Exhibit 10.08.07
ASSET PURCHASE AGREEMENT
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(KLTX-AM, LONG BEACH, CALIFORNIA)
This AGREEMENT (this "Agreement") is dated as of _______, 2000, by and
among SALEM MEDIA OF CALIFORNIA, INC. ("Seller") and HI-FAVOR BROADCASTING, LLC
("Buyer").
RECITALS:
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1. Seller owns and operates radio station KLTX-AM licensed to Long
Beach, California (the "Station"), and holds the licenses and authorizations
issued by the FCC for the operation of the Station.
2. Buyer desires to acquire certain assets of the Station, and Seller
is willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of the
FCC.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Buyer hereby agree as follows:
ARTICLE 1
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TERMINOLOGY
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1.1 ACT.The Communications Act of 1934, as amended.
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1.2 ADJUSTMENT AMOUNT.As provided in Section 2.7, the amount by which
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Buyer's account is to be credited or charged, as reflected on the Adjustment
List.
1.3 ADJUSTMENT LIST.As provided in Section 2.7, an itemized list of all
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sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.
1.4 ASSUMED OBLIGATIONS.Such term shall have the meaning defined in
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Section 2.3.
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1.5 BUSINESS DAY.Any calendar day, excluding Saturdays and Sundays, on
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which federally chartered banks in the city of Los Angeles, California are
regularly open for business.
1.6 BUYER'S THRESHOLD LIMITATION.As provided in Section 9.3 (b), the
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threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.7 CLOSING.The closing with respect to the transactions contemplated
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by this Agreement.
1.8 CLOSING DATE.The date determined as the Closing Date as provided in
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Section 8.1.
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1.9 DOCUMENTS.This Agreement and all Exhibits and Schedules hereto, and
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each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.
1.10 EARNEST MONEY.The amount of One Million Dollars ($1,000,000).
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1.11 ENVIRONMENTAL LAWS.The Comprehensive Environmental Response
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Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.12 ESCROW AGENT. Jonathan Block, Esq.
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1.13 ESCROW AGREEMENT.The Escrow Agreement in the form attached as
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Exhibit A which Seller, Buyer and the Escrow Agent have entered into
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concurrently with the execution of this Agreement relating to the deposit,
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holding, investment and disbursement of the Earnest Money.
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1.14 EXCLUDED ASSETS.Such term shall have the meaning defined in
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Section 2.2.
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1.15 FCC.Federal Communications Commission.
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1.16 FCC LICENSES.The licenses, permits and authorizations of the FCC
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for the operation of the Stations as listed on Schedule 3.7.
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1.17 FCC ORDER.An action, order or decision of the FCC granting its
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consent to the assignment of the FCC Licenses to Buyer.
1.18 FINAL ACTION.An action of the FCC that has not been reversed,
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stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
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sponte action of the FCC with comparable effect is pending and as to which the
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time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
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1.19 HSR ACT. The Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.20 HAZARDOUS MATERIALS.Toxic materials, hazardous wastes, hazardous
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substances, pollutants or contaminants, asbestos or asbestos-related products,
polychlorinated biphenyls ("PCBs"), petroleum, crude oil or any fraction or
distillate thereof in excess of legally-defined permissible limits (as such
terms are defined in any applicable federal, state or local laws, ordinances,
rules and regulations, and including any other terms which are or may be used in
any applicable environmental laws to define prohibited or regulated substances).
1.21 INDEMNIFIED PARTY.Any party described in Section 9.3(a) or 9.4(a)
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against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.22 INDEMNIFYING PARTY.The party to the Agreement (not the Indemnified
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Party) that, in the event of a claim or liability asserted by a third party
against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.23 LIEN.Any mortgage, deed of trust, pledge, hypothecation, security
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interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any Sale Assets
or property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.24 MATERIAL ADVERSE CONDITION.A condition which would materially
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restrict, limit, increase the cost or burden of or otherwise materially
adversely affect or materially impair the right of Buyer to the ownership, use,
control, enjoyment or operation of the Stations or the proceeds therefrom;
provided, however, that any condition which requires that the Station be
operated in accordance with a condition similar to those contained in the
present FCC licenses issued for operation of the Station shall not be deemed a
Material Adverse Condition.
1.25 OSHA LAWS.The Occupational Safety and Health Act of 1970, as
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amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.
1.26 PERMITTED ENCUMBRANCES.For purposes hereof, "Permitted
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Encumbrances" shall mean (i) easements, restrictions, and other similar matters
which will not materially adversely affect the operation of the Station in the
ordinary course of business; (ii) liens for taxes not due and payable or, that
are being contested in good faith by appropriate proceedings; (iii) mechanics,
materialmen's, carriers', warehousemen's, landlords' or other similar liens in
the ordinary course of business for sums not yet due or which are being
contested in good faith by appropriate proceedings; (iv) deposits or pledges to
secure the performance of bids, tenders, contracts (other than for borrowed
money), leases, statutory obligations, surety or appeal bonds or other deposits
or pledges for purposes of a like general nature made or given in the ordinary
course of business: and (v) liens or mortgages that will be released at Closing;
(vi) zoning ordinances and regulations, including statutes and ordinances
relating to the liens of streets and to other municipal improvements, which will
not materially adversely affect the operation of the Station in the ordinary
course of business.
1.27 PERMITTED LIEN.Any statutory lien which secures a payment not yet
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due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way or similar imperfection in the
Seller's title to its assets or properties that, individually and in the
aggregate, are not material in character or amount and do not and are not
reasonably expected to materially impair the value or materially interfere with
the use of any asset or property of the Seller material to the operation of its
business as it has been and is now conducted.
1.28 PURCHASE PRICE.The consideration to be paid by Buyer to Seller for
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purchase of the Sale Assets in an amount equal to Thirty Million Dollars
($30,000,000).
1.29 RULES AND REGULATIONS.The rules of the FCC as set forth in Volume
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47 of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Stations.
1.30 SALE ASSETS.All of the tangible and intangible assets to be
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transferred by Seller to Buyer as set forth in Section 2.1.
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1.31 SELLER'S THRESHOLD LIMITATION.As provided in Section 9.4(b), the
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threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.32 STATION AGREEMENTS.The agreements, commitments, contracts, leases
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and other items described in Section 2.1(c), that relate to operation of the
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Station.
1.33 SURVIVAL PERIOD.The term following the Closing Date during which
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all representations, warranties, covenants and agreements of the parties under
this Agreement shall survive. The term shall be twelve (12) months.
1.34 TANGIBLE PERSONAL PROPERTY.The personal property described in
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Section 2.1(a).
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1.35 TOWER COORDINATES.Such term shall have the meaning defined in
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Section 3.14 hereof.
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ARTICLE II
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PURCHASE AND SALE
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2.1 SALE ASSETS.On the Closing Date, Seller will sell, transfer, assign
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and convey to Buyer, and Buyer will purchase from Seller, free and clear of all
Liens, except Permitted Liens, all of Seller's right, title and interest, legal
and equitable, in and to the tangible and intangible assets (except Excluded
Assets) used or useful in the operation of the Station as specifically set forth
in the following:
(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
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furniture, fixtures and other tangible personal property now or hereinafter
owned by Seller and used in the operation of the Station including, but not
limited to the tangible personal property listed on Schedule 3.6, together with
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such modifications, replacements, improvements and additional items, and subject
to such deletions therefrom, made or acquired between the date hereof and the
Closing Date in accordance with the terms and provisions of this Agreement;
(b) LICENSES AND PERMITS.The FCC Licenses and all other assignable
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or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter obtained by Seller between the date hereof and the Closing Date, to
the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Stations;
(c) STATION AGREEMENTS. All agreements which are listed on
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Schedule 3.8 as agreements which Buyer elects to assume; any renewals,
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extensions, amendments or modifications of those agreements being assumed which
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are made in the ordinary course of Seller's operation of the Station and in
accordance with the terms and provisions of this Agreement;
(d) RECORDS.True and complete copies of all of the books, records,
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accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Station
(other than corporate records);
(e) MISCELLANEOUS ASSETS.Any other tangible or intangible asset,
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properties or rights of any kind or nature not otherwise described in this
Section 2.1 and now or hereinafter owned or used by Seller in the operation of
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the Station.
2.2 EXCLUDED ASSETS.Notwithstanding any provision of this Agreement to
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the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
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Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions
prior to the Closing including, without limitation, claims for tax refunds and
refunds of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
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included as part of the Sale Assets).
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement; all tangible personal property not specifically assumed by
Buyer pursuant to Section 2.1(a) above.
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver materially accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
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2.3 ASSUMPTION OF LIABILITIES.
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(a) At the Closing, Buyer shall assume and agree to perform,
without duplication of Seller's performance, the following liabilities and
obligations of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
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(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing.
(b) Except for the Assumed Obligations, Buyer shall not assume or
in any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
2.4 EARNEST MONEY.
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(a) Within five (5) days of the execution of this Agreement, Buyer
shall deposit with Escrow Agent under the Escrow Agreement, in immediately
available funds, the Earnest Money. The Escrow Agent shall hold the Earnest
Money under the terms of the Escrow Agreement in trust for the benefit of the
parties hereto. Interest and other earnings on the Earnest Money shall be
distributed by the Escrow Agent to Buyer from time to time upon the request of
Buyer.
(b) If Closing does not occur, the Earnest Money shall be
delivered to Seller or returned to Buyer in accordance with Section 10.2, and if
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Closing does occur, the Earnest Money shall be applied to payment of the
Purchase Price at Closing as provided in Section 2.5.
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2.5 PAYMENTS.
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(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
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the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed
to Seller by cashier's check or wire transfer of immediately available funds.
(ii) At the Closing the Purchase Price, less the amount of
the Earnest Money disbursed to Seller, shall be paid to Seller at Closing by
wire transfer of immediately available funds.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
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2.6 ALLOCATION OF THE PURCHASE PRICE.Prior to Closing, Buyer and Seller
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shall agree to an allocation of the Purchase Price. Buyer and Seller shall use
such allocation for all reporting purposes in connection with federal, state and
local income and, to the extent permitted under applicable law, franchise taxes.
Buyer and Seller agree to report such allocation to the Internal Revenue Service
in the form required by Treasury Regulation 1.1060-1T.
2.7 ADJUSTMENT OF PURCHASE PRICE.
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(a) All operating income and operating expenses of the Station
shall be adjusted and allocated between Seller and Buyer, and an adjustment in
the Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the Closing Date shall
be for the account of Seller, and all income and expenses attributable to the
operation of the Station after the closing Date shall be for the account of
Buyer.
(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
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in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this
Section, Buyer shall prepare and deliver the Adjustment List to Seller within
thirty (30) days following the Closing Date, or such earlier or later date as
shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set
forth the Adjustment Amount. If the Adjustment Amount is a credit to the account
of Buyer, Seller shall pay such amount to Buyer, and if the Adjustment Amount is
a charge to the account of Buyer, Buyer shall pay such amount to Seller. In the
event Seller disagrees with the Adjustment Amount determined by Buyer or with
any other matter arising out of this subsection, and Buyer and Seller cannot
within sixty (60) days resolve the disagreement themselves, the parties will
refer the disagreement to a firm of independent certified public accountants,
mutually acceptable to Seller and Buyer, whose decision shall be final and whose
fees and expenses shall be allocated between and paid by Seller and Buyer,
respectively, to the extent that such party does not prevail on the disputed
matters decided by the accountants.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF SELLER
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Notwithstanding anything to the contrary in this Agreement, Seller makes no
representation or warranty other than as set forth in this Article III. Seller
hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation, validly
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existing and in good standing under the laws of the State of California and
authorized to conduct business in the State of California and each and every
jurisdiction where Seller conducts business. Seller has all requisite power to
own, operate and lease its properties and carry on its business as it is now
being conducted and as the same will be conducted until the Closing.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.Seller's execution
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and delivery of, and the performance of its obligations under, this Agreement
and each of the other Documents, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Seller. Seller has the
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. The
Documents, when executed and delivered by the parties hereto, will constitute
legal and valid obligations of Seller enforceable against it in accordance with
their terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors' rights or
remedies generally, and except as may be limited by general principles of equity
(regardless of whether enforceability is sought in a proceeding in equity or at
law).
3.3 ABSENCE OF CONFLICTS.The execution and delivery of, and the
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performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation of the transactions contemplated
hereby and thereby:
(a) do not, to Seller's actual knowledge, in any material respect
(with or without the giving of notice or the passage of time or both) violate
(or result in the creation of any Lien other than a Permitted Lien on any of the
Sale Assets under), any provision of law, rule or regulation or any order,
judgment, injunction, decree or ruling applicable to each Seller;
(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under the Articles of Incorporation or Bylaws of Seller or pursuant to any
lease, agreement, commitment or other instrument which Seller is a party to, or
bound by, or by which any of the Sale Assets may be bound, or result in the
creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets.
3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES.Except for such
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consents as are required by the FCC and except for the applicable requirements
of the HSR Act, to Seller's actual knowledge, the execution and delivery of, and
the performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby, do not require the consent, waiver, approval,
permit, license, clearance or authorization of, or any declaration of filing
with, any court or public agency or other authority, or the consent of any
person under any agreement, arrangement or commitment of a nature to which
Seller is a party or by which it is bound or by which the Sale Assets are bound
or to which they are subject to, the failure of which to obtain would have a
material adverse effect on the Sale Assets or the operation of the Stations.
3.5 SALE ASSETS. To Seller's actual knowledge, the Sale Assets include
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all of the assets, properties and rights of every type and description, tangible
and intangible, that are used to a material extent in the conduct of the
business of owning and operating the Station in the manner in which that
business is now conducted, with the exception of the Excluded Assets.
3.6 TANGIBLE PERSONAL PROPERTY.Except for supplies and other incidental
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items which in the aggregate are not of material value, to Seller's actual
knowledge, the list of Tangible Personal Property set forth on Schedule 3.6 is a
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complete and correct list of all of the items of tangible personal property
(other than Excluded Assets) used to a material extent in the operation of the
Station in the manner in which they are now operated.
(a) Seller has good, marketable and valid title to all of the items of
Tangible Personal Property free and clear of all Liens except Permitted Liens,
and including the right to transfer same.
(b) To Seller's actual knowledge and except as set forth on
Schedule 3.6 the Tangible Personal Property has been maintained in accordance
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with industry practices and is in good operating condition subject to ordinary
wear and tear.
(c) To Seller's actual knowledge the Tangible Personal Property
complies with applicable rules and regulations of the FCC and the terms of the
FCC Licenses.
(d) Seller has no knowledge of any defect in the condition or
operation of any item of the Tangible Personal Property that is reasonably
likely to have a material adverse effect on the operation of the Station.
3.7 FCC LICENSES.Seller is the holder of the FCC Licenses listed on
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Schedule 3.7, and except as set forth on such Schedule, the FCC Licenses (i) are
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valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station in all
material respects as now operated, and (ii) constitute all the current licenses
and authorizations issued by the FCC to Seller for or in connection with the
current operation of the Station. Seller has no knowledge of any condition
imposed by the FCC as part of any FCC License which is neither set forth on the
face thereof as issued by the FCC nor contained in the Rules and Regulations
applicable generally to stations of the type, nature, class or location of the
Stations. The Station is being operated at full authorized power, in accordance
with the terms and conditions of the FCC Licenses applicable to it and in
accordance with the Rules and Regulations, except to the extent a failure to so
comply would not constitute a Material Adverse Condition. No proceedings are
pending or, to the knowledge of the Seller, are threatened which may result in
the revocation, modification, non-renewal or suspension of any of the FCC
Licenses, the denial of any pending applications, the issuance of any cease and
desist order or the imposition of any fines, forfeitures or other administrative
actions by the FCC with respect to the Station or its operation, other than
proceedings affecting the radio broadcasting industry in general. Seller has
complied in all material respects with all requirements to file reports,
applications and other documents with the FCC with respect to the Station, and
all such reports, applications and documents are complete and correct in all
material respects. Seller has no knowledge of any matters (i) which could
reasonably be expected to result in the suspension or revocation of or the
refusal to renew any of the FCC Licenses or the imposition of any fines or
forfeitures by the FCC, or (ii) against Seller which could reasonably be
expected to result in the FCC's refusal to grant approval of the assignment to
Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in
connection with approval of such assignment. To Seller's actual knowledge there
are not any unsatisfied or otherwise outstanding citations issued by the FCC
with respect to the Station or its operation. Complete and accurate copies of
all FCC Licenses are attached as a part of Schedule 3.7. The "Public Inspection
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File" of the Station is in substantial and material compliance with Section
73.3526 of the Rules and Regulations.
3.8 STATION AGREEMENTS.
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(a) To Seller's actual knowledge, Schedule 3.8 sets forth an
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accurate and complete list of all material agreements, contracts, arrangements
or commitments in effect as of the date hereof, including all amendments,
modifications and supplements thereto which the Station or its assets or
properties are bound by, except (A) employee benefit plans and employment
contracts, (B) contracts for the sale of time on the Station, and (C) contracts
which are cancelable by Seller or its assignee without breach or penalty on not
more than sixty (60) days' notice. Complete and correct copies of all such
agreements, contracts, arrangements or commitments that are in writing and
actually known to Seller, including all amendments, modifications and
supplements thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, and with respect to all
Station Agreements being assumed by Buyer, (i) all Station Agreements are legal,
valid and enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) to the actual knowledge of Seller, neither
Seller, nor any party thereto, is in material breach of or in material default
under any Station Agreements; (iii) to the actual knowledge of Seller, there has
not occurred any event which, after the giving of notice or the lapse of time or
both, would constitute a material default under, or result in the material
breach of, any Station Agreements which are, individually or in the aggregate,
material to the operation of the Station; and (iv) Seller holds the right to
enforce and receive the benefits under all of the Station Agreements, free and
clear of all Liens (other than Permitted Liens) but subject to the terms and
provision of each such agreement.
(c) Schedule 3.8 indicates, for each Station Agreement listed thereon which
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is being assumed by buyer, whether consent or approval by any party thereto is
required thereunder for consummation of the transactions contemplated hereby.
3.9 LITIGATION.To the actual knowledge of Seller there are no
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claims, investigations or administrative, arbitration or other proceedings
pending or threatened against Seller which would, individually or in the
aggregate if adversely determined, have a material adverse effect on the Sale
Assets or the operation of the Station, or which would give any third party the
right to enjoin the transactions contemplated by this Agreement. To the actual
knowledge of Seller, there is no basis for any such claim, investigation,
action, suit or proceeding which would, individually or in the aggregate if
adversely determined, have a material adverse effect on the Sale Assets or
operation of the Station. To the actual knowledge of Seller, there are no
existing or pending orders, judgments or decrees of any court or governmental
agency affecting Seller, the Station or any of the Sale Assets which would
materially adversely affect the Station's operations or the Sale Assets.
3.10 LABOR MATTERS.
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(a) Seller is not a party to any collective bargaining agreement,
and there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.
(b) With respect to the Station:
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the actual knowledge of Seller, threatened against the Station;
(ii) To the actual knowledge of Seller, there are neither pending
nor threatened, any suits, actions, administrative proceedings, union organizing
activities, arbitrations, grievances or other proceedings between Seller and any
employees of the Station or any union representing such employees; and to
Seller's actual knowledge, there are no existing labor or employment or other
controversies or grievances involving employees of the Station which have had or
are reasonably likely to have a material adverse effect on the operation of the
Station;
(iii) (A) Seller is in compliance in all material respects with
all laws, rules and regulations relating to the employment of labor and all
employment contractual obligations, including those relating to wages, hours,
collective bargaining, affirmative action, discrimination, sexual harassment,
wrongful discharge and the withholding and payment of taxes and contributions
except for such non-compliance which individually or in the aggregate would not
have a material adverse effect on the business or financial condition of the
Station; (B) Seller has withheld all amounts required by law or agreement to be
withheld from the wages or salaries of its employees; and (C) Seller is not
liable to any present or former employees or any governmental authority for
damages, arrears of wages or any tax or penalty for failure to comply with the
foregoing except for such liability which individually or in the aggregate would
not have a material adverse effect on the business or financial condition of the
Station;
(iv) Buyer's consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.
3.11 EMPLOYEE BENEFIT PLANS.Buyer's consummation of the transactions
-------------------------
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer any obligation under any benefit plan, contract or arrangement
(regardless of whether they are written or unwritten and funded or unfunded)
covering employees or former employees of Seller in connection with their
employment by Seller. For purposes of the Agreement, "benefit plans" shall
include without limitation employee benefit plans within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.12 COMPLIANCE WITH LAW.To Seller's actual knowledge, the operation of
--------------------
the Station complies in all material respects with the applicable rules and
regulations of the FCC and all federal, state, local or other laws, statutes,
ordinances, regulations, and any applicable order, writ, injunction or decree of
any court, commission, board, agency or other instrumentality.
3.13 ENVIRONMENTAL MATTERS; OSHA.
------------------------------
(a) To Seller's actual knowledge Seller has obtained all material,
environmental, health and safety permits necessary or required for either the
operation of the Station as currently operated or the ownership of the Sale
Assets and all such permits are in full force and effect and Seller is in
compliance with all material terms and conditions of such permits.
(b) To Seller's actual knowledge there is no proceeding pending or
threatened which may result in the reversal, rescission, termination,
modification or suspension of any environmental or health or safety permits
necessary for the operation of the Station as currently conducted or the
ownership of the Sale Assets.
(c) To Seller's actual knowledge, with respect to the Station and
the Sale Assets, Seller is in compliance in all material respects with the
provisions of Environmental Laws.
(d) To Seller's actual knowledge, Seller is in material compliance
with all OSHA Laws applicable to the Sale Assets.
3.14 TOWER COORDINATES. To Seller's actual knowledge the current
-------------------
vertical elevation and geographical coordinates of the Station's towers ("the
Tower Coordinates") are properly registered with the FCC and FAA; and (ii) the
Tower Coordinates comply with and correspond to the current vertical elevation
an geographical coordinates authorized by the FAA, FCC and any other
governmental authority, including any federal, state or local authority having
jurisdiction over the Station or said towers.
3.15 FILING OF TAX RETURNS.Seller has filed all federal, state and
-------------------------
local tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due, other
than such returns, taxes and assessments, the failure to file or pay would not,
individually or in the aggregate, have a material adverse effect on Buyer.
3.16 ABSENCE OF INSOLVENCY.No insolvency proceedings of any character
------------------------
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale Assets, are pending or, to the best knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.
3.17 BROKER'S OR FINDER'S FEES.No agent, broker, investment banker or
----------------------------
other person or firm acting on behalf of or under the authority of Seller or any
affiliate of Seller is or will be entitled to any broker's or finder's fee or
any other commission or similar fee, directly or indirectly, in connection with
the transactions contemplated by this Agreement.
3.18 INSURANCE.There is now in full force and effect with reputable
----------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING.Buyer is a limited liability company
-------------------------------
duly organized, validly existing and in good standing under the laws of the
State of California. Buyer has all requisite corporate power to own, operate and
lease its properties and carry on its business as it is now being conducted and
as the same will be conducted following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.Buyer's execution and
----------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents, and the consummation by Buyer of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all
necessary corporate action on the part of Buyer. Buyer has the power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Documents and to consummate the transactions hereby and
thereby contemplated. This Agreement and each of the other Documents have been,
or at or prior to the Closing will be, duly executed by Buyer. The Documents,
when executed and delivered by the parties hereto, will constitute the valid and
legally binding agreement of Buyer, enforceable against Buyer in accordance with
their terms, except as may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights or remedies
generally, and except as may be limited by general principles of equity
(regardless of whether such enforceability is sought in a proceeding in equity
or at law).
4.3 ABSENCE OF CONFLICTS.Buyer's execution and delivery of, and the
-----------------------
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of Buyer
under) any provision of law, rule or regulation or any order, judgment,
injunction, decree or ruling applicable to Buyer in any manner which would have
a material adverse effect on the assets, business, operation or financial
condition or results of operations of Buyer;
(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES.Except for the
-----------------------------------------------------
required consent of the FCC and the applicable requirements of the HSR Act,
Buyer's execution and delivery of, and the performance of its obligations under,
this Agreement and each of the other Documents and the consummation by Buyer of
the transaction contemplated hereby and thereby, do not require the consent,
waiver, approval, permit, license, clearance or authorization of, or any
declaration or filing with, any court or public agency or other authority, or
the consent of any person under any agreement, arrangement or commitment of any
nature to which Buyer is a party or by which it is bound, the failure of which
to obtain would have a material adverse effect on the assets, business,
operation or financial condition or results of operations of Buyer.
4.5 QUALIFICATION.
--------------
(a) Buyer has no knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the Rules and Regulations, would (i) disqualify Buyer
from being the holder of the FCC Licenses, the owner of the Sale Assets or the
operator of the Station upon consummation of the transactions contemplated by
this Agreement, or (ii) raise a substantial and material question of fact
(within the meaning of Section 309(e) of the Act) respecting Buyer's
qualifications.
(b) Without limiting the foregoing Subsection (a), Buyer shall
--------------
make the affirmative certifications provided in Section III of FCC Form 314, or
as may be required on any form required by the FCC to obtain its consent to this
transaction, at the time of filing of such form with the FCC as contemplated by
Section 5.2.
------------
4.6 BROKER'S OR FINDER'S FEES.No agent, broker, investment banker, or
----------------------------
other person or firm acting on behalf of or under the authority or Buyer or any
affiliate of Buyer is or will be entitled to any broker's or finder's fee or any
other commission or similar fee, directly or indirectly, in connection with
transactions contemplated by this Agreement.
4.7 LITIGATION.There are no legal, administrative, arbitration or other
-----------
proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
---------
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE.
-------------------------------------------------------------------
Seller covenants and agrees with Buyer that between the date hereof and the
Closing Date, unless the Buyer otherwise agrees in writing (which agreement
shall not be unreasonably withheld or delayed), Seller shall:
(a) Use reasonable commercial efforts to maintain insurance upon
all of the tangible Sale Assets in such amounts and of such kind comparable to
that in effect on the date hereof with respect to such Sale Assets and with
respect to the operation of the Station, with insurers of substantially the same
or better financial condition;
(b) Operate the Station and otherwise conduct its business in all
material respects in accordance with the terms or conditions of its FCC
Licenses, the Rules and Regulations, the Act and all other rules and
regulations, statutes, ordinances and orders of all governmental authorities
having jurisdiction over any aspect of the operation of the Station, except
where the failure to so operate the Station would not have a material adverse
effect on the Sale Assets or the operation of the Station or on the ability of
Seller to consummate the transactions contemplated hereby;
(c) Comply in all material respects with all Station Agreements now or
hereafter existing which are material, individually or in the aggregate, to the
operation of the Station;
(d) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute an
event of default under such Station Agreements;
(e) Not mortgage, pledge or subject to any Lien other than a
Permitted Lien (except in the ordinary course of business) any of the Sale
Assets;
(f) Not sell, lease or otherwise dispose of, nor agree to sell,
lease or otherwise dispose of, any of the Sale Assets, except for dispositions
in the ordinary course of business;
(g) Not amend or terminate any Station Agreement, other than in
the ordinary course of business;
(h) Not introduce any material change with respect to the
operation of the Station including, without limitation, any material changes in
the broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;
(i) Notify Buyer of any material litigation pending or threatened
against Station or any material damage to or destruction of any assets included
or to be included in the Sale Assets of which Seller receives actual knowledge.
5.2 GOVERNMENTAL CONSENTS.Seller and Buyer have filed with the FCC such
----------------------
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall
take all commercially reasonable steps necessary to prosecute such filings with
diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable;
provided, however, that in the event the application for assignment of the FCC
Licenses has been designated for hearing, either Buyer or Seller may elect to
terminate this Agreement pursuant to Section 10.1(c). Buyer shall not knowingly
---------------
take, and Seller covenants that Seller shall not knowingly take, any action that
party knows or has reason to know would materially and adversely affect or
materially delay issuance of the FCC Order or materially and adversely affect or
materially delay its becoming a Final Action without a Material Adverse
Condition, unless such action is requested or required by the FCC, its staff or
the Rules and Regulations. Should Buyer or Seller become aware of any facts
which could reasonably be expected to materially and adversely affect or
materially delay issuance of the FCC Order without a Material Adverse Condition
(including but not limited to, in the case of Buyer, any facts which would
reasonably be expected to disqualify Buyer from controlling the Station), such
party shall promptly notify the other party thereof in writing and both parties
shall cooperate to take all steps necessary or desirable to resolve the matter
expeditiously and to obtain the FCC's approval of matters pending before it.
5.3 HSR. Within five (5) business days after the execution of
---
this Agreement, Buyer and Seller shall make any required filings with the
Federal Trade Commission and the United States Department of Justice pursuant to
the HSR Act (including a request for early termination of the waiting period
thereunder), and shall thereafter promptly respond to all requests received from
such agencies for additional information or documentation.
5.4 OTHER CONSENTS.Seller shall use its reasonable best efforts to
----------------
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
5.5 TAX RETURNS AND PAYMENTS.All taxes pertaining to ownership of the
---------------------------
Sale Assets or operation of the Station prior to the Closing Date will be timely
paid; provided that Seller shall not be required to pay any such tax so long as
the validity thereof shall be contested in good faith by appropriate proceedings
and Seller shall have set aside adequate reserves with respect to any such tax.
5.6 ACCESS PRIOR TO THE CLOSING DATE.Prior to the Closing, Buyer and
------------------------------------
its representatives may make such reasonable investigation of the assets and
business of the Station as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station.
5.7 CONFIDENTIALITY.All information, data and materials furnished or to
----------------
be furnished to either party with respect to the other party in connection with
this transaction or pursuant to this Agreement is confidential. Each party
agrees that prior to Closing (a) it shall not disclose or otherwise make
available, at any time, any such information, data or material to any person who
does not have a confidential relationship with such party; (b) it shall protect
such information, data and material with a high degree of care to prevent the
disclosure thereof; and (c) if, for any reason, this transaction is not
consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party.
\
5.8 REASONABLE BEST EFFORTS.Subject to the terms and conditions of this
------------------------
Agreement, each of the parties hereto will use its reasonable best efforts to
take all action and to do all things necessary, proper or advisable to satisfy
any condition to the parties' obligations hereunder in its power to satisfy and
to consummate and make effective as soon as practicable the transactions
contemplated by this Agreement.
5.9 FCC REPORTS.Seller shall continue to file, on a current basis until
------------
the Closing Date, all reports and documents required to be filed with the FCC
with respect to the Station. Seller shall provide Buyer with copies of all such
filings within five business days of the filing with the FCC.
5.10 CONVEYANCE FREE AND CLEAR OF LIENS.At or prior to the Closing,
---------------------------------------
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets and properties as security for payment of
loans and other obligations or judgments and of any other Liens on the Sale
Assets. At the closing, Seller shall transfer and convey to Buyer all of the
Sale Assets free and clear of all Liens except Permitted Liens.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless waived by Buyer in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
-------------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date.
------------
6.2 PERFORMANCE OF AGREEMENTS.Seller shall have performed in all
----------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 FCC AND OTHER CONSENTS.
--------------------------
(a) The FCC Order shall have been issued by the FCC without any
Material Adverse Condition.
(b) Seller shall have satisfied all material conditions which the
FCC Order or any order, ruling or decree of any judicial or administrative body
relating thereto or in connection therewith specifies and requires to be
satisfied by Seller prior to transfer of the FCC Licenses to Buyer.
(c) All other material authorizations, consents, approvals and
clearances of federal, state or local governmental agencies required to permit
the consummation by Buyer of the transactions contemplated by this Agreement
including, without limitation, the assignment of any FCC Authorization requested
by Buyer, shall have been obtained; all material statutory and regulatory
requirements for such consummation shall have been fulfilled; and no such
authorizations, consents, approvals or clearances shall contain any conditions
that individually or in the aggregate would have a material adverse effect on
the operations of the Station.
6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer shall
-------------------
be subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending. No governmental authority having jurisdiction shall have notified any
party to this Agreement that consummation of the transaction contemplated hereby
would constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
6.5 OPINION OF SELLER'S FCC COUNSEL.Buyer shall have received from
------------------------------------
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed on Schedule 3.7 are valid, in good
------------
standing and in full force and effect and include all material licenses, permits
and authorizations which are necessary under the Rules and Regulations for
Seller to operate the Station in the manner in which the Station is currently
being operated.
(b) To counsel's knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Station.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC which would materially adversely affect the
continued operation of the Station, other than proceedings affecting the radio
broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon Seller's
representations and warranties in this Agreement and to limit its inquiry to its
files and such FCC files and records as are available to it as of 10:00 o'clock
A.M. Eastern time the business day immediately preceding the Closing Date.
Counsel may state that, as to any factual matters embodied in, or forming a
basis for any legal opinion expressed in, such opinion, counsel's knowledge is
based solely on such inquiry.
6.6 OTHER CONSENTS.Seller shall have obtained in writing and provided
----------------
to Buyer on or before the Closing Date, without any condition materially adverse
to Buyer or the Station, the material consents or waivers to the transactions
contemplated by this Agreement required under those Station Agreements which
Buyer has elected to assume.
6.7 DELIVERY OF CLOSING DOCUMENTS.Seller shall have delivered or caused to
--- --------------------------------
be delivered to Buyer on the Closing Date each of the Documents required to be
delivered pursuant to Section 8.
-----------
6.8 NO CESSATION OF BROADCASTING.
-------------------------------
(a) Between the date hereof and the Closing Date, the Station
shall not have for a period of more than ten (10) continuous days, (i) ceased
broadcasting on its authorized frequency, (ii) lost substantially all of its
normal broadcasting capability or (iii) been broadcasting at a power level of
50% or less of its FCC authorized level. Seller shall promptly notify Buyer of
the occurrence of any one or more of the foregoing events or conditions, and the
non-fulfillment of the condition precedent set forth in this Subsection caused
by the occurrence of the events specified in Seller's notice shall be deemed
waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Seller's written notice, Buyer notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding
the Closing Date, the Station shall have been operating continuously with
substantially all of its normal broadcasting capability except for cessation or
reductions for insignificant periods of time resulting from occurrences (such as
lightning strikes) over which Seller has no control. Seller shall have the right
to delay Closing for a period not to exceed thirty (30) days if Seller
reasonably determines that any action to restore the Station substantially all
of its normal broadcasting capability can be completed during such delay period.
ARTICLE VII
------------
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
-----------------------------
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
-----------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
-----------
are satisfied as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENTS.Buyer shall have performed in all
----------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3. FCC AND OTHER CONSENTS.
--------------------------
(a) The FCC Order shall have been issued by the FCC without any
condition materially adverse to Seller.
(b) Conditions which the FCC Order or any order, ruling or decree
of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied by Buyer prior to transfer of
the FCC Licenses to Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and clearances
of all federal, state and local governmental agencies required to permit the
consummation by Seller of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Seller.
7.4 ADVERSE PROCEEDINGS.Seller shall not be subject to any ruling,
---------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE.Buyer shall have
---------------------------------------------------
delivered or caused to be delivered to Seller on the Closing Date each of the
Documents required to be delivered pursuant to Section 8.3, and Seller shall
-----------
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
------------
ARTICLE VIII
------------
CLOSING
-------
8.1 TIME AND PLACE.Unless otherwise agreed to in advance by the
-----------------
parties, Closing shall take place in person or via facsimile at the offices of
Seller in Camarillo, California, or at such other place as the parties agree, at
10:00 A.M. Pacific Time on the date (the "Closing Date") that is the later of
(i) the fifth Business Day after the Applicable Date or (ii) the date as soon as
practicable following satisfaction or waiver of the conditions precedent
hereunder. The "Applicable Date" shall be the date on which issuance of the FCC
Order without any Material Adverse Condition or condition materially adverse to
Seller has become effective.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER.At the Closing, Seller
---------------------------------------------
shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Sellers' Boards of Directors and
Shareholder approving the execution and delivery of this Agreement and each of
the other Documents and authorizing the consummation of the transactions
contemplated hereby and thereby.
(b) The certificate required by Section 6.1(b).
---------------
(c) A bill of sale and other instruments of transfer and
conveyance transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to all Station Agreements.
(f) An instrument assigning to Buyer all right, title and interest
of Seller in the FCC Licenses, all pending applications relating to the Station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(g) An instrument assigning to Buyer all rights, title and
interest of Seller to the assets described in Section 2.1(e) hereof.
---------------
(h) The opinion of Seller's FCC counsel, dated the Closing Date,
to the effect set forth in Section 6.5.
------------
(i) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained.
8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER.At the Closing, Buyer
----------------------------------------------
shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of Buyer's member and sole manager
approving the execution and delivery of this Agreement and each of the other
Documents and authorizing the consummation of the transaction contemplated
hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
------------
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
---------------
(e) Such additional information and materials as Seller shall
have reasonably requested.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES.All representations,
----------------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period; except
for claims by Buyer for any amounts owed by Seller to Buyer under Section
-------
9.3(a)(iv) and Section 9.3(a)(v), which claims may be made at any time. In the
----- -----------------
event such a notice is so given, the right to indemnification with respect
thereto under this Article shall survive the Survival Period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
Notwithstanding the foregoing, the provisions for survival and the making of
claims shall not apply to the agreements whereby Buyer assumes the obligations
under Subsection 8.3(c), each of which agreements shall be governed by its own
------------------
terms.
9.2 INDEMNIFICATION IN GENERAL.Buyer and Seller agree that the rights
-----------------------------
to indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.
9.3 INDEMNIFICATION BY SELLER.
----------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Seller shall indemnify and hold harmless Buyer and any officer,
----
director, agent, employee and affiliate thereof with respect to any and all
----
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
----
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
---
relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or
(ii) The ownership or operation by Seller of the Station or the
Sale Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller other than
the Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby; or
(b) Except for any amounts owed by Seller to Buyer under Section
-------
9.3(a) (iv), and Section 2.7, if Closing occurs, Seller shall not be obligated
----------- -----------
until the aggregate amount of such claims, liabilities, damages, losses, costs
and expenses exceeds Buyer's Threshold Limitation, in which case Buyer shall
then be entitled to indemnification of the entire aggregate amount.
9.4 INDEMNIFICATION BY BUYER.
---------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Buyer shall indemnify and hold harmless Seller and any officer,
----
director, agent, employee and affiliate thereof with respect to any and all
----
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
----
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
---
relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station after the Closing
Date; or
(iii) All other liabilities or obligations of Buyer.
(b) Except for any amounts owed by Buyer to Seller under Section
-------
2.7, if Closing occurs, Buyer shall not be obligated until the aggregate amount
--
of such claims, liabilities, damages, losses, costs and expenses exceeds
Seller's Threshold Limitation, in which case Seller shall then be entitled to
indemnification of the entire aggregate amount.
9.5 INDEMNIFICATION PROCEDURES.In the event that an Indemnified Party
----------------------------
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
----------
compromise, or defend such a claim without prejudice to any right it may have
hereunder.
ARTICLE X
---------
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 TERMINATION.If Closing shall not have previously occurred, this
------------
Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:
(i) Seller gives such termination notice and is not at such time
in material default hereunder, or Buyer gives such termination notice and Buyer
is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties contained
herein of Buyer (if such termination notice is given by Seller), or of Seller
(if such termination notice is given by Buyer), are inaccurate in any respect
and materially adverse to the party giving such termination notice unless the
inaccuracy has been induced by or is the result of actions or omissions of the
party giving such termination notice; or
(B) Any material obligation to be performed by Buyer (if
such termination notice is given by Seller) or by Seller (if such termination
notice is given by Buyer) is not timely performed in any material respect unless
the lack of timely performance has been induced by or is the result of actions
or omissions of the party giving such termination notice; or
(C) Any condition (other than those referred to in
foregoing Clauses (A) and (B)) to the obligation to close the transaction
------------ ---
contemplated herein of the party giving such termination notice has not been
timely satisfied; and any such inaccuracy, failure to perform or
non-satisfaction of a condition neither has been cured nor satisfied within
twenty (20) days after written notice thereof from the party giving such
termination notice nor waived in writing by the party giving such termination
notice.
(b) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time after one year from the date this Agreement is executed; provided
that termination shall not occur upon the giving of such termination notice by
Seller if Seller is at such time in material default hereunder or upon the
giving of such termination notice by Buyer if Buyer is at such time in material
default hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to Seller,
at any time following a determination by the FCC that the application for
consent to assignment of the FCC Licenses has been designated for hearing;
provided that the party which is the subject of the hearing (or whose alleged
actions or omissions resulted in the designation for hearing) may not elect to
terminate under this subsection (c).
(d) The written election by Buyer under Article XI.
-----------
10.2 OBLIGATIONS UPON TERMINATION.
------------------------------
(a) In the event this Agreement is terminated pursuant to Section
-------
10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder
----------- ---
shall be limited as provided in Subsections (c) and (e), below and the aggregate
-----------------------
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
--------------------
any other reason, neither party shall have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled to
the return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b) (c) or (d), or (ii) if such
----------------------------------------
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is entitled
----------------------------------------------
to the return of the Earnest Money, Seller shall cooperate with Buyer in taking
such action as is required under the Escrow Agreement in order to effect such
return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid
written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer
--------------------------------
agrees that (i) Buyer shall pay Seller upon such termination, as liquidated
damages and not as a penalty, the sum ("Liquidated Damages Amount") of (A) Two
Million Dollars ($2,000,000), plus (B) the amount of the Earnest Money; (ii)
Seller shall be entitled to collect the Liquidated Damages Amount by receiving a
disbursement from the Escrow Agent equal to the Earnest Money; and (iii) Seller
shall be entitled to pursue any other remedy available to Seller at law or in
equity to recover the Liquidated Damages Amount from Buyer, provided that total
monetary damages to which Seller shall be entitled shall not exceed the
Liquidated Damages Amount. SELLER'S RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT
SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND
SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER
IF CLOSING DOES NOT OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE
LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH
WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF
LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE
REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the
contrary, if this Agreement is terminated by Buyer's giving of written notice to
Seller pursuant to Section 10.1(a) (ii) (A) or (B), Buyer shall not be entitled
--------------- ---------------
to damages or indemnification from Seller.
(e) In any dispute between Buyer and Seller as to which party is
entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 TERMINATION NOTICE.Each notice given by a party pursuant to
--------------------
Section 10.1 to terminate this Agreement shall specify the Subsection (and
-------
clause or clauses thereof) of Section 10.1 pursuant to which such notice is
------------
given.
ARTICLE XI
----------
CASUALTY
--------
Upon the occurrence of any casualty loss, damage or destruction material to
the operation of the Station prior to the Closing, Seller shall promptly give
Buyer written notice setting forth in detail the extent of such loss, damage or
destruction and the cause thereof if known. Seller shall use its reasonable
efforts to promptly commence and thereafter to diligently proceed to repair or
replace any such lost, damaged or destroyed property. In the event that such
repair or replacement is not fully completed prior to the Closing Date, Buyer
may elect to postpone the Closing until Seller's repairs have been fully
completed or to consummate the transactions contemplated hereby on the Closing
Date, in which event Seller shall assign to Buyer the portion of the insurance
proceeds (less all reasonable costs and expenses, including without limitation
attorney's fees, expenses and court costs incurred by Seller to collect such
amounts), if any, not previously expended by Seller to repair or replace the
damaged or destroyed property (such assignment of proceeds to take place
regardless of whether the parties close on the scheduled or deferred Closing
Date) and Buyer shall accept the damaged Sale Assets in their damaged condition.
In the event the loss, damage or destruction causes or will cause the Station
to be off the air for more than seven (7) consecutive days or fifteen (15) total
days, whether or not consecutive, then Buyer may elect either (i) to consummate
the transactions contemplated hereby on the Closing Date, in which event Seller
shall assign to Buyer the portion of the insurance proceeds (less all reasonable
costs and expenses, including without limitation attorney's fees, expenses and
court costs, incurred by Seller to collect such amounts), if any, not previously
expended by Seller to repair or replace the damaged or destroyed property, and
Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii)
to terminate this Agreement.
ARTICLE XII
-----------
CONTROL OF STATION
------------------
Between the date of this Agreement and the Closing Date, Buyer
shall not control, manage or supervise the operation of the Station or conduct
of its business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.1 FURTHER ACTIONS.From time to time before, at and after the
-----------------
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
13.2 ACCESS AFTER THE CLOSING DATE.After the Closing and for a period
--------------------------------
of twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records, property, personnel, contracts, commitments and documents of
the Station pertaining to transactions occurring prior to the Closing Date when
requested by Seller, and Buyer shall retain such books and records for the
normal document retention period of Buyer. At the request and expense of Seller,
Buyer shall deliver copies of any such books and records to Seller.
13.3 PAYMENT OF EXPENSES.
---------------------
(a) Any fees assessed in connection with the filings contemplated
by Sections 5.2and 5.3 or consummation of the transactions contemplated hereby
------------- ----
shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant and
other similar taxes payable in connection with consummation of the transactions
contemplated hereby shall be paid by the party primarily liable under applicable
law to pay such tax.
(c) Except as otherwise expressly provided in this Agreement, each
of the parties shall bear its own expenses, including the fees of any attorneys
and accountants engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.
13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a
--------------------
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to equitably enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.
13.5 NOTICES. All notices, demands or other communications given
-------
hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile machine or similar written means of
communication, addressed as follows:
(a) If to Seller, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
Attention: Edward G. Atsinger III
(b) if to Buyer, to:
c/o R.S. Hinz
25233 Anza Drive
Valencia, CA 91355
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third (3rd) business day following the date
mailed, and (ii) if personally delivered or otherwise sent as provided above, on
the date received.
13.6 ENTIRE AGREEMENT.This Agreement, the Schedules and Exhibits hereto,
------------------
and the other Documents constitute the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede any prior negotiations, agreements, understandings or arrangements
between the parties with respect to the subject matter hereof.
13.7 BINDING EFFECT; BENEFITS.Except as otherwise provided herein, this
-------------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors or assigns
13.8 ASSIGNMENT.This Agreement and any rights hereunder shall not be
-----------
assignable by either party hereto without the prior written consent of the other
party.
13.9 GOVERNING LAW.This Agreement shall in all respects be governed by
---------------
and construed in accordance with the laws of the State of California, including
all matters of construction, validity and performance.
13.10 BULK SALES.Buyer hereby waives compliance by Seller with the
------------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
----------
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 AMENDMENTS AND WAIVERS.No term or provision of this Agreement may
-----------------------
be amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written.
<TABLE>
<CAPTION>
<S> <C>
"SELLER" "BUYER "
SALEM MEDIA OF CALIFORNIA, INC. HI-FAVOR BROADCASTING, LLC
By:/S/ Edward G. Atsinger III By:/s/ R.S. Hinz
-------------------------- ------------------------------------
Name: Edward G. Atsinger III R.S. Hinz, as Trustee of the Roland and
Title: President Lila Hinz Living Trust UTD 12/16/86,
Sole Member
</TABLE>
LIST OF SCHEDULES
-------------------
<TABLE>
<CAPTION>
<S> <C>
SCHEDULE 3.6 Tangible Personal Property
SCHEDULE 3.7 FCC Licenses
SCHEDULE 3.8 Station Agreements
</TABLE>
** Buyer and Seller shall use all commercially reasonable efforts to reasonably
agree upon Schedules to this Agreement, drafts of which shall be delivered by
Seller to Buyer on or before July 7, 2000.
