Exhibit 2.32
STOCK PURCHASE AGREEMENT
BETWEEN
CUMULUS HOLDINGS, INC..
AND
XXXXXX X. XXXXX
October 16, 1997
TABLE OF CONTENTS
Page
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1. Purchase and Sale of Company Shares................................1
(a) Basic Transaction...........................................1
(b) Purchase Price..............................................1
(c) The Closing.................................................2
(d) Deliveries at the Closing...................................2
2. Representations and Warranties of the Seller.......................3
(a) Authorization of Transaction................................3
(b) Noncontravention............................................3
(c) Brokers' Fees...............................................3
(d) Company Shares..............................................3
3. Representations and Warranties of the Buyer........................3
(a) Organization of the Buyer...................................4
(b) Authorization of Transaction................................4
(c) Noncontravention............................................4
(d) Brokers' Fees...............................................4
4. Representations and Warranties Concerning the Company..............4
(a) Organization, Qualification, and Corporate Power............4
(b) Capitalization..............................................5
(c) Noncontravention............................................5
(d) Financial Statements........................................5
(e) Subsequent Events...........................................6
(f) Undisclosed Liabilities.....................................8
(g) Tax Matters.................................................8
(h) Tangible Assets.............................................9
(i) Owned Real Property........................................10
(j) Real Property Leases.......................................11
(k) Intellectual Property......................................12
(l) Contracts..................................................13
(m) FCC Licenses and Compliance with FCC Requirements..........14
(n) Insurance..................................................15
(o) Litigation.................................................16
(p) Employees..................................................16
(q) Notes and Accounts Receivable..............................16
(r) Powers of Attorney.........................................16
(s) Employee Benefits..........................................16
(t) Environment, Health, and Safety............................18
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(u) Legal Compliance...........................................19
(v) Certain Business Relationships With the Company
and Its Subsidiaries.....................................19
(w) Brokers' Fees..............................................19
(x) Advertising Contracts......................................19
(y) Disclosure.................................................19
5. Pre-Closing Covenants.............................................19
(a) General....................................................20
(b) Transfer Applications......................................20
(c) Notices and Consents.......................................20
(d) Operation of Business......................................20
(e) Employees..................................................21
(f) Advertising Obligations....................................21
(g) Operating Statements.......................................21
(h) Contracts..................................................21
(i) Operation of Stations......................................21
(j) Credit and Receivables.....................................21
(k) Preservation of Business...................................21
(l) Full Access and Consultation...............................22
(m) Notice of Developments.....................................22
(n) Exclusivity................................................22
(o) Title Insurance............................................22
(p) Surveys....................................................22
(q) Environmental Assessments..................................23
(r) Control of Stations........................................23
(s) Risk of Loss...............................................23
(t) Payment of Dividends.......................................24
(u) Wisconsin Tower Site.......................................24
6. Conditions to Obligation to Close.................................24
(a) Conditions to Obligation of the Buyer......................24
(b) Conditions to Obligation of the Seller.....................25
7. Post-Closing Covenants............................................26
(a) General....................................................26
(b) Funded Indebtedness........................................26
(c) Litigation Support.........................................26
(d) Transition.................................................27
(e) Confidentiality............................................27
(f) Covenant Not to Compete....................................27
(g) Retainage Adjustment.......................................27
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8. Remedies for Breaches of this Agreement...........................27
(a) Survival...................................................27
(b) Indemnification Provisions for the Benefit
of the Buyer ............................................28
(c) Indemnification Provisions for the Benefit
of the Seller ...........................................28
(d) Matters Involving Third Parties............................28
(e) Specific Performance.......................................29
(f) Limitation of Liability....................................29
(g) Other Indemnification......................................29
9. Definitions.......................................................29
10. Termination......................................................34
(a) Termination of Agreement...................................34
(b) Effect of Termination......................................35
11. Miscellaneous....................................................35
(a) Survival...................................................35
(b) Press Releases and Announcements...........................35
(c) No Third Party Beneficiaries...............................35
(d) Entire Agreement...........................................35
(e) Succession and Assignment..................................35
(f) Counterparts...............................................36
(g) Headings...................................................36
(h) Notices....................................................36
(i) Governing Law..............................................37
(j) Amendments and Waivers.....................................37
(k) Severability...............................................37
(l) Expenses...................................................37
(m) Construction...............................................37
(n) Incorporation of Exhibits and Schedules....................38
(o) The Seller.................................................38
(p) Submission to Jurisdiction.................................38
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EXHIBITS
Exhibit A--Form of Xxxxxxx Money Escrow Agreement
Exhibit B--Form of Retainage Agreement
Exhibit C--Form of Opinion of Counsel to the Seller
SCHEDULES
Description Section Reference
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Company Shares 2(e)
Directors and Officers 4(a)
Financial Statements 4(d)
Subsequent Events 4(e)
Tax Matters 4(g)
Tangible Assets 4(h)
Owned Real Property 4(i)
Real Property Leases 4(j)
Intellectual Property 4(k)
Contracts 4(l)
FCC Licenses 4(m)
Insurance 4(n)
Litigation 4(o)
Employees 4(p)
Employee Benefits 4(s)
Business Relationships 4(v)
Advertising Contracts 4(x)
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STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") entered into on October 16, 1997, by
and between Cumulus Holdings, Inc., an Illinois corporation (the "Buyer") and
Xxxxxx X. Xxxxx, (the "Seller"). The Buyer and the Seller are referred to
collectively herein as the "Parties."
The Seller owns all of the outstanding capital stock of
Communications Properties, Inc., a Minnesota corporation (the "Company") which,
in turn, owns and operates radio stations WDBQ-AM, KXGE-FM, and KLYV-FM, all
licensed to operate in Dubuque, Iowa, and WJOD-FM, licensed to operate in
Galena, Illinois (collectively the "Stations").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of the Company in return for Cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of the Company Shares for the consideration
specified below in this Section 1.
(b) Purchase Price. The purchase price to be paid to the Seller by
the Buyer for the Company Shares shall be an amount equal to $4,881,262.72 less
the amount of Funded Indebtedness (the "Purchase Price"), and shall be payable
as set forth in this Section 1. The Seller shall furnish the Buyer with a list
of Funded Indebtedness which Buyer agrees to cause to be paid by the Company in
full immediately following the Closing, whether any such indebtedness is due and
owing on the Closing Date; provided, that, in no event shall the aggregate
amount of the Funded Indebtedness exceed the Purchase Price less the Retainage
Deposit, as defined in Section 1(b)(ii) below. All Funded Indebtedness of the
Company as of the date of this Agreement shall constitute an adjustment to the
Purchase Price. The Purchase Price is payable as follows:
(i) on the date of this Agreement, the Buyer will deposit with
the Xxxxxxx Money Escrow Agent the amount of Two Hundred Fifty Thousand
and 00/100 Dollars ($250,000.00) (the "Xxxxxxx Money Deposit") either in
the form of (a) Cash by wire transfer or delivery of other immediately
available funds, or (b) a letter of credit issued by NationsBank of Texas,
N.A. naming the Escrow Agent as beneficiary;
(ii) on the Closing Date, the Buyer shall deposit with the
Retainage Agent the amount of Seven Hundred Fifty Thousand and 00/100
Dollars ($750,000.00) (the
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"Retainage Deposit") in Cash by wire transfer or delivery of other
immediately available funds; and
(iii) on the Closing Date, the Buyer shall pay to the Seller
the amount equal to $4,881,262.72, less Funded Indebtedness, less the
Xxxxxxx Money Deposit (and any interest earned thereon), and less the
Retainage Deposit.
On the Closing Date in addition to the Purchase Price, an amount
equal to One Million and 00/100 Dollars ($1,000,000.00) shall be paid to the
Seller as consideration for the agreements set forth in Section 7(f) of this
Agreement.
The Xxxxxxx Money Deposit referenced in this Section 1(b)(i) shall be placed in
escrow with the Escrow Money Escrow Agent pursuant to an escrow agreement in the
form attached hereto as Exhibit A (the "Xxxxxxx Money Escrow Agreement"), which
requires that the Xxxxxxx Money Deposit shall be deposited by the Xxxxxxx Money
Escrow Agent with a federally insured financial institution in an interest
bearing account. Interest earned on the Xxxxxxx Money Deposit, if any, shall
accrue to the benefit of the Buyer, and, together with the principal amount of
the Xxxxxxx Money Deposit, shall be payable to the Seller and credited against
the Purchase Price on the Closing Date. If this Agreement is terminated without
Closing of the transaction contemplated herein, the Xxxxxxx Money and all
accrued interest, if any, shall be paid to the Buyer or the Seller as provided
in the Xxxxxxx Money Escrow Agreement.
The Retainage Deposit referenced in this Section 1(b)(ii) shall be
placed in escrow with the Retainage Agent pursuant to an escrow agreement in the
form attached hereto as Exhibit B (the "Retainage Agreement"), which requires
that the Retainage Deposit shall be deposited by the Retainage Agent as provided
in the Retainage Agreement. Interest earned on the Retainage Deposit shall
accrue to the benefit of the Seller, and, together with the principal amount of
the Retainage Deposit, shall be payable to the Seller or the Buyer as provided
in the Retainage Agreement.
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of the Stations
in Dubuque, Iowa, commencing at 9:00 a.m. local time on the date set by the
Buyer not earlier than the fifth business day or later than the tenth business
day after the FCC approval of the Transfer Application becomes a Final Order, by
which date all other conditions to the obligations of the Parties to consummate
the transactions contemplated hereby will have been satisfied or waived, or such
other date as the Parties may mutually determine (the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below, (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 6(b)
below, (iii) the Seller will deliver to the Buyer stock certificates
representing all of his Company Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Seller the
consideration specified in Section 1(b) above.
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2. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 2 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 2) except as set forth in Disclosure Schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule") corresponding
to the lettered and numbered sections of this Section 2.
(a) Authorization of Transaction. Seller has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Seller, enforceable in accordance with its terms and conditions. Seller need
not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement, other than Transfer
Applications described in Section 5(b).
(b) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, nor the
performance of his obligations hereunder, will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which
Seller is subject or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which Seller is a party or by which he is
bound or to which any of his assets is subject.
(c) Brokers' Fees. Other than One Hundred Five Thousand and 00/100
Dollars ($105,000.00) which are one-half of the fees payable to Xxxxx & Co.,
Inc., Seller has no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which the Buyer could become liable or obligated.
(d) Company Shares. Seller holds of record and owns beneficially the
number of Company Shares set forth next to his name in Section 2(d) of the
Disclosure Schedule, free and clear of any restrictions on transfer (other than
any restrictions under the Securities Act and state securities laws), claims,
Taxes, Security Interests, options, warrants, rights, contracts, calls,
commitments, equities, and demands. Seller is not a party to any option,
warrant, right, contract, call, put, or other agreement or commitment providing
for the disposition or acquisition of any capital stock of the Company (other
than this Agreement). Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of
the Company.
3. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made
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then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section 3.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Illinois.
(b) Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Buyer is subject or any provision of the charter or bylaws
of the Buyer or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which either of the Buyer is a party or by
which it is bound or to which any of its assets are subject. Other than with
respect to the Transfer Application, the Buyer does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Other than One Hundred Five Thousand and 00/100
Dollars ($105,000.00) which are one-half of the fees payable to Xxxxx & Co.,
Inc., the Buyer has no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which the Seller could become liable or obligated.
4. Representations and Warranties Concerning the Company. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the lettered and numbered paragraphs
contained in the Disclosure Schedule corresponding to the lettered and numbered
sections of this Section 4.
(a) Organization, Qualification, and Corporate Power. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction in
which the nature of its businesses or the ownership or leasing of its properties
requires such qualification. The Company has full corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. Section 4(a) of the Disclosure Schedule lists
the directors and officers of the Company. The
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Seller has delivered to the Buyer correct and complete copies of the charter and
bylaws of the Company (as amended to date). The minute books containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors, the stock certificate books, and the stock
record books of the Company are correct and complete. The Company is not in
default under or in violation of any provision of its charter or bylaws. The
Company does not have any Subsidiaries and does not control directly or
indirectly or have any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of the Company.
(b) Capitalization. The entire authorized capital stock of the
Company consists of 1,250,000 of each of Class A and Class B Company Shares (and
no other class of capital stock), of which 21,132.5 Class A and 18,671.5 Class B
Company Shares are issued and outstanding. No Company Shares are held in
treasury. All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Seller as set forth in Section 2(d) of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which the Company is a party or which are binding upon the
Company providing for the issuance, disposition, or acquisition of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to the Company. There are no
voting trusts, proxies, or any other agreements or understandings with respect
to the voting of the capital stock of the Company; provided that the Company's
Restated Articles of Incorporation provide that its Class B Common Stock is
nonvoting.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Company is subject or any provision of the charter or
bylaws of the Company or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Company is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to that
Transfer Application, the Company need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) Financial Statements. Included in Section 4(d) of the Disclosure
Schedules are the following financial statements (collectively the "Financial
Statements"): (i) audited, compiled or reviewed balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended August 31, 1992; August 31, 1993; August 31, 1994; August 31, 1995
and August 31, 1996 (the "Most Recent Fiscal Year End"), for the Company; and
(ii) unaudited statements of income and Cash flow, as of and for each month
during 1995 and 1996 and the months ended January 31, February 28, March 31,
April 30, May 31, June 30, July 31, and August 31, 1997 for the Company. The
Financial Statements have been prepared in accordance with GAAP applied
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on a consistent basis throughout the periods covered thereby, are correct and
complete, and are consistent with the books and records of the Company (which
books and records are correct and complete). Without limiting the generality of
the foregoing, all material revenues and expenses of the Company (A) are
properly reflected in the Financial Statements, (B) have arisen in the Ordinary
Course of Business unless otherwise stated therein, (C) are valid and subject to
no offsets or claims, and (D) will be or have been collected or paid at their
recorded amounts subject only to the reserve for bad debts set forth on the face
of the Most Recent Balance Sheets.
(e) Subsequent Events. Since January 1, 1997, except as set forth in
Section 4(e) of the Disclosure Schedules, there has not been any material
adverse change in the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Company with
respect to the operation of the Stations. Without limiting the generality of the
foregoing and with respect to the operation of the Stations since that date:
(i) the Company has not sold, leased, transferred, or assigned
any of its material assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any contract, lease,
sublease, license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course of
Business;
(iii) no party has accelerated, terminated, modified, or
cancelled any contract, lease, sublease, license, or sublicense (or series
of related contracts, leases, subleases, licenses, and sublicenses)
involving more than $5,000 to which the Company is a party or by which it
is bound;
(iv) no Security Interest has been imposed upon any of the
Company's assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of
Business;
(vi) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and acquisitions)
outside the Ordinary Course of Business;
(vii) the Company has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease obligations)
outside the Ordinary Course of Business;
(viii) the Company has not delayed or postponed (beyond its
normal practice) the payment of accounts payable and other Liabilities;
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(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
(x) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) the Company has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property or any
action adversely affecting the FCC Licenses or the Stations;
(xii) the Company has not made any loan to, or entered into
any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business giving rise to any claim or right
on its part against the person or on the part of the person against it;
(xiii) the Company has not entered into any employment
contract, consulting contract or severance agreement or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xiv) the Company has not granted any increase outside the
Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees;
(xv) the Company has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E) retirement,
(F) medical, hospitalization, life, or other insurance, (G) severance, or
(H) other plan, contract, or commitment for any of its directors,
officers, and employees, or modified or terminated any existing such plan,
contract, or commitment (however, the employees of WJOD-FM and KXGE-FM,
both of which have been recently acquired by the Company, have become
participants in all of the Company's benefit plans);
(xvi) the Company has not made any other change in employment
terms for any of its directors, officers, and employees;
(xvii) the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xviii) there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Company;
(xix) the Company has not altered its credit and collection
policies or its accounting policies;
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(xx) the Company has not materially altered the programming,
format or call letters of the Stations or their promotional and marketing
activities (other than the call letter change by former KGGY-FM to
KXGE-FM);
(xxi) the Company has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action necessary to
preserve the FCC Licenses and has operated the Stations in compliance
therewith and with all FCC rules and regulations;
(xxii) there has been no change made or authorized in the
charter or bylaws of the Company;
(xxiii) the Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or
other rights to purchase or obtain (including upon conversion or exercise)
any of its capital stock;
(xxiv) the Company has not declared, set aside, or paid any
dividend or distribution with respect to its capital stock or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xxv) there has been no material adverse change in the market
share or Cash flow of the Stations; and
(xxvi) the Company has not committed to any of the foregoing.
(f) Undisclosed Liabilities. The Company has no Liability (and there
is no Basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Year End in the
Ordinary Course of Business (none of which relates to any breach of contract,
breach of warranty, tort, infringement, or violation of law or arose out of any
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand).
(g) Tax Matters.
(i) The Company has filed all Tax Returns and returns that it
was required to file or may be required to file, except for extensions
granted to the Company which are disclosed on Section 4(g) of the
Disclosure Schedule. All such Tax Returns that were filed were correct and
complete in all respects, and all such Tax Returns that will be filed will
be correct and complete in all respects. All Taxes owed by the Company
have been paid. The Company is not currently a party to a pending Tax
audit, aware of a threatened Tax audit, or the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where the Company does not
file reports and returns that it is or may be subject to taxation by that
jurisdiction. There are no Security
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Interests on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to
any employee, creditor, independent contractor, or other third party.
(iii) No Seller or director or officer (or employee
responsible for Tax matters) of the Company has Knowledge that any
authority has or will seek to assess any additional Taxes for any period
for which returns have been filed. There is no dispute or claim concerning
any Tax Liability of the Company either (A) claimed or raised by any
authority in writing or (B) as to which the Company and the directors and
officers (and employees responsible for Tax matters) of the Company has
Knowledge based upon personal contact with any agent of such authority.
Section 4(g) of the Disclosure Schedule lists all federal, state, local,
and foreign income Tax Returns filed with respect to the Company for
taxable periods ended on or after January 1, 1992, indicates those returns
that have been audited, and indicates those returns that currently are the
subject of audit. The Company has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by the
Company since January 1, 1993.
(iv) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The Company is not a party to any Tax allocation or
sharing agreement. The Company has not ever been (or has any Liability for
unpaid Taxes because it once was) a member of an Affiliated Group during
any part of any consolidated return year within any part of a consolidated
return year.
(vi) Section 4(g) of the Disclosure Schedule sets forth the
following information with respect the Company as of the most recent
practicable date: (A) the basis of the Company in its assets; (B) the
amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution
allocable to the Company; and (C) the amount of any deferred gain or loss
allocable to the Company arising out of any deferred intercompany
transaction.
(vii) The unpaid Taxes of the Company do not exceed the
reserve for tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company in
filing its Tax Returns.
(h) Tangible Assets. Section 4(h) of the Disclosure Schedule sets
forth a listing of all transmitter and station equipment, vehicles and other
tangible personal property used in conducting the operation and business of the
Stations. The Company owns or leases all tangible
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assets necessary for the conduct of the operation and business of the Stations
as presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used. No such tangible asset is in need of immediate
replacement or retirement except the Wisconsin transmission tower of KXGE-FM.
(i) Owned Real Property. Section 4(i) of the Disclosure Schedule
lists and describes briefly all real property that the Company owns. Except as
disclosed in Section 4(i) of the Disclosure Schedule, with respect to each such
parcel of owned real property:
(i) the Company has good and marketable title to the parcel of
real property, free and clear of any Security Interest, easement,
covenant, or other restriction, (including but not limited to leases or
other agreements granting to any party the right of use or occupancy of
and options or rights of first refusal to purchase) except for recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of the
property subject thereto;
(ii) there are no (A) pending or, to the Knowledge of the
Seller and the Company, threatened condemnation proceedings relating to
the property; (B) pending or, to the Knowledge of the Seller and the
Company, threatened litigation or administrative actions relating to the
property; or (C) other matters affecting occupancy, or value thereof;
(iii) the legal description for the parcel contained in the
deed thereof describes such parcel fully and adequately, the buildings,
towers, antennae and improvements are located within the boundary lines of
the described parcels of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications), and do not
encroach on any easement which may burden the land, the land does not
serve any adjoining property for any purpose inconsistent with the use of
the land, the property is not located within any flood plain or subject to
any similar type restriction for which any permits or licenses necessary
to the use thereof have not been obtained, and access to the property is
provided by paved public right-of-way with adequate curb cuts available;
(iv) all facilities have received all approvals of
governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and regulations;
(v) there are no parties (other than the Company) in
possession of the parcel of real property, other than tenants under any
leases disclosed in Section 4(j) of the Disclosure Schedule who are in
possession of space to which they are entitled, no leases, subleases or
other agreements granting to any party any right of use or occupancy or
option or right of refusal with respect to any parcel of real property;
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(vi) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of
such facilities, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer, all of which services are adequate in accordance
with all applicable laws, ordinances, rules, and regulations and are
provided via public roads or via permanent, irrevocable, appurtenant
easements benefitting the parcel of real property; and
(vii) each parcel of real property abuts on and has direct
vehicular access to a public road or access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of
real property.
(j) Real Property Leases. Section 4(j) of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to the
Company. The Company has delivered to the Buyer correct and complete copies of
the leases and subleases listed in Section 4(j) of the Disclosure Schedule (as
amended to date). With respect to each lease and sublease listed in Section 4(j)
of the Disclosure Schedule:
(i) the lease or sublease is and, following the Closing, will
continue to be, legal, valid, binding, enforceable, and in full force and
effect;
(ii) no party to the lease or sublease is in breach or default
(or has repudiated any provision thereof), and no event has occurred
which, with notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration thereunder;
(iii) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease other than the oral lease
for the Wisconsin transmission tower site described on Section 4(j) of the
Disclosure Schedule;
(iv) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (iii) above are true and
correct with respect to the underlying lease;
(v) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(vi) to the Knowledge of the Seller and the Company, all
facilities leased or subleased thereunder have received all approvals of
governmental authorities (including licenses, permits and zoning
approvals) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations;
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of
said facilities; and
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(viii) to the Knowledge of the Company, the owner of the
facility leased or subleased has good and marketable title to the parcel
of real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for recorded easements, covenants,
and other restrictions that impair the current use, occupancy, or value,
or the marketability of title, of the property subject thereto.
(k) Intellectual Property. The Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder will be owned or available for use by the Buyer on identical
terms and conditions immediately subsequent to the Closing hereunder. The
Company has taken all necessary or desirable action to protect each item of
Intellectual Property that it owns or uses.
(i) To the Knowledge of the Seller and the Company, the
Company has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
third parties, and the Company has never received any charge, complaint,
claim, or notice alleging any such interference, infringement,
misappropriation, or violation. To the Company's Knowledge, no third party
has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the Company.
(ii) Section 4(k) of the Disclosure Schedule identifies each
patent, trademark or copyright registration which has been issued to the
Seller or the Company with respect to any of his Intellectual Property,
identifies each pending patent, trademark or copyright application for
registration which the Seller or the Company has made with respect to any
of his Intellectual Property, and identifies each license, agreement, or
other permission which the Seller or the Company has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). The Company has delivered to the Buyer correct and complete
copies of all such patents, trademarks or copyright registrations,
applications, licenses, agreements, and permissions (as amended to date)
and has made available to the Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution (if
applicable) of each such item. With respect to each item of Intellectual
Property that the Seller or the Company owns:
(A) the Seller or the Company possesses all right, title, and
interest in and to the item;
(B) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(C) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the Knowledge of
the Seller and the Company, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
and
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(D) except as set forth on Section 4(k) of the Disclosure
Schedule, the Seller or the Company has not ever agreed to indemnify
any person or entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iii) Section 4(k) of the Disclosure Schedule also identifies
each item of Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement, or permission.
The Company has supplied the Buyer with correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each such item of used Intellectual Property:
(A) the license, sublicense, agreement, or permission covering
the item is, and following the Closing will continue to be on
identical terms, legal, valid, binding, enforceable, and in full
force and effect;
(B) no party to the license, sublicense, agreement, or
permission is, to the Knowledge of the Seller and the Company, in
material breach or default (or has repudiated any provision
thereof), and no event has occurred which with notice or lapse of
time would constitute a material breach or default or permit
termination, modification, or acceleration thereunder;
(C) with respect to each sublicense, to the Knowledge of the
Seller and the Company, the representations and warranties set forth
in subsections (A) and (B) above are true and correct with respect
to the underlying license;
(D) to the Knowledge of the Seller and the Company, the
underlying item of Intellectual Property is not subject to any
outstanding judgment, order, decree, stipulation, injunction, or
charge;
(E) to the Knowledge of the Seller and the Company, no charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
or demand is pending, or is threatened which challenges the
legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(F) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(l) Contracts. Other than Advertising Contracts, Section 4(l) of the
Disclosure Schedule lists the contracts, agreements, and other written
arrangements to which the Company is a party and either involving payment in
excess of One Thousand Dollars ($1,000) per year or not entered into in the
Ordinary Course of Business. The Company has delivered to the Buyer a correct
and complete copy of each written arrangement listed in Section 4(l) of the
Disclosure Schedule (as amended to date). With respect to each written
arrangement so listed:
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(i) the written arrangement is legal, valid, binding, and
enforceable in accordance with its terms against each party thereto;
(ii) the written arrangement will continue to be legal, valid,
binding, and enforceable in accordance with the terms against each party
thereto on identical terms following the Closing;
(iii) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration, under the
written arrangement; and
(iv) no party has repudiated any provision of the written
arrangement.
The written arrangements listed in Section 4(l) of the Disclosure Schedule are
all of the written arrangements reasonably necessary for the conduct of the
operation and business of the Stations as presently conducted and proposed to be
conducted. The Company is not a party to any verbal contract, agreement, or
other arrangement which, if reduced to written form, would be required to be
listed in Section 4(l) of the Disclosure Schedule under the terms of this
Section 4(l), other than the verbal lease of the transmission tower site for
KXGE-FM.
(m) FCC Licenses and Compliance with FCC Requirements.
(i) All licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies,
including, without limitation, the FCC Licenses, used or useful in the
operation of the Stations as they are now being operated are detailed in
Section 4(m) of the Disclosure Schedules and are in full force and effect,
are unimpaired by any acts or omissions of Seller, the Company or the
Company's employees or agents, and are free and clear of any restrictions
which might limit the full operation of the Stations. Except as set forth
in Section 4(m) of the Disclosure Schedules, no condition exists or event
has occurred that permits, or after notice or lapse of time, or both,
would permit, the revocation or termination of any such license, permit,
consent, franchise, or authorization (other than pursuant to their express
expiration date) or the imposition of any material restriction or
limitation upon the operation of the Stations as now conducted. Except as
set forth in Section 4(m) of the Disclosure Schedules, the Seller and the
Company are not aware of any reason why the FCC licenses might not be
renewed in the ordinary course or revoked.
(ii) The Stations are each in compliance with the FCC's policy
on exposure to radio frequency radiation. No renewal of any FCC License
would constitute a major environmental action under the FCC's rules or
policies. Access to the Station's transmission facilities is restricted in
accordance with the policies of the FCC.
(iii) Except as set forth in Section 4(m) of the Disclosure
Schedule, to the best of the Knowledge of the Seller and the Company, the
Company is not the subject of any FCC or other governmental investigation
or any notice of violation or order, or any material complaint, objection,
petition to deny, or opposition issued by or filed with the FCC or any
-14-
other governmental authority in connection with the operation of or
authorization for the Stations, and there are no proceedings (other than
rulemaking proceedings of general applicability) before the FCC or any
other governmental authority that could adversely affect any of the FCC
Licenses or the authorizations listed in Section 4(m) of the Disclosures
Schedule.
(iv) The Company has filed with the FCC and all other
governmental authorities having jurisdiction over the Stations all
material reports, applications, documents, instruments, and other
information required to be filed, and will continue to make such filings
through the Closing Date.
(n) Insurance. Section 4(n) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company is a party, a
named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated
and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable in accordance with its terms against the parties
thereto; (B) the policy will continue to be legal, valid, binding, and
enforceable and in full force and effect on identical terms following the
Closing Date; (C) neither the Company nor any other party to the policy is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default or permit termination,
modification, or acceleration, under the policy; and (D) no party to the policy
has repudiated any provision thereof. The Company has been covered during the
past three (3) years by insurance in scope and amount customary and reasonable
for the businesses in which it has engaged during that three-year period.
Section 4(n) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Company.
(o) Litigation. Section 4(o) of the Disclosure Schedule sets forth
each instance in which the Company: (i) is subject to any unsatisfied judgement,
order, decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Seller and the Company, is
-15-
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the charges, complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 4(o) of the
Disclosure Schedule could result in any material adverse change in the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of the Company or the Stations taken as a whole. To the
Knowledge of the Seller, the Seller and the Company have no reason to believe
(and there is no Basis to have any reason to believe) that any other charge,
complaint, action, suit, proceeding, hearing, or investigation may be brought or
threatened against the Company.
(p) Employees. Section 4(p) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Stations of each employee of
Company. To the Knowledge of the Seller and the Company, no key employee or
group of employees has any plans to terminate employment with the Company. The
Company is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Company has not committed any unfair
labor practice. The Seller and the Company have no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
(q) Notes and Accounts Receivable. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are presently current and
collectible, and will be collected with commercially reasonable efforts in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
(s) Employee Benefits. Section 4(s) of the Disclosure Schedule lists
all Employee Benefit Plans that the Company maintains or has maintained, or to
which the Company contributes, or has contributed for the benefit of any current
or former employee of the Company.
(i) Each Employee Benefit Plan (and each related trust or
insurance contract) complies in form and in operation in all respects with
the applicable requirements of ERISA and the Code.
(ii) Each Employee Benefit Plan that is an Employee Pension
Benefit Plan has received a determination from the Internal Revenue
Service that the form of the plan is qualified under Section 401(a) of the
Code, and nothing has occurred since the date of the determination that
would adversely affect the plan's qualified status.
-16-
(iii) All required reports and descriptions (including, where
applicable, Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each Employee Benefit Plan. The applicable
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code Sec.
4980(B) have been met with respect to each Employee Welfare Benefit Plan.
All premiums or other payments for all periods have been paid with respect
to each Employee Welfare Benefit Plan that is a group health plan within
the meaning of the Code Sec. 4980(B)(g)(2) and Section 607 of ERISA. All
contributions (including all employer contributions and employee salary
reduction contributions) which are or were due have been paid in a timely
manner to each Employee Benefit Plan.
(iv) There have been no Prohibited Transactions with respect
to any Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any Employee Benefit
Plan.
(v) No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the administration or the
investment of the assets of any Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any of the Seller
and the Company, threatened. Neither the Seller nor the Company has any
Knowledge of any Basis for any such charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand.
(vi) The Company has delivered to the Buyer correct and
complete copies of (A) the plan documents and summary plan descriptions,
(B) the most recent determination letter received from the Internal
Revenue Service, (C) the most recent Form 5500 Annual Report, and (D) all
related trust agreements, insurance contracts, and other funding
agreements which implement each Employee Benefit Plan.
The Company does not contribute to, has never contributed to, or has never been
required to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan. The Company has not
incurred, and neither the Seller nor the Company has any reason to expect that
the Company will incur any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any Employee Pension Benefit Plan
that the Company maintains or ever has maintained or to which it contributes,
ever has contributed, or ever has been required to contribute. The Company does
not maintain and has not maintained or contributed, or been required to
contribute to any Employee Pension Benefit Plan that is or was subject to Title
IV of ERISA and/or Employee Welfare Benefit Plan providing health, accident, or
life insurance benefits to former employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980(B)).
(t) Environment, Health, and Safety.
-17-
(i) The Company has complied in all material respects with all
laws (including rules and regulations thereunder) of federal, state, and
local governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against the Company alleging
any failure to comply with any such law or regulation.
(ii) The Company has no Liability (and there is no Basis
related to the past or present operations, and its respective predecessors
for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Company giving rise
to any Liability) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, the Federal Water Pollution Control Act of 1972, the
Clean Air Act of 1970, the Safe Drinking Water Act of 1974, the Toxic
Substances Control Act of 1976, the Refuse Act of 1899, or the Emergency
Planning and Community Right-to-Know Act of 1986 (each as amended), or any
other law (or rule or regulation thereunder) of any federal, state, local,
or foreign government (or agency thereof, concerning release or threatened
release of hazardous substances, public health and safety, or pollution or
protection of the environment, or for damage to any site, location, or
body of water (surface or subsurface) or for illness or personal injury.
(iii) The Company has no Liability (and there is no Basis for
any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Seller giving rise to
any Liability) under the Occupational Safety and Health Act, as amended,
or any other law (or rule or regulation thereunder) of any federal, state,
local, or foreign government (or agency thereof) concerning employee
health and safety, or for any illness of or personal injury to any
employee.
(iv) The Company has obtained and has been in compliance with
all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained
in, all federal, state, local, and foreign laws (including rules,
regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety,
worker health and safety, and pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous,
or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(v) All properties and equipment used in the business of the
Company have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
-18-
(vi) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste ever has been buried, stored,
spilled, leaked, discharged, emitted, or released on any real property
that the Company owns or ever has owned or leases or ever has leased.
(u) Legal Compliance.
(i) The Company has complied in all material respects with all
laws (including rules and regulations thereunder) of federal, state, and
local governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice
has been filed or commenced against the Company alleging any failure to
comply with any such law or regulation, including those relating to the
employment of labor, employee civil rights, and equal employment
opportunities and relating to antitrust matters.
(ii) The Company has filed in a timely manner all reports,
documents, and other materials it was required to file (and the
information contained therein was correct and complete in all respects)
under all applicable laws (including rules and regulations thereunder).
The Company has possession of all records and documents it was required to
retain under all applicable laws (including rules and regulations
thereunder).
(v) Certain Business Relationships With the Company and Its
Subsidiaries. Except as described in Section 4(v) of the Disclosure Schedules,
none of the Seller and his Affiliates has been involved in any business
arrangement or relationship with the Company within the past twelve (12) months,
and neither the Seller nor any Company Affiliate owns any property or right,
tangible or intangible, which is used in the business of the Company.
(w) Brokers' Fees. The Company has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(x) Advertising Contracts. Section 4(x) of the Disclosure Schedule
lists those Advertising Contracts and the daily value of such Advertising
Contracts as of September 19, 1997. Other than to employees of the Company or as
disclosed in Section 4(x) of the Disclosure Schedule, no commission or other
form of renumeration is paid by the Company with respect to Advertising
Contracts. No party to any Advertising Contract has indicated to the Company
within the past year that it will stop or decrease the rate of advertising.
(y) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
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(a) General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set for in Section 6 below).
(b) Transfer Applications. Within ten (10) business days after the
execution of this Agreement, the Company and the Buyer shall jointly file with
the FCC an application for transfer or control of the Company, including its FCC
Licenses, permits and authorizations pertaining to the Stations from the Seller
to the Buyer (the "Transfer Application"). The costs of the FCC filing fees in
connection with the Transfer Application shall be divided equally between the
Seller and the Buyer. Each Party shall pay their own attorneys' fees. The
Seller, the Company and the Buyer shall thereafter prosecute the Transfer
Application with all reasonable diligence and otherwise use their commercially
reasonable efforts to obtain the grant of the Transfer Application as
expeditiously as practicable (but neither the Seller nor the Buyer shall have
any obligation to satisfy complainants or the FCC by taking any steps which
would have material adverse effect upon the Buyer, the Seller, or the Stations.
If the FCC imposes any condition on any Party to the Transfer Application, such
Party shall use commercially reasonable efforts to comply with such condition;
provided that no such Party shall be required hereunder to comply with any
condition that would have a material adverse effect upon the Buyer, the Seller
or the Stations. The Seller and the Buyer shall jointly oppose any requests for
reconsideration or judicial review of FCC approval of the Transfer Application
and shall jointly request from the FCC an extension of the effective period of
FCC approval of the Transfer Application if the Closing shall not have occurred
prior to the expiration of the original effective period of the FCC Consent.
Nothing in this Section 5(b) shall be construed to limit any Party's right to
terminate this Agreement pursuant to Section 10 of this Agreement.
(c) Notices and Consents. The Seller will give any notices to third
parties, and the Seller will cause the Company to use its commercially
reasonable efforts to obtain any third party consents, that the Buyer reasonably
may request in connection with the matters pertaining to the Company or the
Seller disclosed or required to be disclosed in the Disclosure Schedule. Each of
the Parties will file any notification and report forms and related material
that he or it may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
Xxxx-Xxxxx-Xxxxxx Act, will use his or its best efforts to obtain an early
termination of the applicable waiting period, and will make further filings
pursuant thereto that may be necessary, proper or advisable. Each of the Parties
will take any additional action that may be necessary, proper, or advisable in
connection with any other notices to, filings with, and authorizations,
consents, and approvals of governments, governmental agencies, and third parties
that it may be required to give, make, or obtain.
(d) Operation of Business. The Seller will not cause or permit the
Company to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Seller will not (and will
not direct the Company to) engage in any practice, take any action, embark on
any course of inaction, or enter into any transaction of the sort described in
Section 4(e) above.
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(e) Employees. Upon notice to the Seller, and at mutually agreeable
times, the Company will permit the Buyer to meet with the Company's employees
prior to the Closing Date. Neither the Seller nor the Company will take any
action to preclude or discourage any of the Company's employees from continuing
employment with the Company. The Seller shall reimburse the Buyer for severance
and other obligations based on the Company's practices at or prior to the
Closing with respect to any employee of the Company whose employment with the
Company terminates within thirty (30) days after the Closing Date.
(f) Advertising Obligations. The Company shall satisfy its air time
obligations under its Advertising Contracts for goods or services ("Barter
Agreements") such that the outstanding aggregate balance owing under all Barter
Agreements as of the Closing Date shall not exceed Ten Thousand Dollars
($10,000) worth of air time. On the Closing Date, the Seller shall deliver to
the Buyer a schedule, certified by an officer of the Company, reflecting the
aggregate outstanding balances under all Barter Agreements in existence as of
the Closing Date.
(g) Operating Statements. The Seller shall deliver to the Buyer, for
the Buyer's informational purposes only, monthly unaudited statements of
operating revenues and operating expenses of the Stations within ten (10) days
after each such statement is prepared by or for the Company or the Seller.
(h) Contracts. The Company will not without the prior written
consent of the Buyer amend, change, or modify any of the contracts listed on
Section 4(1) of the Disclosure Schedule in any material respect. The Company
will not without prior written consent of the Buyer enter into any new contracts
respecting the Stations or their properties, except (i) Advertising Contracts
which comply with the representations and warranties pertaining to such
contracts set forth in Section 4(1) above; (ii) contracts entered into in the
Ordinary Course of Business which are cancelable on not more than thirty (30)
days' notice without penalty or premium; (iii) contracts entered into in the
Ordinary Course of Business each of which does not involve more than Two
Thousand Dollars ($2,000) or all of which do not involve more than Ten Thousand
Dollars ($10,000) in the aggregate.
(i) Operation of Stations. The Company shall operate the Stations in
compliance with the FCC Licenses and the rules and regulations of the FCC, and
the FCC Licenses shall at all times remain in full force and effect. The Company
shall file with the FCC all material reports, applications, documents,
instruments and other information required to be filed in connection with the
operation of the Stations.
(j) Credit and Receivables. The Company will follow its usual and
customary policies with respect to extending credit for Advertising Contracts
and with respect to collecting accounts receivable arising from such extension
of credit.
(k) Preservation of Business. The Seller will cause the Company to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, relationships with lessors,
licensers, advertisers, suppliers, customers, and employees, all of the
confidential information and trade secrets of the Stations, and the FCC
Licenses.
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(l) Full Access and Consultation. The Seller will permit and will
cause the Company to permit representatives of the Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Stations, to all premises, properties, books,
records, contracts, Tax records, and documents of or pertaining to the Company.
The Buyer will use its best efforts to complete its due diligence review of all
such premises, properties, books, records, contracts, Tax records and documents
of or pertaining to the Company within thirty (30) days from the date of this
Agreement. The Seller will cause the Company to consult with the Buyer's
management with a view to informing the Buyer's management as to the operations,
management and business of the Stations.
(m) Notice of Developments. The Seller will give prompt written
notice to the Buyer of any material development affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of the Company. Each Party will give prompt written notice
to the other of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by any
Party pursuant to this Section 5(m), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(n) Exclusivity. The Seller will not (and the Seller will not cause
or permit the Company to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any (A) liquidation,
dissolution, or recapitalization, (B) merger or consolidation, (C) acquisition
or purchase of securities or assets, or (D) similar transaction or business
combination involving the Seller; or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. The Seller will notify the Buyer
immediately if any person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
(o) Abstract and Title Insurance. The Buyer will obtain and deliver
abstracts with respect to each parcel of real estate that the Company owns and
the leased facility at Saratoga Road, Dubuque, Iowa. The abstract(s) will be
delivered to an attorney of the Buyer's choice for an opinion as to title. With
regard to the real property located in the State of Illinois, the Seller will
assist the Buyer in obtaining an owner's policy issued by a title insurer
reasonably satisfactory to the Buyer in an amount equal to the fair market value
of such real property, insuring title to such real property in the Buyer as of
the Closing subject only to the title exceptions which do not impair the current
use, occupancy or value or the marketability of title of the property and are
disclosed in Section 4(i) or Section 4(j) of the Disclosure Schedule, together
with such endorsements for zoning, contiguity, public access and extended
coverage and such other endorsements as the Buyer reasonably requests. The Buyer
and the Seller shall each pay one-half (1/2) of the cost of such title policies.
(p) Surveys. With respect to each parcel of real property that the
Company owns and as to the leased facility at Saratoga Road, Dubuque, Iowa as to
which a title insurance policy or title opinion is to be procured pursuant to
Section 5(o) above, the Seller will assist the Buyer in the procurement in
preparation for the Closing a current survey of the real property certified to
the Buyer, prepared by a licensed surveyor and conforming to current expanded
ALTA Minimum Detail
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Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Survey"). The Survey shall not
disclose any survey defect or encroachment from or onto the real property which
has not been cured or insured over prior to the Closing. The Buyer and the
Seller shall each pay one-half (1/2) of the costs of such Surveys.
(q) Environmental Assessments. The Seller will assist the Buyer in
obtaining with respect to each parcel of real estate that the Company owns and
as to the leased facility at Saratoga Road, Dubuque, Iowa as to which a title
insurance policy or title opinion is to be procured pursuant to Section 5(o)
above, a current Phase I environmental site assessment from an environmental
consultant or engineer reasonably satisfactory to the Buyer which shall not
disclose or recommend any action with respect to any condition to be remediated
or investigated or any contamination on the site assessed. The Buyer and the
Seller shall each pay one-half (1/2) of the cost of such environmental site
assessment.
(r) Control of Stations. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Transfer Application. Between the date of this Agreement and the
Closing Date, the Buyer and its employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Company.
(s) Risk of Loss. The risk of loss, damage, or destruction to any of
the assets of the Company shall remain with the Seller until the Closing. In the
event of any such loss, damage, or destruction the Seller will promptly notify
the Buyer of all particulars thereof, stating the cause thereof (if known) and
the extent to which the cost of restoration, replacement and repair of the
assets lost, damaged or destroyed will be reimbursed under any insurance policy
with respect thereto. The Seller will repair or replace such assets as soon as
possible after loss, damage or destruction thereof and shall use its best
efforts to restore as promptly as possible transmissions as authorized in the
FCC Licenses. The Closing Date shall be extended (with FCC consent, if
necessary) for up to sixty (60) days to permit such repair or replacement. If
repair or replacement cannot be accomplished within sixty (60) days of the date
of the Seller's notice to the Buyer, and the Buyer reasonably determines that
the Seller's failure to repair or replace, alone or in the aggregate, would have
a material adverse effect on the operation of the Stations:
(i) the Buyer may elect to terminate this Agreement; or
(ii) the Buyer may postpone the Closing Date until such time
as the property has been repaired, replaced or restored in a manner and to
an extent reasonably satisfactory to the Buyer, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Seller's
notice to the Buyer, in which case either Party may terminate this
Agreement; or
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(iii) the Buyer may choose to accept the lost, damaged or
destroyed assets in their "then" condition, together with the Seller's
assignment to the Buyer all rights under any insurance claims covering the
loss, damage or destruction and payment over to the Buyer any proceeds
under any such insurance policies, previously received by the Seller with
respect thereto.
In the event the Closing Date is postponed pursuant to this Section 5(s),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
(t) Payment of Dividends. The Company shall not, without the written
approval of the Buyer (i) pay any dividend or make any distribution on any
Company Share or other security or interest in the Company or any distribution
for the benefit of the Seller, (ii) pay any bonuses or distributions to any
employee or person rendering services to or on behalf of the Company or (iii)
incur any additional Funded Indebtedness; provided, that nothing in this Section
5(t) shall prevent the Company from making expenditures and salary payments in
the Ordinary Course of Business. The Purchase Price will not be adjusted for the
amount of the payments made on Funded Indebtedness between the date of this
Agreement and the Closing.
(u) Wisconsin Tower Site. The Company and the Buyer will cooperate
to identify and purchase a suitable replacement site for the KXGE-FM
transmission tower and to file a construction permit to relocate the KXGE-FM
transmission tower to the site selected, all at the expense of the Buyer.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 2
and Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of
his covenants hereunder in all material respects through the Closing;
(iii) the Seller and the Company shall have procured all of
the third party consents specified in Section 5(c) above, the Buyer shall
have received all of the title insurance commitments, and endorsements and
title opinions specified in Section 5(o) above, all of the surveys
specified in Section 5(p) above; and all the Phase I environmental site
assessments described in Section 5(q) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasijudicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or
-24-
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(C) affect adversely the right of the Buyer to own, operate, or control
the Company Shares, the Company or the Stations (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified above in Section 6(a)(i)-(iv)
is satisfied in all respects;
(vi) the Transfer Applications shall have been approved by a
Final Order of the FCC and the Buyer shall have received all governmental
approvals required to transfer all other authorizations, consents, and
approvals of governments and governmental agencies set forth in the
Disclosure Schedule;
(vii) the Buyer shall have received from counsel to the Seller
an opinion with respect to the matters set forth in Exhibit C attached
hereto, addressed to the Buyer and dated as of the Closing Date;
(viii) subject to Section 7(b), the officers and directors of
the Company shall have tendered written confirmation of their resignation
of service by and for the Company and repaid or satisfied all Liabilities
owed by them to the Company and all shall have released the Company of all
Liabilities owed to them by the Company; and
(ix) all actions in consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasijudicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A)
prevent consummation of any of the transactions contemplated by this
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Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in
Section 5(b)(i)-(iii) is satisfied in all respects;
(v) each of the Transfer Applications shall have been approved
by a Final Order of the FCC and the Buyer shall have received all
governmental approvals required to transfer all other authorizations,
consents, and approvals of governments and governmental agencies set forth
in the Disclosure Schedule; and
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
The Seller may waive any condition specified in this Section 6(b) if it executes
a writing so stating at or prior to the Closing.
7. Post-Closing Covenants. The Parties agree as follows with respect
to the period following the Closing:
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below).
(b) Funded Indebtedness. Immediately following the Closing, the
Buyer shall cause to Company to pay in full the Funded Indebtedness;
(c) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with the
contesting or defending Party and its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access to its
books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 8 below).
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(d) Transition. The Seller will not take any action that primarily
is designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of any of the Stations or the
Company from maintaining the same business relationships with the Stations or
the Company after the Closing as it maintained with the Stations or the Company
prior to the Closing. The Seller will refer all customer inquiries relating to
the business of any of the Stations to the Buyer from and after the Closing.
Seller, Affiliate of Seller, will not employ or offer to employ any employee of
the Company (other than members of Seller's family) for a period of three (3)
years after the Closing Date.
(e) Confidentiality. The Seller will treat and hold as confidential
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in his possession. In the event that the Seller is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Seller will notify the Buyer
promptly of the request or requirement so that the Buyer may seek an appropriate
protective order or waive compliance with the provisions of this Section 7(e).
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Seller is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, that Seller may
disclose the Confidential Information to the tribunal; provided, however, that
the Seller shall use his best efforts to obtain, at the request of the Buyer, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
(f) Covenant Not to Compete. For a period of three (3) years from
and after the Closing Date, the Seller will not engage directly or indirectly in
the radio broadcast business in any geographic area in which the Company
conducts that business as of the Closing Date; provided, however, that no owner
of less than 1% of the outstanding stock of any publicly-traded corporation
shall be deemed to engage solely by reason thereof in any of its businesses.
Nothing in this Section 7(f) shall prohibit the Seller from participating in
fee-based brokerage for sales of radio stations.
(g) Retainage Adjustment. In the event and to the extent that the
Buyer or the Company may become obligated to pay after the Closing any Liability
for which the Buyer would be entitled to indemnification by the Seller under
Section 8(b) of this Agreement, such amount shall be deducted from the Retainage
Deposit pursuant to the terms of the Retainage Agreement.
8. Remedies for Breaches of this Agreement.
(a) Survival. All of the representations and warranties of the
Seller and the Company contained in Sections 4 and 7 of this Agreement (other
than the representations and warranties of the Seller and the Company contained
in Sections 4(a), 4(b), 4(c), 4(g) and 4(x) hereof) shall survive the Closing
(even if the Buyer knew or had reason to know of any misrepresentation or breach
of warranty at the time of Closing) and continue in full force and effect for
the period of the applicable
-27-
statute of limitations plus ninety (90) days for any Liability associated
therewith. All of the other representations, warranties, and covenants of the
Buyer and the Seller contained in this Agreement (including the representations
and warranties of the Seller contained in Sections 2 and of the Company
contained in Sections 4(a), 4(b), 4(c) and 4(g) hereof) shall survive the
Closing (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of Closing) and
continue in full force and effect forever thereafter.
(b) Indemnification Provisions for the Benefit of the Buyer. The
Seller agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by (i) any breach of any of the
Seller's representations, warranties, and covenants contained in this Agreement
(so long as the particular representation, warranty, or covenant survives the
Closing and the Buyer makes a written claim for indemnification within the
applicable survival period); or (ii) the Retained Liabilities.
(c) Indemnification Provisions for the Benefit of the Seller. The
Buyer agrees to indemnify the Seller from and against all Adverse Consequences
the Seller may suffer resulting from, arising out of, relating to, in the nature
of, or caused by (i) the breach of any of the Buyer's representations,
warranties, and covenants contained in this Agreement (so long as the particular
representation, warranty, or covenant survives the Closing and the Seller makes
a written claim for indemnification within the applicable survival period; or
(ii) the Assumed Liabilities.
(d) Matters Involving Third Parties. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced. In the
event any Indemnifying Party notifies the Indemnified Party within fifteen (15)
days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, (i) the Indemnifying Party
will defend the Indemnified Party against the matter with counsel of its choice
reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party may
retain separate co-counsel at its sole cost and expense (except that the
Indemnifying Party will be responsible for the fees and expenses of the separate
co-counsel to the extent the Indemnified Party concludes reasonably that the
counsel the Indemnifying Party has selected has a conflict of interest), (iii)
the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the matter without the written consent of
the Indemnifying Party (not to be withheld unreasonably), and (iv) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all Liability with respect thereto, without the written consent of the
Indemnified Party (not to be withheld unreasonably). In the event the
Indemnifying Party does not notify the Indemnified Party within 15 days after
the Indemnified Party has given notice of the matter that the Indemnifying Party
is assuming the defense thereof, however, the Indemnified Party may defend
against, or enter into any settlement with respect to, the matter in any manner
it reasonably may deem appropriate.
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(e) Specific Performance. Each of the Parties acknowledges and
agrees that the Buyer would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the Buyer shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 11(p) below), in addition
to any other remedy to which it may be entitled, at law or in equity. Each of
the Parties acknowledges and agrees that money damages would not be an adequate
remedy for a breach of any provision of this Agreement.
(f) Limitation of Liability. Notwithstanding anything in this
Agreement to the contrary, after the Closing neither party shall indemnify or
otherwise be liable to the other party from and after the Closing Date except to
the extent that the Adverse Consequences suffered by the Indemnified Party, in
the aggregate from all indemnifiable events shall exceed Ten Thousand Dollars
($10,000) and indemnification shall be made by the indemnifying party only to
the extent of such excess over Ten Thousand Dollars ($10,000); provided,
however, that the foregoing limitation shall not be applicable to: (i) the
obligations of the Buyer to pay and discharge any of the Assumed Liabilities of
the Company existing from and after the Closing Date; (ii) the obligation of the
Seller to pay and discharge any of the Retained Liabilities of the Company
existing as of the Closing; (iii) the Seller's obligation to deliver clear title
to the Company Shares; (iv) any Liability of the Company other than Liability
for Taxes arising from the Company's exchange of radio stations XXXX/KCPI for
radio stations WJOD-FM and KGGY-FM; (v) any Liability of the Company for Taxes
arising from the Company's exchange of radio stations XXXX/KCPI for radio
stations WJOD-FM and KGGY-FM net of any tax benefit obtained as a result of the
Internal Revenue Service's recharacterization or adjustment of the exchange
transaction; or (vi) any Lien on the assets of the Company arising from
circumstances existing at the Closing. The Buyer shall have the right to recoup
from any amount due to the Seller any amount due from the Seller under this
Section 8.
(g) Other Indemnification. The indemnification provisions set forth
in Section 8(a), 8(b), 8(c) and 8(d) are in addition to, and not in derogation
of, any statutory or common law remedy any Party may have for breach of
representation, warranty, or covenant.
9. Definitions.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"Advertising Contract" means any arrangement with any third party under
which the Seller has created, incurred, assumed or guaranteed an obligation to
provide advertising or air time on the Station.
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"Affiliate" means with reference to any person or entity, another person
or entity controlled by, under the control of or under common control with that
person or entity.
"Assumed Liabilities" means (a) Funded Indebtedness; (b) all unpaid trade
vendor payables incurred in the Ordinary Course of Business representing
services and/or non-Cash benefits incurred in the Ordinary Course of Business
prior to Closing; (c) obligations of the Company under commitments, contracts,
quotes and purchase orders with customers and suppliers entered into in the
Ordinary Course of Business as set forth on Section 4(l) of the Disclosure
Schedule; (d) obligations of the Company under Advertising Contracts as set
forth on Section 4(x) of the Disclosure Schedule; and (e) obligations of the
Company under real property leases as set forth on Section 4(j) of the
Disclosure Schedule. The Assumed Liabilities shall not include the Retained
Liabilities.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 1(c) above.
"Closing Date" has the meaning set forth in Section 1(c) above.
"Code" means the Internal Revenue Code of 1986, as amended
"Company" has the meaning set forth in the Preface above.
"Company Share" means any share of the Common Stock, par value $.01 per
share, of the Company.
"Confidential Information" means any information concerning the businesses
and affairs of the Company.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Agreement.
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"Xxxxxxx Money Deposit" has the meaning set forth in Section 1(b) above.
"Xxxxxxx Money Escrow Agent" means Dubuque Bank & Trust Company.
"Xxxxxxx Money Escrow Agreement" has the meaning set forth in Section 1(b)
above.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Entity" means a corporation, limited liability company, partnership,
limited partnership, limited liability partnership or other entity recognized by
any jurisdiction within the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Final Order" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"Financial Statements" has the meaning set forth in Section 4(d) above.
"Funded Indebtedness" means the Company's indebtedness for borrowed money
from any source accrued as of the date of this Agreement, in the principal
amount of $2,926,200.53, plus interest thereon to the Closing Date. All such
Funded Indebtedness as of the date is set forth on Section 9 to the Disclosure
Schedule.
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"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d) above.
"Indemnifying Party" has the meaning set forth in Section 8(d) above.
"Intellectual Property" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and registrations
and applications for registration thereof, (c) all programs, programming
materials, copyrights and registrations and applications for registration
thereof, (d) mask works and registrations and applications for registration
thereof, (e) computer software, data, and documentation, (f) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, market and other research information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (b) copies and tangible embodiments thereof (in whatever
form or medium).
"Joint and Several" has the meaning set forth in Section 10(o) below.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"Licenses" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller and the Company
with respect to the operations of the Stations and all applications therefor,
together with any renewals, extension or modifications thereof and additions
thereto.
"Most Recent Balance Sheet" means the balance sheet of the Company as of
the Most Recent Fiscal Year End.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(d)
above.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 1(b) above.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Requisite Seller" means holders of a majority of the Company Shares.
"Retainage Deposit" has the meaning set forth Section 1(b) above.
"Retainage Agent" means Dubuque Bank & Trust Company.
"Retainage Agreement" has the meaning set forth in Section 1(b) above.
"Retained Liabilities" means (a) any Liability of the Company for unpaid
Taxes (with respect to the Company or otherwise) for periods prior to Closing;
(b) any Liability of the Company for income, transfer, sales, use, and other
Taxes arising in connection with the consummation of the transactions
contemplated hereby; (c) any Liability of the Company for costs and expenses
incurred in connection with this Agreement or the consummation of the
transactions contemplated hereby; (d) any Liability of the Company to the Seller
or any Affiliate or family member of the Seller other than those Liabilities
included in Funded Indebtedness; or (e) any Liability of the Company for any
fine imposed or threatened, after the Closing but relating to events occurring
prior to Closing by a federal, state or local governmental or regulatory agency
for failure to report, register or otherwise comply with applicable law or
regulation.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation; and (c) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Stations" means the radio broadcast stations having the call letters
WDBQ-AM, KLYV-FM and KXGE-FM all licensed by the FCC to operate in Dubuque,
Iowa, and WJOD-FM, licensed by the FCC to operate in Galena, Illinois.
"Subsidiary" means any corporation with respect to which another specified
corporation has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
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"Survey" has the meaning set forth in Section 5(j) above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transfer Application" has the meaning set forth in Section 5(b) above.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event the
Seller is in breach, and the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing in the event
the Buyer is in breach, of any material representation, warranty, or
covenant contained in this Agreement in any material respect in each case
if such breach remains uncured for twenty (20) days after notice of breach
is received from the other party;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under
Section 6(a) hereof (unless the failure results primarily from the Buyer
breaching any representation, warranty, or covenant contained in this
Agreement);
(iv) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing if the Closing shall
not have occurred on or before the 270th day following the date of this
Agreement by reason of the failure of any condition precedent under
Section 6(b) hereof (unless the failure results primarily from the Seller
breaching any representation, warranty, or covenant contained in this
Agreement); or
(v) the Buyer or the Seller may terminate this Agreement if
any Transfer Application is denied by Final Order.
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(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
11. Miscellaneous.
(a) Survival. All of the representations, warranties, and covenants
of the Parties contained in this Agreement shall survive the Closing hereunder
as and to the extent provided in Section 8(a).
(b) Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party, provided that the Buyer may assign all right, title
and interest in, to and under this Agreement to one or more affiliated entities.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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If to the Seller
before closing: Xx. Xxxxxx X. Xxxxx
Communications Properties, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
If to the Seller
after closing: Xx. Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Copy to: Xxxxx X. Xxxxxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
If to the Buyer: Cumulus Holdings, Inc.
c/o Quaestus Management Corporation
000 X. Xxxxxxxx Xxx., Xxx. 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Copy to: Cumulus Broadcasting, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Xxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Illinois.
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(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Requisite Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(l) Expenses. The Buyer and the Seller, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 5(b) with regard to the Transfer Application. The Seller will
pay all income taxes, transfer taxes and other recording or similar fees
necessary to vest title to the Company Shares in the Buyer. The Seller agrees
that the Company has not borne nor will bear any of the Seller's costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(m) Construction. The language used in this Agreement will be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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(o) The Seller. When the Seller makes a representation, warranty, or
covenant herein, then that representation, warranty, or covenant will be
referred to herein as the "Joint and Several" obligation of the Seller. This
means that Seller will be responsible for the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by any breach thereof.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto. The Seller hereby appoints Xxxxxxxx &
Xxxxxx as his agent and the Buyer hereby appoints CT Corporation as its agent to
receive on its behalf service of copies of the summons and complaint and any
other process that might be served in the action or proceeding. Any Party may
make service on the other Party by sending or delivering a copy of the process
(i) to the Party to be served at the address and in the manner provided for the
giving of notices in Section 10(h) above or (ii) to the Party to be served in
care of its or his agent at the address and in the manner provided for the
giving of notices in Section 10(h) above. Nothing in this Section 10(p),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS HOLDINGS, INC.
By:
-----------------------------
Title:
--------------------------
"Buyer"
-------------------------------------------
Xxxxxx X. Xxxxx
"Seller"
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LIST OF OMITTED SCHEDULES AND/OR EXHIBITS:
Escrow Agreement by and among Cumulus Holdings, Xxxxxx Xxxxx and Dubuque
Bank & Trust Company, dated as of October 22, 1997.
Exh. B Form of Retainage Agreement
Exh. C Form of Opinion of Counsel to the Seller
Disclosure Schedules
The preceding schedules and/or exhibits have been omitted from this exhibit.
The Company agees to provide copies of such schedules and/or exhibits to the
Commission upon request.
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