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ASSET PURCHASE AGREEMENT
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by and between
XXXXX BROADCASTING COMPANY OF PENNSYLVANIA, INC.
and
RADIO ONE, INC.
for the sale and purchase of
Station WDRE(FM)
Dated as of December 6, 1996
.
1. RULES OF CONSTRUCTION ............................................ 1
1.1 Defined Terms ............................................... 1
1.2 Other Definitions ........................................... 5
1.3 Number and Gender ........................................... 5
1.4 Headings and Cross-References ............................... 5
1.5 Computation of Time ......................................... 5
2. ASSETS TO BE CONVEYED ............................................ 5
2.1 Purchased Assets ............................................ 5
(a) Licenses................................................. 5
(b) Equipment ............................................... 5
(c) Contracts and Agreements ................................ 5
(d) Programming Materials ................................... 7
(e) Intellectual Property ................................... 7
(f) Intangible Property ..................................... 7
(g) Business Records ........................................ 7
(h) Station Records ......................................... 7
2.2 Excluded Assets ............................................. 7
(a) Receivables ............................................. 7
(b) Cash and Investments ................................... 7
(c) Disposed Personal Property .............................. 7
(d) Insurance ............................................... 7
(e) Employee Benefit Assets ................................. 7
(f) Contracts ............................................... 8
(g) Tax items ............................................... 8
(h) Corporate Records ....................................... 8
(i) Call Letters ............................................ 8
3. ESCROW DEPOSIT ................................................... 8
4. PURCHASE PRICE AND METHOD OF PAYMENT ............................. 8
4.1 Consideration ............................................. 8
4.2 Payment at Closing ........................................ 8
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4.3 Allocation ............................................... 9
4.4 Seller's Liabilities ...................................... 9
5. XXXX-XXXXX-XXXXXX ................................................ 9
6. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS ............... 9
6.1 Existence, Power and Identity ............................. 9
6.2 Binding Effect ............................................ 10
6.3 No Violation .............................................. 10
6.4 Conveyance of Assets ...................................... 10
6.5 Governmental Authorizations................................ 10
6.6 Equipment ................................................. 11
6.7 Contracts ................................................. 11
6.8 Promotional Rights ........................................ 12
6.9 Insurance ................................................. 12
6.10 Financial Statements ...................................... 12
6.11 Employees ................................................. 13
6.12 Employee Benefit Plans .................................... 13
6.13 Environmental Protection .................................. 14
6.14 Compliance with Law ....................................... 15
6.15 Litigation ................................................ 15
6.16 Insolvency Proceedings .................................... 16
6.17 Sales Agreements .......................................... 16
6.18 Sufficiency of Assets ..................................... 16
6.19 Related Parties ........................................... 16
6.20 Taxes ..................................................... 16
6.21 No Misleading Statements .................................. 16
7. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS ................ 17
7.1. Existence and Power ....................................... 17
7.2. Binding Effect ............................................ 17
7.3. No Violation .............................................. 17
7.4. Litigation ................................................ 17
7.5. Licensee Qualifications ................................... 18
7.6. Financial Qualifications .................................. 18
7.7. No Misleading Statements .................................. 18
8. PRE-CLOSING OBLIGATIONS .......................................... 18
8.1. Application for Commission Consent ........................ 18
8.2. Access .................................................... 18
8.3. Operations Prior to Closing ............................... 19
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8.4. Damage .................................................... 20
(a) Risk of Loss .......................................... 20
(b) Failure of Broadcast Transmissions .................... 21
(c) Resolution of Disagreements ........................... 21
8.5. Administrative Violations ................................. 21
8.6. Bulk Sales Act ............................................ 21
8.7. Control of Station ........................................ 22
8.8. Audit ..................................................... 22
8.9. Time Brokerage and Operating Agreement .................... 22
8.10. Closing Obligations ....................................... 22
9. STATUS OF EMPLOYEES .............................................. 22
9.1. Employment Relationship ................................... 22
9.2. Buyer's Right to Employ ................................... 22
10. CONDITIONS PRECEDENT ............................................. 23
10.1. Mutual Conditions ......................................... 23
(a) Approval of Assignment Application .................... 23
(b) Absence of Litigation ................................. 23
(c) Xxxx-Xxxxx-Xxxxxx ..................................... 23
(d) Noncompetition Agreement .............................. 23
10.2. Additional Conditions to Buyer's Obligation ............... 23
(a) Representations and Warranties ........................ 23
(b) Compliance with Conditions ............................ 23
(c) Discharge of Liens .................................... 24
(d) Third-Party Consents .................................. 24
(e) Estoppel Certificates ................................. 24
(f) Opinion of Seller's Counsel ........................... 24
(g) Final Order .......................................... 25
(h) Closing Documents ..................................... 25
10.3. Additional Conditions to Seller's Obligation .............. 26
(a) Representations and Warranties ........................ 26
(b) Compliance with Conditions ............................ 26
(c) Opinion of Buyer's Counsel ............................ 26
(d) Assumption of Liabilities ............................. 27
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(e) Payment ............................................... 27
(f) Closing Documents ..................................... 27
11. CLOSING .......................................................... 27
12. PRORATIONS ....................................................... 27
12.1. Apportionment of Expenses ................................. 27
12.2. Determination and Payment ................................. 27
13. POST-CLOSING OBLIGATIONS ......................................... 28
13.1. Collection of Accounts Receivable ......................... 28
13.2. Indemnification ........................................... 28
(a) Buyer's Right to Indemnification ...................... 28
(b) Seller's Right to Indemnification ..................... 29
(c) Procedure for Indemnification ......................... 29
(d) Assignment of Claims .................................. 30
(e) Indemnification Sole Remedy ........................... 30
(f) De minimis Amount ..................................... 30
13.3. Liabilities ............................................... 30
14. DEFAULT AND REMEDIES ............................................. 30
14.1. Opportunity to Cure ....................................... 30
14.2. Seller's Remedies ......................................... 31
14.3. Buyer's Remedies .......................................... 31
15. TERMINATION OF AGREEMENT ......................................... 31
15.1. Failure to Close .......................................... 31
15.2. Designation for Hearing ................................... 32
16. GENERAL PROVISIONS ............................................... 32
16.1. Brokerage ................................................. 32
16.2. Fees ...................................................... 32
16.3. Notices ................................................... 32
16.4. Assignment ................................................ 33
16.5. Exclusive Dealings ........................................ 34
16.6. Third Parties ............................................. 34
16.7. Indulgences ............................................... 34
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16.8. Survival of Representations and Warranties ................ 34
16.9. Prior Negotiations ........................................ 34
16.10. Exhibits and Appendices ................................... 34
16.11. Entire Agreement; Amendment ............................... 35
16.12. Counsel ................................................... 35
16.13. Governing Law, Jurisdiction ............................... 35
16.14. Severability .............................................. 35
16.15. Counterparts .............................................. 35
16.16. Further Assurances ........................................ 35
16.17. Tax Free Exchange ......................................... 36
16.18. No Disclosure ............................................. 36
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TABLE OF EXHIBITS
EXHIBIT 1 -- Form of Escrow Agreement
EXHIBIT 2 -- Form of Noncompetition Agreement
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TABLE OF APPENDICES
APPENDIX A FCC Licenses
APPENDIX B Equipment
APPENDIX C Contracts
APPENDIX D Intellectual Property
APPENDIX E Seller's Places of Business
APPENDIX F Permitted Encumbrances
APPENDIX G Insurance
APPENDIX H Employees
APPENDIX I Employment and Benefits Agreements
APPENDIX J Environmental
APPENDIX K Litigation
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ASSET PURCHASE AGREEMENT
This Agreement, made and entered into as of this 6th day of December, 1996,
by and between Xxxxx Broadcasting Company of Pennsylvania, Inc., a Pennsylvania
corporation ("Seller"), and Radio One, Inc., a Delaware corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the licensee of Station WDRE(FM), 103.9 MHz, Jenkintown,
Pennsylvania (the "Station"); and
WHEREAS, the parties desire that Buyer purchase certain assets used or held
for use in the operation of the Station and acquire the authorizations issued by
the Federal Communications Commission (the "Commission") for the operation of
the Station; and
WHEREAS, the authorizations issued by the Commission may not be assigned to
Buyer without the Commission's prior consent.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1. RULES OF CONSTRUCTION.
1.1. DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ACCOUNTS RECEIVABLE" means the cash accounts receivable of Seller arising
from Seller's operation of the Station prior to Closing.
"ADMINISTRATIVE VIOLATION" means those violations described in Section 8.5
hereof.
"ASSIGNMENT APPLICATION" means the application on FCC Form 314 that Seller
and Buyer shall join in and file with the Commission requesting its consent to
the assignment of the FCC Licenses (as hereinafter defined) from Seller to
Buyer.
"BUSINESS RECORDS" means all business records of Seller (including logs,
public file materials and engineering records) relating to or used in the
operation of the Station and not relating solely to Seller's internal corporate
affairs.
"BUYER" means Radio One, Inc., a Delaware corporation.
"BUYER DOCUMENTS" means those documents, agreements and instruments to be
executed and delivered by Buyer in connection with this Agreement as described
in Section 7.2.
"CLOSING" means the consummation of the Transaction (as hereinafter
defined).
"CLOSING DATE" means the date on which the Closing takes place, as
determined pursuant to Section 11.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"COLLECTION PERIOD" means the 180-day period following the Closing Date
during which Buyer shall collect the Accounts Receivable of Seller, subject to
the provisions of Section 13.1.
"COMMISSION" means the Federal Communications Commission.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as amended.
"CONTRACTS" means those contracts, leases and other agreements listed or
described in Appendix C which are in effect on the date hereof and which Buyer
has agreed to assume, but not including Sales Agreements and Trade Agreements
(as hereinafter defined).
"ENVIRONMENTAL LAW" means any law, rule, order, decree or regulation of any
Governmental Authority relating to pollution or protection of the environment,
including any law or regulation relating to emissions, discharges, releases or
threatened releases of Hazardous Substances (as hereinafter defined) into
ambient air, surface water, groundwater, land or other environmental media.
"EQUIPMENT" means all tangible personal property and fixtures used or
useful in the operation of the Station as described in Section 2.1(b).
"EXCLUDED ASSETS" means those assets excluded from the Purchased Assets and
retained by the Seller, to the extent in existence on the Closing Date, as
specifically described in Section 2.2.
"FCC LICENSES" means all licenses, pending applications, permits and other
authorizations issued by the Commission for the operation of the Station listed
on Appendix A.
"FINAL ORDER" means any action that shall have been taken by the Commission
(including action duly taken by the Commission's staff, pursuant to delegated
authority) which shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended; with respect to which no timely request for stay,
petition for rehearing, appeal or certiorari or sua sponte action of the
Commission with comparable effect shall be pending; and as to which the time for
filing any such request, petition, appeal, certiorari or for the taking of any
such sua sponte action by the Commission shall have expired or otherwise
terminated.
"FINANCIAL STATEMENTS" means Seller's unaudited financial statements and
balance sheets as described in Section 6.10.
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"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, court or other entity that
exercises executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" means any hazardous or toxic waste, substance or
material, as those or similar terms are defined in or for purposes of any
applicable federal, state or local Environmental Law, and including without
limitation any asbestos or asbestos-related products, oils or petroleum-derived
compounds, CFCS, or PCBS.
"ESCROW AGENT" means Xxxxxxx & Xxxxxx, P.C.
"ESCROW AGREEMENT" means the escrow agreement described in Section 3, the
form of which is attached as Exhibit 1.
"ESCROW DEPOSIT" means the monies deposited with the Escrow Agent described
in Section 3.
"INTANGIBLE PROPERTY" means all of Seller's right, title and interest in
and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station as described in Section 2.1(f).
"INTELLECTUAL PROPERTY" means all Seller's right, title and interest in and
to the trademarks, tradenames, service marks, patents, franchises, copyrights,
including registrations and applications for registration of any of them,
slogans, jingles, logos, computer programs and software, trade secrets and
similar materials and rights relating to the Station as listed on Appendix D.
"KNOWLEDGE OF BUYER" means the actual knowledge, after reasonable inquiry
of Buyer's senior management, and the books and records of Buyer.
"KNOWLEDGE OF SELLER" means the actual knowledge, after reasonable inquiry
of Station management, the books and records of the Station, and the actual
knowledge of Xxxxxx X. Xxxxx.
"MATERIAL CONTRACTS" means those leases, contracts and agreements
specifically designated in Appendix C as being "Material Contracts."
"NONCOMPETITION AGREEMENT" means the agreement between Buyer, Xxxxxx Xxxxx
and Xxx Xxxxx the form of which is attached hereto as Exhibit 2.
"PERMITTED ENCUMBRANCES" means those liens or encumbrances to the Purchased
Assets described in Section 6.4 and set forth on Appendix F.
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"PURCHASE PRICE" shall mean the total consideration for the Purchased
Assets, the Noncompetition Agreements and the Consulting Agreement as described
in Section 4.1.
"PURCHASED ASSETS" means those assets which are the subject matter of this
Agreement that Seller shall sell, assign, transfer, convey and deliver to Buyer
as described in Section 2.1.
"SALES AGREEMENTS" means agreements entered into by Seller for the sale of
time on the Station for cash, as described in Section 2.1(c)(2).
"SELLER" means Xxxxx Broadcasting Company of Pennsylvania, Inc., a
Pennsylvania corporation.
"SELLER DOCUMENTS" means those documents, agreements and instruments to be
executed and delivered by Seller in connection with this Agreement as described
in Section 6.1.
"SPECIFIED EVENT" means those broadcast transmission failures described in
Section 8.4(b).
"STUDIO SITE" means the real estate located at Jenkintown, Pennsylvania
that is currently used as the Station's studio and office facilities.
"TRADE AGREEMENTS" means agreements entered into by Seller for the sale of
time on the Station in exchange for programming, merchandise or services,
including those listed on Appendix C.
"TRADE BALANCE" means the difference between the aggregate value of time
owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, as computed in
accordance with the Station's customary bookkeeping practices. The Trade Balance
is "negative" if the value of time owed exceeds the value of goods and services
to be received after Closing by more than Twenty Five Thousand Dollars
($25,000). The Trade Balance is "positive" if the value of time owed is less
than the value of goods and services to be received after Closing by more than
Twenty Five Thousand Dollars ($25,000).
"TRANSACTION" means the sale and purchase and assignments and assumptions
contemplated by this Agreement and the respective obligations of Seller and
Buyer set forth herein.
"TRANSMITTER SITE" means the real estate located in Philadelphia,
Pennsylvania that is currently used as the Station's transmitter site.
"TRANSMITTER TOWER" means the broadcast tower used by the Station and
located on the Transmitter Site.
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1.2. OTHER DEFINITIONS . Other capitalized terms used in this Agreement
shall have the meanings ascribed to them herein.
1.3. NUMBER AND GENDER. Whenever the context so requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be construed to mean or include any other gender or
genders.
1.4. HEADINGS AND CROSS-REFERENCES. The headings of the Sections and
Paragraphs hereof, the Table of Contents, the Table of Exhibits, and the Table
of Appendices have been included for convenience of reference only, and shall in
no way limit or affect the meaning or interpretation of the specific provisions
of this Agreement. All cross-references to Sections or Paragraphs herein shall
mean the Sections or Paragraphs of this Agreement unless otherwise stated or
clearly required by the context. All references to Appendices herein shall mean
the Appendices to this Agreement. Words such as "herein" and "hereof" shall be
deemed to refer to this Agreement as a whole and not to any particular provision
of this Agreement unless otherwise stated or clearly required by the context.
The term "including" means "including without limitation."
1.5. COMPUTATION OF TIME. Whenever any time period provided for in this
Agreement is measured in "business days" there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the Commission's offices are closed and are not reopened
prior to 5:30 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
2. ASSETS TO BE CONVEYED.
2.1. Purchased Assets. On the Closing Date, Seller shall sell, assign,
transfer, convey and deliver to Buyer free of all liens, encumbrances,
mortgages, security interests of any kind or type whatsoever, all of Seller's
assets used in the conduct of the business and operations of the Station
(collectively referred to as the "Purchased Assets"), including, but not limited
to, the following;
(a) LICENSES. The FCC Licenses, and all other transferrable licenses,
permits and authorizations issued by any Governmental Authority that are used in
or necessary for the lawful operation of the Station as currently operated by
Seller.
(b) EQUIPMENT. All tangible personal property and fixtures used or
held for use in the operation of the Station, including the property and assets
listed or described in Appendix B, together with supplies, inventory, spare
parts and replacements thereof and improvements and additions thereto made
between the date hereof and the Closing Date (the "Equipment").
(c) CONTRACTS AND AGREEMENTS. The Contracts, Sales Agreements and
Trade Agreements, subject to the following:
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(1) Buyer shall be obligated to assume only (i) those Contracts
that are listed in Appendix C and (ii) those contracts and other agreements that
have been or will have been entered into in the ordinary course of the Station's
business, between the date hereof and the Closing Date, provided that, unless
otherwise approved in writing by Buyer, the obligations of the Station or Buyer
under those latter contracts and agreements entered into in the ordinary course
of business between the date hereof and the Closing do not exceed Five Thousand
Dollars ($5,000) per annum per Contract or Fifty Thousand Dollars ($50,000) per
annum in the aggregate or are terminable on not more than 30 days' notice.
(2) Buyer shall be obligated to assume only those Sales
Agreements that have been or will have been entered into in the ordinary course
of business at rates consistent with Seller's usual past practices.
(3) Buyer shall be obligated to assume only those Trade
Agreements that have been or will have been entered into in the ordinary course
of business, between the date hereof and the Closing Date, and (i) are
immediately preemptible for cash time sales trade; (ii) require the provision of
air time only on a "run of schedule" basis; and (iii) provide for goods and
services used in the operation of the Station. Notwithstanding the foregoing,
Buyer shall not be obligated to assume Trade Agreements that have an aggregate
negative Trade Balance exceeding Twenty Five Thousand Dollars ($25,000).
(4) Notwithstanding any provision of this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
Contract or other agreement, undertaking or obligation if (i) an attempted
assignment, without the consent required for such assignment, may constitute a
breach thereof or may in any way have a material adverse effect on Seller's
rights thereunder prior to Closing or Buyer's rights thereunder after Closing
and (ii) such consent is not obtained by Seller prior to Closing, provided,
however, that Seller will use its best efforts at its own expense to obtain all
such consents prior to Closing. If any such required consent is not obtained, or
if an attempted assignment would be ineffective or would adversely affect
Seller's rights thereunder so that Buyer would not receive all such rights and
benefits after Closing, Seller shall arrange to provide Buyer to the fullest
extent possible with Seller's rights and benefits under any such Contract,
agreement, undertaking or obligation including enforcement for the benefit of
Buyer of any rights of Seller against any other party thereto arising out of the
breach or cancellation thereof by such party or otherwise.
(5) With respect to any Contracts, agreements, undertakings or
obligations that require the consent of third parties for assignment, but for
which the consent of such third parties has not been obtained as of the Closing
Date, Buyer shall assume Seller's obligations to be performed under those
Contracts, agreements, undertakings or obligations only for the period after
Closing during which, and only to the extent that, Buyer actually receives the
benefits that Seller was entitled to receive thereunder as of the Closing Date.
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(d) PROGRAMMING MATERIALS. All programs, programming material, and
music libraries in whatever form or nature owned by Seller and used or intended
for use in the operation of the Station.
(e) INTELLECTUAL PROPERTY. All Seller's right, title and interest in
and to the Intellectual Property.
(f) INTANGIBLE PROPERTY. All of Seller's right, title and interest in
and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station, including all customer lists, and sales plans
(the "Intangible Property").
(g) BUSINESS RECORDS. All business records of Seller (including logs,
public file materials and engineering records) relating to or used in the
operation of the Station and not relating solely to Seller's internal corporate
affairs.
(h) STATION RECORDS. All of the Station's proprietary information,
technical information and data, machinery and equipment warranties (to the
extent such warranties are assignable), maps, plans, diagrams, blueprints,
schematics, files, records, studies, data, lists, general accounting records,
books of account, in whatever form, used or held for use for the business or
operation of the Station, including filings with the FCC which relate to the
Station.
2.2. EXCLUDED ASSETS. There shall be excluded from the Purchased Assets and
retained by the Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets"):
(a) RECEIVABLES. All Accounts Receivable.
(b) CASH AND INVESTMENTS. All cash and cash equivalents on hand or in
bank accounts and other cash items and investment securities of Seller on the
Closing Date.
(c) DISPOSED PERSONAL PROPERTY. All tangible personal property
consumed or disposed of in the ordinary course of the Station's business after
the date hereof and prior to the Closing Date.
(d) INSURANCE. All contracts of insurance (including any cash
surrender value thereof) and all insurance proceeds of settlement and insurance
claims made by Seller on or before the Closing Date.
(e) EMPLOYEE BENEFIT ASSETS. All pension, profit sharing and savings
plans and trusts, and any assets thereof, except that any employee account
balances under any plan qualified under Section 401(k) of the Code shall be
promptly transferred to a plan qualified under Section 401(k) and, at Buyer's
request, made available by or on behalf of Buyer if such employee is hired by
Buyer, to the extent allowed under each such plan and applicable law.
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(f) CONTRACTS. All contracts that will have terminated or expired
prior to Closing by their terms and all contracts, agreements, instruments,
undertakings and obligations not expressly assumed by Buyer hereunder.
(g) TAX ITEMS. All claims, rights and interest in and to any refunds
for federal, state or local taxes for periods prior to the Closing Date.
(h) CORPORATE RECORDS. Seller's corporate minute books and other books
and records relating to internal corporate minutes and the sales and expenses of
Station and any other books and records not related to the operation of Station.
(i) CALL LETTERS. The call letters WDRE(FM).
3. ESCROW DEPOSIT. Buyer has already deposited Ten Thousand Dollars ($10,000) in
escrow with Seller. Simultaneously with the execution and delivery of this
Agreement, the Seller shall deliver that sum to Xxxxxxx & Xxxxxx, P.C. ("Escrow
Agent"). Simultaneously with the execution and delivery of this Agreement by
both parties, Buyer has deposited with Escrow Agent an additional Nine Hundred
Ninety Thousand Dollars ($990,000). The total cash deposit of One Million
Dollars ($1,000,000) shall be referred to as the "Escrow Deposit". The Escrow
Deposit shall be held in an interest-bearing account with a federally insured
financial institution and disbursed by Escrow Agent pursuant to the terms of an
escrow agreement in the form attached hereto as Exhibit 1 (the "Escrow
Agreement"), which Escrow Agreement has been entered into by Seller, Buyer and
Escrow Agent simultaneously herewith.
4. PURCHASE PRICE AND METHOD OF PAYMENT.
4.1. CONSIDERATION. The total consideration for the Purchased Assets
and the Noncompetition Agreement (the "Purchase Price") shall be Twenty Million
Dollars ($20,000,000), payable as set forth in this Section 4.
4.2. PAYMENT AT CLOSING. At Closing, Buyer shall pay:
(a) Fifteen Million Dollars ($15,000,000)(as adjusted pursuant to
Sections 8.4 and 12.1) to Seller by check or wire transfer of same day funds
pursuant to wire transfer instructions which shall be delivered by Seller to
Buyer at least five business days prior to Closing.
(b) One Million Dollars ($1,000,000) to Seller by causing the
Escrow Agent to release the Escrow Deposit to Seller, with all interest earned
on the Escrow Deposit remitted to Buyer.
(c) Three Million Dollars ($3,000,000) to Xxxxxx X. Xxxxx for the
Noncompetition Agreement.
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(d) One Million Dollars ($1,000,000) to Xxx X. Xxxxx for the
Noncompetition Agreement.
4.3. ALLOCATION. The sum of Sixteen Million Dollars ($16,000,000)
shall be allocated to the Purchased Assets in accordance with an allocation
schedule prepared by Buyer pursuant to Section 1060 of the Code and mutually
agreed to by Seller and Buyer. Seller and Buyer shall use such allocation for
tax accounting (including preparation of IRS Form 8594), and all other purposes.
If Seller and Buyer have not agreed upon the allocation for the Purchased Assets
prior to the Closing Date, Closing shall take place as scheduled and any dispute
shall be resolved by a qualified media appraiser mutually acceptable to Seller
and Buyer, whose decision shall be final and whose fees and expenses shall be
paid one-half by Seller and one-half by Buyer. If the allocation must be
determined by a media appraiser, Seller and Buyer agree to cooperate in good
faith so that such appraisal may be completed expeditiously.
4.4. SELLER'S LIABILITIES. Buyer does not and shall not assume or be
deemed to assume, pursuant to this Agreement or otherwise, any agreements,
liabilities, undertakings, obligations or commitments of Seller or the Station
of any nature whatsoever except: (i) those expressly assumed by Buyer pursuant
to this Agreement, provided, that, Buyer shall not assume liability for any
breaches, violations or defaults under the Contracts, Sales Agreements and Trade
Agreements that occurred prior to Closing; and (ii) prorated items that are to
be paid by Buyer after Closing pursuant to Section 12.l.
5. XXXX-XXXXX-XXXXXX As promptly as practicable and no later than ten (10) days
following the execution of this Agreement, Seller and Buyer shall complete any
filing that may be required pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, (with Buyer paying any fees required in
conjunction with the filing) or shall mutually agree that no such filing is
required. Seller and Buyer shall diligently take all necessary and proper steps
and provide any additional information reasonably requested in order to comply
with the requirements of such Act.
6. SELLER'S REPRESENTATIONS; WARRANTIES AND COVENANTS. Seller hereby makes to
and for the benefit of Buyer, the following representations, warranties and
covenants:
6.1. EXISTENCE; POWER AND IDENTITY. Seller is a corporation duly
organized and validly existing under the laws of the State of Pennsylvania with
full corporate power and authority (a) to own, lease and use the Purchased
Assets as currently owned, leased and used, (b) to conduct the business and
operation of the Station as currently conducted and (c) to execute and deliver
this Agreement and each other document, agreement and instrument to be executed
and delivered by Seller in connection with this Agreement (collectively, the
"Seller Documents"), and to perform and comply with all of the terms,
obligations and covenants to be performed and complied with by Seller hereunder
and thereunder. The addresses of Seller's chief executive office and all of
Seller's additional places of business, and of all places where any of the
tangible personal property included in the Purchased Assets is now located, or
has
9
been located during the past 180 days, are correctly listed in Appendix E.
Except as set forth in Appendix E, during the past five years, Seller has not
been known by or used, any corporate, partnership, fictitious or other name in
the conduct of the Station's business or in connection with the ownership, use
or operation of the Purchased Assets.
6.2. BINDING EFFECT. The execution, delivery and performance by Seller
of this Agreement has been and the Seller Documents will be duly authorized by
all necessary corporate action, and copies of those authorizing resolutions,
certified by Seller's Secretary shall be delivered to Buyer at Closing. No other
corporate action by Seller is required for Seller's execution, delivery and
performance of this Agreement or any of the Seller Documents. This Agreement has
been duly and validly executed and delivered by Seller to Buyer and constitutes
a legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium and similar laws relating to or affecting
creditors, and other obligees' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
6.3. NO VIOLATION. Except as set forth on Exhibit K, none of (i) the
execution, delivery and performance by Seller of this Agreement or any of the
Seller Documents, (ii) the consummation of the Transaction, or (iii) Seller's
compliance with the terms or conditions hereof will, with or without the giving
of notice or the lapse of time or both, conflict with, breach the terms or
conditions of, constitute a default under, or violate (x) Seller's articles of
incorporation or bylaws, (y) any judgment, decree, order, consent, agreement,
lease or other instrument (including any Contract, Sales Agreement or Trade
Agreement) to which Seller is a party or by which Seller or any of its assets
(including the Purchased Assets) or the Station is or may be legally bound or
affected, or (z) any law, rule, regulation or ordinance of any Governmental
Authority applicable to Seller or any of its assets (including the Purchased
Assets) or the operation of the Station.
6.4. CONVEYANCE OF ASSETS. At Closing, Seller shall convey to Buyer
good and marketable title to all the Purchased Assets, free and clear of all
liens, pledges, collateral assignments, security interests, capital or financing
leases, easements, covenants, restrictions and encumbrances or other defects of
title except: (i) the inchoate lien for current taxes or other governmental
charges not yet due and payable and that will be prorated between Seller and
Buyer pursuant to Section 12.1; and (ii) the permitted encumbrances listed in
Appendix F (the "Permitted Encumbrances").
6.5. GOVERNMENTAL AUTHORIZATIONS. Except for the FCC Licenses, no
licenses, permits, or authorizations from any Governmental Authority are
required to own, use or operate the Purchased Assets, to operate the Station or
to conduct Seller's business as currently operated and conducted by Seller. The
FCC Licenses are all the Commission authorizations held by Seller with respect
to the Station, and are all the Commission authorizations used in or necessary
for the lawful operation of the Station as currently operated by Seller. The FCC
Licenses are in full force and effect, are subject to no conditions or
restrictions other than those which appear on their face and are unimpaired by
any acts or omissions of Seller, Seller's officers, employees
10
or agents. Seller has delivered true and complete copies of all FCC Licenses to
Buyer. There is not pending or, to the Knowledge of Seller, threatened, any
action by or before the Commission or any other Governmental Authority to
revoke, cancel, rescind or modify any of the FCC Licenses (other than
proceedings to amend Commission rules of general applicability or otherwise
affecting the broadcast industry generally), and there is not now issued,
outstanding or pending or, to the Knowledge of Seller, threatened, by or before
the Commission or any other Governmental Authority, any order to show cause,
notice of violation, notice of apparent liability, or notice of forfeiture or
complaint against Seller or otherwise with respect to the Station. The Station
is operating in material compliance with all FCC Licenses, the Communications
Act of 1934, as amended (the "Communications Act"), and the current published
rules, regulations and policies of the Commission. Seller has no knowledge of
any facts relating to it that, under the Communications Act or the current
published rules, regulations and policies of the Commission may cause the
Commission to deny Commission renewal of the FCC Licenses or deny Commission
consent to the Transaction.
6.6. EQUIPMENT. Seller has good and marketable title, both legal and
equitable, to the Equipment. The Equipment, together with any improvements and
additions thereto and replacements thereof less any retirements or other
dispositions as permitted by this Agreement between the date hereof and the
Closing Date, will, at Closing, be all the tangible personal property used or
useful in the lawful operation of the Station as currently operated by Seller.
Except as specifically indicated to the contrary in Appendix B, all Equipment is
serviceable, in good operating condition (reasonable wear and tear excepted),
and is not in imminent need of repair or replacement. All items of transmitting
and studio equipment included in the Equipment (i) have been maintained in a
manner consistent with generally accepted standards of good engineering practice
and (ii) will permit the Station to operate in accordance with the terms of the
FCC Licenses.
6.7. CONTRACTS. Seller has made available to Buyer or its
representatives complete and correct copies of all Contracts on Appendix C
hereto. Except for Sales Agreements, Trade Agreements and employment agreements
with the Station's employees, Appendix C includes all the contracts, leases, and
agreements to which Seller is a party and which Buyer has agreed to assume,
other than those contracts that will be performed in full prior to the Closing,
or by which Seller or the Station is or may be legally bound or affected which
have been entered into in connection with the ownership or operation of the
Station, other than those contracts that will be performed in full prior to the
Closing. To the Knowledge of Seller, each Contract is in full force and effect
and is unimpaired by any acts or omissions of Seller, Seller's employees or
agents, or Seller's officers. Except as set forth on Appendix C, there has not
occurred as to any Contract any event of default by Seller or any event that,
with notice, the lapse of time or otherwise, could become an event of default by
Seller. To the Knowledge of Seller, there has not occurred as to any Contract
any default by any other party thereto or any event that, with notice, the lapse
of time or otherwise, or at the election of any person other than Seller, could
become an event of default by such party. Those Contracts whose stated duration
extends beyond the Closing Date will, at Closing, to the Knowledge of Seller, be
in full force and effect,
11
unimpaired by any acts or omissions of Seller, Seller's employees or agents, or
Seller's officers. If any Contract requires the consent of any third party in
order for Seller to assign that Contract to Buyer, Seller shall use reasonable
efforts to obtain at its own expense such consent prior to Closing.
6.8. PROMOTIONAL RIGHTS. The Intellectual Property set forth on
Appendix D includes all trademarks that Seller is transferring to Buyer, used to
promote or identify the Station, provided that the Intellectual Property does
not include the call sign WDRE. Except as set forth on Appendix D, the
Intellectual Property is in good standing and uncontested by any third party.
Except as set forth on Appendix D, to the Knowledge of Seller there is no
infringement or unlawful or unauthorized use of those promotional rights,
including the use of any slogan or logo by any broadcast or cable station in the
Philadelphia metropolitan area that may be confusingly similar to those
currently used by the Station. Except as set forth on Appendix D, to the
Knowledge of Seller, the operations of the Station do not infringe, and no one
has asserted to Seller that such operations infringe, any copyright, trademark,
tradename, service xxxx or other similar right of any other party.
6.9. INSURANCE. Appendix G lists all insurance policies held by Seller
with respect to the Purchased Assets and the business and operation of the
Station. Such insurance policies are in full force and effect, all premiums with
respect thereto are currently paid and Seller is in compliance with the terms
thereof. Seller has not received any notice from any issuer of any such policies
of its intention to cancel, terminate, or refuse to renew any policy issued by
it. Seller will maintain the insurance policies listed on Appendix G in full
force and effect through the Closing Date.
6.10. FINANCIAL STATEMENTS.
(a) Seller has furnished Buyer with unaudited Financial
Statements for the calendar years 1993, 1994 and 1995 and the nine (9) month
period ending September 30, 1996. The Financial Statements fairly present
Seller's financial income, expenses, assets, liabilities, and the results of
operations of the Station as of the dates and for the periods indicated. No
event has occurred and, prior to Closing, no event will have occurred that would
make such Financial Statement misleading in any material respect.
(b) Except as reflected in the balance sheets as of September 30,
1996, including the notes thereto and except for the current liabilities
incurred in the ordinary course of business of the Station since September 30,
1996, there exist no material liabilities of Seller, contingent or absolute,
matured or unmatured, known or unknown. Since September 30, 1996, (i) Seller has
not incurred any obligation or liability (contingent or otherwise), except in
the ordinary course of business and consistent with past business practices,
(ii) there has not been any discharge or satisfaction of any obligation or
liability owed to Seller which is not in the ordinary course of business or is
inconsistent with past business practices, or (iii) there has not occurred any
sale of or loss or material injury to the Purchased Assets except those
non-material assets disposed of in the ordinary course of business. The balance
sheets fairly present Seller's
12
financial position, assets, liabilities, and the results of operations of the
Station as of the dates and for the periods indicated, subject to year end
adjustments.
6.11. EMPLOYEES. Except as otherwise listed in Appendix H. (i) no
employee of the Station is represented by a union or other collective bargaining
unit, no application for recognition as a collective bargaining unit has been
filed with the National Labor Relations Board, and, to the Knowledge of Seller,
there has been no concerted effort to unionize any of the Station's employees
and (ii) Seller has no other written employment agreement or arrangement with
any Station employee, and no written agreement concerning bonus, termination,
hospitalization or vacation. Included in Appendix H is a list of all persons
currently employed at the Station together with an accurate description of the
compensation for their respective employment as of the date of this Agreement.
Seller will promptly advise Buyer of any changes that occur prior to Closing
with respect to such information.
6.12. EMPLOYEE BENEFIT PLANS.
(a) Except as described in Appendix I, neither Seller nor any
Affiliates (as defined below) have at any time established, sponsored,
maintained, or made any contributions to, or been parties to any contract or
other arrangement or been subject to any statute or rule requiring them to
establish, maintain, sponsor, or make any contribution to, (i) any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, and regulations thereunder (PERISH))
(pension Plans); (ii) any "employee welfare benefit plan" (as defined in Section
3(1) of ERISA) ("Welfare Plans); or (iii) any deferred compensation, bonus,
stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement (bother Plans). Seller and the Affiliates have no
obligations or liabilities (whether accrued, absolute, contingent, or
unliquidated, whether or not known, and whether due or to become due) with
respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA), or
Other Plan that is not listed in Appendix I. For purposes of this Section 6.12,
the term "Affiliate" shall include all persons under common control with Seller
within the meaning of Sections 4001(a)(14) or (b)(1) of ERISA or any regulations
promulgated thereunder, or Sections 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended (the Recodes).
(b) Each plan or arrangement listed in Appendix I (and any
related trust or insurance contract pursuant to which benefits under such plans
or arrangements are funded or paid) has been administered in all material
respects in compliance with its terms and in both form and operation is in
compliance with applicable provisions of ERISA, the Code, the Consolidated
Omnibus Budget Reconciliation Act of 1986 and regulations thereunder, and other
applicable law. Each Pension Plan listed in Appendic I has been determined by
the Internal Revenue Service to be qualified under Section 401(a) and, if
applicable, Section 401(k) of the Code, and nothing has occurred or been omitted
since the date of the last such determination that resulted or could result in
the revocation of such determination. Seller and the Affiliates have made all
required contributions or payments to or under each plan or arrangement listed
in Appendix I on a timely basis and have made adequate provision for reserves to
meet
13
contributions and payments under such plans or arrangements that have not been
made because they are not yet due.
(c) The consummation of this Agreement (and the employment by
Buyer of former employees of Seller or any employees of an Affiliate) not result
in any carryover liability to Buyer for taxes, penalties, interest or any other
claims resulting from any employee benefit plan (as defined in Section 3(3) of
ERISA) or Other Plan. In addition, Seller and each Affiliate make the following
representations (i) as to all of their Pension Plans: (A) neither Seller nor any
Affiliate has become liable to the PBGC under ERISA under which a lien could
attach to the assets of Seller or an Affiliate; (B) Seller and each Affiliate
has not ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA; and (C) Seller and each Affiliate has
not made a complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as defined in
Section 4201 of ERISA, and (ii) all group health plans maintained by the Seller
and each Affiliate have been operated in material compliance with Section
4980B(f) of the Code.
(d) The parties agree that Buyer does not and will not assume the
sponsorship of, or the responsibility for contributions to, or any liability in
connection with, any Pension Plan, any Welfare Plan, or Other Plan maintained by
Seller or an Affiliate for its employees, former employees, retirees, their
beneficiaries or any other person. In addition and not as a limitation of the
foregoing, the parties agree that Seller and such Affiliate shall be liable for
any continuation coverage (including any penaldes, excise taxes or interest
resulting from the failure to provide continuation coverage) required by Section
4980B of the Code due to qualifying events that occur after the Closing Date
resulting Xxx the Transaction contemplated by this Agreement.
6.13. ENVIRONMENTAL PROTECTION. Except as set forth on Appendix J. to
the Knowledge of Seller (i) no Hazardous Substances have been treated, stored,
used, released or disposed of on the Studio Site or Transmitter Site in any
manner that would cause Buyer to incur materiel liability under any
Environmental Laws; (ii) Seller is not liable for cleanup or response costs with
respect to any present or past emission, discharge, or release of any Hazardous
Substances; (iii) no Underground storage table (as that term is defined in
regulations promulgated by the federal Environmental Protection Agency) is used
in the operation of the Station or is located on the Studio Site or the
Transmitter Site; (iv) there are no pending actions, suits, claims, legal
proceedings or any other proceedings based on environmental conditions or
noncompliance at the Studio Site or Transmitter Site, or any part thereof, or
otherwise arising Xxx Seller's activities involving Hazardous Substances; (v)
there are no conditions, facilities, procedures or any other facts or
circumstances at the Studio Site or Transmitter Site which constitute
noncompliance with environmental laws or regulations; and (vi) there are no
structures, improvements, equipment, activities, fixtures or facilities at the
Studio Site or Transmitter Site which are constructed with, use or otherwise
contain Hazardous Substances, including, but without limitation, asbestos or
polychlorinated biphenyls.
14
6.14. COMPLIANCE WITH LAW. There is no outstanding complaint,
citation, or notice issued by any Governmental Authority asserting that Seller
is in violation of any material law, regulation, rule, ordinance, order, decree
or other material requirement of any Governmental Authority (including any
applicable statutes, ordinances or codes relating to zoning and land use, health
and sanitation, environmental protection, occupational safety and the use of
electric power) affecting the Purchased Assets or the business or operations of
the Station, and Seller is in material compliance with all such laws,
regulations, rules, ordinances, decrees, orders and requirements. Without
limiting the foregoing:
(a) The Station's transmitting and studio equipment is in
material respects operating in accordance with the terms and conditions of the
FCC Licenses, all underlying construction permits, and the published rules,
regulations, and policies of the Commission, including all requirements
concerning equipment authorization and human exposure to radio frequency
radiation.
(b) Seller has, in the conduct of the Station's business,
materially complied with all applicable laws, rules and regulations relating to
the employment of labor, including those concerning wages, hours, equal
employment opportunity, collective bargaining, pension and welfare benefit
plans, and the payment of Social Security and similar taxes, and Seller is not
liable for any arrears of wages or any tax penalties due to any failure to
comply with any of the foregoing.
(c) Seller's affirmative action program for the Station and
Seller's other employment practices materially comply with the Commission's
published rules, regulations and policies.
(d) All ownership reports, employment reports, tax returns and
other material documents required to be filed by Seller with the Commission or
other Governmental Authority have been fled; such reports and filings are
accurate and complete in all material respects; such items as are required to be
placed in the Stadon's local public inspection file have been placed in such
file; all proofs of performance and measurements that are required to be made by
Seller with respect to the Stadon's transmission facilities have been completed
and filed at the Station; and all information contained in the foregoing
documents is true, complete and accurate.
(e) Seller has paid to the Commission the regulatory fees due for
the Station for the years 1994 96.
6.15. LITIGATION. Except for proceedings affecting radio broadcasters
generally and except as set forth on Appendix K, there is no litigation,
complaint, investigation, suit, claim, action or proceeding pending, or to the
Knowledge of Seller, threatened before or by the Commission, any other
Governmental Authority, or any arbitrator or other person or entity relating to
the business or operations of the Station or to the Purchased Assets. Except as
set forth on Appendix K, there is no other litigation, action, suit, complaint,
claim, investigation or proceeding pending, or to the Knowledge of Seller,
threatened that may give rise to any claim
15
against any of the Purchased Assets or adversely affect Seller's ability to
consummate the Transaction as provided herein. To the Knowledge of Seller,
Seller has not consulted with counsel concerning any facts that could reasonably
result in any such proceedings.
6.16. INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character, including bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller, the
Station Assets or the Purchased Assets are pending or, to the Knowledge of
Seller, threatened. Seller has not made an assignment for the benefit of
creditors.
6.17. SALES AGREEMENTS. The Sales Agreements in existence on the date
hereof have been entered into in the ordinary course of the Station's business,
at rates consistent with Seller's usual past practices.
6.18. SUFFICIENCY OF ASSETS. The Purchased Assets are and, on the
Closing Date will be, sufficient to conduct the operation and business of the
Station in the manner in which it is currently being conducted.
6.19. RELATED PARTIES. Except as disclosed in Appendix L neither
Seller nor any shareholder, officer or director of Seller has any interest
whatsoever in any corporation, firm, partnership or other business enterprise
which has had any business transactions with Seller relating to the Purchased
Assets or the Station, and no shareholder of Seller has entered into any
transactions with Seller relating to the Purchased Assets or the Station.
6.20. TAXES. The Seller has timely filed with all appropriate
Governmental Authority all federal, state, commonwealth, local, and other tax or
information returns and tax reports (including, but not limited to, all income
tax, unemployment compensation, social security, payroll, sales and use, profit,
excise, privilege, occupation, property, ad valorem, franchise, license, school
and any other tax under the laws of the United States or of any state or any
commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof. Seller
has paid in full all federal, state, commonwealth, foreign, local and other
governmental taxes, estimated taxes, interest, penalties, assessments and
deficiencies (collectively, Taxes) which have become due pursuant to such
returns or without returns or pursuant to any assessments received by Seller. To
the Knowledge of Seller, such returns and forms are true, correct and complete
in all material respects, and to the Knowledge of Seller, Seller has w liability
for any Taxa in excess of the Taxes shown on such returns. Seller is wit a party
to any pending action or proceeding and, to the Knowledge of Seller, there is w
action or proceeding threatened by any Governmental Authority against Seller for
assessment or collection of any Taxes, and no unresolved claim for assessment or
collection of any Taxes has been asserted against Seller.
6.21. NO MISLEADING STATEMENTS. No provision of this Agreement
relating to Seller, the Station or the Purchased Assets or any other document,
Appendix, Exhibit or other information furnished by Seller to Buyer in
connection with the execution, delivery and
16
performance of this Agreement, or the consummation of the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated in
order to make the statement, in light of the circumstances in which it is made,
not misleading. All Exhibits and Appendices attached hereto are materially
accurate and complete as of the date hereof. Seller, prior to Closing, shall
update the Appendices to assure their continued accuracy and shall advise Buyer
upon receipt of any notice, document or occurrence of an event that would make
any representation or warranty contained in this Section 6 untrue.
7. BUYER'S REPRESENTATIONS. WARRANTIES AND COVENANTS. Buyer hereby makes
to and for the benefit of Seller, the following representations, warranties and
covenants:
7.1. EXISTENCE AND POWER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to assume and perform this Agreement.
7.2. BINDING EFFECT. The execution, delivery and performance by Buyer
of this Agreement, and each other document, agreement and instrument to be
executed and delivered by Buyer in connection with this Agreement (collectively,
the "Buyer Documents~) has been or will be duly authorized by all necessary
corporate action, and copies of those authorizing resolutions, certified by
Buyer's Secretary shall be delivered to Seller at Closing. No other corporate
action by Buyer is required for Buyer's execution, delivery and performance of
this Agreement or any of the Buyer Documents. This Agreement has been, and each
of the Buyer Documents will be, duly and validly executed and delivered by Buyer
to Seller and constitutes a legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms, subject to bankruptcy, reorganization,
fraudulent conveyance, insolvency, moratorium and similar laws relating to or
affecting creditors' and other obligees' rights generally and the exercise of
judicial discretion in accordance with general equitable principles.
7.3. NO VIOLATION. None of (i) the execution, delivery and performance
by Buyer of this Agreement or any of the Buyer Documents, (ii) the consummation
of the Transaction, or (iii) Buyer's compliance with the terms and conditions
hereof will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms or conditions of, constitute . a default under,
or violate (x) Buyer's articles of incorporation or by-laws or (y) any judgment,
decree, order, consent agreement, lease or other instrument to which Buyer is a
party or by which Buyer is legally bound.
7.4. LITIGATION. There is no litigation, action, suit, complaint,
proceeding or investigation, pending or, to the Knowledge of Buyer, threatened
that may adversely affect Buyer's ability to consummate the Transaction as
provided herein. Buyer is not aware of any facts that could reasonably result in
any such proceedings.
17
7.5. LICENSEE QUALIFICATIONS. To the Knowledge of Buyer, after
consultation with counsel familiar with the published rules, regulations and
policies of the Commission, there is no fact that would, under the published
rules, regulations and policies of the Commission, or the Communications Act
disqualify Buyer from being the assignee of the FCC Licenses or the owner and
operator of the Station. Should Buyer become aware of any such fact, it will so
inform Seller, and Buyer will use reasonable efforts to remove any such
disqualification. Buyer will not take any action that Buyer knows, or has reason
to believe, would result in such disqualification.
7.6. FINANCIAL QUALIFICATIONS. At Closing, Buyer will have sufficient
funds on hand or from committed sources to pay the Purchase Price.
7.7. NO MISLEADING STATEMENTS. No provision of this Agreement relating
to Buyer or other information furnished by Buyer to Seller in connection with
the execution, delivery and performance of this Agreement, or the consummation
of the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated in order to make the statement, in light of the
circumstances in which it is made, not misleading.
8. PRE-CLOSING OBLIGATIONS. The parties covenant and agree as follows
with respect to the period prior to Closing:
8.1. APPLICATION FOR COMMISSION CONSENT. Within five (5) business days
from the date of this Agreement, Seller and Buyer shall join in and file the
Assignment Application, and they shall diligently take all steps necessary or
desirable and proper expeditiously to prosecute the Assignment Application and
to obtain the Commission's determination that grant of the Assignment
Application will serve the public interest, convenience and necessity. Each
party shall promptly provide the other with a copy of any pleading, order or
other document sewed on the other relating to the Assignment Application. In the
event that Closing occurs prior to a Final Order, then each party's obligations
hereunder shall survive the Closing.
8.2. ACCESS. Between the date hereof and the Closing Date, Seller
shall give Buyer and representatives of Buyer reasonable access to the Purchased
Assets, the Station, the employees of Seller and the Station and the books and
records of Seller relating to the business and operations of the Station;
provided, that, Buyer shall provide Seller with at least three (3) business days
advance notice of: (i) the names of those employees who Buyer intends to contact
and (ii) the dates-of Buyer's visits to the Station's studio; provided that such
contacts and visits will be made in a manner that is not disruptive to the
Station's operations. During such visits Seller will cooperate with Buyer in
meeting with employees. It is expressly understood that, pursuant to this
Section, Buyer, at its expense, shall be entitled to conduct such engineering
inspections of the Station, such environmental assessments and surveys of the
Studio Site and the Transmitter Site (subject to the landlord's prior approval,
which Seller will cooperate in obtaining, and provided Buyer restores such sites
after such assessments), and such reviews of the Station's financial records as
Buyer may desire, so long as the same do not unreasonably
18
interfere with Seller's operation of the Station. No inspection or investigation
made by or on behalf of Buyer, or Buyer's failure to make any inspection or
investigation, shall affect Seller's representations, warranties and covenants
hereunder or be deemed to constitute a waiver of any of those representations,
warranties and covenants.
8.3. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement
and the Closing Date and subject to any Time Brokerage Agreement entered into by
the parties:
(a) Seller shall operate the Station in a manner consistent with
Seller's and the Station's past practice and in material compliance with all
applicable laws, regulations, rules, decrees, ordinances, orders and
requirements of the Commission and all other Governmental Authority. Seller
shall promptly notify Buyer of any actions or proceedings that from the date
hereof are commenced against Seller or the Station or, to the Knowledge of
Seller, against any officer, director, employee, consultant, agent or other
representative of Seller with respect to the business of the Station or the
Purchased Assets.
(b) Seller shall: (i) use the Purchased Assets only for the
operation of the Station; (ii) maintain the Purchased Assets in substantially
their present condition (reasonable wear and tear in normal use and damage due
to unavoidable casualty excepted); (iii) replace and/or repair the Purchased
Assets as necessary in the ordinary course of business; (iv) maintain all
inventories of supplies, tubes and spare parts at levels at least equivalent to
those existing on the date of this Agreement; and (v) promptly give Buyer
written notice of any materially adverse developments with respect to the
Purchased Assets or the business or operations of the Station.
(c) Seller shall maintain the Station's Business Records in the
usual, regular and ordinary manner, on a basis consistent with prior periods.
(d) Seller shall not: (i) sell, lease, encumber or otherwise
dispose of any Purchased Assets or any interest therein except in the ordinary
course of business and only if any Purchased Asset disposed of is replaced by
property of like or better value, quality and utility prior to Closing; (ii)
cancel, terminate, modify, amend or renew any of the Contracts without Buyer's
express prior written consent except in accordance with the terms of such
Contracts; (iii) increase the compensation payable or to become payable to any
employee of the Station except in the ordinary course of business; or (iv)
except to the extent expressly permitted in Section 2.1(c), enter into any
Contract or other agreement (other than Sales Agreements), undertaking or
obligation or assume any liability that may impose any obligation on Buyer after
Closing and which is not subject to termination upon thirty (30) days notice,
whether Seller is acting within or outside of the ordinary course of the
Station's business, without Buyer's prior written consent.
(e) Seller and the Station will enter into Sales Agreements only
in the ordinary course of the Station's business, at rates consistent with
Seller's usual past practices.
19
(f) Seller and the Station will enter into Trade Agreements only
in the ordinary course of the Station's business and only if such Trade
Agreements (i) are immediately preemptible for cash time sales trade; (ii)
require the provision of air time only on a "run of schedule" basis; and (iii)
provide for goods and services used in the operation of the Station.
(g) Seller shall use reasonable efforts to preserve the
operations, organization and reputation of the Station intact, by continuing to
make expenditures and engage in activities designed to promote the Station and
encourage the purchase of advertising time on the Station in a manner consistent
with Seller's past practices. Seller shall use reasonable efforts in accordance
with past practice to preserve the goodwill and business of the Station's
advertisers, suppliers and others having business relations with the Station,
and continue to conduct financial operations of the Station, including credit
and collection policies, with no less effort as in the prior conduct of the
business of the Station.
(h) Seller shall furnish Buyer with monthly financial statements
that are in a form consistent with what has been previously provided to Buyer
within thirty (30) days after the end of each calendar month, and with such
additional data concerning the Station's financial condition as are prepared by
Seller in the ordinary course of business and requested by Buyer.
(i) Seller shall not issue, sell or deliver any shares of stock
of Seller that would result in a transfer of control under the Communications
Act.
8.4. DAMAGE.
(a) RISK OF LOSS . The risk of loss or damage, confiscation or
condemnation of the Purchased Assets shall be borne by Seller at all times prior
to Closing. In the event of material loss or damage, Seller shall promptly
notify Buyer thereof and use its reasonable efforts to repair, replace or
restore the lost or damaged property to its former condition as soon as
possible. If the cost of repairing, replacing or restoring any lost or damaged
property is Twenty Thousand Dollars ($20,000) or less, and Seller has not
repaired, replaced or restored such property prior to the Closing Date, Closing
shall occur as scheduled and Buyer may deduct from the Purchase Price paid at
Closing the amount necessary to restore the lost or damaged property to its
former condition or replace it, whichever is less. If the cost to repair,
replace, or restore the lost or damaged property exceeds Twenty Thousands
Dollars ($20,000), and Seller has not repaired, replaced or restored such
property prior to the Closing Date but is making reasonable and diligent efforts
to complete such repair, replacement or restoration, then, in that event the
Closing, with prior consent of the Commission if necessary, shall be postponed
for such reasonable period of time (not to exceed ninety (90) days) as is
necessary for Seller to repair, replace or restore the lost or damaged property
to its former condition or replace it, whichever is less. In the event that the
repair, replacement or restoration is not completed within that period of
postponement, then the Closing shall proceed and Buyer may deduct from the
Purchase Price paid at Closing the amount necessary to restore the lost or
damaged property to its former condition, in which event Seller shall be
entitled to all proceeds under any applicable insurance policies with respect to
such claim; provided, that, if, after the expiration of the period of
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postponement the lost or damaged property has not been repaired, replaced or
restored in a manner that would permit operation of the Station with at least
eighty percent (80%) of its licensed effective radiated power, Buyer may
terminate this Agreement, in which event the Escrow Deposit and all interest
earned thereon shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
(b) FAILURE OF BROADCAST TRANSMISSIONS. Seller shall give prompt
written notice to Buyer if any of the following (a "Specified Event") shall
occur and continue for a period of more than four (4) hours: (i) the
transmission of the regular broadcast programming of the Station in the normal
and usual manner is interrupted or discontinued; or (ii) the Station is operated
at less than its licensed antenna height above average terrain or at less than
eighty percent (80%) of its licensed effective radiated power. If, prior to
Closing, the Station has not operated at its licensed operating parameters for
more than forty-eight (48) hours (or, in the event of force majeure or utility
failure affecting generally the market served by the Station, ninety-six (96)
hours), whether or not consecutive, during any period of thirty (30) consecutive
days, or if there are three (3) or more Specified Events each lasting more than
four (4) consecutive hours, then Buyer may, at its option: (i) terminate this
Agreement, or (ii) proceed in the manner set forth in Paragraph 8.4(a). In the
event of termination of this Agreement by Buyer pursuant to this Section, the
Escrow Deposit together with all interest accrued thereon shall be returned to
Buyer and the parties shall be released and discharged from any further
obligation hereunder.
(c) RESOLUTION OF DISAGREEMENTS. If the parties are unable to
agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property, the adequacy of any repair, replacement,
or restoration of any lost or damaged property, or any other matter arising
under this Section, the disagreement shall be referred promptly to a qualified
consulting communications engineer mutually acceptable to Seller and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, and whose fees and expenses shall be paid
one-half each by Seller and Buyer.
8.5. ADMINISTRATIVE VIOLATIONS. If Seller receives any finding, order,
complaint, citation or notice prior to Closing which states that any aspect of
the Station's operation violates or may violate any rule, regulation or order of
the Commission or of any other Governmental Authority (an "Administrative
Violation"), including, any rule, regulation or order concerning environmental
protection, the employment of labor or equal employment opportunity, Seller
shall promptly notify Buyer of the Administrative Violation, use reasonable
efforts to remove or correct the Administrative Violation, and be responsible
prior to Closing for the payment of all costs associated therewith, including
any fines or back pay that may be assessed.
8.6. BULK SALES ACT. Seller shall be responsible for compliance with
the provisions of any bulk sales statute applicable to the Transaction, and
shall indemnify and hold Buyer harmless from and against any claims, actions,
liabilities and all costs and expenses, including reasonable legal fees,
incurred or suffered by Buyer as a result of the failure to comply with any such
statute.
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8.7. CONTROL OF STATION. The Transaction shall not be consummated
until after the Commission has given its written consent thereto and between the
date of this Agreement and the Closing Date, Seller shall control, supervise and
direct the operation of the Station.
8.8. AUDIT. Between the date hereof and the Closing Date, Seller, its
shareholders, officers, directors and employees shall cooperate and Seller shall
cause its independent accounting firm to cooperate with Buyer for the purpose of
preparing, at Buyer's sole expense, audited Financial Statements. Such
cooperation shall include, but not be limited to, Buyer's access to and use of
information relied upon by the Seller's independent accounting firm in preparing
the unaudited Financial Statements.
8.9. TIME BROKERAGE AND OPERATING AGREEMENT. After execution of this
Agreement, Seller and Buyer shall cooperate in good faith and use reasonable
efforts to enter into a Time Brokerage Agreement ("TBA") that would be effective
at Buyer's option on or after January 1, 1997, and would permit Buyer to program
up to 24 hours per day, 7 days per week of the Station's programming subject to
Seller's obligation to provide programming responsive to the community's needs.
Such agreement would contain terms and conditions standard in the broadcasting
industry for these types of arrangements including Buyer's obligation to
reimburse Seller for all operating expenses of the Station. Buyer would pay to
Seller the sum of Fifty Thousand Dollars ($50,000) for the months of January and
February, Seventy Five Thousand Dollars ($75,000) for the month of March and One
Hundred Thousand Dollars ($100,000) for each month thereafter. Seller's
obligation to enter into the TBA is subject to Buyer providing evidence
satisfactory to Seller of a financing commitment from a duly qualified
institution agreeing to provide Buyer with sufficient monies to pay the Purchase
Price at Closing.
8.10. CLOSING OBLIGATIONS. Seller and Buyer shall make commercially
reasonable efforts to satisfy the conditions precedent to Closing.
9. STATUS OF EMPLOYEES.
9.1. EMPLOYMENT RELATIONSHIP. All Station employees shall be and
remain Seller's employees, with Seller having full authority and control over
their actions, and Buyer shall not assume the status of an employer or a joint
employer of, or incur or be subject to any liability or obligation of an
employer with respect to, any such employees unless and until actually hired by
Buyer. Seller shall be solely responsible for any and all liabilities and
obligations Seller may have to its employees, including, compensation, severance
pay and accrued vacation time and sick leave. Seller shall be solely responsible
for any and all liabilities, penalties, fines or other sanctions that may be
assessed or otherwise due under such laws on account of the Transaction and the
dismissal or termination of any of Seller's employees.
9.2. BUYER'S RIGHT TO EMPLOY. Seller consents to Buyer discussing with
the Station's employees, at any time after five (5) days from the execution of
this Agreement the possibility of their employment by Buyer; provided, that,
Buyer shall provide three (3) business days' advance notice to Seller of the
names of those employees who Buyer intends to contact. Seller
22
agrees and acknowledges, however, that Buyer is under no obligation to offer
employment to any of those employees. Buyer has no obligation to assume the
contract between Seller and the current Program Director. Should Buyer agree to
assume the existing contract of the Station's Program Director, that shall not
preclude Seller from hiring the Program Director as a consultant with respect to
broadcast stations located outside the greater Philadelphia market.
10. CONDITIONS PRECEDENT.
10.1. MUTUAL CONDITIONS. The respective obligations of both Buyer and
Seller to consummate the Transaction are subject to the satisfaction of each of
the following conditions:
(a) APPROVAL OF ASSIGNMENT APPLICATION. The Commission shall have
granted the Assignment Application, and such grant shall be in full force and
effect on the Closing Date.
(b) ABSENCE OF LITIGATION. As of the Closing Date, no litigation,
action, suit or proceeding enjoining, restraining or prohibiting the
consummation of the Transaction shall be pending before any court, the
Commission or any other Governmental Authority or arbitrator; provided, however,
that this Paragraph may not be invoked by a party if any such litigation,
action, suit or proceeding was solicited or encouraged by, or instituted as a
result of any act or omission of, such party.
(c) XXXX-XXXXX-XXXXXX. If required by this Transaction, all
applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, shall have expired.
(d) NONCOMPETITION AGREEMENT. Xxxxxx X. Xxxxx, Xxx Xxxxx, and
Buyer shall have executed and delivered a Noncompetition Agreement, dated the
Closing Date, in the form attached hereto as Exhibit 2.
10.2. ADDITIONAL CONDITIONS TO BUYER'S OBLIGATION.
In addition to the satisfaction of the mutual conditions contained in
Section 10.1, the obligation of Buyer to consummate the Transaction is subject,
at Buyer's option, to the satisfaction or waiver by Buyer of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller to Buyer shall be true, complete, and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
(b) COMPLIANCE WITH CONDITIONS. All of the terms, conditions and
covenants to be complied with or performed by Seller on or before the Closing
Date under this Agreement and the Seller Documents shall have been duly complied
with and performed in all material respects.
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(c) DISCHARGE OF LIENS. Buyer shall have obtained at Buyer's
expense, at least 10 days prior to Closing, a report prepared by C.T.
Corporation System (or similar firm reasonably acceptable to Buyer) showing the
results of searches of lien, tax, judgment and litigation records, demonstrating
that the Purchased Assets are being conveyed to Buyer free and clear of all
liens, security interests and encumbrances except as expressly permitted by this
Agreement, otherwise consented to by Buyer in writing or to be discharged at
Closing. The record searches shall have taken place no more than 15 days prior
to the Closing Date.
(d) THIRD-PARTY CONSENTS. Seller shall have obtained (i) all
required third-party consents to Buyer's assumption of the Material Contracts,
such that Buyer will, after Closing, enjoy all the rights and privileges of
Seller under the Material Contracts subject only to the same obligations as are
binding on Seller pursuant to the Material Contracts' current terms; and (ii)
all other requisite third-party consents and approvals which may be necessary to
consummate the Transaction.
(e) ESTOPPEL CERTIFICATES. At Closing, Seller shall deliver to
Buyer a certificate executed by the other party to each Material Contract,
including the landlord under the leases for the Studio Site and the Transmitter
Site, dated no more than 15 days prior to the Closing Date, stating (i) that
such Contract is in full force and effect and has not been amended or modified;
(ii) the date to which all rent and/or other payments due thereunder have been
paid; and (iii) that Seller is not in breach or default under such Material
Contract. Seller shall use reasonable efforts to include in the Estoppel
Certificate a Statement that no event has occurred that, with notice or the
passage of time or both, would constitute a breach or default thereunder by
Seller.
(f) OPINION OF SELLER'S COUNSEL. At Closing, Seller shall deliver
to Buyer the written opinion or opinions of Seller's counsel, dated the Closing
Date, in scope and form satisfactory to Buyer, to the following effect:
(1) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Pennsylvania, with all
requisite corporate power and authority to enter into and perform this
Agreement.
(2) This Agreement has been duly executed and delivered by
Seller and such action has been duly authorized by all necessary corporate
action. This Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms subject to
bankruptcy, reorganization, fraudulent conveyance, insolvency, moratorium and
similar laws relating to or affecting creditors' and other obligees' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles.
(3) None of (i) the execution and delivery of this
Agreement, (ii) the consummation of the Transaction, or (iii) compliance with
the terms and conditions of this Agreement will, with or without the giving of
notice or lapse of time or both, conflict with,
24
breach the terms and conditions of, constitute a default under, or violate
Seller's articles of incorporation or bylaws, or to counsel's knowledge, any
judgment, decree, or order, by which Seller, the Station or any of the Seller's
assets, including the Purchased Assets, may be bound or affected, as to which
counsel is representing or advising Seller.
(4) To counsel's knowledge, counsel is not representing or
advising Seller as to any pending or threatened suit, action, claim or
proceeding that questions or may affect the validity of any action to be taken
by Seller pursuant to this Agreement or that seeks to enjoin, restrain or
prohibit Seller from carrying out the Transaction.
(5) To counsel's knowledge, counsel is not representing or
advising Seller as to any outstanding judgment, or any pending or threatened
suit, action, claim or proceeding (other than proceedings affecting radio
broadcasters generally) that could reasonably be expected to have an adverse
effect upon the Purchased Assets or upon the business or operations of the
Station after Closing.
(6) Seller is the authorized legal holder of the FCC
Licenses, the FCC Licenses are in full force and effect, and the FCC Licenses
are not the subject of any pending license renewal application. The FCC Licenses
set forth on Appendix A constitute all FCC licenses and authorizations issued in
connection with the operation of the Station. There are no applications pending
before the Commission with respect to the Station.
(7) The Commission has consented to the assignment of the
FCC Licenses to Buyer and that consent has become a Final Order, unless the
requirement for a Final Order is waived by Buyer.
(8) To the best of such Counsel's knowledge, there is no
Commission investigation, notice of apparent liability or order of forfeiture,
pending or outstanding against the Station, or any complaint, petition to deny
or proceeding against or involving the Station pending before the Commission.
The foregoing opinions shall be for the benefit of and may
be relied on by Buyer and Buyer's lenders (identified at Closing). In rendering
such opinions, Seller's counsel may rely upon such corporate records of Seller,
such certificates of public officials and officers of Seller and such other
documents or assumptions as may be deemed appropriate or necessary. Any opinion
concerning the enforceability of this Agreement may be based on the laws of the
District of Columbia applicable to transactions in that jurisdiction.
(g) FINAL ORDER. The Commission's action granting the Assignment
Application shall have become a Final Order.
(h) CLOSING DOCUMENTS. At the Closing Seller shall deliver to
Buyer (i) such assignments, bills of sale and other instruments of conveyance as
are necessary to vest in Buyer title to the Purchased Assets, all of which
documents shall be dated as of the Closing Date, duly
25
executed by Seller and in form reasonably acceptable to Buyer; (ii) a
certificate, dated the Closing Date, executed by Seller's President certifying
as to those matters set forth in Section 10.2(a) and (b); and (iii) copies of
Seller's corporate resolutions authorizing the Transaction, each certified as to
accuracy and completeness by Seller's Secretary.
10.3. ADDITIONAL CONDITIONS TO SELLER'S OBLIGATION. In addition to
satisfaction of the mutual conditions contained in Section 10.1, the obligation
of Seller to consummate the Transaction is subject, at Seller's option, to the
satisfaction or waiver by Seller of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect as if
then made.
(b) COMPLIANCE WITH CONDITIONS. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the Closing
Date under this Agreement shall have been duly complied with and performed in
all material respects.
(c) OPINION OF BUYER'S COUNSEL. At Closing, Buyer shall deliver
to Seller the written opinion of Buyer's counsel, dated the Closing Date, in
scope and form reasonably satisfactory to Seller, to the following effect:
(1) Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with all
requisite corporate power and authority to enter into and perform this
Agreement.
(2) This Agreement has been duly executed by Buyer, and such
action has been duly authorized by all necessary corporate action. This
Agreement constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to bankruptcy,
reorganization, fraudulent conveyance, insolvency, moratorium, and similar laws
relating to or affecting creditors' and other obligees' rights generally and the
exercise of judicial discretion in accordance with general equitable principles.
(3) None of (i) the execution and delivery of this
Agreement, (ii) the consummation of the Transaction, or (iii) compliance with
the terms and conditions of this Agreement will, with or without the giving of
notice, lapse of time or both, conflict with, breach the terms and conditions
of, constitute a default under or violate Buyer's articles of incorporation or
by-laws, or to counsel's knowledge, any judgment, decree or order to which Buyer
is a party or by which Buyer may be bound and as to which counsel is
representing or advising Buyer.
(4) To the knowledge of counsel, counsel is not representing
or advising Buyer as to any pending or threatened suit, action or proceeding
that questions or may affect the validity of any action to be taken by Buyer
pursuant to this Agreement, or that seeks to enjoin, restrain or prohibit Buyer
from carrying out the Transaction.
26
The foregoing opinions shall be for the benefit of and may
be relied on by Seller. In rendering such opinions, Buyer's counsel may rely
upon such corporate records of Buyer, such certificates of public officials and
officers of Buyer and such other documents or assumptions as may be deemed
appropriate or necessary. Any opinion concerning the enforceability of this
Agreement may be based on the laws of the District of Columbia applicable to
transactions in that jurisdiction.
(d) ASSUMPTION OF LIABILITIES. Buyer shall assume and agree to
pay, perform and discharge Seller's obligations under the Contracts, Sales
Agreements and Trade Agreements to the extent Buyer has expressly agreed to
assume such obligations pursuant to Section 4.4.
(e) PAYMENT. Buyer shall pay Seller the portion of the Purchase
Price due at Closing, as provided in Section 4.2.
(f) CLOSING DOCUMENTS. Buyer shall deliver to Seller at the
Closing (i) copies of Buyer's corporate resolutions authorizing the Transaction
certified as to accuracy and completeness by Buyer's Secretary; and (ii) a
certificate, dated the Closing Date, executed by Buyer's President certifying as
to those matters set forth in Section 10.3(a) and (b).
11. CLOSING. The Closing Date shall be the tenth day after the date on
which the Commission grant of the Assignment Application becomes a Final Order,
or, at Buyer's option, if finality is waived, within fifteen (15) days after
grant of the Assignment Application or such other time as Seller and Buyer shall
mutually agree. Closing shall take place at 10:00 a.m. on the Closing Date at
the offices of Buyer's counsel, Xxxxxxx & Xxxxxx, P.C., 0000 Xxxxxxxxxxx Xxxxxx,
X.X., Xxxxx 0000, Xxxxxxxxxx X.X. 00000.
12. PRORATIONS.
12.1. APPORTIONMENT OF EXPENSES. Seller shall be responsible for all
expenses arising out of the business of the Station until 11:59 p.m. on the
Closing Date, and Buyer shall be responsible for all expenses arising out of the
business of the Station after 11:59 p.m. on the Closing Date to the extent such
expenses relate to liabilities assumed by Buyer pursuant to Section 4.4. All
overlapping expenses shall be prorated or reimbursed, as the case may be, as of
11:59 p.m. on the Closing Date.
12.2. DETERMINATION AND PAYMENT. Prorations shall be made, insofar as
feasible, at Closing and shall be paid by way of adjustment to the Purchase
Price. As to the prorations that cannot be made at Closing, the parties shall,
within ninety (90) days after the Closing Date, make and pay all such
prorations. If the parties are unable to agree upon all such prorations prior to
the expiration of that 90-day period, then any disputed items shall be referred
to a firm of independent certified public accountants, mutually acceptable to
Seller and Buyer, whose decision shall be final, and whose fees and expenses
shall be allocated between and paid by Seller and Buyer, respectively, to the
extent that such party does not prevail on the disputed matters decided by the
accountants.
27
13. POST-CLOSING OBLIGATIONS. The parties covenant and agree as follows
with respect to the period subsequent to Closing:
13.1. COLLECTION OF ACCOUNTS RECEIVABLE. At Closing, Seller shall
assign to Buyer, for purposes of collection only, all of the Accounts Receivable
that are outstanding and unpaid on the Closing Date, except for those Accounts
Receivable which Seller has instituted litigation to collect as of the date of
this Agreement and which are identified on Appendix K. Buyer shall use such
efforts as are reasonable and in the ordinary course of business to those
Accounts Receivable for a period of one hundred eighty (180) days following the
Closing Date (the "Collection Period"). This obligation, however, shall not
extend to the institution of litigation, employment of counsel or any other
extraordinary means of collection. So long as those Accounts Receivable are in
Buyer's possession, neither Seller nor its agents shall make any solicitation of
them for collection purposes or institute litigation for the collection of any
amounts due thereunder. All payments received by Buyer during the Collection
Period from any person obligated with respect to any Accounts Receivable shall
be applied first to Seller's account, and only after full satisfaction thereof,
to Buyer's account; provided, however, that if the customer instructs Buyer to
apply such payment to amounts owed by such customer to Buyer, then that account
shall be deemed a contested account governed by the following sentence. If,
during the Collection Period, any account debtor contests the validity of its
obligation with respect to any Account Receivable, then Buyer shall return that
Account Receivable to Seller after which Seller shall be solely responsible for
the collection thereof. Buyer shall not have the right to compromise, settle, or
adjust the amounts of any of the Accounts Receivable without Seller's prior
written consent. Forty five (45) days after the Closing Date and then on the
fifteenth (l5th) day after the close of each preceding month, Buyer shall
furnish Seller with a list of Accounts Receivable collected during the
applicable period accompanied by a payment equal to the amount of such
collections, less any salesperson's, agency, and representative commissions
applicable thereto that are deducted and paid by Buyer from the proceeds of such
collections. Any Accounts Receivable that are not collected during the
Collection Period shall be reassigned to Seller after which Buyer shall have no
further obligation to Seller with respect to the Accounts Receivable; provided,
however, that all funds subsequently received by Buyer (without time limitation)
that can be specifically identified, whether by accompanying invoice or
otherwise, as a payment on the Accounts Receivable shall be paid over or
forwarded to Seller.
13.2. INDEMNIFICATION.
(a) BUYER'S RIGHT TO INDEMNIFICATION. Seller hereby indemnifies
and holds Buyer and its assigns harmless from and against (i) any breach,
misrepresentation, or violation of any of Seller's representations, warranties,
covenants, or other obligations contained in this Agreement or in any Seller
Document; (ii) all obligations and liabilities of Seller and/or the Station not
expressly assumed by Buyer pursuant to Section 4.4; and (iii) all claims by
third parties against Buyer attributable to the operation of the Station and/or
the use or ownership of the Purchased Assets prior to Closing. This indemnity is
intended by Seller to cover all actions, suits, proceedings, claims, demands,
assessments, adjustments, interest, penalties, costs and
28
expenses (including, reasonable fees and expenses of counsel), whether suit is
instituted or not and, if instituted, whether at the trial or appellate level,
with respect to any and all of the specific matters set forth in this indemnity.
(b) SELLER'S RIGHT TO INDEMNIFICATION. Buyer hereby indemnifies
and holds Seller and its assigns harmless from and against (i) any breach,
misrepresentation or violation of any of Buyer's representations, warranties,
covenants or obligations contained in this Agreement; (ii) all obligations and
liabilities expressly assumed by Buyer hereunder pursuant to Section 4.4; and
(iii) all claims by third parties against Seller attributable to Buyer's
operation of the Station after Closing. This indemnity is intended by Buyer to
cover all actions, suits, proceedings, claims, demands, assessments,
adjustments, interest, penalties, costs and expenses (including reasonable fees
and expenses of counsel), whether suit is instituted or not and, if instituted,
whether at the trial or appellate level, with respect to any and all of the
specific matters set forth in this indemnity.
(c) PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(1) The party claiming indemnification (the "Claimant")
shall give written notice to the party from which indemnification is sought (the
"Indemnitor") promptly after the Claimant learns of any claim or proceeding
covered by the foregoing agreements to indemnify and hold harmless. Failure to
provide prompt notice shall not be deemed to jeopardize Claimant's right to
demand indemnification, provided, that, Indemnitor is not prejudiced by the
delay in receiving notice.
(2) With respect to claims between the parties, following
receipt of notice from the Claimant of a claim, the Indemnitor shall have 15
days to make any investigation of the claim that the Indemnitor deems necessary
or desirable, or such lesser time if a 15-day period would jeopardize any rights
of Claimant to oppose or protest the claim. For the purpose of this
investigation, the Claimant agrees to make available to the Indemnitor and its
authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within the l5-day period, or lesser period
if required by this Section (or any mutually agreed upon extension hereof) the
Claimant may seek appropriate legal remedies.
(3) The Indemnitor shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such claim,
provided, that, Indemnitor acknowledges in writing to Claimant that Indemnitor
would assume responsibility for and demonstrates its financial ability to
satisfy the claim should the party asserting the claim prevail. In the event
that the Indemnitor shall not satisfy the requirements of the preceding sentence
or shall elect not to undertake such defense, or within 15 days after notice of
any such claim from the Claimant shall fail to defend, the Claimant shall have
the right to undertake the defense, 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 Indemnitor. Anything in this Section 13.2(c)(3)
29
to the contrary notwithstanding, (i) if there is a reasonable probability that a
claim may materially and adversely affect the Claimant other than as a result of
money damages or other money payments, the Claimant shall have the right, at its
own cost and expense, to participate in the defense, compromise or settlement of
the claim, (ii) the Indemnitor shall not, without the Claimant's written
consent, settle or compromise any claim or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
plaintiff to the Claimant of a release from all liability in respect of such
claim, and (iii) in the event that the Indemnitor undertakes defense of any
claim consistent with this Section, the Claimant, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to consult with the Indemnitor and its counsel or other
representatives concerning such claim and the Indemnitor and the Claimant and
their respective counsel or other representatives shall cooperate with respect
to such claim.
(d) ASSIGNMENT OF CLAIMS. If any payment is made pursuant to this
Section 13.2, the Indemnitor shall be subrogated to the extent of such payment
to all of the rights of recovery of Claimant, and Claimant shall assign to
Indemnitor, for its use and benefit, any and all claims, causes of actions, and
demands of whatever kind and nature that Claimant may have against the person,
firm, corporation or entity giving rise to the loss for which payment was made.
Claimant agrees to reasonably cooperate in any efforts by Indemnitor to recover
such loss from any person, firm, corporation or entity.
(e) INDEMNIFICATION SOLE REMEDY. The right to indemnification
provided for in this Section shall be the exclusive remedy of either party after
Closing in connection with any breach by the other party of its representations,
warranties, covenants or other obligations hereunder
(f) DE MINIMS AMOUNT. Neither party shall be liable to the other
for indemnification hereunder, exclusive of indemnification for liabilities
retained by Seller or assumed by Buyer, until such amount claimed exceeds One
Hundred Thousand Dollars ($100,000) in the aggregate and then from the first
dollar thereof.
13.3. LIABILITIES. Following the Closing Date, Seller shall pay
promptly when due all of the debts and liabilities of Seller relating to the
Station, other than liabilities specifically assumed by Buyer hereunder.
Promptly shall be defined as no later than thirty (30) days after the due date.
14. DEFAULT AND REMEDIES.
14.1. OPPORTUNITY TO CURE. Except as provided in Section 8.4(a), if
either party believes the other to be in breach hereunder, the former party
shall provide the other with written notice specifying in reasonable detail the
nature of such breach. If the breach has not been cured by the earlier of: (i)
the Closing Date, or (ii) within 10 days after delivery of that notice (or such
additional reasonable time as the circumstances may warrant provided the party
in breach undertakes diligent, good faith efforts to cure the breach within such
10 day period
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and continues such efforts thereafter), then the party giving such notice may
consider the other party to be in default and exercise the remedies available to
such party pursuant to this Section, subject to the right of the other party to
contest the alleged breach through appropriate proceedings.
14.2. SELLER'S REMEDIES. Buyer recognizes that if the Transaction is
not consummated as a result of Buyer's default, Seller would be entitled to
compensation, the extent of which is extremely difficult and impractical to
ascertain. To avoid this problem, the parties agree that if the Transaction is
not consummated due to the default of Buyer, Seller, provided that Seller is not
in default and has otherwise complied with its obligations under this Agreement,
shall be entitled to the Escrow Deposit, with interest earned thereon. The
parties agree that this sum shall constitute liquidated damages and shall be in
lieu of any other relief to which Seller might otherwise be entitled due to
Buyer's failure to consummate the Transaction as a result of a default by Buyer.
14.3. BUYER'S REMEDIES. Seller agrees that the Purchased Assets
include unique property that cannot be readily obtained on the open market and
that Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall have the right specifically to enforce Seller's
performance under this Agreement, and Seller agrees (i) to waive the defense in
any such suit that Buyer has an adequate remedy at law and (ii) to interpose no
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy. If Buyer elects to terminate this Agreement as a result of Seller's
default instead of seeking specific performance, Buyer shall be entitled to the
return of the Escrow Deposit together with all interest earned thereon and any
other remedies to which Buyer may be entitled under law and equity.
15. TERMINATION OF AGREEMENT.
15.1. FAILURE TO CLOSE. This Agreement may be terminated at the option
of either party upon written notice to the other if (x) the Commission has not
granted the Assignment Application within nine (9) months after the Commission
accepts the Assignment Application for filing or (y) the Commission's action
granting the Assignment Application has not become a Final Order within twelve
(12) months after the Commission accepts the Assignment Application for filing;
provided, however, that a party may not terminate this Agreement if such party
is in default hereunder, or if a delay in any decision or determination by the
Commission respecting the Assignment Application has been caused or materially
contributed to (i) by any failure of such party to furnish, file or make
available to the Commission information within its control; (ii) by the willful
furnishing by such party of incorrect, inaccurate or incomplete information to
the Commission; or (iii) by any other action taken by such party for the purpose
of delaying the Commission's decision or determination respecting the Assignment
Application. This Agreement may also be terminated upon the mutual agreement of
Buyer and Seller. In the event of termination pursuant to this Section, the
Escrow Deposit, together with all interest earned thereon, shall be returned to
Buyer and the parties shall be released and discharged from any further
obligation hereunder unless: (x) the failure to consummate the Transaction is
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attributable to Buyer's default, and Seller is not in default and has otherwise
complied with its obligations under this Agreement, in which case the Escrow
Deposit plus interest earned thereon shall be released to Seller as liquidated
damages pursuant to Section 14.2; or (y)the failure to consummate the
Transaction is attributable to Seller's default, and Buyer is not in default and
has otherwise complied with its obligations under this Agreement, in which case
Buyer shall be entitled to the return of the Escrow Deposit and all interest
earned thereon as contemplated by this Section 15.1, and to such other remedies
as are referred to in Section 14.3.
15.2. DESIGNATION FOR HEARING. The time for approval provided in
Section 15.1 notwithstanding, either party may terminate this Agreement upon
written notice to the other, if, for any reason, the Assignment Application is
designated for hearing by the Commission, provided, however, that written notice
of termination must be given within 10 days after the release date of the
hearing designation order and that the party giving such notice is not in
default and has otherwise complied with its obligations under this Agreement.
Upon termination pursuant to this Section, the Escrow Deposit together with all
interest earned thereon shall be returned to Buyer and the parties shall be
released and discharged from any further obligation hereunder, provided,
however, that if the designation for hearing is predicated upon breach by either
party of a representation, warranty or covenant contained in this Agreement, the
non-breaching party may, in addition to termination, pursue the remedies
available to such non-breaching party under Sections 14.2 and 14.3.
16. GENERAL PROVISIONS.
16.1. BROKERAGE. Seller and Buyer represent to each other that neither
party has dealt with a broker in connection with the Transaction and that no
finders fee is due to any person or entity in connection with the Transaction,
except for a possible fee to be paid by Buyer at Closing or later to The
Xxxxxxxx Group, Inc.
16.2. FEES. All Commission filing fees for the Assignment Application,
shall be paid one-half by Seller and one-half by Buyer. Except as otherwise
provided herein, all other expenses incurred in connection with this Agreement
or the Transaction shall be paid by the party incurring those expenses whether
or not the Transaction is consummated.
16.3. NOTICES. All notices, requests, demands and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when (i) delivered personally (which shall include delivery by Federal Express
or other recognized overnight courier service that issues a receipt or other
confirmation of delivery) to the party for whom such communication is intended,
(ii) delivered by facsimile transmission with confirmation of receipt thereof or
(iii) three business days after the date mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:
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(a) If to Seller:
Xx. Xxxxxx X. Xxxxx
Xxxxx Broadcasting Company of Pennsylvania, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx X. Paper, Esquire
Xxxxxxxxx Xxxxxxx Xxxxx and Xxxxxxxx, LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
(b) If to Buyer:
Xx. Xxxxxx X. Xxxxxxx, President
Radio One, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxx, Esquire
Xxxxxxx & Xxxxxx, P.C.
ll50 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000 0000
Either party may change its address for notices by written notice to the other
given pursuant to this Section. Any notice purportedly given by a means other
than as set forth in this Section shall be deemed ineffective.
16.4. ASSIGNMENT. Neither party may assign its rights and obligations
under this Agreement without the other party's express prior written consent,
provided, however, Buyer may assign its rights and obligations pursuant to this
Agreement without Seller's consent prior to Closing to (i) an entity which is a
subsidiary or parent of Buyer or to an entity owned or controlled by Buyer or
its principals or (ii) to Buyer's lenders as collateral for any indebtedness
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incurred by Buyer and only if, such assignment will not require the initiation
of another statutory 30-day public notice period under the Commission's
published rules, regulations or policies; and subsequent to Closing to (x) any
entity which acquires all or substantially all of the Purchased Assets or (y) to
Buyer's lenders as collateral for any indebtedness incurred by Buyer. Subject to
the foregoing, this Agreement shall be binding on, inure to the benefit of, and
be enforceable by the original parties hereto and their respective successors
and permitted assignees.
16.5. EXCLUSIVE DEALINGS. For so long as this Agreement remains in
effect, neither Seller nor any person acting on Seller's behalf shall, directly
or indirectly, solicit or initiate any offer from, or conduct any negotiations
with, any person or entity concerning the acquisition of all or any interest in
any of the Purchased Assets or the Station, other than Buyer or Buyer's
permitted assignees.
16.6. THIRD PARTIES. Nothing in this Agreement, whether express or
implied, is intended to: (i) confer any rights or remedies on any person other
than Seller, Buyer and their respective successors and permitted assignees; (ii)
relieve or discharge the obligations or liability of any third party; or (iii)
give any third party any right of subrogation or action against either Seller or
Buyer.
16.7. INDULGENCES. Unless otherwise specifically agreed in writing to
the contrary: (i) the failure of either party at any time to require performance
by the other of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (ii) no waiver by either party of any
default by the other shall be taken or held to be a waiver by such party of any
other preceding or subsequent default; and (iii) no extension of time granted by
either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
16.8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The several
representations, warranties, and indemnification obligations of the parties
contained herein shall survive for fifteen months after the Closing Date except
that claims properly asserted within the fifteen month period shall survive
until finally and fully resolved; provided, however, that Buyer's
indemnification rights with respect to those obligations and liabilities of
Seller and/or the Station not expressly assumed by Buyer shall survive the
Closing until such liabilities and obligations are discharged in full. Likewise,
Seller's indemnification rights with respect to those liabilities and
obligations expressly assumed by Buyer shall survive the Closing until such
liabilities and obligations are discharged in full.
16.9. PRIOR NEGOTIATIONS. This Agreement supersedes in all respects
all prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All of
such prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
16.10. EXHIBITS AND APPENDICES. The Exhibits and Appendices attached
hereto or referred to herein are a material part of this Agreement, as if set
forth in full herein.
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16.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits and
Appendices to this Agreement set forth the entire understanding between the
parties in connection with the Transaction, and there are no terms, conditions,
warranties or representations other than those contained, referred to or
provided for herein and therein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except by an instrument
in writing signed by each of the parties hereto.
16.12. COUNSEL. Each party has been represented by its own counsel in
connection with the negotiation and preparation of this Agreement.
16.13. GOVERNING LAW, JURISDICTION. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of the State of New
York without regard to the choice of law rules utilized in that jurisdiction.
Buyer and Seller each (a) hereby irrevocably submit to the jurisdiction of the
courts of that state and (b)hereby waive, and agree not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement or
the subject matter hereof may not be enforced in or by such court. Buyer and
Seller each hereby consent to service of process by registered mail at the
address to which notices are to be given. Each of Buyer and Seller agrees that
its submission to jurisdiction and its consent to service of process by mail is
made for the express benefit of the other party hereto. Final judgment against
Buyer or Seller in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction; provided,
however, that any party may at its option bring suit, or institute other
judicial proceedings, in any state or federal court of the United States or of
any country or place where the other party or its assets, may be found.
16.14. SEVERABILITY. If any term of this Agreement is illegal or
unenforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of applicable law and such term, as so modified, and
the balance of this Agreement shall then be fully enforceable.
16.15. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were on the same instrument. Each fully executed set of counterparts shall be
deemed to be an original, and all of the signed counterparts together shall be
deemed to be one and the same instrument.
16.16. FURTHER ASSURANCES. Each party shall at any time and from time
to time after the Closing execute and deliver to the other party such further
conveyances, assignments and other written assurances as may be requested to
vest and confirm in Buyer (or its assignee) the
35
title and rights to and in all the Purchased Assets to be and intended to be
transferred, assigned and conveyed hereunder and to reflect Buyer's assumption
of the liabilities and obligations pursuant to this Agreement.
16.17. TAX FREE EXCHANGE. Seller has advised Buyer that it may elect
to structure this transaction as a tax-deferred like-kind exchange pursuant to
Internal Revenue Code Section 1031. Buyer will cooperate with such an exchange
provided, that, such tax-deferred, like-kind exchange shall (i) not delay the
Closing of this Transaction by the initiation of another statutory 30-day public
notice period under the Commission's published rules, regulations or policies or
otherwise delay the Closing, (ii) not result in any additional cost or expense
to Buyer, (iii) not result in any tax consequences to Buyer and (iv) not affect
Seller's liability for any of the representations, warranties, covenants and
obligations of Seller pursuant to this Agreement. At Closing Seller shall
execute a document which will provide that Seller indemnifies Buyer for any
claims that the intermediate party participating in the like-kind exchange may
have against Buyer.
16.18. NO DISCLOSURE. The parties agree that no public disclosure of
the contents of this Agreement will be made prior to the date that the
Assignment Application is filed absent prior approval from the non-disclosing
party.
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IN WITNESS WHEREOF, and to evidence their assent to the foregoing,
Seller and Buyer have executed this Asset Purchase Agreement under seal as of
the date first written above.
SELLER:
XXXXX BROADCASTING COMPANY OF PENNSYLVANIA, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx,
President
BUYER:
RADIO ONE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxx
President
