Exhibit 10.7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated June 6, 1997, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and
Xxxxxxx X. XxXxxxxx and Xxxxxxx X. XxXxxxxx, d/b/a XxXxxxxx Communications, an
Ohio general Partnership ("Seller").
P R E M I S E S:
A. Seller is the permittee/licensee of and operates radio station
WMMA(FM) Lebanon, Ohio (the "Station") pursuant to licenses issued by the
Federal Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Station and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth. AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
Section 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Station for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Station.
1.2 "Assets" means the tangible and intangible assets owned and used in
connection with the conduct of the business or operations of the Station, being
such assets as are specifically set forth in Section 2.1 herein, which are being
sold, transferred, or otherwise conveyed to Buyer hereunder, as specified in
detail in Section 2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts, except employment or
employee-related contracts, in existence on the Closing Date which meet the
criteria set forth in Section 3.7 (i) - (iii) for exclusion from Schedule 3.7,
and (iv) all Contracts with advertisers for the sale of time or talent on the
Station for cash entered into in the ordinary course of business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Station, and (i) which are in effect on the date hereof, or
(ii) which are entered into by
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Seller in the ordinary course of business between the date hereto and the
Closing Date.
1.8 "Escrow Deposit" shall mean the sum of Two Hundred and Ten Thousand
Dollars ($210,000) held by Media Venture Partners. as Escrow Agent pursuant to
an Escrow Agreement of even date, by and among Buyer, Seller, and Escrow Agent
in the form set forth in Schedule 1.8 hereto.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein, in addition to any assets not specifically set forth in
Section 2.1 herein.
1.10 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.12 "Final Order" means a written action, order or public notice
issued by the FCC, setting forth the FCC Consent and (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
1.13 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, and any other
federal, state or local governmental authorities to Seller in connection with
the conduct of the business or operations of the Station.
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1.14 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used as of the date hereof in the conduct of the business or operations of
the Station, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date all as
specifically set forth in Section 3.6 hereof and in Schedule 3.6 hereto.
1.15 "Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Property" means all of the fee estates and buildings and
other improvements thereon, leasehold interests, easements, licenses, rights to
access, rights-of-way, and other real property interests owned by Seller and
used in the conduct of the business or operations of the Station which are
identified on Schedule 3.5 hereof plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and
clear of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those permitted in
accordance with Section 2.5, 3.5 or 3.6 below), more specifically described as
follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
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(d) The Assumed Contracts;
(e) Goodwill and all trademarks, trade names, service marks
and all other information and similar intangible assets relating to the
Station, including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate
to the Station, including without limitation, technical information and
data, machinery and equipment warranties, maps, computer discs and
tapes, plans, diagrams, blueprints, and schematics, including filings
with the FCC which relate to the Station, if any;
(g) All choses in action and rights under warranties of Seller
relating to the Station or the Assets, if any;
(h) All books and records relating exclusively to the business
or operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept, subject to
the right of Seller to have such books and records made available to
Seller for a reasonable period, not to exceed four (4) years.
2.2 Excluded Assets. The Assets shall exclude the following assets,
in addition to those listed on Schedule 2.2:
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; any and all insurance
policies, letters of credit, or other similar items and any cash
surrender value in regard thereto; and any stocks, bonds, certificates
of deposit and similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Seller, subject to the right of
Buyer to have access to and to copy for a period of four (4) years from
the Closing Date any information dealing exclusively with the business
and operations of
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the Station, and Seller's other books and records related to internal
matters and financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement, except to the extent
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement.
(f) The Accounts Receivable.
2.3 Purchase Price.
(a) The Purchase Price shall be Three Million
Dollars($3,000,000). The Purchase Price shall be adjusted to reflect
any adjustments or prorations made and agreed to at Closing as provided
in Section 2.4 hereof. Payment of the Purchase Price at Closing will be
by direct wire transfer of funds, by Buyer to the account of Seller.
The Escrow Deposit may, at Buyer's discretion, either be applied at
Closing to the Purchase Price, or returned to Buyer.
(b) No later than forty-five (45) days after the Closing Date,
Buyer shall deliver to Seller a reasonable allocation of the Purchase
Price prepared by BIA Consulting, Inc. among the various Assets, and if
such schedule is reasonably satisfactory to Seller it shall be attached
to this Agreement as Schedule 2.3. The parties hereby agree that the
allocation of the Purchase Price, as agreed to by Buyer and Seller and
set forth in Schedule 2.3, shall be controlling for tax purposes and
shall be utilized in preparing Internal Revenue Service Form 8594.
2.4 Adjustments and Prorations. All income and expenses arising from
the conduct of the business or operations of the Stations shall be prorated
between Buyer and Seller in accordance with generally accepted accounting
principles as of 11:59 p.m.,
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local time, on the date immediately preceding the Closing Date. Seller shall
receive all revenues and refunds to Seller and deposits of Seller hald by third
parties and shall be responsible for all liabilities and obligations incurred or
accrued in connection with the operation of the Station through 11:59 p.m.,
local time, of the date immediately preceding the Closing Date, and Buyer shall
receive all revenues and be responsible for such liabilities and obligations
incurred or accruing thereafter. Such prorations shall include all business and
license fees (including any retroactive adjustments thereof), utility charges,
real and personal property taxes and assessments levied against the Assets,
accrued employee benefits such as vacation time and sick time, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, taxes (except for taxes arising from the transfer of the Assets
hereunder), and similar prepaid and deferred items. Buyer shall receive credit
to the extent of value (as calculated in Seller's financial statements
consistent with past practice) of any and all advertising time to be run
following the Closing for which trade or barter consideration has been received
by the Seller prior to the Closing which exceeds Five Thousand Dollars ($5,000),
in the aggregate.
Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall
deliver to Seller a certificate (the "Closing Certificate"), signed by a senior
officer of Buyer after due inquiry by such officer but without any personal
liability to such officer, providing a compilation of the adjustments and
prorations to be made pursuant to this
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Section 2.4, including any adjustments and prorations made at Closing, together
with a copy of any working papers relating to such Closing Certificate and such
other supporting evidence as Seller may reasonably request. If Seller shall
conclude that the Closing Certificate does not accurately reflect the
adjustments and prorations to be made pursuant to this Section 2.4, Seller
shall, within thirty (30) days after its receipt of the Closing Certificate,
provide to Buyer its written statement of any discrepancies believed to exist.
Xxxxxx X. Xxxx on behalf of Buyer, and Xxxxxxx X. Xxxx on behalf of Seller, or
their respective designees, shall attempt jointly to resolve the discrepancies
within fifteen (15) days after receipt of Seller's discrepancy statement, which
resolution, if achieved, shall be binding upon all parties to this Agreement and
not subject to dispute or review. If such representatives cannot resolve the
discrepancy to their mutual satisfaction within such fifteen (15) day period,
Buyer and Seller shall, within the following ten (10) days, jointly designate a
regional or local branch of a nationally known independent public accounting
firm to be retained to review the Closing Certificate together with Seller's
discrepancy statement and any other relevant documents. The cost of retaining
such independent public accounting firm shall be borne equally by Buyer and
Seller. Such firm shall report its conclusions as to adjustments pursuant to
this Section 2.4, within thirty (30) days after it is retained, which report
shall be conclusive on all parties to this Agreement and not subject to dispute
or review. If, after adjustment as appropriate with respect to the amount of the
aforesaid adjustments paid or credited at the Closing, Buyer is determined to
owe an amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer, in each case within ten (10) days of such determination.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period
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on and after the Closing Date, and arising out of events occurring on or after
the Closing Date, (ii) all obligations and liabilities arising out of events
occurring on or after the Closing Date related to Buyer's ownership of the
Assets or its conduct of the business or operations of the Station on or after
the Closing Date, and (iii) all obligations and liabilities for which Buyer
receives a proration adjustment hereunder. All other obligations and liabilities
of Seller, including (i) any obligations under any Contract not included in the
Assumed Contracts, (ii) any obligations under the Assumed Contracts relating to
the time period prior to the Closing Date, (iii) any claims or pending
litigation or proceedings relating to the operation of the Station prior to the
Closing Date, and (iv) those related to employees as set forth in Section 6.9
herein shall remain and be the obligations and liabilities solely of Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a General
Partnership duly formed, validly existing and in good standing under the laws of
the State of Ohio and is duly qualified to conduct its business in the State of
Ohio, which is the only jurisdiction where the conduct of the business or
operations of the Station requires such qualification. Seller has all requisite
power and authority (i) to own, lease, and use the Assets as presently owned,
leased, and used, and (ii) to conduct the business or operations of the Stations
as presently conducted. Seller has all requisite power and authority to execute
and deliver this Agreement and the documents contemplated hereby, and to perform
and comply with all of the terms, covenants and conditions to be performed and
complied with by Seller, hereunder and thereunder. Seller is not a
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participant in any joint venture or partnership with any other person or entity
with respect to any part of the Station's operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary action on the part of Seller. This Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid, and binding obligation
of Seller, enforceable against Seller in accordance with its terms except as the
enforceability hereof may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, or by court-applied equitable remedies.
3.3 Absence of Conflicting Agreements. To Seller's knowledge and
subject to obtaining the Consents, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) does not require the consent of any
third party; (ii) will not conflict with any provision of the Partnership
Agreement of Seller; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, decree, rule,
regulation or ruling of any court or governmental instrumentality, which is
applicable to either Seller; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
material agreement, instrument, license or permit to which either Seller is a
party or by which either may be bound; or (v) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). As described
in Schedule 3.4, the Licenses were validly issued with the Seller designated
thereon being the
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authorized legal holder thereof. The Licenses comprise all of the licenses,
permits and other authorizations required from any governmental or regulatory
authority for the lawful conduct of the business or operations of the Station as
presently operated. Seller has no reason to believe that the Licenses will not
be renewed by the FCC or other granting authority in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
descriptions of all the Real Property, which comprises all real property
interests necessary to conduct the business or operations of the Station as now
conducted. Seller has delivered to Buyer true and complete copies of all leases
or other material instruments pertaining to the Real Property (including any and
all amendments and other modifications of such instruments), all of which
instruments are valid, binding and enforceable in accordance with their terms.
To Seller's knowledge, Seller is not in material breach, nor is any other party
in material breach, of the terms of any of such leases or other instruments. All
Real Property (i) is available for immediate use in the conduct of the business
or operations of the Station, and (ii) to Seller's best knowledge materially
complies as described in Schedule 3.5 with all applicable building, electrical
and zoning codes and all regulations of any governmental authority having
jurisdiction. Seller has full legal and practical access to the Real Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which comprises all
personal property used to conduct the business or operations of the Station as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing.
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Except as shown in Schedule 3.6, to Seller's knowledge the Personal Property
taken as a whole is in good operating condition and repair (ordinary wear and
tear excepted), and is available for immediate use in the business or operations
of the Station, and the transmitting and studio equipment included in the
Personal Property (i) has been maintained consistent with FCC rules and
regulations, and (ii) will permit the Station and any unit auxiliaries thereto
to operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state and local
statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Station for cash and substantially at rate card and which are not prepaid and
which may be cancelled by the Station without penalty on not more than thirty
(30) days notice, (ii) employment contracts and miscellaneous service contracts
terminable at will without penalty, and (iii) other contracts not involving
either aggregate liabilities under all such contacts exceeding Five Thousand
Dollars ($5,000) or any material nonmonetary obligation. Seller has delivered to
Buyer true and complete copies of all written Contracts, and true and complete
memoranda of all oral Contracts (including any and all amendments and other
modifications to such Contracts). Other than the Contracts, to Seller's
knowledge the Seller requires no contract or agreement to enable it to carry on
its business as presently conducted. To Seller's knowledge, all of the Assumed
Contracts are in full force and effect, and are valid, binding and enforceable
in accordance with their terms, except as the enforceability thereof may be
affected by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, or by court-applied equitable remedies. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any such Contracts. Except as expressly set forth in Schedule 3.7, the
Seller is not aware of any intention by any party to any Assumed Contract (i) to
terminate such contract or amend the
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terms thereof, (ii) to refuse to renew the same upon expiration of its term, or
(iii) to renew the same upon expiration only on terms and conditions which are
more onerous than those pertaining to such existing contract. Except for the
Consents, Seller has full legal power and authority to assign its rights under
the Assumed Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability and continuation of any
of the Assumed Contracts.
3.8 Consents. To Seller's knowledge, except for the FCC Consent
provided for in Section 6.1 and the other Consents indicated in Schedule 3.7 or
described in Schedule 3.8, no consent, approval, permit or authorization of, or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) to consummate this Agreement and the
transaction contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer, or (iii) to enable Buyer to conduct the business or operations
of the Station in essentially the same manner as such business or operations are
presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used in the conduct of the business or operations of the
Station, all of which are valid and in good standing and, to Seller's knowledge,
uncontested. Seller has delivered to Buyer copies of all documents establishing
such rights, licenses, or other authority. Seller is not aware that it is
infringing upon or otherwise acting adversely to any trademarks, trade names,
copyrights, patents, patent applications, know-how, methods, or processes owned
by any other person or persons, and there is no claim or action pending, or to
the knowledge of Seller threatened, with respect thereto.
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3.10 Insurance. All of the tangible property included in the Assets is
insured against loss or damage in amounts generally customary in the broadcast
industry. Schedule 3.10 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.10 are in full force and effect.
3.11 Reports. To Seller's knowledge, except where failure to do so
would not have a material adverse effect on the ownership or operation of the
Station: all returns, reports and statements which the Station is currently
required to file with the FCC or with any other governmental agency have been
filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with; all of such
reports, returns and statements are substantially complete and correct as filed;
and the Station's public inspection file is located at the main studio and is in
compliance with the FCC's rules and regulations.
3.12 Employee Benefit Plans. There are no employee benefit plans or
arrangements applicable to the employees of Seller employed at the Stations.
Seller has furnished or made available to Buyer true and complete copies of all
written documents or information with respect to employee matters and
arrangements at the Station, including without limitation, all employee
handbooks, rules and policies, plan documents, trust agreements, employment
agreements, summary plan descriptions, and descriptions of any unwritten plans,
if any, as listed in Schedule 3.12. There exists no action, suit or claim (other
than routine claims for benefits) with respect to any of such plans or
arrangements pending or, to the knowledge of Seller, threatened against any of
such plans or arrangements, and Seller possesses no knowledge of any facts which
could give rise to any such action, suit or claim.
3.13 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station except as described
in Schedule 3.7 hereto. Seller has no written or oral contracts of employment
with any employee
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of the Station, other than those listed in Schedule 3.7. Seller has provided
Buyer with true and complete copies of all such written contracts of employment
and true and complete memoranda of any such oral contracts. To Seller's
knowledge, Seller, in the operation of the Station, has complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination, and the payment of social
security and other payroll related taxes, and it has not received any notice
alleging that it has failed to comply in any material respect with any such
laws, rules or regulations. No controversies, disputes, or proceedings are
pending or, to the best of its knowledge, threatened, between it and employees
(collectively) of the Station. No labor union or other collective bargaining
unit represents any of the employees of the Station. To the best knowledge of
Seller, there is no union campaign being conducted to solicit cards from
employees to authorize a union to request a National Labor Relations Board
certification election with respect to any of Seller's employees at the Station.
3.14 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on said returns or on any tax assessment received by it to the extent that
such taxes have become due, or has set aside on its books reserves (segregated
to the extent required by sound accounting practice) deemed by it to be adequate
with respect thereto. No events have occurred which could impose on Buyer any
transferee liability for any taxes, penalties or interest due or to become due
from Seller.
3.15 Claims, Legal Actions. Except as set forth in Schedule 3.15, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any
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order, decree or judgment, in progress or pending, or to the knowledge of Seller
threatened, against or relating to Seller, the Assets, or the business or
operations of the Station, nor does Seller know of any basis for the same. In
particular, except as set forth in Schedule 3.15, but without limiting the
generality of the foregoing, there are no applications, complaints or
proceedings pending or, to the best of its knowledge, threatened (i) before the
FCC relating to the business or operations of the Station other than
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal or state employment laws or
regulations, or (iii) against Seller or the Station before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.16 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Station conflicts with rights of any other
person, firm or corporation.
3.17 Environmental Matters. During Seller's tenancy under the leases
described in Schedule 3.5 there has been no production, storage, treatment,
recycling, disposal, use, generation, discharge, release or other handling or
disposition of any kind by Seller of any toxic or hazardous wastes, substances,
products, pollutants or materials of any kind, including, without limitation,
petroleum and petroleum products and asbestos, or any other wastes, substances,
products, pollutants or material regulated under any environmental laws at, in,
on, from or under the Real Property which in any event is in material violation
of environmental law. The operations of Seller are and have been conducted, as
the case may be, in material compliance with all applicable Environmental Laws.
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3.18 Conduct of Business in Ordinary Course. Since December 31, 1996,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
(a) Suffered any material adverse change in the business
assets or properties, or condition (financial or otherwise) of Seller
or of the Station, including without limitation any damage, destruction
or loss affecting the Assets and any material decreases in operating
cash flow;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of Seller, or any bonus payment
made or promised to any employee of Seller, or any material change in
personnel policies, employee benefits or other compensation
arrangements affecting the employees of Seller; or
(c) Made any sale, assignment, lease or other transfer of any
of Seller's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor.
3.19 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact made intentionally or in bad faith, or
intentionally or in bad faith omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and shall be, at Closing, qualified to conduct business in the State
of Ohio. Buyer has all requisite corporate power and authority to execute and
deliver this Agreement and the documents contemplated hereby, and to perform and
comply with all of the terms, covenants, and conditions to be performed and
complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
18
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the Station's Assets, and Buyer will
not take, or unreasonably fail to take, any action which Buyer knows or has
reason to know would cause such disqualification (it being understood that Buyer
has an active duty to attempt to ascertain what would cause such
disqualification). Should Buyer become aware of any such facts, it will promptly
notify Seller in writing thereof and use its best efforts to prevent any such
disqualification. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions and undertakings contemplated by this
Agreement.
4.5 Full Disclosure. No representation or warranty made by Buyer herein
nor any certificate, document or other instrument furnished or to be furnished
by Buyer pursuant hereto contains or will contain any untrue statement of a
material fact made intentionally or in bad faith, or intentionally or in bad
faith omits or will omit to state any material fact known to Buyer and required
to make the statements herein or therein not misleading.
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall operate the Station
in the ordinary course of business in accordance with its past practices (except
where such would
19
conflict with the following covenants or with Seller's other obligations
hereunder), and abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not do any of the
following:
(1) Compensation. Increase the compensation, bonuses or other
benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except
in accordance with past practices;
(2) Contracts. Modify or amend any of the Assumed Contracts;
enter into any new Contracts except in the ordinary course of business,
provided that all new Contracts (other than Contracts for the sale of
broadcast time) shall not involve either aggregate liabilities
exceeding Five Thousand Dollars ($5,000), or any material nonmonetary
obligation;
(3) Disposition of Assets. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and
value;
(4) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Assets, except for (i) those in
existence on the date of this Agreement, disclosed in Schedules 3.5 and
3.6, or permitted by Section 2.5, 3.5 or 3.6 and (ii) mechanics' liens
and other similar liens which will be removed prior to the Closing
Date;
(5) Programming. Reduce the Station's programming hours below
the minimum required by the FCC, or make any other material changes in
the Station's programming policies, except such changes as in the good
faith judgment of the Seller are required by the public interest;
(6) Licenses. Do any act or fail to do any act which might
result in the expiration, revocation, suspension or modification of any
of the Licenses, or fail to prosecute with due diligence any
applications to any governmental authority in connection with the
operation of the Station;
(7) Rights. Waive any material right relating to the Station
or the Assets; or
20
(8) No Inconsistent Action. Knowingly take any action which is
inconsistent with its obligations hereunder or which could hinder or
delay the consummation of the transaction contemplated by this
Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at mutually
agreeable times at Buyer's expense during normal business hours to the
Assets and to all other properties, equipment, books, records,
Contracts and documents relating to the Station (but not relating to
Seller's other operations or business) for the purpose of audit and
inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information with respect to the affairs
and business of the Station (but not relating to Seller's other
operations or business) as Buyer may reasonably request, it being
understood that the rights of Buyer hereunder shall not be exercised in
such a manner as to interfere with the operations of the business of
Seller; provided that neither the furnishing of such information to
Buyer or its representatives nor any investigation made heretofore or
hereafter by Buyer shall affect Buyer's rights to rely on any
representation or warranty made by Seller in this Agreement, each of
which shall survive any furnishing of information or any investigation;
(2) Maintenance of Assets. Maintain all of the Assets
or replacements thereof and improvements thereon in current condition
(ordinary wear and tear excepted), and use, operate and maintain all of
the above assets in a reasonable manner, with inventories or spare
parts and expendable supplies being maintained at levels consistent
with past practices;
(3) Insurance. Maintain the existing insurance
policies on the Station and the Assets;
(4) Consents. Use its reasonable efforts to obtain
the Consents;
(5) Preservation of Business. Use its reasonable
efforts to preserve the business and audience of the Stations, and its
present relationships with their employees, suppliers, customers and
others having business relations with it and maintain levels of
marketing and promotions efforts and expenditures during the period
prior to the Closing Date equal to or greater to such levels in the
year immediately prior to the Closing Date;
(6) Books and Records. Maintain its books and records
in accordance with past practices;
(7) Notification. Promptly notify Buyer in writing of
any unusual or material developments with respect to the assets of the
Station, and
21
of any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 hereof or in the
schedules hereto, provided that such notification shall not relieve
Seller of any obligations hereunder;
(8) Personnel. Promptly notify Buyer as personnel
vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions;
(9) Trade and Barter Agreements. Provide prior to the
Closing Date the advertising time due under any trade and barter
agreements listed in Schedule 3.7;
(10) Financial Information. As may be requested,
furnish to Buyer within fifteen (15) days after the end of each month
ending between the date hereof and the Closing Date a statement of
income and expense relating to the Station's operations for the month
just ended and such other financial information (including information
on payables and receivables) as Buyer may reasonably request and which
is prepared in the ordinary course of business.
(11) Contracts. Prior to the Closing Date, deliver to
Buyer a list of all Contracts entered into between the date hereof and
the Closing Date of the type required to be listed in Schedule 3.7,
together with the copies of such Contracts; and
(12) Compliance with Laws. Comply in all material
respects with all rules and regulations of the FCC, and all other laws,
rules and regulations to which Seller, the Station and the Assets are
subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
22
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. Within ten (10) days after the execution of this Agreement,
Buyer and Seller shall file with the FCC an appropriate application for FCC
Consent. The parties shall prosecute said application with all reasonable
diligence and otherwise use their best efforts to obtain the grant of such
application as expeditiously as practicable. If the FCC Consent imposes any
condition on any party hereto, such party shall use its best efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to
obtain reconsideration or judicial review (but nothing herein shall be construed
to limit any party's right to terminate this Agreement pursuant to Section 9 of
this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially adverse
conditions on Buyer, (ii) compliance by the parties hereto with any reasonable
conditions imposed in the FCC Consent, and (iii) the FCC Consent, through the
passage of time or otherwise, becoming a Final Order, provided, though, that the
condition that the FCC Consent shall have become a Final Order may be waived by
Buyer, in its sole discretion.
6.2 Control of the Station. Buyer shall not, directly or indirectly,
control, supervise, direct, or attempt to control, supervise or direct, the
operations of the
23
Station; such operations, including complete control and supervision of all of
the Station's programs, employees, and policies, shall be the sole
responsibility of Seller until the completion of the Closing hereunder.
6.3 Taxes, Fees and Expenses. Buyer shall pay all sales, transfer and
similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. All filing fees required by the FCC shall be paid
equally by Seller and Buyer. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and other
representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it nor any person or entity acting on its behalf has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement, except for Media Venture Partners, whose fee
shall be solely the responsibility of Seller.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby. In the event this Agreement is
24
terminated and the purchase and sale contemplated hereby abandoned, each party
will return to the other party all documents, work papers and other written
material obtained by it in connection with the transaction contemplated hereby,
without retaining copies of such documents, work papers or other written
material.
6.6 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations hereunder. Notwithstanding
the foregoing, except as otherwise set forth herein, Buyer shall have no
obligation (i) to expend funds to obtain the Consents, or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other
event occurs which prevents signal transmission by the Station in the normal and
usual manner and Seller cannot restore or replace the Assets so that the
conditions are cured and normal and usual transmission is resumed before the
Closing Date, the Closing
25
Date shall be postponed, for a period of up to one hundred and twenty (120)
days, to permit the repair or replacement of the damage or loss.
C. In the event of any damage or destruction of the Assets
described above, if such Assets have not been restored or replaced and the
Station's normal and usual transmission resumed within the one hundred and
twenty (120) day period specified above, Buyer may terminate this Agreement
forthwith without any further obligation hereunder by written notice to Seller.
Alternatively, Buyer may, at its option, proceed to close this Agreement and
complete the restoration and replacement of such damaged Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage or destruction of the Assets to
the extent not already expended by Seller arising in connection with such
restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller if any event occurs which prevents signal transmission by the
Station in a manner generally equivalent to its current operations for a
consecutive period of five (5) or a cumulative period of fourteen (14) days
after the date hereof.
6.8 Employee Matters.
A. Within five (5) business days after execution of this
Agreement, Seller shall provide to Buyer an accurate list of all current
employees of the Station together with a description of the terms and conditions
of their respective employment (including salary, bonus and other benefit
arrangements) and their duties as of the date of this Agreement, as well as the
annual salaries thereof. Seller shall
26
promptly notify Buyer of any changes that occur prior to Closing with respect to
such information.
B. Nothing contained in this Agreement shall confer upon any
employee of Seller any right with respect to continued employment by Buyer, nor
shall anything herein interfere with any right the Buyer may have after the
Closing Date to (i) terminate the employment of any of the employees at any
time, with or without cause, or (ii) establish or modify any of the terms and
conditions of the employment of the employees in the exercise of its independent
business judgment.
C. Except as otherwise set forth herein, Buyer will not incur
any liability on account of Seller's employees in connection with the
transaction, including, without limitation, any liability on account of
unemployment insurance contributions, termination payments, retirement, pension,
profit-sharing, bonus, severance pay, disability, health, accrued vacation,
accrued sick lease (unless a pro-rated adjustment is made as to vacation or sick
leave) or other employee benefit plans, practices, agreements, or
understandings.
6.9 Accounts Receivable. At the Closing, Seller shall assign to Buyer
for collection purposes only all Accounts Receivable. Seller shall deliver to
Buyer on or as soon as practicable after the Closing date a complete and
detailed statement showing the name, amount and age of each Account Receivable.
Subject to and limited by the following, collections of the Accounts Receivable
will be for the account of Seller. Buyer shall endeavor in the ordinary course
of business to collect the Accounts Receivable for a period of ninety (90) days
after the Closing Date (the "Collection
27
Period"). Any payment received by Buyer during the Collection Period from any
customer with an account which is an Account Receivable shall first be applied
in reduction of the Account Receivable, unless the customer has commenced legal
action specifically disputing an outstanding balance and so directs in writing
with the accompanying payment. During the Collection Period, Buyer shall, within
ten (10) days of the end of each calendar month, furnish Seller with a list of ,
and pay over to Seller, the amounts collected during such preceding calendar
month with respect to the Accounts Receivable. Buyer shall provide Seller with a
final accounting on or before the fifteenth (15th) day following the end of the
Collection Period. Upon the request of either party at and after such time,
Buyer and Seller shall meet to mutually and in good faith analyze any
uncollected Account Receivable to determine if the same, in their reasonable
business judgment, are deemed to be collectable and if Buyer desires to retain
such Account in the interest of maintaining on advertising relationship. As to
each such Account, Buyer and Seller shall negotiate a good faith value of such
Account, which Buyer shall pay to Seller if Buyer, in its sole discretion,
chooses to retain such Account. Seller shall retain the right to collect any
Account as to which the parties are unable to reach agreement as to a good faith
value, and Buyer agrees to turn over to Seller any payments received against any
such Account. As Seller's agent, Buyer shall not be obligated to use any
extraordinary efforts or expend any sums to collect any of the Accounts
Receivable assigned to it for collection hereunder or to refer any of such
Accounts Receivable to a collection agency or to any attorney for collection,
and Buyer shall not make any such referral or compromise,
28
nor settle or adjust the amount of any such Account Receivable, except with the
approval of Seller. Buyer shall incur no liability to Seller for any uncollected
account unless Buyer shall have engaged in willful misconduct or gross
negligence in the collection of such account. During and after the Collection
Period, without specific agreement with Buyer to the contrary, neither Seller
nor its agents shall make any direct solicitation of the Account Receivable for
collection purposes except for Accounts retained by Seller after the Collection
Period.
6.10 Signal Upgrade. Seller shall fully cooperate, including without
limitation consenting to FCC filings, in Buyer's efforts to upgrade the signal
of the Station to Class B1. Seller shall make available to Buyer all records,
studies and documentation related to the signal and to the proposed relocation
of the transmission site for radio station WVNU(FM), Greenfield, Ohio.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Buyer in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this
29
Agreement, as though such representations and warranties were made at and as of
such time.
B. Covenants and Conditions. Seller shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Consents. The FCC Consent as specified in Sections 1.10 and
6.1.B., above, and each of the Consents marked as "material" on Schedule 3.7
shall have been duly obtained and delivered to Buyer with no material adverse
change to the terms of the License or Assumed Contract with respect to which
such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the
Closing Date, there shall have been no material adverse change in the Assets or
the Stations.
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all
30
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement, as though such representations and warranties were made at
and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Consent. The FCC shall have given its Consent as spedified
in Sections 1.10 and 6.1.B., above.
D. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 8.3.
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00am on a date, to be
set by Buyer, upon five (5) days written notice to Seller, no later than fifteen
(15) business days following the date upon which the FCC Consent has become a
Final Order (the "Closing Date"), provided, though, that Buyer may waive the
requirement for a Final Order and schedule the Closing Date, with five (5) days
written notice to Seller, at any time after the receipt of FCC Consent. Closing
shall be held at the offices of Buyer or Seller or such other place as shall be
mutually agreed to by Buyer and Seller, or by mail, facsimile and/or overnight
delivery.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
32
(a) Transfer Documents. Duly executed warranty bills of sale,
motor vehicle titles, assignments and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer or its permitted assignees, free and clear of any
claims, liabilities, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for those permitted in
accordance with Sections 2.5, 3.5 or 3.6 hereof);
(b) Consents. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) Seller's Certificate. A certificate, dated as of the
Closing Date, executed by the General Partner of Seller, certifying:
(i) that the representations and warranties of Seller contained in this
Agreement are true and complete in all material respects as of the
Closing Date, except for changes contemplated by this Agreement, as
though made on and as of that date; and (ii) that Seller has, in all
material respects, performed its obligations and complied with its
covenants set forth in this Agreement to be performed and complied with
prior to or on the Closing Date;
(d) General Partner's Certificate. A certificate, dated as of
the Closing Date, executed by Seller's General Partner: (i) certifying
that the execution and delivery of this Agreement by Seller and the
consummation of the transaction contemplated hereby have been
authorized and ratified; and (ii) providing, as attachments thereto, a
certificate of legal existence certified by an appropriate Ohio state
official; as of a date not more than fifteen (15) days before the
Closing Date and a copy of Seller's limited Partnership Agreement
certified by Seller's General Partner as of the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies, if
available, of all licenses, Assumed Contracts, blueprints, schematics,
working drawings, plans, projections, statistics, engineering records,
and all files and records used by Seller in connection with its
operations of the Station;
(f) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer and at Buyer's directions, to Buyer's lenders, substantially in
the form of Schedule 8.2 hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price paid by wire transfer
to Seller as provided in Section 2.3;
32
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed by the President or Vice President of Buyer,
certifying (i) that the representations and warranties of Buyer
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date, and (ii) that
Buyer has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be performed
or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that the
resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution of
this Agreement and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect; and
(ii) a copy of the corporate charter, articles of incorporation and
Bylaws of Buyer as in effect on the date hereof, certified by Buyer's
secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3
hereto.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7 of
this Agreement
33
shall not have been materially satisfied, and (ii) satisfaction of such
condition shall not have been waived by the terminating party;
(b) If the Closing shall not have occurred on or before June
1, 1998
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to liquidated damages
as provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Escrow Deposit
shall be paid to Seller as liquidated damages, it being agreed that the Escrow
Deposit shall constitute full payment for any and all damages suffered by Seller
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages would not be adequate. Buyer shall therefore be entitled, as its
exclusive remedy
34
hereunder, to obtain specific performance of the terms of this Agreement. In the
event of any action to enforce this Agreement, Seller hereby waives the defense
that there is an adequate remedy at law.
9.4 Defaults. In the event of a default by a party hereto (the
"Defaulting Party") which results in the filing of a lawsuit for damages,
specific performance, or other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party in the event the
Nondefaulting Party prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive the Closing Date for a period of fifteen (15)
months (the "Survival Period"). No claim for indemnification may be made under
this Section 10 (except for section 10.3(a) or related claims under Section
10.3(c)) after the expiration of the Survival Period. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at Closing
and such knowledge is documented in writing at Closing, such party shall be
deemed to have waived such misrepresentation or breach. As of the effective date
of this Agreement, neither party is aware of any misrepresentation or breach of
warranty under this Agreement on the part of the other party hereto.
35
10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any
covenants by Seller contained herein or in any certificate, delivered
to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Station prior to the Closing
Date, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring prior to the
Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to
any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller
harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to
Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Station on or after the Closing
Date, including any and all liabilities or obligations arising under
the Licenses or the Assumed Contracts which relate to events occurring
after the Closing Date or otherwise assumed by Buyer under this
Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
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A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, such notice shall be given by Claimant within
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) days to make such investigation of
the claim as the Indemnifying Party deems necessary or desirable. For the
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said thirty (30) day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, or if the Indemnifying Party does not respond to such
notice, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. Buyer shall be entitled to apply any or all of the Accounts
Receivable collected on behalf of Seller to a claim as to which Buyer is
entitled to indemnification hereunder. If the Claimant and the Indemnifying
Party do not agree within said period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for reasonable actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects
37
to assume control of the defense of any third-party claim, the Claimant shall
have the right to participate in the defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable efforts
to reach a decision with respect thereto as expeditiously as possible.
E. If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third party claim, it shall be
bound by the results obtained in good faith by the Claimant with respect to such
claim.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners employees
and representatives of the Claimant although for the purpose of the procedures
set forth in this Section 10.4, any indemnification claims by such parties shall
be made by and through the Claimant.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows:
If to Seller: XxXxxxxx Communications
00 Xxxx Xxxxxxx
Xxxxxxx, Xxxx 00000
Attn: Mr. & Xxx. Xxxxxxx XxXxxxxx
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With a copy (which
shall not constitute
notice) to: Xxxx X. Xxxxxxx
Xxxxxxx and Swift
0000 Xxxxxx-Xxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
If to Buyer: American Radio Systems Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President
Fax: (000) 000-0000
with a copy
(which shall not
constitute notice) to: Xxxxxxx X. Xxxxxx, Vice President & General Counsel
American Radio Systems Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, provided, however, that following which
assignment Buyer shall remain liable to Seller for all of Buyer's obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Ohio.
39
11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any
40
party hereto, such consent shall be given in writing in a manner consistent with
the requirements for a waiver of compliance as set forth in this Section 11.7.
11.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greater extent permitted by law.
11.9 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: XXXXXXXX COMMUNICATIONS
By:
BUYER: AMERICAN RADIO SYSTEMS
CORPORATION
By:
Title:
41
SCHEDULES TO ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.3 Allocation of Purchase Price
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.10 List of Insurance Policies
3.12 Employee Benefit Plans
3.15 Claims; legal actions
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
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