Exhibit 2.15
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of December 30, 1997, by
and between Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"),
Cumulus Licensing Corporation, a Nevada corporation ("Licensing"), and Sovereign
Communications Corporation, a Texas corporation (the "Seller"). Broadcasting and
Licensing are referred to collectively herein as the "Buyers." The Buyers and
the Seller are referred to collectively herein as the "Parties." Capitalized
terms used in this Agreement are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers hereby
agree to purchase substantially all of the assets (and assume certain of the
liabilities) that are used in the operation of radio station KZRK-FM and
KZRK-AM, licensed to Canyon, Texas (the "Stations") in return for cash. Seller
does not currently own those assets but shall own those assets as of the
Closing, and representations by the Seller as to ownership of the assets in this
Agreement shall be interpreted accordingly.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Licensing agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to Licensing, all of
the FCC Licenses listed in Section 2(l) of the Disclosure Schedule. In addition,
Broadcasting agrees to purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to Broadcasting, all of the Acquired Assets other
than the FCC Licenses. Both such sales shall take place at the Closing for the
consideration specified below in this Section 1.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to assume and become responsible for all of
the Assumed Liabilities at the Closing. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Seller not included within the definition of Assumed Liabilities and the
Seller agrees to pay and discharge all Liabilities and obligations of the Seller
other than the Assumed Liabilities.
(c) Purchase Price. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the amount of One Million Dollars
($1,000,000.00) (the "Purchase Price"). The Purchase Price shall be payable as
follows:
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i. on the date of this Agreement, the Buyers will deliver to the
Escrow Agent an irrevocable letter of credit issued by NationsBank of
Texas, N.A. for the benefit of the Escrow Agent in substantially similar
form as the letter of credit attached hereto as Exhibit A in the amount of
Fifty Thousand Dollars ($50,000.00) (the "Xxxxxxx Money Deposit"); and
ii. on the Closing Date, the Buyers shall pay to the Seller the
amount of One Million Dollars ($1,000,000.00), with adjustments as
specifically provided in this Agreement.
The Xxxxxxx Money Deposit referenced in this Section 1(c) shall be held in
escrow by the Escrow Agent pursuant to an escrow agreement in the form attached
hereto as Exhibit B (the "Xxxxxxx Money Escrow Agreement"). If this Agreement is
terminated without Closing of the transaction contemplated herein, the Xxxxxxx
Money Deposit shall be paid to the Seller or returned to the Buyers as provided
in the Xxxxxxx Money Escrow Agreement.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Seller in
Cleburne, Texas, or another mutually agreed location, commencing at 9:00 a.m.
local time on the date set by the Buyers not earlier than the fifth business day
or later than the tenth business day after the FCC approval of the Assignment
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 such other date as the Parties may mutually
determine (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) the Seller will deliver
to the Buyers the various certificates, instruments, and documents referred to
in Section 5(a) below; (ii) the Buyers will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 5(b) below;
(iii) the Seller will execute, acknowledge (if appropriate), and deliver to the
Buyers (A) assignments (including Lease and other Assumed Contract assignments
and Intellectual Property transfer documents), bills of sale and warranty deeds,
in a form mutually satisfactory to Buyers and Seller; (B) such affidavits,
transfer tax returns, memorandums of lease, and other additional documents as
may be required by the terms of the title insurance commitments described in
Section 4(o) hereof, as necessary to furnish title insurance as required by such
section or as may be necessary to convey title to the Real Estate to the Buyers
in the condition required herein or provided public notice of existence of the
Leases, and (C) such other instruments of sale, transfer, conveyance, and
assignment as the Buyers and their counsel reasonably may request; (iv) the
Buyers will execute, acknowledge (if appropriate), and deliver to the Seller (A)
an assumption in a form mutually satisfactory to Buyers and Seller; and (B) such
other instruments of assumption as the Seller and its counsel reasonably may
request; and (v) the Buyers will deliver to the Seller the consideration
specified in Section 1(c) above.
(f) Postclosing Agreement. On the Closing Date, the Seller shall execute,
and shall cause shareholder United Heritage Corporation to execute, a
Postclosing Agreement with the Buyer including covenants not to compete with the
Buyer in the markets served by the Stations and agreements to indemnify the
Buyer in the form of Exhibit C attached hereto. A portion of the
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Purchase Price equal to Fifty Thousand Dollars ($50,000) shall be paid to the
Seller by the Buyers on the Closing Date as consideration for the agreements set
forth in the Postclosing Agreement.
(g) Allocation. The Parties agree to allocate the Purchase Price (and all
other capitalizable costs) among the Acquired Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation
schedule attached hereto as Exhibit D.
(h) Local Marketing Agreement. Concurrent with the execution of this
Agreement, the Seller and Buyer shall execute the Local Marketing Agreement (the
"LMA Agreement") which includes the terms and conditions pursuant to which
Broadcasting will purchase the airtime on the Stations. The accounts receivable
of the Stations in existence as of the date of this Agreement shall be collected
pursuant to the terms and conditions of the LMA Agreement.
2. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyers 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),
except as set forth in the lettered and numbered paragraphs contained in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule") corresponding to the lettered and numbered sections
of this Section 2; provided, however, that Seller shall have the right to submit
an amended Disclosure Schedule prior to Closing so long as the amendments are
not material or Buyer consents to the amendments, which consent shall not be
unreasonably withheld.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Seller does not have any Subsidiaries.
The Seller has the power and authority to own or lease its properties and to
carry on all business activities now conducted by it. The sole shareholder of
the Seller is United Heritage Corporation.
(b) Authorization of Transaction. The Seller has full power and authority
to execute and deliver this Agreement and all agreements and instruments to be
executed and delivered by such Party pursuant to this Agreement (collectively,
the "Ancillary Agreements") and to perform its obligations hereunder and
thereunder. Without limiting the generality of the foregoing, the Board of
Directors of the Seller has duly authorized the execution, delivery, and
performance of this Agreement and the Ancillary Agreements by the Seller. This
Agreement and the Ancillary Agreements constitute the valid and legally binding
obligation of the Seller, enforceable in accordance with their respective terms
and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) 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 Seller
is subject or any provision
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of the charter or bylaws of the Seller; 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 or third party consent under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest, or other agreement,
arrangement to which the Seller 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 the Assignment
Application described in Section 4(b) the Seller does not need to give any
notice to, make any filing with, or obtain any Licenses, consent, or approval of
any court or government or governmental agency in order for the Parties to enter
into this agreement or the Ancillary Agreements or to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements
(including the assignments and assumptions referred to in Section 1(e) above).
(d) Title to Acquired Assets. Other than the Security Interests set forth
on Section 2(d) of the Disclosure Schedule (which shall be released at or before
the Closing), at Closing the Seller will have good title to all of the Acquired
Assets, free and clear of any Security Interest or restriction on transfer.
(e) Events Subsequent to January 1, 1997. Since January 1, 1997, except as
set forth in Section 2(e) of the Disclosure Schedule, there has not been any
adverse change in the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Stations. Without
limiting the generality of the foregoing and with respect to the operation of
the Stations since that date:
(i) the Seller has not sold, leased, transferred, or assigned any of its
material assets, tangible or intangible;
(ii) other than this Agreement, the Seller has not entered into any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and sublicenses)
outside the Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and sublicenses)
involving more than $5,000 to which the Seller is a party or by which it or any
of its assets are bound;
(iv) no Security Interest has been imposed upon any of Seller's assets,
tangible or intangible;
(v) the Seller has not made any capital expenditure (or series of related
capital expenditures) outside the Ordinary Course of Business;
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(vi) the Seller 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);
(vii) the Seller has not created, incurred, assumed, or guaranteed any
indebtedness (including capitalized lease obligations) outside the Ordinary
Course of Business;
(viii) the Seller has not delayed or postponed (beyond its normal practice
in the Ordinary Course of Business) the payment of accounts payable and other
Liabilities;
(ix) the Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
(x) the Seller has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(xi) the Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of its property or any action
adversely affecting the FCC Licenses;
(xii) the Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees giving rise to
any claim or right on its part against the person or on the part of the person
against it;
(xiii) the Seller 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;
(xiv) the Seller has not made or pledged to make any charitable or other
capital contribution;
(xv) there has not been any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving
the Seller;
(xvi) the Seller has not altered its credit and collection policies or its
accounting policies;
(xvii) the Seller has not materially altered the programming, format or
call letters of the Stations, or its promotional and marketing activities;
(xviii) the Seller 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; or
(xix) the Seller has not committed to any of the foregoing.
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(f) Tax Matters. The Seller has timely and properly filed all Tax Returns
that they were required to file with respect to the operations of the Station.
All such Tax Returns were correct and complete in all respects and properly
reflect the tax liability of the Seller. The Seller has not requested any
extension of time within which to file returns in respect of any Taxes with
respect to the Seller's operations. No Tax deficiencies have been proposed or
assessed against the Seller. There are no pending, or to the Seller's knowledge,
threatened audits, investigations, or claims for or relating to any liability in
respect of Taxes with respect to the Seller's operations. All Taxes owed by the
Seller with respect to its operations (whether or not shown on any Tax Return)
have been paid. The Seller 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. No claim has ever been
made by any authority in any jurisdiction where the Seller does not file Tax
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 Seller that arose in
connection with any failure (or alleged failure) to pay any Tax.
(g) Tangible Assets. Section 2(g) 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 Seller will, as of Closing, own or lease 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 and all leased assets are specifically
identified as such in Section 2(g) of the Disclosure Schedule. Each such
tangible asset is transferred to Buyers on an "as is, where is" basis, with no
implied or express warranties, including warranty of marketability or fitness
for a particular purpose.
(h) Real Property. Section 2(h) of the Disclosure Schedule lists and
describes briefly all Owned Real Estate and real property leased to the Seller
(including, without limitation, complete legal descriptions for all of the Real
Estate). The Seller has delivered to the Buyer correct and complete copies of
the Leases. With respect to the Real Estate:
(i) the Seller will have as of Closing good title to all of the Owned Real
Estate free and clear of all liens, charges, mortgages, security interests,
easements, restrictions or other encumbrances of any nature whatsoever except
real estate taxes for the year of Closing and municipal and zoning ordinances
and recorded utility easements which do not impair the current use, occupancy or
value or the marketability of title of the property and which are disclosed in
Section 2(h) of the Disclosure Schedule (collectively, the "Permitted Real
Estate Encumbrances");
(ii) the Leases are and, following the Closing will continue to be, legal,
valid, binding, enforceable, and in full force and effect;
(iii) no party to any Lease 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 thereunder or permit termination,
modification, or acceleration thereunder;
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(iv) there are no disputes, oral agreements, or forbearance programs in
effect as to any Lease;
(v) none of the Owned Real Estate and to the Seller's Knowledge, none of
the properties subject to the Leases is subject to any lease (other than
Leases), option to purchase or rights of first refusal;
(vi) all buildings and improvements on the Real Estate are being sold in
"as is" condition without warranty of their condition or habitability;
(vii) the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the Leases or its rights
thereunder; and
(viii) to the Seller's Knowledge, all facilities on the Real Estate 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.
(i) Intellectual Property. The Seller owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for or currently used in the operation of the business of the
Seller as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Seller 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.
With respect to such Intellectual Property:
(i) To the Seller's Knowledge, the Seller has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and the Seller has never received
any charge, complaint, claim, or notice alleging any such interference,
infringement, misappropriation, or violation. To the Knowledge of the Seller, no
third party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of the Seller.
(ii) Section 2(i) of the Disclosure Schedule also identifies each item of
Intellectual Property that any third party owns and that the Seller uses
pursuant to license, sublicense, agreement, or permission including, but not
limited to the call letters of the Stations. The Seller has supplied the Buyer
with correct and complete copies of all such licenses, sublicenses, agreements,
and permissions (as amended to date). To Seller's Knowledge, 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;
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(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, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property;
(F) the Seller has not agreed to indemnify any person or entity for
or against any interference, infringement, misappropriation, or other
conflict with respect to the underlying item of Intellectual Property; and
(G) the Seller has not granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
(j) Contracts. Section 2(j) of the Disclosure Schedule lists the following
contracts, agreements, and other written arrangements (other than with
advertisers for the sale of air time which are listed in Section 2(r) of the
Disclosure Schedule) to which the Seller is a party:
(i) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of $1,000 per year;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of supplies, products, or other
personal property or for the furnishing or receipt of services which
either calls for performance over a period of more than one year or
involves more than the sum of $1,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or guaranteed
(or may create, incur, assume, or guarantee) indebtedness (including
capitalized lease obligations) involving more than $1,000 or under which
it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
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(v) any written arrangement concerning confidentiality or
noncompetition;
(vi) any written arrangement with any of its employees in the nature
of a collective bargaining agreement, consulting agreement, compensation
agreement, employment agreement, commission agreement, or severance
agreement;
(vii) any written arrangement under which the consequences of a
default or termination could have an adverse effect on the assets,
Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Seller or the Stations;
(viii) any written arrangement concerning a guaranty by the Seller
of the obligations of any other party; or
(ix) any other written arrangement (or group of related written
arrangements) either involving more than $5,000 or not entered into in the
Ordinary Course of Business.
The Seller has delivered to the Buyer a correct and complete copy of each
written arrangement listed in Section 2(j) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed which
constitutes an Assumed Contract: (A) the written arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the written arrangement
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing (if the arrangement has not
expired according to its terms); (C) 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 (D) no party has repudiated any provision of the
written arrangement. The Seller 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 2(j) of the Disclosure Schedule under the terms
of this Section 2(j). Except for the Assumed Contracts, the Buyer shall not have
any Liability or obligations for or in respect of any of the contracts set forth
in Section 2(j) of the Disclosure Schedule or any other contracts or agreements
of the Seller. No advertiser of the Stations has indicated within the past year
that it will stop, or decrease the rate of, buying services from them.
(k) Commission Licenses and Compliance with Commission 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 (A) in full force and effect, (B) unimpaired by any acts
or omissions of the Seller or the Seller's employees or agents, (C) free and
clear of any restrictions which might limit the full operation of the Stations,
and (D) detailed in Section 2(k) of the Disclosure Schedule. With respect to the
licenses, permits, authorizations, franchises, certificates of compliance and
consents referenced in the preceding sentence, Section 2(k) of the Disclosure
Schedule also sets forth, without limitation, the date
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of the last renewal, the expiration date thereof, and any conditions or
contingencies related thereto. Except as set forth in Section 2(k) of the
Disclosure Schedule, 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 2(k) of the Disclosure Schedule, the
Seller is 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
Stations' transmission facilities is restricted in accordance with the policies
of the FCC.
(iii) Except as set forth in Section 2(k) of the Disclosure Schedule, to
the Seller's Knowledge, the Seller 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 rule
making 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 2(k) of the Disclosure Schedule.
(iv) The Seller 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.
(v) The Seller is not aware of any information concerning the Stations
that could cause the FCC or any other regulatory authority not to issue to the
Buyer all regulatory certificates and approvals necessary for the consummation
of the transactions contemplated hereunder or the Buyer's operation and/or
ownership of the Stations. Seller is not aware of any pending FCC applications
which, if approved, would allow for the operation of a new radio Stations with a
signal reaching the signal area of the Stations and, in addition, Seller is not
aware of any plans or proposals by existing radio Stations with a signal
reaching the signal area of the Stations to alter or change their format to a
format similar to that of the Stations.
(l) Insurance. Section 2(l) 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 Seller is a party, a named insured,
or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
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(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 through the Closing Date.
(m) Litigation. Section 2(m) of the Disclosure Schedule sets forth each
instance in which the Seller: (i) is subject to any unsatisfied judgment, order,
decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasi-judicial 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 2(m) 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 Seller or the Stations taken as a whole.
The Seller has no reason to believe that any such charge, complaint, action,
suit, proceeding, hearing, or investigation may be brought or threatened against
the Seller.
(n) Employees. Section 2(n) 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
the Seller. Section 2(n) of the Disclosure Schedule also sets forth a list of
all employee handbooks and/or manuals relating to the employees of the Seller,
true and correct copies of which have been delivered to the Buyer. To the
Knowledge of the Seller, no key employee or group of employees has any plans to
terminate employment with the Seller. The Seller is not a party to or bound by
any understanding (whether written or oral), agreement or contract with any
union, labor organization, employee group or other entity or individual which
affects the employment of employees of the Seller including, but not limited to
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. The Seller has no Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of any of the Seller. The Seller has not been subject to a strike,
slow down or other work stoppage during the five (5) year period immediately
preceding the date hereof and, to the Seller's Knowledge, there are no strikes,
slow downs or work stoppages threatened against the Seller. To the Seller's
Knowledge, it has not
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committed any unfair labor practice. There is no basis for any claim by any past
or present employee of the Seller that such employee was subject to wrongful
discharge or any employment discrimination by the Seller or its management
arising out of or relating to the employee's race, sex, age, religion, national
origin, ethnicity, handicap or any other protected characteristic under
applicable law. No proceedings are pending before any court, governmental agency
or instrumentality or arbitrator relating to labor matters, and there is no
pending investigation by any governmental agency or, to the Knowledge of the
Seller, threatened claim by any such agency or other person relating to labor or
employment matters.
(o) Employee Benefits. Section 2(o) of the Disclosure Schedule lists all
Employee Benefit Plans that the Seller maintains or to which the Seller
contributes or is required to contribute for the benefit of any current or
former employee of the Seller and true and correct copies of each such Employee
Benefit Plan have been delivered to the Buyers. Each Employee Benefit Plan (and
each related trust or insurance contract) complies and at all times has complied
in form and in operation in all respects with the applicable requirements of
ERISA and the Code. The Seller does not have any commitment to create any
additional Employee Benefit Plan or modify or change any existing Employee
Benefit Plan that would affect any employee or terminated employee of the
Seller. There are no pending or, to the Knowledge of the Seller, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
(p) Environment, Health, and Safety.
(i) With respect to the operation of the Stations and the Real
Estate, to Seller's Knowledge, the Seller is, and at all times in the past
has been, in compliance in all material respects with all Environmental
Laws and all laws (including rules and regulations thereunder) of federal,
state, and local governments (and all agencies thereof) concerning
employee health and safety, and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has ever been
filed or commenced or, to the Seller's Knowledge, is threatened, against
the Seller alleging any failure to comply with any such Environmental Law
or laws concerning employee health and safety.
(ii) With respect to the operation of the Stations and the Real
Estate, to Seller's Knowledge, the Seller has no Liability (and to
Seller's Knowledge there is no Basis related to the past or present
operations of the Seller or its 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
12
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 of any federal, state, local, or foreign government or agency
thereof (including rules, regulations, codes, plans, judgments, orders,
decrees, stipulations, injunctions, and charges thereunder) relating to
public health and safety, or pollution or protection of the environment,
including, without limitation, 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 ("Environmental
Laws");
(iii) To Seller's Knowledge, the Seller has no Liability (and to
Seller's Knowledge 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 Seller's Knowledge, the Seller has obtained and at all times
has been in compliance in all material respects 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 Environmental Laws or law of
any federal, state, or local or foreign government relating to worker
health and safety.
(v) To Seller's Knowledge, all properties and equipment used in the
business of the Seller have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(vi) To Seller's Knowledge, 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 of the
Real Estate.
(vii) To Seller's Knowledge, none of the Acquired Assets are
required to be upgraded, modified or replaced to be in compliance with
Environmental Laws.
(viii) Section 2(p) of the Disclosure Schedule contains a copy of
all environmental claims, reports, studies, compliance actions or the like
of the Seller or which are available to the Seller with respect to any of
the Real Estate or any of the Acquired Assets.
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(ix) Other than as provided in Section 2(p) of the Disclosure
Schedule, no septic systems or xxxxx exist on, in or under any of the Real
Estate. No above ground or underground storage tanks have ever been
located at, on or under the Real Estate. To Seller's Knowledge, none of
the Real Estate is contaminated by hazardous or toxic substances or waste,
as defined under Environmental Laws, originating from off-site sources.
(q) Legal Compliance.
(i) To Seller's Knowledge, the Seller has complied in all material
respects with all laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced or, to the Seller's Knowledge, is threatened,
against the Seller 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.
(ii) To Seller's Knowledge, the Seller 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 material respects)
under all applicable laws (including rules and regulations thereunder) of
federal state, local and foreign governments (and all agencies thereof). To the
Seller's Knowledge, it has possession of all records and documents it was
required to retain under all applicable laws (including rules and regulations
thereunder).
(r) Advertising Contracts. Section 2(r) of the Disclosure Schedule lists
all arrangements for the sale of air time or advertising on the Stations in
excess of $1000, and the amount to be paid to the Seller therefor. The Seller
has no reason to believe and has not received a notice or indication of the
intention of any of the advertisers or third parties to material contracts of
the Seller to cease doing business or to reduce in any material respect the
business transacted with the Seller or to terminate or modify any agreements
with the Seller (whether as a result of consummation of the transactions
contemplated hereby or otherwise).
(s) Brokers' Fees. 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.
(t) Undisclosed Commitments or Liabilities. There are no commitments,
liabilities or obligations relating to any of the Stations, whether accrued,
absolute, contingent or otherwise including, without limitation, guaranties by
the Seller of the liabilities of third parties, for which specific and adequate
provisions have not been made on the Financial Statements except those incurred
in or as a result of the Ordinary Course of Business since January 1, 1997 (none
of which Ordinary Course of Business obligations have had or will have a
material adverse effect on any Stations).
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(u) Disclosure. The representations and warranties contained in this
Section 2 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 2 not misleading.
3. Representations and Warranties of the Buyer. Buyers represent and
warrant 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.
(a) Organization of the Buyers. Broadcasting and Licensing are
corporations duly organized, validly existing, and in good standing under the
laws of Nevada.
(b) Authorization of Transaction. Buyers have full power and authority to
execute and deliver this Agreement and the Ancillary Agreements and to perform
their obligations hereunder and thereunder. This Agreement and the Ancillary
Agreements constitute the valid and legally binding obligation of the Buyers,
enforceable against the Buyers in accordance with their respective terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) 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 Buyers
are subject or any provision of their articles of organization or other charter
documents, 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 or third party
consent 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 Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1(e) above).
(d) Brokers' Fees. Other than the fee payable to Xxxxxx Xxxxxxx &
Associates (which shall be the exclusive responsibility of the Buyers and for
which the Seller shall have no responsibility), the Buyers have 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.
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4. 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 its reasonable best 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 forth in Section 5 below).
(b) Assignment Applications. Within ten (10) business days after the
execution of this Agreement, the Seller and the Buyers shall jointly file with
the FCC an application for assignment of the FCC Licenses, permits and
authorizations pertaining to the Stations from the Seller to Licensing (the
"Assignment Application"). Each side will pay its filing costs and attorneys'
fees associated with the Assignment Application. The Seller and the Buyers shall
thereafter prosecute the Assignment Application with all reasonable diligence
and otherwise use the commercially reasonable efforts to obtain the grant of the
Assignment Application as expeditiously as practicable (but neither the Seller
nor the Buyers shall have any obligation to satisfy complainants or the FCC by
taking any steps which would have material adverse effect upon the Stations or
upon any Affiliate or impose significant costs on such party). If the FCC
imposes any condition on either party to the Assignment Application, such party
shall use commercially reasonable efforts to comply with such condition,
provided, that neither party shall be required hereunder to comply with any
condition that would have a material adverse effect upon the Stations or any
Affiliate. The Seller and the Buyers shall jointly oppose any requests for
reconsideration or judicial review of FCC approval of the Assignment Application
and shall jointly request from the FCC extension of the effective period of FCC
approval of the Assignment 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 4(b) shall be construed to limit either party's right to
terminate this Agreement pursuant to Section 9 of this Agreement.
(c) Employment Offers. Upon notice to the Seller, and at mutually
agreeable times, the Seller will permit the Buyers to meet with its employees
prior to the Closing Date. Not earlier than one (1) week prior to the Closing,
the Buyers may, at their option, extend offers of employment to all or any of
the Seller's employees effective on the Closing Date. From and after the
execution of this Agreement, the Seller shall use its best efforts to assist
Buyers in retaining those employees of the Stations which the Buyers wish to
hire in connection with the operation of the Stations by the Buyers subsequent
to the Closing, and the Seller will not take any action to preclude or
discourage any of the Seller's employees from accepting any offer of employment
extended by the Buyers.
(d) Notices and Consents. The Seller will give all notices to third
parties and shall have obtained all third party consents, that the Buyers
reasonably may request in connection with the matters pertaining to the Seller
disclosed or required to be disclosed in the Disclosure Schedule (including,
without limitation, consents to assignment of the Leases and other Assumed
Contracts). 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,
16
and approvals of governments, governmental agencies, and third parties that it
may be required to give, make, or obtain.
(e) Operation of Business. The Seller will not engage in any practice,
take any action, embark on any course of inaction, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Seller will not engage in any practice, take any action, embark
on any course of inaction, or enter into any transaction of the sort described
in Section 2(e) above.
(f) Advertising Obligations. The Seller shall satisfy its air time
obligations under its agreements for sale of air time and advertising on the
Stations for goods or services ("Barter Agreements") (excluding arrangements for
the supply of programming and the right to use the Z-ROCK trademark) such that
the outstanding aggregate balance owing under all Barter Agreements as of the
Closing Date shall not exceed Five Thousand Dollars ($5,000.00) worth of air
time without the Buyers' consent. On the Closing Date, the Seller shall deliver
to the Buyers a schedule, certified by an officer of the Seller, 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 Buyers, for the
Buyers' informational purposes only, monthly unaudited statements of operating
revenues and operating expenses of the Stations within ten (10) days after each
such statement is prepared by or for the Seller; provided, however, that this
requirement shall not be in effect during the effective period of the Local
Marketing Agreement.
(h) Contracts. The Seller will not without the prior written consent of
the Buyers amend, change, or modify any of the contracts listed on Section 2(j)
of the Disclosure Schedule in any material respect. The Seller will not without
prior written consent of the Buyers enter into any new contracts respecting the
Stations or their properties, except (i) contracts for the sale of time on the
Stations for cash, goods or services which are entered into in the Ordinary
Course of Business and comply with Sections 4(f) and 4(j) hereof, (ii) contracts
entered into in the Ordinary Course of Business which are cancelable on not more
than thirty-one (31) days' notice without penalty or premium, and (iii)
contracts entered into in the Ordinary Course of Business each of which does not
involve more than Five Thousand Dollars ($5,000) or all of which do not involve
more than Ten Thousand Dollars ($10,000) in the aggregate.
(i) Operation of Stations. The Seller 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 Seller
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 Seller will follow its usual and customary
policies with respect to extending credit for sales of air time and advertising
on the Stations and with respect to collecting accounts receivable arising from
such extension of credit.
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(k) Preservation of Business. The Seller will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, relationships with lessors, licensors,
advertisers, suppliers, customers, and employees, all of the Confidential
Information, call letters and trade secrets of the Stations, and the FCC
Licenses.
(l) Full Access and Consultation. The Seller will permit representatives
of the Buyers 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 Seller for the purpose of permitting the Buyer to, among
other things: (a) conduct its due diligence review, (b) review financial
statements of the Seller, (c) verify the accuracy of representations and
warranties of the Seller contained in this Agreement, and (d) prepare for the
consummation of the transactions contemplated by this Agreement. The Seller will
consult with the Buyers' management with a view to informing 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 Buyers of any material development affecting the assets, Liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Seller or the Stations. 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 4(m), 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 (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 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 Buyers immediately if any person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
(o) Title Insurance, Surveys and Environmental Assessments. The Seller
will obtain (or will assist Buyers in obtaining) with respect to each parcel of
Real Estate subject to the Leases, a leasehold owner's policy issued by a title
insurer reasonably satisfactory to the Buyer, in an amount equal to the fair
market value of such Real Estate (including all improvements located thereon),
insuring over the standard pre-printed exceptions and insuring leasehold title
to such Real Estate in the Buyers as of the Closing subject only to the
Permitted Real Estate Encumbrances, together with such endorsements for zoning,
contiguity, public access and extended coverage as the Buyers or their lender
reasonably requests, (ii) with respect to each parcel of Owned Real Estate, an
owner's policy of title insurance by a title insurer reasonably satisfactory to
the Buyer, in an amount equal to the fair market value of such Real Estate
18
(including all improvements located thereon), insuring over the standard
pre-printed exceptions and insuring title to the Owned Real Estate to be vested
in the Buyers as of the Closing free and clear of all liens and encumbrances
except Permitted Real Estate Encumbrances, together with such endorsements for
zoning, contiguity, public access and extended coverage as the Buyers or their
lender reasonably requests, (iii) a current survey of each parcel of Real Estate
certified to the Buyer and its lender, prepared by a licensed surveyor and
conforming to current 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 "Surveys")
which shall not disclose any survey defect or encroachment from or onto any of
the Real Estate which has not been cured or insured over prior to the Closing;
and (iv) with respect to each parcel of Real Estate, a current Phase I
environmental site assessment from an environmental consultant or engineer
reasonably satisfactory to the Buyers which does not indicate that the Seller
and the Real Estate are not in compliance with any Environmental Law and 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 Buyers
will pay the costs of these title policies and Surveys, and Buyers and the
Seller will each pay one-half (1/2) of the costs of these environmental
assessments.
(p) 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 Assignment Application. Between the date of this Agreement and the
Closing Date, the Buyers and their 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 Seller.
(q) Risk of Loss. The risk of loss, damage, or destruction to any of the
Acquired Assets 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 Acquired Assets
lost, damaged or destroyed will be reimbursed under any insurance policy with
respect thereto. The Seller will, at Seller's expense, repair or replace such
Acquired Assets to their former condition 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 Buyers, and the
Buyers determine that the Seller's failure to repair or replace, alone or in the
aggregate with any other then existing factors, would have a material adverse
effect on the operation of the Stations:
(a) the Buyers may elect to terminate this Agreement; or
(b) the Buyers 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
19
to the Buyers, unless the same cannot be reasonably effected within ninety
(90) days of the date of the Seller's notice to the Buyers, in which case
either party may terminate this Agreement; or
(c) the Buyers may choose to accept the Acquired Asset in their
"then" condition, together with the Seller's assignment to the Buyers of
all rights under any insurance claims covering the loss, damage or
destruction and payment over to the Buyers of any proceeds under any such
insurance policies, previously received by the Seller with respect thereto
plus an amount equal to the amount of any deductible or self-insurance
maintained by Seller on such Acquired Assets.
In the event the Closing Date is postponed pursuant to this Section 4(q),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyers. The obligation of the Buyers
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 2 above shall
be true and correct in all respects at and as of the Closing Date as though made
on and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all respects through the Closing;
(iii) the Seller shall have procured all of the third party consents
specified in Section 4(d) above, including but not limited to those relating to
transmitter and studio leases, and all of the title insurance commitments (and
endorsements), Surveys and environmental site assessments described in Section
4(o) above;
(iv) no action, suit, investigation, inquiry or other proceeding shall be
pending or threatened before any court or quasi-judicial 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 impose damages or penalties upon any of the parties if such
transactions are consummated, (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 Acquired Assets (and no
such judgment, order, decree, stipulation, injunction, or charge shall be in
effect);
20
(v) the Seller shall have delivered to the Buyer a certificate (without
qualification as to knowledge or materiality or otherwise except as provided in
the representation itself) to the effect that each of the conditions specified
above in Sections 5(a)(i) through (iv) is satisfied in all respects and the
statements contained in such certificate shall be deemed a warranty of the
Seller which shall survive the Closing;
(vi) each of the Assignment 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 relevant parties shall have entered into the Postclosing
Agreement;
(viii) the Buyers shall have received from counsel to the Seller an
opinion with respect to the matters set forth in Exhibit E attached hereto,
addressed to the Buyers and its lender and dated as of the Closing Date; and
(ix) all actions to be taken by the Seller in connection with the
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.
In the event that any of the foregoing conditions to Closing shall not have been
satisfied, the Buyers may elect to (i) terminate this Agreement without
liability to the Seller, or (ii) consummate the transactions contemplated herein
despite such failure. Regardless of whether the Buyers elect to terminate this
Agreement or consummate the transactions described herein, if such failure shall
be as a result of a breach of any provision of this Agreement by the Seller
(including, without limitation, any breach arising as a result of the failure of
the Seller to execute and/or deliver any item described in this Section 5(a),
the Buyers may seek appropriate remedies for any and all damages, costs and
expenses incurred by the Buyers by reason of such breach including, without
limitation, indemnification pursuant to Section 7, below.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
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 3 above shall
be true and correct in all respects at and as of the Closing Date as though made
on and as of the Closing Date;
(ii) the Buyers shall have performed and complied with all of their
covenants hereunder in all respects through the Closing;
21
(iii) no action, suit, investigation, inquiry or other proceeding shall be
pending or threatened before any court or quasi-judicial 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 impose damages or penalties upon any of the Parties if such
transactions are consummated, 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 Buyers shall have delivered to the Seller a certificate (without
qualification as to knowledge or materiality or otherwise except as provided in
the representation itself) to the effect that each of the conditions specified
above in Section 5(b)(i)-(iii) is satisfied in all respects and the statements
contained in such certificate shall be deemed a warranty of the Buyers which
shall survive the Closing;
(v) each of the Assignment Applications shall have been approved by a
Final Order of the FCC and the Buyers 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 relevant parties shall have entered into the Postclosing
Agreement; and
(viii) all actions to be taken by the Buyers in connection with the
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.
In the event that any of the foregoing conditions to Closing shall not have been
satisfied, the Seller may elect to (i) terminate this Agreement without
liability to the Buyers, or (ii) consummate the transactions contemplated herein
despite such failure. Regardless of whether the Seller elects to terminate this
Agreement or consummate the transactions described herein, if such failure shall
be as a result of a breach of any provision of this Agreement by the Buyers
(including, without limitation, any breach arising as a result of the failure of
the Buyers to execute and/or deliver any item described in this Section 5(a),
the Seller may seek appropriate remedies for any and all damages, costs and
expenses incurred by the Seller by reason of such breach including, without
limitation, indemnification pursuant to Section 7, below.
6. 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
22
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 7 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 Stations, each of the other Parties will reasonably 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 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
(c) Adjustments. Income and expenses attributable to operation of the
Stations shall be allocated between Buyers and Seller as provided in the Local
Marketing Agreement. Such items as utilities charges, insurance, real and
personal property taxes, prepaid expenses, deposits, music license fees, and
rents and payments pertaining to the Assumed Contracts (including any contracts
for the sale of time for cash, trade or barter so assigned) up and through the
Closing Date shall be for the account of the Seller and thereafter for the
account of the Buyers, except as otherwise provided in the Local Marketing
Agreement. The prorations and adjustments hereunder shall be made and paid
insofar as feasible on the Closing Date, with a final settlement sixty (60) days
after the Closing Date. In the event of any disputes between the Parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at such
time and such disputes shall be determined by an independent accounting firm
mutually acceptable to both parties and the fees and expenses of such accounting
firm shall be paid one-half (1/2) by the Seller and one-half (1/2) by the Buyer.
(d) Severance Obligations. In the event an offer of employment is extended
by the Buyers to and accepted by an employee of the Seller pursuant to Section
4(c) and such subsequent employment by the Buyers is terminated within sixty
(60) days from the Closing Date, the Seller shall be responsible for, and shall
pay to such accepting employee, all severance benefits (if any, pursuant to the
Seller's practices as in effect on the Closing Date) that may be due and owing
such employee by reason of his or her employment with either the Seller or the
Buyers
(e) Consents. In the event any of the Assumed Contracts are not assignable
or any consent to such assignment is not obtained on or prior to the Closing
Date, and the Buyers elect to consummate the transactions contemplated herein
despite such failure or inability to obtain such consent, the Seller shall
continue to use commercially reasonable efforts to obtain any such assignment or
consent after the Closing Date. Until such time as such assignment or approval
has been obtained, the Seller will cooperate with Buyers in any lawful and
23
economically feasible arrangement to provide that the Buyer shall receive the
Seller's interest in the benefits under any such Assumed Contract, including
performance by the Seller as agent, if economically feasible; provided, however,
that the Buyers shall undertake to pay or satisfy the corresponding liabilities
for the enjoyment of such benefit to the extent that Buyers would have been
responsible therefor if such consent or assignment had been obtained.
7. Remedies for Breaches of this Agreement.
(a) Survival. All of the representations and warranties of the Seller
contained in Section 2 of this Agreement and of the Buyers contained in Section
3 of this Agreement shall survive the Closing and continue in full force and
effect for a period of three (3) years following Closing.
(b) Indemnification Provisions for the Benefit of the Buyers.
Except as described below in Section 7(e) with respect to a breach of a
warranty or covenant prior to the Closing Date, the Seller agrees to indemnify
the Buyers from and against the entirety of any Adverse Consequences the Buyers
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by:
(i) any misrepresentation or breach of any of the Seller's representations
or warranties, and covenants contained in this Agreement or in any Ancillary
Agreement executed and/or delivered by the Seller (so long as the Buyers make a
written claim for indemnification within the applicable survival period);
(ii) any breach or nonfulfillment of any agreement or covenant of the
Seller contained herein or in any Ancillary Agreement;
(iii) any Liability of the Seller which is not an Assumed Liability;
and/or
(iv) any Liability of the Buyers arising by operation of law (including
under any bulk transfer law of any jurisdiction or under any common law doctrine
of defacto merger or successor liability) which is not an Assumed Liability.
(c) Indemnification Provisions for the Benefit of the Seller. Except as
described below in Section 7(e) with respect to a breach of a warranty or
covenant prior to the Closing Date, 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 (i)
any misrepresentation or breach of any of the Buyers' representations or
warranties contained in this Agreement or in any Ancillary Agreement executed
and/or delivered by the Buyers (so long as the Seller makes a written claim for
indemnification within the applicable survival period) or (ii) any breach or
nonfulfillment of any agreement or covenant of the Buyers contained herein or in
any Ancillary Agreement, or (iii) any Assumed Liability.
24
(d) Specific Performance. Each of the Parties acknowledges and agrees that
the other Party 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 other
Party 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 10(o) 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 not withstanding the provision in
Section 7(e) with respect to the remedy of liquidated damages upon a breach of a
warranty or 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.
(e) Liquidated Damages. The Buyer and the Seller acknowledge that in the
event that the transactions contemplated by this Agreement are not closed
because of a default by either Party, the Adverse Consequences as a result of
such default may be difficult, if not impossible, to ascertain. Accordingly, in
lieu of indemnification pursuant to Section 7(b) or 7(c), the non defaulting
Party shall be entitled to receive from the defaulting Party for such default
the sum of One Hundred Thousand Dollars ($100,000.00) as liquidated damages
without the need for proof of damages, subject only to successfully proving in a
court of competent jurisdiction that the other Party has materially breached
this Agreement and that the transactions contemplated thereby have not occurred;
provided however, that the Buyers and Seller shall retain the option to receive,
pursuant to Section 7(d), and in lieu of receiving the liquidated damages
provided in this Section 7(e), the remedy of specific performance with respect
to a breach of this Agreement prior to the Closing. The Buyers and the Seller
agree to pay said sum of liquidated damages within ten (10) days of the date
that the non-defaulting party obtains such a judgment, and agree that in the
event this Agreement is terminated by the Seller prior to the Closing Date as a
result of a breach or default by the Buyers under this Agreement, the Seller
shall proceed against the Xxxxxxx Money as partial satisfaction of liquidated
damages owed by Buyers.
(f) 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 indemnifica tion against any other Party (the "Indemnifying
Party") under this Section 7, then the 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 as a result
of such failure. In the event any Indemnifying Party notifies 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, (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
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict
25
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, and/or in the event the
Indemnifying Party shall fail to defend such claim actively and in good faith,
then the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
8. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of
the assets of the Seller with respect to the operation of the Station, wherever
located, including (a) leaseholds and other interests of any kind therein,
improvements, fixtures, and fittings thereon (such as towers and antennae), and
easements, rights-of-way, and other appurtenances thereto); (b) tangible
personal property identified in Section 2(h) of the Disclosure Schedule; (c)
Intellectual Property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, remedies
against infringements thereof, and rights to protection of interests therein
under the laws of all jurisdictions; (d) rights under orders and agreements
(including those Barter Agreements and Advertising Contracts identified on the
Disclosure Schedule) now existing or entered into in the Ordinary Course of
Business for the sale of advertising time on the Stations; (e) Assumed
Contracts, indentures, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (f) call letters of the Stations, jingles,
logos, slogans, and business goodwill of the Stations; (g) claims, deposits,
prepayments, refunds, causes of action, choses in action, rights of recovery
(including rights under policies of insurance), rights of set off, and rights of
recoupment; (h) Licenses and similar rights obtained from governments and
governmental agencies; and (i) FCC logs and records and all other books,
records, ledgers, logs, files, documents, correspondence, advertiser lists, all
other lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, program production materials,
studies, reports, and other printed or written materials; and (j) goodwill of
the Stations.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, 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 Contracts" has the meaning set forth in Section 2(r), above.
26
"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.
"Assignment Application" has the meaning set forth in Section 4(b) above.
"Assumed Contracts" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts identified as Assumed Contracts on
Section 2(j) of the Disclosure Schedule.
"Assumed Liabilities" means obligations of the Seller which accrue after
the Closing Date under the Assumed Contract either: (i) to furnish services, and
other non-Cash benefits to another party after the Closing; or (ii) to pay for
goods, services, and other non-Cash benefits that another party will furnish to
it after the Closing. The Assumed Liabilities shall not include any Retained
Liabilities.
"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.
"Buyers" 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(d) above.
"Closing Date" has the meaning set forth in Section 1(d) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of the Seller.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
"Xxxxxxx Money Deposit" has the meaning set forth in Section 1(c) above.
"Xxxxxxx Money Escrow Agreement" has the meaning set forth in Section 1(c)
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
27
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).
"Environmental Laws" has the meaning set forth in Section 2(q), above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means Xxxxxx Xxxxxxx & Associates.
"Extremely Hazardous Substance" has the meaning set forth in Section 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.
"FCC Licenses" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"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 2(e) 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 7(d) above.
"Indemnifying Party" has the meaning set forth in Section 7(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
28
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).
"Knowledge" means actual knowledge.
"Leases" means those real estate leases to which Seller is a party
governing Seller's studios and FM tower sites, as described in Section 2(h) of
the Disclosure Schedule.
"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 with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"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).
"Owned Real Estate" means the real property owned by the Seller as
described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon.
"Party" has the meaning set forth in the preface above.
"Permitted Real Estate Encumbrances" shall have the meaning set forth in
Section 2(i), above.
"Post-Closing Agreement" means the Post-Closing Agreement with Seller's
owners in the form attached hereto as Exhibit D.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 1(c) above.
29
"Real Estate" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Retained Liabilities" means any other obligations or Liabilities of the
Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the Closing; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(i) relating to Surveys, title commitments and environmental audits and
Section 4(b) with regard to the Assignment Application; or (iv) any Liability or
obligation of the Seller under this Agreement (or under any side agreement
between the Seller on the one hand and the Buyers on the other hand entered into
on or after the date of this Agreement).
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"Seller" has the meaning set forth in the preface above.
"Stations" means the radio broadcast stations having the call letters
KZRK-AM and KZRK-FM, licensed by the FCC to operate in Canyon, Texas.
"Subsidiary," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"Surveys" has the meaning set forth in Section 4(o) 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.
30
"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.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyers and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyers 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
of any representation, warranty, or covenant contained in this Agreement;
provided, however, that if such breach is capable of being cured, such breach
also remains uncured for twenty (20) days after notice of breach is received by
the Seller from the Buyers;
(iii) the Seller may terminate this Agreement by giving written notice to
the Buyers at any time prior to the Closing in the event the Buyers are in
breach of any representation, warranty, or covenant contained in this Agreement;
provided, however that if such breach is capable being cured, such breach
remains uncured for twenty (20) days after notice of breach is received by the
Buyers from the Seller;
(iv) the Buyers 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 5(a) hereof
(unless the failure results primarily from the Buyers themselves breaching any
representation, warranty, or covenant contained in this Agreement);
(v) the Seller may terminate this Agreement by giving written notice to
the Buyers 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 5(b) hereof
(unless the failure results primarily from the Seller itself breaching any
representation, warranty, or covenant contained in this Agreement); or
(vi) the Buyers or the Seller may terminate this Agreement if any
Assignment Application is denied by Final Order.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 9(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).
10. Miscellaneous.
31
(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 7(a) hereof and the Post-Closing Agreement
with respect to Seller's owners.
(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 the Parties acknowledge and reocognize that Seller is a wholly
owned subsidiary of a public company which is required to submit filings with
the Securities Exchange Commission and make other public announcements in the
Ordinary Course of Business, and 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 (i) the Buyers may assign all of its right,
title and interest in, to and under this Agreement to one or more Affiliates,
who shall then, subject to the terms and conditions of this Agreement, have the
right to receive the Acquired Assets, assume the Assumed Liabilities, and to pay
to the Seller the Purchase Price therefor or to any successor to the Buyers in
the event of any sale, merger or consolidation of the Buyers, and (ii) Buyers
may assign their indemnification claims and their rights under the warranties
and representations of the Sellers to the financial institution(s) providing
financing to the Buyers in connection with this transaction.
(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.
32
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be considered to be given
and received in all respects when hand delivered, when delivered via prepaid
express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Seller:
Sovereign Communications Corporation
X.X. Xxx 0000
Xxxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxx
Fax: (000) 000-0000
Copy to:
Xxxxx & Holland LLP
000 X. 0xx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Xxxxx Xxxxxxxx, Esquire
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
c/o QUAESTUS Management Corp.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Fax: (000) 000-0000
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
33
Fax: (000) 000-0000
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including 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 party 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
Texas.
(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
Buyers 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, 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.
(1) Expenses. The Buyers and the Seller, will each bear their own 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 4(b) with regard to the Assignment Applications and as set forth in
Section 4(o) with respect to Surveys, title commitments and environmental
audits. The Seller and the Buyers will each pay one-half (1/2) of any recording
or similar fees necessary to vest title to each of the Acquired Assets in the
Buyers.
(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
34
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 Amarillo, Texas 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. Any Party may make service on the other
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
10(h) above. Nothing in this Section 10(o), 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.
* * * * * *
35
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS BROADCASTING, INC.
By:
-------------------------------
Xxxxxxx Xxxxxxx
Chairman
CUMULUS LICENSING CORPORATION
By:
-------------------------------
Xxxxxxx Xxxxxxx
Chairman
SOVEREIGN COMMUNICATIONS CORPORATION
By:
-------------------------------
(printed)
----------------------------------
Title:
----------------------------
36
LIST OF OMITTED SCHEDULES AND/OR EXHIBITS:
Disclosure Schedules
Local Marketing Agreement by and between Sovereign and Broadcasting, dated as
of December 31, 1997
Escrow Agreement by and among Sovereign, Broadcasting, and Xxxxxx Xxxxxx and
Associates, dated as of December 30, 1997
General Assignment by and between Sovereign and Broadcasting, dated as of
March 31, 1998
General Assignment by and between Sovereign and Licensing, dated as of March
31, 1998
Instrument of Assumption by and between Broadcasting and Sovereign, dated
as of March 31, 1998
Post Closing Agreement by and among Broadcasting, Licensing, Sovereign and
United Heritage Corporation, dated as of March 31, 1998
Assignment of Lease for property located at 0000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxx Xxxxxx, Xxxxx
Assignment of Lease for property located at Deer Creek Unit No. 2
Warranty Deed for property located in Xxxxxxx County, Texas
Side Letter Agreement regarding the Holdback of Purchase Price
Opinion of Xxxxx & Holland, L.L.P.
The preceding schedules and/or exhibits have been omitted from this exhibit.
The Company agrees to provide copies of such schedules and/or exhibits to the
Commission upon request.
