ASSET PURCHASE AGREEMENT
Exhibit
2.1
This
ASSET PURCHASE AGREEMENT is dated as of the 23rd day of
February, 2010, by and among BELTWAY ACQUISITION CORPORATION (hereinafter “BELTWAY” or “Seller”), a Delaware
corporation, and XXXXXXXX MEDIA, LLC, a Texas limited liability company, and
XXXXXXXX LICENSE SUBSIDIARY, LLC, a Texas limited liability company and wholly
owned subsidiary of XXXXXXXX MEDIA, LLC (collectively “Buyer”).
R E C I T A L
S
A. BELTWAY
is the licensee of WMET (AM) Gaithersburg, Maryland (Facility ID#4643) (the
“Station”) and owns or
leases the tangible assets used and utilized in the operation of the
Station.
B. Seller
desires to sell, and Buyer desires to buy, all the assets that are used in the
business or operations of the Station, for the price and on the terms and
conditions set forth in this Agreement.
A G R E E M E N
T
In consideration of the above recitals
and of the mutual agreements and covenants contained in this Agreement, Buyer
and Seller, intending to be bound legally, agree as follows:
SECTION 1 -
DEFINITIONS
The following terms, as used in this
Agreement, shall have the meanings set forth in this Section:
“Accounts Receivable” means
accounts receivable earned by Seller prior to 11:59 p.m., EST, on the day prior
to the Closing Date, including, without limitation, the rights of Seller to
payment for the sale of programming time or advertising time run on the Station
by Seller prior to the day prior to the Closing Date.
“Assets” means the assets to be
sold, transferred, or otherwise conveyed to Buyer under this Agreement, as
specified in Section
2.1.
“Assumed Contracts” means (i)
all Contracts listed in Schedule 3.7, (ii)
all Time Brokerage Agreements, (iii) all Cash Advertising Contracts, and (iv)
any Contracts entered into by Seller between the date of this Agreement and the
Closing Date that Buyer agrees in writing to assume.
“Cancelable TBAs” is defined in
Section
3.7.
“Cash Advertising Contracts” is
defined in Section
3.7.
“Closing” means the
consummation of the purchase and sale of the Assets pursuant to this Agreement
in accordance with the provisions of Section
8.
“Closing Date” means the date
on which the Closing occurs, as determined pursuant to Section
8.
“Consents” means the consents,
permits, or approvals of Governmental Authorities and other third parties
necessary to transfer the Assets to Buyer or otherwise to consummate the
transactions contemplated by this Agreement.
“Contracts” means all
contracts, leases, non-governmental licenses, and other agreements (including
leases for personal or real property and employment agreements), written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and which relate to or affect the Assets
or the business or operations of the Station, and (i) which are in effect
on the date of this Agreement or (ii) which are entered into by Seller between
the date of this Agreement and the Closing Date.
“Xxxxxxx Money Deposit” means
the sum of $400,000.00 as set forth in Section
2.4.
“FCC” means the Federal
Communications Commission.
“FCC Consent” means action by
the FCC granting its consent to the assignment of the FCC Licenses to Buyer as
contemplated by this Agreement.
“FCC Licenses” means all
Licenses (including modifications, renewals and extensions thereof) issued by
the FCC to Seller in connection with the business or operations of the
Station.
“Final Order” means an action
by the FCC that has not been reversed, stayed, enjoined, set aside, annulled, or
suspended, and with respect to which no requests are pending for administrative
or judicial review, reconsideration, appeal, or stay, and the time for filing
any such requests and the time for the FCC to set aside the action on its own
motion have expired.
“Governmental Authorities”
means any federal, state or local governmental entity or municipality or
subdivision thereof or any authority, department, commission, board, agency,
court or instrumentality thereof.
“Initial Order” means the FCC
Consent as granted by the FCC prior to it becoming a Final Order.
“Intangibles” means all FCC
Call Signs, domain names, URL registrations, copyrights, trademarks, trade
names, service marks, service names, licenses, patents, permits, jingles,
proprietary information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used in
the business and operations of the Station as of the date of this Agreement,
together with any additions thereto between the date of this Agreement and the
Closing Date as the parties may agree.
“Licenses” means all licenses,
permits, and other authorizations issued by the FCC, the Federal Aviation
Administration, or any other federal, state, or local Governmental Authorities
to Seller in connection with the conduct of the business or operations of the
Station, together with any additions thereto between the date of this Agreement
and the Closing Date as the parties may agree.
“Permitted Liens” means claims,
liabilities, security interests, mortgages, liens, pledges, conditions, charges,
or encumbrances of any nature whatsoever (i) for current taxes not yet due and
payable, (ii) arising pursuant to the terms of the Assumed Contracts, (iii)
imposed by Buyer, or (iv) set forth on Schedule
1.
“Purchase Price” means the
purchase price specified in Section
2.3.
“Real Property” means the
Station’s existing studio and transmitter sites, as more particularly
described on Schedule
3.5.
“Real Property Agreements” is
defined in Section
3.5(a).
“Tangible Personal Property”
means all machinery, equipment, tools, vehicles, furniture, leasehold
improvements, office equipment, plant, inventory, spare parts, and other
tangible personal property used in the business and operations of the Station
which are listed on Schedule 3.6 together
with any additions thereto between the date of this Agreement and the Closing
Date as the parties may agree, and less any deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing
Date.
“Time Brokerage Agreements”
means contracts for the sale by the Station of discrete blocks of time to a
broker that supplies the Station programming to fill that time and either sells
commercial spot announcements in it or uses portions of the time to solicit
donations from listeners.
SECTION
2. PURCHASE
AND SALE OF ASSETS
2.1 Agreement to Sell and
Buy. Subject to the terms and conditions set forth in this
Agreement, on the Closing Date, Seller hereby agrees to sell, transfer, and
deliver to Buyer, and Buyer agrees to purchase and accept, all of the Assets,
together with any additions thereto between the date of this Agreement and the
Closing Date as the parties may agree (but excluding the assets described in
Section 2.2 and
those assets disposed of in the ordinary course of business between the date
hereof and the Closing Date), free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for Permitted Liens), including
the following:
(a) The
Tangible Personal Property;
(b) The
Licenses; and any pending applications associated with same;
(c) The
Assumed Contracts;
(d) The
Real Property;
(e) The
Intangibles, and all intangible assets of Seller relating solely to the Station
that are not specifically included within the Intangibles, including the
goodwill of the Station, if any;
(f) All
of Seller’s proprietary information, technical information and data, machinery
and equipment warranties, maps, computer discs and tapes, plans, diagrams,
blueprints, and schematics, including filings with the FCC, relating solely to
the business or operation of the Station; and
(g) All
books and records relating solely to the business or operations of the Station,
including executed copies of the Assumed Contracts, and all records required by
the FCC to be kept by the Station, subject to the right of Seller to have such
books and records made available to Seller for a reasonable period, not to
exceed three (3) years after the Closing Date.
2.2 Excluded
Assets. The Assets shall exclude the following
assets:
(a) Seller’s
cash and cash equivalents on hand as of the Closing Date and all other cash and
cash equivalents in any of Seller’s bank or savings accounts; any insurance
policies, letters of credit, or other similar items and cash surrender value in
regard thereto; any stocks, bonds, certificates of deposit and similar
investments; and all prepaid expenses and assets (including deposits) paid prior
to the Closing Date;
(b) BELTWAY’s
corporate name, any books and records which Seller is required by law to retain,
all records relating to the excluded assets described in this Section 2.2 and to
Seller’s accounts payable and accounts receivable and general ledger records,
and BELTWAY’s corporate minute books and other books and records relating to
BELTWAY’s internal corporate matters;
(c) Any
pension, profit-sharing, or employee benefit plans, and any collective
bargaining agreements;
(d) The
Accounts Receivable;
(e) Any
claims, rights and interest in and to any refunds of federal, state or local
franchise, income or other taxes or fees of any nature whatsoever, or refunds
from any other Governmental Authorities or third parties (including utilities),
in each case for periods prior to the Closing Date;
(f) All
property listed on Schedule
2.2;
(g) Any
intercompany receivables;
(h) All
current and prior insurance policies and all rights of any nature with respect
thereto, including all insurance proceeds received or receivable thereunder and
rights to assert claims with respect to any such insurance
recoveries;
(i) All
personnel records (including all human resources and other records) of Seller
relating to employees of Seller that Seller is required by applicable law to
retain in its possession; and
(j) All
rights, claims and causes of action in favor of Seller and Station that arise
out of or are related to the operation of the Station prior to the
Closing.
2.3. Purchase
Price. The Purchase Price for the Assets shall be Four Million
Dollars ($4,000,000.00)(subject to subsection (d) below), paid and adjusted as
provided below.
(a) At
Closing, Buyer shall pay to Seller the sum of $1,300,000.00 (less a credit for
the Xxxxxxx Money Deposit paid pursuant to Section
2.4).
(b) At
Closing, Buyer shall execute (jointly and severally) and deliver to Seller a
secured first priority Promissory Note in the sum of $2,700,000.00 in favor of
Seller signed by an authorized representative of each Buyer (the “Note”). The Note
shall be for a term of 24 months (the “Initial Maturity Date”), and shall bear
interest at 3.0% per annum, with one (1) principal payment in the sum of
$150,000, plus applicable interest payment, on the 180th day
from Closing and five (5) additional quarterly principal payments in
the sum of $75,000.00 each, plus applicable interest payments, on each 90th day
thereafter, and a final balloon payment of principal in the sum of $2,175,000.00
and accrued interest, and shall have such other terms and conditions as set
forth in Exhibit
A. The initial interest per diem is $221.92 which shall adjust
as each principal reduction payment is made.
(c) Prior
to the Initial Maturity Date (and in any event not later than the 22nd
month following Closing), upon written notice to Seller Buyer shall have the
right to extend the maturity of the Note for an additional 12 months (for a
total term of 36 months from the Closing) provided Buyer makes an additional
principal reduction payment of at least $750,000.00 prior to the Initial
Maturity Date in addition to all of the principal payments of $75,000 each
required in subsection (b) above prior to the Initial Maturity
Date. Interest shall accrue on the remaining Note balance for the
additional 12 months at a rate of 6.5% per annum, and three additional
$75,000.00 principal quarterly payments plus accrued interest shall be made
prior to the new Maturity Date of 36 months post Closing, at which time all
remaining principal and accrued interest shall be come due and
payable. Buyer shall not be entitled to so extend the Initial
Maturity Date if it is then in default under the Note, this Agreement or any
other agreement between Buyer and Seller.
(d) Upon
written notice to Seller prior to Closing (and in any event not later than five
(5) business days prior to Closing), Buyer shall also have the ability to elect
to proceed to Closing with an all-cash at Closing payment of $3,600,000.00 (less
a credit for the Xxxxxxx Money Deposit) in lieu of the Note and related
instruments as described above (the “Cash Purchase
Price”).
(e) Prorations. The
Purchase Price shall be increased or decreased as required to effectuate the
proration of expenses. All expenses arising from the operation of the
Station, including business and license fees, utility charges, real and personal
property taxes and assessments levied against the Assets, property and equipment
rentals, applicable copyright or other fees, sales and service charges, taxes
(except for taxes arising from the transfer of the Assets under this Agreement),
FCC annual regulatory fees, ASCAP, BMI and SESAC licenses and similar prepaid
and deferred items, shall be prorated between Buyer and Seller in accordance
with the principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
on and after the Closing Date. Notwithstanding the preceding
sentence, there shall be no adjustment for, and Seller shall remain solely
liable with respect to, any Contracts not included in the Assumed Contracts and
any other obligation or liability not being assumed by Buyer in accordance with
Section
2.6.
(f) Manner of Determining
Adjustments. At Closing, all prorations shall occur in
accordance with the following:
(i) All
income and expenses arising from the operations of the Station shall be prorated
between Buyer on the one hand, and Seller on the other hand, in accordance with
generally accepted accounting principles as of 11:59 p.m., local time, on the
date immediately preceding the Closing Date. Seller shall be
responsible for all liabilities and obligations attributable to the operation of
the Station through 11:59 p.m., local time, of the date immediately preceding
the Closing Date, and Buyer shall be responsible for all such liabilities and
obligations attributable to the period thereafter. Real estate taxes,
if any, shall be apportioned on the basis of taxes assessed for the preceding
year, with a reapportionment as soon as the new tax rate and valuation can be
ascertained.
(ii) Ten
(10) days prior to the Closing Date, Seller shall prepare and deliver to Buyer
an estimated statement of income and expense (the “Preliminary Closing Proration
Statement”), setting forth the adjustment to the Purchase Price
determined in accordance with Section 2.3(e) and
prorations determined in accordance with this Section
2.3(f). The Preliminary Closing Proration Statement shall be
prepared in a form that sets forth the amounts due to or from Buyer or
Seller. Upon receipt of the Preliminary Closing Proration Statement,
Buyer and its accountants shall have the right to examine, at Buyer’s expense
and during normal business hours upon prior reasonable notice, the Preliminary
Closing Proration Statement and all work papers, schedules, and other books and
records used in the preparation of the Preliminary Closing Proration Statement
and to make reasonable inquiry of Seller and its accountants. If
Buyer objects to the Preliminary Closing Proration Statement, it shall so advise
Seller, and Seller and Buyer shall each use their commercially reasonable best
efforts to resolve their differences concerning the Preliminary Closing
Proration Statement as soon as possible, but in any event prior to at least two
(2) days before the Closing Date. If Seller and Buyer are unable to
resolve the matter, they shall jointly appoint an independent certified
accountant to resolve the dispute. The fees of such independent
accountant shall be split evenly between Buyer and Seller. Seller and
Buyer shall cooperate fully with such independent accountant. Such
independent accountant’s resolution of the dispute shall be final and binding
upon the parties. The parties shall use their commercially reasonable
best efforts to cause the accountant to resolve such dispute, if any, concerning
the Preliminary Closing Proration Statement as soon as possible, but in any
event prior to the Closing Date.
(iii) Within
forty five (45) days following the Closing Date, Buyer shall prepare and deliver
to Seller a final statement of income and expense (the “Final Closing Proration
Statement”), indicating the prorations as set forth above and any monies
due to Seller or Buyer to the extent the Final Closing Proration Statement
differs from the Preliminary Closing Proration Statement, together with copies
of all work papers, schedules, and supporting documentation reasonably
sufficient to allow Seller to verify the prorations prepared by
Buyer. Within twenty (20) days of receipt of the Final Closing
Proration Statement, Seller shall either accept the prorations and payment
schedule set forth in the Final Closing Proration Statement or notify Buyer of
its disagreement therewith (a “Notice of
Disagreement”). If Seller fails either to accept the
prorations and payment schedule set forth in the Final Closing Proration
Statement or to give Buyer a Notice of Disagreement within twenty (20) days of
receipt of the Final Closing Proration Statement, then Seller shall be deemed to
have accepted such prorations and payment schedule. The Notice of
Disagreement shall state the amount of money Seller believes is due to or from
Seller pursuant to the prorations set forth herein (“Seller’s Amount”), and Buyer
shall have ten (10) days to accept or reject Seller’s Amount. If
Buyer rejects Seller’s Amount, any amount payable to Seller or Buyer pursuant to
the Final Closing Proration Statement not in dispute shall be immediately paid
and the remaining amount in dispute shall be submitted to an independent
certified accountant selected jointly by the parties for resolution of the
dispute, such resolution to be final and binding upon the
parties. Buyer and Seller agree to share equally the cost and
expenses of such accountant. All amounts owed pursuant to this Section 2.3(f) shall
be paid within ten (10) days of acceptance, failure to object or, if there is a
dispute, resolution of the amount due. If such amount is not paid
within such ten (10) day period, interest on such amount shall accrue until paid
at 10% per annum.
2.4 Xxxxxxx Money
Deposit.
(a) Concurrent
with the execution of this Agreement, Buyer shall deposit the additional sum of
Three Hundred Thousand Dollars ($300,000.00) with Xxxxxxx X. Xxxxxx, Xx., as
Escrow Agent (the “Escrow
Agent”), to be added to the existing deposit of $100,000 already held by
the Escrow Agent, for a total deposit of $400,000.00 (the “Xxxxxxx Money
Deposit”). The Xxxxxxx Money Deposit shall be held in trust by
the Escrow Agent pursuant to the terms of the Escrow Agreement previously
entered into by the parties. Failure by Buyer to remit this
additional $300,000.00 into escrow within one (1) business day of the execution
of this Agreement shall make this Agreement null and void; provided, however, that Seller
shall then be entitled to receipt of the $100,000.00 previously deposited with
the Escrow Agent.
(b) If
the Closing does occur, the Xxxxxxx Money Deposit shall be released to Seller
and applied to payment of the Purchase Price at Closing as provided in Section
9.3. If the Closing does not occur, the Xxxxxxx Money Deposit
shall be released as set forth in Sections 9.3 and
9.4.
2.5. Payment of Purchase
Price. The Purchase Price shall be paid by Buyer to Seller at
Closing by wire transfer of same-day funds pursuant to wire instructions which
shall be delivered by Seller to Buyer, at least two (2) days prior to the
Closing Date.
2.6. Assumption by
Buyer. As of the Closing Date, Buyer shall assume and
undertake to pay, discharge, and perform all obligations and liabilities of
Seller under the Licenses and the Assumed Contracts insofar as they relate to
the time on and after the Closing Date or arise out of events occurring on and
after the Closing Date. Except as Buyer may expressly agree, Buyer
shall not assume any other obligations or liabilities of Seller, including (i)
any obligations or liabilities under any Contract not included in the Assumed
Contracts, (ii) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Closing Date, (iii) any claims or pending
litigation or proceedings relating to the operation of the Station prior to the
Closing, (iv) any obligations or liabilities of Seller arising under capitalized
leases or other financing agreements, (v) any obligations or
liabilities of Seller under any employee pension, retirement, health and welfare
or other benefit plans or collective bargaining agreements, or (vi) any
obligation to any employee of Seller for severance benefits, vacation time, or
sick leave accrued prior to the Closing Date, and all such obligations and
liabilities shall remain and be the obligations and liabilities solely of
Seller.
2.7. Allocation. The
Purchase Price shall be allocated among the Assets by mutual agreement of Buyer
and Seller in a writing executed at Closing, and, if not mutually agreed upon,
in accordance with an appraisal performed by a qualified appraiser jointly
selected by Seller and Buyer, the fees of which shall be divided equally between
Seller and Buyer. Each of Seller and Buyer agree (i) to jointly
complete and separately file Form 8594 with its federal income tax return for
the tax year in which the Closing occurs and (ii) that neither Seller nor
Buyer will take a position on any income, transfer or gains tax return before
any governmental agency charged with the collection of any such tax or in any
judicial proceeding that is in any manner inconsistent with the terms of any
such allocation without the written consent of the other.
SECTION 3 – SELLER’S
REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer
as follows, except as disclosed in the Schedules hereto:
3.1. BELTWAY
is a corporation duly organized under the laws of the State of
Delaware. Seller has all requisite power and authority (i) to own,
lease, and use the Assets as now owned, leased, and used, (ii) to conduct the
business and operations of the Station as now conducted, and (iii) to execute
and deliver this Agreement and the documents contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by Seller hereunder and thereunder.
3.2. The
execution, delivery, and performance of this Agreement by Seller have been duly
authorized by all necessary actions on the part of Seller. This
Agreement has been duly executed and delivered by Seller and constitutes the
legal, valid, and binding obligation of Seller, enforceable against it in
accordance with its terms except as the enforceability of this Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights
generally, and by judicial discretion in the enforcement of equitable
remedies.
3.3. Subject
to obtaining the Consents listed in Schedule 3.8, the
execution, delivery, and performance by Seller of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) do not require the consent of any third party; (ii) will
not conflict with any provision of the Certificate of Incorporation or Bylaws of
Seller; (iii) will not conflict with, result in a breach of, or constitute a
default under, (in each case in any material respect) any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any Governmental
Authorities applicable to Seller and (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, (in each case in any material respect) any agreement, instrument,
license, or permit to which Seller is a party or by which Seller may be
bound.
3.4. Schedule 3.4 includes
a true and complete list of the Licenses. Seller has delivered to
Buyer true and complete copies, in all material respects, of the Licenses
(including any amendments and other modifications thereto). The
Licenses have been validly issued, and BELTWAY is the authorized legal holder
thereof. The Licenses listed on Schedule 3.4 comprise
all of the material licenses, permits, and other authorizations required from
any Governmental Authorities for the lawful conduct of the business and
operations of the Station in the manner and to the full extent they are now
conducted, and none of the Licenses is subject to any restriction or condition
that would limit, in any material respect, the full operation of the Station as
now operated. Except as set forth in Schedule 3.4, to
Seller’s knowledge, there are no actions, complaints or proceedings pending or
threatened as of the date hereof before the FCC or any other Governmental
Authority relating to the business or operations of the Station other than
actions, complaints or proceedings that generally affect the broadcasting
industry. Except as disclosed in Schedule 3.4., there
are no applications before the FCC filed by Seller relating to the
Station. Except as disclosed in Schedule 3.4, in all
material respects the Licenses are in full force and effect and are unimpaired
by any act or omission of Seller or its employees, and the operations of the
Station are in accordance therewith in all material respects. Except
as disclosed in Schedule 3.4, the
Station is broadcasting at full, licensed, effective radiated power and the
antenna height does not exceed the licensed height. All material
reports, forms and statements required to be filed by Seller with the FCC with
respect to the Station have been filed and were complete and accurate in all
material respects at the date of filing. Except as disclosed in Schedule 3.4, to
Seller’s knowledge, there are no facts which under the Communications Act of
1934, as amended, or the existing rules and regulations of the FCC (the “Communications Act”), would
disqualify Seller as an assignor of the Licenses. To Seller’s
knowledge Seller has not taken any action that would be likely to
result in the FCC’s denying the application to be filed by Buyer and Seller with
the FCC for consent to the assignment of the Licenses to Buyer.
Asset
Purchase Agreement – Page 9
3.5. (a) Schedule 3.5 contains
a complete and accurate description of the Real Property and Seller’s interests
therein (including street address, legal description, owner, and use and the
location of all improvements thereon). Seller has good and marketable
fee simple title, to all fee estates (including the improvements thereon)
included in the Real Property, free and clear of all liens, mortgages, pledges,
covenants, easements, restrictions, encroachments, leases, charges, and other
claims and encumbrances of any nature whatsoever, and without reservation or
exclusion of any mineral, timber, or other rights or interests, except for (i)
Permitted Liens, (ii) any mortgages (which will be removed by Seller at or prior
to Closing), (iii) covenants, restrictions and easements disclosed on Schedule 3.5 or (iv)
any on any title commitment associated with the Real Property. Seller
has legally assignable leasehold interests in any leaseholds used in connection
with the operation of the Station. All Real Property (including the
improvements thereon) is available for immediate use in the conduct of the
business and operation of the Station. Subject to matters of public
record, Seller has full legal and practical access to the Real
Property. At the Closing, Seller shall convey the Real Property to
Buyer (as to fee estate land) by warranty deeds free and clear of any
encumbrances except as set forth on Schedule 3.5 or on
any title commitment associated with the Real Property and by assignment of
lease as to any leasehold interests. Schedule 3.5 contains
a list of all leases and other agreements pursuant to which Seller is a lessee
or other user of the Real Property, including any and all amendments and other
modifications (the “Real
Property Agreements”). The Real Property Agreements constitute
valid and binding obligations of Seller and, to Seller’s knowledge, of all other
parties thereto, enforceable in accordance with their terms (except as limited
by laws affecting creditors’ rights or equitable principles generally), and are
in full force and effect as of the date hereof. Seller is not in
default under any of the Real Property Agreements and, to Seller’s knowledge,
the other parties to such agreements are not in default. Seller has
not received or given written notice of any default thereunder from or to any of
the other parties thereto, and no event has occurred, and no condition exists
that, with the passage of time or giving of notice, or both, would constitute
such a default by Seller, or, to Seller’s knowledge, any other party, which has
not been cured.
(b) All
of the Real Property and improvements and the use thereof comply in all material
respects with all applicable laws, statutes, ordinances, rules and regulations
of Governmental Authorities, including those relating to zoning and the rules
and regulations of the FCC.
(c) Seller
has not received any written notice of any appropriation, condemnation or like
proceeding, or of any violation of any applicable zoning law, regulation or
other law, order, regulation or requirement relating to or affecting such Real
Property, or of the need for any material repair, remedy, construction,
alteration or installation with respect to such Real Property, or any change in
the means or methods of conducting operations thereon, nor, to Seller’s
knowledge, has any other person or entity received any such written
notice. The Real Property includes all real property used in the
conduct of the business and operations of the Station as now
operated.
Asset
Purchase Agreement – Page 10
(d) To
Seller’s knowledge, without independent investigation, all towers, guy anchors
and wires, buildings, fences and other improvements on the Real Property are
located entirely within the boundary lines of such Real Property, and no
structure of any kind encroaches on such Real Property in any manner that could
adversely affect in any material respect the use of such Real Property in the
operations of the Station.
3.6. Schedule 3.6 lists
all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6
comprises all material items of tangible personal property currently used to
conduct the business and operations of the Station as now
conducted. Except as described in Schedule 3.6, Seller
owns and has good title to each item of Tangible Personal Property, and none of
the Tangible Personal Property owned by Seller is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for Permitted Liens or as described on Schedule
3.6. Each item of Tangible Personal Property is available for
immediate use in the business and operations of the Station. To Seller’s knowledge,
all Tangible Personal Property and Assets, and the use and the state of
maintenance thereof, are in compliance in all material respects with the
Licenses and the rules and regulations of the FCC, and with all other applicable
statutes, ordinances, rules and regulations of any Governmental
Authority.
3.7. Schedule 3.7 is
a true and complete list of all Assumed Contracts except contracts with
advertisers for the sale of advertising time on the Station for cash at
prevailing rates and which have not been prepaid and which may be canceled by
the Station without penalty on not more than thirty (30) days’ notice (“Cash Advertising Contracts”),
and except for Time Brokerage Agreements which may be canceled by the Station on
not more than thirty (30) days’ notice (“Cancelable
TBAs”). Seller has delivered to Buyer true and complete copies
of all Assumed Contracts, other than Cash Advertising Contracts and Cancelable
TBAs. Seller has complied in all material respects with all Assumed
Contracts and is not in material default beyond any applicable grace periods
under any of the Assumed Contracts, and, to Seller’s knowledge, no other
contracting party is in material default under any of the Assumed
Contracts. Except for the need to obtain the Consents listed in Schedule 3.8, Seller
has full legal power and authority to assign its rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and, to Seller’s
knowledge, such assignment will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts.
3.8. Except
for the FCC Consent provided for in Section 6.1, and the
Consents described in Schedule 3.8, no
consent, approval, permit, or authorization of, or declaration to or filing with
any Governmental Authority, or any other third party is required (i) for Seller
to consummate this Agreement and the transactions contemplated hereby, or (ii)
to permit Seller to assign or transfer the Assets to Buyer.
3.9. Schedule 3.9 is a
true and complete list of all Intangibles, all of which are valid and in good
standing and, to Seller’s knowledge, uncontested. Seller has
delivered to Buyer copies of all documents it has in its possession establishing
or evidencing all Intangibles. Seller has, or will have as of the
Closing Date, good and marketable title to all rights and interests in the
Intangibles, all of which will be, to its knowledge, free and clear of any third
party interests or claims at the Closing. Seller is not aware that it
is infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action filed, or to the knowledge of Seller threatened, with
respect thereto.
Asset
Purchase Agreement – Page 11
3.10. All
reports and statements that the Station is currently required to file with the
FCC or with any other governmental agency have been filed and all reporting
requirements of the FCC and other Governmental Authorities having jurisdiction
over Seller and the Station have been complied with in all material
respects. All of
such reports and statements are substantially complete and correct as
filed. Seller has paid to the FCC all annual regulatory fees payable
with respect to the FCC Licenses required to be paid by
Seller. Except as disclosed in Schedule 3.10 Seller
has not received any written notice asserting any noncompliance with any
applicable statute, rule or regulation, whether federal, state or
local. Seller is not in default with respect to any judgment, order,
injunction or decree applicable to the Assets of any court, administrative
agency or other Governmental Authority or any other tribunal duly authorized to
resolve disputes. To Seller’s knowledge, Seller is in compliance in
all material respects with all laws, regulations and governmental orders
applicable to the Assets and the conduct of the business and operations of the
Station, such that the failure to comply with would have a material adverse
effect on the business, operations or condition (financial or otherwise) of the
Station, including without limitation all FCC and Federal Aviation
Administration rules and regulations with respect to the height, lighting,
effective radiated power and signal of the towers, antennae and other equipment
used by the Station. Except for the consent of the FCC to the
assignment of the Licenses to Buyer as contemplated in this Agreement, no
action, consent or other approval is required from Governmental Authorities in
connection with the transactions contemplated by this Agreement. The
“public files” of the Station are maintained in compliance in all material
respects with FCC rules and policies.
3.11. Neither
Seller nor any person acting on Seller’s behalf has incurred any liability for
any finders’ or brokers’ fees or commissions in connection with the transactions
contemplated by this Agreement for which Buyer could become
liable. Seller has engaged Xxxxxxx X. Xxxxxx as a broker for this
transaction. Any fees due Xxxxxxx X. Xxxxxx shall be paid exclusively
by Seller.
3.12 Except as set forth in
Schedule 3.12,
Seller is not subject to any judgment, award, order, writ, injunction,
arbitration decision or decree which would affect Seller’s ability to perform
its obligations hereunder, and there is no litigation, proceeding or
investigation pending or, to Seller’s knowledge, threatened against Seller or
relating to the Station or Assets in any federal, state or local court, or
before any administrative agency or arbitrator or before any other tribunal duly
authorized to resolve disputes, which would have any material effect upon the
Station or Assets or which seeks to enjoin or prohibit, or otherwise questions
the validity of, any action taken or to be taken pursuant to or in connection
with this Agreement or which would materially adversely affect Seller’s ability
to perform its obligations under this Agreement.
3.13 Seller
maintains policies of fire, casualty, liability and other forms of insurance in
such amounts and against such risks and losses as Seller believes are reasonable
and adequate for the business of the Station and the Assets, and Seller will
maintain such policies or arrangements until the Closing.
Asset
Purchase Agreement – Page 12
3.14 To
Seller’s knowledge, without independent investigation, Seller has not received
any written notice of any radon, lead based paint, asbestos, hazardous or toxic
materials, wastes, underground storage tanks, railroad derailments or spills, or
substances or contamination in, on, or under the Real Property or the
improvements thereon in violation of applicable Environmental, Health, and
Safety Laws from any governmental agency. “Environmental, Health, and Safety
Laws” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, and
the Occupational Safety and Health Act of 1970, each as amended, together with
all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, public health and safety, or employee health
and safety, 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.
3.15 EXCEPT
AS EXPRESSLY SET FORTH IN THIS SECTION 3, NEITHER
SELLER NOR ITS AFFILIATES HAS MADE ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF SELLER, STATION OR THE
ASSETS, INCLUDING, WITHOUT LIMITATION, IN RESPECT OF MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE. ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY SELLER AND ITS
AFFILIATES.
SECTION 4 – BUYER’S
REPRESENTATIONS AND WARRANTIES
Buyer (jointly and severally)
represents and warrants to Seller as follows:
4.1. Each
Buyer is a limited liability company duly organized, validly existing, and in
good standing under the laws of the State of Texas. Each Buyer has
all requisite power and authority to execute and deliver this Agreement and the
documents contemplated hereby, to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by each Buyer
hereunder and thereunder; and to operate the Station from and after the Closing
as currently contemplated.
4.2. The
execution, delivery, and performance of this Agreement by each Buyer have been
duly authorized by all necessary actions on the part of said
Buyer. This Agreement has been duly executed and delivered by each
Buyer and constitutes the legal, valid, and binding obligation of each Buyer,
enforceable against each Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors’ rights generally and by judicial discretion in
the enforcement of equitable remedies.
Asset
Purchase Agreement – Page 13
4.3. Subject
to obtaining the Consents, the execution, delivery, and performance by each
Buyer of this Agreement and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with the Certificate of
Formation and Operating Agreements of any Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any Governmental
Authorities; or (iv) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any agreement,
instrument, license, or permit to which any Buyer is a party or by which any
Buyer may be bound.
4.4. Neither
Buyer nor any person acting on Buyer’s behalf has incurred any liability for any
finders’ or brokers’ fees or commissions in connection with the transactions
contemplated by this Agreement for which Seller could become
liable. Buyer has engaged Xxxx Xxxxxx & Company as a broker for
this transaction. Any fees due Xxxx Xxxxxx & Company shall be
paid exclusively by Buyer.
4.5. No
representation or warranty made by Buyer in this Agreement or in any
certificate, document, or other instrument furnished or to be furnished by Buyer
pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact and required to make any
statement made herein or therein not misleading.
4.6. Buyer
is legally and financially qualified to become licensee of the Station under the
Communications Act of 1934, as amended, the rules and regulations of the FCC and
Section 5301 of the Anti-Drug Act of 1988, as amended.
4.7. There
is no action, suit, investigation or other proceedings pending, or, to Buyer’s
knowledge, threatened which may adversely affect Buyer’s ability to perform in
accordance with the terms of this Agreement (including, without limitation,
performance under the Note, as applicable), and Buyer is unaware of any facts
which could reasonably result in any such proceeding.
4.8. Buyer
has the financial capacity to satisfy all of Buyer’s obligations under this
Agreement and the documents to be executed and exchanged at the Closing
(including, without limitation, under the Note, as applicable), to perform all
of Buyer’s obligations at the Closing, and to operate the Station as currently
contemplated.
4.9 Buyer
is not subject to any judgment, award, order, writ, injunction, arbitration
decision or decree which would affect Buyer’s ability to perform its obligations
hereunder and the other documents to be executed in connection herewith
(including, without limitation, the Note, as applicable), and there is no
litigation, proceeding or investigation pending or, to Buyer’s knowledge,
threatened against Buyer in any federal, state or local court, or before any
administrative agency or arbitrator or before any other tribunal duly authorized
to resolve disputes, which seeks to enjoin or prohibit, or otherwise questions
the validity of, any action taken or to be taken pursuant to or in connection
with this Agreement or which would materially adversely affect Buyer’s ability
to perform its obligations under this Agreement and the other documents to be
executed in connection herewith (including, without limitation, the Note, as
applicable).
Asset
Purchase Agreement – Page 14
4.10 Buyer
shall cooperate with Seller in obtaining any Consent described in Schedule 3.8,
including but not limited to furnishing any third party with information
necessary for that third party to furnish such Consent.
4.11 Buyer
possesses such knowledge and experience in financial and business matters that
it and its employees are capable of evaluating the merits and risks of the
transactions contemplated hereby. Buyer has conducted an
investigation of the Assets and confirms that Seller has made available to it
and its affiliates the opportunity to ask questions of the officers and
management employees of Seller and to acquire additional information about the
Assets.
4.12 No
insolvency proceedings of any character, voluntary or involuntary, affecting
Buyer, are pending or, to Buyer’s knowledge, threatened, and Buyer has not made
any assignment for the benefit of creditors or taken any action which would
constitute the basis for the institution of such insolvency
proceedings.
SECTION 5 - SELLER’S
COVENANTS
5.1. Seller
agrees that, between the date of this Agreement and the Closing Date, Seller
shall operate the Station diligently in the ordinary course of business in
accordance with its past practices (except where such conduct would conflict
with the following covenants or with Seller’s other obligations under this
Agreement), and in accordance with the other covenants in this Section 5 provided
that, notwithstanding any other provision of this Agreement, Seller may, in its
sole and exclusive discretion, take any action it may so desire to reduce the
Station’s operating expenses, including, without limitation, to eliminate staff
and/or programming, or to suspend Station operations and take the Station silent
at any time after the execution of this Agreement pending Closing. If
Seller decides to take the Station silent, it shall notify the FCC of such
action within ten (10) days of said suspension and shall seek Special Temporary
Authorization (“STA”)
from the FCC to continue said suspension within thirty (30) days of said
suspension. If applicable, Seller shall seek extension(s) of the STA
as required by the FCC pending Closing and the Station’s return to
operations. During any period in which the Station is silent pursuant
to this provision or otherwise, Seller shall ensure that the Station remains in
material compliance with all relevant FCC rules.
5.2. Without
the prior consent of Buyer (not to be unreasonably withheld, delayed or
conditioned), Seller will not enter into any material contract or commitment
relating to the Station or the Assets, or amend or terminate any material
Assumed Contract (or waive any material right thereunder), or incur any material
obligation (including obligations relating to the borrowing of money or the
guaranteeing of indebtedness) that will be binding on Buyer after Closing,
except for Cash Advertising Contracts and Cancelable TBAs made in the ordinary
course of business.
Asset
Purchase Agreement – Page 15
5.3. Without
the prior consent of Buyer (not to be unreasonably withheld, delayed or
conditioned), Seller shall not sell, assign, lease, or otherwise transfer or
dispose of any of the Assets, except in the ordinary course of Seller’s
business, where no longer used or useful in the business or operations of the
Station or in connection with the acquisition of replacement property of
equivalent kind and value.
5.4. Seller
shall not take any action that is inconsistent with its obligations under this
Agreement or that would hinder or delay the consummation of the transactions
contemplated by this Agreement.
5.5. Subject
to Seller’s right to reduce expenses under Section 5.1, Seller shall use its
commercially reasonable best efforts to maintain all of the Assets in their
current condition and use, operate, and maintain all of the Assets in a
reasonable manner and in material accordance with the terms of the FCC Licenses,
all rules and regulations of the FCC and generally accepted standards of good
engineering practice.
5.6. Seller
shall use its commercially reasonable best efforts to obtain the Consents
without any change in the terms or conditions of any Contract or License that
could be less advantageous to the Station than those pertaining under the
Contract or License as in effect on the date of this
Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents.
SECTION 6 - PRIOR TO
CLOSING
6.1. (a) The
assignment of the FCC Licenses in connection with the purchase and sale of the
Assets pursuant to this Agreement shall be subject to the prior consent and
approval of the FCC.
(b) Seller
and Buyer shall promptly prepare an appropriate application for the FCC Consent
and shall file the application with the FCC within five (5) business days of the
execution of this Agreement. The cost of the FCC filing fee in
connection with the application for such assignment shall be divided equally
between the parties. Buyer and Seller shall be individually
responsible for their respective attorney’s fees connected with the
application. The parties shall prosecute the application with all
reasonable diligence and otherwise use their commercially reasonable best
efforts to obtain a grant of the application as expeditiously as practicable and
shall oppose any objections to the grant of the application for the FCC
Consent. Each party agrees to comply with any condition imposed on it
by the FCC Consent, except that no party shall be required to comply with a
condition if (i) the condition was imposed on it as the result of a circumstance
the existence of which does not constitute a breach by the party of any of its
representations, warranties, or covenants under this Agreement, and (ii)
compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any requests for reconsideration or
judicial review of the FCC Consent; provided that if the
request for reconsideration or review or other challenge to grant of the
application addresses Buyer’s characteristics or conduct, or that of its
principals, Buyer shall be responsible for the costs of defending the
application. If the Closing shall not have occurred for any reason
within the original effective period of the FCC Consent, and neither party shall
have terminated this Agreement under Section 9, the
parties shall jointly request an extension of the effective period of the FCC
Consent. No extension of the FCC Consent shall limit the exercise by
either party of its rights under Section
9.
Asset
Purchase Agreement – Page 16
6.2. Prior
to Closing, Buyer shall not, directly or indirectly, control, supervise, direct,
or attempt to control, supervise, or direct, the operations of the Station; such
operations, including complete control and supervision of all of the Station’
programs, employees, and policies, shall be the sole responsibility of Seller
until the Closing.
6.3. (a) The
risk of any loss, damage, impairment, confiscation, or condemnation of any of
the Assets from any cause whatsoever shall be borne by Seller at all times prior
to the Closing.
(b) Subject
to Seller’s right to reduce expenses under Section 5.1, if any damage or
destruction of the Assets or any other event occurs which prevents signal
transmission by the Station in the normal and usual manner and Seller cannot
restore or replace the Assets so that such conditions are cured and normal and
usual transmission is resumed before the Closing Date, the Closing Date shall be
postponed, at Buyer’s option, for a period of up to ninety (90) days, to permit
the repair or replacement of the damage or loss.
(c) In
the event of any damage or destruction of the Assets described above, if such
Assets have not been restored or replaced and the Station’ normal and usual
transmission resumed within the ninety (90) day period specified above (subject
to Seller’s right to reduce expenses under Section 5.1), Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller. Alternatively, Buyer may, at its sole option,
proceed to close this Agreement and complete the restoration and replacement of
such damaged Assets at Buyer’s expense after the Closing Date, in which event Seller
promptly shall deliver to Buyer following receipt thereof any insurance proceeds
which it may receive prior to or after Closing in connection with such damage or
destruction of the Assets (such amount not to exceed Buyer’s costs and expense
in connection with such restoration and replacement, but in no event will Seller
be liable in the event it does not receive any insurance proceeds or if the
insurance proceeds received are insufficient to cover Buyer’s costs and expenses
in full).
6.4. Except
as necessary for the consummation of the transaction contemplated by this
Agreement, and except as and to the extent required by law, including, without
limitation, disclosure requirements of federal or state securities laws and the
rules and regulations of securities markets, each party will keep confidential
any information obtained from the other party in connection with the
transactions contemplated by this Agreement. If this Agreement is
terminated, each party will return to the other party all information obtained
by such party from the other party in connection with the transactions
contemplated by this Agreement.
6.5. Buyer
and Seller shall cooperate fully with each other and their respective counsel
and accountants in connection with any actions required to be taken as part of
their respective obligations under this Agreement, and Buyer and Seller shall
execute such other documents as may be reasonably necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use their
commercially reasonable best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, neither Seller nor Buyer
shall have an obligation (i) to expend funds to obtain any of the Consents
except for the FCC Consent or (ii) to agree to any materially adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
Asset
Purchase Agreement – Page 17
6.6. Buyer
shall provide Seller access and the right to copy for a period of three (3)
years from the Closing Date any books and records relating to the
Assets.
6.7. From
the date of this Agreement until the Closing Date, Seller will afford Buyer, its
officers, counsel, accountants, engineers and other representatives, upon three
(3) business days prior written notice, full access to the Assets, and all of
Seller’s real and personal properties, contracts, commitments and other related
records, at all reasonable times during business hours, and such representatives
will be furnished true and complete copies of the same as such representatives
may reasonably request; provided, however, that such
review shall be conducted so as to not interfere unreasonably with or disrupt
the business and broadcast operations of Seller. Such access shall
include, but not be limited to, the right to conduct or have conducted
environmental, soil and other tests and to inspect the structural and physical
condition of the Real Property and all improvements located thereon, and the
mechanical, engineering, plumbing and utility systems located at such Real
Property, together with all other aspects of the Real Property. Such
review and access shall also be subject to the Non-Disclosure Agreement between
the parties, and shall be at Buyer’s sole cost and expense.
6.8. [Intentionally
Omitted.]
6.9. [Intentionally
Omitted]
6.10. Buyer,
at its option, may obtain Uniform Commercial Code financing statement searches
dated not earlier than ten (10) days prior to the Closing Date from each state
and county in which Seller owns or leases any property showing no security
interests, pledges, liens, claims or encumbrances in or affecting any part of
the Assets, other than: (i) those that Seller causes to be released prior to or
concurrently with the Closing Date; (ii) those for which Seller has assumed
responsibility; or (iii) encumbrances or liens that Buyer expressly agrees in
writing to accept. The cost of said searches shall be paid by
Buyer.
6.11. For
each parcel of Real Property that is being purchased or leased hereunder, Buyer
may obtain a Phase I (and Phase II if recommended) Environmental
Assessment. The cost of preparation of the Phase I (and Phase II if
recommended) Environmental Assessment shall be paid by Buyer. In the
event that any remediation is recommended or required by said Assessment, Buyer
may, at its sole option, either terminate this Agreement forthwith without any
further obligation hereunder by written notice to Seller, or close this
Agreement and take the Assets subject to such remediation matters as Buyer and
Seller may agree.
Asset
Purchase Agreement – Page 18
SECTION 7 - OBLIGATIONS AT
CLOSING
7.1. All
obligations of Buyer at the Closing are subject at Buyer’s option to the
fulfillment prior to or at the Closing Date of each of the following
conditions:
(a) Representations and
Warranties. All representations and warranties of Seller
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though made at and as of that time, except for
changes contemplated by this Agreement.
(b) Covenants and
Conditions. Seller shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
(c) Consents. All
Consents on Schedule
3.8 shall have been obtained and delivered to Buyer without any adverse
change in the terms or conditions of any agreement or any governmental license,
permit, or other authorization.
(d) FCC
Consent. The Initial Order shall have been granted without the
imposition on Buyer of any conditions that need not be complied with by Buyer
under Section
6.1, and Seller shall have complied with any conditions imposed on it by
the Initial Order; it being understood that the FCC Consent becoming
a Final Order shall not be a condition to the Closing.
(e) Governmental
Authorizations. Seller shall be the holder of all Licenses and
there shall not have been any modification of any License that would have a
materially adverse effect on the Station or the conduct of its business and
operations. No proceeding shall be pending or threatened the effect
of which would be to revoke, cancel, fail to renew, suspend, or modify adversely
any License.
(f) Deliveries. Seller
shall have made or stand willing to make all the deliveries to Buyer set forth
in Section
8.2.
(g) Adverse Change.
Between the date of this Agreement and the Closing Date, there shall have been
no material adverse change in the Tangible Personal Property, Real Property or
Licenses of the Station; “material adverse change” for the purposes
of this paragraph shall mean any damage, destruction, or loss affecting any
assets used or useful in the conduct of the business of the Station which has
the effect of preventing the Station from operating within its licensed
parameters for a period of more than thirty (30) calendar days.
7.2. All
obligations of Seller at the Closing are subject at Seller’s option to the
fulfillment prior to or at the Closing Date of each of the following
conditions:
(a) Representations and
Warranties. All representations and warranties of Buyer
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though made at and as of that time, except for
changes contemplated by this Agreement.
Asset
Purchase Agreement – Page 19
(b) Covenants and
Conditions. Buyer shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
(c) Deliveries. Buyer
shall have made or stand willing to make all the deliveries set forth in Section
8.3.
(d) FCC
Consent. The Initial Order shall have been granted without the
imposition on Seller of any conditions that need not be complied with by Seller
under Section
6.1, and Buyer shall have complied with any conditions imposed on it by
the FCC Consent.
SECTION 8 - CLOSING
PROCEDURES
8.1. (a) Closing
Date. The Closing shall take place at 10:00 a.m. on a date, to
be set by Buyer on at least five (5) days’ written notice to Seller, that is (i)
not earlier than the first (1st)
business day after the FCC Consent is granted (the Initial Order), and (2) not
later than five (5) business days following the date upon which the FCC Consent
is granted (the Initial Order), subject to satisfaction or waiver of all other
conditions precedent to the holding of the Closing. If Buyer fails to
specify the date for Closing prior to the date upon which the Initial Order is
granted, the Closing shall take place on the fifth (5th)
business day after the date upon which the Initial Order is
granted. In the event the FCC acts after an Initial Order and Closing
pursuant thereto to deny the FCC Consent, the parties shall take all
commercially reasonable actions necessary to unwind the transactions consummated
at Closing in order to return the parties to the status quo ante prior to
Closing.
(b) Closing
Place. The Closing shall be held at any place that is agreed
upon by Buyer and Seller.
8.2. Prior
to or on the Closing Date, Seller shall deliver to Buyer the following, in form
and substance reasonably satisfactory to Buyer and its counsel:
(a) Transfer
Documents. Duly executed warranty deeds, bills of sale, motor
vehicle titles, assignments, and other transfer documents which shall be
sufficient to vest good and marketable title to the Assets in the name of Buyer,
free and clear of all claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges or encumbrances, except for Permitted
Liens;
(b) Consents. An
executed copy of any instrument evidencing receipt of any Consent;
(c) Officer’s
Certificate. A certificate, dated as of the Closing Date,
executed on behalf of Seller by an officer of Seller, certifying (i) that the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects as of the Closing Date as though made on
and as of that date; and (ii) that Seller has in all material respects performed
and complied with all of its obligations, covenants, and agreements set forth in
this Agreement to be performed and complied with on or prior to the Closing
Date;
Asset
Purchase Agreement – Page 20
(d) Licenses, Contracts,
Business Records, Etc. Copies of all Licenses, Assumed
Contracts, blueprints, schematics, working drawings, plans, projections,
engineering records, and all files and records used by Seller in connection with
its operations of the Station; and
(e) Other
Documents. Such other documents and instruments as may be
reasonably requested by counsel for Buyer. Seller shall obtain
consents to assignments of the Real Property Agreements from Seller’s lessor(s)
in a form reasonably acceptable to Buyer evidencing (i) Seller’s material
compliance with all material terms of the Real Property Agreements, including
the timely payment of rent, and (ii) the lessor or lessors’ consent to the terms
of the Real Property Agreements and the assignment of the Real Property
Agreements.
8.3. Prior
to or on the Closing Date, Buyer shall deliver to Seller the following, in form
and substance reasonably satisfactory to Seller and its counsel:
(a) Purchase
Price. The Purchase Price as provided in Section
2.3;
(b) Assumption
Agreements. Appropriate assumption agreements pursuant to
which Buyer shall assume and undertake to perform Seller’s obligations under the
Licenses and Assumed Contracts insofar as they relate to the time on and after
the Closing Date or arise out of events occurring on or after the Closing
Date;
(c) Officer’s
Certificate. A certificate, dated as of the Closing Date,
executed on behalf of Buyer by an officer of Buyer, certifying (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date, and (ii) that Buyer has in all material respects performed and
complied with all of its obligations, covenants, and agreements set forth in
this Agreement to be performed and complied with on or prior to the Closing
Date;
(d) Loan
Documents. If applicable, the Note, UCC-1 Financing Statement
and Security Agreement (in the form of Exhibit B), together
with Membership Pledge Agreements (in the form of Exhibit C) from each
member of each Buyer, and any other ancillary loan documents required to perfect
Seller’s security interest in the assets of the Station to the greatest extent
permitted by the FCC. The loan documents shall include provisions
restricting each Buyer’s ability to incur any secured or unsecured indebtedness
other than (i) the obligations to Seller or (ii) unsecured indebtedness incurred
in the ordinary course of operations of the Station, including, without
limitation, unsecured indebtedness incurred in the ordinary course of operations
of the Station for equipment necessary to propagate the Station’s broadcast
signal; provided, however, that any
such debt shall not be accepted or assumed by the Seller in the event of a
default under the Note, and shall be made expressly junior to the
Note.
Asset
Purchase Agreement – Page 21
SECTION 9 -
TERMINATION
9.1. This
Agreement may be terminated by Seller and the purchase and sale of the Station
abandoned, if Seller is not then in material default, upon written notice to
Buyer, upon the occurrence of any of the following:
(a) Conditions. If
on the date that would otherwise be the Closing Date any of the conditions
precedent to the obligations of Seller set forth in this Agreement have not been
satisfied or waived in writing by Seller.
(b) Judgments. If
there shall be in effect on the date that would otherwise be the Closing Date
any judgment, decree, or order that would prevent or make unlawful the
Closing.
(c) Upset Date. If the Closing shall not
have occurred by July 31st, 2010.
(d) Breach. Without
limiting Seller’s rights under the other provisions of this Section 9.1, if Buyer
has failed to cure, or commenced to cure, any material breach of any of its
representations, warranties or covenants under this Agreement within fifteen
(15) days after Buyer received written notice of such breach from
Seller.
(e) Insolvency. If
insolvency proceedings of any character, voluntary or involuntary, affecting
Buyer, are initiated or threatened, or if Buyer has made any assignment for the
benefit of creditors or taken any action which would constitute the basis for
the institution of such insolvency proceedings.
(f) FCC
Action. If a petition to deny or informal objection is filed
against the application at the FCC or the application is designated for hearing
by the FCC.
9.2. This
Agreement may be terminated by Buyer and the purchase and sale of the Station
abandoned, if Buyer is not then in material default, upon written notice to
Seller, upon the occurrence of any of the following:
(a) Conditions. If
on the date that would otherwise be the Closing Date any of the conditions
precedent to the obligations of Buyer set forth in this Agreement have not been
satisfied or waived in writing by Buyer.
(b) Judgments. If
there shall be in effect on the date that would otherwise be the Closing Date
any judgment, decree, or order that would prevent or make unlawful the
Closing.
(c) Upset Date. If the Closing shall not
have occurred by July 31st, 2010.
(d) Interruption of
Service. If
any event within the control of Seller shall have occurred that prevented signal
transmission of the Station as specified in Section 6.3 hereof.
Asset
Purchase Agreement – Page 22
(e) Breach. Without
limiting Buyer’s rights under the other provisions of this Section 9.2, if
Seller has failed to cure, or commenced to cure, any material breach of any of
its representations, warranties or covenants under this Agreement within fifteen
(15) days after Seller received written notice of such breach from
Buyer.
In
addition, to the foregoing, Buyer shall have the right to terminate this
Agreement as heretofore provided in Sections 6.3 and
6.11.
9.3. Buyer
has, simultaneous with the execution of this Agreement, deposited an additional
$300,000.00 with Escrow Agent. The Xxxxxxx Money Deposit shall be
held and disbursed in accordance with the following provisions:
(a) At
the Closing, Buyer
and Seller shall notify Escrow Agent to release the Xxxxxxx Money Deposit as
provided in the Escrow Agreement, and upon receipt Seller shall apply such
amount to the Purchase Price paid by Buyer as a credit.
(b) If
(i) this Agreement is terminated by Seller pursuant to Section 9.1 due to
Buyer’s material breach of this Agreement, and Seller is not in material breach
of any provision of this Agreement, or (ii) on the date that would otherwise be
the Closing Date, all of the conditions precedent to the obligations of Buyer
set forth in this Agreement have been satisfied or waived in writing by Buyer,
and Seller is not in material breach of any provision of this Agreement, but
Buyer does not consummate the Closing, then in each case Seller shall be
entitled to receipt of the Xxxxxxx Money Deposit from the Escrow
Agent.
(c) If
this Agreement is terminated pursuant to its terms without default on the part
of Buyer, or if Seller shall wrongfully refuse to close in accordance with the
provisions of this Agreement, Buyer shall be entitled to return of the Xxxxxxx
Money Deposit and all interest thereon.
9.4. If
this Agreement is terminated pursuant to Section 9.1 or 9.2 and neither party
is in material breach of any provision of this Agreement, the parties shall not
have any further liability to each other with respect to the purchase and sale
of the Assets and the Xxxxxxx Money Deposit shall be returned to
Buyer. If this Agreement is terminated by either party due to the
other party’s material breach of any provision of this Agreement, and the
terminating party is not in material breach of any provision of this Agreement,
then the terminating party (in addition to the Xxxxxxx Money Deposit) shall have
all rights and remedies available at law or equity, including the right to seek
specific performance of this Agreement.
SECTION 10 - INTENTIONALLY
OMITTED
SECTION 11 – NOTICES,
MISCELLANEOUS
11.1. Any
federal, state, or local sales or transfer tax arising in connection with the
conveyance of the Assets by Seller to Buyer pursuant to this Agreement shall be
paid by Seller. Buyer and Seller shall each pay one-half of all
filing fees required by the FCC in connection with the FCC
Consent. Except as otherwise provided in this Agreement, each party
shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives.
Asset
Purchase Agreement – Page 23
11.2. All
notices, demands, and requests required or permitted to be given under the
provisions of this Agreement shall be (a) in writing, (b) delivered by personal
delivery, or sent by commercial delivery service or registered or certified
mail, return receipt requested, (c) deemed to have been given on the date of
personal delivery or the date set forth in the records of the delivery service
or on the return receipt, and (d) addressed as follows:
If to
Seller, to:
Beltway
Acquisition Corporation
00 Xxxxx
Xxxxx Xxxxx
Xxxxxxxx,
XX 00000
Attention:
Xxxx Xxxxxxx
Telephone:
000-000-0000
With a
copy to:
IDT
Corporation
000 Xxxxx
Xxxxxx
Xxxxxx,
XX 00000
Attention:
Legal Department
Telephone:
000-000-0000
If to
Buyer, to:
Xxxxxxxx Media, LLC
0000 Xxxxxxx Xxxxxx, Xxxxx
000
Xxxxxx, XX 00000
Telephone: 000.000.0000
With a
copy to:
Xxxxxxx
X. Xxxxxx, Esq., P.A.
X.X. Xxx
000000
Xxxxx
Xxxxxxx, XX 00000-0000
Telephone:
000.000.0000
Facsimile:
954.436.6288
or to any
other or additional persons and addresses as the parties may from time to time
designate in a writing delivered in accordance with this Section
11.2.
Asset
Purchase Agreement – Page 24
11.3. Neither
party may assign this Agreement without the prior written consent of the other
party. Upon any permitted assignment by Buyer or Seller in accordance
with this Section
11.3, all references to “Buyer” herein shall be deemed to be references
to Buyer’s assignee and all references to “Seller” herein shall be deemed to be
references to Seller’s assignee, as the case may be. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
11.4. The
parties shall take any reasonable actions and execute any other documents that
may be necessary or desirable to the implementation and consummation of this
Agreement, including, in the case of Seller, any additional bills of sale,
deeds, or other transfer documents that, in the reasonable opinion of Buyer, may
be necessary to ensure, complete, and evidence the full and effective transfer
of the Assets to Buyer pursuant to this Agreement.
11.5. THIS
AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS
THEREOF). ANY
LITIGATION ARISING OUT OF THIS AGREEMENT SHALL BE FILED IN A STATE COURT OF
COMPETENT JURISDICTION IN NEW YORK. EACH PARTY WAIVES TRIAL BY JURY
AS TO ANY CLAIMS ARISING FROM THIS AGREEMENT.
11.6. Buyer
and Seller shall be equally responsible for all FCC related filing fees
associated with this transaction. All other expenses incurred in the
preparation and consummation of this Agreement, except as provided to the
contrary herein or in such other agreement into which the parties may enter,
shall be borne by the party incurring such expenses.
11.7. The
headings in this Agreement are included for ease of reference only and shall not
control or affect the meaning or construction of the provisions of this
Agreement.
11.8. Words
used in this Agreement, regardless of the gender and number specifically used,
shall be deemed and construed to include any other gender, masculine, feminine,
or neuter, and any other number, singular or plural, as the context
requires.
11.9. This
Agreement, the schedules, hereto, and all documents, certificates, and other
documents to be delivered by the parties pursuant hereto, collectively represent
the entire understanding and agreement between Buyer and Seller with respect to
the subject matter hereof (other than the Non-Disclosure Agreement between
them). This Agreement supersedes all prior negotiations between the
parties (other than the Non-Disclosure Agreement between them) and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is
sought.
11.10. Except
as otherwise provided in this Agreement, any failure of any of the parties to
comply with any obligation, representation, warranty, covenant, agreement, or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement, or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on
behalf of any party, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section
11.10.
Asset
Purchase Agreement – Page 25
11.11. Except
as and to the extent required by law, including, without limitation, disclosure
requirements of federal or state securities laws and the rules and regulations
of securities markets, neither party shall publish any press release, make any
other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated
hereby without the prior written consent of the other
party.
11.12. This
Agreement may be signed in counterparts with the same effect as if the signature
on each counterpart were upon the same instrument.
11.13. Buyer
acknowledges that Seller has not taken, and does not intend to take, any action
required to comply with any bulk sale or bulk transfer laws or similar laws, if
applicable. To the fullest extent permitted by applicable law, each
party waives compliance with any bulk sale or bulk transfer laws or similar
laws, if applicable.
11.14 The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event any ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by all parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Asset
Purchase Agreement – Page 26
IN WITNESS WHEREOF, the parties have
duly executed this Asset Purchase Agreement as of the day and year first above
written.
BELTWAY
ACQUISITION CORPORATION
By: /s/ Xxxx
Xxxxxxx
Name:
Xxxx Xxxxxxx
Title: President
XXXXXXXX
MEDIA, LLC
By: /s/ Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title: Managing
Member
XXXXXXXX
LICENSE SUBSIDIARY, LLC
By:
XXXXXXXX MEDIA, LLC
Its
Managing Member
By: /s/ Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title: Managing
Member
EXHIBIT
A
Form
of Note
EXHIBIT
B
Form
of Security Agreement
EXHIBIT
C
Form
of Membership Pledge Agreement
SCHEDULE
1
Permitted
Liens
[None]
SCHEDULE
2.2
Excluded
Assets
Any
property and equipment not set forth in these Schedule, including, without
limitation,
any property or equipment located on the 2nd
floor of the World Building.
SCHEDULE
3.4
FCC
Licenses
WMET (AM)
BL-20040608ACB
SCHEDULE
3.6
Real
Property
(Owned
or Leased)
|
|
-
Amended and Restated WMET Radio Tower Use Agreement between The
Maryland-National Capital Park and Planning Commission and Beltway
Acquisition Corp. dated August
2001.
|
Right to
use Owner’s five radio towers, existing building housing WMET’s transmitter and
certain surrounding property located near 00000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxxxxx,
XX 00000
|
|
-
World Building Office Lease between Royco, Inc. and Beltway Acquisition
Corporation dated November 2006, as amended by that Letter, dated
November10, 2009, from Royco, Inc. to
WMET
|
Approximately
737 rentable square feet of space known as Suite 804, the Studio, approximately
1,939 rentable square feet of office space known as Suite 806, and approximately
850 rentable square feet of office space known as Suite 210, in the building
known as World Building, 0000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, XX
00000
SCHEDULE 3.6
Tangible
Personal Property
(Equipment
List)
[See
attached list. All equipment is owned by Seller]
SCHEDULE
3.7
Assumed
Contracts
|
|
-
Amended and Restated WMET Radio Tower Use Agreement between The
Maryland-National Capital Park and Planning Commission and Beltway
Acquisition Corp. dated August 2001
|
|
|
-
World Building Office Lease between Royco, Inc. and Beltway Acquisition
Corporation dated November 2006, as amended by that Letter, dated
November10, 2009, from Royco, Inc. to
WMET
|
|
|
-
Broadcast Agreement between Xxxxx Xxxxxxx University and WMET Radio, dated
February 2, 2006, as extended by the Broadcast and Cross-Promotional
Agreement Extension dated June 24,
2009
|
|
|
-
Standard Sales Contracts/Time Brokerage Agreements with the following
counterparties:
|
- Xxxxxx
Xxxxxx Corporation Inc. (Deportes – Xxxxx Xxxxxxx Xxxxxxx as Host) - Viette
Communications (In the Garden)
- The
Universal Church
- Voice
of Hagerfiker Radio
- Meklit
Media Ministry (Meklit Radio)
- Xxxxxx
Xxxxx (Radio Merhawit)
- Xxxx
Xxxxxxx
- Friends
of Lubavitch, Inc. (Awake, Alive and Jewish)
- First
Hijrah Radio
- The
Xxxxxxx Xxx Show
- Ohev
Xxxxxx – The National Synagogue (Shmoozin’ with Xxxxxx)
SCHEDULE
3.8
Required
Consents
- FCC
Consent
- Consent
of Landlord, Royco, Inc., under the World Building Office Lease
-
Notice to
Owner, The Maryland-National Capital Park and Planning
Commission, of assignment of WMET Radio Tower Use Agreement
SCHEDULE
3.9
Intangibles
The Call
Sign “WMET”
Domain
Name “WMET1 000.xxx”
SCHEDULE
3.10
Non-Compliance
[None]
SCHEDULE
3.12
Litigation
[None]
SECURED PROMISSORY
NOTE
(24
Month Term (subject to extension) - Principal and Interest)
| May ___, 2010 | GAITHERSBURG, MD |
1. IDENTIFICATION OF THE
PARTIES.
(A)
Borrower.
The Borrowers
are XXXXXXXX
MEDIA, LLC, a Texas limited liability company, and XXXXXXXX LICENSE
SUBSIDIARY, LLC, a Texas limited liability company and wholly owned subsidiary
of XXXXXXXX MEDIA, LLC (collectively referred to as the "Borrower") whose
mailing address is 0000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000.
(B)
Lender.
The Lender is
BELTWAY
ACQUISITION CORPORATION, a Delaware corporation (referred to as the
"Lender") whose mailing address is 00 Xxxxx
Xxxxx Xxxxx, Xxxxxxxx, XX 00000. The Lender may transfer this
Note. The Lender or anyone who takes this Note by transfer and who is
entitled to receive payments under this Note is called the "Note
Holder."
2. BORROWER'S PROMISE TO
PAY.
In return
for a loan and for value received by the Borrower, the Borrower promises to pay
to the order of the Note Holder the sum of U.S. $2,700,000.00
(this amount is referred to as "principal"), plus interest.
3. INTEREST.
(A)
Performing Interest Rate.
Interest will
be charged on unpaid and disbursed principal, from the date of disbursement,
until the full amount of principal has been paid. The Borrower shall
pay interest at an initial annual rate of 3.0% fixed over the term of the loan
(subject to increase as hereinafter provided). Interest shall be collected on
the daily outstanding unpaid balance of principal, said interest to be
calculated and computed on the basis of a 365 day
year.
(B)
Non-Performing Interest Rate.
While in
default, including after the Maturity Date (or after the Extended
Maturity Date, if applicable), the Note shall bear interest at a default rate of
interest equal to the maximum interest rate per annum permissible under
applicable law; provided, however, that in the event, and only in the event,
that there is no applicable maximum interest rate per annum or said rate is
otherwise indeterminable, the Borrower and Note Holder agree that this Note
shall bear interest at a default rate of interest of 12.000 % per annum;
provided further, however, that any such default rate of interest shall not
exceed the maximum permitted by law.
4. PAYMENTS.
(A)
Quarterly Payments of Principal and Interest.
The Borrower
shall pay (i) seven (7) quarterly principal payments of $75,000.00 each and
interest payments calculated at an initial per diem rate of $221.92, with
subsequent interest payments calculated on the then outstanding
principal. The first quarterly payment ordinarily due August ____,
2010 shall be deferred to November ____, 2010 and payable with that 2nd
quarterly principal payment (for a total of $150,000.00) and the
remaining quarterly payments of $75,000.00 each, plus interest, shall be on
February __, 2011, May __, 2011, August __, 2011, November ___, 2011 and
February ___, 2012; and (ii)
(except as provided in 4(C ) below), a final balloon payment of principal in the
sum of $2,175,000.00 plus accrued interest on May ____, 2012.
1
(B)
Application of Payments.
All payments
shall be applied first to interest and other charges accruing under this Note
and second to principal. Any prepayments shall be applied first to any unpaid
interest and other charges accruing under this Note and second to the
installments of principal in the inverse order of maturity.
(C)
Maturity Date, Extension Right.
If on May __,
2012, the Borrower still owes amounts under this Note, the Borrower shall pay
those amounts in full on that date, which date is referred to as the "Maturity
Date;" provided, however,
Borrower shall have the right and option, in Borrower's sole discretion,
to extend the Maturity Date to May __, 2013 (the "Extended Maturity Date")
provided: (i) Borrower is not in default of this Note, or any other agreement
between Borrower and Lender; (ii) Borrower makes an additional payment of
principal to Note Holder in the amount of $750,000.00 on or before the Maturity
Date; and (iii) prior to the Maturity Date (and in any event not later than
March __, 2012), Borrower provides written notice (the "Extension Notice") to
Note Holder that Borrower has opted to so extend the Maturity Date to the
Extended Maturity Date. If so extended, the Borrower shall make three (3)
additional quarterly principal payments of $75,000.00 each on August __, 2012,
November ___, 2012 and February ___, 2013 until the Extended Maturity Date,
together with interest at 6.5% per annum, with a final balloon payment of all
remaining principal and accrued interest at the Extended Maturity
Date.
(D)
Place of Payments.
The Borrower
shall make all payments at 00 Xxxxx
Xxxxx Xxxxx, Xxxxxxxx, XX 00000, or at a different place if required by
the Note Holder. In the alternative, if required by the Note Holder,
payment shall be made by wire transfer of immediately available funds to an
account specified by the Note Holder.
(E)
Amount of Quarterly Payments.
Each of the
quarterly payments shall be made in accordance with the calculations and
instructions of the Note Holder in accordance with the terms set forth in this
Note.
5. BORROWER'S RIGHT TO
PREPAY.
The Borrower
shall have the right to make payments at any time before they are
due. When the Borrower makes a prepayment, the Borrower shall tell
the Note Holder in writing that it is doing so. Prepayments shall be applied as
provided above.
The Borrower
may make a full prepayment or partial prepayments without paying any prepayment
charge. If the Borrower makes a partial prepayment, there will be no
changes in the due dates of the quarterly payments or in the amount of the
quarterly payments or otherwise unless the Note Holder agrees in writing to
those changes.
6. LOAN CHARGES.
If a law,
which applies to this loan and which sets maximum loan charges, is finally
interpreted so that the interest or other loan charges collected or to be
collected in connection with this loan exceed the permitted limits, then: (i)
any such loan charge shall be reduced by the amount necessary to reduce the
charge to the permitted limit; and (ii) any sums already collected from the
Borrower which exceeded permitted limits will be refunded to the Borrower. The
Note Holder may choose to make this refund by applying it to the repayment of
this Note or by making a direct payment to the Borrower. If a refund
is applied to this Note, the reduction will be treated as a partial
prepayment.
7. LATE CHARGES FOR OVERDUE
PAYMENTS.
Notwithstanding any
applicable grace period or any other remedies available to the Note Holder, if
the Note Holder has not received the full amount of any payment by the end of
five (5) calendar
days after the date it is due, the Borrower shall pay a late charge to
the Note Holder. The amount of the late charge will be 5 % of the overdue
payment, and shall be due and payable on the date such overdue payment is
finally made. The Borrower and the Note Holder agree that this late
charge is a fair and reasonable charge for the late payment, and shall not be
deemed to be a penalty.
8.
EVENT OF DEFAULT.
The term
“Event of Default” or "default", wherever used in this Note, shall
mean any one or more of the following events:
| (A) | If the Borrower does not pay the full amount of each payment on the date it is due; |
2
| (B) | If the Borrower does not pay the full amount of each late charge on the date it is due ; |
| (C) | If the Borrower has not properly provided the Extension Notice to Note Holder by March __, 2012, or if the Borrower is not otherwise entitled to provide the Extension Notice, and does not pay the full amount owed under this Note on the Maturity Date. |
| (D) | If the Borrower is entitled to provide, and has properly provided the Extension Notice to Note Holder by March __, 2012, in accordance with the terms set forth above, and does not pay the full amount owed under this Note on the Extended Maturity Date. |
| (E) | If the Borrower does not pay the costs, charges, expenses, disbursements and reasonable attorney's fees incurred by the Note Holder pursuant to the terms of this Note, within ten (10) days of request therefor by the Note Holder; |
| (F) | If the Borrower fails to keep, perform and observe every covenant, condition and agreement in this Note; |
| (G) | Any default under the terms and conditions of any borrowings which may presently or subsequently exist between the Note Holder or any of its affiliates, and the Borrower; |
| (H) | Any breach in any material respect of any warranty or untruth in any material respect of any representation of the Borrower contained in this Note, or any other instrument securing or evidencing this Note, or in any other instrument given as security for this Note; |
| (I) | If the Borrower is in default or breach under any note or agreement in which the Note Holder has an interest; |
| (J) | Any liquidation or dissolution of the Borrower, or of any surety or endorser of this Note; |
| (K) | If the Borrower or any surety or endorser of this Note becomes insolvent or fails or ceases to pay its debts as they mature; or admits in writing its inability to, or generally becomes unable to, pay its debts as such debts become due; or shall file (or have filed against it) a voluntary petition in bankruptcy or shall be adjudicated bankrupt or insolvent, or shall file (or have filed against it) any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, wage earner's plan, assignment for the benefit of creditors, receivership, dissolution or similar relief under any present or future Federal Bankruptcy Act or any other present or future applicable federal, state or other statute or law, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of the Borrower or all or any part of the properties of the Borrower or of any guarantor, surety or endorser of this Note; |
| (L) | Upon a default under any other instrument securing the Obligations of this Note (“Obligations” to mean all the obligations and liabilities of every kind and character, whether direct, indirect or contingent, now or hereafter existing (whether matured or unmatured, contingent or liquidated)); |
| (M) | One or more judgments or decrees shall be entered against the Borrower involving a liability of $100,000 or more in the aggregate for all such judgments and decrees for the Borrower (in each case, not paid or to the extent not covered by insurance); or |
| (N) | The Borrower shall be enjoined, restrained or in any way prevented by the order of any court or any administrative or regulatory agency from conducting any material part of the business of the Borrower; or |
| (O) | Any material adverse change shall occur in the business, assets, operations and condition (financial or otherwise) of the Borrower. |
9.
GRACE PERIOD; ACCELERATION UPON DEFAULT.
Except in
the case of maturity, the Borrower shall have a grace period of five (5)
calendar days after the due date of any payment of interest or principal
due under this Note in which to make said payment, and a grace period of ten
(10) calendar
days following notice to Borrower from Note Holder in which to comply
with, or cure any breach of, any other covenant or Obligation under this
Note. These grace periods shall cease and be of no further force and
effect in the event of either the maturity of this Note or the acceleration of
this Note.
Upon default
of this Note, and after expiration of any applicable grace period, the full
amount of principal which has not been paid, all the interest that is owed on
that amount, and any other charges accruing under this Note, shall at the option
of the Note Holder, and without notice, be accelerated and shall become and be
immediately due and payable. Upon any such acceleration, this Note
shall be deemed to have matured and the maturity date shall be then considered
to be the same date as the date of acceleration.
3
10. GIVING OF
NOTICES.
Unless
applicable law requires a different method, any notice that must be given to the
Borrower under this Note will be given by delivering it or by mailing it by
first class mail to the address given for the Borrower as stated above, or at a
different address if the Note Holder receives from the Borrower a notice
specifically identifying such different address for notice purposes.
Unless
applicable law requires a different method, any notice that must be given to the
Note Holder under this Note will be given by mailing it by certified mail,
return receipt requested, or by overnight delivery by nationally recognized
carrier with delivery confirmation to the address given for the Note Holder as
stated above, or at a different address if the Borrower is given a notice of
that different address.
11. JOINT AND SEVERAL LIABILITY;
OBLIGATIONS OF PERSONS UNDER THIS NOTE.
If more than one person signs this Note, each person is jointly and severally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor, surety or endorser of this Note is also jointly and severally obligated to do these things. Any person who takes over these obligations, including the obligations of a guarantor, surety or endorser of this Note, is also jointly and severally obligated to keep all of the promises made in this Note. The Note Holder may enforce its rights under this Note against each person individually or against some or all together. This means that any one or more Borrower, guarantor, surety or endorser may be required to pay all of the amounts owed under this Note. The Note Holder shall not be required to look to any one Borrower, guarantor, surety or endorser, prior to any other in enforcing its rights under this Note. The Note Holder shall not be required to first institute any suit, or to exhaust its remedies against the Borrower or any other person or party to become liable hereunder or against any other agreement or the other Loan Documents in order to enforce the payment of this Note. The Note Holder by accepting this Note is relying upon the joint and several personal liability of the Borrower and of each guarantor, surety and endorser of this Note, in addition to any collateral security for this Note.
If more than one person signs this Note, each person is jointly and severally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor, surety or endorser of this Note is also jointly and severally obligated to do these things. Any person who takes over these obligations, including the obligations of a guarantor, surety or endorser of this Note, is also jointly and severally obligated to keep all of the promises made in this Note. The Note Holder may enforce its rights under this Note against each person individually or against some or all together. This means that any one or more Borrower, guarantor, surety or endorser may be required to pay all of the amounts owed under this Note. The Note Holder shall not be required to look to any one Borrower, guarantor, surety or endorser, prior to any other in enforcing its rights under this Note. The Note Holder shall not be required to first institute any suit, or to exhaust its remedies against the Borrower or any other person or party to become liable hereunder or against any other agreement or the other Loan Documents in order to enforce the payment of this Note. The Note Holder by accepting this Note is relying upon the joint and several personal liability of the Borrower and of each guarantor, surety and endorser of this Note, in addition to any collateral security for this Note.
12. WAIVER OF PRESENTMENT; NOTICE OF
DISHONOR, ETC.
The Borrower
and any guarantor, surety or endorser of this Note, and any other person who has
obligations under this Note waive the rights of presentment, dishonor, notice of
dishonor, notice of default, notice of nonpayment, protest, demand, valuation,
and appraisement. The obligations of the Borrower hereunder are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever.
13. DELAY OR OMISSION NO
WAIVER.
No delay or
omission of the Note Holder to exercise any right, power or remedy accruing upon
any default shall exhaust or impair any such right, power or remedy nor shall
the same be construed to be a waiver of any such default, or acquiescence
therein; and every right, power and remedy given by this Note to the Note Holder
may be exercised by Note Holder from time to time and as often as may be deemed
expedient by the Note Holder.
14. WAIVER OF ONE DEFAULT NOT TO
AFFECT ANOTHER.
No waiver of
any default shall extend to or shall affect any subsequent or any other default
or shall impair any right, power or remedy consequent thereon. If the Note
Holder: (a) grants forbearance or an extension of time for the payment of any
sums due under this Note; (b) takes other or additional security for the payment
hereof; (c) waives or does not exercise any right, power or remedy granted in
this Note; or (d) releases any part of the property securing this Note; then any
such act or omission shall not release, discharge, modify, change or affect the
original liability under this Note or of the Borrower, or of any guarantor,
surety or endorser of this Note; nor shall any such act or omission preclude the
Note Holder from exercising any right, power or remedy herein granted or
intended to be granted in the event of any other default then made or of any
prior or subsequent default.
15. REMEDIES
CUMULATIVE.
No right,
power or remedy conferred upon or reserved by the Note Holder by this Note, or
in any of the other agreements between the Borrower and Lender or the Loan
Document, is intended to be exclusive of any other right, power or remedy, but
each and every such right, power and remedy shall be cumulative and current and
shall be in addition to any other right, power and remedy given hereunder, in
any of the other agreements between the Borrower and Lender or the Loan
Documents, or now or hereafter existing at law or in equity or by
statute.
16. HEADINGS.
The headings
of the articles, sections, paragraphs and subdivisions of this Note are for
convenience of reference only, and are not to be considered a part hereof, and
shall not limit or otherwise affect any of the terms hereof.
4
17. RULE OF
CONSTRUCTION.
Any ambiguities
contained in this Note shall not be construed against the preparers of this
document.
18. INVALID PROVISIONS TO AFFECT NO
OTHERS.
If any one or
more of the terms or provisions contained in this Note shall be invalid, illegal
or unenforceable in any respect, the validity of the remaining terms and
provisions contained herein shall be in no way affected, prejudiced or disturbed
thereby.
19. RIGHT OF
SET-OFF.
Upon a
default as set forth in this Note or in the event the Note Holder shall
determine that the value of the collateral serving as security for the this Note
is impaired or lessened, the Note Holder shall have the right to set off,
without notice to Borrower, any and all deposits or other sums at any time
credited by or due from the Note Holder to the Borrower, whether in a special
account, general account or other account or represented by a certificate of
deposit (whether or not matured), against any or all sums and indebtedness
evidenced by this Note, whether or not they are then due.
20. TIME IS OF THE
ESSENCE.
It is
specifically agreed that time is of the essence in this Note. No
waiver of any obligation hereunder shall at any time thereafter be held to be a
waiver of the terms hereof.
21. ATTORNEY'S FEES AND
EXPENSES.
The Borrower,
and any guarantor, surety or endorser of this Note, agrees to pay to the Note
Holder, on demand, all costs, charges, expenses, disbursements and reasonable
attorney's fees ("Attorney's Fees and Expenses"):
| (A) | in enforcing the terms of this Note, whether suit be brought or not; |
| (B) | in collecting amounts owed under this Note, whether suit be brought or not; |
| (C) | in any action, proceeding or dispute concerning this Note; |
| (D) | in any action, proceeding or dispute in which the Note Holder is made a party or appears as a party plaintiff or party defendant because of the failure of the Borrower, or of any guarantor, surety or endorser of this Note, promptly and fully to perform and comply with all conditions and covenants of this Note; |
| (E) | for all documentary stamp taxes and intangible taxes, and any penalties or interest on the documentary stamp taxes and intangible taxes; and |
| (F) | in any proceedings with the Federal Communications Commission (“FCC”) concerning this Note. |
All such
costs, charges, expenses, disbursements and attorney's fees shall bear interest
thereon at the default rate of interest specified in this Note, from the date
incurred by the Note Holder until paid by the Borrower.
All such
costs, charges, expenses, disbursements and attorney's fees, and all of the
accrued interest thereon shall become due and payable whether or not there be
notice, demand, attempt to collect or suit pending.
Wherever
provision is made for payment of attorney's or counsel's fees or expenses
incurred by the Note Holder, said provision shall include, but not be limited
to, attorney's or counsel's fees or expenses incurred in any and all judicial,
bankruptcy, reorganization, administrative, or other proceedings, including
appellate proceedings and FCC proceedings, whether such proceedings arise before
or after entry of a final judgment.
22. APPLICABLE LAW;
VENUE.
This Note i
shall be construed, interpreted, enforced and governed by and in accordance with
the laws of the State of New York (excluding the principles thereof governing
conflicts of law), and Federal Law, in the event, and only to the extent,
Federal Law preempts State Law. Venue for any litigation concerning
this Note shall be in any court of competent jurisdiction located within the
State of New York. Each of the parties irrevocably and unconditionally submits
to the exclusive jurisdiction of any court of the State of New York or any
federal court sitting in the State of New York for purposes of any suit, action
or other proceeding arising out of this Note (and agrees not to commence any
action, suit or proceedings relating hereto except in such
courts).
5
Each of
the parties agrees that service of any process, summons, notice or document by
U.S. registered mail at its address set forth herein shall be effective service
of process for any action, suit or proceeding brought against it in any such
court. Each of the parties hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Note, which is brought by or against it, in the courts of the State of
New York or any federal court sitting in the State of New York and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
23.
GENDER AND NUMBER.
All pronouns
and variations thereof shall be deemed to refer to the masculine, feminine or
neuter, and to the singular or plural, as the identity of the person or entity
or persons or entities may require.
24.
CHANGES, OTHER AGREEMENTS, ETC.
Neither this
Note nor any term, covenant or condition hereof may be modified, changed,
waived, discharged or terminated orally, but only by an instrument, in writing,
executed by the party or parties intended to be bound by it, and approved by the
Note Holder. This Note may not be assigned by Borrower without the prior written
consent of the Note Holder.
25.
RELATIONSHIP OF PARTIES.
The Borrower
acknowledges that the relationship between the Borrower and the Note Holder is
strictly limited to that of debtor and creditor. The Note Holder has not
accepted or assumed any duty or obligation, fiduciary or otherwise, to or on
behalf of the Borrower which is not expressly contained herein. The
Borrower has not solicited and the Note Holder has not offered or given any
advice to the Borrower in any manner whatsoever in connection with the loan
transaction and this Note. The Borrower has not relied on any
representation by the Note Holder not contained in this Note.
26.
SECURED NOTE.
(A)
Statement of rights with respect to collateral.
This Note is
secured by the following instruments, (jointly and individually referred to
herein as the "Loan Documents"), to which reference is made for a statement of
the collateral and security, and the rights of the Note Holder with respect to
the collateral and security for the payment of this Note, to wit:
| (1) | Membership Pledge Agreement (dated ________, 2010), executed by Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx as sole members of Xxxxxxxx Media, LLC; |
| (2) | Membership Pledge Agreement (dated ________, 2010), executed by Xxxxxxxx Media, LLC as sole member of Xxxxxxxx License Subsidiary, LLC |
| (3) | UCC-1 Financing Statement (dated ________, 2010) , executed by Xxxxxxxx Media, LLC; |
| (4) | Security Agreement (dated __________, 2010), executed by Xxxxxxxx Media, LLC; |
| (5) | Security Agreement (dated ____________, 2010), executed by Xxxxxxxx License Subsidiary, LLC; and |
| (6) | All other documents and instruments now or hereafter delivered to, and accepted by, the Note Holder in connection with the indebtedness which the Borrower owes the Note Holder as evidenced by this Note. |
27.
ACCELERATION.
(A)
Statement of rights with respect to acceleration.
The maturity
of this Note is subject to acceleration at the option of the Note Holder, upon
the occurrence of certain events, as provided herein and in the Loan
Documents.
28.
WAIVER OF TRIAL BY JURY.
THE NOTE
HOLDER AND THE BORROWER, AND ANY GUARANTOR, SURETY OR ENDORSER, HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS NOTE AND ANY AGREEMENT TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE NOTE HOLDER MAKING THE LOAN EVIDENCED BY THIS
NOTE.
6
29.COVENANTS. So
long as this Note is outstanding, the Borrower covenants and
agrees:
(A)
to operate the business and assets acquired pursuant to the Asset Purchase
Agreement between Lender and Borrower dated February ____, 2010 diligently and
in the ordinary course of business;
(B)
to do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, in accordance with its respective formation
documents, operating agreements, bylaws, and other rights (charter and
statutory) and franchises;
(C)
to pay or discharge, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Borrower
or its properties and assets and (b) all lawful claims that have become due and
payable and that by law have or may become a lien upon the property and assets
of the Borrower;
(D)
to keep books and records which accurately reflect all of the material business
affairs and transactions of the Borrower;
(E)
to comply in all material respects with any applicable law, rule or regulation
governing the Borrower, the Station and their respective properties and assets
(including, without limitation, the FCC);
(F)
not to incur or suffer any Indebtedness; ("Indebtedness" means (1) any liability
(i) for borrowed money, or (ii) evidenced by a note, debenture, bond or other
instrument of indebtedness, given in connection with the acquisition of
property, assets or services; (2) any liability of others described in the
preceding clause (i) which the Borrower has guaranteed or as to which it has
provided security or which is otherwise its legal liability; and (ii) any
modification, renewal, extension, replacement or refunding of any such liability
described in the preceding clauses); provided that the Borrower may incur
unsecured Indebtedness in the ordinary course of operations of the Station,
including, without limitation, unsecured Indebtedness incurred in the ordinary
course of operations of the Station for equipment necessary to propogate the
Station’s broadcast signal; provided, however, that any such Indebtedness shall
not be accepted or assumed by Lender or the Note Holder or any other purchaser
of the Station or other collateral in the event of a default under this Note, or
otherwise and shall be made expressly junior to this Note; and
(G)
not to declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account or in respect of
its equity or other ownership interests.
(H)
Xxxxxxxx License Subsidiary, LLC shall not engage in any other business activity
apart from holding title to the FCC Licenses associated with the assets and
business being acquired pursuant to that Asset Purchase Agreement between the
parties dated February ____, 2010.
7
WITNESS
THE HAND(S) AND SEAL(S) OF THE UNDERSIGNED.
XXXXXXXX
MEDIA, LLC A Texas limited liability company
By:
XXXXXXXX
LICENSE SUBSIDIARY, LLC A Texas limited liability company
By:
8
COMMERCIAL SECURITY
AGREEMENT
LENDER:
BELTWAY
ACQUISITION CORPORATION 00 XXXXX XXXXX XXXXX
XXXXXXXX,
XX 00000
BORROWER/OWNER:
XXXXXXXX
MEDIA, LLC
0000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
1. SECURITY
INTEREST. XXXXXXXX MEDIA, LLC (“Owner” or “Borrower”) grants, mortgages,
pledges, hypothecates, assigns, delivers and transfers to Lender identified
above a first priority continuing security interest in and lien on the
Collateral described below to secure the Obligations described in this
Agreement.
2. OBLIGATIONS.
The Collateral shall secure the payment and performance of all of Borrower’s
present and future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, (including costs of collection,
legal expenses and reasonable attorney’s fees incurred by Lender upon the
occurrence of a default under this Agreement, in collecting or enforcing payment
of such indebtedness, or preserving, protecting or realizing on the Collateral
herein), liabilities, obligations and covenants (cumulatively “Obligations”) to
Lender pursuant to:
(a) This
Agreement and the following promissory note:
| INITIAL INTEREST RATE | PRINCIPAL AMOUNT | FUNDING DATE | MATURITY DATE | |||
| 3.00% | $2,700,000.00 | 05/__/2010 | 05/__/2012 |
(b) all other
present or future, written agreements between Borrower and Lender, (whether
executed for the same or different purposes than the preceding
documents;
(c) all
amendments, modifications, replacements or substitutions to any of the
foregoing; and
(d) applicable
law.
3.
COLLATERAL. The Collateral shall consist of all of the personal property and
other assets of Owner (including, but not limited to, those acquired pursuant to
the Asset Purchase Agreement, dated February ___, 2010, between Owner and
Lender) and all of Owner’s rights, title and interest therein whether now owned
or hereafter acquired by Owner and wheresoever located, including the
following:
(a) All
accounts and contract rights including, but not limited to, the accounts and
contract rights described on Schedule “A” attached hereto and made part hereof
by this reference.
(b) All
chattel paper including, but not limited to, the chattel paper described on
Schedule A attached hereto and made part hereof by this reference.
(c) All
documents including, but not limited to, the documents described on Schedule A
attached hereto and made part hereof by this reference.
(d) All
equipment including, but not limited to, the equipment described on Schedule A
attached hereto and made part hereof by this reference.
(e) All
general intangibles, including, but not limited to, the general intangibles
described on Schedule A attached hereto and made part hereof by this
reference.
(f) All
instruments including, but not limited to, the instruments described on Schedule
A attached hereto and made part hereof by this reference.
(g) All
inventory including, but not limited to, the inventory described and located at
the locations indicated on Schedule A attached hereto and made part hereof by
this reference.
(h) All
monies, instruments, and savings, checking or other deposit accounts that are
now or in the future in the Borrower’s custody or control (excluding XXX, Xxxxx,
trust accounts, and deposits subject to tax penalties if so
assigned).
(i) All
accessions, accessories, additions, amendments, attachments, modifications,
replacements and substitutions to any of the above.
(j) All
proceeds and products of any of the above.
(k) All
policies of insurance pertaining to any of the above as well as any proceeds and
unearned premiums pertaining to such policies; and
(o) All
books and records pertaining to any of the above.
4. OWNER’S
TIN. Owner’s Taxpayer ID Number is :
5. RESIDENCY/LEGAL
STATUS. Owner is a Texas limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Texas, and has all
requisite corporate or other power and authority to own, operate or lease its
assets and properties and to carry on its business as currently conducted and as
proposed to be conducted (including, without limitation, all licenses and
qualifications to operate the Station).
6.
REPRESENTATIONS, WARRANTIES AND COVENANTS: Owner represents, warrants and
covenants to Lender that:
(a) Owner is
and shall remain the sole owner of the Collateral;
(b) Omitted
(c) Owner's
chief executive office, chief place of business, office where its business
records are located, or residence is the address Identified above; Owner shall
promptly advise Lender in writing of any change in or addition to the foregoing
address;
(d) Owner
shall not become a party to any restructuring of its form of business or
participate in any consolidation, merger, liquidation or dissolution without
Lender’s prior written consent;
(e) Owner
shall notify Lender of the nature of any intended change of Owner's name, or the
use of any trade name, and the effective date of such change;
(f) The
Collateral is and shall at all times remain free of all tax and other liens,
security interests, encumbrances and claims of any kind except for those
belonging to Lender and those described on Schedule C attached hereto and
incorporated herein by this reference. without waiving the event of default as a
result thereof, Owner shall take any action and execute any document needed to
discharge the foregoing liens, security interests, encumbrances and
claims;
(g) Owner
shall defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein;
(h) Owner
shall not change the location of any Collateral without the prior written
consent of Lender;
(i) Owner
shall provide Lender with possession of all chattel paper and instruments
constituting the Collateral, and Owner shall promptly xxxx all chattel paper,
instruments, and documents constituting the Collateral to show that the same are
subject to Lender's security interest;
(j) All of
Owner's accounts or contract rights; chattel paper; documents; general
intangibles; instruments; and federal, state, county, and municipal government
and other permits, licenses, trusts, liens, contracts, leases, and agreements
constituting the Collateral are and shall be valid, genuine and legally
enforceable obligations and rights belonging to Owner against one or more third
parties and not subject to any claim, defense, setoff or counterclaim of any
kind;
(k) Owner
shall not amend, modify, replace, or substitute any account or contract right;
chattel paper; document; general intangible; or instrument constituting the
Collateral without the prior written consent of Lender;
(1) Owner
has the right and is duly authorized to enter into and perform its obligations
under this Agreement. Owner's execution and performance of these obligations do
not and shall not conflict with the provisions of any statute, regulation,
ordinance, rule of law, contract or other agreement which may now or hereafter
be binding on Owner;
(m) No action
or proceeding is pending, or threatened, against Owner which might result in any
material or adverse change in its business, operations or financial condition or
materially affect the Collateral;
(n) Owner has
not violated and shall not violate any applicable federal, state, county or
municipal statute, regulation or ordinance (including but not limited to those
governing Hazardous Materials) which may materially and adversely affect its
business, operations or financial condition or the Collateral; and
(o)This
Agreement and the obligations described in this Agreement are executed and
incurred for business
and not consumer purposes.
7. SALE OF
COLLATERAL. Owner shall not assign, convey, lease, sell or transfer any of the
Collateral to any party without the prior written consent of Lender except for
sales of broadcast airtime and commercial inventory to buyers in the ordinary
course of business.
8. FINANCING
STATEMENTS AND OTHER DOCUMENTS. Owner shall take all actions and execute all
documents required by Lender to attach, perfect and maintain Lender's first
priority continuing security interest in the Collateral and establish and
maintain Lender's right to receive the payment of the proceeds of the Collateral
including, but not limited to, executing any financing statements, fixture
filings, continuation statements, notices of security interest and other
documents required by the Uniform Commercial Code and other applicable law.
Owner shall pay the costs of filing such documents in all offices wherever
filing or recording is deemed by Lender to be necessary or desirable. In lieu of
filing security agreements, financing statements, and effective financing
statements, Lender shall be entitled to perfect its security interest in the
Collateral by filing carbon, photographic or other reproductions of the
aforementioned documents with any authority required by the Uniform Commercial
Code or other applicable law. Lender may execute and file any financing
statements, as well as extensions, renewals and amendments of financing
statements in such form as Lender may require to perfect and maintain perfection
of any security interest granted in this Agreement.
9. INQUIRIES
AND NOTIFICATION TO THIRD PARTIES. Owner hereby authorizes Lender to Contact any
third party and make any inquiry pertaining to Owner's financial condition or
the Collateral. In addition, Lender is authorized to provide oral or written
notice of its security interest in the Collateral to any third
party.
10. COLLECTION
OF INDEBTEDNESS FROM THIRD PARTIES. In the event of a Default hereunder, Lender
shall be entitled to notify, and upon the request of Lender, Owner shall notify
any account debtor or other third party (including, but not limited to,
insurance companies) to pay any indebtedness or obligation owing to Owner and
constituting the Collateral (cumulatively “Indebtedness”) to Lender. Owner shall
reasonably pursue collection of the Indebtedness owing to Owner from its account
debtors and other third parties until the giving of such notification. In the
event that Owner possesses or receives possession of any instruments or other
remittances with respect to the Indebtedness following the giving of such
notification or if the instruments or other remittances constitute the
prepayment of any Indebtedness or the payment of any insurance proceeds, Owner
shall hold such instruments and other remittances in trust for Lender apart from
its other property, endorse the instruments and other remittances to Lender, and
immediately provide Lender with possession of the instruments and other
remittances. Lender shall be entitled, but not required, to collect (by legal
proceedings or otherwise), extend the time for payment, compromise, exchange or
release any obligor or collateral upon, or otherwise settle any of the
Indebtedness whether or not an event of default exists under this Agreement.
Lender shall not be liable to Owner for any action, error, mistake, omission or
delay pertaining to the actions described in this paragraph or any damages
resulting therefrom.
11. POWER OF
ATTORNEY. Owner hereby appoints Lender as its attorney-in-fact to endorse
Owner's name on all instruments and other remittances payable to Owner with
respect to the Indebtedness or other documents pertaining to Lender's actions in
connection with the Indebtedness. In addition, Lender shall be entitled, but not
required, to perform any action or execute any document required to be taken or
executed by Owner under this Agreement. Lender's performance of such action or
execution of such documents shall not relieve Owner from any obligation or cure
any default under this Agreement. Furthermore, following an Event of Default and
failure to timely cure, Lender shall be entitled to take any action and to
execute any document which Lender may deem necessary, advisable or desirable to
accomplish the purposes of this Agreement. The powers of attorney described in
this paragraph are coupled with an interest and are irrevocable.
12. USE AND
MAINTENANCE OF COLLATERAL. Owner shall use the Collateral solely in the ordinary
course of its business, for the usual purposes intended by the manufacturer (if
applicable), with due care, and in compliance with the laws, ordinances,
regulations, requirements and rules of all federal, state, county and municipal
authorities including environmental laws and regulations and insurance policies.
Owner shall not make any alterations, additions or improvements to the
Collateral that would have the effect of decreasing the value of the Collateral
without the prior written consent of Lender. Without limiting the foregoing, all
alterations, additions and improvements made to the Collateral shall be subject
to the security interest belonging to Lender, shall not be removed without the
prior written consent of Lender, and shall be made at Owner's sole expense.
Owner shall take all actions and make any repairs or replacements needed to
maintain the Collateral in good condition and working order.
13. LOSS OR
DAMAGE. Owner shall bear the entire risk of any loss, theft, destruction or
damage (cumulatively “Loss or Damage”') to all or any part of the Collateral. In
the event of any Loss or Damage, Owner will either restore the Collateral to its
previous condition, replace the Collateral with similar property acceptable to
Lender in its sole discretion, or pay or cause to be paid to Lender the decrease
in the fair market value of the affected Collateral.
14. INSURANCE.
The Collateral will be kept insured for its full value against all hazards
including loss or damage caused by fire, collision, theft or other casualty. If
the Collateral consists of a motor vehicle, Owner will obtain comprehensive and
collision coverage in amounts at least equal to the actual cash value of the
vehicle with deductibles not to exceed $500. Owner may obtain insurance on the
Collateral from such companies as are acceptable to Lender in its sole
discretion. The insurance policies shall require the insurance company to
provide Lender with at least thirty (30) days' written notice before such
policies are altered or cancelled in any manner. The insurance policies shall
name Lender as a loss payee and provide that no act or omission of Owner or any
other person shall affect the right of Lender to be paid the insurance proceeds
pertaining to the Loss or Damage of the Collateral. In the event Owner fails to
acquire or maintain insurance, Lender (after providing notice as may be required
by law) may in its discretion procure appropriate insurance coverage upon the
Collateral and charge the insurance cost as an advance of principal under the
promissory note. Owner shall furnish Lender with evidence of insurance
indicating the required coverage. Following an Event of Default and failure to
timely cure, Lender may act as attorney-in-fact for Owner in making and settling
claims under insurance policies, canceling any policy or endorsing Owner's name
on any draft or negotiable instrument drawn by any Insurer.
15. INDEMNIFICATION.
Lender shall not assume or be responsible for the performance of any of Owner's
obligations with respect to the Collateral under any circumstances.
16. TAXES AND
ASSESSMENTS. Owner shall execute and file all tax returns and pay all taxes,
licenses, fees and assessments relating to its business, operations and the
Collateral (including, but not limited to, income taxes, personal property
taxes, withholding taxes, sales taxes, use taxes, excise taxes and workers'
compensation premiums) in a timely manner.
17.
INSPECTION OF COLLATERAL AND BOOKS AND RECORDS. Owner shall allow Lender or its
agents to examine, inspect and make abstracts and copies of the Collateral and
Owner's books and records pertaining to Owner's business, operations and
financial condition or the Collateral during normal business hours. Owner shall
provide any reasonable assistance without cost to Owner as may be required by
Lender for these purposes. All of the signatures
and information pertaining to the Collateral or contained in the books and
records shall be genuine, true, accurate and complete in all respects. Owner
shall note existence of Lender's security interest in its books and records
pertaining to the Collateral.
18. EVENT
OF DEFAULT. Owner shall be in default (“Event of Default”) under this Agreement,
(after expiration of any applicable cure period or grace period provided in this
Agreement or any of the Loan Documents) in the event that Owner/Borrower
:
(a) fails to
make any payment under this Agreement or any other indebtedness to Lender when
due;
(b) fails to
perform any obligation or breaches any warranty or covenant to Lender contained
in this Agreement or any other present or future, written or oral, agreement
regarding this or any other indebtedness to Lender;
(c) provides
or causes any false or misleading signature or representation to be provided to
Lender;
(d) allows
the Collateral to be destroyed, lost or stolen, damaged in any material respect,
or subjected to seizure or confiscation;
(e) seeks to
revoke, terminate or otherwise Limit its liability under this
Agreement.;
(f) permits
the entry or service of any garnishment, judgment, tax levy, attachment or lien
against Owner, any guarantor, or any of their property;
(g) becomes
legally incompetent, is dissolved or terminated, ceases to operate its business,
becomes insolvent, makes an assignment for the benefit of creditors, or becomes
the subject of any bankruptcy, insolvency or debtor rehabilitation
proceeding;
(h) allows
the Collateral to be used by anyone to transport or store goods, the possession,
transportation, or use of which, is illegal;
(i) causes
Lender to deem itself insecure for any reasonable cause, or
(j) defaults
under any of the other Obligations.
19.
RIGHTS OF LENDER ON DEFAULT. If there is an Event of Default under this
Agreement, Lender shall be entitled to exercise one or more of the following
remedies without notice or demand, (except in the case of non-monetary Defaults,
following notice to Owner and failure to cure after ten (10) days of such notice
to cure, such period not intended to extend any cure or grace period in any
other Loan Documents) (except as required by law):
(a) to
declare the Obligations immediately due and payable in full;
(b) to
collect the outstanding Obligations with or without resorting to judicial
process;
(c) to take
possession of any Collateral in any manner permitted by law;
(d) to apply
for and obtain, with notice and upon emergency application, the appointment of a
receiver for the Collateral without regard to Owner's financial condition or
solvency, the adequacy of the Collateral to secure the payment or performance of
the obligations, or the existence of any waste to the Collateral;
(e) to
require Owner to deliver and make available to Lender any Collateral at the
community of License
for the Station (see Schedule A hereto);
(f) to sell,
lease or otherwise dispose of any Collateral and collect any deficiency balance
with or without resorting to legal process (if notice to Borrower of the
intended disposition of the Collateral is required by law, five (5) days’ notice
shall constitute reasonable notification); and
(g)to
exercise all other rights available to Lender under any other written agreement
or applicable law.
Lender's
rights are cumulative and may be exercised together, separately, and in any
order. If notice to Owner of intended disposition of Collateral is required by
law, five (5) days' notice shall constitute reasonable notification. Lender's
remedies under this paragraph are in addition to those available at common law,
such as setoff.
20.
WAIVER OF JURY TRIAL. LENDER AND OWNER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO TRIAL BY JURY IN RESPECT TO ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
PROMISSORY NOTE, THIS AGREEMENT AND ANY OTHER AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN EVIDENCED BY
THE PROMISSORY NOTE.
21. APPLICATION
OF PAYMENT. When an Event of Default has occurred under this Agreement, all
payments made by or on behalf of Owner and all credits due to Owner from the
disposition of the Collateral or otherwise may be applied against the amounts
paid by Lender (including reasonable attorneys' fees and legal expenses) in
connection with the exercise of its rights or remedies described in this
Agreement and any interest thereon and then to the payment of the remaining
Obligations in whatever order Lender chooses.
22. REIMBURSEMENT
OF AMOUNTS EXPENDED BY LENDER. Owner shall reimburse Lender for all amounts
(including reasonable attorneys' fees and legal expenses) expended by Lender in
the performance of any action required to be taken by Owner or the exercise of
any right or remedy belonging to Lender under this Agreement, together with
interest thereon at the lower of the highest rate described in any promissory
note or credit agreement executed by Borrower or Owner or the highest rate
allowed by law from the date of payment until the date of reimbursement. These
sums shall be included in the definition of Obligations, shall be secured by the
Collateral identified in this Agreement and shall be payable upon
demand.
23.ASSIGNMENT.
Owner shall not be entitled to assign any of its rights, remedies or obligations
described in
this
Agreement without the prior written consent of Lender. Consent may be withheld
by Lender in its sole discretion. Lender shall be entitled to assign some or all
of its rights and remedies described in this Agreement without prior notice to
or the prior consent of Owner in any manner.
24. MODIFICATION
AND WAIVER. The modification or waiver of any of Owner's Obligations or Lender's
rights under this Agreement must be contained in a writing signed by Lender.
Lender may delay or fail to exercise any of its rights without causing a waiver
of those Obligations or rights. A waiver on one occasion shall not constitute a
waiver on any other occasion. Owner's Obligations under this Agreement shall not
be affected if Lender amends, compromises, exchanges, fails to exercise, impairs
or releases any of the obligations belonging to any Owner or third party or any
of its rights against any Owner, third party or collateral.
25. SUCCESSORS
AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of
Owner and Lender and their respective successors, permitted assigns, trustees,
receivers, administrators, personal representatives, legatees, and
devisees.
26. NOTICES.
Any notice or other communication to be provided under this Agreement shall be
in writing and sent to the parties at the addresses described in this Agreement
or such other address as the parties may designate in writing from time to
time.
27. SEVERABILITY.
..If any provision of this Agreement violates the law or is unenforceable, the
rest of the Agreement shall remain valid.
28. APPLICABLE
LAW. This Agreement shall be governed by the laws of the State of New York.
Owner consents to the jurisdiction and venue of the state courts of New York,
New York in the event of any legal proceeding under this Agreement. Each of the
parties irrevocably and unconditionally submits to the exclusive jurisdiction of
any court of the State of New York or any federal court sitting in the State of
New York for purposes of any suit, action or other proceeding arising out of
this Agreement (and agrees not to commence any action, suit or proceedings
relating hereto except in such courts). Each of the parties agrees that service
of any process, summons, notice or document by U.S. registered mail at its
address set forth herein shall be effective service of process for any action,
suit or proceeding brought against it in any such court. Each of the parties
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement, which is
brought by or against it, in the courts of the State of New York or any federal
court sitting in the State of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
29. COLLECTION
COSTS. If Lender hires an attorney to assist in collecting any amount due or
enforcing any right or remedy under this Agreement, Owner and Lender agree the
prevailing party shall be entitled to an award of reasonable attorney’s fees and
costs (subject to any restrictions imposed by law).
30. MISCELLANEOUS.
This Agreement is executed for commercial purposes. Owner shall supply
information regarding Owner's business, operations and financial condition or
the Collateral in annual unaudited financial statements. All information
furnished by Owner to Lender shall be true, accurate and complete in all
respects. Owner and Lender agree that time is of the essence. Owner waives
presentment, demand for payment, notice of dishonor and protest. If there is
more than one Owner, their obligations shall be joint and several. This
Agreement shall remain in full force and effect until all Obligations are paid
in full. This Agreement and any related documents represent the complete and
integrated understanding between Owner and Lender pertaining to the terms and
conditions of those documents.
31. OBLIGATIONS
OBSOLUTE. Except as required by applicable law, all rights of the Lender
hereunder, the security interest granted hereby, and all obligations of Owner
hereunder, shall be absolute and unconditional irrespective of (a) any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any other agreement or instrument, (c) any exchange,
release or non-perfection of any other Collateral, or any release, amendment or
waiver of, or consent to or departure from, any guaranty for all or any of the
Obligations, or (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Owner in respect of the Obligations or
in respect of this Agreement.
32.ADDITIONAL
TERMS: SEE ATTACHED SCHEDULES “A”, “B” and “C”
Owner
acknowledges that Owner has read, understands, and agrees to the terms and
conditions of this Agreement.
DATED:
BORROWER/OWNER:
XXXXXXXX MEDIA, LLC
BY:
LENDER:
BELTWAY ACQUISITION CORPORATION
BY:
TITLE:
COMMERCIAL
SECURITY AGREEMENT -- SCHEDULE A
by
Xxxxxxxx Media, LLC (“Borrower”)
in
favor of Beltway Acquisition Corporation (“Lender”)
Further Collateral
Description:
In
addition to the categories of Collateral described in Section 3 of this
Agreement, the Collateral shall include any and all personal property owned by
the Borrower, or in which the Borrower has an interest, wherever located,
whether presently owned or existing or hereafter created or acquired including,
without limitation:
|
(a)
|
Investment
property, deposit accounts commercial tort claims and letter of credit
rights;
|
|
(b)
|
General
intangibles including, without limitation, payment intangibles, software,
time brokerage contracts and barter
agreements.
|
|
(c)
|
Supporting
obligations, including security agreements, guaranties, documents, notes,
drafts, right to return goods, warranty claims, licenses and government
payments (to the fullest extent permitted by
law).
|
|
(d)
|
To
the fullest extent permitted by law, AM Broadcast License BL-20040608ACB
(“Broadcast Licenses”), associated with WMET (AM), Gaithersburg, MD (the
“Station”) as extended from time to time, and any and all proceeds and
products thereof;
|
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(e)
|
Books,
records, logs, materials and other documents including, without
limitation, financial records and all technical and other data concerning
the Broadcast Licenses, the Station or the operation of the Broadcast
Licenses or Station; and
|
|
(f)
|
all
cash or non-cash proceeds of the foregoing, including all Collateral
described in Section 3 of this
Agreement.
|
Terms
used herein shall be given their broadest meaning and shall have the meanings
set forth in the Uniform Commercial Code as in effect from time to time in the
State of Maryland.
COMMERCIAL
SECURITY AGREEMENT -- SCHEDULE B
by
Xxxxxxxx Media, LLC (“Borrower”)
in
favor of Beltway Acquisition Corporation (“Lender”)
Additional
Terms:
32(A).The
Borrower further represents, warrants and covenants to Lender that
|
(i)
|
The
Collateral includes 100% of the issued and outstanding membership
interests of Xxxxxxxx License Subsidiary, LLC, a Texas limited liability
company, which is wholly owned by Borrower and which is the FCC licensee
of the Station.
|
|
(ii)
|
No
more than 20% of the membership interests of Borrower are owned or voted
by aliens, or their representatives, as such terms are defined in the
Communications Act of 1934, as amended, and to the extent that any holder
of Borrower’s equity securities is an alien, such alien is neither an
officer nor a director of Borrower.
|
|
(iii)
|
Borrower
will take all action necessary to insure it does not allow any additional
membership interests
to be issued.
|
Borrower
will file this Agreement with the FCC when required and will use best efforts to
obtain promptly any consent of the FCC which may be required in connection with
the execution, delivery or performance of this Agreement and any transfer of
Collateral contemplated hereby, whether upon pledge or later upon default and
disposition, if at that time the Broadcast License is still in
effect.
32(B).
Voting Rights; Unless
and until an Event of Default shall have occurred Owner shall be entitled to
exercise any and all voting and/or consensual rights and powers accruing to an
owner of the Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement
Upon the
occurrence and during the continuance of an Event of Default, all rights of
Owner to exercise the voting and/or consensual rights and powers which Owner is
entitled to exercise pursuant to Section 32(b) hereof shall cease, and all such
rights shall thereupon become vested in Lender or other transferee, who shall
have the sole and exclusive right and authority to exercise such voting and/or
consensual rights; provided,
however, if the Broadcast License is still in effect at that time and if
prior consent from the FCC is required by 47 U.S.C. §310(d) or other applicable
law to authorize such exercise of rights by Lender or other transferee, such
consent shall first be obtained from the FCC.
32(C). Rights of Lender in Default.
(1) In addition to any other remedies available to Lender, if, at any
time after the occurrence of an Event of Default which has not been cured within
the time limits provided in this Agreement, or the Note, the Lender shall in its
discretion deem it necessary for the protection of the Broadcast Licenses or the
Station or for the prevention of deterioration or dissipation of Station assets
pending sale, it may apply to a court of competent jurisdiction for the
appointment of a receiver for Owner, and Owner hereby agrees to said
appointment. Owner further agrees and requests that an application as aforesaid
to a court for appointment of a receiver be handled by the court as an emergency
matter, and Owner agrees to the shortening by the court of prescribed periods of
time for the filing of pleadings and notices of hearings, in order to permit
expedited treatment of the application. If the court shall appoint a receiver,
application shall forthwith be made to the FCC for its consent to the
involuntary transfer of control of the Station Licenses to the receiver, and if
Owner does not upon demand voluntarily sign the transferor's and licensee's
portions of the application, to the extent legally permissible they hereby
empower Lender or any of its officers and directors, or such person who may be
appointed by the court for such purpose, to sign that application for them and
on their behalf. The transferee's portion of the application shall be signed by
the receiver appointed by the court. Rights afforded to Lender by this
subparagraph shall be in addition to and not in derogation of all other rights
afforded by law or in equity. In the event a receiver is appointed,
Borrower/Owner waive the posting of any bond which might otherwise be
required.
(2) In
addition to any other remedies available to Lender, upon the occurrence of an
Event of Default under this Agreement and the Note, and after the opportunity to
cure has expired, Lender may forthwith or at any time ) sell the Collateral,
subject to the prior approval of the FCC as required by 47 U.S.C.
§310(d). Such sale shall be made pursuant to the provisions of the Uniform
Commercial Code of Maryland, as the same may from time to time be amended (the
"Code"). Notices of disposition of the Collateral and other actions are hereby
waived by Borrower/Owner to the extent permitted by law. Any notice of sale,
disposition or other intended action by Lender mailed by Lender to the address
of Borrower/Owner set forth in the preamble to this Agreement (or at such other
address provided to Lender in writing) at least five (5) days before the action
shall constitute reasonable notice.
(3) Lender
may reject any offer by a prospective purchaser or bidder which it then or
thereafter determines, with the reasonable advice of counsel, does not satisfy
all legal requirements of the FCC or with whom it is unable to enter into a
written contract containing terms reasonably acceptable to it, and it may then
either sell to the next highest prospective purchaser or bidder or may re-offer
or re-advertise. Neither Lender nor its officers, directors or stockholders
shall be disqualified from purchasing the Collateral at a private sale or public
auction conducted in accordance with the provisions of this Agreement or
applicable law. Any sale as herein set forth shall be made expressly contingent
on the prior consent of the FCC to a transfer of control of the Broadcast
Licenses and/or Station to the purchaser pursuant to 47 U.S.C.
§310(d).
(4) Following
a sale conducted in accordance with the provisions of this Agreement, if Owner
does not upon demand voluntarily sign the transferor's and licensee's portions
of an application for FCC consent to transfer of control, to the extent legally
permissible, Owner hereby empowers Lender or any of the officers or directors of
Lender, or such persons who may be appointed by the court for such purpose, to
sign those documents for Owner and on Owner’s behalf. The transferee's portion
of the said application shall be signed by the prospective
purchaser.
(5) In case
of any sale or other disposition of any of the Collateral aforesaid by Lender,
after deducting all costs, or expenses of every kind for care, safekeeping,
collection, sale, delivery and for reasonable attorney's fees for legal services
in connection therewith and application and grant fees imposed by the FCC,
Lender may apply the residue of the proceeds of the sale or sales or other
disposition of the Collateral, in full or partial payment of the Obligations
hereby secured, as it may deem proper, and returning the surplus, if any, to
Borrower/Owner. Borrower/Owner agrees to be and to remain liable upon and to pay
to Lender or the holder hereof any of the Obligations hereby secured or any part
thereof not satisfied by the proceeds of such sale or sales or other disposition
of the Collateral. Lender may, if it deems it advisable to do so, restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the resale or distribution of any of the securities comprising the
Collateral.
(6) Notwithstanding
anything herein, or in the other Loan Documents to the contrary, Lender shall
have no duty or obligation to take any action, file any applications or
otherwise to spend any money to maintain the Broadcast Licenses or the Station
as a radio broadcast station if the Broadcast Licenses are no longer in effect
or if in Lender’s opinion the cost of taking any such actions is not
economically reasonable in light of the economic benefits and upon making such
decision in its sole discretion Lender shall be free to dispose of any or all of
the Collateral in accordance with its rights as a secured lender hereunder, in
any Collateral Document, or at law or in equity, without complying with any FCC
laws, rules, orders or regulations (which action the parties acknowledge may
have the effect of causing a termination of the Broadcast
Licenses).
32(D).
Borrower’s Assurances.
Borrower/Owner agrees to cooperate with any receiver or purchaser of the
Broadcast Licenses, Station, capital stock or other Collateral and with the
Lender in the preparation, execution and filing of any forms and providing any
information in its possession that may be necessary or helpful in obtaining the
FCC’s consent to the assignment or transfer of control to such receiver or
purchaser of the Broadcast Licenses, Station, capital stock or other Collateral,
and other FCC authorizations. Borrower/Owner further agrees that, because of the
unique nature of its undertaking herein, that same may be specifically enforced;
and Borrower/Owner hereby waives, and agrees to waive, any claim or defense to
any adequate remedy at law that the Lender would have for the breach of this
undertaking. Borrower/Owner further waives any bond requirement.
COMMERCIAL
SECURITY AGREEMENT -- SCHEDULE C
By
Xxxxxxxx Media, LLC (“Borrower”)
in
favor of Beltway Acquisition Corporation (“Lender”)
1 – Restriction(s) imposed by
rule, order or regulation of the Federal Communications Commission (“FCC”) may
affect Lender’s ability to freely transfer the Collateral upon default by
Borrower without the prior consent of the FCC. Certain rights granted under this
Agreement may be inconsistent with the present rules and policies of the FCC.
They are expressed herein because it is impossible to predict the state of FCC
Law at the time of any future Event of Default. It is the intention of the
parties that FCC Law takes precedence over any contrary right or obligation
expressed herein. Every right granted and every obligation undertaken herein are
granted or undertaken to the full extent permitted by FCC Law, and only to the
extent permitted by FCC Law. If required by FCC Law, upon the occurrence of an
Event of Default; (a) voting rights in Borrower will remain with its members.;
(b) there will be either a public or private arms length sale of the equity
interests in Borrower; and (c) prior to the exercise of any
management/control/voting rights by a purchaser in such public or private sale,
the consent of the FCC shall be obtained.
As used
herein the term “FCC
Law” means (a) the Communications Act of 1934, as amended, 47 USC §101
et. seq.; (b) the Rules and Regulations of the Federal Communications
Commission, 47 CFR § 0.1 et. seq.; (c) the policies and case law of the Federal
Communications Commission implementing and interpreting (a) and (b), above; (d)
the decisions of the United States Courts with respect to (a), (b) and (c),
above; and (e) all of (a), (b), (c) and (d) above as they presently exist and as
they may be amended, supplemented, changed and/or superseded (by legislation,
rule making, adjudication or otherwise) in the future.
MEMBERSHIP INTEREST PLEDGE
AGREEMENT
THIS
AGREEMENT is made and entered into this ____ day of __________, 2010 by and
between XXXXXXXX MEDIA, LLC, a Texas limited liability company (the "Pledgor"),
and BELTWAY ACQUISITION CORPORATION (the “Pledgee").
PRELIMINARY
STATEMENT
The
Pledgor is the owner of 100% of the membership interests (the "Membership
Interest") in XXXXXXXX LICENSE SUBSIDIARY, LLC, a Texas limited liability
company (the "Company"). The Pledgor and the Company, collectively as Borrower,
and the Pledgee, as Lender, are parties to a Note, UCC- 1 Financing Statements,
Security Agreement and other loan documentation (the "Loan Documents”"),
pursuant to which the Pledgee agreed, upon the terms and conditions set forth
therein, to extend in favor of the Company and the Pledgor an aggregate credit
facility in a principal amount of Two Million Seven Hundred Thousand Dollars
($2,700,000.00) (the "Loan"). The Loan is evidenced by a Secured Promissory Note
in the original sum of $2,700,000.00 executed by the Company and the Pledgor on
even date and delivered to the Pledgee (the "Note"). The Note, the Loan
Documents, and the extension of any Loans thereunder, are conditioned, among
other things, upon Pledgor entering into this Pledge Agreement. The Pledgor
acknowledges that the extension of the Loan specifically inures to the Pledgor's
benefit, and in consideration thereof, and further, in order to more fully
secure the complete payment and performance of all of the Pledgor’s and the
Company’s Obligations under the Note and the Loan Documents, the Pledgor has
agreed to further provide for and evidence the pledge of the Membership Interest
to the Pledgee, as provided hereunder.
NOW,
THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1.Defined
Terms.
All
capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to them
in the Note.
2. Pledge.
The
Pledgor hereby pledges, assigns, hypothecates, delivers, transfers and grants to
the Pledgee a first priority lien upon and security interest in the Membership
Interest (and all proceeds thereof) as security for the full, timely and
faithful performance (whether at the stated maturity, by acceleration or
otherwise) of all of the Obligations under the Note, the Loan Documents and this
Agreement. Simultaneously with the execution hereof, the Pledgor shall deliver
to the Pledgee an executed Membership Interest Assignment ("Assignment"), which
the Pledgee agrees to hold as collateral security subject to the provisions of
section 3(b) hereof. Any certificates evidencing the Membership Interest (with
undated stock powers executed in blank and irrevocable proxies) are being
delivered by the Pledgor to the Pledgee contemporaneously with the execution of
this Agreement.
3. Release of
Assignment.
(a) In the
event of full and complete performance of all of the Obligations under the Loan
Documents and payment in full of the Note in accordance with its terms, this
Assignment shall thereupon become null and void and be of no further force and
effect, and Pledgee shall deliver the Membership Interest Assignment marked
“canceled” together with this Pledge Agreement to the Pledgor, along with any
certificates evidencing the Membership Interest (and undated stock powers) which
were delivered to Pledgee pursuant to paragraph 2 above.
(b) Subject
to Section 10 hereof, in the event of a default (other than payment of principal
and/or interest on the Note) or upon a default under the provisions of Section 6
hereof, or upon an Event of Default under the Loan Documents, Pledgee may
forthwith mail written notice thereof to Pledgor of such Event of Default. Ten
(10) days after such notice has been so mailed by Pledgee, and providing that
such notice has been so mailed by Pledgee, and providing that such default has
not been cured by Pledgor, the Pledgee, it its sole and absolute
discretion, may (but shall not be required to) elect to exercise its rights
hereunder and under the Assignment by delivering to the Company the executed
Assignment, in addition to all other available legal or equitable remedies.
Pledgee may exercise its rights and remedies herein after expiration of the
applicable grace period for payment obligations under the Note without necessity
of further notice to Pledgee. The cure period provided herein is not intended to
extend any cure or grace period in any other Loan Documents.
4. Voting.
Unless
otherwise prohibited herein, as long as the Membership Interest is held by the
Pledgee, and until a default hereunder, the Pledgor shall have the right to vote
the Membership Interest for all purposes (subject to the agreements and
covenants set forth herein and in the Note). If requested, the Pledgor shall
execute and deliver to the Pledgee such proxies and authorizations as are
reasonably required to confirm the voting rights of the Pledgor during the term
of this Agreement. The actual possession of the Assignment during the period of
this Agreement shall remain in the control of the Pledgee.
5. Representations and
Warranties of the Pledgor.
The
Pledgor represents, warrants and agrees that the Pledgor shall not, prior to the
full payment of the Note and satisfaction of all Obligations under the Loan
Documents:
(a) Liquidate,
pledge, encumber, sell, transfer or otherwise dispose of the Membership Interest
or any portion thereof to any party without obtaining the prior written consent
of the Pledgee. In the event the Pledgee consents to any such proposed action,
the Pledgor agrees to execute such documents as shall be necessary to continue
the effectiveness of this Agreement.
(b) Take any
action to sell, lease, encumber, or otherwise transfer, in whole or in part, any
of the assets or equity of the Company without first having obtained the consent
of the Pledgee.
The
Pledgor further represents and warrants to the Pledgee that:
(a) The
Pledgor is the record and beneficial owner of, and has legal title to, the
Membership Interest, free and clear of all pledges, liens, security interests
and other encumbrances and restrictions whatsoever, except the liens and
security interests created by this Agreement;
(b) The
Pledgor has full power, authority and legal right to execute this Agreement and
the Loan Documents and to consummate the transactions contemplated
thereby;
(c)There
are no outstanding options, warrants or other agreements with respect to the
Membership
Interest;
(e) The
Membership Interest has been duly and validly authorized and issued, and is
fully paid and non-assessable. The Membership Interest constitutes all of the
issued and outstanding equity of the Company;
(f) Except
for the consent of the FCC to the exercise of the Assignment, no consent,
approval or authorization of or designation or filing with any governmental
authority is required in connection with the pledge and security interest
granted under this Agreement and the Loan Documents, or the exercise by the
Pledgee of the voting and other rights provided for in this Agreement and the
Loan Documents;
(g) The
execution, delivery and performance of this Agreement and the Loan Documents by
the Pledgor will not violate any provision of any applicable law or regulation
or of any order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, or of the certificate of formation
or operating agreement of the Pledgor or of any mortgage, indenture, lease,
contract, or other agreement, instrument or undertaking to which the Pledgor is
a party or which purports to be binding upon the Pledgor or upon any of its
assets, and will not result in the creation or imposition of any lien, charge or
encumbrance on or security interest in any of the assets of the Pledgor except
as contemplated by this Agreement and the Loan Documents; and
(h) The
pledge, assignment and delivery to Pledgee of the Membership Interest pursuant
to this Agreement and other collateral pursuant to the Loan Documents create a
valid first lien on and a first perfected security interest in the Membership
Interest and other collateral, and all proceeds thereof, in favor of the
Pledgee, and are subject to no prior pledge, lien, mortgage, hypothecation,
security interest, charge, option or encumbrance or to any agreement purporting
to grant to any third party a security interest in the property or assets of the
Pledgor which would include the Membership Interest or other collateral. The
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Membership Interest and other collateral, and
the proceeds thereof, against the claims and demands of all persons
whomsoever.
6. Default.
Any
default under the Loan Documents or the Note, or the violation of any provision
of this Agreement or a breach by the Pledgor of any representation or warranty
herein shall constitute a default under this Agreement and be deemed an Event of
Default under the Loan Documents and the Note, and the Pledgee shall be entitled
to all remedies available under this Agreement, the Loan Documents, the Note,
and all agreements entered into pursuant to the Loan Documents.
7. Notice.
Any
notice required or permitted hereunder shall be in writing and shall be
sufficient if mailed by registered mail or certified mail, return receipt
requested, postage prepaid, in care of the following addresses:
(a)
if to the Pledgee, at its offices at
Beltway
Acquisition Corporation c/o CTM Media Holdings, Inc. 00 Xxxxx Xxxxx
Xxxxx
Xxxxxxxx,
XX 00000
Attention:
Xxxx Xxxxxxx
(b)
and
to:
IDT
Corporation 000 Xxxxx Xxxxxx Xxxxxx, XX 00000 Attention: Legal
Department
(c) If to
Pledgor, c/x
Xxxxxxxx
Media, LLC
0000
Xxxxxxx Xxxxxx, Xxxxx 000 Xxxxxx, XX 00000
(d)
and to:
Xxxxxxx
X. Xxxxxx, Esq., P.A. X.X. Xxx 000000
Xxxxx
Xxxxxxx, XX 00000-0000 Telephone: 000.000.0000
Notice
given by registered or certified mail, return receipt requested, shall be deemed
effective four (4) days after mailing. Actual written notice is intended,
however, and if written notice is in fact given in any manner other than as
aforesaid, it shall be fully effective when received.
8. Parties Benefited and
Bound.
This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
9. Counterparts.
This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original.
10.
Savings
Provision.
No
provision herein or in any other instrument contemplated by this Agreement
should be deemed to authorize or require any act or failure to act which would
violate the rules and regulations of the FCC or other
applicable law, rule and regulation, and all provisions herein or in any other
such instrument shall be interpreted and construed in a manner which, as nearly
as possible, reflects the original intent of the parties.. If the exercise of
any right or remedy by the Pledgee hereunder requires the prior approval or
consent of, or notification to, the FCC, the Pledgor shall use its best efforts
to cause such approval, consent or notification to be obtained or given, as the
case may be, including causing the executing and filing of all instruments which
may be necessary to obtain such approval or consent, or give such notification,
and cooperating fully in obtaining or giving the same. Notwithstanding any other
provision of this Agreement, except the Pledgee's right to appoint a receiver in
an Event of Default pursuant to applicable FCC rules and regulations, all voting
rights associated with the Membership Interest shall remain with the Pledgor
even in an Event of Default and should such Event of Default occur, the Pledgee
shall conduct either a private or public sale of the Membership Interest and
prior to the exercise of Membership Interest rights by the purchaser at such
sale, the prior consent of the FCC [pursuant to 47 U.S.C. 310(d)] will be
obtained.
11.
Law Governing
Agreement.
The
Agreement shall be governed as to the validity, interpretation, construction and
performance by the laws of the State of New York, exclusive of its choice-of-law
principles. Any litigation arising from this Agreement shall be brought in a
state court of competent jurisdiction located in New York, New York. Each of the
parties irrevocably and unconditionally submits to the exclusive jurisdiction of
any court of the State of New York or any federal court sitting in the State of
New York for purposes of any suit, action or other proceeding arising out of
this Agreement (and agrees not to commence any action, suit or proceedings
relating hereto except in such courts). Each of the parties agrees that service
of any process, summons, notice or document by U.S. registered mail at its
address set forth herein shall be effective service of process for any action,
suit or proceeding brought against it in any such court. Each of the parties
hereby irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement, which is brought by or against it, in the courts of the State of New
York or any federal court sitting in the State of New York and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
12. Severability.
The
invalidity of any portion of this Agreement shall not affect the validity of the
remainder thereof.
13. Further
Assurances.
Each of
the parties hereto will execute and deliver such further instruments and do such
further acts and things as may be required to carry out the intent and purpose
of this Agreement.
14. Counterparts.
This
Pledge may be executed in counterparts with the same effect as if the signature
on each counterpart were on the same instrument.
15.
No
Waiver; Cumulative Remedies. The Pledgee shall not, by any act, delay, omission
or otherwise, be deemed to have waived any of its remedies hereunder or under
Note or the Loan Documents, and no waiver by the Pledgee shall be valid unless
in writing and signed by the Pledgee and then only to the extent therein set
forth. A waiver by the Pledgee of any right or remedy hereunder or under the
Note or Loan Documents on any one occasion shall not be construed as a bar to
any right or remedy which the Pledgee would otherwise have on any further
occasion. No course of dealing between the Pledgor and the Pledgee and no
failure to exercise, nor any delay in exercising on the part of the Pledgee of
any right, power or privilege hereunder or under the Note or Loan Documents
shall impair such right or remedy or operate as a waiver thereof; nor shall any
single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein and in the Note and the Loan Documents are cumulative
and may be exercised singly or concurrently, and are not exclusive of any rights
or remedies provided by law.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date and year first above written.
| WITNESS: | PLEDGOR: | ||
| XXXXXXXX MEDIA, LLC | |||
| By: | |||
| Xxxxxx Xxxxxxxx, Managing Member | |||
| PLEDGEE: | |||
| BELTWAY ACQUISITION CORPORATION | |||
| By: | [Seal] | ||
| Its | |||
|
BELTWAY ACQUISITION
CORPORATION
|
“BORROWER” |
MEMBERSHIP
ASSIGNMENT
|
| 00 Xxxxx Xxxxx Xxxxx | XXXXXXXX MEDIA, LLC |
SEPARATE
FROM
|
| Xxxxxxxx, XX 00000 | 0000 Xxxxxxx Xxx. #000 |
CERTIFICATE
|
| “Lender” | Xxxxxx, XX 00000 |
|
OWNER
|
PURPOSE
|
|
| This Agreement is executed for Business Purposes | ||
|
XXXXXXXX MEDIA,
LLC
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
|
||
FOR VALUE
RECEIVED, Owner whose federal taxpayer identification numbers is:
hereby sells, assigns, and transfers to Lender the
following:
• Membership: ONE HUNDRED
(100.00%) PERCENT OF THE MEMBERSHIP INTERESTS OF XXXXXXXX LICENSE
SUBSIDIARY, LLC (“Company”) standing in XXXXXXXX MEDIA, LLC’s name on the books
of the Company and represented by Certificate(s) #
and does
hereby irrevocably constitute and appoint BELTWAY ACQUISITION CORPORATION as its
attorney-in-fact to transfer the above described securities on the books of the
Company or Entity with full powers pertaining to the securities.
This
Assignment will be governed by the laws of the State of New York.
DATED:
, 2010
OWNER:
XXXXXXXX MEDIA, LLC
BY:
THE
SIGNATURE(S) ON THIS ASSIGNMENT MUST BE IDENTICAL TO THE NAME(S) ON THE
MEMBERSHIP CERTIFICATES IN ALL RESPECTS.
