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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXX COMMUNICATIONS CORPORATION,
CLEAR CHANNEL
METROPLEX, INC.,
CLEAR CHANNEL METROPLEX LICENSES, INC.
AND
CLEAR CHANNEL
COMMUNICATIONS, INC.
DATED AS OF AUGUST 25, 1997
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TABLE OF CONTENTS
PAGE
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SECTION 1 CERTAIN DEFINITIONS...................................................2
1.1 Terms Defined in Appendix 1........................................2
1.2 Rule of Construction...............................................2
SECTION 2 PURCHASE AND SALE OF ASSETS; ASSET VALUE..............................2
2.1 Purchase and Sale..................................................2
2.2 Excluded Assets....................................................4
2.3 Group II/III Assets, Group IV Assets and Group V Assets............4
2.4 Purchase Price; Allocation.........................................4
2.5 Prorations and Adjustments.........................................4
2.6 Payment of Purchase Price and Prorations and Adjustments...........7
2.7 Assumption of Liabilities and Obligations..........................8
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER..............................9
3.1 Organization and Authority of Seller...............................9
3.2 Authorization and Binding Obligation...............................9
3.3 Absence of Conflicting Agreements; Consents........................9
3.4 Governmental Licenses.............................................10
3.5 Real Property.....................................................11
3.6 Tangible Personal Property........................................12
3.7 Assumed Contracts.................................................12
3.8 Intangibles.......................................................12
3.9 Financial Statements..............................................13
3.10 Taxes and Tax Returns.............................................13
3.11 Insurance.........................................................13
3.12 Personnel.........................................................13
3.13 Claims and Legal Actions..........................................13
3.14 Compliance with Laws..............................................14
3.15 Conduct of Business in Ordinary Course............................14
3.16 Environmental Matters.............................................14
3.17 Brokers...........................................................16
3.18 Transactions With Affiliates......................................16
3.19 Assets............................................................16
3.20 Employee Benefits.................................................16
3.21 Foreign Person....................................................17
3.22 Like-kind Exchange................................................17
3.23 Disclosure........................................................17
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER..............................17
4.1 Organization, Standing and Authority..............................17
4.2 Authorization and Binding Obligation..............................17
4.3 Absence of Conflicting Agreements and Required Consents...........18
4.4 Buyer Qualifications..............................................18
4.5 Brokers...........................................................18
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4.6 Availability of Funds.............................................19
4.7 Disclosure........................................................19
SECTION 5 CONDUCT OF THE BUSINESSES PRIOR TO EFFECTIVE TIME....................19
5.1 Generally.........................................................19
5.2 Dispositions......................................................21
5.3 Liens.............................................................21
5.4 Access to Information.............................................21
5.5 Financial Information.............................................22
5.6 Notice of Proceedings.............................................22
5.7 Representations and Warranties....................................22
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS.....................................23
6.1 FCC Consent.......................................................23
6.2 HSR Act Filing....................................................23
6.3 Confidentiality...................................................24
6.4 Cooperation.......................................................25
6.5 Access to Books and Records.......................................26
6.6 Employee Matters..................................................26
6.7 Cure..............................................................27
6.8 Environmental Reports.............................................27
6.9 Fees of CEA.......................................................28
6.10 Unwind Transaction................................................28
6.11 Updated Information...............................................29
6.12 Risk of Loss......................................................30
6.13 Miscellaneous.....................................................31
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.........................32
7.1 Conditions to Obligations of Buyer at the Closing.................32
7.2 Conditions to Obligations of Seller at the Closing................33
SECTION 8 CLOSING AND CLOSING DELIVERIES.......................................34
8.1 Closing...........................................................34
8.2 Deliveries by Seller..............................................35
8.3 Deliveries by Buyer...............................................37
SECTION 9 TERMINATION..........................................................38
9.1 Termination of Agreement..........................................38
9.2 Procedure and Effect of Termination...............................39
9.3 Attorneys' Fees...................................................41
9.4 Specific Performance..............................................41
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES.............................41
10.1 Survival.........................................................41
10.2 Indemnification by Seller........................................42
10.3 Indemnification by Buyer and Guarantor...........................45
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10.4 Procedure for Indemnification....................................47
SECTION 11 MISCELLANEOUS.......................................................49
11.1 Fees and Expenses................................................49
11.2 Notices..........................................................49
11.3 Benefit and Binding Effect.......................................50
11.4 Further Assurances...............................................51
11.5 GOVERNING LAW....................................................51
11.6 Entire Agreement.................................................51
11.7 Waiver of Compliance; Consents...................................52
11.8 Counterparts.....................................................52
11.9 Severability.....................................................52
11.10 Cooperation With Respect to Like-Kind Exchange...................52
11.11 Guaranty.........................................................53
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Appendices
Appendix 1 Definitions
Exhibits
Exhibit 2.3 Group II - V Asset Purchase Agreement
Exhibit 8.2(a) Assignment and Assumption Agreement
Schedules
Schedule 1.1(f) Excluded Contracts
Schedule 1.1(j) Excluded Assets
Schedule 3.1 Qualifications
Schedule 3.3 Absence of Conflicting Agreements; Consents
Schedule 3.4 FCC Licenses
Schedule 3.5 Real Property
Schedule 3.6 Tangible Personal Property
Schedule 3.7 Contracts
Schedule 3.8 Intangibles
Schedule 3.9 Financial Statements
Schedule 3.10 Tax and Tax Returns
Schedule 3.11 Insurance
Schedule 3.12 Personnel
Schedule 3.13 Claims and Legal Actions
Schedule 3.15 Conduct of Business in Ordinary Course
Schedule 3.16 Environmental
Schedule 3.18 Transactions with Affiliates
Schedule 3.20 Employee Benefits
Schedule 4.4 Buyer Qualifications
Schedule 5.1 Certain Changes
Schedule 5.2 Certain Dispositions
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated as of August 25, 1997, by and
among Xxxxxx Communications Corporation, a Delaware corporation ("PCC" or
"Seller"), Clear Channel Metroplex, Inc., a Nevada corporation ("Metroplex"),
Clear Channel Metroplex Licenses, Inc., a Nevada corporation ("CCL"; Metroplex
and CCL being referred to herein, collectively, as "Buyer"), and Clear Channel
Communications, Inc., a Texas corporation ("Guarantor" or "Clear Channel").
R E C I T A L S:
A. PCC owns certain assets used and useable in the following businesses
(collectively, the "PCC Billboard and Network Businesses"):
i. a commercial billboard outdoor advertising business
in the Orlando, Florida market (the "Orlando Billboard Business" or, the
"Billboard Business");
ii. the Alabama Radio Network (the "Alabama Radio
Network");
iii. the Tennessee Radio Network (the "Tennessee Radio
Network");
iv. the University of Miami Sports radio network (the
"University of Miami Sports Radio Network");
v. the Florida Radio Network (the "Florida Radio
Network");
vi. the University of Florida Sports radio network
(the "University of Florida Sports Radio Network"); and
vii. the Penn State Sports radio network (the "Penn
State Sports Radio Network").
Each of the Billboard Business, the Alabama Radio Network, the
Tennessee Radio Network, the University of Miami Sports Radio Network, the
Florida Radio Network, the University of Florida Sports Radio Network and the
Penn State Sports Radio Network are herein referred to, individually, as a
"Business" and, collectively, as the "Businesses."
B. Seller desires to sell, and Buyer desires to purchase, substantially
all of the Assets of the Businesses, on the terms and conditions hereinafter set
forth.
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C. If so elected by Seller, subject to the terms and conditions of this
Agreement, Seller may enter into an exchange agreement with an Intermediary
providing that the sale and purchase of some or all of the Assets described
herein be effected in a transaction that will qualify, to the extent
permissible, as a "like-kind exchange" under Section 1031 of the Code.
A G R E E M E N T S:
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1 CERTAIN DEFINITIONS
1.1 Terms Defined in Appendix 1. The terms defined in Appendix 1
hereto, as used in this Agreement, have the meanings set forth in Appendix 1.
Section references in the definitions in the Appendix shall be deemed to refer
to this Agreement and the Appendix shall be deemed to be part of this Agreement.
Capitalized terms used, but not defined, herein or in Appendix 1 shall have the
meanings ascribed to such terms in the Group II-V Asset Purchase Agreement.
1.2 Rule of Construction. Except as specifically otherwise provided in
this Agreement in a particular instance, a reference to a Section, Schedule or
Exhibit is a reference to a Section of this Agreement or a Schedule or Exhibit
hereto, and the terms "hereof," "herein," and other like terms refer to this
Agreement as a whole, including the Schedules and Exhibits to this Agreement,
and not solely to any particular part of this Agreement. The Schedules and
Exhibits shall be deemed to be a part of this Agreement. The descriptive
headings in this Agreement are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
SECTION 2 PURCHASE AND SALE OF ASSETS; ASSET VALUE
2.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth in this
Agreement, Seller hereby agrees to transfer, convey, assign and deliver to
Buyer, and Buyer agrees to acquire, all of the following (collectively, the
"Assets"): all the tangible and intangible assets used or useful in connection
with the conduct
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of the business or operations of the Businesses, together with any additions
thereto between the date of this Agreement and the Closing Date in accordance
with the provisions of this Agreement, but excluding assets disposed of between
the date of this Agreement and the Closing Date in accordance with the terms and
provisions of this Agreement and excluding the Excluded Assets, free and clear
of any Liens, except for Permitted Liens, including
(i) the Tangible Personal Property;
(ii) the Real Property;
(iii) the Licenses;
(iv) the Assumed Contracts;
(v) the Intangibles;
(vi) all of Seller's proprietary information,
technical information and data, maps, computer discs and tapes, FCC logs, plans,
diagrams, blueprints and schematics, including filings with the FCC, relating to
the business and operations of the Businesses;
(vii) all books and records of Seller relating
solely to the business or operations of the Businesses, including executed
copies of the Assumed Contracts, other than account books of original entry and
such files and records that are maintained at Seller's corporate offices for tax
and accounting purposes;
(viii) all deposits and prepaid expenses of Seller
with respect to items in respect of the Businesses that are prorated in favor of
Seller pursuant to Section 2.5;
(ix) equipment warranties related to the Assets
to the extent transferable by Seller; and
(x) the Accounts Receivable due to Seller in
respect of the Businesses.
(b) It is understood and agreed that Metroplex shall acquire
the Non-License Assets included in the Assets and CCL shall acquire the License
Assets included in the Assets. Notwithstanding the foregoing, however, it is
understood and agreed that each of Metroplex and CCL shall be jointly and
severally liable to perform the obligations of Buyer provided for in this
Agreement and in the documents contemplated hereby.
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2.2 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets shall not include the Excluded Assets. Notwithstanding
anything to the contrary set forth in this Agreement, no representations,
warranties or covenants or agreements of any nature whatsoever are made by
Seller to Buyer with respect to the Excluded Assets.
2.3 Group II/III Assets, Group IV Assets and Group V Assets.
Simultaneously with the execution and delivery of this Agreement, PCC, Buyer and
X. Xxxxxx, Inc., a Delaware corporation ("LPI"), are entering into an Asset
Purchase Agreement (the "Group II-V Asset Purchase Agreement"), in the form
attached hereto as Exhibit 2.3, and dated as of the date hereof, pursuant to
which PCC (and, in certain cases, LPI) will sell to Buyer, and Buyer will
purchase from Seller (and, in certain cases, LPI), the Group II/III Assets, the
Group IV Assets and the Group V Assets, on the terms and subject to the
conditions set forth therein.
2.4 Purchase Price; Allocation.
(a) Purchase Price. The purchase price for the Assets shall be
Twenty-Five Million Six Hundred Eighty-Eight Thousand Dollars ($25,688,000) (the
"Estimated Purchase Price"), which sum shall be subject to upward or downward
adjustment, as the case may be, pursuant to Section 2.5(a) below (the Estimated
Purchase Price, as so adjusted, the "Purchase Price").
(b) Appraisal and Allocation. Seller shall retain, at Seller's
expense, Bond & Xxxxxx, or another recognized independent appraisal firm
selected by Seller and reasonably acceptable to Buyer, to appraise the
Businesses and the Assets. Seller shall provide Buyer with copies of the
appraisals for the Assets within 90 days after the Closing Date. Seller and
Buyer agree to allocate the Purchase Price among the Businesses and the Assets
for all purposes, including financial accounting and tax purposes, including
Section 1060 of the Code and Temporary Treasury Regulations Section 1.1060-IT,
in accordance with such appraisals. Buyer and Seller agree to file with their
respective federal income tax returns initial asset acquisition statements on
Internal Revenue Service Form 8594 required by Temporary Treasury Regulation
Section 1.1060-IT, all in accordance with, and accurately reflecting, such
appraisals and allocations.
2.5 Prorations and Adjustments.
(a) Prorations and Adjustments. The Purchase Price shall be
determined by increasing or decreasing the Estimated Purchase Price as required
to effectuate the proration of revenues and expenses as provided for herein. All
revenues and all expenses arising from the operation of any of the
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Businesses, including billboard rental, business and license fees, utility
charges, real and personal property taxes and assessments levied against the
Assets, property and equipment rentals, applicable copyright or other fees,
including program license payments, sales and service charges, taxes (except for
taxes arising from the transfer of the Assets under this Agreement), employee
compensation, including wages, salaries, accrued vacation, sick leave, personal
days, and commissions for each employee of Seller who becomes an employee of
Buyer, license fees and similar prepaid and deferred items, shall be prorated
between Buyer and Seller in accordance with GAAP and to effect the principle
that Seller shall receive all revenues (other than Accounts Receivable) and
shall be responsible for all expenses, costs and liabilities (including, without
limitation, performance bonuses payable to the Assumed Employees allocable to
the period prior to the Effective Time based on the pro rata accrual of such
bonuses over the calendar year on a straight line basis) allocable to the
operations of the Businesses for the period prior to the Effective Time, and
Buyer shall receive all revenues and shall be responsible for all expenses,
costs and liabilities (including, without limitation, performance bonuses
payable to the Assumed Employees allocable to the period after the Effective
Time based on the pro rata accrual of such bonuses over the calendar year on a
straight line basis) allocable to the operations of the Businesses for the
period after the Effective Time in accordance with GAAP, subject to the
following:
(1) There shall be no adjustment for, and Seller
shall remain solely liable with respect to, any Excluded Contracts and any other
obligation or liability not being assumed by Buyer in accordance with Section
2.7.
(2) No adjustment or proration shall be made in favor
of Seller for the amount, if any, by which the value of the goods or services to
be received by all the Stations (as defined in the Group II-V Asset Purchase
Agreement) and the Businesses in the aggregate under their trade or barter
agreements as of the Effective Time exceeds the value of any advertising time
remaining to be run by such Stations and the Businesses as of the Effective
Time. For purposes of this Agreement, including, without limitation, this
Section 2.5 and Section 5.1, the liability for performance obligations relating
to advertising time under any trade or barter agreements shall be valued
according to the applicable prevailing rates as of the Effective Time, and
goods, services or other items being received shall be valued in accordance with
GAAP as of the Effective Time.
(3) An adjustment or proration shall be made in favor
of Buyer to the extent, if any, that (a) the value of the goods or services to
be received by all the Stations and the
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Businesses under their trade or barter agreements as of the Effective Time in
the aggregate is more than $150,000 less than the value of any advertising time
remaining to be run by such Stations and the Businesses thereunder as of the
Effective Time (a "Negative Balance") and (b) Buyer has not expressly consented
to the trade or barter agreements giving rise to such Negative Balance (and the
allocation of such Negative Balance among the Businesses, Group II/III Stations,
Group IV Stations and Group V Stations shall be made by Seller in its sole
discretion).
(b) Manner of Determining Prorations and Adjustments. The
Purchase Price, taking into account the adjustments and prorations pursuant to
Section 2.5(a), will be determined in accordance with the following procedures:
(1) Seller shall prepare and deliver to Buyer not
later than five (5) Business Days before the Closing Date a preliminary
settlement statement which shall set forth Seller's good faith estimate of the
adjustments or prorations under Section 2.5(a) (a "Preliminary Settlement
Statement"). The Preliminary Settlement Statement (A) shall contain all
information reasonably necessary to determine the adjustments or prorations
under Section 2.5(a), including appropriate supporting documentation and such
other information as may be reasonably requested by Buyer, to the extent such
adjustments or prorations can be determined or estimated as of the date of the
Preliminary Settlement Statement and (B) shall be certified by an officer (but
without personal liability to such officer) on behalf of Seller to be true and
complete to Seller's knowledge. The "Preliminary Purchase Price" shall be
determined by adjusting the Estimated Purchase Price for the adjustments and
prorations contained in the Preliminary Settlement Statement.
(2) Not later than ninety days after the Closing
Date, Buyer shall deliver to Seller a statement setting forth Buyer's
determination of any changes to the adjustments and prorations made at the
Closing. Buyer's statement (A) shall contain all information reasonably
necessary to determine the adjustments and prorations to the Purchase Price
under Section 2.5(a), including appropriate supporting documentation, and such
other information as may be reasonably requested by Seller, and (B) shall be
certified by an officer (but without personal liability to such officer) on
behalf of Buyer to be true and complete to Buyer's knowledge. Seller (and its
authorized representatives) shall have the right to visit the Businesses during
normal business hours to verify and review such documentation upon providing
reasonable notice to Buyer (such access not to unreasonably interfere with the
business or operations of the Businesses). If Seller disputes the adjustments
and prorations determined by Buyer, it shall deliver
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to Buyer, within fifteen (15) days after its receipt of Buyer's statement, a
statement setting forth its determination of such adjustments and prorations. If
Seller notifies Buyer of its acceptance of Buyer's statement, or if Seller fails
to deliver its statement within the fifteen-day period specified in the
preceding sentence, Buyer's determination of such adjustments and prorations
shall be conclusive and binding on the parties as of the last day of such
fifteen-day period.
(3) Buyer and Seller shall use good faith efforts to
resolve any dispute involving the determination of the adjustments and
prorations in connection with the Closing. If the parties are unable to resolve
any dispute within fifteen days following the delivery to Buyer of the statement
described in the penultimate sentence of Section 2.5(b)(2), Buyer and Seller
shall jointly designate an independent certified public accountant, who shall be
knowledgeable and experienced in the operation of businesses similar to the
Businesses, to resolve such dispute. If the parties are unable to agree on the
designation of an independent certified public accountant, the selection of the
accountant to resolve the dispute shall be submitted to arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association. The accountant's resolution of the dispute shall be final and
binding on the parties, and a judgment may be entered thereon in any court of
competent jurisdiction. Any fees of the accountant, and, if necessary, for
arbitration to select such accountant, shall be split equally between the
parties.
2.6 Payment of Purchase Price and Prorations and Adjustments.
(a) At the Closing, Buyer shall pay or cause to be paid to
Seller (or to such party or parties designated by Seller in writing) the
Preliminary Purchase Price for the Assets by federal wire transfer of same-day
funds in accordance with wire instructions delivered to Buyer by Seller at least
three (3) Business Days prior to such Closing.
(b) Payments to Reflect Prorations and Adjustments.
(1) If the Purchase Price for the Assets as finally
determined pursuant to Section 2.5(b)(2) exceeds the Preliminary Purchase Price,
Buyer shall pay to Seller (or to such party or parties designated by Seller in
writing), by federal wire transfer of same-day funds within five Business Days
after the date on which the Purchase Price is determined pursuant to Section
2.5(b)(2), the difference between such Purchase Price and the Preliminary
Purchase Price.
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(2) If the Purchase Price, as finally determined
pursuant to Section 2.5(b)(2), is less than the Preliminary Purchase Price,
Seller shall pay to Buyer, by federal wire transfer of same-day funds within
five Business Days after the date on which such Purchase Price is determined
pursuant to Section 2.5(b)(2), the difference between the Preliminary Purchase
Price and such Purchase Price.
(3) If any dispute arises over the amount to be
refunded or paid pursuant to this Section 2.6(b), such refund or payment shall
nevertheless be made to the extent any amount is not in dispute.
(c) It is understood and agreed that Buyer shall not be
permitted to offset any amounts in respect of the Assets against any amounts in
respect of the Group II/III Assets, the Group IV Assets or the Group V Assets
that are the subject of the Group II-V Asset Purchase Agreement. Notwithstanding
the foregoing, nothing contained in this Section 2.6(c) shall in any manner
impair any right, remedy or recourse Buyer may have against PCC for fraud in
connection with this Agreement.
2.7 Assumption of Liabilities and Obligations.
(a) Buyer shall assume and undertake to pay, discharge and
perform the Assumed Liabilities as of the Closing Date.
(b) Buyer shall not be required to assume any of the
following: (i) any obligations or liabilities under any Excluded Contract, (ii)
any obligations or liabilities under the Assumed Contracts relating to the
period prior to the Effective Time, except insofar as a proration or adjustment
therefor is made in favor of Buyer under Section 2.5(a), (iii) any liability or
obligation arising out of any litigation, proceeding or claim by any person or
entity relating to the business or operations of any of the Businesses or any of
the Assets with respect to any events or circumstances that occur or exist prior
to the Effective Time relating to such Businesses or the Assets, (iv) any credit
agreements, note purchase agreements, indentures or other financing arrangements
(other than any Assumed Contracts) of Seller and (v) any other obligation or
liability of Seller that is not an Assumed Liability (including, without
limitation, any increase in the Assumed Liabilities in violation of Section
2.7(c)). Buyer shall perform all obligations arising out of the Assets
(including the Assumed Contracts and the Licenses) relating to the period on or
after the Effective Time. Seller shall retain all liabilities of Seller not
assumed by Buyer.
(c) Notwithstanding anything in this Agreement to the
contrary, the parties acknowledge that after the Effective Time,
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Seller shall not, by any voluntary act or omission, increase the Assumed
Liabilities other than as permitted in accordance with the terms and provisions
of this Agreement, without the prior written consent of Buyer.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows as of the date
hereof and as of the Effective Time:
3.1 Organization and Authority of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation and, in respect of the operations of the Businesses, is
qualified to conduct business in the States set forth in Schedule 3.1. Except as
set forth in Schedule 3.1, Seller has the requisite corporate power and
authority to own and operate the Assets owned and operated by it, to carry on
the business of the Businesses now being conducted by it, and to execute,
deliver and perform this Agreement according to its terms.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by Seller have been duly and validly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements; Consents. The execution and
delivery of this Agreement, and the performance of the transactions contemplated
herein, by Seller will not require any consent, approval, authorization or other
action by, or filing with or notification to, any Person or governmental
authority, except as follows: (a) applicable requirements under the HSR Act; (b)
consents to the assignment of the FCC Licenses to Buyer by the FCC; (c) filings
with respect to real estate, sales and other transfer taxes; (d) consent of
third parties to assignment of certain of the Assumed Contracts as specified in
Schedule 3.3; and (e) other immaterial consents, approvals, authorizations,
actions, filings or notifications. Subject to obtaining the Consents, the
execution, delivery and performance by Seller of this Agreement (with or without
the giving of notice, the lapse of time, or both): (a) do not conflict with any
provision of the Certificate of Incorporation and Bylaws of
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Seller; (b) do not conflict with, result in a breach of, or constitute a default
in any material respect under, any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation or ruling of any court or governmental
authority applicable to Seller; (c) do not result in the breach in any material
respect of any contract or agreement to which Seller is a party or by which
Seller may be bound; and (d) will not create any Lien upon any of the Assets,
except for Permitted Liens.
3.4 Governmental Licenses.
(a) Schedule 3.4 identifies all FCC Licenses used in the
operation of the Businesses (collectively, "FCC Licenses") and the date on which
each expires. Except as described on Schedule 3.4, each FCC License is in full
force and effect, and Seller is the authorized legal holder thereof. Except as
set forth in Schedule 3.4, the conduct of the business and operations of each
earth station facility authorized by an FCC License (an "Earth Station") is in
accordance with the terms and conditions of the FCC Licenses for such Earth
Station and the Communications Act and the rules, regulations and policies of
the FCC in all material respects. Schedule 3.4 also sets forth a true and
complete list of all applications filed with respect to any Earth Station that
are pending at the FCC, true and complete copies of which have been delivered by
Seller to Buyer. All material reports and filings required to be filed with the
FCC by Seller with respect to each Earth Station have been timely filed in all
material respects. All such reports and filings are accurate and complete in all
material respects. Seller has received no notice or communication, formal or
informal, indicating that the FCC is considering revoking, suspending,
canceling, rescinding or terminating any FCC License. Seller's operation of the
Earth Stations complies in all material respects with the requirements set forth
in the "Radio Frequency Protection Guides" recommended in "America National
Standard Safety Levels with Respect to Human Exposure to Radio Frequency
Xxxxxxxxxxxxxxx Xxxxxx 000 XXx xx 000 XXx" (XXXX C95.1-1982), issued by the
American National Standards Institute.
(b) The FCC Licenses listed on Schedule 3.4 constitute all of
the material licenses and authorizations required under the Communications Act
or the current rules, regulations and policies of the FCC for the business and
operation of each Earth Station as currently operated. Except as set forth in
Schedule 3.13, and except for investigations or other proceedings affecting the
broadcasting industry generally, Seller has no knowledge of any pending or
threatened investigation by or before the FCC, or any order to show cause,
notice of violation, notice of apparent liability, notice of forfeiture or
material complaint by, before or with the FCC with respect to any Earth Station.
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Seller knows of no fact relating to Seller's ownership or operation of the Earth
Stations that would, under existing law and the existing rules, regulations,
policies and procedures of the FCC, cause the FCC to fail to approve in a timely
fashion any of the applications for the FCC Consents.
3.5 Real Property. Schedule 3.5 contains an accurate description as of
the date of this Agreement of all Real Property. Except as described in Schedule
3.5, Seller has good and marketable fee simple title to all fee estates included
in the Real Property and good title to Seller's interests in all other Real
Property, in each case free and clear of all Liens, except for Permitted Liens.
Schedule 3.5 lists all leases and subleases pursuant to which any of the Real
Property included in the Assets is leased by Seller. Seller has a valid
leasehold interest in all such Real Property. Subject to obtaining the consents
to assignment set forth on Schedule 3.3, such leases and subleases are
assignable to Buyer. Seller is in compliance with such leases and subleases in
all material respects and is not in breach or default in any material respect
thereunder, and, to the knowledge of Seller, each other party to any such lease
or sublease is not in default thereunder in any material respect. The Real
Property includes sufficient access to the Businesses' facilities to conduct the
operations of the Businesses in the manner in which they are currently operated
in all material respects without the need to obtain other access rights. Seller
has delivered to Buyer a true and complete copy of any and all title insurance
policies, surveys, plans and maps relating to the Real Property in the custody,
possession or control of Seller. None of the Real Property is subject to any
lease, sublease, license or other agreement pursuant to which Seller grants to
any other person any right to the use, occupancy or enjoyment of the Real
Property or any part thereof, except as set forth on Schedule 3.5. There is no
pending or, to the knowledge of Seller, threatened condemnation or similar
proceeding affecting any Real Property. All buildings, billboards and other
improvements included within the Real Property are in working order and repair.
The use of the Real Property as currently used is in compliance with applicable
zoning and land-use laws in all material respects. As of the date hereof, Seller
has received no actual written notice of any increase in property taxes
affecting any item of Real Property to an amount in excess of 110% of the
current taxes on such Real Property or of any other imposition which is not
materially consistent with existing impositions, the effect of which is, if
required, reflected on Seller's financial statements; provided that the
foregoing shall not relate to increases resulting from improvements to the
property made by Seller.
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3.6 Tangible Personal Property. Schedule 3.6 lists as of the date
hereof all material items of Tangible Personal Property included in the Assets
owned by Seller. Except as described in Schedule 3.6, Seller owns and has good
title to the Tangible Personal Property listed thereon and none of the Tangible
Personal Property included in the Assets is subject to any Liens, except for
Permitted Liens. The Tangible Personal Property listed on Schedule 3.6 owned by
Seller necessary for the normal operations of the Businesses as presently
conducted is in satisfactory operating condition and adequate repair (given the
age of such property and the use to which such property is put and ordinary wear
and tear excepted).
3.7 Assumed Contracts. Schedules 3.5, 3.7 and 3.12 include a complete
list as of the date of this Agreement of all Assumed Contracts except (a)
contracts with advertisers for production or the sale of advertising time on any
Network for cash that may be canceled by Seller on not more than ninety days'
notice without penalty, (b) trade or barter advertising agreements entered into
in the ordinary course of business, (c) oral employment contracts terminable at
will, (d) miscellaneous service contracts terminable on not more than thirty
(30) days' notice, and (e) other Contracts entered into in the ordinary course
of business, not involving liabilities exceeding Two Thousand Five Hundred
Dollars($2,500) per contract per year and One Hundred Twenty-Five Thousand
Dollars ($125,000) in the aggregate for all such other contracts for the
Stations and the Businesses per year. Seller has delivered or made available to
Buyer true and complete copies of all written Assumed Contracts and accurate
descriptions of all oral Assumed Contracts listed in Schedules 3.5, 3.7 and
3.12. The Assumed Contracts are in full force and effect in all material
respects. Subject to obtaining the consents to assignment set forth on Schedule
3.3, the Assumed Contracts are assignable to Buyer. Seller is in compliance with
the Assumed Contracts in all material respects and is not in breach or default
in any material respect thereunder, and, to the knowledge of Seller, each other
party to the Assumed Contracts is in compliance therewith in all material
respects and not in default in any material respect thereunder.
3.8 Intangibles. Schedule 3.8 is a complete list as of the date of this
Agreement of all material Intangibles (exclusive of Licenses listed on Schedule
3.4). Seller has provided or made available to Buyer copies of all documents
establishing or evidencing the Intangibles listed in Schedule 3.8. Other than
with respect to matters generally affecting the industry of the Businesses and
not particular to Seller, as of the date hereof, except as set forth in Schedule
3.8, Seller has not received any notice or demand alleging that Seller is
infringing upon any trademarks, trade names, service marks, service names,
copyrights
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or similar intellectual property rights owned by any other Person.
3.9 Financial Statements. Seller has furnished Buyer with true and
complete copies of the financial statements with respect to the Businesses
described in Schedule 3.9 (the "Financial Statements"). Except as set forth in
Schedule 3.9, the Financial Statements have been prepared in accordance with
GAAP, and present fairly in all material respects the financial condition of
Seller with respect to the Businesses included in such Financial Statements as
at their respective dates and the results of operations for the periods then
ended.
3.10 Taxes and Tax Returns. Except as set forth in Schedule 3.10 and
except where the failure to file, pay or accrue any Taxes does not result in a
Lien on the Assets or in the imposition of transferee or other liability on
Buyer for the payment of Taxes, (a) all Tax Returns have been filed with the
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and (b) all Taxes shown on such Tax Returns have been
properly accrued or paid to the extent such Taxes have become due.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller with respect to the Businesses. All policies of
insurance listed in Schedule 3.11 are in full force and effect.
3.12 Personnel. Schedule 3.12 contains a true and complete list as of
the date of this Agreement of all employees of Seller engaged in the business
and operations of the Businesses (collectively, the "Employees"), and a
description of the compensation arrangements affecting them. Except as described
in Schedule 3.12, as of the date hereof, Seller has no written or oral contracts
of employment with any employee of the Businesses, other than oral employment
contracts which are terminable at will. Except as set forth in Schedule 3.12,
Seller is not a party to or subject to any collective bargaining agreements with
respect to the Businesses, and, no labor union or other collective bargaining
unit represents or, to Seller's knowledge, claims to represent any of the
employees of the Businesses. Seller has made available to Buyer copies of all
employee handbooks and employee rules and regulations, if any.
3.13 Claims and Legal Actions. Except as disclosed in Schedule 3.13 and
for any FCC rulemaking proceedings generally affecting the industry of the
Businesses and not particular to Seller, as of the date hereof, there is no
material claim, legal action, counterclaim, suit, arbitration, or other legal,
administrative, or tax proceeding, nor any material order,
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decree, or judgment, in progress or pending, or to the knowledge of Seller
threatened, against Seller, the Assets, or the business or operations of any of
the Businesses.
3.14 Compliance with Laws. Seller is in compliance in all material
respects with all federal, state and local laws, rules, regulations and
ordinances applicable or relating to the ownership and operation of the Assets
and the Businesses, including, without limitation, laws, rules, regulations and
ordinances related to the operations and content of billboards.
3.15 Conduct of Business in Ordinary Course. Except as set forth in
Schedule 3.15, from January 1, 1997 through the date of this Agreement, Seller
has conducted the business and operations of the Businesses in the ordinary
course consistent with past practice in all material respects and has not (a)
made any material increase in compensation payable or to become payable to any
of the employees of the Businesses, except as disclosed in Schedule 3.12, or any
material change in personnel policies, insurance benefits or other compensation
arrangements affecting the employees of the Businesses, (b) made any sale,
assignment, lease or other transfer of any of Seller's properties, other than
obsolete assets no longer usable in the operations of the Businesses, or other
assets sold or disposed of in the normal course of business with suitable
replacements being obtained therefor, (c) incurred material loss of, or material
injury to, any of the Assets as a result of any fire, explosion, windstorm,
earthquake, labor trouble, riot, accident, act of God or public authority or
armed forces or other casualty or waived any rights of substantial value related
to the Assets, (d) made any material change in any method of accounting or
accounting practice, or (e) transferred to any Affiliate of Seller any right,
property or interest which is necessary or useful in the operations of the
Businesses.
3.16 Environmental Matters.
(a) For purposes of this Agreement, the following definitions
shall be applicable:
(i) "Applicable Environmental Law" shall mean
any and all laws, statutes, regulations, and judicial interpretations thereof of
the United States, of any state in which the Assets, or any portion thereof, or
the business of the Businesses, are located, and of any other government or
quasi-government authority having jurisdiction, that relate to the prevention,
abatement and elimination of pollution and/or protection of the environment,
including, but not limited to, the federal Comprehensive Environmental Response,
Compensation, and Liability Act, the Resource Conservation and Recovery Act, the
Federal
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Water Pollution Control Act, the Clean Air Act, the Safe Drinking Water Act, the
Toxic Substances Control Act, the Hazardous Materials Transportation Act, the
Refuse Act and the Emergency Planning and Community Right to Know Act (each as
amended on or before the Effective Time), together with all state statutes
serving any similar or related purposes, as in effect on or before the Effective
Time.
(ii) "Hazardous Substance" means any substance
designated pursuant to Section 307(a) and 311(b)(2)(A) of the federal Clean
Water Act, 33 USCA Sections 1317(a), 1321(b)(2)(A), Section 112 of the federal
Clean Air Act, 42 USCA Section 3412, Section 3001 of the federal Resource
Conversation and Recovery Act, 42 USCA Section 6921, Section 7 of the federal
Toxic Substances Control Act, 15 USCA Section 2606, or Section 101(14) and
Section 102 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 USCA Sections 9601(14), 9602, as amended by the Superfund
Amendments and Reorganization Act of 1986.
(b) Seller has supplied to Buyer a true and complete copy of
the report for each environmental inspection or audit that Seller has caused to
be conducted with respect to any of the Real Property as listed in Schedule
3.16.
(c) (i) Except as set forth in Schedule 3.16, the
improvements owned or used by Seller on the owned Real Property and on the
leased Real Property do not contain any asbestos that would constitute a
violation of or noncompliance with any Applicable Environmental Law in any
material respect. The equipment owned or used by Seller on the owned Real
Property or any leased Real Property does not contain any polychlorinated
biphenyls that would constitute a violation of or noncompliance with any
Applicable Environmental Law in any material respect.
(ii) No contamination caused by Seller exists on
or under the owned Real Property or on or under any leased Real Property, or
affecting any natural resources therein that would constitute a violation of or
noncompliance with any Applicable Environmental Law in any material respect.
(iii) No contamination has been caused by Seller
on or under the owned Real Property or leased Real Property, or affecting any
natural resources therein that would constitute a violation of or noncompliance
with any Applicable Environmental Law in any material respect.
(iv) The Assets and the Businesses are in
compliance with all Applicable Environmental Laws in all material respects.
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(v) Seller has no material liability relating to
its ownership and operation of any of the Businesses as a result of
noncompliance with any Applicable Environmental Law. No charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice has
been filed or, to Seller's knowledge, commenced against Seller in connection
with its ownership or operation of any of the Businesses alleging any failure to
comply in any material respect with any Applicable Environmental Law.
3.17 Brokers. Except for the fees payable to Communications Equity
Associates ("CEA"), which fees shall be paid by Buyer and Seller as set forth in
Section 6.11 of the Group II-V Asset Purchase Agreement, neither Seller nor any
Person acting on its behalf has incurred any liability for any finders' or
brokers' fees or commissions in connection with the transactions contemplated by
this Agreement.
3.18 Transactions With Affiliates. Except as set forth in Schedule
3.18, Seller is not, and since January 1, 1997, has not been a party, directly
or indirectly, to any contract, lease, arrangement or transaction which is
material to the business or operations of the Businesses, whether for the
purchase, lease or sale of property, for the rendition of services or otherwise,
with any Affiliate of Seller, or any officer, director, employee, proprietor,
partner or shareholder of Seller, and no such Person has any interest in or
right to any of the Assets. The terms and conditions of the transactions
involving Seller and any Affiliate of Seller which are identified in Schedule
3.18 are described briefly therein.
3.19 Assets. Except for the Excluded Assets, the Assets include all of
the assets or property used in the conduct of the business of the Businesses as
currently operated.
3.20 Employee Benefits. Schedule 3.20 lists all Employee Plans covering
employees of the Businesses and, except as set forth in Schedule 3.20, copies of
such Employee Plans together with any trusts related thereto have previously
been made available to Buyer. All Employee Plans are in compliance with their
terms and with the applicable provisions of ERISA and the Code in all material
respects. No Employee Plan is, or within the past six years has been, subject to
Title IV of ERISA or Section 412 of the Code. Seller has at no time contributed
to, or been obligated to contribute to, any multi-employer plan (as defined in
ERISA Section 3(37)). There exists no action, suit or claim (other than routine
claims for benefits) with respect to any Employee Plan pending, or to the
knowledge of Seller threatened, against any Employee Plan which is reasonably
expected to result in any material liability to Seller. Except
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as required by ERISA Sections 601 et seq. and Code Section 4980B, Seller does
not sponsor, maintain or contribute to any Employee Plan which provides medical
coverage to retirees or other former employees of Seller. Seller has not engaged
in any transaction described in ERISA Section 4069 within the past five years.
There is no governmental audit or examination of any Employee Plan. All
contributions and premium payments required by law have been made in all
material respects to each Employee Plan. Each Employee Plan that is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter that it is so qualified.
3.21 Foreign Person. Seller is not a "foreign person" or a "foreign
corporation" as such terms are defined in Section 1445 of the Code.
3.22 Like-kind Exchange. If Seller elects under Section 11.10 to effect
the transfer of some or all of the Assets to Buyer in a manner qualifying as
part of a like-kind exchange of property by Seller within the meaning of Section
1031 of the Code, Buyer's tax basis in the Assets shall not be less than the tax
basis Buyer would have had in the Assets had Seller not made such an election
under Section 11.10.
3.23 Disclosure. None of the representations or warranties of Seller in
this Agreement contains or will contain any untrue or misleading statement of
material fact or omits or will omit to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows as of the date
hereof and as of the Effective Time:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and, at the Effective Time, will be duly qualified to conduct business in
each jurisdiction in which such qualification is necessary for Buyer to own the
Assets and operate the Businesses. Buyer has the requisite corporate power and
authority to (a) execute, deliver and perform this Agreement according to its
terms, and (b) own the Assets.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by Buyer have been duly and validly authorized by all
necessary corporate action on the
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part of Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes legal, valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms, except as the enforceability of
this Agreement may be affected by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents. Except for
the applicable requirements of the HSR Act and subject to the receipt of the FCC
Consent, the execution, delivery and performance by Buyer of this Agreement
(with or without the giving of notice, the lapse of time, or both): (a) do not
require the consent of any third party; (b) do not conflict with the articles of
incorporation or bylaws of Buyer; (c) do not conflict in any material respect
with, result in a material breach of, or constitute a material default under,
any applicable law, judgment, order, ordinance, injunction, decree, rule,
regulation, or ruling of any court or governmental authority applicable to Buyer
or any material contract or agreement to which Buyer is a party or by which
Buyer may be bound.
4.4 Buyer Qualifications. To Buyer's knowledge, except as set forth on
Schedule 4.4, Buyer is legally, financially and otherwise qualified to be the
licensee of, acquire, own and operate the Earth Stations under the
Communications Act, and the rules, regulations and policies of the FCC. Buyer
knows of no fact that would, under existing law and the existing rules,
regulations, policies and procedures of the FCC (a) disqualify Buyer as an
assignee of the FCC Licenses or as the owner and operator of any of the Earth
Stations or (b) cause the FCC to fail to approve in a timely fashion any of the
applications for the FCC Consents.
4.5 Brokers. Except for the fees payable to CEA, which fees shall be
paid by Buyer and Seller as set forth in Section 6.11 of the Group II-V Asset
Purchase Agreement, neither Buyer nor any Person acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
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4.6 Availability of Funds. Buyer will have available sufficient funds
to enable it to consummate the transactions contemplated hereby.
4.7 Disclosure. None of the representations or warranties of Buyer in
this Agreement contains or will contain any untrue or misleading statement of
material fact or omits or will omit to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.
SECTION 5 CONDUCT OF THE BUSINESSES PRIOR TO EFFECTIVE TIME
The following covenants of Seller in Sections 5.1 through 5.7 below
shall apply between the date of this Agreement and the Effective Time with
respect to the Businesses and the Assets. Notwithstanding anything to the
contrary contained in this Agreement, Buyer and Seller acknowledge and agree
that nothing in this Agreement shall apply to, or in any way restrict or limit,
any of the businesses or operations of the Seller, other than the Businesses.
5.1 Generally. Seller shall conduct the Businesses in all material
respects in the ordinary course of business (except where such conduct would
conflict with the following covenants or with Seller's other obligations under
this Agreement). With respect to the Businesses, Seller shall maintain and
repair the facilities and equipment, maintain inventory of supplies, parts and
other materials and keep books of account, records and files, in each case in
the ordinary course of business consistent with past practice to the extent
commercially reasonable. Seller shall continue to operate the Businesses in
compliance in all material respects with all applicable laws and the FCC
Licenses, to the extent applicable.
Prior to the Effective Time, except as provided in Schedule 5.1 or as
otherwise permitted by any provision of this Section 5.1, Seller with respect to
the Businesses, will not, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld:
(a) apply to the FCC for any construction permit that would
restrict any of the Earth Station's present operations, or make any material
change in any of the buildings, leasehold improvements or fixtures of the
Businesses that is not in the ordinary course of business;
(b) enter into, renew, amend or modify any contract, lease,
license or other agreement, provided that (1) Seller shall
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be permitted to enter into, renew, amend or modify any contract, lease, license
or other agreement in the ordinary course of business not involving liabilities
exceeding Two Thousand Five Hundred Dollars ($2,500) per contract, lease,
license or agreement per year and One Hundred Twenty-Five Thousand Dollars
($125,000) per year in the aggregate for the Businesses and the Stations (as
defined in the Group II-V Asset Purchase Agreement) for all such contracts,
leases, licenses and other agreements, (2) Seller shall be permitted to enter
into trade or barter agreements, in the ordinary course of business, consistent
with past practice, which do not result in a Negative Balance and as set forth
in Section 5.1(f) below, and (3) nothing contained herein shall be deemed to
prevent Seller from entering into any contract, lease, license or other
agreement not falling within the scope of the foregoing clauses of this Section
5.1(b), and, except as provided in clauses (1), (2) and (3) above and Schedule
5.1, any such contract, lease, license or other agreement entered into outside
the ordinary course of business shall not constitute an Assumed Contract, unless
expressly agreed to by Buyer;
(c) make any assignment for the benefit of creditors or take
any action in contemplation of, or which would constitute the basis for, the
institution of insolvency proceedings of any character, including, without
limitation, bankruptcy, receivership, reorganization, composition or arrangement
with creditors, voluntary or involuntary;
(d) except as required by law or the Assumed Contracts, (i)
hire any employee except in the ordinary course of business, (ii) enter into,
renew, amend or modify any contract of employment, collective bargaining
agreement or other labor contract or (iii) permit any increases in the
compensation of any of the employees of the Businesses, except for employees
without employment contracts, salary increases each January 1 and July 1
consistent with past practices not exceeding 5% per year; provided, however,
that Seller may pay bonuses to any of its employees so long as such bonuses do
not create any liability or obligation upon Buyer.
(e) discount or otherwise reduce any accounts receivable of
the Businesses, or collect any such receivables other than in the ordinary
course of business consistent with past practice; and
(f) enter into any trade or barter agreements which would
cause the value of goods or services to be received by all the Stations (as
defined in the Group II-V Asset Purchase Agreement) and the Businesses in the
aggregate to result in a Negative Balance; provided, however, that to the extent
that Seller determines in good faith that it is necessary to enter
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into such a trade or barter agreement, Seller may do so, but if such agreement
has not been consented to by Buyer and causes a Negative Balance, Buyer shall
have no obligation in respect of such agreement to the extent of the obligations
thereunder which cause such Negative Balance.
Whenever, pursuant to subsections (a) through (f) above, Seller shall request
the consent of Buyer, the request shall be sent in writing via facsimile to
Buyer in accordance with Section 11.2. With respect to requests for consent
under Section 5.1, unless Buyer gives or denies its written consent by the end
of the fifth Business Day after the request for consent is transmitted to Buyer,
Buyer's written consent will be presumed to have been given as of that deadline.
Prior to the Effective Time, Seller shall maintain in full force and effect the
insurance policies of Seller listed on Schedule 3.11 with respect to the
Businesses or policies providing similar coverage, and make and prosecute all
claims thereunder in respect of any loss or damage to any of the Assets in
accordance with past practice, and apply the proceeds thereof to the repair or
replacement of any such Assets.
5.2 Dispositions. Prior to the Effective Time, except as contemplated
by this Agreement or set forth on Schedule 5.2, Seller shall not sell, assign,
lease or otherwise transfer or dispose of any of the Assets, except any Assets
no longer used in the business or operations of the Businesses or any Assets
that are replaced with replacement property of equivalent value, kind and use.
Notwithstanding the foregoing or anything else contained in this Agreement, the
expiration by their terms of Contracts prior to the Effective Time shall not be
deemed to be a violation of this Agreement.
5.3 Liens. Prior to the Effective Time, Seller shall not create, assume
or permit to exist any Liens upon the Assets, except for Permitted Liens and
Liens that will be discharged prior to or on the Closing Date.
5.4 Access to Information. Prior to the Effective Time, Seller shall
give Buyer and its employees and other authorized representatives during normal
business hours and with reasonable prior notice, access to the Assets and to all
other books, records and documents of Seller relating to the Businesses (such
access not to unreasonably interfere with the business or operations of the
Businesses), including, without limitation, for purposes of conducting any
surveys and/or environmental assessments of Real Property included in the Assets
in accordance with Section 6.8, and will furnish or cause to be furnished to
Buyer or its authorized representatives, upon reasonable notice, all information
with respect to the business and operation of the Businesses that Buyer may
reasonably request; provided that the
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foregoing do not unreasonably disrupt the business of Seller. As soon as
practicable after the date hereof, and in any case prior to August 29, 1997,
Seller shall provide Buyer with a list of the names under which any of the
Businesses have been conducted by Seller or any Affiliate of Seller.
5.5 Financial Information. For all periods prior to the Effective Time,
Seller shall furnish Buyer within twenty (20) days after the end of each
calendar month after the date hereof an unaudited statement of income and
expense for such month of the Businesses owned by Seller and such other
financial information prepared by Seller relating to the operations of the
Businesses, as Buyer may reasonably request (the "Monthly Financial
Information"). The Monthly Financial Information shall be prepared in accordance
with GAAP (except for the absence of footnotes and year-end adjustments
otherwise required by GAAP) and shall present fairly in all material respects
the financial condition of Seller with respect to the Businesses included in
such Monthly Financial Information as at the date thereof and for the periods
then ended, as appropriate.
5.6 Notice of Proceedings. Prior to the Effective Time, Seller and
Buyer will promptly notify the other in writing upon becoming aware of any order
or decree or any complaint praying for an order or decree restraining or
enjoining the consummation of this Agreement, or the transactions contemplated
hereunder, or upon receiving any notice from any court or government authority
of its intention to institute an investigation into, or institute a suit or
proceeding to restrain or enjoin the consummation of this Agreement or the
transactions contemplated hereunder, or to nullify or render ineffective this
Agreement, or such transactions if consummated. Seller and Buyer will each use
commercially reasonable efforts to contest, defend and resolve any such suit,
proceeding or injunction brought against it, and to cause any temporary
restraining order or preliminary injunction against such consummation to be
lifted, promptly, so as to permit the consummation of the transactions
contemplated hereby and thereby.
5.7 Representations and Warranties. Prior to the Effective Time, Seller
shall give Buyer detailed written notice promptly upon becoming aware (i) that
any representation or warranty of Seller under this Agreement, or under any
document, instrument or agreement made or delivered by Seller in connection
herewith, is untrue or misleading in any material respect and (ii) of any event
or condition that would render any such representation or warranty untrue or
misleading in any material respect if such event or condition were known to
Seller when such representation or warranty was made.
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SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) Buyer and Seller acknowledge that Buyer and Seller have
prepared and, on July 16, 1997, filed with the FCC appropriate applications for
the FCC Consent. Buyer and PCC shall prosecute the applications for the FCC
Consent with commercially reasonable diligence and otherwise use their
commercially reasonable efforts to obtain the grants of the applications as
expeditiously as practicable. Each party will promptly provide to the other
party a copy of any pleading, order or other document served on it relating to
such applications. Buyer and Seller shall oppose any petitions to deny or other
objections filed with respect to any application for FCC Consent and any
requests for reconsideration or review of any FCC Consent.
(b) If the FCC shall not have granted the FCC Consent by the
date that is five Business Days prior to the date otherwise scheduled for the
Closing pursuant to Section 8.1(a), Buyer and Seller shall cooperate and file
with the FCC such requests and supporting information as may be required to
obtain as expeditiously as possible special temporary authority to permit Buyer
to operate the Earth Stations pending receipt of the FCC Consent.
(c) If the Closing shall not have occurred for any reason
within the original effective period of any FCC Consent, and neither party shall
have terminated this Agreement under Section 9, the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the effective period of the FCC Consent shall limit the exercise by either party
of its right to terminate the Agreement under Section 9.
6.2 HSR Act Filing. Seller and Buyer acknowledge that they have filed,
or caused to be filed, with the U.S. Department of Justice ("DOJ") and Federal
Trade Commission ("FTC") certain filings that are required in connection with
the transactions contemplated hereby under the HSR Act and submitted to the
other party, prior to the filing thereof, their respective HSR Act filings and
discussed with the other any comments the reviewing party may have had. Seller
and Buyer agree to file, or cause to be filed, on or before August 26, 1997 with
the DOJ and FTC all additional filings that are required in connection with the
transactions contemplated hereby under the HSR Act, including reflecting that
the assets used and usable in connection with the Tampa Billboard Business and
the Sports Teams Business are to be excluded from the Assets, and will submit to
the other party,
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prior to the filing thereof, their respective HSR Act filing and discuss with
the other any comments the reviewing party may have. Buyer and Seller hereby
agree that Buyer will not buy from Seller, and Seller will not sell to Buyer,
the assets relating to the Tampa Billboard Business and the Sports Teams
Business. Buyer and Seller agree to (a) cooperate with each other in connection
with all such HSR Act filings, which cooperation shall include furnishing the
other with any information or documents that may be reasonably required in
connection with such filings; (b) promptly file, after any request by the FTC or
DOJ and after appropriate negotiation with the FTC or DOJ of the scope of such
request, any information or documents requested by the FTC or DOJ; and (c)
furnish each other with any correspondence from or to, and notify each other of
any other communications with, the FTC or DOJ that relates to the transactions
contemplated hereunder, and to the extent practicable, to permit each other to
participate in any conferences with the FTC or DOJ.
6.3 Confidentiality.
(a) Each party will not use or disclose to third parties
(except as may be necessary for the consummation of the transactions
contemplated hereby, or as required by law, including, without limitation, in
connection with legal proceedings relating to this Agreement, documents
delivered in connection herewith or pursuant hereto and the transactions
contemplated hereby and thereby, or otherwise pursuant to subpoena or the
request of a governmental authority, and then only with prior notice to the
other parties hereto, including delivery of a copy of the subpoena or request,
if applicable) this Agreement or any information (including, without limitation,
financial information and information regarding program contracts and revenue)
received from the other parties hereto or their agents in the course of
investigating, negotiating and performing the transactions contemplated by this
Agreement and the documents delivered in connection herewith or pursuant hereto;
provided, however, that each party may disclose such information to such party's
officers, directors, employees, lenders, advisors, attorneys and accountants who
need to know such information in connection with the consummation of the
transactions contemplated by this Agreement and the documents delivered in
connection herewith or pursuant hereto and who are informed by such party of the
confidential nature of such information. Nothing shall be deemed to be
confidential information that: (1) is already in such party's possession,
provided that such information is not known by such party to be subject to
another confidentiality agreement with or other obligation of secrecy to the
other party hereto or another party, or (2) becomes generally available to the
public other than as a result of a disclosure by such party or such party's
officers, directors, employees, lenders,
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advisors, attorneys or accountants, or (3) becomes available to such party on a
non-confidential basis from a source other than the other party hereto or its
advisors, provided that such source is not known by such party to be bound by a
confidentiality agreement with, or other obligation of secrecy to, the other
party hereto or another party, or (4) is developed independently by either party
without resort to the confidential information of the other party. In the event
this Agreement is terminated and the purchase and sale contemplated hereby
abandoned, Buyer will return to Seller all copies of documents, work papers and
other written confidential material obtained by Buyer in connection with the
transactions contemplated hereby. If this Agreement is terminated, each party
will return to the other party all information (including all documents, work
papers and other written confidential material) obtained by such party from any
other party in connection with the transactions contemplated by this Agreement.
(b) No party shall publish any press release or make any other
public announcement concerning this Agreement or the transactions contemplated
hereby without the prior written consent of each other party, which shall not be
withheld unreasonably; provided, however, that nothing contained in this
Agreement shall prevent any party, after notification to each other party, from
taking any action required by law or from making any filings with governmental
authorities that, in its judgment, may be required or advisable in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
6.4 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary or desirable to the implementation and consummation of this Agreement,
including, without limitation, obtaining any Consents and Estoppel Certificates
and otherwise use their commercially reasonable efforts to consummate the
transactions contemplated hereby and to fulfill their obligations under this
Agreement. Seller and Buyer shall each diligently make, and cooperate with the
other in making, all commercially reasonable efforts to obtain or cause to be
obtained prior to the Closing Date all Consents and Estoppel Certificates. Buyer
agrees to use all commercially reasonable efforts to assist Seller in obtaining
such Consents and Estoppel Certificates, and to take all commercially reasonable
actions necessary or desirable to obtain such Consents and Estoppel
Certificates, including, without limitation, executing such assumption
instruments and other
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documents as may be reasonably required in connection with obtaining the
Consents and Estoppel Certificates.
6.5 Access to Books and Records. Seller shall provide Buyer access and
the right to copy for a period of two (2) years from the Closing Date any books
and records relating to the Assets, but not included in such Assets. Buyer shall
provide Seller access and the right to copy for a period of two (2) years after
the Closing Date any books and records relating to the Assets, that are included
in such Assets. Neither Buyer nor Seller will destroy any such books and records
during such two (2) year period. After the expiration of such two (2) year
period, Buyer and Seller shall use commercially reasonable efforts to give the
other parties to this Agreement reasonable prior written notice of their
intention to destroy any such books and records prior to destroying any such
books and records.
6.6 Employee Matters. The following provisions shall be for the
exclusive benefit of the parties to this Agreement and not for the benefit of
any other person or entity:
(a) (i) Effective as of the Effective Time, Buyer (A) shall
assume the Assumed Contracts listed on Schedule 3.12 and (B) may, in its sole
discretion, but shall not be obligated to, offer employment to any of Seller's
other employees with respect to the Businesses (collectively, those employees to
whom Buyer elects to offer employment and who are employed pursuant to Assumed
Contracts, the "Assumed Employees"). Except as otherwise provided in any Assumed
Contract, Buyer may offer employment to the Assumed Employees on any terms and
conditions that are determined by Buyer in its sole discretion, including with
respect to the provision of retirement and health care benefits. Buyer shall
assume the contracts of employment of the Assumed Employees and, notwithstanding
anything in the foregoing to the contrary, to the extent such employment
contracts assumed hereunder provide for terms and conditions in addition to
those referenced in the preceding sentence, Buyer shall assume the terms
thereof.
(b) To the extent the Purchase Price is reduced pursuant to
Section 2.5 in respect thereof, Buyer shall grant Assumed Employees credit for
and shall assume and be responsible for any liabilities with respect to sick
leave and personal days accrued but unused by any Assumed Employees as of the
Effective Time, and, to the extent of such Purchase Price reduction, Buyer shall
grant Assumed Employees credit for and shall assume and be responsible for any
liabilities with respect to any accrued but unused vacation for such employees
as of the Effective Time. No such credit shall exceed the number of sick,
personal and vacation days listed on Schedule 3.12.
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(c) Buyer agrees that Seller may inform its employees that
Buyer has agreed that the Assumed Employees will be offered employment as
provided in this Section 6.6; provided, however, that Buyer shall have the right
to approve any written statement to be made by Seller in connection therewith.
(d) Seller shall comply with the provisions of the Worker
Adjustment and Retraining and Notification Act (the "WARN Act") and similar laws
and regulations, if applicable, and shall be solely responsible for any and all
liabilities, penalties, fines, or other sanctions that may be assessed or
otherwise due under such applicable laws and regulations on account of the
dismissal or termination of any of the employees of any of the Businesses by
Seller prior to the Effective Time. Buyer shall employ at least that proportion
of the employees of each Station as shall be necessary to prevent a "mass
layoff" or a "plant closing" as such terms are defined in the WARN Act and Buyer
shall comply with all applicable laws and regulations applicable in connection
with Buyer's exercise of discretion in offering employment to employees of
Seller, including, without limitation, those relating to employment
discrimination.
(e) Within a reasonable period of time after the Effective
Time, Seller shall transfer from the Xxxxxx Communications 401(k) Profit Sharing
Plan (the "Seller 401(k) Plan") to the 401(k) Plan maintained by the Guarantor
or its Affiliates for the benefit of the employees of the Buyer ("Buyer's 401(k)
Plan") an amount, in cash, equal to the aggregate account balances held in the
Seller 401(k) Plan as of the date of transfer with respect to all Assumed
Employees hired by Buyer as of the Effective Time, provided, however, that Buyer
shall have no obligation under this Section 6.6(e) if Buyer reasonably believes
such transfer shall cause Buyer's 401(k) Plan to not be qualified under the
Code. Prior to the date of any such transfer, and as preconditions thereto: (i)
Buyer shall use commercially reasonable efforts to deliver to Seller a copy of
the most recently issued Internal Revenue Service ("IRS") determination letter
(or other proof reasonably satisfactory to counsel for Seller) that Buyer's
401(k) Plan is qualified under the Code, and (ii) Seller shall use commercially
reasonable efforts to deliver to Buyer a copy of the most recently issued IRS
determination letter (or other proof reasonably satisfactory to counsel for
Buyer) that the Seller 401(k) Plan is qualified under the Code. Seller and Buyer
agree to cooperate with respect to any government filing, including, but not
limited to, the filing of IRS Forms 5310-A, if necessary, to effect the transfer
of assets contemplated by this Section 6.6(e).
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6.7 Cure. For all purposes under this Agreement, the existence or
occurrence of any events or circumstances that constitutes or causes a breach of
a representation or warranty of Seller or Buyer (including, without limitation,
in the case of Seller, under the information disclosed in the Schedules hereto)
on the date such representation or warranty is made shall be deemed not to
constitute a breach of such representation or warranty if such event or
circumstance is cured in all material respects on or before 30 days after the
receipt by such party of written notice thereof from the other party.
6.8 Environmental Reports.
(a) Seller has ordered, at Seller's cost, a Phase I
environmental report with respect to Seller's office building located at 0000
00xx Xxxxxx, Xxxxxxx, Xxxxxxx and Buyer has ordered Phase I environmental
reports on the following parcels of owned Real Property for which Seller does
not currently have a Phase I environmental report: billboard sites X-00, X-00,
X-00, X-00, X-00, X-00, X-00, X-00(0), O-33(2), X-00, X-00, X-00 and O- 47 (the
"New Phase I Reports"). Buyer and Seller shall each pay one-half of the
aggregate cost of obtaining the New Phase I Reports relating to such billboard
sites. The respective parties shall deliver to the other copies of each New
Phase I Report promptly upon receipt thereof. There are no other environmental
reports with respect to the Real Property that are in the possession, custody or
control of Seller.
(b) Seller will cooperate with Buyer in obtaining, at Seller's
expense, a Phase II environmental report for any parcel of Real Property owned
by Seller with respect to the Businesses to the extent expressly recommended in
any New Phase I Report (a "Phase II Report"). Seller and Buyer shall use
commercially reasonable efforts to obtain the Phase II Reports as soon as
practicable thereafter; provided, however, that no such Phase II Reports (other
than the Phase II Report which has been authorized by Seller with respect to
Seller's office building) shall be ordered or obtained before the expiration of
five (5) Business Days after the date hereof. The New Phase I Reports and any
Phase II Reports are hereinafter referred to as the "Assessments."
(c) Copies of each Assessment shall be delivered to Seller by
Buyer promptly after receipt by Buyer. Seller and Buyer agree that the results
of any Assessment carried out pursuant to this Section shall not be disclosed to
any third party, unless such disclosure is required by law; provided, however,
that each party may disclose such information to such party's officers,
directors, employees, lenders, advisors, attorneys and accountants who need to
know such information in
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connection with the consummation of the transactions contemplated by this
Agreement and who are informed by such party of the confidential nature of such
information.
(d) From and after the Effective Time, in accordance with and
subject to the provisions of Section 10 hereof, Seller shall, at its sole cost,
either undertake, or reimburse Buyer for, any remediation or other action
required to eliminate noncompliance with Applicable Environmental Laws with
respect to any Real Property owned by Seller, in each case as specifically set
forth in any Phase II Report (irrespective of whether such Phase II Report is
received before or after the Effective Time).
6.9 Fees of CEA. No party shall have any liability to any other party
in respect of the fees of CEA to be paid by Buyer and Seller in accordance with
the terms of their respective agreements with CEA.
6.10 Unwind Transaction. (a) If the sale of the Repurchase Assets has
occurred hereunder and (i) the Group II-V Asset Purchase Agreement is terminated
with respect to (A) all Group Sales or (B) the Group II/III Sale and the Group V
Sale, or (ii) the Group II/III Closing and the Group V Closing have not occurred
on or before the Termination Date, the parties hereto shall have the following
rights and obligations:
(1) If the Group II-V Asset Purchase Agreement has
been terminated, other than as a result of Seller's breach or
default of its obligations thereunder, Seller shall have the
right, exercisable by written notice from Seller to Buyer
given within five (5) Business Days of such termination of the
Group II-V Asset Purchase Agreement or the Termination Date,
as the case may be, to cause Buyer to sell back to Seller, and
upon such request by Seller, Buyer shall sell back to Seller,
the Repurchase Assets.
(2) If the Group II-V Asset Purchase Agreement has
been terminated, other than as a result of Buyer's breach or
default of its obligations thereunder, Buyer shall have the
right, exercisable by written notice from Buyer to Seller
given within five (5) Business Days of such termination of the
Group II-V Asset Purchase Agreement, to cause Seller to
repurchase from Buyer, and upon the request of Buyer, Seller
shall repurchase from Buyer, the Repurchase Assets.
(b) Such sale and repurchase described in
Section 6.10(a) shall be effected on substantially the same terms as the terms
on which the Assets were acquired by Buyer pursuant
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to this Agreement, and the purchase price therefor shall be Three Million Six
Hundred Eighty-Eight Thousand Dollars ($3,688,000), subject to adjustment
consistent with Section 2.5(b)(2), paid by Buyer pursuant to this Agreement. The
consummation of such sale and repurchase shall be effected as soon as
practicable following such termination of the Group II-V Asset Purchase
Agreement or the Termination Date, as the case may be, subject to receipt of all
consents, permits and approvals of government authorities and other third
parties necessary to transfer the Assets back to Seller or otherwise to
consummate the sale and repurchase, including, without limitation, all necessary
consents of the FCC, DOJ and FTC pursuant to the HSR Act.
6.11 Updated Information. On the date which is three (3) Business Days
prior to the Closing Date, Seller shall deliver to Buyer a supplement to the
Schedules to this Agreement (the "Schedule Supplement"), certifying that Seller
has delivered to Buyer all notices required by Section 5.7 and setting forth any
matter which, if existing or occurring on the date hereof, would have been
required to be set forth or described on the Schedules hereto or that is
necessary to complete or correct any information contained therein. This Section
6.11 does not, and shall not be construed to, permit any actions or inactions by
Seller not otherwise permitted under this Agreement. For purposes of the
conditions to the Closing, if the matters disclosed in the Schedule Supplement
fall within the exceptions set forth in clauses (1), (2) or (3) to Section
7.1(a) or the exception to Section 7.1(b), then such exceptions shall apply, but
no such disclosure by Seller to Buyer shall otherwise affect any of Buyer's
rights or obligations hereunder, whether before or after the Closing. Without
limiting the foregoing, regardless of any such disclosure, all representations
and warranties of Seller in this Agreement shall survive the Closing to the
extent provided in Section 10.1 of this Agreement, and Buyer shall be entitled
to indemnification, in accordance with Section 10.2.
6.12 Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation or
condemnation of any Assets prior to the Effective Time (collectively, a "Loss")
shall be borne by Seller. In the event of any Loss prior to the Effective Time
that interferes with the normal operation of any of the Businesses to which such
Assets relate, Seller shall promptly notify Buyer of same in writing, specifying
with particularity the Loss incurred, the cause thereof, if known or reasonably
ascertainable, and the insurance coverage, if any, applicable thereto.
(b) (i) Except as provided in Section 6.12(c), if
the Assets subject to such Loss have not been restored or replaced by
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the Effective Time, Buyer shall proceed to consummate the transactions to be
consummated at the Closing pursuant to this Agreement. Buyer and Seller shall
negotiate in good faith to agree on the amount of the costs necessary to
complete the restoration and replacement of such damaged Assets. To the extent
Buyer and Seller are unable to agree on the amount of such costs, Buyer and
Seller shall jointly designate an independent appraiser who shall be
knowledgeable and experienced in the operation of businesses similar to the
Businesses to resolve such dispute. If the parties are unable to agree on the
designation of an independent appraiser, the selection of the appraiser to
resolve the dispute shall be submitted to arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association.
(ii) To the extent the parties agree to the
amount of such costs prior to the Effective Time or the appraiser is able to
determine the amount of such costs prior to the Effective Time, such amount
shall be deducted from the Preliminary Purchase Price. To the extent such amount
is not determined prior to the Closing Date, such amount shall be a Settled
Claim and shall be paid by Seller to Buyer pursuant to Section 10.2(a)(viii).
The appraiser's resolution of any such dispute shall be final and binding on the
parties. Any fees of the appraiser and, if necessary, for arbitration to select
such appraiser, shall be split equally between the parties.
(c) If any Assets have suffered a Loss which has had a
Material Adverse Effect, Seller shall give prompt written notice thereof to
Buyer. If on the Effective Time, such Loss continues to have a Material Adverse
Effect, (i) either and both of Buyer or Seller shall have the right, by giving
prompt written notice thereof to the other, to postpone the Closing Date for a
period of up to 90 days and shall close no later than such 90th day if the
Assets subject to such Loss have been repaired or replaced by such date;
provided, however, that the Closing shall occur as promptly as practicable after
such Assets are repaired or replaced. Notwithstanding the foregoing, if such
Assets are not repaired or replaced in all material respects by the expiration
of such 90-day period, Buyer shall have the right to terminate this Agreement;
such right to be exercised within ten (10) Business Days after the expiration of
such 90-day period.
In addition to the foregoing in this Section 6.12(c), if, prior to the
first applicable Effective Time under the Group II-V Asset Purchase Agreement,
the regular transmission of the Networks considered as a whole, are interrupted
for a period of five (5) or more consecutive days or fourteen (14) or more
periods of 24 consecutive hours, Seller shall give Buyer notice of such
interruption within five (5) Business Days of such
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interruption. After receipt of such notice, Buyer may terminate this Agreement
by giving written notice thereof to Seller within ten (10) Business Days of
receipt by Buyer of such notice. If Buyer chooses not to terminate this
Agreement or fails to give written notice within such ten (10) Business Day
period, Buyer shall have no further right to terminate this Agreement in respect
of such interruption and the remaining provisions of this Agreement shall
govern.
(d) The risk of loss, damage, impairment, confiscation or
condemnation of any of the Assets arising after the Effective Time shall be
borne by Buyer and no such loss, damage, impairment, confiscation or
condemnation of such Assets shall (i) give Buyer any claim against Seller with
respect thereto, including, without limitation, any claim for indemnification
pursuant to Section 10.2, or (ii) otherwise affect Buyer's obligation to
consummate the Closing or pay the Purchase Price.
(e) If before the Effective Time, the regular transmission of
any Network in the normal and usual manner is interrupted for a period of 12
continuous hours or more, Seller shall give prompt written notice thereof to
Buyer.
6.13 Miscellaneous. (a) As soon as practicable after the date hereof,
Seller shall notify Buyer in writing if Seller is subject to any law, regulation
or ordinance with respect to amortization or limitation on any right to
maintain, repair or rebuild any of the billboard faces included in the Assets in
the event of damage or decay.
(b) To the extent that any of the Assets constitute billboard
faces which are under construction on the date hereof, Seller will have the
construction of any such billboard faces completed prior to Closing, at Seller's
sole cost and expense; provided that to the extent such construction is not
completed by Closing, Seller shall be responsible for the cost of completion of
such construction (and, notwithstanding anything to the contrary set forth
herein, such obligation shall not be subject to the Hurdle Amount, as defined
below in Section 10).
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer at the Closing. The obligations
of Buyer at the Closing hereunder are subject, at Buyer's option, to the
fulfillment prior to or at the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller shall be true and
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correct at and as of the Closing Date as though made at and as of that time,
except (1) to the extent any such representation or warranty is expressly stated
only as of a specified earlier date or dates, in which case such representation
or warranty shall be true and correct in all material respects as of such
earlier specified date or dates (subject to clause 3 below), (2) for changes
which are permitted or contemplated pursuant to this Agreement or (3) where the
consequence of the matter set forth in such representation or warranty having
failed to be true and correct as of the date when made, on the Closing Date or
on such earlier specified date, would not have a Material Adverse Effect.
(b) Covenants. Seller shall have performed and complied with
all covenants and agreements required by this Agreement to be performed or
complied with by it prior to or on the Closing Date, except to the extent that
the consequence of the failure of Seller to have so performed or complied would
not have a Material Adverse Effect.
(c) FCC Consent. The FCC Consent shall have been granted or,
if the FCC Consent shall not have been granted, special temporary authority
shall have been granted by the FCC to permit Buyer to operate the Earth Stations
pending the grant of such FCC Consent.
(d) HSR Act. The waiting period under the HSR Act in respect
of the transactions to be consummated at the Closing shall have expired or
terminated and there shall not be pending any action or request for information
instituted by the FTC or the DOJ under the HSR Act relating to such
transactions.
(e) Legal Proceedings. No injunction, restraining order or
decree of any nature of any court or governmental authority of competent
jurisdiction shall be in effect which restrains or prohibits Buyer from
consummating the transactions at the Closing contemplated by this Agreement.
(f) Deliveries. Seller shall have made, or stand willing to
make, all the deliveries to Buyer described in Section 8.2.
(g) Required Consents. All Required Consents shall have been
obtained and delivered to Buyer.
7.2 Conditions to Obligations of Seller at the Closing. The obligations
of Seller at the Closing hereunder are subject, at Seller's option, to the
fulfillment prior to or at such Closings of each of the following conditions:
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(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date as though made at and as of that
time, except to the extent any such representation or warranty is expressly
stated only as of a specified earlier date or dates, in which case such
representation and warranty shall be true and accurate in all material respects
as of such earlier specified date or dates.
(b) Covenants. Buyer shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or on the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted or,
if the FCC Consent shall not have been granted, special temporary authority
shall have been granted by the FCC to permit Buyer to operate the Earth Stations
pending the grant of such FCC Consent.
(d) HSR Act. The waiting period under the HSR Act in respect
of the transactions to be consummated at the Closing shall have expired or
terminated and there shall not be pending any action or request for information
instituted by the FTC or the DOJ under the HSR Act relating to such
transactions.
(e) Legal Proceedings. No injunction, restraining order or
decree of any nature of any court or governmental authority of competent
jurisdiction shall be in effect which restrains or prohibits Seller from
consummating the transactions at the Closing contemplated by this Agreement.
(f) Deliveries. Buyer shall have made or stand willing to make
all the deliveries described in Section 8.3.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(i) Subject to the satisfaction or, to the
extent permissible by law, waiver (by the party for whose benefit the Closing
condition is imposed) on the date scheduled for the Closing of the conditions
precedent set forth in Section 7.1 or 7.2, as appropriate, the parties hereto
agree that the Closing of the transactions contemplated by this Agreement shall
take place at 10:00 a.m., Washington, D.C. time, on the later of (x) October
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1, 1997, and (y) the date reasonably agreeable to Seller and Buyer not less than
five (5) Business Days nor more than ten (10) Business Days, following the
expiration or termination of the waiting period under the HSR Act in respect of
the transactions contemplated by this Agreement; provided, however, that,
notwithstanding clause (y) above, if the waiting period under the HSR Act in
respect of the transactions contemplated by this Agreement expires or terminates
prior to October 1, 1997, the Closing of the transactions contemplated by this
Agreement shall take place no later than October 1, 1997, and, provided, further
that in no event shall the Closing hereunder occur prior to the earlier of (A)
the making of the Group V Loan (as defined in the Group II-V Asset Purchase
Agreement) and (B) the consummation of the Group II/III and Group V Closing (as
defined in the Group II-V Asset Purchase Agreement) and the Closing hereunder
shall be scheduled to occur concurrently with the date that is the earlier of
the foregoing dates in clauses (A) and (B).
(ii) Notwithstanding the foregoing, if on the
date otherwise scheduled for the Closing pursuant to the preceding paragraph,
the conditions precedent set forth in Sections 7.1(c), 7.1(e), 7.1(g), 7.2(c),
or 7.2(e) have not been satisfied, the party for whose benefit such conditions
have been imposed may elect to postpone the Closing, and the Closing shall
thereafter take place on a date specified by not less than five (5) Business
Days' prior written notice from such party, which date shall be not less than
five (5) Business Days nor more than ten (10) Business Days after the
satisfaction or waiver of such conditions precedent. Notwithstanding the
foregoing, if the Closing has been postponed pursuant to Section 6.12, the
Closing shall take place in accordance with the provisions of Section 6.12, on
the date specified by not less than five (5) Business Days' nor more than ten
(10) Business Days' prior written notice from Seller to Buyer until the
expiration of the period set forth in Section 6.12. The parties shall seek any
extension of the FCC Consent that may be required for any such postponement of
the Closing.
(iii) In no event shall the Closing hereunder
occur later than the Termination Date, except as provided in Section 9.1.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Xxxxxx & Xxxxxxxxx, PLLC, 0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxx, X.X. 00000, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
take the following actions and deliver to Buyer the
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following documents, in form and substance reasonably satisfactory to Buyer and
its counsel:
(a) Conveyancing Documents. Duly executed assignments and
other conveyancing documents that are sufficient to convey and vest good and, in
the case of owned Real Property, marketable, title to the Assets to the Buyer,
free and clear of all Liens, except for Permitted Liens. Such documents shall
include, but shall not be limited to, the following:
(i) Assignment and Assumption Agreement for the
Assumed Contracts, substantially in the form of Exhibit 8.2(a) annexed hereto
(the "Assignment and Assumption Agreement"), and assignment agreements in
recordable form for each Real Property lease (provided, however, that Seller
shall have no liability to Buyer with respect to the recording or recordability
of any such assignment agreements and the recording or recordability of any such
assignment agreements shall not be a condition to the satisfaction of this
Section 8.2(a)(i));
(ii) deeds (the "Deeds") in recordable form
conveying fee simple title to all Real Property owned by Seller and used in the
Businesses, subject to Permitted Liens and consistent with and subject to the
representations and warranties and the indemnity limitations set forth in this
Agreement;
(iii) bills of sale; and
(iv) an Assignment and Acceptance of FCC
Licenses.
(b) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by the President of Seller (but
without personal liability to such officer), certifying to the fulfillment of
the conditions set forth in Sections 7.1(a) and 7.1(b).
(c) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by the Secretary of Seller (but without liability to such
officer), certifying that the resolutions, as attached to such certificate, were
duly adopted by the Board of Directors and shareholders (if required) of Seller,
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby and that such resolutions remain in full
force and effect and that attached thereto are true, correct and complete copies
of the Certificate of Incorporation and bylaws of Seller.
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(d) Consents and Estoppel Certificates. A copy of the Required
Consents and any other instrument evidencing any Consents and Estoppel
Certificates received.
(e) Releases. Any mortgage discharges or releases of Liens
that are necessary in order for the Assets to be free and clear of all Liens,
other than the Permitted Liens, or pay-off letters from any of Seller's lenders
providing for such discharges and releases upon payment by Seller of the
obligations owed to such lenders with the proceeds of the Preliminary Purchase
Price on the Closing Date.
(f) Good Standing Certificates. A certificate as to the
formation and good standing of Seller issued by the Secretary of State of the
state of its incorporation, dated not more than ten (10) days before the Closing
Date.
(g) Incumbency Certificate. A certificate signed by an officer
of Seller (but without personal liability to such officer) certifying the
signature and incumbency of the person executing this Agreement on behalf of
Seller.
(h) Title Commitments. ALTA title commitments issued by
Lawyers Title Insurance Corporation obtained by Seller at Buyer's expense (at
the minimum promulgated rates in the State of Florida plus reasonable title
search fees), insuring fee simple title in each fee estate included in the Real
Property, subject to standard survey exceptions and Permitted Liens, in an
amount reasonably determined by Buyer that permits such commitments to be
obtained.
(i) Lien Search Results. The results of a search for tax, lien
and judgment filings with respect to each of the names reasonably requested by
Buyer no later than 20 days before Closing, obtained by Seller, at Buyer's
expense, against the Secretary of State's records of the State of Florida,
Tennessee and Alabama (as applicable, with respect to such names) and in the
records of each county in Florida, Tennessee and Alabama (as applicable, with
respect to such names) in which any of the Assets are located, reflecting the
absence of Liens other than Permitted Liens and Liens removed concurrently with,
or prior to, Closing.
(j) Other. Such other documents expressly called for to be
delivered by Seller under the terms of this Agreement or as may reasonably be
requested by Buyer.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
take the following actions and deliver to Seller the
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following documents, in form and substance reasonably satisfactory to Seller and
its counsel:
(a) Closing Payment. Make the payment described in Section
2.6(a).
(b) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by the President of Buyer (but without
personal liability to such officer), certifying to the fulfillment of the
conditions set forth in Sections 7.2(a) and 7.2(b).
(c) Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Secretary of Buyer (but without personal liability to
such officer), certifying that the resolutions, as attached to such certificate,
were duly adopted by the Board of Directors and shareholders (if required) of
the Buyer, authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect and that attached thereto are true, correct and
complete copies of the Certificate of Incorporation and bylaws of Buyer.
(d) Assignment and Assumption Agreements. The duly executed
Assignment and Assumption Agreement and the Assignment and Acceptances of FCC
Licenses referenced in Section 8.2(a)(iv).
(e) Good Standing Certificate. A certificate as to the
existence and good standing of Buyer issued by the Secretary of State of the
State of organization of Buyer, dated not more than ten (10) days before the
Closing Date, and certificates issued by the appropriate governmental authority
as to the qualification of Buyer to do business in each jurisdiction in which
such qualification is necessary for Buyer to own the Assets and operate the
Businesses.
(f) Incumbency Certificate. A certificate signed by an officer
of Buyer and Guarantor (but without liability to such officers) certifying the
signatures and incumbency of the persons executing this Agreement on behalf of
Buyer and the Guarantor.
(g) Other. Such other documents expressly called for to be
delivered by Buyer under the terms of this Agreement or as may be reasonably
requested by Seller.
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SECTION 9 TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated only as
follows:
(a) at any time by written consent of each of Buyer, Guarantor
and Seller;
(b) by either Buyer or Seller, if the terminating party is not
in default or breach in any material respect of its obligations under this
Agreement, if the Closing hereunder has not taken place on or before the
Termination Date;
(c) by Seller, if Seller is not in default or breach in any
material respect of its obligations under this Agreement, if the conditions
precedent to Seller's obligations in Section 7.2 have not been satisfied (or
waived by Seller) by the date scheduled for such Closing pursuant to Section 8.1
(as such date may be postponed pursuant to Sections 6.12 and 8.1(a)(ii));
(d) by Buyer, if Buyer is not in default or breach in any
material respect of its obligations under this Agreement, if the conditions
precedent to Buyer's obligations in Sections 7.1 have not been satisfied (or
waived by Buyer) by the date scheduled for the Closing pursuant to Section 8.1
(as such date may be postponed pursuant to Sections 6.12 and 8.1(a)(ii));
(e) if the Closing under this Agreement has not occurred, by
either Buyer or Seller, if the terminating party is not in default or breach in
any material respect of its obligations under this Agreement and the Group II-V
Asset Purchase Agreement, if the Group II-V Asset Purchase Agreement is
terminated with respect to (i) the Group II/III Sale and the Group V Sale or
(ii) all Group Sales, in each case, pursuant to Section 9.1 thereof; and
(f) by Buyer, pursuant to Section 6.12(c).
Notwithstanding anything in this Section 9.1 to the contrary,
if on the Termination Date, the Closing has not occurred solely because any
required notice period for the Closing has not lapsed, the Termination Date
shall be extended until the lapse of such period.
Without limiting the generality of the foregoing or any
applicable law, neither Buyer, on the one hand, nor Seller, on the other hand,
may rely on the failure of any condition precedent set forth in Section 7 to be
satisfied as a ground for termination of this Agreement by such party if such
failure was caused by such party's failure to act in good faith, or a breach
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of or failure to perform its representations, warranties, covenants, agreements
or other obligations in accordance with the terms hereof.
9.2 Procedure and Effect of Termination.
(a) In the event of termination of this Agreement by
either or both of Buyer and/or Seller pursuant to Section 9.1, prompt written
notice thereof shall forthwith be given to the other party and this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without further action by any of the parties hereto, but subject to and without
limiting any of the rights of the parties specified herein in the event a party
is in default or breach in any material respect of its obligations under this
Agreement. If this Agreement is terminated as provided herein:
(i) None of the parties hereto shall
have any liability or further obligation to any other
party or any of their respective directors, officers,
shareholders, employees, agents, or Affiliates
pursuant to this Agreement or otherwise, except as
stated in Sections 6.3, 6.9, 9.2, 9.3 and 11.1
hereof;
(ii) Except for Guarantor, which shall
have liability as Guarantor hereunder, if applicable,
and Xx. Xxxxxx X. Xxxxxx, who shall have liability as
guarantor pursuant to the Guaranty set forth in
Section 6.10(a)(i)(6) of the Group II-V Asset
Purchase Agreement to the extent set forth therein,
if applicable, notwithstanding anything herein or in
applicable law to the contrary, none of the
respective directors, officers, shareholders,
employees, agents or Affiliates of any of the parties
hereto shall have any liability or obligation to any
other party or any of their respective directors,
officers, shareholders, employees, agents or
Affiliates pursuant to this Agreement or otherwise;
and
(iii) All filings, applications and other
submissions relating to the transactions contemplated
hereby as to which termination has occurred shall, to
the extent practicable, be withdrawn from the agency
or other Person to which made.
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(b) With respect to terminations pursuant to Section 9.1
hereof:
(i) If this Agreement is terminated
pursuant to Sections 9.1(a) or 9.1(f), then and in
that event, none of the parties hereto shall have any
recourse against or liability to the other parties
hereto, except as stated in this Section 9.2(b) and
Sections 6.3, 6.9, 9.2(a), 9.3 and 11.1 hereof or in
any written agreement entered into by the parties in
connection with such termination.
(ii) If this Agreement is terminated by
Seller pursuant to Section 9.1(b), 9.1(c) or 9.1(e),
and Buyer is in breach or default of its obligations
under this Agreement, then Seller shall have the
right to pursue all legal and equitable remedies
available to it against Buyer and Guarantor for
breach of contract; provided, that, notwithstanding
the foregoing, in the case of termination under
Section 9.1(e) if the Group V Loan (as defined in the
Group II-V Asset Purchase Agreement) has been made,
Seller shall be entitled only to the remedies, if
any, specified in the Group II-V Asset Purchase
Agreement.
(iii) If this Agreement is terminated by
Buyer pursuant to Section 9.1(b), 9.1(d) or 9.1(e),
and Seller is in breach or default of its obligations
under this Agreement, then Buyer shall have the right
to pursue all legal and equitable remedies available
to it against Seller for breach of contract.
9.3 Attorneys' Fees. In the event of a default by either party that
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses incurred in connection
with
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such proceedings (whether incurred in arbitration, at trial, or on appeal).
9.4 Specific Performance. In the event of a breach or threatened breach
by Buyer, Guarantor or Seller of any representation, warranty, covenant or
agreement under this Agreement, in addition to any other remedy available to it
(but subject to the proviso in Section 9.2(b)(ii) hereof), Seller or Buyer, as
the case may be, shall be entitled to an injunction restraining any such breach
or threatened breach by the other parties to this Agreement and, subject to
obtaining any requisite approval of the FCC, to enforcement of this Agreement by
a decree of specific performance requiring such other parties to fulfill their
respective obligations under this Agreement, in each case without the necessity
of showing economic loss or other actual damages and without any bond or other
security being required.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN
REMEDIES
10.1 Survival.
(a) The representations and warranties of Buyer, Guarantor and
Seller contained herein shall survive the Closing for a period expiring eighteen
(18) months after the Effective Time and shall terminate on such date, except to
the extent that any claims for indemnification in respect of a breach of any
such representation or warranty is made on or before the dates set forth in the
preceding clause, in which case such representation or warranty (but not any
others) shall survive until the resolution of such claim.
(b) Notwithstanding the foregoing, (1) any claims for
indemnification related to a breach of the representations and warranties
contained in Section 3.16 shall survive, and must be brought before the
expiration of the period expiring thirty-six (36) months after the Effective
Time and (2) any claims for indemnification pursuant to Section 10.2(a)(iv) or
related to a breach of the representations and warranties contained in Sections
3.10 and 3.22 shall survive, and must be brought before the expiration of, the
applicable statute of limitations.
(c) Buyer's obligation to pay, perform or discharge the
Assumed Liabilities shall survive until such Assumed Liabilities have been paid,
performed or discharged in full.
(d) Seller's obligations to pay, perform or discharge all
liabilities of Seller that are not Assumed Liabilities
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("Retained Liabilities"), and to indemnify Buyer in respect thereof, shall
survive until such liabilities have been paid, performed or discharged in full.
(e) Any claim for indemnification in respect of a covenant or
agreement of Buyer or Seller hereunder to be performed before the Closing shall
be made before the expiration of the eighteen (18) month anniversary of the
Effective Time. The covenants and agreements of the parties contained herein and
to be performed to any extent after the Closing Date shall survive the Closing
until fully paid, discharged and performed, and any claims for indemnification
in respect of a breach of such covenants to be performed after the Closing Date
shall survive until such covenants and agreements are so paid, discharged and
performed.
10.2 Indemnification by Seller. (a) After the Closing, Seller hereby
agrees to indemnify, defend and hold Buyer harmless against and with respect to,
and shall reimburse Buyer for:
(i) Any and all losses, liabilities or damages
resulting from any breach of any representation or warranty made pursuant to
this Agreement as of the date hereof or as of the Effective Time, or any failure
by Seller to perform any covenant of Seller set forth in this Agreement or in
any certificate, document or instrument prepared by Seller and delivered to
Buyer hereunder;
(ii) Any failure by Seller to pay, perform or
discharge any and all Retained Liabilities;
(iii) Any litigation, proceeding or claim by any
third party arising from the business or operations of the Businesses by Seller
prior to the Effective Time, except to the extent arising from the Assumed
Liabilities;
(iv) If Seller elects under Section 11.10 (the
"1031 Election") to effect the transfer of some or all of the Assets to Buyer in
a manner qualifying as part of a like-kind exchange of property by Seller within
the meaning of Section 1031 of the Code (a "Like-kind Exchange"), (A) the
excess, if any, of (1) all reasonable out-of-pocket costs and expenses of Buyer
in consummating the transfer of any of the Assets to Buyer in a Like-kind
Exchange, including, without limitation, reasonable legal fees and expenses for
the review of any additional documentation to be executed and delivered by Buyer
as a result of the Like-kind Exchange, over (2) the costs and expenses of Buyer
in consummating the transfer of such Assets to Buyer if the 1031 Election had
not been made and (B) the excess,
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if any, of (1) if the 1031 Election causes Buyer to obtain a tax basis in such
assets less than the tax basis Buyer would have had in such Assets had Seller
not made a 1031 Election, the Taxes payable by Buyer, over (2) the Taxes that
would have been payable by Buyer had Seller not made the 1031 Election;
(v) With respect to any leased Real Property for
which a Lease Consent or Estoppel Certificate are not obtained by the date which
is twelve (12) months after the Closing Date related to such leased Real
Property only, any and all reasonable out-of-pocket costs and expenses,
including reasonable legal fees and expenses, arising from the termination of
any lease for such Real Property and the transfer of any Assets from the related
leased Real Property to a new site as a result thereof;
(vi) Any and all reasonable out-of-pocket costs
and expenses, including reasonable legal fees and expenses, of undertaking
remediation or such other action to eliminate any noncompliance with applicable
law with respect to any Real Property owned by Seller, in each case as
specifically set forth in any Phase II Report;
(vii) Any and all loss, liabilities or damages
resulting from those provisions of any employment contract between the
Businesses and an Assumed Employee which address the terms and conditions of any
grant by PCC to such Assumed Employee of an option to purchase common stock;
(viii) The amount finally determined pursuant to
Section 6.12(b)(ii); and
(ix) Any and all reasonable out-of-pocket costs
and expenses, including reasonable legal fees and expenses, incident to any
action, suit, proceeding, claim, demand, assessment or judgment incident to the
foregoing or reasonably incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof, or in enforcing this indemnity.
(b) Seller's obligation to indemnify Buyer pursuant to Section
10.2(a) shall be subject to all of the following limitations:
(i) (1) No indemnification shall be required to
be made by Seller as the Indemnifying Party under Section 10.2(a) until the
aggregate amount of all Settled Claims of Buyer as Claimant pursuant to this
Agreement (and any agreements executed in connection herewith or delivered
pursuant hereto) and the Group II-V Asset Purchase Agreement (and any agreements
executed in connection therewith or delivered pursuant thereto)
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exceeds Five Hundred Thousand Dollars ($500,000) in the aggregate (the "Hurdle
Amount"); provided, however, that such limitation shall not apply to claims made
by Buyer with respect to indemnification pursuant to Section 10.2(a)(iv), (v),
(vi), (vii) and (viii) and prorations and adjustments to the Estimated Purchase
Price pursuant to Sections 2.5 and 6.13(b). Once the aggregate amount of all
such Settled Claims exceeds the Hurdle Amount, Seller shall provide
indemnification to Buyer in respect of all Settled Claims, whether occurring
before or after such time.
(2) Notwithstanding anything in this
Agreement or applicable law to the contrary, in no event shall Seller's
obligation for indemnification under this Agreement and the Group II-V Asset
Purchase Agreement (and agreements executed in connection herewith or therewith
or delivered pursuant hereto or thereto) in the aggregate for all such
agreements, exceed $56,967,153, and Buyer waives, releases and shall have no
recourse against Seller for amounts in excess of $56,967,153; provided, however,
that such limitation shall not apply to claims made by Buyer pursuant to Section
10.2(a)(iv) and (viii).
(ii) Buyer shall be entitled to indemnification
only for those damages arising with respect to any claim as to which Buyer has
given Seller written notice within the appropriate time period set forth in
Section 10.1 hereof for such claim.
(iii) All of Buyer's damages sought to be
recovered under Section 10.2(a) hereof shall be net of (i) any insurance
proceeds received by Buyer as Claimant, with respect to events giving rise to
such damages, and (ii) tax benefits finally received by or accruing to Buyer in
connection with such events.
(iv) Following the Closing, the sole and
exclusive remedy for Buyer for any claim arising out of a breach of any
representation, warranty, covenant or other agreement herein or otherwise
arising out of or in connection with the transactions contemplated by this
Agreement (and agreements executed in connection herewith or delivered pursuant
hereto) or the operations of the Businesses, other than in respect of claims
arising in connection with the WHNZ Option Agreement, the WYCL Option Agreement,
the Services Agreements and the TSAs, whether such claim is framed in tort,
contract or otherwise, shall be a claim for indemnification pursuant to this
Section 10.
(v) Anything in this Agreement or any applicable
law to the contrary notwithstanding, it is understood and agreed
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by Buyer that, other than with respect to Seller (but not including any
shareholder, director, officer, employee, agent or Affiliate of Seller) as
expressly provided for in Section 10.2(a) and this Section 10.2(b), no
shareholder, director, officer, employee, agent or Affiliate of Seller shall
have (i) any personal liability to Buyer as a result of the breach of any
representation, warranty, covenant or agreement of Seller contained herein or
otherwise arising out of or in connection with the transactions contemplated
hereby or the operations of the Businesses or (ii) any personal obligation to
indemnify Buyer for any of Buyer's claims pursuant to Section 10.2(a) and Buyer
waives and releases and shall have no recourse against any of such parties
described in this Section 10.2(b)(v) as a result of the breach of any
representation, warranty, covenant or agreement of Seller contained herein or
otherwise arising out of or in connection with the transactions contemplated
hereby or the operations of the Businesses; provided, however, that the
foregoing shall not affect the liability and obligations of any of the parties
to the Clear Channel Loan Agreement and the Guaranty delivered to Buyer pursuant
to Section 6.10(a)(i)(6) of the Group II-V Asset Purchase Agreement thereunder.
10.3 Indemnification by Buyer and Guarantor. (a) After the Closing,
Buyer and Guarantor hereby jointly and severally agree to indemnify, defend and
hold Seller harmless against and with respect to, and shall reimburse Seller
for:
(i) Any and all losses, liabilities or damages
resulting from any material breach of any representation or warranty made
pursuant to this Agreement, or any material failure by Buyer or Guarantor to
perform any covenant of Buyer or Guarantor set forth in this Agreement or in any
certificate, document or instrument delivered to Seller under this Agreement;
(ii) Any failure by Buyer or Guarantor to pay,
perform or discharge any and all Assumed Liabilities or any other liabilities of
Buyer or Guarantor pursuant to this Agreement;
(iii) Any litigation, proceeding or claim arising
from the business or operations of the Assets or the Businesses on or after the
Effective Time;
(iv) Any and all reasonable out-of-pocket costs
sand expenses, including reasonable legal fees and expenses, incident to any
action, suit, proceeding, claim, demand, assessment or judgment incident to the
foregoing or reasonably incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof, or in enforcing this indemnity.
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(b) Buyer's and Guarantor's obligation to indemnify Seller pursuant to
Section 10.3(a) shall be subject to all of the following limitations:
(i) (1) No indemnification shall be required to
be made by Buyer and Guarantor as the Indemnifying Party under Section
10.3(a)(i) relating solely to material breaches of representations and
warranties until the aggregate amount of all Settled Claims of Seller as
Claimant pursuant to this Agreement (and any agreements executed in connection
herewith or delivered pursuant hereto) and the Group II-V Asset Purchase
Agreement (and any agreements executed in connection therewith or delivered
pursuant thereto) exceeds the Hurdle Amount in the aggregate; provided, however,
that once the aggregate amount of all such Settled Claims exceeds the Hurdle
Amount, Buyer shall provide indemnification to Seller in respect of all such
Settled Claims, whether occurring before or after such time.
(2) Notwithstanding anything in this
Agreement or applicable law to the contrary, in no event shall Buyer's or
Guarantor's obligation for indemnification relating solely to representations
and warranties under Section 10.3(a)(i) and Section 10.3(a)(i) of the Group II-V
Asset Purchase Agreement (and agreements executed in connection herewith or
therewith or delivered pursuant hereto or thereto) in the aggregate for all such
agreements, exceed $56,967,153, and Seller waives, releases and shall have no
recourse against Buyer for amounts in excess of $56,967,153 relating solely to
such matters; provided, however, that such limitation shall not apply to claims
made by Seller pursuant to any subsection of Section 10.3 or Section 10.3 of the
Group II-V Purchase Agreement other than the provisions thereof relating solely
to material breaches of representations and warranties under Section
10.3(a)(i)of this Agreement and Section 10.3(a)(i) of the Group II-V Asset
Purchase Agreement.
(ii) Seller shall be entitled to indemnification
only for those damages arising with respect to any claim as to which Seller has
given Buyer written notice within the appropriate time period set forth in
Section 10.1 hereof for such claim.
(iii) All of Seller's damages sought to be
recovered under Section 10.3(a) hereof shall be net of (A) any insurance
proceeds received by Seller as Claimant, with respect to events giving rise to
such damages, and (B) any tax benefits finally received or accruing to Seller in
connection with such events.
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(iv) Following the Closing, the sole and
exclusive remedy for Seller for any claim arising out of a breach of any
representation, warranty, covenant or other agreement herein or otherwise
arising out of or in connection with the transactions contemplated by this
Agreement (and agreements executed in connection herewith or delivered pursuant
hereto) or the operations of the Businesses, other than in respect of claims
arising in connection with the WHNZ Option Agreement, the WYCL Option Agreement,
the Services Agreements and the TSAs, whether such claim is framed in tort,
contract or otherwise, shall be a claim for indemnification pursuant to this
Section 10.
(v) Anything in this Agreement or any applicable
law to the contrary notwithstanding, it is understood and agreed by Seller that,
other than with respect to Buyer and Guarantor (but not including any
shareholder, director, officer, employee, agent or other Affiliate of either of
them), as expressly provided for in Section 10.3(a) and this Section 10.3(b), no
shareholder, director, officer, employee, agent or Affiliate of Buyer or
Guarantor shall have (A) any personal liability to Seller as a result of the
breach of any representation, warranty, covenant or agreement of Buyer contained
herein or otherwise arising out of or in connection with the transactions
contemplated hereby or the operations of the Businesses or (B) personal
obligation to indemnify Seller for any of Seller's claims pursuant to Section
10.3(a), and Seller waives and releases and shall have no recourse against any
one of such parties described in this Section 10.3(b)(v) as the result of the
breach of any representation, warranty, covenant or agreement of Buyer contained
herein or otherwise arising out of or in connection with the transactions
contemplated hereby or the operations of the Businesses.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim,
the amount thereof, estimated in good faith, and the method of computation of
such claim, all with reasonable particularity and containing a reference to the
provisions of this Agreement in respect of which such indemnification claim
shall have occurred. If the claim relates to an action, suit, or proceeding
filed by a third party against Claimant, such notice shall be given by Claimant
within ten Business Days after written notice of such action, suit, or
proceeding was given to Claimant.
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(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim,
subject to the terms hereof (including Sections 10.2(b) and 10.3(b)). If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity, as applicable, subject to the limitations
of Sections 10.2(b) and 10.3(b).
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any
third-party claim, then the Claimant may defend through counsel of its own
choosing and (so long as it gives the Indemnifying Party at least fifteen (15)
days' prior written notice of the terms of the proposed settlement thereof and
permits the Indemnifying Party to then undertake the defense thereof) settle
such claim, action or suit, and to recover from the Indemnifying Party the
amount of such settlement or of any judgment and the costs and expenses of such
defense. The Indemnifying Party shall not compromise or settle any third party
claim, action or suit without the prior written consent of the Claimant, which
consent will not be unreasonably withheld or delayed.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as practicable.
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(e) Any claim for indemnity pursuant to this Section 10 with
respect to which (i) the Claimant and the Indemnifying Party agree as to its
validity and amount, (2) a final judgment, order or award of a court of
competent jurisdiction deciding such claim has been rendered, as evidence by a
certified copy of such judgment, provided that such judgment is not appealable
or the time for taking an appeal has expired or (3) the Indemnifying Party has
not given written notice to the Claimant disputing such claim in whole or in
part within thirty days of receiving notice thereof, is referred to as a
"Settled Claim."
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Except as otherwise specifically provided in
this Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement and the documents and transactions contemplated hereby, including all
fees and expenses of counsel, accountants, agents and representatives; provided,
however, that all transfer taxes, recordation taxes, sales taxes and document
stamps in connection with the transactions contemplated by this Agreement and
all other filing fees (including all FCC and HSR Act filing fees) and other
charges levied by any governmental entity in connection with the transactions
contemplated by this Agreement shall be paid one-half by Buyer and one-half by
Seller. Notwithstanding the foregoing, Seller shall pay (a) all Florida state
sales tax, if any, arising from the conveyance of the Assets to Buyer pursuant
to this Agreement and (b) all federal, state or local income taxes payable by
Seller, and Buyer shall pay all federal, state or local income taxes payable by
Buyer. Buyer hereby waives compliance with the provisions of any applicable bulk
transfer laws.
11.2 Notices. All notices, demands and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing, (ii)
sent by facsimile (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (iii) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (iv) addressed
as follows:
To Metroplex, CCL Clear Channel Metroplex,
or Guarantor: Inc.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
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Attention: Xxxx X. Xxxx, President
Xxxxxxx X. Xxxxx, Senior
Vice President for
Legal Affairs
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy Xxxxx Xxxx & Xxxxxxxx
(which shall 0000 X Xxxxxx, X.X.
not constitute Xxxxxxxxxx, X.X. 00000
notice) to: Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
To Seller: Xxxxxx Communications Corporation
000 Xxxxxxxxxx Xxxx Xxxx
Xxxx Xxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Xx. Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy Dow, Xxxxxx & Xxxxxxxxx, PLLC
(which shall 0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
not constitute Suite 800
notice) to: Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, Xx., Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect. Except as otherwise provided in
Section 11.10 and the following sentence of this Section 11.3, no party hereto
may assign this Agreement without the prior written consent of the other parties
hereto. Buyer may assign all of its rights and obligations under this Agreement
to Clear Channel Radio, Inc. ("CCRI") and Clear Channel Radio License, Inc.
("CCRL"), so long as (i) CCRI and CCRL are wholly-owned subsidiaries of the
Guarantor and (ii) such assignment does not hinder, impair or delay in any
respect the grant by the FCC of the FCC Consent or the Closing; provided that
such assignment shall not release Buyer from any of its obligations hereunder.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
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11.4 Further Assurances. Subject to the terms and conditions of this
Agreement, from time to time prior to, at and after the Closing Date, each party
hereto will use commercially reasonable efforts to take, or cause to be taken,
all such actions and to do or cause to be done, all things, necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the purchase and sale contemplated by this Agreement and the consummation of the
other transactions contemplated hereby, including executing and delivering such
documents as the other party being advised by counsel shall reasonably request
in connection with the consummation of this Agreement and the consummation of
the other transactions contemplated hereby, including, without limitation, the
execution and delivery of any and all confirmatory and other instruments, in
addition to those to be delivered on the Closing Date.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF FLORIDA (WITHOUT REGARD TO THE CHOICE OF
LAW PROVISIONS THEREOF).
11.6 Entire Agreement. This Agreement, the Appendices, Exhibits and
Schedules hereto, the Group II-V Asset Purchase Agreement and all documents,
certificates and other documents to be delivered by the parties pursuant hereto
and thereto, collectively, represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter of this Agreement.
This Agreement supersedes the Letter of Intent dated June 16, 1997, as amended,
and all prior negotiations between the parties and cannot be amended,
supplemented, or changed except by an agreement in writing that makes specific
reference to this Agreement and that is signed by the party against which
enforcement of any such amendment, supplement, or modification is sought. Buyer
acknowledges and agrees that Seller shall not be liable for or bound in any
manner by, and Buyer has not relied upon, any express or implied, oral or
written information, warranty, guaranty, promise, statement, inducement,
presentation or opinion (whether of, by or on behalf of Seller, any broker or
finder, or any officer, employee, agent or representative of any of the
foregoing, or any other person) pertaining to the transactions contemplated
hereby, the Seller, the Businesses, the Assets, or any part of any of the
foregoing (including, without limitation, any projections, budgets or other
financial forecasts or the physical condition of the Businesses or any of the
Assets, or the uses which can be made of the same or the value thereof), except
as is expressly set forth in this Agreement.
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11.7 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
11.8 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the greatest
extent possible.
11.10 Cooperation With Respect to Like-Kind Exchange. Seller may assign
some or all of its rights (but not its obligations) under this Agreement to an
escrow agent or other Person reasonably satisfactory to Buyer serving as a
Intermediary under United States Treasury Regulations promulgated under Section
1031 of the Code; provided that (i) such assignment shall not deprive Buyer of
rights or benefits, or relieve Seller of any obligations or liabilities, under
this Agreement, (ii) Buyer shall not be obligated to expend funds or incur
obligations or liabilities in connection therewith and (iii) Seller shall
indemnify and hold harmless Buyer from and against any and all loss, liability,
cost and expense arising or resulting from any such transaction. Seller intends
for such exchange to constitute a like-kind exchange pursuant to Section 1031 of
the Code. However, nothing in this Agreement shall be
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construed as a representation or warranty of any party to any other party as to
the tax characterization of the transaction.
11.11 Guaranty. (a) Guarantor irrevocably guarantees (the "Guarantee"),
as principal and not as surety, to Seller and its successors and permitted
assigns full and prompt performance by Buyer (which for all purposes hereof
shall include any assignee(s) of Buyer permitted under Section 11.3) of all of
its obligations under or pursuant to this Agreement and all documents and
instruments executed in connection herewith or delivered pursuant hereto in
accordance with the terms hereof and thereof (the "Guaranteed Obligations").
Such guarantee shall apply and survive until all obligations of Buyer under this
Agreement and all documents and instruments executed in connection herewith or
delivered pursuant hereto are performed and satisfied in accordance with the
terms thereof. Guarantor hereby waives any provision of any statute or judicial
decision otherwise applicable hereto which restricts or in any way limits the
rights of any obligee against a guarantor or surety following a default or
failure of performance by an obligor with respect to whose obligations the
guarantee is provided. To the fullest extent permitted by applicable law,
Guarantor hereby waives presentment to, demand of payment from and protest of
any Guaranteed Obligation, and also waives notice of acceptance of its guarantee
and notice of protest for nonpayment. To the fullest extent permitted by
applicable law, the obligations of Guarantor hereunder shall not be affected by
(a) the failure of the applicable obligee to assert any claim or demand or to
enforce any right or remedy against Guarantor pursuant to the provisions of this
Agreement or otherwise and (b) any rescission, waiver, amendment or modification
of, or any release from any of the terms or provisions of this Section 11.11,
unless consented to in writing by Buyer and Seller.
(b) Guarantor hereby represents and warrants to Seller as
follows: (i) Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and has the requisite
corporate power and authority to execute, deliver and perform this Agreement
according to its terms; (ii) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by
Guarantor have been duly authorized by all necessary corporate action on the
part of Guarantor; (iii) this Agreement has been duly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies; and (iv)
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the execution, delivery and performance of this Agreement: (1) do not require
the consent of any third party, (2) do not conflict with the Articles of
Incorporation or bylaws of Guarantor, and (3) do not conflict in any material
respect with, result in a material breach of, or constitute a material default
under any applicable law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any court or governmental authority applicable to
Guarantor or any material contract or agreement to which Guarantor is a party or
by which Guarantor may be bound.
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IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of Buyer, Seller and Guarantor of the date first written
above.
CLEAR CHANNEL METROPLEX, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: President/CEO
CLEAR CHANNEL METROPLEX LICENSES, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: President/CEO
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: President/CEO
XXXXXX COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
