EXHIBIT 10.6
------------
ASSET PURCHASE AGREEMENT
By and between
ALTA CALIFORNIA BROADCASTING, INC.
and
McCOY BROADCASTING COMPANY
for the sale and purchase of
STATIONS KNSN(AM)
and KHSL(FM)
March 12, 1996
1. DEFINITIONS 5
1.1. ACCOUNTS RECEIVABLE 5
1.2. ASSIGNMENT APPLICATION 5
1.3. BUSINESS RECORDS 6
1.4. CLOSING 6
1.5. CLOSING DATE 6
1.6. CODE 6
1.7. CONTRACTS 6
1.8. ERISA 6
1.9. FINAL ORDER 6
1.10. INTANGIBLE PROPERTY 6
1.11. IRS 6
1.12. REAL PROPERTY 6
1.13. PROMOTIONAL RIGHTS 7
1.14. PURCHASED ASSETS 7
1.15. RETAINED ASSETS 7
1.16. SALES AGREEMENTS 7
1.17. STATIONS EQUIPMENT 7
1.18. STATIONS LICENSES 7
1.19. TRADE AGREEMENTS 7
1.20. OTHER DEFINITIONS 8
2. SALE OF ASSETS 8
3. ESCROW DEPOSIT 8
4. PURCHASE PRICE AND METHOD OF PAYMENT 8
4.1. PAYMENT AT CLOSING 8
4.2. PROMISSORY NOTE 8
4.3. SUBORDINATION 9
5. SELLER'S LIABILITIES 9
6. PRORATIONS 9
6.1. APPORTIONMENT OF INCOME AND EXPENSE 9
6.2. EMPLOYEE COMPENSATION 10
6.3. DETERMINATION AND PAYMENT 10
(a) IN GENERAL 10
(b) PROPERTY TAXES 10
7. COLLECTION OF ACCOUNTS RECEIVABLE 11
8. CONDITIONS PRECEDENT 11
8.1. MUTUAL CONDITIONS 11
(a) COMMISSION CONSENT 11
(b) ABSENCE OF LITIGATION 11
(c) TECHNICAL SERVICES AGREEMENT 11
8.2. CONDITIONS TO BUYER'S OBLIGATION 12
(a) REPRESENTATIONS AND WARRANTIES 12
(b) COMPLIANCE WITH CONDITIONS 12
(c) VALIDITY OF STATIONS LICENSES 12
(d) THIRD-PARTY CONSENTS 12
(e) CONDITION OF STATIONS 12
(f) CLOSING DOCUMENTS 12
8.3. CONDITIONS TO SELLER'S OBLIGATION 12
(a) KOFY CP 13
(b) REPRESENTATIONS AND WARRANTIES 13
(c) COMPLIANCE WITH CONDITIONS 13
(d) PAYMENT 13
(e) CLOSING DOCUMENTS 13
9. SATISFACTION OF CONDITIONS 13
9.1. IN GENERAL 13
9.2. APPLICATION FOR COMMISSION CONSENT 13
9.3. OTHER GOVERNMENTAL CONSENTS 14
10. CONTROL OF STATIONS 14
11. DAMAGE 14
11.1. RISK OF LOSS 14
11.2. SUBSTANTIAL IMPACT 14
11.3. RESOLUTION OF DISAGREEMENTS 15
12. CLOSING 15
12.1. CLOSING DATE 15
12.2. PERFORMANCE AT CLOSING 15
(a) BY SELLER 15
(b) BY BUYER 16
13. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 16
13.1. EXISTENCE AND POWER 16
13.2. BINDING AGREEMENT 16
13.3. NO VIOLATION 17
13.4. CONVEYANCE OF PURCHASED ASSETS 17
13.5. LICENSES AND AUTHORIZATIONS 17
13.6. PERSONAL PROPERTY 17
13.7. CONTRACTS 18
13.8. UTILITIES 18
13.9. PATENTS, TRADEMARKS, COPYRIGHTS 18
13.10. INSURANCE 18
13.11. LITIGATION 18
13.12. INSOLVENCY PROCEEDINGS 19
13.13. ADMINISTRATIVE VIOLATIONS 19
13.14. TAXES 19
13.15. ACCESS 19
13.16. COMPLETE DISCLOSURE 19
13.17. FINANCIAL INFORMATION 19
14. BUYER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS 20
14.1. EXISTENCE AND POWER 20
14.2. BINDING AGREEMENT 20
14.3. NO VIOLATION 20
14.4. LICENSEE QUALIFICATIONS 20
14.5. LITIGATION 20
15. INDEMNIFICATION 21
15.1. BUYER'S RIGHT TO INDEMNIFICATION 21
15.2. SELLER'S RIGHT TO INDEMNIFICATION 21
15.3. PROCEDURE 22
15.4. LIMITATIONS ON INDEMNIFICATION RIGHTS 23
15.5. INDEMNIFICATION NOT SOLE REMEDY 23
16. ACCESS TO INFORMATION AND DOCUMENTS AFTER CLOSING 23
16.1. BY SELLER 23
16.2. BY BUYER 23
17. TERMINATION 24
17.1. ABSENCE OF COMMISSION CONSENT 24
17.2. DESIGNATION FOR HEARING 24
17.3. MATERIAL BREACH BY A PARTY 24
18. DEFAULT AND REMEDIES 25
18.1. MATERIAL BREACHES 25
18.2. OPPORTUNITY TO CURE 25
18.3. SELLER'S REMEDIES 25
18.4. BUYER'S REMEDIES 25
19. GENERAL PROVISIONS 25
19.1. BULK SALES ACT 25
19.2. BROKERAGE 26
19.3. EXPENSES 26
19.4. NOTICES 26
19.5. PRIOR NEGOTIATIONS 27
19.6. ENTIRE AGREEMENT; AMENDMENT 27
19.7. EXHIBITS AND APPENDICES 27
19.8. SEVERABILITY 27
19.9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES 27
19.10. WAIVER 28
19.11. NUMBER AND GENDER 28
19.12. HEADINGS AND CROSS-REFERENCES 28
19.13. CHOICE OF LAWS 28
19.14. ARBITRATION 28
19.15. ASSIGNMENT 29
19.16. THIRD PARTIES 29
19.17. COUNTERPARTS 29
19.18. PUBLIC ANNOUNCEMENTS 29
19.19. NO OFFER 29
ASSET PURCHASE AGREEMENT
------------------------
This Agreement has been made and entered into as of this 12th day of
March, 1995, by and between ALTA CALIFORNIA BROADCASTING, Inc. ("Seller"), a
California corporation, and McCOY BROADCASTING COMPANY ("Buyer"), a
__________________ corporation ("Buyer").
WITNESSETH:
----------
WHEREAS, Seller is the licensee of Stations KNSN (AM), Chico, California
and KHSL (FM), Paradise, California, authorized by the Federal Communications
Commission to operate on 1290 kHz and 103.5 MHz, respectively ("Stations");
and
WHEREAS, with certain exceptions, the parties desire that Buyer purchase
the assets used or useful in the operation of the Stations and acquire the
authorizations issued by the Federal Communications Commission (the
"Commission") for the operation of the Stations;
WHEREAS, simultaneously herewith, Pacific FM, Inc. ("Pacific FM") and
Seller have entered into an agreement (the "Pacific FM Agreement") for Pacific
FM to purchase the KNSN towers, antenna system and transmitter; and
WHEREAS, simultaneously herewith, Pacific FM and Buyer have entered into
an agreement (the "Technical Services Agreement") by which Pacific FM will move
the transmitter, towers and antenna of KNSN(AM) to the current KPAY(AM) site
owned by Buyer, KPAY(AM) will turn in its FCC license and Station KOFY(AM),
1050 kHz, San Mateo, California will obtain a construction permit to improve
its coverage (the "KOFY CP"); and
WHEREAS, Buyer desires to enter into a Time Brokerage Agreement ("TBA") to
become effective upon execution of this Agreement, and
WHEREAS, the authorizations issued by the Commission may not be assigned
to Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties intending to be legally bound, agree as follows:
1. DEFINITIONS.
-----------
As used in this Agreement, the following terms shall have the
following meanings:
1.1. ACCOUNTS RECEIVABLE
-------------------
means the cash accounts receivable, if any, arising from
the operation of the Stations prior to Closing.
1.2. ASSIGNMENT APPLICATION
----------------------
means the application on FCC Form 314 that Seller and Buyer
shall join in and file with the Commission requesting its consent to the
assignment of the Stations Licenses from Seller to Buyer.
1.3. BUSINESS RECORDS
----------------
means all business records of Seller relating to the
operation of the Stations and not pertaining solely to Seller's internal
corporate affairs, in whatever medium those records are stored, including but
not limited to all books of account, customer lists, supplier lists, employee
personnel files, local public records file materials, engineering data, sales
materials, logs, programming records, consultants' reports, ratings reports,
budgets, and financial reports and projections. The Business Records shall
also include all surveys of the Real Property and all architectural,
structural, mechanical and electrical plans and specifications for the
buildings, structures, and improvements located thereon that are in Seller's
possession.
1.4. CLOSING
-------
means the consummation of the sale and assignment
contemplated by this Agreement.
1.5. CLOSING DATE
------------
means the date on which the Closing takes place.
1.6. CODE
----
means the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
1.7. CONTRACTS
---------
means the contracts, leases, and other agreements listed or
described in Appendix A together with all other contracts, leases, and
agreements made between the date hereof and the Closing Date as permitted under
the terms of this Agreement.
1.8. ERISA
-----
means the Employment Retirement Income Security Act of
1974, as amended.
1.9. FINAL ORDER
-----------
means any Commission action that, by lapse of time or
otherwise, is no longer subject to administrative or judicial review,
reconsideration, appeal, or stay.
1.10. INTANGIBLE PROPERTY
-------------------
means the goodwill and other intangible assets used in the
operation of the Stations, including but not limited to all computer software,
magnetic media, electronic data processing files, systems and programs,
business lists, trade secrets, and sales and operating plans.
1.11. IRS
---
means the Internal Revenue Service.
1.12. REAL PROPERTY
-------------
means the real estate leased by Seller used or useful in
the operation of the Stations and not excepted from transfer by the terms of
this Agreement. All leases of real property used for the Stations are listed or
described in Appendix A.
1.13. PROMOTIONAL RIGHTS
------------------
means the call signs, slogans, jingles, trademarks,
tradenames, servicemarks, logos, copyrights, and similar materials and rights
listed or described in Appendix C.
1.14. PURCHASED ASSETS
----------------
means (i) the Stations Licenses and all other transferable
licenses, permits, and authorizations issued by any federal, state, or local
regulatory agencies that are used in or necessary for the lawful operation of
the Stations; (ii) the Stations Equipment; (iii) the Contracts, Sales
Agreements, and Trade Agreements to the extent assumed by Buyer pursuant to
Section 5; (iv) the Promotional Rights; (v) the Intangible Property; and (vi)
subject to Section 16.1, the Business Records. The Purchased Assets do not,
however, include any of the Retained Assets.
1.15. RETAINED ASSETS
---------------
means (i) books and records that pertain solely to the
organization, existence, and capitalization of Seller; (ii) Seller's cash and
cash equivalents on hand or in banks, certificates of deposit, money market
funds, securities, and similar type investments; (iii) the Accounts Receivable;
(iv) all Contracts, Sales Agreements, and Trade Agreements that have terminated
or expired prior to Closing in accordance with the terms thereof and as
permitted by this Agreement; (v) all items of tangible personal property that
are consumed or otherwise disposed of prior to the Closing Date in the ordinary
course of business and as permitted by this Agreement; (vi) Seller's insurance
policies in effect on the date of this Agreement or the Closing Date; (vii) all
employee pension benefit and profit sharing plans maintained by Seller, the
trusts established thereunder, and the assets thereof, (viii) the Real Property
comprising the KNSN (AM) transmitter site, (ix) the KNSN (AM) transmitter
towers and antenna system, and (x) the leased automation equipment listed in
Exhibit ____.
1.16. SALES AGREEMENTS
----------------
means agreements for the sale of time on the Stations for
cash.
1.17. STATIONS EQUIPMENT
------------------
means all the fixed and tangible personal property used in
the operation of the Stations, including but not limited to the tangible
personal property listed or described in Appendix B.
1.18. STATIONS LICENSES
-----------------
means the licenses, permits and other authorizations issued
by the Commission for the operation of the Stations and their associated
broadcast auxiliary Stations, as listed or described in Appendix C.
1.19. TRADE AGREEMENTS
----------------
means agreements for the sale of time on the Stations in
exchange for merchandise or services.
1.20. OTHER DEFINITIONS
-----------------
Other capitalized terms used in this Agreement shall have
the meanings ascribed to them herein.
2. SALE OF ASSETS.
--------------
On the Closing Date, subject to the terms and conditions of this
Agreement, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase, assume, and accept from Seller, all of the Purchased
Assets for the Purchase Price to be paid as provided in Section 4.
3. ESCROW DEPOSIT.
--------------
Upon execution and delivery of this Agreement, Buyer shall deposit
the sum of Seventy Thousand Dollars ($70,000) (the "Escrow Deposit") with The
Exline Co. ("Escrow Agent"). The Escrow Deposit shall be in cash and shall be
held in escrow by Escrow Agent pursuant to the terms of an Escrow Agreement in
the form attached hereto as Exhibit 1. The Escrow Agreement shall be signed
by Seller, Buyer, and Escrow Agent simultaneously with the execution of this
Agreement. At Closing, Seller and Buyer shall join in causing the Escrow
Deposit principal sum to be released to Seller and the accrued interest to
Buyer.
4. PURCHASE PRICE AND METHOD OF PAYMENT.
------------------------------------
The total consideration for the Purchased Assets (the "Purchase
Price") shall be the sum of Eight Hundred Thirty-three Thousand Dollars
($833,000). The Purchase Price shall be paid as follows:
4.1. PAYMENT AT CLOSING
------------------
At Closing, Buyer shall pay to Seller the sum of Six
Hundred Thirty-three Thousand Dollars ($633,000) as adjusted to reflect any
prorations made at closing pursuant to Section 6. The net cash amount due
from Buyer to Seller shall be paid by wire transfer of federal funds to [wire
instructions].
4.2. PROMISSORY NOTE
---------------
At Closing, Buyer shall deliver to Seller a promissory note
(the "Note") in the form attached hereto as Appendix A. The Note shall have
the following essential terms and conditions:
(a) The principal balance of the Note shall be Two Hundred
Thousand Dollars ($200,000).
(b) The Note shall be for a term of two (2) years and
shall bear simple interest at the rate of 7 percent (7%) per year. Interest
payments shall be made at quarterly intervals in arrears, with the first such
interest payment becoming due and payable three months after the Closing Date.
The full principal amount of Two Hundred Thousand Dollars ($200,000) shall be
due and payable on the final date of the term. The Note shall be secured by a
Security Interest on the Purchased Assets in the form of a Security Agreement
attached hereto as Exhibit 4.
4.3. SUBORDINATION
-------------
The Note shall be senior to any other of Buyer's
obligations (including any refinancing thereof) to one or more institutional
lenders in connection with Buyer's acquisition and operation of the Station in
an amount except that it may be subordinated to a single senior lender to Buyer
for sums borrowed not to exceed Five Hundred Thousand Dollars ($500,000.)
Buyer agrees to execute and to cause the any of its other lender(s) may from
time to time to execute evidence such subordination.
4.4. ALLOCATION
----------
The Purchase Price shall be allocated among the Purchased
Assets in accordance with Appendix A, attached. Buyer shall be responsible for
the preparation of IRS Form 8594 in accordance with Appendix A, and shall
deliver it to Seller in time to enable Seller to submit its income tax returns
in a timely manner.
5. SELLER'S LIABILITIES.
--------------------
Buyer shall not assume any of Seller's liabilities, including without
limitation, any liability under any single or multi employer "Employee Pension
Benefit Plan" as defined in ERISA or for taxes, except for liabilities accruing
after Closing under the Contracts, Sales Agreements and Trade Agreements,
listed or described in Appendix B ("Assumed Obligations"), subject to the
provisions of this Section. With respect to the Assumed Obligations which
require the consent of third parties for assignment, but for which consent of
such third parties has not been obtained as of the Closing Date, Buyer shall
assume Seller's obligations thereunder, only for the period after Closing
during which Buyer receives the consideration to which Seller is entitled
thereunder.
6. PRORATIONS.
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6.1. APPORTIONMENT OF INCOME AND EXPENSE
-----------------------------------
Seller shall be entitled to all income attributable to, and
shall be responsible for all expenses arising out of the operation of the
Stations until 11:59 p.m. on the Closing Date. Buyer shall be entitled to all
income attributable to, and shall be responsible for all expenses arising out
of, the operation of the Stations after 11:59 p.m. on the Closing Date. All
overlapping items of income or expense, including the following, shall be
prorated or reimbursed, as the case may be, as of 11:59 p.m. on the Closing
Date (the "Prorations"):
(a) Advance payments received from advertisers prior to
Closing for services to be rendered in whole or in part after Closing;
(b) Prepaid expenses and deposits made prior to Closing,
as permitted by the terms hereof, for or in connection with goods or services
where all or part of such goods or services have not been received or used as
of Closing Date (E.G., rents paid in advance for a rental period extending
beyond Closing);
(c) Liabilities customarily accrued, arising from expenses
incurred but unpaid as of Closing (E.G., payroll, payroll taxes, and earned
vacation time and sick leave of any employees of Seller who enter into Buyer's
employ after Closing, rents, sales commissions, and fees for business and
professional services);
(d) Taxes and utility charges related to the Stations or
in respect of any of the Purchased Assets;
(e) Deposits and unearned prepayments received by Seller
in connection with any contract, lease, or other agreement assumed by Buyer;
and
(f) All other items normally prorated in the sale of the
assets of a business and of radio broadcast Stations in particular.
6.2. EMPLOYEE COMPENSATION
---------------------
Seller shall pay all compensation owed to the Stations'
employees up to and including the Closing Date. Buyer may, after Closing,
employ those of Seller's employees as Buyer may elect on terms and conditions
determined by Buyer in Buyer's sole discretion.
6.3. DETERMINATION AND PAYMENT
-------------------------
(a) IN GENERAL
----------
Prorations shall be made, insofar as feasible, at
Closing and shall be paid by way of adjustment to the cash payment due at
Closing. As to Prorations that cannot be made at Closing, within ninety (90)
days after the Closing Date, Buyer shall determine all such Prorations and
shall deliver a statement of its determinations to Seller, which statement
shall set forth in reasonable detail the basis for such determinations. Within
ten (10) days thereafter, Buyer shall pay to Seller or Seller shall pay to
Buyer, as the case may be, the net amount due. If Seller does not concur with
Buyer's determinations, the parties shall confer with regard to the matter and
an appropriate adjustment and payment shall be made as agreed upon by the
parties. If the parties are unable to resolve the matter, it shall be referred
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 paid one-half by Seller and one-half by Buyer.
(b) PROPERTY TAXES
--------------
If the amount of any real or personal property tax to
be prorated is not known on the Closing Date, such tax shall be apportioned on
the basis of the most recent tax assessment. As soon as the new tax rate and
valuation can be ascertained, there shall be a reapportionment and adjustment
with respect to such tax even though that final proration and adjustment may
take place more than ninety (90) days after the Closing Date.
7. COLLECTION OF ACCOUNTS RECEIVABLE.
---------------------------------
At Closing, Seller shall assign to Buyer all of the Accounts Re-
ceivable for purposes of collection only. Buyer shall use such efforts as are
reasonable and in the ordinary course of business to collect the Accounts
Receivable for a period of four (4) months following the Closing Date. This
obligation, however, shall not extend to the institution of litigation,
employment of counsel, or any other extraordinary means of collection. So long
as the Accounts Receivable are in Buyer's possession, neither Seller nor
Seller's agents shall make any solicitation of them for collection purposes or
institute litigation for the collection of any amounts due thereunder. Buyer
shall deposit the proceeds of Seller's Accounts Receivable, as received less
any salesperson's, agency and representative commissions applicable thereto
that are deducted and paid by Buyer from the proceeds of such collections, in
an account of a local Chico bank designated by Seller. Within ten (10)
business days following the expiration of each month during such four (4) month
period, Buyer shall furnish Seller with a list of the Accounts Receivable
collected during such month. All payments received by Buyer during the four (4)
month period following the Closing Date from any person obligated with respect
to any the Accounts Receivable shall be applied first to Seller's account and
only after full satisfaction thereof to Buyer's account; PROVIDED, HOWEVER,
that if during this period any account debtor contests the validity of its
obligation with respect to any Account Receivable, then Buyer may return that
Account Receivable to Seller after which Seller shall be solely responsible for
the collection thereof. Buyer shall not have the right to compromise, settle,
or adjust the amounts of any of the Accounts Receivable without Seller's prior
written consent. Any of the Accounts Receivable that are not collected within
four (4) months after the Closing Date shall be reassigned to Seller after
which Buyer shall have no further obligation to Seller with respect to the
Accounts Receivable; PROVIDED, HOWEVER, that all funds subsequently received by
Buyer (without time limitation) that can be specifically identified, whether by
accompanying invoice or otherwise, as a payment on any Account Receivable shall
be promptly paid over or forwarded to Seller.
8. CONDITIONS PRECEDENT.
--------------------
8.1. MUTUAL CONDITIONS.
-----------------
The obligation of both Seller and Buyer to consummate this
Agreement is subject to the satisfaction of each of the following conditions:
(a) COMMISSION CONSENT
------------------
The Commission shall have granted the Assignment
Application, such grant shall have become a Final Order, and such grant shall
be in full force and effect on the Closing Date.
(b) ABSENCE OF LITIGATION
---------------------
As of the Closing Date, no action, suit or proceeding
seeking to enjoin, restrain, or prohibit the consummation of the transaction
contemplated by this Agreement shall be pending before any court or the
Commission or any other governmental body or authority.
(c) TECHNICAL SERVICES AGREEMENT
----------------------------
The Technical Services Agreement shall be in full
force and effect with Pacific FM ready willing and able to perform its
obligations thereunder.
8.2. CONDITIONS TO BUYER'S OBLIGATION
--------------------------------
In addition to the satisfaction of mutual conditions
contained in Section 8.1, the obligation of Buyer to consummate this Agreement
is subject to the satisfaction of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES
------------------------------
The representations and warranties of Seller to Buyer
shall be true, complete and correct in all material respects as of the Closing
Date with the same force and effect as if then made.
(b) COMPLIANCE WITH CONDITIONS
--------------------------
All of the terms, conditions, and covenants to be
complied with or performed by Seller on or before the Closing Date shall have
been duly complied with and performed in all material respects.
(c) VALIDITY OF STATIONS LICENSES
-----------------------------
On the Closing Date, Seller shall be the owner and
holder of the Stations Licenses to the extent that such licenses can be owned
or held by Seller under the Communications Act of 1934, as amended, and the
Stations Licenses shall be in unconditional full force and effect, valid for
the balance of the current license terms applicable generally to radio Stations
licensed to communities located in the State of California.
(d) THIRD-PARTY CONSENTS
--------------------
At Closing, Seller shall deliver to Buyer all required
third-party consents to Buyer's assumption of the Material Contracts such that
Buyer will enjoy all the rights and privileges of Seller under the Material
Contracts subject only to the same obligations as are binding on Seller
pursuant to the Material Contracts' present terms.
(e) CONDITION OF STATIONS
---------------------
There shall have been no change subsequent to the date
of this Agreement in the operation or condition, financial or otherwise, of the
Stations except for changes in the ordinary course of business or as
contemplated by this Agreement, none of which, individually or in the
aggregate, shall be materially adverse.
(f) CLOSING DOCUMENTS
-----------------
Seller shall deliver to Buyer all of the closing
documents specified in Paragraph 12.2(a), all of which documents shall be dated
as of the Closing Date, duly executed, and in a form reasonably acceptable to
Buyer.
8.3. CONDITIONS TO SELLER'S OBLIGATION
---------------------------------
In addition to satisfaction of the mutual conditions
contained in Section 8.1, the obligation of Seller to consummate this Agreement
is subject to satisfaction of each of the following conditions:
(a) KOFY CP
-------
The Commission shall have granted the KOFY CP and such
grant shall have become a Final Order and shall be in full force and effect.
(b) REPRESENTATIONS AND WARRANTIES
------------------------------
The representations and warranties of Buyer to Seller
shall be true, complete, and correct in all material respects as of the Closing
Date with the same force and effect as if then made.
(c) COMPLIANCE WITH CONDITIONS
--------------------------
All of the terms, conditions and covenants to be
complied with, or performed by Buyer on or before the Closing Date shall have
been duly complied with and performed in all material respects.
(d) PAYMENT
-------
Buyer shall pay Seller the cash due and deliver the
Note and security documents at Closing as provided in Section 4.
(e) CLOSING DOCUMENTS
-----------------
Buyer shall deliver to Seller all the closing
documents specified in Paragraph 12.2(b), all of which documents shall be dated
as of the Closing Date, duly executed, and in a form reasonably satisfactory to
Seller.
9. SATISFACTION OF CONDITIONS.
--------------------------
9.1. IN GENERAL
----------
Each party shall use its respective best efforts and
cooperate with the other in good faith to the extent reasonably required in
order to satisfy the conditions to each party's obligations under this
Agreement as set forth in Section 8 and fully to accomplish the transaction
contemplated by this Agreement in an expeditious fashion. Neither party shall
take or fail to take any action within such party's reasonable control, the
effect of which would be to prevent or unreasonably delay the satisfaction of
any condition to its or the other party's obligations contained in Section 8 or
the consummation of this Agreement in accordance with its terms.
9.2. APPLICATION FOR COMMISSION CONSENT
----------------------------------
Within ten (10) business days from the date of this
Agreement, Seller and Buyer shall join in and file the Assignment Application,
and they will diligently take all steps necessary or desirable and proper
expeditiously to prosecute the Assignment Application and to obtain the
Commission's determination that grant of the Assignment Application will serve
the public interest, convenience, and necessity. The failure by either party
to timely file or diligently prosecute its portion of the Assignment
Application shall be deemed a material breach of this Agreement.
9.3. OTHER GOVERNMENTAL CONSENTS
---------------------------
Promptly following the execution of this Agreement, Seller
and Buyer shall proceed to prepare and file with the appropriate governmental
authorities such other requests, if any, for approval or waiver as may be
required from such governmental authorities in connection with the transaction
contemplated herein, and shall jointly, diligently and expeditiously prosecute,
and shall cooperate fully with each other in the prosecution of, such requests
for approval or waiver and all proceedings necessary to secure such approvals
and waivers.
10. CONTROL OF STATIONS.
-------------------
This Agreement shall not be consummated until after the Commission
has given its written consent thereto, and between the date of this Agreement
and the Closing Date, Buyer shall not directly or indirectly control, supervise
or direct, or attempt to control, supervise or direct the operation of the
Stations. Such operations shall be the sole responsibility of Seller.
11. DAMAGE.
------
11.1. RISK OF LOSS
------------
The risk of loss or damage to the Purchased Assets shall be
upon Seller at all times prior to Closing. In the event of material loss or
damage, Seller shall promptly notify Buyer. At Buyer's option, Seller shall:
(a) apply the insurance proceeds to the repair, replacement or
restoration of the lost of damaged property;
(b) pay the proceeds over to Buyer at Closing; or
(c) elect to postpone the Closing Date for a period of up to
ninety (90) days, with prior consent of the Commission if
necessary, to permit Seller to make such repair,
replacement, or restoration as is required to return the
lost or damaged property to its former condition. If,
after the expiration of the extension period granted by
Buyer, the lost or damaged property has not been adequately
repaired, replaced or restored, Buyer may terminate this
Agreement, and the parties shall be released and discharged
from any further obligation hereunder.
For purposes of this Section, loss or damage shall be deemed "material" if
the reasonable cost to repair, replace, or restore the lost or damaged property
exceeds Five Thousand Dollars ($5,000.00).
11.2. SUBSTANTIAL IMPACT
------------------
In the event of loss or damage to the Purchased Assets
prior to Closing which substantially impacts the Stations' business, Buyer may
at its option elect to terminate this Agreement, in which case the parties
shall be released and discharged from any further obligation hereunder and the
funds and any accrued interest held in escrow pursuant to Paragraph 3 shall be
released to Buyer.
11.3. RESOLUTION OF DISAGREEMENTS
---------------------------
If the parties are unable to agree upon the extent of any
loss or damage, the cost to repair, replace or restore any lost or damaged
property, the adequacy of any repair, replacement, or restoration of any lost
or damaged property, or any other matter arising under this Section, the
disagreement shall be referred to a qualified consulting communications
engineer mutually acceptable to Seller and Buyer, who is a member of the
Association of Federal Communications Consulting Engineers, whose decision
shall be final, and whose fees and expenses shall be paid one-half by Seller
and one-half by Buyer.
12. CLOSING.
-------
12.1. CLOSING DATE
------------
The Closing Date of this Agreement shall be no later than
the fifth (5th) business day after the date on which the Commission's approval
of the Assignment Application becomes a Final Order. In the absence of a
mutual agreement by Seller and Buyer to the contrary, Closing shall take place
on such fifth (5th) business day, commencing at 10:00 a.m. at the offices of
Seller's counsel in Washington, D.C.
12.2. PERFORMANCE AT CLOSING
----------------------
The following documents shall be executed and delivered at
Closing:
(a) BY SELLER
---------
Seller shall deliver to Buyer:
(1) A certificate executed by Seller's President
attesting to (i) Seller's compliance with the
matters set forth in Paragraphs 8.2(a) and
8.2(b), and (ii) the total amount of advertising
time owed in respect of the Trade Agreements and
the Negative Trade Balance, if any.
(2) One or more assignments transferring to Buyer all
of the interests of Seller in and to the Stations
Licenses, and all other licenses, permits, and
authorizations issued by any federal, state, or
local regulatory agencies that are used in or
necessary for the lawful operation of the
Stations.
(3) One or more bills of sale conveying to Buyer all
of the Station's Equipment in a form usual and
customary in the jurisdictions where the
Stations' Equipment is located.
(4) One or more assignments assigning to Buyer all of
Seller's rights under the Assumed Obligations.
(5) One or more assignments conveying to Buyer the
Promotional Rights, the Intangible Property, and
the Business Records.
(6) The Covenant not to Compete of Seller and
Seller's president, John Power, that they will
not actively operate, manage or work for any
radio station which has a sales office in or is
licensed in Butte County, California.
(b) BY BUYER
--------
Buyer shall deliver to Seller:
(1) A certificate executed by Buyer's President
attesting to Buyer's compliance with the matters
set forth in Paragraphs 8.3 (a) and 8.3 (b).
(2) Such assumption agreements and other instruments
and documents as are required to make, confirm
and evidence Buyer's assumption of an obligation
to pay, perform and discharge Seller's
obligations arising after the Closing Date under
the Assumed Obligations.
The parties will also execute such other documents and perform such other
acts, before and after Closing, as may be necessary for the complete
implementation and consummation of this Agreement.
13. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
--------------------------------------------------
Seller hereby makes the following representations, warranties, and
covenants, each of which shall be deemed to be a separate representation,
warranty and covenant, all of which have been made for the purpose of inducing
Buyer to execute this Agreement, and in reliance on which Buyer has agreed to
enter into this Agreement:
13.1. EXISTENCE AND POWER
-------------------
Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, with
full power under its articles of incorporation and by-laws to carry on its
business as now being conducted and to enter into and perform this Agreement.
Seller is qualified to do business as a foreign corporation in each
jurisdiction where the nature of Seller's business or Seller's ownership of
property in connection with the Stations makes such qualification necessary or
appropriate.
13.2. BINDING AGREEMENT
-----------------
The execution, delivery and performance of this
Agreement by Seller has been duly authorized by all necessary corporate action,
and certified copies of those authorizing resolutions shall be delivered to
Buyer at Closing. This Agreement has been duly executed and delivered to Buyer
and constitutes a legal, valid and binding obligation of Seller, enforceable in
accordance with its terms.
13.3. NO VIOLATION
------------
None of (i) the execution, delivery and performance of
this Agreement by Seller, (ii) the consummation of the transaction contemplated
hereby, or (iii) Seller's compliance with the terms and conditions hereof will,
with or without the giving of notice or the lapse of time or both, conflict
with, breach the terms and conditions of, constitute a default under, or
violate Seller's articles of incorporation or by-laws, any judgment, decree,
order, agreement, lease or other instrument to which Seller is a party or by
which Seller is legally bound, or, to the best of Seller's knowledge, any law,
rule, or regulation applicable to Seller or to the operation of the Stations.
13.4. CONVEYANCE OF PURCHASED ASSETS
------------------------------
At Closing, Seller shall convey to Buyer, good and
marketable title to all the Purchased Assets, free and clear of all mortgages,
deeds of trusts, liens, pledges, collateral assignments, security interests,
leases, easements, covenants, restrictions and encumbrances or other defects of
title except: (i) the lien of any personal property taxes that will not become
due until after the closing date and that will not be prorated between Buyer
and Seller pursuant to Section 6; (ii) in the case of Assumed Obligations, the
benefits thereof may depend upon future performance as required by the Assumed
Obligations' respective terms; (iii) security interest in favor of Seller
securing payment of the Note in accordance with Section 4. Any debts or
obligations of Seller which are or may give rise to liens against the Purchased
Assets or which otherwise may give rise to claims against Buyer after Closing
shall be discharged by Seller on or before the Closing.
13.5. LICENSES AND AUTHORIZATIONS
---------------------------
The Stations Licenses are all the Commission
authorizations held by Seller with respect to the Stations, and are all the
Commission authorizations used in or necessary for the lawful operation of the
Stations as presently operated by Seller. Between the date of this Agreement
and the Closing, Seller shall operate the Stations in material compliance with
the rules, regulations and policies of the Commission unless the Commission has
authorized the Stations to remain silent and shall file with the Commission all
applications, reports and other documents required to be filed in connection
with the operations of the Stations.
13.6. PERSONAL PROPERTY
-----------------
The assets listed in Appendix B, together with any
improvements and additions thereto and replacements thereof less any
retirements or other dispositions as permitted by this Agreement between the
date hereof and the Closing Date, will, at Closing, be all material tangible
personal property used in the lawful operation of the Stations as presently
operated by Seller. The Stations Equipment is in good working order and
enables the Stations to operate in substantial compliance with the rules and
regulations of the Commission.
13.7. CONTRACTS
---------
Except for Sales Agreements and Trade Agreements, the
contracts, leases, and agreements listed or described in Appendix A include all
the contracts, leases, and agreements to which Seller is a party or by which
any Seller is legally bound that have a material effect on the revenues or
operating expenses of the Stations. To the best of Seller's knowledge there
has not occurred as to any Contract any material default by any other party
thereto or any event that, with the lapse of time or at the election of any
person other than Seller, could become a material default by such party.
13.8. UTILITIES
---------
All utilities that are required for the full and
complete occupancy and use of the Leased Premises for the purposes for which
they are presently being used by Seller, including, without limitation,
electricity, water, telephone and similar systems, have been connected to the
Leased Premises and are in good working order.
13.9. PATENTS, TRADEMARKS, COPYRIGHTS
-------------------------------
The Promotional Rights include all call signs except
KHSL, copyrights, patents, trademarks, tradenames, slogans, logos, service
marks, and other similar intangible property rights currently used to promote
or identify the Stations, all of which are in good standing and uncontested.
Seller has no knowledge of any infringement or unlawful or unauthorized use of
the Promotional Rights, including without limitation the use of any call sign,
slogan or logo by any broadcast or cable Stations in the Stations' service area
that may be confusingly similar to the call signs, slogans, and logos currently
used by the Stations. No one has asserted to Seller that the operations of the
Stations infringe, and, to the best of Seller's knowledge, such operations do
not infringe any copyright, patent, trademark, tradename, service mark, or
other similar right of any third party.
13.10. INSURANCE
---------
Appendix D lists all insurance policies held by Seller with
respect to the Purchased Assets and the Stations business. All of the
Purchased Assets that are of an insurable character are insured against loss or
damage by fire and other risks customarily insured against by entities of
established reputation owning similar property and operating businesses
comparable to the Stations in the radio market served by the Stations. The
amount, scope, and coverage of such insurance is adequate and reasonable in
light of existing conditions.
13.11. LITIGATION
----------
There is no judgment outstanding or litigation, action,
suit, investigation or other proceeding pending or, to the best of Seller's
knowledge, threatened or probable of assertion that may give rise to any claim
against any of the Purchased Assets or adversely affect Seller's ability to
perform in accordance with the terms of this Agreement, and Seller is not aware
of any facts that could reasonably result in any such proceeding.
13.12. INSOLVENCY PROCEEDINGS
-----------------------
No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller or the
Purchased Assets are pending or threatened. Seller has not made an assignment
for the benefit of creditors, or taken any action with a view to, or that would
constitute a valid basis for, the institution of any such insolvency
proceedings.
13.13. ADMINISTRATIVE VIOLATIONS
-------------------------
If Seller receives any finding, order, complaint, citation,
or notice prior to Closing which states that any aspect of the Stations
operations violates any rule or regulation of the Commission or of any other
federal, state or local regulatory or administrative body (an "Administrative
Violation"), including without limitation any rule or regulation concerning
Hazardous Substances, the employment of labor, or equal employment opportunity,
Seller shall promptly notify Buyer of the Administrative Violation, use its
best efforts to remove or correct the Administrative Violation, and be
responsible for all costs associated therewith, including the payment of any
fines or back pay that may be assessed. As of the date hereof, Seller is not
aware of any Administrative Violations, any pending investigations concerning
possible Administrative Violations, or of any facts that could reasonably
result in any Administrative Violations.
13.14. TAXES
-----
Seller has, or by the Closing Date will have, paid and
discharged all taxes, assessments, excises and other levies relating to the
Purchased Assets that, if due and not paid, would interfere with Buyer's full
enjoyment of the Purchased Assets after Closing, excepting such taxes,
assessments, and other levies as will not be due until after the Closing Date
and that are to be prorated between Seller and Buyer pursuant to Section 6.
13.15. ACCESS
------
Between the date hereof and the Closing Date, Seller shall
give Buyer or representatives of Buyer reasonable access to the Purchased
Assets and to the other properties, titles, contracts, books, records and
affairs of Seller relating to the operations of the Stations.
13.16. COMPLETE DISCLOSURE
-------------------
Seller's representations and warranties in this Agreement
do not contain any untrue statement of any material fact and do not omit to
state any material fact required to make such representations and warranties
not misleading.
13.17. FINANCIAL INFORMATION
---------------------
All financial documents and information provided by Seller
to Buyer are listed in Appendix C. All such financial documents and
information were prepared in accordance with generally accepted accounting
principals consistently applied except for the treatment of trade expenses and
revenues and fairly represent the financial condition of the Stations.
14. BUYER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS.
--------------------------------------------------
Buyer hereby makes the following representations, warranties, and
covenants to Seller for the purpose of inducing Seller to enter into and
perform this Agreement:
14.1. EXISTENCE AND POWER
-------------------
As of the Closing Date, Buyer will be a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full power under its articles of
incorporation to assume and perform this Agreement. On the Closing Date, Buyer
will, if required, be qualified to do business as a foreign corporation in the
State of California.
14.2. BINDING AGREEMENT
-----------------
As of the Closing Date, the assumption and performance of
this Agreement by Buyer will have been duly authorized by all necessary
corporate action, and certified copies of those authorizing resolutions will be
delivered to Seller at Closing. As of the Closing Date, this Agreement will
have been duly assumed by Buyer and will constitute a legal, valid, and binding
obligation of Buyer, enforceable in accordance with its terms.
14.3. NO VIOLATION
------------
As of the Closing Date, none of (i) the assumption and
performance of this Agreement by Buyer, (ii) the consummation of the
transaction contemplated hereby, or (iii) Buyer's compliance with the terms and
conditions hereof will, with or without the giving of notice or the lapse of
time or both, conflict with, breach the terms and conditions of, constitute a
default under, or violate Buyer's articles of incorporation or by-laws, any
judgment, decree, order, agreement, lease, or other instrument to which Buyer
is a party or by which Buyer is legally bound, or, to the best of Buyer's
knowledge, any law, rule, or regulation applicable to Buyer.
14.4. LICENSEE QUALIFICATIONS
-----------------------
To the best of Buyer's knowledge, there will be no fact
that would, under present law (including the Communications Act of 1934, as
amended) and the present rules and regulations of the Commission, disqualify
Buyer from being the assignee of the Stations Licenses or the owner and
operator of the Stations. Buyer will not take any action that Buyer knows, or
has reason to believe, would result in such disqualification. Should Buyer
become aware of any such fact, it will so inform Seller and will use its best
efforts to remove any such disqualification.
14.5. LITIGATION
----------
There is no action, suit, investigation or other proceeding
pending or threatened that may adversely affect Buyer's ability to perform its
obligations hereunder in accordance with the terms hereof, and, as of the
Closing Date, Buyer will not be aware of any facts that could reasonably result
in any such proceeding.
14.6. CLOSING FUNDS
-------------
Buyer has or at Closing will have sufficient net liquid
assets on hand to pay the Purchase Price.
14.7. VACATING TOWER SITE
-------------------
Upon completion of the transfer of facilities required
under the Technical Services Agreement, Buyer shall immediately vacate the KNSN
tower and transmitter site.
15. INDEMNIFICATION.
---------------
15.1. BUYER'S RIGHT TO INDEMNIFICATION
--------------------------------
Seller undertakes and agrees to hold Buyer harmless against
any and all losses, costs, liabilities, claims, obligations and expenses,
including reasonable attorney's fees, incurred or suffered by Buyer arising
from (i) the breach, misrepresentation, or other violation of any of Seller's
representations, warranties, or covenants contained in this Agreement; (ii) the
operation of the Stations or ownership of the Purchased Assets prior to
Closing; (iii) all liabilities of Seller not expressly assumed by Buyer
pursuant to this Agreement; (iv) all liens, charges, or encumbrances on any of
the Purchased Assets that are not expressly permitted by this Agreement; (v)
all Administrative Violations and alleged Administrative Violations occurring
prior to Closing; (vi) all liabilities under the Contracts, Sales Agreements,
and Trade Agreements except to the extent assumed by Buyer pursuant to Section
5; and (vii) any breach or default by Seller under any Contract, Sales
Agreement or Trade Agreement prior to Closing. The foregoing indemnity is
intended by Seller to cover all acts, suits, proceedings, claims, demands,
assessments, adjustments, costs, and expenses with respect to any and all of
the specific matters set forth in this indemnity and shall be without limita-
tion as to amount.
15.2. SELLER'S RIGHT TO INDEMNIFICATION
---------------------------------
Buyer undertakes and agrees to hold Seller harmless against
any and all losses, costs, liabilities, claims, obligations and expenses,
including reasonable attorney's fees, incurred or suffered by Seller arising
from (i) the breach, misrepresentation, or other violation of any of Buyer's
representations, warranties or covenants contained in this Agreement; (ii) the
operation of the Stations or ownership of the Purchased Assets after Closing;
(iii) all liabilities of Buyer; (iv) all liabilities under the Contracts, Sales
Agreements and Trade Agreements to the extent specifically assumed by Buyer
pursuant to Section 5; and (v) any breach or default by Buyer under any
Contract, Sales Agreement or Trade Agreement after Closing. The foregoing
indemnity is intended by Buyer to cover all acts, suits, proceedings, claims,
demands, assessments, adjustments, costs, and expenses with respect to any and
all of the specific matters set forth in this indemnity and shall be without
limitation as to amount.
15.3. PROCEDURE
---------
(a) If any claim or proceeding covered by the foregoing
agreements to indemnify and hold harmless shall arise, the party who seeks
indemnification (the "Indemnified Party") shall give written notice thereof to
the other party (the "Indemnitor") promptly (in no event more than ten (10)
days after the Indemnified Party learns of the existence of such claim or
proceeding). Any claim for indemnification hereunder shall be accompanied by
evidence demonstrating the Indemnified Party's right or possible right to
indemnification, including a copy of all supporting documents relevant thereto.
After the Indemnitor acknowledges its obligation to defend against or settle
any such claim or proceeding, the Indemnitor shall not be liable to the
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof, PROVIDED, HOWEVER, that the Indemnified Party shall have the right to
employ counsel to represent it if, in the Indemnified Party's sole judgment, it
is advisable for the Indemnified Party to be represented by separate counsel,
and in that event the fees and expenses of such separate counsel shall be paid
by the Indemnified Party. The parties shall fully cooperate in the defense of
the claim or proceeding and shall make available to each other all books or
records necessary or appropriate for such defense.
(b) The Indemnitor shall have the right to employ counsel
reasonably acceptable to the Indemnified Party to defend against the claim or
proceeding, or to compromise, settle or otherwise dispose of the same;
PROVIDED, HOWEVER, that no settlement or compromise shall be effected without
the consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed and, PROVIDED, FURTHER, that in the event the Indemnified
Party does not consent to a BONA FIDE offer of settlement made by a third party
and the settlement involves only the payment of money, then the Indemnitor may,
in lieu of payment of that amount to such third party, pay that amount to the
Indemnified Party. After such payment to the Indemnified Party, the Indemnitor
shall have no further liability with respect to that claim or proceeding and
the Indemnified Party shall assume full responsibility for the defense payment,
or settlement of such claim or proceeding.
(c) If the Indemnitor fails to acknowledge in writing its
obligation to defend against or settle any claim or proceeding within twenty
(20) days after receiving notice of the claim or proceeding from the
Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate) the Indemnified Party shall be free to
dispose of the matter, at the expense of the Indemnitor (but subject to the
Indemnitor's right subsequently to contest through appropriate proceedings its
obligation to provide indemnification), in any way that the Indemnified Party
deems in its best interest.
(d) The Indemnitor shall be subrogated to all rights of
the Indemnified Party against any third party with respect to any claim for
which indemnification is paid to the extent of such payment.
15.4. LIMITATIONS ON INDEMNIFICATION RIGHTS
-------------------------------------
Neither party shall be entitled to assert any claim for
indemnification hereunder until the aggregate amount of all claims of that
party for indemnification exceed $5,000 (the "Agreed De Minimis Amount");
PROVIDED, HOWEVER, that the foregoing limitation shall not apply with respect
to third-party claims. Indemnification shall be due only to the extent of the
loss or damage actually suffered (I.E., reduced by any offsetting or related
asset or service received and by any recovery from any third party, such as an
insurer) and then only to the extent of the excess over the Agreed De Minimis
Amount if otherwise applicable.
15.5. INDEMNIFICATION NOT SOLE REMEDY
-------------------------------
The right to indemnification hereunder shall not be the
exclusive remedy of either party in connection with any breach by the other
party of its representations, warranties, or covenants, nor shall such
indemnification be deemed to prejudice or operate as a waiver of any remedy to
which either party may otherwise be entitled as a result of any such breach by
the other party.
16. ACCESS TO INFORMATION AND DOCUMENTS AFTER CLOSING.
-------------------------------------------------
16.1. BY SELLER
---------
At Seller's request, Buyer shall give to Seller and to
Seller's counsel, accountants and other representatives, reasonable access
after Closing to Buyer's property, personnel, books and records, contracts,
commitments and documents that relate to the Stations, shall furnish to Seller
and Seller's representatives all such additional information and documents
concerning Buyer as Seller or Seller's representatives may from time to time
reasonably request, and shall permit Seller and Seller's representatives to
make copies of Buyer's books, records, contracts, commitments and documents for
all reasonable purposes, including but not limited to tax reporting and tax
disputes involving Seller. Seller's request shall state with reasonable
specificity the purpose of the request and the general nature of the property,
personnel, books and records, contracts, commitments and records and additional
information to which Seller desires to have access or to copy, and Seller's
access and copying may be reasonably limited by Buyer to that which is
reasonably necessary to effect Seller's legitimate purposes. In any case, all
such information shall be strictly confidential and may not be disclosed by
Seller to any person, except as otherwise contemplated by this Agreement or
reasonably required to achieve Seller's legitimate purposes. Buyer will also
make its employees reasonably available to assist Seller in closing its books,
and otherwise as may be required for winding up Seller's involvement in the
business and operations of the Stations.
16.2. BY BUYER
--------
At Buyer's request, Seller shall permit Buyer to have
reasonable access, after Closing, to all books and records included in the
Retained Assets to the extent Buyer has legitimate need therefor, and to make
copies of such materials for Buyer's own and confidential use.
17. TERMINATION.
-----------
17.1. ABSENCE OF COMMISSION CONSENT
-----------------------------
If a Final order approving the Assignment Application has
not been obtained within six (6) months after the date on which the Assignment
Application is filed, this Agreement may be terminated at the option of either
party upon written notice to the other, PROVIDED, HOWEVER, that no party may
terminate this Agreement if such party is in default hereunder, or if a delay
in any decision or determination by the Commission respecting the Assignment
Application has been caused or materially contributed to (i) by any failure of
such party to furnish, file or make available to the Commission information
within its control; (ii) by the willful furnishing by such party of incorrect,
inaccurate or incomplete information to the Commission; and (iii) by any other
action taken by such party for the purpose of delaying the Commission's
decision or determination respecting the Assignment Application. In the event
of termination pursuant to this Paragraph, the Escrow Deposit shall be released
to Buyer and the parties shall be released and discharged from any further
obligation hereunder unless the failure to satisfy the mutual conditions to
Closing is attributable to Buyer, as provided in this Section, and Seller is
not in default and has otherwise complied with its obligations under this
Agreement, in which case the Escrow Deposit shall be released to Seller as
liquidated damages pursuant to Section 18.3.
17.2. DESIGNATION FOR HEARING
-----------------------
The time for Commission approval provided in Section 17.1
notwithstanding, either party may terminate this Agreement upon written notice
to the other, if, for any reason, the Assignment Application is designated for
hearing by the Commission, PROVIDED, HOWEVER, that written notice of
termination must be given within twenty (20) days after release of the Hearing
Designation Order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section, the Escrow Deposit shall be returned to
Buyer and the parties shall be released and discharged from any further
obligation hereunder.
17.3. MATERIAL BREACH BY A PARTY
--------------------------
In the event that either party fails to comply with any
material term or obligation or breaches any representation or warranty
contained in this Agreement in any material respect and does not cure such
failure within ten (10) days of receiving written notice from the other party,
then the other party may at its option, by written notice to the breaching
party, terminate this Agreement without further obligation or liability;
provided, however, that the terminating party is not in material breach of this
Agreement at the time of such notice. In the event of termination pursuant to
this Section, the Escrow Deposit shall be released to Buyer and the parties
shall be released and discharged from any further obligation hereunder unless
the termination is attributable to Buyer, as provided in this Section, and
Seller is not in default and has otherwise complied with its obligations under
this Agreement, in which case the Escrow Deposit shall be released to Seller as
liquidated damages.
18. DEFAULT AND REMEDIES.
--------------------
18.1. MATERIAL BREACHES
-----------------
A party shall be deemed to be in default under this
Agreement only if such party has materially breached or failed to perform its
obligations hereunder, and no non-material breaches or failures shall be
grounds for declaring a party to be in default, postponing the Closing, or
terminating this Agreement.
18.2. OPPORTUNITY TO CURE
-------------------
If either party believes the other to be in default
hereunder, such party shall provide the other with written notice specifying in
reasonable detail the nature of the default. If the default has not been cured
within ten (10) days after delivery of that notice (or such additional
reasonable time as the circumstances may warrant provided the party in default
undertakes diligent, good faith efforts to cure the default within such ten
(10) day period and continues such efforts thereafter), then the party giving
such notice may exercise the remedies available to such party pursuant to this
Section, subject to the right of the other party to contest such action through
appropriate proceedings.
18.3. SELLER'S REMEDIES
-----------------
The parties recognize if the transaction provided for in
this Agreement is not consummated as a result of Buyer's default, Seller would
be entitled to compensation, the extent of which is extremely difficult and
impractical to ascertain. Therefore, the parties agree if this Agreement is
not consummated due to Buyer's default, provided Seller is not in default and
has otherwise complied with its obligations under this Agreement, the earnest
money deposit shall be released and paid to Seller, as liquidated damages and
this Agreement shall be of no further effect, it being the intention of the
parties Buyer may forfeit the earnest money and be free of any further
obligations under this Agreement.
18.4. BUYER'S REMEDIES
----------------
Seller agrees that the Purchased Assets include unique
property that cannot be readily obtained on the open market and that Buyer will
be irreparably injured if this Agreement is not specifically enforced.
Therefore, notwithstanding the provisions of Section 19.14, Buyer shall have
the right specifically to enforce Seller's performance under this Agreement,
and Seller agrees to waive the defense in any such suit that Buyer has an
adequate remedy at law and to interpose no opposition, legal or otherwise, as
to the propriety of specific performance as a remedy. The remedies described
in this Section shall be in addition to, and not in lieu of, any other remedies
that Buyer may elect to pursue.
19. GENERAL PROVISIONS.
------------------
19.1. BULK SALES ACT
--------------
Seller shall be responsible for compliance with the
provisions of any bulk sales or fraudulent conveyance statute applicable to the
transaction contemplated by this Agreement, and will indemnify and hold Buyer
harmless, pursuant to Section 15, against any cost or expense, including
without limitation reasonable legal fees, incurred by Buyer as a result of the
failure to comply with any such statute.
19.2. BROKERAGE
---------
The parties represent to each other that Andy McClure of
The Exline Company is the only broker who has been engaged in connection with
this transaction. Seller shall pay the brokerage commission due to McClure.
Each party shall indemnify and hold the other harmless from and against any and
all claims, losses, liabilities and expenses (including reasonable attorneys'
fees) arising out of a claim by any other person or entity based on any such
arrangement or agreement made or alleged to have been made by such party.
19.3. EXPENSES
--------
Except as otherwise provided herein, all expenses involved
in the preparation and consummation of this Agreement shall be borne by the
party incurring same whether or not the transaction contemplated herein is
consummated. All Commission filing fees for the Assignment Applications, all
recording costs for bills of sale and other instruments of transfer, and all
stamp, sales, use, and transfer taxes shall be paid one-half by Seller and one-
half by Buyer.
19.4. NOTICES
-------
All notices, requests, demands, and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when delivered personally or mailed by certified mail, return receipt
requested, postage prepaid, or by an overnight carrier that provides a written
confirmation of delivery, addressed as follows (or to such other address which
a party shall specify to the other party in accordance herewith):
(a) If to Seller:
John Power, President
Alta California Broadcasting
7518 Elbow Bend Rd.
Bldg. A, Suite H
Carefree, Arizona 85377
Fax: 602/488-2384
with copy to:
Gregg P. Skall, Esq.
Pepper & Corazzini
Suite 200
1776 K Street, N.W.
Washington, D.C. 20006
Fax: 202-296-5572
(b) If to Buyer:
Craig W. McCoy, President
McCoy Broadcasting Company
4700 Southwest Macadam Avenue
Portland, Oregon 97201
Fax: 503-796-0525
with copy to:
Terry DeSylvia, Esq.
Brownstein Rask
1200 Southwest Main
Portland, Oregon 97205
Fax: 503-221-1074
Either party may change its address for notices by written notice to the
other given pursuant to this Section.
19.5. PRIOR NEGOTIATIONS
------------------
This Agreement supersedes in all respects all prior and
contemporaneous oral and written negotiations, understandings and agreements
between the parties with respect to the subject matter hereof. All of said
prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
19.6. ENTIRE AGREEMENT; AMENDMENT
---------------------------
This Agreement and the Exhibits and Appendices to this
Agreement set forth the entire understanding between the parties in connection
with the transaction contemplated herein, and there are no terms, conditions,
warranties or representations other than those contained herein, referred to
herein or provided for herein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an
instrument in writing signed by the party against whom the enforcement of any
such change is sought. Notwithstanding the generality of the foregoing, the
parties hereto acknowledge that the transactions contemplated herein are
subject to the approval of the FCC and that while intending to be legally
bound, they have entered into this Agreement before their counsel have had an
opportunity to discuss such transactions with FCC staff. Following such
discussions, should their counsel recommend that this Agreement be modified so
as to increase the speed and/or probability of procuring the consent of the
FCC, than the parties shall negotiate in good faith and agree to such
recommended modifications as are intended to obtain FCC consent while
preserving as closely as possible the parties' intent as expressed herein.
19.7. EXHIBITS AND APPENDICES
-----------------------
The Exhibits and Appendices attached hereto or referred to
herein are a material part of this Agreement, as if set forth in full herein.
19.8. SEVERABILITY
------------
If any term of this Agreement is illegal or unenforceable
at law or in equity, the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of applicable law and such term, as so modified, and
the balance of this Agreement shall then be fully enforceable.
19.9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
The several representations, warranties and covenants of
the parties contained herein shall survive the Closing for a period of one (1)
year.
19.10. WAIVER
------
Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of either party at any time to require performance
by the other of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same, (ii) no waiver by either party of any
default by the other shall be taken or held to be a waiver by such party of any
other preceding or subsequent default, and (iii) no extension of time granted
by either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
19.11. NUMBER AND GENDER
-----------------
Whenever the context so requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be construed to mean or include any other gender
or genders.
19.12. HEADINGS AND CROSS-REFERENCES
-----------------------------
The headings of the Sections and Paragraphs, the Table of
Contents, the Table of Exhibits, and the Table of Appendices have been included
for convenience of reference only, and shall in no way limit or affect the
meaning or interpretation of the specific provisions of this Agreement. All
cross-references to Sections or Paragraphs herein shall mean the Sections or
Paragraphs of this Agreement unless otherwise stated or clearly required by the
context. All references to Appendices herein shall mean the Appendices to this
Agreement which have been separately initialed for identification by Seller and
Buyer. Words such as "herein" and "hereof" shall be deemed to refer to this
Agreement as a whole and not to any particular provision of this Agreement
unless otherwise stated or clearly required by the context.
19.13. CHOICE OF LAWS
--------------
This Agreement is to be construed and governed by the laws
of the State of California, without reference to the choice of law rules
utilized in that jurisdiction.
19.14. ARBITRATION
-----------
Except for the special arbitration provisions of Sections
4.2, 6.3 and 11, and as otherwise provided to the contrary below, any dispute
arising out of or related to this Agreement that Seller and Buyer are unable to
resolve by themselves shall be settled by arbitration in San Francisco,
California, by a panel of three arbitrators. Seller and Buyer shall each
designate one disinterested arbitrator, and the two arbitrators so designated
shall select the third arbitrator. The persons selected as arbitrators need
not be professional arbitrators, and persons such as lawyers, accountants,
brokers, and bankers shall be acceptable. Before undertaking to resolve the
dispute, each arbitrator shall be duly sworn faithfully and fairly to hear and
examine the matters in controversy and to make a just award according to the
best of his or her understanding. The arbitration hearing shall be conducted
in accordance with the rules of the American Arbitration Association. The
written decision of a majority of the arbitrators shall be final and binding on
Seller and Buyer. The costs and expenses of the arbitration proceeding shall
be assessed between Seller and Buyer in a manner to be decided by a majority
of the arbitrators, and the assessment shall be set forth in the decision and
award of the arbitrators. Judgment on the award, if it is not paid within
thirty (30) days, may be entered in any court having jurisdiction over the
matter. No action at law or suit in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Seller or
Buyer against the other except (i) an action to compel arbitration pursuant to
this Section, (ii) an action to enforce the award of the arbitration panel
rendered in accordance with this Section, or (iii) a suit for specific
performance pursuant to Section 18.
19.15. ASSIGNMENT
----------
Neither party may assign its rights or obligations
hereunder without the prior written consent of the other party except: at
Closing, Buyer may make a collateral assignment of its rights under this
Agreement to any institutional lender(s) who provides funds to Buyer the
repayment of which will be secured by liens on the Purchased Assets. Seller
agrees to execute an acknowledgment of such collateral assignment(s) in such
form as Buyer's institutional lender(s) may from time to time request. Subject
to the foregoing, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the parties hereto and their respective successors
and assigns.
19.16. THIRD PARTIES
-------------
Nothing in this Agreement, whether expressed or implied, is
intended to: (i) confer any rights or remedies on any person other than
Seller, Buyer and their respective successors and permitted assigns; (ii) to
relieve or discharge the obligation or liability of any third party; or (iii)
to give any third party any right of subrogation or action against any Seller
or Buyer.
19.17. COUNTERPARTS
------------
This Agreement may be signed in any number of counterparts
with the same effect as if the signature on each such counterpart were on the
same instrument. Each of the counterparts, when signed, shall be deemed to be
an original, and all of the signed counterparts together shall be deemed to be
one and the same instrument.
19.18. PUBLIC ANNOUNCEMENTS
--------------------
No announcements shall be made by either party before or
after the execution of this Agreement and prior to Closing except upon mutual
agreement of Seller and Buyer; PROVIDED, HOWEVER, that Seller shall have the
right to give such local public notice of the Assignment Application as is
required by the Commission without Buyer's prior approval.
19.19. NO OFFER
--------
This Agreement has been provided for examination only and
does not constitute an offer. This Agreement shall become effective only after
execution hereof (or counterparts hereof) by all parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SELLER: ALTA CALIFORNIA BROADCASTING.
/s/ John C. Power
--------------------
By: John C. Power, President
BUYER: MCCOY BROADCASTING INC.
/s/ Craig W. McCoy
--------------------
By: Craig W. McCoy, President
APPENDIX A
ALLOCATION OF PURCHASE PRICE TO SELLER'S ASSETS
-----------------------------------------------
Studio/Mobile Equipment $ 250,000
Transmission Equipment:
Towers and Antennas 80,000
Other 200,000
Office Equipment 40,000
Computers 40,000
Furniture & Equipment 40,000
Licenses & Goodwill 83,333
Covenant Not To Compete 100,000
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Total Assets $ 833,333
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