1
EXHIBIT 2.1
EQUITY INTEREST PURCHASE AGREEMENT
This Equity Interest Purchase Agreement (this "Agreement") is entered
into as of this 2nd day of June, 2000 by and among Xxxxxx Xxxxx, an individual,
Xxxxx Xxxx, an individual, Xxxxxx Xxxx, Jr., an individual, Xxxxxx Xxxx 1956
Living Trust, f/b/o Xxxxxx Xxxx, Jr., a North Carolina trust (the "Xxxxxx Xxxx
Trust"), Centennial Broadcasting Nevada, Inc., a North Carolina corporation
("Centennial Nevada"), Centennial Broadcasting, LLC, a North Carolina limited
liability company ("Centennial Broadcasting"), Centennial Broadcasting License,
LLC, a North Carolina limited liability company (the "Centennial License")
(Centennial Nevada, Centennial Broadcasting and Centennial License,
collectively, the "Centennial Entities"), and Xxxxxxx XX Acquisition Corp., a
Delaware corporation ("Buyer").
BACKGROUND:
The Xxxxxx Xxxx Trust and Xxxxxx Xxxx, Jr., collectively, own all the
capital stock of Centennial Nevada. Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxx Xxxx, the
Xxxxxx Xxxx Trust and Centennial Nevada own all the membership interests in
Centennial Broadcasting. Centennial Broadcasting owns all the membership
interests in Centennial License, which holds certain authorizations issued by
the Federal Communications Commission (the "Commission" or "FCC") relating to
the operation of radio broadcast stations KSTJ(FM), 105.5 MHz, Boulder City,
Nevada; KKLZ(FM), 96.3 MHz, Las Vegas, Nevada; KJUL(FM), 000.0 XXx, Xxxxx Xxx
Xxxxx, Xxxxxx; WBYU(AM), 1450 kHz, New Orleans, Louisiana; KMEZ(FM), 102.9 MHz,
Belle Xxxxxx, Louisiana; and WRNO-FM, 99.5 MHz, New Orleans, Louisiana (together
the "Stations"). Centennial Broadcasting owns certain assets used or held for
use in connection with the operation of the Stations.
In reliance upon the covenants, representations, warranties and
agreements set forth herein, and subject to the terms and conditions contained
herein, Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxx Xxxx, and The Xxxxxx Xxxx Trust
(together "Sellers") desire to sell to Buyer, and Buyer desires to purchase from
Sellers, all of the stock of Centennial Nevada (the "Shares") and all of the
membership interests in Centennial Broadcasting other than the membership
interest held by Centennial Nevada (such interests, the "Purchased Membership
Interests") (the Shares and the Purchased Membership Interests, the "Equity
Interests") (such purchase and sale, the "Transaction").
Accordingly, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties agree as
follows:
ARTICLE I.
PURCHASE AND SALE OF EQUITY INTERESTS
1.1 Purchase and Sale of Equity Interests; Preliminary Transactions.
1.1.1 Upon the terms and subject to the conditions contained
herein, on the Closing Date, Sellers will sell, convey and transfer their
respective Equity Interests to Buyer, and Buyer will purchase and acquire from
Sellers, the Equity Interests, free and clear of all debts,
2
charges, mortgages, deeds of trust, pledges, judgments, trusts, adverse claims,
liabilities, collateral assignments, leases, easements, covenants,
hypothecations, encumbrances, security interests, other liens of any kind or any
other impairments of title ("Liens").
1.1.2 At least one day prior to the conveyance of Equity
Interests pursuant to Section 1.1.1, the Sellers shall take all actions
necessary to ensure that, as of the time of such conveyance, (i) the Assets (as
defined below) and the Assumed Liabilities are held by Centennial Broadcasting
or Centennial License and (ii) the Excluded Assets and the Retained Liabilities
are held by Sellers and/or their affiliates other than the Centennial Entities
(the "Preliminary Transfers"); provided that the obligations and liabilities of
the Centennial Entities under their senior and subordinated credit facilities
and the obligations and liabilities to those persons on Schedule 1.5.11 may be
satisfied and extinguished on the Closing Date. Sellers will consult with Buyer
as to the method of effecting the Preliminary Transfers and will comply with the
reasonable requests of Buyer concerning the form of the Preliminary Transfers.
1.2 Assets. The "Assets" shall mean all of the assets used, held for
use in or arising out of the operation of the Stations, other than the Excluded
Assets, including, without limitation, the following:
1.2.1 All licenses, permits, permissions and other
authorizations issued to any of the Centennial Entities for the operation of the
Stations by the Commission or any other governmental agencies, including, but
not limited to, those listed on Schedule 1.2.1 and the right to use the
Stations' call letters (the "Station Licenses"), and all applications for
modification, extension or renewal thereof, and any applications for any new
licenses, permits, permissions or authorizations pending on the Closing Date,
including, but not limited to, those listed on Schedule 1.2.1 (the "Station
Applications").
1.2.2 All the fixed and tangible personal property used or
held for use in the operation of each of the Stations including, but not limited
to, the transmitters, towers, ground system and studio equipment listed on
Schedule 1.2.2 together with any replacements, improvements, or additions
thereto made between the date hereof and the Closing Date (the "Station
Equipment").
1.2.3 All rights of the Centennial Entities under (a) all
agreements, contracts or leases described on Schedule 1.2.3 (including, without
limitation, rights to deposits under leases or held by utilities or others, and
cash held by the Centennial Entities as deposits under leases under which one or
more of the Centennial Entities is the lessor), and (b) such other contracts,
agreements or leases entered into between the date hereof and the Closing Date
(i) with the written consent of Buyer, or (ii) in accordance with Section 4.11
or Scheule 4.19 of this Agreement. (collectively, the "Contracts").
1.2.4 All right, title and interest in the real property used
or held for use or necessary in the operation of the Stations and owned, leased,
or licensed by the Centennial Entities or their affiliates, as described in
Schedule 1.2.4, or acquired for the benefit of the Stations by Centennial
Entities or their affiliates with the written consent of Buyer between the date
of this Agreement and Closing Date (the "Real Property").
2
3
1.2.5 All of the Centennial Entities' or their affiliates'
rights in the Stations' call signs, copyrights, patents, trademarks, trade
names, slogans, logos, service marks, computer software, magnetic media, data
processing files, systems and programs, business lists, trade secrets, sales and
operating plans, all goodwill of the Stations and other similar intangible
property rights used or held for use in the operation of the Stations, including
but not limited to the intangible property identified on Schedule 1.2.5 (the
"Intangible Property").
1.2.6 All records, including but not limited to all books of
account, customer lists, supplier lists, computer programs and software,
employee personnel files, local public inspection file materials, engineering
data, logs, programming records, consultants' reports, ratings reports, budgets,
marketing and demographic data, financial reports and projections, lists of
advertisers, promotional materials, and sales, operating and business plans,
relating to or used in the operation of the Stations or necessary or desirable
to show compliance with any law or regulation applicable to the Stations or the
operation of the Stations and not pertaining solely to Sellers' personal
financial affairs or their other financial interests (the "Station Records").
1.2.7 All cash, cash equivalents, prepaid expenses, accounts
receivable and other current assets.
1.3 Excluded Assets. The "Excluded Assets" shall mean:
1.3.1 The assets used or held for use in the operation of
radio broadcast station WOSN(FM), Indian River Shores, Florida, or if such
assets are disposed prior to the Closing, the proceeds therefrom;
1.3.2 Centennial Broadcasting's ownership interest in CenPro,
LLC, a North Carolina limited liability company;
1.3.3 The tangible assets, software licenses and
company-developed software (the "Company-Developed Software") located at 0000
Xxxxxxxxxxx Xxxxx, Xxxxxxx-Xxxxx Xxxxx Xxxxxxxx (with copies of the general
ledger and budgeting software included in the Company-Developed Software to be
made available to Buyer on an "as is" basis and with appropriate merchantability
and fitness for a particular purpose warranty disclaimers, all as more
particularly described in Section 10.19 below);
1.3.4 Any Employee Plan and the assets thereof.
1.3.5 Subject to the provisions of Section 7.4, any and all
insurance policies held by the Centennial Entities;
1.3.6 Any contracts, leases, commitments, or agreements not
included among the Contracts; and
1.3.7 The corporate names and corporate logos of the
Centennial Entities, including, without limitation, all rights in the name
"Centennial" and the logo shown on Schedule 1.3.7.
3
4
1.4 Assumed Liabilities. The "Assumed Liabilities" shall mean (i)
the liabilities that accrue under the Contracts on and after the Closing Date
and (ii) the liabilities and obligations that arise with respect to events
occurring after the effective time of the Closing relating to operation of the
Stations and ownership of the Assets; provided, however, that the "Assumed
Liabilities" shall not include any liabilities or obligations that arise outside
of the ordinary course of business during the time on the Closing Date that the
operations of the Stations are under the effective control of the Sellers.
1.5 Retained Liabilities. The "Retained Liabilities" shall mean any
liabilities, obligations, commitments or responsibilities of the Centennial
Entities other than the Assumed Liabilities including, without limitation:
1.5.1 Any obligations or liabilities under any contract,
agreement or lease not included in the Contracts;
1.5.2 Any obligations or liabilities under the Contracts
relating to the period prior to the Closing;
1.5.3 Any obligations or liabilities relating to or arising
out of any claims or pending litigation proceedings to the extent arising out of
events first occurring on or prior to the Closing Date;
1.5.4 Any liabilities or obligations that arise outside of the
ordinary course of business during the time on the Closing Date that the
operations of the Stations are under the effective control of the Sellers;
1.5.5 Any obligations or liabilities relating to the ownership
or operation of radio broadcast station WOSN(FM), Indian River Shores, Florida;
1.5.6 Any obligations or liabilities of the Centennial
Entities under any agreement or arrangement, written or oral, with salaried or
non-salaried employees of the Stations for periods prior to the Closing Date;
1.5.7 Any obligations or liabilities to any employee of the
Stations for accrued commissions, vacation time or sick leave for periods prior
to the Closing Date;
1.5.8 Any obligations or liabilities relating to the
employment and/or termination of the Terminated Employees;
1.5.9 Any obligations of any of the Centennial Entities under
capitalized leases entered into prior to the Closing Date;
1.5.10 All obligations and liabilities associated with any
Employee Plan and the Centennial Broadcasting LLC Capital Bonus Plan;
1.5.11 The liability to pay those amounts to those persons
identified on Schedule 1.5.11;
4
5
1.5.12 If any Contract requires the consent of third parties
for consummation of the Transaction, but (i) such consent has not been obtained
as of the Closing Date, as required by Section 5.2.7, and (ii) in the case of
Material Contracts, Buyer waives such condition precedent to the Closing in its
sole discretion, then Buyer shall assume the Centennial Entities' obligations
under such Contract only for the period after Closing during which Buyer
receives the benefits to which the Centennial Entities are currently entitled
under such Contract (unless consent is subsequently obtained and such delay has
not prejudiced Buyer, and unless the failure of Buyer to receive benefits under
such Contract is due to Buyer's failure to perform the Centennial Entities'
obligations thereunder after Closing);
1.5.13 Any liability of any of the Centennial Entities for
Taxes that accrue or are payable by the Centennial Entities (x) in respect of
any taxable periods that end on or before the Closing Date and (y) for any
taxable period that begins before the Closing Date and ends thereafter, to the
extent that such Taxes are attributable to the portion of such period ending on
the Closing Date under the terms of Section 9.1.7, in each case to the extent
such Taxes are not reflected in the calculation of the Final Net Working Capital
Amount after the adjustment (if any) under Section 1.8.1(c); and
1.5.14 Any liability under any future settlement agreement
between TeleMedia Company of Sourthern California, LLC and Centennial.
1.6 Purchase Price.
The aggregate purchase price for the Equity Interests shall be: (i) One
Hundred Thirty-Two Million Two Hundred Seventy-Five Thousand Dollars
($132,275,000) (the "Base Price"), plus (ii) the Net Working Capital Amount
(which may be positive or negative) determined in accordance with Section 1.8.1;
plus (iii) in accordance with Buyer's election as to the form of the payment for
the Purchase Price, either the Stock Price Adjustment Amount (which may be
positive or zero) or the Cash Payment Adjustment Amount, in either case as
determined in accordance with Section 1.8.2; plus (iv) the KSTJ Upgrade
Adjustment Amount (which may be positive or zero) determined in accordance with
Section 1.8.3 (collectively, the "Purchase Price"). Buyer shall have the option,
in its sole discretion, either to pay Fifteen Million Dollars ($15,000,000) of
the Purchase Price in the form of the Class A common stock of Xxxxxxx Broadcast
Group, Inc. (the "BBGI Class A Common Stock"), and the remainder of the Purchase
Price in cash, or to pay all of the Purchase Price in cash, all as described
herein. Buyer shall notify Sellers in writing of Buyer's election as to the form
of payment of the Purchase Price within seventy-five (75) days after the parties
have filed the Transfer Applications. If Buyer elects to pay a portion of the
Purchase Price in the form of BBGI Class A Common Stock, the number of shares of
BBGI Class A Common Stock to be issued as the above-described portion of the
Purchase Price shall be calculated based upon the average closing price (as
reported on the Nasdaq National Market) during the 30 days prior to the date
that is two days prior to the Closing Date. Sellers will provide Buyer within
five (5) days prior to the Closing Date the names of the Sellers who will
receive BBGI Class A Common Stock, and the number of shares to be issued to
each. The cash portion of the Purchase Price shall be paid to Seller
Representative.
1.7 Closing.
5
6
1.7.1 The consummation of the purchase and sale of the Equity
Interests (the "Closing") shall take place on a date mutually agreeable to Buyer
and Sellers within fifteen (15) business days after the later of (i) the date
that the Commission's action granting its consent to the Transfer Applications
has become a Final Order, or, upon mutual agreement of the Buyer and Sellers,
the date of the Commission's action granting its consent and (ii) the date on
which the applicable waiting period under the HSR Act has expired or been
earlier terminated without receipt of any second or subsequent request for
information from the Department of Justice or Federal Trade Commission, or the
time period for further action by such agencies following any such second or
subsequent request for information shall have passed, and there shall have been
neither any commencement of any litigation by any governmental authority of
competent jurisdiction to restrain the consummation of the Transaction, nor any
written notice from such governmental authority of a decision to commence such
litigation, which has not been withdrawn or otherwise resolved (the day on which
the Closing takes place being referred to herein as the "Closing Date");
provided, however, that the Closing shall occur no later than December 31, 2000
(the "Upset Date"). The Closing shall be effective as of 12:00 a.m. Washington,
D.C. time on the Closing Date. The Closing shall take place on the Closing Date
at (i) the offices of Buyer's counsel in Washington, D.C., commencing at 10:00
a.m. EST or (ii) such other mutually acceptable time or place. If, as of the
Closing Date, any condition precedent described in Article V has not been
satisfied, the party that is entitled to require that such condition be
satisfied may (in its sole discretion) notify the other party of the absence of
such condition precedent at or before the Closing and simultaneously therewith
postpone the Closing until a date ten (10) days after all such conditions have
been (or are able to be) performed, and such postponed date shall constitute the
new Closing Date for all purposes hereunder except that such postponed closing
date shall occur no later than the Upset Date. Each of the parties shall use all
commercially reasonable efforts to obtain any FCC authority necessary to
schedule the Closing Date as contemplated in this Section.
1.7.2 At the Closing, Sellers and the Centennial Entities
shall deliver or cause to be delivered to Buyer:
(a) One or more stock certificates evidencing the Shares,
duly endorsed in blank or accompanied by a stock power duly executed in blank;
(b) A duly authorized, executed and delivered Membership
Interest Assignment Agreement in the form of Exhibit A evidencing the assignment
and transfer by the Sellers of the Purchased Membership Interests to Buyer
pursuant to this Agreement;
(c) A certificate executed by the Sellers and the Centennial
Entities attesting to their compliance with the matters set forth in Sections
5.2.1, 5.2.2 and 5.2.3 together with (i) certified copies of the Articles of
Incorporation or Articles of Organization of the Centennial Entities and (ii)
appropriate evidence of the Centennial Entities' authorization to enter into and
consummate this Agreement;
(d) An opinion of the Centennial Entities' corporate and FCC
counsel, dated the Closing Date, reasonably satisfactory in form and substance
to counsel
6
7
for Buyer, subject to customary assumptions and qualifications and to be for the
benefit of and to be relied upon by Buyer and the lenders listed in Buyer's
senior credit facility then in effect (who shall be named in the opinion
letter);
(e) The affidavit described in Section 2.20;
(f) Non-solicitation Agreements executed in original by each
of Xxxxxx Xxxxx, Xxxxx Xxxx, and Xxxxxx Xxxx and in the form of Exhibit C (the
"Non-solicitation Agreements");
(g) A duly authorized, executed and delivered Employment
Agreement for Xxxxx Xxxx in the form of Exhibit D;
(h) A duly executed and delivered Indemnification Escrow
Agreement in the form of Exhibit E;
(i) The written resignations of the officers, directors,
advisory board members and all similar officeholders of the Centennial Entities
as set forth in Section 4.12, 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;
(j) Payoff letters together with copies of UCC-3 termination
statements executed by the Centennial Entities' senior and subordinated lenders,
such payoff letters including commitments to file the UCC-3 termination
statements following receipt of the payoff amounts as soon as practicable
following the Closing and such other documents and instruments as may be
reasonably necessary to evidence that the Assets at Closing are free and clear
of all Liens; and
(k) The Required Consents and any other consents required
under the Contracts in connection with the consummation of the Transaction as
Sellers and the Centennial Entities shall have obtained.
1.7.3 At the Closing, Buyer shall deliver or cause to be
delivered to Sellers:
(a) If Buyer elects to pay a portion of the Purchase Price
in BBGI Class A Common Stock, stock certificates evidencing the number shares of
the BBGI Class A Common Stock called for under Section 1.6, in denominations and
registered in such names as designated in the instructions to be delivered to
Buyer pursuant to Section 1.6, less the stock certificates to be delivered to
the escrow agent under the Indemnification Escrow Agreement pursuant to Section
6.1.6 hereof;
(b) The Base Price, plus the Estimated Net Working Capital
Amount (which amount may be positive or negative), minus Five Million Dollars
($5,000,000), if Buyer elects to pay the Purchase Price entirely in cash (which
amount shall be placed in Escrow pursuant to the Indemnification Escrow
Agreement), minus the
7
8
amount to be paid to certain third parties pursuant to the written instructions
described in Section 4.21, and either minus Fifteen Million Dollars
($15,000,000) if Buyer elects to pay a portion of the Purchase Price in BBGI
Class A Common Stock or plus the Cash Payment Adjustment Amount if Buyer does
not so elect, in all cases, by intra-bank transfer or wire transfer of
immediately available funds to an account or accounts designated in writing by
Seller Representative;
(c) A certificate executed by Buyer attesting to Buyer's
compliance with the matters set forth in Sections 5.3.1 and 5.3.2, together with
(i) certified copies of the Certificate of Incorporation of Buyer and (ii)
appropriate evidence of Buyer's authorization to enter into and consummate this
Agreement;
(d) If Buyer elects to pay a portion of the Purchase Price
in BBGI Class A Common Stock, duly authorized, executed and delivered
Registration Rights Agreement(s) in the form of Exhibit F;
(e) A duly authorized, executed and delivered Employment
Agreement for Xxxxx Xxxx in the form of Exhibit D;
(f) A duly executed and delivered Indemnification Escrow
Agreement in the form of Exhibit E; and
(g) An opinion of Buyer's corporate counsel, dated the
Closing Date, in form and substance reasonably satisfactory to Sellers' counsel,
subject to customary assumptions and qualifications and to be for the benefit of
and to be relied on by Sellers.
1.7.4 The parties will also execute such other documents and
perform such other acts, before and after the Closing Date, as may be reasonably
necessary for the complete implementation and consummation of this Agreement.
1.7.5 The parties acknowledge that the Net Working Capital
Amount will not be finally determinable until after Closing. Accordingly,
notwithstanding anything else in this Article 1 to the contrary, for purposes of
calculating the amount of the Purchase Price payable on the Closing Date, the
Base Price will be increased or decreased (as applicable) by the Estimated Net
Working Capital Amount (as defined in 1.8.1(a) below). After the Closing, the
parties will determine the Net Working Capital Adjustment Amount, and make such
payments as are provided in Section 1.8.1.
1.7.6 The parties also acknowledge that the Stock Price
Adjustment Amount will not be determinable until after Closing. Accordingly,
notwithstanding anything else in this Article 1 to the contrary, for purposes of
calculating the amount of the Purchase Price payable on the Closing Date, the
Base Price will be not be adjusted by the Stock Price Adjustment Amount. After
the Closing, the parties will determine the Stock Price Adjustment Amount, and
make such payments, if any, as are provided in Section 1.8.2.
1.8 Purchase Price Adjustments.
8
9
1.8.1 Net Working Capital Adjustment.
(a) Estimated Net Working Capital Amount. Not later than
five (5) business days prior to the Closing Date, Sellers and the Centennial
Entities shall deliver to Buyer their good faith estimate of the Net Working
Capital of the Centennial Entities as of 11:59 p.m. on the day prior to the
Closing Date, which may be positive or negative (the "Estimated Net Working
Capital Amount"), together with a reasonably detailed explanation of the
calculation thereof. The "Net Working Capital Amount" shall mean current assets
minus current liabilities. For purposes of this Agreement, in calculating Net
Working Capital Amount, (i) the estimated costs required to complete capital
expenditure projects classified on the accounting records of the Centennial
Entities as construction in progress, as defined by the United States generally
accepted accounting principles ("GAAP") as of the date of determination, shall
be included as a current liability; (ii) the current assets shall be reduced by
adequate reserves in accordance with GAAP (which, in the case of the accounts
receivable arising from the operation of the Stations (the "Accounts
Receivable"), shall include a reserve for doubtful accounts equal to Five
Percent (5%) of the aggregate amount of the Accounts Receivable that were
invoiced within ninety (90) days prior to the Closing Date and Thirty Percent
(30%) of the aggregate amount of the Accounts Receivable that were invoiced more
than ninety (90) days prior to the Closing Date); (iii) if the Trade Balance is
negative, the current liabilities shall not include the first Fifty Thousand
Dollars ($50,000) of such negative amount; and (iv) if the Trade Balance is
positive, the current assets shall not include any portion of such positive
amount. The "Trade Balance" equals the aggregate value of consideration to be
received by the Stations under contracts for the sale of time on the Stations in
exchange for merchandise or services ("Trade Agreements"), minus the aggregate
value of the unfulfilled obligations related to such Trade Agreements, all as of
11:59 p.m. on the day prior to the Closing Date. As set forth in Section 1.7.5,
the Estimated Net Working Capital Amount shall be used to calculate the amount
of the Purchase Price payable at Closing.
(b) Closing Balance Sheet. As soon as reasonably practicable
following the Closing Date, and in any event within ninety (90) days thereafter,
Buyer shall prepare and deliver to Sellers (i) a consolidated balance sheet of
the Centennial Entities as of the 11:59 p.m. on the day prior to Closing Date
(the "Closing Balance Sheet") and (ii) a calculation of the Net Working Capital
Amount from the items reflected on the Closing Balance Sheet (the "Final Net
Working Capital Amount"). The Closing Balance Sheet shall be prepared in
accordance with GAAP on a consistent basis and shall fairly present the
consolidated financial position of the Centennial Entities as of 11:59 p.m. on
the day prior to the Closing Date.
(c) Disputes. Upon delivery of the Closing Balance Sheet,
the Centennial Entities and Buyer will provide to Sellers and their accountants
full access to the books and records of the Centennial Entities, including the
work papers used and produced in preparation of the Closing Balance Sheet, to
the extent reasonably related to a review of the Closing Balance Sheet and the
calculation of the Final Net Working Capital Amount. If Sellers disagree with
the calculation of the Final Net Working Capital Amount
9
10
or any element of the Closing Balance Sheet relevant thereto, they shall notify
Buyer of such disagreement in writing within forty-five (45) days after their
receipt of the Closing Balance Sheet, which notice shall set forth in reasonable
detail the particulars of such disagreement. In the event that Sellers do not
provide such a notice of disagreement within such forty-five (45) day period,
Sellers shall be deemed to have accepted the Closing Balance Sheet and the
calculation of the Final Net Working Capital Amount delivered by Buyer, which
shall be final, binding and conclusive for all purposes hereunder. In the event
any such notice of disagreement is timely provided by Sellers, Buyer and Sellers
shall use their reasonable best efforts for a period of thirty (30) days (or
such longer period as they may mutually agree) to resolve any disagreements with
respect to the calculation of the Final Net Working Capital Amount. If, at the
end of such period, they are unable to resolve such disagreements, then the
accounting firm of Xxxxxx Xxxxxxxx (or such other independent accounting firm of
recognized national standing as may be mutually selected by Sellers and Buyer)
(the "Auditor") shall resolve any remaining disagreements. The Auditor shall
determine as promptly as practicable, but in any event within thirty (30) days
of the date on which such dispute is referred to the Auditor, based solely on
written submissions forwarded by Buyer and Sellers to the Auditor within ten
(10) days following the Auditor's selection, whether the Closing Balance Sheet
was prepared in accordance with the standards set forth in Section 1.8.1(b) and
(only with respect to the remaining disagreements submitted to the Auditor)
whether and to what extent (if any) the Final Net Working Capital Amount
determination requires adjustment. The parties shall share ratably the fees and
expenses of the Auditor as follows: (A) if the Auditor resolves all of the
remaining items in dispute in favor of Buyer (the amount so determined is
referred to herein as the "low value"), the Sellers will be responsible for all
of the fees and expenses of the Auditor; (B) if the Auditor resolves all of the
remaining items in dispute in favor of the Sellers (the amount so determined is
referred to herein as the "high value"), Buyer will be responsible for all of
the fees and expenses of the Auditor; and (C) if the Auditor resolves some of
the remaining items in dispute in favor of Buyer and the rest of the remaining
items in dispute in favor of the Sellers (the amount so determined is referred
to herein as the "actual value"), the Sellers will be responsible for that
fraction of the fees and expenses of the Auditor equal to (I) the difference
between the high value and the actual value divided by (II) the difference
between the high value and the low value, and Buyer will be responsible for the
remainder of the fees and expenses of the Auditor. The determination of the
Auditor shall be final, conclusive and binding on the parties. The date on which
the Final Net Working Capital Amount is finally determined in accordance with
this Section 1.8.1(c) is referred as to the "Determination Date."
(d) Payment. If the Final Net Working Capital Amount is
greater than the Estimated Net Working Capital Amount (such difference, the
"Increase Amount"), then within five (5) days after the Determination Date,
Buyer shall pay to Sellers an additional amount equal to the Increase Amount,
together with interest thereon calculated from the Closing Date to the date of
payment at a per annum equal to the generally prevailing prime interest rate
during that period (as reported by The Wall Street Journal) plus two percent
(2%) (the "Applicable Rate"). Payments due Sellers under this
10
11
Section shall be made as directed in writing by Sellers. If the Estimated Net
Working Capital Amount is greater than the Final Net Working Capital Adjustment
Amount (such difference, the "Deficit Amount"), then within five (5) days after
the Determination Date, Sellers shall pay to Buyer an amount equal to the
Deficit Amount, together with interest thereon calculated from the Closing Date
to the date of payment at the Applicable Rate.
1.8.2 Stock Price Adjustment or Cash Payment Adjustment. If
Buyer elects to pay the Purchase Price entirely in cash, the Base Price shall be
increased by Five Million Two Hundred Fifty Thousand Dollars ($5,250,000) (the
"Cash Payment Adjustment Amount"). If Buyer elects to pay a portion of the
Purchase Price in BBGI Class A Common Stock as set forth in Section 1.6, then
the Purchase Price shall be adjusted by the Stock Price Adjustment Amount as set
forth below:
(a) The Stock Price Adjustment Amount shall be calculated
with reference to the Calculated Value, as defined in 1.8.2(b). In the event the
Calculated Value is between $0 and $6,250,000, the Stock Price Adjustment Amount
shall be the aggregate amount of $6,250,000 less the Calculated Value. In the
event the Calculated Value equals or exceeds $6,250,000, the Stock Price
Adjustment Amount shall be zero dollars ($0). In the event that Calculated Value
is equal to or less than $0, the Stock Price Adjustment Amount shall be the
aggregate amount of $6,250,000.
(b) "Calculated Value" for this purpose shall be defined as
(i) the aggregate number of shares issued to Sellers at Closing in accordance
with Section 1.6, multiplied by the highest closing share price of BBGI Class A
Common Stock during the period beginning on the one-year anniversary of the
Closing Date and ending six months thereafter (the "Adjustment Period") less (b)
$15,000,000. For the purpose of this paragraph, "highest closing share price"
means the average closing price for the period of five consecutive trading days
during the Adjustment Period that would yield the highest average closing price.
(c) Buyer shall pay the Stock Price Adjustment Amount, if
any, to each of the Sellers (or their designees) in cash by the means set forth
in Section 1.7.3 (b) within 10 days following the end of the Adjustment Period
in proportion to the number of shares of BBGI Class A Common Stock issued to
each of the Sellers at Closing.
1.8.3 KSTJ Upgrade Adjustment. Centennial Broadcasting has
entered into that certain Agreement dated as of November 24, 1999, as amended,
between Centennial Broadcasting and Spectrum Scan, LLC ("Spectrum Scan") and
Xxxxxx Xxxxxxxxx (the "Spectrum Scan Agreement"), a copy of which has been
furnished to Buyer, pursuant to which Spectrum Scan has agreed to perform
certain consulting, engineering and related services related to the improvement
of the facilities of radio broadcast station KSTJ, licensed to Centennial
License, with payments to Spectrum Scan, which shall not in any event exceed Two
Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate conditioned
upon certain results to be achieved through Spectrum Scan's services, as
provided in the Spectrum Scan Agreement. In connection with the performance of
the Spectrum Scan Agreement, Centennial License has filed a Petition for Rule
Making with the Commission that proposes to substitute Channel 274C for Channel
288C2
11
12
at Boulder City, Nevada in the Commission's Table of Allotments for FM Broadcast
Stations. If the Commission grants this Petition, the Commission's grant will be
evidenced by a Commission order adopting the proposed change to the Table of
Allotments (the "KSTJ Upgrade Order"). Upon release of the Upgrade Order,
Centennial License would be permitted to apply for Commission authorization to
operate station KSTJ(FM), Boulder City, Nevada at its current main antenna tower
site, or at the Arden Tower Site, on Channel 274 with an effective ERP of 100
kW. This channel change and power upgrade is referred to herein as the "KSTJ
Signal Upgrade." Implementation of the KSTJ Signal Upgrade would require the
purchase of certain FM radio transmission equipment, including, but not limited
to, the items listed on Schedule 1.8.3 (the "Technical Facility Upgrades").
(a) The KSTJ Upgrade Adjustment Amount shall be equal to the
amount that Centennial Broadcasting has paid to Spectrum Scan as of the Closing
Date in accordance with the Spectrum Scan Agreement plus the Technical Facility
Expenses (as defined in Section 1.8.3(b)). Centennial Broadcasting agrees to
consult in good faith with Buyer before making any payments to Spectrum Scan in
accordance with the Spectrum Scan Agreement. Centennial Broadcasting shall
provide Buyer, within five (5) days prior to the Closing, with a listing of
payments to Spectrum Scan in accordance with the Spectrum Scan Agreement made,
or to be made, by Centennial Broadcasting prior to Closing and shall provide
Buyer, at or prior to Closing, with reasonable proof of such payments having
been made to Spectrum Scan.
(b) Five (5) days prior to the Closing Date, the Centennial
Entities shall provide to Buyer an itemized list of the costs of the Technical
Facility Upgrades made by the Centennial Entities. The itemized list shall
include reasonable proof of payment and a description, in reasonable detail, of
the reason for the expenditures. The out-of-pocket costs of the Technical
Facility Upgrades set forth on such itemized list, up to a maximum of One
Hundred Fifty Thousand Dollars ($150,000), shall be the "Technical Facility
Expenses".
1.9 Allocation. Twenty-Nine Million Nine Hundred Thousand Dollars
($29,900,000) of the Purchase Price shall be allocated to the Shares, and the
remainder of the Purchase Price shall be allocated to the Purchased Membership
Interests. Each of the Sellers, the Centennial Entities and Buyer agree that
none of them will take a position on any income, transfer or gains tax return
that is in any manner inconsistent with the terms of the allocation in the
preceding sentence without the written consent of all of them.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLERS
AND THE CENTENNIAL ENTITIES
Each of the Sellers and the Centennial Entities (jointly and severally,
except as specified below) make the following representations and warranties,
all of which have been relied upon by Buyer in entering into this Agreement, all
of which are true, correct and complete as of the date hereof, and all of which,
except as otherwise specifically provided, shall be true, correct and complete
in all material respects (without regard to any materiality limitation contained
in any
12
13
representation or warranty) as of the Closing Date with the same force and
effect as if then made, except to the extent expressly made as of an earlier
date.
2.1 Organization.
2.1.1 Centennial Entities. Centennial Nevada has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of North Carolina and has the corporate power and authority to
own and lease its properties and to conduct the operations of the Stations as
they are now being conducted and as they are proposed to be conducted prior to
Closing. Centennial Broadcasting and Centennial License each have been duly
formed and each are validly existing as a limited liability company in good
standing under the laws of the State of North Carolina and each has the limited
liability company power and authority to own and lease its respective properties
and to conduct the operations of the Stations as they are now being conducted
and as they are proposed to be conducted prior to Closing. The copies of the
respective articles of incorporation and bylaws or limited liability company
articles of organization of the Centennial Entities previously delivered by the
Centennial Entities to Buyer are true, correct and complete. Each of the
Centennial Entities is duly licensed or qualified and in good standing as a
foreign corporation or foreign limited liability company, as the case may be, in
each jurisdiction in which the ownership of its property or the character of its
activities is such as to require it to be so licensed or qualified. The address
of each Centennial Entity's chief executive offices, and the locations of all
tangible personal property included in the Assets are listed in Schedule 2.1.
Except as set forth in Schedule 2.1, during the past five (5) years, none of the
Centennial Entities have, nor to the best of any of the Sellers' knowledge, has
any prior owner of any of the Stations been known by or used any corporate,
partnership, fictitious or other name in the conduct of the Stations' business
or in connection with the use or operation of the Assets.
2.1.2 Xxxxxx Xxxx Trust. Each of Xxxxxx Xxxx, Jr. and the
Xxxxxx Xxxx Trust, severally and not jointly represents and warrants that the
Xxxxxx Xxxx Trust has been duly formed and is validly existing as a trust in
good standing under the laws of the State of North Carolina and has the trust
power and authority to own and hold its assets. The Xxxxxx Xxxx Trust is not
required to be licensed or qualified as a foreign trust in any other
jurisdiction.
2.2 Capital Stock of Centennial Nevada.
2.2.1 General. Xxxxxx Xxxx, Jr. is the sole record and
beneficial owner of one share of Class A common stock, par value $1.00 per
share, of Centennial Nevada, and the Xxxxxx Xxxx Trust is the sole record and
beneficial owner of 750 shares of Class B common stock, par value $1.00 per
share, of Centennial Nevada. The Shares constitute all the authorized, issued
and outstanding shares of capital stock of Centennial Nevada. The Shares have
been duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive rights. Except for the Shares,
there are outstanding (i) no shares of capital stock or other voting securities
of Centennial Nevada, (ii) no securities of Centennial Nevada convertible into
or exchangeable for shares of capital stock or other voting securities of
Centennial Nevada; (iii) no subscription rights, options, warrants, calls,
commitments, preemptive rights or other rights of any kind to acquire from
Centennial Nevada, and no obligation of
13
14
Centennial Nevada to issue or sell, any shares of capital stock or other voting
securities or any securities of Centennial Nevada convertible into or
exchangeable for such capital stock or voting securities, and (iv) no equity
equivalents, interests in the ownership or earnings of, or stock appreciation,
phantom stock or other similar rights of or with respect to Centennial Nevada.
Xxxxxx Xxxx, Jr. and the Xxxxxx Xxxx Trust are, and on the Closing Date will be,
the sole record and beneficial owners of the Shares.
2.2.2 No Liens. Each of Xxxxxx Xxxx, Jr. and the Xxxxxx Xxxx
Trust, severally and not jointly represents and warrants that the Shares owned
by him or it are free and clear of any Liens, and that upon consummation of the
transactions contemplated in this Agreement, Buyer will acquire good, valid and
marketable title to the Shares, free and clear of all Liens.
2.3 Membership Interests of Centennial Broadcasting. Xxxxxx Xxxxx is
a member of Centennial Broadcasting, and the capital and profits interest he
holds in Centennial Broadcasting is set forth on Schedule 2.3. Xxxxx Xxxx is a
member of Centennial Broadcasting, and the capital and profits interest he holds
in Centennial Broadcasting is set forth on Schedule 2.3. Xxxxxx Xxxx is a member
of Centennial Broadcasting, and the capital and profits interest he holds in
Centennial Broadcasting is set forth on Schedule 2.3. The Xxxxxx Xxxx Trust is a
member of Centennial Broadcasting, and the capital and profits interest it holds
in Centennial Broadcasting is set forth on Schedule 2.3. Centennial Nevada is a
member of Centennial Broadcasting, and the capital and profits interest it holds
in Centennial Broadcasting is set forth on Schedule 2.3. The sole asset of
Centennial Nevada is the membership interest in Centennial Broadcasting
described in Schedule 2.3. The Purchased Membership Interests together with the
membership interests owned by Centennial Nevada constitute all of the issued and
outstanding membership interests of Centennial Broadcasting. The Sellers,
together with Centennial Nevada, are the record and beneficial holders of one
hundred percent (100%) of the capital and profits interests in Centennial
Broadcasting. Other than the Sellers and Centennial Nevada and except as listed
on Schedule 2.3, no other person or entity owns or holds any membership interest
or other equity interest in or portion of a membership interest or portion of
equity interest in, Centennial Broadcasting, including an economic interest in
Centennial Broadcasting, an interest in the profits or losses of Centennial
Broadcasting, an interest in the right to affect the management of Centennial
Broadcasting an interest in the capital of Centennial Broadcasting or an
interest in the right to receive distributions from Centennial Broadcasting.
There are no contracts to which Centennial Broadcasting or any Seller is a party
relating to the issuance, sale, or transfer of any membership interests, or any
portions of any membership interests, in Centennial Broadcasting. There are no
(i) outstanding subscriptions, calls, commitments, warrants or options for the
purchase of membership interests in, or other equity securities of, Centennial
Broadcasting, or (ii) other commitments of any kind for the granting or issuance
of additional membership interests or other equity securities by Centennial
Broadcasting or the repurchase, redemption or other acquisition by Centennial
Broadcasting of any membership interests currently outstanding. Each of the
membership interests of Centennial Broadcasting that are issued and outstanding
are duly authorized, validly issued, fully paid and nonassessable and are free
of any preemptive or other similar rights. None of the existing membership
interests of Centennial Broadcasting were issued in violation of the Securities
Act or any other applicable law. Except for the Management Agreement among the
Sellers, which will be terminated at or prior to the Closing, there are no
14
15
equityholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or voting of the
membership interests to which Centennial Broadcasting or any other person or
entity is a party or by which Centennial Broadcasting or any other person or
entity is bound.
2.4 Membership Interests of Centennial License. Centennial
Broadcasting is the record and beneficial holder of one hundred percent (100%)
of the capital and profits interests in Centennial License. Other than
Centennial Broadcasting, and except for liens in favor of the Centennial
Entities' lenders which shall be removed at or prior to Closing, no other person
or entity owns or holds any membership interest or other equity interest in or
portion of a membership interest or portion of equity interest in, Centennial
License, including an economic interest in Centennial License, an interest in
the profits or losses of Centennial License, an interest in the right to affect
the management of Centennial License or an interest in the right to receive
distributions from Centennial License. There are no contracts to which
Centennial License, any Seller or Centennial Broadcasting is a party relating to
the issuance, sale, or transfer of any membership interests, or any portions of
any membership interests, in Centennial License. There are no (i) outstanding
subscriptions, calls, commitments, warrants or options for the purchase of
membership interests in, or other equity securities of, Centennial License; or
(ii) other commitments of any kind for the granting or issuance of additional
membership interests or other equity securities by Centennial License or for the
repurchase, redemption or other acquisition by Centennial License of any
membership interests currently outstanding. Each of the membership interests of
Centennial License that are issued and outstanding are duly authorized, validly
issued, fully paid and nonassessable and are free of any preemptive or other
similar rights. None of the existing membership interests of Centennial License
were issued in violation of the Securities Act or any other applicable law.
There are no equityholder agreements, voting trusts, proxies or other agreements
or understandings with respect to or concerning the purchase, sale or voting of
the membership interests to which Centennial License or any other person or
entity is a party or by which Centennial License or any other person or entity
is bound.
2.5 Subsidiaries.
2.5.1 Neither Centennial License nor Centennial Nevada have
any Subsidiaries. The only Subsidiary of Centennial Broadcasting is Centennial
License. "Subsidiary" means, with respect to any entity, a corporation or other
entity of which 50% or more of the voting power or economic value of the equity
securities or equity interests is owned, directly or indirectly, by such entity,
or the operations of which are otherwise consolidated with those of such entity
under GAAP.
2.5.2 Schedule 2.5.2 sets forth each partnership, joint
venture or other arrangement pursuant to which any of the Centennial Entities
holds any interest in any person or entity that is not a Subsidiary of such
Centennial Entity. Except for the membership interests in Centennial
Broadcasting that are held by Centennial Nevada, and except as disclosed on
Schedule 2.5.2, none of the Centennial Entities holds any record or beneficial
voting or economic interest in any other entity.
2.6 Due Authorization.
15
16
2.6.1 Each of the Centennial Entities has the requisite
corporate or limited liability company power and authority to execute and
deliver this Agreement and each of the other documents or instruments related
thereto or executed in connection therewith or in contemplation of the
Transaction (the "Ancillary Agreements") to which it is a party and to perform
all obligations to be performed by it hereunder and thereunder. The execution
and delivery of this Agreement and each such Ancillary Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized and approved by each of the Centennial Entities by all
requisite corporate or limited liability company action, and no other proceeding
on their parts is necessary to authorize this Agreement and each such Ancillary
Agreement and the consummation of the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and delivered by the
Centennial Entities, and constitutes a legally valid and binding obligation of
the Centennial Entities, enforceable against the Centennial Entities in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity. Each Ancillary Agreement to which a Centennial Entity is a
party, upon being duly and validly executed and delivered by such Centennial
Entity, shall constitute a legally valid and binding obligation of the
respective Centennial Entity, enforceable against the respective Centennial
Entity in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity.
2.6.2 Each of the Sellers makes the following representations,
severally and not jointly, as to himself or itself: (i) such Seller has the full
power and authority to execute and deliver this Agreement and each of the
Ancillary Agreements to which he or it is a party and to perform all obligations
to be performed by him or it hereunder and thereunder; (ii) the Xxxxxx Xxxx
Trust has validly authorized and approved the execution and delivery of this
Agreement and each such Ancillary Agreement and the consummation of the
transactions contemplated hereby and thereby, and no other proceeding on its
part is necessary to authorize this Agreement and each such Ancillary Agreement
and the consummation of the transactions contemplated hereby and thereby; (iii)
each such Seller other than the Xxxxxx Xxxx Trust has validly executed and
delivered this Agreement; (iv) this Agreement constitutes a legally valid and
binding obligation of, such Seller, enforceable against him or it in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles of
equity; and (v) each Ancillary Agreement to which such Seller is a party, upon
being duly and validly executed by the respective individual or trust, shall
constitute a legally valid and binding obligation of such individual or trust,
enforceable against the respective individual or trust in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity.
2.7 No Breach.
2.7.1 Centennial Entities. None of (i) the execution, delivery
and performance of this Agreement by the Centennial Entities; (ii) the
consummation by the
16
17
Centennial Entities of this Agreement and the Ancillary Agreements; or (iii) the
Centennial Entities' compliance with the terms and conditions hereof will, with
or without the giving of notice or the lapse of time or both, conflict with,
breach the terms and conditions of, constitute a default under, or violate (A)
any of the Centennial Entities' respective articles of incorporation or bylaws
or certificate of organization or limited liability company operating agreement;
(B) any judgment, decree, order, injunction, agreement, lease or other
instrument to which the Centennial Entities are a party or by which the
Centennial Entities are legally bound; or (C) any law, rule, or regulation
applicable to the Centennial Entities or the operation of the Stations.
2.7.2 Sellers. Each of the Sellers makes the following
representations, severally and not jointly, as to himself or itself: None of (i)
the execution, delivery and performance of this Agreement by such Seller; (ii)
the consummation by such Seller of this Agreement and the Ancillary Agreements
to which such Seller is party; or (iii) such Seller's compliance with the terms
and conditions hereof will, with or without the giving of notice or the lapse of
time or both, conflict with, breach the terms and conditions of, constitute a
default under or violate (A) any judgement, decree, order, injunction,
agreement, lease or other instrument to which such Seller is a party or by which
such Seller is legally bound; or (B) any law, rule or regulation applicable to
such Seller.
2.8 Station Licenses. Except as set forth on Schedule 2.8, the
Station Licenses are all of the licenses, permits, and other authorizations used
or necessary to lawfully operate the Stations in the manner and to the full
extent as they are now operated, and the Station Licenses are lawfully held by
Centennial License. Centennial License has delivered to Buyer true and complete
copies of the Station Licenses, including any and all amendments and other
modifications thereto. Except as set forth on Schedule 2.8, the Station Licenses
are in full force and effect; are unimpaired by any acts or omissions of
Sellers, the Centennial Entities or any of their affiliates, or the employees,
agents, officers, directors, or shareholders of the Centennial Entities or any
of their affiliates; are not subject to any restrictions that reasonably could
be expected to limit the operation of any of the Stations in the manner and to
the full extent as it is now operated (other than restrictions under the terms
of the licenses themselves or generally applicable under the rules and
regulations of the FCC); and have terms that extend for the balance of the
current license term applicable generally to radio stations licensed to
communities in the state where the each of the Stations is located. There are no
applications, proceedings, or complaints pending or, to the knowledge of the
Sellers or the Centennial Entities, threatened against the Stations, the Sellers
or the Centennial Entities which could reasonably be expected to have an adverse
effect on the business or operation of the Stations (other than rulemaking
proceedings that apply to the radio broadcasting industry generally). Neither
Sellers nor the Centennial Entities is aware of facts (i) that reasonably could
be expected to prevent any of the Station Licenses from being renewed to
Centennial License under its present ownership in the ordinary course for a full
term without material qualifications or (ii) that would provide any reasonable
grounds for the FCC to revoke any of the Station Licenses; or (iii) that would
cause the renewal of any Station License to constitute a major environmental
action under the rules of the Commission; or (iv) that, under the Communications
Act of 1934, as amended, or the existing rules of the Commission, would
disqualify Centennial License from assigning the Station Licenses or from
consummating the transactions contemplated herein within the times contemplated
herein. Each of the Stations is in material compliance with the Commission's
policy on exposure to radio
17
18
frequency radiation. Centennial License maintains a public inspection file at
each Station's main studio in accordance in all material respects with
Commission rules. Access to the Stations' transmission facilities is restricted
in accordance with the policies of the Commission.
2.9 Station Applications. All information contained in any Station
Application (whether described on Schedule 1.2.1 hereto or filed after the date
hereof in compliance with the terms of this Agreement) pending with the
Commission is true, complete and accurate in all material respects, giving
effect to any amendments to such application filed with the FCC. As of the date
of this Agreement, the Station Applications listed on Schedule 1.2.1 constitute
all of the applications for modification, extension or renewal of the Station
Licenses, and all of the applications pending before the FCC for any new
licenses, permits, permissions or authorizations intended for use in the
business and operations of the Stations.
2.10 Title to Assets. The Centennial Entities have good and
marketable title to the Assets, in the case of owned Assets, and a valid
leasehold interest, in the case of leased Assets, in each case free and clear of
all Liens, other than the Liens in favor of the Centennial Entities' senior and
subordinated lenders, which will be removed at or prior to Closing.
2.11 Condition of Equipment. The Station Equipment listed on Schedule
1.2.2 constitutes all of the material personal property that is used, held by
the Centennial Entities or others for use by the Stations, or necessary to
operate the Stations as they are now operated. The Station Equipment is in good
operating condition and repair (reasonable wear and tear excepted), is
maintained in all material respects in compliance with good engineering
practice, is performing satisfactorily, is not in need of repair, has been
maintained in all material respects in accordance with the manufacturers'
recommendations and industry practices, is available for immediate use at its
current location and is otherwise sufficient to permit the Stations to operate
in accordance with the Station Licenses and the rules and regulations of the
Commission. All Station Equipment is type-approved or type-accepted where such
type-approval or type-acceptance is required.
2.12 Condition of Real Property.
2.12.1 The Real Property listed on Schedule 1.2.4 constitutes
all the real property owned ("Owned Real Property") or leased ("Leased Real
Property") by the Centennial Entities or others in connection with the operation
of the Stations as they are now operated. The Centennial Entities have
marketable fee simple title (free and clear of any Liens other than the Liens in
favor of the Centennial Entities' senior and subordinated lenders, which will be
removed at or prior to Closing) to the Owned Real Property. Sellers and the
Centennial Entities have no title insurance policies regarding the Owned Real
Property.
2.12.2 There are no encroachments upon the Real Property by any
buildings, structures, or improvements located on adjoining real estate. None of
the buildings, structures, or improvements (including without limitation any
ground radials, guy wires or guy anchors) constructed on the Real Property
encroach upon adjoining real estate, and all such buildings, structures, and
improvements are constructed in conformity with or are "grandfathered" with
respect to all "setback" lines, easements, and other restrictions, or rights of
record, or that
18
19
have been established by any applicable building or safety code or zoning
ordinance. Such "grandfathered" approvals shall survive indefinitely the
transfer of the Real Property to Buyer. No utility lines serving the Real
Property pass over the lands of others except where appropriate easements have
been obtained. There are no pending or, to the best of Sellers' and the
Centennial Entities' knowledge, threatened or contemplated condemnation or
eminent domain proceedings that may affect the Real Property. There exists no
writ, injunction, decree, order or judgment, nor any litigation, pending, or to
the best of Sellers' and the Centennial Entities' knowledge, threatened,
relating to the ownership, use, lease, occupancy or operation of any of the Real
Property. The Centennial Entities' use and occupancy of the Real Property
complies in all material respects with all regulations, codes, ordinances, and
statutes of all applicable governmental authorities, including without
limitation all environmental protection and sanitary laws and regulations,
occupational safety and health regulations, and electrical codes. There are no
material structural defects in the buildings, structures, and improvements
located on the Real Property. Roofs are in good condition and repair, and all
plumbing equipment, heating, ventilating and air conditioning equipment,
electrical wiring, and water and sewage systems are operating properly and are
free of any material defects. Sellers' and the Centennial Entities'
representations in this Section 2.12.2, as they apply to Leased Real Property,
shall be to the best of Sellers' and the Centennial Entities' knowledge.
2.12.3 The leased premises are leased at the rates and for
terms ending on the dates shown on Schedule 1.2.4 pursuant to the agreements
described in Schedule 1.2.4 (the "Lease Agreements"), which are the sole and
complete agreements concerning the Centennial Entities' use of the leased
premises. Each Lease Agreement is legal, valid, binding, and enforceable against
the Centennial Entity party thereto, and to the best knowledge of Sellers and
the Centennial Entities, against the other party thereto, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity. Each of the Lease Agreements is
in full force and effect. Neither the Centennial Entities, nor to the best
knowledge of Sellers and the Centennial Entities any other party, is in default,
violation or breach in any respect under any Lease Agreement, and no event has
occurred and is continuing that constitutes or, with notice or the passage of
time or both, would constitute a default, violation or breach by the Centennial
Entities, or to the best knowledge of Sellers and the Centennial Entities by any
other party thereunder. No amount payable under any Lease Agreement is past due.
The Centennial Entities have not received any notice of a default, offset or
counterclaim under any Lease Agreement or any other communication asserting
non-compliance with any Lease Agreement. The Centennial Entities have the
exclusive right to use and occupy the premises leased under each Lease Agreement
as they are now currently being used and occupied and for the purposes necessary
to operate the Stations. The Centennial Entities enjoy peaceful and undisturbed
possession of the premises leased by the Centennial Entities under the Lease
Agreements. Except as set forth on Schedule 1.2.4, the Lease Agreements are free
and clear of all Liens, except for the Liens in favor of the Centennial
Entities' senior and subordinated lenders, which will be removed at or prior to
Closing, and except for lessors' interests in the leases. Sellers have delivered
to Buyer, true and complete copies of the Lease Agreements, together, in the
case of any subleases or similar occupancy agreements, with copies of all
overleases. Except as disclosed in Schedule 1.2.4, Sellers have full legal power
and authority to transfer control of
19
20
the Centennial Entities' rights under the Lease Agreements to Buyer in
accordance with this Agreement on terms and conditions no less favorable than
those in effect on the date hereof, and such assignment will not affect the
validity, enforceability and continuity of any such lease.
2.12.4 All utilities that are required for the full and
complete occupancy and use of the Real Property for the purposes for which such
properties are presently being used by the Centennial Entities, including
without limitation electric, water, sewer, telephone (if any) and similar
services, have been connected and are in good working order. By the Closing
Date, the Centennial Entities will have paid all charges for such utilities,
including without limitation any "tie-in" charges or connection fees, except for
those charges that will not become due until after the Closing Date and that are
to be subject to the Net Working Capital Adjustment.
2.13 Contracts. Except as set forth on Schedule 1.2.3, change of
control of the Centennial Entities pursuant to the Transaction will not affect
the terms and conditions of the Contracts or require consent of the other
contracting party to such Contracts, or if such consent is required, such
consent will be secured at the Centennial Entities' sole expense prior to the
Closing Date. Each Contract is in full force and effect and is unimpaired by any
acts or omissions of the Centennial Entities, their employees, agents, officers,
directors or shareholders. The Centennial Entities have complied in all material
respects will all Contracts control of which is to be transferred to Buyer
hereunder, and there has not occurred as to any Contract any default by any of
the Centennial Entities or any event that, with notice or the lapse of time or
otherwise, could become a default by any of the Centennial Entities. None of the
Centennial Entities have granted or been granted any waiver or forbearance with
respect to any of the Contracts. To the best knowledge of Sellers and the
Centennial Entities, there has not occurred as to any Contract any default by
any other party thereto or any event that, with notice or the lapse of time or
at the election of any person other than a Centennial Entity, could become a
default by such party. Those Contracts whose stated duration extends beyond the
Closing Date will, at Closing, be in full force and effect and will be
unimpaired by any acts or omissions of a Centennial Entity, their agents,
employees, officers, directors, members or shareholders. The Centennial Entities
have provided to Buyer true and correct copies of all written Contracts, as
modified to date, or true and complete memoranda describing the terms of all
oral Contracts, and all liabilities and obligations under such Contracts can be
ascertained from such copies or memoranda. The Contracts as amended through the
date of this Agreement will not be modified, except in accordance with Section
4.11, without Buyer's written consent, which consent shall not be unreasonably
withheld.
2.14 Employees.
2.14.1 Schedule 2.14 contains a true and complete list of all
persons employed by the Centennial Entities, each such person's title, each such
person's compensation, a statement whether each such person participates in
bonus arrangements and the Employee Plans listed in Schedule 2.15, if any,
applicable to each such person. No Centennial Entity is a party to any agreement
or arrangement, written or oral, with salaried or non-salaried employees except
as described in Schedules 2.14 and 2.15 or included among the Contracts. Except
as described in Schedule 2.14, neither Sellers nor the Centennial Entities have
knowledge that any employee
20
21
identified in Schedule 2.14 currently plans to terminate employment, whether by
reason of the transactions contemplated by this Agreement or otherwise.
2.14.2 Except as disclosed in Schedule 2.14, neither Sellers
nor the Centennial Entities are a party to, or subject to, any contract with any
labor organization, nor have either Sellers or the Centennial Entities agreed to
recognize any union or other collective bargaining unit, nor has any union or
other collective bargaining unit been certified as representing any of the
Centennial Entities' employees at the Stations. Neither Sellers nor the
Centennial Entities have knowledge of any organizational effort currently being
made or threatened by or on behalf of any labor union with respect to employees
of Centennial Entities at the Stations. There are no unfair labor practice
charges pending or, to the best of Sellers' and the Centennial Entities'
knowledge, threatened against Sellers or the Centennial Entities; there are no
pending or threatened strikes, arbitration proceedings involving labor matters
or other labor disputes affecting the Centennial Entities or the Stations; and
neither Sellers nor the Centennial Entities have experienced any strikes, work
stoppages or other significant labor difficulties of any nature at the Stations
in the past two (2) years.
2.15 Employee Benefit Plans. Schedule 2.15 sets forth a true and
complete list of each employee or retiree benefit or compensation plan within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or compensation, bonus, incentive, deferral, equity
based, severance, termination, retention, change in control, employment or other
similar program, agreement, arrangement, trust or other funding arrangement,
whether or not subject to the provisions of ERISA, to which any of the
Centennial Entities are bound or that is or has been established or maintained
or in respect of which any of the Centennial Entities has any liability or has
ever had any obligation to contribute (each, an "Employee Plan"). Except
pursuant to an Employee Plan, the Centennial Entities have no fixed or
contingent liability or obligation to or in respect of any person now or
formerly employed at the Stations or any beneficiary or dependent of any such
person, including, without limitation, in respect of pension or thrift benefits
or payments, individual or supplemental pension benefits or payments or
compensation arrangements, contributions to hospitalization or other health,
life or other welfare benefits, incentive benefits or payments, bonus benefits
or payments or vacation, sick leave, disability and termination benefits or
payments, including workers' compensation. Except as described on Schedule 2.15,
no trade or business (whether or not incorporated) is or has been as of any date
within the preceding six (6) years treated as a single employer together with
any of the Centennial Entities pursuant to Section 414 of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder (the "Code") (each such
trade or business, a "ERISA Affiliate"). None of the Centennial Entities have
incurred or reasonably expect to incur (either directly or indirectly, including
as a result of any indemnification obligation) any liability that could become a
liability of Buyer or, following the Closing, remain a liability of any
Centennial Entity or the Stations under or pursuant to Title I or IV of ERISA or
the penalty, excise tax or joint and several liability provisions of the Code
relating to employee benefit plans and, to the best knowledge of Sellers and the
Centennial Entities, no event, transaction or condition has occurred or exists
which could result in any such liability. Each of the Employee Plans has been
operated and administered in all material respects in accordance with all
applicable laws, including but not limited to ERISA and the Code. Each Employee
Plan intended to qualify under Section 401(a) of the Code, and each associated
trust intended to be
21
22
exempt from taxation pursuant to Section 501(a) of the Code, is the subject of a
favorable determination, opinion or approval letter from the Internal Revenue
Service ("IRS") regarding its qualification or exemption from taxation, as
applicable, under such section and has, in fact, been qualified or tax exempt,
as applicable, under the applicable section of the Code for all periods for
which the applicable statute of limitations has not expired through and
including the Closing. No event or omission has occurred which would cause any
such Employee Plan to lose its qualification under the applicable Code section.
Except as set forth on Schedule 2.15, none of the Centennial Entities nor any
ERISA Affiliate has any announced plan or legally binding commitment to create
any additional Employee Plan which is intended to cover employees or former
employees of the Centennial Entities or any ERISA Affiliate or to amend or
modify any existing Employee Plan. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Centennial Entities
or any ERISA Affiliate that, individually or collectively, provides for the
payment by the Centennial Entities or any ERISA Affiliate of any amount (a) that
is not deductible under Section 162(a)(1) or 404 of the Code or (b) that is an
"excess parachute payment" pursuant to Section 280G of the Code. It is expressly
understood that all obligations of the Centennial Entities under or with respect
to any Employee Plan are to be transferred to Sellers or their affiliates other
than the Centennial Entities at least one day prior to the Closing as a part of
the Preliminary Transfers and that neither the Centennial Entities nor the Buyer
shall have any liability with respect thereto on or after the Closing Date.
2.16 Litigation. Except as set forth on Schedule 2.16, there is no
unsatisfied judgment outstanding and no litigation, proceeding, claim or
investigation of any nature pending or, to the best of Sellers and the
Centennial Entities' knowledge, threatened against any Centennial Entity, the
Stations or any of the Assets that might adversely affect the continued
operation of the Stations or impair the value of the Assets or which might
adversely affect Sellers' or the Centennial Entities' ability to perform in
accordance with the terms of this Agreement. Neither Sellers nor the Centennial
Entities have knowledge of any facts that are reasonably likely to result in any
such proceedings. With respect to each matter set forth therein, Schedule 2.16
sets forth a description of the forum for the matter, the parties thereto and
the type and amount of relief sought.
2.17 Taxes. Except as otherwise disclosed on Schedule 2.17:
2.17.1 The Centennial Entities have duly filed with the
appropriate Tax authorities all Tax Returns (as defined in Section 9.4) in
respect of Taxes (as defined in Section 9.4) required to be filed by them
through the date hereof, and will timely file any such Tax Returns required to
be filed on or prior to the Closing Date, and all such Tax Returns are true,
complete, and correct in all material respects. All Taxes of the Centennial
Entities in respect of periods beginning before the Closing Date have been
timely paid, or will be timely paid on or prior to the Closing Date, except to
the extent a reserve in the amount of such Taxes is included in the calculation
of the Final Net Working Capital Amount on the Closing Balance Sheet (other than
a reserve for deferred Taxes established to reflect timing differences between
book and Tax income);
2.17.2 There is no audit or other matter in controversy with
respect to any Taxes due and owing by any of the Centennial Entities, and there
is no Tax deficiency or claim
22
23
assessed or, to the best of the Centennial Entities' Knowledge, proposed or
threatened against any of the Centennial Entities;
2.17.3 None of the Centennial Entities has requested any
extension of time within which to file any Tax Return which is currently pending
or has been granted and is in effect and none of the Centennial Entities has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency;
2.17.4 No claim has ever been made by an authority in a
jurisdiction where a Centennial Entity does not file Tax Returns that such
Centennial Entity is or may be subject to taxation by that jurisdiction;
2.17.5 None of the Centennial Entities (i) has filed a consent
under Code Section 341(f) concerning collapsible corporations or (ii) has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii);
2.17.6 None of the Centennial Entities is a party to, or is
bound by, or has any obligation under any Tax allocation or sharing agreement
(including indemnity arrangements), and, after the Closing Date, no Centennial
Entity shall be a party to, bound by or have any obligation under any Tax
allocation or sharing agreement or have any liability thereunder for amounts due
in respect of periods prior to the Closing Date;
2.17.7 None of the Centennial Entities has any liability for
the Taxes of any other person as defined in Section 7701(a)(1) of the Code under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise;
2.17.8 None of the assets of the Centennial Entities (i) are
required to be treated as being owned by any other person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the Code,
(ii) secures any debt the interest on which is tax-exempt under Code Section
103(a), or (iii) is tax-exempt use property within the meaning of Code Section
168(h);
2.17.9 None of the Centennial Entities has agreed to or is
required to make any adjustment pursuant to Code Section 481(a) by reason of a
change in accounting method initiated by such Centennial Entity and none of the
Centennial Entities have knowledge that the IRS has proposed any such adjustment
or change in accounting method;
2.17.10 For Federal income Tax purposes, Centennial Nevada is an
"S Corporation" as defined in Section 1361(a) of the Code and has been an S
Corporation for each taxable year since March 17, 1997. In addition, Centennial
Nevada has taken all required steps to be taxed as an S Corporation under
applicable state income tax law in each state in which each such corporation
does business and which recognizes S Corporations under applicable state income
tax laws (an "S Corporation State"). Centennial Nevada is an S Corporation in
each S Corporation State;
23
24
2.17.11 Centennial Broadcasting is treated, and has been treated
since its formation, as a partnership for U.S. federal and all relevant state
income tax purposes, and is not, and has never been, treated as an association
taxable as a corporation for U.S. federal and relevant state income tax
purposes;
2.17.12 Centennial License is a limited liability company the
membership interests of which are wholly-owned by Centennial Broadcasting, and
Centennial License is disregarded as an entity for federal and all relevant
state tax purposes.
2.17.13 None of the Centennial Entities has made any payments,
nor is any of them obligated to make any payments, and is not a party to any
agreement that could obligate it to make any payments that will not be
deductible under Code Section 280G; and
2.17.14 The transaction contemplated herein is not subject to
the tax withholding provisions of Section 3406 of the Code, or Subchapter A of
Chapter 3 of the Code or of any other provision of law.
2.18 Compliance With Laws. The Centennial Entities have complied in
all material respects with, and are not in material violation of any federal,
state or local laws, regulations or orders (including any applicable statutes,
ordinances or codes relating to zoning and land use, health and sanitation,
environmental protection, occupational safety, and the use of electrical power)
affecting the Assets, the businesses of the Centennial Entities, or the
operation of the Stations. Without limiting the generality of the foregoing:
2.18.1 The Stations' transmitting and studio equipment is
operating in accordance with the terms and conditions of the Station Licenses,
and the rules, regulations and policies of the Commission, including without
limitation all regulations concerning equipment authorization and human exposure
to radio frequency radiation. To the best of Sellers' and the Centennial
Entities' knowledge, (i) the Stations are not causing interference in violation
of Commission rules to the transmission of any other broadcast station or
communications facility and have not received any complaints with respect
thereto; and (ii) no other broadcast station or communications facility is
causing interference in violation of Commission rules to the Stations'
transmissions or the public's reception of such transmissions. Except as set
forth on Schedule 1.2.1, Centennial License has no outstanding construction
permits with respect to the Stations.
2.18.2 The Centennial Entities have, in the conduct of the
Stations' business, complied in all material respects with all applicable laws,
rules and regulations relating to the employment of labor, including those
concerning wages, hours, equal employment opportunity, collective bargaining,
pension and welfare benefit plans, and the payment of Social Security and
similar taxes, and the Centennial Entities are not liable for any arrearages of
wages or any tax penalties due to any failure to comply with any of the
foregoing.
2.18.3 The Centennial Entities have not received notification
from the Commission that their employment practices fail to comply with
Commission rules and policies.
24
25
2.18.4 All material ownership reports, employment reports, and
other documents required to be filed by Centennial License with the Commission
or other governmental authorities have been filed. Such items as are required to
be placed in each Station's local public inspection files have been placed in
such files. All proofs of performance and measurements that are required to be
made by Centennial License with respect to each Station's transmission
facilities have been completed and filed at the Stations. All information
contained in the foregoing documents is true, complete and accurate in all
material respects.
2.18.5 The towers used in the operation of the Stations are
painted, obstruction marked and lighted to the extent required by, and in
accordance with the rules and regulations of the Federal Aviation Administration
(the "FAA"), the Commission and any other applicable requirements of law.
Appropriate notifications to the FAA have been filed for such towers where
required by the Commission's rules and regulations.
2.19 Insolvency Proceedings. None of the Centennial Entities, the
Sellers, or the Assets are the subject of any pending or threatened insolvency
proceedings of any character, including without limitation bankruptcy,
receivership, reorganization, composition or arrangement with creditors,
voluntary or involuntary. None of the Centennial Entities or the Sellers has
made an assignment for the benefit of creditors or taken any action in
contemplation of or which would constitute a valid basis for the institution of
any such insolvency proceedings.
2.20 Citizenship. None of the Sellers or the Centennial Entities is a
"foreign person" as defined in Section 1445(f)(3) of the Code. On the Closing
Date, each Seller and each Centennial Entity will deliver to Buyer an affidavit
to that effect, verified as true and sworn to under penalty of perjury by such
Seller or by a duly-authorized officer or member of such Centennial Entity. Each
Seller's affidavit and each Centennial Entity's affidavit shall also set forth
the respective name, address, taxpayer identification number, and such
additional information as may be required to exempt the Transaction from the
withholding provisions of Section 1445 of the Code. Buyer shall have the right
to furnish copies of the affidavit to the Internal Revenue Service.
2.21 Patents, Trademarks, Copyrights. The call signs and all material
slogans, logos, copyrights, patents, trademarks, trade names, service marks, and
other similar intangible property rights, including registrations and
applications to register or renew the registrations of any of the foregoing,
currently used to promote or identify the Stations, or otherwise used in
connection with each Station's business, are listed or described on Schedule
1.2.5 (the "Promotional Rights"). The Promotional Rights are either owned or
validly licensed by the Centennial Entities, and Schedule 1.2.5 identifies which
Promotional Rights are so owned and which are licensed, and if licensed, the
royalties paid thereon and the parties paid thereunder. Except as described on
Schedule 2.21, neither Sellers nor the Centennial Entities have any knowledge,
nor have the Centennial Entities received any notice to the effect that its use
of any of the Promotional Rights may be or are claimed to infringe on the right
of another, and neither Sellers nor the Centennial Entities have any knowledge
of any facts which would be likely to form the basis of any such claim. Except
as described on Schedule 2.21, neither Sellers nor the Centennial Entities have
knowledge of any infringement or unlawful or unauthorized use of such
Promotional Rights, including without limitation the use of any call sign,
slogan or logo by any
25
26
broadcast or cable station in the radio market areas that may be confusingly
similar to the call signs, slogans, and logos currently used by the Stations.
Except as described on Schedule 2.21, the operations of the Stations do not
infringe any copyright, patent, trademark, trade name, service xxxx, or other
similar right of any third party. Neither Sellers nor the Centennial Entities
have sold, licensed or otherwise disposed of any Promotional Rights to any
person or entity and they have not agreed to indemnify any person or entity for
any patent, trademark or copyright infringement. Schedule 1.2.5 lists all of the
Promotional Rights which have been duly registered with, filed in or issued by,
as the case may be, the United States Patent and Trademark Office and United
States Copyright Office or other filing offices, domestic or foreign.
2.22 Financial Statements. The Centennial Entities have furnished
Buyer with the financial statements described in Schedule 2.22 (the "Financial
Statements"). The Financial Statements include (i) audited consolidated balance
sheets as of December 31, 1997, 1998 and 1999 and the related audited
consolidated statements of income and cash flows for such fiscal years
(including the related notes and schedules thereto) of the Centennial Entities;
(ii) an unaudited balance sheet as of April 30, 2000 of the Stations; and (iii)
unaudited monthly statements of income of the Stations for calendar years 1997,
1998 and 1999 and for the first four months of calendar year 2000. The year-end
Financial Statements: (i) have been prepared in accordance with GAAP on a
consistent basis throughout the periods involved and as compared with prior
periods and (ii) fairly present in all material respects the financial position
and the results of operations and cash flows of the Stations as of the dates and
for the periods indicated. The monthly and other interim Financial Statements:
(i) have been prepared in accordance with GAAP on a consistent basis throughout
the periods involved (except to the extent noted thereon) and on a basis
consistent with the year-end Financial Statements; and (ii) fairly present in
all material respects the financial position and the results of operations and
cash flows of the Stations as of the dates and for the periods indicated. Except
as reflected in the Financial Statements or otherwise disclosed to Buyer in
writing, no event has occurred since the preparation of the most recent
Financial Statements that would make such Financial Statements misleading in any
material respect.
2.23 Absence of Changes or Events. Except as set forth in Schedule
2.23, between December 31, 1999 and the date of this Agreement, the Company has
conducted its businesses only in the ordinary course, and there has not been:
2.23.1 Any change or occurrence which resulted in, or is
reasonably likely to have, a material adverse effect with respect to the
Centennial Entities, the Stations or the Assets;
2.23.2 The creation of any Lien on the Assets or the Equity
Interests;
2.23.3 Any declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of Centennial
Nevada or with respect to the membership interests in Centennial Broadcasting
and Centennial License;
26
27
2.23.4 Any issuance of any shares of capital stock of
Centennial Nevada or any securities convertible into or exchangeable or
exercisable for capital stock of Centennial Nevada that is not reflected in
Section 2.2;
2.23.5 Any issuance of any membership interests in Centennial
Broadcasting or Centennial License or any securities convertible into or
exchangeable or exercisable for such membership interests that is not reflected
in Sections 2.3 or 2.4;
2.23.6 Any split, combination or reclassification of any of the
capital stock of Centennial Nevada or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock;
2.23.7 Any granting by the Centennial Entities to any of their
directors, members, officers or key employees of any material increase in
compensation, except in the ordinary course of business consistent with prior
practice or as required under any of the Contracts;
2.23.8 Any sale, assignment, transfer, lease, or other
disposition or agreement to sell, assign, transfer, lease or otherwise dispose
of any of the Assets having an aggregate replacement value exceeding Fifty
Thousand Dollars ($50,000);
2.23.9 Any damage, destruction or loss not covered by
insurance, that has or reasonably could be expected to have a material adverse
effect with respect to the Centennial Entities or the Assets;
2.23.10 By any Centennial Entity, any acquisition (by merger,
consolidation, acquisition of stock or assets or otherwise) of any corporation,
partnership, or other business organization or division thereof or interest
therein; or
2.23.11 Any change in accounting methods, principles or
practices by the Centennial Entities materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
GAAP.
2.24 Undisclosed Liabilities. As of December 31, 1999, there were no
liabilities of the Centennial Entities required by GAAP to be disclosed in
financial statements, except as and to the extent, reflected or reserved against
in the audited balance sheet dated December 31, 1999. As of the Closing Date,
there shall be no liability of the Centennial Entities except for (a) the
Assumed Liabilities; (b) as, and to the extent, reflected in the calculation of
Net Working Capital, and (c) liabilities covered by insurance, indemnification,
contribution or comparable arrangements, the benefits of which will be available
to Buyer or the Centennial Entities after Closing.
2.25 Sufficiency of Assets. The Assets are sufficient to operate the
Stations as they are now operated.
2.26 No Misleading Statements. No representation or warranty of the
Centennial Entities in this Agreement contains or will contain any untrue
statement of a material
27
28
fact or omits or will omit a material fact necessary in order to make such
representation or warranty not misleading. Each of the Sellers severally
represents and warrants that no representation or warranty made by it severally
in this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit a material fact necessary in order to make such
representation or warranty not misleading. The Sellers jointly and severally
represent and warrant that no representation or warranty made by them jointly
and severally in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit a material fact necessary in order to make
such representation or warranty not misleading.
2.27 Securities Matters. Each of the Sellers severally represents and
warrants as follows:
2.27.1 Each of the Sellers understands that (a) the offering
and sale of the BBGI Class A Common Stock hereunder is intended to be exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) thereof and (b) there is no existing public or other market for the BBGI
Class A Common Stock for so long as it is unregistered and there can be no
assurance that such a market will exist or that Sellers will be able to sell or
dispose of the BBGI Class A Common Stock until it is registered in compliance
with the requirements of the Securities Act.
2.27.2 Each of the Sellers is acquiring the BBGI Class A Common
Stock for his or its own account and without a view to the public distribution
of the BBGI Class A Common Stock or any interest therein.
2.27.3 Each of the Sellers is an "accredited investor" as such
term is defined in Regulation D promulgated under the Securities Act.
2.27.4 Each of Sellers has sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of his or its investment in the BBGI Class A Common Stock, and is
capable of bearing the economic risks of such investment, including a complete
loss of his or its investment in the BBGI Class A Common Stock.
2.27.5 In evaluating the suitability of an investment in the
BBGI Class A Common Stock, Sellers have relied solely upon the representations,
warranties, covenants and agreements made by Buyer herein and the Exchange Act
Reports (as defined below) filed by Buyer and Sellers have not relied upon any
other representations or other information (whether oral or written and
including any estimates, projections or supplemental data) made or supplied by
or on behalf of Buyer or any affiliate, employee, agent or other representative
of Buyer other than as contemplated by this Section 2.27.
2.27.6 Each of the Sellers understands and agrees that he or it
may not sell or dispose of any of the BBGI Class A Common Stock other than
pursuant to a registered offering or in a transaction exempt from the
registration requirements of the Securities Act.
28
29
2.28 Transactions with Affiliates. No affiliate of Sellers other than
the Centennial Entities owns or leases property or is a party to any Contract
affecting or relating to the operation of the Station.
2.29 Insurance. Schedule 2.29 is a true and complete list of all
insurance policies of the Station. All policies of insurance listed in Schedule
2.29 are in full force and effect as of the date of this Agreement.
2.30 Environmental Matters.
2.30.1 Compliance with Environmental Laws. Except as listed and
described on Schedule 2.30.1 to this Agreement, all activities of the Centennial
Entities at or on the Real Property and all operations of the Stations by the
Centennial Entities (whether or not conducted at the Real Property), have been
and are being conducted in compliance in all material respects with all
applicable federal, state and local statutes, ordinances, rules, regulations,
permits, orders and policies concerning (i) manufacturing, processing, handling,
storage, treatment and/or disposal of any hazardous or toxic materials or of any
wastes; (ii) discharges or releases into the air, ground, surface water or
groundwater; and (iii) employee health and safety.
2.30.2 Site Contamination. To the best knowledge of Sellers or
the Centennial Entities, except as listed and described in Schedule 2.30.2, no
Hazardous Substance is present at, on or under the Real Property or has been
disposed of by the Centennial Entities in such a manner as may require
remediation under any Environmental Statute. No claims are pending, or to the
best knowledge of Sellers or the Centennial Entities threatened, against the
Centennial Entities or the Sellers relating to the presence or disposal of such
Hazardous Substances. "Hazardous Substance" means any substance regulated under
any federal, state, or local statute, regulation, ordinance, order, permit, or
policy relating to environmental protection, environmental pollution, liability
for environmental contamination, or protection of worker health and safety
("Environmental Statutes").
2.30.3 Additional Provisions Regarding Hazardous or Toxic
Materials. To the best knowledge of Sellers or the Centennial Entities, except
as listed and described on Schedule 2.30.3, (i) no polychlorinated biphenyls or
substances containing polychlorinated biphenyls are present at, on or under the
Real Property; (ii) no asbestos or materials containing asbestos exist at, on or
under the Real Property; and (iii) no underground storage tanks exist or existed
at, on or under the Real Property.
2.30.4 No Notice of Lack of Compliance with Environmental
Statutes. None of the Sellers or the Centennial Entities has been notified by
any governmental authority of any violation of any Environmental Statute in
connection with the operation of the Stations or the conduct of any activities
on or at the Real Property. None of the Sellers or the Centennial Entities has
any knowledge of notices of violation of Environmental Statutes, notices of
noncompliance with Environmental Statutes or environmental enforcement,
response, removal or remediation actions issued for or undertaken at the Real
Property. Further, none of the Sellers or the Centennial Entities has any
knowledge of investigations or inspections by governmental authorities into
Seller's compliance with Environmental Statutes. Schedule 2.30.4 includes a
29
30
correct and complete list of the Centennial Entities' registrations with,
licenses from, or permits issued by governmental agencies or authorities
pursuant to Environmental Statutes. All such registrations, licenses or permits
are in full force and effect.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties, all of which
have been relied upon by Sellers and the Centennial Entities in entering into
this Agreement, all of which are true, correct and complete as of the date
hereof, and all of which, except as otherwise specifically provided, shall be
true, correct and complete at Closing.
3.1 Organization. Buyer has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to own and lease its
properties and to conduct its business as it is now being conducted. The copies
of the certificate of incorporation and bylaws of Buyer previously delivered by
Buyer to Sellers are true, correct and complete. Buyer is duly licensed or
qualified and in good standing as a foreign corporation in each jurisdiction in
which the ownership of its properties or the character of its activities is such
as to require it to be so licensed or qualified, and will be at Closing duly
qualified to do business and in good standing as a foreign corporation under the
laws of the States of Nevada and Louisiana.
3.2 Authorization. Buyer has the requisite corporate power and
authority to execute and deliver this Agreement and each of the other documents
or instruments related thereto or executed in connection therewith or in
contemplation of the transactions to which it is a party (the "Buyer Ancillary
Agreements"), and to perform all obligations to be performed by it hereunder and
thereunder. The execution and delivery of this Agreement and each Buyer
Ancillary Agreement, including, but not limited to, the Registration Rights
Agreement described in Section 1.7.3(d) (the "Registration Rights Agreement")
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized and approved by Buyer, and no other proceeding
on its part is necessary to authorize this Agreement and each such Buyer
Ancillary Agreement and the consummation of the transactions contemplated hereby
and thereby. Buyer shall deliver evidence of such authorization at Closing. This
Agreement has been duly and validly executed and delivered by Buyer, and
constitutes the legally valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity. Each Buyer Ancillary Agreement to which Buyer is a
party, including, without limitation, the Registration Rights Agreement, upon
being duly and validly executed and delivered by Buyer, shall constitute a
legally valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity.
3.3 No Breach. Except for Buyer's obligations to comply with certain
requirements of that certain Credit Agreement, as amended, (the "Credit
Agreement") dated as of
30
31
August 11, 1999 among Buyer, certain affiliates of Buyer, the lenders named
therein and the Bank of Montreal, Chicago Branch, as agent, or any successor
credit facility to which Buyer is a party (the lenders named in the Credit
Agreement or, alternatively, the lenders named in any successor senior credit
facility then in effect are referred to herein as the "Senior Lenders")
including obtaining the consent of the Senior Lenders, none of (i) the
execution, delivery and performance of this Agreement and the Buyer Ancillary
Agreements by Buyer; (ii) the consummation by Buyer of this Agreement and the
Buyer Ancillary Agreements; or (iii) Buyer's compliance with the terms and
conditions hereof and thereof will, with or without the giving of notice or the
lapse of time or both, conflict with, breach the terms and conditions of,
constitute a default under, or violate (A) Buyer's articles of incorporation,
bylaws; (B) any judgment, decree, order, agreement, lease or other instrument to
which Buyer is a party or by which Buyer is legally bound; or (C) any law, rule
or regulation applicable to Buyer.
3.4 Investment Intent. Buyer is acquiring the Equity Interests for
purposes of investment and not with a view to the distribution thereof.
3.5 Qualification as Broadcast Licensee. Buyer knows of no fact that
would, under the Communications Act of 1934, as amended, or the rules,
regulations and policies of the FCC, disqualify Buyer or a License Sub (as
defined in Section 9.8) from becoming the licensee of the Stations. There are no
proceedings, complaints, notices of forfeiture, claims, investigations pending
or, to the knowledge of Buyer, threatened against any or in respect of any of
the broadcast stations licensed to Buyer or its affiliates that would materially
impair the qualifications of either Buyer or a License Sub to become a licensee
of the Stations, or delay in any material respect the grant of the FCC approval
required for the consummation of the Transaction.
3.6 Capitalization; BBGI Class A Common Stock. The authorized
capital stock of Xxxxxxx Broadcast Group, Inc. ("BBGI") as of the date hereof
consists of 100,000,000 shares of Class A Common Stock, 75,000,000 shares of
Class B Common Stock and 10,000,000 shares of Preferred Stock, of which
8,279,568 shares of Class A Common Stock, 17,021,373 shares of Class B Common
Stock and zero shares of Preferred Stock are issued and outstanding. As of the
date hereof, there has been authorized options to acquire 3,000,000 shares of
BBGI Class A Common Stock, of which options to acquire 2,500,000 shares have
been issued and are outstanding. The BBGI Class A Common Stock issued pursuant
to this Agreement will, when issued, be duly authorized, validly issued, fully
paid and non-assessable, free and clear of any and all Liens, and shall not have
been issued in violation of any preemptive rights. Except as described in the
first and second sentences of this Section, as of the date hereof, there are
outstanding (i) no shares of capital stock or other voting securities of BBGI;
(ii) no securities of BBGI convertible into or exchangeable for shares of
capital stock or other voting securities of BBGI; (iii) no subscription rights,
options, warrants, calls, commitments, preemptive rights or other rights of any
kind to acquire from BBGI, and no obligation of BBGI to issue or sell, any
shares of capital stock or other voting securities or any securities of BBGI
convertible into or exchangeable for such capital stock or voting securities;
and (iv) no equity equivalents, interests in the ownership or earnings of, or
stock appreciation, phantom stock or other similar rights of or with respect to
BBGI. BBGI has taken all action necessary to permit it to issue the BBGI Class A
Common Stock to be issued pursuant to this Agreement.
31
32
3.7 Securities Filings. Buyer's annual report on Form 10-K for the
year ended December 31, 1999 filed with the Securities and Exchange Commission
pursuant to Section 13(a) of the Exchange Act (the "Annual Report"), and all
subsequent reports or documents filed with the Commission pursuant to Section
13(a) or 14 of the Exchange Act (the "Exchange Act Reports"), on their
respective filing dates, complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder. As of the date of this Agreement, the Exchange Act Reports do not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
3.8 Nasdaq National Market Listing. The outstanding shares of Class
A Common Stock of Buyer are, and as of the Closing Date the BBGI Class A Common
Stock included in the Purchase Price will be, included in the Nasdaq National
Market.
3.9 Financial Statements. The financial statements included in the
Annual Report (i) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved; and (ii) fairly present in all
material respects the financial position and the results of operations and cash
flows of BBGI as of the dates and for the periods indicated. Except as reflected
in such financial statements or otherwise disclosed to Sellers in writing, no
event has occurred since the date of the most recent financial statements that
would make such financial statements misleading in any material respect.
3.10 Form S-3 Eligibility. BBGI shall be eligible to use Form S-3 to
register a secondary sale of BBGI Class A Common Stock no later than the filing
date of BBGI's annual report on Form 10-K for the year ending December 31, 2000.
3.11 Rule 144 Eligibility. BBGI shall file all the reports required
to be filed by BBGI under Section 13 of the Exchange Act in accordance with Rule
144(c) of the Securities and Exchange Commission or any applicable successor
rule.
3.12 Compliance with Laws. Buyer has complied in all material
respects with, and is not in violation in any material respects of, any federal,
state or local laws, regulations or orders (including any applicable statutes,
ordinances or codes relating to zoning and land use, health and sanitation,
environmental protection, occupational safety and the use of electrical power)
affecting the businesses of Buyer.
3.13 No Misleading Statements. No representation or warranty of the
Buyer in this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit a material fact necessary in order to make
such representation or warranty not misleading.
ARTICLE IV.
PRE-CLOSING OBLIGATIONS
32
33
The parties covenant and agree as follows with respect to the period
prior to the Closing Date:
4.1 Application for Commission Consent. Within ten (10) business
days after the date of this Agreement, Sellers and Buyer shall join in and file
an application or applications requesting the Commission's written consent to
the transfer of control of the Station Licenses from Sellers to Buyer (the
"Transfer Applications"), and they will diligently take all steps necessary or
desirable and proper to prosecute expeditiously the Transfer Applications and to
obtain the Commission's determination that approval of the Transfer Applications
will serve the public interest, convenience, and necessity, including, without
limitation, compliance with the public notice requirements of the Communications
Act of 1934, as amended. The failure by either party to be in a position to
timely file or diligently prosecute its portion of the Transfer Applications
shall be deemed a material breach of this Agreement. Each party shall bear its
own expenses in connection with the preparation, filing and prosecution of the
Transfer Applications.
4.2 Xxxx-Xxxxx-Xxxxxx Act. No later than June 30, 2000, each party
shall submit to the United States Department of Justice and the United States
Federal Trade Commission all forms and information applicable to the transaction
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules promulgated thereunder (the "HSR Act"), and shall furnish
to the other party all information that the other reasonably requests in
connection with such filings.
4.3 Other Governmental Consents. Promptly following the execution of
this Agreement, Sellers and/or the Centennial Entities and Buyer shall proceed
to prepare and file with the appropriate governmental authorities (other than
the Commission) such requests, if any, for approval or waiver as may be required
from such governmental authorities in connection with the Transaction, and shall
jointly, diligently and expeditiously prosecute, and shall cooperate fully with
each other in the prosecution of, such requests for approval or waiver and all
proceedings necessary to secure such approvals and waivers.
4.4 Financial Information. Between the date hereof and the Closing
Date, the Centennial Entities shall furnish Buyer with monthly financial
statements within fifteen (15) business days after the end of each calendar
month, and with such additional data concerning the Stations' financial
condition as are prepared by the Centennial Entities in the ordinary course of
business, in the same form as the Financial Statements contained in Schedule
2.22. Such financial statements and additional data shall be accompanied by a
certificate executed by the Chief Financial Officer of each Centennial Entity
certifying that such financial statements: (i) have been prepared on a
consistent basis throughout the periods involved (except to the extent noted
thereon) and on a basis consistent with the year-end Financial Statements, and
(ii) fairly present in all material respects the financial position and the
results of operations and cash flows of the Stations as of the dates and for the
periods indicated. Between the date hereof and the Closing Date, the Chief
Financial Officer of each Centennial Entity shall make himself available to
Buyer, upon prior notice, to discuss and explain the compilation and preparation
of the Financial Statements and the monthly financial statements and such other
additional data provided pursuant to this Section 4.4, and each of the
constituent elements reflected thereon.
33
34
4.5 Third Party Consents. Sellers and the Centennial Entities shall
use their commercially reasonable efforts to obtain the consents of the other
contracting parties to the transactions contemplated hereby to the extent
required by the Contracts requiring such consent. The delivery of such consents
that are identified on Schedule 1.2.3 to be material to the operation of the
Stations ("Material Contracts") shall be a condition to Buyer's obligation to
close under Section 5.2.7.
4.6 Environmental Site Assessment. Within sixty (60) days of the
execution of this Agreement, Buyer may obtain a Phase I Environmental Assessment
for each of the parcels of the Real Property (the "Environmental Assessment").
In the event the Environmental Assessment (including the materials referenced in
Schedule 2.30.1) discloses any recognized environmental conditions or any
potential that such conditions may exist, then Buyer may conduct or have
conducted at its expense additional testing to confirm or negate the existence
of any such conditions. If any such Environmental Assessment (including the
materials referenced in Schedule 2.30.1) or additional testing reflects the
existence of any such conditions, Sellers shall cause the conditions to be
remedied as quickly as possible (and in all events prior to Closing) such that
no recognized environmental conditions exist; provided, however, that the
Centennial Entities shall not be obligated to expend in the aggregate in excess
of Seven Hundred Fifty Thousand Dollars ($750,000) to effect such remediation.
In the event that such remedial action(s) does cost in the aggregate in excess
of Seven Hundred Fifty Thousand Dollars ($750,000), the Centennial Entities may
elect not to take such remedial action. In such event, Buyer may require the
Centennial Entities to proceed to Closing and Buyer shall receive a reduction in
the Purchase Price at Closing, in the amount of Seven Hundred Fifty Thousand
Dollars ($750,000). Alternatively, Buyer may terminate this Agreement by notice
to Sellers given within ninety (90) days after the date of this Agreement, and
in the event of such termination, neither the Centennial Entities nor Sellers
shall have liability to Buyer (other than the return of the Letter of Credit) as
a result of such termination. Such Environmental Assessment shall not relieve
Sellers or the Centennial Entities of any obligation with respect to any
representation, warranty or covenant of Sellers or the Centennial Entities in
this Agreement or waive any condition to Buyer's obligations under this
Agreement. The cost of completing the Environmental Assessment shall be paid by
Buyer.
4.7 Title Insurance. The Centennial Entities shall cooperate with
Buyer to extent necessary for Buyer to obtain the commitment of a title
insurance company reasonably satisfactory to Buyer to issue to Buyer's Senior
Lenders, at standard rates, ALTA 1992 Form extended coverage title insurance
policies, insuring Buyer's Senior Lenders' interest in the Real Property (the
"Title Commitment"). The costs of the Title Commitment and the policy to be
issued pursuant to the Title Commitment shall be paid one-half by Sellers and
one-half by Buyer.
4.8 Confidentiality. Each party agrees that any and all information
learned or obtained by it from the other (and that is not otherwise public or
known in the radio broadcast industry) shall be confidential and agrees not to
disclose any such information to any person whatsoever other than as is
necessary for the purpose of effecting the Transaction or as otherwise required
by law.
34
35
4.9 Access. Between the date hereof and the Closing Date, the
Sellers and the Centennial Entities shall give, upon prior notice, Buyer or
representatives of Buyer (including lenders, consultants, appraisers, surveyors
and accountants) reasonable access to the Stations and the Assets and, during
normal business hours, to the books and records of the Centennial Entities. It
is expressly understood that, pursuant to this Section, Buyer, at its sole
expense, shall be entitled to make such engineering inspections of the Stations,
such inspections of the Stations for the purpose of appraising the Assets and
such audits of the Stations' financial records as Buyer may desire, so long as
the same do not unreasonably interfere with the Centennial Entities' operation
of the Stations; 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 right to rely upon any representation or warranty
made by Sellers or the Centennial Entities in this Agreement, each of which
shall survive any furnishing of information to Buyer or its agents, or any
investigation by Buyer or its agents, subject to Section 10.5 hereof.
4.10 Employee Matters.
4.10.1 As set forth on Schedule 2.14, the Centennial Entities
have provided to Buyer an accurate list of all of their current employees
together with such Employees' title and compensation and a statement whether
such Employee participates in bonus arrangements as of the date of this
Agreement. The Centennial Entities shall notify Buyer within thirty (30) days
after the date of this Agreement and within fifteen (15) days after the end of
each calendar month of any changes that occur prior to Closing with respect to
such information.
4.10.2 Buyer shall extend offers of employment to the employees
of Sellers and the Centennial Entities at the Stations ("Station Employees"),
which offers shall be on terms and conditions that Buyer shall determine in its
sole discretion, provided that Buyer shall have the right to designate up to ten
(10) Station Employees that the Sellers or the Centennial Employees shall
terminate at or prior to Closing (the "Terminated Employees"). Buyer shall
provide notice to Sellers that identifies the Terminated Employees within thirty
(30) days after the Commission gives public notice of its grant of consent to
the Transfer Applications. Sellers waive any claims against Buyer, the
Centennial Entities or any of the Station Employees arising from their
employment at the Stations, including without limitation any claims arising from
any employment agreement or non-compete agreement. Sellers and the Centennial
Entities shall terminate the employment of the Terminated Employees effective on
the Closing Date and shall cooperate with, and use its best efforts to assist,
Buyer in its efforts to secure satisfactory employment arrangements with the
Station Employees to whom Buyer makes offers of employment.
4.10.3 Nothing contained in this Agreement shall confer upon
any employee of Sellers or the Centennial Entities any right with respect to
continued employment by Buyer, nor shall anything herein interfere with the
right of Buyer to terminate the employment of any of the Station Employees at
any time, with or without cause.
4.10.4 Buyer shall be solely responsible for providing the
continuation of coverage required under Sections 601-609 of ERISA and Section
4980B of the Code with respect to any person who loses coverage under any group
health plan sponsored by the Centennial
35
36
Entities as the result of a qualifying event which occurred prior to or in
connection with the purchase and sale hereunder, and who is, or whose qualifying
event occurred in connection with, a Centennial Employee whose last employment
prior to the qualifying event was associated with the assets being sold.
4.11 Operations Prior to Closing. Between the date of this Agreement
and the Closing Date:
4.11.1 The Centennial Entities shall operate the Stations in
the normal and usual manner, consistent with their past practice and the rules,
regulations, and policies of the Commission, and shall conduct the Stations'
business only in the ordinary course. To the extent consistent with such
operations, the Centennial Entities shall use their reasonable best efforts to:
(a) maintain the present character and entertainment format of the Stations and
the quality of their programs; (b) keep available for post-Closing operations
the services and number of each Station's present employees reasonably necessary
for the operation of the Stations; (c) preserve each Station's present customers
and business relations; (d) continue to make expenditures and engage in
activities designed to promote the Stations; and (e) continue making capital
expenditures, in the case of both (d) and (e) of this Section 4.11.1, all
consistent with past practices of the Stations.
4.11.2 The Centennial Entities shall: (i) subject to Section
7.4, maintain the Assets in their present condition (reasonable wear and tear in
normal use excepted); and (ii) maintain all inventories of supplies, tubes, and
spare parts at levels consistent with each Station's prior practices.
4.11.3 The Centennial Entities shall maintain their books and
records in the usual and ordinary manner, on a basis consistent with prior
periods.
4.11.4 The Centennial Entities shall comply in all material
respects with all laws, rules, ordinances and regulations applicable to it, to
the Assets and to the business and operation of the Stations.
4.11.5 The Centennial Entities shall perform all Contracts
without default and shall pay all of their trade accounts payable in a timely
manner; provided, however, that the Centennial Entities may dispute, in good
faith, any of their alleged obligations.
4.11.6 The Centennial Entities shall not, without the express
written consent of Buyer which shall not be unreasonably withheld, and which
shall be deemed given in the event Buyer has not responded to a written request
therefor within ten (10) business days: (a) sell or agree to sell or otherwise
dispose of any of the Assets (i) other than in the ordinary course of business,
and (ii) unless such Assets are replaced prior to Closing by assets of equal or
greater worth, quality and utility; (b) create any Lien on the Assets; (c)
acquiesce in any infringement, unauthorized use or impairment of the Intangible
Property or change the Stations' call signs; (d) enter into any employment
contract on behalf of the Stations unless the same is terminable at will and
without penalty; (e) grant any of their directors, members, officers or
employees an increase in compensation, except in the ordinary course of business
consistent with
36
37
prior practice or as required under any of the Contracts; or (f) enter into any
other contract, lease or agreement that will be binding after Closing unless the
Centennial Entities have entered into such contract, lease or agreement in the
ordinary course of business and consistent with past practice and such
contracts, leases or agreements do not impose obligations in excess of
Twenty-five Thousands Dollars per agreement or One Hundred Fifty Thousand
Dollars ($150,000) in the aggregate; provided, however, that the limitation in
this clause (d) shall not apply to time sales agreements entered into by the
Centennial Entities in the ordinary course of business, consistent with past
practice and in exchange for cash but only if such time sales agreements provide
for termination upon sixty (60) days notice by the Centennial Entities (or by
any party to which the Centennial Entities assign or transfer such agreement)
without financial penalty.
4.11.7 Sellers shall not create any Lien on the Equity Interests.
4.11.8 Prior to the Closing, and except for the Preliminary
Transfers, the Centennial Entities shall not, and Sellers shall cause the
Centennial Entities not to, without the written consent of Buyer:
(a) issue, deliver, sell, pledge or otherwise encumber, amend,
split, combine or reclassify any shares of its capital stock or its membership
interests, as the case may be, any other voting or equity securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, interests, voting or equity securities or convertible securities,
except that the Operating Agreement of Centennial Broadcasting may amended to
reallocate profits and losses among the current members;
(b) amend its articles of incorporation and by-laws or articles
of organization and limited liability company agreement, provided that the
Operating Agreement of Centennial Broadcasting may be amended to reallocate
profits and losses among the current members;
(c) make, declare or set aside any dividend or distribution
with respect to the Equity Interests or any other equity securities of the
Centennial Entities or redeem or repurchase any of the Equity Interests or any
other equity securities of the Centennial Entities;
(d) acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any person, entity or other business organization or
division thereof or (ii) any other material assets, except purchases of
furnishings and equipment in the ordinary course of business consistent with
past practice or in accordance with the 2000 capital expenditure plan;
(e) (i) incur any Financing Obligations, enter into any "keep
well" or other Contract to maintain any financial statement condition of another
person or entity or enter into any arrangement having the economic effect of any
of the foregoing or (ii) make any loans or advances or capital contributions to,
or investments in, any other person entity other than (A) loans, advances or
capital contributions to any of the
37
38
Centennial Entities, and (B) extensions of credit to customers in the ordinary
course of business and consistent with past practice. "Financing Obligations"
means (i) indebtedness of any of the Centennial Entities for borrowed money,
(ii) obligations of any of the Centennial Entities evidenced by bonds, notes,
debentures, letters of credit, or similar instruments, (iii) obligations of any
of the Centennial Entities under capitalized leases that are not extinguished in
full at or prior to Closing, (iv) obligations of any of the Centennial Entities
under conditional sale, title retention or similar agreements or arrangements
creating an obligation of any of the Centennial Entities with respect to the
deferred purchase price of property (other than customary trade credit), (v)
interest rate and currency obligation swaps, xxxxxx or similar arrangements and
(vi) all obligations of any of the Centennial Entities to guarantee any of the
foregoing types of obligations on behalf of others;
(f) except in the ordinary course of business
consistent with past practices, modify, amend or terminate any Contract set
forth on Schedule 1.2.3 or waive, release or assign any material rights or
claims;
(g) change accounting methods, principles or practices,
if such charge materially affects the assets, liabilities or business of the
Centennial Entities, except insofar as may have been required by a change in
GAAP;
(h) make any Tax election that could affect Buyer or the
Centennial Entities after Closing or settle any Tax audit for any material
amount; or
(i) authorize any of, or commit or agree to take any
of, the foregoing actions.
4.12 Resignations of Directors and Officers. The Sellers and the
Centennial Entities shall cause all officers, directors, advisory board members
and all similar officeholders of the Centennial Entities 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 Centennial
Entities are not in any way indebted or obligated to the resigning party for
termination pay, loans, advances, or otherwise.
4.13 Adverse Developments. The Sellers and the Centennial
Entities shall promptly notify Buyer of any unusual or materially adverse
developments that occur prior to Closing with respect to the Assets or the
operation of the Stations; provided, however, that the Centennial Entities'
compliance with the disclosure requirements of this Section 4.13 shall not
relieve the Sellers or the Centennial Entities of any obligation with respect to
any representation, warranty or covenant of the Centennial Entities in this
Agreement or waive any condition to Buyer's obligations under this Agreement.
4.14 Administrative Violations. If any of the Centennial
Entities receives any finding, order, complaint, citation or notice prior to the
Closing Date which states that any
38
39
aspect of the Stations' operations violates any rule or regulation of the
Commission or of any other governmental authority (an "Administrative
Violation"), including without limitation any rule or regulation concerning
environmental protection, the employment of labor, or equal employment
opportunity, the Centennial Entities shall promptly notify Buyer of the
Administrative Violation, shall use its best efforts to remove or correct the
Administrative Violation, and be responsible for the payment of all costs
associated therewith, including any fines or back pay that may be assessed.
4.15 Bulk Sales Act. Sellers agree to jointly and severally
indemnify, defend, and hold Buyer harmless against any claims, liabilities,
costs, or expenses, including reasonable attorneys' fees, that Buyer may incur
as a result of the failure to comply with the bulk sales provisions of the
Uniform Commercial Code or similar laws with respect to the transactions
contemplated hereby.
4.16 Control of Stations. This Agreement shall not be
consummated until after the Commission has given its written consent thereto,
and notwithstanding anything herein to the contrary, between the date of this
Agreement and the Closing Date, Buyer shall not directly or indirectly control,
supervise or direct, or attempt to control, supervise or direct the operation of
the Stations. Such operations shall be the sole responsibility of Centennial
License.
4.17 Removal of Financing Obligations. At or prior to the
Closing, Sellers and the Centennial Entities shall cause all Financing
Obligations of the Centennial Entities to be repaid or otherwise terminated.
4.18 Buyer's Financing: Other Documents and Acts. Sellers and
the Centennial Entities shall execute such other documents and perform such
other acts as may be necessary with respect to Buyer's financing of the
Transaction, provided that Sellers shall not be obligated to execute any
document that imposes additional or increased obligations on Sellers.
4.19 KSTJ(FM) Technical Facility Upgrades. Sellers and the
Centennial Entities agree to consult with Buyer in good faith in all respects
regarding the KSTJ Signal Upgrade (as that term is defined in Section 1.8.3). In
this regard, Buyer shall have the right to consult with the consulting engineer
hired by the Centennial Entities' for the project and the right to inspect the
KSTJ facilities during the implementation of the project. Further, Sellers and
the Centennial Entities shall submit for approval to Buyer, which approval shall
not be unreasonably withheld, a detailed proposal for the KSTJ Signal Upgrade,
which proposal shall include a budget which in the aggregate shall not exceed
Two Million Six Hundred Fifty Thousand Dollars ($2,650,000) including all
payments required to be made under the Spectrum Scan Agreement and the Technical
Facility Expenses. The parties acknowledge that the budget contains Seller's
reasonable estimate of the costs of the Technical Facilities Expenses and does
not constitute a guarantee of the amount of such costs in order to accomplish
the KSTJ Signal Upgrade. Sellers will not agree to increase the amounts payable
by Centennial under the Spectrum Scan Agreement without Buyer's prior approval,
such approval not to be unreasonably withheld. Buyer will not have any claim
against Sellers in the event that the costs of the Technical Facilities Expenses
exceed the budgeted amount therefor, irrespective of whether such amounts are
paid before or after Closing; provided however that the foregoing does not
supersede any rights of approval
39
40
Buyer may have with respect to contracts entered into in connection with the
KSTJ Signal Upgrade. The cost of the transmitter site lease for the KSTJ Signal
Upgrade shall not be included in the budget. This detailed proposal shall be
submitted to Buyer before equipment is purchased or construction is begun with
respect to the Technical Facility Upgrades. Buyer agrees to cause Centennial to
perform any remaining legal obligations of Centennial under the Spectrum Scan
Agreement after Closing and any other agreements entered into by Centennial
after the date hereof to implement the Technical Facilities Upgrade, provided
that such agreements have been approved by Buyer, which approval shall not be
unreasonably withheld.
4.20 Public Announcements. Sellers and the Centennial Entities
and Buyer shall consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated herein and shall not issue any such press release or
make any such public statement without the prior written consent of the other
party, which shall not be unreasonably withheld; provided, however, that a party
may, without the prior written consent of the other party, issue such press
release or make such public statement as may be required by Law or any listing
agreement with a national securities exchange to which Buyer is a party if it
has used all reasonable efforts to consult with the other party and to obtain
such party's consent but has been unable to do so in a timely manner. Nothing in
this Section shall prevent either party from disclosing information to its
accountants, attorneys or other advisors.
4.21 Instructions for Certain Payments to Third Parties. At
least three (3) days prior to Closing, Sellers shall provide written
instructions to Buyer regarding the satisfaction, out of the Purchase Price
proceeds, of Sellers' obligations pursuant to the Retained Liabilities described
in Section 1.5.11 to pay certain amounts to the third parties described therein
at the Closing. These written instructions shall set forth the gross amount due
to each such third party, the amount to be withheld by Seller Representative for
payment of taxes in respect of these payments and the net amount to be paid to
each such third party.
4.22 Additional Covenant. Buyer, the Centennial Entities and the
Sellers shall take all commercially reasonable efforts to cause the consummation
of the transactions contemplated by this Agreement. Buyer, the Centennial
Entities and the Sellers shall not take any action that is inconsistent with
their obligations under this Agreement in any material respect or that could
reasonably be expected to hinder or delay the consummation of the transactions
contemplated by this Agreement, and each party shall notify the other if any of
its representations and warranties are no longer true and correct. Neither
Sellers, the Centennial Entities nor any of their respective representatives or
agents shall, directly or indirectly, solicit, initiate, or participate in any
way in discussions or negotiations with, or provide any confidential information
to, any person or entity (other than Buyer or any affiliate or associate of
Buyer and their respective representatives and agents) concerning any possible
disposition of the Stations, the Equity Interests, any of the Assets, or any
similar transaction.
4.23 Copies of FCC Applications. The Centennial Entities shall
promptly deliver to Buyer copies of any applications filed with the FCC with
respect to any of the Stations upon filing the same with the FCC.
40
41
4.24 Estoppel Certificates. Sellers shall use commercially reasonable
efforts to obtain executed versions of the Estoppel Certificates in the form
of Exhibit H hereof.
ARTICLE V.
CONDITIONS PRECEDENT
5.1 Mutual Conditions. The obligation of both Sellers and Buyer to
consummate this Agreement is subject to the satisfaction of each of the
following conditions:
5.1.1 Governmental Consents. The Commission shall have granted
its consent to the Transfer Applications (the "FCC Consent"). Any applicable
waiting period under the HSR Act shall have expired or been earlier terminated
without receipt of any second or subsequent request for information from the
Department of Justice or Federal Trade Commission, or the time period for
further action by such agencies following any such second or subsequent request
for information shall have passed, and there shall have been neither any
commencement of any litigation by any governmental authority of competent
jurisdiction to restrain the consummation of the Transaction, nor any written
notice from such governmental authority of a decision to commence such
litigation, which has not been withdrawn or otherwise resolved.
5.1.2 Absence of Litigation. As of the Closing Date, no action,
claim, suit or proceeding seeking to enjoin, restrain, or prohibit the
consummation of the Transaction shall be pending before any court, the
Commission, or any other governmental authority; provided, however, that this
condition may not be invoked by a party if any such action, suit, or proceeding
was solicited or encouraged by, or instituted as a result of any act or omission
of, such party in breach of this Agreement.
5.2 Conditions to Buyer's Obligation. In addition to satisfaction of
the mutual conditions contained in Section 5.1, the obligation of Buyer to
consummate this Agreement is subject to the satisfaction of each of the
following conditions:
5.2.1 Representations and Warranties. The representations and
warranties of Sellers and the Centennial Entities to Buyer shall be true,
complete, and correct in all material respects (without regard to any
materiality limitation contained in any representation or warranty) as of the
Closing Date with the same force and effect as if then made, except to the
extent expressly made as of an earlier date.
5.2.2 Compliance with Conditions. All of the terms, conditions
and covenants to be complied with or performed by Sellers and the Centennial
Entities on or before the Closing Date shall have been timely complied with and
performed in all material respects (without regard to any materiality limitation
contained in any term, condition and covenant).
5.2.3 No Material Adverse Development. No material adverse
development shall have occurred with respect to the Stations, the Assets, the
Centennial Entities or the Equity Interests that results in a significant
impairment to the ability of the Stations to operate as they are currently
operated or represents a substantial impairment of the aggregate value of the
Stations, the Assets, the Centennial Entities or the Equity Interests.
41
42
5.2.4 Station Licenses. On the Closing Date, Centennial License
shall be the lawful holder of the Station Licenses; the Station Licenses shall
be in full force and effect, in accordance with their terms, and with respect to
the Station Licenses other than broadcast auxiliary licenses, the balance of the
current license term shall be that applicable generally to radio broadcast
stations licensed to communities in the state where the Station in question is
located; and the Station Licenses shall be unimpaired by any acts or omissions
of Sellers, the Centennial Entities or their employees, agents, officers,
directors, members or shareholders.
5.2.5 Closing Documents. Sellers and the Centennial Entities
shall deliver to Buyer all of the closing documents specified in Section 1.7.2,
all of which documents shall be dated as of the Closing Date, duly executed, and
in a form customary in transactions of this type and reasonably acceptable to
Buyer.
5.2.6 Preliminary Transfers. Sellers and the Centennial Entities
shall have effected in Preliminary Transfers at least one day prior to the
Closing and shall have provided certified copies of the documentation, which
shall be reasonably satisfactory to Buyer, necessary and advisable to have
effected the Preliminary Transfers;
5.2.7 Third Party Consents. Sellers and the Centennial Entities
shall have obtained all consents required under the Material Contracts in
connection with the consummation of the Transaction (a "Required Consent"), such
that after the Closing the Centennial Entities will continue to enjoy all of
their rights and privileges under the Contracts subject only to the same
obligations as are currently binding thereunder, pursuant to the present terms
thereof. In the event the Centennial Entities fail to obtain any consent
required under a Contract in connection with the consummation of the Transaction
(other than a Required Consent), such Contract shall be assigned to Sellers or
their affiliates at Closing; provided, however, that Buyer may elect to require
that Sellers provide Buyer or the Centennial Entities the benefits under such
Contract until such necessary consent is obtained and such Contract is then
reassigned to Buyer or a Centennial Entity; provided further, that Buyer shall
reimburse Sellers for amounts paid by Sellers pursuant to the terms of such
Contracts to the extent Buyer or a Centennial Entity receives benefits
thereunder.
5.2.8 Finality. The FCC Consent shall have become a Final Order.
"Final Order" means an order or action of the Commission that, by reason of
expiration of time or exhaustion of remedies, is no longer subject to
administrative or judicial reconsideration or review in the normal course.
5.2.9 Satisfactory Environmental Assessment. To the extent that
the Environmental Assessment or additional testing conducted pursuant to Section
4.6 hereof reflects the existence of conditions contrary to any representation
or warranty in this Agreement, either (i) Sellers shall have completed the
remediation of such conditions in accordance with Section 5.6 hereof or (ii)
Buyer shall have provided notice to Sellers of Buyer's election to proceed to
Closing with the proration to the Purchase Price specified in Section 4.6
hereof.
42
43
5.2.10 Centennial Broadcasting Management Agreement. Sellers shall
have terminated the Management Agreement among them relating to the operation of
Centennial Broadcasting and shall have provided sufficient evidence of such
termination to Buyers.
5.2.11 WBYU(AM) Transmitter Site. The replacement tower for
WBYU(AM) shall have been constructed to the reasonable satisfaction of Buyer at
the Parcel X-1 site that will be the subject of a ground lease with the terms
set forth in the draft ground lease previously provided to Buyer (the "New WBYU
Antenna Site"); the FCC shall have authorized the operation of WBYU(AM) at the
New WBYU Antenna Site either by the grant of a construction permit and program
test authority or by the grant of a Special Temporary Authority; all
governmental permits and authorizations for the construction of the replacement
tower structure at the New WBYU(AM) Antenna Site shall have been obtained,
including any required FAA clearance and zoning authorizations; and WBYU(AM)
shall be operating at the New WBYU Antenna Site either substantially in
accordance with the specifications in the Engineering Exhibit when considered as
a whole or pursuant to Special Temporary Authority with power limitations that
are imposed by the FCC in connection with the grant of the Special Temporary
Authority. In the event that WBYU(AM), as of the Closing, is operating at the
New WBYU Antenna Site pursuant to a Special Temporary Authority, then either
there shall pending before the FCC or the FCC shall have granted an application
for a construction permit authorizing facilities for WBYU(AM) at the New
WBYU(AM) Antenna Site with signal coverage that is substantially in accordance
with the specifications in the Engineering Exhibit when considered as a whole.
5.3 Conditions to Sellers' and the Centennial Entities' Obligation. In
addition to satisfaction of the mutual conditions contained in Section 5.1, the
obligation of Sellers and the Centennial Entities to consummate this Agreement
is subject to satisfaction of each of the following conditions:
5.3.1 Representations and Warranties. The representations and
warranties of Buyer to Sellers and the Centennial Entities shall be true,
complete and correct in all material respects (without regard to any materiality
limitation contained in any representation or warranty) as of the Closing Date
with the same force and effect as if then made, except to the extent expressly
made as of an earlier date; provided, that if Buyer elects to pay the Purchase
Price entirely in cash, Sellers' and the Centennial Entities' obligation to
consummate this agreement shall not be conditioned upon the truth, completeness,
or correctness of Buyer's representations and warranties contained in Sections
3.6, 3.7, 3.8, 3.9 or 3.10 and such representations and warranties shall be
treated for all purposes under this Agreement as if never given.
5.3.2 Compliance with Conditions. All of the terms, conditions
and covenants to be complied with or performed by Buyer on or before the Closing
Date shall have been timely complied with and performed in all material respects
(without regard to any materiality limitation contained in any term, condition
and covenant).
5.3.3 Payment. Buyer shall have delivered the stock
certificate(s) described in Section 1.7.3(a) and the payment described in
Section 1.7.3(b).
43
44
5.3.4 Closing Documents. Buyer shall deliver to Sellers all the
closing documents specified in Section 1.7.3, all of which documents shall be
dated as of the Closing Date, duly executed, and in a form customary in
transactions of this type and reasonably satisfactory to Seller.
ARTICLE VI.
POST-CLOSING OBLIGATIONS
The parties covenant and agree as follows with respect to the period
subsequent to the Closing Date:
6.1 Indemnification.
6.1.1 Buyer's Right to Indemnification. Sellers undertake and
agree to jointly and severally indemnify, defend by counsel reasonably
acceptable to Buyer, and hold harmless Buyer, its parent, subsidiaries,
affiliates, successors and assigns and their respective directors, officers,
employees, shareholders, representatives and agents (hereinafter referred to
collectively as "Buyer Indemnitees") from and against and in respect of any and
all losses, costs, liabilities, claims, obligations, diminution in value and
expenses, including reasonable attorneys' fees, incurred or suffered by a Buyer
Indemnitee ("Losses") arising from (a) the claims of third parties with respect
to the Centennial Entities' operation of the Stations or ownership of the Assets
prior to Closing not expressly assumed by Buyer pursuant to this Agreement or
otherwise consented to by Buyer in writing; (b) a breach, misrepresentation, or
other violation of any of Sellers' or the Centennial Entities' covenants,
warranties or representations contained in this Agreement (in each case, read,
including for purposes of determining whether a breach of such covenant,
warranty or representation has occurred, without regard to materiality
qualifications that may be contained therein); (c) all liabilities of Sellers,
the Centennial Entities or the Stations related to the period prior to the
Closing Date and not expressly assumed by Buyer pursuant to this Agreement or
otherwise consented to by Buyer in writing; (d) all Liens on any of the Assets
that are not expressly permitted by this Agreement or otherwise consented to by
Buyer in writing; (e) all Administrative Violations and alleged Administrative
Violations occurring prior to the Closing Date; (f) any breach or default by any
of the Centennial Entities under any Contract prior to the Closing Date; (g) any
liabilities or obligations of Sellers not expressly assumed by Buyer pursuant to
the terms hereof; (h) the litigation described on Schedule 2.16; (i) the facts
and circumstances described on Schedule 2.21; (j) the conditions disclosed in
the Phase I report referenced on Schedule 2.30.1; (k) the Asset Purchase
Agreement dated August 12, 1998 by and among Jacor Broadcasting of Las Vegas,
Inc., Centennial Broadcasting and Centennial License, but excluding amounts
required to be paid as a result of a judicial action that Buyer or any affiliate
of Buyer directly or indirectly maintained or voluntarily assisted in
maintaining, and also excluding Losses arising from a breach of that Agreement
by Centennial Broadcasting or Centennial License after the Closing Date; (l) the
assets of WBYU-AM (A) not being operated pursuant to a Final Order (the "WBYU
Final Order") granting an application on FCC Form 302 to license the
construction of such facilities in accordance with the specifications for
construction set forth in the draft engineering portion of an as yet unfiled
application for construction permit on FCC Form 301 to change the transmitter
site of the station, which draft engineering portion is attached hereto as
Exhibit J (the "Engineering Exhibit") and (B) not being constructed in an
essentially
44
45
equivalent manner to that set forth in the Engineering Exhibit; provided
however, that liability in the case of this item (l) shall not exceed the sum of
Three Million Dollars ($3,000,000); and provided further that notwithstanding
anything to the contrary herein the right of indemnification under this item (l)
shall survive until one year after the date the WBYU Final Order becomes a Final
Order. In addition to the foregoing, Sellers agree to refund to Buyer within 10
business days after a written request by Buyer the KSTJ Upgrade Amount and to
pay to Buyer or its designee any other amounts, which together with the KSTJ
Amount are not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000)
paid on or after Closing under the Spectrum Scan Agreement Agreement by Buyer or
any party controlled by it or under common control with it if, despite
commercially reasonable efforts by Buyer over a period of one year to secure a
transmitter site for the KTSJ Signal Upgrade on commercially reasonable terms
which transmitter site will permit operation of that station at full Class C
facilities, Buyer is unable to secure a such a transmitter site; provided
however, that if at any time within 12 months after Sellers make such refund,
Buyer commences operation of KSTJ(FM) with full Class C facilities, Buyer shall
promptly return the refund payment to Sellers . The foregoing indemnity is
intended by Sellers to cover all acts, suits, proceedings, claims, demands,
assessments, adjustments, diminution in value, costs, and expenses with respect
to any and all of the specific matters in this indemnity set forth.
Notwithstanding the foregoing, with respect to the breach of any representation
or warranty made herein that is made severally and not jointly, the obligations
of the Sellers to indemnify the Buyer Indemnitees for Losses therefrom shall be
several and not joint, and shall be the obligation only of the Seller breaching
such representation and warranty.
6.1.2 Sellers' Right to Indemnification. Buyer undertakes and
agrees to indemnify, defend by counsel reasonably acceptable to Sellers, and
hold harmless Sellers, their affiliates, successors and assigns and their
respective employees, representatives and agents and, prior to the Closing Date,
the Centennial Entities, and their respective directors, officers, employees and
shareholders, representatives and agents (hereinafter referred to collectively
as "Seller Indemnitees") against any and all Losses incurred or suffered by a
Seller Indemnitee arising from (a) the claims of third parties with respect to
the operation of the Stations or ownership of the Assets or the Equity Interests
after Closing; (b) a breach, misrepresentation, or other violation of any of
Buyer's covenants, warranties or representations contained in this Agreement (in
each case, read, including for purposes of determining whether a breach of such
covenant, warranty or representation has occurred, without regard to materiality
qualifications that may be contained therein); (c) the Assumed Liabilities; (d)
any breach or default by Buyer or the Centennial Entities under any Contract on
or after the Closing Date; and (e) all Administrative Violations and any alleged
Administrative Violation occurring for the first time on or after the Closing
Date, provided, that if Buyer elects to pay the Purchase Price entirely in cash,
Buyer shall have no obligation to indemnify any Seller Indemnitee for a breach,
misrepresentation, or other violation of Buyer's representations and warranties
contained in Sections 3.6, 3.7, 3.8, 3.9 or 3.10. The foregoing indemnity is
intended by Buyer to cover all acts, suits, proceedings, claims, demands,
assessments, adjustments, costs, and expenses with respect to any and all of the
specific matters in this indemnity set forth.
6.1.3 Conduct of Proceedings. If any claim or proceeding covered
by the foregoing agreements to indemnify and hold harmless shall arise, the
party who seeks indemnification (the "Indemnified Party") shall give written
notice thereof to the other party (the
45
46
"Indemnitor") within ten (10) business days after the Indemnified Party is
served with, or otherwise notified of, a claim by a third party and, as to all
other claims or proceedings, promptly after the Indemnified Party learns of the
existence of such claim or proceeding; provided, however, that the Indemnified
Party's failure to give the Indemnitor notice within such time period shall not
bar the Indemnified Party's right to indemnification except to the extent that
such failure has prejudiced the Indemnitor's ability to defend the claim or
proceeding. If the facts pertaining to a Loss arise out of the claim of any
third party, or if there is any claim against a third party available by virtue
of the circumstances of the Loss, the Indemnitor may, by giving written notice
to the Indemnified Party within fifteen (15) days following its receipt of the
notice of such claim acknowledging its obligation to indemnify the Indemnified
Party for the claim under this Section 6.1, elect to assume the defense or the
prosecution of such claim, including the employment of counsel or accountants at
its cost and expense; provided, however, that during the interim the Indemnified
Party shall use its commercially reasonable efforts to take actions (not
including settlement) reasonably necessary to protect against further damage or
loss with respect to the Loss. If the Indemnitor elects to assume the defense or
prosecution of such claim, the Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnitor in any such action and
to participate therein, but the fees and expenses of such counsel shall be at
the Indemnified Party's own expense. Whether or not the Indemnitor chooses so to
defend or prosecute such claim, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony and shall attend such conferences, discovery proceedings and trials as
may be reasonably requested in connection therewith. If the Indemnitor elects
not to assume the defense or prosecution of such claim, the Indemnified Party
may compromise, settle or otherwise dispose of such claim upon the consent of
the Indemnitor, which consent shall be given unless the terms of the proposed
compromise, settlement or other disposition are unreasonable and which shall be
deemed given ten (10) business days after notice of such proposed compromise,
settlement or other disposition unless Indemnitor objects within such
ten-business-day period. In the event of payment by the Indemnitor to the
Indemnified Party in connection with any Loss arising out of a third party
claim, the Indemnitor shall be subrogated to and shall stand in the place of the
Indemnified Party as to any events or circumstances in respect of which the
Indemnified Party may have any right or claim against such third party relating
to such indemnified matter. The Indemnified Party shall cooperate with the
Indemnitor in prosecuting any subrogated claim.
6.1.4 Indemnification Sole Remedy. After Closing, the right to
indemnification hereunder shall be the exclusive remedy of any party in
connection with any breach by another party of its representations, warranties,
or covenants, in lieu of any remedy to which any party may otherwise be entitled
as a result of any such breach, except in cases of common law fraud.
6.1.5 Limits on and Conditions of Indemnification; Threshold and
Cap. Notwithstanding any other provision of this Agreement, no Indemnified Party
shall be entitled to make a claim against an Indemnitor in respect of any breach
of this Agreement except to the extent that the aggregate amount of such damages
exceeds the amount of One Hundred Thousand Dollars ($100,000) (the "Threshold
Amount"); provided, however, that once the Threshold Amount has been exceeded,
such Indemnitor shall be liable for the full amount of such damages.
Notwithstanding any other provision of the Agreement, neither the indemnity
46
47
obligation of Sellers nor the indemnity obligation of Buyer shall exceed Fifteen
Million Dollars ($15,000,000) (the "Indemnity Cap Amount"). This Section 6.1.5
shall not apply to a breach, misrepresentation or other violation by any party
of the covenants contained in this Agreement. The threshold provisions of this
Section 6.1.5 shall not apply to any breach, misrepresentation or other
violation by the representations and warranties of Sellers or the Centennial
Entities contained in Sections 2.2, 2.3, 2.4, 2.5, 2.17, 2.23, 2.24 and 2.27 or
to Buyer's right to indemnification for Losses arising under Sections 6.1.1(h),
(i), (j) (k) and (l). The obligation of the Sellers to indemnify Buyer under
Section 6.1.1(l) and the sentence immediately after the sentence containing
Section 6.1.1 (l) shall be in addition to, and not part of, the Indemnity Cap
Amount. For purposes of this Section 6.1.5(a), the claims of Sellers and, if the
Closing shall not have occurred, the claims of the Centennial Entities, shall be
aggregated as if such parties were a single indemnittee. Claims made under
Sections 6.1.1 and 6.1.2 must be submitted to the Indemnitor within the relevant
survival period as set forth in Section 10.5.
6.1.6 Indemnification Escrow. As security for the indemnities
and other agreements of Sellers in this Agreement, at Closing, Buyer, Sellers
and a mutually acceptable escrow agent shall enter into the Indemnification
Escrow Agreement attached hereto as Exhibit E, pursuant to which Buyer shall
deposit with the escrow agent under the Indemnification Escrow Agreement at
Closing either Five Million Dollars ($5,000,000) of the Purchase Price in cash
or stock certificates evidencing Five Million Dollars ($5,000,000) worth of BBGI
Class A Common Stock (as calculated pursuant to Section 1.6).
6.2 Post-Closing Access. Each party agrees that it will cooperate with
and make available to the other party, during normal business hours and upon
reasonable notice, all books and records which are necessary or useful in
connection with any tax inquiry, audit, investigation or dispute, any litigation
or investigation or any other matter requiring any such books and records,
information or employees for any reasonable business purpose. The party
requesting any such books and records, information or employees shall bear all
of the out-of-pocket costs and expenses reasonably incurred in connection with
providing such books and records, information or employees. All information
received pursuant to this Section 6.2 shall be kept confidential by the party
receiving it. If Buyer or any Seller is required by legal process or operation
of law to disclose any confidential information, it shall provide the other
party with prompt written notice of such request so that such other party may
seek an appropriate protective order.
6.3 Future Financings. Sellers acknowledge that Buyer may use the
pre-Closing financial statements of the Centennial Entities and other
information regarding the pre-Closing operations of the Centennial Entities in
connection with future financings by Buyer, including in secondary public
offering prospectuses and registration statements filed under the Securities Act
of 1933, as amended (the "Public Filings") to be issued or filed by Buyer. For a
period of three (3) years from the Closing Date, Sellers shall cooperate in a
commercially reasonable manner with Buyer so that Buyer can obtain information
sufficient for Buyer to prepare such prospectuses and Public Filings, in each
case the out-of-pocket costs for which shall be borne solely by Buyer. The
foregoing cooperation of Sellers shall include (i) with respect to the period of
time that each of the Stations was owned or controlled by the Centennial
Entities or Sellers, compiling the requisite financial information, including
supplying financial information for
47
48
purposes of comfort letters to be issued in connection with Public Filings, (ii)
granting Buyer and its accountants full and complete access to the books and
records of Sellers and to any personnel knowledgeable about such books and
records (including the Sellers' accountants), in each case, to the extent
reasonably requested by Buyer and (iii) with respect to the period of time that
each of the Stations was owned or controlled by the Centennial Entities or
Sellers, signing customary management representation letters related to the
financial statements and any comfort letters. With respect to matters described
in clause (i), for periods prior to the time a Station was owned or controlled
by the Centennial Entities or Sellers, Sellers agree to provide all relevant
financial information in their possession with respect to such periods, to
contact the former owners of the Stations on behalf of Buyer and to assist Buyer
in arranging access to financial information of such former owners.
6.4 Centennial Entities Name Change. Within two (2) business days
after the Closing, Buyer shall file with the Secretary of State of North
Carolina such filings as may be necessary to amend the articles of incorporation
or limited liability company articles of organization of the Centennial Entities
to change the names of the Centennial Entities to a name that does not use the
word "Centennial." Buyer shall provide receipt-stamped copies of those filings
to Sellers within thirty (30) days after the Closing.
ARTICLE VII.
DEFAULT AND TERMINATION
7.1 Termination by Sellers or the Centennial Entities. This Agreement
may be terminated by Sellers and the Centennial Entities and the purchase and
sale of the Equity Interests abandoned, if Sellers and the Centennial Entities
are not then in material default, upon written notice to Buyer, upon the
occurrence of any of the following:
7.1.1 If on the date that would otherwise be the Closing Date any
of the conditions precedent to the obligations of Sellers and the Centennial
Entities set forth in this Agreement have not been satisfied in all material
respects or waived in writing by Sellers and the Centennial Entities and Buyer
shall not have cured such failure to satisfy such conditions within ten (10)
days thereafter.
7.1.2 If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree or order that would prevent
or make unlawful the Closing.
7.1.3 If the Closing shall not have occurred by the Upset Date.
7.1.4 If there shall have been any material breach of any
representation, warranty, covenant or agreement made herein on the part of Buyer
and Buyer shall not have cured such breach within twenty (20) days after Sellers
or the Centennial Entities have given notice to Buyer of such breach, provided,
that if Buyer elects to pay the Purchase Price entirely in cash, Sellers and the
Centennial Entities shall have no right to terminate this Agreement for a
breach, misrepresentation, or other violation of Buyer's representations and
warranties contained in Sections 3.6, 3.7, 3.8, 3.9 or 3.10.
48
49
7.2 Termination by Buyer. This Agreement may be terminated by Buyer
and the purchase and sale of the Equity Interests abandoned, if Buyer is not
then in material default, upon written notice to Sellers, upon the occurrence of
any of the following:
7.2.1 If on the date that would otherwise be the Closing Date any
of the conditions precedent to the obligations of Buyer set forth in this
Agreement have not been satisfied in all material respects or waived in writing
by Buyer and Sellers and the Centennial Entities shall not have cured such
failure to satisfy such conditions within ten (10) days thereafter.
7.2.2 If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree or order that would prevent
or make unlawful the Closing.
7.2.3 If the Closing shall not have occurred by the Upset Date.
7.2.4 If there shall have been any material breach of any
representation, warranty, covenant or agreement made herein on the part of any
of the Sellers or the Centennial Entities and such party shall not have cured
such breach within twenty (20) days after Buyer has given notice to Sellers or
the Centennial Entities of such breach.
7.3 Designation for Hearing. Either party may terminate this Agreement
upon notice to the other, if, for any reason, the Transfer Applications are
designated for hearing by the Commission; provided, however, that notice of
termination must be given within twenty (20) days after release of the hearing
designation order and that the party giving such notice is not in default and
has otherwise complied with its obligations under this Agreement. Upon
termination pursuant to this Section 7.3, the parties shall be released and
discharged from any further obligation hereunder.
7.4 Damage.
7.4.1 Risk of Loss. The risk of loss or damage to the Assets
shall be upon Sellers and the Centennial Entities at all times prior to the
Closing. In the event of any material loss or damage, Sellers and the Centennial
Entities shall promptly notify Buyer thereof and shall repair, replace and
restore the lost or damaged property to its former condition as soon as
possible. If such repair, replacement and restoration has not been completed
prior to the Closing Date, Buyer may, at its option:
(a) elect to terminate this Agreement, but only if the failure
to repair, replace and restore the lost or damaged property continues for a
period in excess of sixty (60) days from the date that would be the Closing Date
without consideration of this Section 7.4.1;
(b) elect to consummate the Transaction on the Closing Date in
which event Sellers shall pay to Buyer the amount necessary to restore the lost
or damaged property to its former condition and against such obligation shall
assign to Buyer all of Sellers' rights under any applicable insurance policies;
or
49
50
(c) elect to postpone the Closing Date, with prior consent of
the Commission if necessary, which consent both parties will use their
reasonable best efforts to obtain, until a date within fifteen (15) business
days after Sellers and the Centennial Entities give written notice to Buyer of
completion of the repair, replacement and restoration of such lost or damaged
property. If, after the expiration of that extension period, the lost or damaged
property has not been adequately repaired, replaced or a restored, Buyer may
terminate this Agreement, and the parties shall be released and discharged from
any further obligation hereunder.
7.4.2 Failure of Broadcast Transmission. Sellers and the
Centennial Entities shall give prompt written notice to Buyer if either of the
following (a "Specified Event") shall occur at any of the Stations: (a) the
regular broadcast transmissions of any of the Stations in the normal and usual
manner are interrupted or discontinued; (b) any of the Stations that are FM
broadcasting stations are operated at less than their respective licensed
antenna height above average terrain or at less than ninety percent (90%) of
their respective licensed effective radiated power; or (c) WBYU(AM) is operated
at less than ninety percent (90%) of its licensed power. If any Specified Event
at a Station persists for more than seventy-two (72) hours (or, in the event of
force majeure or utility failure affecting generally the markets served such
Station, ninety-six (96) hours), whether or not consecutive, during any period
of thirty (30) consecutive days, then Buyer may, at its option: (x) terminate
this Agreement by written notice given to Sellers not more than ten (10) days
after the expiration of such thirty (30) day period, or (y) proceed in the
manner set forth in Section 7.4.1; provided however, that the amount of time
that broadcasting is discontinued (if any) during the anticipated move to the
New WBYU(AM) Antenna Site, up to 72 hours, shall be disregarded for purposes of
this sentence. With regard to WBYU(AM), the parties acknowledge that WBYU(AM)
may be required to operate pursuant to Special Temporary Authorization of the
FCC and at reduced power as required by the FCC's grant of Special Temporary
Authorization, in connection with the implementation of the move of its antenna
site to the New WBYU Antenna Site and the parties acknowledge that such
operations do not give Buyer a right to terminate under this Section 7.4.2.
Sellers. The Centennial Entities promptly shall provide Buyer with any
correspondence between the Centennial Entities and the FCC relating to the
implementation of the move to the New WBYU Antenna Site. This Section 7.4.2
shall not limit the rights of Buyer under Section 5.2.12 with regard to
WBYU(AM). In the event of termination of this Agreement by Buyer pursuant to
this Section, the parties shall be released and discharged from any further
obligation hereunder.
7.4.3 Resolution of Disagreements. If the parties are unable to
agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property, the adequacy of any repair, replacement,
or restoration of any lost or damaged property, or any other matter arising
under this Section 7.4, the disagreement shall be referred to a qualified
consulting communications engineer mutually acceptable to Sellers and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, binding upon and non-appealable by the parties,
and whose fees and expenses shall be paid one-half by Sellers and one-half by
Buyer.
7.5 Legal Actions. If, prior to the Closing Date, any action, suit, or
proceeding shall have been instituted by or before any court or other
governmental authority
50
51
(other than the Commission) to enjoin, restrain, or prohibit the consummation of
the Transaction, the Closing may be adjourned at the option of either party,
with prior consent of the Commission if necessary, which consent both parties
will use their reasonable best efforts to obtain, for a period of up to thirty
(30) days, and if, at the end of such period, the action, suit, or proceeding
shall not have been favorably resolved, either party may, by written notice to
the other, terminate this Agreement; provided, however, that if such action,
suit, or proceeding shall have been solicited or encouraged by, or instituted as
a result of any act or omission in breach of this Agreement of, Sellers or the
Centennial Entities or Buyer, then such party shall not have any right of
adjournment or termination pursuant to this Section. In the event of termination
pursuant to this Section, the parties shall be released and discharged from any
further obligation hereunder.
7.6 Effect on Obligations. Termination of this Agreement pursuant to
this Article VII shall terminate all obligations of the parties hereunder,
except for the obligations under Section 10.1 (entitled "Brokerage"), Section
10.2 (entitled "Expenses") and Section 10.4 (entitled "Attorneys' Fees");
provided, however, that termination pursuant to Section 7.1.4 or Section 7.2.4
shall not relieve the breaching or defaulting party from any liability to the
other party or affect Sellers' right to liquidated damages under Section 8.2.
ARTICLE VIII.
REMEDIES
8.1 Letter of Credit. Within seventy-two (72) hours of the execution
and delivery of this Agreement, Buyer shall deliver a letter of credit in the
amount of Five Million Dollars ($5,000,000) (the "Letter of Credit") in the form
of Exhibit K hereto to First Union National Bank (the "Escrow Agent") in
accordance with the escrow agreement among Buyer, Sellers and the Escrow Agent
(the "Escrow Agreement") attached hereto as Exhibit I. The Letter of Credit
shall be held and disbursed in accordance with the terms of the Escrow Agreement
and the following provisions:
8.1.1 Upon Closing, Buyer and Sellers shall jointly instruct the
Escrow Agent to return the Letter of Credit to Buyer.
8.1.2 If this Agreement is terminated pursuant to Section 4.6,
7.2, 7.3, 7.4 or 7.5 and Buyer is not in material breach of this Agreement,
Buyer and Sellers shall jointly instruct the Escrow Agent to return the Letter
of Credit to Buyer.
8.1.3 If this Agreement is terminated pursuant to Section 7.1.4
or otherwise on account of a breach by Buyer, and Sellers are not in material
breach of this Agreement, then Buyer and Sellers shall jointly instruct the
Escrow Agent to disburse all amounts held by the Escrow Agent pursuant to the
Escrow Agreement to Sellers.
8.2 Sellers' Remedies. If this Agreement is terminated by Sellers and
Section 8.1.3 applies, then the payment to Sellers pursuant to Section 8.1.3
shall be liquidated damages and shall constitute full payment and the exclusive
remedy for any damages suffered by Sellers and the Centennial Entities. Sellers
and Buyer agree in advance that actual damages would be difficult to ascertain
and that the amount of the payment to be made to Sellers pursuant to
51
52
Section 8.1.3 is a fair and equitable amount to reimburse Sellers and the
Centennial Entities for damages sustained due to Buyer's breach of this
Agreement. Sellers and the Centennial Entities waive all claims to damages
arising from any termination of this Agreement except for liquidated damages
under the circumstances set forth in Section 8.1.3.
8.3 Buyer's Remedies. The parties recognize that if, prior to Closing,
Sellers or the Centennial Entities breach this Agreement and refuse to perform
under the provisions of this Agreement, monetary damages alone would not be
adequate to compensate Buyer for its injury. Buyer shall therefore be entitled,
in addition to any other remedies that may be available, to obtain specific
performance of the terms of this Agreement prior to Closing. If any action is
brought by Buyer to enforce this Agreement prior to Closing, Sellers and the
Centennial Entities shall waive the defense that there is an adequate remedy at
law. In the event Buyer elects to terminate this Agreement as a result of
Sellers' or the Centennial Entities' default instead of seeking specific
performance, Buyer shall be entitled to institute proceedings to recover Buyer's
damages. Following the Closing, Buyer shall be entitled, in addition to any
other remedies that may be available, to seek specific performance of the terms
of this Agreement if such remedy is available at equity.
ARTICLE IX.
TAX MATTERS
9.1 Taxes.
9.1.1 Allocation of Responsibility. From and after the Closing
Date, the Sellers shall pay any Taxes payable by a Centennial Entity (i) for all
taxable periods ending on or prior to the Closing Date, (ii) for all taxable
periods beginning prior to the Closing Date and ending after the Closing Date (a
"Pre-Closing Partial Period"), for that portion of such taxable period up to and
including the Closing Date, and (iii) as a result of any breach of any
representation or warranty in Section 2.17 or any covenant made by Sellers or
Seller Representative in this Article IX or in Section 1.5.13 of this Agreement.
Notwithstanding the foregoing, no payment shall be required for Taxes to the
extent reserves for such Taxes are included in the calculation of the Final Net
Working Capital Amount (other than any reserves for deferred Taxes established
to reflect timing differences between book and Tax income) after adjustment (if
any) under Section 1.8.1(c).
9.1.2 Payment of Tax Obligation. Buyer shall notify the Sellers
of any Tax obligation of a Centennial Entity at least fifteen (15) days before
such obligation is due to be paid. Sellers shall wire transfer funds to Buyer
for value no later than three (3) days before such payments are due.
9.1.3 Returns. Sellers shall cause to be prepared in a manner
consistent with past practices all Tax Returns of each Centennial Entity for
taxable years or periods ending on or before the Closing Date but which are due
to be filed after the Closing Date (taking into account all applicable
extensions of time for filing). Sellers shall file all such Tax Returns and
shall cause to be timely paid all Taxes required to be paid for the periods
covered by such Tax Returns. Notwithstanding the foregoing, no payment shall be
required to be paid for Taxes to the
52
53
extent reserves for such Taxes are included in the calculation of the Net
Working Capital Amount on the Closing Balance Sheet (other than any reserves for
deferred Taxes established to reflect timing differences between book and Tax
income). Buyer shall cause to be prepared in a manner consistent with past
practices, except as otherwise required by applicable law, and to be filed all
other required Tax Returns of a Centennial Entity for any period commencing
before, and ending after, the Closing Date.
9.1.4 Refunds. Sellers shall be entitled to retain, or receive
payment from Buyer within fifteen (15) days of the receipt of any Tax refunds or
credits relating to a Centennial Entity that were paid with respect to (i) all
taxable periods ending on or prior to the Closing Date, and (ii) Pre-Closing
Partial Periods, for that portion of such taxable period up to and including the
Closing Date, except in each case to the extent such refund or credit arises as
the result of a carryback of a loss, credit or other tax benefit arising after
the Closing Date. Buyer shall, if Seller Representative so requests and at
Seller Representative's expense, cause a Centennial Entity to file for and
obtain any refund to which Sellers are entitled to under this Section 9.1(d),
provided that Seller Representative shall not file, and Buyer shall not be
obligated to file, to obtain any refund that would have the effect of (x)
increasing any Tax liability of a Centennial Entity or (y) otherwise materially
and adversely affect any item or Tax attribute of a Centennial Entity, in each
case for any taxable period ending after the Closing Date, without Seller
Representative first obtaining Buyer's consent, which consent shall not be
unreasonably withheld. Buyer shall permit Seller Representative to control (at
the Seller Representative's expense) the prosecution of such refund claim, and
shall cause powers of attorney authorizing Seller Representative to represent a
Centennial Entity before the relevant taxing authority with respect to such
refund to be executed, provided that Seller Representative (i) shall keep Buyer
informed regarding the progress and substantive aspect of any such refund and
(ii) shall not compromise or settle any such refund without obtaining Buyer's
consent, which consent shall not be unreasonably withheld, if such compromise or
settlement would have the effect of (x) increasing any Tax liability of a
Centennial Entity or (y) otherwise materially and adversely affect any item or
Tax attribute of a Centennial Entity, in each case for any taxable period ending
after the Closing Date. In the event that any refund or credit of Taxes for
which a payment has been made pursuant to this section 9.1(d) is subsequently
reduced or disallowed, the Sellers shall indemnify and hold Buyer harmless for
any Taxes assessed against Buyer or a Centennial Entity by reason of the
reduction or disallowance.
9.1.5 Cooperation. Buyer and the Sellers shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of any Tax Returns for a Centennial Entity, the filing and
prosecution of any Tax claims and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
9.1.6 Contests. Buyer and the Sellers agree to give prompt notice
to each other of any proposed adjustment to Taxes for any periods of a
Centennial Entity ending on or prior to the Closing Date or any Pre-Closing
Partial Period. Buyer and the Sellers shall
53
54
cooperate with each other in the conduct of any audit or other proceeding
involving a Centennial Entity for such periods and each party may participate at
its own expense. Sellers shall have the right to control the conduct of any such
audit or proceeding for which the Sellers agree that any resulting Tax allocable
to any period prior to and including the Closing Date is set forth by the
indemnity covered in Section 9.4 of this Agreement, (such audit or proceeding, a
"Seller's Contest") provided that: (i) Sellers shall keep Buyer informed
regarding the progress and substantive aspects of any Seller's Contest and (ii)
Sellers shall not compromise or settle any Seller's Contest if such compromise
or settlement would have the effect of (x) increasing any Tax liability of a
Centennial Entity or (y) otherwise materially and adversely affect any item or
Tax attribute of a Centennial Entity, in each case for any taxable period ending
after the Closing Date, without obtaining Buyer's consent, which consent shall
not be unreasonably withheld. If Sellers choose to direct a Seller's Contest,
Buyer shall cause powers of attorney authorizing Seller Representative to
represent a Centennial Entity before the relevant taxing authority and such
other documents as are reasonably necessary for Seller Representative to control
the conduct of any Sellers' Contest, consistent with the terms of this Section
9.1.6.
9.1.7 Allocation of Taxes. For purposes of Section 2.17 and this
Article IX, in the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date, the
portion of such Taxes payable for the period ending on the Closing Date shall be
(a) in the case of any Tax based upon or measured by income, and in the case of
sale or use tax, the amount which would be payable if the taxable year ended as
of the end of the Closing Date and (b) in the case of any other Tax, such as
property or franchise or capital taxes, the amount of such tax for the entire
period multiplied by a fraction, the numerator of which is the number of days in
the period ending on the Closing Date and the denominator of which is the number
of days in the entire period.
9.1.8 Successors. For purposes of this Article IX, all references
to Buyer, a Centennial Entity and the Sellers include successors.
9.2 Treatment of Indemnity and Other Payments. All indemnity and
other payments made under this Agreement shall be considered to be adjustments
to the Purchase Price.
9.3 Survival and Indemnification. The covenants and agreements of the
parties contained in this Article IX and in Section 1.5.13 of this Agreement and
the representations and warranties contained in Section 2.17 of this Agreement
shall survive the Closing and shall remain in full force and effect until sixty
(60) days following the expiration of the applicable statutes of limitations
with respect to any Taxes that would be indemnifiable under this Article IX. The
procedures set forth in Article VIII of this Agreement shall apply to any claims
made by the parties to this Agreement pursuant to this Article IX. Each of the
Sellers agrees to indemnify, defend and save each Buyer Indemnitee, harmless
from and against, and to promptly pay to a Buyer Indemnitee or reimburse a Buyer
Indemnitee for, any and all Losses sustained or incurred by any Buyer Indemnitee
relating to, resulting from, arising out of or by virtue of misrepresentation or
breach of warranty in Section 2.17 of this Agreement or any covenant made by a
Seller or Seller Representative in this Article IX or in Section 1.5.13 of this
Agreement. Buyer agrees to indemnify, defend and save each Seller Indemnitee,
harmless from
54
55
and against, and to promptly pay to such Seller Indemnitee or reimburse such
Seller Indemnitee for any and all Losses sustained or incurred by such Seller
Indemnitee relating to, resulting from, arising out of or by virtue of any
breach of covenant made by Buyer under this Article IX. Notwithstanding anything
to the contrary in this Agreement, to the extent that the provisions contained
in this Article IX conflict with any provision of Article VI of this Agreement,
the provisions contained in this Article IX shall control. Notwithstanding
anything herein to the contrary, the period of survival of claims arising from
the covenant of each Seller under the Non-solicitation Agreement shall survive
for a period of one year after the two-year term of the non-solicitation
obligation contained therein.
9.4 Taxes and Tax Return Defined. For purposes of this Agreement,
"Tax" or "Taxes" means any federal, state, local or foreign net or gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
personal property, real property, capital stock, profits, social security (or
similar), unemployment, disability, registration, value added, estimated,
alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any
governmental authority. For purposes of this Agreement, "Tax Return" means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
ARTICLE X.
GENERAL PROVISIONS
10.1 Brokerage. Each party represents and warrants to the other that no
agent, broker, investment banker, or other person or firm acting on behalf of
such party or any of its affiliates or under the authority of any of them, other
than Xxxxxxx Xxxxxxx of Xxxxxxx & Company, is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with the Transaction. Buyer shall be responsible for all fees due and owing to
Xxxxxxx Xxxxxxx of Xxxxxxx & Company. Each party hereby agrees to indemnify,
save harmless and defend the other from and against all claims, losses,
liabilities and expenses, including reasonable attorney's fees, arising out of
any claim made by any broker, finder or other intermediary who claims to have
dealt with such party in connection with the transaction which is the subject of
this Agreement. The provisions of this Section 10.1 shall survive Closing
hereunder.
10.2 Expenses. Except as otherwise provided herein, all expenses
involved in the preparation and consummation of this Agreement shall be borne by
the party incurring the same whether or not the Transaction is consummated. All
Commission filing fees for the Assignment Applications and all filing fees
required to be paid under the HSR Act shall be shared equally by Buyer and
Sellers. All recording costs for instruments of transfer, and all stamp, sales,
use and transfer taxes shall be paid by Seller.
10.3 Notices. All notices, requests, demands, and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
(i) when delivered personally (which shall include delivery by Federal Express
or other nationally recognized,
55
56
reputable overnight courier service that issues a receipt or other confirmation
of delivery) to the party for whom such communication is intended, (ii) three
(3) business days after the date mailed by certified or registered U.S. mail,
return receipt requested, postage prepaid, addressed as set forth below or (iii)
if transmitted by facsimile, with a copy mailed on the same day in the manner
provided in clause (ii), when receipt is confirmed by telephone.
(a) If to Seller Representative:
c/o Xxxxxx Xxxxx
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx-Xxxxx, X.X. 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or if to Sellers collectively or individually:
Xxxxxx Xxxx 1956 Living Trust
Trust for the Benefit of Xxxxxx Xxxx, Jr.
000 Xxxx Xxxxxx #00
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxx, Individual Trustee
Telephone: (000) 000-0000
Xxxxxx Xxxx, Jr.
000 Xxxx Xxxxxx #00
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Xxxxx X. Xxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Telephone: (000) 000-0000
Xxxxxx Xxxxx
000 Xxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
56
57
in either case with a copy (which shall not
constitute notice) to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
3300 One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Centennial Entities prior to
Closing:
Centennial Broadcasting Nevada, Inc.
Centennial Broadcasting, LLC
Centennial Broadcasting License, LLC
c/o Centennial Broadcasting, LLC
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx-Xxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
(c) If to Buyer:
Xxxxxxx XX Acquisition Corp.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy (which shall not constitute
notice) to
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(Counsel to Xxxxxxx XX Acquisition Corp.)
Any party may change its address for notices by notice to the others given
pursuant to this Section.
57
58
10.4 Attorneys' Fees. If either party initiates any litigation against
the other party involving this Agreement, the prevailing party in such action
shall be entitled to receive reimbursement from the other party for all
reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
10.5 Survival of Representations, Warranties and Indemnification
Rights. The several representations and warranties of the parties contained
herein, and the parties respective indemnification rights pursuant to Section
6.1, shall survive the Closing for a period of eighteen (18) months, at which
time the same shall expire (except for claims asserted during such
eighteen-month period); provided, however, that the representations and
warranties of Sellers and the Centennial Entities contained in Section 2.24
shall survive the Closing for a period of two (2) years; further provided, that
representations and warranties with respect to taxes, ERISA, and environmental
matters shall survive for the period of the applicable statute of limitations
plus ninety (90) days and the representations and warranties with respect to
title and authorization shall survive in perpetuity.
10.6 Exclusive Dealings. For so long as this Agreement remains in
effect, neither Sellers nor the Centennial Entities, their officers, directors,
employees, nor any person acting on Seller's or the Centennial Entities' behalf,
shall, directly or indirectly, solicit or initiate any offer from, or conduct
any negotiations with, any person other than Buyer or Buyer's assignee(s)
concerning the acquisition of the Stations or the Equity Interests.
10.7 Waiver. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of any party at any time to require performance by any
other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (ii) no waiver by any party of any default by
any other shall be valid unless in writing and acknowledged by an authorized
representative of the non-defaulting party, and no such waiver shall be taken or
held to be a waiver by such party of any other preceding or subsequent default;
and (iii) no extension of time granted by any party for the performance of any
obligation or act by any other party shall be deemed to be an extension of time
for the performance of any other obligation or act hereunder.
10.8 Assignment. No party may assign its rights or obligations
hereunder without the prior written consent of the other parties except: (i)
Buyer may assign all or a portion of its rights and obligations to a
corporation, partnership or other business entity that controls, is controlled
by, or is under common control with Buyer, including without limitation, the
assignment of the Station Licenses and Station Applications to an affiliate (a
"License Sub"), provided that any such assignment shall not release Buyer from
any of its obligations under this Agreement and (ii) Buyer may make a collateral
assignment of its rights under this Agreement to any lender that provides funds
to Buyer for the acquisition of the Equity Interests or the acquisition or
operation of the Stations. Sellers and the Centennial Entities agree to execute
acknowledgments of any assignment(s) and collateral assignment(s) pursuant to
this Section 9.8 in such forms as Buyer or Buyer's lender(s) may from time to
time reasonably request. Subject to the foregoing, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the parties hereto
and their respective successors and assignees.
58
59
10.9 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto (which are incorporated by reference herein) constitute the entire
agreement between the parties with respect to the subject matter hereof and
referenced herein, supersede and terminate any prior agreements between the
parties (written or oral). This Agreement may not be altered or amended except
by an instrument in writing signed by the party against whom enforcement of any
such change is sought.
10.10 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures on each such counterpart
were on the same instrument.
10.11 Construction. The Section headings of this Agreement are for
convenience only and in no way modify, interpret or construe the meaning of
specific provisions of the Agreement. As used herein, the neuter gender shall
also denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
10.12 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement are a material part of this Agreement.
10.13 Severability. If any one or more of the provisions contained in
this Agreement should be found invalid, illegal or unenforceable in any respect,
the validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. Any illegal or
unenforceable term shall be deemed to be void and of no force and effect only to
the minimum extent necessary to bring such term within the provisions of
applicable law and such term, as so modified, and the balance of this Agreement
shall then be fully enforceable.
10.14 Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
choice of law rules utilized in that jurisdiction.
10.15 Counsel. Each party has been represented by its own counsel in
connection with the negotiation and preparation of this Agreement and,
consequently, each party hereby waives the application of any rule of law that
would otherwise be applicable in connection with the interpretation of this
Agreement, including but not limited to any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the party
whose counsel drafted that provision.
10.16 Knowledge. The terms "knowledge," "best knowledge," or similar
terms when used with respect to an individual shall mean actual knowledge
without independent inquiry of such individual, and when used with respect to
any Centennial Entity shall mean actual knowledge, without independent inquiry,
of Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxxx Xxxx, Jr., and the General Manager of each of
the Stations.
59
60
10.17 Appointment of Seller Representative. Within ten (10) days of the
date of this Agreement, Sellers shall form a North Carolina limited liability
company. The operating agreement for that limited liability company (a copy of
which shall be provided to Buyer) shall provide that Xxxxxx Xxxxx is the sole
manager of that entity with the full power and authority to take all lawful
actions on behalf of that entity. Within ten (10) days of the date of this
Agreement, each Seller shall, in writing, irrevocably constitute and appoint
that limited liability company as the true and lawful agent and attorney-in-fact
(the "Seller Representative") of such Seller with full power of substitution to
act in the name, place and stead of such Seller with respect to all actions or
decisions hereunder. Sellers shall promptly provide Buyer a copy of such written
appointment(s). Buyer, the other Buyer Indemnitees, and any other person may
conclusively and absolutely rely, without inquiry, upon any action of Seller
Representative as the action of each Seller, and upon any action of Xxxxxx Xxxxx
on behalf of Seller Representative as the authorized action of Seller
Representative, in all matters related to this Agreement, and each such Seller
confirms all that the Seller Representative shall do or cause to be done by
virtue of its appointment as Seller Representative and all Xxxxxx Xxxxx shall do
as sole manager of Seller Representative. All actions by the Seller
Representative are acknowledged by the parties hereto to be taken by it solely
as agent and attorney-in-fact of each Seller. Each Seller covenants and agrees
that he or it will not voluntarily revoke the power of attorney conferred upon
Seller Representative. If any Seller dies or becomes incapacitated, disabled or
incompetent and, as a result, the power of attorney conferred on Seller
Representative is revoked by operation of law, it shall not be a breach under
this Agreement if the heirs, beneficiaries, estate or other legal representative
of such Seller confirms the appointment of Seller Representative as agent and
attorney-in-fact for such party. If at any time Xxxxxx Xxxxx dies or resigns
from the position of sole manager of Seller Representative, the other Sellers
shall designate Xxxxx Xxxx as the successor sole manager.
10.18 Disclaimer. The parties acknowledge and agree that,
notwithstanding any other provision of this Agreement, no representations or
warranties are made by Sellers or the Centennial Entities with respect to the
accuracy or validity of any budgets, forecasts or projections included in the
Station Records, and that all of such budgets, forecasts and projections were
prepared by the Centennial Entities for internal purposes only and without
regard to the transactions contemplated by this Agreement or the possible use
thereof or reliance thereon by Buyer or Xxxxxxx Broadcast Group, Inc.
10.19 Company-Developed Software. The Sellers will give to Buyer at
Closing a copy of the general ledger and budgeting software included in the
Company-Developed Software; however, it is acknowledged and agreed that the
Company-Developed Software is an Excluded Asset. The Company-Developed Software
is designed to run in connection with other database software which is not
proprietary to the Centennial Entities or to the Sellers, the rights to which
cannot be conveyed or licensed by the Centennial Entities or by Sellers to the
Buyer. Accordingly, Sellers and the Centennial Entities make no representations
or warranties whatsoever with respect to the Company-Developed Software or its
operations, and EXPRESSLY DISCLAIM ANY WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE COMPANY-DEVELOPED SOFTWARE, INCLUDING (WITHOUT LIMITATION) ANY
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT.
60
61
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW.]
61
62
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by a respective duly authorized officer or representative as of the
date first written above.
BUYER:
-----
XXXXXXX XX ACQUISITION CORP.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Secretary
SELLERS:
-------
/s/ Xxxxxx Xxxxx
------------------------------------------
XXXXXX XXXXX
/s/ Xxxxx Xxxx
------------------------------------------
XXXXX XXXX
/s/ Xxxxxx Xxxx, Jr.
------------------------------------------
XXXXXX XXXX, JR.
XXXXXX XXXX 1956 LIVING TRUST f/b/o
XXXXXX XXXX, JR.
By: /s/ Xxxxxx Xxxx, Jr.
------------------------------------------
Name: Xxxxxx Xxxx, Jr.
Title: Individual Trustee
[SIGNATURES CONTINUE ON NEXT PAGE]
S-1
63
[SIGNATURE PAGE CONTINUED]
CENTENNIAL BROADCASTING NEVADA, INC.
By: /s/ Xxxxx Xxxx
--------------------------------------
Name: Xxxxx Xxxx
Title: President and CEO
CENTENNIAL BROADCASTING, LLC
By: /s/ Xxxxx Xxxx
---------------------------------------
Name: Xxxxx Xxxx
Title: Member
CENTENNIAL BROADCASTING LICENSE, LLC
By: Centennial Broadcasting, LLC
Its Member
By:/s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Member
S-2
64
EQUITY INTEREST PURCHASE AGREEMENT
BY AND AMONG
XXXXXXX XX ACQUISITION CORP.
BUYER
AND
XXXXX XXXX
XXXXXX XXXXX,
XXXXXX XXXX, JR.
AND
XXXXXX XXXX 1956 LIVING TRUST
SELLERS
AND
CENTENNIAL BROADCASTING NEVADA, INC.
CENTENNIAL BROADCASTING LICENSE, LLC,
AND
CENTENNIAL BROADCASTING, LLC
DATED AS OF JUNE 2, 2000
65
TABLE OF CONTENTS
PAGE
----
ARTICLE I. PURCHASE AND SALE OF EQUITY INTERESTS........................................................................ 2
1.1 Purchase and Sale of Equity Interests; Preliminary Transactions................................. 2
1.2 Assets.......................................................................................... 3
1.3 Excluded Assets................................................................................. 6
1.4 Assumed Liabilities............................................................................. 7
1.5 Retained Liabilities............................................................................ 8
1.6 Purchase Price................................................................................. 10
1.7 Closing........................................................................................ 11
1.8 Purchase Price Adjustments..................................................................... 18
1.9 Allocation..................................................................................... 26
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE
CENTENNIAL ENTITIES........................................................................................ 26
2.1 Organization................................................................................... 27
2.2 Capital Stock of Centennial Nevada............................................................. 28
2.3 Membership Interests of Centennial Broadcasting................................................ 29
2.4 Membership Interests of Centennial License..................................................... 31
2.5 Subsidiaries................................................................................... 32
2.6 Due Authorization.............................................................................. 33
2.7 No Breach...................................................................................... 35
2.8 Station Licenses............................................................................... 36
2.9 Station Applications........................................................................... 38
2.10 Title to Assets................................................................................ 38
2.11 Condition of Equipment......................................................................... 38
2.12 Condition of Real Property..................................................................... 39
2.13 Contracts...................................................................................... 42
2.14 Employees...................................................................................... 44
2.15 Employee Benefit Plans......................................................................... 45
2.16 Litigation..................................................................................... 47
2.17 Taxes.......................................................................................... 48
2.18 Compliance With Laws........................................................................... 51
2.19 Insolvency Proceedings......................................................................... 53
2.20 Citizenship.................................................................................... 54
2.21 Patents, Trademarks, Copyrights................................................................ 54
2.22 Financial Statements........................................................................... 56
2.23 Absence of Changes or Events................................................................... 57
2.24 Undisclosed Liabilities........................................................................ 59
2.25 Sufficiency of Assets.......................................................................... 59
2.26 No Misleading Statements....................................................................... 59
2.27 Securities Matters............................................................................. 60
2.28 Transactions with Affiliates................................................................... 62
66
2.29 Insurance...................................................................................... 62
2.30 Environmental Matters.......................................................................... 62
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER................................................................... 65
3.1 Organization................................................................................... 65
3.2 Authorization.................................................................................. 65
3.3 No Breach...................................................................................... 66
3.4 Investment Intent.............................................................................. 67
3.5 Qualification as Broadcast Licensee............................................................ 67
3.6 Capitalization; BBGI Class A Common Stock...................................................... 68
3.7 Securities Filings............................................................................. 69
3.8 Nasdaq National Market Listing................................................................. 69
3.9 Financial Statements........................................................................... 70
3.10 Form S-3 Eligibility........................................................................... 70
3.11 Rule 144 Eligibility........................................................................... 70
3.12 Compliance with Laws........................................................................... 71
3.13 No Misleading Statements....................................................................... 71
ARTICLE IV............................................................................................................. 71
ARTICLE IV. PRE-CLOSING OBLIGATIONS.................................................................................... 71
4.1 Application for Commission Consent............................................................. 71
4.2 Xxxx-Xxxxx-Xxxxxx Act.......................................................................... 72
4.3 Other Governmental Consents.................................................................... 72
4.4 Financial Information.......................................................................... 73
4.5 Third Party Consents........................................................................... 74
4.6 Environmental Site Assessment.................................................................. 74
4.7 Title Insurance................................................................................ 75
4.8 Confidentiality................................................................................ 76
4.9 Access......................................................................................... 76
4.10 Employee Matters............................................................................... 77
4.11 Operations Prior to Closing.................................................................... 78
4.12 Resignations of Directors and Officers......................................................... 84
4.13 Adverse Developments........................................................................... 84
4.14 Administrative Violations...................................................................... 84
4.15 Bulk Sales Act................................................................................. 85
4.16 Control of Stations............................................................................ 85
4.17 Removal of Financing Obligations............................................................... 86
4.18 Buyer's Financing: Other Documents and Acts................................................... 86
4.19 KSTJ(FM) Technical Facility Upgrades........................................................... 86
4.20 Public Announcements........................................................................... 87
4.21 Instructions for Certain Payments to Third Parties............................................. 88
4.22 Additional Covenant............................................................................ 88
4.23 Copies of FCC Applications..................................................................... 89
ii
67
ARTICLE V. CONDITIONS PRECEDENT....................................................................................... 90
5.1 Mutual Conditions............................................................................. 90
5.2 Conditions to Buyer's Obligation.............................................................. 91
5.3 Conditions to Sellers' and the Centennial Entities' Obligation................................ 95
ARTICLE VI. POST-CLOSING OBLIGATIONS.................................................................................. 97
6.1 Indemnification............................................................................... 97
6.2 Post-Closing Access........................................................................... 105
6.3 Future Financings............................................................................. 105
6.4 Centennial Entities Name Change............................................................... 107
ARTICLE VII. DEFAULT AND TERMINATION.................................................................................. 107
7.1 Termination by Sellers or the Centennial Entities............................................. 107
7.2 Termination by Buyer.......................................................................... 108
7.3 Designation for Hearing....................................................................... 109
7.4 Damage........................................................................................ 110
7.5 Legal Actions................................................................................. 113
7.6 Effect on Obligations......................................................................... 113
ARTICLE VIII. REMEDIES................................................................................................ 114
8.1 Letter of Credit.............................................................................. 114
8.2 Sellers' Remedies............................................................................. 115
8.3 Buyer's Remedies.............................................................................. 115
ARTICLE IX. TAX MATTERS............................................................................................... 116
9.1 Taxes......................................................................................... 116
9.2 Treatment of Indemnity and Other Payments..................................................... 121
9.3 Survival and Indemnification.................................................................. 121
9.4 Taxes and Tax Return Defined.................................................................. 121
ARTICLE X. GENERAL PROVISIONS......................................................................................... 123
10.1 Brokerage..................................................................................... 123
10.2 Expenses...................................................................................... 123
10.3 Notices....................................................................................... 124
10.4 Attorneys' Fees............................................................................... 128
10.5 Survival of Representations, Warranties and................................................... 128
10.5 Indemnification Rights........................................................................ 129
10.6 Exclusive Dealings............................................................................ 129
10.7 Waiver........................................................................................ 129
10.8 Assignment.................................................................................... 130
10.9 Entire Agreement.............................................................................. 131
10.10 Counterparts.................................................................................. 131
10.11 Construction.................................................................................. 131
10.12 Schedules and Exhibits........................................................................ 132
10.13 Severability.................................................................................. 132
10.14 Choice of Law................................................................................. 132
iii
68
10.15 Counsel....................................................................................... 132
10.16 Knowledge..................................................................................... 133
10.17 Appointment of Seller Representative.......................................................... 133
10.18 Disclaimer.................................................................................... 134
10.19 Company-Developed Software.................................................................... 135
69
DEFINED TERMS
As used herein, the following terms shall have the
meanings defined in the introduction, background or section indicated below:
Accounts Receivable Section 1.8.1(a)
Actual value Section 1.8.1(c)
Adjustment Period Section 1.8.2(b)
Administrative Violation Section 4.14
Agreement Introduction
Ancillary Agreements Section 2.6.1
Annual Report Section 3.7
Applicable Rate Section 1.8.1(d)
Assets Section 1.2
Assumed Liabilities Section 1.4
Auditor Section 1.8.1(c)
Base Price Section 1.6
BBGI Section 3.6
BBGI Class A Common Stock Section 1.6
Buyer Introduction
Buyer Ancillary Agreements Section 3.2
Buyer Indemnitees Section 6.1.1
Calculated Value Section 1.8.2(b)
Cash Payment Adjustment Amount Section 1.8.2
Centennial Broadcasting Introduction
Centennial Entities Introduction
Centennial License Introduction
Centennial Nevada Introduction
Closing Section 1.7.1
Closing Balance Sheet Section 1.8.1(b)
Closing Date Section 1.7.1
Code Section 2.15
Commission Background
Contracts Section 1.2.3
Credit Agreement Section 3.3
Deficit Amount Section 1.8.1(d)
Determination Date Section 1.8.1(c)
Employee Plan Section 2.15
Environmental Assessment Section 4.6
Environmental Statutes Section 2.30.2
Equity Interests Background
ERISA Section 2.15
ERISA Affiliate Section 2.15
Escrow Agent Section 8.1
70
Escrow Agreement Section 8.1
Estimated Net Working Capital Amount Section 1.8.1(a)
Estoppel Certificates Section 5.2.10
Exchange Act Reports Section 3.7
Excluded Assets Section 1.3
FAA Section 2.18.5
FCC Background
FCC Consent Section 5.1.1
Final Net Working Capital Amount Section 1.8.1(b)
Final Order Section 5.2.8
Financial Statements Section 2.22
Financing Obligations Section 4.11.8(e)
GAAP Section 1.8.1(a)
Xxxxxx Xxxx Trust Introduction
Hazardous Substance Section 2.30.2
High value Section 1.8.1(c)
Highest closing share price Section 1.8.2(b)
HSR Act Section 4.2
Increase Amount Section 1.8.1(d)
Indemnified Party Section 6.1.3
Indemnitor Section 6.1.3
Intangible Property Section 1.2.5
IRS Section 2.15
KSTJ Signal Upgrade Section 1.8.3
KSTJ Upgrade Order Section 1.8.3
Lease Agreements Section 2.12.3
Leased Real Property Section 2.12.1
Letter of Credit Section 8.1
License Sub Section 10.8
Liens Section 1.1.1
Losses Section 6.1.1
Low value Section 1.8.1.(c)
Material Contracts Section 4.5
Net Working Capital Amount Section 1.8.1(a)
Non-solicitation Agreements Section 1.7.2(g)
Owned Real Property Section 2.12.1
Pre-Closing Partial Period Section 9.1.1
Preliminary Transfers Section 1.1.2
Promotional Rights Section 2.21
Public Filings Section 6.3
Purchase Price Section 1.6
Purchased Membership Interests Background
Real Property Section 1.2.4
Registration Rights Agreement Section 3.2
71
Required Consent Section 5.2.7
Retained Liabilities Section 1.5
S Corporation Section 2.17.10
S Corporation State Section 2.17.10
Seller Indemnitees Section 6.1.2
Seller Representative Section 10.17
Sellers Background
Senior Lenders Section 3.3
Shares Background
Specified Event Section 7.4.2
Station Applications Section 1.2.1
Station Employees Section 4.10.2
Station Equipment Section 1.2.2
Station Licenses Section 1.2.1
Station Records Section 1.2.6
Stations Background
Subsidiary Section 2.5.1
Tax Section 9.4
Tax Return Section 9.4
Taxes Section 9.4
Technical Facility Expenses Section 1.8.3(b)
Technical Facility Upgrades Section 1.8.3
Terminated Employees Section 4.10.2
Threshold Amount Section 6.1.5
Title Commitment Section 4.7
Trade Agreements Section 1.8.1(a)
Trade Balance Section 1.8.1(a)
Transaction Background
Transfer Applications Section 4.1
Upset Date Section 1.7.1
72
TABLE OF SCHEDULES AND EXHIBITS
SCHEDULE TITLE
-------- -----
Schedule 1.2.1 Licenses
Schedule 1.2.2 Personal Property
Schedule 1.2.3 Contracts and Leases
Schedule 1.2.4 Real Property
Schedule 1.2.5 Intellectual Property
Schedule 1.3.7 Centennial Logo
Schedule 1.5.11 Third Party Payments
Schedule 1.8.3 KSTJ Upgrade Adjustment
Schedule 2.1 Organization of Centennial Entities
Schedule 2.3 Interest in Centennial Entities
Schedule 2.5.2 Subsidiaries
Schedule 2.10 Liens
Schedule 2.14 Employees
Schedule 2.15 Benefit Plans
Schedule 2.16 Litigation
Schedule 2.21 Promotional Rights Infringements
Schedule 2.22 Financial Statements
Schedule 2.23 Absence of Change
Schedule 2.29 Insurance
Schedule 2.30.1 Environmental
Schedule 2.30.2 Hazardous Substances
Schedule 2.30.3 Hazardous or Toxic Materials
Schedule 2.30.4 Environmental Statutes Authorizations
EXHIBIT TITLE
------- -----
A Membership Interest Assignment Agreement
[B Intentionally Omitted]
C Non-solicitation Agreement
D Xxxxx Xxxx Employment Agreement
E Indemnification Escrow Agreement
F Registration Rights Agreement
[G Intentionally Omitted]
H Estoppel Certificate
I Escrow Agreement
J Engineering Exhibit
K Letter of Credit
