Exhibit 10.44
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ASSET PURCHASE AGREEMENT
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by and between
FM 100, INC.
for the sale and purchase of
Stations WKJS-FM and Station WSOJ-FM
Dated as of February 26, 1999
TABLE OF EXHIBITS
EXHIBIT 1 -- Initial Escrow Agreement
EXHIBIT 2 -- Noncompetition Agreement
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TABLE OF SCHEDULES
SCHEDULE 2.1(c)(1) Contracts
SCHEDULE 2.2 Excluded Assets
SCHEDULE 6.1 Seller's Places of Business
SCHEDULE 6.3 Litigation
SCHEDULE 6.4 Permitted Encumbrances
SCHEDULE 6.5 FCC Licenses
SCHEDULE 6.6 Equipment
SCHEDULE 6.8 Intellectual Property
SCHEDULE 6.9 Insurance
SCHEDULE 6.10(b) Financial Statements
SCHEDULE 6.11 Employees
SCHEDULE 6.12 Employment and Benefits Agreements
SCHEDULE 6.13 Real Property
SCHEDULE 6.14 Environmental
SCHEDULE 6.21 Related Parties
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ASSET PURCHASE AGREEMENT
This Agreement, made and entered into as of this 26th day of February,
1999, by and between FM100, Inc., a Virginia corporation ("Seller"), and Radio
One, Inc., a Delaware corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the licensee of Stations WKJS-FM, 104.7 MHz, Crewe, and
WSOJ-FM, 100.3 MHz, Petersburg, Virginia (the "Stations"); and
WHEREAS, the parties desire that Buyer purchase certain assets used or held
for use in the operation of the Stations and acquire the authorizations issued
by the Federal Communications Commission (the "Commission") for the operation of
the Stations; and
WHEREAS, the authorizations issued by the Commission may not be assigned to
Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1.0 RULES OF CONSTRUCTION.
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1.1. Defined Terms.
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As used in this Agreement, the following terms shall have the
following meanings:
"Accounts Receivable" means the cash accounts receivable of Seller arising
from Seller's operation of the Stations prior to and immediately before the
Closing.
"Administrative Violation" means those violations described in Section 8.6
hereof.
"Assignment Application" means the application on FCC Form 314 that Seller
and Buyer shall join in and file with the Commission requesting its consent to
the assignment of the FCC Licenses (as hereinafter defined) from Seller to
Buyer.
"Business Records" means all business records of Seller (including logs,
public files materials and engineering records) relating to or used in the
operation of the Stations and not relating solely to Seller's internal corporate
affairs.
"Buyer" means Radio One, Inc., a Delaware corporation.
"Buyer Documents" means those documents, agreements and instruments to be
executed and delivered by Buyer in connection with this Agreement as described
in Section 7.2.
"Closing" means the consummation of the Transaction (as hereinafter
defined).
"Closing Date" means the date on which the Closing takes place, as
determined by Section 11.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Commission" means the Federal Communications Commission.
"Communications Act" shall mean the Communications Act of 1934, as amended.
"Contracts" means those contracts, leases and other agreements listed or
described in Schedule 2.1(c)(1) which are in effect on the date hereof and which
Buyer has agreed to assume, but not including Sales Agreements and Trade
Agreements (as hereinafter defined).
"Environmental Law" means any law, rule, order, decree or regulation of any
Governmental Authority relating to pollution or protection of human health and
the environment, including any law or regulation relating to emissions,
discharges, releases or threatened releases of Hazardous Substances (as
hereinafter defined) into ambient air, surface water, groundwater, land or other
environmental media, and including without limitation all laws, regulations,
orders and rules pertaining to occupational health and safety.
"Equipment" means all tangible personal property and fixtures used or
useful in the operation of the Stations as described in Section 2.1(b).
"Excluded Assets" means those assets excluded from the Purchased Assets and
retained by the Seller, to the extent in existence on the Closing Date, as
specifically described in Section 2.2.
"FCC Licenses" means all licenses, pending applications, permits and other
authorizations issued by the Commission for the operation of the Stations listed
on Schedule 6.5.
"Final Order" means any action that shall have been taken by the Commission
(including action duly taken by the Commission's staff, pursuant to delegated
authority) which shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended; with respect to which no timely request for stay,
petition for rehearing, appeal or certiorari or sua sponte action of the
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Commission with comparable effect shall be pending; and as to which the time for
filing any such request, petition, appeal, certiorari or for the taking of any
such sua sponte action by the Commission shall have expired or otherwise
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terminated.
"Financial Statements" means Seller's audited and unaudited financial
statements as described in Section 6.10.
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"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any agency, court or other entity that
exercises executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Substances" means any hazardous, dangerous or toxic waste,
substance or material, as those or similar terms are defined in or for purposes
of any applicable federal, state or local Environmental Law, and including
without limitation any asbestos or asbestos-related products, oils, petroleum or
petroleum-derived compounds, CFCS, or PCBs.
"Indebtedness" means any debt or indebtedness, whether evidence by a note
or otherwise, whether secured or unsecured, in each case for borrowed money.
"Initial Escrow Agent" means Media Services Group, Inc..
"Initial Escrow Agreement" means the escrow agreement described in Section
3, the form of which is attached as Exhibit 1.
"Initial Escrow Deposit" means the monies deposited with the Initial Escrow
Agent described in Section 3.
"Intangible Property" means all of Seller's right, title and interest in
and to the goodwill and other intangible assets used or useful in or arising
from the business of the Stations as described in Section 2.1(f).
"Intellectual Property" means all Seller's right, title and interest in and
to the trademarks, tradenames, service marks, patents, franchises, copyrights,
including registrations and applications for registration of any of them,
slogans, jingles, logos, computer programs and software, trade secrets and
similar materials and rights relating to the Stations as listed on Schedule 6.8.
"Knowledge of Buyer" means the actual knowledge, after reasonable inquiry
of Buyer's senior management, and the books and records of Buyer.
"Knowledge of Seller" means the actual knowledge, after reasonable inquiry
of Seller's senior management, the books and records of the Stations, and the
actual knowledge of Xx. Xxxxxx M. Belle and Xxxxx Xxxxx.
"Material Contracts" means those leases, contracts and agreements
specifically designated in Schedule 2.1(c)(1) as being "Material Contracts."
"Noncompetition Agreement" means the agreement to be entered into by FM
100, Inc., and all officers, directors and shareholders of FM-100, Inc.
"Permitted Encumbrances" means those permitted liens or encumbrances to the
Purchased Assets described in Section 6.4 and set forth on Schedule 6.4.
"Purchase Price" shall mean the total consideration for the Purchased
Assets as described in Section 4.1.
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"Purchased Assets" means those assets which are the subject matter of this
Agreement that Seller shall sell, assign, transfer, convey and deliver to Buyer
at Closing as described in Section 2.1.
"Sales Agreements" means agreements entered into by Seller for the sale of
time on the Stations for cash, as described in Section 2.1(c)(2).
"Seller" means FM 100, Inc., a Virginia corporation.
"Seller Documents" means those documents, agreements and instruments to be
executed and delivered by Seller in connection with this Agreement as described
in Section 6.1.
"Specified Event" means those broadcast transmission failures described in
Section 8.5(b).
"Stations" means WKJS-FM, 104.7 MHz, Crewe, Virginia, and WSOJ-FM, 100.3
MHz, Petersburg, Virginia, but shall not be interpreted to mean WREJ(AM),
Richmond, Virginia, which is owned and operated by Fifteen Forty Broadcasting
Corporation, a Virginia corporation ("Fifteen Forty"). Fifteen Forty is an
affiliate of Seller.
"Studio Site" means the real estate located at 0000 Xxxxxxxxx Xxxx,
Xxxxxxxx that is currently used as the Stations' studio and office facilities.
"Trade Agreements" means agreements entered into by Seller for the sale of
time on the Stations in exchange for merchandise or services, including those
listed on Schedule 2.1(c)(1).
"Trade Balance" means the difference between the aggregate value of time
owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, as computed in
accordance with the Station's customary bookkeeping practices. The Trade
Balance is "negative" if the value of time owed as of Closing exceeds the value
of goods and services to be received. The Trade Balance is "positive" if the
value of time owed as of Closing is less than the value of goods and services to
be received.
"Transaction" means the sale and purchase and assignments and assumptions
contemplated by this Agreement and the respective obligations of Seller and
Buyer set forth herein.
"WKJS Transmitter Site" means the real estate located at Crewe, Virginia
that is currently owned by Seller and used as Station WKJS's transmitter site.
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"WSOJ Transmitter Site" means the real estate located at Petersburg,
Virginia that is currently leased and used as Station WSOJ's transmitter site.
1.2. Other Definitions. Other capitalized terms used in this Agreement
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shall have the meanings ascribed to them herein.
1.3. Number and Gender. Whenever the context so requires, words used in
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the singular shall be construed to mean or include the plural and vice versa,
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and pronouns of any gender shall be construed to mean or include any other
gender or genders.
1.4. Headings and Cross-References. - The headings of the Sections and
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Paragraphs hereof, the Table of Contents, the Table of Exhibits, and the Table
of Schedules have been included for convenience of reference only, and shall in
no way limit or affect the meaning or interpretation of the specific provisions
of this Agreement. All cross-references to Sections or Paragraphs herein shall
mean the Sections or Paragraphs of this Agreement unless otherwise stated or
clearly required by the context. All references to Schedules herein shall mean
the Schedules to this Agreement. Words such as "herein" and "hereof" shall be
deemed to refer to this Agreement as a whole and not to any particular provision
of this Agreement unless otherwise stated or clearly required by the context.
The term "including" means "including without limitation."
1.5. Computation of Time. Whenever any time period provided for in this
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Agreement is measured in "business days" there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the Commission's offices are closed and are not reopened
prior to 5:30 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
2.0 ASSETS TO BE CONVEYED.
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2.1. Purchased Assets. On the Closing Date, Seller shall sell, assign,
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transfer, convey and deliver to Buyer free of all liens, encumbrances,
mortgages, security interests of any kind or type whatsoever, all of Seller's
assets used in the conduct of the business and operations of the Stations
(collectively referred to as the "Purchased Assets"), including, but not limited
to, the following;
(a) Licenses. The FCC Licenses, and all other transferrable
licenses, permits and authorizations issued by any other Governmental Authority
that are used in or necessary for the lawful operation of the Stations as
currently operated by Seller.
(b) Equipment. All tangible personal property and fixtures used or
held for use in the operation of the Stations, including the property and assets
listed or described in Schedule 6.6, together with supplies, inventory, spare
parts and replacements thereof and improvements and additions thereto made
between the date hereof and the Closing Date (the "Equipment").
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(c) Contracts and Agreements. The Contracts, Sales Agreements and
Trade Agreements, subject to the following:
(1) Buyer shall be obligated to assume only those Contracts that are
listed in Schedule 2.1(c)(1) or that have been or will have been entered into in
the ordinary course of the Station's business and in accordance with the terms
of this Agreement, between the date hereof and the Closing Date, provided that,
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unless otherwise approved in writing by Buyer, the obligations of the Stations
or Buyer under such Contracts entered into in the ordinary course of business do
not exceed Five Thousand Dollars ($5,000) per annum per Contract or Twenty-five
Thousand Dollars ($25,000) per annum in the aggregate or are terminable by the
Stations on not more than 30 days' notice.
(2) Buyer shall be obligated to assume only those Sales Agreements
that have been or will have been entered into in the ordinary course of business
and in accordance with the terms of this Agreement at commercially reasonable
rates and with terms of no longer than ten (10) weeks, or if containing terms of
longer than 10 weeks, are terminable by the Stations on not more than 15 days'
notice.
(3) Buyer shall be obligated to assume only those Trade Agreements
that are listed in Schedule 2.1(c)(1) or that have been or will have been
entered into in the ordinary course of business and in accordance with the terms
of this Agreement, between the date hereof and the Closing Date, and are (i)
immediately preemptible for cash time sales trade; (ii) require the provision of
air time only on a "run of schedule" basis; and (iii) inure or will inure to the
benefit of the Stations. Notwithstanding the foregoing, Buyer shall not be
obligated to assume Trade Agreements (including both those Trade Agreements
listed on Schedule 2.1(c)(1) and those entered into in the ordinary course of
business) that have an aggregate negative Trade Balance exceeding Five Thousand
Dollars ($5,000).
(4) Notwithstanding any provision of this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any Contract or other
agreement, undertaking or obligation if (i) an attempted assignment, without the
consent required for such assignment, may constitute a breach thereof or may in
any way have a material adverse effect on Seller's rights thereunder prior to
Closing or Buyer's rights thereunder after Closing and (ii) such consent is not
obtained by Seller prior to Closing, provided, however, that Seller will use its
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best efforts at its own expense to obtain all such consents prior to Closing.
(5) Notwithstanding any provision of this Agreement to the contrary,
Buyer acknowledges that, with respect to any Contract assumed by Buyer hereunder
which contains a personal guarantee of any shareholder of Seller, Buyer shall
enter into an agreement at Closing to indemnify that individual as to the post-
closing payment obligations of the assumed Contract. Seller agrees to use its
best efforts to obtain any consents or agreements necessary to remove the
requirement of a guarantor on any such Contract provided such renewal does not
inhibit Buyer's ability to assume any such Contract.
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(d) Programming Materials. All programs, programming material, and
music libraries in whatever form or nature owned by Seller and used or intended
for use in the operation of the Stations.
(e) Intellectual Property. All Seller's right, title and interest
in and to the Intellectual Property used in the operation of the Stations.
(f) Intangible Property. All of Seller's right, title and interest
in and to the goodwill and other intangible assets used or useful in or arising
from the business of the Stations, including all customer lists, and sales
plans.
(g) Business Records. All business records of Seller (including
logs, public file materials and engineering records) relating to or used in the
operation of the Stations and not relating solely to Seller's internal corporate
affairs.
(h) Station Records. All of the Stations' proprietary information,
technical information and data, machinery and equipment warranties (to the
extent such warranties are assignable), maps, plans, diagrams, blueprints,
schematics, files, records, studies, data, lists, general accounting records,
books of account, in whatever form, used or held for use for the business or
operation of the Stations, including filings with the FCC which relate to the
Stations.
(i) Real Property Leases. Seller currently holds a leasehold interest
in the Real Property described in Schedule 6.13, which is used as the Station's
Studio Building. The Studio Site is owned by Fifteen Forty Broadcasting
Corporation ("Fifteen Forty"), a Virginia Corporation, that is an affiliate of
Seller. At Closing, Seller shall cause Fifty Forty to execute a lease for the
Studio Site building to Buyer without charge for a period of twelve months from
the date of Closing. Such lease shall also provide for Fifteen Forty's
continued use and occupancy of the Studio site building for its broadcasting
purposes in connection with Station WREJ(AM) during the term of the lease. In
addition, Buyer shall assume all Seller's rights, title and interest in an
equipment lease with Action Mobile Industries, Inc., dated November 17, 1997,
provided however, that Seller shall prepay lease expenses in the aggregate
amount of $4,500.00 at Closing. Seller also holds a leasehold interest in the
Real Property described in Schedule 6.13, which is used as the WSOJ Transmitter
Site. At Closing, Seller shall assign any and all rights, title and interests
in the WSOJ Transmitter Site lease to Buyer.
(j) Real Property Owned. Seller currently holds title to the Real
Property described in Schedule 6.13 used as the WKJS Transmitter Site. At
Closing, Seller shall convey title to this transmitter site to Buyer.
(k) Receivables. All Accounts Receivable.
2.2. Excluded Assets. There shall be excluded from the Purchased Assets
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and retained by the Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets"):
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(a) Cash and Investments. All cash and cash equivalents on hand or
in bank accounts and other cash items and investment securities of Seller on the
Closing Date.
(b) Insurance. All contracts of insurance (including any cash
surrender value thereof) and all insurance proceeds of settlement and insurance
claims made by Seller on or before the Closing Date.
(c) Employee Benefit Assets. All pension, profit sharing and
savings plans and trusts, and any assets thereof, except that any employee
account balances under any plan qualified under Section 401(k) of the Code shall
be promptly transferred to a plan qualified under Section 401(k) and, at Buyer's
request, made available by or on behalf of Buyer if such employee is hired by
Buyer, to the extent allowed under each such plan and applicable law.
(d) Contracts. All contracts that will have terminated or expired
prior to Closing by their terms and all contracts, agreements, instruments,
undertakings and obligations not expressly assumed by Buyer hereunder.
(e) Tax items. All claims, rights and interest in and to any
refunds for federal, state or local taxes to which Seller is entitled for
periods prior to the Closing Date.
(f) Corporate Records. Seller's corporate minute books and other
books and records relating to internal corporate minutes.
(g) Studio Site. Except as provided in Section 2.1(i) herein,
Fifteen Forty Broadcasting will retain all rights, title and leasehold interest,
if any, to the Studio Building.
3.0 INITIAL ESCROW DEPOSIT. Simultaneously with the execution and delivery
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of this Agreement by both parties, Buyer has deposited with Media Services
Group, Inc. ("Initial Escrow Agent"), a cash deposit of Five Hundred Thousand
Dollars ($500,000) (the "Initial Escrow Deposit"). The Initial Escrow Deposit
shall be held in an interest-bearing account and disbursed by Initial Escrow
Agent pursuant to the terms of an escrow agreement in the form attached hereto
as Exhibit 1 (the "Initial Escrow Agreement"), which Initial Escrow Agreement
has been entered into by Seller, Buyer and Initial Escrow Agent simultaneously
herewith.
4.0 PURCHASE PRICE AND METHOD OF PAYMENT.
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4.1. Consideration. The total consideration for the Purchased Assets at
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Closing (the "Purchase Price") shall be Twelve Million Dollars ($12,000,000),
payable as set forth in this Section 4.
4.2. Payment at Closing. At Closing, Buyer shall pay:
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(a) Eleven Million Five Hundred Thousand Dollars ($11,500,000) (as
adjusted pursuant to Sections 8.5 and 12.1) to Seller by check or wire transfer
of same day funds
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pursuant to wire transfer instructions which shall be delivered by Seller to
Buyer at least five business days prior to Closing.
(b) Five Hundred Thousand Dollars ($500,000) to Seller by causing the
Initial Escrow Agent to release the Initial Escrow Deposit to Seller, with all
interest earned on the Initial Escrow Deposit remitted to Buyer.
4.3 Additional Contingent Consideration. Additional consideration will
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be paid to the Seller subject to certain conditions as described herein. In the
event the cash flow of the Stations operating as a combined entity for calendar
year 1999 exceeds One Million Dollars ($1,000,000), then Buyer shall pay to
Seller an amount in cash equal to the product of (x) ten (10) and (y) the dollar
amount of such cash flow in excess of $1,000,000. So, for example, if the cash
flow for calendar year 1999 is $1,200,000, then Seller would be entitled to be
paid an additional $2,000,000 ($1,200,000-$1,000,000 x 10). For purposes of
this calculation, the term cash flow shall be defined as: net income computed
for calendar year 1999 in accordance with generally accepted accounting
principles, consistently applied (excluding (i) extraordinary expenses relating
to debt and equity restructuring, (ii) extraordinary gains from sales, exchanges
and other dispositions of assets not in the ordinary course of business and
(iii) the effect of any Trade Agreements), plus (1) depreciation, (2)
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amortization of assets, (3) interest expense and (4) taxes, in each case, to the
extent included in the calculation of net income. For purposes of this
calculation, income from the operations of Station WREJ(AM) by Fifteen Forty
Broadcasting shall be excluded. The determination of the amount of cash flow
for the Stations for calendar year 1999 shall be made by Buyer's independent
accounting firm, Xxxxxx Xxxxxxxx, LLP. Seller shall assist Xxxxxx Xxxxxxxx, LLP
by providing any relevant information available to Seller that is necessary
and/or useful in computing the amount of cash flow. At Closing, Seller will
terminate the Employment and Option Agreement between FM 100, Inc., Xxxxx X.
Xxxxx, Walton M. Belle, Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx, dated January 1,
1995. Buyer further agrees to continue the employment of Xxxxx X. Xxxxx as
General Manager of the Stations through December 31, 1999, with all authority
and duty as such title is generally recognized to carry and to conduct the
business of the Stations in a manner similar to the manner in which they have
been conducted prior to the Closing Date. Any determination by Xxxxxx Xxxxxxxx,
LLP shall be final and binding upon Seller and Buyer. If any payment is
required pursuant to this subsection, such payment shall be due ninety (90) days
after the date that Buyer's final audited financial statements for calendar year
1999 are delivered to Buyer by Xxxxxx Xxxxxxxx, LLP.
4.4. Allocation. The Purchase Price shall be allocated to the Purchased
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Assets and Noncompetition Agreements in accordance with an allocation schedule
prepared by Buyer pursuant to Section 1060 of the Code and mutually agreed upon
by Seller and Buyer. Seller and Buyer shall use such allocation for tax
accounting (including preparation of IRS Form 8594), and all other purposes. If
Seller and Buyer have not agreed upon the allocation prior to the Closing Date,
Closing shall take place as scheduled and any dispute shall be resolved by a
qualified media appraiser mutually acceptable to Seller and Buyer, whose
decision shall be final and whose fees and expenses shall be paid one-half by
Seller and one-half by Buyer. If the allocation must be determined by a media
appraiser, Seller and Buyer agree to cooperate in good faith so that such
appraisal may be completed expeditiously.
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4.5. Seller's Liabilities. Buyer does not and shall not assume or be
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deemed to assume, pursuant to this Agreement or otherwise, any agreements,
liabilities, undertakings, obligations or commitments of Seller or the Stations
of any nature whatsoever except: (i) liabilities accruing after Closing under
the Contracts, Sales Agreements and Trade Agreements listed in Schedule
2.1(c)(1) or otherwise expressly assumed by Buyer pursuant to, and subject to,
Section 2.1(c), provided, that, Buyer shall not assume liability for any
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breaches, violations or defaults under the Contracts, Sales Agreements and Trade
Agreements that occurred prior to Closing; and (ii) prorated items that are to
be paid by Buyer after Closing pursuant to Section 12.1.
5.0 XXXX-XXXXX-XXXXXX. As promptly as practicable and no later than ten (10)
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days following the execution of this Agreement, Seller and Buyer shall complete
any filing that may be required pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or shall mutually agree that no such
filing is required. Seller and Buyer shall diligently take all necessary and
proper steps and provide any additional information reasonably requested in
order to comply with the requirements of such Act. Seller and Buyer shall each
pay one-half of the filing fee.
6.0 SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller hereby makes
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to and for the benefit of Buyer, the following representations, warranties and
covenants:
6.1. Existence, Power and Identity. Seller is a corporation duly
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organized and validly existing under the laws of the Commonwealth of Virginia
and licensed to do business in the Commonwealth of Virginia with full corporate
power and authority (a) to own, lease and use the Purchased Assets as currently
owned, leased and used, (b) to conduct the business and operation of the
Stations as currently conducted and (c) to execute and deliver this Agreement
and each other document, agreement and instrument to be executed and delivered
by Seller in connection with this Agreement (collectively, the "Seller
Documents"), and to perform and comply with all of the terms, obligations and
covenants to be performed and complied with by Seller hereunder and thereunder.
The addresses of Seller's chief executive office and all of Seller's additional
places of business, and all places where any of the tangible personal property
included in the Purchased Assets is now located, or has been located during the
past 180 days, are correctly listed in Schedule 6.1. Except as set forth in
Schedule 6.1, during the past five years, Seller has not been known by or used,
nor, to the best of Seller's knowledge, has any prior owner of the Stations been
known by or used, any corporate, partnership, fictitious or other name in the
conduct of the Stations' business or in connection with the ownership, use or
operation of the Purchased Assets.
6.2. Binding Effect. The execution, delivery and performance by Seller
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of this Agreement has been and the Seller Documents will be duly authorized by
all necessary corporate action, and copies of those authorizing resolutions,
certified by Seller's Secretary shall be delivered to Buyer at Closing. No
other corporate action by Seller is required for Seller's execution, delivery
and performance of this Agreement. This Agreement has been duly and
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validly executed and delivered by Seller to Buyer and constitutes a legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, subject to bankruptcy, reorganization, fraudulent conveyance,
insolvency, moratorium and similar laws relating to or affecting creditors, and
other obligees' rights generally and the exercise of judicial discretion in
accordance with general equitable principles.
6.3. No Violation. Except as set forth on Schedule 6.3, none of (i) the
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execution, delivery and performance by Seller of this Agreement or any of the
Seller Documents, (ii) the consummation of the Transaction, or (iii) Seller's
compliance with the terms or conditions hereof will, with or without the giving
of notice or the lapse of time or both, conflict with, breach the terms or
conditions of, constitute a default under, or violate (x) Seller's articles of
incorporation or bylaws, (y) any judgment, decree, order, consent, agreement,
lease or other instrument (including any Contract, Sales Agreement or Trade
Agreement) to which Seller is a party or by which Seller or any of its assets
(including the Purchased Assets) or the Stations is or may be legally bound or
affected, or to the knowledge of Seller, (z) any law, rule, regulation or
ordinance of any Governmental Authority applicable to Seller or any of its
assets (including the Purchased Assets) or the operation of the Stations.
6.4. Conveyance of Assets. At Closing, Seller shall convey to Buyer
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good and marketable title to all the Purchased Assets, free and clear of all
liens, pledges, collateral assignments, security interests, capital or financing
leases, easements, covenants, restrictions and encumbrances or other defects of
title except: (i) the inchoate lien for current taxes or other governmental
charges not yet due and payable and that will be prorated between Seller and
Buyer pursuant to Section 12.1; and (ii) the Permitted Encumbrances.
6.5. Governmental Authorizations. Except for the FCC Licenses, no
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licenses, permits, or authorizations from any Governmental Authority are
required to own, use or operate the Purchased Assets, to operate the Stations or
to conduct Seller's business as currently operated and conducted by Seller. The
FCC Licenses are all the Commission authorizations held by Seller with respect
to the Stations, and are all the Commission authorizations used in or necessary
for the lawful operation of the Stations as currently operated by Seller. The
FCC Licenses are in full force and effect, are subject to no conditions or
restrictions other than those which appear on their face and are unimpaired by
any acts or omissions of Seller, Seller's officers, employees or agents. Seller
has delivered true and complete copies of all FCC Licenses to Buyer. There is
not pending or, to the Knowledge of Seller, threatened, any action by or before
the Commission or any other Governmental Authority to revoke, cancel, rescind or
modify any of the FCC Licenses (other than proceedings to amend Commission rules
of general applicability or otherwise affecting the broadcast industry
generally), and there is not now issued, outstanding or pending or, to the
Knowledge of Seller, threatened, by or before the Commission or any other
Governmental Authority, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against Seller or
otherwise with respect to the Stations. The Stations are operating in
compliance with all FCC Licenses, the Communications Act of 1934, as amended
(the "Communications Act"), and the current rules, regulations, policies and
practices of the Commission. The Commission's most recent renewals of the FCC
Licenses were not challenged by any petition to deny or any competing
application.
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Seller has no knowledge of any facts relating to it that, under the
Communications Act or the current rules, regulations, policies and practices of
the Commission may cause the Commission to deny Commission renewal of the FCC
Licenses or deny Commission consent to the Transaction.
6.6. Equipment. Seller has good and marketable title, both legal and
---------
equitable, to the Equipment. The Equipment, together with any improvements and
additions thereto and replacements thereof less any retirements or other
dispositions as permitted by this Agreement between the date hereof and the
Closing Date, will, at Closing, be all the tangible personal property used or
useful in the lawful operation of the Stations as currently operated by Seller.
Except as specifically indicated to the contrary in Schedule 6.6, all Equipment
is serviceable, in good operating condition (reasonable wear and tear excepted),
and is not in imminent need of repair or replacement. All items of transmitting
and studio equipment included in the Equipment (i) have been maintained in a
manner consistent with generally accepted standards of good engineering practice
and (ii) will permit the Stations to operate in accordance with the terms of the
FCC Licenses.
6.7. Contracts. Seller has made available to Buyer or its
---------
representatives complete and correct copies of all Contracts and Trade
Agreements listed on Schedule 2.1(c)(1) hereto. The list of Trade Agreements on
Schedule 2.1(c)(1) is accurate and complete. Except for Sales Agreements and
Trade Agreements that comply with the terms of this Agreement, Schedule
2.1(c)(1) includes all the contracts, leases, and agreements to which Seller is
a party and which Buyer has agreed to assume, other than those contracts that
will be performed in full prior to the Closing. To the Knowledge of Seller,
each Contract is in full force and effect and is unimpaired by any acts or
omissions of Seller, Seller's employees or agents, or Seller's officers. Except
as set forth on Schedule 2.1(c)(1), there has not occurred as to any Contract
any event of default by Seller or any event that, with notice, the lapse of time
or otherwise, could become an event of default by Seller. There has not
occurred as to any Contract any default by any other party thereto or any event
that, with notice, the lapse of time or otherwise, or at the election of any
person other than Seller, could become an event of default by such party. Those
Contracts whose stated duration extends beyond the Closing Date will, at
Closing, be in full force and effect, unimpaired by any acts or omissions of
Seller, Seller's employees or agents, or Seller's officers. If any Contract
requires the consent of any third party in order for Seller to assign that
Contract to Buyer, Seller shall use its best efforts to obtain at its own
expense such consent prior to Closing.
6.8. Promotional Rights. The Intellectual Property set forth on Schedule
------------------
6.8 includes all call signs and trademarks that Seller is transferring to Buyer,
used to promote or identify the Stations. Except as set forth on Schedule 6.8,
the Intellectual Property is in good standing and uncontested by any third
party. Except as set forth on Schedule 6.8, Seller has no Knowledge of any
infringement or unlawful or unauthorized use of those promotional rights,
including the use of any call sign, slogan or logo by any broadcast or cable
stations in the Richmond metropolitan area that may be confusingly similar to
those currently used by the Stations. Except as set forth on Schedule 6.8, to
the Knowledge of Seller, the operations of the Stations do not infringe, and
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no one has asserted to Seller that such operations infringe, any copyright,
trademark, tradename, service xxxx or other similar right of any other party.
6.9. Insurance. Schedule 6.9 lists all insurance policies held by
---------
Seller with respect to the Purchased Assets and the business and operation of
the Stations. Such insurance policies are in full force and effect, all
premiums with respect thereto are currently paid and Seller is in compliance
with the terms thereof. Seller has not received any notice from any issuer of
any such policies of its intention to cancel, terminate, or refuse to renew any
policy issued by it. Seller will maintain the insurance policies listed on
Schedule 6.9 in full force and effect through the Closing Date.
6.10. Financial Statements.
--------------------
(a) Seller has furnished Buyer with Compilation Unaudited Financial
Statements for fiscal years 1995, 1996, and 1997 as well as Compilation
Unaudited Financial Statements for December 31, 1998 and most recently available
statements. The Financial Statements: (i) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved and as compared with prior periods; and (ii)
fairly present Seller's financial position, income, expenses, assets,
liabilities, shareholder's equity and the results of operations of the Stations
as of the dates and for the periods indicated. Since December 31, 1997, there
has been no material adverse change in the business, assets, properties or
condition (financial or otherwise) of the business. No event has occurred and,
Seller has no knowledge that prior to Closing, any event will have occurred that
would make such Financial Statements misleading in any respect.
(b) Except as reflected in the most recently available balance sheets,
including the notes thereto or otherwise disclosed in this Agreement or the
Schedules hereto, and except for the current liabilities and obligations
incurred in the ordinary course of business of the Stations (not including for
this purpose any tort-like liabilities or breach of contract) since the date of
the most recently available balance sheets, there exist no liabilities or
obligations of Seller, contingent or absolute, matured or unmatured, known or
unknown. Except as set forth on Schedule 6.10(b) since the date of the most
recently available balance sheets, (i) Seller has not made any contract,
agreement or commitment or incurred any obligation or liability (contingent or
otherwise), except in the ordinary course of business and consistent with past
business practices, (ii) there has not been any discharge or satisfaction of any
obligation or liability owed by Seller, which is not in the ordinary course of
business or which is inconsistent with past business practices, (iii) there has
not occurred any sale of or loss or material injury to the business, or any
material adverse change in the business or in the condition (financial or
otherwise) of the Stations, (iv) Seller has operated the business in the
ordinary course and (v) Seller has not increased the salaries or any other
compensation of any of its employees or agreed to the payment of any bonuses.
The monthly balance sheets (i) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and as compared with prior periods; and (ii) fairly present
Company's financial position, income, expenses, assets, liabilities,
shareholder's equity and the results of operations of the Stations as of
-13-
the dates and for the periods indicated, subject to year end adjustments which
do not materially affect the operations of Seller.
6.11. Employees. Except as otherwise listed on Schedule 6.11, (i) no
---------
employee of the Stations is represented by a union or other collective
bargaining unit, no application for recognition as a collective bargaining unit
has been filed with the National Labor Relations Board, and, to the Knowledge of
Seller, there has been no concerted effort to unionize any of the Stations'
employees and (ii) Seller has no other written or oral employment agreement or
arrangement with any Station employee, and no written or oral agreement
concerning bonus, termination, hospitalization or vacation. Seller has
delivered to Buyer a list of all persons currently employed at the Stations
together with an accurate description of the terms and conditions of their
respective employment as of the date of this Agreement. Seller will promptly
advise Buyer of any changes that occur prior to Closing with respect to such
information.
6.12. Employee Benefit Plans.
----------------------
(1) Except as described in Schedule 6.12, neither Seller nor any
Affiliates (as defined below) have at any time established, sponsored,
maintained, or made any contributions to, or been parties to any contract or
other arrangement or been subject to any statute or rule requiring them to
establish, maintain, sponsor, or make any contribution to, (i) any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, and regulations thereunder ("ERISA"))
("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) ("Welfare Plan"); or (iii) any deferred compensation,
bonus, stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement ("Other Plan"). Seller and the Affiliates have no
obligations or liabilities (whether accrued, absolute, contingent, or
unliquidated, whether or not known, and whether due or to become due) with
respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA), or
Other Plan that is not listed in Schedule 6.12. For purposes of this Section
6.12, the term "Affiliate" shall include all persons under common control with
Seller within the meaning of Sections 4001(a)(14) or (b)(1) of ERISA or any
regulations promulgated thereunder, or Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code").
(2) Each plan or arrangement listed in Schedule 6.12 (and any
related trust or insurance contract pursuant to which benefits under such plans
or arrangements are funded or paid) has been administered in all material
respects in compliance with its terms and in both form and operation is in
compliance with applicable provisions of ERISA, the Code, the Consolidated
Omnibus Budget Reconciliation Act of 1986 and regulations thereunder, and other
applicable law. Each Pension Plan listed in Schedule 6.12 has been determined by
the Internal Revenue Service to be qualified under Section 401(a) and, if
applicable, Section 401(k) of the Code, and nothing has occurred or been omitted
since the date of the last such determination that resulted or could result in
the revocation of such determination. Seller and the Affiliates have made all
required contributions or payments to or under each plan or arrangement listed
in Schedule 6.12 on a timely basis and have made adequate provision for reserves
to meet contributions and
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payments under such plans or arrangements that have not been made because they
are not yet due.
(3) The consummation of this Agreement (and the employment by Buyer
of former employees of Seller or any employees of an Affiliate) will not result
in any carryover liability to Buyer for taxes, penalties, interest or any other
claims resulting from any employee benefit plan (as defined in Section 3(3) of
ERISA) or Other Plan. In addition, Seller and each Affiliate make the following
representations (i) as to all of their Pension Plans: (A) neither Seller nor any
Affiliate has become liable to the PBGC under ERISA under which a lien could
attach to the assets of Seller or an Affiliate; (B) Seller and each Affiliate
has not ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA; and (C) Seller and each Affiliate has
not made a complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as defined in
Section 4201 of ERISA, and (ii) all group health plans maintained by the Seller
and each Affiliate have been operated in material compliance with Section
4980B(f) of the Code.
(4) The parties agree that Buyer does not and will not assume the
sponsorship of, or the responsibility for contributions to, or any liability in
connection with, any Pension Plan, any Welfare Plan, or Other Plan maintained by
Seller or an Affiliate for its employees, former employees, retirees, their
beneficiaries or any other person. In addition and not as a limitation of the
foregoing, the parties agree that Seller and such Affiliate shall be liable for
any continuation coverage (including any penalties, excise taxes or interest
resulting from the failure to provide continuation coverage) required by Section
4980B of the Code due to qualifying events that occur after the Closing Date
resulting from the transaction contemplated by this Agreement.
6.13. Real Property. Seller has good, valid and marketable fee title to
-------------
the real property described in Schedule 6.13 (hereinafter "Real Property") which
is used as the WKJS Transmitter Site and except as shown on Schedule 6.13, all
improvements are free and clear of all mortgages, liens, claims encumbrances,
leases, title exceptions and rights of others. Except as listed on Schedule
6.13, all of the improvements, and all heating and air conditioning equipment,
plumbing, electrical and other mechanical facilities, and the roof, walls and
other structural components which are part of, or located in, such improvements,
are in good operating condition and repair, comply in all material respects with
applicable zoning laws and the building, health, fire and environmental
protection codes of all applicable governmental jurisdictions, and do not
require any repairs other than normal routing maintenance to maintain them in
good condition and repair. None of the improvements have any structural
defects. No portion of the Real Property described in Schedule 6.13 is the
subject of any condemnation or eminent domain proceedings currently instituted
or pending, and to the Knowledge of Seller, no such proceedings are threatened.
There are no condemnation, zoning or other land use regulations proceedings
instituted or, to the Knowledge of Seller, planned to be instituted, which would
materially affect the use and operations of the Real Property for any lawful
purpose, and Seller has not received notice of any special assessment
proceedings materially affecting the Real Property. The Real Property has
direct and unobstructed access to all public utilities necessary for the uses to
which the Real Property is currently devoted by Seller in the operation of the
Stations.
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6.14. Environmental Protection. Except as set forth on Schedule 6.14,
------------------------
(i) no Hazardous Substances have been treated, stored, used, released or
disposed of on the Studio Site or the WKJS Transmitter Site or WSOJ Transmitter
Site in any manner that would cause Buyer to incur material liability under any
Environmental Laws; (ii) Seller is not liable for cleanup or response costs with
respect to any present or past emission, discharge, or release of any Hazardous
Substances; (iii) no "underground storage tank" (as that term is defined in
regulations promulgated by the federal Environmental Protection Agency) is used
in the operation of the Stations or is located on the Studio Site or the WKJS
Transmitter Site or WSOJ Transmitter Site; (iv) there are no pending actions,
suits, claims, legal proceedings or any other proceedings based on environmental
conditions or noncompliance at the Studio Site or the WKJS Transmitter Site or
WSOJ Transmitter Site, or any part thereof, or otherwise arising from Seller's
activities involving Hazardous Substances; (v) there are no conditions,
facilities, procedures or any other facts or circumstances at the Studio Site or
the WKJS Transmitter Site or WSOJ Transmitter Site which constitute
noncompliance with environmental laws or regulations; and (vi) there are no
structures, improvements, equipment, activities, fixtures or facilities at the
Studio Site or the WKJS Transmitter Site or WSOJ Transmitter Site which are
constructed with, use or otherwise contain Hazardous Substances, including, but
without limitation, asbestos or polychlorinated biphenyls.
6.15. Compliance with Law. There is no outstanding complaint, citation,
-------------------
or notice issued by any Governmental Authority asserting that Seller is in
violation of any law, regulation, rule, ordinance, order, decree or other
material requirement of any Governmental Authority (including any applicable
statutes, ordinances or codes relating to zoning and land use, health and
sanitation, environmental protection, occupational safety and the use of
electric power) affecting the Purchased Assets or the business or operations of
the Stations, and Seller is in material compliance with all such laws,
regulations, rules, ordinances, decrees, orders and requirements. Without
limiting the foregoing:
(a) The Stations' transmitting and studio equipment is in material
respects operating in accordance with the terms and conditions of the FCC
Licenses, all underlying construction permits, and the rules, regulations,
practices and policies of the Commission, including all requirements concerning
equipment authorization and human exposure to radio frequency radiation.
(b) Seller has, in the conduct of the Stations' business, materially
complied with all applicable laws, rules and regulations relating to the
employment of labor, including those concerning wages, hours, equal employment
opportunity, collective bargaining, pension and welfare benefit plans, and the
payment of Social Security and similar taxes, and Seller is not liable for any
arrears of wages or any tax penalties due to any failure to comply with any of
the foregoing.
(c) All ownership reports, employment reports, tax returns and other
material documents required to be filed by Seller with the Commission or other
Governmental Authority have been filed; such reports and filings are accurate
and complete in all material respects; such
-16-
items as are required to be placed in the Stations' local public records files
have been placed in such files; all proofs of performance and measurements that
are required to be made by Seller with respect to the Stations' transmission
facilities have been completed and filed at the Stations; and all information
contained in the foregoing documents is true, complete and accurate.
(d) The location of the Stations' main studio(s) complies with the
FCC's rules.
(e) Seller has paid to the Commission the regulatory fees due for
the Stations for the years 1994-98.
6.16. Litigation. Except for proceedings affecting radio broadcasters
----------
generally and except as set forth on Schedule 6.3, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Seller, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the business or operations of the Stations or to the Purchased Assets. Except
as set forth on Schedule 6.3, there is no other litigation, action, suit,
complaint, claim, investigation or proceeding pending, or to the Knowledge of
Seller, threatened that may give rise to any claim against any of the Purchased
Assets or adversely affect Seller's ability to consummate the Transaction as
provided herein. Seller is not aware of any facts that could reasonably result
in any such proceedings.
6.17. Insolvency Proceedings. No insolvency proceedings of any
----------------------
character, including bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Stations' Assets or the Purchased Assets are pending or, to the Knowledge of
Seller, threatened. Seller has not made an assignment for the benefit of
creditors.
6.18. Sales Agreements. The Sales Agreements in existence on the date
----------------
hereof have been entered into in the ordinary course of the Stations' business,
at rates consistent with Seller's usual past practices and each Sales Agreement
is for a term no longer than 10 weeks or, if longer, is terminable by the
Stations upon not more than 15 days notice.
6.19. Liabilities. There are no known liabilities or obligations of
-----------
Seller relating to the Stations, whether related to tax or non-tax matters, due
or not yet due, except as and to the extent set forth on the most recent
Financial Statements described in Section 6.10.
6.20. Sufficiency of Assets. The Purchased Assets in conjunction with
---------------------
the leases referred to in Section 2.1(i) are and, on the Closing Date will be,
sufficient to conduct the operation and business of the Stations in the manner
in which it is currently being conducted.
6.21. Related Parties. Except as disclosed in Schedule 6.21 neither
---------------
Seller nor any shareholder, officer or director of Seller has any interest
whatsoever in any corporation, firm, partnership or other business enterprise
which has had any business transactions with Seller
-17-
relating to the Purchased Assets or the Stations, and no shareholder, officer or
director of Seller has entered into any transactions with Seller relating to the
Purchased Assets or the Stations.
6.22. Taxes. The Seller has timely filed with all appropriate
-----
Governmental Authority all federal, state, commonwealth, local, and other tax or
information returns and tax reports (including, but not limited to, all income
tax, unemployment compensation, social security, payroll, sales and use, profit,
excise, privilege, occupation, property, ad valorem, franchise, license, school
and any other tax under the laws of the United States or of any state or any
commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof.
Seller has paid in full all federal, state, commonwealth, foreign, local and
other governmental taxes, estimated taxes, interest, penalties, assessments and
deficiencies (collectively, "Taxes") which have become due pursuant to such
returns or without returns or pursuant to any assessments received by Seller.
Such returns and forms are true, correct and complete in all material respects,
and Seller has no liability for any Taxes in excess of the Taxes shown on such
returns. Seller is not a party to any pending action or proceeding and, to the
Knowledge of Seller, there is no action or proceeding threatened by any
Governmental Authority against Seller for assessment or collection of any Taxes,
and no unresolved claim for assessment or collection of any Taxes has been
asserted against Seller.
6.23. No Misleading Statements. No provision of this Agreement relating
------------------------
to Seller, the Stations or the Purchased Assets or any other document, Schedule,
Exhibit or other information furnished by Seller to Buyer in connection with the
execution, delivery and performance of this Agreement, or the consummation of
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated in order to make the statement, in light of the
circumstances in which it is made, not misleading. In connection with the
preparation of this Agreement and the documents, descriptions, opinions,
certificates, Exhibits, Schedules or written material prepared by Seller and
appended hereto or delivered or to be delivered hereunder, Seller represents and
warrants that it has disclosed, and agrees it will continue to disclose to
Buyer, any fact that Seller is obligated to disclose to assure the continuing
accuracy of the representations and warranties contained in this Section 6. All
Exhibits and Schedules attached hereto are materially accurate and complete as
of the date hereof.
7.0 BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby makes to
-------------------------------------------------
and for the benefit of Seller, the following representations, warranties and
covenants:
7.1. Existence and Power. Buyer is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to assume and perform this Agreement,
and as of the Closing Date will be authorized to do business in the State of
Virginia.
7.2. Binding Effect. The execution, delivery and performance by Buyer
--------------
of this Agreement, and each other document, agreement and instrument to be
executed and delivered by
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Buyer in connection with this Agreement (collectively, the "Buyer Documents")
has been or will be duly authorized by all necessary corporate action, and
copies of those authorizing resolutions, certified by Buyer's Secretary shall be
delivered to Seller at Closing. This Agreement has been, and each of the Buyer
Documents will be, duly and validly executed and delivered by Buyer to Seller
and constitutes a legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, subject to bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium and similar laws relating to or affecting
creditors' and other obligees' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
7.3. No Violation. None of (i) the execution, delivery and performance
------------
by Buyer of this Agreement or any of the Buyer Documents, (ii) the consummation
of the Transaction, or (iii) Buyer's compliance with the terms and conditions
hereof will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms or conditions of, constitute a default under, or
violate (x) Buyer's articles of incorporation or by-laws or (y) any judgment,
decree, order, consent agreement, lease or other instrument to which Buyer is a
party or by which Buyer is legally bound.
7.4. Litigation. There is no litigation, action, suit, complaint,
----------
proceeding or investigation, pending or, to the Knowledge of Buyer, threatened
that may adversely affect Buyer's ability to consummate the Transaction as
provided herein.
7.5. Licensee Qualifications. To the Knowledge of Buyer there is no
-----------------------
fact that would, under the rules and regulations of the Commission, disqualify
Buyer from being the assignee of the FCC Licenses or the owner and operator of
the Stations. Should Buyer become aware of any such fact, it will so inform
Seller, and Buyer will use commercially reasonable efforts to remove any such
disqualification.
8.0 PRE-CLOSING OBLIGATIONS. The parties covenant and agree as follows with
-----------------------
respect to the period prior to Closing:
8.1. Application for Commission Consent. Within five (5) business days
----------------------------------
from the date of this Agreement, Seller and Buyer shall join in and file the
Assignment Application, and they shall diligently take all steps necessary or
desirable and proper expeditiously to prosecute the Assignment Application and
to obtain the Commission's determination that grant of the Assignment
Application will serve the public interest, convenience and necessity. The
failure by either party to timely file or diligently prosecute its portion of
the Assignment Application shall be deemed a material breach of this Agreement.
Each party shall promptly provide the other with a copy of any pleading, order
or other document served on the other relating to the Assignment Application.
In the event that Closing occurs prior to a Final Order, then each party's
obligations hereunder shall survive the Closing.
8.2. Access. Between the date hereof and the Closing Date, Seller shall
------
give Buyer and representatives of Buyer reasonable access to the Purchased
Assets, the Stations, the employees of Seller and the Stations and the books and
records of Seller relating to the business and operations of the Stations. It
is expressly understood that, pursuant to this Section, Buyer, at
-19-
its expense, shall be entitled to conduct such engineering inspections of the
Stations, such environmental assessments and surveys of the WKJS Transmitter
Site and WSOJ Transmitter Site, and such reviews of the Stations' financial
records as Buyer may desire, so long as the same do not unreasonably interfere
with Seller's operation of the Stations. No inspection or investigation made by
or on behalf of Buyer, or Buyer's failure to make any inspection or
investigation, shall affect Seller's representations, warranties and covenants
hereunder or be deemed to constitute a waiver of any of those representations,
warranties and covenants.
8.3. Material Adverse changes; Financial Statements. Through the Closing
-----------------------------------------------
Date:
(a) Seller shall promptly notify Buyer of any event of which Seller
obtains knowledge which has caused or is likely to cause a material adverse
change to the financial condition or operation of the Stations.
(b) Seller shall furnish to Buyer (i) monthly Financial Statements for
Seller and (ii) such other reports as Buyer may reasonably request relating to
Seller. Each of the Financial Statements delivered pursuant to this Section
8.3(b) shall be prepared in accordance with GAAP consistently applied during the
periods covered (except as disclosed therein).
8.4. Operations Prior to Closing. Between the date of this Agreement
---------------------------
and the Closing Date:
(a) Seller shall operate the Stations in a manner consistent with
Seller's and the Stations' past practice and in compliance with all applicable
laws, regulations, rules, decrees, ordinances, orders and requirements of the
Commission and all other Governmental Authority. Seller shall promptly notify
Buyer of any actions or proceedings that from the date hereof are commenced
against Seller or the Stations or, to the Knowledge of Seller, against any
officer, director, employee, consultant, agent or other representative of Seller
with respect to the business of the Stations or the Purchased Assets.
(b) Seller shall: (i) use the Purchased Assets only for the operation
of the Stations; (ii) maintain the Purchased Assets in substantially their
present condition (reasonable wear and tear in normal use and damage due to
unavoidable casualty excepted); (iii) replace and/or repair the Purchased Assets
as necessary in the ordinary course of business; (iv) maintain all inventories
of supplies, tubes and spare parts at levels at least equivalent to those
existing on the date of this Agreement; and (v) promptly give Buyer written
notice of any unusual or materially adverse developments with respect to the
Purchased Assets or the business or operations of the Stations.
(c) Seller shall maintain the Stations' Business Records and Financial
Statements in the usual, regular and ordinary manner, on a basis consistent with
prior periods.
(d) Seller shall not: (i) sell, lease, encumber or otherwise dispose
of any Purchased Assets or any interest therein except in the ordinary course of
business and only if any property disposed of is replaced by property of like or
better value, quality and utility prior to
-20-
Closing; (ii) cancel, terminate, modify, amend or renew any of the Contracts
without Buyer's express prior written consent; (iii) increase the compensation
payable or to become payable to any employee of the Stations; or (iv) except to
the extent expressly permitted in Section 2.1(c), enter into any Contract or
other agreement, undertaking or obligation or assume any liability that may
impose any obligation on Buyer after Closing, whether Seller is acting within or
outside of the ordinary course of the Stations' business, without Buyer's prior
written consent.
(e) Seller and the Stations will enter into Sales Agreements only in
the ordinary course of the Stations' business at commercially reasonable rates
and each such Sales Agreements shall have a term not longer than 10 weeks or, if
longer, shall be terminable by the Stations upon not more than 15 days notice.
(f) Seller and the Stations will enter into Trade Agreements only in
the ordinary course of the Stations' business and only if such Trade Agreements
are (i) immediately preemptible for cash time sales trade; (ii) require the
provision of air time only on a "run of schedule", basis; and (iii) inure or
will inure to the benefit of the Stations.
(g) Seller shall use its best efforts to preserve the operations,
organization and reputation of the Stations intact, by continuing to make
expenditures and engage in activities designed to promote the Stations and
encourage the purchase of advertising time on the Stations in a manner
consistent with Seller's past practices. Seller shall use its best efforts to
preserve the goodwill and business of the Stations' advertisers, suppliers and
others having business relations with the Stations, and to continue to conduct
financial operations of the Stations, including credit and collection policies,
with no less effort, as in the prior conduct of the business of the Stations.
(h) Seller shall not issue, sell or deliver any shares of stock of
Seller or grant any options, warrants or other rights to acquire the stock of
Seller.
(i) Seller shall not make or agree to any material amendment to any
FCC License relating to the Stations.
(j) except as required by law, adopt any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, severance or other
employee benefit plan, payment or arrangement or enter into any employment,
consulting or management contract.
(k) merge or consolidate with any other corporation, acquire control
of any other corporation or business entity, or take any steps incident to, or
in furtherance of, any of such actions, whether by entering into an agreement
providing therefore or otherwise.
(l) solicit, either directly or indirectly, initiate, encourage or
accept any offer for the purchase or acquisition of the Purchased Assets by any
party other than Buyer.
(m) terminate without comparable replacement or fail to renew any
insurance coverage applicable to the assets or properties of Seller.
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(n) take any action or fail to take any action that would cause the
Seller to breach the representations, warranties and covenants contained in this
Agreement.
8.5. Damage.
------
(a) Risk of Loss. The risk of loss or damage, confiscation or
condemnation of the Purchased Assets shall be borne by Seller at all times prior
to Closing. In the event of material loss or damage, Seller shall promptly
notify Buyer thereof and use its best efforts to repair, replace or restore the
lost or damaged property to its former condition as soon as possible. If the
cost of repairing, replacing or restoring any lost or damaged property is Twenty
Five Thousand Dollars ($25,000) or less, and Seller has not repaired, replaced
or restored such property prior to the Closing Date, Closing shall occur as
scheduled and Buyer may deduct from the Purchase Price paid at Closing the
amount necessary to restore the lost or damaged property to its former
condition. If the cost to repair, replace, or restore the lost or damaged
property exceeds Twenty Five Thousand Dollars ($25,000), and Seller has not
repaired, replaced or restored such property prior to the Closing Date to the
satisfaction of Buyer, Buyer may, at its option:
(1) elect to consummate the Closing in which event Buyer may
deduct from the Purchase Price paid at Closing the amount necessary to restore
the lost or damaged property to its former condition in which event Seller shall
be entitled to all proceeds under any applicable insurance policies with respect
to such claim; or
(2) elect to postpone the Closing, with prior consent of the
Commission if necessary, for such reasonable period of time (not to exceed
ninety (90) days) as is necessary for Seller to repair, replace or restore the
lost or damaged property to its former condition.
If, after the expiration of such extension period the lost or damaged
property has not been fully repaired, replaced or restored to Buyer's
satisfaction, Buyer may terminate this Agreement, in which event the Initial
Escrow Deposit and all interest earned thereon shall be returned to Buyer and
the parties shall be released and discharged from any further obligation
hereunder.
(b) Failure of Broadcast Transmissions . Seller shall give prompt
written notice to Buyer if any of the following (a "Specified Event") shall
occur and continue for a period of more than four (4) consecutive hours: (i) the
transmission of the regular broadcast programming of either of the Stations in
the normal and usual manner is interrupted or discontinued; or (ii) either of
the Stations is operated at less than its licensed antenna height above average
terrain or at less than eighty percent (80%) of its licensed effective radiated
power. If, prior to Closing, either of the Stations is not operated at its
licensed operating parameters for more than thirty-six (36) hours (or, in the
event of force majeure or utility failure affecting generally the market served
----- -------
by the Stations, ninety-six (96) hours), whether or not consecutive, during any
period of thirty (30) consecutive days, or if there are three (3) or more
Specified Events each lasting more than four (4) consecutive hours, then Buyer
may, at its option: (i)
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terminate this Agreement, or (ii) proceed in the manner set forth in Paragraph
8.5(a)(1) or 8.5(a)(2). In the event of termination of this Agreement by Buyer
pursuant to this Section, the Initial Escrow Deposit together with all interest
accrued thereon shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
(c) Resolution of Disagreements . If the parties are unable to
agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property, the adequacy of any repair, replacement,
or restoration of any lost or damaged property, or any other matter arising
under this Section, the disagreement shall be referred promptly to a qualified
consulting communications engineer mutually acceptable to Seller and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, and whose fees and expenses shall be paid one-
half each by Seller and Buyer.
8.6. Administrative Violations. If Seller receives any finding, order,
-------------------------
complaint, citation or notice prior to Closing which states that any aspect of
either of the Stations' operations violates or may violate any rule, regulation
or order of the Commission or of any other Governmental Authority (an
"Administrative Violation"), including, any rule, regulation or order concerning
environmental protection, the employment of labor or equal employment
opportunity, Seller shall promptly notify Buyer of the Administrative Violation,
use its best efforts to remove or correct the Administrative Violation, and be
responsible prior to Closing for the payment of all costs associated therewith,
including any fines or back pay that may be assessed.
8.7. Bulk Sales Act. Seller shall be responsible for compliance with
--------------
the provisions of any bulk sales statute applicable to the Transaction, and
shall indemnify and hold Buyer harmless from and against any claims, actions,
liabilities and all costs and expenses, including reasonable legal fees,
incurred or suffered by Buyer as a result of the failure to comply with any such
statute.
8.8. Control of Stations. The Transaction shall not be consummated
-------------------
until after the Commission has given its written consent thereto and between the
date of this Agreement and the Closing Date, Seller shall control, supervise and
direct the operation of the Stations.
8.9. Cooperation with Respect to Financial and Tax Matters. Between the
-----------------------------------------------------
date hereof and the Closing Date, Seller, its shareholders, officers, directors
and employees shall cooperate and Seller shall cause its independent accounting
firm to cooperate with Buyer for the purpose of preparing Financial Statements
reviewed by Buyer's independent accountants for purposes of including such
statements in any reports filed by Buyer with any Governmental Authority. Buyer
shall be permitted to disclose the audited Financial Statements for 1995, 1996,
1997 and 1998 as well as unaudited Financial Statements for any period
subsequent to 1998 available prior to Closing in any reports filed by the Buyer
with any Governmental Authority.
8.10. Closing Obligations. Seller and Buyer shall make commercially
-------------------
reasonable efforts to satisfy the conditions precedent to Closing.
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8.11. Title Insurance and Surveys. Buyer will obtain with respect to each
---------------------------
parcel of Real Property described in Schedule 6.13 which is used as the WKJS
Transmitter Site and WSOJ Transmitter Site (i) within forty-five (45) days of
the date of the execution of this Agreement, an owner's policy by a title
insurer reasonably satisfactory to Seller, in an amount equal to the fair market
value of such Real Property (including all improvements located thereon),
insuring Buyer's fee simple title to such Real Property as of the Closing
without defects in title, together with such endorsements for zoning,
continuity, public access and extended coverage as Buyer or its lender may
reasonably request and (ii) a current survey of each parcel of Real Property
certified to Buyer and its lender, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters shown customarily on such surveys,
and showing access affirmatively to public streets and roads ("Survey") which
shall not disclose any survey defect or encroachment from or onto any of the
Real Property which has not been cured or insured over prior to the Closing.
Buyer shall pay the cost of such title policies and Survey.
8.12. Environmental Assessment. Within forty-five (45) days after filing
------------------------
the Assignment Application, Buyer may commence, at its expense, a Phase I and
Phase II Environmental Assessment of the Real Property. Seller agrees to
cooperate with Buyer and such firm in performing such Environmental Assessment.
Buyer shall provide a copy of such Environmental Assessment to Seller but such
delivery shall not relieve Seller of any obligation with respect to any
representation, warranty or covenant in this Agreement or waive any condition to
Buyer's obligations under this Agreement.
9.0 STATUS OF EMPLOYEES.
-------------------
9.1. Employment Relationship. All Station employees shall be and remain
-----------------------
Seller's employees, with Seller having full authority and control over their
actions, and Buyer shall not assume the status of an employer or a joint
employer of, or incur or be subject to any liability or obligation of an
employer with respect to, any such employees unless and until actually hired by
Buyer. Seller shall be solely responsible for any and all liabilities and
obligations Seller may have to its employees, including, compensation, severance
pay and accrued vacation time and sick leave. Seller shall be solely responsible
for any and all liabilities, penalties, fines or other sanctions that may be
assessed or otherwise due under such laws on account of the Transaction and the
dismissal or termination of any of Seller's employees.
9.2. Buyer's Right to Employ. Seller consents to Buyer discussing with
-----------------------
the Stations' employees, at any time after ten (10) business days from the
execution of this Agreement the possibility of their employment by Buyer.
Seller agrees and acknowledges, however, that Buyer is under no obligation to
offer employment to any of those employees.
10.0 CONDITIONS PRECEDENT.
--------------------
10.1. Mutual Conditions. The respective obligations of both Buyer and
-----------------
Seller to consummate the Transaction are subject to the satisfaction of each of
the following conditions:
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(a) Approval of Assignment Application. The Commission shall have
granted the Assignment Application, and such grant shall be in full force and
effect on the Closing Date.
(b) Absence of Litigation. As of the Closing Date, no litigation,
action, suit or proceeding enjoining, restraining or prohibiting the
consummation of the Transaction shall be pending before any court, the
Commission or any other Governmental Authority or arbitrator; provided, however,
-------- -------
that this Section may not be invoked by a party if any such litigation, action,
suit or proceeding was solicited or encouraged by, or instituted as a result of
any act or omission of, such party.
(c) Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods under the
-----------------
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, shall have
expired.
(d) Noncompetition Agreement. On the Closing Date, the Seller shall
------------------------
cause each of its shareholders, officers and directors other than Xxxxx X. Xxxxx
to execute a Noncompetition Agreement with the Buyer in the form of Exhibit 2,
including covenants not to compete with the Buyer in the Richmond or Petersburg
markets, for a period of five (5) years, except that continued ownership and
operation of Station WREJ(AM), Richmond, Virginia, will be permitted.
10.2. Additional Conditions to Buyer's Obligation. In addition to the
-------------------------------------------
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Buyer to consummate the Transaction is subject, at Buyer's option, to the
satisfaction or waiver by Buyer of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller to Buyer shall be true, complete, and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
(b) Compliance with Conditions. All of the terms, conditions and
covenants to be complied with or performed by Seller on or before the Closing
Date under this Agreement and the Seller Documents shall have been duly complied
with and performed in all material respects.
(c) Discharge of Liens. Seller shall have obtained and delivered
to Buyer, at Seller's expense, at least 10 days prior to Closing, a report
prepared by C.T. Corporation System (or similar firm reasonably acceptable to
Buyer) showing the results of searches of lien, tax, judgment and litigation
records, demonstrating that the Purchased Assets are being conveyed to Buyer
free and clear of all liens, security interests and encumbrances except for
Permitted Encumbrances or otherwise consented to by Buyer in writing. The
record searches described in the report shall have taken place no more than 15
days prior to the Closing Date. Subject to using a portion of the Purchase
Price for payment of all Indebtedness of the Seller, Seller shall have no
Indebtedness and Buyer shall have received a certificate, dated the Closing
Date, and
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signed by the President of the Seller to the effect that the Seller has no such
Indebtedness. In particular, Seller shall have discharged that certain
Consolidated, Amended and Restated Promissory Note dated January 6, 1999, in the
principal amount of $5,000,000 delivered to NationsBank N.A. and secured by deed
of trust dated January 7, 1998 on approximately 100 acres, Nottaway County,
Virginia, and Security Agreement dated January 7, 1998 encumbering all personal
property and intellectual property of FM 100, Inc. and the Installment Note in
the original principal amount of $17,150.00 delivered to Consolidated Bank &
Trust Company and secured by a first lien on the 1995 Chevrolet Van. Buyer shall
also have received such releases and UCC termination statements as it may
reasonably request in connection with the discharge of any such Indebtedness.
(d) Third-Party Consents. - Seller shall have obtained (i) all
required third-party consents to Buyer's assumption of the Material Contracts,
such that Buyer will, after Closing, enjoy all the rights and privileges of
Seller under the Material Contracts subject only to the same obligations as are
binding on Seller pursuant to the Material Contracts' current terms; and (ii)
all other requisite third-party consents and approvals which may be necessary to
consummate the Transaction.
(e) Estoppel Certificates. At Closing, Seller shall deliver to
Buyer a certificate executed by the other party to each Material Contract, dated
no more than 15 days prior to the Closing Date, stating (i) that such Contract
is in full force and effect and has not been amended or modified; (ii) the date
to which all rent and/or other payments due thereunder have been paid; and (iii)
that Seller is not in breach or default under such Material Contract, and that
no event has occurred that, with notice or the passage of time or both, would
constitute a breach or default thereunder by Seller.
(f) No Material Adverse Change. Neither the Stations nor the
Purchased Assets shall have suffered a material adverse change since the date of
this Agreement, and there shall have been no changes since the date of this
Agreement in the business, operations, condition (financial or otherwise),
properties, assets or liabilities of Seller, of the Stations or of the Purchased
Assets, except changes contemplated by this Agreement and changes which are not
(either individually or in the aggregate) materially adverse to the Stations.
(g) Opinion of Seller's Counsel. At Closing, Seller shall deliver to
Buyer the written opinion or opinions of Seller's counsel, dated the Closing
Date, in scope and form satisfactory to Buyer, to the following effect:
(1) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia and licensed to
do business in the Commonwealth of Virginia, with all requisite corporate power
and authority to enter into and perform this Agreement.
(2) This Agreement has been duly executed and delivered by
Seller and such action has been duly authorized by all necessary corporate
action. This Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller in
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accordance with its terms subject to bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium and similar laws relating to or affecting
creditors' and other obligees' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
(3) None of (i) the execution and delivery of this Agreement, (ii)
the consummation of the Transaction, or (iii) compliance with the terms and
conditions of this Agreement will, with or without the giving of notice or lapse
of time or both, conflict with, breach the terms and conditions of, constitute a
default under, or violate Seller's articles of incorporation or bylaws, any law,
rule, regulation or other requirement of any Governmental Authority, or any
judgment, decree, order, agreement, lease or other instrument to which Seller is
a party or by which Seller, the Stations or any of the Seller's assets,
including the Purchased Assets, may be bound or affected.
(4) To such counsel's knowledge, based on a search of court dockets
as shall be reasonably satisfactory to Buyer's counsel, no suit, action, claim
or proceeding is pending or threatened that questions or may affect the validity
of any action to be taken by Seller pursuant to this Agreement or that seeks to
enjoin, restrain or prohibit Seller from carrying out the Transaction.
(5) To such counsel's knowledge, based on a search of court dockets
as shall be reasonably satisfactory to Buyer's counsel, there is no outstanding
judgment, or any suit, action, claim or proceeding pending, threatened or deemed
by Seller's counsel to be probable of assertion, or any governmental proceeding
or investigation in progress (other than proceedings affecting radio
broadcasters generally) that could reasonably be expected to have an adverse
effect upon the Purchased Assets or upon the business or operations of the
Stations after Closing.
(6) Seller is the authorized legal holder of the FCC Licenses, the
FCC Licenses are in full force and effect, and the FCC Licenses are not the
subject of any pending license renewal application. The FCC Licenses set forth
on Schedule 6.5 constitute all FCC licenses and authorizations issued in
connection with the operation of the Stations and are the only such licenses and
authorizations required for the operation of the Stations, as currently
operated. There are no applications pending before the Commission with respect
to the Stations.
(7) The Commission has consented to the assignment of the FCC
Licenses to Buyer and that consent has become a Final Order, unless the
requirement for a Final Order is waived by Buyer.
(8) To the best of such counsel's knowledge, there is no Commission
investigation, notice of apparent liability or order of forfeiture, pending or
outstanding against the Stations, or any complaint, petition to deny or
proceeding against or involving the Stations pending before the Commission.
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The foregoing opinions shall be for the benefit of and may be relied on by
Buyer and Buyer's lenders. In rendering such opinions, Seller's counsel may
rely upon such corporate records of Seller and such certificates of public
officials and officers of Seller.
(h) Final Order . The Commission's action granting the Assignment
Application shall have become a Final Order.
(i) Financial Statements. The financial information set forth in the
Stations' Financial Statements for the years ending December 31, 1997 and
December 31, 1998, and for the period ending thirty (30) days prior to the
Closing Date fairly and accurately reflect the financial performance and results
of operation of the Stations for those periods.
(j) Trade Balance. The Trade Balance, if negative, will not exceed
Five Thousand Dollars ($5,000).
(k) Compensation. Seller shall have satisfied all amounts due
employees for compensation, whether pursuant to the terms of a written agreement
or otherwise, including bonuses, vacation and sick pay and reimbursement of
expenses, that have accrued as of the Closing.
(l) Studio Site Lease. Seller shall cause Fifteen Forty Broadcasting
Corporation, the owner of the Studio Site, to have entered into a written lease
with Buyer for the use of the real property described in Section 6.13 for a one
(1) year period from the date of Closing at no charge.
(m) WSOJ Transmitter Site Lease. Seller, shall have obtained all
necessary consents for Buyer to assume the WSOJ Transmitter Site Lease with a
termination date no earlier than October 31, 2002 .
(n) Environmental Remediation. Seller shall have cured, to Buyer's
reasonable satisfaction, any deficiency identified in the Environmental
Assessment, provided that in no event shall Seller be required to affect any
-------- ----
cure except to the extent any Hazardous Substances would give rise to liability
under Environmental Law as they apply to the present use of the Real Property,
and provided further that Seller shall not be required to expend more than Fifty
-------- ------- ----
Thousand Dollars ($50,000) to cure such deficiency.
(o) Closing Documents. At the Closing Seller shall deliver to
Buyer (i) such assignments, bills of sale, special warranty deeds and other
instruments of conveyance as are necessary to vest in Buyer title to the
Purchased Assets, all of which documents shall be dated as of the Closing Date,
duly executed by Seller and in form reasonably acceptable to Buyer; (ii) a
certificate, dated the Closing Date, executed by Seller's President certifying
as to those matters set forth in Section 10.2(a) and (b); and (iii) copies of
Seller's corporate resolutions authorizing the Transaction, each certified as to
accuracy and completeness by Seller's Secretary.
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10.3. Additional Conditions to Seller's Obligation. In addition to
--------------------------------------------
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Seller to consummate the Transaction is subject, at Seller's option, to the
satisfaction or waiver by Seller of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
(b) Compliance with Conditions. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the Closing
Date under this Agreement shall have been duly complied with and performed in
all material respects.
(c) Assumption of Liabilities. Buyer shall assume and agree to
pay, perform and discharge Seller's obligations under the Contracts, Sales
Agreements and Trade Agreements to the extent Buyer has expressly agreed to
assume such obligations pursuant to Section 4.4.
(d) Payment. Buyer shall pay Seller the Purchase Price due at
Closing, as provided in Section 4.2.
(e) Closing Documents. Buyer shall deliver to Seller at the
Closing (i) copies of Buyer's corporate resolutions authorizing the Transaction
certified as to accuracy and completeness by Buyer's Secretary; and (ii) a
certificate, dated the Closing Date, executed by Buyer's President certifying as
to those matters set forth in Section 10.3(a) and (b).
11.0. CLOSING. The Closing Date shall be on or before the tenth day after the
-------
date on which the Commission grant of the Assignment Application becomes a Final
Order, or, at Buyer's option, if finality is waived, within fifteen (15) days
after grant of the Assignment Application or such other time as Seller and Buyer
shall mutually agree. Closing shall take place at 10:00 a.m. on the Closing
Date at the offices of Buyer's counsel, Xxxxxxxx & Xxxxx, 000 00xx Xxxxxx, XX,
Xxxxx 0000, Xxxxxxxxxx, X.X. 00000.
12.0. PRORATIONS.
----------
12.1. Apportionment of Expenses. Seller shall be responsible for all
-------------------------
expenses arising out of the business of the Stations until 11:59 p.m. on the
Closing Date, and Buyer shall be responsible for all expenses arising out of the
business of the Stations after 11:59 p.m. on the Closing Date to the extent such
expenses relate to liabilities assumed by Buyer pursuant to Section 4.4. All
overlapping expenses shall be prorated or reimbursed, as the case may be, as of
11:59 p.m. on the Closing Date.
12.2. Determination and Payment. Prorations shall be made, insofar as
-------------------------
feasible, at Closing and shall be paid by way of adjustment to the Purchase
Price. As to the prorations that cannot be made at Closing, the parties shall,
within ninety (90) days after the Closing Date, make and pay all such
prorations. If the parties are unable to agree upon all such prorations within
that
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90-day period, then any disputed items shall be referred to a firm of
independent certified public accountants, mutually acceptable to Seller and
Buyer, whose decision shall be final, and whose fees and expenses shall be
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.
13.0. POST-CLOSING OBLIGATIONS. The parties covenant and agree as follows
------------------------
with respect to the period subsequent to Closing:
13.1. Liabilities. Following the Closing Date, Seller shall pay
-----------
promptly when due all of the debts and liabilities of Seller relating to the
Stations, other than liabilities specifically assumed by Buyer hereunder.
13.2. Indemnification.
---------------
(a) Buyer's Right to Indemnification. Seller hereby indemnifies
and holds Buyer, its officers, directors, shareholders and assigns harmless from
and against (i) any breach, misrepresentation, or violation of any of Seller's
representations, warranties, covenants, or other obligations contained in this
Agreement or in any Seller Document; (ii) all obligations and liabilities of
Seller and/or the Stations not expressly assumed by Buyer pursuant to Section
4.4; and (iii) all claims by third parties (including employees) against Buyer
attributable to the operation of the Stations and/or the use or ownership of the
Purchased Assets prior to Closing. This indemnity is intended by Seller to
cover all actions, suits, proceedings, claims, demands, assessments,
adjustments, interest, penalties, costs and expenses (including, reasonable fees
and expenses of counsel), whether suit is instituted or not and, if instituted,
whether at the trial or appellate level, with respect to any and all of the
specific matters set forth in this indemnity.
(b) Seller's Right to Indemnification. Buyer hereby indemnifies
and holds Seller, its officers, directors, shareholders and assigns harmless
from and against (i) any breach, misrepresentation or violation of any of
Buyer's representations, warranties, covenants or obligations contained in this
Agreement; (ii) all obligations and liabilities expressly assumed by Buyer
hereunder pursuant to Section 4.4; and (iii) all claims by third parties against
Seller attributable to Buyer's operation of the Stations after Closing. This
indemnity is intended by Buyer to cover all actions, suits, proceedings, claims,
demands, assessments, adjustments, interest, penalties, costs and expenses
(including reasonable fees and expenses of counsel), whether suit is instituted
or not and, if instituted, whether at the trial or appellate level, with respect
to any and all of the specific matters set forth in this indemnity.
(c) Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(1) The party claiming indemnification (the "Claimant") shall
give written notice to the party from which indemnification is sought (the
"Indemnitor") promptly after the Claimant learns of any claim or proceeding
covered by the foregoing agreements to indemnify and hold harmless and failure
to provide prompt notice shall not be deemed to
-30-
jeopardize Claimant's right to demand indemnification, provided, that,
-------- ----
Indemnitor is not prejudiced by the delay in receiving notice.
(2) With respect to claims between the parties, following
receipt of notice from the Claimant of a claim, the Indemnitor shall have 15
days to make any investigation of the claim that the Indemnitor deems necessary
or desirable, or such lesser time if a 15-day period would jeopardize any rights
of Claimant to oppose or protest the claim. For the purpose of this
investigation, the Claimant agrees to make available to the Indemnitor and its
authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within the 15-day period, or lesser period
if required by this section (or any mutually agreed upon extension hereof) the
Claimant may seek appropriate legal remedies.
(3) The Indemnitor shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such claim,
provided, that, Indemnitor acknowledges in writing to Claimant that Indemnitor
-------- ----
would assume responsibility for and demonstrates its financial ability to
satisfy the claim should the party asserting the claim prevail. In the event
that the Indemnitor shall not satisfy the requirements of the preceding sentence
or shall elect not to undertake such defense, or within 15 days after notice of
any such claim from the Claimant shall fail to defend, the Claimant shall have
the right to undertake the defense, compromise or settlement of such claim, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnitor. Anything in this Section 13.2(c)(3) to the
contrary notwithstanding, (i) if there is a reasonable probability that a claim
may materially and adversely affect the Claimant other than as a result of money
damages or other money payments, the Claimant shall have the right, at its own
cost and expense, to participate in the defense, compromise or settlement of the
claim, (ii) the Indemnitor shall not, without the Claimant's written consent,
settle or compromise any claim or consent to entry of any judgment which does
not include as an unconditional term thereof the giving by the plaintiff to the
Claimant of a release from all liability in respect of such claim, and (iii) in
the event that the Indemnitor undertakes defense of any claim consistent with
this Section, the Claimant, by counsel or other representative of its own
choosing and at its sole cost and expense, shall have the right to consult with
the Indemnitor and its counsel or other representatives concerning such claim
and the Indemnitor and the Claimant and their respective counsel or other
representatives shall cooperate with respect to such claim.
(d) Assignment of Claims. If any payment is made pursuant to this
Section 13.2, the Indemnitor shall be subrogated to the extent of such payment
to all of the rights of recovery of Claimant, and Claimant shall assign to
Indemnitor, for its use and benefit, any and all claims, causes of actions, and
demands of whatever kind and nature that Claimant may have against the person,
firm, corporation or entity giving rise to the loss for which payment was made.
Claimant agrees to reasonably cooperate in any efforts by Indemnitor to recover
such loss from any person, firm, corporation or entity.
(e) Indemnification Not Sole Remedy. The right to indemnification
provided for in this Section shall not be the exclusive remedy of either party
in connection with
-31-
any breach by the other party of its representations, warranties, covenants or
other obligations hereunder, nor shall such indemnification be deemed to
prejudice or operate as a waiver of any right or remedy to which either party
may otherwise be entitled as a result of any such breach by the other party.
(f) Threshold Concerning Sections 13.2(a) and (b). Notwithstanding
anything to the contrary in Sections 13.2(a) and (b), the parties shall not be
entitled to indemnity under Sections 13.2(a) and (b) unless the aggregate loss
indemnified against thereunder exceeds $25,000 (in which case, the Claimant
shall be entitled to recovery from the Indemnitor of the full amount of the
loss).
13.3 Cooperation with Respect to Financial and Tax Matters. From the date
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of Closing and for a period of three (3) years thereafter, Seller shall provide
Buyer with such cooperation and information as Buyer shall reasonably request in
Buyer's: (i) analysis and review of the Financial Statements or (ii) preparation
of documentation to fulfill any reporting requirements of Buyer including
reports that may be filed with the Securities and Exchange Commission. Seller
shall make its independent accounting firm available, the cost of said firm to
be paid by the Buyer, and the information relied upon by that firm, including
its opinions and Financial Statements for the Seller, to provide explanations of
any documents or information provided hereunder and to permit disclosure by
Buyer, including disclosure to any Governmental Authority.
14. DEFAULT AND REMEDIES.
--------------------
14.1. Opportunity to Cure. If either party believes the other to be in
-------------------
breach or in default hereunder, the former party shall provide the other with
written notice specifying in reasonable detail the nature of such default. If
the default has not been cured by the earlier of: (i) the Closing Date, or (ii)
within 10 days after delivery of that notice (or such additional reasonable time
as the circumstances may warrant provided the party in default undertakes
diligent, good faith efforts to cure the default within such 10-day period and
continues such efforts thereafter), then the party giving such notice may
exercise the remedies available to such party pursuant to this Section, subject
to the right of the other party to contest the alleged default through
appropriate proceedings.
14.2. Seller's Remedies. Buyer recognizes that if the Transaction is
-----------------
not consummated as a result of Buyer's breach or default, Seller would be
entitled to compensation, the extent of which is extremely difficult and
impractical to ascertain. To avoid this problem, the parties agree that if the
Transaction is not consummated due to the breach or default of Buyer, Seller,
provided that Seller is not in breach or default and has otherwise complied with
its obligations under this Agreement, shall be entitled to the Initial Escrow
Deposit, with interest earned thereon. The parties agree that this sum shall
constitute liquidated damages and shall be in lieu of any other relief to which
Seller might otherwise be entitled due to Buyer's failure to consummate the
Transaction as a result of a breach or default by Buyer.
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14.3. Buyer's Remedies. Seller agrees that the Purchased Assets include
----------------
unique property that cannot be readily obtained on the open market and that
Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall have the right specifically to enforce
Seller's performance under this Agreement, and Seller agrees (i) to waive the
defense in any such suit that Buyer has an adequate remedy at law and (ii) to
interpose no opposition, legal or otherwise, as to the propriety of specific
performance as a remedy. If Buyer elects to terminate this Agreement as a
result of Seller's breach or default instead of seeking specific performance,
Buyer shall be entitled to the return of the Initial Escrow Deposit together
with all interest earned thereon, and in addition thereto, to initiate a suit
for damages.
15.0. TERMINATION OF AGREEMENT.
------------------------
15.1. Failure to Close. This Agreement may be terminated at the option
----------------
of either party upon written notice to the other if the Commission has not
granted the Assignment Application within nine (9) months after the Commission
accepts the Assignment Application for filing or may be terminated by Buyer if
the Commission's action granting the Assignment Application has not become a
Final Order within twelve (12) months after the Commission accepts the
Assignment Application for filing; provided, however, that a party may not
-------- -------
terminate this Agreement if such party is in default hereunder, or if a delay in
any decision or determination by the Commission respecting the Assignment
Application has been caused or materially contributed to (i) by any failure of
such party to furnish, file or make available to the Commission information
within its control; (ii) by the willful furnishing by such party of incorrect,
inaccurate or incomplete information to the Commission; or (iii) by any other
action taken by such party for the purpose of delaying the Commission's decision
or determination respecting the Assignment Application. This Agreement may also
be terminated upon the mutual agreement of Buyer and Seller. In the event of
termination pursuant to this Section, the Initial Escrow Deposit, together with
all interest earned thereon, shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder unless the failure
to consummate the Transaction is attributable to Buyer's default, and Seller is
not in default and has otherwise complied with its obligations under this
Agreement, in which case the Initial Escrow Deposit plus interest earned thereon
shall be released to Seller as liquidated damages pursuant to Section 14.2.
15.2. Designation for Hearing. The time for approval provided in
-----------------------
Section 15.1 notwithstanding, either party may terminate this Agreement upon
written notice to the other, if, for any reason, the Assignment Application is
designated for hearing by the Commission, provided, however, that written notice
-------- -------
of termination must be given within 10 days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section, the Initial Escrow Deposit together with
all interest earned thereon shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder, provided,
--------
however, that if the designation for hearing is predicated upon breach by either
-------
party of a representation, warranty or covenant contained in this Agreement, the
nonbreaching party may, in addition to termination, pursue the remedies
available to such non-breaching party provided in Sections 14.2 and 14.3.
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15.3. Environmental Remediation. By either Buyer or Seller if the
-------------------------
Environmental Assessment shows the presence of conditions that must be cured or
removed and such remediation will cost in excess of Fifty Thousand Dollars
($50,000) ("Threshold Amount") and Seller declines to pay for remediation in
excess of the Threshold Amount, provided that neither Buyer nor Seller will be
-------- ----
entitled to terminate this Agreement pursuant to this Section 15.3 if Buyer
elects to pay for remediation in excess of the Threshold Amount and such excess
payment does not reduce the Purchase Price.
16. GENERAL PROVISIONS.
------------------
16.1. Brokerage. Seller and Buyer represent to each other that neither
---------
party has dealt with a broker in connection with the Transaction, except that
Seller has retained Media Services Group, Inc. No finders fee is due to any
person or entity in connection with the Transaction except for Media Services
Group, Inc. and such fee as it relates to the Purchase Price shall be paid by
Buyer at Closing. In addition, Seller shall pay the brokerage fee of 1.5%, due
Media Services Group, Inc. on the additional contingent consideration described
in Section 4.3 above on the same date that such additional contingent
consideration, if any, is paid to Seller.
16.2. Fees. All Commission filing fees for the Assignment Application
----
and other similar charges shall be paid one-half by Seller and one-half by
Buyer. With respect to costs associated with the purchase of the Real Property,
Seller shall bear the cost of preparation of the deed and the grantors tax.
Buyer shall pay all other settlement costs associated with the closing on the
purchase of the Real Property. Taxes shall be prorated as of the date of
Settlement on the Real Property. Except as otherwise provided herein, all other
expenses incurred in connection with this Agreement or the Transaction shall be
paid by the party incurring those expenses whether or not the Transaction is
consummated.
16.3. Notices. All notices, requests, demands and other communications
-------
pertaining to this Agreement shall be in writing and shall be deemed duly given
when (i) delivered personally (which shall include delivery by Federal Express
or other recognized overnight courier service that issues a receipt or other
confirmation of delivery) to the party for whom such communication is intended,
(ii) delivered by facsimile transmission or (iii) three business days after the
date mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Seller:
Xx. Xxxxxx M. Belle
President
FM-100, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
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with a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxx, Xxxxxxx & Xxxxx
0000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
If to Buyer:
Xx. Xxxxxx X. Xxxxxxx, President
Radio One, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
with copies (which shall not constitute notice) to:
Xxxxx X. Xxxxxx, Esquire
Radio One, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Xx. Xxxxx Xxxxxxx
Executive Vice President
Radio One, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Either party may change its address for notices by written notice to the other
given pursuant to this Section. Any notice purportedly given by a means other
than as set forth in this Section shall be deemed ineffective.
16.4. Assignment. Neither party may assign this Agreement without the
----------
other party's express prior written consent, provided, however, Buyer may assign
-------- -------
its rights and obligations
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pursuant to this Agreement without Seller's consent prior to closing to (i) an
entity which is a subsidiary or parent of Buyer or to an entity owned or
controlled by Buyer or its principals or (ii) to Buyer's lenders as collateral
for any indebtedness incurred by Buyer; and subsequent to closing to (x) any
entity which acquires all or substantially all of the Purchased Assets or (y) to
Buyer's lenders as collateral for any indebtedness incurred by Buyer. Subject to
the foregoing, this Agreement shall be binding on, inure to the benefit of, and
be enforceable by the original parties hereto and their respective successors
and permitted assignees.
16.5. Exclusive Dealings. For so long as this Agreement remains in
------------------
effect, neither Seller nor any person acting on Seller's behalf shall, directly
or indirectly, solicit or initiate any offer from, or conduct any negotiations
with, any person or entity concerning the acquisition of all or any interest in
any of the Purchased Assets or the Stations, other than Buyer or Buyer's
permitted assignees.
16.6. Third Parties. Nothing in this Agreement, whether express or
-------------
implied, is intended to: (i) confer any rights or remedies on any person other
than Seller, Buyer and their respective successors and permitted assignees; (ii)
relieve or discharge the obligations or liability of any third party; or (iii)
give any third party any right of subrogation or action against either Seller or
Buyer.
16.7. Indulgences. Unless otherwise specifically agreed in writing to
-----------
the contrary: (i) the failure of either party at any time to require performance
by the other of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (ii) no waiver by either party of any
default by the other shall be taken or held to be a waiver by such party of any
other preceding or subsequent default; and (iii) no extension of time granted by
either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
16.8. Survival of Representations and Warranties. The
---------------------------------------------
representations, warranties, and indemnification obligations of the parties
contained herein shall survive for eighteen (18) months after the Closing Date
except that claims properly asserted within the eighteen (18) month period shall
survive until finally and fully resolved; provided, however, that Seller's
-------- -------
representations and warranties in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.10, 6.12,
6.13 and 6.21 and Buyer's indemnification rights with respect thereto and with
respect to Section 13.2(a)(ii) shall survive the Closing until the end of the
applicable statute of limitations period.
16.9. Prior Negotiations. This Agreement supersedes in all respects all
------------------
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All
of such prior and contemporaneous negotiations, understandings and agreements
are merged herein and superseded hereby.
16.10. Exhibits and Schedules. The Exhibits and Schedules attached hereto
----------------------
or referred to herein are a material part of this Agreement, as if set forth in
full herein.
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16.11. Entire Agreement; Amendment. This Agreement, the Exhibits and
---------------------------
Schedules to this Agreement set forth the entire understanding between the
parties in connection with the Transaction, and there are no terms, conditions,
warranties or representations other than those contained, referred to or
provided for herein and therein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an instrument
in writing signed by each of the parties hereto.
16.12. Counsel/Interpretation. Each party has been represented by its own
----------------------
counsel in connection with the negotiation and preparation of this Agreement.
This Agreement shall be fairly interpreted in accordance with its terms and, in
the event of any ambiguities, no inferences shall be drawn against either party.
16.13. Governing Law, Jurisdiction. This Agreement shall be governed by,
---------------------------
and construed and enforced in accordance with the laws of the State of Maryland
without regard to the choice of law rules utilized in that jurisdiction. Buyer
and Seller each (a) hereby irrevocably submit to the jurisdiction of the courts
of that state and (b) hereby waive, and agree not to assert, by way of motion,
as a defense, or otherwise, in any such suit, action or proceeding, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Agreement or the
subject matter hereof may not be enforced in or by such court. Buyer and Seller
each hereby consent to service of process by registered mail at the address to
which notices are to be given. Each of Buyer and Seller agrees that its
submission to jurisdiction and its consent to service of process by mail is made
for the express benefit of the other party hereto. Final judgment against Buyer
or Seller in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction; provided,
--------
however, that any party may at its option bring suit, or institute other
-------
judicial proceedings, in any state or federal court of the United States or of
any country or place where the other party or its assets, may be found.
16.14. Severability. If any term of this Agreement is illegal or
------------
unenforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of applicable law and such term, as so modified, and
the balance of this Agreement shall then be fully enforceable.
16.15. Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument. Each fully executed set of counterparts shall be
deemed to be an original, and all of the signed counterparts together shall be
deemed to be one and the same instrument.
16.16. Further Assurances. Seller shall at any time and from time to time
------------------
after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may request to vest and
confirm in Buyer (or its assignee) the title and rights to and in all the
Purchased Assets to be and intended to be transferred, assigned and conveyed
hereunder.
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IN WITNESS WHEREOF, and to evidence their assent to the foregoing, Seller
and Buyer have executed this Asset Purchase Agreement under seal as of the date
first written above.
SELLER:
FM100, INC.
By: /s/ Walton M. Belle
---------------------
Xx. Xxxxxx M. Belle
President
BUYER:
RADIO ONE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
Xxxxxx X. Xxxxxxx
President
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