AGREEMENT
OF
BROADCAST ELECTRONICS, INC.,
BEI HOLDING CORPORATION
AND
XXXXX INTERNATIONAL NETWORKS, LTD.
TABLE OF CONTENTS
1. Sale of Assets to Xxxxx..............................................................1
Assumption of Certain Obligations and Liabilities....................................2
Excluded Assets and Liabilities......................................................3
Purchase Price.......................................................................4
The Purchase Price Adjustment........................................................4
Purchase Price Allocation............................................................5
Certain Taxes........................................................................5
Nonassignable Contracts..............................................................5
2. Representation, Warranties, and Covenants of BEI.....................................6
Due Organization; The Radio Programming Business; Authority..........................6
Subsidiaries or Affiliates...........................................................7
Financial Statements.................................................................7
Title to Properties; Liens; Condition of Properties..................................8
Governmental Authority; Compliance With Law..........................................9
Taxes................................................................................9
Contracts and Agreements............................................................10
Insurance and Bonds.................................................................11
Labor, Benefit, Employment Agreements, ERISA and Employees..........................11
Litigation and Disputed Items.......................................................12
Accounts Receivable.................................................................12
No Violation of Other Instruments...................................................13
Brokerage Commissions...............................................................13
Governmental Approvals..............................................................13
Transactions with Affiliates........................................................13
Books and Records...................................................................14
Intellectual Property...............................................................14
Libraries and Programs..............................................................14
Distribution........................................................................14
Correctness of Representations and Warranties.......................................14
Operations from Date of Latest Financial Statements to Date of this Agreement.......15
3. [Deliberately Omitted]..............................................................16
4. Representations, Warranties and Covenants of Xxxxx..................................16
Due Organization; Capitalization; Articles and Bylaws; Authority....................16
Brokerage Commissions...............................................................16
No Violation of Other Instruments...................................................16
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Governmental Approvals..............................................................17
Correctness of Representations and Warranties.......................................17
Available Funds.....................................................................17
5. Covenants and Agreements of BEI.....................................................17
Access..............................................................................17
Satisfaction of Conditions..........................................................17
Operations Prior to the Closing.....................................................18
Bulk Sales Law Compliance...........................................................20
Updated Schedules...................................................................20
Certain Financial Statement Matters.................................................20
6. Covenants and Agreements of the Shareholder and BEI.................................21
7. Covenants and Agreements of Xxxxx...................................................21
Satisfaction of Conditions..........................................................21
Employment Offers...................................................................21
Agent Agreement.....................................................................21
401(k) Plan Matters.................................................................21
Digilease Collections...............................................................22
8. Conditions to Obligations of BEI and the Shareholder................................22
Accuracy of Representations, Warranties and Covenants...............................22
Absence of Litigation...............................................................23
Validity of Transactions............................................................23
Xxxx-Xxxxx-Xxxxxx Waiting Period....................................................23
Closing Deliveries..................................................................23
9. Conditions to Obligations of Xxxxx..................................................23
Accuracy of Representations, Warranties and Covenants...............................23
Absence of Litigation...............................................................24
Validity of Transactions............................................................24
No Material Adverse Change, Officers'Certificate....................................24
Xxxx-Xxxxx-Xxxxxx Waiting Period....................................................24
Consents and Lien Terminations; Assets Free and Clear...............................24
Extension of Employment Agreement with Delilah......................................24
Comfort Letter......................................................................25
Closing Deliveries..................................................................25
10. The Closing.........................................................................25
11. Survival of Representations and Warranties..........................................26
ii
12. Expenses............................................................................26
13. Termination.........................................................................26
14. Indemnification.....................................................................27
By BEI..............................................................................27
By the Shareholder..................................................................27
By Xxxxx............................................................................27
Procedure...........................................................................28
Exclusive Remedy....................................................................29
15. Notices.............................................................................29
16. Miscellaneous.......................................................................30
Counterparts........................................................................30
Entire Agreement, No Waiver.........................................................30
Headings............................................................................31
Schedules and Exhibits as Part of Agreement.........................................31
Use of the Plural, etc..............................................................31
Assignment..........................................................................31
Governing Law.......................................................................31
Publicity...........................................................................31
Further Assurances..................................................................32
No Third Party Beneficiaries........................................................32
EXHIBITS:
A. Purchase Price Allocation
B-1,2. Employment Agreements
iii
AGREEMENT
This Agreement, dated as of June 15, 1999 (the "Agreement"), is
between and among BROADCAST ELECTRONICS, INC., a Rhode Island corporation
("BEI"), its sole shareholder BEI HOLDING CORPORATION, a Delaware corporation
(the "Shareholder"), and XXXXX INTERNATIONAL NETWORKS, LTD., a Colorado
corporation ("Xxxxx"). References in this Agreement to BEI shall mean BEI,
its subsidiaries and affiliates.
XXXXXXXX
(a) BEI conducts a radio programming business through its Broadcast
Programming Division. BEI is wholly-owned by the Shareholder.
(b) Xxxxx desires to acquire certain assets and assume certain
liabilities of BEI's Broadcast Programming Division and BEI and the
Shareholder desire to sell such assets and transfer such liabilities to
Xxxxx, all on the terms and conditions hereinafter set forth.
Now, therefore, in consideration of the premises and the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree
as follows:
1. SALE OF ASSETS TO XXXXX.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing (as defined in Section 9) BEI agrees to sell and
deliver to Xxxxx and Xxxxx agrees to acquire from BEI all of the assets and
properties of the Broadcast Programming Division of BEI (the "Division"),
whether real, personal, tangible or intangible as the same may exist on the
date hereof, and all additions thereto on and after the date hereof through
and including the Closing Date (as defined in Section 9) but less (i) any
permitted dispositions thereof between the date of this Agreement and the
Closing Date, and (ii) the "Excluded Assets" as defined in Section l(c). Such
assets and properties to be sold and delivered are referred to hereinafter as
the "Assets," which shall include without limitation the following:
(i) All prepaid expenses and security deposits (the "Prepaid
Expenses") (except for prepaid expenses or premiums relating to
insurance policies);
(ii) Subject to Section 1(h) below, all contracts, contract
rights, talent agreements, programming agreements, radio affiliate
agreements, agreements to provide services to third parties and all
other agreements and arrangements, whether similar or dissimilar (the
"Contracts") (it being acknowledged and agreed
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that, with respect to the Contracts listed in Schedule 7(e), BEI shall
only transfer, and Xxxxx shall only accept and assume, those rights
and obligations that relate to the providing of formatting services or
that are otherwise solely performed by the Division and shall not
accept and assume any obligations with respect to equipment furnished
by BEI);
(iii) All customer, advertiser and radio station affiliate
lists;
(iv) All furniture, fixtures, leasehold improvements,
computer hardware, computer software and websites;
(v) All interests in and to any leased real property;
(vi) All rights in and to all radio programming, all
Intellectual Property (as defined in Section 2(q)) and goodwill;
(vii) All accounts receivable (the "Accounts Receivable");
(viii) All music libraries, radio program libraries, video
libraries and production test equipment (the "Inventory");
(ix) All files, data, books and records related to or with
respect to the Division and the Assets; and
(x) All rights in and to the names "Broadcast Programming",
"Broadcast Programming Division", "Delilah" and "Delilah After Dark",
as well as the Internet names Delilah, Nashville Nights, Neon Nights
and all other Internet names listed on Schedule 1(a)(x), and any
derivations from or variations thereof.
(b) ASSUMPTION OF CERTAIN OBLIGATIONS AND LIABILITIES. On the terms
and subject to the conditions set forth in this Agreement at the Closing,
Xxxxx shall assume and agree to pay, discharge and perform when due all of
the listed (but not any unknown or contingent) liabilities and obligations of
the Division, except those which are specifically hereinafter excluded from
assumption by the terms of this Agreement. Such assumed liabilities are
hereafter referred to as the "Assumed Liabilities". The Assumed Liabilities
shall consist of the following:
(i) CUSTOMER ADVANCES. All liabilities of the Division for any
amounts advanced to the Division by customers of the Division as of the
date hereof and arising in the ordinary course of the business of the
Division between the date hereof and the Closing ("Customer Advances").
A schedule of the Customer Advances as of March 31, 1999 is set forth
on Schedule 1b(i) hereto;
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(ii) CONTRACTS AND LEASED REAL PROPERTY. All liabilities and
obligations of the Division in respect of the Contracts, including that
Asset Purchase Agreement between Astro Communications, LLC and
Broadcast Electronics, Inc. dated December 19, 1996 regarding the
program entitled "Delilah After Dark" hosted by Delilah Xxxx Xxxxxx
(the "Astro Agreement"), and the Leased Real Property and all other
contracts and agreements of BEI that relate to the Division arising in
the ordinary course of the business of the Division between the date
hereof and the Closing; and
(iii) EMPLOYEE RELATED LIABILITIES. All liabilities and
obligations of the Division existing as of the Closing for accrued but
unpaid vacation and sick leave with respect to the employees of the
Division (the "Employee Related Liabilities").
(c) EXCLUDED ASSETS AND LIABILITIES. Notwithstanding Section 1(a),
BEI will retain, and Xxxxx will not purchase or acquire, any other assets of
BEI, or any rights with respect to, which do not constitute the Assets,
including, without limitation, the following (the "Excluded Assets"):
EXCLUDED ASSETS:
(i) All cash and cash equivalents.
(ii) Any and all contracts, plans, contributions, funds or
trusts arising out of or related to any pension plan, deferred
compensation plan, profit sharing plan, 401(k) plan, or other employee
benefit plan or arrangement.
(iii) Minute Books of BEI.
(iv) Proceeds of any litigation.
(v) Any tax refund.
(vi) All rights of BEI in and to any insurance policies.
(vii) All furniture, equipment, computer hardware, software
and all other personal property located on the premises of the Division
and used exclusively by BEI's customer sales and service employees, all
as set forth in Schedule 1(c)(vii).
(viii) Any receivable with respect to so-called "digilease"
transactions.
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EXCLUDED LIABILITIES: Notwithstanding Section 1(b), BEI will retain,
and Xxxxx will not assume, any other liabilities or obligations of BEI
which do not constitute the Assumed Liabilities, including, without
limitation, the following (the "Excluded Liabilities"):
(i) Except for the Employee Related Liabilities, any
liability or obligation whatsoever, whether fixed or contingent, that
arises out of, or relates in any way to, any pension plan, profit
sharing plan, 401(k) plan or other employee benefit, including any
deferred compensation, vacation or health care arrangement.
(ii) Any undisclosed or contingent liability of any kind,
nature or description.
(iii) Any tax liability or tax-related liability of any
kind, nature or description.
(iv) Any liability or responsibility to provide any
COBRA coverage or notices under Part 6 of Title I of ERISA.
(v) Any liability with respect to any litigation, whether or
not disclosed.
(vi) All accounts payable, loans payable and notes payable
(including any inter-company payable regarding so-called "digilease"
transactions).
(vii) Any liability with respect to BEI equipment provided to
radio stations in "digilease"-type transactions.
(d) PURCHASE PRICE. The purchase price payable to BEI for the Assets
shall be twenty million dollars ($20,000,000) plus or minus the "Purchase Price
Adjustment" (as hereinafter defined). The purchase price, as so adjusted, shall
be paid at the Closing in cash.
(e) THE PURCHASE PRICE ADJUSTMENT. At the Closing, the Purchase Price
shall be adjusted as follows (the "Purchase Price Adjustment").
(i) The Purchase Price shall be decreased by the amount equal
to the sum of any amounts in respect of Customer Advances, Employee
Related Liabilities and $897,000 (less any amount or amounts paid prior
to the Closing by BEI pursuant to, and according to the terms of, the
Astro Agreement) with respect to the Astro Agreement (the "Agreed Astro
Payment"), and reflected on Schedule 1(e)(i), which Schedule 1(e)(i)
shall be updated no later than five (5) days prior to
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the Closing and shall be prepared on a basis consistent with
Schedule 1(e)(i). Any amount payable after the Closing with respect
to the Astro Agreement in excess of the Agreed Astro Payment shall
be the responsibility of Xxxxx.
(ii) The Purchase Price shall be increased by the amount equal
to the sum of any amounts in respect of Accounts Receivable, Inventory
and Prepaid Expenses, all as reflected on Schedule 1(e)(ii), which
Schedule 1(e)(ii) shall be updated no later than five (5) days prior to
the Closing and shall be prepared on a basis consistent with Schedule
1(e)(ii).
At the Closing, Xxxxx shall pay the amount of Accounts Receivable
set forth in Schedule 1(e)(ii), less the allowance for certain specific
accounts shown on such Schedule which are not likely to be collected in the
regular course. If the entire net amount of the Accounts Receivable as set
forth on such Schedule is not collected within one-hundred fifty (150) days
after the Closing, Xxxxx shall be entitled to collect the entire shortfall
(the "Receivables Shortfall") from BEI and BEI agrees to pay the Receivables
Shortfall within ten (10) days after notice from Xxxxx. The foregoing
obligation of BEI to pay the Receivables Shortfall shall not be subject to,
or in any way limited by, Section 14 of this Agreement. Upon receiving
payment from BEI, Xxxxx shall assign the uncollected accounts to BEI and
shall execute any assignment documents as are necessary to effectuate such
assignment. Any aggregate amount collected by Xxxxx in excess of the amount
paid by Xxxxx at Closing in respect of the acquired Accounts Receivable shall
be remitted to BEI not less than one hundred sixty (160) days after Closing.
(f) PURCHASE PRICE ALLOCATION. Exhibit A hereto sets forth the
agreed-upon allocation of the purchase price (exclusive of the Purchase Price
Adjustment) to the various Assets. The parties agree to provide an updated
Exhibit A after the Closing, in order to reflect the effect, if any, of the
Purchase Price Adjustment on such allocation. The parties also agree to
report consistently with Exhibit A for federal and applicable state income
tax purposes.
(g) CERTAIN TAXES. Any sales, use, transfer or documentary taxes
imposed in connection with the sale and delivery of the Assets under this
Agreement shall be borne and paid equally by BEI and Xxxxx.
(h) NONASSIGNABLE CONTRACTS.
(i) NONASSIGNABILITY. To the extent that any Contract to be
assigned pursuant hereto is not capable of being assigned without the
consent, approval or
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waiver of a third person or entity, nothing in this Agreement will
constitute an assignment or require the assignment thereof except to
the extent provided in this Section 1(h).
(ii) BEI TO USE ALL COMMERCIALLY REASONABLE EFFORTS.
Notwithstanding anything contained in this Agreement to the contrary,
BEI will not be obligated to assign to Xxxxx any of its rights and
obligations in and to any of the Contracts referred to in Section 1(a)
without first having obtained all consents, approvals and waivers
necessary for such assignment; provided, however, that BEI shall use
all commercially reasonable efforts to obtain all such consents,
approvals and waivers prior to and, if the Closing occurs, after the
Closing.
(iii) IF WAIVERS OR CONSENTS CANNOT BE OBTAINED. If the
Closing occurs, to the extent that the consents, approvals and waivers
referred to above were not obtained by BEI, BEI shall use all
commercially reasonable efforts to provide to Xxxxx the financial and
business benefits of any Contract and enforce, at the request and
expense of Xxxxx, for the account of Xxxxx, any rights of BEI arising
from any such Contract (including without limitation the right to elect
to terminate such Contract in accordance with the terms thereof upon
the advice of Xxxxx).
(iv) NO AFFECT ON CLOSING CONDITIONS. Nothing in this Section
1(h) shall alter, amend or be deemed a waiver by any party of any of
the conditions to Closing set forth in Section 9 of this Agreement.
2. REPRESENTATION, WARRANTIES, AND COVENANTS OF BEI.
BEI hereby represents, warrants and covenants to and with Xxxxx as
follows:
(a) DUE ORGANIZATION; THE RADIO PROGRAMMING BUSINESS; AUTHORITY.
(i) BEI is a corporation duly organized, validly existing and
in good standing under the laws of Rhode Island. BEI has full corporate
power and authority to own, lease and operate the Division and conduct
the business of the Division as presently being conducted. BEI is duly
qualified to do business as a foreign corporation and is in good
standing in all jurisdictions except where the failure to be so
qualified would not have a material adverse effect on the business or
financial condition of the Division.
(ii) BEI conducts its radio programming business only through
the Division, and the Assets and the Excluded Assets constitute all of
the assets of such business and the Division. There are no radio
programming assets of any
6
kind which are owned or controlled by BEI which are not part of the
Assets, except for the Excluded Assets. Upon the Closing, Xxxxx will
acquire the entire radio programming business of the Division, except
for the Excluded Assets.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby have been duly
authorized by the board of directors and the shareholder of BEI, and no
other corporate or other proceedings on the part of BEI are necessary
to authorize the Agreement and the transactions contemplated thereby.
Assuming this Agreement constitutes a valid and binding obligation of
Xxxxx, this Agreement constitutes the valid and binding agreement of
BEI, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy and other laws affecting the
enforceability of creditors' rights generally or laws governing the
availability of specific performance or other equitable remedies.
(b) SUBSIDIARIES OR AFFILIATES. Except as set forth in Schedule 2(b)
hereto, none of the Assets or the Division are comprised of any shares of
stock or other securities in any corporation, nor is BEI, acting through the
Division a partner, venturer, participant or associate in any partnership,
venture or other business with any other person or firm.
(c) FINANCIAL STATEMENTS.
(i) Schedule 2(c)(i) contains (a) the audited balance sheet of
the Division as of December 31, 1998, together with the related audited
statements of income and cash flows for the fiscal year then ended (the
"Year-End Financial Statements") and (b) the unaudited balance sheet of
the Division as of March 31, 1999 (the "Interim Balance Sheet"),
together with the related unaudited statements of income and cash flows
for the three months then ended (the "Interim Financial Statements,"
and together with the Year-End Financial Statements, the "Financial
Statements").
(ii) The Financial Statements (A) are true, correct, complete,
and accurate in all material respects and present fairly the financial
position and results of operations of the Division, as at the dates and
for the periods indicated, in accordance with generally accepted
accounting principles consistently applied; and (B) reflect all known
claims against or affecting the Division or the Assets and all known
debts and liabilities, fixed or contingent, and of a type required to
be disclosed in financial statements under generally accepted
accounting principles ("GAAP"), as of the respective dates thereof.
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(iii) There is no material indebtedness or liability,
contingent or otherwise, arising out of, or related to the Division or
the Assets required to be disclosed under GAAP, except as disclosed or
adequately and specifically reserved for in the Interim Balance Sheet,
or as set forth on Schedule 2(c)(iii). Since the date of the Interim
Balance Sheet (A) there has been no material adverse change in the
business, assets, liabilities (actual or contingent), earnings
prospects or financial or other condition of the Division, (B) there
has been no disposition of any material amount of assets of the
Division, except in the ordinary course of business and (C) the
business of the Division has been conducted only in the ordinary course
and consistent with the manner in which such business was conducted
prior to that date.
(iv) The balance sheets included in the Financial Statements
do not include any material assets or liabilities not intended to
constitute a part of the Division, the Assets, or the Excluded Assets,
after giving effect to the transactions contemplated hereby, and
present fairly the financial condition of the Division as at their
respective dates. The statements of income and retained earnings and
statements of cash flows included in the Financial Statements do not
reflect the operations of any entity or business not intended to
constitute a part of the Division, reflect all costs that historically
have been incurred by the Division and present fairly the results of
operations and cash flows of the Division for the periods indicated.
(d) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(i) Other than as set forth in Schedule 2(d)(i), BEI has good
title to the Assets, free and clear of any mortgages, deeds of trust,
security interests, conditional sales agreements, liens, claims,
restrictions, preferential rights of purchase or other burdens
(collectively, "Liens"), except (a) Liens for taxes that are not yet
due and payable. (b) any Liens that are not, individually or in the
aggregate, material, and (c) any mechanic's, materialmen's, workmen's,
repairmen's, warehousemen's, carrier's lien, or other similar Lien that
has arisen or been incurred in the ordinary course of the business of
the Division since March 31, 1999 and which are not individually or in
the aggregate material (collectively, "Permitted Liens"). Other than as
set forth in Schedule 2(d)(i), with respect to the Division or the
Assets, no presently effective financing statement under the Uniform
Commercial Code is on file in any jurisdiction and BEI has not signed
any presently effective security agreement authorizing any secured
party thereunder to file any such financing statement.
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(ii) The Division presently occupies only the premises
referred to on Schedule 2(d)(ii), under the terms of those lease
agreements described on Schedule 2(d)(ii), true and complete copies of
which have been delivered to Xxxxx.
(iii) The property and equipment of the Division is in good
operating condition and in a state of good repair sufficient for the
conduct of normal operations, subject to normal wear and tear. The
assets and properties (including leased property) of the Division are
adequate to enable the conduct of the business of the Division as now
being conducted. Other than as set forth on Schedule 2(d)(iii), BEI is
not aware of any major capital expenditure with respect to the Division
that will be required before December 31, 1999 that is not consistent
with past practice. Schedule 2(d)(iii) sets forth a list of each item
of property or equipment of the Division that has a cost of at least
$10,000 or is otherwise material to the business of the Division.
(iv) A true and correct copy of all the Contracts has been
delivered to Xxxxx. BEI is not a party to any other agreements
involving network programming or agreements with radio stations.
Schedule 2(d)(iv) lists all obligations with respect to the Division,
fixed or contingent, to make payments of over $25,000 per annum under
any of the Contracts.
(e) GOVERNMENTAL AUTHORITY; COMPLIANCE WITH LAW. With respect to the
Division, BEI possesses all material permits, licenses and/or franchises from
governmental agencies having jurisdiction over it that are required for it to
operate and to continue to operate the Division. All of such permits,
licenses and franchises are in full force and effect and shall remain so as
of the Closing. Except with respect to incidents of non-compliance which have
been corrected, BEI has not received any notice from any governmental
authority alleging any non-compliance with, or failure to secure any such
permit or license or alleging any non-compliance with law which would
materially adversely affect the business of the Division and BEI has complied
in all material respects with all statutes, regulations, rules and other
orders of all governmental departments or agencies, whether U.S. or foreign,
including, without limitation, those statutes, regulations, rules and orders
dealing with environmental matters and/or hazardous materials), the failure
to comply with which would have a material adverse effect on the Division or
the Assets. Schedule 2(e) contains a list of all material permits, licenses
and/or franchises held by BEI with respect to the Division.
(f) TAXES. There are no outstanding claimed deficiencies or
assessments for Taxes, except as indicated on Schedule 2(f), which in any way
affect any of the material Assets or the Division, and no such claimed
deficiencies or assessments are pending or threatened which in any way affect
the Assets or the Division. There are no agreements,
9
consents or waivers extending the time for the assessment of any Tax or Tax
deficiency against BEI which in any way affect the Assets or the Division.
The Latest Financial Statements include adequate reserves with respect to
Taxes accrued but not yet payable which in any way affect the Assets or the
Division. None of the Assets are subject to Tax liens (except for any
Permitted Liens) which in any way affect the Assets or the Division. The
Assets do not include any interest in, and are not subject to any arrangement
which is treated as, a partnership for federal or applicable state or foreign
tax purposes. As used in this Agreement, the term "Taxes" shall mean with
respect to the Division and/or the Assets, all federal, state, county, local,
foreign and other taxes and governmental assessments, including without
limitation income taxes, estimated taxes, withholding taxes, transfer taxes,
excise taxes, sales taxes, real and personal property taxes, ad valorem
taxes, payroll-related taxes, employment taxes, franchise taxes and import
duties, together with any related liabilities for penalties, fines or
additions to tax.
(g) CONTRACTS AND AGREEMENTS.
(i) Schedule 2(g)(i) lists and completely identifies with
respect to the Division and the Assets, every material contract or
agreement, written or oral, (including but not limited to, joint
ventures and partnerships) to which BEI is a party or is subject or by
which BEI or any of its properties is bound, and any other documents to
which BEI is as of the date of this Agreement a party (the "Material
Contracts"), excepting those which (A) are described on, and
cross-referenced to, another Schedule hereto, or (B) were made in the
ordinary course of business and can be canceled upon 30 days' notice or
less without incurring any penalty or liability for such cancellation
and are not material, or (C) did not individually exceed $10,000 in any
one instance or $50,000 in the aggregate in required purchases, sales
or services, or (D) are programming or equipment agreements with radio
station affiliates. A true and complete copy of each Material Contract
has been delivered to Xxxxx. In addition, every programming or similar
agreement with a radio station affiliate, whether or not material, will
be delivered to Xxxxx at or prior to the Closing.
(ii) All of the Material Contracts listed on or made a part of
Schedule 2(g)(i) are valid and binding obligations of the parties
thereto in accordance with their respective terms and there are no
material liabilities arising from any default by BEI heretofore in any
of such agreements or contracts except as set forth on Schedule 2(g)(i)
or Schedule 2(g)(i)-(a). Except as set forth on Schedule 2(g)(i) or
Schedule 2(g)(i)-(a), BEI is not aware of any material default by any
party to any of the agreements listed on Schedule 2(g)(i) or Schedule
2(g)(i)-(a) or in any other schedule attached hereto or of any material
default by any party to any agreements
10
or contracts required to be listed on Schedule 2(g)(i) or of any
assertion by any other person of any material default under any of
such agreements or contracts.
(iii) Except as set forth on Schedule 2(g)(iii), all of the
Material Contracts and affiliate agreements with radio stations
constituting part of the Division or the Assets are freely transferable
to Xxxxx pursuant to this Agreement without the need to obtain any
consent of the parties thereto. Schedule 2(g)(iii)(a) sets forth the
consents with respect to any Material Contract or any affiliate
agreement, with a radio station which will be obtained prior to
Closing, without any adverse change in the terms thereof.
(h) INSURANCE AND BONDS. BEI currently has in full force and effect
with respect to the Division, the respective insurance policies and bonds,
listed on, and in the amounts set forth on, Schedule 2(h). Such insurance
policies and bonds are adequate for the business and properties of the Division
and shall be in full force and effect as of the Closing. True and complete
copies of all such policies and bonds have been delivered to Xxxxx.
(i) LABOR, BENEFIT, EMPLOYMENT AGREEMENTS, ERISA AND EMPLOYEES.
(i) Except as listed on Schedule 2(i)(i) hereto, with respect
to the Division (and the employees thereof), there are no collective
bargaining agreements, nor are there any pension plans or other
employment, profit sharing, 401(k), deferred compensation, bonus, stock
option, stock purchase, retainer, consultant, retirement, welfare,
group medical, disability or health insurance or incentive plans or
contracts or life insurance or other "fringe benefits" for employees. A
true and complete copy of each such agreement, plan and policy has been
delivered to Xxxxx. Except as provided on Schedule 2(i)(i), BEI has no
fixed or contingent liability or obligation to any person now or
formerly employed at the Division, including, without limitation, under
any pension or thrift plan, individual or supplemental pension or
accrued compensation arrangement, contribution to hospitalization or
other health or life insurance program, incentive plan, bonus
arrangement and vacation, sick leave, disability and termination
arrangement or policy, including workers compensation policy. Except
for post-Closing obligations under the agreements between BEI and Xx.
Xxxxxxx Xxxx Xxxxxx, and between BEI and Xxxxxx Xxx Xxxxxxxx (a/k/a Xxx
Xxxxxx) Xxxxx shall not assume or hereby or otherwise become obligated
to pay any debt, obligation or liability arising from BEI's employee
benefit plans, or any other employment arrangement, whether for a group
of employees or a single employee. It is understood and agreed that any
obligation whether past, present or future under any such plan or
arrangement shall not be the responsibility of Xxxxx.
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(ii) With respect to persons employed by or at the Division,
there are no employment agreements, written or oral, now in effect,
except as indicated on Schedule 2(i)(ii), true and complete copies of
each of which have been delivered to Xxxxx. Schedule 2(i)(ii) contains
a true and complete list of all persons employed at or in connection
with the operation of the Division and a description of all
compensation arrangements (including bonus arrangements) applicable to
such employees. BEI has no knowledge that any employee identified on
such Schedule currently plans to terminate employment, whether by
reason of the transactions contemplated by this Agreement or otherwise.
(iii) BEI has, with respect to the operation of the Division,
complied in all material respects with all laws relating to the
employment of labor, including, without limitation, those laws relating
to safety, health, wages, hours, unemployment insurance, workers'
compensation, and equal employment opportunity.
(j) LITIGATION AND DISPUTED ITEMS.
(i) Except as set forth in Schedule 2(j)(i), with respect to
the Division and/or the Assets, no action or proceeding against BEI is
pending, or, to the knowledge of BEI, contemplated or threatened before
any court or governmental body or authority, that has an amount in
issue in excess of $10,000 or that in any manner could materially
adversely affect the business, property or prospects of the Division or
the consummation of the transactions contemplated by this Agreement,
nor is BEI subject to any existing judgment, order or decree materially
affecting the operation of the Division or the Assets, or which would
prevent, hamper or make illegal the transactions contemplated by this
Agreement. It is understood and agreed that Xxxxx shall assume no
responsibility or obligation whatsoever for any litigation and related
claims against BEI, nor shall Xxxxx have any responsibility or
obligation for any costs or expenses related to any such litigation or
claims. Any litigation, whether or not disclosed to Xxxxx, in which BEI
is a party shall not become the responsibility or obligation of Xxxxx
and the litigation shall remain with and be the sole responsibility of
BEI.
(ii) With respect to the Division and/or the Assets, BEI is
not engaged in any material legal action to recover claims for moneys
due or damages sustained or to enforce any right except as set forth on
Schedule 2(j)(ii).
(k) ACCOUNTS RECEIVABLE. The accounts receivable of the Division as
set forth on the Interim Balance Sheet or arising since the date thereof are
valid and genuine, have
12
arisen solely out of bona fide sales and deliveries of goods, performance of
services and other business transactions, and are collectible in a manner
consistent with the past practice of the Division.
(l) NO VIOLATION OF OTHER INSTRUMENTS. Neither the execution and
delivery of this Agreement nor the performance of the transactions
contemplated hereby will (i) constitute a breach of BEI's certificate of
incorporation or bylaws, or of the material terms of any evidence of
indebtedness or agreement to which it is a party or by which it is bound;
(ii) cause a material default under any mortgage or deed of trust or other
lien, charge or encumbrance with respect to the Division or the Assets; (iii)
conflict with, or permit any party to declare a material default under or
cancel or modify any contract with respect to the Division or the Assets;
(iv) accelerate or constitute an event entitling the holder of any of
indebtedness with respect to the Division or the Assets to accelerate the
maturity of any of such indebtedness; or (v) conflict with or result in a
material breach of any judgment, order, writ, injunction or decree of any
court, commission, bureau or agency with respect to the Division or the
Assets.
(m) BROKERAGE COMMISSIONS. No person has acted on BEI's behalf as
agent, finder or broker in negotiating or bringing about this Agreement and
BEI has not agreed to pay to any person any fee or commission in connection
with this Agreement or the transactions contemplated thereby.
(n) GOVERNMENTAL APPROVALS. No authorization, consent, approval,
license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for the
execution and delivery by BEI of this Agreement and the consummation of the
transactions contemplated thereby, except for the expiration of the
applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act").
(o) TRANSACTIONS WITH AFFILIATES. With respect to the Division
and/or any of the Assets, and except as set forth in Schedule 2(o), there are
no material agreements or arrangements of any kind between BEI and any
officer of director or employee of BEI or any holder of any class of capital
stock of BEI or any member of any such officer's, director's, employee's or
stockholder's immediate family or any corporation or other entity controlled
by any such officer, director, employee or stockholder or any corporation or
other entity controlled by any such officer, director, employee, or
stockholder or a member of any such officer's, director's, employee's or
stockholder's immediate family. A true and complete copy of each document
listed in Schedule 2(o)
13
has been delivered to Xxxxx. Any such agreement or transaction shall not be
assumed by Xxxxx without its express written consent, specifically referring
to the agreement or transaction in question.
(p) BOOKS AND RECORDS. With respect to the Division and the Assets,
the books of account, ledgers, order books, records and documents of BEI
accurately and completely reflect all material information relating to the
business of the Division and the nature, acquisition, maintenance, location
and collection of each if its assets.
(q) INTELLECTUAL PROPERTY. With respect to the Division, BEI has
good title in and to all copyrights, trademarks, trade names, service marks,
licenses, permits, jingles, privileges, and other similar intangible property
rights and interests applied for, issued to or owned by it, or under which it
is licensed or franchised, which are used or useful in the present conduct of
the Division ("Intellectual Property"). The Intellectual Property
specifically includes all websites and Internet names owned or used with
respect to the Division, and all the names and marks used on or with respect
to all radio programs of the Division. Schedule 2(q) is a list of all such
Intellectual Property rights. BEI has no knowledge of any threatened or
pending proceeding or litigation affecting or with respect to any
Intellectual Property. BEI has received no notice alleging infringement of
the rights of any third party to Intellectual Property or unlawful use of
such property. BEI has the right to use the Intellectual Property in the
conduct of the business and operations of the Division as now conducted and
has not granted any licenses or other rights and has no obligation to grant
licenses or other rights with respect thereto to any party.
(r) LIBRARIES AND PROGRAMS. BEI has good title to all the Inventory
and radio programs of the Division, and BEI owns or has right to no other
such libraries and programs. Schedule 2(r) sets forth the name of each such
item of Inventory and program, and indicates, if applicable, the rights of
any third parties with respect to any such item of Inventory or program, or
any revenue therefrom.
(s) DISTRIBUTION. Schedule 2(s) sets forth each agreement between
BEI and a distributor of any goods, services or programming (within or
outside of the United States) with respect to the Division, true and correct
copies of which agreements have been delivered to Xxxxx.
(t) CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. To the knowledge
of BEI, no representation or warranty made by BEI in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make such representation or warranty not misleading. For
purposes of the foregoing sentence, the "knowledge of BEI" means the
knowledge of the following persons Xx. X. Xxxxxxxx, Xx. X. XxXxxxx, Xx. X.
Xxxx, Mr. C. Apple, Xx. X. Xxxxxxxx and Xx. X. Xxxxxxx, after their
14
due inquiry. All of the facts recited with respect to BEI in any of the
Schedules attached hereto shall be deemed to be representations as to fact
and shall be as if recited in this Agreement. All the representations and
warranties herein contained shall survive any investigation made by or on
behalf of Xxxxx.
(u) OPERATIONS FROM DATE OF LATEST FINANCIAL STATEMENTS TO DATE OF
THIS AGREEMENT. Since the date of the Latest Financial Statements, BEI has
not, with respect to the Division or the Assets:
(i) Other than in the ordinary course of the business of the
Division, incurred any indebtedness for borrowed money or assumed,
guaranteed, endorsed or otherwise as an accommodation, became
responsible for obligations of any other individual, corporation or
other entity or organization in any one instance in excess of $10,000
or $50,000 in the aggregate;
(ii) Other than in the ordinary course of business, sold,
leased, transferred, released, abandoned or otherwise disposed of, or
entered into any contract or license for the sale, lease or other
disposition of or granted any preferential right to purchase, lease or
otherwise acquire, any of its properties, rights or other assets or any
interest therein or canceled, released or assigned, any indebtedness
owed to it or any claim, license or permit held by it or released,
abandoned or terminated any lease, contract, agreement, instrument or
right relating to title to or ownership of any its properties, rights
or other assets or any interest therein;
(iii) Other than in the ordinary course of business,
mortgaged, pledged, hypothecated, subjected to lien or other
encumbrance, or granted any security interest in any of properties,
rights or other assets or any interest therein;
(iv) Other than in the ordinary course of business, purchased,
leased or otherwise acquired, or entered into any contract for the
purchase, lease or other acquisition of, machinery, equipment,
material, products, supplies, or other personal property or rights or
services at a cost of more than $10,000 in any one instance or more
than $50,000 in the aggregate;
(v) Other than in the ordinary course of business, purchased,
leased or otherwise acquired, or entered into any contract for the
purchase, lease or other acquisition of, any interest in real property;
(vi) Made any investment, either by purchase of stock or other
securities, the purchase of partnership interest, contributions to
capital, transfer, merger,
15
consolidation or otherwise, or by the purchase of any business or any
other individual or entities.
(vii) Entered into or engaged in any transaction with any of
the persons set forth in Schedule 2(i)(ii).
3. [DELIBERATELY OMITTED]
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXX.
Xxxxx hereby represents, warrants and covenants to and with BEI as
follows:
(a) DUE ORGANIZATION; CAPITALIZATION; ARTICLES AND BYLAWS; AUTHORITY.
(i) Xxxxx is a duly organized, validly existing corporation,
in good standing under the laws of Colorado. Xxxxx has full power and
authority to own, lease and operate its properties and conduct its
business as presently being conducted. Xxxxx is duly qualified to do
business as a foreign entity and is in good standing in all
jurisdictions wherein the failure to be so qualified would have a
material adverse effect on its business or financial condition.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby have been duly
authorized by the board of directors of Xxxxx, and no other proceedings
are necessary to authorize this Agreement and the transactions
contemplated thereby. Assuming the Agreement constitutes a valid and
binding agreement of BEI and the Shareholder, this Agreement
constitutes the valid and binding agreement of Xxxxx, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy and other laws affecting the enforceability of creditors'
rights generally or laws governing the availability of specific
performance or other equitable remedies.
(b) BROKERAGE COMMISSIONS. No person has acted on behalf of Xxxxx in
negotiating or bringing about the Agreement and Xxxxx has not agreed to pay
to any person any fee or commission in the nature of a finder's, broker's or
originator's fee or commission in connection with this Agreement or the
transactions contemplated thereby which in any way shall be the
responsibility of BEI or the Shareholder.
(c) NO VIOLATION OF OTHER INSTRUMENTS. Neither the execution and
delivery of this Agreement nor the performance of the transactions
contemplated thereby will (i) constitute a breach of the articles of
incorporation or bylaws of Xxxxx, or of the terms of
16
any evidence of indebtedness or agreement to which Xxxxx is a party or by
which Xxxxx is bound (ii) conflict with or result in the breach of any
judgment, order, writ, injunction or decree of any court, commission, bureau
or agency to which Xxxxx is a party or by which Xxxxx is bound.
(d) GOVERNMENTAL APPROVALS. No authorization, consent, approval,
license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for the
execution and delivery by Xxxxx of this Agreement and the consummation of the
transactions contemplated thereby, except for the expiration of the waiting
periods under the HRS Act.
(e) CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty made by Xxxxx in this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary to make such
representation or warranty not misleading. All representations and warranties
of Xxxxx herein contained shall survive any investigation made by or on
behalf of BEI.
(f) AVAILABLE FUNDS. Xxxxx has available to it, and at the Closing
will have available to it, all funds necessary to pay the cash portion of the
consideration for the Assets and to satisfy its other obligations under this
Agreement.
5. COVENANTS AND AGREEMENTS OF BEI.
BEI covenants and agrees that, from and after the date of this
Agreement and until (i) the termination of this Agreement or (ii) the
Closing, whichever shall first occur:
(a) ACCESS. Upon reasonable advance notice, it will permit Xxxxx and
its authorized representatives to have full access to its premises and books
and records of BEI during reasonable business hours and will make available
to Xxxxx such financial and operating data and other information with respect
to the business and properties of the Division as Xxxxx reasonably shall
request, including all working papers pertaining to examinations made by its
auditors and accountants.
(b) SATISFACTION OF CONDITIONS. BEI will use all commercially
reasonable efforts to cause the satisfaction of the conditions precedent
contained in this Agreement to bring about the transactions contemplated by
this Agreement as soon as practicable.
17
(c) OPERATIONS PRIOR TO THE CLOSING.
Prior to the Closing, except in accordance with prior
approval of Xxxxx (which shall not be unreasonably withheld):
(i) BEI will carry on the business of the Division in the same
manner as was conducted immediately prior to the date of this Agreement
and will not make any purchase or sale or enter into any transaction or
execute any agreement or incur any obligation or liability or introduce
any method of management or operation in respect of any such business,
except in the ordinary course of business as heretofore conducted (and
in every case, only in accordance with and subject to the other
restrictions of this Agreement).
(ii) BEI will, with respect to the Division, use its best
efforts to maintain and preserve intact the business organizations and
relationships with employees, radio stations, on-air talent, suppliers
and customers and others having business relations with the Division.
(iii) Except as specifically contemplated hereby, BEI will
not, with respect to the Division:
(A) Other than in the ordinary course of business,
enter into (i) any contract which commits it for a fixed term
(unless such term is terminable by it without penalty on not
more than 30 days' notice), or (ii) any agreement with any
labor union or other employee bargaining agent or unit;
(B) Other than in the ordinary course of business,
prepay any Assumed Liabilities;
(C) Other than in the ordinary course of business,
incur any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become
responsible for obligations of any other individual,
corporation or other entity or organization (except for
endorsement for collection or deposit of negotiable
instruments received in the ordinary and usual course of
business);
(D) Other than in the ordinary course of business,
sell, lease, transfer, release, abandon or otherwise dispose
of, or enter into any contract or license for the sale, lease
or other disposition of or grant any preferential right to
purchase, lease or otherwise acquire, any of the Assets or any
18
interest therein or cancel, release or assign any indebtedness
owed to it or any claim, license or permit held by it or
release, abandon or terminate any lease, contract, agreement,
instrument or right relating to title to or ownership of any
of the Assets or any interest therein;
(E) Other than in the ordinary course of business,
mortgage, pledge, hypothecate, subject to lien or other
encumbrance, or grant any security interest in any of the
Assets or any interest therein;
(F) Other than in the ordinary course of business,
purchase, lease or otherwise, acquire, or enter into any
contract for the purchase, lease or other acquisition of,
machinery, equipment, material, products, supplies, other
personal property or rights or services;
(G) Other than in the ordinary course of business,
purchase, lease or otherwise acquire, or enter into any
contract for the purchase, lease or other acquisition of, any
interest in real property;
(H) Make any investment either by the purchase of
stock or other securities, the purchase of partnership
interests, contributions to capital, transfer, merger,
consolidation or otherwise, or by the purchase of any property
or business of, any other individual or entity;
(I) Other than in the ordinary course of business,
increase in any manner the compensation of any of its
officers, managers, employees or consultants; enter into or
adopt, or make or commit itself or make any contribution to,
any pension plan, retirement plan, bonus plan, profit sharing
plan, stock purchase plan, insurance plan or other employee
benefit plan or agreement; enter into or commit itself to any
employment agreement, management agreement or consulting
agreement with or for the benefit of any person;
(J) Other than in the ordinary course of business,
agree to any changes to the compensation arrangements outlined
on Schedule 2(i)(ii) hereto;
(K) Make any loans or advances (except in the case of
normal business travel and expense advances) to any
individual, entity or organization;
19
(L) Take or permit any action within its control that
would prevent performance of this Agreement;
(M) Sell the Division or the Assets, or to conduct
any discussions or negotiations with respect thereto;
(N) Enter into any transaction, including, without
limitation, any loans or extensions of credit, with any
officer or director of BEI, or any member of their respective
immediate families or any corporation or other entity directly
or indirectly controlled by one or more of such officers or
directors or members of their immediate families.
(d) BULK SALES LAW COMPLIANCE. Xxxxx hereby waives compliance by BEI
with the provisions of the Bulk Sales Law of any state (if applicable), and
BEI warrants and agrees to pay and discharge when due all claims of creditors
which could be asserted against it by reason of such noncompliance to the
extent that such liabilities are not specifically assumed under this
Agreement. BEI hereby indemnifies and agrees to hold Xxxxx harmless from,
against and in respect of (and shall on demand reimburse Xxxxx for) any loss,
liability, cost or expense, including, without limitation, attorneys' fees,
suffered or incurred by Xxxxx by reason of the failure of BEI to pay or
discharge such claims.
(e) UPDATED SCHEDULES. Not less than five days prior to Closing, BEI
will deliver to Xxxxx revised copies of the Schedules, which shall have been
updated to show any changes occurring between the date of this Agreement and
the date of such delivery and any corrections to the Schedules in the form
originally attached to this Agreement; provided, however, that for purposes
of the representations, warranties and covenants in this Agreement of BEI,
including the indemnification provisions set forth in Section 13 of this
Agreement, all references to the Schedules will mean the version of the
Schedules attached to this Agreement on the date of signing, and provided
further, that, if the effect of any such updates to Schedules is to disclose
any one or more additional Assets or additional liabilities, Xxxxx, at or
before the Closing, will have the right (to be exercised by written notice)
to cause any one or more of such items to be designated as and deemed to
constitute Excluded Assets or Excluded Liabilities for all purposes of this
Agreement.
(f) CERTAIN FINANCIAL STATEMENT MATTERS. BEI agrees to provide to
Xxxxx, as soon as completed, but in any event no later than the 30th day of
each month, copies of BEI's internal, unaudited monthly balance sheet,
statement of operations and for the prior month, beginning with the month of
April, 1999, and through the Closing. BEI also agrees both before and after
the Closing to provide such information and assistance to Xxxxx as Xxxxx may
reasonably request in order to cause the Financial Statements to be in
20
compliance with Regulation S-X of the Securities and Exchange Commission,
should such compliance be questioned, either before or after the Closing.
6. COVENANTS AND AGREEMENTS OF THE XXXXXXXXXXX AND BEI
Prior to 11:59 P.M., Denver time on the Closing Date, (the "Exclusivity
Period"), BEI and/or the Shareholder shall not, directly or indirectly,
through any employee, legal or financial advisor or other agent or otherwise,
solicit, initiate or encourage submission of, proposals or offers from any
person relating to any acquisition or purchase of all or a portion of the
Assets, or any equity interest in, the Division, or any business combination
with BEI or in any shares of BEI held by the Shareholder, the effect of which
would be to transfer control of the Division to a third party, or participate
in any negotiations regarding, or furnish to any other person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. BEI and/or the Shareholder shall
immediately cease and cause to be terminated any existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. BEI and/or the Shareholder shall promptly notify Xxxxx if any such
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made.
7. COVENANTS AND AGREEMENTS OF XXXXX.
(a) SATISFACTION OF CONDITIONS. Xxxxx will use all commercially
reasonable efforts to cause the satisfaction of the conditions precedent
contained in this Agreement and to bring about the transactions contemplated
by this Agreement as soon as practicable.
(b) EMPLOYMENT OFFERS. Upon and subject to the Closing, Xxxxx will
make offers of employment to the full-time employees of the Division who meet
the employment standards of Xxxxx (the "Division Employees"), on the same
cash salary basis as now exists for such persons, but with the benefits
package available to other Xxxxx employees.
(c) AGENT AGREEMENT. Xxxxx agrees that, at the Closing, Xxxxx will
enter into an agent agreement with BEI in form and substance reasonably
satisfactory to BEI and Xxxxx (the "Agent Agreement") regarding the manner in
which Xxxxx will act as agent for the sale of equipment manufactured by BEI
after the Closing, and the compensation of Xxxxx for such services.
(d) 401(K) PLAN MATTERS. To the extent of the accrual recorded as of
the Closing, BEI will, as soon as practicable after the Closing, contribute
to the 401(k) Plan
21
maintained by BEI for its employees (the "BEI 401(k) Plan") the PRORATA
portion of any matching contributions that otherwise would have been payable
to the BEI 401(k) Plan with respect to the Division Employees for such
period. At the Closing, BEI will 100% vest all Division Employees under the
BEI 401(k) Plan. Xxxxx will not assume the BEI 401(k) Plan or accept a direct
transfer from the trust associated with the BEI 401(k) Plan into any Xxxxx
401(k) plan, although Xxxxx will accept individual rollovers by the Division
Employees into a 401(k) plan designated by Xxxxx, subject to the
administrator's approval, which will not be unreasonably withheld. Xxxxx
will, as soon as practicable after the Closing, offer all of the Division
Employees a 401(k) plan designated by Xxxxx and will credit each Division
Employee with his or her service with the Division for purposes of
determining eligibility and vesting under such 401(k) plan, subject to any
entry date requirements.
(e) DIGILEASE COLLECTIONS. On or before the 15th day of each month
following the Closing, Xxxxx shall pay to BEI, by check mailed to the
attention of Xxxxx Xxxx, an amount equal to the sum of all amounts collected
by Xxxxx from customers of the Division during the immediately preceding
month in respect of equipment lease payments and maintenance fees under the
so-called "digilease" transactions set forth on Schedule 7(e).
8. CONDITIONS TO OBLIGATIONS OF BEI AND THE XXXXXXXXXXX.
The obligations of BEI and the Shareholder to consummate the Closing
under this Agreement are subject to the satisfaction on or prior to the
Closing of all of the following conditions precedent, compliance with which
or the occurrence of which may be waived in whole or in part by BEI and the
Shareholder in writing.
(a) ACCURACY OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties of Xxxxx contained in
this Agreement shall be true and correct in all material respects on
and as of the Closing Date, with the same effect as though the same had
been made on and as of the Closing Date.
(ii) Xxxxx shall have performed and satisfied all agreements,
covenants, and conditions required by the Agreements to be performed or
satisfied by it on or prior to the Closing Date.
(iii) There shall have been delivered to BEI and the
Shareholder on the Closing Date a certificate dated as of the Closing
Date from officers of Xxxxx certifying that Xxxxx has complied with
their obligations under this Section.
22
(b) ABSENCE OF LITIGATION. On the Closing Date, there shall not be
pending or threatened litigation in any court or any proceeding by any
governmental commission, board or agency, with a view to seeking or in which
it is sought to restrain or prohibit consummation of this Agreement or in
which it is sought to obtain rescission or damages in connection with this
Agreement, and, to the knowledge of any of the parties hereto, no
investigation by any governmental agency shall be pending or threatened which
might eventuate in any such suit, action or other proceeding.
(c) VALIDITY OF TRANSACTIONS. The form and substance of certificates
and other documents to be delivered to BEI and the Shareholder hereunder
shall be reasonably satisfactory in all respects to BEI and the Shareholder.
(d) XXXX-XXXXX-XXXXXX WAITING PERIOD. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or
otherwise been terminated.
(e) CLOSING DELIVERIES. Xxxxx shall have delivered all of the
documents to BEI contemplated under Section 10.
9. CONDITIONS TO OBLIGATIONS OF XXXXX.
The obligations of Xxxxx to consummate the Closing under this
Agreement are subject to the satisfaction on or prior to the Closing of all
of the following conditions precedent, compliance with which or the
occurrence of which may be waived in whole or in part by Xxxxx in writing:
(a) ACCURACY OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties of BEI contained in
this Agreement to the extent qualified by materiality or material
adverse effect, shall be true and correct on and as of the Closing
Date, and to the extent not qualified by materiality or material
adverse effect, shall be true and correct in all material respects, in
each INSTANCE, with the same effect as though the same had been made on
and as of the Closing Date, and the Schedules provided by BEI attached
hereto shall likewise be true and correct in every material respect on
and as of the Closing Date.
(ii) BEI and the Shareholder shall have performed and
satisfied all agreements, covenants and conditions required by this
Agreement to be performed or satisfied by them on or prior to the
Closing Date.
23
(iii) There shall have been delivered to Xxxxx on the Closing
Date (A) a certificate of the President and the Chief Financial Officer
of BEI dated as of the Closing Date certifying that BEI has complied
with this Section and (B) a certificate of the President and of the
Shareholder dated the Closing Date certifying that the Shareholder has
complied with its obligations under this Section.
(b) ABSENCE OF LITIGATION. On the Closing Date, there shall not be
pending or threatened litigation in any court or any proceeding by any
governmental commission, board or agency, with a view to seeking or in which
it is sought to restrain or prohibit consummation of this Agreement or in
which it is sought to obtain rescission or damages in connection with this
Agreement, and, to the knowledge of any of the parties hereto, no
investigation by any governmental agency shall be pending or threatened which
might eventuate in any such suit, action or other proceeding.
(c) VALIDITY OF TRANSACTIONS. The form and substance of certificates
and other documents to be delivered to Xxxxx hereunder shall be reasonably
satisfactory in all respects to Xxxxx.
(d) NO MATERIAL ADVERSE CHANGE, OFFICERS' CERTIFICATE. During the
period from the date of the Latest Financial Statements to the Closing Date,
there shall not have been any material adverse change in the financial
condition, properties or results of operations of the Division, and there
shall not have occurred any material destruction, loss or damage to the
Assets, whether or not insured. Xxxxx shall have received a certificate dated
the Closing Date, signed by the President and Chief Financial Officer of BEI,
certifying to the foregoing effect.
(e) XXXX-XXXXX-XXXXXX WAITING PERIOD. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or
otherwise been terminated.
(f) CONSENTS AND LIEN TERMINATIONS; ASSETS FREE AND CLEAR. All
required consents of third parties with respect to the assignment or transfer
of the Material Contracts and the affiliate agreements with radio stations,
as shown on Schedule 2(g) (iii) (a) (and any consents of governmental bodies)
to be obtained by BEI shall have been obtained. In the case of assigned
agreements, such consents shall have been obtained without any adverse change
to the terms of such agreements. The Assets shall be free and clear of any
and all liens, claims, encumbrances and security interests and all necessary
lien terminations shall have been delivered by BEI to Xxxxx.
(g) EXTENSION OF EMPLOYMENT AGREEMENT WITH DELILAH. The Employment
Agreement between Delilah Xxxx Xxxxxx and BEI shall have been extended to
June 30,
24
2004, on terms satisfactory to Xxxxx in its sole discretion. In addition,
satisfactory confirmation shall have been received by Xxxxx that life
insurance and disability insurance on Xx. Xxxxxx in an amount of no less than
$10,000,000 shall be available on normal rates and terms.
(h) COMFORT LETTER. Xxxxx shall have received satisfactory written
assurance from the audit firm which audited the Year-End Financial Statements
that the Year-End Financial Statements were prepared in compliance with
Regulation S-X of the United States Securities and Exchange Commission.
(i) CLOSING DELIVERIES. BEI and the Shareholder shall have
delivered all of the documents to Xxxxx contemplated under Sections 8 and 9.
10. THE CLOSING.
The Closing hereunder shall be held at 9:00 a.m. on the first business
day which is five (5) days after the receipt of the consents required by Section
7(e) of this Agreement, but not later than August 9, 1999 (unless the parties
agree to an extension of such date) at the offices of Xxxxx, 0000 Xxxx Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at such other time, date and place as the
parties shall agree (the date of such Closing being herein called the "Closing
Date"). At the Closing, the parties shall deliver the following:
(a) BEI shall deliver such suitable transfer documents as Xxxxx may
require pursuant to which the Assets are conveyed to Xxxxx.
(b) Xxxxx shall deliver (i) one or more documents whereby it agrees to
assume the Assumed Liabilities, (ii) the purchase price for the Assets by wire
transfer in immediately available funds to an account designated in writing by
BEI.
(c) The parties thereto shall deliver (i) the Employment Agreements
between Xxxxx and Xx. Xxxxxxxx and Xx. XxXxxxx, respectively, in the form set
forth as Exhibits B-1 and B-2 hereto.
(d) The various closing certificates and documents contemplated by
Sections 8 and 9 of this Agreement.
(e) The Agent Agreement between BEI and Xxxxx.
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties and covenants in the Agreements or
in any closing certificate delivered pursuant to the provisions of this
Agreement shall be continuing and shall survive the Closing for a period of
one (1) year, except for any warranties and covenants set forth in Sections
2(f) and except for those involving environmental matters, all of which shall
survive until the end of the applicable statute of limitation. Any claim with
respect to any of such matters which is not asserted by notice given as
herein provided relating thereto within the applicable foregoing period
following the Closing may not be pursued and is hereby irrevocably waived
after such time.
12. EXPENSES.
Costs and expenses relating to the transactions contemplated by this
Agreement shall be borne and paid by the respective parties incurring same.
13. TERMINATION.
This Agreement may be terminated and the transactions contemplated
by this Agreement may be abandoned at any time prior to the Closing:
(a) By the mutual written consent of BEI, the Shareholder and Xxxxx;
(b) By BEI and the Shareholder in the event that any condition to
their obligations set forth in Section 8 has not been fulfilled at or prior
to the Closing; or
(c)By Xxxxx in the event that any condition to its obligations set
forth in Section 9 has not been fulfilled at or prior to the Closing.
(d) By Xxxxx or by BEI and the Shareholder in the event the Closing
has not occurred by August 9, 1999; or
(e) By either party if a court of competent jurisdiction or any
governmental body shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use
their best efforts to lift), in each case permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
nonappealable.
The right to terminate this Agreement shall be exercised by written
notice from the terminating party to the other party or parties, which notice
shall specify in reasonable
26
detail the basis upon which the Agreement is being terminated. The
termination of this Agreement will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement at or before the date of termination.
14. INDEMNIFICATION.
(a) BY BEI. BEI will indemnify, defend and hold harmless Xxxxx and
its officers, directors, shareholders, owners, employees, agents, successors
and assigns from and against all losses, damages, liabilities, deficiencies
or obligations ("Losses") resulting from or arising out of (i) any breach of
any representation or warranty made by BEI in this Agreement, (ii) any breach
of any covenant, agreement or obligation of BEI contained in this Agreement,
(iii) any act or omission of BEI with respect to, or any event or
circumstance related to, the ownership or operation of the Assets or the
conduct of the business of the Division, which act, omission, event or
circumstance occurred or existed prior to or at the Closing Date, without
regard to whether a claim with respect to such matter is first asserted
before or after the Closing Date, including any matters disclosed in the
Schedules hereto, (iv) any liability or obligation of the Division which was
not expressly assumed under this Agreement by Xxxxx, and (v) all claims,
actions, suits, proceedings, demands, judgments, assessments, fines,
interest, penalties, costs and expenses (including settlement costs and
reasonable legal, accounting, experts' and other fees, costs and expenses)
incident or relating to or resulting from any of the foregoing; Xxxxx shall
not be entitled to recover any amount for indemnification claims under
Section 14(a)(i) unless and until the amount which Xxxxx is entitled to
recover in respect of such claims exceeds, in the aggregate, $200,000 (the
"Deductible"), after which (subject to the following sentence) BEI shall only
be liable for Losses that, in the aggregate, exceed the Deductible. The
maximum amount recoverable by Xxxxx shall in the aggregate not exceed five
million dollars ($5,000,000).
(b) BY THE SHAREHOLDER. The Shareholder will indemnify, defend and
hold harmless Xxxxx and its officers, directors, shareholders, owners,
employees, agents, successors and assigns from and against all Losses
resulting from or arising out of i) any breach of any covenant, agreement or
obligations of the Shareholder contained in this Agreement, and (ii) all
claims, actions, suits, proceedings, demands, judgments, assessments, fines,
interest, penalties, costs and expenses (including settlement costs and
reasonable legal, accounting, experts' and other fees, costs and expenses)
incident or relating to or resulting from any of the foregoing.
(c) BY XXXXX. Xxxxx will indemnify, defend and hold harmless BEI,
the Shareholder and their officers, directors, shareholders, employees,
agents, successors and
27
assigns from and against all Losses resulting from or arising out of (i) any
breach of any representation or warranty made by Xxxxx in this Agreement,
(ii) any breach of any covenant, agreement or obligation of Xxxxx contained
in this Agreement, (iii) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts' and
other fees, costs and expenses) incident or relating to or resulting from any
of the foregoing, and (iv) any Assumed Liabilities and the conduct of the
business of the Division or any portion thereof, or the use or ownership of
the Assets after the Closing. Any recovery from Xxxxx for indemnification
shall be limited as follows: Xxxxx shall not be liable for any amount for
indemnification claims under Section 14(c)(i) unless and until the amount in
respect of such claims exceeds, in the aggregate, $200,000 (the "Xxxxx
Deductible"), after which (subject to the following sentence) Xxxxx shall
only be liable for Losses that, in the aggregate, exceed the Xxxxx
Deductible. The maximum amount recoverable from Xxxxx shall in the aggregate
not exceed five million dollars ($5,000,000).
(d) PROCEDURE.
(i) In the event that any party shall incur or suffer any
losses in respect of which indemnification may be sought by such party
pursuant to the provisions of this Section, the party seeking to be
indemnified hereunder (the "Indemnitee") shall assert a claim for
indemnification by written notice (a "Notice") to the party from whom
indemnification is sought (the "Indemnitor") stating the nature and
basis of claim, and if such claim is with respect to a third-party
claim, accompanied by a copy of the written notice of the third-party
claimant. In the case of losses arising by reason of any third-party
claim, the Notice shall be given within thirty (30) days of the filing
or other written assertion of any such claim against the Indemnitee.
The Indemnitor shall have the option, and shall notify the Indemnitee
in writing within thirty (30) days after the date of the Notice of its
election either (A) to participate (at its own expense) in the defense
of such claim (in which case the defense of such claim shall be
controlled by the Indemnitee) or (B) to take charge of and control the
defense of such claim (at its own expense). If the Indemnitor fails to
notify the Indemnitee of its election within the applicable response
period (as determined in the immediately preceding sentence), then the
Indemnitor shall be deemed to have elected not to assume the defense of
such claim, in which case the Indemnitee may assume the defense of such
claim (provided that the Indemnitee shall not settle such claim without
the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld). The Indemnitor's failure to respond shall not
relieve the Indemnitor of its indemnification obligations under this
Section. If the Indemnitor elects to assume the defense of any claim in
accordance with this paragraph, then the Indemnitee
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shall be entitled to participate (at its own expense) in such
defense. If the Indemnitor elects not to assume the defense of any
claim, the Indemnitor may nonetheless participate (at its own expense)
in the defense thereof.
(ii) The Indemnitee shall provide to the Indemnitor on request
all information and documentation reasonably necessary to support and
verify any losses which the Indemnitee believes gives rise to a claim
for indemnification hereunder and shall give the Indemnitor reasonable
access to all books, records and personnel in the possession or under
the control of the Indemnitee which would have a bearing on such claim.
(e) EXCLUSIVE REMEDY. The indemnification provisions set forth in
this Section 14 shall constitute the sole and exclusive remedy of the parties
with respect to claims of breaches of the representations, warranties and
covenants contained in this Agreement, except for a breach of Section 6 of
this Agreement and the right of Xxxxx under Section 2(e) with respect to the
Receivables Shortfall.
15. NOTICES.
All notices, requests, demands, and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if (i) mailed, registered or certified mail,
return receipt requested, postage prepaid, (ii) delivered by hand, (iii) sent
by facsimile transmission, or (iv) delivered by courier, to the following
addresses, or at such other address as a party may designate by notice given
in accordance with this Section:
If to Xxxxx to: Xxxxx International Networks, Ltd.
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-000-0000
With copy to: General Counsel
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
29
If to BEI to: Broadcast Electronics, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Shareholder: BEI Holding Corporation
0000 Xxxxxxx Xxxx
Xxxxx 000-XX00
Xxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Notices delivered personally or by courier shall be effective upon
delivery to the intended recipient. Notices transmitted by facsimile
transmission shall be effective when confirmation of transmission is
received. Notices delivered by registered or certified mail shall be
effective on the delivery date set forth on the receipt of registered or
certified mail, or three days after deposit in the mail, whichever is earlier.
16. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one agreement.
(b) ENTIRE AGREEMENT, NO WAIVER. This Agreement and the documents
and instruments referred to therein constitute the entire agreements between
the parties hereto pertaining to the subject matter thereof and supersede all
prior and contemporaneous agreements and understandings of the parties, and
there are no warranties, representations or other agreements among the
parties in connection with the subject matter thereof except as specifically
set forth therein. No supplement, modification or waiver or termination of
this Agreement shall be binding unless executed in writing by the party
30
against whom it is asserted and delivered by that party to each of the other
parties. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions thereof (whether or not
similar), nor shall such waiver constitute a continuing waiver.
(c) HEADINGS. The title or headings of the various sections and
paragraphs hereof are intended solely for convenience of reference and are
not intended and shall not be deemed for any purpose whatsoever to modify or
explain or place any construction upon any of the provisions of this
Agreement.
(d) SCHEDULES AND EXHIBITS AS PART OF AGREEMENT. The Schedules and
Exhibit A to this Agreement constitute a part of this Agreement. Such
Schedules are referred to herein individually as a "Schedule" and
collectively as "Schedules." All statements contained in any Schedule or
certificate or other instrument delivered by or on behalf of the parties
hereto, or in connection with the transactions contemplated hereby, are an
integral part of this Agreement and shall be deemed representations and
warranties hereunder.
(e) USE OF THE PLURAL, ETC. Throughout this Agreement, wherever the
context so requires the singular shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and vice versa.
(f) ASSIGNMENT. No party may assign this Agreement or any interest
herein without the prior written consent of the other parties, except that
Xxxxx may assign this Agreement to any entity controlling, controlled by or
under common control with it, which assignment shall not relieve Xxxxx of its
obligations under this Agreement. Subject to the foregoing, all of the terms
and provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective transferees, successors,
and assigns.
(g) GOVERNING LAW. The parties agree that this Agreement has been
executed and delivered in the State of Colorado and shall be construed,
enforced and governed by the laws thereof, without giving effect to the
principles of conflicts of law of such State.
(h) PUBLICITY. Any communications and notices to third parties and
all other publicity concerning the transactions contemplated by this
Agreement shall be planned and coordinated between Xxxxx and BEI. None of the
parties hereto shall disseminate or make public or cause to be disseminated
or made public any information regarding the transactions contemplated
hereunder without the prior written approval of Xxxxx and BEI, which approval
shall not be unreasonably withheld, subject however to the disclosure
31
obligations of any party and its affiliates under applicable securities laws
or as otherwise required pursuant to court order, subpoena or other process
of law.
(i) FURTHER ASSURANCES. From time to time after the Closing, BEI
shall, if reasonably requested by Xxxxx, make, execute and deliver to Xxxxx
such additional assignments, bills of sale, deeds and other instruments of
transfer, as may be necessary or proper to transfer all of BEI's right,
title, and interest in and to the Assets.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights, claims or remedies upon anyone not a party to this Agreement or
the permitted successors and assigns of such a party, except under the
indemnification provisions of this Agreement.
[The remainder of this page has been left blank intentionally]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized and have caused
their respective corporate seals to be hereunto affixed and attested by the
signatures of their respective Secretaries or Assistant Secretaries, and to
be delivered, and this Agreement has been signed and delivered by the
Shareholders all effective as of the date first above written.
ATTEST: BROADCAST ELECTRONICS, INC.
/s/ Xxxxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxxx
----------------------------- ---------------------------
Secretary Vice President
ATTEST: BEI HOLDING CORPORATION
/s/ Xxxxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxxx
----------------------------- ---------------------------
Secretary President
ATTEST: XXXXX INTERNATIONAL
NETWORKS, LTD.
/s/ Xxxxx Xxxxx By: /s/ Xxx X. Xxxxx
----------------------------- ---------------------------
Assistant Secretary Group Vice President
