EXHIBIT 10.1
Asset Purchase Agreement
THIS AGREEMENT, dated as of May 20, 1997, is made among BONNEVILLE
INTERNATIONAL CORPORATION, a Utah corporation ("BIC"); BONNEVILLE HOLDING
COMPANY, a Utah corporation ("BHC"; BIC and BHC are collectively referred to
herein as "Sellers"); and CHILDREN'S BROADCASTING CORPORATION, a Minnesota
corporation, or its assigns ("CBC" or "Buyer"); and
W I T N E S S E T H :
THAT, WHEREAS, BHC is the Federal Communications Commission ("FCC")
licensee of Radio Station KIDR(AM), licensed to Phoenix, Arizona ("Station");
WHEREAS, pursuant to an operating agreement with BHC, BIC operates the
Station and BIC owns substantially all of the assets of the Station other than
the Licenses (as defined below);
WHEREAS, BHC is also the licensee of radio station KHTC(FM) in Phoenix,
Arizona and the studios and offices of KHTC(FM) are co-located with the studios
and offices of the Station; and
WHEREAS, subject to and conditioned upon the consent of the FCC, the
Sellers desire to sell and transfer and Buyer desires to purchase and acquire
the Station and all of the tangible and intangible assets of the Sellers
primarily used or held for use in connection with the operation of the Station,
except as excluded herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
SALE AND TRANSFER OF ASSETS
1.1. ASSETS. At closing of the transaction described herein ("Closing"), the
Sellers shall sell, convey, assign, transfer and deliver to Buyer, free
and clear of any lien, encumbrance, interest, reservation, restriction,
mortgage or security interest of any nature whatsoever, except as
expressly provided herein, all the material assets owned or leased by
the Sellers primarily relating to, used or held for use in connection
with the operation of the Station, specifically excluding the Excluded
Assets (as defined below), and including, without limitation, the
following (collectively, the "Assets") (except to the extent any of the
following Assets are Excluded Assets):
1.1.1. All licenses, permits and authorizations ("Licenses") issued by
the FCC, all of which are listed on SCHEDULE A attached hereto;
1.1.2. All of the Sellers' owned real property including that described
in SCHEDULE B attached hereto ("Real Property");
1.1.3. All tangible personal property owned by the Sellers including,
without limitation, that listed on SCHEDULE C attached hereto,
and any replacements therefor or improvements thereof acquired or
constructed prior to Closing ("Personal Property"), provided that
the Assets shall not include such items of tangible personal
property as are disposed of or consumed in the ordinary course of
the business of the Station or with the consent of Buyer between
the date hereof and the Closing Date;
1.1.4. All of the Sellers' rights and benefits under the business
agreements, leases and contracts listed on SCHEDULE D attached
hereto, including any renewals, extensions, amendments or
modifications thereof, all time sales agreements upon terms
consistent with the Station's usual and customary selling
practices, and any additional agreements, leases and contracts
made or entered into by the Sellers in the ordinary course of
business between the date of such Schedule and the Closing
approved in writing by Buyer or otherwise permitted hereunder
("Leases and Agreements");
1.1.5. All right, title and interest of BHC in and to the use of the
call letters KIDR for the Station (referred to herein as the
"Call Letters"), to the extent they can be conveyed; together
with all trademarks, service marks, trade names and other similar
rights held by Sellers including all accretions thereto, as
listed on SCHEDULE E attached hereto ("General Intangibles");
1.1.6. All magnetic media, electronic data processing files, systems and
programs, logs, public files, records required by the FCC,
historical billing information, record program libraries,
promotional material, supplies, customer files, correspondence,
maintenance records or any other business records, but not
including records pertaining to corporate affairs (including tax
records) and original journals. The Sellers shall have
reasonable access to all such records which might be in the
possession of Buyer for a period of five (5) years following the
Closing, and shall, at its own expense, have the right to make
copies thereof; and
1.1.7. All other personal property whether tangible or intangible, not
hereinbefore mentioned. The Sellers agree that the Assets
conveyed to Buyer on the Closing Date pursuant to this Agreement
will be conveyed free and clear of all liens, charges, claims and
encumbrances whatsoever, excepting (i) those obligations from and
after the Closing Date with respect to obligations of the Sellers
expressly agreed to be assumed by Buyer hereunder, (ii) with
respect to the Real Property, easements, restrictions, rights,
limitations or encumbrances of record, (iii) with respect to the
Assets, materialmen's or similar liens for ongoing or recently
completed work and (iv) liens for current taxes, and assessments
not yet due and payable ("Permitted Encumbrances").
All of the Licenses shall be assigned and transferred to Buyer by
BHC. All other items comprising the Assets shall be assigned and
transferred to Buyer by BIC.
1.2. EXCLUDED ASSETS. Certain assets shall be specifically excluded from the
Assets and shall be retained by Sellers (the "Excluded Assets") (such
designation as an Excluded Asset shall control in the event there is
any overlap in the description of items as Assets or Excluded Assets),
including the following:
1.2.1. Cash on hand, cash equivalents, accounts receivable, corporate
tax and accounting records, security deposits, and insurance
policies, proceeds and claims, except as otherwise expressly
provided herein;
1.2.2. Corporate and management information and company-wide licensed
software;
1.2.3. Any employee benefit plans of Sellers;
1.2.4. Test equipment and other technical equipment not used primarily
in the operation of the Station;
1.2.5. Any and all causes of action and claims of Sellers arising out of
or relating to transactions or time periods prior to Closing,
including, without limitation, insurance claims and claims for
the refunds;
1.2.6 The Services Agreement and the Office and Studio Sublease
Agreement between BIC and Nationwide Communications, Inc.
identified on SCHEDULE D; and
1.2.7. Other property as more fully described on SCHEDULE F attached
hereto.
ARTICLE 2
PURCHASE PRICE AND PAYMENTS
2.1. PURCHASE PRICE. As the purchase price for the Assets, Buyer agrees to
pay to the Sellers the sum of One Million and no/100 Dollars
($1,000,000.00), subject to adjustment as provided in Section 2.3 as
the purchase price for the Assets (the "Purchase Price").
2.2. METHOD OF PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid
as follows:
2.2.1. XXXXXXX MONEY ESCROW. The amount of Twenty-five Thousand and
no/100 Dollars ($25,000.00) (the "Escrowed Funds") shall be paid
into escrow contemporaneously with the execution hereof pursuant
to the terms of that Escrow Agreement (the "Escrow Agreement") a
copy of which is attached hereto as EXHIBIT A.
2.2.2. CBC COMMON STOCK. The Purchase Price shall be payable by the
issuance by Buyer to Sellers of tradable shares of CBC $.02 per
share par value Common Stock (the "CBC Stock"). The number of
shares of CBC Stock to be issued equals One Million and no/100
Dollars ($1,000,000.00) divided by the "Price Per Share" as
hereinafter defined. Any fractional share shall be paid in cash
based upon the Price Per Share. The Price Per Share shall be
equal to the average closing price of such stock for the thirty
(30) trading days prior to five (5) days prior to Closing as
reported by the Nasdaq National Market System. The number of
shares of CBC Stock issued to Sellers shall not be less than Two
Hundred Thousand (200,000) shares. Notwithstanding the
foregoing, if between the date of this Agreement and the Closing
Date the outstanding shares of CBC Stock are changed into a
different number of shares or a different class or series, by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the
number of shares of CBC Stock described above shall be
correspondingly and proportionately adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. Buyer reserves the
right to pay cash at Closing in lieu of all or part of the CBC
Stock payment called for hereunder, provided Buyer gives Sellers
notice of its intention to pay cash at least one week prior to
the Closing Date.
2.3. PRORATIONS. The operations of the Station and the income and expenses
attributable thereto up to 12:01 A.M. on the day of the Closing (the
"Adjustment Time"), shall, except as otherwise provided in this
Agreement, be for the account of the Sellers and thereafter (except
with respect to any Excluded Assets) shall be for the account of Buyer.
Expenses such as power and utility charges, lease rents, property taxes
according to year of payment, frequency discounts, annual license fees
(if any), wages, commissions, payroll taxes, and other fringe benefits
of employees of the Sellers who enter the employment of the Buyer, and
similar deferred items shall be prorated between the Sellers and the
Buyer. Prepaid deposits shall not be prorated but shall remain the
property of the Sellers and shall be paid to Sellers by Buyer at
Closing. Employees' employment with the Sellers shall be terminated as
of the Closing Date, and Buyer shall employ employees of its choice
from and after said date upon terms acceptable to Buyer and such
employees. Any prorations shall be made and paid insofar as feasible
at the Closing, with a final settlement within ninety (90) days after
the Closing.
2.4 ASSUMED LIABILITIES. Except as expressly provided for in this
Agreement, at the Closing Buyer shall not assume, incur or be
charged with, in connection with the transactions herein
contemplated, any liabilities or obligations of any nature
whatsoever, contingent or otherwise. Without limitation of the
foregoing, Buyer shall not assume any obligations to the Sellers or
the Station's employees under any employee benefit plans or
employment contracts. Notwithstanding the foregoing, Buyer agrees
to assume all obligations relating to the Station, including
without limitation those payment and
performance obligations under the Leases and Agreements, which arise
after Closing and Buyer agrees to pay and perform such obligations
in a timely manner.
2.5. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets by Buyer and Sellers as Buyer and Sellers shall
agree pursuant to an arm's length negotiation. Such allocation
shall be agreed upon within sixty (60) days following the Closing
Date and shall be consistent with Section 1060 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder.
The parties agree to jointly complete and separately file IRS Forms
8594 with their respective income tax returns for the tax year in
which the Closing Date occurs. The parties further agree that
neither Buyer nor Sellers will take any position on any income,
transfer or gains tax return before any governmental agency charged
with the collection of any such tax or in any judicial proceeding
that is in any manner inconsistent with the terms of such allocation
without the written consent of the other.
2.6. COLLECTION OF BIC'S ACCOUNTS RECEIVABLE. During the four-month
period commencing on the Closing Date (the "Collection Period"),
Buyer shall collect and receive payment in the ordinary course of
business with respect to BIC's accounts receivable and shall pursue
collection thereof in accordance with Buyer's normal practices,
provided, however, that Buyer shall not have the right to
compromise, settle or adjust the amounts of any of BIC's accounts
receivable without BIC's prior written consent. No later than
fifteen (15) days after the end of each calendar month during the
Collection Period, Buyer shall remit to BIC all BIC's accounts
receivable collected hereunder. All payments received by Buyer from
any person obligated with respect to any of BIC's accounts
receivable shall be applied first to BIC's account and only after
full satisfaction thereof to Buyer's account, unless the account
debtor contests the amount owed to BIC or gives contrary remittance
instructions or advice to Buyer. Upon the expiration of the
Collection Period, all rights and obligations related to collecting
BIC accounts receivable will revert back to BIC and Buyer will cease
to have any further responsibilities related to the uncollected BIC
accounts receivable (except that Buyer shall promptly remit to BIC
any amounts subsequently received by Buyer on account of BIC's
accounts receivable). Thereafter, BIC may collect any of BIC's
accounts receivable in any manner BIC chooses.
ARTICLE 3
FEDERAL SECURITIES LAW MATTERS
3.1. DEFINITIONS. As used in this Article 3, the following terms shall
have the following meanings:
"ACT" means the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"ADVICE" has the meaning set forth in Section 3.3.
"AFFILIATE" means, with respect to any specified person, any other
person who, directly or indirectly, controls, is controlled by, or
is under common control with such specified person.
"COMMISSION" means the Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and
regulations of the Commission promulgated thereunder.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including without limitation, a prospectus that discloses
information previously omitted from a Prospectus filed as part of an
effective registration statement in reliance upon Rule 430A
promulgated under the Act), as amended or supplemented by any
Prospectus supplement, and by all other amendments and supplements
to the Prospectus, including post-effective amendments, and in each
case including all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.
"REGISTRATION STATEMENT" means any registration statement of CBC
that covers any of the Shares pursuant to the provisions of this
Agreement and all amendments and supplements to any such
registration statement, including post-effective amendments, in each
case including the Prospectus, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference
in such registration statement.
"SHARES" means the shares of CBC Stock issued to the Sellers
pursuant to this Agreement.
"SUSPENSION NOTICE" has the meaning set forth in Section 3.3.
3.2. REGISTRATION EFFECTIVENESS. On February 11, 1997, the Commission
declared effective CBC's Registration Statement on Form S-4 (the
"S-4") which registered the Shares under the Act. CBC will use
reasonable efforts to keep the Registration Statement effective
until the Closing date.
3.3. REGISTRATION PROCEDURES. In connection with the obligation of CBC
to use reasonable efforts to cause the Registration Statement to
remain effective in accordance with the provisions of this
Agreement, CBC shall promptly:
(a) Prepare and file with the Commission such post-effective
amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective and shall timely file
with the Commission all required filings under the Act and the
Exchange Act as are necessary to keep the Registration Statement
effective for as long as such registration is required to remain
effective pursuant to the terms hereof; shall cause the
Prospectus to be supplemented by any required Prospectus
supplement, and, as so supplemented, to be filed pursuant to Rule
424 under the Act; and shall comply with the provisions of the
Act applicable to it with respect to the disposition of all
Shares covered by the Registration Statement during the
applicable period;
(b) Furnish to the Sellers such number of copies of the Prospectus
and any amendments or supplements thereto, as the Sellers may
reasonably request in order to facilitate the public sale or
other disposition of the Shares being sold by the Sellers;
(c) Notify the Sellers (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed with
respect to the Registration Statement or any post-effective
amendment thereto, (ii) of any request by the Commission or any
state securities authority for amendments and supplements to a
Registration Statement or post-effective amendment thereto or for
additional information, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement, (iv) of the issuance by any state
securities commission or other regulatory authority of any order
suspending the qualification or exemption from qualification of
any of the Shares under state securities or "blue sky" laws, and
(v) of the happening or failure to occur of any event which
happening or failure makes any statement made in the Registration
Statement or related Prospectus untrue or requires the making of
any changes in the Registration Statement or Prospectus so that
they will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. As
soon as practicable following the occurrence of an event
described in subsections (ii) through (iv) above, CBC shall
prepare and file with the Commission and furnish a supplement or
amendment to such Prospectus which remedies the event so
described.
As soon as practicable following the occurrence of an event
described in subsection (v) above, CBC shall prepare and file
with the Commission and furnish a supplement or amendment to such
Prospectus so that, as thereafter deliverable to the purchasers
of such Shares, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Upon receipt of any notice (a "Suspension Notice") by the Sellers
from CBC of the happening of any event of the kind described in
Section 3.3(c)(ii) through (v), the Sellers shall forthwith
discontinue disposition of the Shares pursuant to the Registration
Statement covering the Shares until the Sellers' receipt of the
copies of the supplemented or amended Prospectus contemplated by
Section 3.3(c) or until the Sellers are advised in writing (the
"Advice") by CBC that the use of the Prospectus may be resumed, and
has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus, and, if so directed
by CBC, will, or will request any broker-dealer acting as the
Sellers' agent to, deliver to CBC (at CBC's expense) all copies,
other than permanent file copies then in Sellers' or broker-dealer's
possession, of the Prospectus covering such Shares current at the
time of receipt of such notice; PROVIDED, HOWEVER, that in no event
shall the period from the date on which Sellers receive a Suspension
Notice to the date on which Sellers receive either the Advice or
copies of the supplemented or amended Prospectus contemplated by
Section 3.3(c) (the "Suspension Period") exceed forty-five (45) days.
3.4. REGISTRATION AND OTHER EXPENSES. CBC shall bear all expenses
incurred in connection with causing the registration of the Shares
to remain effective pursuant to Section 3.2 of this Agreement. Such
expenses shall include, without limitation, all printing, legal and
accounting expenses incurred by CBC and all registration and filing
fees imposed by the Commission, any state securities commission or
the Nasdaq Stock Market. CBC agrees to pay directly when due (and
in any case to indemnify Sellers immediately upon demand for) any
and all transfer taxes, stamp duties or other similar taxes or
expenses payable by or on behalf of Sellers in connection with (i)
the issuance to Sellers by CBC of the Shares (ii) the acquisition by
Sellers of the Shares or (iii) the consummation by CBC of any of its
obligations hereunder. The Sellers shall be responsible for any
brokerage fees or commissions and taxes of any kind (including,
without limitation, transfer taxes) with respect to any disposition,
sale or transfer of Shares by the Sellers and for any legal,
accounting and other expenses incurred by the Sellers in connection
therewith.
3.5. INDEMNIFICATION AND CONTRIBUTION.
3.5.1. INDEMNIFICATION BY CBC. CBC agrees to indemnify and hold
harmless, to the full extent permitted by law, the Sellers, their
stockholders, directors and officers, from and against all
losses, claims, damages, liabilities and expenses (including
without limitation reasonable legal fees and expenses incurred by
the Sellers) (collectively, the "Damages") to which the Sellers
may become subject under the Act, the Exchange Act or otherwise,
insofar as such Damages (or proceedings in respect thereof) arise
out of or are based upon any untrue statement of material fact
contained in any Registration Statement (or any amendment
thereto) pursuant to which the Shares were registered under the
Act, or caused by any omission to state therein a material fact
necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or
caused by any untrue statement of a material fact contained in
any Prospectus (as amended or supplemented if CBC shall have
furnished any amendments or supplements thereto), or caused by
any omission to state therein a material fact necessary to make
the statements therein in light of the circumstances under which
they were made not misleading, except insofar as such Damages
arise out of or are based upon any such untrue statement or
omission based upon information relating to the Sellers furnished
in writing to CBC by the Sellers specifically for use therein;
PROVIDED, HOWEVER, that CBC shall not be liable to the Sellers
under this Section 3.5.1 to the extent that any such Damages were
caused by the fact that the Sellers sold Shares to a person as to
whom it shall be established that there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the
Prospectus as then amended or supplemented if, but only if, (i)
CBC has previously furnished copies of such amended or
supplemented Prospectus to the Sellers and (ii) such Damages were
caused by any untrue statement or omission contained in the
Prospectus so delivered which was corrected in such amended or
supplemented Prospectus.
3.5.2. INDEMNIFICATION BY THE SELLERS. The Sellers agree to indemnify
and hold harmless CBC, its stockholders, directors, officers and
each person, if any, who controls CBC within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from CBC to the
Sellers, but only with reference to information relating to the
Sellers furnished in writing to CBC by the Sellers specifically
for use in any Registration Statement (or any amendment thereto)
or any Prospectus (or any amendment or supplement thereto);
PROVIDED, HOWEVER, that the Sellers shall not be obligated to
provide such indemnity to the extent that such Damages result
from the failure of CBC to promptly amend or take action to
correct or supplement any such Registration Statement or
Prospectus on the basis of corrected or supplemental information
provided by the Sellers to CBC expressly for such purpose. In no
event shall the liability of the Sellers hereunder be greater in
amount than the amount of the proceeds received by the Sellers
upon the sale of the Shares giving rise to such indemnification
obligation.
3.5.3 CONTRIBUTION. To the extent that the indemnification provided
for in paragraph 3.5.1 or 3.5.2 of this Section 3.5 is
unavailable to an indemnified party or insufficient in respect of
any Damages, then each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified
party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of CBC on the one hand
and the Sellers on the other hand in connection with the
statements or omissions that resulted in such Damages, as well as
any other relevant equitable considerations. The relative fault
of CBC on the one hand and of the Sellers on the other hand shall
be determined by reference to, among other things, whether the
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by CBC or by the
Sellers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission.
If indemnification is available under paragraph 3.5.1 or 3.5.2 of
this Section 3.5, the indemnifying parties shall indemnity each
indemnified party to the full extent provided in such paragraphs
without regard to the relative fault of said indemnifying party
or indemnified party or any other equitable consideration
provided for in this Section 3.5.3. CBC and the Sellers agree
that it would not be just or equitable if contribution pursuant
to this Section 3.5.3 were determined by pro rata allocation or
by any other method of allocation that does not take account of
the equitable considerations referred to herein.
3.6. REPRESENTATIONS AND WARRANTIES. Sellers make to CBC the following
representations and warranties:
(a) Sellers are not directly or indirectly controlled by, or acting
on behalf of any person which is, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act"), required to register as such under the 1940
Act.
(b) Sellers (i) have received the prospectus contained in the S-4;
and (ii) have received copies of the documents incorporated by
reference into the S-4, which the Sellers have deemed relevant
for purposes of evaluating their acquisition of the Shares.
(c) Sellers are "accredited investors" as defined in Rule 501(a) of
Regulation D of the Act.
3.7. As a material inducement to Sellers to enter into this Agreement and
to consummate the transactions contemplated hereby, CBC represents
and warrants as follows, which representations and warranties shall
be deemed to have been made again at the Closing:
(a) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of the
Registration Statement or the Prospectus or any part thereof and
no proceedings for a stop order suspending the effectiveness of
the Registration Statement or the trading of any of the CBC Stock
have been instituted or are pending or, to
the knowledge of CBC, threatened. As of the effective dates
thereof, as of the date hereof and as of the Closing, the
Registration Statement and the Prospectus (as amended or as
supplemented if CBC shall have filed with the Commission any
amendment or supplement thereto), including the reports and
financial statements included or incorporated by reference in the
Prospectus, complies in all material respects with applicable
provisions of the Act. As of the effective dates thereof, as of
the date hereof and as of the Closing, no part of the
Registration Statement, the Prospectus or any amendment or
supplement thereto, at the time thereof, contained an untrue
statement of material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. Since the date of the most
recent financial statements included in the Prospectus, there has
been no material adverse change in the condition (financial or
other), earnings, business or properties of CBC, whether or not
arising from transactions in the ordinary course of business,
except as set forth or contemplated in the Prospectus or
disclosed in materials incorporated by reference therein.
(b) Upon the issuance and delivery of the Shares to Sellers pursuant
to the terms hereof, Sellers will have acquired good and
indefeasible title to the Shares free and clear of any lien,
charge, claim, encumbrance, pledge, security interest, defect or
other restriction of any kind whatsoever. The Shares, when
issued and delivered at Closing, shall be duly authorized,
validly issued, fully paid and nonassessable.
(c) No consent, approval, authorization or order of, or filing or
declaration with, any court or governmental agency or body is
required for or in connection with the issuance and delivery of
the Shares pursuant hereto under the Act or as may be required
under state securities or Blue Sky laws or the bylaws and rules
of the National Association of Securities Dealers (the "NASD"),
except such as shall have been obtained prior to the Closing.
(d) The CBC Stock is, and the Shares shall be at the Closing, listed
for trading on the Nasdaq National Market under the symbol
"AAHS," and CBC is not aware of any threatened or pending
proceedings or actions by the NASD to revoke or suspend such
listing.
ARTICLE 4
THE SELLERS' REPRESENTATIONS,
WARRANTIES AND AGREEMENTS
Sellers represent, warrant and agree as follows, which representations,
warranties and agreements shall be deemed to have been made again at Closing:
4.1. CORPORATE EXISTENCE AND POWERS. The Sellers are corporations
organized and existing in good standing under the laws of the State
of Utah with full power and authority to enter into this Agreement
and to enter into and complete the transactions contemplated herein.
BIC is, and will be at the time of Closing, qualified to do
business in the State of Arizona. All required corporate action has
been taken by the Sellers to make and carry out this Agreement,
which is a valid and binding obligation of Sellers and which is
enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar law
affecting the rights of creditors generally, and equitable
principles. The execution of this Agreement and the completion of
the transactions herein involved will not result in the material
violation of any order, licenses, permit, rule, judgment or decree
to which either of the Sellers is subject or the breach of any
material contract, agreement or other commitment to which either of
the Sellers is a party or by which it is bound. Except for receipt
of the FCC Approval (as defined below) with respect to the
assignment of the Licenses to Buyer, no other consents of any kind
are required that have not been obtained for the Sellers to make or
carry out the terms of this Agreement, except with respect to those
consents required of parties to Leases and Agreements listed on
SCHEDULE B or SCHEDULE D, with respect to assignment and assumption
of specific contract rights and obligations. The Sellers shall use
their best
efforts to obtain third party consents with respect to any leases,
contracts or agreements designated by Buyer and the Sellers as
"material," to the extent required by such documents. Buyer shall
cooperate with the Sellers in obtaining all such required consents.
Sellers have delivered to Buyer true and complete copies of the
Sellers' Articles of Incorporation and Bylaws and will deliver to
Buyer at Closing certificates of good standing of Sellers issued by
the States of Utah and Arizona.
4.2. LICENSES AND PERMITS. BHC is the holder of the Licenses listed on
SCHEDULE A, all of which are valid, in full force and effect and
which have been unconditionally issued for the full license term.
The Licenses constitute all of the licenses, grants, permits,
waivers and authorizations issued by the FCC and required for and/or
used in the operation of the Station as it is currently being
operated. BHC is fully qualified to hold all such Licenses. All
ownership and employment reports, renewal applications, and other
material reports and documents required to be filed for the Station
have been properly and timely filed. The Station is operating in
all material respects in accordance with the Licenses, and in
compliance with the Communications Act of 1934, as amended, and the
rules and regulations of the FCC, including, without limitation,
those regulations governing the Station's equal employment
opportunity practices and public file, and any other applicable
laws, ordinances, rules and regulations. The Licenses are
unimpaired in any material respect by any act or omission of Sellers
or their officers, directors, employees and agents and Sellers will
not, without Buyer's prior written consent, by an act or omission,
surrender, modify, forfeit or fail to seek renewals on regular
terms, of any License, or cause the FCC or other regulatory
authority to institute any proceeding for the cancellation or
modification of any such License, or fail to prosecute with due
diligence any pending application to the FCC or other regulatory
authority. There is not now pending, or to the best of Sellers'
knowledge threatened, any action by or before the FCC or other
regulatory authority to revoke, cancel, rescind, modify or refuse to
renew in the ordinary course any of the Licenses, or any
investigation, order to show cause, notice of violation, notice of
inquiry, notice of apparent liability or of forfeiture or complaint
against the Station or Sellers relating to the Station, and Sellers
have no knowledge of any basis for the commencement of any such
proceeding in the future. Should any such action or investigation
be commenced, order or notice be released, or complaint be filed,
Sellers will promptly notify Buyer and take all actions reasonably
necessary to protect the Station and the Licenses from any material
adverse impact.
4.3. ASSETS. The Assets and Excluded Assets (along with related
personnel) represent all the assets necessary for the Station's
current operations and represent all the assets owned by the Sellers
and used for the Station's current operations. Until Closing, none
of the Assets will be sold, leased or otherwise disposed of unless
replaced by a similar Asset of equal or greater value or disposed or
consumed in the ordinary course of business. At Closing, all of the
Assets shall be owned by and transferred by the Sellers to Buyer
free and clear of all liens, encumbrances, interests or restrictions
of any kind whatsoever except Permitted Encumbrances. The Assets
have been maintained in good condition, subject to normal wear and
tear.
4.4. CONTRACTS, LEASES, AGREEMENTS, ETC. Except as set forth on SCHEDULE
D, each of the Leases and Agreements are in full force and effect in
accordance with their respective terms, and there are no outstanding
notices of cancellation, acceleration or termination in connection
therewith. Sellers are not in material breach or default in
connection with any of the Leases and Agreements and, to the best of
Sellers' knowledge, there is no basis for any material claim, breach
or default with respect to Sellers or any other party under any of
said Leases and Agreements. Sellers have made available to Buyer
true and correct copies of all agreements and instruments listed on
SCHEDULE D. On the Closing Date there will be no Leases or
Agreements relating to the Station (not including this Agreement)
which will be binding on the Buyer other than those specifically
identified herein, including the Schedules attached hereto, or as
otherwise approved in writing by Buyer.
4.5. LITIGATION. Except as set forth on SCHEDULE G, no strike, labor
dispute, investigation, litigation, court or administrative
proceeding is pending or, to the best of Sellers' knowledge,
threatened, against the Sellers relating to the Station, its
employees or any of the Assets to be conveyed hereunder which may
result in any material adverse change in the business, operations,
assets or financial condition of the
Sellers or may materially adversely affect Buyer's use and enjoyment
of the Assets, or which would hinder or prevent the consummation of
the transaction contemplated by this Agreement, and the Sellers know
of no basis for any such possible action.
4.6. HAZARDOUS WASTE. As of now and as of the Closing Date, Sellers have
not participated in nor approved, nor has there occurred any
production, disposal or storage on the Real Property of any
hazardous waste or toxic substance (other than small quantities of
maintenance, cleaning and emergency generator fuel supplies
customary for the operation of radio stations and maintained in the
ordinary course of business) in material violation of law or which
has not been substantially remedied, nor does such waste or
substance exist on the Real Property in material violation of law or
which has not been substantially remedied (above or beneath the
surface), nor is there any proceeding or inquiry, by any
governmental authority (federal or state) with respect to the
presence of such waste or substance on the Real Property, nor are
there any underground storage tanks on the Real Property.
"Hazardous waste" shall consist of the substances defined as
"hazardous substances," "hazardous materials," or "toxic substances"
in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 USC Section 9601, et seq., or
in the Hazardous Materials Transportation Act, 49 USC Section 1801,
et seq., or in the Resources Conservation and Recovery Act, 42 USC
Section 6901, et seq., and all substances defined as "hazardous
waste" under the Statutes of the State of Arizona or any regulations
adopted pursuant to those statutes.
4.7. INSURANCE. Until Closing, the Sellers shall keep the Assets insured
to full insurable value against loss or damage by fire or from other
causes customarily insured against by other radio stations similarly
situated, and have provided Buyer with an abstract of such casualty
insurance coverage.
4.8. ACCESS TO INFORMATION. Upon reasonable advance notice, the Sellers
shall give Buyer and its representatives reasonable access during
normal business hours throughout the period prior to Closing to the
operations, properties, books, accounting records, contracts,
agreements, leases, commitments, programming, technical and sales
records and other records of and pertaining solely to the Station;
provided, however, such access shall not disrupt the Sellers' normal
operations. The Sellers shall furnish to Buyer all information
solely concerning the Station's affairs as Buyer may reasonably
request. Buyer will maintain the confidentiality of all the
information and materials delivered to it or made available for its
inspection by the Sellers hereunder, except where such information
or materials are required to be filed with the FCC in connection
with the assignment application or are disclosed to partners of
Buyer or lenders thereto as reasonably required to secure financing
to consummate the transactions contemplated herein. In the latter
event, Buyer will use reasonable efforts to cause its partners or
lenders to maintain confidentiality. If for any reason the
transactions contemplated herein are not consummated, Buyer will
return to the Sellers all such materials in its possession and keep
all of the foregoing information confidential.
4.9. COPYRIGHTS, TRADEMARKS AND SIMILAR RIGHTS. KIDR are the call
letters used by Sellers during the radio broadcast operations of the
Station to identify the Station to its audience. Sellers have full
right and authority from the FCC to use such call letters. Sellers
have not licensed or consented to, and have no knowledge of, any
other entity's or individual's use of such call letters. There is
no other material name, trademark, service xxxx, copyright, or other
trade or service right or xxxx currently being used in the business
and operations of the Station other than those listed on SCHEDULE E.
To the knowledge of Sellers, the current operations of the Station
do not infringe on any trademark, service xxxx, copyright or other
intellectual property or similar right owned by others.
4.10. EMPLOYEE BENEFITS.
4.10.1. All of BIC's material employee plans and compensation
arrangements providing benefits to employees of the Station as of
the date hereof are described in SCHEDULE H. Except as disclosed
in SCHEDULE H, there is not now in effect or scheduled to become
effective after the date hereof, any new employee plan or
compensation arrangement or any amendment
to an existing employee plan or compensation arrangement which
will affect the benefits of employees or former employees of the
Station.
4.10.2. Neither of Sellers has incurred or reasonably expects to incur
(either directly or indirectly, including as a result of the
proposed sale of the Assets to Buyer) any liability (including
withdrawal liability) that could become a liability of Buyer
under or pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code
relating to employee benefit plans and no event, transaction or
condition has occurred or exists which could result in any such
liability. BIC has made all required contributions to all
multiemployee plans within the meaning of Section 3(37) of ERISA.
4.10.3. Sellers acknowledge that Buyer has no obligation hereunder to
offer employment to any employee of BIC; however, Buyer shall
have the right to offer employment to such of the employees of
BIC employed at the Station as Buyer may select. With respect to
any employees that Buyer hires, Sellers further acknowledge that
Buyer shall have no obligation for, and shall not assume as part
of the transaction contemplated by this Agreement, any "accrued
vacation" or other accrued leave time of said employees as a
consequence of their being hired by Buyer. Sellers also
acknowledge that with respect to such employees as are hired by
Buyer, and where any such accrued leave time exists for said
employees, BIC will retain the responsibility for any liability
arising therefrom. Buyer will notify Sellers on or before May
15, 1997, of which employees, if any, of Sellers that Buyer
intends to hire following Closing.
4.11. LABOR RELATIONS. SCHEDULE I lists the names, dates of hire and
current salaries of all persons employed by BIC directly and
principally in connection with the operation of the Station.
Sellers are not a party to or subject to any collective bargaining
agreements with respect to the Station. Sellers have no written or
oral contracts of employment with any employee of the Station, other
than (i) oral employment agreements terminable at will without
penalty, or (ii) those listed in SCHEDULE I. Sellers, in the
operation of the Station, have substantially complied with all
applicable laws, rules and regulations relating to the employment of
labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination and the payment of
social security and other payroll related taxes. There is no
representation or organizing effort pending or threatened against or
involving or affecting Sellers with respect to employees employed at
the Station.
4.12. PRE-CLOSING COVENANTS. Between the date hereof and the Closing, the
Sellers covenant that:
Sellers shall continue to operate the business of the Station in the
ordinary course of business consistent with past practices,
including without limitation, the maintenance of inventories of
spare parts and expendable supplies at levels consistent with past
practices, comply with the Licenses and all laws, rules,
regulations, licenses and permits applicable to the Station's
business and operations, file all required tax returns when due, pay
all required taxes when payable, and maintain property damage and
other insurance in the amount in effect on the date hereof. From
the date hereof through the Closing Sellers shall not with respect
to the Station:
(i) sell, lease or dispose of any Asset, except in the ordinary
course of business or with replacement with an asset of
equivalent kind, utility and value;
(ii) enter into any employment or professional services contract that
would survive the Closing or any collective bargaining agreement;
(iii) change employment terms, including, without limitation, wages,
salary or bonuses, or institute or modify any benefit plans or
programs, except for regularly scheduled compensation increases
in accordance with historical practices;
(iv) enter into any time brokerage agreement, joint sales agreement or
similar agreement or arrangement;
(v) enter into any new, or amend or terminate any existing Leases and
Agreements, other than contracts for the sale of broadcast time
for cash, involving annual consideration of more than $10,000 or
entered into in the ordinary course of business;
(vi) take or omit to take any action which would cause a material
breach of any Station contract;
(vii) take or omit to take any action which could jeopardize the
validity or renewal expectancy of any of the Licenses or their
assignability to Buyer; or
(viii) enter into any transaction which is not in the ordinary course of
business.
The Sellers further represent, warrant and covenant:
(a) Between the date hereof and Closing, the Sellers shall not take
any action which will prevent or impede Buyer from obtaining at
the Closing the actual and immediate occupancy and possession of
the Assets purchased hereunder.
(b) On the Closing date, the Sellers will be the owner of the Assets
except such of the same replaced by suitable property of no less
than equivalent value in the ordinary course of business, with
title thereto, free and clear of all liens and encumbrances,
except for Permitted Encumbrances; and that between the date of
this Agreement and the Closing, there will be no more than the
ordinary normal wear and tear and expendability of those Assets,
and that the Assets will be in good working condition.
(c) That the Sellers do not know of any facts relating to them or the
Station which would cause (i) the applications for assignment of
the Licenses to Buyer to be challenged, (ii) the FCC to deny its
consent to the assignments of the Station's Licenses to Buyer, or
(iii) the FCC to grant such application to assignment subject to
material adverse conditions to Buyer.
(d) The Sellers will have paid and discharged all taxes, assessments,
excises, and levies known to the Sellers which are due and
payable and have not been paid and that would materially
interfere with the Sellers' assets, facilities, licenses or other
items conveyed hereunder.
(e) That the Sellers do not know of any facts which would cause any
application for renewal by BHC of any of the Licenses to be
challenged at the FCC or that would cause such renewal to be
granted other than in the ordinary course for a full license term
without material adverse condition.
(f) Sellers shall continue to operate the Station as an affiliate of
CBC, as set forth in that Affiliation Agreement, dated September
18, 1992, between Children's Satellite Network and BIC, until
Closing.
ARTICLE 5
BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants as follows, which representations and
warranties shall be deemed to have been made again at Closing.
5.1. CORPORATE EXISTENCE AND POWERS. Buyer is a corporation organized
and existing in good standing under the laws of the State of
Minnesota with full power and authority to enter into this Agreement
and enter into and complete the transactions contemplated herein.
Buyer is, or will be at the time of Closing, qualified to do
business in the State of Arizona. All required corporate action has
been taken by Buyer to make and carry out this Agreement. The
execution of the Agreement and, once the consent referred to in the
next sentence is obtained, the completion of the transactions herein
involved will not result in the violation of any order, license,
permit, rule, judgment or decree to which Buyer is subject or the
breach of any contract, agreement or other commitment to which Buyer
is a party or by which it is bound. Except for the consent of the
FCC to the assignment of the Licenses to Buyer, no other consent of
any kind is required that has not been obtained for Buyer to make or
carry out the terms of this Agreement.
5.2. BUYER'S QUALIFICATIONS. At Closing, Buyer will be legally and
financially qualified to become the licensee of the FCC. Buyer does
not know of any facts relating to it which would cause the FCC to
deny its consent, or which would materially hinder or delay receipt
of such consent, to the assignment of the Licenses to Buyer.
5.3. STUDIO AND SERVICES. Buyer acknowledges that it will have to obtain
a new studio location for the Station as of the Closing Date because
no rights under the Lease identified on Schedule F or the Office and
Studio Sublease Agreement identified on SCHEDULE D will be assigned
to CBC. Buyer further acknowledges that the Services Agreement
between Nationwide Communications Inc. and BIC identified on
SCHEDULE D will terminate at Closing and that Buyer will have to
make other arrangements following Closing for the services provided
thereunder.
5.4. AM EXPANDED BAND. Buyer acknowledges that the Station does not
qualify for migration to the AM expanded band.
5.5. REPRESENTATIONS AND WARRANTIES. Buyer hereby acknowledges that the
only representations and warranties made by Sellers regarding the
Station and the sale of the Assets to Buyer are the representations
and warranties made by Sellers in Article 4 herein. Buyer has not
relied on any other statement or information in entering into this
Agreement.
ARTICLE 6
BREACH OF AGREEMENTS,
REPRESENTATIONS AND WARRANTIES
6.1. BREACH OF THE SELLERS' AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
The Sellers shall indemnify and hold harmless Buyer and any of its
directors, members, stockholders, officers, partners, employees,
agents, consultants and representatives from and against any loss,
damage, liability, claim, demand, judgment or expense, including
claims of third parties arising out of ownership of the Assets or
the operation of the Station by the Sellers prior to Closing, and
including without being limited to, reasonable counsel fees and
reasonable accounting fees, arising out of or sustained by Buyer by
reason of any material breach of any warranty, representation,
covenant or agreement of the Sellers contained herein or in the
Schedules attached hereto; provided, however, that such
indemnification shall be required only if written notice, with
respect to any matter for which indemnification is claimed, is given.
6.2. BREACH OF BUYER'S AGREEMENTS, REPRESENTATIONS AND WARRANTIES. Buyer
shall indemnify and hold harmless the Sellers and any of their
directors, members, stockholders, officers, partners, employees,
agents, consultants and representatives from and against any loss,
damage, liability, claim, demand, judgment or expense, including
claims of third parties arising out of ownership of the Assets or
operation of the Station by Buyer after Closing, and including
without being limited to, reasonable counsel fees and reasonable
accounting fees, arising out of or sustained by the Sellers by
reason of any material breach of any warranty, representation,
covenant or agreement of Buyer contained
herein; provided, however, that such indemnification shall be required
only if written notice, with respect to any matter for which
indemnification is claimed, is given.
6.3. THRESHOLD AND CAP. Neither Buyer nor Sellers shall be entitled to
recover under this Agreement for any indemnification claims until
the aggregate losses, damages or expenses suffered by such party in
connection therewith exceed $25,000 (the "Threshold") and then only
to the extent such aggregate losses, damages or expenses exceed the
Threshold. The combined maximum aggregate liability of Sellers and
the maximum aggregate liability of Buyer for indemnification claims
under this Agreement shall be $250,000.
6.4. SPECIFIC PERFORMANCE. The Sellers acknowledge that the Assets and
property to be transferred and assigned under this Agreement are
unique and not readily bought or sold on the open market and, for
that reason, among others, the Buyer would be irreparably harmed by
any breach or failure of the other party to consummate this
Agreement, and monetary damages therefor will be highly difficult,
if not wholly impossible, to ascertain. It is therefore agreed that
this Agreement shall be enforceable by Buyer in a court of equity by
a decree of specific performance, and an injunction may be issued
restraining any transfer or assignment of the Assets contrary to the
provisions of this Agreement pending the determination of such
controversy. The Sellers, for themselves and their successors and
assigns, hereby waive the claim or defense that an adequate remedy
at law exists.
6.5. INDEMNITY UNIMPAIRED BY KNOWLEDGE. The right to indemnification,
payment of damages or any other remedy hereunder shall not be
affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time,
regardless of whether before or after the execution and delivery of
this Agreement or the Closing. The waiver of any condition by a
party shall not affect any right to indemnification, payment of
damages or any other remedy hereunder based on the subject matter of
such condition.
6.6. PROCEDURES: THIRD PARTY CLAIMS. The indemnified party agrees to
give written notice within ten (10) business days to the
indemnifying party of any claim or other assertion of liability by
third parties which could give rise to a claim for indemnification
hereunder (hereinafter collectively "Claims," and individually a
"Claim"), it being understood that the failure to give such notice
shall not affect the indemnified party's obligation to indemnify as
set forth in this Agreement, unless, and then only to the extent,
the indemnifying party's ability to contest, defend or settle with
respect to such Claim is thereby demonstrably and materially
prejudiced. The obligations and liabilities of the parties hereto
with respect to their respective indemnities pursuant to this
Article 6 resulting from any Claim, shall be subject to the
following additional terms and conditions:
(a) Provided the indemnifying party acknowledges in writing its
obligation to indemnify the indemnified party with respect to the Claim and
further provides reasonable assurances to the indemnified party as to its
financial ability to satisfy such indemnification obligation, the
indemnifying party shall have the right to undertake, by counsel or other
representatives of its own choosing, the defense or opposition to such
Claim.
(b) Subject to subsection (d) below, in the event that the
indemnifying party shall either (i) elect not to undertake, or shall fail
to satisfy any requirements to undertake, such defense or opposition, or
(ii) fail to properly elect within thirty (30) days after notice of any
such Claim from the indemnified party or thereafter fail to defend or
oppose such Claim, then, in either such event, the indemnified party shall
have the right to undertake the defense, opposition, compromise or
settlement of such Claim, by counsel or other representatives of its own
choosing, on behalf of and for the account and risk of the indemnifying
party.
(c) Anything in this Section 6.6 to the contrary
notwithstanding, (i) the indemnifying party shall not, without the
indemnified party's written consent, which consent shall not be
unreasonably withheld, settle or compromise any Claim or consent to entry
of any judgment which includes any admission of liability or does not
include as a term thereof the giving by the claimant or the plaintiff
to the indemnified party of an unconditional release from all liability in
respect of such Claim, and (ii) in the event that the indemnifying party
undertakes defense of or opposition to any Claim, the indemnified party, by
counsel or other representative of its own choosing and at its sole cost
and expense, shall have the right to consult with the indemnifying party
and its counsel or other representatives concerning such Claim and the
indemnifying party and the indemnified party and their respective counsel
or other representatives shall cooperate in good faith with respect to such
Claim.
(d) Anything in this Section 6.6 to the contrary
notwithstanding, the indemnifying party shall have the right to contest
through appropriate proceedings its obligation to provide indemnification
hereunder.
ARTICLE 7
RISK OF LOSS
7.1. BUYER'S OPTIONS. The risk of any loss, damage or destruction to any
of the Assets to be transferred to the Buyer hereunder from fire or
other casualty or loss shall be borne by the Sellers at all times
prior to the Closing. Except for loss or damage affecting the
broadcast transmission capabilities of the Station, which is covered
by the terms of Section 7.2 below, upon the occurrence of any
material loss or damage to any of the Assets to be transferred
hereunder having an aggregate fair market value in excess of
$150,000 as a result of fire, casualty, or other causes prior to the
Closing, the Sellers shall notify the Buyer of same in writing
immediately, stating with particularity the reasonable estimates of
the loss or damage incurred, the cause of damage, if known, and the
extent to which restoration, replacement and repair of the Assets
lost or destroyed is believed reimbursable under any insurance
policy with respect thereto. Provided the Sellers, at their sole
expense, have not repaired, restored or replaced the damaged Assets
to Buyer's reasonable satisfaction by the Closing, Buyer shall have
the option (but not the obligation) exercisable at the Closing to:
(i) terminate this Agreement in which case none of the parties shall
have any further liability to the other parties and all Escrowed
Funds shall be returned to Buyer, except that the Sellers shall
have a reasonable period of time, not to exceed thirty (30) days,
to effect repairs of the damaged Assets before Buyer may exercise
its option under this subparagraph 7.1 (i);
(ii) postpone the Closing for up to sixty (60) days to allow the
property to be completely repaired, replaced or restored, at the
Sellers' sole expense; or
(iii) elect to consummate the Closing and accept the property in its
"then" condition, in which event the Sellers shall assign to
Buyer all rights under any insurance claim covering the loss and
pay over to the Buyer the proceeds under any such insurance
policy heretofore received by the Sellers with respect thereto
and Sellers shall otherwise not have any responsibility to Buyer.
7.2. BROADCAST TRANSMISSION OF THE STATION PRIOR TO CLOSING. If, prior
to the Closing Date, the Station incurs any unusual operating
problems (including any event described below), the Sellers shall
provide Buyer with prompt written notice of such problem and the
measures being taken, at Sellers' sole expense, to correct same.
If, after the date hereof and prior to the Closing Date, any event
occurs which prevents the authorized power broadcast transmission of
a station pursuant to its FCC license authority, except for ordinary
maintenance, for (i) a period of 72 consecutive hours or more, (ii)
three separate periods of 4 hours or more, or (iii) ten separate
occasions of 1 hour or more, Buyer shall have the right, by giving
written notice to the Sellers of its election to do so, to terminate
this Agreement and all Escrowed Funds shall be returned to Buyer.
ARTICLE 8
APPLICATION FOR FCC APPROVAL
8.1. FILING AND PROSECUTION OF APPLICATION. Buyer and the Sellers shall,
as soon as practicable after the date of this Agreement and in any
event not later than five business days thereafter, join in an
application to be filed with the FCC requesting its written consent
to the assignment of the Licenses of the Station from BHC to Buyer.
The parties shall prepare their own portions of the application.
Buyer and the Sellers shall take all steps necessary to the
expeditious prosecution of such application to a favorable
conclusion, using their best efforts throughout.
8.2. EXPENSES. The parties shall bear their own legal, accounting and
other expenses in connection with the consummation of the
contemplated transaction. The parties shall cooperate with the
preparation of the FCC application and in connection with the
prosecution of such application. The filing fee or fees shall be
shared equally by the Sellers and Buyer.
8.3. DESIGNATION FOR HEARING. If, for any reason, any application for an
assignment of license is designated for hearing by the FCC prior to
grant thereof, either of the parties shall have the right by written
notice within thirty (30) days of such designation for hearing, to
terminate this Agreement.
8.4. TIME FOR FCC CONSENT. If the FCC has not given its written consent
to the assignments of the Licenses set forth herein, or if the
Closing has not otherwise taken place by May 30, 1997, either of the
parties, if not then in default, may terminate this Agreement by
giving written notice to the other party. Upon such termination,
neither of the parties shall have any right or liability hereunder
and all Escrowed Funds shall be promptly disbursed pursuant to the
Escrow Agreement.
8.5. CONTROL OF STATION. Until Closing, Buyer shall not directly or
indirectly, control, supervise, direct or attempt to control,
supervise or direct the operation of the Station, but such operation
shall be the sole responsibility of the Sellers, subject to and
consistent with all rules, regulations and policies of the FCC.
8.6. PUBLIC ANNOUNCEMENTS. The parties agree to consult with each other
prior to making any public announcement regarding the purchase of
the Station, except pursuant to any filings with the FCC or any
other governmental authorities contemplated by this Agreement, and
except as may be required by law, governmental rule or regulation or
the rules of the Nasdaq Stock Market or any stock exchange on which
the disclosing party or one of its Affiliates has securities listed
for trading or in connection with any Registration Statement filed
pursuant to the Act by the disclosing party or one of its
Affiliates, provided reasonable advance notice will be given
whenever possible.
ARTICLE 9
CLOSING
Subject to the terms and conditions herein stated, the parties agree as
follows:
9.1. CLOSING DATE. The Closing of this Agreement shall be held at such
time and date as shall be mutually agreed by the Sellers and Buyer;
provided, however, that the Closing must occur by May 30, 1997.
(The date scheduled, or required to be scheduled for Closing
hereunder is referred to herein as the "Closing Date.") Closing
shall take place at the offices of the Buyer in Minneapolis, or, at
either party's option, by mail.
9.2. THE SELLERS' OBLIGATIONS AT CLOSING. At Closing, the Buyer shall have
received from the Sellers the following:
9.2.1. An Assignment of the Licenses described in SCHEDULE A; a Special
Warranty Deed for the Real Property described in SCHEDULE B
conveying all of the Sellers' interest in such Real Property and
an Assignment and Xxxx of Sale, or similar instruments
transferring to Buyer all other Assets to be transferred
hereunder, free and clear of all liens, encumbrances and
restrictions of any kind whatsoever, except for Permitted
Encumbrances.
9.2.2. The business records described in Section 1.7;
9.2.3. A duly executed opinion letter from Sellers' legal counsel dated
as of the Closing Date, in form and substance satisfactory to
Buyer and its counsel, to the effect that:
(a) Sellers are corporations duly organized and validly existing
and in good standing in the State of Utah and they have all
necessary corporate power to own the Station; and BIC is
qualified to do business in the State of Arizona;
(b) This Agreement and all collateral documents have been duly
and validly authorized, executed and delivered by Sellers,
constitute the valid and binding obligations of Sellers, and
are enforceable (assuming the Agreement is governed by the
laws of the State of Utah) in accordance with their terms,
except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally;
provided, however, that no opinion is to be given as to the
enforceability of the remedies provided in Section 6.4 of
the Agreement;
(c) No suit, action, arbitration, legal or administrative
proceeding, or any governmental investigation, is pending
or, to the knowledge of counsel, threatened against Sellers,
or any of their businesses or properties, which might
materially adversely affect the Station or the sale of the
Assets to Buyer; and
(d) Neither the execution nor delivery of this Agreement, nor
the consummation of the transactions contemplated in this
Agreement, will constitute a violation of Sellers' Articles
of Incorporation or Bylaws, or to the best of such counsel's
knowledge after due inquiry, a default under, or violation
or breach of, any indenture, license, lease, mortgage,
instrument, or other agreement to which Sellers is a party,
or by which Sellers' properties may be bound.
9.2.4. Certificates of Sellers' Presidents or Secretaries verifying that
Sellers' representations, warranties and covenants as provided
herein remain materially true and correct up to and through the
Closing Date;
9.2.5. Instructions to the escrow agent pursuant to the Escrow Agreement
to pay the Escrowed Funds to Buyer;
9.2.6. Certificates of Sellers' Secretaries certifying as to Sellers'
Articles of Incorporation and Bylaws (copies of which shall be
attached thereto); and
9.2.7. Such other documents and instruments as might reasonably be
requested by Buyer to consummate the transaction contemplated
hereunder consistent with the intent expressed herein.
9.3. BUYER'S OBLIGATIONS AT CLOSING. At Closing, Buyer shall deliver to the
Sellers the following:
9.3.1. Shares of CBC Stock in an amount to be determined as set forth in
Section 2.2.1, PROVIDED that such Shares shall be delivered at
Closing to the Depository Trust Co. or such other depository for
the benefit of Sellers in the name of such broker or other
nominee as Sellers shall have designated in writing to Buyer;
9.3.2. An opinion of Buyer's counsel, addressed to the Sellers,
confirming the correctness of Buyer's representations made in
Sections 3.7 and 5.1;
9.3.3. A certificate of Buyer's President or Secretary verifying that
Buyer's representations, warranties and covenants as provided
herein remain materially true and correct up to and through the
Closing Date;
9.3.4. An Assumption Agreement pursuant to which Buyer assumes all
obligations relating to the Station, including without
limitation, payment and performance obligations under the Leases
and Agreements, which arise after Closing; and
9.3.5. Such other documents and instruments as might reasonably be
requested by Sellers to consummate the transaction contemplated
hereunder consistent with the intent expressed herein.
9.4. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transaction herein contemplated at Closing are
subject to and conditioned on:
9.4.1. The written consent of the FCC evidencing its written approval to
the assignment to Buyer or its assigns of the Licenses, provided
that such assignment is without any condition that is materially
adverse to Buyer;
9.4.2. The satisfaction at or before Closing of all material agreements,
obligations and conditions of the Sellers hereunder required to
be performed or complied with by them on or before Closing;
9.4.3. The representations and warranties set forth in Article 4 above
shall be true and correct in all material respects at and as of
the Closing Date;
9.4.4. No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge is reasonably likely to (i) prevent
consummation of the transaction contemplated by this Agreement,
(ii) cause the transaction contemplated by this Agreement to be
rescinded following consummation, or (iii) affect adversely the
right of the Buyer to own the Assets.
9.5. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers to consummate the transaction herein contemplated at Closing
are subject to and conditioned on:
9.5.1. The written consent of the FCC evidencing its written approval of
the assignment to Buyer of the Licenses ("FCC Approval"),
provided that such assignment is without any condition that is
materially adverse to the Sellers;
9.5.2. The satisfaction at or before Closing of all agreements,
obligations and conditions of Buyer hereunder required to be
performed or complied with by it at or before the Closing; and
9.5.3. The representations and warranties set forth in Section 3.7 and
Article 5 above shall be true and correct in all material
respects at and as of the Closing Date.
9.5.4. No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge is reasonably likely to (i) prevent
consummation of the transaction contemplated by this Agreement,
(ii) cause the transaction contemplated by this Agreement to be
rescinded following consummation, or (iii) affect adversely the
right of the Buyer to own the Assets.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants of Sellers contained in this
Agreement shall survive for a period of eighteen (18) months after the
Closing Date.
10.2. ARBITRATION.
10.2.1 PROCEDURE. Except as specifically provided to the contrary in
this Agreement, all disputes arising among the parties under this
Agreement shall be resolved by arbitration under this Section
10.2. The parties do not intend that any matters relating to
fraud or material misrepresentation shall be subject to
arbitration. Any party desiring arbitration shall deliver notice
to the other party and in such notice shall (i) specify in detail
those matters (the "Disputed Matters") as to which such party has
a claim, such party's position with respect to the Disputed
Matter and the basis for such party's claim; and (ii) appoint as
an arbitrator a disinterested person of recognized competence in
the area at issue. Within fifteen (15) days thereafter, each
party shall, by notice to the originating party, (i) specify in
detail such party's position with respect to the Disputed Matters
and the basis for such party's disagreement; and (ii) appoint
another person similarly qualified as the additional arbitrator.
Within fifteen (15) days thereafter, the arbitrators thus
appointed shall appoint another person similarly qualified as an
additional arbitrator, and all such arbitrators shall be directed
to resolve such Disputed Matters within thirty (30) days, unless
the arbitrators in good faith determine that such a deadline is
impractical.
The arbitrators shall resolve any Disputed Matters by adopting
the position with respect thereto of one of the parties, and
unless otherwise agreed by the parties, the arbitrator shall have
not authority to adopt any other resolution of such Disputed
Matters. The determination of the majority of the arbitrators or
the sole arbitrator, as the case may be, shall, to the extent
permitted by law, be conclusive and binding upon the parties.
Any party shall, upon such determination, have the right to
enforce the determination in a court of competent jurisdiction.
The arbitrator or arbitrators shall give notice to the parties
stating their determination, and shall furnish to each a copy of
such determination signed by them. In the event of the failure,
refusal or inability of any arbitrator to act, a new arbitrator
shall be appointed in his or her stead, which appointment shall
be made in the same manner as hereinbefore provided for the
appointment of the arbitrator so failing, refusing or unable to
act.
10.2.2. ARBITRATOR APPOINTMENT DISPUTE. Notwithstanding the provisions
of the prior paragraph, (i) if the additional arbitrator shall
not have been appointed as aforesaid, the first arbitrator shall
determine such matter; and (ii) if the arbitrators appointed by
the parties shall be unable to agree upon the appointment of
another arbitrator within fifteen (15) days after the appointment
of the lastly appointed arbitrator, they shall give written
notice of such failure to agree to the parties, and, if the
parties shall fail to agree upon the selection to such other
arbitrator within fifteen (15) days thereafter, then within ten
(10) days thereafter, any of the parties upon written notice to
the other party may apply for such appointment to a local court
of competent jurisdiction.
10.2.3. RULES AND PROCEDURES.
(a) Any such arbitration shall be conducted in Phoenix,
Arizona, in accordance with the Commercial Arbitration
Rules (the "Rules") of the American Arbitration
Association ("AAA") to the fullest extent such Rules
are permitted by, and to the fullest extent not
inconsistent with, applicable law
and the Rules set forth below, which shall be controlling to
the extent they differ from the AAA Rules.
(b) Each party shall be entitled to present evidence and
arguments to the arbitrators. Each party hereby
authorizes the arbitrators (i) to order such discovery
(including third party discovery) as the arbitrators
shall determine to be reasonable under the
circumstances; (ii) to impose reasonable schedules and
deadlines to ensure that discovery is conducted and
concluded on a timely basis; (iii) to impose sanctions
on any party for abuse or delay of the discovery; and
(iv) to apply such Rules of evidence as the arbitrators
in their sole discretion may determine.
(c) Any party may elect, by notice to the other party and
the arbitrators, to have the arbitration conducted on
an expedited basis. In such event, the parties hereby
agree that the arbitrator shall be authorized to
authorize to expedite the proceedings by all reasonable
means consistent with a fair hearing of the dispute.
Such means may include the imposition of accelerated
discovery and hearing schedules, requiring submissions
within abbreviated time periods and imposing
limitations on numbers of witnesses and the length of
hearings.
10.2.4. COSTS AND COMPLIANCE WITH DECISION. Each party agrees to comply
with any order or request of the arbitrators delivered pursuant
to this Section 10.2. Each party will compensate the arbitrator
selected by it, and the fees of the arbitrator appointed by the
other arbitrators and the expenses of the proceeding will be
shared equally by the parties. Subject to the foregoing
sentence, each party shall bear its own expenses, including
attorneys' fees, in connection with any arbitration proceedings
hereunder. No party in any such arbitration, or in any action,
trial or appeal thereon, shall be entitled to attorneys' fees or
court, arbitration or other costs incurred, unless otherwise
decreed by the court or arbitrators in the same or a separate
suit.
10.3. EXECUTION OF DOCUMENTS. The parties agree to execute all
applications, documents and instruments which may be necessary for the
consummation of the transaction contemplated hereunder, or which might
be from time to time reasonably requested by any party hereto in
connection therewith, whether before or after the date of Closing.
10.4. NOTICES. All notices, requests, elections, demands and other
communications given pursuant to this Agreement shall be in writing
and shall be duly given when delivered personally or when deposited in
the mails, certified or registered mail, postage prepaid, return
receipt requested, and shall be addressed as follows:
If to Sellers: Xx. Xxxxx Xxxxx
Bonneville International Corporation
Broadcast House, 00 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
with copies to: Xxxxx X. Xxxx, Esq.
Bonneville International Corporation
Broadcast House, 00 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
and Xxxxxxx X. Xxxxxx, Esq.
Wilkinson, Barker, Xxxxxx & Xxxxx
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
If to Buyer: Xx. Xxxxxxxxxxx Xxxx
Children's Broadcasting Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
with copy to: Xxxxx X. Xxxxx, Esq.
Children's Broadcasting Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
10.5. EXHIBITS AND SCHEDULES. All Exhibits and Schedules referred to herein
are incorporated into this Agreement by reference for all purposes and
shall be deemed part of this Agreement.
10.6. ENTIRE AGREEMENT. This Agreement together with all Exhibits and
Schedules referred to herein contain all of the terms and conditions
agreed upon by the parties hereto with respect to the transaction
contemplated hereunder.
10.7. ASSIGNABILITY. None of the parties may assign their rights or
obligations under this Agreement without the prior written consent of
the other parties, which consent will not be unreasonably denied or
delayed, except that any party may make an assignment to an entity
under essentially common control as the assigning entity.
10.8. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the xxxxxxxxxxxxxxx, xxxxx, xxxxxxx, successors, and
assigns of the parties hereto.
10.9. HEADINGS. The headings contained in this Agreement are for reference
only and shall not effect in any way the meaning or interpretation of
this Agreement.
10.10. COUNTERPARTS. This Agreement and any other instrument to be signed by
the parties hereto may be executed by the parties, together or
separately, in two or more identical counterparts, each of which shall
be deemed an original, but all of which together shall constitute but
one and the same instrument.
10.11. GOVERNING LAW. This Agreement has been entered into in the State of
Arizona and shall be governed in accordance with the laws of the State
of Arizona.
10.12. BROKER COMMISSION. The Sellers and Buyer each represent to the other
that they have engaged no broker in connection with the contemplated
transaction except for Star Media Brokerage, which has been engaged by
and is to be paid by Sellers, and agree to indemnify and hold the
other party or parties harmless against any claims made by a broker
through it or them in connection with the transactions contemplated
hereunder.
10.13. SALES TAX. Any sales tax, including bulk sales taxes (if applicable),
and real property transfer tax, due upon consummation of this
transaction will be computed at Closing and paid one-half each by the
Buyer and by the Sellers. Buyer will pay any tax or fee necessary to
cause title certificates to be issued in the name of Buyer for any of
the Assets.
[THIS SPACE LEFT INTENTIONALLY BLANK.]
IN WITNESS WHEREOF, the parties hereto, by their properly authorized
representatives, have caused this Agreement to be executed as of the day and
date first above written.
SELLERS: BUYER:
BONNEVILLE INTERNATIONAL CHILDREN'S BROADCASTING
CORPORATION CORPORATION
BY: /s/ Xxxxx X. Xxxxx BY: /s/ Xxxxx X. Xxxxxxxxxx
------------------ -----------------------
ITS: President ITS: Chief Operating Officer
BONNEVILLE HOLDING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
ITS: Vice President
EXHIBIT A
ESCROW AGREEMENT
SEE SECTION 2.2.1
SCHEDULE A
LICENSES, PERMITS AND AUTHORIZATIONS
SEE SECTION 1.1.1
SCHEDULE B
REAL PROPERTY
SEE SECTION 1.1.2
SCHEDULE C
PERSONAL PROPERTY
SEE SECTION 1.1.3
SCHEDULE D
LEASES AND AGREEMENTS
SEE SECTION 1.1.4
SCHEDULE E
GENERAL INTANGIBLES
SEE SECTION 1.1.5
SCHEDULE F
EXCLUDED ASSETS
SEE SECTION 1.2.7
SCHEDULE G
LITIGATION
SEE SECTION 4.5
SCHEDULE H
SELLERS' EMPLOYEE PLANS AND
COMPENSATION ARRANGEMENTS
SEE SECTION 4.10.1
SCHEDULE I
PERSONS EMPLOYED IN CONNECTION WITH
THE OPERATION OF THE STATION
SEE SECTION 4.11
