STOCK PURCHASE AGREEMENT
BETWEEN
CUMULUS HOLDINGS, INC.
AND
XXXXX XXXXXX
November 7, 1997
EXHIBITS
Exhibit A--Form of Xxxxxxx Money Escrow Agreement
Exhibit B--Form of Retainage Agreement
Exhibit C--Form of Opinion of Counsel to the Seller
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into on November 7, 1997, by
and among Cumulus Holdings, Inc., an Illinois corporation (the "Buyer") and
Xxxxx Xxxxxx (the "Seller"). The Buyer and the Seller are referred to
collectively herein as the "Parties."
The Seller owns all of the outstanding capital stock of Forjay
Broadcasting Corporation (the "Company") which owns and operates radio stations
XXXX-FM and XXXX-AM, each licensed to operate in Florence, South Carolina
(collectively the "Stations").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of the Company in return for Cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of his Company Shares for the consideration
specified below in this Section 1.
(b) Purchase Price. The Buyer agrees to pay to the Seller Four
Million One Hundred Thousand and 00/100 Dollars ($4,100,000.00), plus the
Working Capital Price Adjustment (collectively the "Purchase Price") payable as
follows:
(i) on the date of this Agreement, the Buyer will deposit with
the Xxxxxxx Money Escrow Agent the amount of Two Hundred Five Thousand and
00/100 Dollars ($205,000.00) (the "Xxxxxxx Money Deposit") in Cash by
delivery of either (A) a clean and irrevocable letter of credit issued by
NationsBank Texas, N.A. for the benefit of the Xxxxxxx Money Escrow Agent
or (B) by wire transfer or delivery of other immediately available funds;
(ii) on the Closing Date, the Buyer shall deposit with the
Retainage Agent the amount of Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) (the "Retainage Deposit") in Cash by wire transfer
or delivery of other immediately available funds;
(iii) on the Closing Date, the Buyer shall pay to the Seller
the amount of Three Million Six Hundred Forty Five Thousand and 00/100
Dollars ($3,645,000.00), less
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interest earned on the Xxxxxxx Money Deposit, by wire transfer or delivery
of other immediately available funds; and
(iv) on the date set forth in Section 7(d), the Buyer shall
pay to the Seller the Working Capital Price Adjustment.
The Xxxxxxx Money Deposit referenced in this Section 1(i) shall be placed in
escrow with the Escrow Money Escrow Agent pursuant to an escrow agreement in the
form attached hereto as Exhibit A (the "Xxxxxxx Money Escrow Agreement"), which
requires that the Xxxxxxx Money Deposit in the form of cash shall be deposited
by the Xxxxxxx Money Escrow Agent with a federally insured financial institution
in an interest bearing account. Any interest earned on the Xxxxxxx Money Deposit
shall accrue to the benefit of the Buyer, and, together with the principal
amount of the Xxxxxxx Money Deposit, shall be payable to the Seller and credited
against the Purchase Price on the Closing Date. If this Agreement is terminated
without Closing of the transaction contemplated herein, the Xxxxxxx Money and
all accrued interest shall be paid to the Buyer or the Seller as provided in the
Xxxxxxx Money Escrow Agreement.
The Retainage Deposit referenced in this Section 1(ii) shall be placed in escrow
with the Retainage Agreement pursuant to an escrow agreement in the form
attached hereto as Exhibit B (the "Retainage Agreement"), which requires that
the Retainage Deposit shall be deposited by the Retainage Agent as provided in
the Retainage Agreement. Interest earned on the Retainage Deposit shall accrue
to the benefit of the Seller, and, together with the principal amount of the
Retainage Deposit, shall be payable to the Seller or the Buyer as provided in
the Retainage Agreement.
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of the Stations
in Florence, South Carolina, commencing at 9:00 a.m. local time on the date set
by the Buyer not earlier than the fifth business day or later than the tenth
business day after the FCC approval of the Transfer Application becomes a Final
Order, by which date all other conditions to the obligations of the Parties to
consummate the transactions contemplated hereby will have been satisfied or
waived, or such other date as the Parties may mutually determine (the "Closing
Date").
(d) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below, (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 6(b)
below, (iii) the Seller will deliver to the Buyer stock certificates
representing all of his Company Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Seller the
consideration specified in Section 1(b) above.
2. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 2 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 2) with respect to himself, herself or itself, except as set forth in
Disclosure Schedule accompanying
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this Agreement and initialed by the Parties (the "Disclosure Schedules")
corresponding to the lettered and numbered sections of this Section 2.
(a) Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions. The
Seller need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement, other than
Transfer Assignment Applications described in Section 5(b).
(b) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, nor the
performance of his obligations hereunder, will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Seller is subject or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Seller is a party or by which he is
bound or to which any of his assets is subject.
(c) Brokers' Fees. Other than One Hundred Twelve Thousand and 00/100
Dollars ($112,000.00) of the fees payable by the Seller to The Xxxxxxx Agency,
the Seller has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or obligated.
(d) Company Shares. The Seller holds of record and owns beneficially
the number of Company Shares set forth next to his or its name in Section 2(e)
of the Disclosure Schedule, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), claims, Taxes, Security Interests, options, warrants, rights, contracts,
calls, commitments, equities, and demands. The Seller is not a party to any
option, warrant, right, contract, call, put, or other agreement or commitment
providing for the disposition or acquisition of any capital stock of the Company
(other than this Agreement). The Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of any
capital stock of the Company.
3. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
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(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Illinois.
(b) Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 1 above), will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Buyer is subject or any provision of the charter or bylaws
of the Buyer or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which either of the Buyer is a party or by
which it is bound or to which any of its assets are subject. Other than with
respect to the Transfer Application, the Buyer does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
4. Representations and Warranties Concerning the Company. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the lettered and numbered paragraphs
contained in the Disclosure Schedule corresponding to the lettered and numbered
sections of this Section 4.
(a) Organization, Qualification, and Corporate Power. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction in
which the nature of its businesses or the ownership or leasing of its properties
requires such qualification. The Company has full corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. Section 4(a) of the Disclosure Schedule lists
the directors and officers of the Company. The Seller has delivered to the Buyer
correct and complete copies of the charter and bylaws of the Company (as amended
to date). The minute books containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors, the stock certificate books, and the stock record books of the
Company are correct and complete. The Company is not in default under or in
violation of any provision of its charter or bylaws. The
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Company does not have any Subsidiaries and does not control directly or
indirectly or have any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of the Company.
(b) Capitalization. The entire authorized capital stock of the
Company consists of ______ Company Shares, of which 40 Company Shares are issued
and outstanding and no Company Shares are held in treasury. All of the issued
and outstanding Company Shares have been duly authorized, are validly issued,
fully paid, and nonassessable, and are held of record by the Seller. There are
no outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights, or other agreements or commitments to
which the Company is a party or which are binding upon the Company providing for
the issuance, disposition, or acquisition of any of its capital stock. There are
no outstanding or authorized stock appreciation, phantom stock, or similar
rights with respect to the Company. There are no voting trusts, proxies, or any
other agreements or understandings with respect to the voting of the capital
stock of the Company.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Company is subject or any provision of the charter or
bylaws of the Company or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Company is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to that
Transfer Application, the Company need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) Financial Statements. Included in Section 4(d) of the Disclosure
Schedules are the following financial statements (collectively the "Financial
Statements") (i) compiled balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1993; December 31, 1994; December 31, 1995 and December 31, 1996
(the "Most Recent Fiscal Year End") for the Company; and (ii) unaudited
statements of income and cash flow for each month during 1995 and 1996 and for
the months ended January 31, February 28, March 31, April 30, May 31, June 30,
July 31 and August 31, 1997 for the Company. The Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby (other than the absence of accruals for income taxes),
are correct and complete, and are consistent with the books and records of the
Company (which books and records are correct and complete). Without limiting the
generality of the foregoing, all material revenues and expenses of the Company
(A) are properly reflected in the Financial Statements, (B) have arisen in the
Ordinary Course of Business, (C) are valid and subject to no counter-claims, and
(D) will be or has been collected or paid at their recorded amounts subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheets.
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(e) Subsequent Events. Since January 1, 1997, except as set forth in
Section 4(e) of the Disclosure Schedules, there has not been any adverse change
in the assets, Liabilities, business, financial condition, operations, results
of operations, or future prospects of the Company with respect to the operation
of the Stations. Without limiting the generality of the foregoing and with
respect to the operation of the Stations since that date:
(i) the Company has not sold, leased, transferred, or assigned
any of its material assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any contract, lease,
sublease, license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course of
Business;
(iii) no party has accelerated, terminated, modified, or
cancelled any contract, lease, sublease, license, or sublicense (or series
of related contracts, leases, subleases, licenses, and sublicenses)
involving more than $5,000 to which the Company is a party or by which it
is bound;
(iv) no Security Interest has been imposed upon any of the
Company's assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of
Business;
(vi) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and acquisitions)
outside the Ordinary Course of Business;
(vii) the Company has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease obligations)
outside the Ordinary Course of Business other than the obligations of the
Company under the Bonus Agreements;
(viii) the Company has not delayed or postponed (beyond its
normal practice) the payment of accounts payable and other Liabilities;
(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
(x) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
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(xi) the Company has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property or any
action adversely affecting the FCC Licenses or the Stations;
(xii) the Company has not made any loan to, or entered into
any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business giving rise to any claim or right
on its part against the person or on the part of the person against it;
(xiii) the Company has not entered into any employment
contract, consulting contract or severance agreement or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xiv) the Company has not granted any increase outside the
Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees;
(xv) the Company has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E) retirement,
(F) medical, hospitalization, life, or other insurance, (G) severance, or
(H) other plan, contract, or commitment for any of its directors,
officers, and employees, or modified or terminated any existing such plan,
contract, or commitment;
(xvi) the Company has not made any other change in employment
terms for any of its directors, officers, and employees;
(xvii) the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xviii) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Company;
(xix) the Company has not altered its credit and collection
policies or its accounting policies;
(xx) the Company has not materially altered the programming,
format or call letters of the Stations or their promotional and marketing
activities;
(xxi) the Company has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action necessary to
preserve the FCC Licenses and has operated the Stations in compliance
therewith and with all FCC rules and regulations;
(xxii) there has been no change made or authorized in the
charter or bylaws of the Company;
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(xxiii) the Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or
other rights to purchase or obtain (including upon conversion or exercise)
any of its capital stock;
(xxiv) the Company has not declared, set aside, or paid any
dividend or distribution with respect to its capital stock or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xxv) there has been no adverse change in the market share or
Cash flow of the Stations; and
(xxvi) the Company has not committed to any of the foregoing.
(f) Undisclosed Liabilities. The Company has no Liability (and there
is no Basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Year End in the
Ordinary Course of Business (none of which relates to any breach of contract,
breach of warranty, tort, infringement, or violation of law or arose out of any
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand).
(g) Tax Matters.
(i) The Company has filed all Tax Returns and returns that it
was required to file or may be required to file. All such Tax Returns that
were filed were correct and complete in all respects, and all such Tax
Returns that will be filed will be correct and complete in all respects.
All Taxes owed by the Company have been paid. The Company is not currently
a party to a pending Tax audit, aware of a threatened Tax audit, or the
beneficiary of any extension of time within which to file any Tax Return.
No claim has ever been made by an authority in a jurisdiction where the
Company does not file reports and returns that it is or may be subject to
taxation by that jurisdiction. There are no Security Interests on any of
the assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to
any employee, creditor, independent contractor, or other third party.
(iii) No Seller or director or officer (or employee
responsible for Tax matters) of the Company has Knowledge that any
authority has or will seek to assess any additional Taxes for any period
for which returns have been filed. There is no dispute or claim concerning
any Tax Liability of the Company either (A) claimed or raised by any
authority in writing or (B) as to which the Company and the directors and
officers (and employees responsible for Tax matters) of the Company has
Knowledge based upon
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personal contact with any agent of such authority. Section 4(g) of the
Disclosure Schedule lists all federal, state, local, and foreign income
Tax Returns filed with respect to the Company for taxable periods ended on
or after January 1, 1992, indicates those returns that have been audited,
and indicates those returns that currently are the subject of audit. The
Company has delivered to the Buyer correct and complete copies of all
federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company since January 1,
1993.
(iv) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The Company is not a party to any Tax allocation or
sharing agreement. The Company has not ever been (or has any Liability for
unpaid Taxes because it once was) a member of an Affiliated Group during
any part of any consolidated return year within any part of a consolidated
return year.
(vi) Section 4(g) of the Disclosure Schedule sets forth the
following information with respect the Company as of the most recent
practicable date: (A) the basis of the Company in its assets; (B) the
amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution
allocable to the Company; and (C) the amount of any deferred gain or loss
allocable to the Company arising out of any Deferred Intercompany
Transaction.
(vii) The unpaid Taxes of the Company do not exceed the
reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company in
filing its Tax Returns; provided, that the financial statements do not
reflect accruals for federal, state and local income taxes of the Company.
(h) Tangible Assets. Section 4(h) of the Disclosure Schedule sets
forth a listing of all transmitter and station equipment, vehicles and other
tangible personal property used in conducting the operation and business of the
Stations. The Company owns or leases all tangible assets necessary for the
conduct of the operation and business of the Stations as presently conducted and
as presently proposed to be conducted. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used.
To the Knowledge of the Seller, no such tangible asset is in need of
replacement.
(i) Owned Real Property. Section 4(i) of the Disclosure Schedule
lists and describes briefly all real property that the Company owns. With
respect to each such parcel of owned real property:
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(i) the Company has good and marketable title to the parcel of
real property, free and clear of any Security Interest, easement,
covenant, or other restriction, (including but not limited to leases or
other agreements granting to any party the right of use or occupancy of
and options or rights of first refusal to purchase) except for recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of the
property subject thereto;
(ii) there are no (A) pending or, to the Knowledge of the
Seller and the Company, threatened condemnation proceedings relating to
the property; (B) pending or, to the Knowledge of the Seller and the
Company, threatened litigation or administrative actions relating to the
property; or (C) other matters affecting occupancy, or value thereof;
(iii) the legal description for the parcel contained in the
deed thereof describes such parcel fully and adequately, the buildings,
towers, antennae and improvements are located within the boundary lines of
the described parcels of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications), and do not
encroach on any easement which may burden the land, the land does not
serve any adjoining property for any purpose inconsistent with the use of
the land, the property is not located within any flood plain or subject to
any similar type restriction for which any permits or licenses necessary
to the use thereof have not been obtained, and access to the property is
provided by paved public right-of-way with adequate curb cuts available;
(iv) all facilities have received all approvals of
governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and regulations;
(v) there are no parties (other than the Seller) in possession
of the parcel of real property, other than tenants under any leases
disclosed in Section 4(j) of the Disclosure Schedule who are in possession
of space to which they are entitled, no leases, subleases or other
agreements granting to any party any right of use or occupancy or option
or right of refusal with respect to any parcel of real property;
(vi) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of
such facilities, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer, all of which services are adequate in accordance
with all applicable laws, ordinances, rules, and regulations and are
provided via public roads or via permanent, irrevocable, appurtenant
easements benefitting the parcel of real property; and
(vii) except as set forth on Section 4(i) of the Disclosure
Schedule, each parcel of real property abuts on and has direct vehicular
access to a public road or access
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to a public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of real property.
(j) Real Property Leases. Section 4(j) of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to the
Company. Section 4(j) of the Disclosure Schedule also identifies the leased or
subleased properties for which title insurance policies are to be procured in
accordance with Section 6(i) below. The Company has delivered to the Buyer
correct and complete copies of the leases and subleases listed in Section 4(j)
of the Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 4(j) of the Disclosure Schedule:
(i) the lease or sublease is and, following the Closing, will
continue to be, legal, valid, binding, enforceable, and in full force and
effect;
(ii) no party to the lease or sublease is in breach or default
(or has repudiated any provision thereof), and no event has occurred
which, with notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration thereunder;
(iii) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(iv) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (iii) above are true and
correct with respect to the underlying lease;
(v) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(vi) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses,
permits and zoning approvals) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of
said facilities; and
(viii) the owner of the facility leased or subleased has good
and marketable title to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction, except for
recorded easements, covenants, and other restrictions impair the current
use, occupancy, or value, or the marketability of title, of the property
subject thereto.
(k) Intellectual Property. The Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation
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of the businesses of the Company as presently conducted and as presently
proposed to be conducted. Each item of Intellectual Property owned or used by
the Company immediately prior to the Closing hereunder will be owned or
available for use by the Buyer on identical terms and conditions immediately
subsequent to the Closing hereunder. The Company has taken all necessary or
desirable action to protect each item of Intellectual Property that it owns or
uses.
(i) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and the Company has never received any
charge, complaint, claim, or notice alleging any such interference,
infringement, misappropriation, or violation. No third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of any of the Company.
(ii) Section 4(k) of the Disclosure Schedule identifies each
patent, trademark or copyright registration which has been issued to the
Seller or the Company with respect to any of his, her or its Intellectual
Property, identifies each pending patent, trademark or copyright
application for registration which the Seller or the Company has made with
respect to any of his, her or its Intellectual Property, and identifies
each license, agreement, or other permission which the Seller or the
Company has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). The Company has
delivered to the Buyer correct and complete copies of all such patents,
trademarks or copyright registrations, applications, licenses, agreements,
and permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. With respect
to each item of Intellectual Property that the Seller or the Company owns:
(A) the Seller or the Company possesses all right, title, and
interest in and to the item;
(B) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(C) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the Knowledge of
the Seller and the Company, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
and
(D) the Seller or the Company has not ever agreed to indemnify
any person or entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iii) Section 4(k) of the Disclosure Schedule also identifies each
item of Intellectual Property that any third party owns and that the Company
uses pursuant to license, sublicense, agreement, or permission. The Company has
supplied the Buyer with
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correct and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each such item of used
Intellectual Property:
(A) the license, sublicense, agreement, or permission covering
the item is, and following the Closing will continue to be on
identical terms, legal, valid, binding, enforceable, and in full
force and effect;
(B) no party to the license, sublicense, agreement, or
permission is in breach or default (or has repudiated any provision
thereof), and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(C) with respect to each sublicense, the representations and
warranties set forth in subsections (A) and (B) above are true and
correct with respect to the underlying license;
(D) the underlying item of Intellectual Property is not
subject to any outstanding judgment, order, decree, stipulation,
injunction, or charge;
(E) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending, or, to the Knowledge of
the Seller and the Company, is threatened which challenges the
legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(F) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(l) Contracts. Other than Advertising Contracts, Section 4(l) of the
Disclosure Schedule lists the contracts, agreements, and other written
arrangements to which the Company is a party and either involving payment in
excess of One Thousand Dollars ($1,000) per year or not entered into in the
Ordinary Course of Business. The Company has delivered to the Buyer a correct
and complete copy of each written arrangement listed in Section 4(l) of the
Disclosure Schedule (as amended to date). With respect to each written
arrangement so listed:
(i) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the written arrangement will continue to be legal, valid,
binding, and enforceable and in full force and effect on identical terms
following the Closing;
(iii) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration, under the
written arrangement; and
(iv) no party has repudiated any provision of the written
arrangement.
-13-
The written arrangement listed in Section 4(l) of the Disclosure Schedule are
all of the written arrangements necessary for the conduct of the operation and
business of the Stations as presently conducted and proposed to be conducted.
The Company is not a party to any verbal contract, agreement, or other
arrangement which, if reduced to written form, would be required to be listed in
Section 4(l) of the Disclosure Schedule under the terms of this Section 4(l).
(m) FCC Licenses and Compliance with FCC Requirements.
(i) All licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies,
including, without limitation, the FCC Licenses, used or useful in the
operation of the Stations as they are now being operated are detailed in
Section 4(m) of the Disclosure Schedules and are in full force and effect,
are unimpaired by any acts or omissions of the Seller, the Company or the
Company's employees or agents, and are free and clear of any restrictions
which might limit the full operation of the Stations. Except as set forth
in Section 4(m) of the Disclosure Schedules, no condition exists or event
has occurred that permits, or after notice or lapse of time, or both,
would permit, the revocation or termination of any such license, permit,
consent, franchise, or authorization (other than pursuant to their express
expiration date) or the imposition of any material restriction or
limitation upon the operation of the Stations as now conducted. Except as
set forth in Section 4(m) of the Disclosure Schedules, the Seller and the
Company are not aware of any reason why the FCC licenses might not be
renewed in the ordinary course or revoked.
(ii) The Stations are each in compliance with the FCC's policy
on exposure to radio frequency radiation. No renewal of any FCC License
would constitute a major environmental action under the FCC's rules or
policies. Access to the Station's transmission facilities is restricted in
accordance with the policies of the FCC.
(iii) Except as set forth in Section 4(m) of the Disclosure
Schedule, to the best of the Knowledge of the Seller and the Company, the
Company is not the subject of any FCC or other governmental investigation
or any notice of violation or order, or any material complaint, objection,
petition to deny, or opposition issued by or filed with the FCC or any
other governmental authority in connection with the operation of or
authorization for the Stations, and there are no proceedings (other than
rulemaking proceedings of general applicability) before the FCC or any
other governmental authority that could adversely affect any of the FCC
Licenses or the authorizations listed in Section 4(m) of the Disclosure
Schedule.
(iv) The Company has filed with the FCC and all other
governmental authorities having jurisdiction over the Stations all
material reports, applications, documents, instruments, and other
information required to be filed, and will continue to make such filings
through the Closing Date.
-14-
(n) Insurance. Section 4(n) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company is a party, a
named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated
and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing Date; (C) neither the Company
nor any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default or permit termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any provision thereof. The
Company has been covered during the past three (3) years by insurance in scope
and amount customary and reasonable for the businesses in which it has engaged
during that three-year period. Section 4(n) of the Disclosure Schedule describes
any self-insurance arrangements affecting the Company.
(o) Litigation. Section 4(o) of the Disclosure Schedule sets forth
each instance in which the Company: (i) is subject to any unsatisfied judgement,
order, decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Seller and the Company, is threatened to be made a party to any
charge, complaint, action, suit, proceeding, hearing, or investigation of or in
any court or quasijudicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. None of the charges,
complaints, actions, suits, proceedings, hearings, and investigations set forth
in Section 4(o) of the Disclosure Schedule could result in any adverse change in
the assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company or the Stations taken as a whole.
To the Knowledge of the Seller, the Seller and the Company have no reason to
believe (and there is no Basis to have any reason to believe) that any other
charge, complaint, action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Company.
-15-
(p) Employees. Section 4(p) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Stations of each employee of
Company. To the Knowledge of the Seller and the Company, no key employee or
group of employees has any plans to terminate employment with the Company. The
Company is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Company has not committed any unfair
labor practice. The Seller and the Company have no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
(q) Notes and Accounts Receivable. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are presently current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
(s) Employee Benefits. Section 4(s) of the Disclosure Schedule lists
all Employee Benefit Plans that the Company maintains or has maintained, or to
which the Company contributes, or has contributed for the benefit of any current
or former employee of the Company. Each Employee Benefit Plan so listed is an
Employee Welfare Benefit Plan and none is an Employee Pension Benefit Plan.
(i) Each Employee Benefit Plan (and each related trust or
insurance contract) complies in form and in operation in all respects with
the applicable requirements of ERISA and the Code.
(ii) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to
each Employee Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980(B) have been met with respect to
each Employee Welfare Benefit Plan. All premiums or other payments for all
periods have been paid with respect to each Employee Welfare Benefit Plan
that is a group health plan within the meaning of the Code Sec.
4980(B)(g)(2) and Section 607 of ERISA.
(iii) There have been no Prohibited Transactions with respect
to any Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any Employee Benefit
Plan.
-16-
(iv) No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the administration or the
investment of the assets of any Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any of the Seller
and the Company, threatened. None of the Seller and the Company has any
Knowledge of any Basis for any such charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand.
(v) The Company has delivered to the Buyer correct and
complete copies of (A) the plan documents and summary plan descriptions,
(B) the most recent determination letter received from the Internal
Revenue Service, (C) the most recent Form 5500 Annual Report, and (D) all
related trust agreements, insurance contracts, and other funding
agreements which implement each Employee Benefit Plan.
The Company does not contribute to, has never contributed to, or has never been
required to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan. The Company has not
incurred, and neither the Seller nor the Company has any reason to expect that
the Company will incur any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any Employee Pension Benefit Plan
that the Company maintains or ever has maintained or to which it contributes,
ever has contributed, or ever has been required to contribute. The Company does
not maintain and has not maintained or contributed, or been required to
contribute to any Employee Pension Benefit Plan or Employee Welfare Benefit Plan
providing health, accident, or life insurance benefits to former employees,
their spouses, or their dependents (other than in accordance with Code Sec.
4980(B)).
(t) Environment, Health, and Safety.
(i) The Company has complied in all material respects with all
laws (including rules and regulations thereunder) of federal, state, and
local governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against the Company alleging
any failure to comply with any such law or regulation.
(ii) To the Knowledge of the Seller, the Company has no
Liability (and there is no Basis related to the past or present
operations, and its respective predecessors for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against the Seller giving rise to any Liability) under
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Resource Conservation and Recovery Act of 1976, the Federal
Water Pollution Control Act of 1972, the Clean Air Act of 1970, the Safe
Drinking Water Act of 1974, the Toxic Substances Control Act of 1976, the
Refuse Act of 1899, or the Emergency Planning and Community Right-to-Know
Act of 1986 (each as amended), or any other law (or rule or regulation
thereunder) of any federal, state, local, or foreign government (or agency
thereof, concerning release or threatened release of hazardous substances,
public health
-17-
and safety, or pollution or protection of the environment, or for damage
to any site, location, or body of water (surface or subsurface) or for
illness or personal injury.
(iii) To the Knowledge of the Seller, the Company has no
Liability (and there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against the Seller giving rise to any Liability) under the
Occupational Safety and Health Act, as amended, or any other law (or rule
or regulation thereunder) of any federal, state, local, or foreign
government (or agency thereof) concerning employee health and safety, or
for any illness of or personal injury to any employee.
(iv) To the Knowledge of the Seller, the Company has obtained
and has been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, local, and foreign
laws (including rules, regulations, codes, plans, judgments, orders,
decrees, stipulations, injunctions, and charges thereunder) relating to
public health and safety, worker health and safety, and pollution or
protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or wastes into
ambient air, surface water, ground water, or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
(v) To the Knowledge of the Seller, all properties and
equipment used in the business of the Company have been free of asbestos,
PCB's, methylene chloride, trichloroethylene, 1, 2-trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous Substances.
(vi) To the Knowledge of the Seller, no pollutant,
contaminant, or chemical, industrial, hazardous, or toxic material or
waste ever has been buried, stored, spilled, leaked, discharged, emitted,
or released on any real property that the Company owns or ever has owned
or leases or ever has leased.
(u) Legal Compliance.
(i) The Company has complied in all material respects with all
laws (including rules and regulations thereunder) of federal, state, and
local governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice
has been filed or commenced against the Company alleging any failure to
comply with any such law or regulation, including those relating to the
employment of labor, employee civil rights, and equal employment
opportunities and relating to antitrust matters.
-18-
(ii) To the Knowledge of the Seller, the Company has filed in
a timely manner all reports, documents, and other materials it was
required to file (and the information contained therein was correct and
complete in all respects) under all applicable laws (including rules and
regulations thereunder). The Company has possession of all records and
documents it was required to retain under all applicable laws (including
rules and regulations thereunder).
(v) Certain Business Relationships With the Company and Its
Subsidiaries. Except as described in Section 4(v) of the Disclosure Schedules,
neither the Seller nor his Affiliates has been involved in any business
arrangement or relationship with the Company within the past twelve (12) months,
and neither the Seller nor his Affiliates owns any property or right, tangible
or intangible, which is used in the business of the Company.
(w) Brokers' Fees. The Company has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(x) Advertising Contracts. Section 4(x) of the Disclosure Schedule
lists those Advertising Contracts and the daily value of such Advertising
Contracts as of November 3, 1997. Other than to employees of the Company or as
disclosed in Section 4(x) of the Disclosure Schedule, no commission or other
form of renumeration is paid by the Company with respect to Advertising
Contracts. No party to any Advertising Contract has indicated to the Company
within the past year that it will stop or decrease the rate of advertising.
(y) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set for in Section 6 below).
(b) Transfer Applications. Within ten (10) business days after the
execution of this Agreement, the Company and the Buyer shall jointly file with
the FCC an application for transfer or control of the Company, including its FCC
Licenses, permits and authorizations pertaining to the Stations from the Seller
to the Buyer (the "Transfer Application"). The costs of the FCC filing fees in
connection with the Transfer Application shall be divided equally between the
Seller and the Buyer. Each Party shall pay their own attorneys' fees. The
Seller, the Company and the Buyer shall thereafter prosecute the Transfer
Application with all reasonable diligence and otherwise use their commercially
reasonable efforts to obtain the grant of the Transfer Application as
expeditiously as practicable (but neither the Seller nor the Buyer shall have
any
-19-
obligation to satisfy complainants or the FCC by taking any steps which would
have material adverse effect upon the Buyer, the Seller, or the Stations. If the
FCC imposes any condition on any Party to the Transfer Application, such Party
shall use commercially reasonable efforts to comply with such condition;
provided that no such Party shall be required hereunder to comply with any
condition that would have a material adverse effect upon the Buyer, the Seller
or the Stations. The Seller and the Buyer shall jointly oppose any requests for
reconsideration or judicial review of FCC approval of the Transfer Application
and shall jointly request from the FCC an extension of the effective period of
FCC approval of the Transfer Application if the Closing shall not have occurred
prior to the expiration of the original effective period of the FCC Consent.
Nothing in this Section 5(b) shall be construed to limit any Party's right to
terminate this Agreement pursuant to Section 10 of this Agreement.
(c) Notices and Consents. The Seller will give any notices to third
parties, and the Seller will cause the Company to use its commercially
reasonable efforts to obtain any third party consents, that the Buyer reasonably
may request in connection with the matters pertaining to the Company or the
Seller disclosed or required to be disclosed in the Disclosure Schedule. Each of
the Parties will file any notification and report forms and related material
that he or it may be required to file Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx
Act, will use his or its best efforts to obtain an early termination of the
applicable waiting period, and will make further filings pursuant thereto that
may be necessary, proper or advisable. Each of the Parties will take any
additional action that may be necessary, proper, or advisable in connection with
any other notices to, filings with, and authorizations, consents, and approvals
of governments, governmental agencies, and third parties that it may be required
to give, make, or obtain.
(d) Operation of Business. The Seller will not cause or permit the
Company to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of Business,
other than the obligations of the Company under the Bonus Agreements and other
than a distribution to the Seller at Closing of all Cash and accounts
receivable, the automobile owned by the Company and the life insurance policy on
the life of Xxxxx Xxxxxx (the purchase price will be reduced by the equity value
of the automobile and the cash value of the life insurance policy and the Seller
assumes all Liability associated with the automobile and the life insurance
policy). Without limiting the generality of the foregoing, the Seller will not
(and will not direct the Company to) engage in any practice, take any action,
embark on any course of inaction, or enter into any transaction of the sort
described in Section 4(e) above.
(e) Employees. Upon notice to the Seller, and at mutually agreeable
times, the Company will permit the Buyer to meet with the Company's employees
prior to the Closing Date. Neither the Seller nor the Company will take any
action to preclude or discourage any of the Company's employees from continuing
employment with the Company. The Seller shall reimburse the Buyer for severance
and other obligations based on the Company's past policies and practices as of
or prior to the Closing with respect to any employee of the Company whose
employment with the Company terminates within sixty (60) days after the Closing
Date.
-20-
(f) Advertising Obligations. The Company shall satisfy its air time
obligations under its Advertising Contracts for goods or services ("Barter
Agreements") such that the outstanding aggregate balance owing under all Barter
Agreements as of the Closing Date shall not exceed Five Thousand Dollars
($5,000) worth of air time. On the Closing Date, the Seller shall deliver to the
Buyer a schedule, certified by an officer of the Company, reflecting the
aggregate outstanding balances under all Barter Agreements in existence as of
the Closing Date.
(g) Operating Statements. The Seller shall deliver to the Buyer, for
the Buyer's informational purposes only, monthly unaudited statements of
operating revenues and operating expenses of the Stations with ten (10) days
after each such statement is prepared by or for the Company or the Seller.
(h) Contracts. The Company will not without the prior written
consent of the Buyer amend, change, or modify any of the contracts listed on
Section 2(1) of the Disclosure Schedule in any material respect. The Company
will not without prior written consent of the Buyer enter into any new contracts
respecting the Stations or their properties, except (i) Advertising Contracts
which comply with the representations and warranties pertaining to such
contracts set forth in Section 2(1) above; (ii) contracts entered into in the
Ordinary Course of Business which are cancelable on not more than thirty (30)
days' notice without penalty or premium; (iii) contracts entered into in the
Ordinary Course of Business each of which does not involve more than One
Thousand Dollars ($1,000) or all of which do not involve more than Five Thousand
Dollars ($5,000) in the aggregate.
(i) Operation of Stations. The Company shall operate the Stations in
compliance with the FCC Licenses and the rules and regulations of the FCC, and
the FCC Licenses shall at all times remain in full force and effect. The Company
shall file with the FCC all material reports, applications, documents,
instruments and other information required to be filed in connection with the
operation of the Stations.
(j) Credit and Receivables. The Company will follow its usual and
customary policies with respect to extending credit for Advertising Contracts
and with respect to collecting accounts receivable arising from such extension
of credit.
(k) Preservation of Business. The Seller will cause the Company to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, relationships with lessors,
licensers, advertisers, suppliers, customers, and employees, all of the
confidential information and trade secrets of the Stations, and the FCC
Licenses.
(l) Full Access and Consultation. The Seller will permit and will
cause the Company to permit representatives of the Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Stations, to all premises, properties, books,
records, contracts, Tax records, and documents of or pertaining to the Company.
The Buyer will use its best efforts to complete its due diligence review of all
such premises, properties, books, records, contracts, Tax records and documents
of or pertaining to the
-21-
Company within sixty (60) days from the date of this Agreement. The Seller will
cause the Company to consult with the Buyer's management with a view to
informing the Buyer's management as to the operations, management and business
of the Stations.
(m) Notice of Developments. The Seller will give prompt written
notice to the Buyer of any material development affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of the Company. Each Party will give prompt written notice
to the other of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by any
Party pursuant to this Section 5(g), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(n) Exclusivity. The Seller will not (and the Seller will not cause
or permit the Company to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any (A) liquidation,
dissolution, or recapitalization, (B) merger or consolidation, (C) acquisition
or purchase of securities or assets, or (D) similar transaction or business
combination involving any of the Seller; or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. The Seller will notify the Buyer
immediately if any person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
(o) Title Insurance. The Seller will assist the Buyer in obtaining
with respect to each parcel of real estate that the Company owns, leases or
subleases an owner's or leasehold owner's policy (as appropriate) issued by a
title insurer reasonably satisfactory to the Buyer, in an amount equal to the
fair market value of such real property (including all improvements located
thereon), insuring title to such real property in the Buyer as of the Closing
subject only to the title exceptions which do not impair the current use,
occupancy or value or the marketability of title of the property and are
disclosed in Section 4(i) or Section 4(j) of the Disclosure Schedule, together
with such endorsements for zoning, contiguity, public access and extended
coverage and such other endorsements as the Buyer reasonably requests. The Buyer
and the Seller will each pay one-half (1/2) of the costs of these title
policies.
(p) Surveys. With respect to each parcel of real property that the
Company owns, leases, or subleases, and as to which a title insurance policy is
to be procured pursuant to Section 5(o) above, the Seller will assist the Buyer
in the procurement in preparation for the Closing a current survey of the real
property certified to the Buyer, prepared by a licensed surveyor and conforming
to current expanded ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters shown customarily on such surveys,
and showing access affirmatively to public streets and roads (the "Survey"). The
Survey shall not disclose any survey defect or encroachment from or onto the
real property which has not been cured or insured over prior to the Closing. The
Buyer and Seller will each pay one-half the cost of these surveys.
-22-
(q) Environmental Assessments. The Seller will assist the Buyer in
obtaining, with respect to each parcel of real estate that the Company owns,
leases or subleases and as to which a title insurance policy is to be procured
pursuant to Section 5(o) above, a current Phase I environmental site assessment
from an environmental consultant or engineer reasonably satisfactory to the
Buyer which shall not disclose or recommend any action with respect to any
condition to be remediated or investigated or any contamination on the site
assessed. The Buyer and the Seller will each pay one-half (1/2) of the costs of
these environmental assessments.
(r) Control of Stations. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Transfer Application. Between the date of this Agreement and the
Closing Date, the Buyer and its employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Company.
(s) Risk of Loss. The risk of loss, damage, or destruction to any of
the assets of the Company shall remain with the Seller until the Closing. In the
event of any such loss, damage, or destruction the Seller will promptly notify
the Buyer of all particulars thereof, stating the cause thereof (if known) and
the extent to which the cost of restoration, replacement and repair of the
assets lost, damaged or destroyed will be reimbursed under any insurance policy
with respect thereto. The Seller will repair or replace such assets as soon as
possible after loss, damage or destruction thereof and shall use its best
efforts to restore as promptly as possible transmissions as authorized in the
FCC Licenses. The Closing Date shall be extended (with FCC consent, if
necessary) for up to sixty (60) days to permit such repair or replacement. If
repair or replacement cannot be accomplished within sixty (60) days of the date
of the Seller's notice to the Buyer, and the Buyer determines that the Seller's
failure to repair or replace, alone or in the aggregate, would have a material
adverse effect on the operation of the Stations:
(i) the Buyer may elect to terminate this Agreement; or
(ii) the Buyer may postpone the Closing Date until such time
as the property has been repaired, replaced or restored in a manner and to
an extent reasonably satisfactory to the Buyer, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Seller's
notice to the Buyer, in which case either Party may terminate this
Agreement; or
(iii) the Buyer may choose to accept the lost, damaged or
destroyed assets in their "then" condition, together with the Seller's
assignment to the Buyer all rights under any insurance claims covering the
loss, damage or destruction and payment over to the Buyer any proceeds
under any such insurance policies, previously received by the Seller with
respect thereto.
In the event the Closing Date is postponed pursuant to this Section 5(s),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
-23-
(t) Bonus Agreements. The Company shall enter into the Bonus
Agreements.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 2
and Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) the Seller and the Company shall have procured all of
the third party consents specified in Section 5(c) above, all of the title
insurance commitments, and endorsements specified in Section 5(o) above,
all of the surveys specified in Section 5(p) above; and all the Phase I
environmental site assessments described in Section 5(q) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasijudicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) affect adversely
the right of the Buyer to own, operate, or control the Company Shares, the
Company or the Stations (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified above in Section 6(a)(i)-(iv)
is satisfied in all respects;
(vi) the Transfer Applications shall have been approved by a
Final Order of the FCC and the Buyer shall have received all governmental
approvals required to transfer all other authorizations, consents, and
approvals of governments and governmental agencies set forth in the
Disclosure Schedule;
(vii) the Buyer shall have received from counsel to the Seller
an opinion with respect to the matters set forth in Exhibit C attached
hereto, addressed to the Buyer and dated as of the Closing Date; and
(viii) the officers and directors of the Company shall have
tendered written confirmation of their resignation of service by and for
the Company and repaid or satisfied all Liabilities to the Company and
shall have released the Company of all Liabilities;
-24-
(ix) the Seller and the Company shall have paid or obtained
the release of all Liabilities of the Company existing at the Closing Date
including, but not limited to, indebtedness for borrowed money and trade
accounts payable and all Liabilities to Seller;
(x) the Company shall have entered into the Bonus Agreements;
and
(xi) all actions in consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasijudicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in
Section 5(b)(i)-(iii) is satisfied in all respects;
(v) each of the Transfer Applications shall have been approved
by a Final Order of the FCC and the Buyer shall have received all
governmental approvals required to transfer all other authorizations,
consents, and approvals of governments and governmental agencies set forth
in the Disclosure Schedule;
(vi) the Company shall have entered into the Bonus Agreements;
and
-25-
(vii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
The Seller may waive any condition specified in this Section 6(b) if it executes
a writing so stating at or prior to the Closing.
7. Post-Closing Covenants. The Parties agree as follows with respect
to the period following the Closing:
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with the
contesting or defending Party and its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access to its
books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 8 below).
(c) Transition. The Seller will not take any action that primarily
is designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of any of the Stations or the
Company from maintaining the same business relationships with the Stations or
the Company after the Closing as it maintained with the Stations or the Company
prior to the Closing. The Seller will refer all customer inquiries relating to
the business of any of the Stations to the Buyer from and after the Closing. The
Seller and no Affiliate of Seller will employ or offer to employ any employee of
the Company for a period of three (3) years after the Closing Date. Buyer shall
retain the books and business records of the Company according to its record
retention policy. No later than thirty (30) days prior to the date on which the
Buyer intends to discard the documents of the Company the related to the
Stations, the Buyer will give written notice to the Seller of its intention to
discard the documents and will transfer to the Seller upon request of the Seller
and at the Seller's expense, any documents related to the Stations.
(d) Working Capital Purchase Price Adjustment. At the Closing, the
Seller will deliver to the Buyer a schedule of the accounts receivable of the
Stations owing to the Seller as of the close of business on the Closing Date.
The Buyer agrees to use commercially reasonable
-26-
efforts in the ordinary course of business (but without responsibility to
institute legal or collection proceedings) to collect such accounts receivable
during the 120-day period following the Closing Date from any advertiser. The
Buyer shall apply said moneys to the oldest outstanding balance due on the
particular account, except in the case of a "disputed" account receivable. For
purposes of this Section 7(d), a "disputed" account receivable means one which
the account debtor refuses to pay because he asserts that the money is not owed
or the amount is incorrect. In the case of such a disputed account, the Buyer
shall immediately assign the account to the Seller prior to expiration of the
120-day period following the Closing Date. If the Buyer returns a disputed
account to the Seller, the Buyer shall have no further responsibility for its
collection and may accept payment from the account debtor for advertising
carried on any of the Stations after the Closing Date. At the end of the 120-day
period following the Closing Date, the Buyer will assign to the Seller all of
the accounts receivable of the Stations as of the Closing Date owing to the
Seller which have not yet been collected, and the Buyer will thereafter have no
further responsibility with respect to the collection of such receivables. At
the end of the 120-day period following the Closing Date, the Buyer will pay to
the Seller as the purchase price for such collected accounts an amount (the
"Working Capital Price Adjustment") equal to the aggregate collections of
accounts receivable of the Stations as of the Closing Date, plus any Cash of the
Company on hand as of the Closing Date, less the aggregate amount of any
Liabilities of Seller as of the Closing Date paid by the Seller after the
Closing Date.
(e) Confidentiality. The Seller will treat and hold as confidential
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or its possession. In the event that any of the Seller is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Company will notify the
Buyer promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section 7(e). If, in the absence of a protective order or the receipt of a
waiver hereunder, the Seller is, on the advice of counsel, compelled to disclose
any Confidential Information to any tribunal or else stand liable for contempt,
that Company may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Company shall use his or its best efforts
to obtain, at the request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
(f) Covenant Not to Compete. For a period of three (3) years from
and after the Closing Date, the Seller will not engage directly or indirectly
the radio broadcast business in any geographic area in which the Company
conducts that business as of the Closing Date; provided, however, that no owner
of less than 1% of the outstanding stock of any publicly-traded corporation
shall be deemed to engage solely by reason thereof in any of its businesses.
Furthermore, the Seller will not take any action primarily designed or intended
to have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of the
-27-
Company or the Seller from maintaining the same business relationship with the
Company or the Buyer after the Closing as it maintained with the Company or the
Seller prior to Closing. The Seller will refer all inquiries relating to the
Company to the Buyer from and after the Closing. No Seller and no one affiliated
with the Seller will employ or offer to employ any employee of the Company for a
period of three years after the Closing Date.
(g) Retainage Adjustment. In the event and to the extent that the
Buyer or the Company may become obligated to pay after the Closing any Liability
of the Company that accrued prior to the Closing, such amount shall be deducted
from the Retainage Deposit pursuant to the terms of the Retainage Agreement.
8. Remedies for Breaches of this Agreement.
(a) Survival. All of the representations and warranties of the
Seller and the Company contained in Section 4 of this Agreement (other than the
representations and warranties of the Seller contained in Section 2 and of the
Company contained in Sections 4(a), 4(b), 4(c) and 4(x) hereof) shall survive
the Closing (even if the Buyer knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for the period of 18 months thereafter, except that any
representation or warranty relating to Buyer's freedom from liability to pay a
Liability of Seller shall continue in full force and effect for the period of
the applicable statute of limitations plus ninety (90) days for any Liability
associated therewith. All of the other representations, warranties, and
covenants of the Seller contained in Section 2 and of the Company contained in
Sections 4(a), 4(b), 4(c) and 4(x) hereof) shall survive the Closing (even if
the damaged Party knew or had reason to know of any misrepresentation or breach
of warranty or covenant at the time of Closing) and continue in full force and
effect forever thereafter.
(b) Indemnification Provisions for the Benefit of the Buyer. The
Seller agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by (i) any breach of any of the
Seller's representations, warranties, and covenants contained in this Agreement
(so long as the particular representation, warranty, or covenant survives the
Closing and the Buyer makes a written claim for indemnification within the
applicable survival period); or (ii) any Liability of the Company existing as of
the Closing, including, but not limited to accounts payable.
(c) Indemnification Provisions for the Benefit of the Seller. The
Buyer agrees to indemnify the Seller from and against the entirety of any
Adverse Consequences the Seller may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any of the Buyer's
representations, warranties, and covenants contained in this Agreement (so long
as the particular representation, warranty, or covenant survives the Closing and
the Seller make a written claim for indemnification within the applicable
survival period).
(d) Matters Involving Third Parties. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 8, then the
-28-
Indemnified Party shall notify the Indemnifying Party thereof promptly;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party from any
liability or obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is damaged. In the event any Indemnifying Party
notifies the Indemnified Party within fifteen (15) days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is assuming the
defense thereof, (i) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party concludes reasonably that the counsel the Indemnifying
Party has selected has a conflict of interest), (iii) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the matter without the written consent of the Indemnifying Party (not
to be withheld unreasonably), and (iv) the Indemnifying Party will not consent
to the entry of any judgment with respect to the matter, or enter into any
settlement which does not include a provision whereby the plaintiff or claimant
in the matter releases the Indemnified Party from all Liability with respect
thereto, without the written consent of the Indemnified Party (not to be
withheld unreasonably). In the event the Indemnifying Party does not notify the
Indemnified Party within 15 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, however,
the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
(e) Specific Performance. Each of the Parties acknowledges and
agrees that the Buyer would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the Buyer shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 11(p) below), in addition
to any other remedy to which it may be entitled, at law or in equity. Each of
the Parties acknowledges and agrees that notwithstanding the provision in
Section 8(f) with respect to the payment of the transaction fee upon a breach of
a covenant of this Agreement prior to the Closing, money damages would not be an
adequate remedy for a breach of any provision of this Agreement.
(f) Other Indemnification Provisions. The indemnification provisions
set forth in Sections 8(a), 8(b), 8(c) and 8(d) are in addition to, and not in
derogation of, any statutory or common law remedy any Party may have for breach
of representation, warranty, or covenant. The Buyer shall have the right to
recoup from any amount due to the Seller any amount due from the Seller under
this Section 8.
9. Definitions.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions,
-29-
damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including all attorneys'
fees and court costs.
"Advertising Contract" means any arrangement with any third party under
which the Seller has created, incurred, assumed or guaranteed an obligation to
provide advertising or air time on the Station.
"Affiliate" means with reference to any person or entity, another person
or entity controlled by, under the control of or under common control with that
person or entity.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Bonus Agreements" means the agreements entered into between the Company
and each of Xxxxx Xxxxx and Xxxxx Xxxx for the one-time bonus payment of
$100,000.00.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 1(c) above.
"Closing Date" has the meaning set forth in Section 1(c) above.
"Code" means the Internal Revenue Code of 1986, as amended
"Company" has the meaning set forth in the Preface above.
"Company Share" means any share of the Common Stock, par value $______ per
share, of the Company.
"Confidential Information" means any information concerning the businesses
and affairs of the Company.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Agreement.
-30-
"Xxxxxxx Money Deposit" has the meaning set forth in Section 1(b) above.
"Xxxxxxx Money Escrow Agent" means Branch Banking & Trust Company of South
Carolina.
"Xxxxxxx Money Escrow Agreement" has the meaning set forth in Section 1(b)
above.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Entity" means a corporation, limited liability company, partnership,
limited partnership, limited liability partnership or other entity recognized by
any jurisdiction within the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Final Order" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"Financial Statements" has the meaning set forth in Section 4(d) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d) above.
-31-
"Indemnifying Party" has the meaning set forth in Section 8(d) above.
"Intellectual Property" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and registrations
and applications for registration thereof, (c) all programs, programming
materials, copyrights and registrations and applications for registration
thereof, (d) mask works and registrations and applications for registration
thereof, (e) computer software, data, and documentation, (f) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, market and other research information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (b) copies and tangible embodiments thereof (in whatever
form or medium).
"Joint and Several" has the meaning set forth in Section 10(o) below.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"Licenses" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller and the Company
with respect to the operations of the Stations and all applications therefor,
together with any renewals, extension or modifications thereof and additions
thereto.
"Most Recent Balance Sheet" means the balance sheet of the Company as of
the Most Recent Fiscal Year End.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(d)
above.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Process Agent" has the meaning set forth in Section 11(p) below.
-32-
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 1(b) above.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Retainage Deposit" has the meaning set forth in Section 1(b) above.
"Retainage Agent" means ________________________.
"Retainage Agreement" has the meaning set forth in Section 1(b) above.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation; and (c) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Stations" means the radio broadcast stations having the call letters
XXXX-AM and XXXX-FM, each licensed by the FCC to operate in Florence, South
Carolina.
"Subsidiary" means any corporation with respect to which another specified
corporation has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
"Survey" has the meaning set forth in Section 5(j) above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"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.
-33-
"Transfer Application" has the meaning set forth in Section 5(b) above.
"Working Capital Price Adjustment" has the meaning set forth in Section
6(d) above.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event the
Seller is in breach, and the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing in the event
the Buyer is in breach, of any material representation, warranty, or
covenant contained in this Agreement in any material respect in each case
if such breach remains uncured for ten (10) days after notice of breach is
received from the other party;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under
Section 7(a) hereof (unless the failure results primarily from the Buyer
breaching any representation, warranty, or covenant contained in this
Agreement);
(iv) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under
Section 7(b) hereof (unless the failure results primarily from the Seller
breaching any representation, warranty, or covenant contained in this
Agreement); or
(v) the Buyer or the Seller may terminate this Agreement if
any Transfer Application is denied by Final Order.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
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11. Miscellaneous.
(a) Survival. All of the representations, warranties, and covenants
of the Parties contained in this Agreement shall survive the Closing hereunder
as and to the extent provided in Section 8(a).
(b) Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party, provided that the Buyer may assign all right, title
and interest in, to and under this Agreement to one or more affiliated entities.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: Xx. Xxxxx Xxxxxx
----------------------
----------------------
----------------------
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Copy to: Xxxx Xxxxxxxx, Esq.
000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
If to the Buyer: Cumulus Holdings, Inc.
c/o Quaestus Management Corporation
000 X. Xxxxxxxx Xxx., Xxx. 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Copy to: Cumulus Broadcasting, Inc.
000 X. Xxxxxxxx Xxxxxx, Xxx. 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Xxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of South Carolina.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable,
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the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
(l) Expenses. The Buyer and the Seller will each bear his or its
respective costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby, other
than as set forth in Section 5(b) with regard to the Transfer Application. The
Seller will pay all income taxes, transfer taxes and other recording or similar
fees necessary to vest title to the Company Shares in the Buyer. The Seller
costs and expenses (including any of their legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby
will be paid at or prior to Closing.
(m) Construction. The language used in this Agreement will be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Florence, South Carolina
in any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Each Party
appoints CT Corporation (the "Process Agent") as its agent to receive on its
behalf service of copies of the summons and complaint and any other process that
might be served in the action or proceeding. Any Party may make service on the
other Party by sending or delivering a copy of the process (i) to the Party to
be served at the address and in the manner provided for the giving of notices in
Section 10(h) above or (ii) to the Party to be served in care of the Process
Agent at the address and in the manner provided for the giving of notices in
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Section 10(h) above. Nothing in this Section 10(p), however, shall affect the
right of any Party to serve legal process in any other manner permitted by law.
Each Party agrees that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS HOLDINGS, INC.
By:
---------------------------
Title:
------------------------
("Buyer")
------------------------------
Xxxxx Xxxxxx ("Seller")
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