EXHIBIT 10.21
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated March 31, 1997 by and between
American Radio Systems Corp., a Delaware Corporation ("Buyer"), and Amaturo
Group of California, Ltd., a Florida limited partnership ("Seller") .
P R E M I S E S :
A. Seller is the licensee of and operates radio stations KFRG (FM), San
Bernardino, California, and KXFG (FM), Sun City, California (the "Stations"),
pursuant to licenses issued by the Federal Communications Commission (the
"FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
of Seller's assets used or useful in the operation of the Stations and the
broadcast business made possible thereby for the price and on the terms and
conditions hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Stations for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Stations.
1.2 "Assets" means the tangible and intangible assets used or useful in
connection with the conduct of the business or operations of the Stations, which
assets are being sold, transferred or otherwise conveyed to Buyer hereunder, as
specified in detail in Section 2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule
3.7, (ii) any Contracts entered into by Seller in the ordinary course of
business between the date hereof and the Closing Date which would have been
listed on Schedule 3.7 had they been in existence on the date hereof and which
Buyer agrees in writing to assume, (iii) all Contracts, except employment or
employee-related contracts, in existence on the Closing Date which meet the
criteria set forth in Section 3.7 (i)-(iii) for exclusion from Schedule 3.7 and
(iv) all Contracts with advertisers for the sale of time or talent on the
Stations for cash entered into in the ordinary course of business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8 hereof.
1.5 "Closing Date" means the date of the Closing specified in Section
8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Stations and (i) which are in effect on the date hereof or
(ii) which are entered into by Seller in the ordinary course of business between
the date hereof and the Closing Date.
1.8 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.9 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Stations.
1.10 "Final Order" means a written action, order or public notice
issued by the FCC, setting forth the FCC Consent and (a) which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC Consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
2
1.11 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any other federal, state or local
governmental authorities, to Seller in connection with the conduct of the
business or operations of the Stations.
1.12 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
Seller and used or useful as of the date hereof in the conduct of the business
or operations of the Stations, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
1.13 "Purchase Price" means the purchase price specified in Section 2.3
hereof.
1.14 "Real Property" means all of the leasehold interests, easements,
licenses, rights to access, rights-of-way and other real property interest which
are used or held by Seller, or owned by Seller and useful, as of the date
hereof, in the business operations of the Stations, plus such additions thereto
and deletions therefrom arising in the ordinary course of business between the
date hereof and the Closing Date.
1.15 "Deposit" means the sum of Six Million Dollars ($6,000,000.00)
deposited by Buyer in escrow upon the execution of this Agreement.
SECTION 2
PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase on the Closing Date, all of
the Assets, free and clear of any claims, liabilities, mortgages, liens,
pledges, conditions, charges or encumbrances of any nature whatsoever (except
for those permitted in accordance with Sections 2.5, 3.5 or 3.6 below), more
specifically described as follows:
3
(a) The Personal Property;
(b) The Real Property,
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks and all other
information and similar intangible assets relating to the Stations, including
those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate to the
Stations, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints and schematics, including filings with the FCC which relate
to the Stations;
(g) All choses in action and rights under warranties of Seller relating
to the Stations or the Assets;
(h) All books and records relating to the business or operations of the
Stations, including executed copies of the Assumed Contracts, and all records
required by the FCC to be kept, subject to the right of Seller to have such
books and records made available to Seller for a reasonable period, not to
exceed three (3) years; and
(i) All intangible assets of Seller relating to the Stations not
specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets, in
addition to those listed on Schedule 2.2:
(a) The Seller's Accounts Receivable;
(b) Seller's cash on hand as of the Closing Date and all other cash in
any of Seller's bank or savings accounts; any and all insurance policies,
letters of credit or other similar items and any cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar investments;
(c) Any Contracts other than the Assumed Contracts;
4
(d) Any books and records which Seller is required by law to retain,
subject to the right of Buyer to have access and to copy for a period of three
(3) years from the Closing Date, and Seller's corporate records and other books
and records related to internal corporate matters and financial relationships
with Seller's lender;
(e) Any claims, rights and interest in and to any refunds of federal,
state or local franchise, income or other taxes or fees of any nature whatsoever
for periods prior to the Closing Date; and
(f) Any pension, profit-sharing or employee benefit plans, and any
employment or collective bargaining agreement, except to the extent specifically
assumed in Section 2.4 or 2.5 of this Agreement.
2.3 Purchase Price. The Purchase Price shall be Sixty Million Dollars
($60,000,000.00) payable by Buyer to Seller as follows:
A. Six Million Dollars ($6,000,000.00) to be deposited into escrow
pursuant to the Escrow Agreement in Schedule 2.3 upon the execution of this
Agreement to secure Buyers performance hereunder
B. The Purchase Price shall be adjusted to reflect any adjustments or
prorations made at Closing as
provided in Section 2.4 hereof.
C. The Purchase Price, including the adjustment set forth in subsection
2.3B and any credit for funds drawn against the Deposit by Seller pursuant to
the Escrow Agreement, shall be payable to Seller by wire transfer of immediately
available federal funds to such accounts as are designated by Seller in written
instructions to Buyer.
2.4 Adjustments and Prorations. All revenues arising from the Stations
up until midnight on the day prior to the Closing Date, and all expenses arising
from the Stations up until midnight on the day prior to the Closing Date,
including business and license fees (including any retroactive adjustments
thereof), utility charges, real and personal property taxes and assessments
levied against the Assets, accrued employee benefits such as vacation time,
property and equipment rentals, applicable copyright or other fees, sales and
service charges, taxes (except for taxes arising from the transfer of the Assets
hereunder), and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall receive all
revenues, and all refunds to Seller and deposits of Seller held by third
parties, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the business or operations of the
5
Stations for the period prior to the Closing Date, and Buyer shall receive all
revenues and shall be responsible for all expenses, costs and obligations
allocable to the conduct of the business or operations of the Stations on the
Closing Date and for the period thereafter. Buyer shall receive credit to the
extent of the value (as calculated in Seller's financial statements consistent
with past practice) of any and all advertising time to be run following the
Closing for which trade or barter consideration has been received by the Seller
prior to the closing ("Negative Trade Balance"), but only if and to the extent
the Negative Trade Balance exceeds Forty Thousand Dollars ($40,000.00)
Notwithstanding the foregoing, there shall be no adjustment for, and Seller
shall remain solely liable with respect to, any Contracts not included in the
Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5 hereof.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B hereof.
B. Within sixty (60) days after the Closing Date, Buyer shall deliver
to Seller a certificate (the "Closing Certificate"), signed by a senior officer
of Buyer after due inquiry by such officer but without any personal liability to
such officer, providing a compilation of the adjustments and prorations to be
made pursuant to this Section 2.4, including any adjustments and prorations made
at Closing, together with a copy of any working papers relating to such Closing
Certificate and such other supporting evidence as Seller may reasonably request.
If Seller determines that the Closing Certificate accurately reflects the
adjustments and prorations to be made pursuant to this Section 2.4, Buyer shall
pay such agreed upon amount to Seller or Seller shall pay such agreed upon
amount to Buyer, as appropriate. If Seller shall conclude that the Closing
Certificate does not accurately reflect the adjustments and prorations to be
made pursuant to this Section 2.4, Seller shall, within thirty (30) days after
its receipt of the Closing Certificate, provide to Buyer its written statement
of any discrepancies believed to exist. Xxxxxx X. Xxxx, Chief Financial Officer,
on behalf of Buyer, and Xxxxxxx Xxxxxx, Comptroller, on behalf of Seller, or
their respective designees, shall attempt jointly to resolve the discrepancies
within fifteen (15) days after receipt of Seller's discrepancy statement, which
resolution, if achieved, shall be binding upon all parties to this Agreement and
not subject to dispute or review. If such representatives cannot resolve the
discrepancy to their mutual satisfaction within such fifteen ( 15) day period,
Buyer and Seller shall, within the following ten (10) days, jointly designate a
nationally known independent public accounting firm to be retained to review the
Closing Certificate together with Seller's discrepancy statement and any other
relevant documents. The cost of retaining such independent public accounting
firm shall be borne equally by Buyer and Seller. Such firm shall report its
conclusions as to adjustments pursuant to this Section 2.4, which report shall
be conclusive on all parties to this Agreement and
6
not subject to dispute or review. If, after adjustment as appropriate with
respect to the amount of the aforesaid adjustments paid or credited at the
Closing, Buyer is determined to owe an amount to Seller, Buyer shall pay such
amount to Seller, and if Seller is determined to owe an amount to Buyer, Seller
shall pay such amount thereof to Buyer, in each case within ten (l0) days of
such determination.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period on and after the Closing Date, and arising out of
events occurring on or after the Closing Date, (ii) all obligations and
liabilities arising out of events occurring on or after the Closing Date related
to Buyer's ownership of the Assets or its conduct of the business or operations
of the Stations on or after the Closing Date, and (iii) all obligations and
liabilities for which Buyer receives a proration adjustment hereunder. All other
obligations and liabilities of Seller, including (i) any obligations under any
Contract not included in the Assumed Contracts, (ii) any obligations under the
Assumed Contracts relating to the time period prior to the Closing Date, (iii)
any claims or pending litigation or proceedings relating to the operation of the
Stations prior to the Closing Date and (iv) those related to employees as set
forth in Section 6.9 herein shall remain and be the obligations and liabilities
solely of Seller.
2.6. Tax Allocation. The Purchase Price shall be allocated among the
Assets being purchased in accordance with an independent appraisal by B I A to
be undertaken by Buyer, in compliance with Section 1060 of the Internal Revenue
Code ("IRC") and the regulations promulgated thereunder and reasonably
acceptable to Seller. Such allocation shall be set forth on IRC Form 8594 (in a
manner mutually agreed to by the parties) and filed with the Internal Revenue
Service following the Closing as required by law; provided, however, that Seller
shall be under no obligation to accept such allocation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization. Standing and Authority. Seller is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Florida. Seller has all requisite partnership power and authority
(i) to own, lease and use the Assets as presently owned, leased and used and
(ii) to conduct the business or operations of the Stations as presently
conducted. Seller has all requisite partnership power and
7
authority to execute and deliver this Agreement and the documents contemplated
hereby and to perform and comply with all of the terms, covenants and conditions
to be performed and complied with by Seller hereunder and thereunder. Seller is
not a participant in any joint venture or partnership with any other person or
entity with respect to any part of the Stations's operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary partnership action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery and performance of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any third party; (ii)
will not conflict with any provision of the partnership agreement of Seller;
(iii) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, ordinance, decree, rule, regulation or ruling
of any court or governmental instrumentality, which is applicable to Seller;
(iv) will not conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under or accelerate or permit the acceleration
of any performance required by the terms of any material agreement, instrument,
license or permit to which Seller is a party or by which it may be bound; or (v)
will not create any claim, liability, mortgage, lien, pledge, condition, charge
or encumbrance of any nature whatsoever upon the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). As described
in Schedule 3.4, the Licenses were validly issued with Seller being the
authorized legal holder thereof. The Licenses comprise all of the licenses,
permits and other authorizations required from any governmental or regulatory
authority for the lawful conduct of the business or operations of the Stations.
Seller has no reason to believe that the Licenses will not be renewed by the FCC
or other granting authority in the ordinary course.
3.5 Condition of Real Property. Schedule 3.5 contains descriptions of
all the Real Property (including the location of all improvements thereon),
which comprises all real property interest necessary to conduct the business or
operations of the Stations as now conducted. Seller shall deliver to Buyer true
8
and complete copies of all deeds, leases or other material instruments
pertaining to the Real Property (including any and all amendments and other
modifications of such instruments), all of which instruments are valid, binding
and enforceable in accordance with their terms. Seller is not in material
breach, nor to Seller's knowledge is any other party in material breach, of the
terms of any of such leases or other instruments. All Real Property (including
the improvements thereof) (i) is in good condition and repair consistent with
its present use reasonable wear and tear excepted, (ii) is available for
immediate use in the conduct of the business or operations of the Stations, and
(iii), to Seller's best knowledge, materially complies as described in Schedule
3.5 hereof with all applicable building, electrical and zoning codes and all
regulations of any governmental authority having jurisdiction. Seller has full
legal and practical access to the Real Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 hereof
contains descriptions of all material items of the Personal Property, which
comprises all personal property necessary to conduct the business or operations
of the Stations as now conducted. Except as described in Schedule 3.6, Seller
owns and has good title to al1 Personal Property. None of the Personal Property
owned by Seller is subject to any security interest, mortgage, pledge,
conditional sales agreement or other lien or encumbrance, except for (i) liens
for current taxes not yet due and payable and (ii) any other claims or
encumbrances which are described in Schedule 3.6 and annotated to indicate that
such claims or encumbrances shall be removed prior to or at Closing. Except as
shown in Schedule 3.6, the Personal Property taken as a whole is in good
operating condition and repair (ordinary wear and tear excepted), and is
available for immediate use in the business or operations of the Stations, and
the transmitting and studio equipment included in the Personal Property (i) has
been maintained in a manner consistent with generally accepted standards of good
engineering practice and (ii) will permit the Stations and any unit auxiliaries
thereto to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC, and with all other applicable federal, state
and local statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts
except for: (i) contracts with advertisers for the sale of time or talent on the
Stations for cash and substantially at rate card rates and which are not prepaid
and which may be cancelled by the Stations without penalty on not more than
thirty (30) days notice, (ii) employment contracts and miscellaneous service
contracts terminable at will without penalty and (iii) other contracts not
involving either aggregate liabilities under all such contacts exceeding Five
Thousand Dollars ($5,000.00) or any material non-monetary obligation. Seller has
delivered to Buyer true and complete copies of all written Contracts and true
and complete memoranda of all oral Contracts (including any and all amendments
and other modifications to such Contracts). Other than the Contracts, Seller
requires no contract or agreement to enable it to carry on its business as
presently conducted. All of the Assumed Contracts are in
9
full force and effect and are valid, binding and enforceable in accordance with
their terms, except as the enforceability thereof may be affected by bankruptcy,
insolvency or similar laws affecting creditors' rights generally, or by
court-applied equitable remedies. Seller is not in material breach, nor to
Seller's knowledge is any other party in material breach7 of the terms of any
such Contracts. Except as expressly set forth in Schedule 3.7, Seller is not
aware of any intention by any party to any Assumed Contract (i) to terminate
such contract or amend the terms thereof, (ii) to refuse to renew the same upon
expiration of its term or (iii) to renew the same upon expiration only on terms
and conditions which are more onerous than those pertaining to such existing
contract. Except for the Consents, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in accordance with this
Agreement, and such assignment will not affect the validity, enforceability and
continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
hereof, the Premerger Notification Requirements Under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976. and the other Consents indicated in Schedule
3.7 or described in Schedule 3.8, no consent, approval, permit or authorization
of, or declaration to or filing with any governmental or regulatory authority or
any other third party is required (i) to consummate this Agreement and the
transaction contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer or (iii) to enable Buyer to conduct the business or operations
of the Stations in essentially the same manner as such business or operations
are presently conducted.
3.9 Trademarks. Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, tradenames, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used or useful in the conduct of the business or operations of
the Stations, all of which are valid and in good standing and uncontested.
Seller has delivered to Buyer copies of all documents establishing such rights,
licenses or other authority. Seller is not aware that it is infringing upon or
otherwise acting adversely to any trademarks, trade names, copyrights, patents,
patent applications, know-how, methods or processes owned by any other person or
persons, and there is no claim or action pending, or to the knowledge of Seller
threatened, with respect thereto.
3.10 Financial Statements. True and complete copies of audited
financial statements of Seller containing balance sheets and statements of
income for Seller's fiscal years ended December 31, 1994,1995 and 1996
(collectively, the "Financial Statements") shall be supplied promptly to Buyer
upon the execution of this Agreement. The Financial Statements are prepared in
accordance with generally accepted accounting principles, consistently applied,
are true and correct in all material respects and present fairly the operating
10
income and financial condition of the Stations as of their respective dates and
the results of operations for the periods then ended.
3.11 Insurance. All of the tangible property included in the Assets is
insured against loss or damage in amounts generally customary in the broadcast
industry. Schedule 3.11 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.11 are in full force and effect. During the three
(3) year period ending on the date hereof, no insurance policy of Seller on the
Assets or the Stations has been canceled by the insurer and no application of
Seller for insurance has been rejected by any insurer.
3.12 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Stations, all returns,
reports and statements which the Stations is currently required to file with the
FCC or with any other governmental agency have been filed, all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with and all such reports, returns and statements are
substantially complete and correct as filed. The Stations's public inspection
file is located in the Stations's city of license, with a duplicate copy at the
main studio, and is in compliance with the FCC's rules and regulations.
3.13 Employee Benefit Plans. Schedule 3.13 contains a true and complete
list as of the date of this Agreement of all employee benefit plans or
arrangements applicable to the employees of Seller employed at the Stations and
all fixed or contingent liabilities or obligations of Seller with respect to any
person now or formerly employed by Seller at the Stations, including pension or
thrift plans, individual or supplemental pension or accrued compensation
arrangements, contributions to hospitalization or other health or life insurance
programs, incentive plans, bonus arrangements and vacation and termination
arrangements or policies, including workers' compensation policies. Seller has
furnished or made available to Buyer true and complete copies of all employee
handbooks, employee rules and regulations, all applicable plan documents, trust
documents, insurance contracts, contracts with employees and summary plan
descriptions of the written plans and arrangements listed in Schedule 3.13, and
with descriptions, in writing, of the unwritten plans listed in Schedule 3.13.
All employee benefits and welfare plans or arrangements listed in Schedule 3.13
were established and have been executed, managed and administered without
material exception in accordance with all applicable requirements of the
Internal Revenue Code of 1986, as amended, of the Employee Retirement Income
Security Act of 1974, as amended, and of other applicable laws. Seller is not
aware of the existence of any governmental audit or examination of any of such
plans or arrangements or of any facts which would lead it to believe that any
such audit or examination is pending or threatened. There exists no action, suit
11
or claim (other than routine claims for benefits) with respect to any of such
plans or arrangements pending or, to the knowledge of Seller, threatened against
any of such plans or arrangements, and Seller possesses no knowledge of any
facts which could give rise to any such action, suit or claim.
3.14 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Stations except as
described in Schedule 3.7 hereto. Seller has no written or oral contracts of
employment with any employee of the Stations, other than those listed in
Schedule 3.14. Seller has provided Buyer with true and complete copies of all
such written contracts of employment and true and complete memoranda of any such
oral contracts. Seller, in the operation of the Stations has complied in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination and the payment of social
security and other payroll related taxes, and it has not received any notice
alleging that it has failed to comply in any material respect with any such
laws, rules or regulations. No controversies, disputes or proceedings are
pending or to the best of Seller's knowledge, threatened7 between it and
employees (collectively) of the Stations. No labor union or other collective
bargaining unit represents any of the employees of the Stations. To the best
knowledge of Seller7 there is no union campaign being conducted to solicit cards
from employees to authorize a union to request a National Labor Relations Board
certification election with respect to any of Seller's employees at the
Stations.
3.15 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on said returns or on any tax assessment received by it to the extent that
such taxes have become due, or has set aside on its books reserves (segregated
to the extent required by sound accounting practice) deemed by it to be adequate
with respect thereto. No events have occurred which could impose on Buyer any
transferee liability for any taxes, penalties or interest due or to become due
from Seller.
3.16 Claims: Legal Actions. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller, threatened, against or relating to Seller, the Assets or
the business or operations of the Stations, nor does Seller know of any basis
for the same. In particular, except as set forth in Schedule 3.16, but without
limiting the generality of the foregoing, there are no applications, complaints
or proceedings pending or, to the best of its knowledge, threatened (i) before
the FCC relating to the business or operations of the Stations other than
12
applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Stations under any federal or state employment laws or
regulations or (iii) against Seller or the Stations before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.17 Compliance with Laws. To the best knowledge of Seller, Seller has
complied in all material respects with (i) the Licenses and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Stations conflicts with rights of any other
person, firm or corporation. To the best of its knowledge, there has been no
production, storage, treatment, recycling, disposal, use, generation, discharge,
release or other handling or disposition of any kind by Seller of any toxic or
hazardous wastes, substances, products, pollutants or materials of any kind,
including, without limitation, petroleum and petroleum products and asbestos, or
any other wastes, substances, products, pollutants or material regulated under
any environmental laws at, in, on, from or under the Real Property or any
structure or improvement on the Real Property which in any event is in material
violation of environmental law. The operations of Seller are and have been
conducted in material compliance with all applicable environmental laws. Seller
knows of no notices, claims or pending or threatened actions or suits of an
environmental nature involving the Real Property or Seller's operation of the
Stations.
3.18 Conduct of Business in Ordinary Course. Since January 1, 1996,
Seller has conducted the business and operations of the Stations only in the
ordinary course and has not:
(a) Suffered any damage, destruction or loss affecting the Assets or;
(b) Made any sale, assignment, lease or other transfer of any of
Seller's properties other than in the normal and usual course of business with
suitable replacements being obtained therefor.
3.19 Full Disclosure. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to be
furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
known to Seller and required to make the statements herein or therein not
misleading.
13
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization. Standing and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is and shall be, at Closing, qualified to conduct business in the
State of California. Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and the documents contemplated hereby and to
perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as the enforceability hereof may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery and performance of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses or permit to which Buyer is a
party or by which Buyer may be bound.
4.4 Full Disclosure. No representation or warranty made by Buyer herein
nor any certificate, document or other instrument furnished or to be furnished
by Buyer pursuant hereto contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact known to Buyer
and required to make the statements herein or therein not misleading.
14
SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, Seller shall operate the Stations
in the ordinary course of business in accordance with its past practices (except
where such would conflict with the following covenants or with Seller's other
obligations hereunder), and abide by the following negative and affirmative
covenants:
A. Negative Covenants. Seller shall not do any of the following:
(1) Compensation. Increase the compensation, bonuses or other benefits
payable or to be payable to any person employed in connection with the conduct
of the business or operations of the Stations, except in accordance with past
practices;
(2) Contracts. Enter into any trade or barter contracts, modify or
amend any of the Assumed Contracts or enter into any new Contracts, each except
in the ordinary course of business; provided that all new Contracts (other than
Contracts for the sale of broadcast time) shall not involve either aggregate
liabilities exceeding Twenty Thousand Dollars ($20,000.00) or any material
non-monetary obligation;
(3) Disposition of Assets. Sell, assign, lease or otherwise transfer or
dispose of any of the Assets, except for assets consumed or disposed of in the
ordinary course of business, where no longer used or useful in the business or
operations of the Stations or in connection with the acquisition of replacement
property of equivalent kind and value;
(4) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge or encumbrance of any
nature whatsoever upon the Assets, except for (i) those in existence on the date
of this Agreement, disclosed in Schedules 3.5 and 3.6, or permitted by Sections
2.5, 3.5 or 3.6 and (ii) mechanics' liens and other similar liens which will be
removed prior to the Closing Date;
(5) Programing. Make any material changes in the broadcast hours or in
the percentages of types of programming broadcast by the Stations, or make any
other material changes in the Stations's programming policies, except such
changes as in the good faith judgment of the Seller are required by the public
interest;
(6) Licenses. Do any act or fail to do any act which might result in
the expiration, revocation, suspension or modification of any of the Licenses,
or fail to prosecute with due diligence any applications to any governmental
authority in connection with the operation of the Stations;
15
(7) Rights. Waive any material right relating to the Stations; or
(8) No Inconsistent Action. Take any action which is inconsistent with
its obligations hereunder or which could hinder or delay the consummation of the
transaction contemplated by this Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. At Buyer's expense, during normal business
hours and with the prior approval of Seller's home office, allow Buyer and its
authorized representatives reasonable access to the Assets and to all other
properties, equipment, books, records, contracts and documents relating to the
Stations for the purpose of audit and inspection and furnish or cause to be
furnished to Buyer or its authorized representatives all information with
respect to the affairs and business of the Stations as Buyer may reasonably
request, it being understood that the rights of Buyer hereunder shall not be
exercised in such a manner as to in any way interfere with the operations of the
business of Seller; provided that neither the furnishing of such information to
Buyer or its representatives nor any investigation made heretofore or hereafter
by Buyer shall affect Buyer's rights to rely on any representation or warranty
made by Seller in this Agreement, each of which shall survive any furnishing of
information or any investigation;
(2) Maintenance of Assets. Maintain all of the Assets or replacements
thereof and improvements thereon in current condition (ordinary wear and tear
excepted), and use, operate and maintain all of the above assets in a reasonable
manner, with inventories or spare parts and expendable supplies being maintained
at levels consistent with past practices;
(3) Insurance. Maintain the existing insurance policies on the Stations
and the Assets;
(4) Consents. Use its reasonable efforts to obtain the Consents;
(5) Books and Records. Maintain its books and records in accordance
with past practices;
(6) Notification. Promptly notify Buyer in writing of any unusual or
material developments with respect to the business or operations of the
Stations, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 hereof or in the
schedules hereto, provided that such notification shall not relieve Seller of
any obligations hereunder;
16
(8) Personnel. Promptly notify Buyer as personnel vacancies occur at
the Stations and consider for employment all personnel recommended by Buyer for
such vacant positions; provided that the choice of Seller to fill a position at
the Stations with an individual other than one recommended by Buyer shall not
relieve Buyer of any of its obligations hereunder;
(9) Contracts. Prior to the Closing Date, deliver to Buyer a list of
all Contracts entered into between the date hereof and the Closing Date of the
type required to be listed in Schedule 3.,, together with the copies of such
Contracts; and
(10) Compliance with Laws. Comply in all material respects with all
rules and regulations of the FCC, and all other laws, rules and regulations to
which Seller, the Stations and the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC.
A. As soon as possible, but in no event later than (__) business days
after the execution of this Agreement, Buyer and Seller shall file with the FCC
an appropriate application for FCC Consent. The parties shall prosecute said
application with all reasonable diligence and otherwise use their best efforts
to obtain the grant of such application as expeditiously as practicable. If the
FCC Consent imposes any condition on any party hereto, such party shall use its
best efforts to comply with such condition unless compliance would be unduly
burdensome or would have a material adverse effect upon it. If reconsideration
or judicial review is sought with respect to the FCC Consent, Buyer and Seller
shall oppose such efforts to obtain reconsideration or judicial review (but
nothing herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Section 9 of this Agreement).
17
B. Within days of the execution of this agreement, if required by law,
Buyer and Seller shall file the requisite forms with the Federal Trade
Commission pursuant to the Premerger Notification Requirements Under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
C. The transfer of the Assets hereunder is expressly conditioned upon
(i) the grant of the FCC Consent without any materially adverse conditions on
Buyer, (ii) compliance by the parties hereto with the condition (if any) imposed
in the FCC Consent, (iii) the FCC Consent, through the passage of time or
otherwise, becoming a Final Order; provided, though, that the condition that the
FCC Consent shall have become a Final Order may be waived by Buyer, in its sole
discretion, and (iv) Notice of Termination of the waiting period provided by
Section 7A (b) (1) of the Xxxxxxx Act and Section 803.10 (B) of the Premerger
Notification Requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976
6.2 Control of the Stations. Buyer shall not, directly or indirectly,
control, supervise, direct or attempt to control, supervise or direct, the
operations of the Stations; such operations, including complete control and
supervision of all of the Stations's programs, employees and policies, shall be
the sole responsibility of Seller until the completion of the Closing hereunder.
6.3 Taxes, Fees and Expenses. Seller and Buyer shall each pay 50% of
all sales, transfer and similar taxes and fees, if any, arising out of the
transfer of the Assets pursuant to this Agreement. All filing fees required by
the FCC and the Federal Trade Commission shall be paid equally by Seller and
Buyer. Except as otherwise provided in this Agreement, each party shall pay its
own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither
it nor any person or entity acting on its behalf has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement.
6. 5 Noncompetition Agreement. Buyer and Seller and Seller's principal
shall enter into at Closing a Noncompetition Agreement in the form set forth in
Schedule 6.5 attached hereto.
6.6 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the
18
transaction contemplated hereby and which is not readily available to members of
the general public, and will not use such information for any purpose other than
in furtherance of the transactions contemplated hereby. In the event this
Agreement is terminated and the purchase and sale contemplated hereby abandoned,
each party will return to the other party all documents, work papers and other
written material obtained by it in connection with the transactions contemplated
hereby.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations hereunder. Notwithstanding
the foregoing, except as otherwise set forth herein, Buyer shall have no
obligation (i) to expend funds to obtain the Consents or (ii) to agree to any
adverse change in any License or Assumed Contract to obtain a Consent required
with respect thereto.
6.8 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or condemnation
of any of the Assets from any cause whatsoever shall be borne by Seller at all
times prior to the completion of the Closing and by Buyer at all times following
the completion of the Closing.
B. If any damage or destruction of the Assets or any other event occurs
which prevents signal transmission by the Stations in the normal and usual
manner and Seller cannot restore or replace the Assets so that the conditions
are cured and normal and usual transmission is resumed before the Closing Date,
the Closing Date shall be postponed, for a period of up to sixty (60) days, to
permit the repair or replacement of the damage or loss.
C. In the event of any damage or destruction of the Assets described
above, if such Assets have not been restored or replaced and the Stations's
normal and usual transmission resumed within the sixty (60) day period specified
above, Buyer may terminate this Agreement forthwith without any further
obligation hereunder by written notice to Seller. Alternatively, Buyer may, at
its option, proceed to close this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event Seller
shall deliver to Buyer all insurance proceeds received in connection with such
19
damage or destruction of the Assets to the extent not already expended by Seller
arising in connection with such restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder by written notice
to Seller if any event occurs which prevents signal transmission by the Stations
in the normal and usual manner for a consecutive period of five (5) or a
cumulative period of fourteen (14) days between the date hereof and the Closing
Date.
6.9 Employee Matters:.
A. Within thirty (30) business days after execution of this Agreement,
Seller shall provide to Buyer an accurate list of all current employees of the
Station together with a description of the terms and conditions of their
respective employment (including salary, bonus and other benefit arrangements)
and their duties as of the date of this Agreement, as well as the annual
salaries thereof. Seller shall promptly notify Buyer of any changes that occur
prior to Closing with respect to such information.
B. Nothing contained in this Agreement shall confer upon any employee
of Seller any right with respect to continued employment by Buyer, nor shall
anything herein interfere with any right the Buyer may have after the Closing
Date to (i) terminate the employment of any of the employees at any time, with
or without cause, or (ii) establish or modify any of the terms and conditions of
the employment of the employees in the exercise of its independent business
judgment.
C. Notwithstanding Paragraph 6.9B above, any of Seller's employees
whom Buyer chooses not to hire as of the Closing Date or whose employment is
continued at the Station by Buyer after Closing Date, but who are subsequently
terminated, with or without cause, within six (6) months of the Closing Date,
shall be paid three (3) months' severance by Buyer.
D. Except as otherwise set forth herein, Buyer will not incur any
liability on account of Seller's employees in connection with this transaction,
including, without limitation, any liability on account of employment insurance
contributions, termination payments, retirement, pension, profit-sharing, bonus,
severance pay, disability, health, accrued vacation or other employee benefit
plans, practices, agreements or understandings.
20
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions of Obligations of Buyer. All obligations of Buyer at
the Closing thereunder are subject to the fulfillment prior to and at the
Closing Date of each of the following conditions:
A. Representations and Warranties. The representations and warranties
of Seller in this Agreement shall be true and complete in all material respects
at and as of the Closing Date, except for changes contemplated by this
Agreement, as though such representations and warranties were made at and as of
such time.
B. Covenants and Conditions. Seller shall have in all material respects
performed and complied with the covenants, agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
C. Consents. Each of the Consents marked as "material" on Schedule 3.,
shall have been duly obtained and delivered to Buyer with no material adverse
change to the terms of the License or Assumed Contract with respect to which
such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and there
shall not have been any modification of any of such Licenses which has an
adverse effect on the Stations or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and able to make
all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the Closing
Date, there shall have been no Material Adverse Change (as such term is defined
below) in the Assets or t-h-e Station, including, without limitation, any
damage, destruction or loss (subject to the provisions of Section 6.8) affecting
the Assets. For purposes of this Agreement, "Material Adverse Change" shall be
deemed to have occurred only if the gross sales of the Station from the date
hereof until the Closing Date shall be more than twenty percent (20%) less than
the Station during the same period during the prior year. Notwithstanding the
previous sentence, if,
21
during the period between the date hereof and the Closing Date, the total gross
radio sales in the San Bernardino market, as determined by Miller, Kaplan, Arase
and Co., shall be less than the total radio sales in the San Bernardino market
during the same period during the prior year, Material Adverse Change shall only
be deemed to have occurred if the gross sales of the Station, from the date
hereof until the Closing Date, shall have declined by more than (i) twenty
percent (20%) from the same period during the prior year plus (ii) the
percentage by which the gross radio sales have fallen in the San Bernardino
market from the date hereof until the Closing Date versus the prior year. Any
format attack on the Station or decline in ratings of the Station shall not be
considered a Material Adverse Change.
7.2 Conditions to Obligations of Seller. The obligations of Seller at
the Closing thereunder are subject to the fulfillment prior to and at the
Closing Date of each of the following conditions:
A. Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects at and as of the Closing Date, except for changes contemplated by this
Agreement, as though such representations and warranties were made at and as of
such time.
B. Covenants and Conditions. Buyer shall have in all material respect
performed and complied with the covenants, agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
C. Deliveries. Buyer shall have made or stand willing and able to make
all the deliveries set forth in Section 8.3 hereof.
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. The closing shall take place at 10:00 am on a date, to be
set by Buyer, upon five (5) days written notice to Seller, no later than ten
(10) days following the date upon which the FCC Consent has become a Final Order
(the "Closing Date"); provided, however, that Buyer may waive the requirement
for a Final Order and schedule the Closing Date, with five (5) days written
notice to Seller, at any time after the receipt of FCC Consent. Closing shall be
held at the offices of Buyer at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
22
Massachusetts or such other place as shall be mutually agreed to by Buyer and
Seller. In no event shall the closing take place prior to January , 1998.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
A. Transfer Documents. Duly executed bills of sale, assignments and
other transfer documents which shall be sufficient to vest good and marketable
title to the Assets in the name of Buyer or its permitted assignees, free and
clear of any claims, liabilities, mortgages, liens, pledges, conditions, charges
or encumbrances of any nature whatsoever (except for those permitted in
accordance with Sections 2.5, 3.5 or 3.6 hereof);
B. Consents. The original of each Consent marked as "material" on
Schedule 3.,;
C. General Partner's Certificate. A certificate, dated as of the
Closing Date, executed by the General Partner of Seller, certifying that (i) the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects as of the Closing Date, except for changes
contemplated by this Agreement, as though made on and as of that date, and (ii)
Seller has, in all material respects, performed its obligations and complied
with its covenants set forth in this Agreement to be performed and complied with
prior to or on the Closing Date;
D. Limited Partner's Consent. A certificate executed by all of the
Limited Partners of Seller authorizing and approving the execution of this
Agreement and the consummation of the transaction contemplated hereby by the
General Partner.
E. Certificate of Good Standing. A certificate of good standing for
Amaturo Group of California, Ltd. from the State of Florida, as of a date not
more than fifteen (15) days before the Closing Date and by Seller's General
Partner as of the Closing Date and a copy of Seller's Limited Partnership
Agreement as in effect on the date hereof certified by Seller's General Partner.
F. Tax. Lien and Judgment Searches. A search for Uniform Commercial
Code ("UCC"), lien and judgment filings in the Secretary of State's records of
the State of Florida, and in the records of those towns or cities where the
Assets are located, such searches having been made no earlier than fifteen (15)
days prior to the Closing Date;
23
G. Licenses. Contracts. Business Records. Etc. Copies of all licenses,
Assumed Contracts, blueprints, schematics, working drawings, plans, projections,
statistics, engineering records and all files and records used by Seller in
connection with its operations of the Stations;
H. Noncompetition Agreement. The Noncompetition Agreement as set forth
in Schedule 6.5; and
I. Opinions of Counsel. Opinions of Seller's general and communications
counsel, Xxxx Xxxxx Xxxxxxx, P.A., dated as of the Closing Date, and addressed
to Buyer and at Buyer's directions, to Buyer's lenders, substantially in the
form of Schedule 8.2(i) hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
A. Purchase Price. The Purchase Price as provided in Section 2.3
hereof.
B. Assumption Agreements. Appropriate assumption agreements, pursuant
to which Buyer shall assume and undertake to perform Seller's obligations under
the Licenses and Assumed Contracts arising on or after the Closing Date;
C. Officer's Certificate. A certificate, dated as of the Closing Date,
executed by the President or Vice President of Buyer, certifying (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date, except for changes
contemplated by this Agreement, as though made on and as of that date, and (ii)
that Buyer has, in all material respects, performed its obligations and complied
with its covenants set forth in this Agreement to be performed or complied with
on or prior to the Closing Date;
D. Secretary's Certificate. A certificate, dated as of the Closing
Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) certifying a copy of the corporate charter, articles
of incorporation and Bylaws of Buyer as in effect on the date hereof and as of
the Closing Date;
24
E. Opinion of Counsel. An opinion of Buyer's General Counsel dated as
of the Closing Date and addressed to Seller, substantially in the form of
Schedule 8.3(e) hereto.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights. This Agreement may be terminated by either
Buyer or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
A. If on the Closing Date (i) any of the conditions precedent to the
obligations of the terminating party set forth in Section , of this Agreement
shall not have been materially satisfied and (ii) satisfaction of such condition
shall not have been waived by the terminating party;
B. If the application for FCC Consent shall be set for hearing by the
FCC for any reason;
C. If the Closing shall not have occurred on or before the first
anniversary of this Agreement.
Upon termination: (i) if neither party hereto is in breach of any
material provision of this Agreement, the parties hereto shall not have any
further liability to each other; (ii) if Seller shall be in breach of any
material provision of this Agreement, Buyer shall have only the rights and
remedies provided in Section 9.3 hereof; or (iii) if Buyer shall be in breach of
any material provision of this Agreement, Seller shall be entitled only to
liquidated damages as provided in Section 9.2 hereof. If, upon termination,
Buyer shall not be in breach of any material provision of this Agreement, the
Deposit plus all interest or other proceeds from the investment thereof, less
any compensation due the Escrow Agent, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the Deposit and all
interest earned thereon shall be retained by Seller as liquidated damages, it
being agreed that the Deposit shall constitute full payment for any and all
damages suffered by Seller by reason of Buyer's breach of this Agreement. Buyer
and Seller agree in advance that actual damages would be difficult to
25
ascertain and that the amount of the Deposit is a fair and equitable amount to
reimburse Seller for damages sustained due to Buyer's failure to consummate this
Agreement. In the event of a material breach by Buyer under this Agreement, all
interest on or other proceeds from the investment of the Deposit shall be
retained by Seller.
9.3 Specific Performance. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Therefore, in the event Seller shall refuse
to perform under this Agreement, Buyer shall be entitled to obtain specific
performance of the terms of this Agreement. In the event of any action to
enforce this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law.
9.4 Legal Fees and Expense. In the event of a default by a party hereto
(the "Defaulting Party") which results in the filing of a lawsuit for damages,
specific performance or other remedy, the other party (the "Non-defaulting
Party") shall be entitled to reimbursement by the Defaulting Party of reasonable
legal fees and expenses incurred by the Nondefaulting Party in the event the
Non-defaulting Party prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing Date for a period of fifteen (15)
months (the "Survival Period"). No claim for indemnification may be made under
this Section 10 (except for Section 10.3(a) or related claims under Section
10.3(c)) after the expiration of the Survival Period. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at Closing
and such knowledge is documented in writing at Closing, such party shall be
deemed to have waived such misrepresentation or breach.
10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer
harrnless against and with respect to, and shall reimburse Buyer for:
26
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or non-fulfillment of any covenants by
Seller contained herein or in any certificate delivered to Buyer hereunder;
(b) Any and all obligations of Seller not assumed by Buyer pursuant to
the terms hereof;
(c) Any and all losses, liabilities or damages resulting from Seller's
operation or ownership of the Stations prior to the Closing Date, including any
and all liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments and reasonable costs and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller
harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or non-fulfillment of any covenants by
Buyer contained herein or in any certificate delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from Buyer's
operation or ownership of the Stations on or after the Closing Date, including
any and all liabilities or obligations arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Closing Date or otherwise
assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments and reasonable costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant") shall
promptly give notice to the party from whom indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties
27
or brought by a third party, specifying (i) the factual basis for such claim and
(ii) the amount of the claim. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, such notice shall be given
by Claimant within five (5) days after written notice of such action, suit or
proceeding was given to Claimant.
B. Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty (3Q) days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the Indemnifying
Party and/or its authorized representative(s) the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of said thirty (30) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
claim, or if the Indemnifying Party does not respond to such notice, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. Buyer shall not be entitled to apply any of the Accounts Receivable
collected on behalf of Seller to a claim as to which Buyer may be entitled to
indemnification hereunder. If the Claimant and the Indemnifying Party do not
agree within said period (or any mutually agreed upon extension thereof), the
Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnifying Party shall have the
right, at its own expense, to participate in or assume control of the defense of
such claim, and the Claimant shall cooperate fully with the Indemnifying Party,
subject to reimbursement for reasonable actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnifying Party. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense of such
claim at its own expense.
D. If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make all reasonable efforts to reach
a decision with respect thereto as expeditiously as possible.
E. f the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third party claim, it shall be bound
by the results obtained in good faith by the Claimant with respect to such
claim.
F. The indemnification rights provided in Sections 10.2 and 10.3 hereof
shall extend to the shareholders, directors, officers, partners employees and
representatives of the Claimant although for the
28
purpose of the procedures set forth in this Section 10.4, any indemnification
claims by such parties shall be made by and through the Claimant.
10.5 Deductible. The obligation of each party to pay any amounts on
account of the indemnification provisions of this Agreement (except for (i)
nonperformance by either Buyer or Seller, as the case may be, under any Assumed
Contract, or (ii) any liability associated with any matter set forth in Schedule
3.16 hereto) shall arise only after, and only to the extent that, the aggregate
amount to be paid by the Indemnifying Party on account of all claims for
indemnification hereunder exceeds Two Hundred-Thousand Dollars ($200,000.00).
10.6 Exclusive Remedy. No party hereto shall have any liability for any
of the matters set forth in Section 10.2 or 10.3, except pursuant to and in
accordance with the terms and conditions of this Section 10.
SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by registered or certified mail, return
receipt requested deemed to have been given on the date of personal delivery or
the date set forth in the records of the delivery service or on the return
receipt, and (iv) addressed as follows:
If to Seller:
Amaturo Group of California, Ltd.
0000 Xxxxx Xxxxxxx Xxx.
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
29
with a copy (which shall not constitute notice) to:
Xxxx Xxxxx Xxxxxxx, Esq.
0000 Xxxxx Xxxxxxx Xxx.
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
If to Buyer:
American Radio Systems Corp
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx, CEO
with a copy (which shall not constitute notice) to:
American Radio Systems Corp.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Vice President and Counsel
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
30
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to a
subsidiary or affiliated entity, following which assignment Buyer shall remain
responsible for all obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of Florida.
11.4 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.5 Gender and Number. Words used herein, regardless of the gender
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 Waiver of Compliance: Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
31
11.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greater extent permitted by law.
11.9 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
32
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
AMATURO GROUP OF CALIFORNIA, LTD.
By: Xxxxxx X. Xxxxxxx
General Partner
AMERICAN RADIO SYSTEMS CORP.
By: Xxxxxx X. Xxxxx
Chief Executive Officer
33
ADDENDUM TO ASSET PURCHASE AGREEMENT
This Addendum to ASSET PURCHASE AGREEMENT is dated April__, 1997 by and
between American Radio Systems Corp., a Delaware Corporation ("Buyer") and
Amaturo Group of California, Ltd. a Florida limited partnership ("Seller").
P R E M I S I S
A. Seller is the licensee of and operates station KXEZ, Riverside,
California. Station KXEZ shares some common facilities with Station KFRG.
B. Following the closing of the assignment of license of KFRG and
KXFG from Seller to Buyer, Seller and Buyer agree that the two stations will
continue to share said facilities under the terms and conditions hereafter set
forth.
AGREEMENTS
In consideration of the above premises and the covenants and
agreements contained herein, Buyer and Seller agree as follows:
SECTION 1
TRANSMITTER SITE
1. KXEZ and KFRG utilize a common generator at the transmitter site.
The generator shall be included in the Personal Property conveyed to Buyer.
Station KXEZ shall continue to utilize the generator or any replacement
generator so long as it is in service at the site. Seller or any successor
licensee of KXEZ shall pay its prorata share of the cost of fuel and maintenance
as may be billed from time to time by Seller.
2. The transmitter buildings of stations KXEZ and KFRG are cross
connected to the electrical service at the site. In the event that one station
loses its electrical service it can tap into the electrical service of the other
until power is restored.
3. Station KXEZ and KFRG utilize a single tower for their
transmitting and communications antennas. The easement for the tower site shall
be assigned to Buyer at Closing, however Seller or any successor licensee of
KXEZ shall pay 1/2 of the annual easement fee ($50.00) and 1/2 of the tower
maintenance costs as may be billed from time to time by Seller, for its
continued use of the tower.
At Closing Seller and Buyer shall enter into a mutual easement
agreement for the use of the generator, electrical service cross connection and
the tower.
SECTION 2
STUDIO SlTE
Following the closing, Buyer and seller shall enter into an agreement
whereby Station KXEZ so long as it is licensed to Seller or Seller's affiliate
Amaturo Group of L. A., Ltd. may locate its Main Studios as defined by the FCC,
at the KFRG studios in Colton, Ca. without charge to Seller. It is specifically
understood that only KXEZ's General Manager will be assigned to that office and
that the programming for KXEZ will originate from another location, and any
utilization of the broadcast studios at the Colton location will only be in an
emergency. Seller shall provide its own phone lines, but Buyer's personnel will
answer incoming calls, if necessary.
IN WITNESS WHEREOF, this Addendum to Agreement has been executed by
Buyer and Seller as of the date first written.
AMATURO GROUP OF CALIFORNIA, LTD.
By:___________________________________
Xxxxxx X Xxxxxxx, General Partner
AMERICAN RADIO SYSTEMS CORP.
By:___________________________________
