ASSET PURCHASE AGREEMENT
BETWEEN
SECRET COMMUNICATIONS LIMITED PARTNERSHIP
AND
SFX BROADCASTING, INC.
TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS...............................1
1.1. Purchase and Sale of Purchased Assets........................1
1.2. Excluded Assets..............................................3
1.3. Purchase Price...............................................4
1.4. Assumption of Liabilities....................................4
1.5. Excluded Liabilities.........................................4
1.6. Closing Date; Deliveries.....................................5
1.7. Further Assurances...........................................5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER............................6
2.1. Organization of Seller.......................................6
2.2. Subsidiaries and Investments.................................6
2.3. Authority of Seller..........................................6
2.4. Financial Statements.........................................7
2.5. Operations Since Balance Sheet Date..........................8
2.6. Taxes........................................................8
2.7. Availability of Assets.......................................9
2.8. Governmental Permits.........................................9
2.9. Real Property...............................................10
2.10. Real Property Leases........................................11
2.11. Condemnation................................................12
2.12. Personal Property...........................................12
2.13. Personal Property Leases....................................12
2.14. Intellectual Property.......................................12
2.15. Title to Purchased Assets...................................13
2.16. Contracts...................................................13
2.17. Status of Contracts.........................................14
2.18. No Violation, Litigation or Regulatory Action...............15
2.19. Hazardous Materials.........................................15
2.20. Finder......................................................16
2.21. No Interference.............................................16
2.22. Foreign Investment in Real Property Tax Act.................16
2.23. Bankruptcy..................................................16
2.24. Employee Benefit Plans......................................17
2.25. Exchange Agreement..........................................17
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2.26. Full Disclosure.............................................18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER............................18
3.1. Organization of Buyer.......................................18
3.2. Authority of Buyer..........................................18
3.3. Absence of Knowledge as to Certain Facts....................19
3.4. Financial Capability........................................19
3.5. No Finder...................................................19
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE...................................19
4.1. Investigation of the Stations by Buyer......................19
4.2. Preserve Accuracy of Representations and Warranties.........20
4.3. FCC Consent; Improvements Act Approval; Other
Consents and Approvals....................................20
4.4. Operations Prior to the Closing Date........................21
4.5. Delivery of Schedules.......................................23
ARTICLE V
ADDITIONAL AGREEMENTS..............................................24
5.1. Taxes; Sales, Use and Transfer Taxes; Title Insurance.......24
5.2. Audit of Financial Statements of Stations...................25
5.3. Covenant Not to Compete...................................25
5.4. Collection of Receivables...................................26
5.5. Employees and Employee Benefit Plans......................27
5.6. Relocation of Pittsburgh Antennae and Studio.................28
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.......................29
6.1. No Misrepresentation or Breach of Covenants and
Warranties................................................29
6.2. Opinion of Counsel for Seller...............................29
6.3. Partnership Action..........................................29
6.4. No Restraint or Litigation..................................29
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6.5. FCC Consent.................................................29
6.6. Necessary Consents..........................................30
6.7. FIRPTA Certificate..........................................30
6.8. Exchange Transaction.........................................30
6.9. Completion of Audit..........................................30
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER......................30
7.1. No Misrepresentation or Breach of Covenants and
Warranties................................................30
7.2. Opinion of Counsel for Buyer................................31
7.3. Corporate Action............................................31
7.4. No Restraint................................................31
7.5. FCC Consent.................................................31
7.6. Exchange Transaction........................................31
ARTICLE VIII
INDEMNIFICATION....................................................31
8.1. Indemnification by Seller...................................31
8.2. Indemnification by Buyer....................................32
8.3. Limitations of Indemnification Obligations..................32
8.4. Notice of Claims............................................34
8.5. Third Party Claims..........................................34
8.6. Exclusive Remedy............................................35
ARTICLE IX
TERMINATION........................................................36
9.1. Termination.................................................36
9.2. Notice of Termination.......................................37
ARTICLE X
GENERAL PROVISIONS.................................................37
10.1. No Announcement............................................37
10.2. Confidential Nature of Information.........................37
10.3. Governing Law; Submission to Jurisdiction..................38
10.4. Notices....................................................39
10.5. Successors and Assigns.....................................40
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10.6. Access to Records after Closing............................41
10.7. Entire Agreement; Amendments...............................41
10.8. Interpretation; Disclosure Schedules.......................41
10.9. Waivers....................................................42
10.10. Expenses...................................................42
10.11. Partial Invalidity.........................................42
10.12. Execution in Counterparts..................................42
10.13. Definitions................................................43
10.14. Allocation of Purchase Price...............................47
10.15. Specific Performance; Other Rights and Remedies............47
10.16. Risk of Loss...............................................47
10.17. Assignment of Rights Under Exchange Agreement..............48
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EXHIBIT DESCRIPTION
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A Escrow Agreement
B Undertaking and Assumption
C Xxxx of Sale and Assignment
SCHEDULE DESCRIPTION
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1.2(k) -- Excluded Software
2.3 -- Conflicts; Consents of Seller
2.4(a)&(b) -- Financial Statements
2.5 -- Changes in Operations
2.7 -- Unavailable Assets
2.8 -- Governmental Permits
2.9 -- Real Property
2.10 -- Real Property Leases
2.12 -- Personal Property
2.13 -- Personal Property Leases
2.14 -- Intellectual Property
2.15 -- Title to Property
2.16 -- Contracts
2.17 -- Status of Contracts
2.18 -- Legal Proceedings
2.19 -- Environmental Matters
2.24 -- Employee Benefit Plans
3.2 -- Conflicts; Consents of Buyer
3.3 -- Absence of Knowledge of Certain Facts
4.4(b) -- Conduct of Business
6.6 -- Necessary Consents
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October 15, 1996
between Secret Communications Limited Partnership, a Delaware limited
partnership ("Seller"), and SFX Broadcasting, Inc., a Delaware corporation
("Buyer").
W I T N E S S E T H :
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WHEREAS, Seller is the licensee of and operates radio stations WTAM-AM and
WLTF-FM in Cleveland, Ohio, WFBQ-FM, WRZX-FM and WNDE-AM in Indianapolis,
Indiana and WDVE-FM and WXDX-FM in Pittsburgh, Pennsylvania (the "Owned
Stations") and, upon the consummation of the transactions contemplated by the
Asset Exchange Agreement (the "Exchange Agreement") dated as of May 31, 1996 by
and among Seller, Nationwide Communications, Inc. and Entercom (as defined
below), Seller will become the licensee of and have the right to operate radio
stations WDSY-FM and WJJJ-FM (formerly WNRQ-FM) in Pittsburgh, Pennsylvania
(the "Purchased Stations") (the Owned Stations and the Purchased Stations being
collectively referred to herein as the "Stations");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the assets, properties and business relating
to the Stations, all on the terms and subject to the conditions set forth
herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
Buyer, Seller and The First National Bank of Chicago (the "Escrow Agent") have
executed and delivered the Escrow Agreement dated the date hereof (the "Escrow
Agreement") in the form of Exhibit A, and Buyer has delivered to the Escrow
Agent a letter of credit with a drawable balance of $15,000,000 to be held by
the Escrow Agent pursuant to the terms and conditions of the Escrow Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed between Seller and Buyer as follows:
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ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS
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1.1. PURCHASE AND SALE OF PURCHASED ASSETS. Upon the terms and subject to
the conditions of this Agreement, on the Closing Date, Seller shall sell,
transfer, assign, convey and deliver to Buyer, and Buyer shall purchase from
Seller, free and clear of all Encumbrances (except for Permitted Encumbrances),
all of the assets, properties and business (excepting only the Excluded Assets)
of every kind and description, wherever located, real, personal or mixed,
tangible or intangible, owned or held by Seller relating to the Stations as the
same shall exist on the Closing Date (herein collectively called the "Purchased
Assets"), including, without limitation, all right, title and interest of
Seller in, to and under:
(a) The broadcast licenses for the Stations (including the right to
use the call letters "WTAM-AM", "WLTF-FM", "WFBQ-FM", "WRZX-FM", "WNDE-AM",
"WDVE-FM", "WXDX-FM", "WDSY-FM" and "WJJJ-FM") issued by the FCC and all other
Governmental Permits listed in Schedule 2.8;
(b) The Owned Real Property listed in Schedule 2.9;
(c) The real property leases and leasehold improvements listed or
described in Schedule 2.10;
(d) All machinery, equipment (including computers and office
equipment), auxiliary and translator facilities, transmitting towers,
transmitters, broadcast equipment, antennae, inventory (including all records,
tapes, recordings, compact discs and music cassettes), vehicles, furniture and
other personal property of the Stations listed or referred to in Schedule 2.12;
(e) The personal property leases listed in Schedule 2.13;
(f) All trademarks, trade names, service marks and copyrights (and all
goodwill associated therewith), registered or unregistered, of Seller relating
to the Stations, and the applications for registration thereof and the
licenses relating to any of the foregoing listed in Schedule 2.14;
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(g) The contracts, agreements or understandings listed or described in
Schedule 2.16;
(h) All advertising customer lists, mailing lists, processes, trade
secrets, know-how and other proprietary or confidential information used in or
relating to the Stations;
(i) All of Seller's rights, claims or causes of action against third
parties arising under warranties from manufacturers, vendors and others in
connection with the Purchased Assets;
(j) All jingles, slogans and promotional materials used in or relating
to the Stations; and
(k) All books and records (including all computer programs) of Seller
relating to the assets, business and operations of the Stations, including,
without limitation, all files, logs, programming information and studies and
news and advertising studies.
1.2. EXCLUDED ASSETS. Notwithstanding the foregoing, the Purchased Assets
shall not include the following (herein referred to as the "Excluded Assets"):
(a) All cash and cash equivalents (including any marketable securities
or certificates of deposit) of Seller or Entercom relating to the Stations and
all notes and accounts receivable or other evidences of indebtedness owed to
Seller or its Affiliates or Entercom or its Affiliates relating to the
Stations;
(b) All notes and accounts receivable or other evidences of
indebtedness owed to Seller by any of its Affiliates;
(c) All claims, rights and interests of Seller in and to any refunds
for federal, state or local franchise, income or other Taxes or fees of any
nature whatsoever for periods prior to the Closing Date;
(d) Except as otherwise provided in Section 1.1(i), any of Seller's
rights, claims or causes of action against third parties relating to the
assets, properties, business or
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operations of the Stations arising out of transactions occurring prior to the
Closing Date;
(e) All bonds, contracts or policies of insurance and prepaid
insurance with respect to such contracts or policies;
(f) All records prepared in connection with the sale of the Stations,
including bids received from others and analyses relating to the Stations and
the Purchased Assets;
(g) The partnership name of Secret;
(h) All records and documents relating to Excluded Assets or to
liabilities other than Assumed Liabilities;
(i) Seller's employee benefit agreements, plans or arrangements
maintained by Seller on behalf of persons employed by Seller;
(j) All rights, claims or causes of action against third Persons
relating to the assets, business or operation of the Stations which may arise
in connection with the discharge by Seller of the Excluded Liabilities;
(k) Software programs and other assets at Seller's principal executive
offices set forth on Schedule 1.2(k) used to provide certain financial and
accounting services for the Stations;
(l) All rights of Seller under the Exchange Agreement and all related
agreements not otherwise assigned to Buyer herein; and
(m) Any of Seller's rights under or pursuant to this Agreement or the
other agreements with Buyer contemplated hereby.
1.3. PURCHASE PRICE. The purchase price for the Purchased Assets (the
"Purchase Price") shall be equal to $300,000,000; provided, that if Aggregate
1996 Broadcast Cash Flow of the Stations is less than $13,374,000, then the
Purchase Price shall be equal to $291,000,000.
1.4. ASSUMPTION OF LIABILITIES. On the Closing Date, Buyer shall deliver
to Seller an undertaking and assumption, in
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the form of Exhibit B, pursuant to which Buyer shall assume and be obligated
for, and shall agree to pay, perform, defend and discharge in accordance with
their terms, all liabilities and obligations of Seller arising after the
Closing Date under (i) the Seller Agreements, (ii) the leases, contracts and
other agreements not required by the terms of Section 2.16 to be listed in a
Schedule to this Agreement and (iii) the leases, contracts and other agreements
entered into by Seller with respect to the Stations after the date hereof
consistent with the terms of this Agreement, except, in each case, to the
extent such liabilities and obligations have accrued prior to the Closing Date.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
1.5. EXCLUDED LIABILITIES. Buyer shall not assume or be obligated to pay,
perform or otherwise discharge any liability or obligation of Seller not
expressly assumed by Buyer pursuant to the undertaking and assumption referred
to in Section 1.4 (all such liabilities and obligations not being assumed being
herein called the "Excluded Liabilities") and, notwithstanding anything to the
contrary in Section 1.4, none of the following shall be "Assumed Liabilities"
for purposes of this Agreement:
(i) any liabilities in respect of any Taxes of Seller for which
Seller is liable pursuant to Section 5.1(a);
(ii) any intercompany payables and other liabilities or obligations
of Seller to any of its Affiliates;
(iii) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(iv) any liabilities or obligations in respect of any Excluded
Assets; or
(v) any liabilities arising from the operation of the Stations prior
to the Closing regardless of whether operated by Seller or any predecessor
owner of the Station.
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1.6. CLOSING DATE; DELIVERIES. (a) The Closing shall be consummated at
10:00 A.M., local time, on the tenth business day after the FCC Consent shall
become a Final Order at the offices of Buyer, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 or at such other place, time and date as shall be agreed upon by
Buyer and Seller (the date and time on which the Closing is actually held being
hereinafter referred to as the "Closing Date").
(b) On the Closing Date, Seller shall deliver to Buyer (i) a xxxx of
sale and assignment, in the form of Exhibit C, of all of the Purchased Assets
and (ii) all of the documents, instruments and opinions required to be
delivered by Seller pursuant to Article VI.
(c) On the Closing Date, Buyer shall (i) deliver to Seller (A) by bank
wire transfer of immediately available funds to an account number to be
designated by Seller in writing at least two business days prior to Closing an
amount equal to the Purchase Price and (B) all of the documents, instruments
and opinions required to be delivered by Buyer pursuant to Section 1.4 and
Article VII.
1.7. FURTHER ASSURANCES. On the Closing Date, Seller shall (a) deliver to
Buyer such other bills of sale, deeds, endorsements, assignments and other good
and sufficient instruments of conveyance and transfer as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of Seller in, to or under any or all of the Purchased
Assets and (b) take all steps as may be reasonably necessary to put Buyer in
actual possession and control of all the Purchased Assets. From time to time
following the Closing, Seller shall execute and deliver, or cause to be
executed and delivered, to Buyer such other instruments of conveyance and
transfer as Buyer may reasonably request or as may be otherwise necessary to
more effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets which cannot
be transferred or assigned effectively without the consent of third parties
which consent has not been obtained prior to the Closing, to cooperate with
Buyer at its reasonable request in endeavoring to obtain such consent.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
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As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer and agrees as follows:
2.1. ORGANIZATION OF SELLER. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign limited
partnership in the States of Indiana, Ohio and Pennsylvania. Seller has full
partnership power and authority, or will have full partnership power and
authority upon consummation of the transactions contemplated by the Exchange
Agreement (the "Exchange Transaction"), to own or lease and to operate and use
the Purchased Assets and to carry on the business of the Stations as now
conducted.
2.2. SUBSIDIARIES AND INVESTMENTS. Seller does not, directly or
indirectly, own, of record or beneficially, any outstanding voting securities
or other equity interests in any corporation, partnership, joint venture or
other entity which is involved in or relates to the Stations.
2.3. AUTHORITY OF SELLER. Seller has the partnership power and authority
to execute, deliver and perform, or will have the partnership power and
authority upon consummation of the Exchange Transaction to perform, this
Agreement and all of the other agreements and instruments to be executed and
delivered by Seller to Buyer pursuant hereto (collectively, the "Seller
Ancillary Agreements").
The execution, delivery and performance of this Agreement and the Seller
Ancillary Agreements by Seller have been duly authorized and approved by all
necessary partnership action on behalf of Seller and its general partners. This
Agreement is, and each Seller Ancillary Agreement when executed and delivered
by Seller and the other parties thereto will be, a legal, valid and binding
agreement of Seller enforceable in accordance with its respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application
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relating to or affecting creditors' rights and general equity principles.
Except as set forth in Schedule 2.3, neither the execution and delivery
by Seller of this Agreement or any of the Seller Ancillary Agreements or the
consummation by Seller of any of the transactions contemplated hereby or
thereby nor compliance by Seller with or fulfillment by Seller of the terms,
conditions and provisions hereof or thereof will:
(a) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon any of the Purchased
Assets under, the partnership agreement of Seller, any Seller Agreement or any
judgment, order, award or decree to which Seller is a party or any of the
Purchased Assets is subject or by which Seller is bound or any Requirements of
Law affecting Seller or the Purchased Assets; or
(b) require the approval, consent, authorization or act of, or the
making by Seller of any declaration, filing or registration with, any Person,
except for such of the foregoing as are necessary pursuant to the Improvements
Act or the Communications Act.
2.4. FINANCIAL STATEMENTS. (a) Schedule 2.4(a) contains (i) the unaudited
balance sheets of the Owned Stations as of December 31, 1995 and the related
statements of income for the year then ended and (ii) the unaudited balance
sheets (the "Balance Sheet") of the Owned Stations as of August 31, 1996 (the
"Balance Sheet Date") and the related statement of income for the eight months
then ended. Such balance sheets and statements of income have been prepared in
accordance with generally accepted accounting principles and present fairly the
financial position and results of operations of the Owned Stations as of their
respective dates and for the respective periods covered thereby subject to the
absence of footnotes and statements of cash flows and to normal year-end
adjustments.
(b) Schedule 2.4(b) contains the unaudited statements of income of the
Purchased Stations for the three month period ended August 31, 1996. The
statements of income for the three
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month period ended August 31, 1996 present fairly the results of operations of
the Purchased Stations for the period covered thereby subject to the absence of
footnotes, balance sheet and statement of cash flows and normal year-end
adjustments.
(c) Schedule 2.4(c) contains (i) the balance sheet of the Purchased
Stations as of September 30, 1995 (the "Purchased Stations Balance Sheet" and
the unaudited statements of income for the twelve months then ended and (ii)
the unaudited statements of income for the eight months ended May 31, 1996, in
each case in the form provided to Seller by Entercom pursuant to the Exchange
Agreement. To the knowledge of Seller, except as set forth therein, the balance
sheets as of September 30, 1995 and the statements of income for the twelve
months then ended and the statements of income for the eight months ended May
31, 1996 present fairly the financial position and results of operations of the
Purchased Stations as of such dates and for the period covered thereby subject
to the absence of footnotes and statements of cash flows and normal year-end
adjustments.
2.5. OPERATIONS SINCE BALANCE SHEET DATE. Except as set forth in Schedule
2.5(b), since the Balance Sheet Date, Seller has conducted the business of the
Owned Stations and, to the knowledge of Seller, the business of the Purchased
Stations has only been conducted, in the ordinary course. Without limiting the
generality of the foregoing, since the Balance Sheet Date, except as set forth
in such Schedule, Seller has not, in respect of the Owned Stations and, to the
knowledge of Seller, the Purchased Stations:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from Seller to any of its Affiliates), or
mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance
on, any of the assets reflected on the Balance Sheet or the Purchased
Stations Balance Sheet or any assets acquired after the Balance Sheet Date
relating to the Stations, other than personal property having an aggregate
value of less than $50,000 sold or otherwise disposed of in the ordinary
course of the business of the Stations which would not reasonably be
expected to have a material adverse effect on the business or operations
of the Stations and except for Permitted Encumbrances;
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(ii) created, incurred, or assumed, or agreed to create,
incur, or assume, any indebtedness for borrowed money (other than
money borrowed or advances from any of its Affiliates in the ordinary
course of the business of the Stations) or entered into (as lessee)
any capitalized leases; or
(iii) granted or instituted any material increase in any rate
of salary or compensation of any employee of the Stations or any
profit sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare or other
employee benefit plan.
2.6. TAXES. (a) Seller has, in respect of the Owned Stations, either filed
or obtained extensions for filing pursuant to applicable law all Tax Returns
due on or prior to the date of this Agreement and has paid or made provision
for the payment of all Taxes which have become due pursuant to such Tax Returns
or pursuant to any assessments which have become payable and which are not
being contested in good faith. All monies required to be withheld by Seller
from employees of the Owned Stations for income Taxes, social security and
other payroll Taxes have been collected or withheld, and either paid to the
respective governmental agencies, set aside in accounts for such purpose, or
accrued, reserved against and entered upon the books of Seller.
(b) In respect of the Purchased Stations, to the knowledge of Seller,
either Seller or Entercom has filed or obtained extensions for filing pursuant
to applicable law all Tax Returns due on or prior to the date of this Agreement
and either Seller or Entercom has paid or made provision for the payment of all
Taxes which have become due pursuant to such Tax Returns or pursuant to any
assessments which have become payable and which are not being contested in good
faith. To the knowledge of Seller, monies required to be withheld from
employees of the Purchased Stations for income Taxes, social security and other
payroll Taxes have been collected or withheld, and either paid to the
respective governmental agencies, set aside in accounts of Seller or Entercom
for such purpose, or accrued, reserved against and entered upon the books of
Seller or Entercom. To the knowledge of Seller, no Taxing authority has
asserted in writing against Seller or Entercom any deficiency or claim for
additional
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Taxes in respect of the Purchased Stations which is currently pending.
2.7. AVAILABILITY OF ASSETS. Except as set forth in Schedule 2.7 and
except for the Excluded Assets, the Purchased Assets constitute all the assets
used in the conduct of the business of the Stations (including, without
limitation, all books, records, computers and computer programs and data
processing systems). All tangible Purchased Assets are in good repair and
operating condition, ordinary wear and tear excepted, and have been maintained
in accordance with industry practice and comply with all applicable rules and
regulations of the FCC and the terms of the FCC Authorizations. Except as set
forth in Schedule 2.7, the Purchased Assets are sufficient to operate the
Stations as they are now operated. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES MADE IN THIS AGREEMENT, ALL OF THE TANGIBLE PURCHASED ASSETS ARE
SOLD TO BUYER "AS IS" WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS
FOR INTENDED USE OR OTHERWISE.
2.8. GOVERNMENTAL PERMITS. Seller owns, holds or possesses, or upon
consummation of the Exchange Transaction will own, hold or possess, the FCC
Authorizations and all other governmental licenses, franchises, permits,
privileges, immunities, approvals and other authorizations which are necessary
to entitle it to own or lease, operate and use the Purchased Assets and to
carry on and conduct the business of the Stations as currently conducted
(herein collectively called "Governmental Permits"), except for such
Governmental Permits which the failure to so own, hold or possess would not
have a material adverse effect on the operations and financial condition of the
Stations taken as a whole. Schedule 2.8 sets forth a list and brief description
of each such Governmental Permit held by Seller as of the date of this
Agreement with respect to the Owned Station and each such Governmental Permit
disclosed to Seller by Entercom pursuant to the Exchange Agreement or otherwise
with respect to the Purchased Stations, except for such incidental licenses,
permits and other authorizations which would be readily obtainable by any
qualified applicant without undue burden in the event of any lapse,
termination, cancellation or forfeiture thereof. Schedule 2.8 includes a list
of all FCC Authorizations with respect to the Owned Stations and, to the
knowledge of Seller, all FCC Authorizations with respect to the Purchased
Stations.
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Except as set forth in Schedule 2.8, (i) Seller has fulfilled and
performed its obligations under each of such Governmental Permits, and no event
has occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default under any
such Governmental Permit, (ii) no notice of cancellation, of default or of any
dispute concerning any Governmental Permit, or of any event, condition or state
of facts described in the preceding clause (i), has been received by Seller,
(iii) each of the Governmental Permits is valid, subsisting and in full force
and effect and, subject to the receipt of the FCC Consent and consummation of
the Exchange Transaction, may be assigned and transferred to Buyer in
accordance with this Agreement and will continue in full force and effect
thereafter, in each case without (A) the occurrence of any breach, default or
forfeiture of rights thereunder or (B) the consent, approval, or act of, or the
making of any filing with, any governmental body, regulatory commission or
other party (other than the FCC as contemplated by Section 4.3); and (iv) the
Stations are being operated in accordance with the FCC Authorizations. Except
as set forth in Schedule 2.8, Seller is not aware of any reason why the FCC
Authorizations would not be renewed in the ordinary course for a full term
without material qualifications or of any reason why any of the FCC
Authorizations might be revoked. No renewal of any FCC Authorization would
constitute a major environmental action under the rules of the FCC. There are
no facts which, under the Communications Act or the existing rules of the FCC,
would disqualify Seller from assigning the FCC Authorizations or from
consummating the transactions contemplated herein within the times contemplated
herein. Seller maintains appropriate public inspection files at the Owned
Stations' studios, and to the knowledge of Seller, appropriate public
inspection files are maintained at the Purchased Stations' studio, in
accordance with FCC rules.
2.9. REAL PROPERTY. Schedule 2.9 contains a brief description of each
parcel of real property owned by Seller and used in or relating to the Owned
Stations (the "Owned Real Property") (showing the record title holder,
location, and any indebtedness secured by a mortgage or other lien thereon) and
of each option, right or contract to purchase held by Seller to acquire any
real property for use in connection with the Owned Stations. Seller will not be
acquiring title to any real property, or any options to acquire title to real
property, upon
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consummation of the Exchange Transaction. The Owned Real Property is zoned for
the purposes for which it is currently being used by Seller. Except as set
forth in Schedule 2.9, to the knowledge of Seller, there are no structural
defects in the buildings, structures and improvements located on the Owned Real
Property. The roofs of such buildings are in good condition and repair, and all
plumbing equipment, heating, ventilating and air conditioning equipment,
electrical wiring, and water and sewage systems located on the Owned Real
Property are operating properly, ordinary wear and tear excepted and normal
maintenance requirements excluded. There are no encroachments upon the Owned
Real Property by any buildings, structures or improvements located on adjoining
real estate. None of the buildings, structures or improvements (including,
without limitation, any guy wires or guy anchors) constructed on the Owned Real
Property encroach upon adjoining real estate, and all such buildings,
structures and improvements are constructed in conformity with or are
"grandfathered" with respect to all "setback" lines, easement and other
restrictions or rights of record, or that have been established by any
applicable building or safety code or zoning ordinance. To the knowledge of
Seller, any such "grandfathered" approvals shall survive indefinitely the
transfer of the Owned Real Property to Buyer and no utility lines serving the
Owned Real Property pass over the lands of others except where appropriate
easements have been obtained. The Owned Real Property, together with all leases
of real property set forth in Schedule 2.10 (the "Leased Real Property"), are
sufficient to operate the Stations as they are now operated.
2.10. REAL PROPERTY LEASES. Schedule 2.10 sets forth a list and brief
description of each lease or similar agreement under which (i) Seller is lessee
of, or holds or operates, or upon the consummation of the Exchange Transaction
will be lessee of, or hold or operate, any real property owned by any third
party and used in or relating to the Stations or (ii) Seller is the lessor of
any of the Owned Real Property. To the knowledge of Seller, the Leased Real
Property is zoned for the purposes for which it is currently being used by
Seller. To the knowledge of Seller, except as set forth in Schedule 2.10, there
are no structural defects in the buildings, structures and improvements located
on the Leased Real Property. To the knowledge of Seller, the roofs of such
buildings are in good condition and repair, and all plumbing equipment,
heating, ventilating and air conditioning equipment, electrical wiring, and
water and sewage systems
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located on the Leased Real Property are operating properly, ordinary wear and
tear excepted and normal maintenance requirements excluded. To the knowledge of
Seller, there are no encroachments upon the Leased Real Property by any
buildings, structures or improvements located on adjoining real estate. To the
knowledge of Seller, none of the buildings, structures or improvements
(including, without limitation, any guy wires or guy anchors) constructed on
the Leased Real Property encroach upon adjoining real estate, and, to the
knowledge of Seller, all such buildings, structures and improvements are
constructed in conformity with or are "grandfathered" with respect to all
"setback" lines, easements and other restrictions or rights of record, or that
have been established by any applicable building or safety code or zoning
ordinance. To the knowledge of Seller, any such "grandfathered" approvals shall
survive indefinitely the transfer of the Leased Real Property to Buyer and no
utility lines serving the Leased Real Property pass over the lands of others
except where appropriate easements have been obtained. To the knowledge of
Seller, the Leased Real Property, together with any real property owned by
Entercom relating to the Purchased Stations, is sufficient to operate the
Purchased Station as now operated.
2.11. CONDEMNATION. As of the date of the Agreement, (a) neither the whole
nor any part of any real property owned, leased, used or occupied by Seller, or
to be owned, leased or occupied by Seller upon consummation of the Exchange
Transaction, in connection with the Stations is subject to any pending suit for
condemnation or other taking by any public authority and (b) to the knowledge
of Seller, no such condemnation or other taking is threatened.
2.12. PERSONAL PROPERTY. Schedule 2.12 contains (i) the existing records
as of June 30, 1996 of all machinery, equipment, vehicles, furniture and other
personal property owned by Seller having an original cost of $5,000 or more and
used in or relating to the business of the Owned Stations and (ii) the list of
material items of fixed assets and equipment of the Purchased Stations
furnished to Seller by Entercom as part of the Exchange Agreement.
2.13. PERSONAL PROPERTY LEASES. Schedule 2.13 contains a list of each
lease or other agreement or right, whether written or oral, under which Seller
is lessee of, or holds or
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operates any machinery, equipment, vehicle or other tangible personal property
owned by a third party and used in or relating to the business of the Stations
and which is not terminable by Seller without penalty on 60 days' notice or
less and which provides for annual rentals in excess of $6,000.
2.14. INTELLECTUAL PROPERTY. Schedule 2.14 contains a list of: (i) all
trademarks, service marks, trade names and copyrights related to the Owned
Stations and, to the knowledge, of Seller, all trademarks, service marks, trade
names and copyrights related to the Purchased Stations, for which registrations
have been issued to Seller, in the case of the Owned Stations, or
Entercom, in the case of the Purchased Stations, or applications for
registrations have been made by Seller, in the case of the Owned Stations, or
Entercom, in the case of the Purchased Stations, and (ii) all licenses,
agreements or other arrangements under which Seller, in connection with the
Stations, has the right, or upon the consummation of the Exchange Transaction
will have the right, to use any trademark, service xxxx, trade name or
copyright (other than such as are included in the Seller Agreements). No
proceedings have been instituted, are pending or, to the knowledge of Seller,
are threatened which challenge the validity of the ownership or use by Seller
of any trademarks, service marks, trade names or copyrights related to the
Owned Stations and, to the knowledge of Seller, no such proceedings have been
instituted, are pending or are threatened which challenge the validity of the
ownership or right of use to be obtained by Seller upon consummation of the
Exchange Transaction with respect to any trademarks, service marks, trade names
or copyrights related to the Purchased Stations. Except as set forth in
Schedule 2.14, Seller has not licensed anyone to use any trademarks, service
marks, trade names or copyrights relating to the Stations, and to the knowledge
of Seller, there has been no infringement by any Person of any trademarks,
service marks, trade names or copyrights owned or used by it, or which it will
own or have the right to use upon consummation of the Exchange Transaction,
relating to the Stations. Except as set forth in Schedule 2.14, to the
knowledge of Seller, the operations of the Stations do not infringe upon the
trademarks, service marks, trade names or copyrights of any other Person.
2.15. TITLE TO PURCHASED ASSETS. Except as set forth in Schedule 2.15,
Seller owns all Owned Real Property, free and clear of all Encumbrances except
Permitted Encumbrances, and
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Seller has, or upon the consummation of the Exchange Transaction will have,
good and marketable title to all of the other tangible Purchased Assets, free
and clear of all Encumbrances except for Permitted Encumbrances. Upon delivery
to Buyer on the Closing Date of the xxxx of sale and assignment contemplated by
Section 1.6(b), Seller will thereby transfer to Buyer good and marketable title
to such other tangible Purchased Assets and all intellectual property relating
to the Stations owned by Seller listed in Schedule 2.14, subject to no
Encumbrances, except for Permitted Encumbrances.
2.16. CONTRACTS. Except as set forth in Schedule 2.16 or any other
Schedule hereto, as of the date of this Agreement, Seller is not and, upon the
consummation of the Exchange Transaction, will not be, with respect to the
Stations, a party to or bound by:
(a) Any contract for the purchase or sale of real property;
(b) Any contract for the purchase, rental or use of any radio
programming or programming services which is not terminable by Seller without
penalty on 60 days' notice or less, provides for performance over a period of
more than 90 days and which involves the payment after the date hereof of more
than $50,000;
(c) Any contract for the purchase of merchandise, supplies or personal
property or for the receipt of services (other than services referred to in
clause (b) above) which is not terminable by Seller on 60 days' notice or less
and involves the payment after the date hereof of more than $25,000;
(d) Any employment contract, consulting agreement or collective
bargaining agreement;
(e) Any contract for the sale of broadcast time for advertising which
was not made in the ordinary course of the business of the Stations (including
any contracts where the advertising sold is not at prices and on terms
consistent with the usual and customary practices of the Station);
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(f) Any guarantee by Seller of the obligations of customers,
suppliers, officers, directors, employees, Affiliates or others; or
(g) Any other contract which is material to the business of the Owned
Stations or the Purchased Stations, as the case may be.
2.17. STATUS OF CONTRACTS. Except as set forth in Schedule 2.17 or in any
other Schedule hereto, each of the leases, contracts and other agreements
listed in Schedules 2.10, 2.13, 2.14 and 2.16 (the "Seller Agreements")
constitutes, or upon consummation of the Exchange Transaction will constitute,
a valid and binding obligation of Seller and, to the knowledge of Seller, the
other parties thereto (subject to bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights and
general equity principles) and is, or upon consummation of the Exchange
Transaction will be, in full force and effect and (except as set forth in
Schedule 2.3 and except for those Seller Agreements which by their terms will
expire prior to the Closing Date or will be otherwise terminated prior to the
Closing Date in accordance with the provisions thereof) may be transferred to
Buyer pursuant to this Agreement and will continue in full force and effect
thereafter, in each case without breaching the terms thereof or resulting in
the forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. With
respect to the Seller Agreements relating to the Owned Stations, Seller has
fulfilled and performed its obligations under such Seller Agreements, and
Seller is not in, or, to the knowledge of Seller, alleged to be in, breach or
default under any such Seller Agreement and, to the knowledge of Seller, no
other party to any such Seller Agreement is in breach or default thereunder,
and to the knowledge of Seller, no event has occurred and no condition or state
of facts exists which, with the passage of time or the giving of notice or
both, would constitute such a default or breach by Seller or by any such other
party. With respect to the Seller Agreements relating to the Purchased
Stations, (i) each of Seller and, to the knowledge of Seller, Entercom has
fulfilled and performed in all material respects its respective obligations, if
any, under each such Seller Agreement, (ii) neither Seller nor, to the
knowledge of Seller, Entercom is in, or alleged to be in, material breach or
material default under any such Seller Agreement, (iii) to the
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knowledge of Seller, no other party to any such Seller Agreement is in material
breach nor material default thereunder, and (iv) no event has occurred and no
condition or state of facts exists which, with the passage of time or giving of
notice or both, would constitute such a default or breach by Seller or, to the
knowledge of Seller, Entercom or by any such other party. Seller has not and,
to the knowledge of Seller, Entercom has not granted any material waiver or
forbearance with respect to any of the Seller Agreements. Complete and correct
copies of each of the Seller Agreements have heretofore been, or will within
seven days hereof be, made available to Buyer by Seller.
2.18. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set forth
in Schedule 2.18 or in any other Schedule hereto:
(a) Seller has complied with all material Requirements of Laws which
are applicable to the Purchased Assets or the business of the Stations
(including those requiring the availability of spare parts);
(b) As of the date of this Agreement, there are no lawsuits, claims,
suits, proceedings or investigations pending against Seller or, to the
knowledge of Seller, threatened against Seller, in respect of the Stations or,
to the knowledge of Seller, pending or threatened against Entercom in respect
of the Purchased Stations; and
(c) As of the date of this Agreement, there is no action, suit or
proceeding pending against Seller or, to the knowledge of Seller, threatened
against Seller which questions the legality or propriety of the transactions
contemplated by this Agreement.
2.19. HAZARDOUS MATERIALS. Except as permitted by or consistent with
applicable Environmental Laws or as set forth in Schedule 2.19:
(a) Seller's use of the Owned Real Property and the Leased Real
Property relating to the Stations is in compliance with all Environmental Laws;
(b) Seller has never generated, transported, used, stored or disposed
of on any Owned Real Property or the Leased
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Real Property any Hazardous Material and, to Seller's knowledge, there has
never been any Hazardous Material generated, transported, used, stored or
disposed of on any Owned Real Property or the Leased Real Property;
(c) no Hazardous Material has ever been spilled, released or disposed
of on, under or about any Owned Real Property or Leased Real Property by Seller
or, to Seller's knowledge, has ever come to be located in the soil or
groundwater of any Owned Real Property or Leased Real Property; and
(d) no underground storage tanks, or underground piping associated
with such tanks, are located on or under any Owned Real Property or, to the
knowledge of Seller, any Leased Real Property.
Except as set forth in Schedule 2.19, Seller has never and, to the
knowledge of Seller, Entercom has not entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with
respect to any environmental matter or received any request for information,
notice, demand letter, administrative inquiry, or formal or informal complaint
or claim with respect to any environmental matter or the enforcement of any
Environmental Law, in each case involving the Owned Real Property or the Leased
Real Property.
2.20. FINDER. Neither Seller nor any party acting on its behalf has paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement other than to Star Media Group, Inc., whose fees or commissions, to
the extent payable, shall be paid by or on behalf of Seller.
2.21. NO INTERFERENCE. To the knowledge of Seller, the Stations are not
causing interference in violation of FCC rules to the transmission of any other
broadcast station or communications facility and, since August 1, 1994 Seller
has not received any complaints with respect thereto. To the knowledge of
Seller, no other broadcast station or communications facility is causing
interference in violation of FCC rules to the Stations' transmissions or the
public's reception of such transmissions.
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2.22. FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Seller is not a
"foreign person" within the meaning of Section 1445 of the Code.
2.23. BANKRUPTCY. No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, of Seller, are pending
or, to the knowledge of Seller, threatened against Seller or its general
partners, and neither Seller nor either of its general partners has made any
assignment for the benefit of creditors or taken any action in contemplation of
or which would constitute the basis for the institution of such insolvency
proceedings.
2.24. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 2.24, with
respect to the employees of the Stations, there are no employee or retiree
benefit or compensation plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
compensation, bonus, incentive, deferral, equity based, severance, termination,
retention, change in control, employment or other similar program, agreement,
arrangement, trust or other funding arrangement, whether or not subject to the
provisions of ERISA, to which Seller is bound, or will be bound upon
consummation of the Exchange Transaction, or that is or has been established or
maintained or in respect of which Seller has ever had an obligation to
contribute, or will have an obligation to contribute upon consummation of the
Exchange Transaction. Seller has neither incurred nor reasonably expects to
incur (either directly or indirectly, including as a result of any
indemnification obligation) any liability that could become a liability of
Buyer or, following Closing, remain a liability of the Stations under or
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans and
no event, transaction or condition has occurred or exists which could result in
any such liability. Each plan, program, agreement, arrangement, trust or other
funding arrangement listed in Schedule 2.24 has been operated and administered
in all material respects in accordance with all Requirements of Law, including
but not limited to ERISA and the Code.
2.25. EXCHANGE AGREEMENT. Seller has entered into the Exchange Agreement
with Entercom and Nationwide Communications,
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Inc. pursuant to which Seller, upon the consummation of the transactions
contemplated by the Exchange Agreement, will acquire the assets defined therein
as the "Pittsburgh Assets" and will assume the liabilities of Entercom with
respect to the ownership and operations of the Purchased Stations set forth in
Section 3.2 of the Exchange Agreement. As contemplated by the Exchange
Agreement, Seller and Entercom have entered into a Time Brokerage and
Programming Acquisition Agreement dated as of May 31, 1996 (the "Purchased
Stations Time Brokerage Agreement" with respect to the Purchased Stations.
Complete copies of the Exchange Agreement and the Purchased Stations Time
Brokerage Agreement have been made available to Buyer by Seller. Seller and, to
the knowledge of Seller, the other parties to the Exchange Agreement have made
the requisite filings under the Improvements Act with respect to the
transactions contemplated by the Exchange Agreement and the applicable waiting
periods under the HSR Act have expired.
2.26. FULL DISCLOSURE. To the knowledge of Seller, neither this Agreement
nor any certificate delivered pursuant hereto contains any untrue statement of
a material fact or omits any statement of a material fact necessary to make any
statement contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby represents and warrants to
Seller and agrees as follows:
3.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer
has full corporate power and authority to own or lease and to operate and use
its properties and assets and to carry on its business as now conducted.
3.2. AUTHORITY OF BUYER. Buyer has the corporate power and authority to
execute, deliver and perform this Agreement and all of the other agreements and
instruments to be
-21-
executed and delivered by Buyer pursuant hereto (collectively, the "Buyer
Ancillary Agreements").
The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
all necessary corporate action on behalf of Buyer. This Agreement is, and each
Buyer Ancillary Agreement when executed and delivered by Buyer and the other
parties thereto will be, the legal, valid and binding agreement of Buyer
enforceable in accordance with its respective terms, subject to bankruptcy,
insolvency, moratorium and similar laws of general application relating to or
affecting creditors' rights and general equity principles.
Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement or any Buyer Ancillary Agreement by Buyer or the
consummation by Buyer of any of the transactions contemplated hereby or thereby
nor compliance by Buyer with or fulfillment by Buyer of the terms, conditions
and provisions hereof or thereof will:
(a) result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, the
charter or By-laws of Buyer or any material agreement, judgment, order, award
or decree to which Buyer is a party or any of its properties is subject or by
which Buyer is bound or any Requirements of Law affecting Buyer; or
(b) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any Person,
except for such of the foregoing as are necessary pursuant to the Improvements
Act or the Communications Act.
3.3. ABSENCE OF KNOWLEDGE AS TO CERTAIN FACTS. Except as set forth in
Schedule 3.3, Buyer has no knowledge of any fact which could, under the
Communications Act, the existing rules, regulations and practices of the FCC or
otherwise disqualify Buyer as an assignee of the FCC Authorizations or as the
owner and operator of the Stations or the Purchased Assets.
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3.4. FINANCIAL CAPABILITY. Buyer has or on the Closing Date will have
sufficient financial capabilities to pay the Purchase Price in accordance with
this Agreement.
3.5. NO FINDER. Neither Buyer nor any party acting on its behalf has paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
--------------------------------
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
4.1. INVESTIGATION OF THE STATIONS BY BUYER. From the date hereof until
the Closing Date, upon the request of Buyer, Seller shall afford, and prior to
the consummation of the Exchange Transaction Seller will use its reasonable
efforts to cause Entercom to afford, to the officers, employees and authorized
representatives of Buyer (including, without limitation, independent public
accountants and attorneys) reasonable access during normal business hours upon
reasonable advance notice to the offices, properties, employees and business
and financial records (including computer files, retrieval programs and similar
documentation) of the Stations to the extent Buyer shall reasonably deem
necessary or desirable and shall furnish to Buyer or its authorized
representatives such additional information concerning the Purchased Assets and
the Stations as shall be reasonably requested; provided, however, that Seller
shall not be required to violate any obligation of confidentiality to which it
is subject in discharging its obligations pursuant to this Section 4.1, it
being agreed by Seller that Seller will give notice to Buyer whenever
information is being withheld from Buyer pursuant to this proviso and will
describe for Buyer the basis on which such information is being withheld. Buyer
agrees that such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operations of Seller. If in the course of any
investigation pursuant to this Section 4.1, Buyer's officers, employees or
authorized representatives discover any breach of any representa-
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tion or warranty contained in this Agreement, or any circumstance or condition
that upon Closing would constitute such a breach, Buyer covenants that it will
promptly so inform Seller.
4.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. From the date
hereof until the Closing Date, except for actions permitted or required to be
taken by Seller pursuant to Section 4.4 each of the parties hereto shall
refrain from taking any action which would render any representation or
warranty contained in Article II or III inaccurate as of the Closing Date. Each
party shall promptly notify the other of any action, suit or proceeding that
shall be instituted or threatened against such party to restrain, prohibit or
otherwise challenge the legality of any transaction contemplated by this
Agreement. Seller shall promptly notify Buyer of any lawsuit, claim, proceeding
or investigation that may be threatened, brought, asserted or commenced against
Seller which would have been listed in Schedule 2.18 if such lawsuit, claim,
proceeding or investigation had arisen prior to the date hereof.
4.3. FCC CONSENT; IMPROVEMENTS ACT APPROVAL; OTHER CONSENTS AND APPROVALS.
(a) Within 10 business days of the date hereof, Buyer and Seller shall file
with the FCC applications requesting its consent to the assignment of the FCC
Authorizations (and any extensions or renewals thereof) from Seller to Buyer.
Buyer and Seller will cooperate in the preparation of such applications and
will diligently take, or cooperate in the taking of, all necessary, desirable
and proper steps, provide any additional information reasonably required and
otherwise use their reasonable best efforts to obtain promptly the requested
consent, approval and waiver of the FCC. Any fees assessed by the FCC incident
to the filing of such applications shall be paid 50% by Buyer and 50% by
Seller. Seller and Buyer shall each make available to the other, promptly after
the filing thereof, copies of all reports filed on or prior to the Closing Date
with the FCC by Seller or Buyer, as the case may be, in respect of the
Stations.
(b) As promptly as practicable after the date hereof, Buyer and Seller
shall file with the Federal Trade Commission and the Antitrust Division of the
Department of Justice the notifications and other information required to be
filed by such party under the Improvements Act, or any rules and regulations
-24-
promulgated thereunder, with respect to the transactions contemplated hereby.
Each of Buyer and Seller covenants to file as promptly as practicable such
additional information as may be requested to be filed by such party. Each of
Buyer and Seller warrants that all such filings by it, as of the date filed,
will be true and accurate and in accordance with the requirements of the
Improvements Act and any such rules and regulations. Each of Buyer and Seller
agrees to make available to the other such information as each of them may
reasonably request relative to its business, assets and property as may be
required by each of them to file any additional information requested by such
agencies under the Improvements Act and such rules and regulations. Each party
hereto shall promptly inform the other of any material communication from the
Federal Trade Commission, the Department of Justice or any other governmental
authority regarding any of the transactions contemplated hereby. Each party
hereto will advise the other promptly in respect of any understandings,
undertakings or agreements (oral or written) that such party proposes to make
or enter into with the Federal Trade Commission, the Department of Justice or
any other governmental authority in connection with the transactions
contemplated hereby. The cost of the filing fees payable under the Improvements
Act in connection with the notifications and information described in this
Section 4.3(b) shall be paid 50% by Buyer and 50% by Seller.
(c) Buyer and Seller shall each use their reasonable best efforts
promptly to obtain all consents and amendments from parties to the Seller
Agreements and all consents, amendments or permits from governmental
authorities, which are required by the terms thereof or this Agreement for the
due and punctual consummation of the transactions contemplated by this
Agreement; provided, that neither Buyer nor Seller shall have any obligation to
offer or pay any consideration in order to obtain any such consents or
amendments.
4.4. OPERATIONS PRIOR TO THE CLOSING DATE. (a) From the date hereof until
the Closing Date, Seller shall operate and carry on the business of the Owned
Stations, and use its best efforts to cause the Purchased Stations to be
operated and carried on, only in the ordinary course and substantially as
currently operated. Consistent with the foregoing, Seller shall keep and
maintain the Purchased Assets in good operating condition and repair and shall
use its reasonable efforts consistent
-25-
with good business practice to preserve the goodwill of the customers and
others having business relations with the Stations.
(b) Notwithstanding Section 4.4(a), except as expressly contemplated
by this Agreement, except as set forth in Schedule 4.4(b) or except with the
express prior written approval of Buyer, Seller shall not:
(i) make any material change in the business or the operations
of the Stations;
(ii) make any capital expenditure relating to the Stations, or
enter into any contract or commitment therefor, in excess of $50,000
in the aggregate, other than capital expenditures required pursuant
to Section 4.4(c)(v);
(iii) sell, lease, transfer or otherwise dispose of or mortgage
or pledge, or impose or suffer to be imposed any Encumbrance on, any
of the Purchased Assets, other than (A) minor amounts of personal
property having an aggregate value of less than $50,000 sold or
otherwise disposed of in the ordinary course of the business of the
Stations which would not reasonably be expected to have a material
adverse effect on the business or operations of the Stations, (B)
minor amounts of personal property which are replaced due to defect
or obsolescence with personal property of substantially the same
nature and of equal or greater quality in the ordinary course of the
business of the Stations and (C) Permitted Encumbrances;
(iv) enter into any agreement providing for annual payments by
the Stations in excess of $25,000, other than agreements entered into
in the ordinary course of business;
(v) institute any general increase in the compensation of the
employees of any Station except as and to the extent reflected in the
1996 budgets of the Stations previously made available to Buyer or as
required under any existing employment agreement;
-26-
(vi) grant any bonus to any executive employee of any Station
except as and to the extent reflected in the 1996 budgets of the
Stations previously made available to Buyer or as required by any
existing employment agreement or bonus plan; or
(vii) make any material changes in the hours of broadcast of any
Station or in the format or programming policies of any Station.
(c) From the date hereof until the Closing Date, Seller shall:
(i) operate the Owned Stations, and use its reasonable best
efforts to cause the Purchased Stations to be operated, in all
material respects in accordance with the FCC's rules and regulations
and the FCC Authorizations and shall not fail to prosecute with due
diligence any pending application to the FCC, including, without
limitation, the renewal applications relating to the FCC
Authorizations for the Owned Stations, and shall not cause or permit
by any act, or failure to act, any of the FCC Authorizations to
expire, be surrendered, adversely modified, or otherwise terminated,
or the FCC to institute any proceeding for the suspension, revocation
or material adverse modification of any of the FCC Authorizations;
(ii) maintain insurance policies on the Owned Stations and the
related Purchased Assets, and use its reasonable best efforts to
cause insurance policies to be maintained on the Purchased Stations
and the related Purchased Assets, on terms and conditions and with
insurers substantially identical to or better than those in effect
immediately prior to the date hereof;
(iii) if the broadcast transmissions of the Stations from their
main broadcast antennae at authorized power are interrupted or
impaired, use its reasonable best efforts to restore transmissions at
full authorized power as soon as reasonably possible;
(iv) protect and defend the FCC Authorizations, broadcast
coverage area and signal integrity relating
-27-
to each of the Owned Stations and use its reasonable best efforts to
cause the protection and defense of the FCC Authorizations, broadcast
coverage area and signal integrity relating to the Purchased
Stations;
(v) make all capital expenditures contemplated by the capital
budget of each of the Owned Stations;
(vi) spend in the aggregate substantially all of the amounts for
promotion and expense contemplated in the 1996 budget of the Stations
previously made available to Buyer and in the 1997 budget to be
prepared by Seller;
(vii) not modify, waive or amend any provision of or right under
the Exchange Agreement without the prior written consent of Buyer;
(viii) use its reasonable best efforts to consummate the
Exchange Transaction and proceed diligently to exercise its rights
with respect to the Purchased Stations; and
(ix) keep its books and accounts, records and files relating to
the Stations in the ordinary course of business and in a manner
consistent with past practice.
4.5. DELIVERY OF SCHEDULES. Seller has heretofore delivered to Buyer
drafts of the Schedules referred to herein. As soon as practicable after the
date hereof, but not later than October 22, 1996, Seller shall deliver to Buyer
the Schedules referred to herein.
ARTICLE V
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ADDITIONAL AGREEMENTS
---------------------
5.1. TAXES; SALES, USE AND TRANSFER TAXES; TITLE INSURANCE. (a) Seller
shall be liable for and shall pay all Taxes (whether assessed or unassessed)
applicable to the Stations or the Purchased Assets, in each case attributable
to periods (or portions thereof) ending on or prior to the Closing Date. Buyer
shall be liable for and shall pay all Taxes (whether assessed or unassessed)
applicable to the Stations or the Purchased Assets, in each case attributable
to periods (or portions thereof) beginning after the Closing Date. For purposes
of this Section 5.1(a), any period beginning before and ending after the
Closing Date shall be treated as two partial periods, one ending on the Closing
Date and the other beginning after the Closing Date; provided, however, that
Taxes (such as property Taxes) imposed on a periodic basis shall be allocated
on a daily basis. Notwithstanding the preceding sentence, if the transactions
contemplated by this Agreement result in the reassessment of the value of any
of the Purchased Assets for property Tax purposes, or the imposition of any
property Taxes on such Purchased Assets at a rate which is different than the
rate that would have been imposed if such transactions had not occurred, then
(y) the portion of such property Taxes for the portion of the period ending on
the Closing Date shall be determined on a daily basis, using the assessed value
and Tax rate that would have applied had such transactions not occurred, and
(z) the portion of such property Taxes for the portion of such period beginning
after the Closing Date shall be the total property Taxes for the period minus
the amount described in clause (y) of this sentence.
(b) Notwithstanding Section 5.1(a), any sales, use or other transfer
Taxes payable by reason of transfer and conveyance of the Purchased Assets
hereunder shall be payable by Buyer and any documentary stamp or transfer Taxes
payable by reason of the real estate or interests therein included in the
Purchased Assets shall be paid by Seller. The costs of any commitments for
title insurance and surveys for the Owned Real Property and all fees relating
to any filing with any governmental or regulatory body required for transfer
and conveyance of the Purchased Assets hereunder shall be paid by Buyer.
(c) Seller or Buyer, as the case may be, shall provide reimbursement
for any Tax paid by one party all or a portion of
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which is the responsibility of the other party in accordance with the terms of
this Section 5.1. Within a reasonable time prior to the payment of any said
Tax, the party paying such Tax shall give notice to the other party of the Tax
payable and the portion which is the liability of each party, although failure
to do so will not relieve the other party from its liability hereunder.
(d) Each party shall promptly notify the other in writing upon receipt
by such party or any of its Affiliates of notice of any pending or threatened
federal, state, local or foreign Tax audits, examinations or assessments which
may materially affect the Tax liabilities for which the other party would be
required to indemnify such party pursuant to Section 5.1(a). The party that
would be responsible for the relevant Taxes under Section 5.1(a) shall have the
sole right to control any Tax audit or administrative or court proceeding
relating to taxable periods ending at the time of or before the Closing Date,
and to employ counsel of its choice at its expense. In the case of a taxable
period beginning before and ending after the Closing Date, Seller shall be
entitled to participate at its expense in any Tax audit or administrative or
court proceeding relating in whole or in part to Taxes attributable to the
portion of such period ending on the Closing Date and, with the written consent
of Buyer, and at Seller's sole expense, may assume the entire control of such
audit or proceeding. Neither party nor any of its Affiliates may settle any Tax
claim for any taxable year or period ending at or before the Closing Date (or
for the portion of any taxable year or period ending on the Closing Date) which
may be the subject of indemnification by the other party under Section 5.1(a)
without the prior written consent of the other party.
(e) Any payments made pursuant to this Section 5.1 shall be treated
for income tax purposes by Buyer and Seller as an adjustment to the Purchase
Price.
5.2. AUDIT OF FINANCIAL STATEMENTS OF STATIONS. Seller shall cooperate and
use its reasonable best efforts to cause Entercom and each of Seller's and
Entercom's independent accountants to cooperate with Buyer, at Buyer's expense,
in order to enable Buyer to have its independent accountants prepare audited
financial statements for the Stations. Without limiting the generality of the
foregoing, Seller agrees that it will (i) consent to the use of such audited
financial statements in any
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registration statement or other document filed by Buyer (or any of its
subsidiaries) under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and (ii) execute and deliver, and cause its
partners and officers to execute and deliver, such "representation" letters as
are customarily delivered in connection with audits and as Buyer's independent
accountants may reasonably request under the circumstances.
5.3. COVENANT NOT TO COMPETE. In furtherance of the sale of the Purchased
Assets to Buyer hereunder by virtue of the transactions contemplated hereby and
more effectively to protect the value and goodwill of the Stations, Seller
covenants and agrees that it will not directly or indirectly (whether as
principal, agent, independent contractor, partner or otherwise) own, manage,
operate, control or otherwise carry on for a period beginning on the Closing
Date and ending on the second anniversary thereafter, a radio station business
in the Cleveland, Ohio, Indianapolis, Indiana or Pittsburgh, Pennsylvania radio
markets, each as determined by The Arbitron Company.
Notwithstanding the foregoing, nothing set forth in Section 5.5 shall
prohibit Seller from owning not in excess of 25% in the aggregate of any class
of capital stock of any corporation if such stock is publicly traded and listed
on any national or regional stock exchange or quoted on the Nasdaq Stock
Market.
5.4. COLLECTION OF RECEIVABLES. (a) The notes and accounts receivable of
the Stations generated prior to the Closing Date (the "Pre-closing
Receivables") shall be and remain the property of Seller. Within 10 days after
the Closing Date, Seller shall furnish Buyer with a list (certified by the
President or Chief Financial Officer of a general partner of Seller to be a
true and complete list) of all notes and accounts receivable of Seller which
were outstanding as of the Closing. Buyer agrees that it shall remit to Seller
any payments it receives in respect of any Pre-closing Receivable (net of
agency commissions) no later than the 10th day of the month following receipt
thereof and shall deliver to Seller concurrently with such remittance a report
showing the status of collection of the Pre-closing Receivables.
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(b) During the period commencing on the Closing Date and ending on the
120th day after the Closing Date, Buyer shall use reasonable efforts,
consistent with Seller's current billing and collection practices and in the
ordinary course of the business of the Stations, to effect the collection of
any outstanding Pre-closing Receivables; provided, however, that,
notwithstanding the foregoing, Buyer shall be under no obligation to commence
litigation, employ counsel or engage the services of a collection agency to
effect collection. Buyer shall not make any compromise, adjustment, concession
or settlement of any Pre-closing Receivable without Seller's express written
consent and Buyer shall be under no obligation to compromise, adjust, concede
or settle any accounts receivable generated after the Closing or otherwise
grant any credit or allowance to effect collection of a Pre-closing Receivable.
Absent written evidence that an account debtor owing a Pre-closing Receivable
is disputing in good faith any portion of such Pre-closing Receivable, any
payments received by Buyer after Closing from such account debtor shall be
presumed to represent payment on any undisputed portion of such Pre-closing
Receivable which is then outstanding (with each such payment received from such
account debtor to be applied first to the most-aged Pre-closing Receivable then
owing from such account debtor).
(c) Except as contemplated by Section 5.4(b), Seller agrees to remit
to Buyer, not later than 10 days after receipt thereof, any payment received by
Seller after the Closing Date in respect of an account receivable of Buyer or
the Stations generated after the Closing. In the event Seller receives any such
payment and, in lieu of remitting the same to Buyer in accordance with the
preceding sentence, elects to apply it to the payment of a Pre-closing
Receivable owing from the account debtor from whom it has been received, Seller
will so notify Buyer in writing of such election.
5.5. EMPLOYEES AND EMPLOYEE BENEFIT PLANS. (a) On the Closing Date, the
employment by Seller of each Station employee shall be terminated and Buyer
shall offer employment to each such employee at the rate of pay at which such
employee is being compensated immediately prior to the Closing Date. A Station
employee who is not actively at work on the Closing Date on account of illness,
disability, other than long-term disability, or approved temporary leave of
absence and who shall offer to return to work at such time as shall be
consistent with the
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reason for such employee's absence from active employment shall be offered
employment by Buyer in a substantially similar position and at substantially
the same rate of pay, as in effect at the time such employee's active
employment ceased.
(b) Effective as of the Closing Date, Buyer shall cause each Station
employee who accepts employment with Buyer (a "Transferred Employee" to be
covered under a group health plan, as defined in Section 607(1) of ERISA, which
does not contain any exclusion or limitation with respect to any preexisting
condition for which Seller's group health plan provides benefits. Buyer, at its
discretion, shall either provide medical, dental and disability plans which
provide substantially similar benefits as those benefits provided to Station
employees immediately prior to the Closing Date under plans maintained by
Seller, or will provide medical, dental and disability benefits to all
Transferred Employees that are the same or similar to those provided to other
similarly situated employees of Buyer. A Transferred Employee's service with
Seller shall be taken into account for the purpose of determining eligibility
for participation under any employee welfare benefit plan maintained by Buyer
in which such Transferred Employee participates. Any eligible expenses incurred
by a Transferred Employee between January 1, 1997 and the Closing Date shall be
accepted by Buyer's health and dental plans for the purposes of satisfying such
employee's individual or family deductible or coinsurance requirement and
satisfaction of maximum out of pocket provisions for the Buyer's plan year
ending December 31, 1997. Any medical, dental, or disability claims and
expenses incurred by Transferred Employees on or after the Closing Date shall
be considered subject to the terms and conditions of the benefit plans provided
to Transferred Employees by Buyer.
(c) Buyer, as successor employer for federal, state and local
withholding and employment Taxes, shall assume Seller's responsibilities as
predecessor employer for filing all federal, state and local withholding income
Tax and employment Tax Returns and to furnish for the 1997 calendar year Forms
W-2 and similar forms relating to all Transferred Employees for the calendar
year in which the Closing Date occurs that are due after the Closing Date.
Buyer shall assume such responsibility in accordance with the alternative
procedure described in section 5 of Revenue Procedure 84-77 and, for the
calendar year in which the Closing Date occurs, shall assume Seller's
obligations to furnish Forms
-33-
W-2 to all Transferred Employees. Seller shall comply with all of the
requirements set forth in such alternative procedure that are imposed on a
predecessor employer and Buyer shall comply with all of the requirements set
forth in such procedure that are imposed on a successor employer. Seller shall
provide information and data to Buyer upon request with respect to the wages of
Station employees and related payroll Taxes for the calendar year in which the
Closing Date occurs through the last regular wage payment prior to the Closing
Date in order for Buyer to file timely and proper Tax Returns and forms for the
calendar year in which the Closing Date occurs.
(d) A Transferred Employee's service with Seller or any predecessor of
Seller shall be taken into account and treated as service with Buyer for the
purposes of determining eligibility to participate and benefit entitlement
under any applicable severance or vacation benefit programs provided by Buyer.
5.6. RELOCATION OF PITTSBURGH ANTENNAE AND STUDIO. (a) Seller is in the
process of arranging for the relocation of the antennae for the Purchased
Stations to a tower to be constructed by Crown Towers and Entercom and is
negotiating the terms of an antennae site lease. Seller will continue its
efforts in this regard; provided that if such relocation has not occurred prior
to the Closing, Seller's obligations thereafter regarding such relocation shall
be limited to reimbursing Buyer for the reasonable costs and expenses incurred
by Buyer to complete such relocation, but in no event shall Seller be obligated
to reimburse Buyer for more then the amount by which $750,000 exceeds the
amount expended by Seller in its relocation efforts prior to the Closing.
(b) Seller is also in the process of arranging for the relocation of
the studios for the Purchased Stations to 000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx and is negotiating the terms of a studio lease. Seller will
continue its efforts in this regard until the Closing Date. Buyer agrees that
if the Closing occurs, Buyer will reimburse Seller for the reasonable costs and
expenses incurred by Seller prior to the Closing in connection with such
relocation, but in no event shall Buyer be obligated to reimburse Seller for
more than $1,000,000.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer to effect the Closing in accordance with this
Agreement shall, at the option of Buyer, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
6.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. There
shall have been no material breach by Seller in the performance of any of its
covenants and agreements herein; each of the representations and warranties of
Seller contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date
(except to the extent that they expressly speak as of a specific date or time
other than the Closing Date, in which case they need only have been true and
correct in all material respects as of such specified date or time), except to
the extent any inaccuracy or breach results from any transaction specifically
permitted by this Agreement, any transaction expressly consented to in writing
by Buyer or any transaction permitted by Section 4.4; and there shall have been
delivered to Buyer a certificate or certificates to such effect dated the
Closing Date, signed by and on behalf of Seller by the President or any Vice
President of a general partner of Seller.
6.2. OPINION OF COUNSEL FOR SELLER. Counsel for Seller (which may include
in-house counsel) shall have delivered to Buyer an opinion, dated the Closing
Date, in form and substance reasonably satisfactory to Buyer and its counsel.
6.3. PARTNERSHIP ACTION. Seller shall have taken all partnership action
necessary to approve the transactions contemplated by this Agreement.
6.4. NO RESTRAINT OR LITIGATION. Any applicable waiting period under the
Improvements Act shall have expired or have been terminated and no injunction
or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits any material
transaction contemplated hereby.
-35-
6.5. FCC CONSENT. The FCC Consent shall have been granted, without any
condition or qualification which has a materially adverse effect on the
operations and financial condition of the Owned Stations or the Purchased
Station (it being agreed that an EEO reporting obligation shall not constitute
such a condition or qualification), and shall have become a Final Order with
respect to each Station.
6.6. NECESSARY CONSENTS. Seller shall have received consents, in form and
substance reasonably satisfactory to Buyer, to the assignment to Buyer of the
Seller Agreements specified in Schedule 6.6.
6.7. FIRPTA CERTIFICATE. There shall have delivered to Buyer a certificate
to the effect that Seller is not a "foreign person" within the meaning of
Section 1445 of the Code, dated the Closing Date signed by and on behalf of
Seller by the President or any Vice President of a general partner of Seller.
6.8. EXCHANGE TRANSACTION. The acquisition by Seller
of the Purchased Stations pursuant to the Exchange Agreement
shall have been consummated.
6.9. COMPLETION OF AUDIT. The audit of the financial
statements of the Stations referred to in Section 5.2 shall have
been completed.
Notwithstanding the failure of any one or more of the foregoing
conditions, Buyer may proceed with the Closing without satisfaction, in whole
or in part, of any one or more of such conditions and without written waiver.
To the extent that at the Closing Seller delivers to Buyer a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Seller of any of the representations or warranties of Seller herein,
and Buyer nevertheless proceeds with the Closing, Buyer shall be deemed to have
waived for all purposes any rights or remedies it may have against Seller by
reason of the failure of any such conditions or the breach of any such
representations or warranties to the extent described in such notice.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller to effect the Closing in accordance with this
Agreement shall, at the option of Seller, be subject to the satisfaction on or
prior to the Closing Date, of the following conditions:
7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. There
shall have been no material breach by Buyer in the performance of any of its
covenants and agreements herein; each of the representations and warranties of
Buyer contained or referred to in this Agreement shall be true and correct on
the Closing Date as though made on the Closing Date, except to the extent any
inaccuracy or breach results from any transactions specifically permitted by
this Agreement, any transaction expressly consented to in writing by Seller or
any transaction contemplated by this Agreement; and there shall have been
delivered to Seller a certificate or certificates to such effect, dated the
Closing Date and signed on behalf of Buyer by its President or any Vice
President.
7.2. OPINION OF COUNSEL FOR BUYER. Counsel for Buyer (which may include
in-house counsel) shall have delivered to Seller an opinion, dated the Closing
Date, in form and substance reasonably satisfactory to Seller and its counsel.
7.3. CORPORATE ACTION. The board of directors of Buyer shall have taken
all corporate action necessary to approve the transactions contemplated by this
Agreement.
7.4. NO RESTRAINT. Any applicable waiting period under the Improvements
Act shall have expired or been terminated and no injunction or restraining
order shall have been issued by any court of competent jurisdiction and be in
effect which restrains or prohibits any material transaction contemplated
hereby.
7.5. FCC CONSENT. The FCC Consent shall have been granted, without any
condition or qualification which is materially adverse to Seller, and shall
have become a Final Order.
-37-
7.6. EXCHANGE TRANSACTION. The acquisition by Seller of the Purchased
Stations pursuant to the Exchange Agreement shall have been consummated.
Notwithstanding the failure of any one or more of the foregoing
conditions, Seller may proceed with the Closing without satisfaction, in whole
or in part, of any one or more of such conditions and without written waiver.
To the extent that at the Closing Buyer delivers to Seller a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Buyer of any of the representations or warranties of Buyer herein,
and Seller nevertheless proceeds with the Closing, Seller shall be deemed to
have waived for all purposes any rights or remedies it may have against Buyer
by reason of the failure of any such conditions or the breach of any such
representations or warranties to the extent described in such notice.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1. INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
harmless Buyer from and against any and all Losses and Expenses incurred by
Buyer in connection with or arising from:
(i) any breach by Seller of, or any other failure of Seller to
perform, any of its covenants, agreements or obligations in this Agreement
or in any Seller Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Seller contained or referred to in this Agreement or any
certificate delivered by or on behalf of Seller pursuant hereto; or
(iii) the failure of Seller to perform any of the Excluded
Liabilities.
8.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold harmless
Seller from and against any and all Losses and Expenses incurred by Seller in
connection with or arising from:
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(i) any breach by Buyer of, or other failure of Buyer to perform, any
of its covenants, agreements or obligations in this Agreement or any Buyer
Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in
any certificate delivered by or on behalf of Buyer pursuant hereto; or
(iii) the failure of Buyer to perform any of the Assumed Liabilities.
8.3. LIMITATIONS OF INDEMNIFICATION OBLIGATIONS. Anything contained in
this Agreement to the contrary notwithstanding:
(a) no amount shall be payable by an indemnifying party with respect
to any claim by an indemnified party for any Loss or Expense incurred in
connection with, resulting from or arising out of the breach of any warranty or
the inaccuracy of any representation contained in this Agreement if the
indemnifying party is first notified of such claim pursuant to Section 8.4 on
or after 18 months after the Closing Date (except with respect to (i) the
representation made in Section 2.6 as to which the indemnifying party must be
notified by the sixth anniversary of the Closing Date and (ii) the
representation made in Section 2.15 as to which no time limitation shall
apply); provided, however, that if the indemnifying party is first notified of
such a claim prior to the applicable notice period, such claim may continue to
be maintained until the final determination of such claim;
(b) the aggregate amount required to be paid by Seller pursuant to
Section 8.1 shall not, under any circumstances, exceed the Purchase Price;
(c) an indemnifying party shall not be required to provide
indemnification hereunder with respect to the Stations in any market (i.e.
Cleveland, Indianapolis or Pittsburgh) unless and until the aggregate amount of
Losses and Expenses incurred by the other party with respect to the Stations in
such market exceeds $50,000, in which case the indemnifying party shall be
required to provide indemnification for all Losses and Expenses
-39-
incurred by the other party with respect to the Stations in such market payable
pursuant to this Article VIII; provided, that indemnification provided in
respect of failures described in Section 8.2(iii) shall be required without
regard to this Section 8.3(c);
(d) Buyer shall be obligated to prosecute diligently and in good faith
any claim for any Loss or Expense with any applicable insurer prior to
collecting any indemnification payment under this Article VIII, and shall only
be indemnified under this Article VIII to the extent that Buyer's Loss or
Expense exceeds the proceeds received by Buyer in respect of any such claim;
(e) in calculating the amount of any Loss or Expense there shall be
deducted the amount of any Tax benefit to the indemnified party (or any of its
Affiliates) with respect to such Loss or Expense (after giving effect to the
Tax effect of receipt of the indemnification payments);
(f) in any case where an indemnified party recovers from third parties
any amount in respect of a matter with respect to which an indemnifying party
has indemnified it pursuant to this Article VIII, such indemnified party shall
promptly pay over to the indemnifying party the amount so recovered (after
deducting therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of the sum of (i) any amount previously so
paid by the indemnifying party to or on behalf of the indemnified party in
respect of such matter and (ii) any amount expended by the indemnifying party
in pursuing or defending any claim arising out of such matter;
(g) no party hereto shall be indemnified for special, exemplary or
consequential damages, including, without limitation, loss of future profit or
future revenue or interference with operations; and
(h) no party shall have any liability for any inaccuracy in or breach
of any representation or warranty by such party if the other party or any of
its officers, employees, counsel or other representatives had actual knowledge
on or before the Closing Date of the facts as a result of which such
representation or warranty was inaccurate or breached.
-40-
8.4. NOTICE OF CLAIMS. (a) A party seeking indemnification hereunder shall
give to the indemnifying party a notice describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such notice (if then known) the amount or the method of computation of the
amount of such claim, and a reference to the provision of this Agreement or any
other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; provided, that a notice in respect of
any action at law or suit in equity by or against a third Person as to which
indemnification will be sought shall be given promptly after the action or suit
is commenced.
(b) The amount to which an indemnified party shall be entitled under
this Article VIII shall be determined: (i) by written agreement between Seller
and Buyer, (ii) by a final judgment or decree of any court of competent
jurisdiction or (iii) by any other means to which Seller and Buyer shall agree.
The judgment or decree of a court shall be deemed final when the time for
appeal, if any, shall have expired and no appeal shall have been taken or when
all appeals taken have been finally determined. The indemnified party shall
have the burden of proof in establishing the amount of the Loss and Expense
suffered by it.
8.5. THIRD PARTY CLAIMS. (a) Subject to Section 8.5(b), the indemnified
party shall have the right to conduct and control, through counsel of its
choosing, the defense, compromise or settlement of any third Person claim,
action or suit against such indemnified party as to which indemnification will
be sought by such indemnified party from any party hereunder, and in any such
case the indemnifying party shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the indemnified party in connection therewith; provided, that the
indemnifying party may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action or suit as to which the
indemnified party has so elected to conduct and control the defense thereof;
and provided, further, that the indemnified party shall not, without the
written consent of the indemnifying party (which written consent shall not be
unreasonably withheld), pay, compromise or settle any such claim, action or
suit, except that no such consent shall be required if, following a written
request from the indemnified party, the
-41-
indemnifying party shall fail, within 14 days after the making of such request,
to acknowledge and agree in writing that, if such claim, action or suit shall
be adversely determined, such indemnifying party has an obligation to provide
indemnification hereunder to such indemnified party. Notwithstanding the
foregoing, the indemnified party shall have the right to pay, settle or
compromise any such claim, action or suit, provided that in such event the
indemnified party shall waive any right to indemnity therefor hereunder.
(b) If any third Person claim, action or suit against any indemnified
party is solely for money damages or, where Seller is the indemnifying party,
will have no continuing effect or any material adverse impact on the Stations
or the Purchased Assets, then the indemnifying party shall have the right to
conduct and control, through counsel of its choosing and at its expense, the
defense, compromise or settlement of any such third Person claim, action or
suit against the indemnified party as to which indemnification will be sought
from the indemnifying party if the indemnifying party has acknowledged and
agreed in writing that, if the same is adversely determined, the indemnifying
party has an obligation to provide indemnification to the indemnified party in
respect thereof, and in any such case the indemnified party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably requested by the indemnifying party in connection
therewith; provided, that the indemnified party may participate, through
counsel chosen by it and at its own expense, in the defense of any such claim,
action or suit as to which the indemnifying party has so elected to conduct and
control the defense thereof. Notwithstanding the foregoing, the indemnified
party shall have the right to pay, settle or compromise any such claim, action
or suit, provided that in such event the indemnified party shall waive any
right to indemnification therefor hereunder.
(c) If there are any conflicts between the provisions of this Section
8.5 and Section 5.1(d), the provisions of Section 5.1(d) shall control with
respect to Tax contests.
8.6. EXCLUSIVE REMEDY. Any other provision of this Agreement to the
contrary notwithstanding, from and after the Closing, the sole and exclusive
liability and responsibility of
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Seller to Buyer, or of Buyer to Seller, under or in connection with this
Agreement or the transactions contemplated hereby (including, without
limitation, for any breach or inaccuracy of any representation or warranty or
for any breach of any covenant or for any other reason), and the sole and
exclusive remedy of Buyer and Seller vis-a-vis each other with respect to any
of the foregoing, shall be as set forth in this Article VIII; provided,
however, that each party hereto shall retain all non-monetary equitable
remedies available to it in respect of any breach by any other party of any
covenant or other agreement of such other party contained in or made pursuant
to this Agreement and required to be performed after the Closing Date. To the
extent that a party hereto has any Loss or Expense for which it may assert
against the other party hereto any other right to indemnification, contribution
or recovery (whether under this Agreement, under common law or any statute or
otherwise), such party with such Loss or Expense hereby waives, releases and
agrees not to assert such right.
ARTICLE IX
TERMINATION
-----------
9.1. TERMINATION. (a) Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated:
(i) at any time prior to the Closing by Buyer in the event of a
material breach by Seller of any of its agreements, representations or
warranties contained in this Agreement and the failure of Seller to cure
such breach within 14 days after receipt of notice from Buyer requesting
such to be cured;
(ii) at any time prior to the Closing by Seller in the event of a
material breach by Buyer of any of its agreements, representations or
warranties contained in this Agreement and the failure of Buyer to cure
such breach within 14 days after receipt of notice from Seller requesting
such to be cured;
(iii) at any time following the determination of Aggregate 1996
Broadcast Cash Flow of the Stations and
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on or prior to February 15, 1997 by Buyer or Seller if Aggregate 1996
Broadcast Cash Flow of the Stations is less than $12,671,000;
(iv) by the mutual consent of Buyer and of Seller;
(v) by Buyer or Seller if the Closing shall not have occurred on or
before September 30, 1997 (or such later date as may be agreed to by Buyer
and Seller);
(vi) at any time prior to the Closing by Buyer or Seller if any court
of competent jurisdiction in the United States or any United States
governmental or regulatory body shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby; or
(vii) at any time prior to the Closing by Buyer or Seller if the
Exchange Agreement is terminated.
(b) If the final Schedules to this Agreement delivered to Buyer by
Seller pursuant to Section 4.5 contain changes from the draft Schedules
heretofore delivered to Buyer that in the reasonable judgment of Buyer
represent a material adverse change from the information contained in such
draft Schedules, then Buyer may terminate this Agreement by notice to Seller
within seven days of receipt of such Schedules; provided, however, that under
no circumstances shall delivery by Seller of Schedules rejected by Buyer
pursuant to this Section 9.1(b) be deemed to constitute a willful breach of
this Agreement by Seller.
(c) Buyer shall have the right to perform an inspection of the
Stations and may terminate this Agreement by notice to Seller given on or
before October 22, 1996 if Buyer shall reasonably determine that the antennae
and broadcasting and transmission equipment of the Stations, taken as a whole,
are not in all material respects in good repair and operating condition,
ordinary wear and tear excepted.
(d) In the event that this Agreement shall be terminated pursuant to
this Article IX, all further obligations
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of the parties under this Agreement (other than Sections 10.1, 10.2 and 10.10)
shall be terminated without further liability of any party to the other,
provided that nothing herein shall relieve any party from liability for its
wilful breach of this Agreement.
9.2. NOTICE OF TERMINATION. Any party desiring to terminate this Agreement
pursuant to Section 9.1 shall give notice of such termination to the other
party to this Agreement.
ARTICLE X
GENERAL PROVISIONS
------------------
10.1. NO ANNOUNCEMENT. Neither Buyer nor Seller shall, without the
approval of the other, make any press release or other announcement concerning
the transactions contemplated by this Agreement, except as and to the extent
that any such party shall be so obligated by law or by the rules, regulations
or policies of any national securities exchange or association, in which case
the other party shall be advised and the parties shall use their best efforts
to cause a mutually agreeable release or announcement to be issued.
10.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it will
treat in confidence all documents, materials and other information which it
shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), the
investigation provided for herein and the preparation of this Agreement and
other related documents, and, in the event the transactions contemplated hereby
shall not be consummated, each party will return to the other party all copies
of nonpublic documents and materials which have been furnished in connection
therewith. Such documents, materials and information shall not be communicated
to any third Person (other than, in the case of Buyer, to its counsel,
accountants, financial advisors or lenders, and in the case of the Seller, to
its counsel, accountants or financial advisors). The obligation of each party
to treat such documents, materials and other information in confidence shall
not apply to any information which (a) such party can demonstrate was already
lawfully in its possession
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prior to the disclosure thereof by the other party, (b) is known to the public
and did not become so known through any violation of a legal obligation, (c)
became known to the public through no fault of such party, (d) such party is
required to disclose any such information pursuant to judicial order or, in the
opinion of counsel, pursuant to applicable law (but only to the extent it must
be so disclosed), or (e) such party reasonably deems necessary to disclose to
obtain any of the consents or approvals contemplated hereby. Without limiting
the right of either party to pursue all other legal and equitable rights
available to it for violation of this Section 10.2 by the other party, it is
agreed that other remedies cannot fully compensate the aggrieved party for such
a violation of this Section 10.2 and that the aggrieved party shall be entitled
to injunctive relief to prevent a violation or continuing violation hereof.
10.3. GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) This Agreement shall
be governed by and construed in accordance with the internal laws (as opposed
to the conflict of laws provisions) of the State of Illinois.
(b) Buyer and Seller agree that all actions, suits or proceedings
arising out of or based upon this Agreement or the subject matter hereof shall
be brought and maintained exclusively in the federal and state courts of the
State of Illinois. Each of Buyer and Seller, by execution hereof, (i)
irrevocably submits to the jurisdiction of the federal and state courts in the
State of Illinois for the purpose of any such action, suit or proceeding and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that it is immune from extraterritorial
injunctive relief or other injunctive relief, that its property is exempt or
immune from attachment or execution, that any such action, suit or proceeding
may not be brought or maintained in one of the above-named courts, that any
such action, suit or proceeding brought or maintained in one of the above-named
courts should be dismissed on grounds of forum non conveniens, should be
transferred to any court other than one of the above-named courts, should be
stayed by virtue of the pendency of any other action, suit or proceeding in any
court other than one of the above-named courts, or that this Agreement or the
subject matter hereof may not be enforced in or by any of the above-named
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courts. Each of Buyer and Seller hereby consents to service of process in any
such suit, action or proceeding in any manner permitted by the laws of the
State of Illinois, agrees that service of process by registered or certified
mail, return receipt requested, at the address specified in or pursuant to
Section 10.4, is reasonably calculated to give actual notice and waives and
agrees not to assert by way of motion, as a defense or otherwise, in any such
action, suit or proceeding any claim that service of process made in accordance
with Section 10.4 does not constitute good and sufficient service of process.
The provisions of this Section 10.3(b) shall not restrict the ability of Buyer
or Seller to enforce in any court any judgment obtained in a federal or state
court of the State of Illinois.
10.4. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally, by messenger or by private courier or 72 hours after
having been sent by registered or certified mail addressed as follows:
If to Seller, to:
Secret Communications Limited Partnership
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx,
Chief Executive Officer
and
0000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.,
General Counsel
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
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If to Buyer, to:
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx F.X. Sillerman
with a copy to:
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address as such party may indicate by a notice delivered to
the other parties hereto in accordance with this Section 10.4.
10.5. SUCCESSORS AND ASSIGNS. (a) The rights of either party under this
Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of the other; provided, however, that (i) the
rights of Buyer hereunder may be assigned prior to Closing, without the consent
of Seller, to a wholly-owned subsidiary of Buyer without Buyer being released
from any of its obligations hereunder and (ii) if Seller or Buyer subsequently
determines to qualify the transfer of any or all of the Purchased Assets as a
like-kind exchange under Section 1031 of the Code, such party shall be entitled
to assign its rights (but not its obligations) under this Agreement to a
"qualified intermediary" (as defined in Treas. Reg. ss. 1.1031 (k)-1(g)(4)). In
the event described in clause (ii) above, Buyer or Seller, as the case may be,
agrees to (A) consent to and acknowledge the assignment of this Agreement (or
such portions thereof as the other party shall determine) by the other party to
such qualified intermediary, (B) pay the Purchase Price directly to such
qualified intermediary, (C) make appropriate filings with the FCC and to amend
any FCC filings theretofore made and (D) otherwise cooperate with the other
party in order to enable such party to effect a like-kind exchange under
Section 1031 of the Code. Following the Closing, either party may assign any of
its rights hereunder, but no such assignment shall relieve it of its
obligations hereunder.
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(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include, without limitation, in the case
of Buyer, any permitted assignee as well as the successors in interest to such
permitted assignee (whether by merger, liquidation (including successive
mergers or liquidations) or otherwise). Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any Person other than
the parties and successors and assigns permitted by this Section 10.5 any
right, remedy or claim under or by reason of this Agreement.
10.6. ACCESS TO RECORDS AFTER CLOSING. For a period of six years after the
Closing Date, Seller and its representatives shall have reasonable access to
all of the books and records relating to the Stations transferred to Buyer
hereunder to the extent that such access may reasonably be required by Seller
in connection with matters relating to or affected by the operations of the
Stations prior to the Closing Date. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours. Seller
shall be solely responsible for any costs or expenses incurred by it pursuant
to this Section 10.6. If Buyer shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Buyer shall, prior to
such disposition, give Seller a reasonable opportunity, at Seller's expense, to
segregate and remove such books and records as Seller may select.
For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Stations which Seller or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Seller and its Affiliates
upon receipt of reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 10.6. If Seller or any of its Affiliates shall desire
to dispose of any of such books and records prior to the expiration of such
six-year period, Seller shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select.
10.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Exhibits and
Schedules referred to herein and therein and
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the documents delivered pursuant hereto and thereto contain the entire
understanding of the parties hereto and thereto with regard to the subject
matter contained herein or therein, and supersede all prior agreements,
understandings or intents between or among any of the parties hereto. This
Agreement may not be amended, modified and supplemented except by a written
instruction signed by an authorized representative of each of the parties
hereto.
10.8. INTERPRETATION; DISCLOSURE SCHEDULES. Article titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed
with and as an integral part of this Agreement to the same extent as if they
were set forth verbatim herein. Disclosure of any fact or item in any Schedule
hereto referenced by a particular section in this Agreement shall be deemed to
have been disclosed with respect to every other section in this Agreement. The
specification of any dollar amount in the representations or warranties
contained in this Agreement or the inclusion of any specific item in any
Schedules hereto is not intended to imply that such amounts, or higher or lower
amounts, or the items so included or other items, are or are not material, and
neither party shall use the fact of the setting of such amounts or the
inclusion of any such item in any dispute or controversy between the parties as
to whether any obligation, item or matter not described herein or included in a
Schedule is or is not material for purposes of this Agreement.
10.9. WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. The failure of any party hereto to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
10.10. EXPENSES. Except as herein provided, each party hereto will pay all
of its own costs and expenses incident to its negotiation and preparation of
this Agreement and to its
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performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.
10.11. PARTIAL INVALIDITY. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable
law, but in case any one or more of the provisions contained herein shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
10.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by each of the
parties and delivered to each of Seller and Buyer.
10.13. DEFINITIONS. As used in this Agreement, the following terms have
the meanings specified or referred to in this Section 10.13:
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Aggregate 1996 Broadcast Cash Flow of the Stations" means the sum of
Broadcast Cash Flow of each of the Stations for the period January 1, 1996
through December 31, 1996, in the case of the Owned Stations, and for the
period June 1, 1996 through December 31, 1996, in the case of the Purchased
Stations.
"Allocation Schedule" has the meaning specified in Section 10.14.
"Assumed Liabilities" has the meaning specified in Section 1.4.
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"Balance Sheet" has the meaning specified in Section 2.4.
"Balance Sheet Date" has the meaning specified in Section 2.4.
"Broadcast Cash Flow" of any Station for any period means the excess of
the net revenues of such Station (exclusive of trade or barter items) for such
period over the operating expenses of such Station (exclusive of trade or
barter items) for such period; provided that the fees payable by Seller to
Entercom under the Purchased Stations Time Brokerage Agreement shall not be
included in the computation of Broadcast Cash Flow of the Purchased Stations.
"Buyer" has the meaning specified in the first paragraph of this
Agreement.
"Buyer Ancillary Agreements" has the meaning specified in Section 3.2.
"Closing" means the closing of the transfer of the Purchased Assets from
Seller to Buyer and the assumption of the Assumed Liabilities by Buyer.
"Closing Date" has the meaning specified in Section 1.6(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as amended.
"Encumbrance" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect
in title, covenant or other restrictions of any kind.
"Entercom" means Entertainment Communications, Inc.
"Environmental Laws" means any law, statute, regulation or court order
binding upon Seller, consent decree binding upon Seller, or settlement
agreement to which Seller is a party, which
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imposes liability for or standards of conduct concerning the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
release, threat of release, cleanup, transport or handling of Hazardous
Materials, including the Comprehensive Environmental Response Compensation and
Liability Act, the Resources Conservation and Recovery Act, any other
"Superfund" or "Superlien" law, the Toxic Substances Control Act, the Hazardous
Materials Transportation Act, their implementing regulations or any other
similar federal, state or local statutes or regulations.
"ERISA" has the meaning specified in Section 2.24.
"Escrow Agent" has the meaning specified in the third recital to this
Agreement.
"Escrow Agreement" has the meaning specified in the third recital to this
Agreement.
"Event of Loss" has the meaning specified in Section 10.16.
"Exchange Agreement" has the meaning specified in the first recital to
this Agreement.
"Exchange Transaction" has the meaning specified in Section 2.1.
"Excluded Assets" has the meaning specified in Section 1.2.
"Excluded Liabilities" has the meaning specified in Section 1.5.
"Expenses" means any and all reasonable expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals).
"FCC" means the Federal Communications Commission.
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"FCC Authorizations" means those Governmental Permits issued by the FCC
for each of the Stations.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Authorizations as contemplated by this Agreement
pursuant to appropriate applications filed by the parties with the FCC.
"Final Order" means the FCC Consent, (a) which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, and (b) with respect to
which (i) no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay and the time for filing any such requests, and
the time for the FCC to set aside the action on its own motion, has expired, or
(ii) in the event of review, reconsideration or appeal, the FCC's order has
been affirmed and become final by expiration of the time for further review,
reconsideration or appeal.
"Governmental Permits" has the meaning specified in Section 2.8.
"Hazardous Materials" means substances defined as "hazardous substances,"
"hazardous materials," "hazardous wastes" or "toxic substances" in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act or any analogous federal, state or local
laws, and shall specifically include, without limitation, petroleum (including
crude oil or any fraction thereof).
"Improvements Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Knowledge of Seller" means the actual knowledge of Xxxxx X. Xxxx, Xxxx X.
Xxxxx and Xxxxxx X. Xxxxxxxx, after due inquiry of the appropriate management
level personnel of each Station and after review of the Exchange Agreement and
the schedules thereto and the documents described therein.
"Leased Real Property" has the meaning specified in Section 2.9.
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"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Owned Real Property" has the meaning specified in Section 2.9.
"Owned Stations" has the meaning specified in the first recital to this
Agreement.
"Permitted Encumbrances" means (a) liens for taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the ordinary course of business for sums not yet
due and payable and (c) other liens or imperfections on property which are not
material in amount or do not materially detract from the value of or materially
impair the existing use of the property affected by such lien or imperfection.
"Person" means any person, employee, individual, corporation, limited
liability company, partnership, trust, or any other non-governmental entity or
any governmental or regulatory authority or body.
"Purchased Assets" has the meaning specified in Section 1.1.
"Purchased Stations" has the meaning specified in the first recital to
this Agreement.
"Purchased Stations Balance Sheet" has the meaning specified in Section
2.4(c).
"Purchased Stations Time Brokerage Agreement" has the meaning specified in
Section 2.25.
"Purchase Price" has the meaning specified in Section 1.3.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement
of Contami-
-55-
nants through or in the air, soil, surface water, groundwater or
property.
"Requirements of Law" means any federal, state or local law, rule or
regulation, Governmental Permit or other binding determination of any
governmental or regulatory authority or body.
"Seller" has the meaning specified in the first paragraph of this
Agreement.
"Seller Agreements" has the meaning specified in Section 2.17.
"Seller Ancillary Agreements" has the meaning specified in Section 2.3.
"Stations" has the meaning specified in first recital to this Agreement.
"Tax" means any federal, state, local or foreign net income, alternative
or add-on minimum, gross income, gross receipts, property, sales, use,
transfer, gains, license, excise, employment, payroll, withholding or minimum
tax, or any other tax custom, duty, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed on Seller by any federal, state,
local, foreign or other governmental authority or regulatory body.
"Tax Return" means any return, report or similar statement of Seller
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
10.14. ALLOCATION OF PURCHASE PRICE. Within 30 days following the Closing,
Buyer and Seller shall use their respective best efforts to negotiate and draft
a schedule (the "Allocation Schedule") allocating the Purchase Price
(including, for purposes of this Section 10.14, any other consideration paid to
Seller, including the Assumed Liabilities) among the Stations and the Purchased
Assets. The Allocation Schedule shall be reasonable and shall be prepared in
accordance with Section 1060
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of the Code and the regulations thereunder. Buyer and Seller each agrees that
promptly upon receiving said Allocation Schedule it shall return an executed
copy thereof to the other party. Buyer and Seller each agrees to file Internal
Revenue Service Form 8594, and all federal, state, local and foreign Tax
Returns, in accordance with the Allocation Schedule. Buyer and Seller each
agrees to provide the other promptly with any other information required to
complete Form 8594. Notwithstanding the foregoing, if Buyer and Seller are
unable to agree on an Allocation Schedule each party shall be entitled to take
its own position on Form 8594 and such Tax Returns as to the allocation of the
Purchase Price.
10.15. SPECIFIC PERFORMANCE; OTHER RIGHTS AND REMEDIES. Subject to Section
8.6, each party agrees that each party shall, in addition to such other
remedies as may be available to it at law, be entitled to injunctive relief and
to enforce its rights by an action for specific performance to the extent
permitted by applicable Requirements of Law. Each party hereby waives any
requirement for security or the posting of any bond or other surety in
connection with any temporary or permanent award of injunctive, mandatory or
other equitable relief.
10.16. RISK OF LOSS. The risk of loss or damage to any of the Purchased
Assets shall be on Seller prior to the Closing Date and thereafter shall be on
Buyer. If any of the Purchased Assets is damaged or destroyed prior to the
Closing Date (any such event being referred to as an "Event of Loss"), Seller,
at its expense, shall use reasonable efforts to replace or repair the item with
comparable property of like value and quality as soon as practicable before the
Closing Date. If any Event of Loss shall materially affect the operations of
the Stations and repair or replacement cannot be accomplished by the scheduled
Closing Date but can be accomplished within 60 days after that date, the
Closing Date shall be postponed for such 60-day period; if, however, the
repair or replacement cannot be accomplished within such 60-day period, Buyer
may elect by written notice to Seller within 20 days after Buyer has received
notice that any Event of Loss has occurred:
(a) To postpone the Closing until a date within 15 business days after
Seller gives written notice to Buyer that the Purchased Assets which are the
subject of the Event of Loss have
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been substantially restored to their condition immediately prior to the Event
of Loss, which date shall not be more than 60 days beyond the date specified in
Section 9.1(a)(v);
(b) To consummate the Closing on the scheduled Closing Date and accept
all of the Purchased Assets as is, in which event Seller shall assign to Buyer
at the Closing all of its rights under any insurance policies and to all
insurance proceeds covering that Event of Loss, including property damage, loss
of income and continuing expenses (less amounts due to the Seller for repairs
or replacements of the property prior to the Closing); or
(c) To terminate this Agreement without liability on the part of
Seller or Buyer.
If the Closing Date is postponed beyond the date specified in Section
9.1(a)(v), the parties shall amend their application to the FCC to request an
extension of the date of Closing.
10.17. ASSIGNMENT OF RIGHTS UNDER EXCHANGE AGREEMENT. Seller shall use its
reasonable best efforts to obtain the written consent of Entercom to the
assignment to Buyer, on or immediately after the Closing Date, of its rights
arising under Section 9.6.3 of the Exchange Agreement with respect to the
Purchased Stations and, after such assignment has been consummated, shall take
all actions reasonably requested by Buyer to enforce any of such rights with
respect to the Purchased Stations for the benefit of Buyer (it being the intent
of the parties that pursuant to this provision Seller shall transfer to Buyer
to the maximum extent possible the benefits of all representations and
warranties and covenants of Entercom contained in the Exchange Agreement). If
Seller is unable to obtain the consent of Entercom to the assignment of the
rights arising under Section 9.6.3 of the Exchange Agreement, Seller shall,
upon the request of Buyer, proceed diligently to exercise Seller's right to
indemnification under the Exchange Agreement with respect to the Purchased
Stations and Buyer shall be entitled to receive from Seller any amount actually
received by Seller with respect to such rights, less reasonable out of pocket
fees and expenses incurred by Seller in exercising such rights. Notwithstanding
the foregoing, Seller shall retain such rights against Entercom under the
Exchange Agreement (to the extent such
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rights exist under the Exchange Agreement) as shall be necessary to recover
from Entercom with respect to any liability for which Seller makes payment to
Buyer pursuant to Seller's indemnification obligation under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SECRET COMMUNICATIONS LIMITED PARTNERSHIP
By: Broadcast Alchemy, L.P.,
a General Partner
By: Lane Broadcasting, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: Secretary
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SFX BROADCASTING, INC.
By: /s/ Xxxxxx F.X. Sillerman
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Its: Chairman of the Board and
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Chief Executive Officer
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