Closing Date each of the Documents required to
be delivered pursuant to Section 8.2.
27
6.8 No Cessation of Broadcasting.
(a) Between the date hereof and the Closing Date, the Station shall
not have for a period of more than ten (10) days in the aggregate (i) ceased
broadcasting on its authorized frequency, (ii) lost substantially all of its
normal broadcasting capability. Between the date of the grant of any license
application filed to cover any technical changes made as a result of the repairs
to the Harbor Island tower site and the Closing Date, the Station shall not
have, for a period of more than ten (10) days in the aggregate, been
broadcasting at a power level of 50% or less of its FCC authorized level. Seller
shall promptly notify Buyer of the occurrence of any one or more of the
foregoing events or conditions, and the non-fulfillment of the condition
precedent set forth in this Subsection caused by the occurrence of the events
specified in Seller's notice shall be deemed waived by Buyer unless, within
fifteen (15) days after Buyer's receipt of Seller's written notice, Buyer
notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding the
Closing Date, the Station shall have been operating continuously with
substantially all of its normal broadcasting capability except for cessation or
reductions for insignificant periods of time resulting from occurrences (such as
lightning strikes) over which Seller has no control. Seller shall have the right
to delay Closing for a period not to exceed thirty (30) days if Seller
reasonably determines that any action to restore the Station substantially all
of its normal broadcasting capability can be completed during such delay period.
6.9 Environmental Conditions. The Environmental Assessment obtained by
Buyer pursuant to Section 5.10 hereof shall not have disclosed any material
violation of any Environmental Law at the Real Property which is not removed or
cured by Seller prior to Closing.
6.10 Title Insurance Commitment. Title to the Real Property shall be in
fee simple, good and marketable and insurable at regular rates by any title
insurance company selected by Buyer, licensed in the State of Washington
pursuant to the standard stipulations and conditions of the ALTA policy of
owner's title insurance prescribed by the applicable regulatory authorities for
the State of Washington, free and clear of all liens and encumbrances except
Permitted Encumbrances. All costs associated with obtaining the standard ALTA
policy of title insurance shall be paid by Seller.
6.11 Survey. Within ten (10) business days after execution of this
Agreement, Seller shall provide Buyer with the originals or readable copies of
any surveys of the Real Property in Seller's possession. All costs associated
with updating such survey or preparing new surveys shall be paid by Buyer.
28
ARTICLE VII
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:
7.1 Accuracy of Representations and Warranties.
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
are satisfied as of the Closing Date.
7.2 Performance of Agreements. Buyer shall have performed in all material
respects all of its covenants, agreements and obligations required by this
Agreement and each of the other Documents to be performed or complied with by it
prior to or upon the Closing Date.
7.3. FCC and Other Consents.
(a) The FCC Order shall have been issued by the FCC and shall have
become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied by Buyer prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and clearances of
all federal, state and local governmental agencies required to permit the
consummation by Seller of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Seller.
29
7.4 Adverse Proceedings. Seller shall not be subject to any ruling,
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
7.5 Delivery of Closing Documents and Purchase Price. Buyer shall have
delivered or caused to be delivered to Seller on the Closing Date each of the
Documents required to be delivered pursuant to Section 8.3, and Seller shall
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
ARTICLE VIII
CLOSING
8.1 Time and Place. Unless otherwise agreed to in advance by the parties,
Closing shall take place in person or via facsimile at the offices of Buyer's
counsel in Camarillo, California, or at such other place as the parties agree,
at 10:00 A.M. Pacific Time on the date (the "Closing Date") that is the later of
(i) the fifth Business Day after the Applicable Date or (ii) the date as soon as
practicable following satisfaction or waiver of the conditions precedent
hereunder. The Applicable Date shall be the date on which issuance of the FCC
Order without any Material Adverse Condition has become a Final Action.
8.2 Documents to be Delivered to Buyer by Seller. At the Closing, Seller
shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Seller's Board of Directors (and
shareholders, if required by applicable law) approving the execution and
delivery of this Agreement and each of the other documents and authorizing the
consummation of the transactions contemplated hereby and thereby.
(b) The certificate required by Section 6.1(b).
(c) A bill of sale and other instruments of transfer and conveyance
transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise in
form and substance reasonably satisfactory to Buyer, of any security interests
granted in the
30
Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) General Warranty deeds and any other required instruments of
transfer and conveyance transferring to Buyer the Real Property.
(f) Executed mortgage satisfactions and any other documents required
by the title insurance company under Section 6.10 as a condition to issuing the
title insurance policy in the form required by Section 6.10.
(g) An instrument or instruments assigning to Buyer all right, title
and interest of Seller in and to all Station Agreements being assumed by Buyer.
(h) An instrument assigning to Buyer all right, title and interest
of Seller in the FCC Licenses, all pending applications relating to the station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(i) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.
(j) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained.
8.3 Documents to be Delivered to Seller by Buyer. At the Closing, Buyer
shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of Buyer's Board of Directors approving
the execution and delivery of this Agreement and each of the other Documents and
authorizing the consummation of the transaction contemplated hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
(e) Such additional information and materials as Seller shall have
reasonably requested.
31
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
9.1 Survival of Representation and Warranties. All representations,
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period; except
for claims by Buyer for any amounts owed by Seller to Buyer under Section
9.3(a)(v), which claims may be made at any time. In the event such a notice is
so given, the right to indemnification with respect thereto under this Article
shall survive the Survival Period until such claim is finally resolved and any
obligations with respect thereto are fully satisfied. Notwithstanding the
foregoing, the provisions for survival and the making of claims shall not apply
to the agreements whereby Buyer assumes the obligations under Subsection 8.3(c),
each of which agreements shall be governed by its own terms.
9.2 Indemnification in General. Buyer and Seller agree that the rights to
indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.
9.3 Indemnification by Seller.
(a) Subject to the provisions of Subsection (b) below and Section
10.2 below, Seller shall indemnify and hold harmless Buyer and any officer,
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or
(ii) The ownership or operation by Seller of the Station or
the Sale Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller other
than the Assumed Obligations; or
32
(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby; or
(v) Any violation of any Environmental Laws by Seller or the
existence of any Hazardous Materials on the Real Property on or before Closing.
(b) Except for any amounts owed by Seller to Buyer under Section
9.3(a) (iv), Section 9.3(a)(v) and Section 2.7, if Closing occurs, Seller shall
not be obligated (a) until the aggregate amount of such claims, liabilities,
damages, losses, costs and expenses exceeds Buyer's Threshold Limitation, in
which case Buyer shall then be entitled to indemnification of the entire
aggregate amount, or (b) for any amounts in excess of the Purchase Price.
9.4 Indemnification by Buyer.
(a) Subject to the provisions of Subsection (b) below and Section
10.2 below, Buyer shall indemnify and hold harmless Seller and any officer,
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station after the
Closing Date; or
(iii) All other liabilities or obligations of Buyer.
(b) Except for any amounts owed by Buyer to Seller under Section
2.7, if Closing occurs, Buyer shall not be obligated (a) until the aggregate
amount of such claims, liabilities, damages, losses, costs and expenses exceeds
Seller's Threshold Limitation, in which case Seller shall then be entitled to
indemnification of the entire aggregate amount, or (b) for any amount in excess
of the Purchase Price.
9.5 Indemnification Procedures. In the event that an Indemnified Party may
be entitled to indemnification hereunder with respect to any asserted claim of,
or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
33
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
compromise, or defend such a claim without prejudice to any right it may have
hereunder.
ARTICLE X
TERMINATION; LIQUIDATED DAMAGES
10.1 Termination. If Closing shall not have previously occurred, this
Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from Buyer
to Seller, if:
(i) Seller gives such termination notice and is not at such
time in material default hereunder, or Buyer gives such termination notice and
Buyer is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties contained
herein of Buyer (if such termination notice is given by Seller), or of Seller
(if such termination notice is given by Buyer), are inaccurate in any respect
and materially adverse to the party giving such termination notice unless the
inaccuracy has been induced by or is the result of actions or omissions of the
party giving such termination notice; or
(B) Any material obligation to be performed by Buyer (if
such termination notice is given by Seller) or by Seller (if such termination
notice is given by Buyer) is not timely performed in any material respect unless
the lack of timely performance has been induced by or is the result of actions
or omissions of the party giving such termination notice; or
(C) Any condition (other than those referred to in
foregoing Clauses (A) and (B)) to the obligation to close the transaction
contemplated herein of the party giving such termination notice has not been
timely satisfied; and any such inaccuracy, failure to perform or
non-satisfaction of a condition neither has been cured nor satisfied within
twenty (20) days after written notice thereof from the party giving such
termination notice nor waived in writing by the party giving such termination
notice.
34
(b) Written notice from Seller to Buyer, or from Buyer to Seller, at
any time after June 30, 1997 provided that termination shall not occur upon the
giving of such termination notice by Seller if Seller is at such time in
material default hereunder or upon the giving of such termination notice by
Buyer if Buyer is at such time in material default hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to Seller, at
any time following a determination by the FCC that the application for consent
to assignment of the FCC Licenses has been designated for hearing; provided that
the party which is the subject of the hearing (or whose alleged actions or
omissions resulted in the designation for hearing) may not elect to terminate
under this subsection (c).
(d) The written election by Buyer under Article XI.
10.2 Obligations Upon Termination.
(a) In the event this Agreement is terminated pursuant to Section
10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder
shall be limited as provided in Subsections (c) and (e), below and the aggregate
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
any other reason, neither party shall have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled to
the return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b) (c) or (d) , or (ii) if such
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is entitled
to the return of the Earnest Money, Seller shall cooperate with Buyer in taking
such action as is required under the Escrow Agreement in order to effect such
return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid
written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer
agrees that Seller shall be entitled to receive upon such termination, as
liquidated damages and not as a penalty, the Earnest Money ("Liquidated Damages
Amount"). SELLER'S RECEIPT OF THE EARNEST MONEY SHALL CONSTITUTE PAYMENT OF
LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S SOLE
REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT
OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGE
AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY
BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE
INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN
35
ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the contrary,
but subject to the provisions of the following sentences, if this Agreement is
terminated by Buyer's giving of written notice to Seller pursuant to Subsection
10.1(a), Buyer shall not be entitled to damages or indemnification from Seller.
Subject to the following sentence, if Seller attempts to terminate this
Agreement under circumstances where it is not entitled to do so, or if Seller,
by its own action, causes a breach of warranty or fails to satisfy a condition
(including without limitation a refusal to consummate the transaction after
Buyer has satisfied all conditions to Seller's obligation to close and Buyer has
demonstrated its willingness and ability to close on the terms set forth in this
Agreement and Buyer is not in default hereunder) with the intent of creating a
situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does
so elect to terminate, the monetary damages, if any, to which Buyer shall be
entitled shall be limited to direct and actual damages and shall in no event
exceed One Hundred Thousand Dollars ($100,000) in the aggregate. If a
circumstance described in the preceding sentence should arise and if Buyer
establishes that the action of Seller described therein was taken intentionally
in order to allow Seller to sell or enter into negotiations to sell the Station
to another party, the damages to which Buyer shall be entitled shall not be
limited to direct and actual damages.
(e) In any dispute between Buyer and Seller as to which party is
entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 Termination Notice. Each notice given by a party pursuant to Section
10.1 to terminate this Agreement shall specify the Subsection (and clause or
clauses thereof) of Section 10.1 pursuant to which such notice is given.
ARTICLE XI
CASUALTY
Upon the occurrence of any casualty loss, damage or destruction material
to the operation of the Station prior to the Closing, Seller shall promptly give
Buyer written notice setting forth in detail the extent of such loss, damage or
destruction and the cause thereof if known. Seller shall use its reasonable
efforts to promptly commence and thereafter to diligently proceed to repair or
replace any such lost, damaged or destroyed property. In the event that such
repair or replacement is not fully completed prior to the Closing Date, Buyer
may elect to postpone the Closing until Seller's repairs have been fully
completed or to consummate the transactions contemplated hereby on the Closing
36
Date, in which event Seller shall assign to Buyer the portion of the insurance
proceeds (less all reasonable costs and expenses, including without limitation
attorney's fees, expenses and court costs incurred by Seller to collect such
amounts), if any, not previously expended by Seller to repair or replace the
damaged or destroyed property (such assignment of proceeds to take place
regardless of whether the parties close on the scheduled or deferred Closing
Date) and Buyer shall accept the damaged Sale Assets in their damaged condition.
In the event the loss, damage or destruction causes or will cause the Station to
be off the air for more than seven (7) consecutive days or fifteen (15) total
days, whether or not consecutive, then Buyer may elect either (i) to consummate
the transactions contemplated hereby on the Closing Date, in which event Seller
shall assign to Buyer the portion of the insurance proceeds (less all reasonable
costs and expenses, including without limitation attorney's fees, expenses and
court costs, incurred by Seller to collect such amounts), if any, not previously
expended by Seller to repair or replace the damaged or destroyed property, and
Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii)
to terminate this Agreement.
ARTICLE XII
CONTROL OF STATION
Between the date of this Agreement and the Closing Date, Buyer shall not
control, manage or supervise the operation of the Station or conduct of its
business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Further Actions. From time to time before, at and after the Closing,
each party, at its expense and without further consideration, will execute and
deliver such documents to the other party as the other party may reasonably
request in order more effectively to consummate the transactions contemplated
hereby.
13.2 Access After the Closing Date. After the Closing and for a period of
twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records, property, personnel, contracts, commitments and documents of
the Station pertaining to transactions occurring prior to the Closing Date when
requested by Seller, and Buyer shall retain such books and records for the
normal document retention period of Buyer. At the request and expense of Seller,
Buyer shall deliver copies of any such books and records to Seller.
37
13.3 Payment of Expenses.
(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2(a) or consummation of the transactions contemplated
hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant and
other similar taxes payable in connection with consummation of the transactions
contemplated hereby shall be paid by the party primarily liable under applicable
law to pay such tax.
(c) Except as otherwise expressly provided in this Agreement, each
of the parties shall bear its own expenses, including the fees of any attorneys
and accountants engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.
13.4 Specific Performance. Seller acknowledges that the Station is of a
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to equitably enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.
13.5 Notices. All notices, demands or other communications given hereunder
shall be in writing and shall be sufficiently given if delivered by courier or
sent by registered or certified mail, first class, postage prepaid, or by telex,
cable, telegram, facsimile machine or similar written means of communication,
addressed as follows:
(a) if to Seller, to:
EZ Communications, Inc.
10800 Main Street
Fairfax, VA 22030
Attn: Alan Box
President
38
Copy to:
Joseph Conroy, Esq.
Hunton & Williams
1751 Pinnacle Drive, Suite 1700
McLean, VA 22102
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third (3rd) business day following the date
mailed, and (ii) if personally delivered or otherwise sent as provided above, on
the date received.
13.6 Entire Agreement. This Agreement, the Schedules and Exhibits hereto,
and the other Documents constitute the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede any prior negotiations, agreements, understandings or arrangements
between the parties with respect to the subject matter hereof.
13.7 Binding Effect; Benefits. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors or assigns. Except to the extent specified
herein, nothing in this Agreement, express or implied, shall confer on any
person other than the parties hereto and their respective successors or assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
13.8 Assignment. This Agreement and any rights hereunder shall not be
assignable by either party hereto without the prior written consent of the other
party; provided, however, that Buyer may, at its own expense, without Seller's
prior written consent, assign its rights and obligations to acquire the Real
Property to Edward G. Atsinger III and Stuart W. Epperson, or trusts created for
their benefit and/or the benefit of their spouses and their issue so long as (i)
no delay in the Closing Date results, (ii) no extra expense results to Seller,
and (iii) Buyer remains liable for indemnification of Seller in respect of all
Assumed Obligations in respect of the Real Property. The parties acknowledge
that American Radio Systems Corporation ("ARSC") may become the
39
successor in interest of Seller prior to the closing Date and agree that all
rights and obligations of Seller hereunder shall inure to ARSC without the
requirements of consent by or notice to Buyer; provided ARSC shall first assume
the obligations of Seller hereunder.
13.9 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Washington, including
all matters of construction, validity and performance.
13.10 Bulk Sales. Buyer hereby waives compliance by Seller with the
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 Amendments and Waivers. No term or provision of this Agreement may
be amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
13.12 Severability. Any provision of this Agreement which is unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such unenforceability without invalidating the remaining provisions hereof,
and any such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
13.13 Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
13.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.15 References. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.16 Schedules and Exhibits. Unless otherwise specified herein, each
Schedule and Exhibit referred to in this Agreement is attached hereto, and each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.
40
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written.
"SELLER" "BUYER "
PROFESSIONAL BROADCASTING INSPIRATION MEDIA, INC.
INCORPORATED
By: /s/ Alan Box By: /s/ Eric H. Halvorson
-------------------------------- --------------------------------
Alan Box Eric H. Halvorson
President Executive Vice President
EZ SEATTLE, INC.
By: /s/ Alan Box
--------------------------------
Alan Box
President
41
LIST OF SCHEDULES
Schedule 3.4 List of required consents of any
court, public agency, authority or
any person to the consummation of
the transactions contemplated by
Asset Purchase Agreement.
Schedule 3.6 List of Tangible Personal Property.
Schedule 3.7 Description of Real Property.
Schedule 3.8 List of FCC Licenses.
Schedule 3.9 List of Station Agreements.
Schedule 3.11 Labor Matters.
Schedule 3.13 Legal Matters.
Schedule 3.14 Environmental Matters.
Schedule 3.18 Identification of brokerage
agreements.
SCHEDULE 3.18
Buyer and Seller acknowledge that Gary Stevens & Co., Inc. acted as the sole and
exclusive broker with respect to the instant transaction. All fees due Gary
Stevens & Co., Inc. arising out of the instant transaction shall be paid in full
by Seller at Closing