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EXHIBIT 10.08.02
ASSET PURCHASE AGREEMENT
WNIV - FM, ATLANTA, GEORGIA
WLTA - FM, ALPHARETTA, GEORGIA
This AGREEMENT (the "Agreement") is dated as of August 18, 1999, by and
between SALEM MEDIA OF GEORGIA, INC. ("Buyer") and GENESIS COMMUNICATIONS, INC.
("Seller").
RECITALS:
1. Seller owns and operates radio stations WNIV-FM, Atlanta, Georgia
("WNIV"), and WLTA-FM, Alpharetta, Georgia ("WLTA" and with WNIV, the
"Stations"), and holds the licenses and authorizations issued by the FCC for the
operation of the Stations.
2. Seller is willing to convey the Sale Assets to Buyer, and Buyer is
willing to acquire the Sale Assets.
3. The acquisition of the Stations 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 Atlanta, Georgia, are regularly
open for business.
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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 CASUALTY TERMINATION PERIOD. Such term shall have the meaning
defined in Article XII.
1.8 CLOSING. The closing with respect to the transactions contemplated
by this Agreement.
1.9 CLOSING DATE. The date determined as the Closing Date as provided
in Section 8.1.
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 Four Hundred Thousand Dollars
($400,000).
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
(as defined below).
1.14 ESCROW AGENT. Jorgenson Broadcast Brokerage.
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.
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1.18 FCC LICENSES. The licenses, permits and authorizations of the FCC
for the operation of the Stations as listed on Schedule 3.8.
1.19 FCC ORDER. An order or decisions of the FCC granting its consent
to the assignments 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 maybe 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 KNOWLEDGE. Means: (i) as to Buyer, the knowledge, after due
inquiry in their respective areas of responsibility of Edward G. Atsinger III,
President, and Eric H. Halvorson, Executive Vice President; and (ii) as to
Seller, the knowledge, after due inquiry in their respective areas of
responsibility, of Bruce Maduri, President of Genesis Communications, Inc. and
____________, General Manager of the Stations.
1.25 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.
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1.26 MATERIAL ADVERSE CONDITION OR MATERIAL ADVERSE EFFECT. A condition
which would materially restrict, limit, increase the cost or burden of or
otherwise adversely affect or impair the right of Buyer to the ownership, use,
control, enjoyment or operation of the Sale Assets or the Stations or the
proceeds therefrom; provided, however, that any condition which requires that
the Stations be operated in accordance with a condition similar to those
contained in the present FCC licenses issued for operation of the Stations shall
not be deemed a Material Adverse Condition.
1.27 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.
1.28 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, encroachment 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;
provided said term shall not include any such lien which is discharged at or
before closing.
1.29 PURCHASE PRICE. The consideration to be paid by Buyer to Seller
for purchase of the Sale Assets in an amount equal to Eight Million Dollars
($8,000,000).
1.30 REAL PROPERTY. Such term shall have the meaning defined in Section
3.7.
1.31 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 written policies of
the Commission, whether contained in the Code of Federal Regulations, or not,
that apply to the Stations.
1.32 SALE ASSETS. All of the tangible and intangible assets to be
transferred by Seller to Buyer as set forth in Section 2.1.
1.33 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).
1.34 SUBSTANTIAL CASUALTY. Such term shall have the meaning defined in
Article XI.
1.35 STATION AGREEMENTS. The agreements, commitments, contracts, leases
and other items described in Section 2.1(d) which relate to the operation of the
Stations.
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1.36 SURVIVAL PERIOD. Such term shall have the meaning defined in
Section 9.1.
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 and other Liens expressly accepted by
Buyer, all of Seller's right, title and interest, legal and equitable, in and to
all tangible and intangible assets (except Excluded Assets) used and/or useful
in the operation of the Stations as they are or have been and/or are now being
operated, including, without limitation, the following:
(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
furniture, fixtures and other tangible personal property used and/or useful in
the operation of the stations as they have been and/or are now being operated,
including, without limitation, those items listed on Schedule 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. All right, title and interest in and to the Real
Property and any other real estate or interests therein acquired by Seller
solely in connection with the Stations between the date hereof and the Closing
Date in accordance with the terms and provisions of this Agreement.
(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 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 Stations.
(d) STATION AGREEMENTS. All agreements which Seller is a party to
or bound by 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 Stations 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
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the Closing Date in accordance with the terms and provisions of this Agreement
and which Buyer elects to assume in writing.
(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 Stations
(other than corporate records), including, without limitation, the public
inspection files of the Stations.
(f) MISCELLANEOUS ASSETS. Any intangible assets, properties or
rights described on any schedule hereto or on Schedule 2.1(f), including the
call letters and any goodwill of the Stations.
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 Stations 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).
(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.
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(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Stations, 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) All property, real or personal, tangible or intangible,
disclosed on Schedule 3.5.
2.3 ASSUMPTION OF LIABILITIES.
(a) At the Closing, Buyer shall assume and agree to perform 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.
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.
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2.5 PAYMENT OF PURCHASE PRICE.
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery by Seller 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) 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) 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 use their reasonable best efforts to agree on 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 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 Section 1.1060-1T.
2.7 ADJUSTMENT OF PURCHASE PRICE.
(a) All operating income and operating expenses of the Stations
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 Stations on or before the Closing Date
shall be for the account of Seller, and all income and expenses attributable to
the operation of the Stations 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, unless disputed, 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
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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.
2.8 ACCOUNTS RECEIVABLE For a period of time (the "Collection Period")
from the Closing Date to a date being ninety (90) days from the Closing Date,
Buyer shall collect all of the accounts receivable of Seller ("Accounts
Receivable") relating to the Stations and existing as of the Closing Date.
During such period neither Seller nor its agents shall make any solicitation for
collection purposes nor institute litigation for the collection of any amounts
due thereunder, except for such Accounts Receivable which Buyer has consented to
Seller's collection thereof prior to the expiration of the Collection Period.
Any payment received by Buyer during the Collection Period from an account
debtor shall be applied to such specific outstanding invoices or in such other
manner as may be designated by such account debtor. In the absence of any such
designation, all payments received by Buyer shall be applied to the outstanding
amounts due from any such account debtor (including amounts arising from
Seller's operation of the Business prior to the Closing) in chronological order,
beginning with the oldest outstanding amounts based on the dates of the original
underlying invoices. Buyer shall use commercially reasonable efforts to collect
the Accounts Receivable during the Collection Period. After the expiration of
the Collection Period, Buyer shall have no right or obligation with respect to
such Accounts Receivable. Buyer agrees to remit to Seller any payment on any
Account Receivable which Buyer has received; provided, however, that nothing
contained in this Section 2.8 shall be construed to grant Seller any right with
respect to any accounts receivable accrued in connection with Buyer's operation
of the Stations on or after the Closing Date. Following the Collection Period,
Buyer shall make available to Seller, upon the reasonable request of Seller,
copies of all of its records relating to any uncollected Accounts Receivable.
2.9 EMPLOYEES. Buyer shall be free to hire such persons, whether or not
employees of Seller or the Stations, on such terms and conditions of employment
as Buyer shall determine in the exercise of its sole discretion, and nothing in
this Agreement shall establish any obligation or commitment on the part of Buyer
for any right or claim (legal or equitable) of any person other than the parties
hereto, including, without limitation, any employee of Seller or Buyer or any
beneficiary of such employee. Any claim, including any claim for benefits,
asserted by or on behalf of any person with respect to such person's employment
by Buyer shall be governed solely by applicable employment policies and employee
benefit plans. Seller has delivered to Buyer a true and complete list (including
names, titles, job descriptions, compensation, date of hire, and full vs.
part-time status) of all employees of the Stations as of the date such list is
delivered. In addition, Seller shall be liable for, and shall pay, all wages,
salaries, payroll taxes and employee benefits, including without limitation,
vacation pay or benefits, due, owing or accrued for all employees of the
Stations through the Closing. All claims
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incurred or liabilities asserted under Seller's employee benefit plans
(including any such claims resulting from Seller's termination of any employee
benefit plan) shall be the responsibility of Seller, and Buyer shall not have
any liability with respect to such claims or liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Genesis Communications, Inc. is a
corporation duly organized and validly existing under the laws of the state of
Georgia. Seller is authorized and in good standing in Georgia and each and every
other jurisdiction where Seller operates, owns property or conducts business.
Seller has all requisite power to own, convey, 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 action on the part of Seller. Seller has the corporate
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. Assuming all the consents described in
Section 3.4 are obtained, 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 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 in any manner which would constitute a Material Adverse
Condition.
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(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,
where such conflict, breach, termination, default or right would have a material
adverse effect on the Sale Assets or the operation of the Stations, under
corporate organizational documents 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 for the
required consent of the FCC or as set forth on Schedule 3.8 or Schedule 3.9, 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, any court or public agency or other authority,
or the consent of any person under any agreement, arrangement or commitment of a
nature which Seller is a party to or bound or by which the Sale Assets are bound
by or subject to, the failure of which to obtain would have a material adverse
effect on the Sale Assets or the operation of the Stations.
3.5 SALE ASSETS. Except as set forth on Schedule 3.5, the Sale Assets
include all assets, properties and rights of every type and description, real,
personal and mixed, tangible and intangible, as are used and/or useful by Seller
in the business of owning and operating the Stations, 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 and/or useful to a material extent in the operation of the Stations
in the manner in which they have been and are 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 in all material respects
been maintained in accordance with industry practices and is in good condition
subject to ordinary wear and tear.
(c) The Tangible Personal Property complies in all material
respects with all applicable rules and regulations of the FCC and the terms of
the FCC Licenses.
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(d) Seller has no Knowledge of any defect or defects in the
condition or operation of any item of Tangible Personal Property which is
reasonably likely to have a material adverse effect on the operation of the
Stations.
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 estate (including any real property leased by Seller pursuant
to a lease described in Schedule 3.9) used to any extent in the operation of the
Stations in the manner in which they have been and are 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 material man 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 as of the date hereof other than routine maintenance projects
having an aggregate cost through completion thereof of no more than Five
Thousand Dollars ($5,000).
(c) The present use of the Real Property is in compliance in all
material respects 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 has
been maintained in accordance with industry practices and is in good condition,
subject to ordinary wear and tear. The Real Property has full and free access to
public roadways and is served by electricity and water in capacities adequate
for the present use of the Real Property and improvements thereon.
(d) Seller has good, marketable and valid title to all of the Real
Property free and clear of all Liens except Permitted Liens, and including the
right to transfer same. Seller has not made any agreement for the sale of, or
given any person an option to purchase, or a right of first refusal to purchase,
all or any part of the Real Property, and Seller has not subjected the Real
Property to any Liens (other than Permitted Liens), easements, rights, duties,
obligations, covenants, conditions, restrictions, limitations or agreements.
Except as provided in Schedule 3.7, Seller has not made any agreements to lease
all or any part of the Real Property or any improvements thereon.
(e) No portion of the Real Property or improvements thereon is the
subject of any condemnation or eminent domain proceeding presently instituted
or, to Seller's Knowledge, pending, and Seller has not received notice from any
condemning authority that such proceedings are threatened.
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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 for, or used in, the operation of
the Stations as now operated, and (ii) constitute all the licenses and
authorizations issued to Seller for or in connection with the current operation
of the Stations. 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 Stations. Except as
disclosed on Schedule 3.8, the Stations are 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 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 Stations or their 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 Stations, 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 Stations or their operation. Complete and accurate copies of
all FCC Licenses are attached as a part of Schedule 3.8. The "Public Inspection
Files" of the Stations are 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 Stations or their assets or properties are bound by, except (A)
employee benefit plans and employment contracts, (B) contracts for the sale of
time on the Stations, and (C) contracts which are cancelable by Seller or its
assignee without breach or penalty on not more than thirty (30) 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
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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 material
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 Stations; and (iv) Seller holds the right to enforce and
receive the benefits under all of the Station 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 (collectively referred to herein as
"Litigation") pending or, to the 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 Stations
(excluding any Litigation affecting the radio broadcasting industry generally),
or which would give any third party the right to enjoin the transactions
contemplated by this Agreement. To the 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 Stations (excluding any
Litigation affecting the radio broadcasting industry generally). There are no
existing or, to the Knowledge of Seller, pending orders, judgments or decrees of
any court or governmental agency affecting the Stations or any of the Sale
Assets (excluding any orders, judgments or decrees of any court or government
agency that affect the radio broadcasting industry generally). Notwithstanding
the disclosure of any Litigation of Seller to Buyer pursuant to this Section,
Buyer shall not assume any liability, damages, cost or expense of Seller
relating to or arising out of any Litigation.
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) With respect to Seller and the Stations:
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the Knowledge of Seller, threatened against the Stations;
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(ii) There are neither pending nor, to the Knowledge of Seller
threatened, any suits, actions, administrative proceedings, union organizing
activities, arbitrations, grievances or other proceedings between Seller and any
employees of the Stations or any union representing such employees; and there
are no existing labor or employment or other controversies or grievances
involving employees of the Stations which have had or are reasonably likely to
have a material adverse effect on the operation of the Stations;
(iii) (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;
(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;
(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. The operation of the Stations complies in all
material respects with the applicable rules and regulations of the FCC.
3.14 ENVIRONMENTAL MATTERS; OSHA.
(a) Seller has obtained all environmental, health and safety
permits, the failure of which to obtain would have a material adverse effect on
either the operation of the Stations or the ownership of the Sale Assets and all
such permits are in full force and effect and Seller is in material compliance
with all terms and conditions of such permits.
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(b) There is no proceeding pending or 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
Stations or the ownership of the Sale Assets.
(c) With respect to the Stations and the Sale Assets, Seller is in
compliance in all material respects with the provisions of all Environmental
Laws.
(d) With respect to the Sale Assets, Seller has not, and to
Seller's Knowledge no other person or entity has, caused or permitted materials
to be generated, released, stored, treated, recycled, disposed of on, under, at
or in the Sale Assets or the Real Property, 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 buildings
or improvements). 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. To Seller's Knowledge,
there are no underground storage tanks and no polychlorinated biphenyls ("PCB")
or friable asbestos on, in or under the Sale Assets.
(e) To Seller's Knowledge, Seller is not subject to any judgment,
decree, order or citation with respect to the Stations or the Sale Assets
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, which matter reasonably relates to the Stations or the Sale
Assets.
(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 Sale
Assets owned by third parties, which may form the basis for any present or
future claim based upon the Environmental Laws 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 Sale
Assets to claims by third parties (except to the extent third party liability
can be established) for damages.
(g) No portion of the Sale Assets has ever been used by Seller,
nor 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 adversely affect the value of the Sale Assets.
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(h) With respect to the Sale Assets, no pesticides, herbicides,
fertilizers or other materials have been used, applied or disposed of by Seller
in 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).
(i) With respect to the Stations or the Sale Assets, Seller has
disposed of all waste in material compliance with all Environmental Laws and
there is no existing condition that may form the basis of any present or future
material 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 Sale Assets.
(j) Seller and the Sale Assets are in material compliance with all
OSHA Laws.
3.15 FILING OF TAX RETURNS. To the extent the failure to file or pay
would result in a Lien on the Sale Assets or have a material adverse effect on
Buyer or the Sale Assets, 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.
3.16 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.
3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17,
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.
3.18 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.
3.19 TOWER COORDINATES. The current vertical elevation and geographical
coordinates of the Stations' towers ("the Tower Coordinates") have been
registered with the FAA and FCC, if required by law. The registration numbers,
if any, are set forth on Schedule 3.19 hereto. Seller further represents and
warrants that the Tower Coordinates comply with and correspond to the current
vertical elevation an geographical coordinates
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authorized by the FAA, FCC and any other governmental authority, including any
federal, state or local authority having jurisdiction over the Stations or said
towers.
3.20 FINANCIAL STATEMENTS.
(a) Attached hereto as SCHEDULE 3.20 are copies of the financial
statements of Seller (collectively the "Financial Statements") including (i)
Audited financial statements for the Stations as of __________; and (ii)
Unaudited monthly income statements for the Stations from _____________ to
_________.
(b) The Financial Statements have been prepared by management of
Seller in accordance with Seller's historical accounting practices during the
periods covered thereby and, in all material respects, present fairly and
accurately the financial condition of the Stations at the dates of said
statements and the results of operations of the Stations for the periods covered
thereby in conformity with GAAP. Except as set forth on SCHEDULE 3.20, as of
_________________ (the "Base Balance Sheet Date"), Seller had no material
liabilities or obligations of any kind with respect to the Stations, whether
accrued, contingent or otherwise, that are not disclosed and adequately reserved
for on the Base Balance Sheet, other than immaterial liabilities incurred in the
ordinary course of business which would not be reflected in the Base Balance
Sheet under GAAP, applied consistently.
3.21 BUSINESS SINCE THE BASE BALANCE SHEET DATE. Since the Base Balance
Sheet Date and except as set forth on SCHEDULE 3.21:
(a) There has been no (i) material adverse change in the Stations
or in the Sale Assets, operations or financial condition of the Stations and
(ii) event, circumstance or combination thereof, whether arising prior to or
after the Base Balance Sheet Date, that might reasonably be expected to result
in a Material Adverse Condition;
(b) The Stations have, in all material respects, been operated in
the ordinary course and in substantially the same manner as they were operated
before the date of the Base Balance Sheet Date;
(c) There has not been any material obligation or liability
(contingent or other) incurred by Seller with respect to the Stations, outside
the ordinary course;
(d) There has not been any change in the collection, payment and
accounting policies used by Seller at the Stations;
(e) Seller has not granted or agreed to grant any change in the
compensation of any employee of the Stations (including any increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or any change in
the compensation payable or to become payable to any employee of the Stations,
except for those granted in the ordinary course of business consistent with past
practice.
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3.22 DISCLOSURES. No representation or warranty by Seller contained in
this Agreement nor any statement or certificate furnished or to be furnished by
or on behalf of Seller to Buyer contains or will contain any untrue statement of
material fact, or omits or will omit to state any material fact required to make
the statements contained herein and therein not misleading. There is no fact
(other than matters of a general economic nature which do not affect the
Stations uniquely) known to Seller that has not been disclosed by Seller to
Buyer that might reasonably be expected to be a Material Adverse Condition.
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
Delaware. 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. Buyer has the
corporate 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 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
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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 transactions 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 which Buyer is a party to or
bound by, 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.
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 Stations 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.
(c) Buyer will have available on the Closing Date sufficient funds
to enable it to consummate the transactions contemplated by this Agreement, and
Buyer acknowledges that the receipt of adequate financing by Buyer is not a
condition precedent to performance by Buyer of its obligations under this
Agreement.
4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17, 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.
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4.7 LITIGATION. There is no Litigation 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 STATIONS' 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 Stations in substantially
the same manner in which they are currently being operated;
(b) Use commercially reasonable 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 Stations, with insurers of substantially the
same or better financial condition;
(c) Operate the Stations and otherwise conduct their business in
accordance with the terms or conditions of their FCC Licenses, the Rules and
Regulations, the Act and use reasonable efforts to conduct their business in
accordance with all other rules and regulations, statutes, ordinances and orders
of all governmental authorities having jurisdiction over any aspect of the
operation of the Stations, except where the failure to so operate the Stations
would not have a material adverse effect on the Sale Assets or the operation of
the Stations or on the ability of Seller to consummate the transactions
contemplated hereby;
(d) Maintain the books and records of the Stations in Seller's
customary manner on a basis consistent 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 Stations;
(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 Stations, and any
event or condition which, with notice or lapse of time or both, would constitute
a material default under such Station Agreements;
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(g) Not mortgage, pledge or subject to any 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 amend or terminate any license, or any Station Agreement,
other than in the ordinary course of business;
(j) Not introduce any material change with respect to the operation
of the Stations including, without limitation, any material changes in the
broadcast hours of the Stations or any other material change in the Stations'
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 the Stations or Seller or any material damage to or destruction of any
assets included or to be included in the Sale Assets;
5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC,
within ten (10) 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.
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 Stations), 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 commercially reasonable 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.
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5.4 TAX RETURNS AND PAYMENTS. To the extent the failure to file any
return, estimate, or report or pay any taxes would result in a Lien on the Sale
Assets or have a material adverse effect on Buyer or the Sale Assets:
(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 Stations 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 the Stations 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 Stations, 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 Stations or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of the Stations 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
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necessary or appropriate in connection with the operation of the Stations 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:
(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;
(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; or
(iii) disclosing any information to the SEC, FCC, FAA or any other
governmental authority provided that the disclosing party reasonably believes
such disclosure to be required.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances or required by
law, 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 Stations. 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 or payoff letters, 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.
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5.10 ENVIRONMENTAL ASSESSMENT. Within ten (10) business days after the
execution of this Agreement, Seller shall provide Buyer with the originals or
readable copies of any environmental assessments in Seller's possession or
control. Prior to Closing, Buyer shall obtain an assessment of the Real Property
by an environmental engineer selected by Buyer (the "Environmental Assessment").
Buyer shall commission and pay the cost of such Environmental Assessment and
shall provide a copy to Seller within ten (10) days of its receipt by Buyer. 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 consistent with good commercial or customary practice,
the engineer concludes, as set forth in the Environmental Assessment, that
environmental conditions exist on, under or affecting such properties that would
constitute a material 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, but 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 Stations under conditions where there exist any uncured
violations of warranties, representations or covenants with respect to
environmental matters.
5.11 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 or control. All costs
associated with updating such survey or preparing new surveys shall be paid by
Buyer.
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:
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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 such time except for changes that are not materially adverse,
individually or in the aggregate, to the Stations or the Sale Assets taken as a
whole.
(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, individually or in the aggregate,
to the Stations, the Sale Assets or Seller's ability to consummate the
transaction contemplated hereby), the conditions specified in Section 6.2 are
satisfied as of the Closing Date.
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 prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Seller.
(c) All other material 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
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
Stations.
6.4 ADVERSE PROCEEDINGS. Buyer shall not 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
Stations; and no Litigation seeking to obtain any such ruling, decree, order or
injunction shall be pending or shall have been threatened in writing and have a
reasonable likelihood of success (excluding any such Litigation instituted or
initiated by Buyer or its affiliates). No governmental authority
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having jurisdiction shall have notified any party to this 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) 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 Stations in the manner in which the Stations are 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 Stations.
(c) 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 Stations or their
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 Stations, the consents or waivers to the transactions
contemplated by this Agreement required under those Station Agreements which
Buyer has elected to assume and identified as material on Schedule 3.9.
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.
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6.8 NO CESSATION OF BROADCASTING; CASUALTY.
(a) Between the date hereof and the Closing Date, neither Station
shall have for a period of more than ten (10) days in the aggregate (i) ceased
broadcasting on its authorized frequencies, (ii) lost substantially all of its
normal broadcasting capability or (iii) have broadcast 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 Stations shall have been operating continuously with
substantially all of their 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 or Buyer shall
have the right to delay Closing for a period not to exceed thirty (30) days if
Seller or Buyer reasonably determines that any action to restore the Stations
substantially all of their normal broadcasting capability can be completed
during such delay period.
(c) If a Substantial Casualty shall have occurred, the Casualty
Termination Period shall have expired.
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 a title
insurance company reasonably acceptable to Buyer and licensed in the state the
real property is located, pursuant to the standard stipulations and conditions
of an ALTA policy of owner's title insurance, or its reasonable equivalent,
prescribed by the applicable regulatory authorities for the state the real
property is located, free and clear of all liens and encumbrances except
Permitted Encumbrances, as hereinafter defined. 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, including the business of operating the Stations; (ii) liens
for taxes not due and payable; (iii) mechanics, materialmen's, carriers',
warehousemen's, landlords' or other similar liens in the ordinary course of
business for sums not yet due; (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. All costs
associated with obtaining the standard ALTA policy of title insurance shall be
paid by Seller.
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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, individually or in the
aggregate, 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, individually or in the aggregate,
to Buyer's ability to consummate the transactions 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 prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other material 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
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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.
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; and no
Litigation seeking to obtain any such ruling, decrees, order or injunction shall
be pending or shall have been threatened in writing and have a reasonable
likelihood of success (excluding such Litigation instituted or initiated by
Seller or its affiliates). 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. The Closing shall take place at the offices of
Buyer's counsel in Atlanta, Georgia, or at such other place as the parties
agree, at 10:00 A.M. Eastern Time on the fifth business day following the date
(the "Closing Date") which is the later to occur of (i) the date on which of the
FCC Order without any Material Adverse condition has become effective, (ii) the
date as soon as practicable following satisfaction or waiver of the conditions
precedent hereunder and (iii) January 3, 2000.
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 the Board of Directors of Seller and
its shareholders 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.
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(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 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, including
therewith the policy of title insurance described in Section 6.10 hereof.
(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 Stations
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(i) The items set forth in Section 2.1(e).
(j) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to the Station Assets described in Section
2.1(f).
(k) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.
(l) Such additional instruments, information and materials as Buyer
shall have reasonably requested, including without limitation, evidence that all
material 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 the Board of Directors of Buyer and
Salem Communications Corporation 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.
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(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 instruments, information and materials as
Seller shall have reasonably requested.
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. 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.
For purposes of this agreement the "Survival Period" shall be twelve (12) months
except as follows:
(a) As to any representation and warranty (collectively "Surviving
Warranties") contained in Section 3.1, Section 3.2, Section 3.3, Section 3.4,
Section 3.6(a), Section 3.9(b)(iv), Section 3.11(b)(iv), Section 3.12, Section
3.15, Section 4.1, Section 4.2, Section 4.3 and Section 4.4, and any other
representation or warranty of Buyer of Seller as to (i) such party's
qualification and authority to consummate the transactions contemplated hereby,
(ii) title of the parties to any Station Asset or (iii) any tax obligation of
Seller, the Survival Period shall be indefinite; and,
(b) As to any representation and warranty relating to any Station
Agreement, the Survival Period shall be for the presently existing term of such
Station Agreement plus any applicable period of time under any applicable law
governing the bringing of claims under such Station Agreement.
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.
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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,
(collectively referred to herein or "Losses") 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 Stations 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;
(iv) All liabilities and obligations relating to Hazardous
Materials existing on the Real Property as of the Closing; or
(v) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Seller shall not be obligated until the aggregate amount of
Losses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be
entitled to indemnification of the entire amount in excess of Buyer's Threshold
Limitation, provided that any amounts owed by Seller to Buyer under Subsection
(a) (iv) above and Section 2.7 shall not be counted in determining whether
Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation.
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
Losses 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
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(ii) The ownership or operation of the Stations after the
Closing Date; or
(iii) The Assumed Obligations and all other liabilities or
obligations of Buyer.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to
Subsection (a) above unless and until the aggregate amount of such Losses
exceeds Seller's Threshold Limitation, in which case Seller shall then be
entitled to indemnification of the entire amount in excess of Seller's Threshold
Limitation, provided that any payment owed by Buyer to Seller under Section 2.7
shall not be counted in determining whether Seller's Threshold Limitation is
satisfied, and Seller shall have the right to recover any such payment without
regard to any such limitation.
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
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
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(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, individually or in the aggregate, 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
unless the accuracy of such representation or warranty is not a condition to
closing; 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 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 material 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, unless the failure of said condition to be satisfied was
induced by the party giving such termination notice with the intended result of
terminating the Agreement pursuant to this Clause (C); and
(iii) 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.
(b) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time after twelve (12) months following the date first written above,
provided that termination shall not occur (i) upon the giving of such
termination notice by Seller if Seller is at such time in material default
hereunder or (ii) 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 even
with diligent efforts; provided, however, only the party whose qualifications
are not in issue may terminate this Agreement under this provision and only if
such party has given the other sixty (60) days' prior written notice and the
requirement for such hearing has not been set aside within that period.
(d) The written election by Buyer under Article XI.
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10.2 OBLIGATIONS UPON TERMINATION.
(a) In the event this Agreement is terminated pursuant to Section
10.1(a)(ii)(A), or Section 10.1(a)(ii)(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 Section 10.1(a)(ii)(A), or Section
10.1(a)(ii)(B), Buyer agrees that Buyer shall release to Seller upon such
termination, as liquidated damages and not as penalty, the Earnest Money
("Liquidated Damage Amount"). SELLER'S RECEIPT OF THE LIQUIDATED DAMAGE AMOUNT
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 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 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 material breach of
warranty or fails to satisfy a material 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 (but in no event shall Seller be responsible for such
direct and actual damages in an amount over $250,000). If a circumstance
described in the preceding sentence should
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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 Stations, or any of them, to another party, the damages to which
Buyer shall be entitled shall not be limited to direct and actual damages (but
in no event shall Seller be responsible for any damages greater than
$1,000,000).
(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, and its reasonable
attorney fees expended to recover said amounts.
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
Seller will bear the risk of any loss or damage to the Sale Assets
resulting from fire, theft or other casualty (except reasonable wear and tear)
at all times prior to the Closing. If any such loss or damage is sufficiently
substantial so as to cause the Stations, or either of them, to be off the air
for more than seven (7) consecutive days or fifteen (15) total days, whether or
not consecutive ("Substantial Casualty"), then Seller will immediately notify
Buyer in writing of that fact and Buyer, at any time within 15 business days
after receipt of such notice ("Casualty Termination Period"), may elect by
written notice to Seller to terminate this Agreement. If Buyer elects to so
terminate this Agreement, Buyer and Seller will stand fully released and
discharged of any and all obligations under this Agreement (provided Seller
shall remain liable for its obligations pursuant to Section 10.2(b)). If Buyer
does not elect to so terminate this Agreement within the Casualty Termination
Period, then, without waiving any of its rights hereunder, the Substantial
Casualty shall not serve as a basis to terminate this Agreement and there will
be no adjustment in the consideration payable to Seller on account of such loss
or damage. All insurance proceeds payable as a result of the occurrence of the
Substantial Casualty (to the extent not used to replace or restore such lost or
damaged property) will be delivered by Seller to Buyer, or the rights to such
proceeds will be assigned by Seller to Buyer if not yet paid over to Seller, and
Seller will pay to Buyer an amount equal to the difference between the amount of
such insurance proceeds and the full replacement cost of the damaged or lost
Sale Assets.
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ARTICLE XII
CONTROL OF STATIONS
Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Stations or conduct of
their 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 Stations 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.
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 transfer taxes and document stamps payable in connection
with consummation of the transactions contemplated hereby shall be paid by
Seller; all state or local sales or use taxes payable in connection with the
consummation of the transactions contemplated hereby shall be paid by Buyer.
(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 Stations are of
a special, unique, and extraordinary character, and that any breach of this
Agreement by
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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 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:
Genesis Communications, Inc.
2970 Peachtree Road, NW, 8th Floor
Atlanta, GA 30305
Attention: Mr. Bruce Maduri
(b) If to Buyer, to:
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Associate General 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 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 and supersede any prior negotiations,
agreements, understandings or arrangements between the parties including,
without limitation, all letters of intent previously entered into by the parties
hereto.
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
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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 hereunder, or any
portion thereof, to any entity controlled by or under common control with Buyer,
so long as (i) no delay results in the Closing Date (ii) no extra expense
results to Seller, and (iii) Buyer is not relieved of its obligation 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 Georgia (without
giving effect to the choice of law provisions therein), including all matters of
construction, validity and performance.
13.10 BULK SALES. 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 the Bulk Sales Act and similar laws of any state or
jurisdiction.
13.11 AMENDMENTS AND WAIVERS. No term or provision of this Agreement
may be amended, waived, discharged or terminated except 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 other than Article 1,
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.
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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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written.
"SELLER" "BUYER"
GENESIS COMMUNICATIONS, INC. SALEM MEDIA OF GEORGIA, INC.
By: By:
-------------------------------- --------------------------------
Bruce Maduri Eric H. Halvorson
President Executive Vice President
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