EXHIBIT 10.06.05
EXECUTION COPY
================================================================================
ASSET PURCHASE AGREEMENT by and between
INFINITY BROADCASTING CORPORATION OF DALLAS
AND
INSPIRATION MEDIA OF TEXAS, INC.
Dated as of September 30, 1996
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE 1 ASSETS TO BE CONVEYED............................................ 1
1.1. Closing.......................................................... 1
1.2. Transfer of KEWS Assets.......................................... 1
1.3. Excluded Assets.................................................. 2
ARTICLE 2 PURCHASE PRICE................................................... 2
2.1. Purchase Price................................................... 2
2.2. Payment of Cash Purchase Price................................... 3
2.3. Transfer of the KDFX Assets...................................... 3
2.4. Allocation....................................................... 4
ARTICLE 3 ASSUMPTION OF OBLIGATIONS; PRORATIONS ........................... 4
3.1. Assumption of Obligations........................................ 4
3.2. Limitation....................................................... 4
3.3. Proration of Expenses............................................ 5
3.4. Payment of Proration Items....................................... 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES COMMON TO BOTH
INFINITY AND SALEM.............................................. 6
4.1. Organization and Standing........................................ 6
4.2. Authorization and Binding Obligation............................. 6
4.3. Absence of Conflicting Agreements or Required Consents........... 6
4.5 Taxes............................................................ 7
4.6 Insolvency Proceedings........................................... 7
4.7. Broker's Fees.................................................... 7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF INFINITY....................... 7
5.1. FCC Authorizations and Qualifications............................ 7
5.2. Title to and Condition of Personal Property...................... 8
5.3. Assumed Contracts; Real Estate Leases............................ 8
5.4. Compliance With Laws............................................. 9
5.5. Insurance........................................................ 10
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SALEM ......................... 10
6.1. FCC Authorizations and Qualifications............................ 10
6.2. Title to and Condition of Personal Property...................... 10
6.3. Assumed Contracts; Real Estate Leases............................ 11
6.4. Compliance With Laws............................................. 11
6.5. Insurance........................................................ 12
ARTICLE 7 GOVERNMENTAL CONSENTS ........................................... 12
7.1. FCC Application.................................................. 12
7.2 Compliance with HSRA............................................. 13
7.3 Other Governmental Consents...................................... 13
ARTICLE 8 COVENANTS........................................................ 14
8.1. Conduct of Business.............................................. 14
8.2. Notification..................................................... 14
8.3. Access........................................................... 14
8.4. Third-Party Consents............................................. 15
8.5. Pre-Closing Efforts.............................................. 15
8.6. Risk of Loss..................................................... 15
8.7. Confidentiality.................................................. 16
8.7. Further Assurances............................................... 16
8.8 Covenant Not to Compete.......................................... 16
8.9 KDFX Transmitter Site Lease...................................... 16
ARTICLE 9 CONDITIONS PRECEDENT............................................. 16
9.1. To Salem's Obligations........................................... 16
9.2 To Infinity's Obligations........................................ 17
ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING......................... 18
10.1. Documents to be Delivered by Infinity............................ 18
10.2. Documents to be Delivered by Salem............................... 18
ARTICLE 11 INDEMNIFICATION, SURVIVAL........................................ 19
11.1. Infinity's Indemnities........................................... 19
11.2. Salem's Indemnities.............................................. 20
11.3. Procedure for Indemnification.................................... 20
11.4. Limitations...................................................... 21
ii
11.5. Survival of Representations, Warranties and Covenants............ 22
11.6. Sole Remedy...................................................... 22
ARTICLE 12 TERMINATION RIGHTS............................................... 22
12.1. Termination...................................................... 22
12.2. Effect of Termination............................................ 23
ARTICLE 13 REMEDIES LIPON DEFAULT; SPECIFIC PERFORMANCE..................... 23
13.1. Default by Infinity; Specific Performance........................ 23
13.2. Default by Salem; Liquidated Damages............................. 23
ARTICLE 14 OTHER PROVISIONS................................................. 24
14.1. Transfer Taxes and Expenses...................................... 24
14.2. Benefit and Assignment........................................... 24
14.3. Entire Agreement; Schedules; Amendment; Waiver................... 24
14.4. Headings......................................................... 24
14.5. Computation of Time.............................................. 25
14.6. Governing Law; Waiver of Jury Trial.............................. 25
14.7. Attorneys' Fees.................................................. 25
14.8. Severability..................................................... 25
14.9. Notices.......................................................... 25
14.10. Counterparts..................................................... 26
ARTICLE 15 DEFINITIONS...................................................... 26
15.1. Defined Terms.................................................... 26
15.2. Miscellaneous Terms.............................................. 30
iii
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Form of Covenant Not to Compete
Exhibit C Form of Amended KDFX Transmitter Site Lease
SCHEDULES
Schedule 1.2(a) KEWS FCC Licenses
Schedule 1.2(c) KEWS Main Studio Equipment
Schedule 1.2(d) KEWS Assumed Contracts
Schedule 2.3(a)(i) KDFX FCC Licenses
Schedule 2.3(a)(iii) KDFX Main Studio Equipment
Schedule 2.3(a)(iv) KDFX Assumed Contracts
Schedule 4.3(a) Infinity's Required Consents
Schedule 4.3(b) Salem's Required Consents
Schedule 5.1 Infinity's FCC Qualifications Exceptions
iv
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of the 30th day of
September 1996, is between Infinity Broadcasting Corporation of Dallas, a
Delaware corporation ("Infinity"), and Inspiration Media of Texas, Inc., a Texas
corporation ("Salem").
Infinity is the licensee of station KEWS-FM, 00.0 xXx, Xxxxxxxxx, Xxxxx
("KEWS"). Salem is the licensee of station KDFX(AM), 0000 xXx, Xxxxxx, Xxxxx
("KDFX").
Salem has expressed an interest in acquiring certain assets used in the
operation of KEWS, including the KEWS FCC Licenses (as defined below). Infinity
has expressed an interest in acquiring certain assets used in the operation of
KDFX, including the KDFX FCC Licenses (as defined below). Infinity has agreed to
sell the KEWS Assets (as defined below) to Salem in return for the payment of
$32,000,000 and the assignment of the KDFX Assets (as defined below).
Definitions of capitalized terms in this Agreement are set forth in SECTION
15.1.
The assignment of KEWS FCC Licenses to Salem and the assignment of the KDFX
FCC Licenses to Infinity require the prior consent of the Federal Communications
Commission ("FCC").
Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
---------------------
1.1. CLOSING. Subject to SECTION 12.1 (Termination Rights), the closing (the
"Closing") of the sale and purchase of the KEWS Assets and the KDFX Assets shall
take place in the offices of Xxxxxxxxx, Xxxxxx & Xxxxxx, 0000 X Xxxxxx, X.X.,
Xxxxxxxxxx, X.X., at 10:00 a.m., local time, on the fifth (5th) business day
following the satisfaction or waiver of the conditions set forth in SECTIONS
9.1(b) and 9.2(b) (FCC Consent), but in no event prior to December 2, 1996, or
at such other place, time or date as Salem and Infinity may agree in writing.
1.2. TRANSFER OF KEWS ASSETS. At the Closing, Infinity shall sell, assign,
transfer and convey to Salem, and Salem shall purchase from Infinity, the
following assets (the "KEWS Assets"):
(a) all of Infinity's rights in and to the FCC licenses, permits and
other authorizations, including any temporary waiver or special temporary
authorization, issued to or held by Infinity exclusively in the operation
of KEWS, including any pending applications therefor, all as set forth in
Schedule 1.2(a) (the "KEWS FCC Licenses").
---------------
(b) all of Infinity's right, title and interest in the equipment, spare
parts and other tangible personal property located at the KEWS transmitter
site and used or held for use exclusively in the operation of KEWS (the
"KEWS Transmitter Site Equipment");
(c) all of Infinity's right, title and interest in the equipment, spare
parts and other tangible personal property listed on Schedule 1.2(c) (the
---------------
"KEWS Main Studio Equipment" and together with the KEWS Transmitter Site
Equipment, the "KEWS Personal Property");
(d) all of Infinity's rights under and interest in, to the extent
assignable, the leases set forth contained in Schedule 1.2(d) (the "KEWS
---------------
Assumed Contracts");
(e) KEWS's public inspection file, filings with the FCC related to KEWS,
executed copies of all written KEWS Assumed Contracts, and such technical
information, engineering data, rights under manufacturers' warranties as
exist at Closing and relate exclusively to the KEWS Personal Property being
conveyed hereunder.
The KEWS Assets shall be delivered without any representation or warranty by
Infinity except as expressly set forth in this Agreement, and Salem acknowledges
that it has not relied on or been induced to enter into this Agreement by any
representation or warranty other than those expressly set forth in ARTICLES 4
AND 5 hereof. The KEWS Assets shall be conveyed to Salem free and clear of all
Liens, except as otherwise expressly provided in this Agreement.
1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the KEWS Assets
shall not include any properties, assets, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description, wherever located, of Infinity or any of its affiliates, including
all right, title and interest in the call sign "KEWS," which Salem agrees
Infinity may use on any other station the Dallas/Ft. Worth market, including
station KDFX after it has been acquired by Infinity.
ARTICLE 2
PURCHASE PRICE
--------------
2.1. PURCHASE PRICE.
(a) The aggregate purchase price to be paid by Salem for the KEWS Assets (the
"Purchase Price") shall be (i) $32,100,000 (the "Cash Purchase Price") plus (ii)
the assignment of the KDFX Assets as provided in SECTION 2.3 below.
(b) The parties stipulate that the Purchase Price is not based in any way
upon the ratings or financial performance of either KEWS or KDFX. Neither
station is being sold as a going concern, and the assets being conveyed do not
include any goodwill or intellectual property. Therefore, neither Infinity nor
Salem makes any representation or warranty as to ratings or cash flow, and
neither Salem's nor Infinity's obligations under this Agreement are conditioned
in any way on the financial performance between the date of this Agreement and
the Closing of the station to be acquired.
2
2.2. PAYMENT OF CASH PURCHASE PRICE. Salem shall pay the Cash Purchase Price
as follows:
(a) Simultaneous with the execution of this Agreement, Salem shall
deposit $1,600,000 with the Escrow Agent to be held and distributed
pursuant to the Escrow Agreement.
(b) At the Closing, Salem shall pay $30,500,000 by wire transfer prior
to 3:00 p.m., local Washington, D.C. time, of immediately available federal
funds to an account at a bank or financial institution pursuant to wire
instructions that Infinity shall deliver to Salem at least one (1) business
day prior to the Closing Date.
2.3. TRANSFER OF THE KDFX ASSETS.
(a) At the Closing, Salem shall sell, assign, transfer and convey to
Infinity, and Infinity shall acquire from Salem, the following assets (the
"KDFX Assets"):
(i) all of Salem's rights in and to the FCC licenses, permits and other
authorizations, including any temporary waiver or special temporary
authorization, issued to or held by Salem exclusively in the operation of
KDFX, including any pending applications therefor, all as set forth in
Schedule 2.3(i) (the "KDFX FCC Licenses").
---------------
(ii) all of Salem's right, title and interest in the equipment, spare
parts and other tangible personal property located at the KDFX transmitter
site and used or held for use exclusively in the operation of KDFX (the
"KDFX Transmitter Site Equipment");
(iii) all of Salem's right, title and interest in the equipment, spare
parts and other tangible personal property included on Schedule 2.3(a)(iii)
--------------------
(the "KDFX Main Studio Equipment" and together with the KDFX Transmitter
Site Equipment, the "KDFX Personal Property");
(iv) subject to the requirement of SECTION 8.9 of this Agreement, all of
Salem's rights under and interest in, to the extent assignable, the leases
set forth in Schedule 2.3(a)(iv) (the "KDFX Assumed Contracts");
-------------------
(v) KDFX's public inspection file, filings with the FCC related to KDFX,
executed copies of all written KDFX Assumed Contracts, and such technical
information, engineering data, rights under manufacturers' warranties as
exist at Closing and relate exclusively to the KDFX Personal Property being
conveyed hereunder.
3
The KDFX Assets shall be delivered without any representation or warranty by
Salem except as expressly set forth in this Agreement, and Infinity acknowledges
that it has not relied on or been induced to enter into this Agreement by any
representation or warranty other than those expressly set forth in ARTICLES 4
AND 6 hereof. The KDFX Assets shall be conveyed to Infinity free and clear of
all Liens, except as otherwise expressly provided in this Agreement.
(b) Except as set forth in this SECTION 2.3, the KDFX Assets shall not
include any properties, assets, privileges, rights, interests and claims, real
and personal, tangible and intangible, of every type and description, wherever
located, of Salem or any of its affiliates, including all right, title and
interest in the call sign "KDFX," which Infinity agrees Salem may use on any
other station the Dallas/Ft. Worth market, including station KEWS after it has
been acquired by Salem.
2.4. ALLOCATION. If Salem and Infinity are unable to agree between the date
hereof and the Closing on an allocation of the Purchase Price for income tax
purposes, Infinity shall arrange for an appraisal of the KDFX Assets and the
KEWS Assets. Any such appraisal shall be completed within one hundred eighty
(180) days after the Closing, and based upon such appraisal, if prepared,
Infinity shall prepare an initial draft of IRS Form 8594. Infinity shall forward
such form to Salem for its approval. If the parties reach an agreement on the
contents of IRS Form 8594, Salem and Infinity shall each file the IRS Form 8594
finally agreed upon by the parties with their respective federal income tax
return for the tax year in which the Closing occurs.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS; PRORATIONS
-------------------------------------
3.1. ASSUMPTION OF OBLIGATIONS.
(a) At the Closing, Salem shall assume and undertake to pay, satisfy or
discharge (i) all liabilities, obligations and commitments of Infinity under the
KEWS Assumed Contracts, arising or accruing after 12:01 a.m., local Dallas time,
on the Closing Date (the "Effective Time"), and (ii) all liabilities,
obligations and commitments arising from or relating to the ownership of the
KEWS Assets after the Effective Time.
(b) At the Closing, Infinity shall assume and undertake to pay, satisfy or
discharge (i) all liabilities, obligations and commitments of Salem under the
KDFX Assumed Contracts, arising or accruing after the Effective Time, subject to
the requirement of SECTION 8.9 of this Agreement, and (ii) all liabilities,
obligations and commitments arising from or relating to the ownership of the
KDFX Assets after the Effective Time.
3.2. LIMITATION. Except as set forth in Section 3.1, Infinity and Salem
expressly do not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by
4
reason of the transactions contemplated hereby, any liabilities, obligations or
commitments of the other of any nature whatsoever.
3.3. PRORATION OF EXPENSES. All expenses arising from the operation of the
KEWS Assets and the KDFX Assets shall be prorated between Infinity and Salem as
of the Effective Time in accordance with GAAP. Such prorations shall be based
upon the principle that (a) Infinity shall be responsible for all liabilities
and obligations accruing in connection with the ownership of the KEWS Assets
until the Effective Time, and Salem shall (subject to SECTION 3.2 above) be
responsible for such liabilities and obligations accruing thereafter and (b)
Salem shall be responsible for all liabilities and obligations accruing in
connection with the ownership of the KDFX Assets until the Effective Time, and
Infinity shall (subject to SECTION 3.2 above) be responsible for such
liabilities and obligations accruing thereafter. Such prorations shall include,
without limitation, all ad valorem and other property taxes (but excluding
taxes arising by reason of the transfers of the KEWS Assets and the KDFX Assets
as contemplated hereby, which shall be paid as set forth in SECTION 14.1 of this
Agreement), deposits, utility expenses, liabilities and obligations under the
KEWS Assumed Contracts and the KDFX Assumed Contracts, rents and similar prepaid
and deferred items and all other expenses attributable to the ownership and
operation of the KEWS Assets and the KDFX Assets. Any real estate taxes shall be
apportioned on the basis of the number of days that each party owned such real
property during the relevant tax year.
3.4. PAYMENT OF PRORATION ITEMS. Three (3) business days prior to the
Closing, Infinity shall deliver to Salem a preliminary list of all items to be
prorated pursuant to SECTION 3.3 and, to the extent feasible, such prorations
shall be made at the Closing. In the event Infinity and Salem do not reach a
final agreement on such prorations at the Closing, Salem shall deliver to
Infinity a schedule of its proposed prorations (which shall set forth in
reasonable detail the basis for those determinations) (the "Proration Schedule")
no later than forty-five (45) days after the Closing Date. The Proration
Schedule shall be conclusive and binding upon Infinity unless Infinity provides
Salem with written notice of objection (the "Notice of Disagreement") within
thirty (30) days after Infinity's receipt of the Proration Schedule, which
notice shall state the prorations of expenses proposed by Infinity (the
"Infinity's Proration Amount"). Salem shall have twenty (20) days from receipt
of a Notice of Disagreement to accept or reject Infinity's Proration Amount. If
Salem rejects Infinity's Proration Amount, the dispute shall be submitted within
ten (10) days to the Dallas office of Xxxxxx Xxxxxxxx (the "Referee") for
resolution of the dispute, such resolution to be made within thirty (30) days
after submission to the Referee and to be final, conclusive and binding on
Infinity and Salem. Salem and Infinity agree to share equally the cost and
expenses of the Referee, but each party shall bear its own legal and other
expenses, if any. Payment by Salem or Infinity, as the case may be, for the
proration amounts determined pursuant to this SECTION 3.4 shall be due fifteen
(15) days after the last to occur of (a) Infinity's acceptance of the Proration
Schedule or failure to give Salem a timely Notice of Disagreement; (b) Salem's
acceptance of Infinity's Proration Amount or failure to reject Infinity's
Proration Amount
5
within twenty (20) days of receipt of a Notice of Disagreement; and (c) notice
to Infinity and Salem of the resolution of the disputed amount by the Referee.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
COMMON TO BOTH INFINITY AND SALEM
---------------------------------
Infinity represents and warrants to Salem, and Salem represents and warrants
to Infinity, as follows (the party making the representations and warranties
being referred to as the "Representing Party"):
4.1. ORGANIZATION AND STANDING. The Representing Party (a) is a corporation
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) if necessary, is qualified to do business
as a foreign corporation and is in good standing in the State of Texas and (c)
has all necessary corporate power and authority to own, lease and operate the
assets it is conveying hereunder and to carry on its business as now conducted.
4.2. AUTHORIZATION AND BINDING OBLIGATION. The Representing Party has the
full right and authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions provided for herein.
All required corporate action with respect to the Representing Party has been
taken to approve this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Representing Party and
constitutes its valid and binding obligation, enforceable against the
Representing Party in accordance with its terms.
4.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set
forth in ARTICLE 7 and in Schedules 4.3 (a) and (b) hereto, the execution,
--------- -------------------------
delivery and performance of this Agreement by the Representing Party: (a) do not
and will not violate any provisions of the Representing Party's organizational
documents; (b) do not and will not require the consent or approval of or any
filing with any third party or governmental authority; (c) do not and will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority; and (d) do not and will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination or acceleration of or result
in a breach of the terms, conditions or provisions of, or constitute a default
under any agreement, lease, instrument, license or permit to which the
Representing Party is now subject.
4.4. NO LITIGATION. There are (a) no unsatisfied judgments, awards, orders,
writs, injunctions, arbitration decisions or decrees outstanding, and (b) no
claims, actions, suits, investigations or proceedings pending or, to the best of
the Representing Party's knowledge, threatened against or affecting the
Representing Party's assets to be conveyed hereunder, in
6
any court or before any governmental authority or arbitrator that (if adversely
determined, in the case of pending or threatened matters) would impair in any
material respect the ability of the Representing Party to perform its
obligations hereunder or would impair or hinder in any material respect the
ability or right of the Acquiring Party to operate the station to be conveyed to
it by the Representing Party after the Closing in the manner heretofore operated
by the Representing Party.
4.5 TAXES. There are no tax audits or other governmental proceedings pending
or, to the best of the Representing Party's knowledge, threatened that could
result in a Lien on the assets being conveyed by the Representing Party
hereunder or the imposition of any tax liability on the Acquiring Party and, to
the best of the Representing Party's knowledge, no event has occurred that
could impose on the applicable Acquiring Party any liability for any taxes,
penalties or interest due or to become due from the Representing Party.
4.6 INSOLVENCY PROCEEDINGS. Neither the Representing Party nor any of the
Representing Party's assets to be conveyed hereunder are the subject of any
pending insolvency proceedings of any character. The Representing Party has
neither made an assignment for the benefit of creditors nor taken any action
with a view to the institution of any such insolvency proceedings.
4.7. BROKER'S FEES. Except for the brokerage fee payable to Xxxx Xxxxxxx &
Co., neither the Representing Party nor any person or entity acting on its
behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, and no person or entity is entitled to any such payment from the
Representing Party in connection with the transactions contemplated by this
Agreement. The parties agree that Infinity shall pay $100,000 and Salem shall
pay the balance of any brokerage fee payable to Xxxx Xxxxxxx & Co.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INFINITY
------------------------------------------
Infinity represents and warrants to Salem as follows:
5.1. FCC AUTHORIZATIONS AND QUALIFICATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the KEWS FCC
---------------
Licenses, and there are no other licenses, permits or other authorizations from
the FCC required for the lawful operation of KEWS in the manner now operated.
The KEWS FCC Licenses are in full force and effect. All required FCC regulatory
fees with respect to the KEWS FCC Licenses have been paid. The KEWS FCC Licenses
have been issued for the full terms customarily issued to a radio broadcast
station in the State of Texas, and the KEWS FCC Licenses are not subject to any
condition except for conditions shown on the face of the
7
KEWS FCC Licenses, applicable to radio broadcast licenses generally or otherwise
disclosed in Schedule 1.2(a). Except as disclosed in Schedule 1.2(a), KEWS is
---------------
being operated at full authorized power in material compliance with the terms
and conditions of the KEWS FCC Licenses and the rules and regulations of the
FCC.
(b) Except as set forth in Schedule 1.2(a), to Infinity's knowledge, there
---------------
are no applications, petitions, complaints, proceedings or other actions pending
or threatened before the FCC relating to KEWS, other than proceedings affecting
the radio broadcasting industry generally.
(c) Except as disclosed on Schedule 5.1, to the best of its knowledge,
------------
Infinity is legally, financially and otherwise qualified under the
Communications Act of 1934, as amended, and the rules and regulations of the FCC
(together, the "Act"), to become the assignee of the KDFX FCC Licenses. Infinity
has no reason to believe that the FCC Applications might be challenged or might
not be granted by the FCC in the ordinary course.
5.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing, Infinity
will have good title to the KEWS Personal Property free and clear of all Liens.
At the Closing, the KEWS Personal Property will be in good operating condition
and repair (ordinary wear and tear excepted), will be performing satisfactory
and will be in material compliance with the rules and regulations of the FCC and
all other applicable federal, state and local statues, ordinances, rules and
regulations.
5.3. ASSUMED CONTRACTS; REAL ESTATE LEASES.
(a) Infinity has delivered to Salem true and complete copies of all of the
KEWS Assumed Contracts. At the Closing, all KEWS Assumed Contracts will be
valid, binding and enforceable by Infinity in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. At the Closing, Infinity will have complied in all
material respects with all KEWS Assumed Contracts. To Infinity's knowledge, no
other contracting party will be in material default under any of the KEWS
Assumed Contracts as of the Closing. Except as set forth in Schedule 4.3(a), as
---------------
of the Closing, Infinity will have full legal power and authority to assign its
rights under the KEWS Assumed Contracts to Salem in accordance with this
Agreement on terms and conditions no less favorable than those in effect on the
date hereof, and such assignment will not require the consent of any third party
or affect the validity, enforceability and continuity of any of the KEWS Assumed
Contracts.
(b) So long as Infinity fulfills its obligations under any real property
lease set forth on Schedule 1.2(d), Infinity has enforceable rights to
---------------
nondisturbance and quiet enjoyment, and no third party holds any interest in the
leased premises (the "KEWS Real Property") with the right to foreclose upon
Infinity's leasehold or subleasehold interest. All of KEWS's transmitting
antenna, antenna towers, guy anchors, transmitter buildings and related
8
improvements are located entirely on the KEWS Real Property. Infinity has no
knowledge of any pending, threatened or contemplated action to take by eminent
domain or otherwise to condemn any part of the KEWS Real Property.
5.4. COMPLIANCE WITH LAWS. Infinity has complied in all material respects
with, and is not in violation of any federal, state or local laws, regulations
or orders relating to the operation of KEWS. Without limiting the generality of
the foregoing:
(a) The KEWS transmitting and other equipment to be conveyed
hereunder is operating in accordance with the terms and conditions of the
KEWS FCC Licenses and all underlying construction permits, and the rules,
regulations and policies of the FCC, including, without limitation all
regulations concerning equipment authorization and human exposure to radio
frequency radiation.
(b) All ownership reports, employment reports and other documents
required to be filed by Infinity with the FCC have been so filed. Such
items as are required to be placed in KEWS's local public inspection files
have been placed in such files. All proofs of performance and measurements
that are required to be made by Infinity with respect to KEWS's
transmission facilities have been completed and filed at KEWS. All
information contained in the foregoing documents is true, complete and
accurate in all material respects.
(c) To the best of Infinity's knowledge, (a) no Hazardous Substance
(i) is or has been used, treated, stored, disposed of, released, spilled,
generated, manufactured, transported or otherwise handled on KEWS Real
Property, (ii) has been spilled, released or disposed of on property
adjacent to the KEWS Real Property, or (iii) has otherwise come to be
located on or under the KEWS Real Property, (b) the KEWS Real Property and
all operations on the KEWS Real Property are in compliance with all
Environmental Laws, and (c) Infinity has obtained all environmental, health
and safety permits necessary for the operation of KEWS, and all such
permits are in full force and effect, and Infinity is in compliance with
the terms and conditions of all such permits. No outstanding liens have
been placed on the KEWS Real Property under any Environmental Laws.
Infinity has not received any notice, and is not aware, of any
administrative or judicial investigations, proceedings or actions with
respect to violations, alleged or proven, of Environmental Laws by Infinity
or any tenants of Infinity, or otherwise involving the KEWS Real Property
or the operations conducted on the KEWS Real Property. The KEWS Real
Property and all operations conducted on the KEWS Real Property are in
compliance with all federal and state statutes and regulations relating to
Asbestos, and to the best of Infinity's knowledge, no Asbestos-Containing
Material is present in any of the improvements on the KEWS Real Property or
is otherwise located on the KEWS Real Property. To the best of Infinity's
knowledge, there are no underground storage tanks, whether in use or
closed, on or under the KEWS Real Property, and no PCB is
9
present on the KEWS Real Property. No PCB is used in the KEWS Personal
Property.
5.5. INSURANCE. The KEWS Assets are, and will be until the Closing Date, in
the reasonable judgment of Infinity, adequately insured.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SALEM
---------------------------------------
Salem represents and warrants to Infinity as follows:
6.1. FCC AUTHORIZATIONS AND QUALIFICATIONS.
(a) Schedule 2.3(a)(i) contains a true and complete list of the KDFX FCC
------------------
Licenses, and there are no other licenses, permits or other authorizations from
the FCC required for the lawful operation of KDFX in the manner now operated.
The KDFX FCC Licenses are in full force and effect. All required FCC regulatory
fees with respect to the KDFX FCC Licenses have been paid. The KDFX FCC Licenses
have been issued for the full terms customarily issued to a radio broadcast
station in the State of Texas, and the KDFX FCC Licenses are not subject to any
condition except for conditions shown on the face of the KDFX FCC Licenses,
applicable to radio broadcast licenses generally or otherwise disclosed in
Schedule 2.3(a)(i). Except as disclosed in Schedule 2.3(a)(i), KDFX is being
------------------- -------------------
operated at full authorized power in material compliance with the terms and
conditions of the KDFX FCC Licenses and the rules and regulations of the FCC.
(b) Except as set forth in Schedule 2.3(a)(i), to Salem's knowledge, there
-------------------
are no applications, petitions, complaints, proceedings or other actions pending
or threatened before the FCC relating to KDFX, other than proceedings affecting
the radio broadcasting industry generally.
(c) To the best of its knowledge, Salem is legally, financially and otherwise
qualified under the Act to be the assignee of the KEWS FCC Licenses. Salem has
no reason to believe that the FCC Applications might be challenged or might not
be granted by the FCC in the ordinary course.
6.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing, Salem will
have good title to the KDFX Personal Property free and clear of all Liens. At
the Closing, the KDFX Personal Property will be in good operating condition and
repair (ordinary wear and tear excepted), will be performing satisfactory and
will be in material compliance with the rules and regulations of the FCC and all
other applicable federal, state and local statues, ordinances, rules and
regulations.
10
6.3. ASSUMED CONTRACTS; REAL ESTATE LEASES.
(a) Salem has delivered to Infinity true and complete copies of all of the
KDFX Assumed Contracts. At the Closing, all KDFX Assumed Contracts will be
valid, binding and enforceable by Salem in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. At the Closing, Salem will have complied in all material
respects with all KDFX Assumed Contracts. To Salem's knowledge, no other
contracting party will be in material default under any of the KDFX Assumed
Contracts as of the Closing. Except as set forth in Schedule 4.3(b), as of the
----------------
Closing, Salem will have full legal power and authority to assign its rights
under the KDFX Assumed Contracts to Infinity in accordance with this Agreement
on terms and conditions no less favorable than those in effect on the date
hereof, and such assignment will not require the consent of any third party or
affect the validity, enforceability and continuity of any of the KDFX Assumed
Contracts.
(b) so long as Salem fulfills its obligations under any real property lease
set forth on Schedule 2.3(a)(iv), Salem has enforceable rights to nondisturbance
-------------------
and quiet enjoyment, and no third party holds any interest in the leased
premises (the "KDFX Real Property") with the right to foreclose upon Salem's
leasehold or subleasehold interest. All of KDFX's transmitting towers, ground
radials, guy anchors, transmitter buildings and related improvements are located
entirely on the KDFX Real Property. Salem has no knowledge of any pending,
threatened or contemplated action to take by eminent domain or otherwise to
condemn any part of the KDFX Real Property.
6.4. COMPLIANCE WITH LAWS. Salem has complied in all material respects with,
and is not in violation of any federal, state or local laws, regulations or
orders relating to the operation of KDFX. Without limiting the generality of the
foregoing:
(a) The KDFX transmitting and other equipment to be conveyed
hereunder is operating in accordance with the terms and conditions of the
KDFX FCC Licenses and all underlying construction permits, and the rules,
regulations and policies of the FCC, including, without limitation all
regulations concerning equipment authorization and human exposure to radio
frequency radiation.
(b) All ownership reports, employment reports and other documents
required to be filed by Salem with the FCC have been so filed. Such items
as are required to be placed in KDFX's local public inspection files have
been placed in such files. All proofs of performance and measurements that
are required to be made by Salem with respect to KDFX's transmission
facilities have been completed and filed at KDFX. All information contained
in the foregoing documents is true, complete and accurate in all material
respects.
11
(c) To the best of Salem's knowledge, (a) no Hazardous Substance (i)
is or has been used, treated, stored, disposed of, released, spilled,
generated, manufactured, transported or otherwise handled on KDFX Real
Property, (ii) has been spilled, released or disposed of on property
adjacent to the KDFX Real Property, or (iii) has otherwise come to be
located on or under the KDFX Real Property, (b) the KDFX Real Property and
all operations on the KDFX Real Property are in compliance with all
Environmental Laws, and (c) Salem has obtained all environmental, health
and safety permits necessary for the operation of KDFX, and all such
permits are in full force and effect, and Salem is in compliance with the
terms and conditions of all such permits. No outstanding liens have been
placed on the KDFX Real Property under any Environmental Laws. Salem has
not received any notice, and is not aware, of any administrative or
judicial investigations, proceedings or actions with respect to violations,
alleged or proven, of Environmental Laws by Salem or any tenants of Salem,
or otherwise involving the KDFX Real Property or the operations conducted
on the KDFX Real Property. The KDFX Real Property and all operations
conducted on the KDFX Real Property are in compliance with all federal and
state statutes and regulations relating to Asbestos, and to the best of
Salem's knowledge, no Asbestos-Containing Material is present in any of the
improvements on the KDFX Real Property or is otherwise located on the KDFX
Real Property. To the best of Salem's knowledge, there are no underground
storage tanks, whether in use or closed, on or under the KDFX Real
Property, and no PCB is present on the KDFX Real Property. No PCB is used
in the KDFX Personal Property.
6.5. INSURANCE. The KDFX Assets are, and will be until the Closing Date, in
the reasonable judgment of Salem, adequately insured.
ARTICLE 7
GOVERNMENTAL CONSENTS
---------------------
7.1. FCC Application.
(a) The assignments of the KEWS FCC Licenses and the KDFX FCC Licenses as
contemplated by this Agreement are subject to the prior consent and approval of
the FCC. Between the date of this Agreement and the Closing, Salem shall not
directly or indirectly, control the operation of KEWS, and Infinity shall not
directly or indirectly, control the operation of KDFX.
(b) No later than five (5) business days after the date of this Agreement,
Salem and Infinity shall each prepare and jointly file complete and grantable
applications requesting the FCC's consent to the assignment of the KEWS FCC
Licenses to Salem and the assignment of KDFX FCC Licenses to Infinity pursuant
to this Agreement (the "FCC
12
Applications"). Infinity and Salem shall thereafter prosecute the FCC
Applications in good faith and with all reasonable diligence and otherwise use
their best efforts to obtain the grant of the FCC Applications as expeditiously
as practicable; provided, however, that neither Infinity nor Salem shall have
any obligation to satisfy any complainant or the FCC by taking any steps which
would have a material adverse effect upon Infinity or Salem or upon any
affiliated entity, but neither the expense nor inconvenience to a party of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse effect on such party. If the FCC Consent to either of the FCC
Applications imposes any condition on any party hereto, such party shall use its
best efforts to comply with such condition; provided, however, that no party
shall be required to comply with any condition that would have a material
adverse effect upon it or any affiliated entity. If reconsideration or judicial
review is sought with respect to one of the FCC Consents, the party or parties
affected shall vigorously oppose such efforts for reconsideration or judicial
review; provided, however, that nothing herein shall be construed to limit
either party's right to terminate this Agreement pursuant to ARTICLE 12
(Termination Rights).
(c) All FCC filing or grant fees shall be borne equally by Salem and
Infinity. Each party shall otherwise bear its own costs and expenses (including
the fees and disbursements of its counsel) in connection with the preparation of
the portion of the FCC Applications to be prepared by it and in connection with
the processing and defense of such applications.
7.2 COMPLIANCE WITH HSRA. Each party shall make or cause to be made in a
timely fashion, and in any event within ten (10) business days following the
date of this Agreement, all filings which are required in connection with the
transactions contemplated hereby under the HSRA, and shall furnish to the other
party all information that the other reasonably requests in connection with such
filings. The transfer of the KEWS Assets hereunder is conditioned upon the
expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to the consummation of the
transactions contemplated hereunder. Salem and Infinity shall split the cost of
any HSRA filing fees. Each party shall otherwise bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of any HSRA filing to be prepared by it and in connection with the
prosecution and defense of that filing.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of this
Agreement, the parties shall prepare and file with the appropriate governmental
authorities any other requests for approval or waiver that are required from
such governmental authorities in connection with the transactions contemplated
hereby and shall diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such requests for approval or
waiver and all proceedings necessary to secure such approvals and waivers. Each
party shall bear its own costs and expenses in connection with the preparation
of any filings, documents or requests to be prepared by it in order to obtain
such
13
governmental consents, approvals or waivers and in connection with any
prosecution or defense by it of such filings, documents or requests.
ARTICLE 8
COVENANTS
---------
8.1. CONDUCT OF BUSINESS. Between the date of this Agreement and the Closing,
Infinity, with respect to KEWS, and Salem, with respect to KDFX, shall, except
as expressly permitted by this Agreement or with the prior written consent of
the other:
(a) comply in all material respects with all laws and contractual
obligations applicable to such station or to the conduct of the business of
such station;
(b) perform all material obligations relating to the business of such
station;
(c) refrain from selling, assigning, leasing or otherwise transferring
or disposing of any of the KEWS Assets or the KDFX Assets, as the case may
be, except for assets consumed or disposed of in the ordinary course of
business;
(d) maintain the KEWS Assets or the KDFX Assets, as the case may be, in
customary repair, maintenance and condition, replace all items of equipment
at time intervals consistent with prior practice, and repair or replace
(subject to SECTION 8.6 (Risk of Loss)) any asset that may be damaged or
destroyed with items of equal or greater value and utility unless Infinity
or Salem, as the case may be, determines in good faith that such a repair
or replacement is not necessary or useful for the continued operation of
such station; and
(e) not modify the KEWS Assumed Contracts or the KDFX Assumed Contracts,
as amended through the date of this Agreement.
8.2. NOTIFICATION. Between the date of this Agreement and the Closing,
Infinity and Salem shall each promptly notify the other of (a) any pending or,
to its knowledge, threatened litigation, arbitration or administrative
proceeding that seeks to revoke, cancel, rescind, modify or fail to renew in the
ordinary course any of the KEWS FCC Licenses or the KDFX FCC Licenses, as the
case may be, or that challenges the transactions contemplated hereby, including
any challenges to the FCC Applications; (b) the issuance of any order to show
cause, notice of violation, notice of apparent liability or notice of forfeiture
with respect to KEWS or KDFX; or (c) the submission, to such party's knowledge,
of any material complaint against or with respect to KEWS or KDFX.
8.3. ACCESS. Between the date hereof and the Closing, Infinity and Salem
shall each give, upon prior reasonable notice, the other or it representatives
(including consultants
14
and advisors) reasonable access to the KEWS Assets or the KDFX Assets as
applicable. It is expressly understood that, pursuant to this SECTION 8.3, the
Acquiring Party, at its sole expense, shall be entitled to make such engineering
and other inspections of the KEWS Assets or the KDFX Assets, as applicable, as
it may desire, so long as such inspection does not unreasonably interfere with
the operation of such station in the conveying party's reasonable judgment.
8.4. THIRD-PARTY CONSENTS. Between the date of this Agreement and the
Closing, each party shall use reasonable efforts to obtain the consent of any
third party necessary for the assignment of any of the KEWS Assumed Contracts or
KDFX Assumed Contracts; provided, that neither party shall be obligated to pay
any money to obtain such consent. In the event a consent or waiver required with
respect to the assignment of any of the KEWS Assumed Contracts or the KDFX
Assumed Contracts has not been obtained on or before the Closing, Infinity or
Salem, as the case may be, shall use reasonable efforts to provide the other
with the benefits of any such assumed contract (including, without limitation,
permitting such other party to enforce any rights of Infinity or Salem under
such assumed contract), and Salem or Infinity shall, to the extent Salem or
Infinity, as the case may be, is provided with the benefits of such assumed
contract, perform all obligations of the other party thereunder.
8.5. PRE-CLOSING EFFORTS. Between the date of this Agreement and the Closing,
each party shall use its reasonable efforts to cause the fulfillment at the
earliest practicable date of all of the conditions to the obligations of the
other party to consummate the sale and purchase under this Agreement. Neither
party shall take any action which is materially inconsistent with its
obligations under this Agreement or that would materially hinder or delay the
consummation of the transactions contemplated by this Agreement. In particular,
neither party shall take any action that would result in its disqualification to
hold the KEWS FCC Licenses or the KDFX FCC Licenses, as the case may be, or in
any way delay grant of the FCC Applications or consummation of the transactions
contemplated by this Agreement. Should either party become aware of any such
fact or circumstance, such party shall promptly inform the other.
8.6. RISK OF LOSS. The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the KEWS Assets from any cause whatsoever shall be borne
by Infinity at all times prior to the Closing. The risk of any loss, damage,
impairment, confiscation, or condemnation of any of the KDFX Assets from any
cause whatsoever shall be borne by Salem at all times prior to the Closing. If
there is any loss, damage, impairment, confiscation, or condemnation of or to
any of such assets, Infinity or Salem, as the case may be, shall repair,
replace, or restore such assets (the "Damaged Assets") to their prior condition
as represented in this Agreement as soon thereafter as possible; provided,
however, that no party shall have any obligation to repair or replace any
immaterial or obsolete asset no longer necessary or useful for the continued
operation of the station consistent with past practice. If Infinity or Salem, as
the case may be (the "Repairing Party"), is unable to repair
15
or replace the Damaged Assets by the date on which the Closing would otherwise
occur under this Agreement, then the Repairing Party shall reimburse all
reasonable costs incurred by the Acquiring Party in repairing or replacing the
Damaged Assets after the Closing.
8.7. CONFIDENTIALITY.
(a) Salem and Infinity shall each keep confidential all information obtained
by it with respect to the other in connection with this Agreement, except where
such information is known or available through other lawful sources or where its
disclosure is required in accordance with applicable law. If the transactions
contemplated hereby are not consummated for any reason, Salem and Infinity shall
return to the other, without retaining a copy thereof, any schedules, documents
or other written information, including all financial information, obtained from
the other in connection with this Agreement and the transactions contemplated
hereby.
(b) Except as required by the FCC in connection with the filing of the FCC
application, without the prior consent of both Salem and Infinity, there shall
be no public announcement relating to this Agreement or the transactions
proposed herein.
8.7. FURTHER ASSURANCES. Infinity and Salem shall cooperate and take such
actions, and execute such other documents, at the Closing or subsequently, as
may be reasonably requested by the other in order to carry out the provisions
and purposes of this Agreement.
8.8 COVENANT NOT TO COMPETE. At the Closing, Salem shall execute and deliver,
and cause its parent to execute and deliver, the Covenant Not to Compete.
8.9 KDFX TRANSMITTER SITE LEASE. Prior to or at the Closing, Salem shall
enter into an amended lease for KDFX's transmitter site. Such amended lease
shall be in the form of Exhibit C hereto (the "Amended KDFX Transmitter Site
---------
Lease").
ARTICLE 9
CONDITIONS PRECEDENT
--------------------
9.1. TO SALEM'S OBLIGATIONS. The obligations of Salem hereunder are, at its
option, subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
16
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Infinity in this
Agreement shall be true and complete in all material respects on and
as of the Closing Date (except to the extent they expressly relate to
an earlier time, in which case they shall have been true and correct
only as of such earlier time) as if made on and as of that date,
except to the extent changes are permitted under SECTION 8.1 of this
Agreement.
(ii) All of the terms, covenants and conditions to be complied
with and performed by Infinity under this Agreement on or prior to
Closing Date shall have been complied with or performed in all
material respects.
(b) FCC CONSENT. The FCC Consents to the Applications shall have been
obtained, without the imposition of any condition materially adverse to
Salem, and such FCC Consents shall have become Final Orders; provided, that
Salem agrees to waive the requirement of Final Orders if its senior lenders
consent to such waiver.
(c) NO INJUNCTION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by
this Agreement in accordance with its terms.
(d) DELIVERIES. Infinity shall have made or stand willing to make all
deliveries required under SECTION 10.1.
9.2 TO INFINITY'S OBLIGATIONS. The obligations of Infinity hereunder are, at
its option, subject to satisfaction, at or prior to the Closing Date, of each of
the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Salem in this
Agreement shall be true and complete in all material respects on and
as of the Closing Date (except to the extent they expressly relate to
an earlier time, in which case they shall have been true and correct
only as of such earlier time) as if made on and as of that date.
(ii) All of the terms, covenants and conditions to be complied
with and performed by Salem under this Agreement on or prior to the
Closing Date shall have been complied with or performed in all
material respects.
(b) FCC CONSENT. The FCC Consents to the FCC Applications shall have
been obtained, without the imposition of any condition materially adverse
to Infinity, and such FCC Consents shall have become Final Orders;
provided, that Infinity agrees
17
to waive the requirement of Final Orders if Salem's senior lenders consent
to Salem's waiving of the requirement.
(c) NO INJUNCTION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by
this Agreement in accordance with its terms.
(d) DELIVERIES. Salem shall have made or stand willing to make all the
deliveries required under SECTION 10.2 and shall have paid or stand willing
to pay the Cash Purchase Price as provided in SECTION 2.2.
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
----------------------------------------
10.1. DOCUMENTS TO BE DELIVERED BY INFINITY. At the Closing, Infinity shall
deliver to Salem the following:
(a) a copy of the resolution of the board of directors of Infinity,
certified by an authorized officer of Infinity, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Salem, effecting the sale, transfer,
assignment and conveyance of the KEWS Assets to Salem, including, but not
limited to, the following:
(i) an assignment of the KEWS FCC Licenses;
(ii) bills of sale for all KEWS Personal Property;
(iii) assignments of the Assumed Contracts, together with all third
party consents as provided in SECTION 8.4;
(c) instruments, in form and substance reasonably satisfactory to Salem
and its counsel, pursuant to which Infinity assumes the obligations,
liabilities and commitments of Salem as provided in ARTICLE 3; and
(d) such other documents as may reasonably be requested by Salem's
counsel.
10.2. DOCUMENTS TO BE DELIVERED BY SALEM. At the Closing, Salem shall deliver
to Infinity the following:
18
(a) a copy of the resolution of the board of directors of Salem,
certified by an authorized officer of Salem, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Infinity, effecting the sale,
transfer, assignment and conveyance of the KDFX Assets to Infinity,
including, but not limited to, the following:
(i) an assignment of the KDFX FCC Licenses;
(ii) bills of sale for all KDFX Personal Property;
(iii) assignments of the Assumed Contracts, together with all
third party consents as provided in SECTION 8.4;
(c) instruments, in form and substance reasonably satisfactory to
Infinity and its counsel, pursuant to which Salem assumes the obligations,
liabilities and commitments of infinity as provided in ARTICLE 3;
(d) the Covenant Not to Compete duly executed by Salem and its parent;
(e) immediately available wire transferred federal funds as provided
in SECTION 2.2;
(f) the Amended KDFX Transmitter Site Lease executed by the landlord
thereunder and dated the Closing Date; and
(g) such other documents as may reasonably be requested by Infinity's
counsel.
ARTICLE 11
INDEMNIFICATION, SURVIVAL
-------------------------
11.1. INFINITY'S INDEMNITIES. From and after the Closing, Infinity shall
indemnify, defend, and hold harmless Salem and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them for,
all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from:
(a) any liabilities or obligations of Infinity or its affiliates not
assumed by Salem under this Agreement;
19
(b) any untrue representation, breach of warranty, or nonfulfillment of
any covenant by Infinity contained in this Agreement or in any certificate
document or instrument delivered to Salem under this Agreement;
(c) Infinity's operation or ownership of KEWS prior to the Effective
Time;
(d) Infinity's operation or ownership of KDFX after the Effective Time;
or
(e) any failure to comply with any "bulk sales" laws applicable to the
sale of KEWS hereunder.
11.2. SALEM'S INDEMNITIES. From and after the Closing, Salem shall indemnify,
defend and hold harmless Infinity and its affiliates and their respective
directors, officers, employees, and representatives, and the successors and
assigns of any of them, from and against, and reimburse them for, all claims,
damages, costs and expenses, including, without limitation, interest, penalties,
court costs and reasonable attorneys' fees and expenses, resulting from:
(a) any liabilities or obligations of Salem or its affiliates not
assumed by Infinity under this Agreement;
(b) any untrue representation, breach of warranty, or nonfulfillment of
any covenant by Salem contained in this Agreement or in any certificate
document or instrument delivered to Infinity under this Agreement;
(c) Salem's operation or ownership of KDFX prior to the Effective Time;
(d) Salem's operation or ownership of KEWS after the Effective Time; or
(e) any failure to comply with any "bulk sales" laws applicable to the
sale of KDFX hereunder.
11.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall
be as follows:
(a) The party seeking indemnification under this ARTICLE 11 (the
"Claimant") shall give notice to the party from whom indemnification is
sought (the "Indemnitor") of any claim, whether solely between the parties
or brought by a third party, reasonably specifying (i) the factual basis
for the claim, and (ii) the amount of the claim if then known. If the claim
relates to an action, suit or proceeding filed by a third party against
Claimant, notice shall be given by Claimant within fifteen (15) days after
written notice of the action, suit or proceeding was given to Claimant. In
all other circumstances, notice shall be given by Claimant within thirty
(30) days after
20
Claimant becomes, or should have become, aware of the facts giving rise to
the claim. Notwithstanding the foregoing, Claimant's failure to give
Indemnitor timely notice shall not preclude Claimant from seeking
indemnification from Indemnitor if Claimant's failure has not materially
prejudiced Indemnitor's ability to defend the claim or litigation.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have thirty (30)
days to make any investigation of the claim that the Indemnitor deems
necessary or desirable. For the purposes of this investigation, the
Claimant agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate
the claim. If the Claimant and the Indemnitor cannot agree as to the
validity and amount of the claim within the 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal
remedy.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnitor shall have the
right at its own expense to participate in or assume control of the defense
of the claim with counsel reasonably acceptable to Claimant, and the
Claimant shall cooperate fully with the Indemnitor, subject to
reimbursement for reasonable expenses incurred by the Claimant as the
result of a request by the Indemnitor. If the Indemnitor elects to assume
control of the defense of any third-party claim, the Claimant shall have
the right to participate in the defense of the claim at its own expense. If
the Indemnitor does not elect to assume control or otherwise participate in
the defense of any third party claim, Claimant may, but shall have no
obligation to, defend or settle such claim or litigation in such a manner
as it deems appropriate, and in any event Indemnitor shall be bound by the
results obtained by the Claimant with respect to the claim (by default or
otherwise) and shall promptly reimburse Claimant for the amount of all
expenses (including the amount of any judgment rendered), legal or
otherwise, incurred in connection with such claim or litigation. The
Indemnitor shall be subrogated to all rights of the Claimant against any
third party with respect to any claim for which indemnity was paid.
11.4. LIMITATIONS.
(a) Neither Infinity nor Salem shall have any obligation to the other
party for any matter described in SECTION 11.1 or SECTION 11.2, as the case
may be, except upon compliance by the other party with the provisions of
this ARTICLE 11, particularly SECTION 11.3.
(b) Neither party shall be required to indemnify the other party under
this ARTICLE 11 unless (i) written notice of a claim under this ARTICLE 11
was received by the party within the pertinent survival period specified in
SECTION 11.5 and (ii) unless and until the aggregate amount of claims
against the party to which the other party (as a Claimant) is entitled to
be
21
indemnified under this Agreement exceeds $50,000, and then only for the
excess over $50,000. The foregoing "deductible" shall not apply to (i) any
proration of expenses under SECTION 3.3, (ii) either party's obligation to
indemnify by reason of such party's non-compliance with the provisions of
any bulk sales laws applicable to this transaction, or (iii) any obligation
to indemnify against third-party claims. Neither party shall have any
liability to the other party under any circumstances for special,
consequential, punitive or exemplary damages.
11.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants, indemnities and agreements contained in
this Agreement or in any certificate, document or instrument delivered pursuant
to this Agreement are and will be deemed and construed to be continuing
covenants, indemnities and agreements and shall survive the Closing for a period
of six (6) months after the Closing Date (the "Survival Period"). No claim may
be brought under this Agreement unless written notice describing in reasonable
detail the nature and basis of such claim is given on or prior to the last day
of the Survival Period. In any event such notice is given, the tight to
indemnification with respect thereto shall survive the Survival Period until
such claim is finally resolved and any obligations thereto are fully satisfied.
Any investigation by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, covenant or agreement
contained herein.
11.6. SOLE REMEDY. After the Closing, the right to indemnification under this
ARTICLE 11 shall be the exclusive remedy of any party in connection with any
breach or default by another party under this Agreement.
ARTICLE 12
TERMINATION RIGHTS
------------------
12.1. TERMINATION.
(a) This Agreement may be terminated by either Salem or Infinity, if the
party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of
the following:
(i) if, subject to the opportunity to cure period set forth in
Section 12.1(c) below, the other party is in material breach of this
Agreement;
(ii) if there shall be in effect any order or decree from the
Department of Justice or any judgment, final decree or order that would
prevent or make unlawful the Closing or if the FCC shall have released a
hearing designation order requiring a formal hearing on either of the FCC
Applications; or
(iii) if the Closing has not occurred by June 30, 1997 (the "Upset
Date").
22
(b) This Agreement may be terminated by mutual written consent of Salem
and Infinity
(c) If either party believes the other to be in breach or default of
this Agreement, the non-defaulting party shall, prior to exercising its right to
terminate under SECTION 12.1(a)(i), provide the defaulting party with notice
specifying in reasonable detail the nature of such breach or default. Except for
a failure to pay the Cash Purchase Price, the defaulting party shall have ten
(10) days from receipt of such notice to cure such default; provided, that if
the breach or default is due to no fault of the defaulting party and is
incapable of cure within such 1O-day period, the cure period shall be extended
as long as the defaulting party is diligently and in good faith attempting to
effectuate a cure. Nothing in this SECTION 12.1(c) shall be interpreted to
extend the Upset Date.
12.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement pursuant to SECTION 12.1, this
Agreement (other than SECTION 8.7 (Confidentiality), which shall remain in full
force and effect) shall forthwith become null and void, and no party hereto (nor
any of their respective affiliates, directors, officers or employees) shall have
any liability or further obligation, except as provided in this ARTICLE 12 and
in ARTICLE 13; provided, that nothing in this SECTION 12.2 shall relieve any
party from liability for any breach of this Agreement.
ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE
-------------------------------------------
13.1. DEFAULT BY INFINITY; SPECIFIC PERFORMANCE. Infinity recognizes that, in
the event Infinity defaults in the performance of its obligations under this
Agreement, monetary damages alone will not be adequate. In such event, Salem
shall be entitled to obtain specific performance of the terms of this Agreement
without being required to post bond or furnish other security. In addition,
Salem shall be entitled to obtain from Infinity court costs and reasonable
attorneys' fees and expenses incurred by it in enforcing its rights hereunder.
As a condition to seeking specific performance, Salem shall not be required to
have tendered the Purchase Price specified in ARTICLE 2 of this Agreement, but
shall be ready, willing and able to do so.
13.2. DEFAULT BY SALEM; LIQUIDATED DAMAGES. If Salem breaches or defaults in
its obligations under this Agreement, Infinity may pursue any legal or equitable
remedies available to it and shall be entitled to obtain from Salem court costs
and reasonable attorneys' fees and expenses incurred by it in enforcing its
rights hereunder; provided, however, that if this Agreement is terminated by
-------------------
Infinity pursuant to SECTION 12.1(a) as a result of a breach or default by Salem
of its representations, warranties, covenants or obligations hereunder, then
Salem shall pay Infinity $2,000,000 as liquidated damages, in full settlement of
any damages of any kind or nature that Infinity may suffer or allege to suffer
as a result thereof, it being
23
understood and agreed that the amount of liquidated damages represents Salem's
and Infinity's reasonable estimate of actual damages and does not constitute a
penalty. In the event that Infinity is entitled to liquidated damages, the
Escrow Deposit shall be paid over to Infinity in partial satisfaction of Salem's
liability for liquidated damages. In the event of a termination of this
Agreement pursuant to SECTION 12.1 for any other reason, the Escrow Deposit,
together with any interest and earnings thereon, shall be paid to Salem.
ARTICLE 14
OTHER PROVISIONS
----------------
14.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer, documentary,
excise, sales or use taxes or fees imposed on this transaction shall be shared
equally by Salem and Infinity. Except as otherwise provided in this Agreement,
each party shall be solely responsible for and shall pay all other costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
14.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither Salem nor Infinity may assign its rights under this Agreement
without the prior written consent of the other party hereto.
14.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement, and the
exhibits and schedules hereto and thereto, embody the entire agreement and
understanding of the parties hereto and supersede any and all prior agreements,
arrangements and understandings relating to the matters provided for herein. Any
matter that is disclosed in a Schedule hereto in such a way as to make its
relevance to the information called for by another Schedule readily apparent
shall be deemed to have been included in such other Schedule, notwithstanding
the omission of an appropriate cross-reference. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any waiver, amendment, change,
extension or discharge is sought. No failure or delay on the part of Salem or
Infinity in exercising any right or power under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power.
14.4. HEADINGS. The headings set forth in this Agreement are for convenience
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
24
14.5. COMPUTATION OF TIME. If after making computations of time provided for
in this Agreement, a time for action or notice falls on Saturday, Sunday or a
Federal holiday, then such time shall be extended to the next business day.
14.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and performance
of this Agreement shall be governed by the law of the State of New York without
regard to its principles of conflicts of law. SALEM AND INFINITY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE. Salem and Infinity hereby acknowledge that
they have each been represented by counsel in the negotiation, execution and
delivery of this Agreement and that their lawyers have fully explained the
meaning of the Agreement, including in particular the jury-trial waiver. Any
question of doubtful interpretation shall not be resolved by any rule providing
for interpretation against the party who causes the uncertainty to exist or
against the drafter of this Agreement.
14.7. ATTORNEYS' FEES. In the event of any dispute between the parties to
this Agreement, Infinity or Salem, as the case may be, shall reimburse the
prevailing party for its reasonable attorneys' fees and other costs incurred in
enforcing its rights or exercising its remedies under this Agreement. Such right
of reimbursement shall be in addition to any other right or remedy that the
prevailing party may have under this Agreement.
14.8. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance shall, to any extent be held
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
14.9. NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any party may request.
If to Infinity:
c/o Infinity Broadcasting Corporation
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
25
With a copy (which shall not constitute notice) to:
Xxxxxxxxx, Xxxxxx & Xxxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Lermart, Esq.
Telephone: 000-000-0000
Facsimile: 202-293-7783
If to Salem:
Salem Communications Corporation
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Block, Esq.
Telephone: 000-000-0000
Facsimile: 805-482-8570
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the date
of a signed receipt, if sent by an overnight delivery service, but only if sent
in the same manner to all persons entitled to receive notice or a copy.
14.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
ARTICLE 15
DEFINITIONS
-----------
15.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the following
terms when used herein shall have the meanings assigned to them below (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).
"Acquiring Party" shall mean either Infinity or Salem, as required by the
context in which such term is used, in its capacity as the party acquiring a
station hereunder.
"Act" shall have the meaning set forth in SECTION 5.1(c).
"Agreement" shall mean this Asset Purchase Agreement.
26
"Amended KDFX Transmitter Site Lease" shall have the meaning set forth in
SECTION 8.9.
"Asbestos" shall mean any and all varieties of materials included in the
definition of "asbestos" under any federal or state law or regulation relating
to the protection of human health or the environment.
"Asbestos-Containing Material" shall mean any material containing more than
one (1) percent Asbestos by weight.
"Cash Purchase Price" shall have the meaning set forth in SECTION 1.2.
"Claimant" shall have the meaning set forth in SECTION 11.3.
"Closing" shall have the meaning set forth in SECTION 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Covenant Not to Compete" shall mean the Covenant Not to Compete among
Infinity, Salem and Salem's parent substantially in the form of Exhibit B to
---------
this Agreement.
"Damaged Assets" shall have the meaning set forth in SECTION 8.6.
"Effective Time" shall have the meaning set forth in SECTION 3.1.
"Environmental Laws" shall mean all applicable local, state and federal
statutes and regulations relating to the protection of human health or the
environment including the FCC's regulations concerning radio frequency
radiation.
"Escrow Agent" shall mean Xxxx Xxxxxxx & Co.
"Escrow Agreement" shall mean the agreement among Infinity, Salem and
Escrow Agent substantially in the form attached hereto as Exhibit A.
---------
"Escrow Deposit" shall mean the amount held by the Escrow Agent pursuant to
the Escrow Agreement, including all earnings and interest thereon.
"FCC" shall have the meaning set forth in the preamble to this Agreement.
"FCC Applications" shall have the meaning set forth in SECTION 7.1.
"FCC Consent" shall mean the action by the FCC granting the applicable FCC
Application.
27
"Final Order" shall mean action by the FCC, with respect to an FCC
Application, (i) which has not been vacated, reversed, stayed, or suspended;
(ii) with respect to which no timely appeal, request for stay or petition for
rehearing, reconsideration or review by any party or by the FCC on its own
motion, is pending; and (iii) as to which the time for filing any such appeal
request, petition, or similar document or for the reconsideration or review by
the FCC on its own motion under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, has expired.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Hazardous Substance" shall mean all hazardous or toxic waste or material
which, because of its quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. "Hazardous
Substance" shall include, but is not limited to, any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such federal
or state statutes. "Hazardous Substance" shall not include ordinary quantities
of consumer or commercial products used in the normal course of broadcast
station operations, including grounds and building operation and maintenance;
provided, that such products have been properly stored, handled and disposed of.
--------
"HSRA" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Xxx 0000, as
amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in SECTION 11.3.
"Infinity" shall have the meaning set forth in the preamble to this
Agreement.
"Infinity's Proration Amount" shall have the meaning set forth in SECTION
3.4.
"KDFX" shall have the meaning set forth in the preamble to this Agreement.
"KDFX Assets" shall have the meaning set forth in SECTION 2.3(a).
"KDFX Assumed Contracts" shall have the meaning set forth in SECTION
2.3(a)(iv).
"KDFX FCC Licenses" shall have the meaning set forth in SECTION 2.3(a)(i).
"KDFX Main Studio Equipment" shall have the meaning set forth in SECTION
2.3(a)(iii).
28
"KDFX Personal Property" shall have the meaning set forth in SECTION
2.3(a)(iii). "KDFX Real Property" shall have the meaning set forth in SECTION
6.3(b).
"KDFX Transmitter Site Equipment shall have the meaning set forth in
SECTION 2.3(a)(ii).
"KEWS" shall have the meaning set forth in the preamble to this Agreement.
"KEWS Assets" shall mean the assets to be transferred to Salem hereunder,
as more fully specified in SECTION 1.2.
"KEWS Assumed Contracts" shall have the meaning set forth in SECTION 1.2.
"KEWS FCC Licenses" shall have the meaning set forth in SECTION 1.2.
"KEWS Main Studio Equipment" shall have the meaning set forth in SECTION
1.2.
"KEWS Personal Property" shall have the meaning set forth in SECTION 1.2.
"KEWS Real Property" shall have the meaning set forth in SECTION 5.3(C).
"KEWS Transmitter Site Equipment" shall have the meaning set forth in
SECTION 1.2.
"Liens" shall mean mortgages, deeds of trust, liens, security interests,
pledges, collateral assignments, conditional sales agreements, leases,
encumbrances, claims, or other defects of title, but shall not include (i) liens
for current taxes not yet due and payable, (ii) other liens imposed by law (such
as materialman's, mechanic's, carrier's, worker's and repairman's liens) arising
in the ordinary course of business (provided that such liens do not interfere in
any material respect with the use of the Station Assets as currently used),
(iii) valid leases or subleases to third parties with respect to property not
used in the operation of the Station, and (iv) defects in title or other matters
that are not material to the owner or lessee, as the case may be.
"Notice of Disagreement" shall have the meaning set forth in SECTION 3.4.
"PCB" shall mean polychlorinated biphenyl.
"Proration Schedule" shall have the meaning set forth in SECTION 3.4.
"Purchase Price" shall have the meaning set forth in SECTION 2.1.
"Referee" shall have the meaning set forth in SECTION 3.4.
29
"Repairing Party" shall have the meaning set forth in SECTION 8.6.
"Representing Party" shall have the meaning set forth in ARTICLE 4.
"Salem" shall have the meaning set forth in the preamble to this Agreement.
"Survival Period" shall have the meaning set forth in SECTION 11.5.
"To Infinity's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Infinity.
"To Salem's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Salem.
"Upset Date" shall have the meaning set forth in SECTION 12.1.
15.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term "and" is
conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Masculine terms apply to females; feminine terms apply to males. The term
"includes" or "including" is by way of example and not limitation.
[Signatures immediately following this page.]
3O
IN WITNESS WHEREOF. the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
INFINITY BROADCASTING
CORPORATION OF DALLAS
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxx
Title: VP Finance/CFO
INSPIRATION MEDIA OF TEXAS, INC.
By:
-----------------------------
Xxxx X. Xxxxxxxxx
Executive Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
INFINITY BROADCASTING
CORPORATION OF DALLAS
By:
----------------------------
Name:
-----------------------
Title:
----------------------
INSPIRATION MEDIA OF TEXAS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------
Xxxx X. Xxxxxxxxx
Executive Vice President