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EXHIBIT 10.28
STOCK PURCHASE AGREEMENT
BY AND AMONG
CAPSTAR ACQUISITION COMPANY, INC.,
XXXXX BROADCASTING COMPANY
AND
THE SELLING STOCKHOLDERS NAMED HEREIN
DATED AS OF
JUNE 5, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINED TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . 11
2.2. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 11
2.3. Delivery of Notices . . . . . . . . . . . . . . . . . . . . 11
2.4. Payments at Closing . . . . . . . . . . . . . . . . . . . . 11
2.5. Post-Closing Purchase Price Adjustment; Post-Closing Payment 12
2.6. Xxxxxxx Money . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding the Company. . . . 13
3.2. Representations and Warranties of Selling Stockholders . . . 24
3.3. Representations and Warranties of Buyer . . . . . . . . . . 25
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of the Company and the Selling Stockholders . . . 27
4.2. Negative Trade Balance . . . . . . . . . . . . . . . . . . . 29
4.3. Environmental Site Assessments . . . . . . . . . . . . . . . 29
4.4. Broadcast Transmission Interruption . . . . . . . . . . . . 29
ARTICLE V
ADDITIONAL AGREEMENTS OF THE COMPANYAND THE SELLING
STOCKHOLDERS
5.1. No Solicitation of Transactions . . . . . . . . . . . . . . 29
5.2. Access and Information . . . . . . . . . . . . . . . . . . . 30
5.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4. Compliance With Station Licenses . . . . . . . . . . . . . . 31
(i)
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5.5. Notification of Certain Matters . . . . . . . . . . . . . . 32
5.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . 32
5.7. Resignations of Directors and Officers . . . . . . . . . . . 32
5.8. Xxxx X. Xxxxx Employment Agreement . . . . . . . . . . . . . 32
ARTICLE VI COVENANTS OF BUYER
6.1. Notification of Certain Matters . . . . . . . . . . . . . . 33
6.2. Employee Matters . . . . . . . . . . . . . . . . . . . . . . 33
6.3. Certain Legal Qualifications . . . . . . . . . . . . . . . . 33
6.4. Future Acquisitions . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIIMUTUAL COVENANTS
7.1. Application for FCC Consents . . . . . . . . . . . . . . . . 34
7.2. Control of Stations . . . . . . . . . . . . . . . . . . . . 34
7.3. Other Governmental Consents . . . . . . . . . . . . . . . . 34
7.4. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . 34
7.5. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 35
7.6. Additional Agreements . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation . . . . . . . . . . . 36
8.2. Conditions to Obligation of Buyer . . . . . . . . . . . . . 37
8.3. Conditions to Obligations of the Selling Stockholders . . . 37
ARTICLE IX
CLOSING
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . 39
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 42
(ii)
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ARTICLE XI
INDEMNIFICATION
11.1. Indemnification of Buyer . . . . . . . . . . . . . . . . . . 44
11.2. Indemnification of Selling Stockholders . . . . . . . . . . 44
11.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . 44
11.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . 45
11.5. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.6. Limitations . . . . . . . . . . . . . . . . . . . . . . . . 45
11.7. Instructions to Escrow Agent . . . . . . . . . . . . . . . . 47
11.8. No Waiver Relating to Claims for Fraud . . . . . . . . . . . 47
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants . . . 48
12.2. Further Actions . . . . . . . . . . . . . . . . . . . . . . 48
12.3. Amendment and Modification . . . . . . . . . . . . . . . . . 48
12.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . 48
12.5. Specific Performance . . . . . . . . . . . . . . . . . . . . 48
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . 49
12.7. Expenses and Obligations . . . . . . . . . . . . . . . . . . 49
12.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . 49
12.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 51
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 51
12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 51
12.13. Public Announcements . . . . . . . . . . . . . . . . . . . . 52
12.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.15. Director and Officer Liability . . . . . . . . . . . . . . . 52
12.16. No Reversionary Interest . . . . . . . . . . . . . . . . . . 52
12.17. Relationship of Selling Stockholders . . . . . . . . . . . . 52
12.18. Appointment of Stockholders' Representative . . . . . . . . 53
12.19. Consulting Agreement . . . . . . . . . . . . . . . . . . . . 55
(iii)
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EXHIBITS:
Exhibit A -- Form of Deposit Escrow Agreement
Exhibit B -- Form of Employment Agreement
Exhibit C -- Form of Indemnification Escrow Agreement
Exhibit D -- Form of Release
Exhibit E -- Form of Legal Opinions
Exhibit F -- Form of Legal Opinion of Xxxxxx & Xxxxxx L.L.P.
Exhibit G -- Form of Consulting Agreement
SCHEDULES:
Schedule 2.1 -- Shares Owned
Schedule 2.4(a) -- Allocation of Purchase Price
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(c) -- List of Stockholders and Ownership
Schedule 3.1(f) -- Unrecorded Liabilities and Conduct of Business
Schedule 3.1(g) -- Licenses and Permits
Schedule 3.1(h) -- Litigation
Schedule 3.1(i) -- Insurance
Schedule 3.1(j) -- Real Estate
Schedule 3.1(k) -- Leased Real Property
Schedule 3.1(l) -- Personal Property
Schedule 3.1(p) -- Certain Agreements
Schedule 3.1(q) -- Employee Benefit Plans
Schedule 3.1(r) -- Patents, Trademarks; Etc.
Schedule 3.1(s) -- Affiliate Relationships
Schedule 3.1(u) -- Trade Deals
Schedule 3.2(a) -- Certain Liens
Schedule 6.2 -- Employee Matters
(iv)
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of June 6, 1997, by and among Xxxxx Broadcasting Company, an Iowa
corporation (the "Company"), each of the persons identified on Annex A (the
"Selling Stockholders"), and Capstar Acquisition Company, Inc., a Delaware
corporation ("Buyer").
R E C I T A L S
A. The Selling Stockholders collectively own all of the issued and
outstanding shares of the common stock, par value $.01 per share ("Common
Stock"), of the Company, which shares constitute all of the authorized,
issued, and outstanding capital stock of the Company.
B. Buyer desires to purchase from the Selling Stockholders, and the
Selling Stockholders desire to sell to Buyer, all of the shares of Common Stock
held by the Selling Stockholders (the "Shares") in consideration of the
Purchase Price (hereinafter defined), upon the terms and subject to the
conditions set forth herein.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of the Company to cash payment
for the sale of advertising time by the Stations and other amounts that would
be classified as an account receivable on the asset side of a balance sheet of
the Company prepared in accordance with GAAP.
"Adjustment Amount" has the meaning set forth in Section 2.5(c).
"Affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with such person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
"Applicable Laws" means all laws, statutes, rules, regulations,
ordinances, judgments, orders, decrees, injunctions, and writs of any
Governmental Entity having jurisdiction over the Company or the business,
operations or assets of the Company, as they may be in effect on or prior to
the Closing.
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"Applications" has the meaning set forth in Section 7.1.
"Balance Sheet" has the meaning set forth in Section 3.1(f).
"Balance Sheet Date" has the meaning set forth in Section 3.1(f).
"Banking Event" has the meaning set forth in Section 9.1.
"business day" means any other day than (i) a Saturday or Sunday or
(ii) a day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required to be closed.
"Buyer" has the meaning set forth in the first paragraph of this
Agreement, and it includes its permitted successors and assigns.
"Buyer Indemnified Costs" means (a) any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) that any of the
Buyer Indemnified Parties incurs and that arise out of (i) any breach or
default by the Company or any Selling Stockholder of any of the representations
or warranties under this Agreement or any agreement or document executed in
connection herewith; (ii) the business or operations of the Company or any of
the Stations prior to the Closing Date, including any and all liabilities
arising under the Licenses or the Contracts, but only to the extent that such
damages, losses, claims, liabilities, demands, charges, suits, penalties, costs
and expenses relate to events or circumstances occurring prior to the Closing
Date; and (iii) any breach or default by the Selling Stockholders or the
Company of any covenant or agreement under this Agreement or any other
Transaction Document; and (b) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing. In determining the
amount of any of the items described in the preceding clauses (a) or (b), such
amount shall be reduced by (A) the net amount the Buyer Indemnified Parties
recover (after deducting all attorney's fees, expenses and other out-of-pocket
costs of recovery) from any insurer or other party liable for such item; and
(B) the amount of any tax benefits actually realized by the Buyer Indemnified
Parties as a result of any such item.
"Buyer Indemnified Parties" means Buyer and each officer, director,
employee, consultant, stockholder, and Affiliate of Buyer.
"Capped Buyer Indemnified Costs" means all Buyer Indemnified Costs
other than (a) damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs, and expenses (including court costs and reasonable attorneys'
fees and expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Buyer Indemnified Parties incurs and that arise out
of any breach or default by the Company or any Selling Stockholder of any of
the representations and warranties contained in Section 3.1(o) or Section
3.2(a), and (b) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees
and expenses, incident to the foregoing.
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"Capped Indemnified Costs" means the Capped Buyer Indemnified Costs or
the Selling Stockholders Indemnified Costs, as the case may be.
"CERCLA" has the meaning set forth in the definition of Environmental
Laws contained in this Section 1.1.
"Closing" means the consummation of the transactions contemplated by
this Agreement in accordance with the provisions of Article IX.
"Closing Balance Sheet" has the meaning set forth in Section 2.5(a).
"Closing Date" means the date of the Closing specified in Article IX.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended. All references to the Code, U.S. Treasury regulations or other
governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Common Stock" has the meaning set forth in the first recital of this
Agreement.
"Communications Act" means the Communication Act of 1934, as amended,
and all material rules, regulations and written policies of the FCC thereunder.
"Company Negative Trade Balance" means the difference, if negative,
between the value of time owed under barter agreements to which any of the
Stations is a party or by which any of them is bound, and the value of the
goods and services to be received under such agreements, but excluding any such
values to the extent that they are included in Current Assets, Current
Liabilities or Funded Debt.
"Company Reports" has the meaning set forth in Section 3.1(f).
"Conflict Event" has the meaning set forth in Section 9.1.
"Consents" means all governmental consents and approvals, including
the FCC Consents, and all consents and approvals of third parties, in each case
that are necessary in order to transfer the Common Stock, or the control of the
Company and its properties and assets, to Buyer and otherwise to consummate the
transactions contemplated hereby.
"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and
other modifications thereto), to which the Company is a party or is otherwise
bound.
"Cure Period" has the meaning set forth in Section 10.1(b).
"Current Assets" means assets of the Company which, in accordance with
GAAP,. are current assets, after deducting adequate reserves in accordance with
GAAP (which, in the case
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of Accounts Receivable, shall include a reserve for doubtful accounts equal to
2% of the aggregate amount of the Accounts Receivable).
"Current Liabilities" means liabilities of the Company which, in
accordance with GAAP, are current liabilities.
"Debt", without duplication, means (a) all indebtedness of the
Company, whether or not represented by bonds, debentures, notes or other
securities, for the repayment of money borrowed, (b) all deferred indebtedness
of the Company for the payment of the purchase price of property or assets
purchased, (c) all obligations of the Company to pay rent or other payment
amounts under a lease of real or personal property which is required to be
classified as a capital lease or a liability on the face of a balance sheet
prepared in accordance with GAAP, (d) any reimbursement obligation of the
Company with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of the Company, (e) any net payment
obligation of the Company under any interest rate swap agreement, forward rate
agreement, interest rate cap or collar agreement or other financial agreement
or arrangement entered into for the purpose of limiting or managing interest
rate risks, (f) all indebtedness secured by any Lien existing on property owned
by the Company, whether or not indebtedness secured thereby shall have been
assumed, (g) all guaranties, endorsements, assumptions and other contingent
obligations of the Company in respect of, or to purchase or to otherwise
acquire, indebtedness of others, and (h) all other obligations of the Company
which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liabilities side of a balance sheet as of the date
of determination.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement among
the Company, the Selling Stockholders and Media Venture Partners, Ltd., a copy
of which is attached hereto as Exhibit A.
"Deposit Letter of Credit" means that certain original, irrevocable
letter of credit in favor of the Selling Stockholders and the Escrow Agent
issued by Bankers Trust Company or another lender for the sum of $750,000 and
held in accordance with the provisions of the Deposit Escrow Agreement.
"Employee Benefit Plans" means any "employee benefit plan" within the
meaning of Section 3(3) of ERISA and any bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, severance, disability, death benefit, hospitalization or
insurance plan providing benefits to any present or former employee or
contractor of the Company or any member of the ERISA Group maintained by any
such entity or as to which any such entity has any liability or obligation.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Employment Agreement" means the Employment Agreement between Central
Star Communications, Inc. and Xxxx X. Xxxxx substantially in the form attached
hereto as Exhibit B.
"Environmental Costs or Liabilities" has the meaning set forth in
Section 3.1(o)(iv).
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"Environmental Laws" means all Applicable Laws and rules of common law
pertaining to the environment, natural resources, and public or employee health
and safety including the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Emergency
Planning and Community Right to Know Act and the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the
Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990, the
Hazardous Materials Transportation Act, and any similar or analogous statutes,
regulations and decisional law of any Governmental Authority, as each of the
foregoing may be amended and in effect on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" has the meaning set forth in Section 3.1(q).
"ESA" means Phase I or Phase II environmental site assessments.
"Escrow Agent" means Citibank, N.A. and includes its successors and
assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Existing ESAs" means the Phase I Environmental Assessment of KHAK
Radio Tower Property, U.S. Highway 30 East and Ivanhoe Road, Cedar Rapids,
Iowa, dated September 1992, prepared by Green Environmental Services, Inc. of
Cedar Rapids, Iowa and the Phase I Environmental Site Assessment for 0000 Xxxxx
Xxxxxx Xxxxx Xxxx, Xxxxx Xxxxxx, Xxxx, dated January 1995, prepared by
Xxxxx-Xxxxxxx Engineers and Architects, Inc. of Iowa City, Iowa.
"FCC" means the Federal Communications Commission.
"FCC Consents" means actions by the FCC granting its initial consent
to the transfer of the control of the FCC Licenses for each of the Stations to
Buyer as contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to the Company and applications of the
Company, if any, to the FCC relating to or used in the business or operations
of each of the Stations, including those listed on Schedule 3.1(l) and any
additions thereto between the date hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC setting
forth the FCC Consents and (a) which has not been reversed, stayed, enjoined,
set aside, annulled, or suspended and (b) with respect to which (i) no requests
have been filed for administrative or judicial review, reconsideration, appeal,
or stay, and the time for filing any such requests and for the FCC to set aside
the action on its own motion has expired or (ii) in the event of review,
reconsideration, or appeal, such review, reconsideration, or appeal has been
denied and the time for further review, reconsideration, or appeal has expired.
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"Financial Statements"has the meaning set forth in Section 3.1(f).
"Former Selling Stockholder" has the meaning as set forth in Section
12.18.
"Funded Debt" means (a) all Debt of the Company maturing by its terms
more than one year after, or which is renewable or extendible at the option of
the Company for a period ending one year or more after, the date as of which
Funded Debt is being determined, and shall include Debt of such maturity
created, assumed or guaranteed by the Company either directly or indirectly,
including obligations of such maturity secured by a lien upon property of the
Company, and (b) all interest, unamortized discount, charges, fees, expenses,
penalties, premiums, or other amounts, including prepayment penalties, which
have become due on the foregoing items.
"Funded Debt Payoff Notice" has the meaning set forth in Section
2.3(a).
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Entity" means any governmental department, commission,
board, bureau, agency, court or other instrumentality of the United States or
any state, county, parish or municipality, jurisdiction, or other political
subdivision thereof.
"Hazardous Substances" has the meaning set forth in Section 3.1(n).
"Holdback Amount" has the meaning set forth in Section 11.5.
"Indemnification Escrow Agreement" means the Indemnification Escrow
Agreement among Selling Stockholders (or the Stockholders' Representative on
behalf of the Selling Stockholders), Buyer, and Escrow Agent substantially in
the form attached hereto as Exhibit C.
"Indemnified Costs" means the Buyer Indemnified Costs or the Selling
Stockholders Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or the
Selling Stockholders Indemnified Parties, as the case may be.
"Indemnifying Party" means any person who is obligated to provide
indemnification hereunder.
"Intellectual Property" means all Trademarks, Know-how, copyrights,
copyright registrations and applications for registration, Patents and all
other intellectual property rights whether registered or not, licenses to or
owned by the Company, including the call letters of each of the Stations and
the goodwill related to the foregoing.
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information and all other confidential or proprietary technical and
business information.
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"Knowledge" means, with respect to a specified party hereto, the
actual knowledge of such party.
"Leased Real Property" means all of the Company leasehold interests,
easements, licenses, rights to access and rights-of-way which are used or held
for use in the business and operations of the Company, including those
interests which are identified and described in Schedule 3.1(k), as modified by
any addition or permitted deletion thereto between the date hereof and the
Closing Date.
"Licenses" means the FCC Licenses and all Permits issued by any
Governmental Entity to the Company, including those listed on Schedule 3.1(l),
with any additions thereto between the date hereof and the Closing Date.
"Liens" has the meaning set forth in Section 3.1(m).
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties, condition (financial or otherwise), results
of operations, assets, liabilities, or prospects of the Company, in each case
taken as a whole.
"Minimum Loss" has the meaning as set forth in Section 11.6(a).
"Multiemployer Plan" has the meaning set forth in Section 3(37) or
Section 4001(a)(3) of ERISA.
"Outstanding Transaction Costs" means all fees, expenses and other
costs, including any brokerage or finders fees, payable by the Company after
the Closing Date in connection with the transactions contemplated by this
Agreement and the other Transaction Documents, other than any such items that
are included as a liability on the Closing Balance Sheet.
"Owned Real Property" means those parcels of real property owned in
fee and used or held for use by the Company as described in Schedule 3.1(j),
and all buildings, structures, improvements, and fixtures thereon, together
with all rights of way, easements, privileges, and appurtenances pertaining or
belonging thereto, including any right, title, and interest of the Company in
and to any street or other property adjoining any portion of such property.
"Patents" means all patent and patent applications (including all
reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by the Company.
"Pension Plans" has the meaning set forth in Schedule 3.1(q).
"Permits" has the meaning set forth in Section 3.1(n).
"Permitted Encumbrances" means (a) statutory Liens for current Taxes
not yet due and payable, (b) mechanics', carriers', workers', repairers', and
other similar liens imposed by law arising or incurred in the ordinary course
of business for obligations not yet due, (c) in the case of
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leases of vehicles, rolling stock, and other personal property, encumbrances,
which do not, individually or in the aggregate, materially impair the operation
of the business at the facility at which such leased equipment or other
personal property is located, (d) other liens, charges or encumbrances
incidental to the operation of the Company or the ownership of the Company's
assets which were not incurred in connection with the borrowing of money or the
advance of credit and which do not materially detract from the value of the
assets encumbered thereby or materially interfere with the use thereof or the
operation of such asset or the Stations, and (e) Liens on leases of real
property arising from the provisions of such leases, including, in relation to
leased real property, any agreements and/or conditions imposed on the issuance
of land use permits, zoning, business licenses, use permits, or other
entitlements of various types issued by any Governmental Entity, necessary or
beneficial to the continued use and occupancy of the Company assets or the
continuation of the operation of any Station.
"Permitted Liens" has the meaning set forth in Section 3.1(m).
"person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, or other
entity.
"Personal Property" means all of the machinery, equipment (including
the transmitter and studio equipment), computer programs, computer software,
tools, motor vehicles, furniture, furnishings, leasehold improvements, office
equipment, inventories, supplies, plant, spare parts, and other tangible or
intangible personal property which are owned or leased by the Company and which
are used or held for use in its business or operations, including the personal
property which is listed on Schedule 3.1(k) hereto, together with any additions
thereto between the date hereof and the Closing Date less any dispositions made
in accordance with Section 4.1.
"Proportionate Share" means (a) with respect to Xxxx X. Xxxxx, 65%,
and (b) with respect to the Xxxxxxx X. Xxxxxxxx Trust and the Xxxxxxx X.
Xxxxxxxx Charitable Remainder Trust, 35%.
"Purchase Price" means the consideration payable by Buyer to the
Selling Stockholders as provided in Section 2.2 hereof.
"Real Property" means the Leased Real Property and the Owned Real
Property.
"Referee" has the meaning set forth in Section 2.5(b).
"Release" means the Release of Claims between Buyer and the Selling
Stockholders substantially in the form of Exhibit D.
"Released Claims" has the meaning set forth in Section 10.2(b).
"Released Parties" has the meaning set forth in Section 10.2(b).
"Schedules" means the Schedules attached hereto.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Stockholders" has the meaning set forth in the first
paragraph of this Agreement.
"Selling Stockholders Indemnified Costs" means (a) any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Selling Stockholders Indemnified Parties incurs and
that arise out of (i) any breach or default by Buyer of any of the
representations, or warranties under this Agreement or any agreement or
document executed in connection herewith; (ii) the business or operation of the
Company on and after the Closing Date, including any and all liabilities
arising under the Licenses or the Contracts, but only to the extent that such
damages, losses, claims, liabilities, demands, charges, suits, penalties and
expenses relate to events or circumstances occurring after the Closing Date;
and (iii) any breach or default by Buyer of any covenant or agreement under
this Agreement or any other Transaction Document; (b) the items indemnified
against pursuant to Section 5.3; and (c) any and all actions, suits,
proceedings claims, demands, assessments, judgments, costs, and expenses,
including reasonable legal fees and expenses, incident to any of the foregoing.
In determining the amount of any of the items described in the preceding
clauses (a) or (b), such amount shall be reduced by (A) the net amount the
Selling Stockholders Indemnified Parties recover (after deducting all
attorney's fees, expenses and other out- of-pocket costs of recovery) from any
insurer or other party liable for such item; and (B) the amount of any tax
benefits actually realized by the Selling Stockholders Indemnified Parties as a
result of any such item.
"Selling Stockholders Indemnified Parties" means each of the Selling
Stockholders and each officer, director, employee, consultant, stockholder, and
Affiliate of the Company.
"Shares" has the meaning set forth in the second recital of this
Agreement.
"Station Event" has the meaning set forth in Section 9.1.
"Station Licenses" has the meaning set forth in Section 3.1(f).
"Station Management" has the meaning set forth in Section 4.1(b).
"Stockholders' Representative" means Xxxx X. Xxxxx or her successor in
that capacity appointed pursuant to Section 12.18.
"Successor Selling Stockholders" has the meaning set forth in Section
12.18.
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
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"Tax Returns" means any return, report, information return or other
document (including any related or supporting information) filed or required to
be filed with any Governmental Entity in connection with the determination,
assessment, collection or administration of any Taxes or the administration of
any laws, regulations or administrative requirements relating to any Taxes.
"Trade Deals" means the exchanges by a Station of its advertising time
for goods or services, other than in connection with the licensing of programs
and programming material.
"Trademarks" means (a) trademarks, service marks, trade names, trade
dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of the business of any Station, whether or
not registered, and any applications or registrations therefor and (b) any
associated goodwill incident thereto owned by the Company.
"Trading Event" has the meaning set forth in Section 9.1.
"Transaction Documents" has the meaning set forth in Section 3.1(d).
"Voting Debt" has the meaning set forth in Section 3.1(c).
"Working Capital Deficit" means the amount by which the sum of Current
Liabilities (as shown on the Closing Balance Sheet) exceed Current Assets (as
shown on the Closing Balance Sheet).
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, at the Closing (hereinafter defined), each Selling Stockholder
shall sell to Buyer, and Buyer shall purchase from such Selling Stockholder,
the Shares set forth opposite such Selling Stockholders' name on Schedule 2.1,
free and clear of all Liens.
2.2. PURCHASE PRICE. (a) Subject to Section 2.2(b), the aggregate purchase
price payable by Buyer to the Selling Stockholders in consideration for the
sale of the Shares (the "Purchase Price") shall be $14,980,000.
(b) The Purchase Price shall be subject to adjustment after the
Closing as set forth in Section 2.5.
2.3. DELIVERY OF NOTICES.
(a) Funded Debt Payoff Notice. No later than the date that is three
business days prior to the date scheduled for the Closing, the Company shall
deliver to Buyer a written notice (the "Funded Debt Payoff Notice") setting
forth (i) the payments necessary to be made in order for the Funded Debt to be
repaid in full and retired as of the Closing Date, (ii) the name of the persons
to whom such payments are to be made, and (iii) wiring instructions for the
recipients of such
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payments. At the Closing, an amount of the Purchase Price equal to the Funded
Debt shall be applied to the payment and retirement in full of the Funded Debt
identified in such notice.
(b) Wiring Instructions. Contemporaneously with the delivery of the
Funded Debt Payoff Notice, the Company or the Selling Stockholders shall
deliver to Buyer a notice setting forth wiring instructions for the Purchase
Price to be paid to the Selling Stockholders on the Closing Date.
2.4. PAYMENTS AT CLOSING. At the Closing, subject to the satisfaction of
the other terms and conditions of this Agreement, Buyer shall:
(a) pay or cause to be paid to the Selling Stockholders cash, via wire
transfer of immediately available funds, in an amount equal to the Purchase
Price, minus the sum of the amount of the Funded Debt and the Holdback Amount,
which amount shall be allocated among the Selling Stockholders as provided on
Schedule 2.4(a);.
(b) wire transfer an amount equal to the amount of the Funded Debt in
accordance with the Funded Debt Notice; and
(c) deposit or cause to be deposited the Holdback Amount with the
Escrow Agent. Buyer is directed by each Selling Stockholder to deposit the
amount of the Holdback Amount set forth opposite such Selling Stockholder's
name in Column A of Schedule 2.4(a) with the Escrow Agent at the Closing and
Buyer shall make such deposit as directed.
2.5. POST-CLOSING PURCHASE PRICE ADJUSTMENT; POST-CLOSING PAYMENT. (a) No
later than 60 days after the Closing Date, the Selling Stockholders shall cause
to be prepared and delivered to Buyer (i) a balance sheet for the Company as of
11:59 p.m. on the date immediately prior to the Closing Date (but giving effect
to the Funded Debt payment pursuant to Section 2.3(a)) (the "Closing Balance
Sheet"),(ii) a calculation of the Working Capital Deficit of the Company as
determined from the Closing Balance Sheet and (iii) calculations of the Company
Negative Trade Balance and Outstanding Transaction Costs as determined, to the
extent practicable, from the Closing Balance Sheet. The Closing Balance Sheet
shall be prepared in accordance with GAAP, and shall fairly present the
financial position of the Company as of 11:59 p.m. on the date immediately
prior to the Closing Date, subject to normal recurring year- end adjustments
(but giving effect to the Funded Debt payment pursuant to Section 2.3(a)). The
Closing Balance Sheet and such calculations shall be prepared in consultation
with Buyer and McGladrey & Xxxxxx, L.L.P., accountants for the Selling
Stockholders, (and, if requested by Buyer, McGladrey & Xxxxxx, L.L.P. shall
consult with Coopers & Xxxxxxx, accountants for the Buyer), but need not be
audited unless Buyer requests that the Closing Balance Sheet be audited in a
notice delivered to the Selling Stockholders no later than 30 days after the
Closing Date. If Buyer requests an audit, the Closing Balance Sheet shall be
audited by either McGladrey & Xxxxxx, L.L.P. or Coopers & Xxxxxxx, whichever
firm is specified in Buyer's notice, and the Closing Balance Sheet delivered to
Buyer shall be accompanied by the auditors report thereon. The Company shall
bear the cost of the audit which cost shall not constitute an Outstanding
Transaction Cost hereunder.
(b) If Buyer disputes the accuracy of the Closing Balance Sheet, or
the calculation of the Working Capital Deficit, the Outstanding Transaction
Costs or the Company Negative Trade
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Balance, Buyer shall promptly inform the Selling Stockholders of the disputed
amount of the Closing Balance Sheet or such calculation and the basis for
Buyer's dispute in reasonable detail. If the Selling Stockholders do not agree
to modify the Closing Balance Sheet or the calculation of the Working Capital
Deficit, the Outstanding Transaction Costs or the Company Negative Trade
Balance, as applicable, in accordance with Buyer's position regarding such
disputed amount of the Closing Balance Sheet or the calculation of the Working
Capital Deficit, the Outstanding Transaction Costs or the Company Negative
Trade Balance, as applicable, Buyer and the Selling Stockholders shall submit
such dispute to an independent "big six" accounting firm selected jointly by
Coopers & Xxxxxxx and McGladrey & Xxxxxx, L.L.P. (the "Referee") for
arbitration. The parties shall use all reasonable efforts to achieve a
decision by such Referee as soon as practicable, and in any event no later than
30 days from the date such dispute is submitted. The decision of the Referee
shall be final, conclusive and binding on the parties.
(c) If the Closing Balance Sheet or the calculation of the
Outstanding Transaction Costs and the Company Negative Trade Balance reflects
the existence of a Working Capital Deficit or an amount of Outstanding
Transaction Costs or Company Negative Trade Balance, then the Purchase Price
shall be decreased by the amount of the sum of (i) the Working Capital Deficit,
(ii) the Outstanding Transaction Costs, and (iii) the amount by which the
Company Negative Trade Balance exceeds $25,000 (the "Adjustment Amount"). The
Selling Stockholders shall promptly (and, in any event, within five business
days following the acceptance of, or resolution of any disputes in regard to,
the Closing Balance Sheet or such calculations) refund to Buyer the amount of
the Adjusted Amount via wire transfer of immediately available funds. Each
Selling Stockholder shall pay its Proportionate Share of the Adjustment Amount.
If a Selling Stockholder fails to pay its Proportionate Share of the Adjustment
Amount, then, in addition to whatever other remedies it may have, Buyer shall
be entitled to recover the amount of the unpaid Adjustment Amount from the
Holdback Amount, without regard to the Minimum Loss limitation described in
Section 11.6(a).
(d) If less than 98% of the Accounts Receivable included in the
Closing Balance Sheet are collected on or before the 120th day after the
Closing Date, then Buyer shall deliver to the Selling Stockholders a notice
setting forth the difference between the amount collected and 98% of the
Accounts Receivables included in the Closing Balance Sheet. Each Selling
Stockholder shall pay its Proportionate Share of such difference to Buyer
within five business days of Buyer's notice. If a Selling Stockholder fails to
pay such Proportionate Share, then, in addition to what other remedies it may
have, Buyer shall be entitled to recover the amount of such Proportionate Share
from the Holdback Amount, without regard to any Minimum Loss limitation. Upon
payment of the foregoing amounts Buyer shall assign any such uncollected
Accounts Receivable promptly to the Selling Stockholders or their designee. If
greater than 98% of the Accounts Receivable included in the Closing Balance
Sheet are collected on or before the 120th day after the Closing Date, then
Buyer shall, on or before the 150th day after the Closing Date, remit to each
Selling Stockholder its Proportionate Share of the amount collected in excess
of 98% of the Accounts Receivable included in the Closing Balance Sheet.
2.6. XXXXXXX MONEY. (a) Concurrently with the execution of this
Agreement, Buyer shall deposit the Deposit Letter of Credit with Media Venture
Partners, Ltd. to be held in escrow in accordance with the Deposit Escrow
Agreement.
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(b) Subject to satisfaction of the conditions to the obligations set
forth in Article VIII, at the Closing, the Selling Stockholders shall instruct
Media Venture Partners, Ltd. to release and return the Deposit Letter of Credit
to Buyer for cancellation.
(c) If this Agreement is terminated as provided in Section 10.1, Buyer
and the Selling Stockholders shall instruct Media Venture Partners, Ltd. to
release the Deposit Letter of Credit to Buyer or to the Selling Stockholders,
all as provided in Section 10.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. The Company,
and each Selling Stockholder, jointly and severally (but subject to the
provisions of Sections 11.6 and 12.17(b)), represent and warrant to Buyer as
follows (with the understanding that Buyer is relying on such representations
and warranties in entering into and performing this Agreement).
(a) Organization, Good Standing, Etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Iowa, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
and is duly qualified and in good standing to do business in each state listed
on Schedule 3.1(a), which states represent every jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary. The Company has delivered to Buyer true and complete
copies of its Articles of Incorporation and Bylaws, as in effect at the date of
this Agreement. The Company is not in violation of any provisions of its
Articles of Incorporation or Bylaws.
(b) Subsidiaries of the Company. The Company does not own, directly
or indirectly, any equity interest in, any other corporation, partnership, or
other person or have the right, pursuant to a contract or otherwise, to acquire
any capital stock, equity interest or other similar investment in any
corporation, partnership, or other person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 80,000 shares of Common Stock, and 20,000 shares of preferred
stock, par value $7.50 per share ("Preferred Stock"), none of which is
designated. There are 17,000 shares of Common Stock issued and outstanding and
3,000 shares of Common Stock are held by the Company in its treasury. No
shares of Preferred Stock are issued and outstanding. No shares of capital
stock of the Company are reserved for issuance for any other purpose. All the
issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive or similar rights. As of the date
hereof, there are no bonds, debentures, notes or other indebtedness issued or
outstanding having the right to vote ("Voting Debt") on any matters on which
holders of Common Stock may vote. There are no options, warrants, calls,
rights, commitments, or agreements of any character to which the Company is a
party or by which it is bound obligating the Company to issue, deliver, or
sell, or cause to be, delivered or sold, additional shares of capital stock or
any Voting Debt of the Company, or obligating the
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Company to grant, extend, or enter into any such option, warrant, call, right,
commitment, or agreement. There are no outstanding contractual obligations of
the Company to repurchase, redeem, or otherwise acquire any shares of Common
Stock or other capital stock of the Company. Schedule 3.1(c) identifies as of
the date of this Agreement the record and beneficial owner, if different, of
the issued and outstanding shares of Common Stock.
(d) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement, the Deposit Escrow Agreement, and each
other agreement, document, and instrument required to be executed by the
Company in accordance herewith (collectively, the "Transaction Documents") and
to consummate the transactions contemplated hereby or thereby. The execution
and delivery of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby or thereby have been
duly authorized by all necessary action on the part of the Company. The
Transaction Documents have been, or upon execution and delivery will be, duly
executed and delivered and constitute the valid and binding obligations of the
Company enforceable against it in accordance with their respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(e) No Conflict; Required Filings and Consents. The execution and
delivery of the Transaction Documents by the Company do not and the performance
by the Company of the transactions contemplated hereby or thereby will not,
subject to obtaining the consents, approvals, authorizations, and permits and
making the filings described in this Section 3.1(e) or listed on Schedule
3.1(e) or Schedule 3.1(p), (i) violate, conflict with, or result in any breach
of any provision of the Company's Articles of Incorporation and Bylaws, (ii)
violate, conflict with, or result in a violation or breach of, or constitute a
default (with or without due notice or lapse of time or both) under, or permit
the termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of the Company or
otherwise) any obligation, or result in the loss of any benefit, or give any
person the right to require any security to be repurchased, or give rise to the
creation of any Lien upon any of the assets of the Company under any of the
terms, conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which the Company is a party or by which it
or any of the assets of the Company may be bound or subjected, or (iii) violate
any order, writ, judgment, injunction, decree, statute, law, rule, or
regulation, of any Governmental Entity applicable to the Company or by which or
to which any of such assets is bound or subject. No Consent of any
Governmental Entity is required by or with respect to the Company in connection
with the execution and delivery of any Transaction Documents by the Company or
the consummation of the transactions contemplated hereby or thereby, except for
(A) the FCC Consents (as contemplated by Section 7.1 hereof) and (B) applicable
requirements, if any, of the Securities Act and the Exchange Act and state
securities or blue sky laws.
(f) Reports; Financial Statements; Absence of Certain Changes or
Events.
(i) The Company has timely filed all forms, reports, statements,
and other documents required to be filed with the FCC. The Company has
filed all forms, reports, statements, and other documents required to be
filed with any and all other Governmental
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Entities. All such forms, reports, statements and other documents required
to be filed with the FCC or any other Governmental Entity are referred to
herein, collectively, as the "Company Reports"). The Company Reports were
prepared in all material respects in accordance with the requirements of
applicable law.
(ii) The Company has delivered to Buyer copies of (A) the
audited balance sheets of the Company as of December 31, 1995 and December
31, 1996, together with the audited statements of income and cash flows of
the Company for the periods then ended, and the notes thereto, accompanied
by the reports thereon of McGladrey & Xxxxxx, L.L.P., independent public
accountants, and (B) the unaudited balance sheet of the Company as of April
30, 1997, together with the related unaudited statements of income for the
four-month period then ended (such audited and unaudited financial
statements collectively being referred to as the "Financial Statements").
The Financial Statements, including the notes thereto, were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except to the extent disclosed therein or required by
changes in GAAP) and present accurately the information purported to be
presented therein as of such dates and for the periods then ended, provided
that such unaudited financial statements need not reflect recurring year-
end adjustments.
(iii) Except as disclosed in Schedule 3.1(f), there is no
liability or obligation of any kind, whether accrued, absolute, fixed,
contingent, or otherwise, of the Company that is not reflected or reserved
against in the balance sheet of the Company as of April 30, 1997 (the
"Balance Sheet"), other than (A) liabilities incurred in the ordinary
course of business in a manner consistent with past practice since April
30, 1997 (the "Balance Sheet Date"), or (B) any such liability or
obligation which would not be required to be presented in financial
statements or the notes thereto prepared in conformity with GAAP applied,
in a manner consistent with past practice, in the preparation of the
Financial Statements.
(iv) Except as disclosed in Schedule 3.1(f), since the Balance
Sheet Date, the Company has conducted its business only in the ordinary
course consistent with past practice and nothing has occurred that would
have been prohibited by Section 4.1(g), 4.1(i), 4.1(k) or 4.1(p) if the
terms of such section had been in effect as of and after the Balance Sheet
Date. Additionally, since the Balance Sheet Date, there has not occurred,
and the Company has not incurred or suffered, any event or circumstance
that materially impairs the physical assets of any of the Stations.
(g) Compliance with Applicable Laws: FCC Matters.
(i) The business of the Company has been conducted in compliance
in all material respects with each Applicable Law. No investigation or
review by any Governmental Entity with respect to the Company is pending
or, to the Knowledge of the Company and the Selling Stockholders,
threatened. Without limiting the generality of the foregoing, the Company
has complied with the Communications Act, all obligations with respect to
equal employment opportunity under Applicable Law, and all material rules
and regulations of the Federal Aviation Administration applicable to each
of the towers used or
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held for use by a Station. In addition, the Company has duly and timely
filed, or caused to be so filed, with the FCC and other appropriate
Governmental Entities all reports, statements, documents, registrations,
filings, or submissions with respect to the operation of each Station and
the ownership thereof, including, applications for renewal of authority
required by Applicable Law to be filed. All such FCC filings complied in
all material respects with Applicable Laws when made, and no deficiencies
have been asserted with respect to any such filings. The material required
by 47 C.F.R. Section 73.3526 to be kept in the public inspection files of
each Station is complete in all material respects.
(ii) Schedule 3.1(g) is a true and complete list of (A) all of
the FCC Licenses, including the expiration dates thereof, as of the date of
this Agreement, other than immaterial auxiliary licenses, and (B) all other
material licenses, permits, or authorizations issued to the Company by any
other Governmental Entities and held by it as of the date of this
Agreement. Such FCC Licenses, licenses, permits, and authorizations, and
all pending applications for modification, extension, or renewal thereof or
for new licenses, permits, permissions, or authorizations, are collectively
referred to herein as the "Station Licenses." Schedule 3.1(g) accurately
lists the legally authorized holder(s) of the Station Licenses. The
Station Licenses constitute all the licenses, permits and authorizations
required for the operation of each of the Stations and the business of the
Company, and each of the Station Licenses is in full force and effect.
Each of the Stations has been operated in all material respects in
accordance with the terms of its Station Licenses and the Company is
otherwise in compliance with, and has conducted its business so as to
comply with, the terms of such Station Licenses. There are no proceedings
pending or, to the Knowledge of the Company and the Selling Stockholders,
threatened with respect to the Company's ownership or operation of any
Station which reasonably may be expected to result in the revocation,
material adverse modification, non-renewal, or suspension of any of the
Station Licenses, the denial of any pending applications for any Station
Licenses, the issuance against the Company of any cease and desist order,
or the imposition of any administrative actions, including the proposed
assessment of any fines or penalties, by the FCC or any other Governmental
Entity with respect to any Station Licenses, or which reasonably may be
expected to adversely affect any Station's ability to operate as currently
operated or Buyer's or the Company's ability to obtain control of any
Station Licenses or to operate any Station. To the Knowledge of the
Company and the Selling Stockholders, no other broadcast station or radio
communications facility is causing interference to any Station's
transmissions beyond that which is allowed by FCC rules and regulations and
no Station is causing interference to any other broadcast station or radio
communications facilities' transmissions beyond that which is allowed by
the FCC rules and regulations. To the Knowledge of the Company and the
Selling Stockholders, there is no reason to believe that the FCC will not
renew any of the Station Licenses issued by the FCC in the ordinary course
of business. To the Knowledge of the Company and the Selling Stockholders,
there are no facts relating to the Selling Stockholders or the Company
under the Communications Act that reasonably may be expected to disqualify
the Selling Stockholders from transferring control of any of the Station
Licenses pursuant to the terms of this Agreement or that would prevent the
consummation by the Company or any of the Selling Stockholders of the
transactions contemplated by this Agreement.
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(h) Absence of Litigation. Except as set forth on Schedule 3.1(h),
there is no claim, action, suit, inquiry, judicial, or administrative
proceeding, grievance, or arbitration pending or, to the Knowledge of the
Company and the Selling Stockholders, threatened against the Company or any of
the assets of the Company by or before any arbitrator or Governmental Entity,
nor are there any investigations relating to the Company or any of such assets
pending or, to the Knowledge of the Company and the Selling Stockholders,
threatened by or before any arbitrator or Governmental Entity. Except as set
forth in Schedule 3.1(h), there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator, or settlement agreement, outstanding against the Company
or any of the assets of the Company. There is no action, suit, inquiry,
judicial, or administrative proceeding pending or, to the Knowledge of the
Company and the Selling Stockholders, threatened against the Selling
Stockholders or the Company relating to the transactions contemplated by this
Agreement.
(i) Insurance. Schedule 3.1(i) sets forth an accurate summary of all
title, fire, general liability, malpractice liability, theft, and other forms
of insurance and all fidelity bonds held by or applicable to the Company.
Except as set forth on Schedule 3.1(i), the title insurance and the policies of
general liability, malpractice liability, fire, theft, and other insurance
maintained with respect to the operations, assets, or business of the Company
provide adequate coverage against loss. No event has occurred, including the
failure by the Company to give any notice or information or the delivery of any
inaccurate or erroneous notice or information, which limits or impairs the
rights of the Company under any such insurance policies in such a manner as
could have a Material Adverse Effect. Excluding insurance policies that have
expired and been replaced in the ordinary course of business, no insurance
policy has been canceled within the last two years prior to the date hereof.
(j) Owned Real Property. Schedule 3.1(j) sets forth the address and
use of all the Owned Real Property. The Company has good and marketable, fee
simple, absolute title in and to the Owned Real Property, free and clear of all
liens other than Permitted Liens. The Company has sufficient title to such
easements, rights of way and other rights appurtenant to each of the Owned Real
Properties as are necessary to permit ingress and egress to and from the Owned
Real Property to a public way, and the improvements on the Owned Real Property
have access to such utilities as are necessary to allow the business of the
Company operated thereon to be operated in the ordinary course. There is no
pending condemnation or similar proceeding affecting the Owned Real Property or
any portion thereof, and to the Knowledge of the Company and the Selling
Stockholders, no such action is threatened. Except as set forth on Schedule
3.1(j), the improvements located on the Owned Real Property are in sufficiently
good condition (except for ordinary wear and tear) to allow the business of the
Company to be operated in the ordinary course and there has been no damage to
such improvements that affects the conduct of such business in any material
respect that has not been repaired or remedied. Except as set forth on
Schedule 3.1(j), there are no lessees or tenants at will in possession of any
portion of any of the Owned Real Property other than the Company, whether as
lessees, tenants at will, trespassers or otherwise. Except as set forth on
Schedule 3.1(j), no zoning, building or other federal, state or municipal law,
ordinance, regulation or restriction is violated in any material respect by the
continued maintenance, operation or use of the Owned Real Property or any tract
or portion thereof or interest therein in its present manner. The current use
of the Owned Real Property and all parts thereof does not violate any
restrictive covenants of record affecting any of the Owned Real Property. All
necessary Licenses by any Governmental Entity with respect to the
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Owned Real Property have been obtained, have been validly issued and are in
full force and effect. The Company's fee simple interest in the Owned Real
Property is insured under valid and subsisting owner's title insurance policies
issued by reputable and financially capable insurers and such policies are not
subject to any exceptions other than standard printed exceptions and Permitted
Liens.
(k) Leased Real Property. Schedule 3.1(k) sets forth the address and
use of all the leasehold interests relating to the Company or its business and
operations as now conducted. Each lease described in Schedule 3.1(k) is a
valid and binding obligation of the Company and is in full force and effect
without amendment other than as described in Schedule 3.1(k). Except as
otherwise disclosed on Schedule 3.1(k), the Company is not, and to the
Knowledge of the Company and the Selling Stockholders, no other party is, in
default under any lease described in Schedule 3.1(k). Subject to obtaining the
Consents disclosed in Schedule 3.1(k), the Company has the full legal power and
authority to assign its rights under the leases listed in Schedule 3.1(k) to
Buyer. All leasehold interests listed in Schedule 3.1(k) (including the
improvements thereon) are available for immediate use in the conduct of the
business and operations of each of the Stations as currently conducted.
(l) Personal Property. Schedule 3.1(l) contains a description of the
items of Personal Property (having a replacement cost of not less than $10,000
for each item) which comprise all Personal Property used or held for use in
connection with the business and operations of the Company or which permit the
operation of each Station as now conducted. Except as set forth on Schedule
3.1(l), the Company has good title to, or a valid leasehold or license interest
in, all Personal Property and none of the Personal Property is subject to any
Lien or other encumbrances, except for Permitted Liens. The Company is not,
and to the Knowledge of the Company and the Selling Stockholders, no other
party is, in default under any of the leases, licenses and other Contracts
relating to the Personal Property. Except as otherwise disclosed in Schedule
3.1(l), the Personal Property (i) is in good operating condition and repair
(ordinary wear and tear excepted), (ii) is available for immediate use in the
business and operation of each of the Stations as currently conducted and (iii)
permits each of the Stations to operate in accordance with the terms of their
respective FCC Licenses, and the rules and regulations of the FCC, and with all
other applicable federal, state and local statutes, ordinances, rules and
regulations.
(m) Liens and Encumbrances. All of the assets of the Company,
including leases, are free and clear of all liens, pledges, claims, security
interests, restrictions, mortgages, tenancies, and other possessory interests,
conditional sale or other title retention agreements, assessments, easements,
rights of way, covenants, restrictions, rights of first refusal, defects in
title, encroachments, and other burdens, options or encumbrances of any kind
(collectively, "Liens") except (i) Permitted Encumbrances and (ii) Liens set
forth on Schedule 3.1(l) (the Liens referred to in clauses (i) and (ii) being
"Permitted Liens"). At the Closing, all of the assets of the Company shall be
free and clear of all Liens other than Permitted Encumbrances.
(n) Environmental Matters. Except as expressly disclosed in the
Existing ESAs:
(i) The real property and facilities owned, operated, and leased
by the Company and the operations of the Company thereon comply and have at
all times complied in all material respects with all Environmental Laws;
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(ii) No judicial proceedings are pending or, to the Knowledge
of the Company and the Selling Stockholders, threatened against the Company
alleging the violation of any Environmental Laws, and there are no
administrative proceedings pending or, to the Knowledge of the Company and
the Selling Stockholders, threatened against the Company, alleging the
violation of any Environmental Laws and no written notice from any
Governmental Entity or any private or public person has been received by
the Company claiming any violation of any Environmental Laws in connection
with any real property or facility owned, operated or leased by the
Company, or requiring any remediation, clean-up, modification, repairs,
work, construction, alterations, or installations on or in connection with
any real property or facility owned, operated or leased by the Company that
are necessary to comply with any Environmental Laws and that have not been
complied with or otherwise resolved to the satisfaction of the party giving
notice;
(iii) All permits, registrations, licenses, authorizations, and
the like ("Permits") required to be obtained or filed by the Company under
any Environmental Laws in connection with the Company's operations,
including those activities relating to the generation, use, storage,
treatment, disposal, release, or remediation of Hazardous Substances (as
such term is defined in Section 3.1(n)(iv) hereof), have been duly obtained
or filed, and the Company is and has at all times been in full compliance
in all material respects with the terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by the Company
or any of its predecessors on, in, or under any of the owned, operated, or
leased real property or facilities are and have at all times been
generated, stored, used, treated, disposed of, and released by such persons
or on their behalf in such manner as not to result in any material
Environmental Costs or Liabilities. "Hazardous Substances" means (A) any
hazardous materials, hazardous wastes, hazardous substances, toxic wastes,
and toxic substances as those or similar terms are defined under any
Environmental Laws; (B) any asbestos or any material which contains any
hydrated mineral silicate, including chrysolite, amosite, crocidolite,
tremolite, anthophylite and/or actinolite, whether friable or non-friable;
(C) PCBs, or PCB-containing materials, or fluids; (D) radon; (E) any other
hazardous, radioactive, toxic or noxious substance, material, pollutant,
contaminant, constituent, or solid, liquid or gaseous waste; (F) any
petroleum, petroleum hydrocarbons, petroleum products, crude oil and any
fractions or derivatives thereof, any oil or gas exploration or production
waste, and any natural gas, synthetic gas and any mixtures thereof; (G) any
substance that, whether by its nature or its use, is subject to regulation
under any Environmental Laws or with respect to which any Environmental
Laws or Governmental Entity requires environmental investigation,
monitoring or remediation; and (H) any underground storage tanks, dikes, or
impoundments as defined under any Environmental Laws. "Environmental Costs
or Liabilities" means any losses, liabilities, obligations, damages, fines,
penalties, judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and expenses
of legal counsel, experts, engineers and consultants, and the costs of
investigation or feasibility studies and performance of remedial or removal
actions and cleanup activities) in connection with (1) any Environmental
Laws, (2) order of, or contract of the Company with, any
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Governmental Entity or any private or public persons or (3) any exposure of
any person or property to Hazardous Substances;
(v) There are not now, nor have there been in the past, on, in or
under any property or facilities when owned, leased, or operated by the
Company or when owned, leased, or operated by any of its predecessors, any
Hazardous Substances that are in a condition or location that violates any
Environmental Law or that reasonably could be expected to require
remediation under any Environmental Laws or give rise to a claim for
damages or compensation by any affected person or to any Environmental
Costs or Liabilities; and
(vi) The Company has not received, and to the Knowledge of the
Company and the Selling Stockholder, does not expect to receive, any
notification from any source advising the Company that: (A) it is a
potentially responsible party under CERCLA or any other Environmental Laws;
(B) any real property or facility currently or previously owned, operated,
or leased by it is identified or proposed for listing as a federal National
Priorities List ("NPL") (or state-equivalent) site or a Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS") list (or state-equivalent) site; and (C) any facility to which
it has ever transported or otherwise arranged for the disposal of Hazardous
Substances is identified or proposed for listing as an NPL (or state-
equivalent) site or CERCLIS (or state-equivalent) site.
(o) Taxes. The Company has filed, or caused to be filed, all Tax
Returns, and all such Tax Returns which have been filed are accurate and
complete. The Company has paid (or there has been paid on its behalf), or has
set up an adequate reserve for the payment of, all taxes required to be paid,
withheld, or deducted, or for which the Company is liable, in respect of the
periods covered by such Tax Returns, and with respect to each tax, from the end
of the period covered by the most recently filed Tax Return to the date hereof,
and the Balance Sheet reflects an adequate reserve for all taxes payable, or
required to be withheld and remitted, by the Company, or for which the Company
is liable, accrued through the Balance Sheet Date. No deficiencies for any
taxes have been proposed, asserted, or assessed against the Company and are
pending, and no requests for waivers of the time to assess any such taxes are
pending. The federal income Tax Returns of the Company have not been examined
by the Internal Revenue Service. The Company (i) has not filed a consent under
section 341(f) of the Code, (ii) has not made, or is not obligated or may
become obligated to make, any payments that will not be deductible by reason of
section 280G of the Code, or (iii) has not been a member of an affiliated group
of corporations which has filed a consolidated federal income tax return nor
otherwise has any liability for the taxes of any person under Treas. Reg.
Section 1.1502-6, any similar provision of state, local, or foreign law, or by
reason of its status as a transferee, successor, indemnitor or otherwise.
(p) Certain Agreements.
(i) Schedule 3.1(p) hereto lists each (A) employment or consulting
Contract which is not terminable without liability or penalty on 30 days or
less notice, (B) Contract under which any party thereto remains obligated
to provide goods or services having a value, or to make payments
aggregating, in excess of $50,000 per year, and
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(C) other Contract that is material to the Company, the operation of the
Stations or to the Company's business, in any such case to which the
Company is a party or the Company or its assets are bound. Each such
Contract described in Schedule 3.1(p) or required to be so described is a
valid and binding obligation of the Company and is in full force and effect
without amendment. The Company and, to the Knowledge of the Company and
the Selling Stockholders, each other party to such Contracts, has performed
in all material respects the obligations required to be performed by it
under such Contracts and is not (with or without lapse of time or the
giving of notice, or both) in breach or default thereunder. Schedule
3.1(p) identifies, as to each such Contract listed thereon, whether the
consent of the other party thereto is required in order for such Contract
to continue in full force and effect upon the consummation of the
transactions contemplated hereby or whether such Contract can be canceled
by the other party without liability to such other party due to the
consummation of the transactions contemplated hereby. A complete copy of
each written Contract and a description of each oral Contract set forth in
Schedule 3.1(p) has been provided to Buyer prior to the date of this
Agreement.
(ii) The Company is not a party to any oral or written
agreement, plan or arrangement, other than as required by the Consolidated
Omnibus Reconciliation Act of 1985, with any employee or other station or
broadcast personnel (whether an employee, consultant or an independent
contractor) of the Company (A) the benefits of which are contingent, or the
terms of which are materially altered, upon, or result from, the occurrence
of a transaction involving the Company of the nature of any of the
transactions contemplated by this Agreement, (B) providing severance
benefits longer than forty-five days or other benefits after the
termination of employment or other contractual relationship regardless of
the reason for such termination and regardless of whether such termination
is before or after a change of control, (C) under which any person may
receive payments subject to the tax imposed by Section 4999 of the Code or
(D) any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
(q) ERISA Compliance; Labor.
(i) Neither the Company nor any member of the controlled group of
corporations as defined in Section 414(b) of the Code (the "ERISA Group"),
nor any officer of the Company or any member of the ERISA Group or any of
the Employee Benefit Plans of the Company or any member of the ERISA Group
which are subject to ERISA, or any trusts created thereunder, or any
trustee or administrator thereof, has engaged in a "prohibited
transaction," as such term is described in Section 4975 of the Code or
Section 406 of the Employee Retirement Security Act of 1974 as amended
("ERISA"), which has subjected or which could subject the Company or any
member of the ERISA Group, any officer of the Company or any of such plans
or any trust to any material tax or penalty on prohibited transactions
imposed under the Code or ERISA. None of the employee pension benefit
plans, as defined in Section 3(3) of ERISA, currently maintained by the
Company or any member of the ERISA Group or maintained during the last
three years by the Company or any member of the ERISA Group is subject to
Title IV of ERISA. Neither the Company or
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any member of the ERISA Group has contributed or been obligated to
contribute to any "multi-employer plan" as such term is defined in Section
3(37) or Section 4001(a)(3) of ERISA. Except as set forth on Schedule
3.1(q), there are no employee benefit plans as defined in Section 3(3) of
ERISA that are currently maintained by the Company or any member of the
ERISA Group or that have been maintained by the Company or a member of the
ERISA Group during the last three years (the "Employee Benefit Plans").
(ii) True, correct, and complete copies of each of the Employee
Benefit Plans, and related trusts, if applicable, have been furnished to
Buyer, along with the most recent report filed on Form 5500 and summary
plan description with respect to each Employee Benefit Plan required to
file Form 5500. All reports and disclosures relating to the Employee
Benefit Plans required to be filed with or furnished to governmental
agencies or plan participants or beneficiaries have been furnished in
accordance with Applicable Law in a timely manner. Each Employee Benefit
Plan has been maintained in all material respects in compliance with ERISA
and the Code, and each Employee Benefit Plan intended to be qualified under
Section 401 of the Code has received a current favorable determination
letter from the Internal Revenue Service regarding the qualified status,
including the tax qualified status of the Employee Benefit Plan as it
pertains to the Tax Reform Act of 1986. There are no actions, suits, or
claims pending (other than routine claims for benefits) or, to the
Knowledge of the Company and the Selling Stockholders, threatened against,
or with respect to any of the Employee Benefit Plans. All contributions
required to be made to the Employee Benefit Plans pursuant to their terms
have been timely made. To the Knowledge of the Company and the Selling
Stockholders, there is no matter pending with respect to any of the
Employee Benefit Plans before the Internal Revenue Service, Department of
Labor or the Pension Benefit Guaranty Corporation. Except as required by
Applicable Law, none of the Employee Benefit Plans provides medical
insurance coverage following retirement. Each Employee Benefit Plan which
is an "employee welfare benefit plan," as defined in Section 3(1) of ERISA,
may be unilaterally amended or terminated in its entirety without liability
except as to benefits accrued prior to such amendment or termination. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not require the Company or a member
of the ERISA Group to make a larger contribution, or pay greater benefits
under, any Employee Benefit Plan or employment agreement.
(iii) The Company is not a party to any collective bargaining
agreement. The Company has not agreed to recognize any union or other
collective bargaining representative, nor has any union or other collective
bargaining representative been certified as the exclusive bargaining
representative of any of its employees. Except as set forth on Schedule
3.1(q), the Company (A) is, and has always been since January 1, 1995, in
substantial compliance with all Applicable Laws regarding labor, employment
and employment practices, including, but not limited to, Applicable Laws
relating to terms and conditions of employment, equal employment
opportunity, employee benefits, affirmative action, wages and hours, plant
closing and mass layoff, occupational safety and health, immigration, and
workers' compensation, (B) is not engaged, nor has it since January 1,
1995, engaged, in any unfair labor practices, and has no, and has not had
since January 1, 1995, any, unfair labor practice charges or complaints
before the National Labor Relations
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Board pending or, to the Knowledge of the Company and the Selling
Stockholders threatened against it, (C) has no, and has not had since
January 1, 1995, any grievances, arbitrations, or other proceedings arising
or asserted to arise under any collective bargaining agreement, pending or,
to the Knowledge of the Company and the Selling Stockholders threatened,
against it and (D) has no, and has not had since January 1, 1995, any,
charges, complaints, or proceedings before the Equal Employment Opportunity
Commission, Department of Labor or any other Governmental Entity
responsible for regulating employment practices, pending, or, to the
Company's and the Selling Stockholders' Knowledge, threatened against it.
There is no labor strike, slowdown, work stoppage or lockout pending or, to
the Knowledge of the Company and the Selling Stockholders, threatened
against or affecting the Company, and the Company has not experienced any
labor strike, slowdown, work stoppage or lockout since January 1, 1995. To
the Knowledge of the Company and the Selling Stockholders, no union
organizational campaign or representation petition is currently pending or
threatened with respect to any of the employees of the Company.
(r) Patents, Trademarks, Etc. Schedule 3.1(r) is a true and complete
list of all of the Intellectual Property. Except as set forth on Schedule
3.1(r), the Company owns or has the unencumbered right to use pursuant to a
valid, binding, and enforceable license agreement or other contract or
arrangement all such Intellectual Property. To the Knowledge of the Company
and the Selling Stockholders, the Company is not infringing any such
Intellectual Property, and neither the Company nor either of the Selling
Stockholders is aware of any infringement by others of any of the Intellectual
Property owned by the Company.
(s) Affiliate Relationships. Except as set forth in Schedule 3.1(s),
there are no contracts or other arrangements involving the Company in which any
member, manager, officer, director, or Affiliate of the Company has a financial
interest, including indebtedness to the Company.
(t) No Dispositions. Since the Balance Sheet Date, there has not
occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of the assets of the Company other than any disposition of
(i) obsolete property, (ii) property in connection with the acquisition of
replacement property of equal value, or (iii) assets having, in the aggregate,
a value of less than $10,000 disposed of in the ordinary course of business and
consistent with past practices.
(u) Trade Deals. Schedule 3.1(u) contains a list of all of the Trade
Deals in effect as of March 31, 1997 and correctly sets forth the balance, in
dollar value, of either (i) the Company's obligations to the other party under
such Trade Deals (denoted by a minus on Schedule 2.5(b)) or (ii) the amount due
the Company under such Trade Deals (reflected as a positive on Schedule
2.5(b)).
(v) Disclosure. No representation or warranty by the Company or any
Selling Stockholder contained in this Agreement or in any certificate furnished
pursuant to this Agreement contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
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3.2. REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDERS. Each Selling
Stockholder, severally as to it or her and not jointly, represents and warrants
to Buyer (with the understanding that Buyer is relying on such representations
and warranties in entering into and performing this Agreement), as follows:
(a) Owners of Shares. As of the date hereof, such Selling Stockholder
is the holder of record and owns beneficially that number of shares of Common
Stock and, as of the Closing Date, will be the holder of record and will own
beneficially that number of shares of Common Stock, set forth opposite her or
its name on Schedule I hereto, free and clear of all Liens, other than those
Liens listed on Schedule 3.2(a) which shall be released on the Closing Date.
At the Closing, such Selling Stockholder will transfer to Buyer good and valid
title to the Shares owned by such Selling Stockholder free and clear of all
Liens.
(b) Authority. Such Selling Stockholder has full legal capacity to
execute and deliver this Agreement and the other Transaction Documents to which
such Selling Stockholder is a party to perform the obligations of such Selling
Stockholder hereunder and thereunder. This Agreement and such Transaction
Documents have been, or upon execution and delivery will be, duly and validly
executed and delivered by such Selling Stockholder and constitute a valid and
binding obligation of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with their respective terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The execution and
delivery of the Transaction Documents by such Selling Stockholder do not and
the performance by such Selling Stockholder of the transactions contemplated
hereby or thereby will not, subject to obtaining the consents, approvals,
authorizations, and permits and making the filings described in this Section
3.2(c) and assuming the release of the Liens described in Schedule 3.2(a) on
the Closing Date, (i) violate, conflict with, or result in a violation or
breach of, or constitute a default (with or without due notice or lapse of time
or both) under, or permit the termination of, or result in the acceleration of,
or entitle any party to accelerate any obligation, or give rise to the creation
of any Lien upon the Shares, under any of the terms, conditions, or provisions
of any agreement, or other instrument or obligation to which such Selling
Stockholder is a party or by which it may be bound, or (ii) violate any order,
writ, judgment, injunction, decree, statute, law, rule, or regulation, of any
Governmental Entity applicable to such Selling Stockholder or by which she or
it is bound or subject. No Consent of any Governmental Entity is required by
or with respect to such Selling Stockholder in connection with the execution
and delivery of any Transaction Documents by such Selling Stockholder or the
consummation of the transactions contemplated hereby or thereby, except for (A)
the FCC Consents (as contemplated by Section 7.1 hereof) and (B) applicable
requirements, if any, of the Securities Act and the Exchange Act and state
securities or blue sky laws.
3.3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to the Selling Stockholders as follows (with the understanding that the Selling
Stockholders are relying on such representations and warranties in entering
into and performing this Agreement):
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(a) Organization Standing and Power. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease,
and operate its properties and to carry on its business as now being conducted.
(b) Authority. Buyer has all requisite corporate power and authority
to enter into the Transaction Documents to which it will be a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of such Transaction Documents by Buyer and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Buyer. The Transaction Documents
to which Buyer will be a party have been executed and delivered, or upon
execution and delivery will be executed and delivered and, upon execution and
delivery, will constitute the valid and binding obligation of Buyer,
enforceable against it in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The execution and
delivery of the Transaction Documents to which Buyer will be a party do not and
the performance by Buyer of the transactions contemplated hereby or thereby
will not, subject to obtaining the consents, approvals, authorizations, and
permits and making the filings described in this Section 3.3(c), (i) violate,
conflict with, or result in any breach of any provisions of Buyer's Certificate
of Incorporation and Bylaws, (ii) violate, conflict with, or result in a
violation or breach of, or constitute a default (with or without due notice or
lapse of time or both) under any of the terms, conditions, or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or
any license, lease, agreement, or other instrument or obligation to which Buyer
is a party and the effect of which would be to prohibit or substantially delay
the consummation by the Buyer of the transactions contemplated by this
Agreement, or (iii) violate any order, writ, judgment, injunction, decree,
statute, law, rule or regulation, of any Governmental Entity applicable to
Buyer. No Consent of any Governmental Entity is required by or with respect to
Buyer in connection with the execution and delivery of any Transaction
Documents by Buyer or the consummation by it of the transactions contemplated
hereby or thereby, except for (A) the FCC Consents (as contemplated by Section
7.1), and (B) applicable requirements, if any, of the Securities Act and the
Exchange Act and the rules and regulations thereunder and state securities or
blue sky laws.
(d) Litigation. There is no action, suit, inquiry, judicial or
administrative proceeding pending or, to the Knowledge of Buyer, threatened
against it or any of its Affiliates relating to the transactions contemplated
by this Agreement.
(e) FCC Matters. There are no proceedings, complaints, notices of
forfeiture claims, investigations pending or, to the knowledge of the Buyer,
threatened against Buyer or any of its Affiliates or any facts relating to
Buyer or any of its Affiliates under the Communications Act that reasonably may
be expected to disqualify it from obtaining control of the Station Licenses or
that would prevent it from consummating the transactions contemplated by this
Agreement. Buyer is able to certify on an FCC Form 314 that it is financially
qualified.
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(f) Investment Intent. Buyer is acquiring the Shares for purposes of
investment and not with a view to the distribution thereof.
(g) Disclosure. No representation or warranty made by Buyer contained
in this Agreement or in any certificate furnished by Buyer pursuant to this
Agreement contains or will contain an untrue statement of material fact, or
omits or will omit to state a material fact necessary, in the light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. Except as
contemplated by this Agreement or to the extent that Buyer shall otherwise
consent in writing, from the date of this Agreement until the Closing, the
Company and the Selling Stockholders, jointly and severally, covenant and agree
that the Company shall not:
(a) conduct its business in any manner except in the ordinary course
consistent with past practice; or
(b) fail to use its commercially reasonable efforts to preserve intact
the Company's present business organization and to keep available the services
of its present officers, station managerial personnel (including the General
Manager, Station Manager, General Sales Manager, Local Sales Manager,
Programming Director, and Business Manager, or persons performing comparable
duties, of each Station (collectively, the "Station Management")) and
over-the-air employees or independent contractors and preserve its
relationships with customers, suppliers and others having business dealings
with it; or
(c) fail to use commercially reasonable efforts to maintain the assets
of the Company in their current condition, except for ordinary wear and tear
and damage by casualty governed by Section 7.7; or
(d) fail to use all commercially reasonable efforts to maintain the
present format of the Stations and with programming consistent with past
practices; or
(e) merge or consolidate with or into any other legal entity,
dissolve, or liquidate; or
(f) except as required by the terms and provisions of written
contracts between the Company and an employee thereof as in existence on April
1, 1997, adopt or amend any Employee Benefit Plan or collective bargaining
agreement; or
(g) acquire (including, without limitation, by merger, consolidation,
or the acquisition of any equity interest or assets) or sell (whether by
merger, consolidation, or the sale of an equity interest or assets), lease, or
dispose of any assets of the Company except in the ordinary
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course of business and consistent with past practice or, even if in the
ordinary course of business and consistent with past practices (other than
sales of surplus or obsolete equipment), whether in one or more transactions,
in no event involving an asset or assets having an aggregate fair market value
in excess of $25,000; or
(h) mortgage, pledge, or subject to any material Lien, other than
Permitted Encumbrances, any of the assets of the Company; or
(i) except as required by GAAP, applicable law, or circumstances which
did not exist as of the Balance Sheet Date, change any of the material
accounting principles or practices used by it; or
(j) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of the
Stations and, except with respect to good faith attempts consistent with past
practice to obtain payment of a past due receivable, or except in accordance
with existing practices, a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether to the
account debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(k) pay, discharge, or satisfy any material claims, liabilities, or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business consistent with past
practice or as provided in Section 2.3(a), or fail to pay or otherwise satisfy
(except if being contested in good faith) any material accounts payable,
claims, liabilities, or obligations on a basis, and within the time, consistent
with past practice; or
(l) change any Station's advertising rates or policies, procedures or
methods in connection with the sale of advertising time in a manner expected to
accelerate the receipt of cash payments or fail to incur annual advertising and
promotional department expenses in cash and trade other than as budgeted for
1997 (as such budget previously has been delivered to Buyer); or
(m) split, combine, divide, distribute, or reclassify any shares of
its capital stock, declare, pay, or set aside for payment any dividend or other
distribution in respect of its capital stock, or directly or indirectly,
redeem, purchase, or otherwise acquire any shares of its capital stock or other
securities; provided, however, that immediately prior to the Closing and after
consultation with Buyer, the Company may pay a cash dividend to the Selling
Stockholders out of the Current Assets resulting from the operation of the
Company in the ordinary course; or
(n) issue, sell, pledge, dispose of, encumber, or deliver (whether
through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
securities convertible into or exercisable or exchangeable for shares of stock
of any class (other than the issuance of certificates in replacement of lost
certificates); or
(o) change or amend its charter documents or bylaws; or
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(p) incur or assume any long-term debt (including obligations in
respect of capital leases and for interest), assume, guarantee, endorse, or
otherwise become liable or responsible (whether directly, contingently, or
otherwise) for the obligations of any other person (other than endorsements of
checks in the ordinary course) or make any loans, advances, or capital
contributions to, or investments in, any person (other than advances to
employees in the ordinary course of business); or
(q) make any settlement of or compromise any tax liability, change any
tax election or tax method of accounting or make any new tax election or adopt
any new tax method of accounting; or
(r) enter into, or enter into negotiations or discussions with any
person other than Buyer with respect to any local marketing agreement, time
brokerage agreement, joint sales agreement, or any other similar agreement; or
(s) agree to or make any commitment, orally or in writing, to take any
actions prohibited by this Agreement.
With respect to a consent requested by the Company under this Section 4.1,
Buyer agrees that a failure to respond to such request within three business
days of receipt thereof shall be deemed a consent to such request.
4.2. NEGATIVE TRADE BALANCE. The Company shall use commercially
reasonable efforts to ensure that the Company Negative Trade Balance of the
Stations, taken as a whole, does not exceed $25,000 in the aggregate at the
Closing Date.
4.3. ENVIRONMENTAL SITE ASSESSMENTS. If Buyer or its lenders or other
financing sources require Phase I or Phase II ESAs, the Company and the Selling
Stockholders covenant and agree that, upon written notice from Buyer to the
Company identifying the locations at which such ESAs are required, the Company
and the Selling Stockholders shall permit a nationally recognized and duly
qualified environmental consultant reasonably acceptable to Buyer and the
Company to prepare an ESA at each identified transmission site owned, operated,
or leased by the Company and at such other identified real properties and
facilities owned, operated, or leased by the Company. The ESAs which are to be
conducted for the benefit of Buyer shall be performed in a manner that at a
minimum satisfies the requirements of ASTM Practice E 1527-94. The cost of any
Phase I or Phase II ESA shall be borne by Buyer.
4.4. BROADCAST TRANSMISSION INTERRUPTION. If before the Closing the
regular broadcast transmission of any of the Stations in the normal and usual
manner is interrupted for a period of two (2) consecutive hours or more,
excluding normal and routine maintenance, Seller shall give prompt written
notice thereof to Buyer.
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ARTICLE V
ADDITIONAL AGREEMENTS OF THE COMPANY
AND THE SELLING STOCKHOLDERS
5.1. NO SOLICITATION OF TRANSACTIONS. Neither the Company nor the
Selling Stockholders shall, directly or indirectly, through any officer,
director, stockholder, employee, agent, financial advisor, banker or other
representative, or otherwise, solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the assets of the Company or any equity
interest in the Company or any merger, consolidation, share exchange, business
combination, or other similar transaction with the Company or participate in
any negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist or participate
in, facilitate, or encourage, any effort or attempt by any other person to do
or seek any of the foregoing. The Company shall immediately communicate to
Buyer the material terms of any such proposal (and the identity of the party
making such proposal) which it may receive and, if such proposal is in writing,
the Company shall promptly deliver a copy of such proposal to Buyer. The
Company agrees not to release any third party from, or waive any provision of,
any confidentiality or standstill agreement to which the Company is a party.
The Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2. ACCESS AND INFORMATION. (a) Until the Closing, the Company shall
afford to Buyer and its representatives (including accountants and counsel)
full access, during normal business hours, upon reasonable notice and in such
manner as will not unreasonably interfere with the conduct of the business of
the Company, to all properties, books, records, and Tax Returns of the Company
and all other information with respect to its business, together with the
opportunity to make copies (at Buyer's expense) of such books, records, and
other documents and to discuss the business of the Company with such officers,
directors, station managerial personnel (including the Station Management of
each Station), accountants, consultants, and counsel for the Company as Buyer
deems reasonably necessary or appropriate for the purposes of familiarizing
itself with the Company and the Stations, including the right to visit the
Stations. In furtherance of the foregoing, the Company shall authorize and
instruct its independent public accountants to meet with Buyer and its
representatives, including Buyer's independent public accountants, to discuss
the business and accounts of the Company and to make available (with the
opportunity to make copies at Buyer's expense) to Buyer and its
representatives, including its independent public accountants, all the work
papers of its accountants related to their audit of the consolidated financial
statements and Tax Returns of the Company.
(b) Within 30 days after the end of each calendar month, the Company
shall deliver to Buyer, for each of the Stations, and for the Company as a
whole, monthly operating statements (in a form consistent with the monthly
operating statements previously supplied to Buyer) prepared in the ordinary
course of business for internal purposes. In addition, within 45 days after
the end of each calendar quarter, the Company shall deliver to Buyer, for each
of the Stations, quarterly statements prepared in the ordinary course for
internal purposes containing a detailed listing of all trade and barter
agreements of each Station showing the status of all such agreements
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as of the end of the quarter. The Company shall deliver to Buyer the rating
books and such other ratings information subscribed to by the Company
including, without limitation, Arbitrends, Accuratings or any other written
information reflective of the quantitative or qualitative nature of the
audiences of the Stations for each of the Stations upon receipt of the same by
any officer or director of the Company. The Company shall instruct the Station
Management of each Station to provide such information and reports to Buyer's
corporate officers promptly upon receipt by such Station Management. In
addition, the Company will promptly provide Buyer with copies of each Station's
weekly sales pacing reports.
(c) Without duplication of Section 5.2(b), at such time as the Company
provides the same to its lenders or stockholders, the Company shall provide
Buyer with copies of the financial statements and other information delivered
by the Company to such lenders or stockholders.
5.3. ASSISTANCE. If Buyer requests, the Company will cooperate, and
will cause its accountants to cooperate, in all reasonable respects with any
financing efforts of Buyer or its Affiliates (including providing assistance in
the preparation of one or more registration statements or other offering
documents relating to debt and/or equity financing) and any other filings that
may be made by Buyer or its Affiliates with the Securities and Exchange
Commission, all at the sole expense of Buyer. The Company (a) shall furnish to
its independent accountants (or, if requested by Buyer to Buyer's independent
public accountants), such customary management representation letters as its
accountants may require of the Company as a condition to its execution of any
required accountants' consents necessary in connection with the delivery of any
"comfort" letters requested by financing sources of Buyer or its Affiliates and
(b) shall furnish to Buyer all financial statements (audited and unaudited) and
other information in the possession of the Company or its representatives or
agents as Buyer shall reasonably determine is necessary or appropriate in
connection with such financing. Buyer will indemnify and hold harmless the
Company and its, officers, directors, and controlling persons against any and
all claims, losses, liabilities, damages, demands, charges, suits, penalties,
costs, or expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing any litigation or proceeding)
that may arise out of or with respect to the financing efforts by Buyer or its
Affiliates, including any registration statement, prospectus, offering
documents, and other filings related thereto; provided, however, that subject
to the limitations and provisions of this Agreement, nothing in this Section
5.3 shall prevent Buyer from asserting any claim for breach of representation
or warranty under this Agreement.
5.4. COMPLIANCE WITH STATION LICENSES. The Company and the Selling
Stockholders shall cause the Stations to be operated in accordance with the
Station Licenses and all applicable rules and regulations of the FCC and in
compliance with all other applicable laws, regulations, rules, and orders. The
Company and the Selling Stockholders shall use all commercially reasonable
efforts not to cause or permit any of the Station Licenses to expire or be
surrendered, adversely modified, or terminated. The Company shall file or
cause to be filed with the FCC all applications (including license renewals) or
other documents required to be filed in connection with the operation of the
Stations. Should the FCC institute any proceedings for the suspension,
revocation or adverse modification of any of the Station Licenses or any
forfeiture proceedings, the Company and the Selling Stockholders will use all
commercially reasonable efforts to promptly contest such proceedings and to
seek to have such proceedings terminated in a manner that is favorable to the
Stations. The Company will use all commercially reasonable efforts to maintain
the FCC
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construction permits (if any) listed in Schedule 3.1(g) in effect until the
applicable construction projects are timely completed and to diligently
prosecute all pending FCC applications listed in Schedule 3.1(g). If the
Company (or its FCC counsel) receives an administrative or other order or
notification relating to any violation or claimed violation of the rules and
regulations of the FCC, or of any other Governmental Entity, that could affect
the Company's or any Selling Stockholders' ability to consummate the
transactions contemplated hereby, the Company shall promptly notify Buyer in
writing and use its commercially reasonable efforts to take such steps as may
be necessary to remove any such impediment to the transactions contemplated by
this Agreement.
5.5. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
written notice to Buyer of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of the Company or any Selling Stockholder
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Closing Date, (b) the failure of the
Company or any Selling Stockholder, or any officer, director, employee, or
agent of the Company, to comply with or satisfy in any material respect any
covenant, condition, or agreement to be complied with or satisfied by it
hereunder, (c) the occurrence of a Station Event (as defined in Section 9.1),
and (d) the occurrence of any threat made to the Company by any officer of the
Company or any General Manager, Station Manager, General Sales Manager or
Programming Director of a Station to resign or otherwise terminate their
employment or independent contractor relationship with the Company. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
5.6. THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, the Company shall use its commercially reasonable efforts to obtain
the written consent from any party to an agreement or instrument identified in
Schedule 3.1(p) or any other Contract which is required to permit the
consummation of the transactions contemplated hereby.
5.7. RESIGNATIONS OF DIRECTORS AND OFFICERS. The Company and the
Selling Stockholders shall cause all directors and officers of the Company to
deliver their written resignations to Buyer, which resignations shall be
effective at the Closing (assuming Buyer elects one or more duly qualified
directors to replace such resigning directors at the Closing) and shall be in
form and substance satisfactory to Buyer. Each such resignation shall state
that the Company is not in any way indebted or obligated to the resigning party
for termination pay, loans, advances, or otherwise.
5.8. XXXX X. XXXXX EMPLOYMENT AGREEMENT. Subject to the terms and
conditions hereof, Xxxx X. Xxxxx hereby agrees, and Buyer agrees that it shall
cause Central Star Communications, Inc., to execute and deliver the Employment
Agreement at or immediately prior to the Closing.
5.9. SURVEY. If requested by Buyer, the Company and Selling
Stockholders shall permit Buyer, at its sole cost and expense, to obtain a
survey of the Owned Real Property which shall be prepared by a registered land
surveyor reasonably selected by Buyer and shall satisfy the ALTA-ACSM Standards
(1992).
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5.10. MONTHLY FINANCIALS. Promptly after the end of each month
occurring during the period commencing on the date of this Agreement and ending
on the Closing Date, the Company shall deliver to Buyer an unaudited balance
sheet of the Company as of the last day of such month and an unaudited income
statement for the month then ended. Such monthly financial statements shall be
prepared in accordance with GAAP.
ARTICLE VI
COVENANTS OF BUYER
6.1. NOTIFICATION OF CERTAIN MATTERS. If Buyer or any of its
Affiliates receives an administrative or other order or notification relating
to any violation or claimed violation of the rules and regulations of the FCC,
or of any Governmental Entity, that could affect Buyer's ability to consummate
the transactions contemplated hereby, or should Buyer or any of its Affiliates
become aware of any fact relating to the qualifications of Buyer that
reasonably could be expected to cause the FCC to withhold its consent to the
assignment of the Station Licenses, Buyer shall promptly notify the Company
thereof and shall use its commercially reasonable efforts to take such steps as
may be necessary to remove any such impediment to the transactions contemplated
by this Agreement; provided, however, that Buyer shall not be required
pursuant to this Section 6.1 to divest itself or cause any Affiliate thereof to
divest itself of any media business or interest therein. In addition, Buyer
shall give to the Company prompt written notice of (a) the occurrence, or
failure to occur, of any event of which it becomes aware that has caused or
that would be likely to cause any representation or warranty of Buyer contained
in this Agreement to be untrue or inaccurate at any time from the date hereof
to the Closing Date, and (b) the failure of Buyer, or any officer, director,
employee, or agent thereof, to comply with or satisfy in any material respect
any covenant, condition, or agreement to be complied with or satisfied by it
hereunder. No such notification shall affect the representations or warranties
of the parties or the conditions to their respective obligations hereunder.
6.2. EMPLOYEE MATTERS. Subject to the provisions of the employment
contracts listed in Schedule 3.1(p) and Section 5.8 and except as set forth on
Schedule 6.2, nothing contained in this Agreement shall be deemed to give any
employee of the Company the right to be retained in the employ of the Company
on or after the Closing Date, to retain the same salary, job responsibility or
job location, or interfere with the right of the Company to terminate any
employee at any time.
6.3. CERTAIN LEGAL QUALIFICATIONS. Buyer covenants that, after the
date of this Agreement, neither it nor any Affiliate of Buyer will acquire
broadcast stations or other property or interests therein that will prevent the
parties from obtaining the FCC Consents by reason of the "multiple ownership"
or "cross-interest" rules promulgated under the Communications Act or otherwise
make the acquisition of the Shares hereunder illegal or, if such an acquisition
is made that has such an affect, the Selling Stockholders shall have the rights
specified in Article X with respect to a material breach of this Agreement by
Buyer.
6.4. FUTURE ACQUISITIONS. Buyer agrees that if Buyer acquires any
radio stations licensed to Cedar Rapids, Iowa or Iowa City, Iowa (each, an
"Acquired Station") prior to the Closing or the termination of this Agreement,
then if this Agreement is terminated (other than as a result of a breach
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of or default under this Agreement by the Company or any Selling Stockholder)
Buyer shall offer the Company the opportunity to purchase the Acquired Station
from Buyer at a price equal to the purchase price paid for the Acquired Station
by Buyer on substantially identical terms to those provided in the agreements
documenting Buyer's acquisition of any such Acquired Station, including the
assumption of any indemnification or similar obligations, subject to any
modifications required to address the passage of time or other changed
circumstances. The Company shall deliver written notice of its election to
exercise such right to Buyer within ten business days after the termination of
this Agreement and Buyer and the Company shall negotiate, execute and deliver
any documents necessary to evidence the transactions contemplated by this
Section 6.4 within 20 business days of the receipt of such notice. Buyer
acknowledges that the provisions of this Section 6.4 do not modify, reduce or
mitigate Buyer's obligations under Section 6.3.
ARTICLE VII
MUTUAL COVENANTS
7.1. APPLICATION FOR FCC CONSENTS. By the tenth business day after the
date hereof, the Company and Buyer will, and will cause all necessary persons
or entities to join in one or more applications filed with the FCC requesting
the FCC's written consent to the assignment of the FCC Licenses pursuant to
this Agreement (the "Applications"). The parties will take all proper steps
reasonably necessary (a) to diligently prosecute the Applications and (b) to
obtain the FCC Consents. The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material breach
of this Agreement; provided, however, that Buyer shall not be required pursuant
to this Section 7.1 to divest itself or cause any Affiliate thereof to divest
itself of any media business or interest therein.
7.2. CONTROL OF STATIONS. The Closing shall not occur until after the
FCC Consents with respect to the Applications referred to in Section 7.1 are
granted and have become Final Orders, subject to the waiver thereof by Buyer.
Between the date of this Agreement and the Closing Date, Buyer will not
directly or indirectly control, supervise or direct the operation of the
Stations. Further, between the date of this Agreement and the Closing Date,
the Company shall, directly or indirectly, supervise and control the operation
of the Stations. Such operation shall be the sole responsibility of the
Company.
7.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with this Agreement and shall
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such matters. Without limiting the foregoing,
promptly following the execution of this Agreement, the parties shall (a) file
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice the notifications and other information (if any) required to be
filed under the HSR Act with respect to the transactions contemplated hereby
and shall use their commercially reasonable efforts to cause all applicable
waiting periods under the HSR Act to expire or be terminated as of the earliest
possible date and (b) make all necessary filings and, thereafter, make any
other required submissions with respect to the transactions contemplated hereby
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under the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities laws. Nothing in this Section 7.3 shall
require Buyer to divest itself or to cause any Affiliate thereof to divest
itself of any media business or interest therein.
7.4. BROKERS OR FINDERS. The Company and the Selling Stockholders
represent and warrant to Buyer, that no agent, broker, investment banker, or
other or person engaged by the Company or a Selling Stockholder is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
payable by the Selling Stockholders, Buyer or the Company in connection with
any of the transactions contemplated by this Agreement. Except for the
previously disclosed fee payable to Media Venture Partners, which fee shall be
paid in accordance with the provisions of Section 12.7, Buyer represents and
warrants to the Company and the Selling Stockholders that Buyer has not engaged
any agent, broker, investment banker or other person that will be entitled to
any broker's or finder's fee or any other commissions or fee from the Selling
Stockholders, Buyer or the Company in connection with any of the transactions
contemplated by this Agreement.
7.5. RISK OF LOSS.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the assets of the Company from any cause whatsoever
shall be borne by the Company at all times prior to the Closing. In the event
of any material loss, damage, impairment, confiscation, or condemnation,
whether or not covered by insurance, the Company shall promptly notify Buyer of
such loss, damage, impairment, confiscation, or condemnation. Such notice
shall state the estimated cost of repair, replacement or restoration of such
assets and whether the Company intends to repair, replace or restore the
assets.
(b) In order to complete such repair, replacement or restoration, the
Selling Stockholders shall have the right to postpone the Closing to a date, to
be specified in a notice delivered to Buyer, no later than 60 days after the
date of the occurrence of the loss, damage, impairment, confiscation or
condemnation.
(c) If the Company, at its expense, repairs, replaces, or restores
such assets to their prior condition to the satisfaction of Buyer before the
Closing, the Company shall be entitled to all insurance proceeds and
condemnation awards, if any, by reason of such award or loss.
(d) If the Company does not or cannot repair, restore or replace lost,
damaged, impaired, confiscated or condemned assets having a replacement cost in
excess of $50,000 in the aggregate or informs Buyer that it does not intend to
repair, restore or replace such assets, Buyer may at its option:
(i) subject to the last sentence of Section 10.1, terminate this
Agreement by notice forthwith without any further obligation hereunder; or
(ii) proceed to the Closing without the Company completing the
restoration and replacement of such assets, provided that the Company shall
retain all rights under applicable insurance policies and condemnation
awards, if any; and in such event, the
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Selling Stockholders shall have no further liability with respect to the
condition of the assets directly attributable to the loss, damage,
impairment, confiscation, or condemnation.
(e) If the Company informs Buyer that it does not intend to repair,
restore or replace the lost, damaged, impaired, confiscated or condemned
assets, then Buyer will notify the Company of a decision under the options
described in Section 7.5(d)(i) or (ii) above within 10 business days after the
Company's notice to Buyer of the damage or destruction of assets, the estimate
of the costs to repair or replace and the Company's intention not to repair,
restore or replace. If the Company states that it intends to restore the
damaged assets and if the Company has not restored such damaged assets
immediately prior to the Closing Date (after giving effect to any postponement
pursuant to Section 7.5(b)), then, notwithstanding any prior delivery of a
notice by Buyer to proceed pursuant to this Section 7.5(e), then Buyer shall
have the right to either postpone the Closing or, subject to the last sentence
of Section 10.1, terminate this Agreement by notice forthwith.
7.6. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date, any further action is
reasonably necessary or desirable to carry out the purposes of this Agreement,
the parties to this Agreement and their duly authorized representatives shall
take all such action. Without limiting the generality of the foregoing, if,
after the Closing Date, Buyer seeks indemnification or recovery from one or
more other parties to a Contract or otherwise seeks to enforce such Contract
and, in order to obtain such indemnification, recovery or enforcement, it is
necessary for a Selling Stockholder to participate in any enforcement
proceeding or otherwise provide assistance to Buyer, then, at the request and
the sole expense of Buyer, each Selling Stockholder shall take such action as
Buyer may reasonably request in connection with Buyer's efforts to obtain such
indemnification, recovery or enforcement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligations
of Buyer, the Company and the Selling Stockholders to effect the transactions
contemplated hereby are subject to the satisfaction (or, in the case of the
condition specified in the last sentence of Section 8.l(a), the waiver by
Buyer) on or prior to the Closing Date of the following conditions:
(a) Consents and Approvals. All authorizations, consents, orders, or
approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Entity necessary for the consummation of
the transactions contemplated by this Agreement shall have been filed,
occurred, or been obtained; provided, however, that no consent or approval of
the Securities and Exchange Commission shall be considered necessary for such
consummation. The FCC Consents shall have become Final Orders and shall be in
form and substance satisfactory to Buyer.
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(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken, nor any statute,
rule, or regulation shall have been enacted, by any Governmental Entity that
makes the consummation of the transactions contemplated hereby illegal.
8.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations and
warranties of the Company and the Selling Stockholders set forth in this
Agreement shall be true and correct in all material respects (provided that any
representation or warranty of the Company or a Selling Stockholder contained
herein that is qualified by a materiality standard shall not be further
qualified hereby) as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date, and Buyer shall have received a
certificate to such effect signed on behalf of the Company by the chief
executive officer or by the chief financial officer of the Company and by each
of the Selling Stockholders with respect to the representations and warranties
of such Selling Stockholder.
(b) Performance of Obligations. The Company and the Selling
Stockholders shall have performed in all material respects all obligations
required to be performed by it or them under this Agreement prior to the
Closing Date, and Buyer shall have received a certificate to such effect signed
on behalf of the Company by the chief executive officer or by the chief
financial officer of the Company and by each of the Selling Stockholders.
(c) Consents Under Agreements. Buyer shall have been furnished with
evidence reasonably satisfactory to it of the consent or approval of each
person that is a party to a Contract specifically identified in Schedule 3.1(p)
whose consent or approval shall be required in order to permit the consummation
of the transactions contemplated hereby and such consent or approval shall be
in form and substance reasonably satisfactory to Buyer.
(d) Legal Opinions. Buyer shall have received from each of Xxxxxx &
Xxxxxxx Xxxxx & Xxxxxxx, P.L.C., and Sparks & Xxxxx, counsel to the Selling
Stockholders and the Company, an opinion dated the Closing Date, in
substantially the form of the opinions of such counsel attached as Exhibits X-
0, X-0 and E-3 hereto.
(e) Xxxx X. Xxxxx Employment Agreement. Central Star Communications,
Inc. and Xxxx X. Xxxxx shall have executed and delivered the Employment
Agreement as required by Section 5.8.
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(f) Closing Deliveries. All documents, instruments, certificates or other
items required to be delivered by the Company or the Selling Stockholders
pursuant to Section 9.2 shall have been delivered.
8.3. CONDITIONS TO OBLIGATIONS OF THE SELLING STOCKHOLDERS. The
obligation of the Selling Stockholders to effect the transactions contemplated
hereby is subject to the satisfaction of the following conditions unless
waived, in whole or in part, by the Selling Stockholders (or the Stockholders'
Representative).
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and the Selling
Stockholders shall have received a certificate to such effect signed on behalf
of Buyer by the chief executive officer or by the chief financial officer of
Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have performed
in all material respects the obligations required to be performed by it under
this Agreement prior to the Closing Date, and the Selling Stockholders shall
have received a certificate to such effect signed on behalf of Buyer by the
chief executive officer or by the chief financial officer of Buyer.
(c) Legal Opinion. The Selling Stockholders shall have received from
Xxxxxx & Xxxxxx L.L.P., counsel to the Buyer, an opinion dated the Closing
Date, in substantially the form of the opinion of such counsel attached as
Exhibit F hereto.
(d) Closing Deliveries. All documents and instruments required to be
delivered by Buyer pursuant to Section 9.2 shall have been delivered.
ARTICLE IX
CLOSING
9.1. CLOSING. Subject to the satisfaction or waiver of the conditions
set forth in Article VIII, the Closing will take place at the offices of Xxxxxx
& Xxxxxx L.L.P., Dallas, Texas, at 10:00 a.m., local time (or at such other
place and time as Buyer and the Selling Stockholders may agree), on the later
to occur of (a) January 12, 1998, or (b) a date selected by Buyer and the
Selling Stockholders, which date shall be no later than the 10th business day
after the day on which the FCC Consents have been granted by Final Order (the
"Closing Date"). If Buyer and Selling Stockholders fail to select the Closing
Date, the Closing Date shall be such 10th business day. Notwithstanding the
foregoing:
(a) In the case of a Station Event (as defined below), (i) if the
Cessation Date (as defined below) is less than 60 days after the Event Date (as
defined below), Buyer, in its discretion, may extend the Closing Date to a date
not later than the 10th day after the Cessation Date, (ii) if the
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Cessation Date is more than 60, but less than 90, days after the Event Date,
Buyer, in its discretion, shall elect on the first to occur of the 10th
business day after the Cessation Date or the 90th day (or, if not a business
day, the next business day) after the Event Date (the "Election Date") to
either (A) close the transactions contemplated by this Agreement on the later
to occur of the fifth business day after the Election Date or the 90th day (or,
if not a business day, the next business day) after the Event Date or (B)
terminate this Agreement, or (iii) if the Cessation Date has not occurred by
the 90th day after the Event Date, then on the 90th day (or, if not a business
day, the next business day) after the Event Date, Buyer, in its discretion,
shall elect to close the transactions contemplated by this Agreement on the
fifth business day thereafter or terminate this Agreement;
(b) In the case of a Banking Event, Trading Event or Conflict Event,
Buyer, in its discretion, may extend the Closing Date to a date not to exceed
the 30th day after the Event Date;
(c) If a Cure Period has not ended on or before the Closing Date, the
Closing Date shall be extended to the end of the Cure Period;
(d) If the Company intends to repair, replace or restore a lost,
damaged, impaired, confiscated or condemned asset in accordance with the
provisions of Section 7.5, the Closing may be extended by the Selling
Stockholders until the date specified by the Selling Stockholders pursuant to
Section 7.5(b); and
(e) If the Closing does not occur within 80 days after the date of the
Final Order, the parties shall request approval from the FCC to extend the
Closing so that the Closing contemplated hereunder will not violate any FCC
rules or regulations.
For purposes of this Agreement, a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; a "Conflict Event" shall mean
the occurrence of any major armed conflict involving a substantial
participation by the armed forces of the United States of America that causes a
disruption of the capital markets of the United States of a magnitude similar
to the disruption that could be caused by a Trading Event or Banking Event; a
"Station Event" shall mean any act of nature, calamity or casualty (including
fires, floods, earthquakes, and storms), or condemnation that has caused one or
more Stations representing an aggregate of at least 3% of the consolidated
gross revenues of the Company for the last full 12 calendar months prior to the
Station Event not to be operating in a manner substantially consistent with the
operations conducted before such act, calamity, casualty, condemnation occurred
or not in material compliance with its or their respective Station License(s);
a "Trading Event" shall mean that trading generally in securities on the New
York Stock Exchange shall have been suspended or materially limited; an "Event
Date" shall mean the date on which a Banking Event, Conflict Event, Station
Event, or a Trading Event occurs; and a "Cessation Date" shall mean the date on
which a Station Event ends. Pro forma adjustments shall be made for purposes
of calculating gross revenues for the 12-month period specified in the
definition of "Station Event" with respect to any radio broadcast station
acquired during such 12-month period, to assume that such station was acquired
at the beginning of such 12-month period and include the gross revenues of such
station for the full 12-month period.
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9.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to the Selling Stockholders
(or to the Escrow Agent or the creditors of the Funded Debt, as indicated) the
following:
(i) Purchase Price. The Purchase Price (less the Holdback Amount
and the amount of the Funded Debt) by wire transfer of immediately available
funds;
(ii) Funded Debt. The amount of the Funded Debt to the persons
designated in the Funded Debt Payoff Notice;
(iii) Holdback Amount. The Holdback Amount to the Escrow Agent
by wire transfer of immediately available funds;
(iv) Certificates. The certificates referred to in Section
8.3(a) and (b);
(v) Legal Opinion. The opinion of counsel referred to in Section
8.3(c); and
(vi) Indemnification Escrow Agreement. A counterpart of the
Indemnification Escrow Agreement executed by Buyer.
(b) At the Closing, the Company and the Selling Stockholders shall
deliver to Buyer the following:
(i) Share Certificates. Certificates representing the Shares,
duly endorsed in blank or accompanied by stock powers duly endorsed in blank,
and otherwise in proper form for transfer;
(ii) Certificates. The certificates described in Section
8.2(a) and (b);
(iii) Indemnification Escrow Agreement. A counterpart of the
Indemnification Escrow Agreement executed by the Selling Stockholders or the
Stockholders' Representative;
(iv) Legal Opinion. The opinion of counsel referred to in
Section 8.2(d);
(v) Consents; Acknowledgments. The original of each Consent; and
(vi) Resignations. The resignations described in Section 5.7.
(c) At the Closing, the Selling Stockholders and Buyer shall instruct
the Escrow Agent to deliver, and it shall deliver, the Deposit Letter of Credit
to Buyer.
(d) At the Closing, Buyer shall receive from the chief executive
officer or chief financial officer of each Selling Stockholder a non-foreign
affidavit within the meaning of section 1445(b)(2) of the Code.
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(e) At the Closing, Xxxx X. Xxxxx shall execute, and Buyer shall cause
Central Star Communications, Inc. to execute, the Employment Agreement.
(f) At the Closing, the Liens described in Schedule 3.2(a) shall be
released and if such Liens were perfected by the filing of a financing
statement or other instrument, the Selling Stockholders shall deliver to Buyer
appropriate termination statements or instruments reflecting the release of
such Liens.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and the Selling Stockholders;
(b) by either the Selling Stockholders or Buyer;
(i) if there shall have been any material breach (provided that
any representation or warranty of a party contained herein that is qualified by
a materiality standard or a Material Adverse Effect qualification shall not be
further qualified hereby) of any representation, warranty, covenant, or
agreement, on the part of Buyer, on the one hand, or the Company and the
Selling Stockholders, on the other hand, set forth in this Agreement, which
breach shall not have been cured within 20 days, or within five days, in the
case of a failure by Buyer to observe its covenant to pay the Purchase Price if
the conditions to such payment are satisfied (the "Cure Period") following
receipt by the breaching party of written notice of such breach;
(ii) if a court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree, or ruling or taken any other action
(which order, decree or ruling the parties hereto shall use their best efforts
to lift), in each case permanently restraining, enjoining, or otherwise
prohibiting the transactions contemplated by this Agreement, and such order,
decree, ruling, or other action shall have become final and nonappealable;
(iii) if, for any reason, the FCC denies or dismisses any of the
Applications and the time for reconsideration or court review under the
Communications Act with respect to such denial or dismissal has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review;
(iv) if, for any reason, any of the Applications is designated
for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the latest of May
31, 1998 or the date to which the Closing Date is extended pursuant to Section
7.5(b) or the second sentence of Section 9.1; provided, however, that the right
to terminate this Agreement under this clause (v)
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shall not be available to any party whose breach of this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date; or
(c) by Buyer:
(i) pursuant to the provisions of Section 7.5;
(ii) with respect to a Station Event, at its option, as
provided in the second sentence of Section 9.1; or
(iii) if the FCC grants any of the Applications with any adverse
conditions not generally imposed on grants of such applications other than
adverse conditions imposed upon such grants relating to Buyer's qualification
to hold the FCC Licenses and the time for reconsideration or court review under
the Communications Act with respect to such adverse conditions has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review.
The right of any party hereto to terminate this Agreement pursuant to this
Section 10.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement. If
the Buyer or the Selling Stockholders intend to terminate the Agreement
pursuant to Section 10.1 (b)(i), then the party having that intention shall
notify the other party or parties, which notice shall specify the particular
breach upon which such party intends to rely to terminate this Agreement.
Notwithstanding anything in the foregoing to the contrary, a party that is in
material breach of this Agreement shall not be entitled to terminate this
Agreement except, in the case of a default by the Company or either Selling
Stockholder, with the consent of Buyer, or in the case of a default by Buyer,
with the consent of each Selling Stockholder.
10.2. EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by either the
Selling Stockholders or Buyer as provided above, there shall be no liability on
the part of either the Selling Stockholders, the Company or Buyer, except for
liability arising out of a breach of this Agreement. If this Agreement is
terminated by the Selling Stockholders pursuant to Section 10.1(b)(i) or is
terminated pursuant to clause (iii) of Section 10.1(b) and the sole reason for
the denial or dismissal of the Application is the breach by Buyer of the
covenant contained in Section 6.3, the parties agree and acknowledge that the
Selling Stockholders will suffer damages that are not practicable to ascertain.
Accordingly, in such event and if, within 15 business days after termination of
this Agreement by the Selling Stockholders pursuant to Section 10.1(b)(i) or
pursuant to clause (iii) of Section 10.1(b) and the sole reason for the denial
or dismissal of the Application is the breach by Buyer of the covenant
contained in Section 6.3, the Selling Stockholders deliver to Buyer a written
demand for liquidated damages, subject to Buyer's receipt of a counterpart of
the Release executed by the Selling Stockholders, the Selling Stockholders
shall be entitled to the sum of $750,000 as liquidated damages payable by Buyer
within 10 business days after receipt of the Selling Stockholder's written
demand and payable in accordance with the provisions of the Deposit Escrow
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Agreement. As security for payment thereof, Buyer has, concurrently with the
execution of this Agreement, entered into the Deposit Escrow Agreement with the
Selling Stockholders and the Escrow Agent as provided in Section 2.7. The
parties agree that the foregoing liquidated damages are reasonable considering
all the circumstances existing as of the date hereof and constitute the
parties' good faith estimate of the actual damages reasonably expected to
result from the termination of this Agreement by the Selling Stockholders
pursuant to Section 10.1(b)(i) or by the Selling Stockholders or Buyer pursuant
to Section 10.1(b)(iii) because of the denial or dismissal of an Application
caused by the breach by Buyer of the covenant contained in Section 6.3. The
Selling Stockholders and the Company agree that, to the fullest extent
permitted by law, Selling Stockholders's right to payment of such liquidated
damages as provided in this Section 10.2 shall be the Selling Stockholders' and
the Company's sole and exclusive remedy if the Closing does not occur with
respect to any damages whatsoever that Selling Stockholders or the Company may
suffer or allege to suffer as a result of any claim or cause of action asserted
by Selling Stockholders relating to or arising from breaches of the
representations, warranties or covenants of Buyer contained in this Agreement
and to be made or performed at or prior to the Closing. If this Agreement is
terminated by Selling Stockholders pursuant to Section 10.1(b)(i) or is
terminated pursuant to clause (iii) of Section 10.1(b) and the sole reason for
the denial or dismissal of the Application is the breach by Buyer of the
covenant contained in Section 6.3, upon Buyer's receipt of a counterpart of the
Release executed by Selling Stockholders and the Company, Buyer and Selling
Stockholders shall instruct the Escrow Agent to release the Deposit Letter of
Credit to Selling Stockholders. If this Agreement is terminated either by
Buyer or Selling Stockholders pursuant to any provision of Section 10.1 other
than a termination by Selling Stockholders pursuant to Section 10.1(b)(1) or by
the Selling Stockholders or Buyer pursuant to Section 10.1(b)(ii) because of
the denial or dismissal of an Application caused by Buyer's breach of the
covenant contained in Section 6.3, then Buyer and Selling Stockholders shall
instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer.
(b) As a condition of payment, and upon receipt of the liquidated
damages under this Section 10.2, the Selling Stockholders hereby irrevocably
and unconditionally release, acquit, and forever discharge Buyer and its
successors, assigns, officers, directors, employees, agents, stockholders,
subsidiaries, parent companies and other affiliates (corporate or otherwise)
(the "Released Parties") of and from any and all Released Claims, including,
without limitation, all Released Claims arising out of, based upon, resulting
from or relating to the negotiation, execution, performance, breach or
otherwise related to or arising out of the Transaction Documents or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses
or expenses (including attorneys' and other professional fees and expenses)
held by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or contingent,
direct or derivative.
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ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION OF BUYER. Subject to the provisions of this
Article XI (in particular, to Section 11.6(e) and (f)) and of Section 12.17(b),
each Selling Stockholders and the Company, jointly and severally agrees to
indemnify and hold harmless the Buyer Indemnified Parties from and against any
and all Buyer Indemnified Costs.
11.2. INDEMNIFICATION OF SELLING STOCKHOLDERS. Subject to the
provisions of this Article XI, Buyer agrees to indemnify and hold harmless the
Selling Stockholders Indemnified Parties from and against any and all Selling
Stockholders Indemnified Costs.
11.3. DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall give
prompt written notice to any entity or person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article XI to
the extent that the failure to give such notice materially and adversely
prejudices such Indemnifying Party. The Indemnifying Party shall have the
right to assume control of the defense of, settle, or otherwise dispose of such
third-party action on such terms as they deem appropriate; provided, however,
that:
(a) The Indemnified Party shall be entitled, at its own expense, to
participate in the defense of such third-party action (provided, however, that
the Indemnifying Parties shall pay the attorneys' fees of the Indemnified Party
if (i) the employment of separate counsel shall have been authorized in writing
by any such Indemnifying Party in connection with the defense of such third-
party action, (ii) such third-party action could reasonably be expected to
result in Buyer Indemnified Costs in excess of the remainder of the Holdback
Amount then held by the Escrow Agent pursuant to the terms of the
Indemnification Escrow Agreement (and not subject to pending claims), or (iii)
the Indemnified Party's counsel shall have advised the Indemnified Party in
writing, with a copy delivered to the Indemnifying Party, that there is a
conflict of interest that could make it inappropriate under applicable
standards of professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written approval of
the Indemnified Party before entering into or making any settlement,
compromise, admission, or acknowledgment of the validity of such third-party
action or any liability in respect thereof if, pursuant to or as a result of
such settlement, compromise, admission, or acknowledgment, injunctive or other
equitable relief would be imposed against the Indemnified Party or if, in the
opinion of the Indemnified Party, such settlement, compromise, admission, or
acknowledgment could reasonably be expected to have an adverse effect on its
business which approval shall not be unreasonably withheld or delayed (it shall
not be deemed unreasonable for Buyer to withhold consent with respect to any
settlement, compromise, admission, or acknowledgment if the amount of Buyer
Indemnified Costs resulting therefrom could reasonably be expected to exceed
the remainder of the Holdback
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Amount then held by the Escrow Agent pursuant to the terms of the
Indemnification Escrow Agreement (and not subject to pending claims));
(c) No Indemnifying Party shall consent to the entry of any judgment
or enter into any settlement in respect of any claim for which indemnity is
required hereunder that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each Indemnified Party of a release
from all liability in respect of such third-party action; and
(d) The Indemnifying Party shall not be entitled to control (but shall
be entitled to participate at its own expense in the defense of), and the
Indemnified Party shall be entitled to have sole control over, the defense or
settlement, compromise, admission, or acknowledgment of any third-party action
(i) as to which the Indemnifying Party fails to assume the defense within a
reasonable length of time and such failure could reasonably be expected to
prejudice the defense of the action, or (ii) to the extent the third-party
action seeks an order, injunction, or other equitable relief against the
Indemnified Party which, if successful, would materially adversely affect the
business, operations, assets, or financial condition of the Indemnified Party;
provided, however, that the Indemnified Party shall make no settlement,
compromise, admission, or acknowledgment that would give rise to liability on
the part of any Indemnifying Party without the prior written consent of such
Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article XI and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4. DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. Subject to
the limitations set forth in Section 11.6(c), the failure of the Indemnified
Party to exercise promptness in such notification shall amount to a waiver of
such claim to the extent that the resulting delay materially prejudices the
position of the Indemnifying Party with respect to such claim.
11.5. ESCROW. On the Closing Date, Buyer, the Selling Stockholders (or
the Selling Stockholders' Representatives on behalf of the Selling
Stockholders) and the Escrow Agent will enter into the Indemnification Escrow
Agreement in accordance with which Buyer shall, at Closing, deposit an amount
of the Purchase Price equal to $500,000 (the "Holdback Amount") with the Escrow
Agent.
11.6. LIMITATIONS. Subject to Section 11.7 and Section 11.8 hereof, the
following provisions of this Section 11.6 shall be applicable after the
Closing:
(a) Minimum Loss. Except for Capped Indemnified Costs arising out of
a breach of a covenant or an agreement under this Agreement or another
Transaction Document that would have the effect of avoiding, delaying or
deferring an obligation of the Company or the Selling Stockholders which by its
terms was due and payable at or prior to the Closing, no Indemnifying
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Party shall be required to indemnify an Indemnified Party for Capped
Indemnified Costs unless and until the aggregate amount of such Capped
Indemnified Costs for which the Indemnified Party is otherwise entitled to
indemnification pursuant to this Article XI exceeds $50,000 (the "Minimum
Loss"). After the Minimum Loss is exceeded, the Indemnified Party shall be
entitled to be paid the amount of its Capped Indemnified Costs in excess of the
amount of the Minimum Loss, subject to the limitations on recovery and recourse
set forth in this Section 11.6 and in Section 11.7 and subject to the exception
contained in Section 11.8. Subject to such limitations and exceptions, an
Indemnified Party shall be entitled to be paid the entire amount of its Capped
Indemnified Costs for a breach of a covenant or agreement under this Agreement
or another Transaction Document without regard to any Minimum Loss threshold.
For purposes of determining the aggregate amount of Minimum Loss suffered by an
Indemnified Party, each representation and warranty contained in this Agreement
for which indemnification can be or is sought hereunder shall be read
(including for purposes of determining whether a breach of such representation
or warranty has occurred) without regard to materiality (including Material
Adverse Effect) qualifications that may be contained therein. In addition, in
determining whether an Indemnifying Party shall be required to indemnify an
Indemnified Party under this Article XI, once the Minimum Loss requirement set
forth in this clause (a) has been satisfied, each representation and warranty
contained in this Agreement for which indemnification can be or is sought
hereunder shall be read (including for purposes of determining whether a breach
of such representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein.
(b) Limitation as to Time. No Indemnifying Party shall be liable for
any Capped Indemnified Costs pursuant to this Article XI unless a written claim
for indemnification in accordance with Section 11.3 or 11.4 is given by the
Indemnified Party to the Indemnifying Party with respect thereto on or before
the 450th day after the Closing Date, except that this time limitation shall
not apply to any claims contemplated by Section 11.8.
(c) Recourse against Escrowed Funds. Subject to Section 11.8 hereof,
a Buyer Indemnified Party shall be entitled to payment only out of the Holdback
Amount pursuant to the terms of this Article XI and the Indemnification Escrow
Agreement for all amounts due to a Buyer Indemnified Party with respect to any
claim by a Buyer Indemnified Party against a Selling Stockholder for Capped
Buyer Indemnified Costs payable under this Article XI. Except as provided in
Section 11.8 and except to the extent that the remedy of specific performance
may be available for the enforcement of a covenant, subsequent to the Closing,
indemnification under this Article XI shall be the exclusive remedy of Buyer
Indemnified Parties with respect to any Capped Buyer Indemnified Costs.
(d) Other Indemnified Costs. The provisions of this Section 11.6
(other than the last sentence of Section 11.6(a) and Sections 11.6(e) and
11.6(f)) shall only be applicable to Capped Indemnified Costs and shall not be
applicable to any other Indemnified Costs. Moreover, such provisions (and the
provisions of Section 11.6(e)) shall only be applicable to the period following
the Closing.
(e) Buyer Indemnified Costs Other than Capped Buyer Indemnified Costs.
A Buyer Indemnified Party shall be entitled to payment out of the Holdback
Amount pursuant to the terms of this Article XI and the Indemnification Escrow
Agreement for all amounts due to a Buyer
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Indemnified Party with respect to any claim by a Buyer Indemnified Party
against a Selling Stockholder for Buyer Indemnified Costs other than Capped
Buyer Indemnified Costs and, if such Buyer Indemnified Costs other than Capped
Buyer Indemnified Costs exceed the amount available for such payment from the
Holdback Amount, then each Selling Stockholder shall be liable for, and shall
pay to Buyer, (i) its Proportionate Share (but only its Proportionate Share) of
such excess with respect to any Buyer Indemnified Costs arising out of a breach
or default by the Company or any Selling Stockholder of the representations or
warranties contained in Section 3.1(o), and (ii) the full amount of any Buyer
Indemnified Costs arising out of a breach or default by such Selling
Stockholder under Section 3.2(a) or Section 3.2(b).
(f) No Contribution. If the Closing occurs, then the Selling
Stockholders, and not the Company, shall be fully liable for any Buyer
Indemnified Costs sustained by any Buyer Indemnified Parties. In that event,
the Selling Stockholders shall not be entitled to contribution or any other
payments from the Company for any Buyer Indemnified Costs that the Selling
Stockholders are obligated to pay.
11.7. INSTRUCTIONS TO ESCROW AGENT. Each Selling Stockholder hereby
covenants and agrees that at any time a Selling Stockholder is or becomes
obligated to indemnify a Buyer Indemnified Party for Buyer Indemnified Costs
under this Article XI, the Selling Stockholders will execute and deliver to
the Escrow Agent written instructions to release to the Buyer Indemnified Party
such portion of the Holdback Amount as is necessary to indemnify the Buyer
Indemnified Party for such Buyer Indemnified Costs.
11.8. NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any party
under this Article XI shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section
11.6(a), 11.6(b), or 11.6(c), shall be deemed a waiver by any party to this
Agreement of any right or remedy which such party may have at law or equity
based on any other party's fraudulent acts or omissions, nor shall any such
provisions limit, or be deemed to limit, (a) the amounts of recovery sought or
awarded in any such claim for fraud, (b) the time period during which a claim
for fraud may be brought, or (c) the recourse which any such party may seek
against another party with respect to a claim for fraud; provided, that with
respect to such rights and remedies at law or equity, the parties further
acknowledge and agree that none of the provisions of this Section 11.8, nor any
reference to this Section 11.8 throughout this Agreement, shall be deemed a
waiver of any defenses which may be available in respect of actions or claims
for fraud, including but not limited to, defenses of statutes of limitations or
limitations of damages.
ARTICLE XII
GENERAL PROVISIONS
12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations, warranties and covenants made hereunder
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or pursuant hereto or in connection with the transactions contemplated hereby
shall survive the Closing. The representations, warranties and covenants set
forth in this Agreement shall terminate on the 450th day after the Closing Date
except (a) that the representations and warranties set forth in Section 3.1(o)
shall terminate on the date of expiration of the applicable statute of
limitations, (b) the representations and warranties set forth in Section 3.2(a)
shall survive indefinitely, (c) the provisions of this Article XII shall
survive indefinitely, and (d) as provided in the next succeeding sentence.
Following the date of termination of a representation, warranty or covenant, no
claim can be brought with respect to a breach of such representation, warranty
or covenant, but such termination shall not affect any claim for a breach of a
representation, warranty or covenant that was asserted before the date of
termination. If this Agreement is terminated pursuant to Section 10.1, the
provisions of Articles I, X, XI and XII and Section 7.7 shall survive such
termination.
12.2. FURTHER ACTIONS. After the Closing Date, each Selling Stockholder
shall execute and deliver such other certificates, agreements, conveyances, and
other documents, and take such other action, as may be reasonably requested by
Buyer in order to transfer and assign to, and vest in, Buyer the Shares
pursuant to the terms of this Agreement or to permit Buyer to control the
Company and its assets.
12.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto or by Buyer,
the Company and the Stockholders' Representative.
12.4. WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand, or
the Company or a Selling Stockholder, on the other hand, to comply with any
obligation, covenant, agreement, or condition contained herein may be waived
only if set forth in an instrument in writing signed by the party or parties to
be bound by such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any other failure.
12.5. SPECIFIC PERFORMANCE. The parties recognize that in the event the
Company or a Selling Stockholder should refuse to perform under the provisions
of this Agreement, monetary damages alone will not be adequate. Buyer shall
therefore be entitled, in addition to any other remedies which may be
available, including money damages, to obtain specific performance of the terms
of this Agreement. In the event of any action to enforce this Agreement
specifically, the Company and the Selling Stockholders hereby waive the defense
that there is an adequate remedy at law.
12.6. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of applicable law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.
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12.7. EXPENSES AND OBLIGATIONS. Except as otherwise expressly provided
in this Agreement or as provided by law, if the Closing does not occur, all
costs and expenses incurred by the parties hereto in connection with the
consummation of the transactions contemplated hereby shall be borne solely and
entirely by the party which has incurred such expenses. If the Closing does
occur, then, except as so provided, all costs and expenses incurred by the
Company and the Selling Stockholders, on the one hand, and Buyer, on the other,
in connection with such consummation shall be borne solely and entirely by the
Selling Stockholders and Buyer, respectively. Notwithstanding the foregoing,
(a) the fee payable to the Escrow Agent shall be borne as provided in the
Indemnification Escrow Agreement and the Deposit Escrow Agreement, (b) the
brokerage fee payable to Media Venture Partners shall be borne by the Buyer and
the Selling Stockholders shall pay the brokerage fee of any person retained by
the Company or any of the Selling Stockholders, and (c) all sales, documentary
or stamp taxes arising out of the transactions contemplated by this Agreement
shall be paid one-half by Buyer and one-half by the Selling Stockholders.
Buyer, on one hand, and the Selling Stockholders, on the other hand, shall each
be responsible for their own fees and expenses in connection with the
arbitration contemplated by Section 2.5(b), and the fees and expenses of the
Referee shall be borne equally by Buyer, on one hand, and the Selling
Stockholders, on the other hand; provided, however, that if the Referee
determines that one party has not proceeded in good faith in resolving such
dispute, the fees and expenses of the prevailing party and of the Referee shall
be borne by the party deemed not to have proceeded in good faith. In the event
of a dispute between the parties in connection with this Agreement and the
transactions contemplated hereby (other than the arbitration contemplated by
Section 2.5(b)), each of the parties hereto hereby agrees that the prevailing
party shall be entitled to reimbursement by the other party of reasonable legal
fees and expenses incurred in connection with any action or proceeding.
12.8. PARTIES IN INTEREST. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
(other than the Indemnified Parties as provided in Article XI) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer, to
Capstar Acquisition Company, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
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with copies to
Xxxxxx & Xxxxxx L.L.P.
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Capstar Broadcasting Partners
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Xx.
Facsimile: (000) 000-0000
Xxxxxxxxx & Associates, P.A.
Suite 1450
Suntrust International Center
Xxx Xxxxxxxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
(b) If to the Company, to
Xxxxx Broadcasting Company
000 0xx Xxxxxx X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
(c) If to the Selling Stockholders or the Selling Stockholder's
Representative, to
Xxxx X. Xxxxx
000 0xx Xxxxxx X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
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with a copy to
Xxxxxxx X. Xxxxxxxx Trust
Xxxxxxx X. Xxxxxxxx Charitable Remainder Trust
0000 0xx Xxxxxx X.X., Xxxx 000
Xxxxx Xxxxxx, Xxxx 00000
and
0000 Xxx Xxxxxx Xxxxx, Xxxx 000
Xxxxxx, Xxxxxxx 00000
12.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.
12.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12.13. PUBLIC ANNOUNCEMENTS. The Company and the Selling Stockholders,
on the one hand, and Buyer, on the other, shall consult with each other before
issuing any press release or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement prior to such
consultation. Prior to the Closing, neither the Company nor the Selling
Stockholders will issue any other press release or otherwise make any public
statements regarding the Company's business, except as may be required by
applicable law or applicable rules of the Nasdaq Stock Market or any stock
exchange.
12.14. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to the Selling Stockholders and without releasing Buyer from any of
its obligations or liabilities hereunder, Buyer may assign or delegate any or
all of its rights or obligations under this Agreement to any Affiliate thereof,
and (b) nothing in this Agreement shall limit Buyer's ability to make a
collateral assignment of its rights under this Agreement to any institutional
lender that provides funds to Buyer without the consent of the Selling
Stockholders or the Company. The Company and the Selling Stockholders shall
execute an acknowledgment of such assignment(s) and collateral assignments in
such forms as Buyer or its institutional lenders may
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from time to time reasonably request; provided, however, that unless written
notice is given to the Company and the Selling Stockholders that any such
collateral assignment has been foreclosed upon, the Company and the Selling
Stockholders shall be entitled to deal exclusively with Buyer as to any matters
arising under this Agreement or any of the other agreements delivered pursuant
hereto. In the event of such an assignment, the provisions of this Agreement
shall inure to the benefit of and be binding on Buyer's assigns.
12.15. DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of Buyer and its Affiliates shall not have any personal liability
or obligation arising under this Agreement (including any claims that the
Company or a Selling Stockholder may assert) other than as an assignee of this
Agreement. The current directors of the Company, other than Xxxx X. Xxxxx and
Xxxxxxx X. Xxxxxxxx, shall not have any personal liability or obligation
arising under this Agreement.
12.16. NO REVERSIONARY INTEREST. The parties expressly agree, pursuant to
Section 73.1150 of the FCC's rules, that the Selling Stockholders do not retain
any right to reassignment of any of the FCC Licenses in the future, or to
operate or use the facilities of the Stations for any period beyond the Closing
Date.
12.17. RELATIONSHIP OF SELLING STOCKHOLDERS.
(a) Except as expressly provided herein, the representations,
warranties and covenants of the Selling Stockholders are joint and several.
The default of one Selling Stockholder shall not relieve any other Selling
Stockholder of its obligations hereunder. Each Selling Stockholder agrees that
she or it shall cause the Company to comply with the provisions of the
Agreement and perform its obligations hereunder that are to be complied with or
performed on or before the Closing Date. Buyer shall not have any
responsibility for the distribution of the proceeds of a draw on the Deposit
Letter of Credit or the Purchase Price among the Selling Stockholders, but this
sentence shall not be construed as relieving any Buyer from its obligation to
pay the Purchase Price to the Selling Stockholders at Closing.
(b) Notwithstanding Section 12.17(a), or any other provision of this
Agreement, each Selling Stockholder shall indemnify Buyer for (i) its
Proportionate Share (but only its Proportionate Share) of any Buyer Indemnified
Costs arising out of a breach or default by the Company or any Selling
Stockholder of the representations and warranties contained in Section 3.1(o),
and (ii) the full amount of any Buyer Indemnified Costs arising out of a breach
or default by such Selling Stockholder of the representations of warranties
contained in Sections 3.2(a) or (b)), that are in excess of the Holdback Amount
available to pay such Buyer Indemnified Costs. The obligation of a Selling
Stockholder to pay such Proportionate Amount is several and not joint.
12.18. APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVE. By the execution and
delivery of this Agreement, each Selling Stockholder hereby irrevocably
constitutes and appoints Xxxx X. Xxxxx as the true and lawful agent and
attorney-in-fact (the "Stockholders' Representative") of such Selling
Stockholder with full power of substitution to act in the name, place and stead
of such Selling Stockholder with respect to the following:
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(a) During the period between the date of this Agreement and the
Closing Date, the Stockholders' Representative shall have the following
powers:
(i) the power to execute and deliver all applications and
associated exhibits, forms, affidavits, and other documents
required to be signed by the Selling Stockholders and filed
with any federal, state or local administrative agency from
whom Consents must be obtained; and
(ii) the power to amend this Agreement and the Deposit Escrow
Agreement; provided, however, that no such amendment shall be
binding upon a Selling Stockholder if the effect thereof is to
reduce the Purchase Price or any other sums due and owing to
such Selling Stockholder hereunder by an amount that
cumulatively exceeds $100,000.00, to make or expand any
warranties and representations on behalf of such Selling
Stockholder, to limit the Selling Stockholder's right to
indemnification under Section 11.1 above, or to materially
delay (by the express terms of such amendment) the
contemplated Closing.
(b) After the Closing, the Stockholders' Representative shall have
the following powers:
(i) the power to amend the Indemnification Escrow Agreement (other
than any amendment that would increase the amount of the
Holdback Amount);
(ii) the power to deal exclusively with the Buyer with regard to
all matters involving the indemnification of Selling
Stockholders as set forth in Section 11.2 of this Agreement;
(iii) the power to deal exclusively with the Buyer and the Escrow
Agent, with regard to all matters involving indemnification of
the Buyer as set forth in Section 11.1 of this Agreement;
subject, however, to the limitation on Capped Buyer
Indemnified Costs evidenced by the Holdback Amount;
(iv) the power to negotiate with the Buyer with regard to any
indemnification sought by the Buyer pursuant to the terms of
Section 3.1(o) of this Agreement; and
(v) to the extent that collusive fraud is alleged against all
Selling Stockholders, the power to deal with the Buyer with
regard to any indemnification sought by the Buyer pursuant to
Section 11.8 of this Agreement.
In the event the Buyer seeks indemnification against a Selling Stockholder
for fraud committed solely by such Selling Stockholder pursuant to Section
11.8, or in the event the Buyer seeks indemnification solely against a Selling
Stockholder for breach of the representations and warranties of such Selling
Stockholder under Section 3.2 of this Agreement, the Stockholder's
Representative shall have no authority or power to act on behalf of such
Selling Stockholder, and
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the defense to any claim for indemnification by the Buyer with regard to such
matter shall be the exclusive privilege of the Selling Stockholder from whom
indemnification is sought.
Except as limited by the immediately preceding paragraph, Buyer, the other
Buyer Indemnified Parties, and any other person, may conclusively and
absolutely rely, without inquiry, upon any action of the Stockholders'
Representative as the action of each Selling Stockholder in all matters
referred to herein, and each such Selling Stockholder confirms all that the
Stockholders' Representative shall do or cause to be done by virtue of her
appointment as Stockholders' Representative. All actions by the Stockholders'
Representative are acknowledged by the parties hereto to be taken by it solely
as agent and attorney-in-fact for each Selling Stockholder. By the execution
of this Agreement, Xxxx X. Xxxxx has accepted her appointment as Stockholders'
Representative and in consideration for Xxxx X. Xxxxx' agreement to act as the
Stockholders' Representative, each Selling Stockholder hereby agrees to
indemnify and hold Xxxx X. Xxxxx harmless from and against all damages, losses,
liabilities, charges, penalties, costs and expenses (including court costs and
attorneys' fees and expenses, if any) incurred by her in connection with her
performance as Stockholders' Representative, unless such performance
constituted gross negligence or willful misconduct on the part of the
Stockholders' Representative. Each Selling Stockholder covenants and agrees
that he or she will not voluntarily revoke the power of attorney conferred in
this Section 12.18. If any Selling Stockholder dies or becomes incapacitated,
disabled or incompetent (such deceased, incapacitated, disabled or incompetent
Selling Stockholder being a "Former Selling Stockholder") and, as a result, the
power of attorney conferred by this Section 12.18 is revoked by operation of
law, it shall not be a breach under this Agreement if the heirs, beneficiaries,
estate, administrator, executor, guardian, conservator or other legal
representative of such Former Selling Stockholder (each a "Successor Selling
Stockholder") confirms the appointment of the Stockholders' Representative as
agent and attorney-in-fact for such Successor Selling Stockholder. If the
power of attorney conferred by this Section 12.18 is revoked by operation of
law and thereafter not reconfirmed by the Successor Selling Stockholder prior
to the Closing, such revocation shall not be deemed a breach of any of the
provisions of this Agreement provided that such Successor Selling Stockholder
executes and delivers such other certificates, documents or instruments
(including, without limitation, any amendments hereto, the Deposit Escrow
Agreement and the Indemnification Escrow Agreement) that would have been
delivered on its behalf by the Stockholders' Representative had such Successor
Selling Stockholder reconfirmed the agency and power of attorney conferred by
this Section 12.18. If at any time Xxxx X. Xxxxx dies or resigns from his
position as the Stockholders' Representative, the other Selling Stockholders
shall designate a successor to Xxxx X. Xxxxx as soon as practicable.
12.19. Consulting Agreement. Concurrently with the execution hereof Xxxx
X. Xxxxx and Buyer are entering into the Consulting Agreement substantially in
the form of Exhibit G hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company, the Selling Stockholders and Buyer have
caused this Agreement to be signed, all as of the date first written above.
XXXXX BROADCASTING COMPANY:
By: /S/ Xxxx Xxxxx
---------------------------------------------------
Name: Xxxx Xxxxx
-------------------------------------------------
Title: President
------------------------------------------------
SELLING STOCKHOLDERS:
/S/ Xxxx X. Xxxxx
------------------------------------------------------
Xxxx X. Xxxxx
XXXXXXX X. XXXXXXXX TRUST, 9/29/92
/S/ Xxxxxxx X. Xxxxxxxx, Trustee
------------------------------------------------------
By: Xxxxxxx X. Xxxxxxxx, Trustee
XXXXXXX X. XXXXXXXX CHARITABLE
REMAINDER TRUST, 1997
/S/ Xxxxxxx X. Xxxxxxxx, Trustee
------------------------------------------------------
By: Xxxxxxx X. Xxxxxxxx, Trustee
BUYER:
CAPSTAR ACQUISITION COMPANY, INC.
By: /S/ Xxxx X. Xxxxx
---------------------------------------------------
Name: /S/ Xxxx X. Xxxxx
-------------------------------------------------
Its: Vice President
--------------------------------------------------
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ANNEX A
LIST OF SELLING STOCKHOLDERS AND OWNERSHIP
Xxxx X. Xxxxx 64.71%
00 Xxxxx Xxxxx XX 1,000 Shares
Xxxxx Xxxxxx, Xxxx 00000 Common Stock
Xxxxxxx X. Xxxxxxxx Trust 22.06%
0000 0xx Xxxxxx XX #000 3,750 Shares
Xxxxx Xxxxxx, Xxxx 00000 Common Stock
Xxxxxxx X. Xxxxxxxx Charitable Remainder Trust 13.24%
0000 0xx Xxxxxx XX #000 2,250 Shares
Xxxxx Xxxxxx, Xxxx 00000 Common Stock
00
XXXXX X
XXX XXXXXXXX
XXXX-XX Xxxxx Xxxxxx, Xxxx
KDAT-FM Cedar Rapids, Iowa
KTOF-AM Cedar Rapids, Iowa
56
