<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 23, 1999
CUMULUS MEDIA INC.
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(Exact Name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
ILLINOIS 000-24525 36-4159663
---------------------------- ---------------- -------------------
<S> <C> <C>
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
</TABLE>
111 EAST KILBOURN AVENUE, SUITE 2700 MILWAUKEE, WI 53202
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (414) 615-2800
NONE
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(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events
On September 15, 1999, Cumulus Broadcasting, Inc., a Nevada corporation
("Cumulus Broadcasting") and a wholly-owned subsidiary of Cumulus Media Inc.,
an Illinois corporation (the "Company"), completed (i) the acquisition of six
radio stations in Wisconsin pursuant to the terms of an Asset Purchase
Agreement dated as of April 2, 1999, by and between Cumulus Broadcasting,
Cumulus Licensing Corp., a Nevada corporation ("Cumulus Licensing"), Cumulus
Wireless Services Inc., a Nevada corporation ("Cumulus Wireless") and Phillips
Broadcasting Company, Inc., an Iowa corporation, for a purchase price of $14.8
million in cash and (ii) the acquisition of five radio stations in Kentucky
pursuant to an Asset Purchase Agreement dated as of March 9, 1999 by and
between Cumulus Broadcasting, Cumulus Licensing, Cumulus Wireless, HMH
Broadcasting Inc., a Kentucky corporation, and HMH Realty, LLC, a Kentucky
limited liability company, for a purchase price of $44.5 million in cash.
In addition, on November 1, 1999, the Company acquired all of the
outstanding capital stock of Calendar Broadcasting, Inc., a Delaware
corporation ("Calendar") pursuant to the terms of a Stock Purchase Agreement
dated June 15, 1999, among the Company and M&F Calendar Holdings, L.P., a
Delaware limited partnership, Kevin C. Whitman, Nassau Capital Partners L.P.,
a Delaware limited partnership, NAS Partners I L.L.C., a Delaware limited
liability company, and Philip J. Giordano. Calendar, indirectly through
subsidiaries, owns and operates two radio stations in Texas and three radio
stations in Alabama.
Subsidiaries of the Company are parties to the following acquisition
agreements which have not yet been consummated but which the Company believes
are probable of completion:
1) Asset Purchase Agreement dated as of June 29, 1999, by and
among Cumulus Broadcasting, Cumulus Licensing and Coast Radio, L.L.C.,
2) Asset Purchase Agreement (the "Cape Fear Asset Purchase Agreement")
dated as of September 23, 1999, by and between Cumulus Broadcasting,
Cumulus Licensing, Cumulus Wireless, C. F. Radio, Inc., Cape Fear
Radio, LLC, Cape Fear Broadcasting Company and Cape Fear Tower
Systems, LLC.
The execution of the Cape Fear Asset Purchase Agreement, when aggregated
with the other completed and pending acquisitions described in this Current
Report on Form 8-K, requires the inclusion, under Section 3-05 of Regulation
S-X, of the historical financial statements included herein in a registration
statement filed by the Company under the Securities Act of 1933, as amended.
Accordingly, the historical financial statements included herein are
incorporated by reference in the Registration Statement on Form S-3 filed by the
Company (Registration No. 333-89825) on October 28, 1999.
<PAGE> 3
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
Index to Financial Statements attached hereto
(1) HMH Broadcasting, Inc.
Report of Independent Accountants
Financial Statements:
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998
Statements of Operations for six months ended June 30, 1999 and 1998
(unaudited) and for the year ended December 31, 1998
Statement of Changes in Shareholders' Equity for the year ended
December 31, 1998
Statements of Cash Flows for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998
Notes to Financial Statements
(2) Phillips Broadcasting Company, Inc.
Report of Independent Accountants
Financial Statements:
Balance Sheets as of June 30, 1999 and December 31, 1998 (unaudited)
Statements of Operations and Retained Earnings for the six months
ended June 30, 1999 and 1998(unaudited) and for the year ended
December 31, 1998
Statements of Cash Flows for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998
Notes to Financial Statements
(3) Cape Fear Broadcasting Company
Report of Independent Accountants
Financial Statements:
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998
Statements of Operations for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998
Statement of Changes in Shareholders' Equity for the year ended
December 31, 1998
Statements of Cash Flows for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998
Notes to Financial Statements
(4) C.F. Radio, Inc.,
Report of Independent Accountants
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and
December 31, 1998
Consolidated Statements of Operations for the six months ended June
30, 1999 and 1998 (unaudited) and for the year ended December 31,
1998
Consolidated Statement of Changes in Shareholders' Equity for the
year ended December 31, 1998
Consolidated Statements of Cash Flows for the six months ended June
30, 1999 and 1998 (unaudited) and for the year ended December 31,
1998
Notes to Consolidated Financial Statements
(5) Calendar Broadcasting, Inc. and Subsidiaries
Independent Auditors Report
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and
December 31, 1998
Consolidated Statements of Operations for the six months ended June
30, 1999 and 1998 (unaudited) and for the year ended December 31,
1998
Consolidated Statements of Stockholders' Equity for the six months
ended June 30, 1999 (unaudited) and for the year ended
December 31, 1998
Consolidated Statements of Cash Flows for the six months ended June
30, 1999 and 1998 (unaudited) and for the year ended December 31,
1998
Notes to Consolidated Financial Statements
(6) Coast Radio L.L.C.
Report of Independent Accountants
Financial Statements:
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998
Statements of Operations for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998
Statement of Changes in Members' Equity for the year ended
December 31, 1998
Statements of Cash Flows for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998
Notes to Financial Statements
(b) Pro Forma Financial Information.
Cumulus Media Inc. Unaudited Pro Forma Statement of Operations for
the Year Ended December 31, 1998.
Cumulus Media Inc. Unaudited Pro Forma Balance Sheet as of June 30,
1999 and Unaudited Pro Forma Statement of Operations for the Six
Months Ended June 30, 1999.
(c) Exhibits:
2.0 Asset Purchase Agreement dated as of April 2, 1999, by and
between Cumulus Broadcasting, Cumulus Licensing, Cumulus
Wireless and Phillips Broadcasting Company
2.1 Asset Purchase Agreement dated as of March 9, 1999 by and
between Cumulus Broadcasting, Cumulus Licensing, Cumulus
Wireless, HMH Broadcasting Inc., and HMH Realty, LLC.
2.2 Stock Purchase Agreement dated June 15, 1999, among the Company
and M&F Calendar Holdings, L.P., Kevin C. Whitman, nassau
Capital Partners L.P., NAS Partners I L.L.C., and Philip J.
Giordano.
2.3 Asset Purchase Agreement dated as of June 29, 1999, by and
among Cumulus Broadcasting, Cumulus Licensing and Coast Radio,.
L.C., a Florida limited liability company.
2.4 Asset Purchase Agreement dated as of September
23, 1999, by and between Cumulus Broadcasting, Cumulus
Licensing, Cumulus Wireless, C. F. Radio, Inc., Cape Fear
Radio, LLC, Cape Fear Broadcasting Company and Cape Fear Tower
Systems, LLC.
23.0 Consent of PricewaterhouseCoopers LLP.
23.1 Consent of Wipfli Ullrich Bertelson LLP.
23.2 Consent of KPMG LLP.
<PAGE> 4
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CUMULUS MEDIA INC.
By: /s/ Richard W. Weening
----------------------
Richard W. Weening
Executive Chairman
and Treasurer
Date: November 3, 1999
<PAGE> 5
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited Pro Forma Financial Statements are excerpted from
the Company's Registration Statement (registration number 333-89825)(the
"Registration Statement") on Form S-3 filed on October 28, 1999. Please refer
to the Registration Statement for a more detailed description of the transaction
reflected in the unaudited Pro Forma Financial Statements.
The following unaudited pro forma financial statements reflect the results
of operations for the year ended December 31, 1998 and the six months ended June
30, 1999 and the balance sheet as of June 30, 1999 after giving effect to the
transactions described below. The information set forth under the heading
"Cumulus Historical" in the pro forma statements of operations includes results
relating to LMAs. The information set forth under the heading "Pending
Acquisitions" in the pro forma statements of operations excludes results
relating to LMAs to the extent that such activity is included in our historical
financial information.
The pro forma statements of operations for the year ended December 31, 1998
and the six months ended June 30, 1999 give effect to:
- this offering,
- the July 1999 offering of our Class A common stock,
- the completion of our 1998 and 1999 acquisitions and our pending
acquisitions,
- our initial public offerings of our Class A common stock, our senior
subordinated notes and our Series A preferred stock,
- the redemption of a portion of our Series A preferred stock,
- borrowings under and the repayment of all indebtedness outstanding under
our old credit facility, and
- borrowings under our credit facility,
in each case as if such transactions had occurred on January 1, 1998.
The information set forth under the heading "Pro Forma Adjustments for
Cumulus Historical and the 1999 Completed Acquisitions" in the pro forma
statement of operations for the year ended December 31, 1998 includes the
effects of our initial public offerings. The information set forth under the
heading "1999 Subsequent Acquisitions" in the pro forma statement of operations
for the six months ended June 30, 1999 includes the effect of our acquisitions
completed after June 30, 1999.
- The pro forma balance sheet as of June 30, 1999 gives effect to:
- this offering,
- the July 1999 offering of our Class A common stock,
- the redemption of a portion of our Series A preferred stock,
- the completion of our pending acquisitions and acquisitions completed
after June 30, 1999,
- the borrowings under and repayment of all indebtedness outstanding under
our old credit facility, and
- borrowings under our credit facility,
in each case as if such transactions had occurred on June 30, 1999.
The information set forth under the heading "Pro Forma Adjustments for the
1999 Subsequent Acquisitions" includes the effect of our acquisitions completed
after June 30, 1999.
The pro forma financial statements are based on our historical consolidated
financial statements and the financial statements of those entities acquired, or
from which assets were acquired, in conjunction with our completed and pending
acquisitions. The unaudited pro forma financial information reflects the use of
the purchase method of accounting for all acquisitions. For purposes of the
unaudited pro forma financial statements, the purchase prices of the stations
acquired and to be acquired in our completed acquisitions and pending
acquisitions have been allocated based primarily on information furnished by
management of the acquired stations. The final allocation of the relative
purchase prices of the stations acquired and to be acquired to our completed
acquisitions and pending acquisitions is determined a reasonable time after
consummation of such transactions and are based on complete evaluations of the
assets acquired and liabilities
<PAGE> 6
assumed. Accordingly the information presented herein may differ from the final
purchase price allocation; however, in the opinion of our management, the final
purchase price allocation will not differ significantly from the information
presented herein. In the opinion of our management, all adjustments have been
made that are necessary to present fairly the pro forma data.
The unaudited pro forma information is presented for illustrative purposes
only and is not indicative of the operating results or financial position that
would have occurred if the transactions referred to above had been consummated
on the dates indicated, nor is it indicative of future operating results or
financial positions. The failure of the aforementioned transactions to be
completed would significantly alter the unaudited pro forma information.
All pro forma financial information should be read in conjunction with our
consolidated financial statements.
<PAGE> 7
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
(D)
PRO FORMA
ADJUSTMENTS
FOR (A)+(B)+(C)+
CUMULUS (D) = (E)
(B) HISTORICAL PRO FORMA AS
PRO FORMA (C) AND THE ADJUSTED FOR
(A) ADJUSTMENTS 1999 1999 THE 1999
CUMULUS FOR CUMULUS COMPLETED COMPLETED COMPLETED
HISTORICAL HISTORICAL(2) ACQUISITIONS(3) ACQUISITIONS ACQUISITIONS
---------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $108,172 $29,250 $32,304 $ -- $169,726
Less: agency commissions..................... (9,385) (1,934) (1,815) -- (13,134)
-------- ------- ------- -------- --------
Net revenues................................. 98,787 27,316 30,489 -- 156,592
Station operating expenses excluding
depreciation and amortization............... 72,154 20,973 22,019 -- 115,146
Depreciation and amortization................ 19,584 3,772 4,794 8,015 (4) 36,165
Corporate general and administrative
expenses.................................... 5,607 1,395 1,116 -- 8,118
-------- ------- ------- -------- --------
Operating income (loss)...................... 1,442 1,176 2,560 (8,015) (2,837)
Interest expense............................. (15,551) (2,950) (3,482) (5,400)(5) (27,383)
Interest income.............................. 2,373 -- -- (2,173)(6) 200
Gain (loss) on sale of assets................ -- 21,249 (72) (21,177)(7) --
Other income (expense)....................... (2) (182) (129) -- (313)
-------- ------- ------- -------- --------
Income (loss) before income taxes............ (11,738) 19,293 (1,123) (36,765) (30,333)
Income tax (expense) benefit................. (126) (86) (24) -- (236)
-------- ------- ------- -------- --------
Net income (loss) before extraordinary
item........................................ (11,864) 19,207 (1,147) (36,765) (30,569)
Preferred stock dividends and accretion of
discount.................................... (13,591) -- -- (4,503)(8) (18,094)
-------- ------- ------- -------- --------
Net income (loss) before extraordinary item
attributable to common stockholders......... $(25,455) $19,207 $(1,147) $(41,268) $(48,663)
======== ======= ======= ======== ========
<CAPTION>
(E)+(F)=(G)
(F) PRO FORMA AS (I)
PRO FORMA ADJUSTED FOR THE PRO FORMA
ADJUSTMENTS 1999 COMPLETED ADJUSTMENTS
FOR THE ACQUISITIONS, FOR THE PENDING
COMPLETED THE COMPLETED ACQUISITIONS
OFFERING OFFERING AND (H) AND THE (G)+(H)+(I)=(J)
AND THE NEW THE NEW CREDIT PENDING CURRENT PRO FORMA
CREDIT FACILITY FACILITY ACQUISITIONS OFFERING AS ADJUSTED(1)
--------------- ---------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $ -- $169,726 $30,149 $ -- $199,875
Less: agency commissions..................... -- (13,134) (2,154) -- (15,288)
------- -------- ------- ------- --------
Net revenues................................. -- 156,592 27,995 -- 184,587
Station operating expenses excluding
depreciation and amortization............... -- 115,146 24,383 139,529
Depreciation and amortization................ -- 36,165 2,975 5,694(4) 44,834
Corporate general and administrative
expenses.................................... -- 8,118 1,007 -- 9,125
------- -------- ------- ------- --------
Operating income (loss)...................... -- (2,837) (370) (5,694) (8,901)
Interest expense............................. (1,397)(9) (28,780) (1,210) 1,210(11) (28,780)
Interest income.............................. -- 200 -- 200
Gain (loss) on sale of assets................ -- -- 1,072 (1,072)(12) --
Other income (expense)....................... -- (313) 433 120
------- -------- ------- ------- --------
Income (loss) before income taxes............ (1,397) (31,730) (75) (5,556) (37,361)
Income tax (expense) benefit................. -- (236) 32 -- (204)
------- -------- ------- ------- --------
Net income (loss) before extraordinary
item........................................ (1,397) (31,966) (43) (5,556) (37,565)
Preferred stock dividends and accretion of
discount.................................... 6,333(10) (11,761) -- -- (11,761)
------- -------- ------- ------- --------
Net income (loss) before extraordinary item
attributable to common stockholders......... $ 4,936 $(43,727) $ (43) $(5,556) $(49,326)
======= ======== ======= ======= ========
</TABLE>
See accompanying notes to the unaudited pro forma statement of operations.
<PAGE> 8
Cumlus Media Inc.
Support for Column(C)-1999 Completed Acquisitions
for the year Ended December 31, 1998
<TABLE>
<CAPTION>
CALENDAR 1999 COMPLETED
HMH BROADCASTING, PHILLIPS OTHER COMPLETED ACQUISITIONS
BROADCASTING, INC. INC AND SUBSIDIARIES BROADCASTING, INC. ACQUISITIONS COLUMN(C)
----------------- -------------------- ------------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $ 9,735 $ 7,570 $3,610 $11,389 $32,304
Less: agency commissions (1,222) - (175) (418) (1,815)
---------------- ---------------- ----------------- --------------- -------------
Net revenues 8,513 7,570 3,435 10,971 30,489
Station operating expenses excluding
depreciation and amortization 5,387 4,888 2,471 9,273 22,019
Depreciation and amortization 1,329 1,439 705 1,321 4,794
Corporate General and
administrative expenses 311 547 - 258 1,116
Non-cash stock compensation expense - - - - 0
---------------- ---------------- ----------------- -------------- -------------
Operating income(loss) 1,486 696 259 119 2,560
---------------- ---------------- ----------------- -------------- -------------
Interest expense (866) (1,472) (436) (708) (3,482)
Interest income - - - - 0
Gain (loss) on sale of asset - (72) - - (72)
Other income (expense) - (154) 19 6 (129)
---------------- ---------------- ----------------- -------------- -------------
Income (loss) before income taxes 620 (1,002) (158) (583) (1,123)
Income tax (expense) benefit - - - (24) (24)
---------------- ---------------- ----------------- -------------- -------------
Net income (loss) before
extraordinary item $ 620 (1,002) $ (158) $ (607) $(1,147)
================ ================ ================= ============== =============
</TABLE>
<PAGE> 9
Cumulus Media Inc.
Support for Column H - Pending Acquisitions
for the year ended December 31, 1998
<TABLE>
<CAPTION>
CAPE FEAR C.F. COAST OTHER PENDING
BROADCASTING RADIO, INC. RADIO, LLC PENDING ACQUISITIONS
COMPANY ACQUISITIONS COLUMN(H)
------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $5,847 $2,040 $2,932 $19,330 $30,149
Less: agency commissions (573) (234) (318) (1,029) (2,154)
----------- --------- -------- ----------- -----------
- - - - -
Net revenues 5,274 1,806 2,614 18,301 27,995
- - - - -
Station operating expenses - - - - -
excluding depreciation and - - - - -
amortization 3,711 1,096 2,173 17,403 24,383
- - - - -
Depreciation and amortization 142 355 129 2,349 2,975
- - - - -
Corporate General and - - - - -
administrative expenses - - - 1,007 1,007
- - - - -
Non-cash stock compensation expense - - - - -
----------- --------- -------- ----------- -----------
- - - - -
Operating income (loss) 1,421 355 312 (2,458) (370)
----------- --------- -------- ----------- -----------
- - - - -
Interest expense (28) (350) (20) (812) (1,210)
Interest income - - - - -
Gain (loss) on sale of asset - - - 1,072 1,072
Other income (expense) 180 12 - 241 433
----------- --------- -------- ----------- -----------
- - - - -
Income (loss) before income 1,573 17 292 (1,957) (75)
taxes - - - - -
Income tax (expense) benefit - - 37 (5) 32
----------- --------- -------- ----------- -----------
- - - - -
Net income (loss) before
extraordinary loss 1,573 17 329 (1,962) (43)
=========== ========= ======== =========== ===========
</TABLE>
<PAGE> 10
NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
(1) The pro forma financial results exclude the effects of estimated cost
savings which management believes will result from the integration of our
completed and pending acquisitions.
(2) Reflects historical revenues and expenses of stations acquired by us in
1998 for the period from January 1, 1998 through the date the stations were
acquired by us.
(3) Reflects the historical revenues and expenses of stations acquired by us in
1999 for the period from January 1, 1998 through December 31, 1998.
(4) Adjustments reflect (i) the change in depreciation and amortization expense
resulting from conforming the estimated useful lives of our completed and
pending acquisitions' assets to our policies and (ii) the additional
depreciation and amortization expense resulting from the allocation of the
purchase price to the estimated fair market value of the assets acquired.
On a pro forma basis, depreciation expense is $10,560 and amortization
expense is $34,274 after giving effect to the completed and pending
acquisitions. Depreciation expense has been calculated on a straight line
basis using a weighted average life of seven years for property and
equipment. Goodwill and other intangible assets' amortization has been
calculated on a straight line basis over 25 years. Non-compete agreements
are being amortized over the lives of the agreements which range from one
to three years.
We allocate the purchase prices of the acquired stations based on
evaluations of the assets acquired and the liabilities assumed. We believe
that the excess of cost over the fair value of tangible net assets of an
acquired radio station almost exclusively relates to the value of the FCC
broadcasting license and goodwill. We believe that the purchase price
allocation method described above is consistent with general practice in
the radio broadcasting industry.
(5) Adjustment to reflect increased interest expense resulting from:
<TABLE>
<S> <C>
Interest on the $114,450 indebtedness under the old credit
facility at 8.5%............................................ $ 9,728
Interest on our senior subordinated notes at 10.375%........ 16,600
Annual amortization of $3,102 in transaction costs
associated with the old credit facility over eight
years..................................................... 387
Annual amortization of $6,689 in debt issue costs associated
with our senior subordinated notes over ten years......... 668
--------
Total interest expense...................................... 27,383
Less: historical interest recorded by us and the businesses
acquired in connection with our completed acquisitions.... (21,983)
--------
Net adjustment.............................................. $ 5,400
========
</TABLE>
(6) Adjustment to reduce historical interest income to reflect the effects of
our completed and pending acquisitions as of January 1, 1998.
(7) Adjustment to eliminate intercompany gains recognized by Crystal Radio
Group, Inc., Midland Broadcasting, Inc. and Savannah Communications, L.P.
on the 1998 sales of radio stations to us.
(8) Adjustment to reflect additional accretion related to Series A preferred
stock dividend as if the Series A preferred stock were outstanding for the
full period from January 1, 1998 to December 31, 1998.
<PAGE> 11
<TABLE>
<S> <C>
Accretion of Series A preferred stock dividend (compounded
quarterly at 13.75%)........................................ $ 18,094
Less: historical dividends recorded by us................... (13,591)
--------
Net adjustment.............................................. $ 4,503
========
</TABLE>
(9) Adjustment to reflect increased interest expense resulting from:
<TABLE>
<S> <C> <C>
Sources of funds from Completed Offering and Credit
Facility:
Amount financed by the new credit facility ($125,000 to
Cumulus net of fees of $4,000).............................. $121,000
Class A common stock offered ($268,116 to Cumulus net of
fees of $14,656)....................................... 253,460
--------
Total.................................................. $374,460
========
Uses of funds:
Repayment of the old credit facility...................... $ 62,500
Redemption of Series A preferred stock:
Redemption of original liquidation preference (35% of
$125,000)............................................ $43,750
Redemption premium (13.75% of redeemed amount)......... 6,016
-------
Total payment to Series A preferred stockholders....... 49,766
Cash on hand........................................... 262,194
--------
Total................................................ $374,460
========
Interest on the $125,000 indebtedness under the new credit
facility at 8.50%......................................... $ 10,625
Interest on our senior subordinated notes at 10.375%........ 16,600
Annual amortization of $7,102 in deferred transaction costs
associated with the old and new credit facilities over
eight years............................................... 887
Annual amortization of $6,689 in debt issue costs associated
with our senior subordinated notes over ten years......... 668
--------
Total interest expense................................. 28,780
Less: interest expense recorded pro forma as adjusted
for the 1999 completed acquisitions.................. (27,383)
--------
Net adjustment......................................... $ 1,397
========
</TABLE>
(10) Adjustment to reflect the reduction in the dividend on the Series A
preferred stock, on a pro forma basis, as if the redemption had occurred
as of January 1, 1998:
<TABLE>
<S> <C>
Annual dividend on $81,250 Series A preferred stock at
13.75%...................................................... $ 11,761
Less: pro forma dividend as adjusted for the 1999 completed
acquisitions.............................................. (18,094)
--------
Net adjustment.............................................. $ 6,333
========
</TABLE>
(11) Adjustment to reflect the elimination of $1,210 of interest expense
recorded by sellers related to debt which was not assumed by Cumulus.
(12) Adjustment recorded to eliminate the net non-recurring gains (losses) on
the sale of assets recorded by Anderson Broadcasting Company and Calendar
Broadcasting Inc., combined with an adjustment recorded to eliminate the
net non-recurring gain recognized by Savannah Valley Broadcasting Radio
<PAGE> 12
Properties. The non-recurring gain was recognized by Savannah Valley
Broadcasting Radio Properties upon the sale of assets not acquired by us.
Sources of funds from the Current Offering:
<TABLE>
<S> <C>
Class A common stock offered ($99,000 to Cumulus net of
fees of $6,200)........................................ $ 92,800
Escrow funds.............................................. 3,736
--------
Total.................................................. $ 96,536
========
Uses of funds:
Purchase price of the pending acquisitions................ $144,595
Decrease in cash on hand.................................. (48,059)
--------
Total.................................................. $ 96,536
========
</TABLE>
The floating interest rate used to calculate pro forma interest expense on
the new credit facility is eight and one half percent (8.50%). The rate on the
new credit facility is based on our estimates, considering current market
conditions for similar securities. A one-eighth of one percent (0.125%) change
in the interest rate on the new credit facility results in a $156 increase or
decrease in the pro forma interest expense for the twelve months ended December
31, 1998.
Upon the consummation of the preferred stock redemption on October 1, 1999,
we will record a redemption premium of $6,016 on the redemption of $43,750
Series A preferred stock in the fourth quarter of 1999.
<PAGE> 13
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
(D)
PRO FORMA (A)+(B)+(C)+
(B) ADJUSTMENTS (D)=(E)
PRO FORMA (C) FOR CUMULUS PRO FORMA AS
(A) ADJUSTMENTS 1999 HISTORICAL AND THE ADJUSTED FOR THE
CUMULUS FOR CUMULUS SUBSEQUENT 1999 COMPLETED 1999 COMPLETED
HISTORICAL HISTORICAL(1)(2) ACQUISITIONS(3) ACQUISITIONS ACQUISITIONS
---------- ---------------- --------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $ 84,241 $ 400 $8,308 $ -- $ 92,949
Less: agency commissions......... (6,526) (30) (765) -- (7,321)
-------- ----- ------ ------- --------
Net revenues..................... 77,715 370 7,543 -- 85,628
Station operating expenses
excluding depreciation and
amortization................... 59,126 427 5,239 64,792
Depreciation and amortization.... 16,341 110 1,857 (617)(4) 17,691
Corporate general and
administrative expenses........ 3,410 -- 537 -- 3,947
-------- ----- ------ ------- --------
Operating income (loss).......... (1,162) (167) (90) 617 (802)
Interest expense................. (12,492) (71) (1,313) 478 (5) (13,398)
Interest income.................. 220 -- -- (170)(6) 50
Gain (loss) on sale of asset..... -- -- -- -- --
Other income (expense)........... (2) 2 123 -- 123
-------- ----- ------ ------- --------
Income (loss) before income
taxes.......................... (13,436) (236) (1,280) 925 (14,027)
Income tax (expense) benefit..... -- -- -- -- --
-------- ----- ------ ------- --------
Net income (loss) before
extraordinary item............. (13,436) (236) (1,280) 925 (14,027)
Preferred stock dividends........ (9,297) -- -- -- (7) (9,297)
-------- ----- ------ ------- --------
Net income (loss) before
extraordinary item attributable
to common stockholders......... (22,733) (236) (1,280) 925 (23,324)
======== ===== ====== ======= ========
<CAPTION>
(E)+(F)=(G)
PRO FORMA AS (I)
(F) ADJUSTED FOR PRO FORMA
PRO FORMA THE 1999 ADJUSTMENTS
ADJUSTMENTS COMPLETED FOR THE
FOR THE ACQUISITIONS, PENDING
COMPLETED THE COMPLETED ACQUISITIONS
OFFERING OFFERING AND (H) AND THE (G)+(H)+(I)= (J)
AND THE NEW THE NEW CREDIT PENDING CURRENT PRO FORMA
CREDIT FACILITY FACILITY ACQUISITIONS OFFERING COMBINED(1)
--------------- -------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $ -- $ 92,949 $11,235 $ $104,184
Less: agency commissions......... -- (7,321) (792) -- (8,113)
------ -------- ------- ------- --------
Net revenues..................... -- 85,628 10,443 -- 96,071
Station operating expenses
excluding depreciation and
amortization................... -- 64,792 9,208 74,000
Depreciation and amortization.... -- 17,691 1,378 2,957 (4) 22,026
Corporate general and
administrative expenses........ -- 3,947 201 -- 4,148
------ -------- ------- ------- --------
Operating income (loss).......... -- (802) (344) (2,957) (4,103)
Interest expense................. (992)(8) (14,390) (533) 533 (10) (14,390)
Interest income.................. -- 50 -- 50
Gain (loss) on sale of asset..... -- -- 60 (60)(11) --
Other income (expense)........... -- 123 117 240
------ -------- ------- ------- --------
Income (loss) before income
taxes.......................... (992) (15,019) (700) (2,484) (18,203)
Income tax (expense) benefit..... -- -- -- -- --
------ -------- ------- ------- --------
Net income (loss) before
extraordinary item............. (992) (15,019) (700) (2,484) (18,203)
Preferred stock dividends........ 2,793 (9) (6,504) -- -- (6,504)
------ -------- ------- ------- --------
Net income (loss) before
extraordinary item attributable
to common stockholders......... 1,801 (21,523) (700) (2,484) (24,707)
====== ======== ======= ======= ========
</TABLE>
See accompanying notes to the unaudited pro forma statement of operations.
<PAGE> 14
<TABLE>
<CAPTION>
CALENDAR OTHER 1999 COMPLETED
HMH BROADCASTING, INC. PHILLIPS COMPLETED ACQUISITIONS
BROADCASTING, INC. AND SUBSIDIARIES BROADCASTING, INC. ACQUISITIONS COLUMN(C)
------------------ ------------------ ------------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $2,383 $4,174 $ 888 $863 $ 8,308
Less: agency commissions (260) (442) (63) - (765)
---------------- ------ ---------------- ----------- ------------
Net revenues 2,123 3,732 825 863 7,543
Station operating expenses
excluding depreciation and -
amortization 1,314 2,439 730 756 5,239
Depreciation and amortization 675 738 340 104 1,857
Corporate General and -
administrative expenses 85 432 - 20 537
Non-cash stock compensation
expense - - - - -
---------------- ------ ---------------- ----------- ------------
Operating income (loss) 49 123 (245) (17) (90)
---------------- ------ ---------------- ----------- ------------
Interest expense (409) (700) (204) - (1,313)
Interest income - - - - -
(Gain) loss on sale of asset - - - - -
Other income (expense) - - 123 - 123
---------------- ------ ---------------- ----------- ------------
Income (loss) before income taxes (360) (577) (326) (17) (1,280)
Income tax (expense) benefit - - - - -
---------------- ------ ---------------- ----------- ------------
Net income (loss) before
extraordinary item $ (360) (577) $(326) $(17) $(1,280)
================ ====== ================ =========== ============
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
C/F CAPE FEAR PENDING
RADIO, BROADCASTING, COAST OTHER PENDING ACQUISITIONS
INC. INC RADIO, LLC ACQUISITIONS COLUMN (H)
---------- --------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $1,179 $2,860 $1,431 $ 5,765 $11,235
Less: agency commissions (132) (263) (155) (242) (792)
------- ------ ------- -------- -------
Net revenues 1,047 2,597 1,276 5,523 10,443
Station operating expenses
excluding depreciation and - - - - -
amortization 764 1,910 948 5,586 9,208
Depreciation and amortization 323 83 65 907 1,378
Corporate General and - - - - -
administrative expenses - - - 201 201
Non-cash stock compensation
expense - - - - -
------ ------ ------- -------- -------
Operating income (loss) (40) 604 263 (1,171) (344)
------ ------ ------- -------- -------
Interest expense (254) (20) (9) (250) (533)
Interest income - - - - -
Gain (loss) on sale of asset - - - 60 60
Other income (expense) 35 57 - 25 117
------ ------ ------- -------- -------
Income (loss) before income taxes (259) 641 254 (1,336) (700)
Income tax (expense) benefit - - - - -
------ ------ ------- -------- -------
Net income (loss) before extra
ordinary loss (259) 641 254 (1,336) $ (700)
====== ====== ======= ======== =======
</TABLE>
<PAGE> 16
NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(1) The pro forma financial results exclude the effects of estimated cost
savings which management believes will result from the integration of our
completed and pending acquisitions.
(2) Reflects historical revenues and expenses of stations acquired by us in the
first six months of 1999 for the period from January 1, 1999 through the
date the stations were acquired by us.
(3) Reflects the historical revenues and expenses of stations acquired by us
after June 30, 1999 for the period from January 1, 1999 through June 30,
1999.
(4) Adjustments reflect (i) the change in depreciation and amortization expense
resulting from conforming the estimated useful lives of our completed and
pending acquisitions' assets to our policies and (ii) the additional
depreciation and amortization expense resulting from the allocation of the
purchase price to the estimated fair market value of the assets acquired. On
a pro forma basis, depreciation expense is $5,211 and amortization expense
is $16,815 after giving effect to the completed and pending acquisitions.
Depreciation expense has been calculated on a straight-line basis using a
weighted average life of seven years for property and equipment. Goodwill
and other intangible assets' amortization has been calculated on a
straight-line basis over 25 years. Non-compete agreements are being
amortized over the lives of the agreements which range from one to three
years.
We allocate the purchase prices of the acquired stations based on
evaluations of the assets acquired and the liabilities assumed. We believe
that the excess of cost over the fair value of tangible net assets of an
acquired radio station almost exclusively relates to the value of the FCC
broadcasting license and goodwill. We believe that the purchase price
allocation method described above is consistent with general practice in the
radio broadcasting industry.
(5) Adjustment to reflect increased interest expense resulting from:
<TABLE>
<S> <C>
Six months of interest on the $114,450 indebtedness under
the old credit facility at 8.5%........................... $ 4,570
Six Month of interest on our senior subordinated notes at
10.375%..................................................... 8,300
Six months of amortization of $3,102 in transaction costs
associated with the old credit facility over eight
years..................................................... 194
Six months of amortization of $6,689 in debt issue costs
associated with our senior subordinated notes over ten
years..................................................... 334
--------
Total interest expense................................. 13,398
Less: historical interest recorded by us and the
businesses acquired in connection with our completed
acquisitions.......................................... (13,876)
--------
Net adjustment......................................... $ (478)
========
</TABLE>
(6) Adjustments to reduce historical interest income to reflect the effects of
our completed and pending acquisitions as of January 1, 1999.
(7) Adjustment to reflect additional accretion related to Series A preferred
stock dividend as if the Series A preferred stock were outstanding for the
full period from January 1, 1998 to June 30, 1999.
<TABLE>
<S> <C>
Accretion of Series A preferred stock dividend (compounded
quarterly at 13.75%)...................................... $ 9,297
Less: historical dividends recorded by us.................. (9,297)
-------
Net adjustment.............................................. $ 0
=======
</TABLE>
<PAGE> 17
(8) Adjustment to reflect increased interest expense resulting from:
<TABLE>
<S> <C> <C>
Sources of funds:
Amount financed by the new credit facility ($125,000 to
Cumulus net of fees of $4,000)........................ $121,000
Class A common stock offered ($268,116 to Cumulus net of
fees of $14,656)....................................... 253,460
--------
Total.................................................. $374,460
========
Uses of funds:
Repayment of the old credit facility..................... $107,537
Redemption of Series A preferred stock:
Redemption of original liquidation preference (35% of
$125,000)............................................ $43,750
Redemption premium (13.75% of redeemed amount)....... 6,016
-------
Total payment to Series A preferred stockholders..... 49,766
Cash on hand............................................. $217,157
--------
Total.............................................. $374,460
========
Six months interest on the $125,000 indebtedness under
the new credit facility at 8.50%....................... 5,312
Six months interest on our senior subordinated notes at
10.375%................................................ 8,300
Six Months amortization of $7,102 in deferred transaction
costs associated with the old and new credit facilities
over eight years....................................... 444
Six Months amortization of $6,689 in debt issue costs
associated with our senior subordinated notes over ten
years.................................................. 334
--------
Total interest expense............................. 14,390
Less: interest expense recorded pro forma as adjusted
for our completed acquisitions.................... (13,398)
--------
Net adjustment...................................... $ 992
========
</TABLE>
(9) Adjustment to reflect the redemption of Series A preferred stock, on a pro
forma basis, as if the redemption had occurred as of January 1, 1998:
<TABLE>
<S> <C>
Original Series A preferred stock....................... $125,000
Less: redemption of original liquidation preference..... (43,750)
--------
Pro forma Series A preferred stock balance as of
January 1, 1998......................................... 81,250
Annual dividend on Series A preferred stock at 13.75%
compounded quarterly.................................. 11,761
--------
Pro forma Series A preferred stock balance as of
December 31, 1998....................................... 93,011
Six Months dividend on $93,011 Series A preferred stock ========
at 13.75%............................................... (6,504)
Less: pro forma dividend as adjusted for the 1999
subsequent acquisitions................................ (9,297)
--------
Net adjustment............................................ $ 2,793
========
</TABLE>
(10) Adjustment to reflect the elimination of $533 of interest expense
recorded by sellers related to debt which was not assumed by Cumulus.
<PAGE> 18
(11) Adjustment recorded to eliminate the non-recurring gain on the sale of
assets recorded by Centroplex Communications Inc.
<TABLE>
<S> <C>
Sources of funds:
Class A common stock offered ($99,000 to Cumulus net
of fees of $6,200)................................... $ 92,800
Escrow funds......................................... 3,736
--------
Total.............................................. $ 96,536
========
Uses of funds:
Purchase price of the pending acquisitions......... $144,595
Decrease in cash on hand......................... (48,059)
--------
Total............................................ $ 96,536
========
</TABLE>
The floating interest rate used to calculate pro forma interest expense on
the new credit facility is eight and one quarter percent (8.25%). The rate on
the new credit facility is based on our estimates, considering current market
conditions for similar securities. A one-eighth of one percent (0.125%) change
in the interest rate on our new credit facility results in a $39 increase or
decrease in the pro forma interest expense for the twelve months ended March 31,
1999.
Upon the consummation of the Series A Preferred Stock Redemption on October
1, 1999, we will record a redemption premium of $6,016 on the redemption of
$43,750 Series A preferred stock in the fourth quarter of 1999.
<PAGE> 19
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
(A)+(B)+(C)=(D)
(B) (C) PRO FORMA AS
PRO FORMA PRO FORMA ADJUSTED FOR THE
ADJUSTMENTS FOR ADJUSTMENTS COMPLETED OFFERINGS,
(A) THE COMPLETED FOR THE 1999 THE CREDIT FACILITY
CUMULUS OFFERINGS AND THE SUBSEQUENT AND THE 1999
HISTORICAL CREDIT FACILITY(1) ACQUISITIONS(2) SUBSEQUENT ACQUISITIONS
---------- ------------------ --------------- -----------------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents.......... $ 9,086 $ 217,157 $(102,050) $124,193
Accounts receivable................ 41,508 -- -- 41,508
Prepaid expenses and other current
assets........................... 5,723 -- -- 5,723
-------- --------- -------- --------
Total current assets........... 56,317 217,157 (102,050) 171,424
Property and equipment, net........ 49,228 -- 10,205 59,433
Intangible assets, net............. 431,113 -- 98,325 529,438
Other assets....................... 15,808 4,000 -- 19,808
-------- --------- -------- --------
Total assets................... $552,466 $ 221,157 $ 6,480 $780,103
======== ========= ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities:
Accounts payable and other
liabilities...................... $ 21,152 $ -- $ -- $ 21,152
Current portion of long-term
debt............................. 1,020 -- -- 1,020
-------- --------- -------- --------
Total current liabilities...... 22,172 -- -- 22,172
Long-term debt:
Old credit facility.............. 107,537 (107,537) -- --
New credit facility.............. 125,000 125,000
Senior subordinated notes........ 160,000 -- -- 160,000
Other............................ -- -- -- --
Other long-term liabilities:
Deferred tax liability............. 15,074 -- 6,480 21,554
Other long-term liabilities........ 2,244 -- -- 2,244
-------- --------- -------- --------
Total liabilities.............. 307,027 17,463 6,480 330,970
-------- --------- -------- --------
Preferred stock subject to
mandatory redemption............. 143,038 (43,750) -- 99,288
-------- --------- -------- --------
Stockholders' equity:
Class A common stock............. 87 111 -- 198
Class B common stock............. 87 -- -- 87
Class C common stock............. 24 -- -- 24
Additional paid in capital....... 132,913 268,004 -- 400,917
(14,655) (14,655)
(6,016) (6,016)
-- --
Accumulated other comprehensive
income........................... 5 -- -- 5
Retained earnings (deficit)........ (30,715) -- -- (30,715)
-------- --------- -------- --------
Total stockholders' equity..... 102,401 247,444 -- 349,845
-------- --------- -------- --------
Total liabilities and
stockholders' equity......... $552,466 $ 221,157 $ 6,480 $780,103
======== ========= ======== ========
<CAPTION>
(E) (F)
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS (E)+(F)=(G)
FOR THE FOR THE PENDING PRO FORMA
CURRENT OFFERING(3) ACQUISITIONS(4) COMBINED
------------------- --------------- -----------
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents.......... $92,800 $(140,859) $ 76,134
Accounts receivable................ -- -- 41,508
Prepaid expenses and other current
assets........................... -- -- 5,723
------- --------- --------
Total current assets........... 92,800 (140,859) 123,365
Property and equipment, net........ -- 14,460 73,893
Intangible assets, net............. -- 131,022 660,460
Other assets....................... -- (3,736) 16,072
------- --------- --------
Total assets................... $92,800 $ 887 $873,790
======= ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities:
Accounts payable and other
liabilities...................... $ -- $ -- $ 21,152
Current portion of long-term
debt............................. -- -- 1,020
------- --------- --------
Total current liabilities...... -- -- 22,172
Long-term debt:
Old credit facility.............. -- -- --
New credit facility.............. -- -- 125,000
Senior subordinated notes........ -- -- 160,000
Other............................ -- -- --
Other long-term liabilities:
Deferred tax liability............. -- 887 22,441
Other long-term liabilities........ -- -- 2,244
------- --------- --------
Total liabilities.............. -- 887 331,857
------- --------- --------
Preferred stock subject to
mandatory redemption............. -- -- 99,288
------- --------- --------
Stockholders' equity:
Class A common stock............. 40 -- 238
Class B common stock............. (10) -- 77
Class C common stock............. -- -- 24
Additional paid in capital....... 98,970 -- 473,016
(6,200)
Accumulated other comprehensive
income........................... -- -- 5
Retained earnings (deficit)........ -- -- (30,715)
------- --------- --------
Total stockholders' equity..... 92,800 -- 442,645
------- --------- --------
Total liabilities and
stockholders' equity......... $92,800 $ 887 $873,790
======= ========= ========
</TABLE>
See accompanying notes to the unaudited pro forma balance sheet.
<PAGE> 20
Cumulus Media Inc.
Support for Column (C) - Total Subsequent Acquisitions as Adjusted
June 30, 1999
<TABLE>
<CAPTION>
TOTAL
CALENDAR SUBSEQUENT
HMH BROADCASTING PHILLIPS OTHER TOTAL ACQUISITIONS
BROADCASTING, INC. AND BROADCASTING, SUBSEQUENT SUBSEQUENT PRO FORMA AS ADJUSTED
INC. SUBSIDIARIES INC. ACQUISITIONS ACQUISITIONS ADJUSTMENTS COLUMN (C)
----------- ------------ ----------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 26 $ 497 $ 150 $ 72 $ 745 (102,795) (102,050)
Accounts receivable 940 1,399 180 80 2,599 (2,599) -
Prepaid expenses and other current
assets 16 175 - 71 262 (262) -
----------- ----------- ----------- ------------ ----------- ---------- -------------
Total current assets 982 2,071 330 223 3,606 (105,656) (102,050)
Property and equipment, net 1,681 1,918 1,569 378 5,546 4,659 10,205
Intangible assets, net 11,937 11,291 2,517 796 26,541 71,784 98,325
Other assets 209 20 - - 229 (229) -
----------- ----------- ----------- ------------ ----------- ---------- -------------
TOTAL ASSETS $14,809 $15,300 4,416 $1,397 35,922 $(29,442) $ 6,480
=========== =========== =========== ============ =========== ========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
- - - -
Accounts payable and other liabilities 428 509 160 161 1,258 (1,258) -
Notes payable - - - - - - -
Due to partners/affiliated companies - - - - - - -
Current portion of long-term debt 1,053 338 1,660 - 3,051 (3,051) -
----------- ----------- ----------- ------------ ----------- ---------- -------------
Total current liabilities 1,481 847 1,820 161 4,309 (4,309) -
Credit Facility - - - - - - -
Notes - - - - - - -
Deferred Tax Liability - - - - - 6,480 6,480
Other long-term liabilities 8,837 12,507 3,139 16 24,499 (24,499) -
Preferred Stock subject to long-term
redemption - 1,550 - - 1,550 (1,550) -
----------- ----------- ----------- ------------ ----------- ---------- -------------
- - - -
Total liabilities 10,318 14,904 4,959 177 30,358 (23,878) 6,480
- - - -
STOCKHOLDERS' EQUITY: - - - - - - -
Series A Common 5,089 - 51 20 5,160 (5,160) -
Series B Common - - - - - - -
Series C Common - - - - - - -
Partner's investment - - - - - - -
Additional paid in capital (802) 4,894 (649) 870 4,313 (4,313) -
Accumulated other comprehensive
income - - - - - - -
Retained earnings (deficit) 204 (4,498) 55 330 (3,909) 3,909 -
Cost of treasury shares - - - - -
----------- ----------- ----------- ------------ ----------- ---------- -------------
Total stockholders' equity (deficit) 4,491 396 (543) 1,220 5,564 (5,564) -
----------- ----------- ----------- ------------ ----------- ---------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $14,809 $15,300 $4,416 $1,397 $35,922 $(29,442) $ 6,480
=========== =========== =========== ============ =========== ========== =============
</TABLE>
<PAGE> 21
Cumulus Media Inc.
Support for Column (F) - Total Pending Acquisitions as Adjusted
June 30, 1999
<TABLE>
<CAPTION>
C/F CAPE FEAR COAST
RADIO,INC. BROADCASTING, RADIO, LLC
INC.
---------- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $671 $1,713 $863
Accounts receivable 579 1,140 485
Prepaid expenses and other
current assets 14 178 146
------------- -------------- ------------
Total current assets 1,264 3,031 1,494
Property and equipment, net 1,742 732 532
Intangible assets, net 3,960 4 595
Other assets - 2,783 -
------------- -------------- ------------
TOTAL ASSETS $6,966 $6,550 $2,621
============= ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable and other liabilities 240 459 22
Current portion of long-term debt 334 56 53
------------- -------------- ------------
Total current liabilities 574 515 75
Credit Facility - - -
Notes - - -
Deferred Tax Liability - - -
Other long-term liabilities 6,542 314 157
Preferred Stock subject to long-term
redemption - - -
------------- -------------- ------------
Total liabilities 7,116 829 232
STOCKHOLDERS' EQUITY: - - -
Series A Common 7 41 -
Series B Common - - -
Series C Common - - -
Additional paid in capital - - -
Accumulated other comprehensive income - 376 -
Retained earnings (deficit) (157) 5,304 2,389
Cost of treasury shares - - -
------------- -------------- ------------
Total stockholders' equity (deficit) (150) 5,721 2,389
------------- -------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $6,966 $6,550 $2,621
============= ============== ============
</TABLE>
<TABLE>
<CAPTION>
OTHER TOTAL PRO FORMA TOTAL PENDING
PENDING PENDING ADJUSTMENTS ACQUISITIONS AS
ACQUISITIONS ACQUISITIONS ADJUSTED
COLUMN (F)
------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 1,049 $4,296 $(145,155) $(140,859)
Accounts receivable 2,668 4,872 (4,872) -
Prepaid expenses and other
current assets 192 530 (530) -
----------- -------------- ------------ -------------
Total current assets 3,909 9,698 (150,557) (140,859)
Property and equipment, net 4,424 7,430 7,030 14,460
Intangible assets, net 8,158 12,717 118,305 131,022
Other assets 1,425 4,208 (7,944) (3,736)
----------- -------------- ------------ -------------
TOTAL ASSETS $17,916 $34,053 $(33,166) $ 887
=========== ============== ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and other liabilities 2,872 3,593 (3,593) -
Current portion of long-term debt 2,417 2,860 (2,860) -
----------- -------------- ------------ -------------
Total current liabilities 5,289 6,453 (6,453) -
Credit Facility - - - -
Notes - - - -
Deferred Tax Liability - - 887 887
Other long-term liabilities 12,848 19,861 (19,861) -
Preferred Stock subject to long-term
redemption - - - -
----------- -------------- ------------ -------------
Total liabilities 18,137 26,314 (25,427) 887
STOCKHOLDERS' EQUITY: - - - -
Series A Common 734 782 (782) -
Series B Common - - - -
Series C Common - - - -
Additional paid in capital 4,450 4,450 (4,450) -
Accumulated other comprehensive income - 376 (376) -
Retained earnings (deficit) (5,405) 2,131 (2,131) -
Cost of treasury shares - - - -
----------- -------------- ------------ -------------
Total stockholders' equity (deficit) (221) 7,739 (7,739) -
----------- -------------- ------------ -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $17,916 $34,053 $(33,166) $ 887
=========== ============== ============ =============
</TABLE>
<PAGE> 22
NOTES TO THE UNAUDITED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
(1) To reflect: (i) the net proceeds of July offering to Cumulus of
$268,115, net of $14,655 in issuance costs; (ii) the redemption of 35%
of the original liquidation preference of the Series A preferred stock
in the amount of $43,750 plus a 13.75% redemption premium on the
redeemed preferred stock in the amount of $6,016; (iii) borrowings of
$125,000 under the new credit facility; and (iv) a net repayment of
$107,537 of our old credit facility. Remaining proceeds of this
offering and borrowings under our new credit facility will be used to
fund the completion of our pending acquisitions.
<TABLE>
<S> <C> <C>
Sources of funds:
Amount financed by the new credit facility
($125,000 to Cumulus net of fees of $4,000)... $121,000
Class A common stock offered ($268,115 to
Cumulus net of fees of $14,655)............... 253,460
--------
Total................................. $374,460
========
Uses of funds:
Repayment of the old credit facility............ $107,537
Redemption of Series A preferred stock:
Redemption of original liquidation preference
(35% of $125,000).......................... $ 43,750
Redemption premium (13.75% of redeemed
amount).................................... 6,016
---------
Total payment to Series A preferred
stockholders.................................. 49,766
Cash on hand.................................. $217,157
--------
Total................................. $374,460
========
</TABLE>
(2) To record the allocation of the $102,050 purchase price paid for
transactions consummated subsequent to June 30, 1999. The pro forma
allocation of the purchase price of the 1999 subsequent acquisitions is
as follows:
<TABLE>
<S> <C>
Property and equipment.......................... $ 10,205
Intangible assets, principally broadcast
licenses...................................... 98,325
Deferred Tax Liability.......................... (6,480)
---------
$ 102,050
=========
</TABLE>
(3) To reflect: (i) the net proceeds of Current offering to Cumulus of
$99,000, net of $6,200 in issuance costs
<TABLE>
<S> <C>
Sources of funds from Completed Offering and the Credit
Facility:
Class A common stock offered ($99,000 to Cumulus net of
fees of $6,200)...................................... $ 92,800
Escrow funds............................................ 3,736
--------
Total........................................... $ 96,536
========
Uses of funds:
Purchase price of the pending acquisitions.............. $144,595
Decrease in cash on hand................................ (48,059)
========
Total........................................... $ 96,536
========
</TABLE>
<PAGE> 23
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
HMH BROADCASTING, INC.
Report of Independent Accountants............................................................... F-1
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998............................ F-2
Statements of Operations for the six months ended June 30, 1999 and 1998 (unaudited)
and for the year ended December 31, 1998.................................................... F-3
Statement of Changes in Shareholders' Equity for the year ended
December 31, 1998........................................................................... F-4
Statements of Cash Flows for the six months ended June 30, 1999 and 1998 (unaudited)
and for the year ended December 31, 1998.................................................... F-5
Notes to Financial Statements................................................................... F-6
PHILLIPS BROADCASTING COMPANY, INC.
Report of Independent Accountants............................................................... F-11
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998............................ F-12
Statements of Operations and Retained Earnings for the six months ended June 30, 1999
and 1998 (unaudited) and for the year ended December 31, 1998............................... F-14
Statements of Cash Flows for the six months ended June 30, 1999 and 1998 (unaudited)
and for the year ended December 31, 1998.................................................... F-15
Notes to Financial Statements................................................................... F-16
CAPE FEAR BROADCASTING COMPANY
Report of Independent Accountants............................................................... F-23
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998............................ F-24
Statements of Operations for the six months ended June 30, 1999 and 1998 (unaudited)
and for the year ended December 31, 1998.................................................... F-25
Statement of Changes in Shareholders' Equity for the year ended
December 31, 1998............................................................................ F-26
Statements of Cash Flows for the six months ended June 30, 1999 and 1998 (unaudited)
and for the year ended December 31, 1998..................................................... F-27
Notes to Financial Statements................................................................... F-29
C.F. RADIO, INC.
Report of Independent Accountants............................................................... F-33
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998............... F-34
Consolidated Statements of Operations for the six months ended June 30, 1999 and
1998 (unaudited) and for the year ended December 31, 1998................................... F-35
Consolidated Statement of Changes in Shareholders' Equity for the
year ended December 31, 1998................................................................ F-36
Consolidated Statements of Cash Flows for the six months ended June 30, 1999
and 1998 (unaudited) and for the year ended December 31, 1998............................... F-37
Notes to Consolidated Financial Statements...................................................... F-38
CALENDAR BROADCASTING, INC. AND SUBSIDIARIES
Independent Auditors' Report.................................................................... F-44
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998............... F-45
Consolidated Statements of Operations for the six months ended June 30, 1999 and 1998
(unaudited) and for the year ended December 31, 1998........................................ F-46
Consolidated Statement of Stockholders' Equity for the six months ended June 30, 1999
(unaudited) and for the year ended December 31, 1998........................................ F-47
Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998
(unaudited) and for the year ended December 31, 1998........................................ F-48
Notes to Consolidated Financial Statements...................................................... F-49
COAST RADIO LLC
Report of Independent Accountants............................................................... F-59
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998............................ F-60
Statements of Operations for the six months ended June 30, 1999 and 1998 (unaudited)
and for the year ended December 31, 1998..................................................... F-61
Statement of Changes in Members' Equity for the year ended
December 31, 1998............................................................................ F-62
Statements of Cash Flows for the six months ended June 30, 1999 and 1988 (unaudited)
and for the year ended December 31, 1998..................................................... F-63
Notes to Financial Statements................................................................... F-64
</TABLE>
<PAGE> 24
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Cumulus Media Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in shareholders' equity and of cash flows present fairly,
in all material respects, the financial position of HMH Broadcasting, Inc. at
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
February 28, 1999, except for Note 8, which is dated September 15, 1999
Chicago, Illinois
F-1
<PAGE> 25
HMH BROADCASTING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1999 1998
---------------- ------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 25,069 $ 10,050
Accounts receivable, less allowance for doubtful accounts
of $18,998 as of June 30, 1999 and $0 as of December 31, 1998 940,560 1,724,924
Prepaid expenses and other 16,551 57,231
---------------- ------------------
Total current assets 982,180 1,792,205
Property and equipment, net 1,681,122 1,635,881
Intangible assets, net 11,936,891 12,457,310
Other assets 209,449 95,844
---------------- ------------------
Total assets $ 14,809,642 $ 15,981,240
================ ==================
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 1,053,819 $ 516,819
Accounts payable 13,506 43,932
Accrued commissions 67,222 274,348
Other accrued expenses 70,454 281,137
Due to related party 275,986 225,296
---------------- ------------------
Total current liabilities 1,480,987 1,341,532
---------------- ------------------
Long-term debt 8,837,500 9,512,500
---------------- ------------------
Total liabilities 10,318,487 10,854,032
---------------- ------------------
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, 1,000 shares authorized,
923 shares issued 5,088,500 5,088,500
Retained earnings 204,322 840,375
Common stock held in treasury, at cost (801,667) (801,667)
---------------- ------------------
Total shareholders' equity 4,491,155 5,127,208
---------------- ------------------
Total liabilities and shareholders' equity $ 14,809,642 $ 15,981,240
================ ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE> 26
HMH BROADCASTING, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
June 30, Ended
-------------------------------------- December 31,
1999 1998 1998
------------------ ------------------ ------------------
(Unaudited)
<S> <C> <C> <C>
Revenues $ 2,383,367 $ 4,609,974 $ 9,734,692
Less: Agency commissions (259,948) (619,662) (1,221,764)
------------------ ------------------ ------------------
Net revenues 2,123,419 3,990,312 8,512,928
------------------ --------------- ------------------
Station operating expenses 858,493 1,660,287 3,928,404
General and administrative expenses 540,400 916,283 1,770,088
Depreciation and amortization 674,768 648,807 1,329,011
------------------ ------------------ ------------------
Income from operations 49,758 764,935 1,485,425
Interest expense 408,911 429,979 865,707
------------------ ------------------ ------------------
Net income (loss) $ (359,153) $ 334,956 $ 619,718
================== ================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 27
HMH BROADCASTING, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Common Retained Treasury
Stock Earnings Stock Total
<S> <C> <C> <C> <C>
Balance at January 1, 1998 $ 5,088,500 $ 690,257 $ 5,778,757
Purchase of 77 shares of Company
common stock $ (801,667) (801,667)
Net income 619,718 619,718
Dividends paid (469,600) (469,600)
---------------- ---------------- --------------- ---------------
Balance at December 31, 1998 $ 5,088,500 $ 840,375 $ (801,667) $ 5,127,208
================ ================ =============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 28
HMH BROADCASTING, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
June 30, Ended
--------------------------------------- December 31,
1999 1998 1998
------------------ ------------------ ------------------
(Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (359,153) $ 334,956 $ 619,718
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 674,768 648,807 1,329,011
Changes in operating assets and liabilities:
Accounts receivable 784,364 184,974 151,255
Prepaid expenses and other 40,680 60,896 53,657
Other assets 1,229 - (33,739)
Accounts payable (30,426) 29,398 (7,575)
Accrued commissions (207,126) 19,913 (7,179)
Other accrued expenses (210,683) (491,789) (360,058)
Due to related party 50,690 58,910 101,971
------------------ ------------------ ------------------
Net cash provided by operating
activities 744,343 846,065 1,847,061
------------------ ------------------ ------------------
Cash flows from investing activities:
Capital expenditures (199,590) (80,116) (354,812)
Acquisition costs (114,834) - -
------------------ ------------------ ------------------
Net cash used for investing activities (314,424) (80,116) (354,812)
------------------ ------------------ ------------------
Cash flows from financing activities:
Proceeds from revolving note payable 486,000 1,385,000 1,516,000
Repayment of revolving note payable (624,000) (972,000) (1,687,000)
Repayment of note to shareholder - - (50,000)
Dividends paid to shareholders (276,900) (377,300) (469,600)
Purchase of treasury stock - (801,667) (801,667)
------------------ ------------------ ------------------
Net cash used for financing activities (414,900) (765,967) (1,492,267)
------------------ ------------------ ------------------
Increase (Decrease) in cash and cash equivalents 15,019 (18) (18)
Cash and cash equivalents at beginning of year 10,050 10,068 10,068
------------------ ------------------ ------------------
Cash and cash equivalents at end of year $ 25,069 $ 10,050 $ 10,050
================== ================== ==================
Supplemental disclosures of cash flow information:
Cash paid for interest $ 403,717 $ 433,780 $ 858,527
================== ================== ==================
Non-cash operating activities:
Trade revenue $ 91,063 $ 190,131 $ 345,275
================== ================== ==================
Trade expense $ 84,984 $ 89,033 $ 334,554
================== ================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 29
HMH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
HMH Broadcasting, Inc. owns and operates five radio stations: WVLK-AM,
WVLK-FM, WLRO-FM, WXZZ-FM and WLTO-FM (the "Stations" or "Company")
located in Lexington, Kentucky.
The significant accounting principles followed by the Company and the
methods of applying those principles which materially affect the
determination of financial position, results of operations, and cash
flows are summarized below.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS
All items with an original maturity of three months or less are
considered to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable.
The Company performs credit evaluations of its customers and generally
does not require collateral for its accounts receivable. The Company
reserves for potential credit losses based upon the expected
collectibility of all accounts receivable. The Company considers accounts
receivable at December 31, 1998 to be fully collectible; accordingly no
allowance for doubtful accounts is required.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable and accounts payable
approximates fair value because of the short maturity of these
instruments. The carrying value of the Company's debt approximates fair
value. Fair value of the debt is based on the quoted market prices for
the same or similar issues.
F-6
<PAGE> 30
HMH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
PROPERTY AND EQUIPMENT
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized
at cost and depreciated on a straight-line basis over their estimated
useful lives as follows:
<TABLE>
<S> <C>
Office furniture and equipment 7 years
Tower, antenna and equipment 7-20 years
Leasehold improvement 3 years
Other 5 - 39 years
</TABLE>
Maintenance, repairs, and minor replacement of these items are charged to
expense as incurred.
INTANGIBLE ASSETS
Intangible assets include FCC licenses and goodwill. Intangible assets
are stated at cost and are being amortized using the straight-line method
over 15 years. Management regularly monitors and evaluates the
realizability of recorded intangibles. Recoverability of assets to be
held and used is measured by a comparison of carrying amount of the
assets to future cash flows expected to be generated by the assets. If
such assets are considered to be impaired, the impairment to be
recognized is the amount by which the carrying amount exceeds the fair
value of the assets. The Company believes that the carrying value of
recorded intangibles is not impaired.
INCOME TAXES
The Company is organized as a Subchapter S-Corporation. Accordingly, all
income is personally taxable to the shareholders and no provision for
income taxes has been recorded in the accompanying financial statements.
REVENUE RECOGNITION
Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.
TRADE AGREEMENTS
The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Revenues from
trade agreements are recognized at the fair market value of products or
services received as advertising air time is broadcast. Products and
services received are expensed when used in the broadcast operations. In
1998, trade revenues were less than 5% of total broadcast revenues.
INTERIM FINANCIAL STATEMENTS
The financial statements for the six months ended June 30, 1999 and 1998,
are unaudited, but in the opinion of management, such financial
statements have been presented on the same basis as the audited financial
statements for the year ended December 31, 1998, and include all
adjustments, consisting only of normal recurring adjustments necessary
for a fair presentation of the financial position and results of
operations and cash flows for these periods.
F-7
<PAGE> 31
HMH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<S> <C>
Office furniture and equipment $ 733,845
Tower, antenna and equipment 1,552,361
Leasehold improvements 170,443
Other 40,933
------------------
2,497,582
Accumulated depreciation 861,701
------------------
Property and equipment, net $ 1,635,881
==================
</TABLE>
Depreciation expense was $288,072 for the year ended December 31, 1998.
3. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<S> <C>
FCC licenses and goodwill $ 15,297,650
Accumulated amortization 2,840,340
------------------
Intangible assets, net $ 12,457,310
==================
</TABLE>
Amortization expense was $1,040,939 for the year ended December 31, 1998.
4. EMPLOYEE BENEFIT PLANS
Effective July 1, 1996, the Company established a qualified deferred
compensation plan under section 401(k) of the Internal Revenue Code.
Under the plan, employees may elect to defer up to 10% of their salary,
subject to the Internal Revenue Service limits. The Company may make a
discretionary contribution. The Company accrued contributions of $100,000
in 1998 that were paid to the plan in February, 1999.
5. LONG-TERM DEBT
The Company has a $11,600,000 reducing revolving credit note payable with
a local bank. Interest accrues at 8% and is payable quarterly. The
maximum principal balance of $11,600,000 reduces quarterly until August
18, 2002. Subsequent to August 18, 2002, the maximum borrowings under the
facility are limited to $5,600,000. Borrowings are collateralized by
substantially all of the Company's assets.
F-8
<PAGE> 32
HMH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. LONG-TERM DEBT, CONTINUED
The quarterly principal balance reductions are as follows:
<TABLE>
<S> <C>
January 1, 1999 - October 1, 1999 $ 250,000
October 1, 1999 - October 1, 2000 337,500
October 1, 2000 - January 1, 2001 362,500
January 1, 2001 - April 1, 2001 362,000
April 1, 2001 - July 1, 2001 363,000
July 1, 2001 - August 18, 2002 362,500
</TABLE>
Debt consists of the following at December 31, 1998:
<TABLE>
<S> <C>
Reducing revolving credit note payable $ 10,029,319
Less current maturities 516,819
--------------
Long-term debt $ 9,512,500
==============
</TABLE>
6. RELATED PARTY TRANSACTIONS
The Company leases its radio station facility and corporate headquarters
from HMH Realty, LLC, which is owned by shareholders of the Company. The
lease term is five years with six options to renew for five years each.
The base rent is $8,750 per month. The rent fluctuates annually based upon
the change in the Consumer Price Index. The monthly rate at December 31,
1998 was $9,240.
At December 31, 1998, the future non-cancelable minimum lease payments
under the above lease were as follows:
<TABLE>
<S> <C>
1999 $ 110,880
2000 110,880
2001 36,960
------------------
Total $ 258,720
==================
</TABLE>
Rent expense under this operating lease totaled $109,880 for the year
ended December 31, 1998.
At December 31, 1998, the Company owes HMH Realty, LLC $225,296 with
interest at 4%. The amount is due and payable on demand and is included in
due to related party.
F-9
<PAGE> 33
HMH BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. COMMITMENTS AND CONTINGENCIES
The Company leases office equipment and studio and tower space under
certain non-cancelable operating leases which expire between 1999 and
2004.
At December 31, 1998, the future minimum rental payments under
non-cancelable operating leases, excluding related party leases in Note 7
were as follows:
<TABLE>
<S> <C>
1999 $ 215,904
2000 168,403
2001 165,971
2002 161,014
2003 119,824
Thereafter 4,565
------------------
$ 835,681
==================
</TABLE>
Rent expense, excluding related party rent in Note 7, for the year ended
December 31, 1998 was $194,968.
The Company is party to an agreement with three other unrelated parties
for the purpose of broadcasting all University of Kentucky football and
baseball games over a network of radio stations located in Kentucky. Each
party to the agreement shares equally in the profits or losses associated
with broadcasting of such games. In 1998, the Company's portion of the
profits were immaterial and are included in broadcast revenues.
8. SUBSEQUENT EVENTS
In February 1999, the Company entered into an agreement to sell
substantially all of its broadcast assets and FCC licenses to Cumulus
Broadcasting, Inc. (a wholly owned subsidiary of Cumulus Media Inc.)
("Cumulus") for $44,500,000 cash. In April, 1999 the Company entered
into a local marketing agreement with Cumulus Broadcasting, Inc. Under
the local marketing agreement the licensee of the Company's stations make
available to Cumulus Broadcasting Inc., for a fee, air time on their
stations. Cumulus will provide the programming to be broadcast during the
air time and will collect the advertising it sells for such programming.
The transaction closed on September 15, 1999.
F-10
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Phillips Broadcasting Company, Inc.
Eau Claire, Wisconsin
In our opinion, the accompanying balance sheet and the related statements of
income and retained earnings and cash flows present fairly, in all material
respects, the financial position of Phillips Broadcasting Company, Inc. at
December 31, 1998, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
/s/ Wipfli Ullrich Bertelson LLP
February 25, 1999
Eau Claire, Wisconsin
F-11
<PAGE> 35
Phillips Broadcasting Company, Inc.
Balance Sheets
June 30, 1999 and 1998 (unaudited) and December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
UNAUDITED AUDITED
--------------------------------- --------------------
ASSETS JUNE 30, JUNE 30, DECEMBER 31,
1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $150,450 $40,606 $28,113
Accounts receivable 96,550 577,152 550,039
Notes receivable 83,254 3,946 3,946
Prepaid expenses 326 326 326
- ------------------------------------------------------------------------------------------------------------------------------
Total current assets 330,580 622,030 582,424
- ------------------------------------------------------------------------------------------------------------------------------
Property and equipment:
Land 83,478 83,478 83,478
Buildings and improvements 587,291 583,501 587,291
Tower and antenna 526,728 504,397 526,382
Equipment 1,550,883 1,475,076 1,517,168
Vehicles 146,041 146,041 146,041
Office furniture and equipment 438,263 414,619 432,668
- ------------------------------------------------------------------------------------------------------------------------------
Totals 3,332,684 3,207,112 3,293,028
Less - Accumulated depreciation 1,763,643 1,400,326 1,609,150
- ------------------------------------------------------------------------------------------------------------------------------
Net property and equipment 1,569,041 1,806,786 1,683,878
- ------------------------------------------------------------------------------------------------------------------------------
Other assets:
Goodwill - Net of accumulated amortization 2,213,568 2,389,481 2,301,525
Loan fees - Net of accumulated amortization 59,891 59,909 54,400
Organization costs - Net of accumulated amortization 0 90,926 86,939
Consulting agreement - Net of accumulated amortization 243,289 365,711 300,000
- ------------------------------------------------------------------------------------------------------------------------------
Total other assets 2,516,748 2,906,027 2,742,864
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $4,416,369 $5,334,843 $5,009,166
==============================================================================================================================
</TABLE>
F-12
<PAGE> 36
Phillips Broadcasting Company, Inc.
Balance Sheets
June 30, 1999 and 1998 (unaudited) and December 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
UNAUDITED AUDITED
--------------------------------- --------------------
JUNE 30, JUNE 30, DECEMBER 31,
LIABILITIES AND DEFICIENCY IN ASSETS 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current liabilities:
Current maturities of notes payable $545,098 $622,152 $623,528
Current maturities of capital lease obligations 15,830 11,000 16,297
Note payable - Bank 1,100,000 0 0
Accounts payable - Trade 53,566 62,428 101,873
Accounts payable - Stockholder 0 0 6,330
Accrued expenses 105,934 246,630 282,495
- ------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,820,428 942,210 1,030,523
- ------------------------------------------------------------------------------------------------------------------------------
Long-term liabilities:
Notes payable 3,105,445 4,702,359 4,340,784
Capital lease obligations 33,359 33,244 38,364
- ------------------------------------------------------------------------------------------------------------------------------
Total long-term liabilities 3,138,804 4,735,603 4,379,148
- ------------------------------------------------------------------------------------------------------------------------------
Deficiency in assets:
Common stock - No par value:
Authorized - 600 shares
Issued - 330 shares 51,000 51,000 51,000
Retained earnings 54,637 254,530 196,995
- ------------------------------------------------------------------------------------------------------------------------------
Total 105,637 305,530 247,995
Less - 66 shares of treasury stock - At cost 648,500 648,500 648,500
- ------------------------------------------------------------------------------------------------------------------------------
Total deficiency in assets (542,863) (342,970) (400,505)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $4,416,369 $5,334,843 $5,009,166
==============================================================================================================================
</TABLE>
F-13
<PAGE> 37
Phillips Broadcasting Company, Inc.
Statements of Operations and Retained Earnings
Six months ended June 30, 1999 and 1998 (unaudited) and year ended December 31,
1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNAUDITED AUDITED
-------------------------------- ----------------
JUNE 30, JUNE 30, DECEMBER 31,
1999 1998 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
AM revenue $138,169 $217,150 $437,371
FM revenue 750,411 1,506,411 3,172,296
- -----------------------------------------------------------------------------------------------------
Total revenues 888,580 1,723,561 3,609,667
Less - Agency commission 62,922 94,962 175,170
- -----------------------------------------------------------------------------------------------------
Net revenues 825,658 1,628,599 3,434,497
- -----------------------------------------------------------------------------------------------------
Operating expenses:
Technical expenses 103,166 116,628 284,871
Program expenses 264,859 487,251 1,044,554
Selling expenses 193,009 326,390 654,395
General and administrative expenses 509,072 598,898 1,191,587
- -----------------------------------------------------------------------------------------------------
Total operating expenses 1,070,106 1,529,167 3,175,407
- -----------------------------------------------------------------------------------------------------
Gross profit (loss) from operations (244,448) 99,432 259,090
- -----------------------------------------------------------------------------------------------------
Other income (deductions):
Rental income 6,366 7,450 19,100
Interest income 52 361 789
Interest expense (204,430) (224,858) (436,708)
Other income 203,358 16,458 36,571
Other expense 0 0 (37,571)
Organization costs write-off (86,939) 0 0
- -----------------------------------------------------------------------------------------------------
Total other income (deductions) (81,593) (200,589) (417,819)
- -----------------------------------------------------------------------------------------------------
Net loss before extraordinary item (326,041) (101,157) (158,729)
Extraordinary item - Forgiveness of principal
and interest upon extinguishment of debt related
to previous business acquisition 191,205 0 0
- -----------------------------------------------------------------------------------------------------
Net loss (134,836) (101,157) (158,729)
Retained earnings at beginning 196,995 357,070 357,070
- -----------------------------------------------------------------------------------------------------
Totals 62,159 255,913 198,341
Distributions to stockholder 7,522 1,383 1,346
- -----------------------------------------------------------------------------------------------------
Retained earnings at end $ 54,637 $254,530 $196,995
=====================================================================================================
</TABLE>
F-14
<PAGE> 38
Phillips Broadcasting Company, Inc.
Statements of Cash Flows
Six months ended June 30, 1999 and 1998 (unaudited) and year ended December 31,
1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
UNAUDITED AUDITED
--------------------------------- ----------------
JUNE 30, JUNE 30, DECEMBER 31,
1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($134,836) ($101,157) ($158,729)
- -----------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Provision for depreciation and amortization 413,609 332,963 704,951
Extraordinary gain on extinguishment of debt (191,205) 0 0
Changes in operating assets and liabilities:
Accounts receivable 453,489 (18,389) 8,724
Prepaid expenses and other assets (79,308) 0 0
Accounts payable (54,637) (11,000) 34,774
Accrued and other liabilities (83,356) 51,636 87,501
- -----------------------------------------------------------------------------------------------------------------------------
Total adjustments 458,592 355,210 835,950
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 323,756 254,053 677,221
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (39,656) (77,943) (163,860)
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in short-term debt 1,100,000 0 0
Principal payments on long-term liabilities (1,221,241) (140,362) (505,493)
Proceeds from issuance of long-term liabilities 0 0 15,350
Stockholder distributions (7,522) (1,383) (1,346)
Payment of loan fees (33,000) (4,800) (4,800)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (161,763) (146,545) (496,289)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 122,337 29,565 17,072
Cash and cash equivalents at beginning 28,113 11,041 11,041
- -----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end $150,450 $40,606 $28,113
=============================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $190,705 $204,459 $398,086
</TABLE>
F-15
<PAGE> 39
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPAL BUSINESS ACTIVITY
Phillips Broadcasting Company, Inc. (the "Company") operates six radio
stations in western Wisconsin: WMEQ-AM and FM, located in Menomonie;
WQRB-FM in Bloomer; WATQ-FM in Chetek; and WBIZ-AM and FM licensed in
Eau Claire.
On February 13, 1999, the sole stockholder of the Company signed a
letter of intent for sale of all tangible and intangible assets used in
the operation of all stations. The agreement calls for negotiation and
execution of a definitive Asset Purchase Agreement to be completed
within 45 days of delivery of various documents to the buyer. On April
7, 1999, the Company entered into a Local Marketing Agreement ("LMA")
with Cumulus Broadcasting, Inc. Under the LMA, Phillips makes
available, for a fee, airtime on its station to Cumulus, which supplies
programming to be broadcast during that airtime and collects from
advertising aired during such programming. The LMA remained in effect
until the Asset Purchase Agreement was finalized on September 15, 1999.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of the accompanying financial statements in conformity
with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results
of reported assets, liabilities, revenue, and expenses. Actual results
may differ from these estimates.
TRADE AGREEMENTS
The Company enters into trade agreements which give rise to sales of
advertising airtime in exchange for products and services. Sales from
trade agreements are recognized at the fair market value of products or
services received as advertising airtime is broadcast. Products and
services received are expensed when used in the broadcast operations.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and accounts
receivable. The Company performs ongoing credit evaluations of its
customers and believes credit risk is minimal.
The Company maintains its cash in bank deposit accounts at various
local financial institutions. Accounts at each institution are insured
by the Federal Deposit Insurance Corporation up to $100,000. Operating
cash requirements frequently require that
F-16
<PAGE> 40
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
amounts on deposit exceed the FDIC limits. Management believes these
financial institutions have strong credit ratings and the credit risk
related to these deposits is minimal.
F-17
<PAGE> 41
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with an
original maturity of three months or less to be cash equivalents.
PROPERTY, EQUIPMENT, AND DEPRECIATION
Property and equipment are valued at cost and include equipment under
leases which have been capitalized. Maintenance and repair costs are
charged to expense as incurred. Gains or losses on disposition of
property and equipment are reflected in income. Depreciation and
amortization of property and equipment are provided for financial
reporting purposes using straight-line and accelerated methods over the
estimated useful lives of the assets or terms of the lease, whichever
is required. Depreciation expense for the year totalled $400,715.
<TABLE>
<CAPTION>
<S> <C>
Buildings and improvements 31 to 39 years
Tower and antenna 15 to 20 years
Equipment 5 to 10 years
Vehicles 5 years
Office furniture and equipment 5 to 7 years
</TABLE>
OTHER ASSETS
Organization costs related to the start up of WATQ-FM in Chetek and the
acquisition of WBIZ-AM and FM in Eau Claire are being amortized on the
straight-line basis over a 60-month period.
During the first quarter of 1999, the Company changed its method of
accounting for organization costs. The change involved expensing these
costs as incurred, rather than capitalizing and subsequently amortizing
these costs. The change in accounting principle resulted in a write-off
of the costs capitalized as of January 1, 1999 totalling $86,939.
Loan origination fees are being amortized on the straight-line basis
over the terms of the related long-term debt.
Goodwill acquired in the acquisition of WBIZ-AM and FM in Eau Claire is
being amortized on the straight-line basis over 15 years.
A consulting agreement entered into as part of the acquisition of
WBIZ-AM and FM is being amortized over the five-year life of the
agreement.
Total amortization expense for the year totalled $304,236.
F-18
<PAGE> 42
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INCOME TAXES
The Company has elected to be taxed under the provisions of Subchapter
S of the Internal Revenue Code and comparable state regulations. Under
these provisions, the Company does not pay federal and state corporate
income taxes on its taxable income (nor is it allowed a net operating
loss carryback or carryover as a deduction). Instead, the stockholder
reports on his personal income tax return his proportionate share of
the Company's taxable income (or loss) and tax credits.
INTERIM FINANCIAL DATA (UNAUDITED)
The interim financial data as of June 30, 1999 and 1998, and for each
of the six months ended June 30, 1999 and 1998, is unaudited. The
accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with Rule 10-01 of Regulation S-X.
Accordingly they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
necessary for a fair presentation of results of the interim periods
have been made and such adjustments were of a normal and recurring
nature. The results of operations and cash flows for the six months
ended June 30, 1999, are not necessarily indicative of the results that
can be expected for the entire fiscal year ending December 31, 1999.
NOTE 2 LONG-TERM NOTES PAYABLE
Long-term notes payable consist of the following:
F-19
<PAGE> 43
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUDITED
DECEMBER 31,
1998
- ---------------------------------------------------------------------------------
<S> <C>
Variable rate note payable (8.5% at December 31, 1998)
with Norwest Bank Minnesota N.A., secured by accounts
receivable, property and equipment, and general
intangibles, personal guaranty of the sole
stockholder, and assignment of various life insurance
policies with principal payable in monthly
installments ranging from $41,892 in 1999 to $67,027
in 2004 plus interest, due December 1, 2004. $3,866,950
6% note payable to Americus Communications #1 Limited
Partnership with accrued interest and principal
balance due in a single payment on February 5, 2002,
subordinate to Norwest Bank Minnesota N.A. note 750,000
payable above.
Installment obligation to Americus Communications #1
Limited Partnership for consulting services, payable
in annual installments of $100,000 through February 5, 300,000
2002.
</TABLE>
F-20
<PAGE> 44
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 3 LONG-TERM NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
AUDITED
DECEMBER 31,
1998
-------------------------------------------------------------------------
<S> <C>
8.25% note payable, secured by a vehicle, payable in
monthly installments of $392 including interest, due
June 5, 2000. $4,298
9.25% note payable, secured by a vehicle, payable in
monthly installments of $1,253 including interest, due
September 10, 2001. 36,401
8.25% note payable, secured by a vehicle, payable in
monthly installments of $732 including interest, due
August 21, 1999. 6,663
--------------------------------------------------------------------------
Totals 4,964,312
Less - Current maturities 623,528
--------------------------------------------------------------------------
Total long-term portion $4,340,784
==========================================================================
</TABLE>
The variable rate note payable is supported by a credit agreement which
provides for certain restrictive covenants, including minimum amounts
of operating cash flow, maintenance of various financial ratios, and
limitations on additional borrowing or payment of dividends.
Required payments of principal on long-term notes payable including
current maturities, are summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $623,528
2000 668,635
2001 717,980
2002 1,415,112
2003 734,724
Thereafter 804,333
--------------------------------------------------------------------------------------------------------
Totals $4,964,312
========================================================================================================
</TABLE>
F-21
<PAGE> 45
Phillips Broadcasting Company, Inc.
Notes to Financial Statements
- ------------------------------------------------------------------------------
NOTE 4 LEASES
The Company leases office equipment and software under agreements
expiring in the next four years, which are classified as capital
leases.
Property and equipment includes the following amounts for the leases
that have been capitalized:
<TABLE>
<CAPTION>
<S> <C>
Office equipment $71,507
Less - Accumulated amortization 28,723
-------------------------------------------------------------------------------------------------------
Total $42,784
=======================================================================================================
</TABLE>
Lease amortization is included in depreciation expense.
Future minimum payments by year and in aggregate, under the capital
leases with initial or remaining terms in excess of one year, consist
of the following at June 30, 1999:
<TABLE>
<CAPTION>
<S> <C>
1999 $20,311
2000 19,193
2001 16,887
2002 6,033
------------------------------------------------------------------------------------------------------
Total minimum lease payments 62,424
Amount representing interest 7,763
------------------------------------------------------------------------------------------------------
Present value of net minimum lease payments 54,661
Less - Current maturities 16,297
------------------------------------------------------------------------------------------------------
Long-term obligations under capital leases $38,364
======================================================================================================
</TABLE>
F-22
<PAGE> 46
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Cumulus Media Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in shareholders' equity and of cash flows present fairly,
in all material respects, the financial position of Cape Fear Broadcasting
Company at December 31, 1998, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
October 27, 1999
Chicago, Illinois
F-23
<PAGE> 47
CAPE FEAR BROADCASTING COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1999 1998
---------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,712,799 $2,002,609
Accounts receivable, less allowance for doubtful
accounts of $85,202 at June 30, 1999 and December 31, 1998 1,140,254 1,247,924
Current portion of notes receivable from shareholders 152,311 166,170
Prepaid expenses 26,377 6,646
---------- ----------
Total current assets 3,031,741 3,423,349
---------- ----------
Property and equipment, net 732,035 731,147
Intangible assets, net of accumulated amortization of $1,666 3,334 --
Notes receivable from shareholders, net of current portion 304,887 296,215
Accounts receivable, officers 604,746 582,005
Due from affiliate 1,325,678 989,442
Securities available for sale 547,834 418,856
---------- ----------
3,518,514 3,017,665
---------- ----------
Total assets $6,550,255 $6,441,014
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 56,350 $ 72,580
Accounts payable 63,353 99,238
Accrued payroll and commissions 282,648 279,877
Accrued taxes payable 46,772 115,988
Other accrued expenses 66,852 57,550
---------- ----------
Total current liabilities 515,975 625,233
---------- ----------
Long term debt, net of current portion 313,112 344,740
---------- ----------
Total liabilities 829,087 969,973
---------- ----------
Commitments and contingencies
Shareholders' equity:
Capital stock $100 par value, 1,000 shares authorized
with 416 shares issued and outstanding 41,600 41,600
Retained earnings 5,303,807 5,182,658
Accumulated other comprehensive income 375,761 246,783
---------- ----------
Total shareholders' equity 5,721,168 5,471,041
---------- ----------
Total liabilities and shareholders' equity $6,550,255 $6,441,014
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 48
CAPE FEAR BROADCASTING COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-----------------------------------
December 31,
1999 1998 1998
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Revenues $ 2,860,634 $ 2,661,160 $ 5,847,552
Less: Agency commissions (263,405) (215,536) (573,887)
----------- ----------- -----------
Net revenues 2,597,229 2,445,624 5,273,665
----------- ----------- -----------
Station operating expenses 1,156,795 1,072,009 2,251,644
General and administrative expenses 753,201 684,467 1,458,619
Depreciation and amortization 82,815 99,822 141,463
----------- ----------- -----------
Income from operations 604,418 589,326 1,421,939
----------- ----------- -----------
Interest income 43,020 27,399 131,436
Interest expense 20,314 26,439 27,869
Other income, net 13,885 1,155 48,704
----------- ----------- -----------
Net income $ 641,009 $ 591,441 $ 1,574,210
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE> 49
CAPE FEAR BROADCASTING COMPANY
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Accumulated
Other
Capital Retained Comprehensive
Stock Earnings Income Total
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 $ 41,600 $ 4,574,048 $ 108,108 $ 4,723,756
Net income 1,574,210 1,574,210
Unrealized holding gains on securities
available for sale 138,675 138,675
-----------
Comprehensive income 1,712,885
Distributions to shareholders (965,600) (965,600)
----------- ----------- ----------- -----------
Balance at December 31, 1998 $ 41,600 $ 5,182,658 $ 246,783 $ 5,471,041
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE> 50
CAPE FEAR BROADCASTING COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-------------------------------
December 31,
1999 1998 1998
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 641,009 $ 591,441 $ 1,574,210
Adjustment to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 82,815 99,822 141,463
Allowance for doubtful accounts -- -- 85,202
Changes in operating assets and liabilities:
Accounts receivable 107,670 (1,891) (201,913)
Prepaid expenses (19,731) (28,431) 15,257
Accounts receivable, officers and affiliates (358,977) (138,294) (812,605)
Other assets -- (157,951) --
Accounts payable (35,885) 10,056 46,939
Accrued payroll and commissions 2,771 1,620 83,638
Other accrued expenses 9,302 (63,200) 37,896
Accrued taxes payable (69,216) 2,858 107,869
----------- ----------- -----------
Net cash provided by operating activities 359,758 316,030 1,077,956
----------- ----------- -----------
Cash flows from investing activities:
Purchase of intangible asset (5,001) -- --
Purchase of property and equipment (82,036) (100,988) (84,290)
Purchase of investments -- -- (10,281)
Issuances of notes receivable -- (98,636) --
Payments received on notes receivable 5,187 -- 538,847
----------- ----------- -----------
Net cash (used) provided by investing activities (81,850) (199,624) 444,276
----------- ----------- -----------
Cash flows from financing activities:
Issuance of long-term debt -- -- 21,000
Payments made on long-term debt (47,858) (24,271) (114,880)
Distributions to shareholders (519,860) (317,048) (965,600)
----------- ----------- -----------
Net cash used by financing activities (567,718) (341,319) (1,059,480)
----------- ----------- -----------
Net (decrease) increase in cash (289,810) (224,913) 462,752
Cash at beginning of year 2,002,609 1,539,857 1,539,857
----------- ----------- -----------
Cash at end of year $ 1,712,799 $ 1,314,944 $ 2,002,609
=========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 20,314 $ 26,439 $ 27,869
=========== =========== ===========
Non-cash operating activities:
Trade revenue $ 53,420 $ 62,710 $ 233,469
=========== =========== ===========
Trade expense $ 45,606 $ 61,791 $ 229,480
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE> 51
\CAPE FEAR BROADCASTING COMPANY
INDEX TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Company was incorporated in 1942 under the laws of the State of North
Carolina. The Company is engaged in radio broadcasting, operating
stations WFNC-AM, WQSM and WGNI in the Fayetteville and Wilmington, North
Carolina markets.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
All items with an original maturity of three months or less are
considered to be cash equivalents.
REVENUE RECOGNITION
Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.
TRADE
The Company enters into agreements in which advertising time is traded
for various products or services. Trade transactions are reported at the
value of goods or services received. Revenue or expense and a
corresponding asset or liability are reported when advertisements are
aired or when goods and services are received.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line basis over their estimated useful lives as follows:
<TABLE>
<CAPTION>
<S> <C>
Transmitting and studio equipment 5-15 years
Furniture and fixtures 5-10 years
Vehicles 5 years
Building 39 years
</TABLE>
INTANGIBLE ASSETS
Intangible assets consist of a broadcast license which is amortized
on a straight-line basis over 5 years.
Management regularly monitors and evaluates the realizability of recorded
intangibles. Recoverability of assets to be held and used is measured by
a comparison of carrying amount of the assets to future cash flows
expected to be generated by the assets. If such assets are considered to
be impaired, the impairment to be recognized is the amount by which the
carrying amount exceeds the fair value of the assets. The Company
believes that the carrying value of recorded intangibles is not
impaired.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable.
The Company performs credit evaluations of its customers and generally
does not require collateral for its accounts receivable. The Company
reserves for potential credit losses based upon the expected
collectibility of all accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable and accounts payable
approximates fair value because of the short maturity of these
instruments. The carrying value of the Company's debt approximates fair
value. Fair value of the debt is based on the quoted market prices for
the same or similar issues.
F-28
<PAGE> 52
CAPE FEAR BROADCASTING COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
SECURITIES AVAILABLE FOR SALE
The Company's securities available for sale consist of marketable equity
securities that have a readily determinable fair market value. Management
determines the appropriate classification of its investments at the time
of purchase. The securities are carried at fair market value.
Unrealized gains and losses are reported as a separate component of
shareholders' equity. Realized gains and losses on all marketable
securities are determined by specific identification and are charged or
credited to current earnings.
INCOME TAXES
The Company has elected to be taxed as an S Corporation, effective June
1, 1987, under the provisions of the Internal Revenue Code. Under those
provisions, the Company does not pay corporate income taxes on its
taxable income. Instead, the shareholders are liable for individual
income taxes on their respective share of the Company's taxable income.
INTERIM FINANCIAL STATEMENTS
The financial statements for the six months ended June 30, 1999 and 1998,
are unaudited, but in the opinion of management, such financial
statements have been presented on the same basis as the audited financial
statements for the year ended December 31, 1998, and include all
adjustments, consisting only of normal recurring adjustments necessary
for a fair presentation of the financial position and results of
operations and cash flows for these periods.
2. PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<S> <C>
Transmitting and studio equipment $ 1,914,501
Furniture and fixtures 496,055
Building and improvements 657,350
Vehicles 222,172
Land 71,819
--------------
3,361,897
Accumulated depreciation 2,630,750
--------------
Property and equipment, net $ 731,147
===============
</TABLE>
Depreciation expense was $141,463 for the year ended December 31, 1998.
F-29
<PAGE> 53
CAPE FEAR BROADCASTING COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. NOTES RECEIVABLE FROM SHAREHOLDER
Notes receivable consist of the following:
<TABLE>
<S> <C>
Notes receivable from shareholders, interest
accrual at 5.63% per annum, secured by stock of the Company $ 323,815
Notes receivable from shareholders, interest
accrual at 5.63% per annum, secured by stock of the Company 138,570
-------------
462,385
Less current portion 166,170
-------------
$ 296,215
=============
</TABLE>
4. SECURITIES AVAILABLE FOR SALE
The cost and estimated market value of securities available for sale at
December 31, 1998 are as follows:
<TABLE>
<S> <C>
Fair market value $ 418,856
Cost 172,073
------------
Unrealized gain $ 246,783
============
</TABLE>
F-30
<PAGE> 54
CAPE FEAR BROADCASTING COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. LONG TERM DEBT
<TABLE>
<S> <C>
Long term debt consists of the following:
Note payable to First Union National Bank,
payments of $2,795 per month, including
interest at prime, collateralized by broadcast tower, due
February 2000 $ 18,809
Note payable to First Union National Bank,
payments of $627 per month including
interest at 9.5%, collateralized by broadcast equipment,due
February 1999 942
Note payable to First Union National Bank,
payments of $585 per month, including
interest at 8.5% collateralized by vehicle, due November 2001 18,085
Note payable to First Union National Bank,
payments to $6,500 per month including
interest at prime, a balloon payment due
December 2000, collateralized by real estate 379,484
-----------
417,320
Less current portion 72,580
-----------
$ 344,740
===========
</TABLE>
Maturities of long term debt are as follows:
<TABLE>
<S> <C>
1999 $ 72,580
2000 338,620
2001 6,120
-----------
$ 417,320
===========
</TABLE>
6. CONCENTRATION OF CREDIT RISK
The Company maintains its cash balances at five financial institutions
located in Fayetteville, NC and Wilmington, NC. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up
to $100,000. At December 31, 1998, the Company's uninsured cash balances
totaled $1,460,320. The Company has not experienced any losses in such
cash accounts and believes it is not exposed to any significant credit
risk.
F-31
<PAGE> 55
CAPE FEAR BROADCASTING COMPANY
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is an unconditional guarantor of a C.F. Radio, Inc. bank
loan in the amount of $4,511,278 (see Note 8). The Company leases
office and tower space from an affiliated company for radio
broadcasting operations under an oral lease agreement. Management
believes the rent charged approximates market rates.
8. RELATED PARTY TRANSACTIONS
The Company is affiliated with C.F. Radio, Inc., a North Carolina
corporation, through common ownership. At December 31, 1998 amounts
receivable from C.F. Radio, Inc. were $989,442.
Accounts receivable for $582,005 as of December 31, 1998 are due the
Company from certain officers for life insurance premiums.
The Company has notes receivable from shareholders totaling $462,385 as
of December 31, 1998. These notes bear interest at 5.63%.
9. EMPLOYEE BENEFIT PLANS
Effective July 1, 1997, the Company established a qualified deferred
compensation plan under section 401(k) of the Internal Revenue Code.
Under the plan, employees may elect to defer up to 10% of their
salary, subject to the Internal Revenue Service limits. The Company
may make a discretionary contribution. The Company accrued
contributions of $10,417 in 1998 that were paid to the plan in
January, 1999.
10. SUBSEQUENT EVENT
On September 1, 1999 the Company entered into a local marketing
agreement with Cumulus Broadcasting, Inc. Under the local marketing
agreement the licensee of the Company's stations make available to
Cumulus Broadcasting Inc., for a fee, air time on their stations.
Cumulus will provide the programming to be broadcast during the air
time and will collect the advertising it sells for such programming.
On September 23, 1999, the Company and C.F. Radio, Inc., an entity also
controlled by the Company's shareholders entered into an agreement to
sell substantially all of their broadcast assets and FCC licenses to
Cumulus Broadcasting, Inc., Cumulus Wireless Services, Inc., and
Cumulus Licensing Corp., (wholly owned subsidiaries of Cumulus Media
Inc.) (collectively "Cumulus") for $44,000,000 in cash and an
additional payment of $3,000,000 due at closing, payable in cash or
stock at the discretion of Cumulus.
F-32
<PAGE> 56
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Cumulus Media Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
C.F. Radio, Inc. at December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
October 27, 1999
Chicago, Illinois
F-33
<PAGE> 57
C.F. RADIO, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1999 1998
---------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 670,579 $ 591,793
Accounts receivable 579,972 513,232
Prepaid expenses 13,503 1,628
---------- ----------
Total current assets 1,264,054 1,106,653
---------- ----------
Property and equipment, net 1,741,801 1,825,245
Intangible assets, net 3,960,482 4,103,980
Other assets - 19,706
---------- ----------
Total assets $6,966,337 $7,055,584
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 334,386 $ 181,481
Accounts payable 28,930 52,396
Accrued payroll and commissions 113,480 108,800
Accrued interest 37,241 37,658
Other accrued expenses 59,914 35,347
---------- ----------
Total current liabilities 573,951 415,682
---------- ----------
Long term liabilities:
Long term debt, net of current portion 5,218,836 5,400,621
Due to affiliate 1,324,037 989,442
---------- ----------
Total long term liabilities 6,542,873 6,390,063
---------- ----------
Total liabilities 7,116,824 6,805,745
---------- ----------
Commitments and contingencies
Shareholders' equity:
Capital stock no par value, 100,000 shares authorized
with 7,000 shares issued and outstanding 7,000 7,000
Retained earnings (deficit) (157,487) 242,839
---------- ----------
Total shareholders' equity (150,487) 249,839
---------- ----------
Total liabilities and shareholders' equity $6,966,337 $7,055,584
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE> 58
C.F. RADIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------- DECEMBER 31,
1999 1998 1998
---------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Revenues $1,179,617 $707,639 $2,040,052
Less: Agency commissions (132,382) (84,585) (233,518)
---------- -------- ----------
Net revenues 1,047,235 623,054 1,806,534
Station operating expenses 561,047 241,855 753,284
General and administrative expenses 203,104 113,561 342,817
Depreciation and amortization 323,498 62,485 354,866
---------- -------- ----------
Income (loss) from operations (40,414) 205,153 355,567
---------- -------- ----------
Interest expense 254,142 41,388 350,368
Other income, net 34,528 22,045 11,952
---------- -------- ----------
Net income (loss) $ (260,028) $185,810 $ 17,151
========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE> 59
C.F. RADIO, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended December 31, 1998
<TABLE>
<CAPTION>
CAPITAL RETAINED
STOCK EARNINGS TOTAL
------ -------- --------
<S> <C> <C> <C>
Balance at January 1, 1998 $7,000 $232,688 $239,688
Net income 17,151 17,151
Distributions to shareholders (7,000) (7,000)
------ -------- --------
Balance at December 31, 1998 $7,000 $242,839 $249,839
====== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE> 60
C.F. RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------ DECEMBER 31,
1999 1998 1998
--------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(260,028) $ 185,810 $ 17,151
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 323,498 62,485 354,866
Change in operating assets and liabilities:
Accounts receivable (66,740) (21,418) (231,146)
Prepaid expenses (11,875) 1,538 (1,582)
Other assets 19,706 - (28,872)
Accounts payable (23,466) (1,553) 45,804
Accrued payroll and commissions (51,454) 11,606 60,427
Other accrued expenses and accrued interest 80,284 31,533 67,632
--------- ----------- -----------
Net cash provided by operating activities 9,925 270,001 284,280
Cash flows from investing activities:
Purchase of property and equipment (96,556) (416,937) (212,773)
Acquisition of stations (559,110) (5,219,213)
Due to affiliate 334,595 259,440 770,239
--------- ----------- -----------
Net cash used by investing activities 238,039 (716,607) (4,661,747)
--------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long term debt - 500,000 5,076,538
Payments made on long term debt (28,880) (82,729) (612,440)
Distributions to shareholders (140,298) (7,000)
--------- ----------- -----------
Net cash used by financing activities (169,178) 417,271 4,457,098
--------- ----------- -----------
Net increase (decrease) in cash 78,786 (29,335) 79,631
Cash at beginning of year 591,793 512,162 512,162
--------- ----------- -----------
Cash at end of year $ 670,579 $ 482,827 $ 591,793
========= =========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 254,559 $ 41,388 $ 312,710
========= =========== ===========
Noncash operating activities:
Trade revenue $ 16,171 $ - $ 32,350
========= =========== ===========
Trade expense $ 13,612 $ - $ 9,723
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 61
C.F. RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
C.F. Radio, Inc. was incorporated in April, 1992 under the laws of the
State of North Carolina and began operations in July, 1992. C.F. Radio,
Inc. owns 100% of Cape Fear Tower Systems, L.L.C. C.F. Radio, Inc. and
Cape Fear Tower Systems, L.L.C. (collectively, "the Company") is engaged
in radio broadcasting, operating stations WFNC-FM, WRCQ, and WMNX in the
Fayetteville and Wilmington, North Carolina markets.
The consolidated financial statements of the Company include the
accounts of C.F. Radio, Inc. and Cape Fear Tower Systems, LLC. Significant
intercompany balances have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
All items with an original maturity of three months or less are considered
to be cash equivalents.
TRADE
The Company enters into agreements in which advertising time is traded for
various products or services. Trade transactions are reported at the fair
value of the goods or services received. Revenue or expense and a
corresponding asset or liability are reported when advertisements are
aired or when goods and services are received.
ACCOUNTS RECEIVABLE
The Company considers accounts receivable at December 31, 1998 to be fully
collectible; accordingly, no allowance for doubtful accounts is required.
Amounts that become uncollectible are charged to operations when that
determination is made.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line basis over their estimated useful lives as follows:
<TABLE>
<S> <C>
Transmitting and studio equipment 5-15 years
Furniture and fixtures 5-10 years
Vehicles 5 years
Building 39 years
</TABLE>
INTANGIBLE ASSETS
Intangible assets, primarily FCC licenses and goodwill, are capitalized
and amortized on a straight-line basis and amortized over 15 years.
Management regularly monitors and evaluates the realizability of recorded
intangibles. Recoverability of assets to be held and used is measured by a
comparison of carrying amount of the assets to future cash flows expected
to be generated by the assets. If such assets are considered to be
impaired, the impairment to be recognized is the amount by which the
carrying amount exceeds the fair value of the assets. The Company believes
that the carrying value of recorded intangibles is not impaired.
F-38
<PAGE> 62
C.F. RADIO, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
REVENUE RECOGNITION
Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable and accounts payable
approximates fair value because of the short maturity of these
instruments. The carrying value of the Company's debt approximates fair
value. The fair value of debt is based on the quoted market prices for
the same or similar issues.
INCOME TAXES
The Company has elected to be taxed as an S Corporation since inception,
under the provisions of the Internal Revenue Code. Under those provisions,
the Company does not pay corporate income taxes on its taxable income.
Instead, the shareholders are liable for individual income taxes on their
respective share of the Company's taxable income.
INTERIM FINANCIAL STATEMENTS
The financial statements for the six months ended June 30, 1999 and 1998,
are unaudited, but in the opinion of management, such financial statements
have been presented on the same basis as the audited financial statements
for the year ended December 31, 1998, and include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations and cash
flows for these periods.
2. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<S> <C>
FCC licenses and goodwill $4,267,937
Accumulated amortization (163,957)
-----------
Intangible assets, net $4,103,980
===========
</TABLE>
Amortization expense was $133,057 for the year ended December 31, 1998.
3. ACQUISITIONS OF STATIONS
On March 2, 1998, C.F. Radio, Inc. acquired the assets of WFNC-FM in
Lumberton, NC for an aggregate purchase price of $700,000 plus acquisition
costs of $9,328. The acquisition was accounted for as a purchase and was
included with combined operations from that date through December 31,
1998. The purchase was financed with a $500,000 loan from the former owner
of the station and a $200,000 cash payment.
The total purchase price of $709,328 was allocated as follows:
<TABLE>
<S> <C>
Property and equipment $350,218
Intangible assets 359,110
--------
Total $709,328
========
</TABLE>
The allocation of the purchase price was based upon management's estimate
of the fair market value of the acquired assets.
F-39
<PAGE> 63
C.F. RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. ACQUISITIONS OF STATIONS, CONTINUED
On July 28, 1998, C.F. Radio, Inc. acquired the assets of WRCQ in
Fayetteville, NC for an aggregate purchase price of $4,313,688 and
acquisition costs of $196,197. The acquisition was accounted for as a
purchase and was included with combined operations from that date through
December 31, 1998. The purchase was financed with a $4,025,000 bank loan
and $288,688 cash payment.
The total purchase price of $4,509,885 was allocated as follows:
<TABLE>
<S> <C>
Property and equipment $ 695,871
Prepaid expenses 4,522
Program deposits 9,166
Intangible assets 3,800,326
----------
$4,509,885
==========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
Transmitting and studio equipment $1,827,871
Furniture and fixtures 113,165
Building and improvements 309,618
Vehicles 54,397
Land 85,000
----------
2,390,051
Accumulated depreciation 564,806
----------
Property and equipment, net $1,825,245
==========
</TABLE>
Depreciation expense was $221,809 for the year ended December 31, 1998.
F-40
<PAGE> 64
C.F. RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Note payable to First Union Bank, monthly interest only
payments through September 1999 at a variable interest
rate of the LIBOR Market Index plus an Applicable
Margin of 2.85% (see Note 6), monthly principal payments
to commence October 1999, balloon payment of $3,042,668
due July 2003, collateralized by substantially all assets
of the Company plus Company stock $4,511,278
Note payable to shareholders, payable in monthly installments,
with interest at 5.63% per annum due December 1999. 315,861
Mortgage payable to DRW Agency, Inc. monthly payments
of $3,773 including interest at 9%, collateralized by
purchase money deed of trust on real estate and guaranty
agreements of shareholders, due February 2005. 213,667
Note payable to First Union Bank, monthly payments of
$808, including interest at 7.8%, collateralized by
equipment, due December 2003. 39,893
Note payable to BB&T, monthly payments, of $516
including interest at 8%, collateralized by vehicle, due 25,367
December 2003.
Note payable, Arthur DeBerry and Associates, Inc.,
monthly payments of $6,334 including interest at 9%, 476,036
due March 2008. ----------
5,582,102
Less current portion 181,481
----------
$5,400,621
==========
</TABLE>
F-41
<PAGE> 65
C.F. RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. LONG-TERM DEBT, CONTINUED
Maturities of long term debt are as follows:
<TABLE>
<S> <C>
1999 $ 181,481
2000 449,073
2001 488,226
2002 534,807
2003 3,433,089
Thereafter 495,426
----------
$5,582,102
==========
</TABLE>
The First Union note in the amount of $4,511,728 contains restrictive
covenants regarding fixed charge coverage, interest coverage, debt to
earnings before interest and taxes, and capital expenditures. For the year
ended December 31, 1998, the Company was in violation of capital
expenditure covenant. The Company has received a waiver for this
violation.
6. INTEREST RATE SWAP AGREEMENT
On August 3, 1998, in conjunction with the $4,511,278 loan payable to
First Union, the Company entered into an interest rate swap agreement on
the full amount of the debt, which effectively converts the loan to a
fixed interest rate of 8.99%. The agreement terminates on July 31, 2003.
Each month, the Company makes payments to (receives payments from) First
Union equal to the amount by which the loan's monthly interest at 8.99%
exceeds (is less than) the monthly interest at the loan's floating rate.
If the Company should repay the loan prior to its scheduled maturity, or
otherwise break the swap agreement, an amount would be due by the Company
to First Union, or by First Union to the Company, based approximately upon
the present value of the future monthly payments under the swap agreement
given the interest rates in effect at the time the swap agreement is
canceled. As of December 31, 1998, the Company has no plans to cancel the
swap agreement; accordingly, no liability for any amounts which would be
due to First Union if the agreement were canceled has been recorded.
7. CONCENTRATION OF CREDIT RISK
The Company maintains its cash balances at financial institutions located
in Fayetteville and Wilmington, NC. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation up to $100,000. At
December 31, 1998 the Company's uninsured cash balances totaled $313,895.
The Company has not experienced any losses in such cash accounts and
believes it is not exposed to any significant credit risk.
F-42
<PAGE> 66
C.F. RADIO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
8. RELATED PARTY TRANSACTIONS
The Company is affiliated with Cape Fear Broadcasting Co., Inc., a North
Carolina corporation, through common ownership. At December 31, 1998
amounts payable to Cape Fear Broadcasting Co., Inc. were $989,442.
The Company borrowed funds from its shareholders in conjunction with the
initial purchase of the assets of the Company in 1992. At December 31,
1998 the amount owed to shareholders on these loans was $315,861.
The Company rents office and tower space to an affiliated company for
radio broadcasting operations under an oral lease agreement. Related
party rental income of approximately $35,000 is included within other
income.
9. EMPLOYEE BENEFIT PLANS
Effective July 1, 1997, the Company established a qualified deferred
compensation plan under section 401(k) of the Internal Revenue Code. Under
the plan, employees may elect to defer up to 10% of their salary, subject
to the Internal Revenue Service limits. The Company may make a
discretionary contribution. The Company accrued contributions of $573 in
1998 that were paid to the plan in January, 1999.
10. SUBSEQUENT EVENT
On September 1, 1999, the Company entered into a local marketing agreement
with Cumulus Broadcasting, Inc. Under the local marketing agreement the
licensees of the Company's stations make available to Cumulus
Broadcasting, Inc., for a fee, air time on their stations. Cumulus will
provide the programming to be broadcast during the air time and will
collect the advertising it sells for such programming.
On September 23, 1999, the Company and Cape Fear Broadcasting Company,
an entity also controlled by the Company's shareholders, entered into an
agreement to sell substantially all of their broadcast assets and FCC
licenses to Cumulus Broadcasting, Inc., Cumulus Wireless Services, Inc.,
and Cumulus Licensing Corp., (wholly owned subsidiaries of Cumulus Media
Inc.) (collectively "Cumulus") for $44,000,000 in cash and an additional
payment of $3,000,000 due at closing, payable in cash or stock at the
discretion of Cumulus.
F-43
<PAGE> 67
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
Calendar Broadcasting, Inc.:
We have audited the accompanying consolidated balance sheet of Calendar
Broadcasting, Inc. and subsidiaries as of December 31, 1998, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Calendar
Broadcasting, Inc. and subsidiaries as of December 31, 1998, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
April 2, 1999, except as to
note 13, which is as of
November 1, 1999
F-44
<PAGE> 68
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
Assets (note 5) 1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash 496,551 413,555
Accounts receivable, less allowance for doubtful accounts
of $99,921 and $94,669 at June 30, 1999 and
December 31, 1998, respectively 1,399,371 1,523,510
Prepaid expenses 102,604 49,689
Note receivable from affiliate (note 9) -- 130,500
Other current assets 72,129 42,110
------------ ------------
Total current assets 2,070,655 2,159,364
Property and equipment, net of accumulated depreciation of
$3,666,740 and $3,455,077 at June 30, 1999 and
December 31, 1998, respectively (notes 3 and 4) 1,918,003 2,058,505
Intangible assets, net of accumulated amortization of $6,642,294
and $6,114,510, at June 30, 1999 and December 31, 1998,
respectively (notes 3 and 5) 11,290,758 11,818,542
Other assets 20,605 19,605
------------ ------------
15,300,021 16,056,016
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 183,984 69,871
Accrued compensation 149,805 38,518
Accrued management fees (note 9) -- 175,000
Other accrued expenses 66,448 147,949
Accrued interest 109,393 124,261
Deferred revenue -- 20,531
Current portion of long-term debt (note 6) 337,500 450,000
------------ ------------
Total current liabilities 847,130 1,026,130
Long-term debt (note 6) 12,507,000 12,507,000
Mandatory redeemable convertible preferred stock, stated
and redemption value $1,000 per share. Authorized,
issued and outstanding 1,550 shares (note 11) 1,550,000 1,550,000
Stockholder's equity (notes 6 and 11):
Common stock, par value $.01. Authorized 30,000 shares;
issued and outstanding 6,783 shares 67 67
Additional paid-in capital 4,893,934 4,893,934
Accumulated deficit (4,498,110) (3,921,115)
------------ ------------
Total stockholders' equity 395,891 972,886
------------ ------------
Commitments (notes 10 and 12)
15,300,021 16,056,016
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-45
<PAGE> 69
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
SIX-MONTH PERIOD YEAR ENDED
ENDED JUNE 30 DECEMBER 31
-------------------------- -----------
1999 1998 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
Revenues 3,732,838 3,414,748 7,569,065
----------- ----------- -----------
Expenses:
Selling, technical and program 1,769,660 1,585,727 3,462,500
General and administrative (notes 9 and 10) 1,101,629 1,034,738 2,171,762
Depreciation and amortization 739,447 722,642 1,438,905
----------- ----------- -----------
Total expenses 3,610,736 3,343,107 7,073,167
----------- ----------- -----------
Operating income 122,102 71,641 495,898
Other income (expense):
Interest income 753 175 26,952
Interest expense (note 6) (699,850) (657,848) (1,499,000)
Loss on sale of radio station KVJY (AM) (note 3) -- -- (72,027)
----------- ----------- -----------
Loss before minority interest
in losses of subsidiaries
and extraordinary item (576,995) (586,032) (1,048,177)
Minority interest in losses of subsidiaries (note 1) 57,484 46,000
----------- ----------- -----------
Loss before extraordinary item (576,995) (528,548) (1,002,177)
Extraordinary item - loss on extinguishment of debt
(note 6) -- -- (236,725)
----------- ----------- -----------
Net loss (576,995) (528,548) (1,238,902)
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-46
<PAGE> 70
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholder's Equity
<TABLE>
<CAPTION>
COMMON ADDITIONAL
STOCK, $.01 PAID-IN ACCUMULATED
PAR VALUE CAPITAL DEFICIT TOTAL
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1997 67 5,993,934 (2,682,213) 3,311,788
Repurchase of warrants (note 6) -- (1,100,000) -- (1,100,000)
Net loss -- -- (1,238,902) (1,238,902)
---------- ---------- ---------- ----------
Balance at December 31, 1998 67 4,893,934 (3,921,115) 972,886
Net loss (unaudited) -- -- (576,995) (576,995)
---------- ---------- ---------- ----------
Balance at June 30, 1999 (unaudited) $ 67 4,893,934 (4,498,110) 395,891
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-47
<PAGE> 71
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
SIX-MONTH PERIOD
ENDED JUNE 30 DECEMBER 31
---------------------------- -----------
1999 1998 1998
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash (576,995) (528,548) (1,238,902)
(used in) provided by operating activities:
Extraordinary item - loss on extinguishment of debt -- 236,725
Depreciation and amortization 739,447 722,642 1,438,905
Minority interest -- (57,484) (46,000)
Amortization of deferred financing costs -- -- 41,491
Amortization of debt discount -- 17,000 31,575
Loss on sale of radio station KVJY (AM) -- -- 72,027
Change in allowance for doubtful accounts 5,252 (45,681) 3,540
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 118,887 (221,739) (313,664)
Increase in prepaid expenses (52,915) (29,366) (20,816)
(Increase) decrease in other current assets (30,019) 26,869 38,393
Increase in accrued interest on note receivable
from minority stockholder -- -- (26,484)
Increase in other assets, net (1,000) -- (1,000)
Increase (decrease) in accounts payable, accrued
expenses and deferred revenue (51,632) 245,321 (238,445)
Increase (decrease) in accrued and deferred
interest (14,868) 136,099 (30,055)
-------- -------- --------
Net cash (used in) provided by operating
activities 136,157 265,113 (52,710)
-------- -------- --------
Cash flows from investing activities:
Purchases of property and equipment (71,161) (216,140) (326,090)
Proceeds from sale of radio station KVJY (AM), net
of selling costs of $71,422 -- -- 628,578
(Increase) decrease in note receivable from affiliate 130,500 -- (130,500)
-------- ------- --------
Net cash (used in) provided by
investing activities 59,339 (216,140) 171,988
-------- -------- --------
Cash flows from financing activities:
Repurchase of warrants -- -- (1,100,000)
Repayments of subordinated debt -- -- (4,000,000)
Proceeds from term note payable -- 5,857,000
Repayment of term note (112,500) -- (500,000)
Payments under covenant not-to-compete -- (60,000)
Repayments of note receivable from
minority stockholder -- -- 15,000
Deferred financing costs -- -- (135,000)
-------- --------- ---------
Net cash provided by (used in)
financing activities (112,500) -- 77,000
Net increase in cash -------- -------- --------
Cash at beginning of period 82,996 48,973 196,278
413,555 217,277 217,277
Cash at end of period -------- ---------- --------
496,551 266,250 413,555
======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1998
-------------
<S> <C>
Supplemental disclosure of cash flow information - cash
paid for interest 1,456,844
============
</TABLE>
See accompanying notes to consolidated financial statements.
F-48
<PAGE> 72
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
(1) NATURE OF BUSINESS AND ORGANIZATION
Calendar Broadcasting, Inc. (the Company) was incorporated in the state
of Delaware in 1989 and is owned by M&F Calendar Holdings, L.P. (M&F
Calendar). M&F Calendar is a special purpose investment partnership
formed by the equity investment firm of M&F Associates, L.P. (formerly
Murphy & Fauver, L.P.). The Company was established for the purposes of
purchasing, owning, operating and managing radio stations.
In 1990, the Company established May Holding Corporation (May Holding), a
90% subsidiary, which in turn established May Communications, Inc. (May
Communications), a wholly-owned subsidiary. May Communications owns and
operates radio station KBFM (FM) in Edinburg, Texas, which was acquired
in 1991 for a purchase price of approximately $2,500,000.
In 1993, the Company established July Broadcasting, Inc. (July
Broadcasting). July Broadcasting owns and operates radio station KTEX
(FM) in Brownsville, Texas, and KVJY (AM) in Pharr, Texas, purchased for
$5,100,000 in 1995. On December 16, 1994, the Company established July
Holding Corporation (July Holding), an 88% subsidiary, for the purposes
of purchasing, owning, operating and managing radio stations. KVJY (AM)
was sold during 1998 (see note 3).
On February 7, 1997, April Holding Corporation (April Holding), a 90%
subsidiary of the Company, acquired April Broadcasting, Inc. (April
Broadcasting), for cash, exchange of stock and conversion of a Class A
note receivable due from April Broadcasting into common stock of April
Holding. April Broadcasting owns WBLX (FM) and WDLT (AM) in Mobile,
Alabama, purchased in 1990 for $5,250,000 and WDLT (FM) in Mobile,
Alabama, purchased in 1997 for approximately $3,400,000.
The Company, April Holding, April Broadcasting, May Holding, May
Communications, July Holding and July Broadcasting have some common
officers and directors.
(2) SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Company, April Holding, April Broadcasting, May Holding, May
Communications, July Holding and July Broadcasting. All material
intercompany items and transactions have been eliminated.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the respective
assets, which range from 5 to 31-1/2 years. Maintenance and repairs are
charged to operations as incurred.
(Continued)
F-49
<PAGE> 73
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
INTANGIBLE ASSETS
Intangible assets consist primarily of broadcasting assets amortized on a
straight-line basis over periods from 5 to 25 years.
Management regularly monitors and evaluates the realizability of recorded
intangibles. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of the assets to future undiscounted
cash flows expected to be generated by the assets. If such assets are
considered to be impaired, the impairment to be recognized is the amount
by which the carrying amount exceeds the fair value of the assets. The
Company believes that the carrying value of recorded intangibles is not
impaired.
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Deferred income taxes are measured using the enacted tax rates
and laws that are anticipated to be in effect when the differences are
expected to reverse.
REVENUE
Broadcast revenue is recognized when advertisements are aired and is
presented net of agency commissions.
BARTER TRANSACTIONS
Revenue from barter transactions (advertising provided in exchange for
goods and services) is recognized as income when advertisements are
broadcast, and barter expense is recognized when merchandise is received
or services are performed. Barter revenue was approximately $390,000 and
barter expense was approximately $324,000 during the year ended December
31, 1998.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets and identifiable intangibles
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable through a review
of undiscounted cash flows.
(Continued)
F-50
<PAGE> 74
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
(3) DISPOSITION
On November 9, 1998, July Broadcasting completed the sale of KVJY (AM)
Pharr, Texas, to Vie Dansante Broadcasting, Inc. for $700,000. A portion
of the proceeds from the sale was used to repay a portion of the
principal balance of the FINOVA Term Loan (see note 6). July Broadcasting
recognized a loss on the sale totaling $72,027.
(Continued)
F-51
<PAGE> 75
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
(4) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 consists of the following:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
Land 211,110
Buildings 1,039,742
Equipment 4,040,206
Furniture and fixtures 196,406
Vehicles 26,118
----------
5,513,582
Less accumulated depreciation 3,455,077
----------
2,058,505
==========
</TABLE>
(5) INTANGIBLE ASSETS
Intangible assets at December 31, 1998 consists of the following:
<TABLE>
<CAPTION>
1998
------------
<S> <C>
Goodwill 6,452,271
FCC licenses 5,892,524
Advertising client base and contracts 2,096,987
Favorable leases 623,167
Covenants not to compete 635,081
Deferred financing costs 130,576
Other intangibles 2,102,446
------------
17,933,052
Less accumulated amortization 6,114,510
------------
11,818,542
============
</TABLE>
(Continued)
F-52
<PAGE> 76
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
(6) LONG-TERM DEBT
Long-term debt at December 31, 1998 consists of the following:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
Term loan 12,957,000
----------
Total long-term debt 12,957,000
Less current portion 450,000
----------
12,507,000
==========
</TABLE>
On October 29, 1998, April Broadcasting, May Communications and
July Broadcasting executed the Second Amended and Restated Loan
Agreement by which they borrowed an additional $5,857,000 from
FINOVA which was used to repay in full amounts due under the
Allied agreement (discussed below); repurchase the Allied
warrants; pay all amounts due under the covenant not to compete;
pay transaction costs; and provide working capital. The principal
terms of the Term Loan, as amended are repayment in 20 consecutive
quarterly installments, starting at $150,000 and increasing to
$350,000 beginning April 1, 1999, with the remaining principal of
$1,357,000 due on the first business day of October 2003; and
interest payable monthly beginning November 1998 at the base rate
of a major bank plus an
(Continued)
F-53
<PAGE> 77
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
additional factor which varies from 1.00% to 2.50%, based upon a cash
flow related ratio. In connection with the repayments under the Allied
agreement and the FINOVA refinancing, the Company wrote off the related
unamortized deferred financing costs and unamortized discount on the
Allied subordinated debt, which are included as an extraordinary item in
the accompanying consolidated statement of operations for the year ended
December 31, 1998.
On November 9, 1998, July Broadcasting made a $500,000 payment of the
principal balance of the FINOVA Term Loan from a portion of the proceeds
from the sale of KVJY (AM) (see note 3).
The Term Loan is collateralized by substantially all of the assets and
stock of April Broadcasting, May Communications and July Broadcasting.
The refinanced loan also contains certain restrictive covenants that
require the maintenance of certain debt service and leverage ratios, as
well as other financial and nonfinancial covenants, applied on a
consolidated basis. The term loan is guaranteed by the minority
stockholder of the Company.
On October 31, 1997, the Company entered into a subordinated debt
agreement with Allied for $4,000,000. The proceeds were used for
working capital and to provide April Broadcasting funds to acquire radio
station WDLT (FM). No principal payments could be made under this
subordinated debt agreemnt until the Term Loan was paid in full;
however; quarterly interest payments were required to be made. The
agreement granted Allited warrants for 15% of the Company's capital
stock. The warrants were exercisable at any time at an exercise price
of $100. At any time beginning five years after the date of the
subordinated debt agreement, the holders could, on one occasion only,
require the Company to purchase the warrants or the shares issued
thereunder at the price determinded as of the time of the exercise of
the clause, equl to the product of the appraised value of the Company
determined pursuant to the terms of the agreement. If the subordinated
debentures are repaid in full within three years of the date of the
subordinated debt agreement, the Company at its option could repurchase
the warrants or any shares issued thereunder at $1,100,000 through the
24th month of the subordinated debt agreement and at $2,000,000 through
the 36th month.
All outstanding amounts under the subordinated debt agreement were due
February 14, 2003. The restrictive covenants required under the Term Loan
applied to the subordinated debt agreement.
The Allied agreement was repaid in full on October 29, 1998 and the
warrants were repurchased for $1,100,000.
(Continued)
F-54
<PAGE> 78
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
The aggregate minimum principal amounts due under the above agreements at
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1999 $ 450,000
2000 825,000
2001 1,000,000
2002 1,200,000
2003 9,482,000
------------
$ 12,957,000
============
</TABLE>
(7) COVENANT NOT-TO-COMPETE
The WBLX (AM/FM) purchase agreement included a covenant not-to-compete
for $250,000. The agreement provided for annual payments of $50,000 to
the seller over five years subject to certain specified cash flow levels.
On October 29, 1998, the balance, together with the related accrued
interest, was repaid.
(8) INCOME TAXES
Income tax benefit for the year ended December 31, 1998 differed from the
amount computed by applying the U.S. federal income tax rate of 34% to
pretax income as a result of the following:
<TABLE>
<CAPTION>
1998
------------
<S> <C>
Computed tax benefit at 34% (421,227)
Increase decrease in income taxes
resulting from:
Goodwill 154,610
Meals and entertainment expense 2,169
Increase in balance of the valuation
allowance for deferred tax assets 264,448
------------
Income tax expense --
============
</TABLE>
(Continued)
F-55
<PAGE> 79
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liability at
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
1998
---------------
<S> <C>
Deferred tax assets:
Federal and state net operating loss carryforwards 2,755,838
Allowance for doubtful accounts 32,188
---------------
Total gross deferred tax assets 2,788,026
Less valuation allowance 2,737,012
---------------
Net deferred tax assets 51,014
Deferred tax liability - book vs. tax basis accumulated
depreciation and amortization 51,014
---------------
Net deferred taxes --
===============
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1998 was
$2,472,564. The net change in the total valuation allowance for the year
ended December 31, 1998 was an increase of $264,448. The Company has
experienced certain ownership changes which, under the provisions of
Section 382 of the Internal Revenue Code of 1986, as amended, may result
in an annual limitation on the Company's ability to utilize its net
operating losses in the future. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than
not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable
income and tax planning strategies in making this assessment. Based upon
the level of historical taxable income and projections for future taxable
income over the periods in which the deferred tax assets are deductible,
management could not conclude that it is more likely than not that the
Company will realize the benefits of these deductible differences. As a
result, there is a full valuation allowance at December 31, 1998.
At December 31, 1998, the Company has net operating loss carryforwards of
approximately $8,200,000 for federal and state income tax reporting
purposes available to offset future taxable income through the year 2013.
(Continued)
F-56
<PAGE> 80
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
(9) RELATED-PARTY TRANSACTIONS
April Broadcasting, May Communications and July Broadcasting have
management agreements with M&F Associates L.P. (M&F), the general partner
of M&F Calendar, to perform financial advisory and management services.
The annual fee is $50,000 each for April Broadcasting and May
Communications and $100,000 for July Broadcasting, plus out-of-pocket
expenses. M&F charged $200,000 under these agreements in 1998. As of
December 31, 1998, $175,000 has been accrued for the unpaid portions of
these services.
During 1995, July Holding received a capital contribution in the form of
a $303,000 note receivable from a stockholder of the Company. Interest
accrues quarterly on the note at prime plus 1% and is payable with the
principal on June 27, 2000. During 1998, the stockholder repaid $15,000
of this note. The unpaid balance of the note plus accrued interest is
reflected as an offset to minority interest in the accompanying
consolidated balance sheets. In March 1999, the note receivable was
forgiven by the Company and was written off against the minority interest
liability.
In October 1998, the Company loaned $130,500 to an affiliated
organization. The note is noninterest bearing and is payable in full on
the earlier of the date on which a sale of substantially all of the
Company's operating radio stations is consummated or November 1, 2003.
The affiliate may repay any or all of the outstanding principal balance
at any time.
(10) EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries maintained a 401(k) Employee Savings
Plan (the Plan) covering all of their full-time employees. All eligible
employees could elect to contribute a portion of their wages to the Plan,
subject to certain limitations. In addition, the Company contributed to
the Plan at the rate of 25% of the employee contributions up to a maximum
of 4% of the employee's salary. The Company's contribution to the Plan
was $2,615 during the year ended December 31, 1998. On August 25, 1998,
the Company filed an application with the Internal Revenue Service to
terminate the Plan effective March 31, 1998 and received a favorable
determination letter from the Internal Revenue Service in April 1999.
(Continued)
F-57
<PAGE> 81
CALENDAR BROADCASTING, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998
(11) REDEEMABLE CONVERTIBLE PREFERRED STOCK
The Company has 1,550 shares of Series A Convertible Preferred Stock, par
value $1,000 per share, outstanding as of December 31, 1998. Each share
of the Series A Preferred Stock is convertible at the option of the
holder into one share of common stock. The Company is required to redeem
all outstanding shares of Series A Preferred Stock not previously
converted on June 30, 2001, at a price of $1,000 per share plus accrued
dividends, if any. As of December 31, 1998, no dividends had been
declared.
(12) COMMITMENTS
LEASES
As of December 31, 1998, the Company and its subsidiaries are obligated
for future minimum payments under certain noncancelable operating leases
as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1999 $ 173,722
2000 144,029
2001 111,625
2002 107,667
2003 83,679
Thereafter 822,821
----------
$1,443,543
==========
</TABLE>
Rental expense, principally for office space and tower rentals, amounted
to approximately $137,030 for the year ended December 31, 1998.
(13) SUBSEQUENT EVENTS
On June 15, 1999, the Company's stockholders entered into a stock
purchase agreement for the sale of the Company's outstanding common stock
to Cumulus Media Inc. (the Buyer) for $36,000,000. The Company has
guaranteed net working capital of at least $1,500,000 at the closing
date. Failure by the Company to transfer the $1,500,000 will result in a
reduction of the purchase price by such shortfall. The sale was
consummated on November 1, 1999.
F-58
<PAGE> 82
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Cumulus Media Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, changes in members' equity and cash flows present fairly, in all
material respects, the financial position of Coast Radio L.L.C. at December 31,
1998, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
February 28, 1999
Chicago, Illinois
F-59
<PAGE> 83
COAST RADIO L.L.C.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 862,193 $ 668,066
Accounts receivable 485,012 521,979
Prepaid expenses 77,142 74,541
Due from member 69,000 5,000
----------- ------------
Total current assets 1,493,347 1,269,586
Property and equipment, net 532,989 581,647
Intangible assets, net 595,108 606,219
----------- ------------
Total assets $ 2,621,444 $ 2,457,452
=========== ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND MEMBERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ - $ 14,579
Accrued expenses 22,196 53,555
Current portion, long term debt 52,958 52,985
----------- -------------
Total current liabilities 75,154 121,119
Long term debt 157,613 181,261
----------- -------------
Total liabilities 232,767 302,380
----------- -------------
Commitments:
Members' equity 2,388,677 2,155,072
----------- -------------
Total liabilities and members' equity $ 2,621,444 $ 2,457,452
=========== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-60
<PAGE> 84
COAST RADIO L.L.C.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR
JUNE 30, ENDED
--------------------------------- DECEMBER 31,
1999 1998 1998
------------ ------------ --------------
(UNAUDITED)
<S> <C> <C> <C>
Revenues $ 1,431,703 $ 1,327,314 $ 2,932,119
Less: Agency commissions (155,939) (133,834) (317,717)
------------ ------------ -------------
Net revenues 1,275,764 1,193,480 2,614,402
------------ ------------ -------------
Operating expenses:
Programming 202,432 223,711 440,331
Sales and promotions 413,446 399,430 805,246
Technical 14,703 9,143 27,285
General and administrative 318,655 276,289 900,587
Depreciation and amortization 64,698 62,522 128,825
------------ ------------ -------------
Total operating expenses 1,013,934 971,095 2,302,274
------------ ------------ -------------
Income from operations 261,830 222,385 312,128
Interest expense 9,085 9,338 19,962
------------ ------------ -------------
Income before income taxes 252,745 213,047 292,166
State income tax benefit - - (37,092)
------------ ------------- -------------
Net Income $ 252,745 $ 213,047 $ 329,258
============ ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-61
<PAGE> 85
COAST RADIO L.L.C.
STATEMENT OF CHANGES IN MEMBERS' EQUITY
for the year ended December 31, 1998
<TABLE>
<S> <C>
Balance at January 1, 1998 $ 1,918,416
Net income 329,258
Distributions (92,602)
-----------
Balance at December 31, 1998 $ 2,155,072
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-62
<PAGE> 86
COAST RADIO L.L.C.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR
JUNE 30, ENDED
-------------------------------------- DECEMBER 31,
1999 1998 1998
------------------ -------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income $ 252,745 $ 213,047 $ 329,258
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 64,698 62,522 128,827
Deferred tax liability - - 37,092
Changes in operating assets and liabilities:
Accounts receivable 36,967 (39,013) (77,094)
Due from member (64,000) (13,000) (5,000)
Prepaid expenses (2,601) (15,922) (41,904)
Accounts payable (14,579) - 14,579
Accrued expenses (31,359) 101 (56,269)
---------------- --------------- -----------
Net cash provided by operating activities 241,871 207,735 329,489
---------------- --------------- -----------
Cash flows from investing activities:
Acquisition costs (1,259)
Purchase of property and equipment (3,670) (814)
Proceeds from sale of property and equipment - - (6,547)
---------------- --------------- -----------
Cash provided by used for investing activities (4,929) (814) (6,547)
---------------- --------------- -----------
Cash flows from financing activities:
Principal payments on bank borrowings (23,675) (20,325) (48,888)
Distributions to members (19,140) (56,278) (92,602)
---------------- --------------- -----------
Cash used for financing activities (42,815) (76,603) (141,490)
---------------- --------------- -----------
Increase in cash and cash equivalents 194,127 130,318 181,452
Cash and cash equivalents at beginning of year 668,066 486,614 486,614
---------------- --------------- -----------
Cash and cash equivalents at end of year $ 862,193 $ 616,932 $ 668,066
================ =============== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 9,085 $ 9,338 $ (19,962)
================ =============== ===========
Non-cash operating activities:
Trade revenue $ 64,781 $ 62,855 $ 131,641
================ =============== ===========
Trade expense $ 94,723 $ 42,482 $ 103,720
================ =============== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-63
<PAGE> 87
COAST RADIO L.L.C.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUBSEQUENT EVENTS
Effective January 29, 1999, the Company entered into an option agreement
with Cumulus Broadcasting, Inc. (a wholly owned subsidiary of Cumulus Media
Inc.) ("Cumulus") to sell substantially all of the Company's assets for $9
million in cash. Under the terms of the agreement, Cumulus has the right to
exercise the purchase option at any time through December 31, 1999. The
Company may require Cumulus to exercise the option between June 30, 1999
and December 31, 1999. Additionally, should Cumulus enter into a purchase
agreement with any other station in the Company's market area prior to June
30, 1999, the Company has the right to require Cumulus to exercise the
option.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Coast Radio LLC, formed in 1994, owns and operates two radio stations;
WWRO-FM and WCOA-AM (the "Stations" or "Company") located in Pensacola,
Florida.
The significant accounting principles followed by the Company and the
methods of applying those principles which materially affect the
determination of financial position, results of operations, and cash flows
are summarized below.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS
All items with an original maturity of three months or less are considered
to be cash equivalents.
The Company has $668,066 on deposit with a single financial institution,
which is in excess of the $100,000 insured limit.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts receivable and
accounts payable approximates fair value because of the short maturity of
these instruments. The carrying value of the Company's debt approximates
fair value. Fair value is based upon the current market price of similar
issues.
PROPERTY AND EQUIPMENT
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives
F-64
<PAGE> 88
COAST RADIO L.L.C.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
of the assets, are capitalized at cost and depreciated on a straight-line
basis over their estimated useful lives as follows:
Broadcasting equipment 10 years
Office furniture and equipment 5 years
Tower and antenna 10 years
Vehicles 3 years
Maintenance, repairs, and minor replacement of these items are charged to
expense as incurred.
INTANGIBLE ASSETS
Intangible assets include FCC broadcast licenses, are stated at cost and
are being amortized using the straight-line method over the estimated
useful life of 30 years. Management regularly monitors and evaluates the
realizability of recorded intangibles. Recoverability of assets to be held
and used is measured by a comparison of carrying amount of the assets to
future cash flows expected to be generated by the assets. If such assets
are considered to be impaired, the impairment to be recognized is the
amount by which the carrying amount exceeds the fair value of the assets.
The Company believes that the carrying value of recorded intangibles is
not impaired.
INCOME TAXES
The Company has organized in the State of Florida as a Limited Liability
Company (LLC) and is treated as a partnership for federal income tax
purposes. Accordingly, income of the Company is personally taxable to the
members of the LLC for federal tax purposes and no federal income tax
expense has been recorded in these financial statements.
Prior to 1998, the State of Florida recognized the Company as a regular
corporation and therefore, was subject to state income taxes. Beginning in
1998, the State of Florida recognizes LLC's as a partnership. The income
tax benefit recognized in these financial statements represents the
reversal of previously recorded deferred state income taxes, as such, the
liability will ultimately be paid by the members.
REVENUE RECOGNITION
Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.
TRADE AGREEMENTS
The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from
trade agreements are recognized at the fair market value of products or
services received as advertising air time is broadcast. Products and
services received are expensed when used in the broadcast operations.
F-65
<PAGE> 89
COAST RADIO L.L.C.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
ACCOUNTS RECEIVABLE
The Company considers accounts receivable at December 31, 1998 to be fully
collectible; accordingly, no allowance for doubtful accounts is required.
Amounts that become uncollectible are charged to operations when that
determination is made.
INTERIM FINANCIAL STATEMENTS
The financial statements for the six months ended June 30, 1999 and 1998,
are unaudited, but in the opinion of management, such financial statements
have been presented on the same basis as the audited financial statements
for the year ended December 31, 1998, and include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations and cash
flows for these periods.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<S> <C>
Broadcasting equipment $ 754,731
Office furniture and equipment 144,516
Tower and antenna 124,000
Vehicles 58,426
------------
1,081,673
Accumulated depreciation (500,026)
------------
Property and equipment, net $ 581,647
============
</TABLE>
Depreciation expense was $104,086 for the year ended December 31, 1998.
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<S> <C>
FCC broadcast licenses $ 713,041
Accumulated amortization (106,822)
------------
Intangible assets, net $ 606,219
============
</TABLE>
Amortization expense was $24,741 for the year ended December 31, 1998.
F-66
<PAGE> 90
COAST RADIO L.L.C.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. COMMITMENTS
The Company incurred expenses of approximately $57,188 for the year ended
December 31, 1998 under an operating lease for radio broadcasting
facilities. Future minimum annual payments under this operating lease are
$71,208 through February 2003. The Company may terminate this lease by
providing the lessor 90 days notice and a termination fee equal to six
months rent.
The Company has entered into a joint venture agreement to share expenses of
leasing and maintaining a tower. Total amounts paid under this agreement
were $19,789 for the year ended December 31, 1998. The Company is liable
for its pro-rata share of lease payments under a lease agreement executed
by the joint venture. The Company's share of future minimum lease payments
under this agreement is $4,635 through 2003 and $45,900 for the remaining
11 years through 2014.
6. LONG-TERM DEBT
Long-term debt consists of the following as of December 31, 1998:
<TABLE>
<S> <C>
Note payable to AmSouth Bank, due in monthly
installments of $5,460, including interest at 8.00%;
maturing February, 2003; $234,246
Less current maturities (52,985)
---------
Long-term $181,261
=========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<S> <C> <C>
1999 52,985
2000 52,932
2001 57,325
2002 62,083
2003 8,921
-------
234,246
=======
</TABLE>
7. STOCK PURCHASE AGREEMENT
The Company and its members have reached an agreement which stipulates the
terms under which the Company's shares can be sold, transferred or pledged.
The agreement extends the option to the Company, then to members, to
purchase a members' shares upon termination of employment, retirement,
disability or incapacity. The Company is obligated to purchase the shares
of any member upon death, bankruptcy or dissolution. Other transfers of
stock by its members are also restricted. The purchase price shall be
calculated based on the members' portion of the total value of the Company,
as stipulated in the agreement. This value was approximately $9.5 million
as of December 31, 1998. The purchase price is payable in 60 monthly
installments, with interest on the unpaid principle balance at the rate of
8 percent.
F-67
<PAGE> 91
COAST RADIO L.L.C.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
8. RETIREMENT PLAN
The Company has adopted a 401(k) retirement plan covering substantially all
employees. Under the plan, employees may elect to defer up to the maximum
percentage allowable subject to IRS regulations. The plan allows the
Company to make discretionary matching contributions not to exceed the
first 5 percent deferred by an employee. No Company contributions were made
for the years ended December 31, 1998 and 1997.
F-68
<PAGE> 92
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------------------------------------------------------------- -------------
<S> <C> <C>
2.0 Asset Purchase Agreement dated as of April 2,
1999, by and between Cumulus Broadcasting, Cumulus Licensing,
Cumulus Wireless and Phillips Broadcasting Company, Inc.
2.1 Asset Purchase Agreement dated as of March 9,
1999 by and between Cumulus Broadcasting, Cumulus Licensing,
Cumulus Wireless, HMH Broadcasting Inc., a Kentucky
corporation and HMH Realty, LLC.
2.2 Stock Purchase Agreement dated June 15, 1999,
among the Company and M&F Calendar Holdings, L.P., Kevin C.
Whitman, nassau Capital Partners L.P., NAS Partners I L.L.C.,
and Philip J. Giordano.
2.3 Asset Purchase Agreement dated as of June 29, 1999, by and
among Cumulus Broadcasting, Cumulus Licensing and Coast
Radio, L.C., a Florida limited liability company.
2.4 Asset Purchase Agreement dated as of September
23, 1999, by and between Cumulus Broadcasting, Cumulus
Licensing, Cumulus Wireless, C. F. Radio, Inc., Cape Fear
Radio, LLC, Cape Fear Broadcasting Company and Cape Fear Tower
Systems, LLC.
23.0 Consent of PricewaterhouseCoopers LLP.
23.1 Consent of Wipfli Ullrich Bertelson LLP.
23.2 Consent of KPMG LLP.
- ----------------
</TABLE>
<PAGE> 1
EXHIBIT 2.0
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of April 2, 1999, by
and between CUMULUS BROADCASTING, INC., a Nevada corporation ("Broadcasting"),
CUMULUS LICENSING CORP., a Nevada corporation ("Licensing), CUMULUS WIRELESS
SERVICES INC., a Nevada corporation ("Wireless") and PHILLIPS BROADCASTING
COMPANY, INC., an Iowa corporation (the "Seller"). Broadcasting, Licensing and
Wireless are referred to collectively herein as the "Buyers." The Buyers and the
Seller are referred to individually as the "Party" or collectively as the
"Parties." Capitalized terms used in this Agreement are defined in Section 8
hereof.
Subject to the terms and conditions of this Agreement, the Buyers
hereby agree to purchase substantially all of the assets (and assume certain of
the liabilities) of the Seller that are used or useful in the operation of radio
Stations WBIZ-AM and WBIZ-FM, licensed to Eau Claire, WI; WMEQ-AM and WMEQ-FM,
licensed to Menomonie, WI; WQRB-FM, licensed to Bloomer, WI; and WATQ-FM,
licensed to Chetek, WI (the "Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. BASIC TRANSACTION.
a. PURCHASE AND SALE OF ASSETS. On and subject to the terms
and conditions of this Agreement, the Seller agrees to sell, transfer, convey
and deliver to (i) Licensing, and Licensing agrees to purchase from the Seller,
all of the FCC Licenses listed in Section 2(k) of the disclosure schedule
("Disclosure Schedule"); and (ii) Seller agrees to sell, transfer convey and
deliver to Broadcasting and Wireless, and Broadcasting and Wireless agree to
purchase from the Seller, all of the Acquired Assets other than the FCC
Licenses. Both such sales shall take place at the Closing for the consideration
specified below in this Section 1.
b. ASSUMPTION OF LIABILITIES. On and subject to the terms
and conditions of this Agreement, Broadcasting and Wireless agree to assume and
become responsible for all of the Assumed Liabilities at the Closing. The Buyers
will not assume or have any responsibility, however, with respect to any other
obligation or Liability of the Seller not included within the definition of
Assumed Liabilities and assumed by Broadcasting and Wireless, and the Seller
agrees to pay and discharge all Liabilities and obligations of the Seller other
than the Assumed Liabilities.
c. PURCHASE PRICE. The Buyers agree to pay to the Seller,
as consideration for the Acquired Assets, the purchase price (the "Purchase
Price") described in Schedule A to this Agreement, and agrees to make the escrow
deposit (the "Escrow Deposit") in the form and manner described in Schedule A
and more particularly in the earnest money escrow agreement ("Earnest Money
Escrow Agreement") attached hereto as Exhibit A. The Purchase Price shall be
allocated among the Acquired Assets in the manner set forth in Schedule B.
1
<PAGE> 2
D. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at a mutually agreed location,
commencing at 9:00 a.m. local time within ten (10) business days after the FCC
approval of the Assignment Application becomes a Final Order, by which date all
other conditions to the obligations of the Parties to consummate the
transactions contemplated hereby will have been satisfied, or such other date as
the Parties may mutually determine (the "Closing Date").
E. DELIVERIES AT THE CLOSING. At the Closing, (i) the
Seller will deliver to the Buyers the various certificates, instruments, and
documents referred to in Section 5(a) below; (ii) the Buyers will deliver to the
Seller the various certificates, instruments, and documents referred to in
Section 5(b) below; (iii) the Seller will execute, acknowledge (if appropriate),
and deliver to the Buyers (A) assignments (including Lease and other Assumed
Contract assignments and Intellectual Property transfer documents), bills of
sale and warranty deeds in form acceptable to the Buyers, (B) such affidavits,
transfer tax returns, memorandums of lease, and other additional documents as
may be required by the terms of the title insurance commitments described in
Section 4(o) hereof, as necessary to furnish title insurance as required by such
section or as may be necessary to convey title to the Real Estate to the Buyers
in the condition required herein or provide public notice of existence of the
Leases, and (C) such other instruments of sale, transfer, conveyance, and
assignment as the Buyers and their counsel reasonably may request; (iv) the
Buyers will execute, acknowledge (if appropriate), and deliver to the Seller (A)
an assumption in the form attached hereto as Exhibit B and (B) such other
instruments of assumption as the Seller and its counsel reasonably may request;
and (v) the Buyers will deliver to the Seller the consideration specified in
Section 1(c) above.
F. POST-CLOSING AGREEMENT. On the Closing Date, the Seller
shall execute, and shall cause its sole shareholder to execute, a Post-closing
Agreement with the Buyers including covenants not to compete with the Buyers in
the markets served by the Stations and agreements to indemnify the Buyers in the
form of Exhibit C attached hereto. A portion of the Purchase Price equal to
Fifty Thousand Dollars ($50,000) shall be paid to the Seller by the Buyers on
the Closing Date as consideration for the agreements set forth in the
Post-closing Agreement.
G. LOCAL MARKETING AGREEMENT. As of the date hereof, the
Parties have executed the Local Marketing Agreement attached as Exhibit D hereto
(the "LMA Agreement"), under which Broadcasting will purchase airtime on the
Stations pending the closing of the transaction contemplated herein.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyers that the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date, except as set
forth in the Disclosure Schedule, and subject to the operation of the Stations
by Broadcasting during the term of the LMA Agreement.
2
<PAGE> 3
A. ORGANIZATION OF THE SELLER. The Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Seller does not have any Subsidiaries.
The Seller has the power and authority to own or lease its properties and to
carry on all business activities now conducted by it. The sole shareholder of
the Seller is Michael A. Phillips ("Phillips").
B. AUTHORIZATION OF TRANSACTION. The Seller has full power
and authority to execute and deliver this Agreement and all agreements and
instruments to be executed and delivered by Seller pursuant to this Agreement
(collectively, the "Ancillary Agreements") and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
Board of Directors of the Seller has duly authorized the execution, delivery,
and performance of this Agreement and the Ancillary Agreements by the Seller.
This Agreement and the Ancillary Agreements constitute the valid and legally
binding obligation of the Seller, enforceable in accordance with their
respective terms and conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Seller is subject or any provision of the charter or bylaws of the Seller; or
(ii) except as set forth In Section 2[c] of the Disclosure Schedule, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or third party consent under any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest, or
other agreement, arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to the
Assignment Application described in Section 4(b) the Seller does not need to
give any notice to, make any filing with, or obtain any Licenses, consent, or
approval of any court or government or governmental agency in order for the
Parties to enter into this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements (including the assignments and assumptions referred to in Section
1(e) above).
D. TITLE TO ACQUIRED ASSETS. Other than the Security
Interests set forth on Section 2(d) of the Disclosure Schedule (which shall be
released at or before the Closing) the Seller has good and marketable title to
all of the Acquired Assets, free and clear of any Security Interest or
restriction on transfer.
E. FINANCIAL STATEMENTS. Included in Section 2(e) of the
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements"): (i) unaudited balance sheets and statements of income,
and cash flow as of and for the fiscal years ended December 31, 1996, December
31, 1997, and December 31, 1998 for the Seller; and (ii) unaudited balance
sheets and statements of income, as of and for each month during 1998 and each
month to date in 1999 for the Seller. The Financial Statements have been
prepared in
3
<PAGE> 4
conformity with the Seller's normal accounting policies, practices and
procedures applied on a consistent basis, throughout the periods covered
thereby, are correct and complete, fairly present the financial condition of the
Seller and the results of operation of Seller at the dates and for the periods
indicated, and are consistent with the books and records of the Seller (which
books and records are correct and complete). The Financial Statements accurately
state the cash revenues of the Stations for the periods indicated therein, but
do not include revenues attributable to Barter Agreements.
F. EVENTS SUBSEQUENT TO JANUARY 1, 1999. Since January 1,
1999, except as set forth in Section 2(f) of the Disclosure Schedule, there has
not been any material adverse change in the assets, Liabilities, business,
financial condition, operations, results of operations, or future prospects of
the Seller with respect to the operation of the Stations. Without limiting the
generality of the foregoing and with respect to the operation of the Stations
since January 1, 1999 (but subject to the operation of the Stations by
Broadcasting during the term of the LMA Agreement):
(i) other than this Agreement, the Seller has not
entered into any agreement, contract, lease, sublease, license, or
sublicense (or series of related agreements, contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course of
Business;
(ii) the Seller has not delayed or postponed
(beyond its normal practice in the Ordinary Course of Business) the
payment of accounts payable and other Liabilities;
(iii) the Seller has not altered its credit and
collection policies or its accounting policies;
(iv) other than in the Ordinary Course of Business,
the Seller has not entered into or terminated any employment
arrangement, employment contract, consulting contract or severance
agreement or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(v) other than in the Ordinary Course of Business,
there have been no changes and, to Seller's knowledge, any threatened
changes in employment terms for any of its directors, officers, and
employees;
(vi) there has not been any other occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Seller;
(vii) the Seller has not materially altered the
programming, format or call letters of the Stations, or its promotional
and marketing activities;
4
<PAGE> 5
(viii)the Seller has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action necessary
to preserve the FCC Licenses and has operated the Stations in
compliance therewith and with all FCC rules and regulations;
(ix) the Seller has not terminated or received
notice of termination for any syndicated programming; and
(x) the Seller has not committed to any of the
foregoing.
G. TAX MATTERS. The Seller has timely and properly filed
all Tax Returns that it was required to file with respect to the Seller's
operations. All such Tax Returns were correct and complete and properly reflect
the tax liability of the Seller. No Tax deficiencies have been proposed or
assessed against the Seller. All Taxes owed by the Seller with respect to its
operations (whether or not shown on any Tax Return) have been paid. The Seller
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party. No claim has ever been made by any authority
in any jurisdiction where the Seller does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction.
H. TANGIBLE ASSETS. Section 2(h) of the Disclosure Schedule
sets forth a listing of all transmitters, equipment, vehicles and other tangible
personal property used in conducting the operation and business of the Stations.
With exception of certain vehicles the titles to which are in Phillips' name,
the Seller owns or leases all tangible assets necessary for the conduct of the
operation and business of the Stations as presently conducted and as presently
proposed to be conducted and assets that are subject to leases or purchase
agreements are specifically identified as such in Section 2(h) of the Disclosure
Schedule. At Closing, the Seller shall cause the vehicles in Phillips' name to
be conveyed to Broadcasting and/or Wireless as the Buyers may direct.
I. REAL PROPERTY. Section 2(i) of the Disclosure Schedule
lists and describes briefly all Owned Real Estate and real property leased to
the Seller (including, without limitation, complete legal descriptions for all
of Owned Real Estate). The Seller has delivered to the Buyers correct and
complete copies of the Leases. With respect to the Real Estate:
(i) the Seller has good and marketable title to
all of the Owned Real Estate that as of Closing will be free and clear
of all liens, charges, mortgages, security interests, easements,
restrictions or other encumbrances of any nature whatsoever except real
estate taxes for the year of Closing and municipal and zoning
ordinances and recorded utility easements which do not impair the
current use, occupancy or value or the marketability of title of the
property and which are disclosed in Section 2(i) of the Disclosure
Schedule (collectively, the "Permitted Real Estate Encumbrances");
(ii) the Leases are and, following the Closing will
continue to be, legal, valid, binding, enforceable, and in full force
and effect;
5
<PAGE> 6
(iii) no party to any Lease is in breach or default
(or has repudiated any provision thereof), and no event has occurred
which, with notice or lapse of time, would constitute a breach or
default thereunder or permit termination, modification, or acceleration
thereunder;
(iv) there are no disputes, oral agreements, or
forbearance programs in effect as to any Lease, except as set forth in
Section 2(i) of the Disclosure Schedule;
(v) none of the Owned Real Estate and to the
Seller's Knowledge, none of the properties subject to the Leases is
subject to any lease (other than Leases), option to purchase or rights
of first refusal;
(vi) except for Permitted Real Estate Encumbrances,
there are no (i) actual or, to the Seller's Knowledge, proposed special
assessments with respect to any of the Real Estate; (ii) pending or, to
the Seller's Knowledge, threatened condemnation proceedings with
respect to any of the Real Estate; (iii) structural or mechanical
defects in any of the buildings or improvements located on the Real
Estate; (iv) any pending or, to the Seller's Knowledge, threatened
changed in any zoning laws or ordinances which may materially adversely
affect any of the Real Estate or Seller's use thereof;
(vii) as of Closing, the Seller will assign the
Leases and its rights thereunder free of any mortgage, deed of trust,
security interest or similar encumbrance;
(viii)to the Seller's Knowledge, all facilities on
the Real Estate have received all approvals of governmental authorities
(including licenses, permits and zoning approvals) required in
connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations;
and
(ix) to the Seller's Knowledge, the owner of each
leased facility has good and marketable title to the underlying parcel
of real property, and Seller's leasehold interest in each Lease has
priority over any other interest except for the fee interest therein
and Permitted Real Estate Encumbrances.
J. CONTRACTS. Section 2(j) of the Disclosure Schedule lists
any written arrangement (or group of related written arrangements) either
involving more than $5,000 or not entered into in the Ordinary Course of
Business. The Seller has delivered to the Buyers a correct and complete copy of
each written arrangement listed in Section 2(j) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed which
constitutes an Assumed Contract: (A) the written arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the written arrangement
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing (if the arrangement has not
expired according to its terms); (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration, under the
written arrangement; and (D) no party has repudiated any provision of the
written arrangement. The Seller is not a party to any
6
<PAGE> 7
verbal contract, agreement, or other arrangement which, if reduced to written
form, would be required to be listed in Section 2(j) of the Disclosure Schedule
under the terms of this Section 2(j). Except for the Assumed Contracts, the
Buyers shall not have any Liability or obligations for or in respect of any of
the contracts set forth in Section 2(j) of the Disclosure Schedule or any other
contracts or agreements of the Seller.
K. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION
REQUIREMENTS.
(i) All licenses, permits, authorizations,
franchises, certificates of compliance, and consents of governmental
bodies, including, without limitation, the FCC Licenses, used or useful
in the operation of the Stations as they are now being operated are (A)
in full force and effect, (B) unimpaired by any acts or omissions of
the Seller or the Seller's employees or agents, (C) free and clear of
any restrictions which might limit the full operation of the Stations,
and (D) detailed in Section 2(k) of the Disclosure Schedule. With
respect to the licenses, permits, authorizations, franchises,
certificates of compliance and consents referenced in the preceding
sentence, Section 2(k) of the Disclosure Schedule also sets forth,
without limitation, the date of the last renewal, the expiration date
thereof, and any conditions or contingencies related thereto. Except as
set forth in Section 2(k) of the Disclosure Schedule, no condition
exists or event has occurred that permits, or after notice or lapse of
time, or both, would permit, the revocation or termination of any such
license, permit, consent, franchise, or authorization (other than
pursuant to their express expiration date) or the imposition of any
material restriction or limitation upon the operation of the Stations
as now conducted. Except as set forth in Section 2(k) of the Disclosure
Schedule, the Seller is not aware of any reason why the FCC licenses
might not be renewed in the ordinary course or revoked.
(ii) The Stations are in compliance with the FCC's
policy on exposure to radio frequency radiation. No renewal of any FCC
License would constitute a major environmental action under the FCC's
rules or policies. Access to the Stations' transmission facilities is
restricted in accordance with the policies of the FCC.
(iii) Except as set forth in Section 2(k) of the
Disclosure Schedule, to the Seller's Knowledge, the Seller is not the
subject of any FCC or other governmental investigation or any notice of
violation or order, or any material complaint, objection, petition to
deny, or opposition issued by or filed with the FCC or any other
governmental authority in connection with the operation of or
authorization for the Stations, and there are no proceedings (other
than rule making proceedings of general applicability) before the FCC
or any other governmental authority that could adversely affect any of
the FCC Licenses or the authorizations listed in Section 2(k) of the
Disclosure Schedule.
(iv) The Seller has filed with the FCC and all
other governmental authorities having jurisdiction over the Stations
all material reports, applications, documents, instruments, and other
information required to be filed, and will continue to make such
filings through the Closing Date.
7
<PAGE> 8
(v) The Seller is not aware of any information
concerning the Stations that could cause the FCC or any other
regulatory authority not to issue to the Buyers all regulatory
certificates and approvals necessary for the consummation of the
transactions contemplated hereunder or the Buyer's operation and/or
ownership of the Stations.
L. INTELLECTUAL PROPERTY. The Seller owns or has the right
to use pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the businesses of the Seller as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Seller immediately prior to the
Closing hereunder is set forth on Section 2(l) of the Disclosure Schedule and
each item listed will be owned or available for use by the Buyers on identical
terms and conditions immediately subsequent to the Closing hereunder. The Seller
has not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and the Seller
has never received any charge, complaint, or notice alleging any such
interference, infringement, misappropriation, or violation. To the Knowledge of
the Seller, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of the
Seller.
M. INSURANCE. Section 2(m) of the Disclosure Schedule sets
forth a complete and accurate description of all Seller's insurance coverage.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms through the Closing Date.
N. LITIGATION. Section 2(n) of the Disclosure Schedule sets
forth each instance in which the Seller: (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge; or (ii) is a party
or, to the Knowledge of the Seller, is threatened to be made a party to any
charge, complaint, action, suit, proceeding, hearing, or investigation of or in
any court or quasijudicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. Except as otherwise
note in Section 2(n) of the Disclosure Schedule, none of the charges,
complaints, actions, suits, proceedings, hearings, and investigations set forth
in Section 2(n) of the Disclosure Schedule could result in any adverse change in
the assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Seller or the Stations taken as a whole.
Except as noted in Section 2(n) of the Disclosure Schedule, the Seller has no
Knowledge of any Basis for any such charge, complaint, action, suit, proceeding,
hearing, or investigation against the Seller.
O. EMPLOYEES. Section 2(o) of the Disclosure Schedule sets
forth a listing of the names, positions, job descriptions, salary or wage rates
and all other forms of compensation paid for work at the Stations of each
employee. To the Knowledge of the Seller, no key employee or group of employees
has any plans to terminate employment with the Seller. The Seller is not a party
to or bound by any collective bargaining or similar agreement, nor has it
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or
8
<PAGE> 9
on behalf of any labor union with respect to the employees of the Seller. The
Seller has no Knowledge of any Basis for any claim by past or current employees
of the Seller or applicants for employment that the Seller or its management has
discriminated based on each individuals race, sex, national origin, religion,
ethnicity, handicap or any other protected characteristic under applicable law.
P. EMPLOYEE BENEFITS. Section 2(p) of the Disclosure
Schedule lists all Employee Benefit Plans that the Seller maintains or to which
the Seller contributes or is required to contribute for the benefit of any
current or former employee of the Seller and true and correct copies of each
such Employee Benefit Plan have been delivered to the Buyers. Each Employee
Benefit Plan (and each related trust or insurance contract) complies and at all
times has complied in form and in operation in all respects with the applicable
requirements of ERISA and the Code. The Seller does not have any commitment to
create any additional Employee Benefit Plan or modify or change any existing
Employee Benefit Plan that would affect any employee or terminated employee of
the Seller. There are no pending or, to the Knowledge of the Seller, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
Q. ENVIRONMENT, HEALTH, AND SAFETY.
(i) With respect to the operation of the Stations
and the Real Estate, the Seller is, and at all times in the past has
been, in compliance in all material respects with all Environmental
Laws and all laws (including rules and regulations thereunder) of
federal, state, and local governments (and all agencies thereof)
concerning employee health and safety, and the Seller has no Liability
(and to Seller's Knowledge there is no Basis related to the past or
present operations of the Seller or its predecessors for any present or
future Liability) under any Environmental Law. The Seller has no
Liability (and to Seller's Knowledge there is no Basis for any present
or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Seller giving rise to any
Liability) under the Occupational Safety and Health Act, as amended, or
any other law (or rule or regulation thereunder) of any federal, state,
local, or foreign government (or agency thereof) concerning employee
health and safety, or for any illness of or personal injury to any
employee.
(ii) The Seller has obtained and at all times has
been in compliance in all material respects with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental Laws or law of any federal, state, or local or foreign
government relating to worker health and safety.
(iii) All properties and equipment used in the
Stations and the Acquired Assets are free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-
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dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances. To the Seller's Knowledge, no pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or waste ever has
been buried, stored, spilled, leaked, discharged, emitted, or released
on any of the Real Estate. No above ground or underground storage tanks
are or, to the Seller's Knowledge, have ever been located at, on or
under the Real Estate. The Seller has delivered to the Buyers a
complete copy of all environmental claims, reports, studies, compliance
actions or the like of the Seller or which are available to the Seller
with respect to any of the Real Estate or any of the Acquired Assets.
R. LEGAL COMPLIANCE. The Seller has complied in all
material respects with all laws (including rules and regulations thereunder) of
federal, state, local and foreign governments (and all agencies thereof. The
Seller has filed in a timely manner all reports, documents, and other materials
it was required to file (and the information contained therein was correct and
complete in all material respects) under all applicable laws.
S. ADVERTISING CONTRACTS. Section 2(s) of the Disclosure
Schedule lists all arrangements for the sale of air time or advertising on the
Stations in excess of $1000, and the amount to be paid to the Seller therefor.
T. BROKERS' FEES. Other than the fee payable to Robert
Maccini and Media Services Group, Inc., which shall be the exclusive
responsibility of Seller, the Seller has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
U. UNDISCLOSED COMMITMENTS OR LIABILITIES. There are no
material commitments, liabilities or obligations relating to the Stations,
whether accrued, absolute, contingent or otherwise including, without
limitation, guaranties by the Seller of the liabilities of third parties, for
which specific and adequate provisions have not been made on the Financial
Statements except those incurred in or as a result of the Ordinary Course of
Business since January 1, 1999.
V. DISCLOSURE. The representations and warranties contained
in this Section 2 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 2 not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyers represent and warrant to the Seller that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date except as set
forth in the Disclosure Schedule.
A. ORGANIZATION OF THE BUYERS. Broadcasting, Licensing and
Wireless are corporations duly organized, validly existing, and in good standing
under the laws of Nevada.
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B. AUTHORIZATION OF TRANSACTION. Buyers have full power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform their obligations hereunder and thereunder. This Agreement and the
Ancillary Agreements constitute legally binding obligations of the Buyers,
enforceable against the Buyers in accordance with their respective terms and
conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Buyers are subject or any provision of their articles of organization or other
charter documents, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1 (e) above).
D. BROKERS' FEES. The Buyers have no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Seller
could become liable or obligated.
E. FCC QUALIFICATIONS. Licensing is legally, financially
and otherwise qualified to be the assignee of the FCC Licenses under the
Communications Act of 1934 and the rules, regulations and policies of the FCC.
4. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period
between the execution of this Agreement and the Closing:
A. GENERAL. Each of the Parties will use its reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable to consummate and make effective the transactions contemplated by this
Agreement (including satisfying the closing conditions set forth in Section 5
below).
B. ASSIGNMENT APPLICATIONS. Within ten (10) business days
after the execution of this Agreement, the Seller and the Buyers shall jointly
file with the FCC an application for assignment of the FCC Licenses, permits and
authorizations pertaining to the Stations from the Seller to Licensing (the
"Assignment Application"). The costs of the FCC filing fees in
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connection with the Assignment Application shall be divided equally between the
Parties. Each party shall pay its own attorneys' fees. The Seller and the Buyers
shall thereafter prosecute the Assignment Application with all reasonable
diligence and otherwise use commercially reasonable efforts to obtain the grant
of the Assignment Application as expeditiously as practicable (but neither the
Seller nor the Buyers shall have any obligation to satisfy complainants or the
FCC by taking any steps which would have a material adverse effect upon the
Stations or impose significant costs on such party). If the FCC imposes any
condition on either party to the Assignment Application, such party shall use
commercially reasonable efforts to comply with such condition, provided, that
neither party shall be required hereunder to comply with any condition that
would have a material adverse effect upon the Stations or any Affiliate. The
Seller and the Buyers shall jointly oppose any requests for reconsideration or
judicial review of FCC approval of the Assignment Application and shall jointly
request from the FCC extension of the effective period of FCC approval of the
Assignment Application if the Closing shall not have occurred prior to the
expiration of the original effective period of the FCC Consent. Nothing in this
Section 4(b) shall be construed to limit either party's right to terminate this
Agreement pursuant to Section 9 of this Agreement.
C. EMPLOYMENT OFFERS. Upon notice to the Seller, and at
mutually agreeable times, the Seller will permit the Buyers to meet with its
employees prior to the LMA Effective Date. The Buyers may, at their option,
extend offers of employment to all or any of the Seller's employees effective on
the LMA Effective Date. From and after the execution of this Agreement, the
Seller shall use its best efforts to assist Buyers in retaining those employees
of the Stations which the Buyers wish to hire in connection with the operation
of the Stations by the Buyers subsequent to the LMA Effective Date, and the
Seller will not take any action to preclude or discourage any of the Seller's
employees from accepting any offer of employment extended by the Buyers.
D. NOTICES AND CONSENTS. The Seller will give all notices
to third parties and shall have obtained all third party consents that the
Buyers reasonably may request. The Parties have determined that no notification
with respect to this Agreement is required to be filed the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the Hart-Scott-Rodino Act and each will provide such documentation as
reasonably necessary to demonstrate no such notification need be filed. Each of
the Parties will take any additional action that may be necessary, proper, or
advisable in connection with any other notices to, filings with, and
authorizations, consents, and approvals of governments, governmental agencies,
and third parties that it may be required to give, make, or obtain.
E. ADVERTISING OBLIGATIONS. An adjustment to the Purchase
Price for the value of trade time and goods and services shall be made at the
Closing as follows: on all agreements or arrangements pursuant to which
advertising is exchanged for goods and services ("Barter Agreements") for which
an obligation to broadcast advertising time remains, Buyer shall be entitled to
an adjustment in their favor equal to the aggregate value of the advertising
time which remains to be broadcast as of the LMA Effective Date to the extent
that such value exceeds the aggregate value of goods yet to be received and
services yet to be used by more than $20,000 in the aggregate for all Barter
Agreements. The amount to be attributed to the value of remaining
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broadcast advertising time and goods and services hereunder shall be the amount
specified in the Barter Agreement in question, as established at the time the
Barter Agreement was entered into. At the LMA Effective Date, Seller shall
deliver a reconciliation of the Barter Agreements as of the LMA Effective Date.
In the event of any dispute between the parties as to adjustments under this
Section 4(e), the amounts not in dispute shall nonetheless be paid and adjusted
for at the closing and such disputes shall be promptly presented for resolution
to an independent certified public accountant mutually acceptable to the
parties. The accountant's resolution of the dispute shall be final and binding
on the parties and a judgment may be entered thereon, provided, however, that
any such accountant shall have no authority to assess damages or award
attorney's fees or costs. The fees and expenses of such accountant shall be paid
one-half by the Seller and one-half by the Buyer.
F. OPERATING STATEMENTS. Prior to the Effective Date of the
LMA, the Seller shall deliver to the Buyer, for the Buyer's informational
purposes only, monthly unaudited statements of operating revenues and operating
expenses of the Stations with ten (10) days after each such statement is
prepared by or for the Company or the Seller. The Seller shall provide to the
Buyer such written or oral sales, inventory, and pacing reports as Seller may
have available and Buyer may reasonably request.
G. CONTRACTS. The Seller will not without the prior written
consent of the Buyers amend, change, or modify any of the contracts listed on
Section 2(k) of the Disclosure Schedule in any material respect. The Seller will
not without prior written consent of the Buyers enter into any contract outside
the Ordinary Course of Business which involves more than Five Thousand Dollars
($5,000).
H. OPERATION OF STATIONS. Subject to the operation of the
Stations by Broadcasting under the LMA Agreement, the Seller will not engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. The Seller shall operate the Stations in compliance
with the FCC Licenses and the rules and regulations of the FCC, and the FCC
Licenses shall at all times remain in full force and effect. The Seller shall
file with the FCC all material reports, applications, documents, instruments and
other information required to be filed in connection with the operation of the
Stations.
I. CREDIT AND RECEIVABLES. Prior to the LMA Effective Date,
the Seller will follow its usual and customary policies with respect to
extending credit for sales of air time and advertising on the Stations and with
respect to collecting accounts receivable arising from such extension of credit.
J. PRESERVATION OF STATIONS AND THE ACQUIRED ASSETS. The
Seller will keep its Stations and the Acquired Assets and properties
substantially intact, including its present operations, physical facilities,
working conditions, relationships with lessors, licensors, advertisers,
suppliers, customers, and employees, all of the Confidential Information, call
letters and trade secrets of the Stations, and the FCC Licenses.
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K. FULL ACCESS AND CONSULTATION. Prior to the LMA Effective
Date, the Seller will permit representatives of the Buyers to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Stations, to all premises, properties, books,
records, contracts, Tax records, and documents of or pertaining to the Seller.
The Seller will consult with the Buyers' management with a view to informing
Buyers' management as to the operations, management and business of the
Stations.
L. NOTICE OF DEVELOPMENTS. The Seller will give prompt
written notice to the Buyers of any material development affecting business,
operations or prospects of the Stations or the Acquired Assets or the ability of
the Seller to perform hereunder.
M. EXCLUSIVITY. The Seller will not (i) solicit, initiate,
or encourage the submission of any proposal or offer from any person relating to
any (A) merger or consolidation, (B) acquisition or purchase of securities or
assets, or (C) similar transaction or business combination involving the Seller,
or (ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing. The Seller will notify the Buyers immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
N. TITLE INSURANCE, SURVEYS AND ENVIRONMENTAL ASSESSMENTS.
The Buyers will obtain (i) with respect to each parcel of Real Estate subject to
the Leases, a leasehold owner's policy issued by a title insurer reasonably
satisfactory to the Seller, in an amount equal to the fair market value of such
Real Estate (including all improvements located thereon), insuring over the
standard pre-printed exceptions and insuring leasehold title to such Real Estate
in the Buyers as of the Closing subject only to the Permitted Real Estate
Encumbrances, together with such endorsements for zoning, contiguity, public
access and extended coverage as the Buyers or their lender reasonably request,
(ii) with respect to each parcel of Owned Real Estate, an owner's policy of
title insurance by a title insurer reasonably satisfactory to the Buyers, in an
amount equal to the fair market value of such Real Estate (including all
improvements located thereon), insuring over the standard pre-printed exceptions
and insuring title to the Owned Real Estate to be vested in the Buyers as of the
Closing free and clear of all liens and encumbrances except Permitted Real
Estate Encumbrances, together with such endorsements for zoning, contiguity,
public access and extended coverage as the Buyers or its lender reasonably
request, (iii) a current survey of each parcel of Real Estate certified to the
Buyers and its lender, prepared by a licensed surveyor and conforming to current
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Surveys') which shall not
disclose any survey defect or encroachment from or onto any of the Real Estate
which has not been cured or insured over prior to the Closing; and (iv) with
respect to each parcel of Real Estate, a current Phase I environmental site
assessment from an environmental consultant or engineer reasonably satisfactory
to the Seller which does not indicate that the Seller and the Real Estate are
not in compliance with any Environmental Law and which shall not disclose or
recommend any action with respect to any condition to be remedied or
investigated or any contamination on the site
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assessed. If necessary to obtain the leasehold title insurance referred to in
Subsection (i) of this Section 4(n), the Seller will use its best commercially
reasonable efforts to amend the Leases with respect to the transmitter sites for
WMEQ-FM and WATQ to include complete legal descriptions of the land leased. The
Buyers and Seller will each pay one-half (1/2) the costs of these title
policies, Surveys, and environmental assessments.
O. CONTROL OF STATIONS. The transactions contemplated by
this Agreement shall not be consummated until after the FCC has given its
consent and approval to the Assignment Application. Between the date of this
Agreement and the Closing Date, the Buyers and their employees or agents shall
not directly or indirectly control, supervise, or direct, or attempt to control,
supervise, or direct, the operation of the Stations, and such operation shall be
the sole responsibility of and in the control of the Seller.
P. RISK OF LOSS. The risk of loss, damage, or destruction
to any of the Acquired Assets shall remain with the Seller until the Closing. In
the event of any such loss, damage, or destruction the Seller will promptly
notify the Buyers of all particulars thereof, stating the cause thereof (if
known) and the extent to which the cost of restoration, replacement and repair
of the Acquired Assets lost, damaged or destroyed will be reimbursed under any
insurance policy with respect thereto. The Seller will, at Seller's expense,
repair or replace such Acquired Assets to their former condition as soon as
possible after loss, damage or destruction thereof and shall use its best
efforts to restore as promptly as possible transmissions as authorized in the
FCC Licenses. The Closing Date shall be extended (with FCC consent, if
necessary) for up to sixty (60) days to permit such repair or replacement. If
repair or replacement cannot be accomplished within sixty (60) days of the date
of the Seller's notice to the Buyers and the Buyers determine that the Seller's
failure to repair or replace would have a material adverse effect on the
operation of the Stations:
(i) the Buyers may elect to terminate this
Agreement; or
(ii) the Buyers may postpone the Closing Date until
such time as the property has been repaired, replaced or restored in a
manner and to an extent reasonably satisfactory to the Buyers, unless
the same cannot be reasonably effected within ninety (90) days of the
date of the Seller's notice to the Buyers, in which case either party
may terminate this Agreement; or
(iii) the Buyers may choose to accept the Acquired
Asset in their "then" condition, together with the Seller's assignment
to the Buyers of all rights under any insurance claims covering the
loss, damage or destruction and payment over to the Buyers of any
proceeds under any such insurance policies, previously received by the
Seller with respect thereto plus an amount equal to the amount of any
deductible or self-insurance maintained by Seller on such Acquired
Assets. In the event the Closing Date is postponed pursuant to this
Section 4(p), the parties hereto will cooperate to extend the time
during which this Agreement must be closed as specified in the consent
of the FCC.
5. CONDITIONS TO OBLIGATION TO CLOSE.
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A. Conditions to Obligation of the Buyers. The obligation
of Buyers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 2 above shall be true and correct in all respects at and as
of the Closing Date as though made on and as of the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all respects through the
Closing;
(iii) the Seller shall have procured all of the
third party consents specified in Section 4(d) above and all of the
title insurance commitments (and endorsements), Surveys and
environmental site assessments described in Section 4(n) above;
(iv) no action, suit, investigation, inquiry or
other proceeding shall be pending or threatened before any court or
quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement or impose
damages or penalties upon any of the parties if such transactions are
consummated, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) affect
adversely the right of the Buyers to own, operate, or control the
Acquired Assets (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyers
a certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in
Sections 5(a)(i) through (iv) is satisfied in all respects;
(vi) each of the Assignment Applications shall have
been approved by a Final Order of the FCC and the Buyers shall have
received all governmental approvals required to transfer all other
authorizations and such other consents and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(vii) the relevant parties shall have entered into
the Post-closing Agreement;
(viii)the Buyers shall have received from counsel to
the Seller an opinion with respect to the matters set forth in Exhibit
E attached hereto, addressed to the Buyers and its lender and dated as
of the Closing Date; and
(ix) all actions to be taken by the Seller in
connection with the consummation of the transactions contemplated
hereby and all certificates, opinions,
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instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to the Buyers.
B. CONDITIONS TO OBLIGATION OF THE SELLER. The obligation
of the Seller to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 3 above shall be true and correct in all respects at and as
of the Closing Date as though made on and as of the Closing Date;
(ii) the Buyers shall have performed and complied
with all of their covenants hereunder in all respects through the
Closing;
(iii) no action, suit, investigation, inquiry or
other proceeding shall be pending or threatened before any court or
quasi judicial or administrative agency of any federal, state, local,
or foreign jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement or impose
damages or penalties upon any of the Parties if such transactions are
consummated, or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Seller
a certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in
Section 5(b)(i)-(iii) is satisfied in all respects and the statements
contained in such certificate shall be deemed a warranty of the Buyers
which shall survive the Closing;
(v) each of the Assignment Applications shall have
been approved by a Final Order of the FCC and the Buyers shall have
received all governmental approvals required to transfer all other
authorizations, consents, and approvals of governments and governmental
agencies set forth in the Disclosure Schedule;
(vi) the relevant parties shall have entered into
the Post-closing Agreement; and
(vii) all actions to be taken by the Buyers in
connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Seller.
6. POST-CLOSING COVENANTS.
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The Parties agree as follows with respect to the period
following the Closing:
A. GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 7 below).
B. LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Stations, each of the other Parties will
reasonably cooperate with the contesting or defending Party and its counsel in
the contest or defense, make available his or its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 7 below); provided, however,
that such access and cooperation does not unreasonably disrupt the normal
operations of the cooperating party.
C. ADJUSTMENTS. Subject to the provisions of the LMA
Agreement and subject to the provisions of Section 6[c] of the Disclosure
Schedule with respect to the "B-95/WMEQ Spring Home and Garden Show," operation
of the Stations and the income and expenses attributable thereto up through the
close of business on the day before the Closing Date shall be for the account of
the Seller and thereafter for the account of the Buyers. Such items as employee
salaries, vacation, sick day and personal time accruals, and fringe benefits,
power and utilities charges, insurance, real and personal property taxes,
prepaid expenses, deposits, music license fees, and rents and payments
pertaining to the Assumed Contracts (including any contracts for the sale of
time for cash, trade or barter so assigned) shall be prorated between the Seller
and the Buyers as of the Closing Date unless the LMA Agreement specifies that a
particular item shall be prorated as of the LMA Effective Date. In addition, all
commissions payable with respect to the accounts receivable of the Seller
(whether due before or after Closing) shall be solely for the account and
responsibility of the Seller. Contractual arrangements that do not reflect an
equal rate of compensation to a Stations over the term of the agreement shall be
equitably adjusted as of the Closing Date. The prorations and adjustments
hereunder shall be made and paid insofar as feasible on the Closing Date, with a
final settlement sixty (60) days after the Closing Date. In the event of any
disputes between the Parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at such time and such disputes shall be determined by
an independent accounting firm mutually acceptable to both parties and the fees
and expenses of such accounting firm shall be paid one-half (1/2) by the Seller
and one-half (1/2) by the Buyer.
D. CONSENTS. In the event any of the Assumed Contracts are
not assignable or any consent to such assignment is not obtained on or prior to
the Closing Date, and the Buyers elect to consummate the transactions
contemplated herein despite such failure or inability to
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obtain such consent, the Seller shall continue to use commercially reasonable
efforts to obtain any such assignment or consent after the Closing Date. Until
such time as such assignment or approval has been obtained, the Seller will
cooperate with Buyers in any lawful and economically feasible arrangement to
provide that the Buyers shall receive the Seller's interest in the benefits
under any such Assumed Contract, including performance by the Seller as agent,
if economically feasible; provided, however, that the Buyers shall undertake to
pay or satisfy the corresponding liabilities for the enjoyment of such benefit
to the extent that Buyers would have been responsible therefor if such consent
or assignment had been obtained.
E. ACCESS FOR AUDITS. Seller acknowledges the Buyers are
subsidiaries of a publicly traded company and as such may have responsibilities
under SEC rules and regulations to obtain audits of the Stations for the period
prior to the date of this Agreement. Seller agrees to use best efforts, before
or after Closing to prepare such audits at Buyers' request and at Buyers'
expense, and to provide such access to its historical records as may be
reasonably necessary for Buyers to comply with their financial reporting
obligations.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
A. SURVIVAL. All of the representations and warranties of
the Seller contained in Section 2 of this Agreement (other than the
representations and warranties of the Seller contained in Sections 2(a), 2(b),
2(c), and 2(d) hereof or relating to the Seller's title to the Acquired Assets)
shall survive the Closing and continue in full force and effect for a period
until 90 days after the applicable statute of limitations has expired with
respect to any claim by the Buyers based on a claim or action by a third party
and for a period of eighteen (18) months following Closing with respect to any
claim by the Buyers not based on a claim or action by a third party. All of the
other representations and warranties of Seller (including the representations
and warranties Seller contained in Sections 2(a), 2(b), 2(c), and 2(d) hereof or
relating to the Seller's title to the Acquired Assets) and all representations
and warranties of the Buyers shall survive the Closing and continue in full
force and effect forever thereafter.
B. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE
BUYERS. Except as described below in Section 7(e) with respect to a breach of a
warranty or covenant prior to the Closing Date, the Seller agrees to indemnify
the Buyers from and against the entirety of any Adverse Consequences the Buyers
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by:
(i) any misrepresentation or breach of any of the
Seller's representations or warranties, and covenants contained in this
Agreement or in any Ancillary Agreement executed and/or delivered by
the Seller (so long as the Buyers make a written claim for
indemnification within the applicable survival period);
(ii) any breach or nonfulfillment of any agreement
or covenant of the Seller contained herein or in any Ancillary
Agreement;
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(iii) any Liability of the Seller which is not an
Assumed Liability; and/or
(iv) any Liability of the Buyers arising by
operation of law (including under any bulk transfer law of any
jurisdiction or under any common law doctrine of defacto merger or
successor liability) which is not an Assumed Liability.
C. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE
SELLER. Except as described below in Section 7(e) with respect to a breach of a
warranty or covenant prior to the Closing Date, the Buyers agree to indemnify
the Seller from and against the entirety of any Adverse Consequences the Seller
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by (i) any misrepresentation or breach of any of the Buyers'
representations or warranties contained in this Agreement or in any Ancillary
Agreement executed and/or delivered by the Buyers (so long as the Seller makes a
written claim for indemnification within the applicable survival period) or (ii)
any breach or nonfulfillment of any agreement or covenant of the Buyers
contained herein or in any Ancillary Agreement, or (iii) any Assumed Liability.
D. SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the Buyers would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the Buyers shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 10(n) below), in addition
to any other remedy to which it may be entitled, at law or in equity. Each of
the Parties acknowledges and agrees that notwithstanding the provision in
Section 7(e) with respect to the remedy of liquidated damages upon a breach of a
warranty or covenant of this Agreement prior to the Closing, money damages would
not be an adequate remedy for Buyers for a breach of any provision of this
Agreement.
E. LIQUIDATED DAMAGES. The Buyers and the Seller
acknowledge that in the event that the transactions contemplated by this
Agreement are not closed because of a default by the Buyers, the Adverse
Consequences to the Seller as a result of such default may be difficult, if not
impossible, to ascertain. Accordingly, in lieu of indemnification pursuant to
Section 7(c), the Seller shall be entitled to receive from the Buyers for such
default the Earnest Money Deposit as liquidated damages without the need for
proof of damages, subject only to successfully proving in a court of competent
jurisdiction that the Buyer materially breached this Agreement and that the
transactions contemplated thereby have not occurred. The Seller shall proceed
against the Earnest Money Deposit as full satisfaction of liquidated damages
owed by the Buyers and as its sole remedy for a failure of the transactions
contemplated hereby to occur as a result of a material breach of the terms of
this Agreement by the Buyers.
F. MATTERS INVOLVING THIRD PARTIES. If any third party
shall notify any Party (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 7, then the
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Indemnified Party shall notify the Indemnifying Party thereof promptly;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party from any
liability or obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is damaged as a result of such failure. In the event
any Indemnifying Party notifies the Indemnified Party within 15 days after the
Indemnified Party has given notice of the matter that the Indemnifying Party is
assuming the defense thereof, (i) the Indemnifying Party will defend the
Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (ii) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest), (iii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party (not to be withheld unreasonably), and (iv) the Indemnifying
Party will not consent to the entry of any judgment with respect to the matter,
or enter into any settlement which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from all
Liability with respect thereto, without the written consent of the Indemnified
Party (not to be withheld unreasonably). In the event the Indemnifying Party
does not notify the Indemnified Party within 15 days after the Indemnified Party
has given notice of the matter that the Indemnifying Party is assuming the
defense thereof, however, and/or in the event the Indemnifying Party shall fail
to defend such claim actively and in good faith, then the Indemnified Party may
defend against, or enter into any settlement with respect to, the matter in any
manner it reasonably may deem appropriate.
G. LIMITATION OF LIABILITY. Notwithstanding anything in
this Agreement to the contrary, after the Closing neither party shall indemnify
or otherwise be liable to the other party from and after the Closing Date except
to the extent that the Adverse Consequences suffered by the Indemnified Party,
in the aggregate from all indemnifiable events shall exceed Ten Thousand Dollars
($10,000) and indemnification shall be made by the indemnifying party only to
the extent of such excess over Ten Thousand Dollars ($10,000); provided however
that the foregoing limitation shall not be applicable to: (i) the obligations of
the Buyer to pay and discharge any Liability of the Seller to third parties from
and after the Closing Date assumed by the Buyer under the terms of this
Agreement; (ii) the obligation of the Seller to pay and discharge any Liability
to third parties not assumed by the Buyer under the terms of this Agreement,
(iii) the Seller's obligation to deliver clear title to the Acquired Assets, or
(iv) the Seller's entitlement to the Earnest Money Deposit as liquidated damages
under the circumstances set forth in Section 7(e).
8. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of
the assets of the Seller, other than Retained Assets, that are used or useful in
the operation of the Stations, wherever located, including but not limited to
all of its (a) real property, leaseholds and other interests of any kind
therein, improvements, fixtures, and fittings thereon (such as towers and
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antennae), and easements, rights-of-way, and other appurtenances thereto), but
excluding the land and building at 430 Crescent Street in Menomonie, Wisconsin,
and the former WMEQ-FM tower site located 1.8 miles southeast of Menomonie,
which is not currently being used by the Stations; (b) tangible personal
property (such as fixed assets, computers, data processing equipment, electrical
devices, monitoring equipment, test equipment, switching, terminal and studio
equipment, transmitters, transformers, receivers, broadcast facilities,
furniture, furnishings, inventories of compact disks, records, tapes and other
supplies, vehicles) and all assignable warranties with respect thereto; (c)
Intellectual Property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, remedies
against infringements thereof, and rights to protection of interests therein
under the laws of all jurisdictions; (d) rights under orders and agreements
(including those Barter Agreements and Advertising Contracts identified on the
Disclosure Schedule) now existing or entered into in the Ordinary Course of
Business for the sale of advertising time on the Stations; (e) Assumed
Contracts, indentures, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (f) call letters of the Stations, jingles,
logos, slogans, and business goodwill of the Stations; (g) claims, deposits
(excluding those of the Seller with respect to Wisconsin unemployment
insurance), prepayments, refunds, causes of action, chooses in action, rights of
recovery (including rights under policies of insurance), rights of set off, and
rights of recoupment; (h) Licenses and similar rights obtained from governments
and governmental agencies; and (i) FCC logs and records and all other books,
records, ledgers, logs, files, documents, correspondence, advertiser lists, all
other lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, program production materials,
studies, reports, and other printed or written materials; and (j) goodwill of
the Stations.
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"ADVERTISING CONTRACTS" has the meaning set forth in Section 2(s)
above.
"AFFILIATE" means with reference to any person or entity, another
person or entity controlled by, under the control of or under common control
with that person or entity.
"ASSIGNMENT APPLICATION" has the meaning set forth in Section 4(b)
above.
"ASSUMED CONTRACTS" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts identified on Section 2(j) of the
Disclosure Schedule as those to be assumed by Broadcasting.
"ASSUMED LIABILITIES" means (a) obligations of the Seller which accrue
after the Closing Date under the Assumed Contract either: (i) to furnish
services, and other non-Cash benefits to another party after the Closing; or
(ii) to pay for goods, services, and other non-Cash benefits that another party
will furnish to it after the Closing. The Assumed Liabilities shall not include
any Retained Liabilities.
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"BARTER AGREEMENT" has the meaning set forth in Section 4(e) above.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BUYERS" has the meaning set forth in the preface above.
"CASH" means cash and cash equivalents determined in accordance with
GAAP applied on a basis consistent with the preparation of the Financial
Statements.
"CLOSING" has the meaning set forth in Section 1(d) above.
"CLOSING DATE" has the meaning set forth in Section 1(d) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Seller.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 1 above.
"EARNEST MONEY DEPOSIT" has the meaning set forth in Section 1(c)
above.
"EARNEST MONEY ESCROW AGREEMENT" has the meaning set forth in Section
1(c) above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control Act
of 1976, the Refuse Act of 1899, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other law of any federal,
state, local, or foreign government or agency thereof (including rules,
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regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, 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
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means Robert Maccini.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC LICENSES" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"FINAL ORDER" means an action by the FCC as to which: (a) no request
for stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7(f) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7(f) above.
"INTELLECTUAL PROPERTY" means all (a) patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, service marks,
trade dress, call letters, logos, trade names, and corporate names and
registrations and applications for registration thereof, (c) all programs,
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programming materials, copyrights and registrations and applications for
registration thereof, (d) registrations and applications for registration
thereof, (e) computer software, data, and documentation, (f) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, market and other research information, drawings,
specifications, designs, plans proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
"KNOWLEDGE" means actual knowledge after reasonable investigation.
"LEASES" means those real estate leases to which Seller is a party
governing Seller's studios and FM tower sites, as described in Section 2(i) of
the Disclosure Schedule, including the tower space leases in which the Seller is
the lessor, but excluding the lease for the former WMEQ-FM tower site, located
1.8 miles southeast of Menomonie , which lease is listed as a Retained Asset.
"LIABILITY" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes any liquidated damages that
become due pursuant to Section 7(e) above.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"MULTI-EMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNED REAL ESTATE" means the real property owned by the Seller as
described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon, but excluding the land and building
at 430 Crescent Street, Menomonie, Wisconsin, which real property is listed as a
Retained Asset.
"PARTY" has the meaning set forth in the preface above.
"PERMITTED REAL ESTATE ENCUMBRANCES" shall have the meaning set forth
in Section 2(i), above.
"POST-CLOSING AGREEMENT" means the Post-Closing Agreement with Seller's
owners in the form attached hereto as Exhibit C.
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"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"PURCHASE PRICE" has the meaning set forth in Section 1(c) above.
"REAL ESTATE" means the Owned Real Estate and the real estate,
building, fixtures and improvements which are the subject of the Leases,
excluding the real property interests identified as Retained Assets.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAINED ASSETS" means (i) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation; (ii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyers on
the other hand entered into on or after the date of this Agreement); (iii)
accounts, notes and other receivables of the Seller; (iv) Cash; (v) the deposit
of the Seller with respect to Wisconsin unemployment insurance; (vi) the land
and building located at 430 Crescent Street in Menomonie, (vii) the former
WMEQ-FM tower site located 1.8 miles southeast of Menomonie, which is not
currently being used by the Stations and (viii) the tower located on the
above-referenced former WMEQ-FM tower site.
"RETAINED LIABILITIES" means any other obligations or Liabilities of
the Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the Closing; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(i) relating to Surveys, title commitments and environmental audits and
Section 4(b) with regard to the Assignment Application; or (iv) any Liability or
obligation of the Seller under this Agreement (or under any side agreement
between the Seller on the one hand and the Buyers on the other hand entered into
on or after the date of this Agreement).
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"SELLER" has the meaning set forth in the preface above.
"STATIONS" means the radio broadcast stations WBIZ-AM and WBIZ-FM,
licensed to Eau Claire, WI; WMEQ-AM and WMEQ-FM, licensed to Menomonie, WI;
WQRB-FM, licensed to Bloomer, WI; and WATQ-FM, licensed to Chetek, WI.
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"SUBSIDIARY," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"SURVEYS" has the meaning set forth in Section 4(o) above.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
9. TERMINATION.
A. TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Buyers and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyers may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing in
the event the Seller is in breach of any representation, warranty, or
covenant contained in this Agreement; provided, however, that if such
breach is capable of being cured, such breach also remains uncured for
twenty (20) days after notice of breach is received by the Seller from
the Buyers;
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyers at any time prior to the Closing in
the event the Buyers are in breach of any representation, warranty, or
covenant contained in this Agreement; provided, however that if such
breach is capable being cured, such breach remains uncured for twenty
(20) days after notice of breach is received by the Buyers from the
Seller;
(iv) the Buyers may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing if
the Closing shall not have occurred on or before the 360th day
following the date of this Agreement by reason of the failure of any
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condition precedent under Section 5(a) hereof (unless the failure
results primarily from the Buyers themselves breaching any
representation, warranty, or covenant contained in this Agreement);
(v) the Seller may terminate this Agreement by
giving written notice to the Buyers at any time prior to the Closing if
the Closing shall not have occurred on or before the 360th day
following the date of this Agreement by reason of the failure of any
condition precedent under Section 5(b) hereof (unless the failure
results primarily from the Seller itself breaching any representation,
warranty, or covenant contained in this Agreement);
(vi) the Buyers or the Seller may terminate this
Agreement if any Assignment Application is denied by Final Order.
B. EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 9(a) above, all obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. MISCELLANEOUS.
A. PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue
any press release or announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by law or regulation (in which case the
disclosing Party will advise the other Party prior to making the disclosure).
B. NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
C. ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, that may have related in any way to
the subject matter hereof.
D. SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party, provided that (i) the Buyers may
assign all of their right, title and interest in, to and under this Agreement to
one or more Affiliates, who shall then, subject to the terms and conditions of
this Agreement, have the right to receive the Acquired Assets, assume the
Assumed Liabilities, and to pay to the Seller the Purchase Price therefor or to
any successor to the Buyers in the event of any sale, merger or consolidation of
the Buyers, and (ii) Buyers may assign their indemnification claims and their
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rights under the warranties and representations of the Seller to the financial
institution(s) providing financing to the Buyers in connection with this
transaction.
E. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
F. HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
G. NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing and shall be considered to be
given and received in all respects when hand delivered, when delivered via
prepaid express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Seller:
Phillips Broadcasting Company, Inc.
430 Crescent Street
Menomonie, Wisconsin 54751
Attn: Michael A. Phillips
Fax: (715) 835-9680
Copy to:
Reddy, Begley and McCormick
2175 K Street, NW
Washington, DC 20036
Attn: Matthew McCormick, Esquire
Fax: (202) 659-5711
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
Cumulus Wireless Services Inc.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53202
Attn: Terrence J. Leahy
Fax: (414) 615-2800
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With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
875 N. Michigan Avenue
Suite 3650
Chicago, Illinois 60611
Attn: Richard J. Bonick
Fax: (312) 867-0098
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
H. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Wisconsin.
I. AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyers and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
J. SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
K. EXPENSES. The Buyers and the Seller, will each bear
their own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby, other
than as set forth in Section 4(b) with regard to the Assignment Applications and
as set forth in Section 4(n) with respect to Surveys, title commitments and
environmental audits. The Seller and the Buyers will each pay one-half (1/2)
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of any transfer or sales taxes and other recording or similar fees necessary to
vest title to each of the Acquired Assets in the Buyers.
L. CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
M. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
N. SUBMISSION TO JURISDICTION. Each of the Parties submits
to the jurisdiction of any state or federal court sitting in Eau Claire,
Wisconsin in any action or proceeding arising out of or relating to this
Agreement, agrees that all claims in respect of the action or proceeding may be
heard and determined in any such court, and agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on the other Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 10(g) above. Nothing in this Section 10(n),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.
CUMULUS BROADCASTING, INC.
By: /s/ Richard W. Weening
-----------------------------------
Richard Weening
Executive Chairman
CUMULUS LICENSING CORP.
By: /s/ Richard W. Weening
-----------------------------------
Richard Weening
Executive Chairman
CUMULUS WIRELESS SERVICES INC.
By: /s/ Richard W. Weening
-----------------------------------
Richard Weening
Executive Chairman
PHILLIPS BROADCASTING COMPANY, INC.
By: /s/ Michael A. Phillips
-----------------------------------
Michael A. Phillips (printed)
-----------------------------------
Title: President
---------------------------------
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<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of March 9, 1999 by and
between CUMULUS BROADCASTING, INC., a Nevada corporation ("Broadcasting"),
CUMULUS LICENSING CORP., a Nevada corporation ("Licensing), CUMULUS WIRELESS
SERVICES INC., a Nevada corporation ("Wireless"), HMH BROADCASTING INC., a
Kentucky corporation ("HMH"), and HMH REALTY, LLC, a Kentucky limited liability
company ("HMH Realty"). Broadcasting, Licensing, and Wireless are referred to
collectively herein as the "Buyers." HMH and HMH Realty are referred to
collectively as the "Sellers." The Buyers and the Seller are referred to
individually as the "Party" or collectively as the "Parties." Capitalized terms
used in this Agreement are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers
hereby agree to purchase substantially all of the assets (and assume certain of
the liabilities) of the Seller that are used or useful in the operation of radio
stations WLRO-FM licensed to Richmond, KY; WLTO-FM licensed to Nicholasville,
KY; WVLK-FM and WVLK-AM licensed to Lexington, KY; and WXZZ-FM licensed to
Georgetown, KY (the "Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. BASIC TRANSACTION.
A. PURCHASE AND SALE OF ASSETS. On and subject to the terms
and conditions of this Agreement, (i) the Seller agrees to sell, transfer,
convey and deliver to Licensing, and Licensing agrees to purchase from the
Seller, all of the FCC Licenses listed in Section 2(k) of the disclosure
schedule ("Disclosure Schedule"); and (ii) Seller agrees to sell, transfer
convey and deliver to Broadcasting , and Broadcasting agrees to purchase from
the Seller, all of the Acquired Assets other than the FCC Licenses and the Tower
Properties listed in Section 2(i) of the Disclosure Schedule; and (iii) Seller
agrees to sell, transfer, convey and deliver to Wireless, and Wireless agrees to
purchase from the Seller, all of the Tower Properties. All of these sales,
except for the sales effected previously pursuant to the TBA, shall take place
at the Closing for the consideration specified below in this Section 1.
B. ASSUMPTION OF LIABILITIES. On and subject to the terms
and conditions of this Agreement, Broadcasting agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing, except as
otherwise provided in the TBA and as set forth below. The Buyers will not assume
or have any responsibility, however, with respect to any other obligation or
Liability of the Seller not included within the definition of Assumed
Liabilities and assumed by Broadcasting, and the Seller agrees to pay and
discharge all Liabilities and obligations of the Seller other than the Assumed
Liabilities.
Buyer and Seller agree as follows with respect to certain Assumed
Liabilities:
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(i) With respect to the three Radio Programming Lease
Agreements between Broadcast Programming and HMH listed on
Section IIA of Exhibit G, Seller agrees that it will
negotiate in good faith to terminate these agreements prior
to the TBA Date. In the event that Broadcast Programming
does not agree to terminate these agreements without
liability, Buyer and Seller agree that each will pay fifty
percent (50%) of the termination liability for each
contract, with Seller paying its portion in cash and Buyers
paying their portion under a barter arrangement with
Broadcast Programming.
(ii) With respect to the Employment Agreement dated 11/30/98
between James F. Barnhart and Seller (the "Barnhart
Contract"), and notwithstanding any provision of this
Section to the contrary, Buyers agree to honor the terms and
conditions of the Barnhart Contract for the full term of
such contract. With respect to each of the other labor and
employment contracts listed in Section III of Exhibit G
attached hereto, Buyers agree to honor the terms and
conditions of each such contract for the duration of the
term of the TBA. On the expiration of the TBA, Buyers shall
not assume and shall not be held to the terms and conditions
of such labor and employment contract, except as provided
below. In the event that there are labor and employment
contracts which Buyers do not assume and which entitle such
employees to severance pay, the severance pay shall be paid
as follows. First, Buyers shall make such severance payments
as may be consistent with their then-current policies and as
may be negotiated with such employees. Second, Seller shall
pay any additional severance pay owed to such employees, up
to one hundred twenty-five thousand dollars ($125,000) in
the aggregate, which shall be Seller's sole and exclusive
severance liability with respect to such employee(s). Third,
any severance liability still remaining shall be the
responsibility of Buyers, who shall reimburse Seller by
means of an adjustment to the Purchase Price at Closing or
by means of a post-Closing adjustment, but Buyers shall have
no other obligations with respect to such labor and
employment contracts.
C. PURCHASE PRICE. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the amount of Forty-Four Million Five
Hundred Thousand and no/100 Dollars ($44,500,000.00) (the "Purchase Price"),
payable as follows:
(i) on the date of this Agreement, the Buyers will deposit with
the Escrow Agent an irrevocable letter of credit in favor of
the Escrow Agent in the amount of Two Million Two Hundred
Twenty-Five Thousand and no/100 Dollars ($2,225,000.00) (the
"Earnest Money Deposit"); and
(ii) on the Closing Date, the Buyers shall deposit with the
Escrow Agent the amount of One Million One Hundred Twelve
Thousand Five Hundred and no/100 Dollars ($1,112,500.00),
which shall constitute the Post-Closing Escrow described
below;
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(iii) on the Closing Date, the Buyers shall pay the Seller the
amount of Forty-Three Million Two Hundred Eighty-Seven
Thousand Five Hundred and no/100 Dollars ($43,287,500.00),
less (a) the amount, if any, distributed by the Escrow Agent
to the Seller at the closing pursuant to Section 3(A) of the
Escrow Agreement, by wire transfer or delivery of other
immediately available funds, and (b) any Purchase Price
Adjustment;
(iv) on the Closing Date, the Buyers shall pay to the Seller, on
behalf of Ralph E. Hacker pursuant to the Post-Closing
Agreement, the amount of One Hundred Thousand and no/100
Dollars ($100,000).
The Earnest Money Deposit referenced in this Section 1(c) shall be placed in
escrow with the Escrow Agent pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the "Escrow Agreement") and shall be disbursed in
accordance with the terms thereof. The Escrow Agreement shall provide that, in
the event Seller makes a claim against the Earnest Money Deposit, Seller shall
be entitled to the interest on such Earnest Money Deposit from the date Seller
makes such claim until the date Seller receives damages as a result of the
claim. The Escrow Agreement shall further provide that if the letter of credit
has not been replaced by a new letter of credit more than thirty (30) days
before the expiration date of the letter of credit, then the Escrow Agent shall
present the letter of credit to Seller who shall draw down the letter of the
credit and hold the proceeds as a cash escrow. The One Million One Hundred
Twelve Thousand Five Hundred Dollars ($1,112,500.00) deposited by Buyers with
the Escrow Agent at the Closing under Section 1(c)(ii) (the "Post-Closing
Escrow") shall be credited against the Purchase Price on the Closing Date but
shall remain in escrow, in whole or in part, from and after the Closing Date
with the Escrow Agent for a period of twelve (12) months from the Closing Date
(or such longer period as provided in the Escrow Agreement if an indemnification
claim is submitted during such twelve (12) month period) pursuant to the Escrow
Agreement. The Post-Closing Escrow shall be invested by Escrow Agent in
accordance with the instructions of Seller, and all interest earned thereon
shall be the property of Seller, payable to Seller upon demand. If this
Agreement is terminated without Closing of the transaction contemplated herein,
the Earnest Money deposit and all accrued interest (if any) shall be paid to the
Buyers or the Seller as provided in the Escrow Agreement.
D. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at a mutually agreed location,
commencing at 9:00 a.m. local time on either (i) a date mutually agreeable to
the Buyers and Seller not earlier than the fifth business day or later than
tenth business day after the FCC approval of the Assignment Application becomes
a Final Order, by which date all other conditions to the obligations of the
Parties to consummate the transactions contemplated hereby will have been
satisfied, or (ii) such other date as the Parties may mutually determine (with
either date being referred to as the "Closing Date").
E. DELIVERIES AT THE CLOSING. At the Closing, unless
previously delivered to the Buyer or the Seller, as the case may be, pursuant to
the TBA (i) the Seller will deliver to the Buyers the various certificates,
instruments, and documents referred to in Section 5(a) below; (ii)
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the Buyers will deliver to the Seller the various certificates, instruments, and
documents referred to in Section 5(b) below; (iii) the Seller will execute,
acknowledge (if appropriate), and deliver to the Buyers (A) assignments
(including Lease and other Assumed Contract assignments and Intellectual
Property transfer documents), bills of sale and warranty deeds in form
reasonably acceptable to the Buyers, (B) such affidavits, transfer tax returns,
memorandums of lease, and other additional documents as may be required by the
terms of the title insurance commitments described in Section 4(n) hereof, as
necessary for Buyer to obtain title insurance as required by such section or as
may be necessary to convey title to the Real Estate to the Buyers in the
condition required herein or provide public notice of existence of the Leases,
and (C) such other instruments of sale, transfer, conveyance, and assignment as
the Buyers and their counsel reasonably may request; (iv) the Buyers will
execute, acknowledge (if appropriate), and deliver to the Seller (A) an
assumption in the form attached hereto as Exhibit B and (B) such other
instruments of assumption as the Seller and its counsel reasonably may request;
and (v) the Buyers will deliver to the Seller the consideration specified in
Section 1(c) above.
F. POST-CLOSING AGREEMENT. On the Closing Date, the Seller
shall execute, and shall cause Ralph E. Hacker to execute, a Post-Closing
Agreement with the Buyers including covenants not to compete with the Buyers in
the markets served by the Stations in the form of Exhibit C attached hereto. A
portion of the Purchase Price equal to One Hundred Thousand Dollars ($100,000)
shall be paid to Ralph E. Hacker by the Buyers on the Closing Date as
consideration for the agreements set forth in the Post-Closing Agreement.
G. ALLOCATION. The Parties agree to jointly complete and
separately file Form 8594 with their federal income tax return for the tax year
in which the Closing occurs. If after good faith negotiations, the Parties
cannot reach agreement on the allocation in connection with jointly completing
Form 8594, the Parties agree that there will be no further obligation on the
part of either party to jointly complete the application and the Parties may
file Form 8594 without any input from the other Party.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyers that the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete in all material respects as of the
Closing Date (as though made then and as though the Closing Date or the TBA
Date, as specified, were substituted for the date of this Agreement throughout
this Section 2), (i) except as set forth in the lettered and numbered paragraphs
contained in the disclosure schedule accompanying this Agreement and initialed
by the Parties (the "Disclosure Schedule") corresponding to the lettered and
numbered sections of this Section 2, (ii) except for the last sentence of
Section 2(s) which is being given only as of the date of this Agreement, and
(iii) except as set forth in Section 4(r).
A. ORGANIZATION OF THE SELLER. The Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Except as set forth in Section 2(a) of the
Disclosure Schedule, the Seller does not have any
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<PAGE> 5
Subsidiaries. The Seller has the power and authority to own or lease its
properties and to carry on all business activities now conducted by it.
B. AUTHORIZATION OF TRANSACTION. Subject to the approval of
the shareholders of Seller as described below, the Seller has full power and
authority to execute and deliver this Agreement, the TBA, and all agreements and
instruments to be executed and delivered by Seller pursuant to this Agreement
(collectively, the "Ancillary Agreements") and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
Board of Directors of the Seller and the requisite number of shareholders of
Seller have, or shall have at or before Closing, duly authorized the execution,
delivery, and performance of this Agreement and the Ancillary Agreements by the
Seller. This Agreement and the Ancillary Agreements constitute the valid and
legally binding obligations of the Seller, enforceable in accordance with their
respective terms and conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Seller is subject or any provision of the charter or bylaws of the Seller; or
(ii) except as set forth in Section 2(c) of the Disclosure Schedule, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or third party consent under any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest, or
other agreement, arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to the
Assignment Application described in Section 4(b) the Seller does not need to
give any notice to, make any filing with, or obtain any Licenses, consent, or
approval of any court or government or governmental agency in order for the
Parties to enter into this agreement or the Ancillary Agreements or to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements (including the assignments and assumptions referred to in Section
1(e) above).
D. TITLE TO ACQUIRED ASSETS. Other than the Security
Interests set forth on Section 2(d) of the Disclosure Schedule (which shall be
released at or before the Closing) the Seller has good and marketable title to
all of the Acquired Assets, free and clear of any Security Interest or
restriction on transfer.
E. FINANCIAL STATEMENTS. Included in Section 2(e) of the
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements"): (i) reviewed balance sheets and statements of income,
and cash flow as of and for the fiscal years ended December 31, 1996, December
31, 1997 and December 31, 1998 for the Seller; and (ii) reviewed balance sheets
and statements of income, as of and for each month in 1998 and to date in 1999
for the Seller. Ending with the last calendar month before the TBA Date, the
Financial Statements have been, or by the TBA Date will have been, prepared in
conformity with the
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Seller's normal accounting policies, practices and procedures applied on a
consistent basis, throughout the periods covered thereby, are correct and
complete, fairly present the financial condition of the Seller and the results
of operation of Seller at the dates and for the periods indicated, and are
consistent with the books and records of the Seller (which books and records are
correct and complete). The Financial Statements accurately state the revenues of
the Stations for the period indicated therein and include an accurate breakout
of cash and trade revenues.
F. EVENTS SUBSEQUENT TO DECEMBER 31, 1998. Since December
31, 1998, except as set forth in Section 2(f) of the Disclosure Schedule, the
following statements are correct and complete as of the date hereof, and will be
correct and complete in all material respects as of the TBA Date (except for
Section 2(f)(viii) which will be correct and complete in all material respects
as of the Closing Date):
(i) other than this Agreement, the Seller has not
entered into any agreement, contract, lease, sublease, license, or
sublicense (or series of related agreements, contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course
of Business;
(ii) the Seller has not delayed or postponed (beyond
its normal practice in the Ordinary Course of Business) the
payment of accounts payable and other Liabilities;
(iii) the Seller has not altered its credit and
collection policies or its accounting policies;
(iv) except as set forth in Section 2(f)(iv) of the
Disclosure Schedule, the Seller has not entered into or terminated
any employment arrangement, employment contract, consulting
contract or severance agreement or collective bargaining
agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(v) except as set forth in Section 2(f)(v) of the
Disclosure Schedule, there have been no changes and, to Seller's
Knowledge, any threatened changes in employment terms for any of
its directors, officers, and employees;
(vi) except as set forth in Section 2(f)(vi) of the
Disclosure Schedule, there has not been any other occurrence,
event, incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving the Seller;
(vii) the Seller has not materially altered the
programming, format or call letters of the Stations, or its
promotional and marketing activities;
(viii) the Seller has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action
necessary to preserve the FCC Licenses and has operated the
Stations in compliance therewith and with all FCC rules and
regulations;
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(ix) the Seller has not terminated or received notice
of termination for any syndicated programming; and
(x) the Seller has not committed to any of the
foregoing.
Nothing in this Section 2(f) shall be deemed a warranty or
representation by the Seller with respect to trends or conditions
affecting the radio industry generally or the Lexington, Kentucky
market generally and Seller shall not be in breach of the
provisions of this Section 2(f) as a result of such general trends
or conditions.
G. TAX MATTERS. The Seller has timely and properly filed all
Tax Returns that it was required to file with respect to the Seller's
operations. All such Tax Returns were correct and complete and properly reflect
the tax liability of the Seller. Except as set forth in Section 2(g) of the
Disclosure Schedule, no Tax deficiencies have been proposed or assessed against
the Seller. The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. To the Seller's
Knowledge, no claim has ever been made by any authority in any jurisdiction
where the Seller does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction.
H. TANGIBLE ASSETS. Section 2(h) of the Disclosure Schedule
sets forth a listing of all transmitter and station equipment, vehicles and
other tangible personal property (having a replacement cost of not less than
$10,000 for each item) used in conducting the operation and business of the
Stations. The Seller owns or leases, and until the TBA Date will own or lease,
all tangible assets necessary for the conduct of the operation and business of
the Stations as presently conducted and as presently proposed to be conducted
and all leased assets are specifically identified as such in Section 2(h) of the
Disclosure Schedule. The equipment included in the Acquired Assets permits the
Stations to be operated in material compliance with all requirements. Except as
set forth in Section 2(h) of the Disclosure Schedule, no shareholder of the
Seller has any interest in any right, property or asset used or required by the
Seller in the operation of the Stations.
I. REAL PROPERTY. Section 2(i) of the Disclosure Schedule
lists and describes briefly all Owned Real Estate and real property leased to
the Seller (including, without limitation, complete legal descriptions for all
of the Real Estate). The Seller has delivered to the Buyers correct and complete
copies of the Leases. With respect to the Real Estate:
(i) HMH Realty has good and marketable title to
all of the Owned Real Estate free and clear of all liens, charges,
mortgages, security interests, easements, restrictions or other
encumbrances of any nature whatsoever except real estate taxes for
the year of Closing and municipal and zoning ordinances and
recorded utility easements which do not impair the current use,
occupancy or value or the marketability of title of the property
and which are disclosed in Section 2(i) of the Disclosure Schedule
(collectively, the "Permitted Real Estate Encumbrances");
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(ii) the Leases are and, following the Closing, to
the Seller's Knowledge, will continue to be, legal, valid,
binding, enforceable, and in full force and effect;
(iii) the Seller is not in breach or default (or has
repudiated any provision thereof), and to the Seller's Knowledge,
no event has occurred which, with notice or lapse of time, would
constitute a breach or default thereunder or permit termination,
modification, or acceleration thereunder;
(iv) there are no material disputes, oral
agreements, or forbearance programs in effect as to any Lease;
(v) none of the Owned Real Estate and to the
Seller's Knowledge, none of the properties subject to the Leases
is subject to any lease (other than Leases), option to purchase or
rights of first refusal;
(vi) except for Permitted Real Estate Encumbrances,
there are no (i) actual or, to the Seller's Knowledge, proposed
special assessments with respect to any of the Real Estate; (ii)
pending or, to the Seller's Knowledge, threatened condemnation
proceedings with respect to any of the Real Estate; (iii)
structural or mechanical defects in any of the buildings or
improvements located on the Real Estate; (iv) any pending or, to
the Seller's Knowledge, threatened changes in any zoning laws or
ordinances which may affect any of the Real Estate or Seller's use
thereof;
(vii) except as set forth in Section 2(f)(vii) of
the Disclosure Schedule, the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the Leases or its rights thereunder;
(viii) to the Seller's Knowledge, all facilities on
the Real Estate have received all approvals of governmental
authorities (including licenses, permits and zoning approvals)
required in connection with the operation thereof and have been
materially operated and maintained in accordance with applicable
laws, rules, and regulations, and all buildings and improvements
on the Real Estate are in good condition and repair, normal wear
and tear excepted; and
(ix) to the Seller's Knowledge, the owner of each
leased facility has good and marketable title to the underlying
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for Permitted
Real Estate Encumbrances and Seller's leasehold interest in each
Lease has priority over any other interest except for the fee
interest therein and Permitted Real Estate Encumbrances.
J. CONTRACTS. Section 2(j) of the Disclosure Schedule lists
any written arrangement (or group of related written arrangements) either
involving more than $5,000 or not entered into in the Ordinary Course of
Business. The Seller has delivered to the Buyers a correct and complete copy of
each written arrangement listed in Section 2(j) of the Disclosure Schedule
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(as amended to date). With respect to each written arrangement so listed which
constitutes an Assumed Contract: (A) the written arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the written arrangement
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the TBA Date (if the arrangement has not
expired according to its terms) and upon obtaining the required consents, if
needed; (C) except as set forth in Section 2(j) of the Disclosure Schedule,
Seller is not in breach or default, and to Seller's Knowledge no other party is
in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination, modification,
or acceleration, under the written arrangement; and (D) no party has repudiated
any provision of the written arrangement. Except as set forth in Section 2(j) of
the Disclosure Schedule, the Seller is not a party to any verbal contract,
agreement, or other arrangement which, if reduced to written form, would be
required to be listed in Section 2(j) of the Disclosure Schedule under the terms
of this Section 2(j). Except for the Assumed Contracts, the Buyers shall not
have any Liability or obligations for or in respect of any of the contracts set
forth in Section 2(j) of the Disclosure Schedule or any other contracts or
agreements of the Seller.
K. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION
REQUIREMENTS.
(i) All licenses, permits, authorizations,
franchises, certificates of compliance, tower registrations, and
consents of governmental bodies, including, without limitation,
the FCC Licenses, used or useful in the operation of the Stations
as they are now being operated are (A) in full force and effect,
(B) unimpaired by any acts or omissions of the Seller or the
Seller's employees or agents, (C) free and clear of any
restrictions which might limit the full operation of the Stations,
and (D) detailed in Section 2(k) of the Disclosure Schedule. With
respect to the licenses, permits, authorizations, franchises,
certificates of compliance, tower registrations, and consents
referenced in the preceding sentence, Section 2(k) of the
Disclosure Schedule also sets forth, without limitation, the date
of the last renewal, the expiration date thereof, and any
conditions or contingencies related thereto. Except as set forth
in Section 2(k) of the Disclosure Schedule, no condition exists or
event has occurred that permits, or after notice or lapse of time,
or both, would permit, the revocation or termination of any such
license, permit, consent, franchise, or authorization (other than
pursuant to their express expiration date) or the imposition of
any material restriction or limitation upon the operation of the
Stations as now conducted. Except as set forth in Section 2(k) of
the Disclosure Schedule, the Seller is not aware of any reason why
the FCC licenses might not be renewed in the ordinary course or
revoked.
(ii) The Stations are in material compliance with
the FCC's policy on exposure to radio frequency radiation. No
renewal of any FCC License would constitute a major environmental
action under the FCC's rules or policies. Access to the Stations
transmission facilities is restricted in accordance with the
policies of the FCC.
(iii) Except as set forth in Section 2(k) of the
Disclosure Schedule, the Seller is not the subject of any FCC or
other governmental investigation or any notice of
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violation or order, or any material complaint, objection, petition
to deny, or opposition issued by or filed with the FCC or any
other governmental authority in connection with the operation of
or authorization for the Stations, and there are no proceedings
(other than rule making proceedings of general applicability)
before the FCC or any other governmental authority that could
adversely affect any of the FCC Licenses or the authorizations
listed in Section 2(k) of the Disclosure Schedule.
(iv) The Seller has filed with the FCC and all
other governmental authorities having jurisdiction over the
Stations all material reports, applications, documents,
instruments, and other information required to be filed, and will
continue to make such filings through the Closing Date.
(v) Except as set forth in Section 4(d)
below, the Seller is not aware of any information concerning the
Stations that could cause the FCC or any other regulatory
authority not to issue to the Buyers all regulatory certificates
and approvals necessary for the consummation of the transactions
contemplated hereunder or the Buyer's operation and/or ownership
of the Stations. Except as set forth in Section 2(k)(v) of the
Disclosure Schedule, Seller is not aware of any pending FCC
applications which, if approved, would allow for the operation of
a new radio station with a signal reaching the signal area of the
Stations and, in addition, Seller is not aware of any plans or
proposals by any existing radio stations with a signal reaching
the signal area of the Stations to alter or change their format to
a format similar to that of the Stations.
L. INTELLECTUAL PROPERTY. The Seller owns or has the right
to use pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the businesses of the Seller as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Seller immediately prior to the TBA
Date hereunder is set forth on Section 2(l) of the Disclosure Schedule and each
item listed will be owned or available for use by the Buyers on identical terms
and conditions immediately subsequent to the TBA Date hereunder. The Seller has
not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and the Seller
has never received any charge, complaint, or notice alleging any such
interference, infringement, misappropriation, or violation. To the Knowledge of
the Seller, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of the
Seller.
M. INSURANCE. Section 2(m) of the Disclosure Schedule sets
forth a complete and accurate description of all Seller's insurance coverage.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms through the Closing Date, except to the extent
otherwise provided in the TBA.
N. LITIGATION. Section 2(n) of the Disclosure Schedule sets
forth each instance in which the Seller: (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge; or (ii) is a party
or, to the Knowledge of the Seller, is threatened to be made a party to
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any charge, complaint, action, suit, proceeding, hearing, or investigation of or
in any court or quasijudicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. None of the charges,
complaints, actions, suits, proceedings, hearings, and investigations set forth
in Section 2(n) of the Disclosure Schedule could result in any materially
adverse change in the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Seller or the
Stations taken as a whole. The Seller has no Knowledge of any Basis for any such
charge, complaint, action, suit, proceeding, hearing, or investigation against
the Seller.
O. EMPLOYEES. Section 2(o) of the Disclosure Schedule sets
forth a listing of the names, positions, job descriptions, salary or wage rates
and all other forms of compensation paid for work at the Stations of each
employee. Except as set forth in Section 2(o) of the Disclosure Schedule, to the
Knowledge of the Seller, no key employee or group of employees has any plans to
terminate employment with the Seller. The Seller is not a party to or bound by
any collective bargaining or similar agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to the employees of the Seller. The Seller has no Knowledge of any Basis
for any claim by past or current employees of the Seller or applicants for
employment that the Seller or its management has discriminated based on each
individuals race, sex, national origin, religion, ethnicity, handicap or any
other protected characteristic under applicable law.
P. EMPLOYEE BENEFITS. Section 2(p) of the Disclosure
Schedule lists all Employee Benefit Plans that the Seller maintains or to which
the Seller contributes or is required to contribute for the benefit of any
current or former employee of the Seller and true and correct copies of each
such Employee Benefit Plan have been delivered to the Buyers. Each Employee
Benefit Plan (and each related trust or insurance contract) complies and at all
times has complied in form and in operation in all respects with the applicable
requirements of ERISA and the Code. The Seller does not have any commitment to
create any additional Employee Benefit Plan or modify or change any existing
Employee Benefit Plan that would affect any employee or terminated employee of
the Seller. There are no pending or, to the Knowledge of the Seller, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
Q. ENVIRONMENT, HEALTH, AND SAFETY.
(i) To Seller's Knowledge, with respect to the
operation of the Stations and the Real Estate, the Seller is in
compliance in all material respects with all Environmental Laws
and all laws (including rules and regulations thereunder) of
federal, state, and local governments (and all agencies thereof)
concerning employee health and safety, and the Seller has no
Liability (and to Seller's Knowledge there is no Basis related to
the present operations of the Seller for any Liability) under any
Environmental Law.
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(ii) To the Seller's Knowledge, the Seller has
obtained and at all times has been in compliance in all material
respects with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental Laws.
(iii) To the Seller's Knowledge, all properties
and equipment used in the Stations and the Acquired Assets are
free of asbestos, PCB's, methylene chloride, trichloroethylene, 1,
2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances. To the Seller's Knowledge, no pollutant,
contaminant, or chemical, industrial, hazardous, or toxic material
or waste is buried, stored, spilled, leaked, discharged, emitted,
or released on any of the Real Estate. To the Seller's Knowledge,
no above ground or underground storage tanks are located at, on or
under the Real Estate. The Seller has delivered to the Buyers a
complete copy of all environmental claims, reports, studies,
compliance actions or the like of the Seller or which are
available to the Seller with respect to any of the Real Estate or
any of the Acquired Assets.
R. LEGAL COMPLIANCE. The Seller has materially complied
with all material laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof. The Seller has
filed in a timely manner all material reports, documents, and other materials
it was required to file (and the information contained therein was correct and
complete in all material respects) under all applicable laws.
S. UNDISCLOSED COMMITMENTS OR LIABILITIES. There are no
material commitments, liabilities or obligations relating to the Stations,
whether accrued, absolute, contingent or otherwise including, without
limitation, guaranties by the Seller of the liabilities of third parties, for
which specific and adequate provisions have not been made on the Financial
Statements except those incurred in or as a result of the Ordinary Course of
Business since December 31, 1998.
T. DISCLOSURE. The representations and warranties contained
in this Section 2 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information contained in
this Section 2 not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyers represent and warrant to the Seller that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3).
A. ORGANIZATION OF THE BUYERS. Broadcasting, Licensing, and
Wireless are corporations duly organized, validly existing, and in good standing
under the laws of Nevada.
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B. AUTHORIZATION OF TRANSACTION. Buyers have full power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform their obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the Buyers have or will have at or before Closing
duly authorized the execution, delivery and performance of this Agreement and
the Ancillary Agreements by Buyers. This Agreement and the Ancillary Agreements
constitute legally binding obligations of the Buyers, enforceable against the
Buyers in accordance with their respective terms and conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Buyers are subject or any provision of their articles of organization or other
charter documents, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1(e) above).
D. BROKER'S FEES. Except for the brokers' fee to be paid by
Buyers to Media Services Group, Inc., which shall be the exclusive
responsibility of the Buyers, the Buyers have no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
E. QUALIFICATION AS BROADCAST LICENSEE. Licensing is
legally, technically and otherwise qualified under the Communications Act of
1934, as amended, and all material rules, regulations and written policies of
the FCC thereunder, to become the licensee of the Stations and to consummate the
transactions contemplated by this Agreement. There are no proceedings,
complaints, notices of forfeiture, claims or investigations pending or, to the
Knowledge of Buyer threatened, against any or in respect of any of the broadcast
stations licensed to Licensing or its Affiliates that reasonably may be expected
to impair materially the qualifications of Licensing to become a licensee of the
Stations or that could prevent it from consummating the transactions
contemplated by this Agreement.
F. FINANCIAL CAPACITY. 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, and to perform all of Buyer's obligations
at the Closing.
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G. LITIGATION. There is no action, suit, inquiry,
investigation, judicial or administrative proceeding pending or, to the Buyer's
Knowledge, threatened against it that could adversely affect Buyer's ability to
perform in accordance with the terms of this Agreement, and Buyer is unaware of
any facts that could reasonably result in any such proceeding.
4. PRE-CLOSING COVENANTS.
Subject to the commencement of the TBA as set forth in
Section 4(r), the Parties agree as follows with respect to the period between
the execution of this Agreement and the Closing:
A. GENERAL. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
B. ASSIGNMENT APPLICATIONS. Within thirty (30) business days
after the execution of this Agreement, the Seller and the Buyers shall jointly
file with the FCC an application for assignment of the FCC Licenses, permits and
authorizations pertaining to the Stations from the Seller to Licensing (the
"Assignment Application"). The Parties shall use their respective best efforts
to keep this Agreement and the transaction contemplated herein confidential
until the date of the filing of the Assignment Application, unless both Parties
have agreed to begin the TBA prior to that date or unless the Buyers elect to
permit an announcement prior to that date. The costs of the FCC filing fees in
connection with the Assignment Application shall be divided equally between the
Parties. Each party shall pay its own attorneys' fees. The Seller and the Buyers
shall thereafter prosecute the Assignment Application with all reasonable
diligence and otherwise use commercially reasonable efforts to obtain the grant
of the Assignment Application as expeditiously as practicable (but neither the
Seller nor the Buyers shall have any obligation to satisfy complainants or the
FCC by taking any steps which would have a material adverse effect upon the
Stations or impose significant costs on such party). If the FCC imposes any
condition on either party to the Assignment Application, such party shall use
commercially reasonable efforts to comply with such condition, provided, that
neither party shall be required hereunder to comply with any condition that
would have a material adverse effect upon the Stations or any Affiliate. The
Seller and the Buyers shall jointly oppose any requests for reconsideration or
judicial review of FCC approval of the Assignment Application and shall jointly
request from the FCC extension of the effective period of FCC approval of the
Assignment Application if the Closing shall not have occurred prior to the
expiration of the original effective period of the FCC Consent. Nothing in this
Section 4(b) shall be construed to limit either party's right to terminate this
Agreement pursuant to Section 9 of this Agreement.
C. EMPLOYMENT OFFERS. Upon notice to the Seller, and at
mutually agreeable times, the Seller will permit the Buyers to meet with its
employees prior to the Closing Date. The Buyers may, at their option, extend
offers of employment to all or any of the Seller's employees effective on the
TBA Date. From and after the execution of this Agreement, the Seller shall use
its best efforts to assist Buyers in retaining those employees of the Stations
which
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the Buyers wish to hire in connection with the operation of the Stations by the
Buyers subsequent to the TBA Date, and the Seller will not take any action to
preclude or discourage any of the Seller's employees from accepting any offer of
employment extended by the Buyers.
D. NOTICES AND CONSENTS. The Seller will give all notices to
third parties and will use its commercially reasonable efforts to obtain all
third party consents that the Buyers reasonably may request. The absence of any
such consent shall not be a breach hereof unless the contract is designated as
"material" on Section 4(d) of the Disclosure Schedule. Buyer acknowledges that
it has been fully apprised of the CID and that it has had full opportunity to
conduct due diligence with respect thereto. Buyer accepts all risks, costs,
liabilities and consequences that may arise from compliance with the CID or
filings under the Hart-Scott-Rodino Act, or both, following the Closing Date.
Each of the Parties shall cooperate in preparing and filing any necessary
notification and report forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Act, and each of the
Parties shall split equally the filing fees associated with such filings. Each
of the Parties will use its best efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper or advisable. In the event the FCC, the Federal
Trade Commission, or the Antitrust Division of the Department of Justice
challenges the transaction contemplated by this Agreement, Buyers will agree to
divest promptly such station assets as may be required in order for regulatory
authorities to approve the transaction without requiring a second request or
further administrative or judicial action. Buyer shall assume all risks and
responsibility for such divestitures, and the Purchase Price shall not be
adjusted because of any such required divestiture(s). Notwithstanding the
foregoing, Seller and its counsel shall use best efforts to cooperate with
Buyers to dissuade regulatory authorities form pursuing any investigation of the
transaction proposed herein, with each Party to bear its own expenses in such
effort. Each of the Parties will use its reasonable best efforts to take any
additional action that may be necessary, proper, or advisable in connection with
any other notices to, filings with, and authorizations, consents, and approvals
of governments, governmental agencies, and third parties that it may be required
to give, make, or obtain.
E. MAINTENANCE OF QUALIFICATIONS. Buyer shall take no action
that could reasonably be expected to (i) cause the FCC to deny its Assignment
Application or to delay the FCC's processing or consideration thereof, (ii)
require any waiver of the rules, regulations or policies of the FCC, or (iii) in
any way diminish or render less certain Buyer's qualifications to be the
licensee of the Stations.
F. OPERATING STATEMENTS. Until the TBA Date, the Seller
shall deliver to the Buyer, for the Buyer's informational purposes only, monthly
reviewed statements of operating revenues and operating expenses of the Stations
with ten (10) days after each such statement is prepared by or for the Company
or the Seller. The Seller shall provide to the Buyer such written or oral sales,
inventory, and pacing reports as Seller may have available and Buyer may
reasonably request.
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G. CONTRACTS. Except as otherwise provided by the TBA, the
Seller will not without the prior written consent of the Buyers (i) amend,
change, or modify any of the contracts listed on Section 2(k) of the Disclosure
Schedule in any material respect, or (ii) enter into any contract outside the
Ordinary Course of Business which involves more than Ten Thousand Dollars
($10,000).
H. OPERATION OF STATIONS. The Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. The Seller shall operate the Stations in compliance with the
FCC Licenses and the rules and regulations of the FCC, and the FCC Licenses
shall at all times remain in full force and effect. The Seller shall file with
the FCC all material reports, applications, documents, instruments and other
information required to be filed in connection with the operation of the
Stations.
I. CREDIT AND RECEIVABLES. Through the TBA Date, the Seller
will follow its usual and customary policies with respect to extending credit
for sales of air time and advertising on the Stations and with respect to
collecting accounts receivable arising from such extension of credit.
J. PRESERVATION OF STATIONS AND THE ACQUIRED ASSETS. Through
the TBA Date, the Seller will use commercially reasonable efforts to keep its
Stations and the Acquired Assets and properties substantially intact, including
its present operations, physical facilities, working conditions, relationships
with lessors, licensors, advertisers, suppliers, customers, and employees, all
of the Confidential Information, call letters and trade secrets of the Stations,
and the FCC Licenses.
K. FULL ACCESS AND CONSULTATION. Without limiting in any way
the rights and obligations of the Parties under the TBA, the Seller will permit
representatives of the Buyers to have reasonable access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
the Stations, to all premises, properties, books, records, contracts, Tax
records, and documents of or pertaining to the Seller for the purpose of
permitting the Buyers, among other things, to: (a) conduct its due diligence
review, (b) review financial statements of the Seller, (c) verify the accuracy
of representations and warranties of the Seller contained in this Agreement, and
(d) prepare for the consummation of the transactions contemplated by this
Agreement. The Seller will consult with the Buyers' management with a view to
informing Buyers' management as to the operations, management and business of
the Stations.
L. NOTICE OF DEVELOPMENTS. The Seller will give prompt
written notice to the Buyers of any material development affecting business,
operations or prospects of the Stations or the Acquired Assets or the ability of
the Seller to perform hereunder.
M. EXCLUSIVITY. The Seller will not (i) solicit, initiate,
or encourage the submission of any proposal or offer from any person relating to
any (A) merger or consolidation, (B) acquisition or purchase of securities or
assets, or (C) similar transaction or business combination involving the Seller,
or (ii) participate in any discussions or negotiations regarding,
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furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing. The Seller will notify the Buyers immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
N. CONTROL OF STATIONS. The transactions contemplated by
this Agreement shall not be consummated until after the FCC has given its
consent and approval to the Assignment Application. Without in any way limiting
the rights and obligations of the Parties under the TBA, between the date of
this Agreement and the Closing Date, the Buyers and their employees or agents
shall not directly or indirectly control, supervise, or direct, or attempt to
control, supervise, or direct, the operation of the Stations, and such operation
shall be the sole responsibility of and in the control of the Seller.
O. ENVIRONMENTAL ASSESSMENTS. Provided that the Buyers are
provided with adequate access to each parcel of Real Estate and permitted to
conduct all requested testing, the Buyers will provide to the Seller, within
forty-five (45) days hereof, the results of its environmental assessments for
each such parcel of Real Estate. The results submitted to Seller under this
Section 4(o) shall identify any violations of Environmental Law and any
condition to be remedied and the actions or remediation required to bring the
property into compliance with Environmental Laws. If the Buyers' Phase I
environmental assessment recommends additional testing and Buyers begin such
testing but such testing cannot be completed and reported to Seller within the
forty-five (45) day period provided for herein, the period shall be extended as
reasonably required to complete such additional testing and reporting to the
Seller. The Seller will have ten (10) days after the Buyers notify the Seller
that it has received all of the environmental assessments and that such
assessments indicate that the property is not in compliance with Environmental
Laws to determine and notify the Buyers in writing if it elects to immediately
terminate this Agreement or take any and all actions at its sole expense to
remedy the violations identified with respect to an assessed site; provided,
however, that the Seller may not terminate this Agreement and must take any and
all actions to remedy the violations identified if the aggregate cost of such
actions would not exceed Two Hundred Thousand Dollars ($200,000). If the
aggregate cost of such actions would exceed Two Hundred Thousand Dollars
($200,000) and the Seller does not provide timely notice hereunder, stating its
intent to remedy all such violations, Buyer may elect to (i) terminate this
Agreement, (ii) extend the time in which the Seller must respond in writing, or
(iii) elect to accept the environmental conditions and consummate the
transaction contemplated hereby; provided, however, that the Buyers shall
forfeit their right to terminate this Agreement pursuant to this Section 4(o) if
they fail to make an election within ten (10) days after the expiration of the
Seller's election period as extended by the Buyers hereunder. If the Seller
elects or is required under the terms hereof to take all actions to remediate
each site and Seller does not proceed with reasonable diligence to take such
actions or such actions cannot be or are not fully accomplished on or before the
360th day following the date of this Agreement, Buyers may elect to terminate
this Agreement or postpone the Closing Date until such time as all of the
actions necessary to remedy the violations identified have been fully performed
in a manner and to the extent necessary to satisfy the Seller's obligations. In
the event the Closing Date is postponed pursuant to this Section 4(o), the
Parties will cooperate to extend the time during which this Agreement must be
closed as specified in the consent of the
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FCC. The Buyers may elect to terminate this Agreement if they or their
environmental consultants and agents are not granted adequate access to each
parcel of Real Estate to conduct the environmental testing contemplated in this
Section 4(o); provided, however, that the Buyers shall forfeit their right to
terminate this Agreement as a result of insufficient access to any parcel of
Real Estate if they fail to make such election within forty-five (45) days after
the date hereof. The Buyers shall pay all of the costs of the environmental
assessments performed by the Buyers pursuant to this Agreement. Notwithstanding
any provisions of this Agreement to the contrary, the terms and provisions of
this Section 4(o) constitute Buyer's sole and exclusive remedy with respect to
environmental claims.
P. RISK OF LOSS. The risk of loss, damage, or destruction to
any of the Acquired Assets shall remain with the Seller until the TBA Date,
except in the case of transmission equipment, with respect to which such risk of
loss shall remain with the Seller until the Closing. In the event of any such
loss, damage, or destruction the Seller will promptly notify the Buyers of all
particulars thereof, stating the cause thereof (if known) and the extent to
which the cost of restoration, replacement and repair of the Acquired Assets
lost, damaged or destroyed will be reimbursed under any insurance policy with
respect thereto. The Seller will, at Seller's expense, repair or replace such
Acquired Assets to their former condition as soon as possible after loss, damage
or destruction thereof and shall use its best efforts to restore as promptly as
possible transmissions as authorized in the FCC Licenses. The Closing Date shall
be extended (with FCC consent, if necessary) for up to sixty (60) days to permit
such repair or replacement. If repair or replacement cannot be accomplished
within sixty (60) days of the date of the Seller's notice to the Buyers and the
Buyers determine that the Seller's failure to repair or replace would have a
material adverse effect on the operation of the Stations:
(i) the Buyers may elect to terminate this
Agreement; or
(ii) the Buyers may postpone the Closing Date until
such time as the property has been repaired, replaced or restored
in a manner and to an extent reasonably satisfactory to the
Buyers, unless the same cannot be reasonably effected within
ninety (90) days of the date of the Seller's notice to the Buyers,
in which case either party may terminate this Agreement; or
(iii) the Buyers may choose to accept the Acquired
Asset in their "then" condition, together with the Seller's
assignment to the Buyers of all rights under any insurance claims
covering the loss, damage or destruction and payment over to the
Buyers of any proceeds under any such insurance policies,
previously received by the Seller with respect thereto plus an
amount equal to the amount of any deductible or self-insurance
maintained by Seller on such Acquired Assets. In the event the
Closing Date is postponed pursuant to this Section 4(p), the
parties hereto will cooperate to extend the time during which this
Agreement must be closed as specified in the consent of the FCC.
Q. TBA. The Parties acknowledge and agree that the Parties
intend, if appropriate at the time the Hart-Scott-Rodino waiting period has
expired or been terminated, to begin operating under a time brokerage agreement
(the "TBA"), attached as Exhibit D hereto,
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with respect to the Stations. Anything in this Agreement to the contrary
notwithstanding, including, without limitation any provision of Sections 2, 3,
5(a) and 5(b): (i) Seller shall not be liable in any respect to the extent any
of the representations and warranties contained in Section 2 are not true and
correct in any material respect on and as of the Closing Date due to the
existence and operation of the TBA; (ii) the conditions set forth in Sections
5(a)(i) and 5(a)(ii) shall not be deemed to be not satisfied as a result of any
action or failure to act of Buyer pursuant to the TBA; and (iii) the
certificates to be delivered to Buyer pursuant to Section 5(a)(v) shall not be
required to address any of such representations and warranties that are not true
and correct in any material respect on and as of the Closing Date due to the
existence and operation of the TBA.
5. CONDITIONS TO OBLIGATION TO CLOSE.
A. Conditions to Obligation of the Buyers. Subject to
Section 4(r), the obligation of Buyers to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(i) the representations and warranties set forth
in Section 2 above shall be true and correct in all material
respects at and as of the Closing Date as though made on and as of
the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all respects through the
Closing;
(iii) the Seller shall have procured all of the
"material" third party consents specified in Section 4(d) above
and shall have delivered good title to the Real Estate without
conditions that could materially interfere with the operation of
the Real Estate for the purpose of radio broadcasting;
(iv) except for the CID and/or any inquiry
under the Hart-Scott-Rodino Act, no action, suit, investigation,
inquiry or other proceeding shall be pending or threatened before
any court or quasijudicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or impose damages or penalties upon
any of the parties if such transactions are consummated, (B) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (C) affect materially and
adversely the right of the Buyers to own, operate, or control the
Acquired Assets (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyers
a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the
conditions specified above in Sections 5(a)(i) and 5(a)(ii) are
satisfied in all respects;
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(vi) each of the Assignment Applications shall have
been approved by a Final Order of the FCC, all applicable waiting
periods and any extensions thereof) under the Hart-Scott-Rodino
Act shall have expired or been terminated, and the Buyers shall
have received all governmental approvals required to transfer all
other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(vii) the relevant parties shall have entered into
the Post-Closing Agreement;
(viii) the Buyers shall have received from counsel to
the Seller an opinion with respect to the matters set forth in
Exhibit E attached hereto, addressed to the Buyers and its lender
and dated as of the Closing Date;
(ix) the Seller shall have delivered to the Buyers
all items required to be delivered thereby under Section 1(e)
above; and
(x) the Buyers shall have received a landlord
estoppel, consent and waiver letter for each parcel of Real Estate
subject to a Lease, duly executed by the owner of the Real Estate,
in a form reasonably satisfactory to the Buyers' lenders which are
financing the transaction contemplated hereby.
In the event that any of the conditions set forth in subsections
5(a)(i), (ii), (iv), (v), (ix) or (x) above are not satisfied and
such failure does not or is not reasonably likely to have a
Material Adverse Effect, Buyers acknowledge and agree that,
notwithstanding the introductory sentence of this Section 5(a),
they shall be required to consummate the transactions contemplated
herein despite such failure; provided, however, that Buyers may
still seek indemnification pursuant to Section 7, below, as
hereinafter described. In the event that (i) any of the conditions
set forth in subsections 5(a)(i), (ii), (iv), (v), (ix) or (x)
above, are not satisfied and such failure has or is reasonably
likely to have a Material Adverse Effect, or (ii) any of the other
conditions set forth in this Section 5(a) are not satisfied, the
Buyers may elect to (i) terminate this Agreement without liability
to the Buyers, or (ii) consummate the transactions contemplated
herein despite such failure. If any of the conditions to Closing
set forth in this Section 5(a) are not satisfied and the Buyers
elect or are required to consummate the transactions described
herein, and if such failure (regardless of whether such failure is
material or has or is reasonably likely to have a Material Adverse
Effect), shall be as a result of a breach of any representation,
warranty, covenant or provision of this Agreement by the Seller
(including, without limitation, any breach arising as a result of
the failure of the Seller to execute and/or deliver any item
described in this Section 5(a)), the Buyers may seek appropriate
remedies for any and all damages, costs and expenses incurred by
the Buyers by reason of such breach, including, without
limitation, indemnification pursuant to Section 7, below, unless
and to the extent that the event or the condition giving rise to
such failure also constitutes a breach of a representation,
warranty or covenant of the Seller set forth in Sections 2 or 4
hereof.
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B. CONDITIONS TO OBLIGATION OF THE SELLER. The obligation
of the Seller to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 3 above shall be true and correct in all respects at
and as of the Closing Date as though made on and as of the Closing
Date;
(ii) the Buyers shall have performed and complied
with all of their covenants hereunder in all respects through the
Closing;
(iii) except for the CID and/or any inquiry
under the Hart-Scott-Rodino Act, no action, suit, investigation,
inquiry or other proceeding shall be pending or threatened before
any court or quasi judicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or impose damages or penalties upon
any of the Parties if such transactions are consummated, or (B)
cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such judgment, order,
decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Seller
a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the
conditions specified above in Sections 5(b)(i) and 5(b)(ii) is
satisfied in all respects and the statements contained in such
certificate shall be deemed a warranty of the Buyers which shall
survive the Closing;
(v) each of the Assignment Applications shall have
been approved by a Final Order of the FCC and the Buyers shall
have received all governmental approvals required to transfer all
other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(vi) the relevant parties shall have entered into
the Post-Closing Agreement and the Seller shall have received from
counsel to the Buyers an opinion with respect to the matters set
forth in Exhibit F attached hereto, addressed to the Seller and
dated as of the Closing Date; and
(vii) the Buyers shall have delivered to the Seller
all items required to be delivered thereby under Section 1(e)
above.
In the event that any of the conditions set forth in subsections
5(b)(i), (ii), (iii), (iv), or (vii) above are not satisfied and
such failure does not or is not reasonably likely to have a
Material Adverse Effect, Seller acknowledges and agrees that,
notwithstanding the introductory sentence of this Section 5(b),
Seller shall be required to consummate the
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transactions contemplated herein despite such failure; provided,
however, that Seller may still seek indemnification pursuant to
Section 7, below, as hereinafter described. In the event that (i)
any of the conditions set forth in subsections 5(b)(i), (ii),
(iii), (iv) or (vii) above, are not satisfied and such failure has
or is reasonably likely to have a Material Adverse Effect, or (ii)
any of the other conditions set forth in this Section 5(b) are not
satisfied, the Seller may elect to (i) terminate this Agreement
without liability to the Seller, or (ii) consummate the
transactions contemplated herein despite such failure. If any of
the conditions to Closing set forth in this Section 5(b) are not
satisfied and the Seller elects or is required to consummate the
transactions described herein, and if such failure (regardless of
whether such failure is Material or has or is reasonably likely to
have a Material Adverse Effect), shall be as a result of a breach
of any representation, warranty, covenant or provision of this
Agreement by the Buyer (including, without limitation, any breach
arising as a result of the failure of the Buyer to execute and/or
deliver any item described in this Section 5(a)), the Seller may
seek appropriate remedies for any and all damages, costs and
expenses incurred by the Seller by reason of such breach,
including, without limitation, indemnification pursuant to Section
7, below, unless and at to the extent that the event or the
condition giving rise to such failure also constitutes a breach of
a representation, warranty or covenant of the Buyer set forth in
Sections 3 or 4 hereof.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period
following the Closing:
A. GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 7 below).
B. LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Stations, each of the other Parties will
reasonably cooperate with the contesting or defending Party and its counsel in
the contest or defense, make available his or its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 7 below); provided, however,
that such access and cooperation does not unreasonably disrupt the normal
operations of the cooperating party.
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C. ADJUSTMENTS. Operation of the Stations and the income and
expenses attributable thereto up through the close of business on the day before
the TBA Date shall be for the account of the Seller and thereafter for the
account of the Buyers. Such items as employee salaries, sick day and personal
time accruals, and fringe benefits, power and utilities charges, insurance, real
and personal property taxes, prepaid expenses, deposits, music license fees, and
rents and payments pertaining to the Assumed Contracts (including any contracts
for the sale of time for cash, trade or barter so assigned) shall be prorated
between the Seller and the Buyers as of the TBA Date in accordance with the
foregoing principle. In addition, all commissions payable with respect to the
accounts receivable of the Seller (whether due before or after TBA Date) shall
be solely for the account and responsibility of the Seller. Employees' vacation
day accruals will be rolled over as a non-cash item and assumed by Buyers as a
non-cash liability. Contractual arrangements that do not reflect an equal rate
of compensation to the Stations over the term of the agreement shall be
equitably adjusted as of the TBA Date. The prorations and adjustments hereunder
shall be made and paid insofar as feasible on the TBA Date, with a final
settlement sixty (60) days after the TBA Date. In the event of any disputes
between the Parties as to such adjustments, the amounts not in dispute shall
nonetheless be paid at such time and such disputes shall be determined by an
independent accounting firm mutually acceptable to both parties and the fees and
expenses of such accounting firm shall be paid one-half (1/2) by the Seller and
one-half (1/2) by the Buyer.
D. COLLECTION OF ACCOUNTS RECEIVABLE. At the TBA Date, the
Seller will turn over to the Buyers, for collection only, the accounts
receivable of the Stations owing to the Seller as of the close of business on
the day before the TBA Date. A schedule of such accounts receivable will be
delivered by the Seller to the Buyers on the TBA Date or as soon thereafter as
possible. The Buyers agree to use commercially reasonable efforts in the
ordinary course of business (but without responsibility to institute legal or
collection proceedings) to collect such accounts receivable during the one
hundred eighty (180) day period following the TBA Date, and will remit all
payments received within ten (10) days of the end of the month in which the
payments were received, together with an accounting of all payments received
within such period. The Buyers shall have the sole right to collect such
accounts receivable during such 180-day period. In the event the Buyers receive
monies during the 180-day period following the TBA Date from an advertiser who,
after the TBA Date, is advertising on the Stations, and that advertiser was
included among the accounts receivable as of the TBA Date, the Buyers shall
apply said monies to the oldest outstanding balance due on the particular
account, except in the case of a "disputed" account receivable. For purposes of
this Section 6(d), a "disputed" account receivable means one which the account
debtor refuses to pay because he asserts that the money is not owed or the
amount is incorrect. In the case of such a disputed account, the Buyers shall
immediately return the account to the Seller prior to expiration of the 180-day
period following the TBA Date. If the Buyers return a disputed account to the
Seller, the Buyers shall have no further responsibility for its collection and
may accept payment from the account debtor for advertising carried on the
Stations after the TBA Date. At the end of the 180-day period following the TBA
Date, the Buyers will turn back to the Seller all of the accounts receivable of
the Stations as of the TBA Date owing to the Seller which have not yet been
collected, and the Buyers will thereafter have no further responsibility with
respect to the collection of such receivables. During the 180-day period
following the TBA Date, the Buyers shall afford the
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Seller reasonable access to the accounts receivable "aging list." The Seller
acknowledges and agrees that the Buyers are acting as collection agent hereunder
for the sole benefit of the Seller and that Buyers have accepted such
responsibility for the accommodation of the Seller. The Buyers shall not have
any duty to inquire as to the form, manner of execution or validity of any item,
document, instrument or notice deposited, received or delivered in connection
with such collection efforts, nor shall the Buyers have any duty to inquire as
to the identity, authority or rights of the persons who executed the same. The
Seller shall indemnify Buyers and hold them harmless from and against any
judgments, expenses (including attorney's fees) costs or liabilities which the
Buyers may incur or sustain as a result of or by reason of such collection
efforts.
E. CONSENTS. In the event any of the Assumed Contracts are
not assignable or any consent to such assignment is not obtained on or prior to
the Closing Date, and the Buyers elect to consummate the transactions
contemplated herein despite such failure or inability to obtain such consent,
the Seller shall continue to use commercially reasonable efforts to obtain any
such assignment or consent after the Closing Date. Until such time as such
assignment or approval has been obtained, the Seller will cooperate with Buyers
in any lawful and economically feasible arrangement to provide that the Buyers
shall receive the Seller's interest in the benefits under any such Assumed
Contract, including performance by the Seller as agent, if economically
feasible; provided, however, that the Buyers shall undertake to pay or satisfy
the corresponding liabilities for the enjoyment of such benefit to the extent
that Buyers would have been responsible therefor if such consent or assignment
had been obtained.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
A. SURVIVAL. Except with respect to the obligations and
liabilities assumed pursuant to the Assumed Contracts, and except as otherwise
contemplated by Section 4(q), all of the representations and warranties of the
Seller contained in Section 2 and all of the representations and warranties of
the Buyers contained in Section 3 of this Agreement shall survive the Closing
and continue in full force and effect for a period of one (1) year following the
Closing.
B. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYERS.
The Seller agrees to indemnify the Buyers from and against the entirety of any
Adverse Consequences the Buyers may suffer resulting from, arising out of,
relating to, in the nature of, or caused by:
(i) any misrepresentation or breach of any of the
Seller's representations or warranties, and covenants contained in
this Agreement or in any Ancillary Agreement executed and/or
delivered by the Seller (so long as the Buyers make a written
claim for indemnification within the applicable survival period);
(ii) any breach or nonfulfillment of any agreement
or covenant of the Seller contained herein or in any Ancillary
Agreement;
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(iii) any Liability of the Seller which is not an
Assumed Liability; and/or
(iv) any Liability of the Buyers arising by
operation of law (including under any bulk transfer law of any
jurisdiction or under any common law doctrine of defacto merger or
successor liability) which is not an Assumed Liability; and/or
(v) any Tax Liabilities of the Seller with respect
to the operation of the Stations or the business of the Seller at
any time prior to the Closing Date.
The Buyers shall not have the right to assert claims for
indemnification under subsection (i) unless and until the
aggregate amount of any Adverse Consequences that the Buyers in
total may suffer or have suffered as a result of such breach
exceeds Seventy-Five Thousand Dollars ($75,000), and then only for
the amounts in excess of such Seventy-Five Thousand Dollars
($75,000) aggregate amount. As Buyer's sole and exclusive remedy
pursuant to this Section 7(b), Buyers shall be entitled to payment
only out of the Post-Closing Escrow pursuant to the terms of this
Section 7(b) and the Escrow Agreement for all amounts due to the
Buyers with respect to such claims, whether direct or indirect.
C. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLER.
Except as described below in Section 7(e) with respect to a breach of a warranty
or covenant prior to the Closing Date, the Buyers agree to indemnify the Seller
from and against the entirety of any Adverse Consequences the Seller may suffer
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any misrepresentation or breach of any of the Buyers' representations or
warranties contained in this Agreement or in any Ancillary Agreement executed
and/or delivered by the Buyers (so long as the Seller makes a written claim for
indemnification within the applicable survival period) or (ii) any breach or
nonfulfillment of any agreement or covenant of the Buyers contained herein or in
any Ancillary Agreement, or (iii) any Assumed Liability, or (iv) any operation
of the Stations from and after the TBA Date except with respect to claims
related to Seller's activities as Licensee, or (v) any operation of the Stations
after the Closing.
D. SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 10(o)
below), in addition to any other remedy to which it may be entitled, at law or
in equity.
E. LIQUIDATED DAMAGES. The Buyers and the Seller acknowledge
that in the event that the transactions contemplated by this Agreement are not
closed because of a default by the Buyers, the Adverse Consequences to the
Seller as a result of such default may be difficult, if
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not impossible, to ascertain. Accordingly, in the event of a breach by Buyers
prior to Closing, the Seller shall be entitled to receive from the Buyers for
such default (i) the Earnest Money Deposit and (ii) interest on such Earnest
Money Deposit from the date Seller makes a written claim for damages until the
date Seller receives payment therefor, as liquidated damages without the need
for proof of damages, subject only to successfully proving in a court of
competent jurisdiction that the Buyers have materially breached this Agreement
and that the transactions contemplated thereby have not occurred. The Buyers
agree to pay said sum of liquidated damages within ten (10) days of the date
that the Seller obtains such a judgment. Notwithstanding anything contained
herein to the contrary, the Seller acknowledges and agrees that in the event
this Agreement is terminated by the Seller prior to the Closing Date as a result
of a breach or default by Buyers under this Agreement, the Seller's sole and
exclusive remedy with respect to such default shall be to proceed against the
Earnest Money Deposit as liquidated damages.
F. MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 7, then the Indemnified Party shall
notify the Indemnifying Party thereof promptly; provided, however, that no delay
on the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any liability or obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is damaged as a
result of such failure. In the event any Indemnifying Party notifies the
Indemnified Party within 15 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified Party within 15 days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, however, and/or in the event the
Indemnifying Party shall fail to defend such claim actively and in good faith,
then the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
8. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of
the assets of the Seller, other than Retained Assets, that are used or useful in
the operation of the Stations,
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wherever located, including but not limited to all of its (a) real property,
leaseholds and other interests of any kind therein, improvements, fixtures, and
fittings thereon (such as towers and antennae), and easements, rights-of-way,
and other appurtenances thereto; (b) tangible personal property (such as fixed
assets, computers, data processing equipment, electrical devices, monitoring
equipment, test equipment, switching, terminal and studio equipment,
transmitters, transformers, receivers, broadcast facilities, furniture,
furnishings, inventories of compact disks, records, tapes and other supplies,
vehicles) and all assignable warranties with respect thereto; (c) Intellectual
Property, goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions; (d) rights under orders and agreements (including
those Barter Agreements and Advertising Contracts identified on the Disclosure
Schedule) now existing or entered into in the Ordinary Course of Business for
the sale of advertising time on the Stations; (e) Assumed Contracts, indentures,
Security Interests, guaranties, other similar arrangements, and rights
thereunder; (f) call letters of the Stations, jingles, logos, slogans, and
business goodwill of the Stations; (g) claims, deposits, prepayments, refunds,
causes of action, chooses in action, rights of recovery (including rights under
policies of insurance), rights of set off, and rights of recoupment; (h)
Licenses and similar rights obtained from governments and governmental agencies;
and (i) FCC logs and records and all other books, records, ledgers, logs, files,
documents, correspondence, advertiser lists, all other lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, program production materials, studies,
reports, and other printed or written materials; and (j) goodwill of the
Stations.
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"ADVERTISING CONTRACTS" has the meaning set forth in Section 2(s),
above.
"AFFILIATE" means with reference to any person or entity, another
person or entity controlled by, under the control of or under common control
with that person or entity.
"ANCILLARY AGREEMENTS" has the meaning set forth in Section 2(b) above.
"ASSIGNMENT APPLICATION" has the meaning set forth in Section 4(b)
above.
"ASSUMED CONTRACTS" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts listed on Exhibit G attached hereto.
"ASSUMED LIABILITIES" means (a) obligations of the Seller under the
Assumed Contracts which accrue after the TBA Date under the Assumed Contracts
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"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BUYERS" has the meaning set forth in the preface above.
"CASH" means cash and cash equivalents determined in accordance with
GAAP applied on a basis consistent with the preparation of the Financial
Statements.
"CID" means that certain Civil Investigative Demand No. 17490 dated
December 30, 1997, issued to HMH Broadcasting, Inc. pursuant to the Antitrust
Civil Process Act. 15 U.S.C. Sections 1311 et al.
"CLOSING" has the meaning set forth in Section 1(d) above.
"CLOSING DATE" has the meaning set forth in Section 1(d) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Seller.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 2 above.
"EARNEST MONEY DEPOSIT" has the meaning set forth in Section 1(c)
above.
"ESCROW AGREEMENT" has the meaning set forth in Section 1(c) above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control Act
of 1976, the Refuse Act of 1899, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other law of any federal,
state, local, or foreign government or agency thereof (including rules,
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regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, 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
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means the First National Bank of Maryland in Washington,
D.C.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC LICENSES" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"FINAL ORDER" means an action by the FCC as to which: (a) no request
for stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7(d) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7(d) above.
"INTELLECTUAL PROPERTY" means all of the following used or useful in
the operation of the Stations: (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and
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registrations and applications for registration thereof, (c) all programs,
programming materials, copyrights and registrations and applications for
registration thereof, (d) mask works and registrations and applications for
registration thereof, (e) computer software, data, and documentation, (f) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, market and other research information, drawings,
specifications, designs, plans proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
"KNOWLEDGE" means actual knowledge of Ralph E. Hacker after reasonable
investigation.
"LEASES" means those real estate leases to which Seller is a party
governing Seller's studios and FM tower sites, as described in Section 2(i) of
the Disclosure Schedule.
"LIABILITY" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"MATERIAL" or "MATERIALLY" means an event, condition, circumstance,
act, omission or effect, which, individually or in the aggregate with other
similar events, conditions, circumstances, acts, omissions or effects, is, in
the opinion of a reasonably prudent buyer, likely to have a material effect on
the transactions contemplated hereby or the operation or condition of the
Stations taken as a whole.
"MATERIAL ADVERSE EFFECT" means an event, condition, circumstance, act,
omission or effect which, individually or in the aggregate with other similar
events, conditions, circumstances, acts, omission or effects, is, in the opinion
of a reasonably prudent buyer, likely to have a material adverse effect on the
transactions contemplated hereby or condition of the Stations taken as a whole;
provided, however, that the following shall not constitute a Material Adverse
Effect: changes in (i) Seller's cash flow, (ii) the economy, (iii) the radio
industry generally or locally or (iv) the Stations' Arbitron ratings; provided
however, that a decline in the revenues of the Stations shall not be considered
a Material Adverse Effect but shall result in an adjustment if and to the extent
permitted under the procedure in the definition of "Purchase Price Adjustment"
set forth below.
"MULTI-EMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
30
<PAGE> 31
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNED REAL ESTATE" means the real property owned by HMH Realty, LLC,
as described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon.
"PARTY" has the meaning set forth in the preface above.
"PERMITTED REAL ESTATE ENCUMBRANCES" shall have the meaning set forth
in Section 2(i), above.
"POST-CLOSING AGREEMENT" means the Post-Closing Agreement with Seller's
president in the form attached hereto as Exhibit D.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"PURCHASE PRICE " has the meaning set forth in Section 1(c) above.
"PURCHASE PRICE ADJUSTMENT" shall have the following meaning. If gross
revenues for the twelve-month period ending on the last day of the month before
the Closing Date (the "Trailing Revenues") are less than the gross revenues for
the twelve-month period ending December 31, 1998 (the "Benchmark Revenues") by
more than ten (10) percent of the Benchmark Revenues, there shall be an
adjustment to the purchase price (the "Base Purchase Price") as follows: For
every percentage decline in the Trailing Revenues compared to the Benchmark
Revenues beyond ten percent, there shall be a corresponding percentage reduction
in the Base Purchase Price (the "Purchase Price Adjustment"). By way of example,
if Trailing Revenues are eleven percent less than Benchmark Revenues, the
Purchase Price Adjustment shall be one percent of the Base Purchase Price, or
Four Hundred Forty-Five Thousand Dollars ($445,000.00); similarly, if Trailing
Revenues are fifteen percent less than Benchmark Revenues, the Purchase Price
Adjustment shall be Two Million Two Hundred Twenty-Five Thousand Dollars
($2,225,000.00); and so on.
"REAL ESTATE" means the Owned Real Estate and the real estate,
building, fixtures and improvements which are the subject of the Leases.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAINED ASSETS" means (i) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation; (ii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyers on
the other hand entered into
31
<PAGE> 32
on or after the date of this Agreement); (iii) accounts, notes and other
receivables of the Seller; and (iv) Cash.
"RETAINED LIABILITIES" means any other obligations or Liabilities of
the Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the TBA Date; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(n) relating to Surveys and title commitments and Section 4(b) with
regard to the Assignment Application); or (iv) any Liability or obligation of
the Seller under this Agreement (or under any side agreement between the Seller
on the one hand and the Buyers on the other hand entered into on or after the
date of this Agreement).
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"SELLER" has the meaning set forth in the preface above.
"STATIONS" means the radio broadcast Stations WLRO-FM licensed to
Richmond, KY; WLTO-FM licensed to Nicholasville, KY; WVLK-FM and WVLK-AM
licensed to Lexington, KY; and WXZZ-FM licensed to Georgetown, KY.
"SUBSIDIARY," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"SURVEYS" has the meaning set forth in Section 4(o) above.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
32
<PAGE> 33
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TBA" has the meaning set forth in Section 4(q) above.
"TBA DATE" means the date on which operations under the TBA shall
become effective.
9. TERMINATION.
a. TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Buyers and the Seller may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyers may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing in the event the Seller is in material breach of any
representation, warranty, or covenant contained in this Agreement
and such breach is likely to create a Material Adverse Effect;
provided, however, that if such breach is capable of being cured,
such breach also remains uncured for twenty (20) days after notice
of breach is received by the Seller from the Buyers;
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyers at any time prior to the
Closing in the event the Buyers are in material breach of any
representation, warranty, or covenant contained in this Agreement
and such breach if likely to create a Material Adverse Effect;
provided, however that if such breach is capable being cured, such
breach remains uncured for ten (10) days after notice of breach is
received by the Buyers from the Seller;
(iv) the Buyers may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing if the Closing shall not have occurred on or before the
360th day following the date of this Agreement by reason of the
failure of any condition precedent under Section 5(a) hereof
(unless the failure results primarily from the Buyers themselves
breaching any representation, warranty, or covenant contained in
this Agreement);
(v) the Seller may terminate this Agreement by
giving written notice to the Buyers at any time prior to the
Closing if the Closing shall not have occurred on or before the
360th day following the date of this Agreement by reason of the
failure of any condition precedent under Section 5(b) hereof
(unless the failure results primarily from the Seller itself
breaching any representation, warranty, or covenant contained in
this Agreement);
33
<PAGE> 34
(vi) the Buyers may terminate this Agreement as
provided in Sections 4(p) and 4(q);
(vii) the Buyers or the Seller may terminate this
Agreement if any Assignment Application is denied by Final Order.
b. EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 9(a) above, all obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. MISCELLANEOUS.
a. PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue
any press release or announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by law or regulation (in which case the
disclosing Party will advise the other Party prior to making the disclosure).
b. NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
c. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
d. SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party, provided that (i) the Buyers may
assign all of their right, title and interest in, to and under this Agreement to
one or more Affiliates, who shall then, subject to the terms and conditions of
this Agreement, have the right to receive the Acquired Assets, assume the
Assumed Liabilities, and to pay to the Seller the Purchase Price therefor or to
any successor to the Buyers in the event of any sale, merger or consolidation of
the Buyers, and (ii) Buyers may assign their indemnification claims and their
rights under the warranties and representations of the Seller to the financial
institution(s) providing financing to the Buyers in connection with this
transaction.
e. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
34
<PAGE> 35
f. HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
g. NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing and shall be considered to be
given and received in all respects when hand delivered, when delivered via
prepaid express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Seller:
HMH Broadcasting, Inc.
300 West Vine Street
Lexington, Kentucky 40507
Attn: Ralph E. Hacker
Phone: (606) 253-5900
Fax: (606) 253-5903
Copy to:
Latham & Watkins
1001 Pennsylvania Avenue, NW
Suite 1300
Washington, DC 20004
Attn: Eric Bernthal
Phone: (202) 637-2200
Fax: (202) 637-2201
(which copy shall not constitute notice to Seller)
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53202
Attn: Terrence J. Leahy
Phone: (414) 615-2800
Fax: (414) 615-2880
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
875 N. Michigan Avenue
Suite 3650
35
<PAGE> 36
Chicago, Illinois 60611
Attn: Richard J. Bonick
Phone: (312) 867-0091
Fax: (312) 867-0098
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
H. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Kentucky.
I. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyers and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
J. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
K. EXPENSES. The Buyers and the Seller, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 4(b) with regard to the Assignment Applications. The Buyer will
pay for all environmental audits performed under Section 4(p) hereof. The Seller
and the Buyers will each pay one-half (1/2) of any transfer or sales taxes and
other recording or similar fees necessary to vest title to each of the Acquired
Assets in the Buyers.
L. CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction
36
<PAGE> 37
shall be applied against any Party. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
M. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
N. SUBMISSION TO JURISDICTION. Each of the Parties submits to
the jurisdiction of any state or federal court sitting in Lexington, Kentucky in
any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on the other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 10(g) above. Nothing in this Section 10(n),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
37
<PAGE> 38
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.
CUMULUS BROADCASTING, INC.
By: /s/ Richard W. Weening
-------------------------------
Richard Weening
Executive Chairman
CUMULUS LICENSING CORP.
By: /s/ Richard W. Weening
-------------------------------
Richard Weening
Executive Chairman
CUMULUS WIRELESS SERVICES INC.
By: /s/ Richard W. Weening
-------------------------------
Richard Weening
Executive Chairman
HMH BROADCASTING, INC.
By: /s/ Ralph E. Hacker
-------------------------------
Ralph E. Hacker
President and Chairman
Solely as to Section 2(i)(i):
HMH REALTY, LLC
By: /s/ Ralph E. Hacker
-------------------------------
Ralph E. Hacker
General Partner
38
<PAGE> 1
EXHIBIT 2.2
EXECUTION COPY
--------------
STOCK PURCHASE AGREEMENT
AMONG
CUMULUS MEDIA INC.
AND
M&F CALENDAR HOLDINGS, L.P., KEVIN C. WHITMAN,
NASSAU CAPITAL PARTNERS L.P., NAS PARTNERS I L.L.C., AND
PHILIP J. GIORDANO
JUNE 15, 1999
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
1. PURCHASE AND SALE OF TARGET SHARES..........................................................1
----------------------------------
(a) BASIC TRANSACTION.................................................................1
(b) PURCHASE PRICE....................................................................2
(c) EARNEST MONEY DEPOSIT.............................................................2
(d) THE CLOSING.......................................................................2
(e) DELIVERIES AT THE CLOSING.........................................................2
(f) NONCOMPETITION AGREEMENT..........................................................2
(g) RETAINAGE AGREEMENT...............................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS...............................................3
---------------------------------------------
(a) AUTHORIZATION OF TRANSACTION......................................................3
(b) NONCONTRAVENTION..................................................................3
(c) BROKERS' FEES.....................................................................3
(d) COMPANY SHARES....................................................................4
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.................................................4
-------------------------------------------
(a) ORGANIZATION OF THE BUYER.........................................................4
(b) AUTHORIZATION OF TRANSACTION......................................................4
(c) NONCONTRAVENTION..................................................................4
(d) BROKERS' FEES.....................................................................5
(e) FINANCING.........................................................................5
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.......................................5
-----------------------------------------------------
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER..................................5
(b) CAPITALIZATION....................................................................6
(c) NONCONTRAVENTION..................................................................8
(d) FINANCIAL STATEMENTS..............................................................8
(e) SUBSEQUENT EVENTS.................................................................9
(f) UNDISCLOSED LIABILITIES..........................................................11
(g) TAX MATTERS......................................................................11
(h) TANGIBLE ASSETS..................................................................12
(i) OWNED REAL PROPERTY..............................................................13
(j) REAL PROPERTY LEASES.............................................................14
(k) INTELLECTUAL PROPERTY............................................................15
(l) CONTRACTS........................................................................15
(m) FCC LICENSES AND COMPLIANCE WITH FCC REQUIREMENTS................................16
(n) INSURANCE........................................................................17
(o) LITIGATION.......................................................................17
(p) EMPLOYEES........................................................................17
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
(q) NOTES AND ACCOUNTS RECEIVABLE....................................................18
(r) POWERS OF ATTORNEY...............................................................18
(s) EMPLOYEE BENEFITS................................................................19
(t) LEGAL COMPLIANCE.................................................................20
(u) CERTAIN BUSINESS RELATIONSHIPS WITH THE
COMPANY AND ITS SUBSIDIARIES.................................................21
(v) ADVERTISING CONTRACTS............................................................21
(w) DISCLOSURE.......................................................................21
5. PRE-CLOSING COVENANTS......................................................................21
---------------------
(a) GENERAL..........................................................................21
(b) TRANSFER APPLICATIONS............................................................21
(c) HART SCOTT RODINO NOTIFICATION...................................................22
(d) NOTICES AND CONSENTS.............................................................22
(e) OPERATION OF BUSINESS............................................................23
(f) EMPLOYEES........................................................................23
(g) ADVERTISING OBLIGATIONS..........................................................23
(h) OPERATING STATEMENTS.............................................................23
(i) CONTRACTS........................................................................23
(j) OPERATION OF STATIONS............................................................24
(k) CREDIT AND RECEIVABLES...........................................................24
(l) PRESERVATION OF BUSINESS.........................................................24
(m) ACCESS AND CONSULTATION..........................................................24
(n) NOTICE OF DEVELOPMENTS...........................................................24
(o) EXCLUSIVITY......................................................................25
(p) TITLE INSURANCE..................................................................25
(q) SURVEYS..........................................................................25
(r) ENVIRONMENTAL ASSESSMENTS........................................................25
(s) CONTROL OF STATIONS..............................................................26
(t) RISK OF LOSS.....................................................................27
(u) SCHEDULE UPDATES.................................................................27
6. CONDITIONS TO OBLIGATION TO CLOSE..........................................................29
---------------------------------
(a) CONDITIONS TO OBLIGATION OF THE BUYER............................................29
(b) CONDITIONS TO OBLIGATION OF THE SELLERS..........................................30
7. POST-CLOSING COVENANTS.....................................................................31
----------------------
(a) GENERAL..........................................................................32
(b) LITIGATION SUPPORT...............................................................32
(c) TRANSITION.......................................................................32
(d) CONFIDENTIALITY..................................................................32
(e) RETAINAGE ADJUSTMENT.............................................................33
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
8. REMEDIES FOR BREACHES OF THIS AGREEMENT....................................................33
---------------------------------------
(a) SURVIVAL.........................................................................33
(b) INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYER..........................33
(c) INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLERS........................34
(d) MATTERS INVOLVING THIRD PARTIES..................................................34
(e) SPECIFIC PERFORMANCE OF BUYER....................................................35
(f) LIQUIDATED DAMAGES FOR SELLER....................................................35
(g) OTHER PROVISIONS.................................................................36
(h) ARBITRATION......................................................................36
9. DEFINITIONS...............................................................................36
-----------
10. TERMINATION...............................................................................42
-----------
(a) TERMINATION OF AGREEMENT.........................................................42
(b) EFFECT OF TERMINATION............................................................42
11. STOCKHOLDER REPRESENTATIVE................................................................43
--------------------------
(a) APPOINTMENT OF STOCKHOLDER REPRESENTATIVE........................................43
(b) POWERS INCLUDED..................................................................43
(c) DECISION CONCLUSIVE..............................................................44
(d) FEES AND EXPENSES................................................................44
12. MISCELLANEOUS.............................................................................44
-------------
(a) SURVIVAL.........................................................................44
(b) PRESS RELEASES AND ANNOUNCEMENTS.................................................44
(c) NO THIRD PARTY BENEFICIARIES.....................................................44
(d) ENTIRE AGREEMENT.................................................................44
(e) SUCCESSION AND ASSIGNMENT........................................................45
(f) COUNTERPARTS.....................................................................45
(g) HEADINGS.........................................................................45
(h) NOTICES..........................................................................45
(i) GOVERNING LAW....................................................................47
(j) AMENDMENTS AND WAIVERS...........................................................47
(k) SEVERABILITY.....................................................................47
(l) EXPENSES.........................................................................47
(m) CONSTRUCTION.....................................................................47
(n) INCORPORATION OF EXHIBITS AND SCHEDULES..........................................48
(o) SUBMISSION TO JURISDICTION.......................................................48
</TABLE>
-iii-
<PAGE> 5
LIST OF EXHIBITS
Exhibit A................Form of Earnest Money Escrow Agreement
Exhibit A-1..............Form of Letter of Credit
Exhibit B................Form of Noncompetition Agreement
Exhibit C................Form of Retainage Agreement
Exhibit D................Form of Opinion of Counsel to the Seller
Exhibit E................Form of Opinion of Counsel to the Buyer
Schedule A...............Purchase Price
<TABLE>
<CAPTION>
DISCLOSURE SCHEDULES
DESCRIPTION SECTION REFERENCE
- ----------- -----------------
<S> <C>
Company Shares..........................................................................................2(d)
Directors and Officers..................................................................................4(a)
Financial Statements....................................................................................4(d)
Subsequent Events.......................................................................................4(e)
Tangible Assets.........................................................................................4(h)
Owned Real Property.....................................................................................4(i)
Real Property Leases....................................................................................4(j)
Intellectual Property...................................................................................4(k)
Contracts...............................................................................................4(l)
FCC Licenses............................................................................................4(m)
Insurance...............................................................................................4(n)
Litigation..............................................................................................4(o)
Employees...............................................................................................4(p)
Employee Benefits.......................................................................................4(s)
Business Relationships..................................................................................4(u)
Advertising Contracts...................................................................................4(x)
</TABLE>
-iv-
<PAGE> 6
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") entered into as of June 15, 1999, by and
among CUMULUS MEDIA INC., an Illinois corporation (the "Buyer"); and M&F
CALENDAR HOLDINGS, L.P., a Delaware limited partnership ("M&F"), KEVIN C.
WHITMAN, an individual resident of California ("Whitman"), NASSAU CAPITAL
PARTNERS L.P., a Delaware limited partnership ("Nassau"), NAS PARTNERS I L.L.C.,
a Delaware limited liability company ("NAS"), (M&F, Whitman, Nassau and NAS are
herein collectively referred to as the "Calendar Shareholders") and PHILIP J.
Giordano, an individual resident of New Jersey ("Giordano") (the Calendar
Shareholders and Giordano are collectively referred to as the "Sellers"). The
Buyer and the Sellers are referred to collectively herein as the "Parties."
R E C I T A L S
The Calendar Shareholders in the aggregate own all of the outstanding
capital stock of CALENDAR BROADCASTING, INC., a Delaware corporation (the
"Company" or "Calendar"). Calendar and Giordano own all of the outstanding
capital stock of the Holding Companies (as hereinafter defined). Calendar,
indirectly through subsidiaries, owns and operates radio stations KBFM-FM
(licensed to Edinburg, TX); KTEX-FM (licensed to Brownsville, TX); WBLX-FM
(licensed to Mobile, AL); WDLT-FM (licensed to Chicksaw, AL); and WDLT-AM
(licensed to Fairhope, AL) (collectively the "Stations").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Sellers, and the Sellers will sell to the Buyer, all of the
outstanding capital stock of the Company and all of Giordano's capital stock of
the Holding Companies in return for cash.
Certain capitalized terms used herein are defined in Section 9 below.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. PURCHASE AND SALE OF TARGET SHARES.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to the Buyer, all of his or its
Company Shares or Holding Companies Shares, as applicable, for the consideration
specified below in this Section 1.
(b) PURCHASE PRICE. The Buyer agrees to pay to the Calendar
Shareholders, as consideration for all of the outstanding Company Shares, and to
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Giordano, as consideration for his Holding Companies Shares, the Purchase Price
described in Schedule A to this Agreement. The Purchase Price shall be allocated
among the Sellers in proportion to their respective holdings of Company Shares
or Holding Companies Shares, as applicable, as set forth in Section 1(b) of the
Disclosure Schedule.
(c) EARNEST MONEY DEPOSIT. On the date of this Agreement, the
Buyer will deposit with the Earnest Money Escrow Agent the amount of One Million
Eight Hundred Thousand and no/100 Dollars ($1,800,000.00) (the "Earnest Money
Deposit") in the form of an irrevocable letter of credit of Lehman Commercial
Credit Corp. in favor of the Sellers, in the form attached as Exhibit A-1, to be
held pursuant to the earnest money escrow agreement ("Earnest Money Escrow
Agreement") attached hereto as Exhibit A.
(d) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at a mutually agreeable
location, commencing at 9:00 a.m. local time on the date set by the Buyer not
earlier than the fifth business day or later than the tenth business day after
the FCC approval of the Transfer Application becomes a Final Order and all other
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby have been satisfied or waived (other than those conditions
which, by their nature, are satisfied only at Closing), or such other date as
the Parties may mutually determine (the "Closing Date").
(e) DELIVERIES AT THE CLOSING. At the Closing, (i) the Sellers
will deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below, (ii) the Buyer will deliver to the Sellers
the various certificates, instruments, and documents referred to in Section 6(b)
below, (iii) each of the Sellers will deliver to the Buyer stock certificates
representing all of his, her or its Company Shares or Holding Companies Shares,
as applicable, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) the Buyer will deliver to each of the Sellers the
consideration specified in Section 1(b) above.
(f) NONCOMPETITION AGREEMENT. On the Closing Date, Giordano
shall execute and M&F shall cause John J. Murphy, Jr. to execute a
Noncompetition Agreement with the Buyer in the form attached hereto as Exhibit B
(the "Noncompetition Agreement"), which shall include a covenant not to compete
with the Buyer in the markets served by the Stations.
(g) RETAINAGE AGREEMENT. Concurrent with the execution of this
Agreement, the Stockholder Representative and Buyer shall execute the Retainage
Agreement in the form attached hereto as Exhibit C, which shall provide for the
retention of a portion of the Purchase Price by the Retainage Agent under the
terms and conditions set forth in that Agreement.
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<PAGE> 8
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers
represents and warrants to the Buyer that the statements contained in this
Section 2 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 2) with respect to himself or itself, except as set forth in the
Disclosure Schedule accompanying this Agreement (which Disclosure Schedule may
be updated by Sellers between the date of this Agreement and the Closing Date to
reflect matters first arising or discovered during such period and which affect
the accuracy of the representations and warranties, as provided in Section 5(v)
below) (the "Disclosure Schedule") corresponding to the lettered and numbered
sections of this Section 2.
(a) AUTHORIZATION OF TRANSACTION. Such Seller has full power
and authority to execute and deliver this Agreement and to perform its, his or
her obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms and conditions, except to the extent limited by bankruptcy,
insolvency, moratorium and other laws of general application relating to or
affecting the enforcement of creditors' rights or by general equitable
principles. Such Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement,
other than Transfer Assignment Applications described in Section 5(b).
(b) NONCONTRAVENTION. Neither such Seller's execution and the
delivery of this Agreement, nor (assuming the receipt of all necessary
regulatory approvals) the consummation of the transactions contemplated hereby,
or the performance of its, his or her obligations hereunder, will (i) violate
any statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or court to
which such Seller is subject, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
Security Interest, or other arrangement to which such Seller is a party or by
which he or it is bound or to which any of his or its assets is subject.
(c) BROKERS' FEES. Sellers have the exclusive responsibility
for the fee owed to Bergner & Company and to any other broker retained by the
Sellers or the Company with respect to the transactions contemplated herein,
which shall be paid at Closing by the Sellers.
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(d) COMPANY SHARES. Such Calendar Shareholder holds of record
and owns beneficially the number of Company Shares and Giordano holds of record
and owns beneficially the number of shares of the Holding Companies set forth
next to his or its name in Section 2(d) of the Disclosure Schedule, free and
clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), claims, Taxes, Security Interests,
options, warrants, rights, contracts, calls, commitments, equities, and demands
except for those in favor of FINOVA, all of which FINOVA will release in full
upon payment by the Buyer at Closing of all amounts owed to FINOVA, as provided
in Schedule A to this Agreement. Such Seller is not a party to any option,
warrant, right, contract, call, put, or other agreement or commitment providing
for the disposition or acquisition of any capital stock of the Company (other
than this Agreement). Such Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital stock
of the Company or any Holding Company.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Sellers that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
(a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Illinois.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms and
conditions, except to the extent limited by bankruptcy, insolvency, moratorium
and other laws of general application relating to or affecting the enforcement
of creditors' rights or by general equitable principles.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor (assuming the receipt of all necessary regulatory
approvals) the consummation of the transactions contemplated hereby (including
the assignments and assumptions referred to in Section 1 above), will (i)
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Buyer is subject or any provision of the charter or bylaws
of the Buyer or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease,
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<PAGE> 10
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets are subject. Other than with respect to the Transfer
Application, the Buyer does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) BROKERS' FEES. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Sellers could become
liable or obligated.
(e) FINANCING. The Buyer has available to it and will continue
to have available to it on the Closing Date sufficient funds to pay the Purchase
Price.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY AND
SUBSIDIARIES. The Sellers represent and warrant to the Buyer that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date, except as set
forth in the Disclosure Schedule (which Disclosure Schedule may be updated by
Sellers between the date of this Agreement and the Closing Date to reflect
matters first arising or discovered during such period and which affect the
accuracy of the representations and warranties, as provided in Section 5(v)
below). The Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification. The Company has full corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it. Section 4(a) of the Disclosure
Schedule lists the directors and officers of the Company. The Sellers have
delivered to the Buyer correct and complete copies of the charter and bylaws of
the Company (as amended to date). The minute books containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors, the stock certificate books, and the stock record books of
the Company are correct and complete in all material respects. The Company is
not in default under or in violation of any provision of its charter or bylaws
in any material respect. The Subsidiaries of the Company are disclosed on
Section 4(a) of the Disclosure Schedule. Each of the representations and
warranties in this Section 4(a) applies to each of the Subsidiaries of
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<PAGE> 11
the Company as if set forth separately herein. Other than as disclosed in
Section 4(a) of the Disclosure Schedule, the Company does not control directly
or indirectly or have any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of the Company.
(b) CAPITALIZATION.
(i) The entire authorized capital stock of the
Company consists of 30,000 shares of Calendar Common Stock, of which 6,783.333
shares are issued and outstanding, and 1,550 shares of Calendar Preferred Stock,
of which 1,550 shares are issued and outstanding. All of the issued and
outstanding Company Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the respective Sellers as set
forth in Section 2(d) of the Disclosure Schedule. There are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights, or other agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition, or acquisition of any of its capital stock, except as set
forth in the certificate of incorporation of the Company. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to the Company. There are no voting trusts, proxies, or any other
agreements or understandings with respect to the voting of the capital stock of
the Company.
(ii) The entire authorized capital stock of April
Holding consists of 10,000 shares of common stock, of which 7,000 shares are
issued and outstanding. All of the issued and outstanding shares of common stock
of April Holding have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Company and Giordano, in the
amounts set forth in Section 2(d) of the Disclosure Schedule. There are no
outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights, or other agreements or commitments to
which the April Holding is a party or which are binding upon April Holding
providing for the issuance, disposition, or acquisition of any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
or similar rights with respect to April Holding. There are no voting trusts,
proxies, or any other agreements or understandings with respect to the voting of
the capital stock of April Holding.
(iii) The entire authorized capital stock of May
Holding consists of 10,000 shares of common stock, of which 5,120 shares are
issued and outstanding. All of the issued and outstanding shares of common stock
of May Holding have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Company and Giordano, in the
amounts set forth in Section 2(d) of the Disclosure Schedule. There are no
outstanding or authorized options, warrants, rights, contracts,
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calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which the May Holding is a party or which are binding upon May
Holding providing for the issuance, disposition, or acquisition of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to May Holding. There are no
voting trusts, proxies, or any other agreements or understandings with respect
to the voting of the capital stock of May Holding.
(iv) The entire authorized capital stock of July
Holding consists of 10,000 shares of common stock, of which 2,528.409 shares are
issued and outstanding. All of the issued and outstanding shares of common stock
of July Holding have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Company and Giordano, in the
amounts set forth in Section 2(d) of the Disclosure Schedule. There are no
outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights, or other agreements or commitments to
which the July Holding is a party or which are binding upon July Holding
providing for the issuance, disposition, or acquisition of any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
or similar rights with respect to July Holding. There are no voting trusts,
proxies, or any other agreements or understandings with respect to the voting of
the capital stock of July Holding.
(v) The entire authorized capital stock of April
Broadcasting consists of 10,000 shares of common stock, of which 7,000 shares
are issued and outstanding and all of which are owned, beneficially and of
record, by April Holding. All of the issued and outstanding shares of common
stock of April Broadcasting have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments to which April Broadcasting is a
party or which are binding upon April Broadcasting providing for the issuance,
disposition, or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to April Broadcasting.
(vi) The entire authorized capital stock of May
Communications consists of 10,000 shares of common stock, of which 1,000 shares
are issued and outstanding and all of which are owned, beneficially and of
record, by May Holding. All of the issued and outstanding shares of common stock
of May Communications have been duly authorized, are validly issued, fully paid,
and nonassessable. There are no outstanding or authorized options, warrants,
rights, contracts, calls, puts, rights to subscribe, conversion rights, or other
agreements or commitments to which May Communications is a party or which are
binding upon May Communications providing for the issuance, disposition, or
acquisition of any of its capital stock. There are no
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outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to May Communications.
(vii) The entire authorized capital stock of July
Broadcasting consists of 10,000 shares of common stock, of which 2,225 shares
are issued and outstanding and all of which are owned, beneficially and of
record, by July Holding. All of the issued and outstanding shares of common
stock of July Broadcasting have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments to which July Broadcasting is a party
or which are binding upon July Broadcasting providing for the issuance,
disposition, or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to July Broadcasting.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement by Sellers, nor (assuming receipt of all necessary regulatory
approvals) the consummation of the transactions contemplated hereby, will (i)
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Company or any Subsidiary is subject or any provision of
the charter or bylaws of the Company or any Subsidiary or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest, or other arrangement to which the
Company or any Subsidiary is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any Security Interest upon
any of its assets), in each case which would reasonably be expected to result in
a Material Adverse Effect. Other than with respect to the Transfer Application,
neither the Company nor any Subsidiary need give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) FINANCIAL STATEMENTS. The following financial statements
have been provided to Buyer and are included in Section 4(d) of the Disclosure
Schedules (collectively the "Financial Statements"): (i) consolidated audited
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended December 31, 1997 and December
31, 1998 (the "Most Recent Fiscal Year End"), for the Company and its
Subsidiaries; and (ii) consolidated unaudited statements of income and cash
flow, as of and for each month during 1998 and 1999 (through April) for the
Company and its Subsidiaries. The Financial Statements have
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<PAGE> 14
been prepared in accordance with GAAP (subject to, in the case of the unaudited
financial statements (y) the lack of footnote disclosures and (z) charges
resulting from normal year-end audit adjustments) applied on a consistent basis
throughout the periods covered thereby, and fairly present, in all material
respects, the financial position and results of operation of the Company and are
consistent in all material respects with the books and records of the Company
and its Subsidiaries as of the dates thereof and for the periods covered
thereby. The allowance for uncollectable accounts receivable set forth in the
Financial Statements for the Most Recent Fiscal Year End are reasonable in light
of the prior collection history of the Company and its Subsidiaries, and conform
to all applicable requirements of GAAP.
(e) SUBSEQUENT EVENTS. Since January 1, 1999, except as set
forth in Section 4(e) of the Disclosure Schedule:
(i) neither the Company nor any Subsidiary has sold,
leased, transferred, or assigned any of its material assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course of
Business;
(ii) neither the Company nor any Subsidiary has
entered into any contract, lease, sublease, license, or sublicense (or series of
related contracts, leases, subleases, licenses, and sublicenses) outside the
Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified,
or cancelled any contract, lease, sublease, license, or sublicense (or series of
related contracts, leases, subleases, licenses, and sublicenses) involving more
than $5,000 to which the Company or any Subsidiary is a party or by which it is
bound;
(iv) no Security Interest has been imposed upon any
of the Company's or any Subsidiary's assets, tangible or intangible;
(v) neither the Company nor any Subsidiary has made
any capital expenditure (or series of related capital expenditures) outside the
Ordinary Course of Business;
(vi) neither the Company nor any Subsidiary has made
any capital investment in, any loan to, or any acquisition of the securities or
assets of any other person (or series of related capital investments, loans, and
acquisitions) outside the Ordinary Course of Business;
(vii) neither the Company nor any Subsidiary has
created, incurred, assumed, or guaranteed any indebtedness (including
capitalized lease obligations) outside the Ordinary Course of Business;
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(VIII) neither the Company nor any Subsidiary has delayed or
postponed (beyond its normal practice) the payment of accounts payable and other
Liabilities;
(IX) neither the Company nor any Subsidiary has cancelled,
compromised, waived, or released any right or claim (or series of related rights
and claims) outside the Ordinary Course of Business;
(X) neither the Company nor any Subsidiary has granted any license
or sublicense of any rights under or with respect to any Intellectual Property;
(XI) neither the Company nor any Subsidiary has experienced any
action adversely affecting the FCC Licenses;
(XII) neither the Company nor any Subsidiary has made any loan to,
or entered into any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business giving rise to any claim or
right on its part against the person or on the part of the person against it;
(XIII) outside the Ordinary Course of Business, neither the
Company nor any Subsidiary has terminated or entered into any employment
arrangement, employment contract, consulting contract or severance agreement or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(XIV) neither the Company nor any Subsidiary has granted any
increase outside the Ordinary Course of Business in the base compensation of any
of its directors, officers, and employees;
(XV) neither the Company nor any Subsidiary has adopted any (A)
bonus, (B) profit-sharing, (C) incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization, life, or other insurance, (G)
severance, or (H) other plan, contract, or commitment for any of its directors,
officers, and employees, or modified or terminated any existing such plan,
contract, or commitment;
(XVI) outside the Ordinary Course of Business, neither the Company
nor any Subsidiary has made any other change in employment terms for any of its
directors, officers, and employees;
(XVII) neither the Company nor any Subsidiary has made or pledged
to make any charitable or other capital contribution outside the Ordinary Course
of Business;
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<PAGE> 16
(XVIII) neither the Company nor any Subsidiary has materially
altered its credit and collection policies or its accounting policies;
(XIX) neither the Company nor any Subsidiary has materially
altered the programming, format or call letters of the Stations or their
promotional and marketing activities, nor has the Company or any Subsidiary
terminated or received notice of termination for any syndicated programming;
(XX) neither the Company nor any Subsidiary has applied to the FCC
for any modification of the FCC Licenses or failed to take any action necessary
to preserve the FCC Licenses and has operated the Stations in material
compliance therewith and with all FCC rules and regulations;
(XXI) there has been no change made or authorized in the charter
or bylaws of the Company or any Subsidiary;
(XXII) neither the Company nor any Subsidiary has issued, sold, or
otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion or
exercise) any of its capital stock;
(XXIII) neither the Company nor any Subsidiary has declared, set
aside, or paid any dividend, distribution, or bonus with respect to its capital
stock or redeemed, purchased, or otherwise acquired any of its capital stock;
and
(XXIV) neither the Company nor any Subsidiary has committed to do
any of the foregoing.
(F) UNDISCLOSED LIABILITIES. Neither the Company nor any Subsidiary has
any undischarged material Liability, except for (i) Liabilities set forth on the
face of the Most Recent Balance Sheet or in the notes to the most recent audited
financial statements of the Company, (ii) Liabilities which have arisen after
the Most Recent Fiscal Year End in the Ordinary Course of Business, (iii)
Liabilities incurred in connection with the contemplated sale of the Company and
the Subsidiaries, and (iv) Liabilities set forth in the Disclosure Schedules.
(G) TAX MATTERS.
(I) The Company and each Subsidiary has filed all Tax Returns and
returns that it was required to file. All such Tax Returns that were filed were
correct and complete in all respects. All Taxes owed by the Company and the
Subsidiaries have been paid. Neither the Company nor any Subsidiary is currently
a party to a pending Tax
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<PAGE> 17
audit, the Company has no Knowledge of a threatened Tax audit, and neither the
Company nor any Subsidiary is the beneficiary of any extension of time within
which to file any Tax Return. No claim is pending by an authority in a
jurisdiction where the Company or any Subsidiary does not file reports and
returns that it is or may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of the Company or any Subsidiary that
arose in connection with any failure (or alleged failure) to pay any Tax, except
for Security Interests relating to Taxes not yet due and payable.
(II) The Company and each Subsidiary has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party.
(III) The Company has no Knowledge that any governmental authority
has sought or will seek to assess any additional Taxes for any period for which
returns have been filed. There is no dispute or claim concerning any Tax
Liability of the Company or any Subsidiary either (A) claimed or raised by any
governmental authority in writing or (B) as to which the Company has Knowledge.
The Company has made available to Buyer for inspection true and correct copies
of all federal, state, local, and foreign income Tax Returns filed with respect
to the Company and the Subsidiaries for taxable periods ended on or after
January 1, 1993, and all examination reports, and statements of deficiencies
assessed against or agreed to by the Company or any Subsidiary since January 1,
1994. No such return has been the subject of audit. The Company has made
available to the Buyer correct and complete copies of all federal income Tax
Returns.
(IV) The unpaid Taxes of the Company do not exceed the reserve for
Tax Liability, if any, (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto).
(V) Neither the Company nor any Subsidiary has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(VI) Neither the Company nor any Subsidiary is a party to any Tax
allocation or sharing agreement.
(H) TANGIBLE ASSETS. Section 4(h) of the Disclosure Schedule sets forth
a listing of all material transmitter and station equipment, vehicles and other
material tangible personal property used in conducting the operation and
business of the Stations. Each such asset is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it is used. The Company and its
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<PAGE> 18
Subsidiaries own or lease all tangible assets necessary for the conduct of the
operation and business of the Stations as presently conducted and as presently
proposed to be conducted.
(I) OWNED REAL PROPERTY. Section 4(i) of the Disclosure Schedule lists
and describes briefly all real property that the Company and the Subsidiaries
own. With respect to each such parcel of owned real property (other than the
property at Wolf Ridge Road in Mobile, Alabama, which is to be transferred or
sold by the Company prior to the Closing):
(I) each of the Company and the Subsidiaries has good and
marketable title to each parcel of real property owned by it, free and clear of
any Security Interest, easement, covenant, or other restriction (including but
not limited to leases or other agreements granting to any party the right of use
or occupancy of and options or rights of first refusal to purchase), except for
recorded easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of the property
subject thereto;
(II) there are no (A) pending or, to the Knowledge of the Sellers
and the Company, threatened condemnation proceedings relating to the property;
or (B) pending or, to the Knowledge of the Sellers and the Company, threatened
litigation or administrative actions relating to the property;
(III) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings, towers,
antennae and improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback requirements, zoning
laws, and ordinances (and none of the properties or buildings or improvements
thereon are subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications), and do not encroach on any easement
which may burden the land, the land does not serve any adjoining property for
any purpose inconsistent with the use of the land, the property is not subject
to any restriction for which any permits or licenses necessary to the use
thereof have not been obtained, and access to the property is provided by public
right-of-way;
(IV) all facilities have received all material approvals of
governmental authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and maintained in
accordance in all material respects with applicable laws, rules, and
regulations;
(V) there are no parties (other than the Company and its direct
and indirect Subsidiaries) in possession of the parcel of real property, other
than tenants
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under any leases disclosed in Section 4(j) of the Disclosure Schedule who are in
possession of space to which they are entitled, no leases, subleases or other
agreements granting to any party any right of use or occupancy or option or
right of refusal with respect to any parcel of real property;
(VI) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of such
facilities, including electricity and telephone, all of which services are
adequate for the operation of such facility; and
(VII) each parcel of real property abuts on and has direct
vehicular access to a public road or access to a public road.
(J) REAL PROPERTY LEASES. Section 4(j) of the Disclosure Schedule lists
all real property leased or subleased to the Company or any Subsidiary. The
Company has delivered to the Buyer correct and complete copies of the leases and
subleases listed in Section 4(j) of the Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in Section 4(j) of the
Disclosure Schedule:
(I) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect, except to the extent limited by bankruptcy,
insolvency, moratorium and other laws of general application relating to or
affecting the enforcement of creditors' rights or by general equitable
principles;
(II) neither the Company or any Subsidiary, as applicable, nor, to
the Knowledge of the Company, any party to the lease or sublease is in breach or
default (or has repudiated any provision thereof), and to the Knowledge of the
Company, no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(III) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(IV) with respect to each sublease, to the Knowledge of the
Company, the representations and warranties set forth in subsections (i) through
(iii) above are true and correct with respect to the underlying lease;
(V) neither the Company nor any Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in
the leasehold or subleasehold;
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(VI) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses, permits and
zoning approvals) required in connection with the operation thereof and have
been operated and maintained in accordance in all material respects with
applicable laws, rules, and regulations;
(VII) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities; and
(VIII) the Company has no Knowledge of any reason why the owner of
the facility leased or subleased would not have good and marketable title to the
parcel of real property.
(K) INTELLECTUAL PROPERTY. The Company and the Subsidiaries own or have
the right to use pursuant to license, sublicense, agreement, or permission all
material Intellectual Property used in the operation of the businesses of the
Company or Subsidiary, as applicable, as presently conducted and as presently
proposed to be conducted. Each material item of Intellectual Property owned or
used by the Company or any Subsidiary immediately prior to the Closing hereunder
is set forth on Section 4(k) of the Disclosure Schedule and each item listed
will be owned or available for use by the Buyer on identical terms and
conditions immediately subsequent to the Closing hereunder. To the Knowledge of
Sellers and the Company, neither the Company nor any Subsidiary has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and neither the Company nor any
Subsidiary has received any charge, complaint, claim, or notice alleging any
such interference, infringement, misappropriation, or violation. To the
Knowledge of the Sellers and the Company, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Company or any Subsidiary.
(L) CONTRACTS. Other than Advertising Contracts, Section 4(l) of the
Disclosure Schedule lists the contracts, agreements, and other written
arrangements to which the Company or any Subsidiary is a party and either
involving payment in excess of Five Thousand Dollars ($5,000) per year or not
entered into in the Ordinary Course of Business. The Company has delivered to
the Buyer a correct and complete copy of each written arrangement listed in
Section 4(l) of the Disclosure Schedule (as amended to date). With respect to
each written agreement so listed:
(I) the written arrangement is legal, valid, binding, enforceable,
and in full force and effect, except to the extent limited by bankruptcy,
insolvency, moratorium and other laws of general application relating to or
affecting the enforcement of creditors' rights and equitable limitations or by
general equitable principles;
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<PAGE> 21
(II) to the Knowledge of the Company, no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the written agreement; and
(III) to the Knowledge of the Company, no party has repudiated any
provision of the written agreement.
The written arrangements listed in Section 4(l) of the Disclosure Schedule are
all of the written arrangements necessary for the conduct of the operation and
business of the Stations as presently conducted and proposed to be conducted.
Neither the Company nor any Subsidiary is a party to any verbal contract,
agreement, or other arrangement which, if reduced to written form, would be
required to be listed in Section 4(l) of the Disclosure Schedule under the terms
of this Section 4(l).
(M) FCC LICENSES AND COMPLIANCE WITH FCC REQUIREMENTS.
(I) All material licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies, including,
without limitation, the FCC Licenses, used or useful in the operation of the
Stations as they are now being operated are listed in Section 4(m) of the
Disclosure Schedule and are in full force and effect, are unimpaired by any acts
or omissions of any Sellers, the Company, the Subsidiaries or the Company's or
the Subsidiaries' employees or agents, and are free and clear of any
restrictions which might limit the full operation of the Stations. No condition
exists or event has occurred that permits, or after notice or lapse of time, or
both, would permit, the revocation or termination of any such license, permit,
consent, franchise, or authorization (other than pursuant to their express
expiration date) or the imposition of any material restriction or limitation
upon the operation of the Stations as now conducted. The Sellers and the Company
are not aware of any reason why the FCC licenses will not be renewed in the
ordinary course or revoked.
(II) The Stations are each in compliance with the FCC's policy on
exposure to radio frequency radiation. No renewal of any FCC License would
constitute a major environmental action under the FCC's rules or policies.
Access to the Station's transmission facilities is restricted in accordance with
the policies of the FCC.
(III) To the Knowledge of the Sellers and the Company, neither the
Company nor any Subsidiary is the subject of any FCC or other governmental
investigation or any notice of violation or order, or any material complaint,
objection, petition to deny, or opposition issued by or filed with the FCC or
any other governmental authority in connection with the operation of or
authorization for the Stations, and there are no proceedings (other than
rulemaking proceedings of general applicability) before
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<PAGE> 22
the FCC or any other governmental authority that could adversely affect any of
the FCC Licenses or the authorizations listed in Section 4(m) of the Disclosure
Schedule.
(IV) The Company and each Subsidiary has filed with the FCC and
all other governmental authorities having jurisdiction over the Stations all
material reports, applications, documents, instruments, and other information
required to be filed by it, and will continue to make such filings through the
Closing Date.
(N) INSURANCE. Section 4(n) of the Disclosure Schedule sets forth a
complete and accurate description of all of the Company's insurance coverage.
With respect to each such insurance policy, the policy is legal, valid, binding
and enforceable and in full force and effect, except to the extent limited by
bankruptcy, insolvency, moratorium and other laws of general application
relating to or affecting the enforcement of creditors' rights or by general
equitable principles.
(O) LITIGATION. Section 4(o) of the Disclosure Schedule sets forth each
instance in which the Company or any Subsidiary: (i) is subject to any
unsatisfied judgement, order, decree, stipulation, injunction, or charge; or
(ii) is a party or, to the Knowledge of the Sellers and the Company, is
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the charges, complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 4(o) of the
Disclosure Schedule could reasonably be expected to result in a Material Adverse
Effect. The Sellers and the Company have no Knowledge of any Basis for any such
charge, complaint, action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Company and any Subsidiary.
(P) EMPLOYEES. Section 4(p) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Stations of each employee of
Company and the Subsidiaries. To the Knowledge of the Sellers and the Company,
no key employee or group of employees has any plans to terminate employment with
the Company or any Subsidiary, except for Giordano and James Sack (as of
Closing). Neither the Company nor any Subsidiary is a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes.
Neither the Company nor any Subsidiary has committed any unfair labor practice.
The Sellers and the Company have no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company or any Subsidiary.
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<PAGE> 23
(Q) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company.
(R) EMPLOYEE BENEFITS. Section 4(r) of the Disclosure Schedule lists
all Employee Benefit Plans that the Company and the Subsidiaries maintain or
have maintained, or to which the Company or any Subsidiary contributes, or has
contributed for the benefit of any current or former employee of the Company or
any Subsidiary. Each Employee Benefit Plan so listed is an Employee Welfare
Benefit Plan and none is an Employee Pension Benefit Plan.
(I) Each Employee Benefit Plan (and each related trust or
insurance contract) complies in form and in operation in all material respects
with the applicable requirements of ERISA and the Code.
(II) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions)
have been filed or distributed in substantial compliance with applicable law
with respect to each Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Sec. 4980(B) have been met in all
material respects with respect to each Employee Welfare Benefit Plan to which
such requirements apply. All required premium or similar payments for all
periods ending prior to the Closing Date have been paid with respect to each
Employee Welfare Benefit Plan that is a group health plan within the meaning of
the Code Sec. 4980(B)(g)(2) and Section 607 of ERISA.
(III) There have been no Prohibited Transactions with respect to
any Employee Benefit Plan. To the Knowledge of the Company, no Fiduciary has any
Liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any Employee
Benefit Plan.
(IV) No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the administration or the
investment of the assets of any Employee Benefit Plan (other than routine claims
for benefits) is pending or, to the Knowledge of any of the Sellers and the
Company, threatened. None of the Sellers and the Company has any Knowledge of
any Basis for any such charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand.
(V) The Company has delivered to the Buyer correct and complete
copies of (A) the plan documents and summary plan descriptions, (B) the most
recent Form 5500 Annual Report, and (C) all related trust agreements, insurance
contracts, and other funding agreements which implement each Employee Benefit
Plan.
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<PAGE> 24
Neither the Company nor any Subsidiary contributes to, has ever contributed to,
or has ever been required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal Liability) under any Multiemployer Plan. Neither
the Company nor any Subsidiary has incurred, and neither the Sellers nor the
Company has any reason to expect that the Company or any Subsidiary will incur
any Liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or under the Code with
respect to any Employee Pension Benefit Plan that the Company or any Subsidiary
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute. Neither the Company nor
any Subsidiary maintains or has maintained or contributed, or been required to
contribute to any Employee Pension Benefit Plan or Employee Welfare Benefit Plan
providing health, accident, or life insurance benefits to former employees,
their spouses, or their dependents (other than in accordance with Code Sec.
4980(B)).
(S) ENVIRONMENT, HEALTH, AND SAFETY.
(I) The Company and each Subsidiary has complied in all material
respects with all laws (including rules and regulations thereunder) of federal,
state, and local governments (and all agencies thereof) concerning the
environment, public health and safety, and employee health and safety, and no
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against the Company or any
Subsidiary alleging any failure to comply with any such law or regulation.
(II) To the Knowledge of the Company, neither the Company nor any
Subsidiary has any Liability (and there is no Basis related to the past or
present operations, and its respective predecessors for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against the Sellers giving rise to any Liability) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Federal Water Pollution Control Act
of 1972, the Clean Air Act of 1970, the Safe Drinking Water Act of 1974, the
Toxic Substances Control Act of 1976, the Refuse Act of 1899, or the Emergency
Planning and Community Right-to-Know Act of 1986 (each as amended), or any other
law (or rule or regulation thereunder) of any federal, state, local, or foreign
government (or agency thereof), concerning release or threatened release of
hazardous substances, public health and safety, or pollution or protection of
the environment, or for damage to any site, location, or body of water (surface
or subsurface) or for illness or personal injury.
(III) To the Knowledge of the Company, neither the Company nor any
Subsidiary has any Liability (and there is no Basis for any present or future
charge,
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<PAGE> 25
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against the Sellers giving rise to any Liability) under the Occupational Safety
and Health Act, as amended, or any other law (or rule or regulation thereunder)
of any federal, state, local, or foreign government (or agency thereof)
concerning employee health and safety, or for any illness of or personal injury
to any employee.
(IV) To the Knowledge of the Company, the Company and each
Subsidiary has obtained and has been in material compliance with all of the
terms and conditions of all permits, licenses, and other authorizations which
are required under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, local, and foreign laws (including rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution or
protection of the environment, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(V) The Company has no Knowledge of any pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or waste ever having been
buried, stored, spilled, leaked, discharged, emitted, or released on any real
property that the Company or any Subsidiary owns or leases. The Sellers have
delivered to the Buyer a complete copy of all environmental claims, reports,
studies, compliance actions or the like of the Company which are available to
the Sellers or the Company with respect to any of the Real Estate.
(T) LEGAL COMPLIANCE.
(I) The Company and each Subsidiary has complied in all material
respects with all laws (including rules and regulations thereunder) of federal,
state, and local governments (and all agencies thereof), and to the Knowledge of
the Sellers and the Company, no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against the Company or any Subsidiary alleging any failure to comply with any
such law or regulation, including those relating to the employment of labor,
employee civil rights, and equal employment opportunities and relating to
antitrust matters.
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(II) The Company and each Subsidiary has filed in a timely manner
all material reports, documents, and other materials it was required to file
(and the information contained therein was correct and complete in all material
respects) under all applicable laws (including rules and regulations
thereunder). The Company and each Subsidiary has possession of all material
records and documents it was required to retain under all applicable laws
(including rules and regulations thereunder).
(U) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY AND ITS
SUBSIDIARIES. Except as described in Section 4(u) of the Disclosure Schedule,
none of the Sellers or their Affiliates have been involved in any business
arrangement or relationship with the Company or any Subsidiary within the past
twelve (12) months (other than transactions between the Company and the
Subsidiaries), and none of the Sellers and their Affiliates owns any property or
right, tangible or intangible, which is used in the business of the Company or
any Subsidiary.
(V) ADVERTISING CONTRACTS. Section 4(v) of the Disclosure Schedule
lists the Company's and Subsidiaries' accounts receivable as of April 30, 1999.
(W) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained in
this Section 4 not materially misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(A) GENERAL. The Buyer will, and M&F and Giordano will cause the
Company to, use commercially reasonable efforts to take all action and to do all
things necessary, proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Section 6 below).
(B) TRANSFER APPLICATION. Within ten (10) business days after the
execution of this Agreement, the Stockholder Representative, as agent for the
Sellers, and the Buyer shall jointly file with the FCC an application for
transfer or control of the Company, including its FCC Licenses, permits and
authorizations pertaining to the Stations from the Sellers to the Buyer (the
"Transfer Application"). The costs of the FCC filing fees in connection with the
Transfer Application shall be divided equally between the Sellers and the Buyer.
Each of the Buyer and the Sellers shall pay their own attorneys' fees. The costs
of the Sellers for such matters shall be paid by the Company, so long as such
payments are reflected in Net Working Capital as of Closing. The Stockholder
Representative and the Buyer shall thereafter prosecute the Transfer Application
with all
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reasonable diligence and otherwise use their commercially reasonable efforts to
obtain the grant of the Transfer Application as expeditiously as practicable
(but neither the Stockholder Representative nor the Buyer shall have any
obligation to satisfy complainants or the FCC by taking any steps which would
have material adverse effect upon the Buyer, the Company, or the Stations). If
the FCC imposes any condition on any Party to the Transfer Application, such
Party shall use commercially reasonable efforts to comply with such condition;
provided that no such Party shall be required hereunder to comply with any
condition that would have a material adverse effect upon the Buyer, the Company
or the Stations. The Stockholder Representative and the Buyer shall jointly
oppose any requests for reconsideration or judicial review of FCC approval of
the Transfer Application and shall jointly request from the FCC an extension of
the effective period of FCC approval of the Transfer Application if the Closing
shall not have occurred prior to the expiration of the original effective period
of the FCC Consent. Nothing in this Section 5(b) shall be construed to limit any
Party's right to terminate this Agreement pursuant to Section 10 of this
Agreement.
(C) HART SCOTT RODINO NOTIFICATION. If legally necessary, Buyer and
Stockholder Representative, as agent for the Sellers, agree that as soon as
practicable, but in no event later than thirty (30) days after the date of this
Agreement, each will complete the "Antitrust Improvements Act Notification and
Report Form for Certain Mergers and Acquisitions" (the "HSR Form") with respect
to the transactions contemplated by this Agreement and file such HSR Form with
the Federal Trade Commission and the Department of Justice, as required by the
Hart Scott Rodino Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR Act"). Each of Buyer and the
Stockholder Representative shall request early termination of the waiting period
under the HSR Act and will promptly complete and file responses to all requests
for additional data and information which may be made under the HSR Act. Buyer
and the Stockholder Representative shall each be responsible for their costs in
preparing, filing and prosecuting the HSR Form and any such responses to
requests for additional data or information, and will cooperate with each other
in obtaining clearance of the transactions contemplated by this Agreement under
the HSR Act as promptly as is practicable. Buyer and the Sellers shall each pay
one-half of the filing fee required under the HSR Act with respect to the
transactions contemplated by this Agreement. The costs of Sellers for such
matters shall be paid by the Company, provided that such costs are reflected in
the Net Working Capital as of Closing.
(D) NOTICES AND CONSENTS. The Stockholder Representative will give any
notices to third parties, and M&F and Giordano will cause the Company to use its
commercially reasonable efforts to obtain any third party consents that the
Buyer reasonably may request in connection with the matters pertaining to the
Company or the
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Sellers disclosed or required to be disclosed in the Disclosure Schedule. Each
of the Parties will take any additional action that may be necessary, proper, or
advisable in connection with any other notices to, filings with, and
authorizations, consents, and approvals of governments, governmental agencies,
and third parties that it may be required to give, make, or obtain.
(E) OPERATION OF BUSINESS. M&F and Giordano will not cause or permit
the Company to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of Business,
except that the Company may pay the expenses related to the contemplated sale of
the Company and any bonuses due to employees as a result of the sale of the
Company so long as the payment of such expenses and bonuses are reflected in the
Net Working Capital of the Company as of Closing. Without limiting the
generality of the foregoing, the Sellers will not (and will not direct the
Company to) engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction of the sort described in Section 4(e)
above.
(F) EMPLOYEES. Upon notice to the Stockholder Representative, and at
mutually agreeable times, the Company will permit the Buyer to meet with the
Company's employees prior to the Closing Date. Neither the Sellers, the Company
nor the Buyer will take any action to preclude or discourage any of the
Company's employees from continuing employment with the Company (other than
Giordano or James Sack).
(G) ADVERTISING OBLIGATIONS. The Company and the Subsidiaries shall
satisfy its air time obligations under its Advertising Contracts for goods or
services ("Barter Agreements") such that the outstanding aggregate balance owing
under all Barter Agreements as of the Closing Date (taking into account both
trade receivables and trade payables) shall not exceed Ten Thousand Dollars
($10,000) worth of air time. On the Closing Date, the Sellers shall deliver to
the Buyer a schedule, certified by an officer of the Company, reflecting the
aggregate outstanding balances under all Barter Agreements in existence as of
the Closing Date.
(H) OPERATING STATEMENTS. The Stockholder Representative shall deliver
to the Buyer, for the Buyer's informational purposes only, monthly unaudited
statements of operating revenues and operating expenses of the Stations with ten
(10) days after each such statement is prepared by or for the Company or the
Sellers.
(I) CONTRACTS. The Company will not without the prior written consent
of the Buyer amend, change, or modify any of the contracts listed on Section
2(1) of the Disclosure Schedule in any material respect, except in the Ordinary
Course of Business and except as will not have a Material Adverse Effect. The
Company will not without prior
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written consent of the Buyer enter into any new contracts respecting the
Stations or their properties, except (i) Advertising Contracts which comply with
the representations and warranties pertaining to such contracts set forth in
Section 2(1) above; (ii) contracts entered into in the Ordinary Course of
Business which are cancelable on not more than thirty (30) days' notice without
penalty or premium; and (iii) contracts entered into in the Ordinary Course of
Business each of which does not involve more than Ten Thousand Dollars ($10,000)
or all of which do not involve more than Fifty Thousand Dollars ($50,000) in the
aggregate.
(J) OPERATION OF STATIONS. The Company shall operate the Stations in
material compliance with the FCC Licenses and the rules and regulations of the
FCC, and the FCC Licenses shall at all times remain in full force and effect.
The Company shall file with the FCC all material reports, applications,
documents, instruments and other information required to be filed in connection
with the operation of the Stations.
(K) CREDIT AND RECEIVABLES. The Company will follow its usual and
customary policies with respect to extending credit for Advertising Contracts
and with respect to collecting accounts receivable arising from such extension
of credit.
(L) PRESERVATION OF BUSINESS. M&F and Giordano will cause the Company
to use its best efforts to keep its business and properties substantially
intact, including its present operations, physical facilities, relationships
with lessors, licensers, advertisers, suppliers, customers, and employees, all
of the confidential information and trade secrets of the Stations, and the FCC
Licenses.
(M) ACCESS AND CONSULTATION. M&F and Giordano will permit and will
cause the Company to permit representatives of the Buyer to have reasonable
access at all reasonable times as scheduled in advance with the Company, and in
a manner so as not to interfere with the normal business operations of the
Stations, to all premises, properties, books, records, contracts, Tax records,
and documents of or pertaining to the Company for the purpose, among other
things, to review financial statements of the Company, to verify the accuracy of
representations and warranties of the Sellers and the Company contained in this
Agreement, and to prepare for the consummation of the transactions contemplated
by this Agreement. M&F and Giordano will cause the Company to reasonably respond
to questions from the Buyer's management with respect to the operations,
management and business of the Stations.
(N) NOTICE OF DEVELOPMENTS. The Stockholder Representative will give
prompt written notice to the Buyer of any material development affecting the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company. Each Party will give prompt
written notice to the other of any
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material development affecting the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(O) EXCLUSIVITY. The Sellers will not (and the Sellers will not cause
or permit the Company to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any (A) liquidation,
dissolution, or recapitalization, (B) merger or consolidation, (C) acquisition
or purchase of securities or material assets (other than the Wolf Ridge Road
Property), or (D) similar transaction or business combination involving the
Company; or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing. The Sellers will notify the Buyer immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(P) TITLE INSURANCE. To the extent required by Buyer's lender, the
Sellers will reasonably cooperate with the Buyer in connection with the Buyer's
obtaining with respect to each parcel of real estate that the Company owns an
owner's policy issued by a title insurer reasonably satisfactory to the Buyer
and Sellers, in an amount equal to the fair market value of such real property
(including all improvements located thereon). Provided that the Buyer obtains
the same as an endorsement and bring-down of the existing title policies of the
Company's Subsidiaries, the Sellers shall pay one-half and Buyer shall pay
one-half the cost of such title policies; otherwise, the Buyer shall pay the
entire cost of such title policies. The costs of the Sellers for such matters
shall be paid by the Company, so long as such payments are reflected in Net
Working Capital as of Closing.
(Q) SURVEYS. With respect to each parcel of real property that the
Company owns, the Sellers will reasonably cooperate with the Buyer in connection
with the Buyer's procurement of, in preparation for the Closing, a current
survey of the real property certified to the Buyer, prepared by a licensed
surveyor and conforming to current expanded ALTA Minimum Detail Requirements for
Land Title Surveys. The Sellers shall pay one-half and Buyer shall pay one-half
of the reasonable cost of such Surveys. The costs of the Sellers for such
matters shall be paid by the Company, so long as such payments are reflected in
Net Working Capital as of Closing.
(R) ENVIRONMENTAL ASSESSMENTS. The Sellers will reasonably cooperate
with the Buyer in connection with the Buyer's obtaining with respect to each
parcel of real estate that the Company or any Subsidiary owns a current Phase I
environmental site assessment from an environmental consultant or engineer
reasonably satisfactory to the Buyer. The Sellers shall pay one-half and the
Buyer shall pay one-half of the reasonable cost of such environmental site
assessments. The costs of the Sellers for such matters
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shall be paid by the Company, so long as such payments are reflected in Net
Working Capital as of Closing.
The Buyer will provide to the Stockholder Representative, within ninety
(90) days after the date hereof, written reports of its environmental
consultants or engineers setting forth the results of their environmental
assessments for each such parcel of real estate. The reports submitted to Seller
under this Section 5(r) shall identify any violations of environmental law and
any condition to be remedied and the actions or remediation required to bring
the property into compliance with environmental laws. If the Buyer's Phase I
environmental assessment recommends additional testing and Buyer begins such
testing but such testing cannot be completed and reported to the Stockholder
Representative within the ninety (90) day period provided for herein, the period
shall be extended as reasonably required to complete such additional testing and
reported to the Stockholder Representative. M&F and Giordano will cause the
Company to take any and all actions to remedy the violations identified if the
aggregate cost of such actions would not exceed Five Hundred Thousand Dollars
($500,000). If the aggregate cost of such actions would exceed Five Hundred
Thousand Dollars ($500,000), and the Stockholder Representative indicates to
Buyer that the Company does not intend to remedy all such violations, Buyer may
elect to (i) terminate this Agreement by giving written notice of termination
within ten (10) business days after the Buyer provides the Stockholder
Representative with notice of the cost of such actions, or (ii) require the
Company to complete the remediation of the violations and reimburse the Sellers
for the amounts expended in excess of Five Hundred Thousand Dollars ($500,000).
If the Company elects or is required under the terms hereof to take all actions
to remediate each site and such actions are not fully accomplished on or before
the date upon which the Closing Date would otherwise occur, Buyer may elect to
postpone the Closing Date until such time as all of the actions necessary to
remedy the violations identified have been fully performed in a manner and to
the extent necessary to satisfy the Company's obligations, or proceed to close
with a reasonable escrow established (in an amount not exceeding Five Hundred
Thousand Dollars ($500,000) less amounts expended by the Company through such
date) to complete such remediation post-closing. In the event the Closing Date
is postponed pursuant to this Section 5(r), the Parties will cooperate to extend
the time during which this Agreement must be closed as specified in the consent
of the FCC.
(S) CONTROL OF STATIONS. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Transfer Application. Between the date of this Agreement and the
Closing Date, the Buyer and its employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Company.
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(T) RISK OF LOSS. The risk of loss, damage, or destruction to any of
the assets of the Company shall remain with the Sellers until the Closing. In
the event of any such loss, damage, or destruction the Sellers will promptly
notify the Buyer of all particulars thereof, stating the cause thereof (if
known) and the extent to which the cost of restoration, replacement and repair
of the assets lost, damaged or destroyed will be reimbursed under any insurance
policy with respect thereto. M&F and Giordano will cause the Company to repair
or replace such assets as soon as possible after loss, damage or destruction
thereof and shall cause the Company to use its best efforts to restore as
promptly as possible transmissions as authorized in the FCC Licenses. The
Closing Date shall be extended (with FCC consent, if necessary) for up to sixty
(60) days to permit such repair or replacement. If repair or replacement cannot
be accomplished within sixty (60) days of the date of the Sellers' notice to the
Buyer, and the Buyer determines that the Sellers' failure to repair or replace,
alone or in the aggregate, would have a material adverse effect on the operation
of the Stations:
(I) the Buyer may elect to terminate this Agreement; or
(II) the Buyer may postpone the Closing Date until such time as
the property has been repaired, replaced or restored in a manner and to an
extent reasonably satisfactory to the Buyer, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Sellers' notice
to the Buyer, in which case either Party may terminate this Agreement; or
(III) the Buyer may choose to accept the lost, damaged or
destroyed assets in their "then" condition, together with the Seller's
assignment to the Buyer all rights under any insurance claims covering the loss,
damage or destruction and payment over to the Buyer any proceeds under any such
insurance policies, previously received by the Sellers with respect thereto.
In the event the Closing Date is postponed pursuant to this Section 5(s),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
(U) SCHEDULE UPDATES. The Stockholder's Representative, at any time and
from time to time after the date of this Agreement, deliver to Buyer a revised
or supplemented Disclosure Schedule (or portion thereof) updating the
qualifications to Sellers' representations and warranties set forth herein to
reflect new matters first arising or discovered after the date of this Agreement
("Updated Schedules"). To the extent that such Updated Schedules disclose
changes which (i) are contemplated and permitted by this Agreement (e.g., new
Contracts entered into as permitted under Section 5(i)), or (ii) arise as a
consequence of the transaction contemplated herein (e.g., litigation
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commenced against the Company seeking to prevent the transaction contemplated
herein from occurring) (changes described in (i) or (ii) are hereinafter
referred to as "Permitted Changes"), such Updated Schedules shall be deemed to
amend the Disclosure Schedule for all purposes of this Agreement and Sellers
shall have no Liability to Buyer hereunder as a consequence thereof. To the
extent that such Updated Schedules disclose changes other than Permitted
Changes:
(I) each of the Sellers, severally, agrees to indemnify the Buyer,
on and after the Closing, from and against any Adverse Consequences the Buyer
may suffer resulting from any breach of Sellers' representations, warranties or
covenants contained in this Agreement (without regard to such Schedule Updates)
which are caused by any such change (so long as the Buyer makes a written claim
for indemnification for same within ten (10) business days after such Schedule
Update is delivered to Buyer); provided, that such indemnification shall be
subject to the limitations contained in Subsections 8(b)(i) through 8(b)(iv);
provided, further, that the Buyer shall not be entitled to recover from any
Seller an amount under this clause (i) in excess of such Seller's Pro Rata Share
of (A) One Million Eight Hundred Thousand and 00/100 Dollars ($1,800,000) less
(B) any amounts which the Company or the Sellers are required to expend to
remediate environmental problems pursuant to Section 5(r); and provided,
further, that indemnification claims made pursuant to this clause (i) of this
Section 5(u) shall be subject to the provisions of Sections 8(d) and (g);
(II) if it is reasonably likely that the Buyer will suffer Adverse
Consequences of more than One Million Eight Hundred Thousand and 00/100 Dollars
($1,800,000) resulting from breaches of Sellers' representations, warranties or
covenants contained in this Agreement (without regard to such Schedule Updates)
which are caused by any such change, Buyer may terminate this Agreement prior to
Closing by giving written notice of such termination to Sellers prior to Closing
(in which event Sellers shall have no Liability pursuant to the foregoing clause
(i) of this Section 5(u)); and
(III) except for Buyer's rights pursuant to the foregoing clauses
(i) and (ii) of this Section 5(u), such Updated Schedules shall be deemed to
amend the Disclosure Schedule for all purposes of this Agreement, and Sellers
shall have no Liability to Buyer hereunder as a consequence thereof.
Notwithstanding the foregoing, all matters disclosed in the environmental
reports to be delivered to Sellers pursuant to Section 5(r) shall automatically
be deemed to amend the Disclosure Schedule for all purposes of this Agreement,
and Sellers shall have no Liability to Buyer hereunder as a consequence thereof
other than pursuant to
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Section 5(r), including, without limitation, any obligation to indemnify Buyer
for same pursuant to clause (i) of this Section 5(u).
6. CONDITIONS TO OBLIGATION TO CLOSE.
(A) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(I) the representations and warranties set forth in Section 2 and
Section 4 above shall be true and correct in all material respects at and as of
the Closing Date;
(II) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(III) the Company shall have procured all of the third party
consents with respect to the contracts listed on Schedule 4(l) of the Disclosure
Schedule which are designated as requiring consent as a condition to closing ;
(IV) the Company shall have reasonably cooperated with the Buyer
in procuring the title insurance commitments, surveys, and Phase I environmental
site assessments described in Section 5(p) (q) and (r), respectively, above, and
such commitments, surveys and environmental site assessments shall not have
disclosed any matter not contained in the Disclosure Schedule which might
reasonably be expected to have a Material Adverse Effect (provided that this
condition shall be deemed waived by the Buyer with respect to any matter as to
which the Buyer has not notified the Sellers within sixty (60) days following
execution of this Agreement, regardless of whether such commitments, surveys or
site assessments were completed as of such time);
(V) no action, suit, or proceeding (other than any initiated by
Buyer or any Affiliate of Buyer) shall be pending before any court or
quasijudicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, or (C) have a material
adverse effect on the right of the Buyer to own, operate, or control the Company
Shares, the Company or the Stations (and no such judgment, order, decree,
stipulation, injunction, or charge shall be in effect), and no Civil
Investigative Demand from the U.S. Department of Justice with respect to the
transactions contemplated herein shall be pending;
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(VI) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above in Section
6(a)(i)-(iv) is satisfied;
(VII) the Transfer Applications shall have been
approved by a Final Order of the FCC; the applicable waiting period, including
any extensions thereof, under the HSR Act shall have expired or been terminated;
and the Buyer shall have received all governmental approvals required to
transfer all other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(VIII) the Buyer shall have received from counsel to
the Sellers an opinion with respect to the matters set forth in Exhibit D
attached hereto, addressed to the Buyer and dated as of the Closing Date;
(IX) the officers and directors of the Company shall
have tendered written confirmation of their resignation of service by and for
the Company and repaid or satisfied all Liabilities which they have to the
Company;
(X) the Sellers and the Company shall have made
arrangements to pay simultaneously with the Closing of all Liabilities of the
Company to FINOVA and the Subsidiaries and any other indebtedness of the Company
outstanding on the Closing Date other than accounts payable and intercompany
indebtedness of Calendar or any of its Subsidiaries to any other of such parties
existing at the Closing Date;
(XI) Giordano and John J. Murphy, Jr. shall have
executed the Noncompetition Agreement; and
(XII) all actions in consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer (including such
instruments as may be necessary to transfer the Company's real estate at Wolf
Ridge Road in Mobile, Alabama at or prior to Closing, without any adverse tax
consequences to the Company other than those which would be reflected in Net
Working Capital).
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing. The Buyer specifically
acknowledges that the Buyer's financing of the transaction shall not be a
condition to the Buyer's obligation to close.
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of
the Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
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(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Buyer shall have performed and complied with
all of their covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding (other than any
initiated by any Seller or any Affiliate of a Seller) shall be pending before
any court or quasijudicial or administrative agency of any federal, state,
local, or foreign jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such judgment, order, decree, stipulation, injunction, or charge shall be in
effect), and no Civil Investigative Demand from the U.S. Department of Justice
with respect to the transactions contemplated herein shall be pending;
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above in Section
5(b)(i)-(iii) is satisfied;
(v) each of the Transfer Applications shall have been
approved by a Final Order of the FCC; the applicable waiting period, including
any extensions thereof, under the HSR Act shall have expired or been terminated;
and the Buyer shall have received all governmental approvals required to
transfer all other authorizations, consents, and approvals of governments and
governmental agencies set forth in the Disclosure Schedule;
(vi) the Sellers shall have received from counsel to
the Buyer an opinion with respect to the matters set forth in Exhibit E
attached hereto, addressed to the Sellers and dated as of the Closing Date; and
(vii) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Sellers.
The Sellers may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing:
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(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below). At Sellers' request, Buyer shall provide Sellers with
reasonable access to such books and records of the Company as Sellers may
reasonably require to comply with their tax reporting and filing obligations or
for any other reasonable purpose.
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with the contesting or defending Party and its counsel in the contest
or defense, make available his or its personnel, and provide such testimony and
access to its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).
(c) TRANSITION. None of the Sellers will take any action that
primarily is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of any of the Stations
or the Company from maintaining the same business relationships with the
Stations or the Company after the Closing as it maintained with the Stations or
the Company prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the business of any of the Stations to the Buyer from and
after the Closing. Neither M&F nor Giordano nor any of their Affiliates will
employ or offer to employ any employee of the Company in the McAllen-
Brownsville, Texas or Mobile, Alabama metropolitan areas for a period of three
(3) years after the Closing Date, unless such employee has been terminated by
Buyer.
(d) CONFIDENTIALITY. Each of the Sellers will treat and hold
as confidential the Confidential Information and refrain from using any of the
Confidential Information except in connection with this Agreement or in
connection with any tax or other reasonably necessary purpose. In the event that
any of the Sellers is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, such Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or
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waive compliance with the provisions of this Section 6(d). If, in the absence
of a protective order or the receipt of a waiver hereunder, any of the Sellers
is, on the advice of counsel, compelled to disclose any Confidential Information
to any tribunal or else stand liable for contempt, that Company may disclose the
Confidential Information to the tribunal; provided, however, that the disclosing
Seller shall use his or its reasonable efforts to obtain, at the request of the
Buyer, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as the
Buyer shall designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
(e) RETAINAGE ADJUSTMENT. In the event and to the extent that
the Buyer or the Company may become obligated to pay after the Closing any
Liability of the Company that accrued prior to the Closing and was not reflected
in the Net Working Capital as of Closing, such amount shall be deducted from the
Retainage Deposit pursuant to the terms of the Retainage Agreement.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL. All of the representations and warranties of the
Sellers contained in Section 4 of this Agreement (other than the representations
and warranties of the Sellers contained in Sections 4(a), 4(b), 4(c), and 4(g)
hereof) shall survive the Closing (even if the Buyer knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of two (2) years following
Closing. The representations and warranties of the Sellers contained in Section
2 and Sections 4(a), 4(b), 4(c) and 4(g) and the representations and warranties
of the Buyer contained in Section 3 shall survive the Closing (even if the
damaged Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect for a
period equal to the applicable statute of limitations.
(b) INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYER.
Each of the Sellers, severally, agrees to indemnify the Buyer from and against
any Adverse Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any breach of any of the Seller's
representations, warranties, and covenants contained in this Agreement (so long
as the particular representation, warranty, or covenant survives the Closing and
the Buyer makes a written claim for indemnification within the applicable
survival period). Notwithstanding anything in this Agreement to the contrary,
the obligation of the Sellers to indemnify the Buyer shall be subject to the
following:
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(i) The Buyer shall not be entitled to recover for
any Adverse Consequences until the aggregate of all such Adverse Consequences
suffered by the Buyer exceeds $250,000 (the "Minimum Loss"). After the Minimum
Loss is exceeded, the Buyer may recover the entire amount of the Adverse
Consequences of Buyer, subject to Subsections (ii) and (iii) below.
(ii) The Buyer shall not be entitled to recover from
any Seller an amount for any Adverse Consequences relating to breaches of
representations and warranties contained in Section 4 in excess of such Seller's
Pro Rata Share of such Adverse Consequence. Each Seller's "Pro Rata Share" shall
be equal to the percentage of the aggregate Consideration which is represented
by the Consideration received by such Seller. In addition, the Buyer shall not
be entitled to recover from any Seller an amount for Adverse Consequences in
excess of the portion of the Consideration received by him or it.
(iii) The Adverse Consequences suffered by Buyer
shall be determined net of any insurance proceeds or tax benefits actually
received by Buyer in connection with the condition or event giving rise to the
Adverse Consequences. In the event the Buyer recovers for its Adverse
Consequences from the Sellers, or the Retainage Deposit, prior to actual receipt
of any insurance proceeds, the Buyer shall refund to Sellers, as applicable, the
amount of the Adverse Consequences at such time and to the extent insurance
proceeds are actually received.
(iv) The Buyer shall recover amounts for Adverse
Consequences from the Retainage Deposit prior to recovering any amounts directly
from the Sellers.
(c) INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLERS.
The Buyer agrees to indemnify the Sellers from and against any Adverse
Consequences the Sellers may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the breach of any of the Buyer's representations,
warranties, and covenants contained in this Agreement (so long as the particular
representation, warranty, or covenant survives the Closing and the Sellers make
a written claim for indemnification within the applicable survival period).
Notwithstanding anything in this Agreement to the contrary, the Sellers shall
not be entitled to recover from the Buyer an amount for Adverse Consequences in
excess of the Consideration.
(d) MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party shall
notify the Indemnifying Party thereof promptly; provided, however, that no delay
on the part of the Indemnified Party in notifying the Indemnifying
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Party shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is prejudiced. In the event any Indemnifying Party notifies the Indemnified
Party within fifteen (15) days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
concludes reasonably that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified Party within 15 days
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, however, the Indemnified Party may defend
against, or enter into any settlement with respect to, the matter in any manner
it reasonably may deem appropriate.
(e) SPECIFIC PERFORMANCE FOR BUYER. Each of the Parties
acknowledges and agrees that the Buyer would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the Buyer shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 11(p)
below), in addition to any other remedy to which it may be entitled, at law or
in equity.
(f) LIQUIDATED DAMAGES FOR SELLERS. The Buyer and the Sellers
acknowledge that in the event that the transactions contemplated by this
Agreement are not closed because of a default by the Buyer, the Adverse
Consequences as a result of such default may be difficult, if not impossible, to
ascertain. Accordingly, in the event that the transactions contemplated by this
Agreement are not consummated due to a default of this Agreement by the Buyer,
then the Sellers shall be entitled to recover from the Buyer for such default,
One Million Eight Hundred Thousand and no/100 Dollars ($1,800,000.00). The
Parties agree that such amount represents the Parties' reasonable
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estimate of actual damages, and does not constitute a penalty. The Buyer agrees
to pay said liquidated damages within ten (10) days of the date that this
Agreement is terminated due to a default by the Buyer, or, in the event of a
dispute, within ten (10) following an award in binding arbitration, pursuant to
the arbitration provisions set forth in the Earnest Money Escrow Agreement and
this Agreement. Sellers shall recover such amounts by instructing the Escrow
Agent to draw upon the letter of credit deposited with the Earnest Money Escrow
Agent (which instructions shall include a copy of the arbitration award in the
event of a dispute); provided that, if the Sellers are unable to recover such
amounts from the Earnest Money Deposit, for any reason, Sellers may recover such
amounts from the Buyer.
(g) OTHER PROVISIONS. The remedies provided in Sections 8(e)
and 8(f) shall be exclusive remedies of the Parties prior to the Closing for any
breach of representation, warranty or covenant.
(h) ARBITRATION. All disputes with regard to the parties'
respective entitlement to the Earnest Money Deposit or Retainage Deposit or
generally with regard to any claim for indemnification shall be settled by
arbitration in New York, New York, before a single arbitrator pursuant to the
rules of the American Arbitration Association, and judgment upon the award of
the arbitrator may be entered in any court having jurisdiction thereof.
Arbitration may be initiated by either party hereto, and in the case of any
claim to the Earnest Money Deposit or Retainage Deposit, using the procedures
set forth in the Escrow Agreement or Retainage Agreement, respectively. Any
award rendered by arbitrator shall be conclusive and binding upon the parties;
provided, however, that any such award shall be accompanied by a written opinion
of the arbitrator giving the reasons for the award. This provision for
arbitration shall be specifically enforceable by the parties and the decision of
the arbitrator in accordance herewith shall be final and binding and there shall
be no right of appeal therefrom.
The right of the Buyer to bring suit to specifically enforce this
Agreement as set forth in subsection 8(e) hereof shall not be affected by this
subsection.
9. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all reasonable attorneys' fees and court costs.
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"ADVERTISING CONTRACT" means any arrangement with any third party under
which the Seller has created, incurred, assumed or guaranteed an obligation to
provide advertising or air time on the Station.
"AFFILIATE" means with reference to any person or entity, another person or
entity controlled by, under the control of or under common control with that
person or entity.
"APRIL BROADCASTING" means April Broadcasting, Inc., a Delaware corporation
and wholly owned subsidiary of April Holding.
"APRIL HOLDING" means April Holding Corporation, a Delaware corporation.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"BUYER" has the meaning set forth in the preface above.
"CALENDAR COMMON STOCK" means the common stock, par value $.01 per share,
of the Company.
"CALENDAR PREFERRED STOCK" means the Series A Preferred Stock, par value
$.01 per share, of the Company.
"CASH" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"CLOSING" has the meaning set forth in Section 1(c) above.
"CLOSING DATE" has the meaning set forth in Section 1(c) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the Preface above.
"COMPANY SHARE" means any share of the common stock or preferred stock of
the Company.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of the Company.
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"CONSIDERATION" means the Purchase Price less the costs associated with the
sale of the Company (including, without limitation, broker fees and legal
expenses) and less the repayment of amounts due to FINOVA.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 2 above. Nothing
in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other items itself). The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement.
"EARNEST MONEY DEPOSIT" has the meaning set forth in Section 1(b) above.
"EARNEST MONEY ESCROW AGENT" means Chase Manhattan Bank.
"EARNEST MONEY ESCROW AGREEMENT" has the meaning set forth in Section 1(b)
above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENTITY" means a corporation, limited liability company, partnership,
limited partnership, limited liability partnership or other entity recognized by
any jurisdiction within the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
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"FCC" means the Federal Communications Commission of the United States.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3(21).
"FINAL ORDER" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4(d) above.
"FINOVA" means FINOVA Capital Corporation.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"HOLDING COMPANIES" means April Holding, May Holding, and July Holding.
"HOLDING COMPANIES SHARES" means any share of the common stock of any of
the Holding Companies.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(d) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(d) above.
"INTELLECTUAL PROPERTY" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, domain names, logos, trade names, and corporate names and
registrations and applications for registration thereof, (c) all programs,
programming materials, copyrights and registrations and applications for
registration thereof, (d) mask works and registrations and applications for
registration thereof, (e) computer software, data, and documentation, (f) trade
secrets and confidential business information (including formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), market and other research information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing, and business data, pricing and cost information, business and
marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
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"JOINT AND SEVERAL" has the meaning set forth in Section 10(o) below.
"JULY BROADCASTING" means July Broadcasting, Inc., a Delaware corporation
and wholly owned subsidiary of July Holding.
"JULY HOLDING" means July Holding Corporation, a Delaware corporation.
"KNOWLEDGE" in the case of the Company, means actual knowledge of Giordano
and John J. Murphy, Jr., after reasonable inquiry of station managers and other
employees of the Company or its Subsidiaries having responsibility for the
matter at issue; in the case of an individual, means the actual knowledge of
such individual; in the case of a partnership, means the actual knowledge of the
managing general partner of such partnership; and in the case of a limited
liability company, means the actual knowledge of the manager.
"LIABILITY" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Sellers and the
Company with respect to the operations of the Stations and all applications
therefor, together with any renewals, extension or modifications thereof and
additions thereto.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, assets or operations of the Company and its Subsidiaries, taken as a
whole.
"MAY COMMUNICATIONS" means May Communications, Inc., a Delaware corporation
and wholly owned subsidiary of May Holding.
"MAY HOLDING CORPORATION" means May Holding Corporation, a Delaware
corporation.
"MOST RECENT BALANCE SHEET" means the balance sheet of the Company as of
the Most Recent Fiscal Year End.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 4(d)
above.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"NET WORKING CAPITAL" means the current assets of the Company and its
Subsidiaries, on a consolidated basis (including without limitation cash and
accounts receivable), as of the Closing Date minus the liabilities for accounts
payable of the
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Company and its Subsidiaries, on a consolidated basis, as of the Closing Date
(excluding any amounts owed to FINOVA or other indebtedness paid by Buyer at
Closing as part of the Purchase Price as provided in Schedule A to this
Agreement), in each case, as determined in accordance with GAAP.
"NONCOMPETITION AGREEMENT" has the meaning set forth in Section 1(f) above.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PROCESS AGENT" has the meaning set forth in Section 11(p) below.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"PURCHASE PRICE" has the meaning set forth in Section 1(b) above.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043.
"RETAINAGE DEPOSIT" has the meaning set forth in Section 1(b) above.
"RETAINAGE AGENT" means Chase Manhattan Bank.
"RETAINAGE AGREEMENT" has the meaning set forth in Section 1 above.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation; and (c) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"SELLERS" has the meaning set forth in the preface above.
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"STATIONS" means the radio broadcast stations having the call letters
KBFM-FM (licensed to Edinburg, TX); KTEX-FM (licensed to Brownsville, TX);
WBLX-FM (licensed to Mobile, AL); WDLT-FM (licensed to Chicksaw, AL); and
WDLT-AM (licensed to Fairhope, AL).
"SUBSIDIARY" means any corporation with respect to which the Company has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors, and any Subsidiaries of a Subsidiary.
"SURVEY" has the meaning set forth in Section 5(j) above.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TRANSFER APPLICATION" has the meaning set forth in Section 5(b) above.
10. TERMINATION.
(A) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(I) the Buyer and the Stockholder Representative, as agent for
the Sellers, may terminate this Agreement by mutual written consent at any time
prior to the Closing;
(II) the Buyer may terminate this Agreement by giving written
notice to the Stockholder Representative, as agent for the Sellers, at any time
prior to the Closing in the event the Sellers are in breach, and the Stockholder
Representative, as agent for the Sellers, may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing in the event the
Buyer is in breach, of any material representation, warranty, or covenant
contained in this Agreement in any material respect in each case if such breach
remains uncured for twenty (20) days after notice of breach is received from the
other party;
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<PAGE> 48
(III) the Buyer may terminate this Agreement by giving written
notice to the Stockholder Representative, as agent for the Sellers, at any time
prior to the Closing if the Closing shall not have occurred on or before
February 29, 2000;
(IV) the Stockholder Representative, as agent for the Sellers,
may terminate this Agreement by giving written notice to the Buyer at any time
prior to the Closing if the Closing shall not have occurred on or before
February 29, 2000; or
(V) the Buyer or the Stockholder Representative, as agent for
the Sellers, may terminate this Agreement if any Transfer Application is denied
by Final Order.
(VI) the Buyer may terminate this Agreement if and as provided
in Section 5(r) or Section 5(u).
(B) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 10(a) above, all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
11. STOCKHOLDER REPRESENTATIVE.
(A) APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. The Sellers hereby
irrevocably make, constitute and appoint M&F as their agent and attorney-in-fact
(the "Stockholder Representative"), with full power and authority to fulfill the
role of Stockholder Representative hereunder.
(B) POWERS INCLUDED. Each Seller hereby makes, constitutes and
appoints the Stockholder Representative such Seller's true and lawful attorney
in fact and agent, for such Seller and in such Seller's name, as effectively as
such Seller could act for himself or itself, with full power of substitution in
the premises, to take all actions which under this Agreement are to be taken by
the Sellers, including without limitation, (a) to take all action necessary or
desirable in connection with the waiver of any condition to the obligations of
the Sellers to consummate the transactions contemplated by this Agreement, (b)
to enter into the Earnest Money Escrow Agreement and the Retainage Agreement on
behalf of each Seller and take any and all actions which may be taken
thereunder, (c) to give and receive all notices and communications to be given
or received under this Agreement, and (d) to direct the payment from the
Retainage Deposit, defend, settle or compromise, and make all other decisions
relating to, any claim made by the Buyer pursuant to Section 8. The death or
incapacity of any Seller shall not terminate the agency and power of attorney
granted hereby to the Stockholder Representative. Such agency and power of
attorney is irrevocable and coupled with an interest, and the
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provisions of this Section 11 are independent and severable and shall be
enforceable notwithstanding any rights or remedies that any Seller may have in
connection with, or in any way arising out of, the transactions contemplated by
this Agreement.
(C) DECISIONS CONCLUSIVE. All actions, decisions and instruction of
the Stockholder Representative shall be conclusive and binding upon all of the
Sellers and no Seller shall have any cause of action against the Stockholder
Representative for any action taken or not taken by the Stockholder
Representative in its role as such, except for any action or omission taken or
made fraudulently or in bad faith with respect to such Seller.
(D) FEES AND EXPENSES. All reasonable out-of-pocket fees and expenses
incurred by the Stockholder Representative in connection with its performing
such function shall be paid by the Sellers in proportion to such Seller's share
of the Consideration, and may be deducted by the Stockholder Representative from
any amounts otherwise payable to any Seller hereunder.
12. MISCELLANEOUS.
(A) SURVIVAL. All of the representations, warranties, and covenants of
the Parties contained in this Agreement shall survive the Closing hereunder as
and to the extent provided in Section 8(a).
(B) PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case, except as to public notices
required by FCC rules, the disclosing Party will advise the other Party prior to
making the disclosure).
(C) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
(D) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, that may have related in any way to the subject matter hereof,
except that the Confidentiality Agreement dated May 6, 1999, by and between the
Company and the Buyer shall remain in full force and effect.
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<PAGE> 50
(E) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party, provided that the Buyer may assign all right, title
and interest in, to and under this Agreement to one or more Affiliates of Buyer.
(F) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(G) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(H) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Sellers: Philip J. Giordano
Calendar Broadcasting, Inc.
One Independence Plaza
280 Highway 35
Middletown, New Jersey 07701
P: (732) 758-8900
F: (732) 758-9882
Copy to: Murphy & Partners
45 Rockefeller Plaza
Suite 601
New York, NY 10111
Attn: John J. Murphy, Jr.
P: (212) 332-2929
F: (212) 332-2920
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<PAGE> 51
Reed Smith Shaw & McClay
1301 K Street, N.W.
Suite 110-East Tower
Washington, D.C. 20005
Attn: Robert Hill, Esq.
P: (202) 414-9402
F: (202) 414-9299
Nassau Capital Partners L.P.
NAS Partners I L.L.C.
c/o Nassau Capital, L.L.C.
22 Chambers Street
Princeton, NJ 08542
Attn: Mr. William Stewart
Kevin C. Whitman
Whitman Development Corporation
One Sansome Street, Suite 2100
San Francisco, CA 944104
If to the Buyer: Cumulus Media Inc.
111 E. Kilbourn Ave., Suite. 2700
Milwaukee, WI 53202
Attn: Terrence J. Leahy
P: (414) 615-2800
F: (414) 615-2880
Copy to: Cumulus Broadcasting, Inc.
875 N. Michigan Avenue
Chicago, IL 60611
Attn: Richard J. Bonick
P: (312) 867-0091
F: (312) 867-0098
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the
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manner herein set forth. The Stockholder's Representative may give any notice,
request, demand, claim or other communication hereunder on behalf of the
Sellers.
(I) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Delaware.
(J) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Sellers. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(K) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(L) EXPENSES. The Buyer and the Sellers, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 5(b) with regard to the Transfer Application or as otherwise
expressly provided herein. The Sellers will pay all transfer taxes and other
recording or similar fees necessary to vest title to the Company Shares in the
Buyer. Any fees or expenses payable by the Sellers may be paid by the Company so
long as such payment is reflected in the Net Working Capital as of Closing.
(M) CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations
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promulgated thereunder, unless the context requires otherwise. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
(N) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(O) TIME IS OF THE ESSENCE. The Buyer and Sellers agree that time is
of the essence in the performance of each and every obligation of the Parties
under this Agreement.
SIGNATURES TO FOLLOW
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<PAGE> 54
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS MEDIA INC.
By: /s/ Richard W. Weening
------------------------------------------------
Title: Executive Chairman
---------------------------------------------
"Buyer"
M&F CALENDAR HOLDINGS, L.P.
By: /s/ John Murphy
---------------------------------------------------
Title:
/s/ Kevin C. Whitman
---------------------------------------------------
Kevin C. Whitman
NASSAU CAPITAL PARTNERS L.P.
By: /s/ Randall Hack
---------------------------------------------------
Title:
NAS PARTNERS I L.L.C.
By: /s/ Randall Hack
---------------------------------------------------
Title:
/s/ Phillip J. Giordano
---------------------------------------------------
Phillip J. Giordano
"Sellers"
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<PAGE> 55
SCHEDULE A
PURCHASE PRICE. The Buyer agrees to pay to the Sellers, as the purchase
price for the Company Shares and the Holding Companies Shares, the amount of
Thirty Six Million and 00/100 Dollars ($36,000,000), subject to the adjustments
set forth below (the "Purchase Price"), payable as follows:
(i) on the Closing Date, the Buyer shall deposit with the Retainage
Agent the amount of One Million Eight Hundred Thousand and no/100 Dollars
($1,800,000.00) (the "Retainage Deposit") in cash by wire transfer of
immediately available funds, which shall be placed in an interest-bearing
account and (x) one-half of which shall be released to Sellers on the first
anniversary of the Closing Date, except to the extent that, as of such date,
Buyer has submitted notices of claims for indemnification under Section 8 of
this Agreement which aggregate more than Nine Hundred Thousand and 00/100
Dollars ($900,000) above the threshold for indemnification and which then remain
unresolved, and (y) the remainder of which shall be released to Sellers on the
second anniversary of the Closing Date, except to the extent that, as of such
date, Buyer has submitted notices of claims for indemnification under Section 8
of this Agreement above the threshold for indemnification, which then remain
unresolved, all as set forth in greater detail in the Retainage Agreement; and
(ii) on the Closing Date, the Buyer shall pay to the Sellers in cash
by wire transfer of immediately available funds to such accounts as may be
designated by Sellers the amount of Thirty Four Million Two Hundred Thousand and
no/100 Dollars ($34,200,000.00), less the amount by which One Million Five
Hundred Thousand and 00/100 Dollars ($1,500,000) exceeds the Net Working Capital
or plus the amount by which the Net Working Capital exceeds One Million Five
Hundred Thousand and 00/100 Dollars ($1,500,000), as applicable, and less all
amounts owed by the Company and its Subsidiaries to FINOVA or other lenders as
of the Closing Date (excluding inter-company indebtedness), which Buyer shall
pay to FINOVA or other lenders, as appropriate, in full simultaneously with the
Closing.
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EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of June 29, 1999, by
and among Cumulus Broadcasting, Inc., a Nevada corporation ("Broadcasting"),
Cumulus Licensing Corporation, a Nevada corporation ("Licensing), and Coast
Radio, L.C., a Florida limited liability company (the "Seller"). Broadcasting
and Licensing are referred to collectively herein as the "Buyers." The Buyers
and the Seller are referred to individually as the "Party" or collectively as
the "Parties." Capitalized terms used in this Agreement are defined in Section 8
hereof.
Subject to the terms and conditions of this Agreement, the Buyers
hereby agree to purchase substantially all of the assets (and assume certain of
the liabilities) of the Seller that are used or useful in the operation of radio
stations WWRO-FM and WCOA-AM (the "Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. BASIC TRANSACTION.
A. PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, the Seller agrees to sell, transfer, convey and
deliver to (i) Licensing, and Licensing agrees to purchase from the Seller, all
of the FCC Licenses listed in Section 2(k) of the disclosure schedule
("Disclosure Schedule"); and (ii) Seller agrees to sell, transfer convey and
deliver to Broadcasting, and Broadcasting agrees to purchase from the Seller,
all of the Acquired Assets other than the FCC Licenses. Both such sales shall
take place at the Closing for the consideration specified below in this Section
1.
B. ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, Broadcasting agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing. The Buyers will
not assume or have any responsibility, however, with respect to any other
obligation or Liability of the Seller not included within the definition of
Assumed Liabilities and assumed by Broadcasting, and the Seller agrees to pay
and discharge all Liabilities and obligations of the Seller other than the
Assumed Liabilities.
C. PURCHASE PRICE. The Buyers agree to pay to the Seller, as
consideration for the Acquired Assets, the purchase price (the "Purchase Price")
described in Schedule A to this Agreement, and agree to make the escrow deposit
(the "Escrow Deposit") in the form and manner described in Schedule A and more
particularly in the earnest money escrow agreement ("Earnest Money Escrow
Agreement") attached hereto as Exhibit A.
D. CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a mutually agreed location, after
the FCC approval of the
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<PAGE> 2
Assignment Application becomes a Final Order, by which date all other conditions
to the obligations of the Parties to consummate the transactions contemplated
hereby will have been satisfied, or such other date as the Parties may mutually
determine (the "Closing Date").
E. DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyers the various certificates, instruments, and documents
referred to in Section 5(a) below; (ii) the Buyers will deliver to the Seller
the various certificates, instruments, and documents referred to in Section 5(b)
below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver
to the Buyers (A) assignments (including Lease and other Assumed Contract
assignments and Intellectual Property transfer documents), bills of sale and
warranty deeds in form acceptable to the Buyers, (B) such affidavits, transfer
tax returns, memorandums of lease, and other additional documents as may be
required by the terms of the title insurance commitments described in Section
4(o) hereof, as necessary to furnish title insurance as required by such section
or as may be necessary to convey title to the Real Estate to the Buyers in the
condition required herein or provide public notice of existence of the Leases,
and (C) such other instruments of sale, transfer, conveyance, and assignment as
the Buyers and their counsel reasonably may request; (iv) the Buyers will
execute, acknowledge (if appropriate), and deliver to the Seller (A) an
assumption in the form attached hereto as Exhibit C and (B) such other
instruments of assumption as the Seller and its counsel reasonably may request;
and (v) the Buyers will deliver to the Seller the consideration specified in
Schedule 1(c) above.
F. POSTCLOSING AGREEMENT. On the Closing Date, the Seller shall
execute, and shall cause Gregory W. Gordon and Thomas W. Diamond to execute, a
Postclosing Agreement with the Buyers including covenants not to compete with
the Buyers in the markets served by the Stations and agreements to indemnify the
Buyers in the form of Exhibit D attached hereto. A portion of the Purchase Price
equal to Fifty Thousand Dollars ($50,000) shall be paid to the Seller by the
Buyers on the Closing Date as consideration for the agreements set forth in the
Postclosing Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyers that the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date, except as set
forth in the Disclosure Schedule.
A. ORGANIZATION OF THE SELLER. The Seller is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization. The Seller does not have any Subsidiaries.
The Seller has the power and authority to own or lease its properties and to
carry on all business activities now conducted by it. The shareholders of the
Seller are Thomas W. Diamond, Gregory W. Gordon, Eddie Gordon and David Pavlock.
B. AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority to execute and deliver this Agreement and all agreements and
instruments to be executed and delivered by Seller pursuant to this Agreement
(collectively, the "Ancillary Agreements") and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
requisite number of members of the Seller has duly authorized the execution,
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delivery, and performance of this Agreement and the Ancillary Agreements by the
Seller. This Agreement and the Ancillary Agreements constitute the valid and
legally binding obligation of the Seller, enforceable in accordance with their
respective terms and conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Seller is subject or any provision of the articles of organization or operating
agreement of the Seller; or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or (other than as
described in Section 2(c) of the Disclosure Schedule) require any notice or
third party consent under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest, or other agreement, arrangement
to which the Seller is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). Other than with respect to the Assignment Application described
in Section 4(b) the Seller does not need to give any notice to, make any filing
with, or obtain any Licenses, consent, or approval of any court or government or
governmental agency in order for the Parties to enter into this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements (including the assignments and assumptions
referred to in Section 1(e) above).
D. TITLE TO ACQUIRED ASSETS. Other than the Security Interests set
forth on Section 2(d) of the Disclosure Schedule (which shall be released at or
before the Closing) the Seller has good and marketable title to all of the
Acquired Assets, free and clear of any Security Interest or restriction on
transfer.
E. FINANCIAL STATEMENTS. Included in Section 2(e) of the
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements"): (i) unaudited balance sheets and statements of income,
and cash flow as of and for the fiscal years ended December 31, 1995, December
31, 1996, December 31, 1997, and December 31, 1998 for the Seller; and (ii)
unaudited balance sheets and statements of income, as of and for each month
during 1998 and each month to date in 1999 for the Seller. The Financial
Statements have been prepared in conformity with the Seller's normal accounting
policies, practices and procedures applied on a consistent basis, throughout the
periods covered thereby, are correct and complete, fairly present the financial
condition of the Seller and the results of operation of Seller at the dates and
for the periods indicated, and are consistent with the books and records of the
Seller (which books and records are correct and complete). The Financial
Statements accurately state the revenues of the Stations for the period
indicated therein and include an accurate breakout of cash and trade revenues.
F. EVENTS SUBSEQUENT TO JUNE 30, 1998. Since June 30, 1998, except
as set forth in Section 2(f) of the Disclosure Schedule, there has not been any
material adverse change in the assets, Liabilities, business, financial
condition, operations, results of operations, or future prospects of the Seller
with respect to the operation of the Stations. Without limiting the
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generality of the foregoing and with respect to the operation of the Stations
since January 1, 1998:
(i) other than this Agreement, the Seller has not entered
into any agreement, contract, lease, sublease, license, or sublicense
(or series of related agreements, contracts, leases, subleases,
licenses, and sublicenses) outside the Ordinary Course of Business;
(ii) the Seller has not delayed or postponed (beyond its
normal practice in the Ordinary Course of Business) the payment of
accounts payable and other Liabilities;
(iii) the Seller has not altered its credit and collection
policies or its accounting policies;
(iv) the Seller has not entered into or terminated any
employment arrangement, employment contract, consulting contract or
severance agreement or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement;
(v) there have been no changes and, to Seller's Knowledge,
any threatened changes in employment terms for any of its managers,
officers, and employees;
(vi) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Seller;
(vii) the Seller has not materially altered the programming,
format or call letters of the Stations, or its promotional and
marketing activities;
(viii) the Seller has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action necessary
to preserve the FCC Licenses and has operated the Stations in
compliance therewith and with all FCC rules and regulations;
(ix) the Seller has not terminated or received notice of
termination for any syndicated programming; and
(x) the Seller has not committed to any of the foregoing.
G. TAX MATTERS. The Seller has timely and properly filed all Tax
Returns that it was required to file with respect to the Seller's operations.
All such Tax Returns were correct and complete and properly reflect the tax
liability of the Seller. No Tax deficiencies have been proposed or assessed
against the Seller. All Taxes owed by the Seller with respect to its operations
(whether or not shown on any Tax Return) have been paid. The Seller has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor, or
other third party. No claim has ever
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been made by any authority in any jurisdiction where the Seller does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
H. TANGIBLE ASSETS. Section 2(h) of the Disclosure Schedule sets
forth a listing of all transmitter and Stations equipment, vehicles and other
tangible personal property used in conducting the operation and business of the
Stations. The Seller owns or leases all tangible assets necessary for the
conduct of the operation and business of the Stations as presently conducted and
as presently proposed to be conducted and all leased assets are specifically
identified as such in Section 2(h) of the Disclosure Schedule.
I. REAL PROPERTY. Section 2(i) of the Disclosure Schedule lists
and describes briefly all Owned Real Estate and real property leased to the
Seller (including, without limitation, complete legal descriptions for all of
the Real Estate). The Seller has delivered to the Buyers correct and complete
copies of the Leases. With respect to the Real Estate:
(i) the Seller has good and marketable title to all of the
Owned Real Estate free and clear of all liens, charges, mortgages,
security interests, easements, restrictions or other encumbrances of
any nature whatsoever except real estate taxes for the year of Closing
and municipal and zoning ordinances, recorded utility easements, and
other restrictions and encumbrances which do not impair the current
use, occupancy or value or the marketability of title of the property
and which are disclosed in Section 2(i) of the Disclosure Schedule
(collectively, the "Permitted Real Estate Encumbrances");
(ii) the Leases are and, following the Closing will
continue to be, legal, valid, binding, enforceable, and in full force
and effect;
(iii) no party to any Lease is in breach or default (or has
repudiated any provision thereof), and no event has occurred which,
with notice or lapse of time, would constitute a breach or default
thereunder or permit termination, modification, or acceleration
thereunder;
(iv) there are no disputes, oral agreements, or forbearance
programs in effect as to any Lease;
(v) none of the Owned Real Estate and to the Seller's
Knowledge, none of the properties subject to the Leases is subject to
any lease (other than Leases), option to purchase or rights of first
refusal;
(vi) except for Permitted Real Estate Encumbrances, there
are no (i) actual or, to the Seller's Knowledge, proposed special
assessments with respect to any of the Real Estate; (ii) pending or, to
the Seller's Knowledge, threatened condemnation proceedings with
respect to any of the Real Estate; (iii) structural or mechanical
defects in any of the buildings or improvements located on the Real
Estate; (iv) any pending or, to the Seller's Knowledge, threatened
changed in any zoning laws or ordinances which may materially adversely
affect any of the Real Estate or Seller's use thereof;
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(vii) the Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the Leases or
its rights thereunder;
(viii) to the Seller's Knowledge, all facilities on the Real
Estate have received all approvals of governmental authorities
(including licenses, permits and zoning approvals) required in
connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations;
and
J. CONTRACTS. Section 2(j) of the Disclosure Schedule lists any
written arrangement (or group of related written arrangements) either involving
more than $5,000 or not entered into in the Ordinary Course of Business. The
Seller has delivered to the Buyers a correct and complete copy of each written
arrangement listed in Section 2(j) of the Disclosure Schedule (as amended to
date). With respect to each written arrangement so listed which constitutes an
Assumed Contract: (A) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect; (B) the written arrangement will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing (if the arrangement has not
expired according to its terms); (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration, under the
written arrangement; and (D) no party has repudiated any provision of the
written arrangement. The Seller is not a party to any verbal contract,
agreement, or other arrangement which, if reduced to written form, would be
required to be listed in Section 2(j) of the Disclosure Schedule under the terms
of this Section 2(j). Except for the Assumed Contracts, the Buyers shall not
have any Liability or obligations for or in respect of any of the contracts set
forth in Section 2(j) of the Disclosure Schedule or any other contracts or
agreements of the Seller.
K. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION
REQUIREMENTS.
(i) All licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies,
including, without limitation, the FCC Licenses, used or useful in the
operation of the Stations as they are now being operated are (A) in
full force and effect, (B) unimpaired by any acts or omissions of the
Seller or the Seller's employees or agents, (C) free and clear of any
restrictions which might limit the full operation of the Stations, and
(D) detailed in Section 2(k) of the Disclosure Schedule. With respect
to the licenses, permits, authorizations, franchises, certificates of
compliance and consents referenced in the preceding sentence, Section
2(k) of the Disclosure Schedule also sets forth, without limitation,
the date of the last renewal, the expiration date thereof, and any
conditions or contingencies related thereto. Except as set forth in
Section 2(k) of the Disclosure Schedule, no condition exists or event
has occurred that permits, or after notice or lapse of time, or both,
would permit, the revocation or termination of any such license,
permit, consent, franchise, or authorization (other than pursuant to
their express expiration date) or the imposition of any material
restriction or limitation upon the operation of the Stations as now
conducted. Except as set forth in Section 2(k) of the Disclosure
Schedule, the Seller is not aware of any reason why the FCC licenses
might not be renewed in the ordinary course or revoked.
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(ii) The Stations are in compliance with the FCC's policy
on exposure to radio frequency radiation. No renewal of any FCC License
would constitute a major environmental action under the FCC's rules or
policies. Access to the Stations' transmission facilities is restricted
in accordance with the policies of the FCC.
(iii) Except as set forth in Section 2(k) of the Disclosure
Schedule, to the Seller's Knowledge, the Seller is not the subject of
any FCC or other governmental investigation or any notice of violation
or order, or any material complaint, objection, petition to deny, or
opposition issued by or filed with the FCC or any other governmental
authority in connection with the operation of or authorization for the
Stations, and there are no proceedings (other than rule making
proceedings of general applicability) before the FCC or any other
governmental authority that could adversely affect any of the FCC
Licenses or the authorizations listed in Section 2(k) of the Disclosure
Schedule.
(iv) The Seller has filed with the FCC and all other
governmental authorities having jurisdiction over the Stations all
material reports, applications, documents, instruments, and other
information required to be filed, and will continue to make such
filings through the Closing Date.
(v) The Seller is not aware of any information concerning
the Stations that could cause the FCC or any other regulatory authority
not to issue to the Buyers all regulatory certificates and approvals
necessary for the consummation of the transactions contemplated
hereunder or the Buyer's operation and/or Ownership of the Stations.
Seller is not aware of any pending FCC applications which, if approved,
would allow for the operation of a new radio station with a signal
reaching the signal area of the Stations and, in addition, Seller is
not aware of any plans or proposals by any existing radio stations with
a signal reaching the signal area of the Stations to alter or change
their format to a format similar to that of the Stations.
L. INTELLECTUAL PROPERTY. The Seller owns or has the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the businesses of the Seller as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Seller immediately prior to the
Closing hereunder is set forth on Section 2(l) of the Disclosure Schedule and
each item listed will be owned or available for use by the Buyers on identical
terms and conditions immediately subsequent to the Closing hereunder. The Seller
has not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and the Seller
has never received any charge, complaint, or notice alleging any such
interference, infringement, misappropriation, or violation. To the Knowledge of
the Seller, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of the
Seller.
M. INSURANCE. Section 2(m) of the Disclosure Schedule sets forth a
complete and accurate description of all Seller's insurance coverage. With
respect to each such insurance policy: (A) the policy is legal, valid, binding,
and enforceable and in full force and effect; (B) the policy will continue to be
legal, valid, binding, and enforceable and in full force and effect on identical
terms through the Closing Date.
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N. LITIGATION. Section 2(n) of the Disclosure Schedule sets forth
each instance in which the Seller: (i) is subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. None of the charges, complaints,
actions, suits, proceedings, hearings, and investigations set forth in Section
2(n) of the Disclosure Schedule could result in any adverse change in the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Seller or the Stations taken as a whole.
The Seller has no Knowledge of any Basis for any such charge, complaint, action,
suit, proceeding, hearing, or investigation against the Seller.
O. EMPLOYEES. Section 2(o) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Stations of each employee,
including all employees leased through Amstaff Leasing, Inc., which are
designated as leased employees on Section 2(o) of the Disclosure Schedule. To
the Knowledge of the Seller, no key employee or group of employees has any plans
to terminate employment with the Seller. The Seller is not a party to or bound
by any collective bargaining or similar agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to the employees of the Seller. The Seller has no Knowledge of any Basis
for any claim by past or current employees of the Seller or applicants for
employment that the Seller or its management has discriminated based on each
individuals race, sex, national origin, religion, ethnicity, handicap or any
other protected characteristic under applicable law.
P. EMPLOYEE BENEFITS. Section 2(p) of the Disclosure Schedule
lists all Employee Benefit Plans that the Seller maintains or to which the
Seller contributes or is required to contribute for the benefit of any current
or former employee of the Seller and true and correct copies of each such
Employee Benefit Plan have been delivered to the Buyers. Each Employee Benefit
Plan (and each related trust or insurance contract) complies and at all times
has complied in form and in operation in all respects with the applicable
requirements of ERISA and the Code. The Seller does not have any commitment to
create any additional Employee Benefit Plan or modify or change any existing
Employee Benefit Plan that would affect any employee or terminated employee of
the Seller. There are no pending or, to the Knowledge of the Seller, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
Q. ENVIRONMENT, HEALTH, AND SAFETY.
(i) With respect to the operation of the Stations and the
Real Estate, the Seller is, and at all times in the past has been, in
compliance in all material respects with all Environmental Laws and all
laws (including rules and regulations thereunder) of federal, state,
and local governments (and all agencies thereof) concerning employee
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health and safety, and to Seller's Knowledge there is no current
Liability (and to Seller's Knowledge there is no Basis related to the
past or present operations of the Seller or its predecessors for any
present or future Liability) under any Environmental Law. To Seller's
Knowledge there is no current Liability (and to Seller's Knowledge
there is no Basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against the
Seller giving rise to any Liability) under the Occupational Safety and
Health Act, as amended, or any other law (or rule or regulation
thereunder) of any federal, state, local, or foreign government (or
agency thereof) concerning employee health and safety, or for any
illness of or personal injury to any employee.
(ii) The Seller has obtained and at all times has been in
compliance in all material respects with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental Laws or law of any federal, state, or local or foreign
government relating to worker health and safety.
(iii) To Seller's Knowledge, all properties and equipment
used in the Stations and the Acquired Assets have been free of
asbestos, PCB's, methylene chloride, trichloroethylene, 1,
2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances. To Seller's Knowledge, no pollutant, contaminant,
or chemical, industrial, hazardous, or toxic material or waste ever has
been buried, stored, spilled, leaked, discharged, emitted, or released
on any of the Real Estate. To Seller's Knowledge, no above ground or
underground storage tanks have ever been located at, on or under the
Real Estate. The Seller has delivered to the Buyers a complete copy of
all environmental claims, reports, studies, compliance actions or the
like of the Seller or which are available to the Seller with respect to
any of the Real Estate or any of the Acquired Assets.
R. LEGAL COMPLIANCE. The Seller has complied in all material
respects with all laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof). The Seller has
filed in a timely manner all reports, documents, and other materials it was
required to file (and the information contained therein was correct and complete
in all material respects) under all applicable laws.
S. ADVERTISING CONTRACTS. Section 2(s) of the Disclosure Schedule
lists all arrangements for the sale of air time or advertising on the Stations
in excess of $1000, and the amount to be paid to the Seller therefor. The Seller
has no reason to believe and has not received a notice or indication of the
intention of any of the advertisers or third parties to material contracts of
the Seller to cease doing business or to reduce in any material respect the
business transacted with the Seller or to terminate or modify any agreements
with the Seller (whether as a result of consummation of the transactions
contemplated hereby or otherwise).
T. BROKERS' FEES. Other than the fee payable to Media Services
Group, which shall be the exclusive responsibility of Seller, the Seller has no
Liability or obligation to pay any
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fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
U. UNDISCLOSED COMMITMENTS OR LIABILITIES. There are no material
commitments, liabilities or obligations relating to the Stations, whether
accrued, absolute, contingent or otherwise including, without limitation,
guaranties by the Seller of the liabilities of third parties, for which specific
and adequate provisions have not been made on the Financial Statements except
those incurred in or as a result of the Ordinary Course of Business since
January 1, 1998.
S. DISCLOSURE. The representations and warranties contained in
this Section 2 do
not contain any untrue statement of a fact or omit to state any fact necessary
in order to make the statements and information contained in this Section 2 not
misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyers represent and warrant to the Seller that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date except as set
forth in the Disclosure Schedule.
A. ORGANIZATION OF THE BUYERS. Broadcasting and Licensing are
corporations duly organized, validly existing, and in good standing under the
laws of Nevada.
B. AUTHORIZATION OF TRANSACTION. Buyers have full power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform their obligations hereunder and thereunder. This Agreement and the
Ancillary Agreements constitute legally binding obligations of the Buyers,
enforceable against the Buyers in accordance with their respective terms and
conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Buyers are subject or any provision of their articles of organization or other
charter documents, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyers are a
party or by which they are bound or to which any of their assets is subject.
Other than the Assignment Application described in Section 4(b), the Buyers do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any court or government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements (including the assignments and
assumptions referred to in Section 1 (e) above).
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D. BROKERS' FEES. The Buyers have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
4. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between
the execution of this Agreement and the Closing:
A. GENERAL. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
B. ASSIGNMENT APPLICATIONS. On a date to be agreed by the Parties,
the Seller and the Buyers shall jointly file with the FCC an application for
assignment of the FCC Licenses, permits and authorizations pertaining to the
Stations from the Seller to Licensing (the "Assignment Application"). The costs
of the FCC filing fees in connection with the Assignment Application shall be
divided equally between the Parties. Each party shall pay its own attorneys'
fees. The Seller and the Buyers shall thereafter prosecute the Assignment
Application with all reasonable diligence and otherwise use commercially
reasonable efforts to obtain the grant of the Assignment Application as
expeditiously as practicable (but neither the Seller nor the Buyers shall have
any obligation to satisfy complainants or the FCC by taking any steps which
would have a material adverse effect upon the Stations or impose significant
costs on such party). If the FCC imposes any condition on either party to the
Assignment Application, such party shall use commercially reasonable efforts to
comply with such condition, provided, that neither party shall be required
hereunder to comply with any condition that would have a material adverse effect
upon the Stations or any Affiliate or impose significant costs on such party.
The Seller and the Buyers shall jointly oppose any requests for reconsideration
or judicial review of FCC approval of the Assignment Application and shall
jointly request from the FCC extension of the effective period of FCC approval
of the Assignment Application if the Closing shall not have occurred prior to
the expiration of the original effective period of the FCC Consent. Nothing in
this Section 4(b) shall be construed to limit either party's right to terminate
this Agreement pursuant to Section 9 of this Agreement.
C. EMPLOYMENT OFFERS. Upon notice to the Seller, and at mutually
agreeable times, the Seller will permit the Buyers to meet with its employees
prior to the Closing Date. The Buyers may, at their option, extend offers of
employment to all or any of the Seller's employees effective on the Closing
Date. From and after the execution of this Agreement, the Seller shall use its
best efforts to assist Buyers in retaining those employees of the Stations which
the Buyers wish to hire in connection with the operation of the Stations by the
Buyers subsequent to the Closing, and the Seller will not take any action to
preclude or discourage any of the Seller's employees from accepting any offer of
employment extended by the Buyers.
D. NOTICES AND CONSENTS. The Seller will give all notices to third
parties and shall use commercially reasonable efforts to obtain all third party
consents that the Buyers reasonably may request, provided that only such
consents designated by Buyer in the Disclosure
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Schedule shall be required to be obtained as a condition of closing. Each of the
Parties will take any additional action that may be necessary, proper, or
advisable in connection with any other notices to, filings with, and
authorizations, consents, and approvals of governments, governmental agencies,
and third parties that it may be required to give, make, or obtain.
E. ADVERTISING OBLIGATIONS. An adjustment to the Purchase Price
for the value of trade time and goods and services shall be made at the Closing
as follows: on all agreements or arrangements pursuant to which advertising is
exchanged for goods and services ("Barter Agreements") for which an obligation
to broadcast advertising time remains, Buyer shall be entitled to an adjustment
in their favor equal to the aggregate value of the advertising time which
remains to be broadcast as of the Closing Date to the extent that such value
exceeds the aggregate value of goods yet to be received and services yet to be
used by more than $5,000 in the aggregate for all Barter Agreements. The amount
to be attributed to the value of remaining broadcast advertising time and goods
and services hereunder shall be the amount specified in the Barter Agreement in
question, as established at the time the Barter Agreement was entered into. At
the Closing, Seller shall deliver a reconciliation of the Barter Agreements as
of the Closing Date. In the event of any dispute between the parties as to
adjustments under this section 4(e), the amounts not in dispute shall
nonetheless be paid and adjusted for at the closing and such disputes shall be
promptly presented for resolution to an independent certified public accountant
mutually acceptable to the parties. The accountant's resolution of the dispute
shall be final and binding on the parties and a judgment may be entered thereon,
provided, however, that any such accountant shall have no authority to assess
damages or award attorney's fees or costs. The fees and expenses of such
accountant shall be paid one-half by the Seller and one-half by the Buyer.
F. OPERATING STATEMENTS. The Seller shall deliver to the Buyer,
for the Buyer's informational purposes only, monthly unaudited statements of
operating revenues and operating expenses of the Station with ten (10) days
after each such statement is prepared by or for the Company or the Seller. The
Seller shall provide to the Buyer such written or oral sales, inventory, and
pacing reports as Seller may have available and Buyer may reasonably request.
G. CONTRACTS. The Seller will not without the prior written
consent of the Buyers amend, change, or modify any of the contracts listed on
Section 2(j) of the Disclosure Schedule in any material respect. The Seller will
not without prior written consent of the Buyers enter into any contract outside
the Ordinary Course of Business which involves more than Five Thousand Dollars
($5,000).
H. OPERATION OF STATIONS. The Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. The Seller shall operate the Stations in compliance with the
FCC Licenses and the rules and regulations of the FCC, and the FCC Licenses
shall at all times remain in full force and effect. The Seller shall file with
the FCC all material reports, applications, documents, instruments and other
information required to be filed in connection with the operation of the
Stations.
I. CREDIT AND RECEIVABLES. The Seller will follow its usual and
customary policies with respect to extending credit for sales of air time and
advertising on the Stations and with respect to collecting accounts receivable
arising from such extension of credit.
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J. PRESERVATION OF STATIONS AND THE ACQUIRED ASSETS. The Seller
will keep its Stations and the Acquired Assets and properties substantially
intact, including its present operations, physical facilities, working
conditions, relationships with lessors, licensors, advertisers, suppliers,
customers, and employees, all of the Confidential Information, call letters and
trade secrets of the Stations, and the FCC Licenses.
K. FULL ACCESS AND CONSULTATION. The Seller will permit
representatives of the Buyers to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Stations, to all premises, properties, books, records, contracts, Tax records,
and documents of or pertaining to the Seller. The Seller will consult with the
Buyers' management with a view to informing Buyers' management as to the
operations, management and business of the Stations.
L. NOTICE OF DEVELOPMENTS. The Seller will give prompt written
notice to the Buyers of any material development affecting business, operations
or prospects of the Stations or the Acquired Assets or the ability of the Seller
to perform hereunder.
M. EXCLUSIVITY. The Seller will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any person relating to
any (A) merger or consolidation, (B) acquisition or purchase of securities or
assets, or (C) similar transaction or business combination involving the Seller,
or (ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing. The Seller will notify the Buyers immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
N. TITLE INSURANCE, SURVEYS AND ENVIRONMENTAL ASSESSMENTS. The
Seller will obtain with respect to each parcel of Real Estate subject to the
Leases, (i) a leasehold Owner's policy issued by a title insurer reasonably
satisfactory to the Seller, in an amount equal to the fair market value of such
Real Estate (including all improvements located thereon), insuring over the
standard pre-printed exceptions and insuring leasehold title to such Real Estate
in the Buyers as of the Closing subject only to the Permitted Real Estate
Encumbrances, together with such endorsements for zoning, contiguity, public
access and extended coverage as the Buyers or their lender reasonably request,
(ii) with respect to each parcel of Owned Real Estate, an Owner's policy of
title insurance by a title insurer reasonably satisfactory to the Buyers, in an
amount equal to the fair market value of such Real Estate (including all
improvements located thereon), insuring over the standard pre-printed exceptions
and insuring title to the Owned Real Estate to be vested in the Buyers as of the
Closing free and clear of all liens and encumbrances except Permitted Real
Estate Encumbrances, together with such endorsements for zoning, contiguity,
public access and extended coverage as the Buyers or its lender reasonably
request, (iii) a current survey of each parcel of Real Estate certified to the
Buyers and its lender, prepared by a licensed surveyor and conforming to current
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Surveys') which shall not
disclose any survey defect or encroachment from or onto any of the Real Estate
which has not been cured or insured over prior to the Closing; and (iv) with
respect to each parcel of Real Estate, a current
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Phase I environmental site assessment from an environmental consultant or
engineer reasonably satisfactory to the Seller which does not indicate that the
Seller and the Real Estate are not in compliance with any Environmental Law and
which shall not disclose or recommend any action with respect to any condition
to be remediated or investigated or any contamination on the site assessed. The
Buyers will pay the costs of these title policies, Surveys, and environmental
assesments.
O. CONTROL OF STATIONS. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Assignment Application. Between the date of this Agreement and
the Closing Date, the Buyers and their employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Seller.
P. RISK OF LOSS. The risk of loss, damage, or destruction to any
of the Acquired Assets shall remain with the Seller until the Closing. In the
event of any such loss, damage, or destruction the Seller will promptly notify
the Buyers of all particulars thereof, stating the cause thereof (if known) and
the extent to which the cost of restoration, replacement and repair of the
Acquired Assets lost, damaged or destroyed will be reimbursed under any
insurance policy with respect thereto. The Seller will, at Seller's expense,
repair or replace such Acquired Assets to their former condition as soon as
possible after loss, damage or destruction thereof and shall use its best
efforts to restore as promptly as possible transmissions as authorized in the
FCC Licenses. The Closing Date shall be extended (with FCC consent, if
necessary) for up to sixty (60) days to permit such repair or replacement. If
repair or replacement cannot be accomplished within sixty (60) days of the date
of the Seller's notice to the Buyers and the Buyers determine that the Seller's
failure to repair or replace would have a material adverse effect on the
operation of the Stations:
(i) the Buyers may elect to terminate this Agreement; or
(ii) the Buyers may postpone the Closing Date until such
time as the property has been repaired, replaced or restored in a
manner and to an extent reasonably satisfactory to the Buyers, unless
the same cannot be reasonably effected within ninety (90) days of the
date of the Seller's notice to the Buyers, in which case either party
may terminate this Agreement; or
(iii) the Buyers may choose to accept the Acquired Asset in
their "then" condition, together with the Seller's assignment to the
Buyers of all rights under any insurance claims covering the loss,
damage or destruction and payment over to the Buyers of any proceeds
under any such insurance policies, previously received by the Seller
with respect thereto plus an amount equal to the amount of any
deductible or self-insurance maintained by Seller on such Acquired
Assets. In the event the Closing Date is postponed pursuant to this
Section 4(p), the parties hereto will cooperate to extend the time
during which this Agreement must be closed as specified in the consent
of the FCC.
5. CONDITIONS TO OBLIGATION TO CLOSE.
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A. CONDITIONS TO OBLIGATION OF THE BUYERS. The obligation of
Buyers to consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 2 above shall be true and correct in all respects at and as of
the Closing Date as though made on and as of the Closing Date;
(ii) the Seller shall have performed and complied with all
of its covenants hereunder in all respects through the Closing;
(iii) the Seller shall have procured all of the third party
consents specified in Section 4(d) above and all of the title insurance
commitments (and endorsements), Surveys and environmental site
assessments described in Section 4(n) above;
(iv) no action, suit, investigation, inquiry or other
proceeding shall be pending or threatened before any court or
quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement or impose
damages or penalties upon any of the parties if such transactions are
consummated, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) affect
adversely the right of the Buyers to own, operate, or control the
Acquired Assets (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyers a
certificate (without qualification as to knowledge or materiality or
otherwise except as provided in the specific representation, warranty,
or covenant at issue) to the effect that each of the conditions
specified above in Sections 5(a)(i) through (iv) is satisfied in all
respects;
(vi) each of the Assignment Applications shall have been
approved by a Final Order of the FCC and the Buyers shall have received
all governmental approvals required to transfer all other
authorizations, consents, and approvals of governments and governmental
agencies set forth in the Disclosure Schedule;
(vii) the relevant parties shall have entered into the
Postclosing Agreement;
(viii) the Buyers shall have received from counsel to the
Seller an opinion with respect to the matters set forth in Exhibit E
attached hereto, addressed to the Buyers and its lender and dated as of
the Closing Date;
(ix) the Parties shall have agreed to allocate the Purchase
Price (and all other capitalizable costs) among the Acquired Assets for
all purposes (including financial accounting and tax purposes) in
accordance with an allocation schedule to be delivered at closing; and
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(x) all actions to be taken by the Seller in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyers.
B. CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all respects at and as of
the Closing Date as though made on and as of the Closing Date;
(ii) the Buyers shall have performed and complied with all
of their covenants hereunder in all respects through the Closing;
(iii) no action, suit, investigation, inquiry or other
proceeding shall be pending or threatened before any court or quasi
judicial or administrative agency of any federal, state, local, or
foreign jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement or impose
damages or penalties upon any of the Parties if such transactions are
consummated, or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Seller a
certificate (without qualification as to knowledge or materiality or
otherwise except as may be provided in the specific representation,
warranty or covenant at issue) to the effect that each of the
conditions specified above in Section 5(b)(i)-(iii) is satisfied in all
respects and the statements contained in such certificate shall be
deemed a warranty of the Buyers which shall survive the Closing;
(v) each of the Assignment Applications shall have been
approved by a Final Order of the FCC and the Buyers shall have received
all governmental approvals required to transfer all other
authorizations, consents, and approvals of governments and governmental
agencies set forth in the Disclosure Schedule;
(vi) the relevant parties shall have entered into the
Postclosing Agreement; and
(vii) the environmental assessments to be obtained by Buyer
with respect to Seller's Owned Real Property and Pensacola Studio shall
not disclose environmental contamination or potential environmental
contamination with an aggregate estimated remediation cost in excess of
Five Thousand Dollars ($5,000), and Buyer shall not have agreed to
cover the cost of remediation in excess of Five Thousand Dollars
($5,000);
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(viii) between January , 1999, and the Closing Date, no
federal or state tax legislation shall have been enacted which shall
cause a material increase in the combined federal and state income
taxes (including capital gain taxes) payable by either the Seller or
its Members, or a combination of the Seller and its Members, as a
result of the consummation of the transaction described herein;
provided, however, that Buyer shall not have agreed to compensate
Seller or its Members for any increase in taxes beyond the material
increase. Material increase for purposes of this subparagraph shall
mean a more than 2.5 percent increase in such combined federal or state
income taxes;
(ix) on or before the Closing Date, the Buyers and Gregory
Gordon shall have entered into an Employment Agreement in the form
attached hereto as Exhibit F, provided, however, that if Gordon fails
or refuses to enter into the Employment Agreement on or before the
Closing Date, this condition shall be deemed waived by Seller;
(x) all actions to be taken by the Buyers in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following
the Closing:
A. GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 7 below).
B. LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Stations, each of the other Parties will reasonably cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
C. ADJUSTMENTS. Operation of the Stations and the income and
expenses attributable thereto up through the close of business on the day before
the Closing Date shall be for the account of the Seller and thereafter for the
account of the Buyers. Such items as employee salaries, vacation, sick day and
personal time accruals, and fringe benefits, power and utilities
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charges, insurance, real and personal property taxes, prepaid expenses,
deposits, music license fees, and rents and payments pertaining to the Assumed
Contracts (including any contracts for the sale of time for cash, trade or
barter so assigned) shall be prorated between the Seller and the Buyers as of
the Closing Date in accordance with the foregoing principle. In addition, all
commissions payable with respect to the accounts receivable of the Seller
(whether due before or after Closing) shall be solely for the account and
responsibility of the Seller. Contractual arrangements that do not reflect an
equal rate of compensation to a Stations over the term of the agreement shall be
equitably adjusted as of the Closing Date. The prorations and adjustments
hereunder shall be made and paid insofar as feasible on the Closing Date, with a
final settlement sixty (60) days after the Closing Date. In the event of any
disputes between the Parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at such time and such disputes shall be determined by
an independent accounting firm mutually acceptable to both parties and the fees
and expenses of such accounting firm shall be paid one-half (1/2) by the Seller
and one-half (1/2) by the Buyer.
D. COLLECTION OF ACCOUNTS RECEIVABLE. At the Closing, the Seller
will turn over to the Buyers, for collection only, the accounts receivable of
the Stations owing to the Seller as of the close of business on the day before
the Closing Date. A schedule of such accounts receivable will be delivered by
the Seller to the Buyers on the Closing Date or as soon thereafter as possible.
The Buyers agree to use commercially reasonable efforts in the ordinary course
of business (but without responsibility to institute legal or collection
proceedings) to collect such accounts receivable during the 120-day period
following the Closing Date, and will remit all payments received on accounts on
the 15th (fifteenth) day following the month in which they are collected,
together with an accounting of all payments received within such period. Except
as specifically provided herein, the Buyers shall have the sole right to collect
such accounts receivable during such one hundred twenty (120) day period. In the
event the Buyers receive monies during the 120-day period following the Closing
Date from an advertiser who, after the Closing Date, is advertising on the
Stations, and that advertiser was included among the accounts receivable as of
the Closing Date, the Buyers shall apply said monies to the oldest outstanding
balance due on the particular account, except in the case of a "disputed"
account receivable. For purposes of this Section 6(d), a "disputed" account
receivable means one which the account debtor refuses to pay because he asserts
that the money is not owed or the amount is incorrect. In the case of such a
disputed account, the Buyers shall immediately return the account to the Seller
prior to expiration of the 120-day period following the Closing Date. If the
Buyers return a disputed account to the Seller, the Buyers shall have no further
responsibility for its collection and may accept payment from the account debtor
for advertising carried on the Stations after the Closing Date. At the end of
the 120-day period following the Closing Date, the Buyers will turn back to the
Seller all of the accounts receivable of the Stations as of the Closing Date
owing to the Seller which have not yet been collected, and the Buyers will
thereafter have no further responsibility with respect to the collection of such
receivables. During the 120-day period following the Closing Date, the Buyers
shall afford the Seller reasonable access to the accounts receivable "aging
list." The Seller acknowledges and agrees that the Buyers are acting as
collection agent hereunder for the sole benefit of the Seller and that Buyers
have accepted such responsibility for the accommodation of the Seller. The
Buyers shall not have any duty to inquire as to the form, manner of execution or
validity of any item, document, instrument or notice deposited, received or
delivered in connection with such collection efforts, nor shall the Buyers
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have any duty to inquire as to the identity, authority or rights of the persons
who executed the same.
E. SEVERANCE OBLIGATIONS. In the event an offer of employment is
extended by the Buyers to and accepted by an employee of the Seller pursuant to
Section 4(c) and such subsequent employment by the Buyers is terminated within
sixty (60) days from the Closing Date, the Seller shall be responsible for, and
shall pay to such accepting employee, all severance benefits (if any, pursuant
to the Seller's practices as in effect on the Closing Date) that may be due and
owing such employee by reason of his or her employment with either the Seller or
the Buyers.
F. CONSENTS. In the event any of the Assumed Contracts are not
assignable or any consent to such assignment is not obtained on or prior to the
Closing Date, and the Buyers elect to consummate the transactions contemplated
herein despite such failure or inability to obtain such consent, the Seller
shall continue to use commercially reasonable efforts to obtain any such
assignment or consent after the Closing Date. Until such time as such assignment
or approval has been obtained, the Seller will cooperate with Buyers in any
lawful and economically feasible arrangement to provide that the Buyers shall
receive the Seller's interest in the benefits under any such Assumed Contract,
including performance by the Seller as agent, if economically feasible;
provided, however, that the Buyers shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent that
Buyers would have been responsible therefor if such consent or assignment had
been obtained.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
A. SURVIVAL. All of the representations and warranties of the
Seller contained in Section 2 of this Agreement (other than the representations
and warranties of the Seller contained in Sections 2(a), 2(b), 2(c), and 2(d)
hereof or relating to the Seller's title to the Acquired Assets) shall survive
the Closing and continue in full force and effect for a period until 90 days
after the applicable statute of limitations has expired with respect to any
claim by the Buyers based on a claim or action by a third party and for a period
of three (3) years following Closing with respect to any claim by the Buyers not
based on a claim or action by a third party. All of the other representations
and warranties (including the representations and warranties of the Seller
contained in Sections 2(a), 2(b), 2(c), and 2(d) hereof or relating to the
Seller's title to the Acquired Assets) and all covenants of the Buyers and the
Seller contained in this Agreement shall survive the Closing and continue in
full force and effect forever thereafter.
B. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYERS.
Except as described below in Section 7(d) with respect to a breach of a warranty
or covenant prior to the Closing Date, the Seller agrees to indemnify the Buyers
from and against the entirety of any Adverse Consequences the Buyers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by:
(i) any misrepresentation or breach of any of the Seller's
representations or warranties, and covenants contained in this
Agreement or in any Ancillary Agreement executed and/or delivered by
the Seller (so long as the Buyers make a written claim for
indemnification within the applicable survival period);
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(ii) any breach or nonfulfillment of any agreement or
covenant of the Seller contained herein or in any Ancillary Agreement;
(iii) any Liability of the Seller which is not an Assumed
Liability; and/or
(iv) any Liability of the Buyers arising by operation of
law (including under any bulk transfer law of any jurisdiction or under
any common law doctrine of defacto merger or successor liability) which
is not an Assumed Liability.
C. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLER.
Except as described below in Section 7(e) with respect to a breach of a warranty
or covenant prior to the Closing Date, the Buyers agree to indemnify the Seller
from and against the entirety of any Adverse Consequences the Seller may suffer
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any misrepresentation or breach of any of the Buyers' representations or
warranties contained in this Agreement or in any Ancillary Agreement executed
and/or delivered by the Buyers (so long as the Seller makes a written claim for
indemnification within the applicable survival period) or (ii) any breach or
nonfulfillment of any agreement or covenant of the Buyers contained herein or in
any Ancillary Agreement, or (iii) any Assumed Liability.
D. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the Buyers would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the Buyers shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 10(n) below), in addition
to any other remedy to which it may be entitled, at law or in equity. Each of
the Parties acknowledges and agrees that not withstanding the provision in
Section 7(e) with respect to the remedy of liquidated damages upon a breach of a
warranty or covenant of this Agreement prior to the Closing, money damages would
not be an adequate remedy for Buyers for a breach of any provision of this
Agreement.
E. LIQUIDATED DAMAGES. The Buyers and the Seller acknowledge that
in the event that the transactions contemplated by this Agreement are not closed
because of a default by the Buyers, the Adverse Consequences to the Seller as a
result of such default may be difficult, if not impossible, to ascertain.
Accordingly, in lieu of indemnification pursuant to Section 7(c), the Seller
shall be entitled to receive from the defaulting Party for such default the
Earnest Money Deposit as liquidated damages without the need for proof of
damages, subject only to successfully proving in a court of competent
jurisdiction that the Buyer materially breached this Agreement and that the
transactions contemplated thereby have not occurred. The Seller shall proceed
against the Earnest Money Deposit as full satisfaction of liquidated damages
owed by the Buyers and as its sole remedy for a failure of the transactions
contemplated hereby to occur as a result of a material breach of the terms of
this Agreement by the Buyers.
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F. MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 7, then the Indemnified Party shall
notify the Indemnifying Party thereof promptly; provided, however, that no delay
on the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any liability or obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is damaged as a
result of such failure. In the event any Indemnifying Party notifies the
Indemnified Party within 15 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense,
(iii) the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the matter without the written consent
of the Indemnifying Party (not to be withheld unreasonably), and (iv) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all Liability with respect thereto, without the written consent of the
Indemnified Party (not to be withheld unreasonably). In the event the
Indemnifying Party does not notify the Indemnified Party within 15 days after
the Indemnified Party has given notice of the matter that the Indemnifying Party
is assuming the defense thereof, however, and/or in the event the Indemnifying
Party shall fail to defend such claim actively and in good faith, then the
Indemnified Party may defend against, or enter into any settlement with respect
to, the matter in any manner it reasonably may deem appropriate.
G. LIMITATION OF LIABILITY. Notwithstanding anything in this
Agreement to the contrary, after the Closing neither party shall indemnify or
otherwise be liable to the other party from and after the Closing Date except to
the extent that the Adverse Consequences suffered by the Identified Party, in
the aggregate from all indemnifiable events shall exceed Ten Thousand Dollars
($10,000) and indemnification shall be made by the indemnifying party only to
the extent of such excess over Ten Thousand Dollars ($10,000); provided however
that the foregoing limitation shall not be applicable to: (i) the obligations of
the Buyer to pay and discharge any Liability of the Seller to third parties from
and after the Closing Date assumed by the Buyer under the terms of this
Agreement; (ii) the obligation of the Seller to pay and discharge any Liability
to third parties not assumed by the Buyer under the terms of this Agreement, or
(iii) the Seller's obligation to deliver clear title to the Acquired Assets.
8. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of
the assets of the Seller, other than Retained Assets that are used or useful in
the operation of the Stations, wherever located, including but not limited to
all of its (a) leaseholds and other interests of any kind therein, improvements,
fixtures, and fittings thereon (such as towers and antennae), and easements,
rights-of-way, and other appurtenances thereto); (b) tangible personal property
(such as fixed assets, computers, data processing equipment, electrical devices,
monitoring equipment, test equipment, switching, terminal and studio equipment,
transmitters, transformers, receivers, broadcast facilities, furniture,
furnishings, inventories of compact disks, records, tapes and other
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supplies, vehicles) and all assignable warranties with respect thereto; (c)
Intellectual Property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, remedies
against infringements thereof, and rights to protection of interests therein
under the laws of all jurisdictions; (d) rights under orders and agreements
(including those Barter Agreements and Advertising Contracts identified on the
Disclosure Schedule) now existing or entered into in the Ordinary Course of
Business for the sale of advertising time on the Stations; (e) Assumed
Contracts, indentures, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (f) call letters of the Stations, jingles,
logos, slogans, and business goodwill of the Stations; (g) claims, deposits,
prepayments, causes of action, chooses in action, rights of recovery (including
rights under policies of insurance), rights of set off, and rights of
recoupment; (h) Licenses and similar rights obtained from governments and
governmental agencies; and (i) FCC logs and records and all other books,
records, ledgers, logs, files, documents, correspondence, advertiser lists, all
other lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, program production materials,
studies, reports, and other printed or written materials; and (j) goodwill of
the Stations.
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"ADVERTISING CONTRACTS" has the meaning set forth in Section 2(s),
above.
"AFFILIATE" means with reference to any person or entity, another
person or entity controlled by, under the control of or under common control
with that person or entity.
"ASSIGNMENT APPLICATION" has the meaning set forth in Section 4(b)
above.
"ASSUMED CONTRACTS" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts identified on Section 2(j) of the
Disclosure Schedule as those to be assumed by Broadcasting.
"ASSUMED LIABILITIES" means (a) obligations of the Seller which accrue
after the Closing Date under the Assumed Contract either: (i) to furnish
services, and other non-Cash benefits to another party after the Closing; or
(ii) to pay for goods, services, and other non-Cash benefits that another party
will furnish to it after the Closing. The Assumed Liabilities shall not include
any Retained Liabilities.
"BARTER AGREEMENTS" has the meaning set forth in Section 4(e) above.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BUYERS" has the meaning set forth in the preface above.
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<PAGE> 23
"CASH" means cash and cash equivalents determined in accordance with
GAAP applied on a basis consistent with the preparation of the Financial
Statements.
"CLOSING" has the meaning set forth in Section 1(d) above.
"CLOSING DATE" has the meaning set forth in Section 1(d) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Seller.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 1 above.
"EARNEST MONEY DEPOSIT" has the meaning set forth in Section 1(c)
above.
"EARNEST MONEY ESCROW AGREEMENT" has the meaning set forth in Section
1(c) above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control Act
of 1976, the Refuse Act of 1899, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other law of any federal,
state, local, or foreign government or agency thereof (including rules,
regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, 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
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means Media Services Group.
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<PAGE> 24
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC LICENSES" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Seller in connection with the conduct of the business and operation
of the Stations.
"FINAL ORDER" means an action by the FCC as to which: (a) no request
for stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7(d) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7(d) above.
"INTELLECTUAL PROPERTY" means all (a) patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, service marks,
trade dress, call letters, logos, trade names, and corporate names and
registrations and applications for registration thereof, (c) all programs,
programming materials, copyrights and registrations and applications for
registration thereof, (d) mask works and registrations and applications for
registration thereof, (e) computer software, data, and documentation, (f) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, market and other research information, drawings,
specifications, designs, plans proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
"KNOWLEDGE" means actual knowledge of a Member of Seller without
further investigation.
"LEASES" means those real estate leases to which Seller is a party
governing Seller's studios and FM tower sites, as described in Section 2(i) of
the Disclosure Schedule.
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<PAGE> 25
"LIABILITY" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Seller with respect to
the operations of the Stations and all applications therefor, together with any
renewals, extension or modifications thereof and additions thereto.
"MULTI-EMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNED REAL ESTATE" means the real property owned by the Seller as
described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon.
"PARTY" has the meaning set forth in the preface above.
"PERMITTED REAL ESTATE ENCUMBRANCES" shall have the meaning set forth
in Section 2(i), above.
"POST-CLOSING AGREEMENT" means the Post-Closing Agreement with Seller's
Ownerss in the form attached hereto as Exhibit C.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"PURCHASE PRICE" has the meaning set forth in Section 1(c) above.
"REAL ESTATE" means the Owned Real Estate and the real estate,
building, fixtures and improvements which are the subject of the Leases.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAINED ASSETS" means (i) the corporate charter, qualifications to
conduct business as a foreign entity, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a limited liability company; (ii) any of the rights of the Seller under this
Agreement (or under any side agreement between the Seller on the one hand and
the Buyers on the other hand entered into on or after the date of this
Agreement); (iii) accounts, notes and other receivables of the Seller; (iv)
Cash; (v) any refunds; and (vi) vehicles and personal effects owned by the
Members of Seller.
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<PAGE> 26
"RETAINED LIABILITIES" means any other obligations or Liabilities of
the Seller, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the Closing; (ii) any Liability
of the Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation contemplated hereby; (iii) any Liability of the
Seller for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby (except as set forth in
Section 4(n) relating to Surveys, title commitments and environmental audits and
Section 4(b) with regard to the Assignment Application; or (iv) any Liability or
obligation of the Seller under this Agreement (or under any side agreement
between the Seller on the one hand and the Buyers on the other hand entered into
on or after the date of this Agreement).
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"SELLER" has the meaning set forth in the preface above.
"STATIONS" means the radio broadcast Stations WWRO-FM and WCOA-AM.
"SUBSIDIARY," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"SURVEYS" has the meaning set forth in Section 4(n) above.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
9. TERMINATION.
A. TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
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<PAGE> 27
(i) the Buyers and the Seller may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(ii) the Buyers may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing in the
event the Seller is in breach of any representation, warranty, or
covenant contained in this Agreement; provided, however, that if such
breach is capable of being cured, such breach also remains uncured for
twenty (20) days after notice of breach is received by the Seller from
the Buyers;
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyers at any time prior to the Closing in the
event the Buyers are in breach of any representation, warranty, or
covenant contained in this Agreement; provided, however that if such
breach is capable being cured, such breach remains uncured for twenty
(20) days after notice of breach is received by the Buyers from the
Seller;
(iv) the Buyers may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing if the
Closing shall not have occurred on or before the 360th day following
the date of this Agreement by reason of the failure of any condition
precedent under Section 5(a) hereof (unless the failure results
primarily from the Buyers themselves breaching any representation,
warranty, or covenant contained in this Agreement);
(v) the Seller may terminate this Agreement by giving
written notice to the Buyers at any time prior to the Closing if the
Closing shall not have occurred on or before the 360th day following
the date of this Agreement by reason of the failure of any condition
precedent under Section 5(b) hereof (unless the failure results
primarily from the Seller itself breaching any representation,
warranty, or covenant contained in this Agreement);
(vi) the Buyers or the Seller may terminate this Agreement
if any Assignment Application is denied by Final Order.
B. EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section above, all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
10. MISCELLANEOUS.
A. PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any
press release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the other Party;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by law or regulation (in which case the disclosing Party
will advise the other Party prior to making the disclosure).
B. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
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<PAGE> 28
C. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
D. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party, provided that (i) the Buyers may assign all of
their right, title and interest in, to and under this Agreement to one or more
Affiliates, who shall then, subject to the terms and conditions of this
Agreement, have the right to receive the Acquired Assets, assume the Assumed
Liabilities, and to pay to the Seller the Purchase Price therefor or to any
successor to the Buyers in the event of any sale, merger or consolidation of the
Buyers, and (ii) Buyers may assign their indemnification claims and their rights
under the warranties and representations of the Seller to the financial
institution(s) providing financing to the Buyers in connection with this
transaction.
E. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
F. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
G. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be considered to be given
and received in all respects when hand delivered, when delivered via prepaid
express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Seller:
Coast Radio, L.C.
P.O. Box 12487
Pensacola, Florida 32573
Copy to:
Helmsing, Sims & Leach, P.C.
150 Government Street
Mobile, Alabama 36602
Attn: Robert H. Rouse
Phone: (334) 432-5521
Fax: (334) 432-0633
(which copy shall not constitute notice to Seller)
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<PAGE> 29
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53202
Attn: Terrence J. Leahy
Phone: (414) 615-2800
Fax: (414) 615-2880
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
875 N. Michigan Avenue
Suite 3650
Chicago, Illinois 60611
Attn: Richard J. Bonick
Phone: (312) 867-0091
Fax: (312) 867-0098
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
H. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Florida.
I. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyers and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
J. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or
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<PAGE> 30
unenforceable term or provision, and this Agreement shall be enforceable as so
modified after the expiration of the time within which the judgment may be
appealed.
K. EXPENSES. The Buyers and the Seller, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 4(b) with regard to the Assignment Applications and as set
forth in Section 4(n) with respect to Surveys, title commitments and
environmental audits. The Seller will pay all income taxes. The Seller and the
Buyers will each pay one-half (1/2) of any title insurance company closing fee,
transfer or sales taxes and other recording or similar fees necessary to vest
title to each of the Acquired Assets in the Buyers.
L. CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
M. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
N. SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Pensacola, Florida in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto. Any Party may make service on the other
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
10(g) above. Nothing in this Section 10(n), however, shall affect the right of
any Party to serve legal process in any other manner permitted by law. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.
CUMULUS BROADCASTING, INC.
By: /s/ Richard W. Weening
-----------------------------
Richard W. Weening (printed)
-----------------------------
Title: Executive Chairman
-----------------------------
CUMULUS LICENSING CORPORATION
By: /s/ Richard W. Weening
-----------------------------
Richard W. Weening (printed)
-----------------------------
Title: Executive Chairman
-----------------------------
COAST RADIO, L.C.
By: Thomas W. Diamond
------------------------------
Thomas W. Diamond (printed)
------------------------------
Title: Manager
------------------------------
By: Gregory W. Gordon
------------------------------
Gregory W. Gordon (printed)
------------------------------
Title: Manager
------------------------------
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<PAGE> 1
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into as of September 23, 1999, by
and between CUMULUS BROADCASTING, INC., a Nevada corporation ("Broadcasting"),
CUMULUS LICENSING CORP., a Nevada corporation ("Licensing), CUMULUS WIRELESS
SERVICES INC., a Nevada corporation ("Wireless"), C. F. RADIO, INC., a North
Carolina corporation ("CF"), CAPE FEAR RADIO, LLC, a North Carolina limited
liability company ("CFLLC"), CAPE FEAR BROADCASTING COMPANY, a North Carolina
corporation ("CFB"), and CAPE FEAR TOWER SYSTEMS, LLC, a North Carolina limited
liability company ("CF Towers"). Broadcasting, Licensing, and Wireless are
referred to collectively herein as the "Buyers." CF, CFLLC, CFB, and CF Towers
are referred to collectively herein as the "Sellers." The Buyers and the Sellers
are referred to individually as the "Party" or collectively as the "Parties."
Capitalized terms used in this Agreement are defined in Section 8 hereof.
Subject to the terms and conditions of this Agreement, the Buyers hereby
agree to purchase substantially all of the assets (and assume certain of the
liabilities) of the Sellers that are used or useful in the operation of radio
stations WFNC-AM, Fayetteville, NC; WFNC-FM, Lumberton, NC; WQSM-FM,
Fayetteville, NC; WRCQ-FM, Dunn, NC; WGNI-FM, Wilmington, NC; and WMNX-FM,
Wilmington, NC (the "Stations") in return for cash.
Now, therefore, in consideration of the above premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. BASIC TRANSACTION.
A. PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, the Sellers agree to sell, transfer, convey and
deliver to (i) Licensing, and Licensing agrees to purchase from the Sellers, all
of the FCC Licenses listed in Section 2(k) of the disclosure schedule
("Disclosure Schedule"); and (ii) Sellers agree to sell, transfer convey and
deliver to Broadcasting and Wireless, and Broadcasting and Wireless agree to
purchase from the Sellers, all of the Acquired Assets other than the FCC
Licenses. Both such sales shall take place at the Closing for the consideration
specified below in this Section 1.
B. ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, Broadcasting and Wireless agree to assume and
become responsible for all of the Assumed Liabilities at the Closing. The Buyers
will not assume or have any responsibility, however, with respect to any other
obligation or Liability of the Sellers not included within the definition of
Assumed Liabilities and assumed by Broadcasting, and the Sellers agree to pay
and discharge all Liabilities and obligations of the Sellers other than the
Assumed Liabilities.
C. PURCHASE PRICE. The Buyers agree to pay to the Sellers, as
consideration for the Acquired Assets, the purchase price (the "Purchase Price")
described in Schedule A to this Agreement, and agree to make the escrow deposit
(the "Escrow Deposit") in the form and manner described in Schedule A and more
particularly in the earnest money escrow agreement ("Earnest Money Escrow
Agreement") attached hereto as Exhibit A.
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<PAGE> 2
D. CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a mutually agreed location, within
ten (10) business days after the FCC approval of the Assignment Application
becomes a Final Order, by which date all other conditions to the obligations of
the Parties to consummate the transactions contemplated hereby will have been
satisfied or waived, or such other date as the Parties may mutually determine
(the "Closing Date").
E. DELIVERIES AT THE CLOSING. At the Closing, (i) the Sellers will
deliver to the Buyers the various certificates, instruments, and documents
referred to in Section 5(a) below; (ii) the Buyers will deliver to the Sellers
the various certificates, instruments, and documents referred to in Section 5(b)
below; (iii) the Sellers will execute, acknowledge (if appropriate), and deliver
to the Buyers (A) assignments in the form attached as Exhibits B-1 and B-2
hereto, other necessary assignments, (including Lease and other Assumed Contract
assignments and Intellectual Property transfer documents), bills of sale and
warranty deeds in form acceptable to the Buyers, (B) such affidavits, transfer
tax returns, memorandums of lease, and other additional documents as may be
required by the terms of the title insurance commitments obtained by Buyers, as
necessary for Buyers to acquire title insurance or as may be necessary to convey
title to the Real Estate to the Buyers in the condition required herein or
provide public notice of existence of the Leases, and (C) such other instruments
of sale, transfer, conveyance, and assignment as the Buyers and their counsel
reasonably may request; (iv) the Buyers will execute, acknowledge (if
appropriate), and deliver to the Sellers (A) an assumption in the form attached
hereto as Exhibit B-3 and (B) such other instruments of assumption as the
Sellers and their counsel reasonably may request; and (v) the Buyers will
deliver to the Sellers the consideration specified in Schedule 1(c) above.
F. POSTCLOSING AGREEMENT. On the Closing Date, the Sellers shall
execute, and shall cause certain of its shareholders to execute, a Postclosing
Agreement with the Buyers including covenants not to compete with the Buyers in
the markets served by the Stations and agreements to indemnify the Buyers in the
form of Exhibit C attached hereto.
G. LOCAL MARKETING AGREEMENT. As of the date of this Agreement,
Broadcasting, CF and CFB shall enter into Local Marketing Agreements in the form
attached as Exhibit D hereto ("Local Marketing Agreement"), under which
Broadcasting shall purchase from Sellers airtime on the Stations under the terms
and conditions specified in such Local Marketing Agreements.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
The Sellers represent and warrant to the Buyers that the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date, except as set
forth in the Disclosure Schedule.
A. ORGANIZATION OF THE SELLERS. Each Seller is either a corporation or
a limited liability company duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or
organization. Other than the Subsidiaries described in Section 2(a) of the
Disclosure Schedule, the Sellers do not have any Subsidiaries. The Sellers have
the power and authority to own or lease its properties and to carry on all
business activities now
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conducted by them. All of the shareholders of the Sellers and all of the members
of the limited liability company Sellers are identified in Section 2(a) of the
Disclosure Schedule.
B. AUTHORIZATION OF TRANSACTION. The Sellers have full power and
authority to execute and deliver this Agreement and all agreements and
instruments to be executed and delivered by Sellers pursuant to this Agreement
(collectively, the "Ancillary Agreements") and to perform their obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
Boards of Directors of CF and CFB, and the managing members of CFLLC and CF
Towers, have duly authorized the execution, delivery, and performance of this
Agreement and the Ancillary Agreements by their respective entities. This
Agreement and the Ancillary Agreements constitute the valid and legally binding
obligation of the Sellers, enforceable in accordance with their respective terms
and conditions.
C. NONCONTRAVENTION. Assuming the receipt of the necessary consents
described in the Disclosure Schedule, neither the execution and the delivery of
this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments and
assumptions referred to in Section 1(e) above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Sellers are subject or any provision of the charter or bylaws of the Sellers; or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice or third party consent under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other agreement, arrangement to which the Sellers are a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). Other than with
respect to the Assignment Application described in Section 4(b) and the
Hart-Scott-Rodino Application described in Section 4(c), the Sellers do not need
to give any notice to, make any filing with, or obtain any Licenses, consent, or
approval of any court or government or governmental agency in order for the
Parties to enter into this agreement or the Ancillary Agreements or to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements (including the assignments and assumptions referred to in Section
1(e) above).
D. TITLE TO ACQUIRED ASSETS. Other than the Security Interests set
forth on Section 2(d) of the Disclosure Schedule (which shall be released at or
before the Closing) the Sellers have good and marketable title to all of the
Acquired Assets, free and clear of any Security Interest or restriction on
transfer.
E. FINANCIAL STATEMENTS. Included in Section 2(e) of the Disclosure
Schedule are the following financial statements (collectively the "Financial
Statements"): (i) unaudited balance sheets and statements of income, and cash
flow as of and for the fiscal years ended December 31, 1996, December 31, 1997,
and December 31, 1998 for the Sellers; and (ii) unaudited balance sheets and
statements of income, as of and for each month during 1998 and each month to
date in 1999 for the Sellers. The Financial Statements have been prepared in
conformity with the Sellers' normal accounting policies, practices and
procedures applied on a consistent basis, throughout the periods covered
thereby, are correct and complete in all material respects, fairly present the
financial condition of the Sellers and the results of operation of Sellers
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at the dates and for the periods indicated, and are consistent with the books
and records of the Sellers (which books and records are correct and complete in
all material respects). The Financial Statements accurately state the revenues
of the Stations for the period indicated therein and include an accurate
breakout of cash and trade revenues.
F. EVENTS SUBSEQUENT TO DECEMBER 31, 1998. Since December 31, 1998,
except as set forth in Section 2(f) of the Disclosure Schedule, there has not
been any material adverse change in the assets or Liabilities of the Sellers
with respect to the operation of the Stations. Without limiting the generality
of the foregoing and with respect to the operation of the Stations since
December 31, 1998:
(i) other than this Agreement, the Sellers have not entered into any
agreement, contract, lease, sublease, license, or sublicense (or series of
related agreements, contracts, leases, subleases, licenses, and
sublicenses) outside the Ordinary Course of Business;
(ii) the Sellers have not entered into or terminated any employment
arrangement, employment contract, consulting contract or severance
agreement or collective bargaining agreement, written or oral, or modified
the terms of any existing such contract or agreement;
(iii) the Sellers have not applied to the FCC for any modification of
the FCC Licenses or failed to take any action necessary to preserve the FCC
Licenses and has operated the Stations in compliance therewith and with all
FCC rules and regulations; and
(iv) the Sellers have not committed to any of the foregoing.
G. TAX MATTERS. Except as set forth in Section 2(g) of the Disclosure
Schedule, the Sellers have timely and properly filed all Tax Returns that they
were required to file with respect to the Sellers' operations. All such Tax
Returns were correct and complete and properly reflect the tax liability of the
Sellers. No Tax deficiencies have been assessed, or to their Knowledge proposed,
against the Sellers. All Taxes currently due and payable by the Sellers with
respect to their operations (whether or not shown on any Tax Return) have been
paid. The Sellers have withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. No claim has ever been
made by any authority in any jurisdiction where the Sellers do not file Tax
Returns that they are or may be subject to taxation by that jurisdiction.
H. TANGIBLE ASSETS. Section 2(h) of the Disclosure Schedule sets forth
a listing of all transmitter and station equipment, vehicles and other tangible
personal property used in conducting the operation and business of the Stations.
The Sellers own or lease all tangible assets necessary for the conduct of the
operation and business of the Stations as presently conducted and as presently
proposed to be conducted and all leased assets are specifically identified as
such in Section 2(h) of the Disclosure Schedule.
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I. REAL PROPERTY. Section 2(i) of the Disclosure Schedule lists and
describes briefly all Owned Real Estate and real property leased to the Sellers
(including, without limitation, complete legal descriptions for all of the Real
Estate). The Sellers have delivered to the Buyers correct and complete copies of
the Leases. With respect to the Real Estate:
(i) the Sellers have good and marketable title to all of the Owned
Real Estate free and clear of all liens, charges, mortgages, security
interests, easements, restrictions or other encumbrances of any nature
whatsoever except for those matters disclosed in Section 2(i) of the
Disclosure Schedule (collectively, the "Permitted Real Estate
Encumbrances");
(ii) the Leases are and, as of the Closing will continue to be,
legal, valid, binding, enforceable, and in full force and effect;
(iii) Sellers are not in breach or default of any Lease (and has not
repudiated any provision thereof) and to Seller's Knowledge, no party to
any Lease is in breach or default (or has repudiated any provision
thereof), and no event has occurred which, with notice or lapse of time,
would constitute a breach or default thereunder or permit termination,
modification, or acceleration thereunder;
(iv) there are no disputes, oral agreements, or forbearance programs
in effect as to any Lease;
(v) none of the Owned Real Estate, and to the Sellers' Knowledge,
none of the properties subject to the Leases, is subject to any lease
(other than Leases), option to purchase or rights of first refusal;
(vi) except for Permitted Real Estate Encumbrances, there are (i) no
actual or, to the Sellers' Knowledge, proposed special assessments with
respect to any of the Real Estate; (ii) no pending or, to the Sellers'
Knowledge, threatened condemnation proceedings with respect to any of the
Real Estate; (iii) to Sellers' Knowledge, no material structural or
mechanical defects in any of the buildings or improvements located on the
Real Estate; (iv) no pending or, to the Sellers' Knowledge, threatened
changed in any zoning laws or ordinances which may materially adversely
affect any of the Real Estate or Sellers' use thereof;
(vii) the Sellers have not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the Leases or its
rights thereunder;
(viii) to the Sellers' Knowledge, all facilities on the Real Estate
have received all approvals of governmental authorities (including
licenses, permits and zoning approvals) required in connection with the
operation thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations; and
(ix) to the Sellers' Knowledge, the owner of each leased facility
has good and marketable title to the underlying parcel of real property,
free and clear of any Security Interest, easement, covenant, or other
restriction, except for Permitted Real
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<PAGE> 6
Estate Encumbrances and, to Seller's Knowledge, Sellers' leasehold interest
in each Lease has priority over any other interest except for the fee
interest therein and Permitted Real Estate Encumbrances.
J. CONTRACTS. Section 2(j) of the Disclosure Schedule lists any
written arrangement (or group of related written arrangements) either involving
more than $5,000 or not entered into in the Ordinary Course of Business. The
Sellers have delivered to the Buyers a correct and complete copy of each written
arrangement listed in Section 2(j) of the Disclosure Schedule (as amended to
date). With respect to each written arrangement so listed which constitutes an
Assumed Contract: (A) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect; (B) the written arrangement will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms as of the Closing (if the arrangement has not expired
according to its terms); (C) Sellers are not in breach or default, and to
Sellers' Knowledge, no other party is in breach or default, and to Seller's
Knowledge no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the written arrangement; and (D) no party has repudiated any
provision of the written arrangement. The Sellers are not a party to any verbal
contract, agreement, or other arrangement which, if reduced to written form,
would be required to be listed in Section 2(j) of the Disclosure Schedule under
the terms of this Section 2(j). Except for the Assumed Contracts, the Buyers
shall not have any Liability or obligations for or in respect of any of the
contracts set forth in Section 2(j) of the Disclosure Schedule or any other
contracts or agreements of the Sellers.
K. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION REQUIREMENTS.
(i) All licenses, permits, authorizations, franchises, certificates
of compliance, and consents of governmental bodies, including, without
limitation, the FCC Licenses, used or useful in the operation of the
Stations as they are now being operated are (A) in full force and effect,
(B) unimpaired by any acts or omissions of the Sellers or the Sellers'
employees or agents, (C) free and clear of any restrictions which might
limit the full operation of the Stations, and (D) detailed in Section 2(k)
of the Disclosure Schedule. With respect to the licenses, permits,
authorizations, franchises, certificates of compliance and consents
referenced in the preceding sentence, Section 2(k) of the Disclosure
Schedule also sets forth, without limitation, the date of the last renewal,
the expiration date thereof, and any conditions or contingencies related
thereto. Except as set forth in Section 2(k) of the Disclosure Schedule, no
condition exists or event has occurred that permits, or after notice or
lapse of time, or both, would permit, the revocation or termination of any
such license, permit, consent, franchise, or authorization (other than
pursuant to their express expiration date) or the imposition of any
material restriction or limitation upon the operation of the Stations as
now conducted. Except as set forth in Section 2(k) of the Disclosure
Schedule, the Sellers are not aware of any reason why the FCC licenses
might not be renewed in the ordinary course or revoked.
(ii) The Stations are in compliance with the FCC's policy on exposure
to radio frequency radiation. No renewal of any FCC License would
constitute a major environmental action under the FCC's rules or policies.
Access to the Stations' transmission facilities is restricted in accordance
with the policies of the FCC.
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<PAGE> 7
(iii) Except as set forth in Section 2(k) of the Disclosure Schedule,
to the Sellers' Knowledge, the Sellers are not the subject of any FCC or
other governmental investigation or any notice of violation or order, or
any material complaint, objection, petition to deny, or opposition issued
by or filed with the FCC or any other governmental authority in connection
with the operation of or authorization for the Stations, and there are no
proceedings (other than rule making proceedings of general applicability)
before the FCC or any other governmental authority that could adversely
affect any of the FCC Licenses or the authorizations listed in Section 2(k)
of the Disclosure Schedule.
(iv) The Sellers have filed with the FCC and all other governmental
authorities having jurisdiction over the Stations all material reports,
applications, documents, instruments, and other information required to be
filed, and will continue to make such filings through the Closing Date.
(v) The Sellers are not aware of any information concerning the
Stations that could cause the FCC or any other regulatory authority not to
issue to the Buyers all regulatory certificates and approvals necessary for
the consummation of the transactions contemplated hereunder or the Buyer's
operation and/or ownership of the Stations. Sellers are not aware of any
pending FCC applications which, if approved, would allow for the operation
of a new radio station with a signal reaching the signal area of the
Stations and, in addition, Sellers are not aware of any plans or proposals
by any existing radio stations with a signal reaching the signal area of
the Stations to alter or change their format to a format similar to that of
the Stations.
L. INTELLECTUAL PROPERTY. The Sellers own or have the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of the businesses of the Sellers as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Sellers immediately prior to the
Closing hereunder is set forth on Section 2(l) of the Disclosure Schedule and
each item listed will be owned or available for use by the Buyers on identical
terms and conditions immediately subsequent to the Closing hereunder. Sellers'
use of the Intellectual Property has not interfered with, infringed upon, caused
a misappropriation of, or otherwise come into conflict with any Intellectual
Property rights of third parties, and the Sellers have never received any
charge, complaint, or notice alleging any such interference, infringement,
misappropriation, or violation. To the Knowledge of the Sellers, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Sellers.
M. INSURANCE. Section 2(m) of the Disclosure Schedule sets forth a
complete and accurate description of all Sellers' insurance coverage. With
respect to each such insurance policy: (A) the policy is legal, valid, binding,
and enforceable and in full force and effect; and (B) the policy will continue
to be legal, valid, binding, and enforceable and in full force and effect on
identical terms through the Closing Date.
N. LITIGATION. Section 2(n) of the Disclosure Schedule sets forth each
instance in which the Sellers: (i) are subject to any unsatisfied judgment,
order, decree, stipulation,
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injunction, or charge; or (ii) are a party or, to the Sellers' Knowledge, is
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the charges, complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 2(n) of the
Disclosure Schedule could result in any adverse change in the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of the Sellers or the Stations taken as a whole. The Sellers
have no Knowledge of any Basis for any such charge, complaint, action, suit,
proceeding, hearing, or investigation against the Sellers.
O. EMPLOYEES. Section 2(o) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Stations of each employee. To
the Knowledge of the Sellers, no key employee or group of employees has any
plans to terminate employment with the Sellers. The Sellers are not a party to
or bound by any collective bargaining or similar agreement, nor have they
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes. The Sellers have no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the employees of the Sellers. The Sellers have no
Knowledge of any Basis for any claim by past or current employees of the Sellers
or applicants for employment that the Sellers or their management has
discriminated based on each individuals race, sex, national origin, religion,
ethnicity, handicap or any other protected characteristic under applicable law.
P. EMPLOYEE BENEFITS. Section 2(p) of the Disclosure Schedule lists
all Employee Benefit Plans that the Sellers maintain or to which the Sellers
contribute or are required to contribute for the benefit of any current or
former employee of the Sellers and true and correct copies of each such Employee
Benefit Plan have been delivered to the Buyers. Each Employee Benefit Plan (and
each related trust or insurance contract) complies and at all times has complied
in form and in operation in all respects with the applicable requirements of
ERISA and the Code. The Sellers do not have any commitment to create any
additional Employee Benefit Plan or modify or change any existing Employee
Benefit Plan that would affect any employee or terminated employee of the
Sellers. There are no pending or, to the Knowledge of the Sellers, threatened
claims under, by or on behalf of any of the Employee Benefit Plans, by any
employee or beneficiary covered by any such Employee Benefit Plan, or otherwise
involving any such Employee Benefit Plan (other than routine claims for
benefits), nor have there been any Reportable Events or Prohibited Transactions
with respect to any Employee Benefit Plan.
Q. ENVIRONMENT, HEALTH, AND SAFETY.
(i) With respect to the operation of the Stations and the Real
Estate, to Sellers' Knowledge, the Sellers are, and at all times in the
past have been, in compliance in all material respects with all
Environmental Laws and all laws (including rules and regulations
thereunder) of federal, state, and local governments (and all agencies
thereof) concerning employee health and safety, and the Sellers have no
Liability (and to Sellers' Knowledge there is no Basis related to the past
or present operations of the Sellers or their predecessors for any present
or future Liability) under any Environmental Law. The Sellers have no
Liability (and to Sellers' Knowledge there is no Basis for any present or
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future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against the Sellers giving rise to any Liability) under
the Occupational Safety and Health Act, as amended, or any other law (or
rule or regulation thereunder) of any federal, state, local, or foreign
government (or agency thereof) concerning employee health and safety, or
for any illness of or personal injury to any employee.
(ii) The Sellers have obtained and at all times have been in
compliance in all material respects with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under,
and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental Laws or law of any
federal, state, or local or foreign government relating to worker health
and safety.
(iii) All properties and equipment used in the Stations and the
Acquired Assets have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances. No pollutant, contaminant, or chemical,
industrial, hazardous, or toxic material or waste ever has been buried,
stored, spilled, leaked, discharged, emitted, or released on any of the
Real Estate. Except as set forth in Section 2(g) of the Disclosure
Schedule, no above ground or underground storage tanks have ever been
located at, on or under the Real Estate. The Sellers have delivered to the
Buyers a complete copy of all environmental claims, reports, studies,
compliance actions or the like of the Sellers or which are available to the
Sellers with respect to any of the Real Estate or any of the Acquired
Assets.
R. LEGAL COMPLIANCE. The Sellers have complied in all material
respects with all laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof. The Sellers have
filed in a timely manner all reports, documents, and other materials they were
required to file (and the information contained therein was correct and complete
in all material respects) under all applicable laws.
S. ADVERTISING CONTRACTS. Section 2(s) of the Disclosure Schedule
lists all arrangements for the sale of air time or advertising on the Stations
in excess of $1000, and the amount to be paid to the Sellers therefor. The
Sellers have no reason to believe and have not received a notice or indication
of the intention of any of the advertisers or third parties to material
contracts of the Sellers to cease doing business with Sellers or to reduce in
any material respect the business transacted with the Sellers or to terminate or
modify any agreements with the Seller (whether as a result of consummation of
the transactions contemplated hereby or otherwise).
T. BROKERS' FEES. The Sellers have no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
U. UNDISCLOSED COMMITMENTS OR LIABILITIES. There are no material
commitments, liabilities or obligations relating to the Stations, whether
accrued, absolute, contingent or otherwise including, without limitation,
guaranties by the Sellers of the liabilities
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<PAGE> 10
of third parties, for which specific and adequate provisions have not been made
on the Financial Statements except those incurred in or as a result of the
Ordinary Course of Business since December 31, 1998.
S. DISCLOSURE. The representations and warranties contained in this
Section 2 do not contain any untrue statement of a material fact or omit to
state any fact necessary in order to make the statements and information
contained in this Section 2 not misleading in any material respect.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYERS.
Buyers represent and warrant to the Sellers that the statements contained
in this Section 3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date except as set forth in the
Disclosure Schedule.
A. ORGANIZATION OF THE BUYERS. Buyers are corporations duly organized,
validly existing, and in good standing under the laws of Nevada.
B. AUTHORIZATION OF TRANSACTION. Buyers have full power and authority
to execute and deliver this Agreement and the Ancillary Agreements and to
perform their obligations hereunder and thereunder. Without limiting the
foregoing, the Boards of Directors of Broadcasting, Licensing and Wireless have
duly authorized the execution, delivery and performance of this Agreement and
the Ancillary Agreements by their respective entities. This Agreement and the
Ancillary Agreements constitute legally binding obligations of the Buyers,
enforceable against the Buyers in accordance with their respective terms and
conditions.
C. NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Section 1(e) above), will (i) violate any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which the Buyers
are subject or any provision of their articles of incorporation, organization or
other charter documents, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice or
third party consent under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest, or other arrangement to which the
Buyers are a party or by which they are bound or to which any of their assets is
subject. Other than the Assignment Application described in Section 4(b) and the
Hart-Scott Rodino Application described in Section 4(c), the Buyers do not need
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any court or government or governmental agency in order
for the Parties to consummate the transactions contemplated by this Agreement or
the Ancillary Agreements (including the assignments and assumptions referred to
in Section 1 (e) above).
D. BROKERS' FEES. The Buyers have no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
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E. COMMISSION LICENSES AND COMPLIANCE WITH COMMISSION REQUIREMENTS.
Buyers know of no facts or circumstances which would, under the Communications
Act of 1934, as amended, or the rules, regulations, and policies of the FCC,
disqualify or preclude any of the Buyers from assuming the FCC Licenses and
becoming the duly authorized licensee of the Stations. There are no proceedings,
complaints, notices of forfeiture, claims, or investigations pending or
threatened against any Buyer or any principal, officer, director, or owner of
any Buyer that would materially impair the qualification of any Buyer to assume
the FCC Licenses or which would materially impede any Buyer's ability to
prosecute the Assignment Application or to seek the FCC Consent. Sellers
acknowledge that Buyer and its affiliates own and operate Stations WWQQ-FM,
WWAV-FM, WWAV-AM, WXQR-FM, and WQSL-FM in the Wilmington, NC and Jacksonville,
NC metropolitan areas, and that Buyer will not be deemed to have violated this
section by virtue of such ownership.
F. LITIGATION. The Buyers are not (i) subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge; or (ii) a party or,
to the Buyers' Knowledge, are threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, that could result in any adverse
change in the assets, liabilities, business, financial condition, operations,
results of operations, or future prospects of the Buyers taken as a whole. The
Buyers have no Knowledge of any Basis for any such charge, complaint, action,
suit, proceeding, hearing, or investigation against the Sellers.
G. DISCLOSURE. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a material fact or omit to
state any fact necessary in order to make the statements and information
contained in this Section 3 not misleading in any material respects.
4. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
A. GENERAL. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable to
consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 5 below).
B. ASSIGNMENT APPLICATIONS. Within ten (10) days of the execution of
this Agreement, the Sellers and the Buyers shall jointly file with the FCC an
application for assignment of the FCC Licenses, permits and authorizations
pertaining to the Stations from the Sellers to Licensing (the "Assignment
Application"). The costs of the FCC filing fees in connection with the
Assignment Application shall be divided equally between the Parties. Each party
shall pay its own attorneys' fees. The Sellers and the Buyers shall thereafter
prosecute the Assignment Application with all reasonable diligence and otherwise
use commercially reasonable efforts to obtain the grant of the Assignment
Application as expeditiously as practicable (but neither the Sellers nor the
Buyers shall have any obligation to satisfy
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<PAGE> 12
complainants or the FCC by taking any steps which would have a material adverse
effect upon the Stations or impose significant costs on such party). If the FCC
imposes any condition on either party to the Assignment Application, such party
shall use commercially reasonable efforts to comply with such condition,
provided, that neither party shall be required hereunder to comply with any
condition that would have a material adverse effect upon the Stations or any
Affiliate. The Sellers and the Buyers shall jointly oppose any requests for
reconsideration or judicial review of FCC approval of the Assignment Application
and shall jointly request from the FCC extension of the effective period of FCC
approval of the Assignment Application if the Closing shall not have occurred
prior to the expiration of the original effective period of the FCC Consent.
Nothing in this Section 4(b) shall be construed to limit any party's right to
terminate this Agreement pursuant to Section 9 of this Agreement.
C. NOTICES AND CONSENTS. The Sellers will give all notices to third
parties and shall have obtained all third party consents that the Buyers
reasonably may request and that the Buyers have designated as material consents,
and Sellers will use their best efforts to obtain all other third party
consents. The Sellers and Buyers acknowledge that no filing with the Department
of Justice or the Federal Trade Commission is required under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the "Hart-Scott-Rodino
Application"). Each of the Parties will take any additional action that may be
necessary, proper, or advisable in connection with any other notices to, filings
with, and authorizations, consents, and approvals of governments, governmental
agencies, and third parties that it may be required to give, make, or obtain.
D. CONTRACTS. The Sellers will not without the prior written consent
of the Buyers amend, change, or modify any of the contracts listed on Section
2(k) of the Disclosure Schedule in any material respect. The Sellers will not
without prior written consent of the Buyers enter into any contract outside the
Ordinary Course of Business which involves more than Five Thousand Dollars
($5,000).
E. OPERATION OF STATIONS. The Sellers will not engage in any practice,
take any action, or enter into any transaction with respect to any of the
Stations outside the Ordinary Course of Business. The Sellers shall operate the
Stations in compliance with the FCC Licenses and the rules and regulations of
the FCC, and the FCC Licenses shall at all times remain in full force and
effect. The Sellers shall file with the FCC all material reports, applications,
documents, instruments and other information required to be filed in connection
with the operation of the Stations.
F. PRESERVATION OF STATIONS AND THE ACQUIRED ASSETS. Subject to the
operation of the Stations by Broadcasting under the LMA Agreement, the Sellers
will keep the Stations and the Acquired Assets and properties substantially
intact, including its physical facilities, working conditions, all of the
Confidential Information, call letters and trade secrets of the Stations, and
the FCC Licenses.
G. FULL ACCESS AND CONSULTATION. The Sellers will permit
representatives of the Buyers to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Stations, to all premises, properties, books, records, contracts, Tax records,
and documents of or pertaining to the Sellers. The Sellers will consult with the
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Buyers' management with a view to informing Buyers' management as to the
operations, management and business of the Stations.
H. NOTICE OF DEVELOPMENTS. The Sellers will give prompt written notice
to the Buyers of any material development affecting business, operations or
prospects of the Stations or the Acquired Assets or the ability of the Sellers
to perform hereunder.
I. EXCLUSIVITY. The Sellers will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any person relating to
any (A) merger or consolidation, (B) acquisition or purchase of securities or
assets of Sellers, or (C) similar transaction or business combination involving
the sale or transfer of any assets or securities of Sellers, or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any person to do or seek any of the foregoing. The Sellers
will notify the Buyers immediately if any person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
J. TITLE INSURANCE, SURVEYS AND ENVIRONMENTAL ASSESSMENTS. The Buyers
will obtain (i) with respect to each parcel of Real Estate subject to the
Leases, a leasehold owner's policy issued by a title insurer reasonably
satisfactory to the Sellers, in an amount equal to the fair market value of such
Real Estate (including all improvements located thereon), insuring over the
standard pre-printed exceptions and insuring leasehold title to such Real Estate
in the Buyers as of the Closing subject only to the Permitted Real Estate
Encumbrances, together with such endorsements for zoning, contiguity, public
access and extended coverage as the Buyers or their lender reasonably request,
(ii) with respect to each parcel of Owned Real Estate, an owner's policy of
title insurance by a title insurer reasonably satisfactory to the Buyers, in an
amount equal to the fair market value of such Real Estate (including all
improvements located thereon), insuring over the standard pre-printed exceptions
and insuring title to the Owned Real Estate to be vested in the Buyers as of the
Closing free and clear of all liens and encumbrances except Permitted Real
Estate Encumbrances, together with such endorsements for zoning, contiguity,
public access and extended coverage as the Buyers or its lender reasonably
request, (iii) a current survey of each parcel of Real Estate certified to the
Buyers and its lender, prepared by a licensed surveyor and conforming to current
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Surveys') which shall not
disclose any survey defect or encroachment from or onto any of the Real Estate
which has not been cured or insured over prior to the Closing; and (iv) with
respect to each parcel of Real Estate, a current Phase I environmental site
assessment from an environmental consultant or engineer reasonably satisfactory
to the Sellers which does not indicate that the Sellers and the Real Estate are
not in compliance with any Environmental Law and which shall not disclose or
recommend any action with respect to any condition to be remediated or
investigated or any contamination on the site assessed. The Buyers will pay the
costs of these title policies, Surveys, and environmental assessments.
K. CONTROL OF STATIONS. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Assignment Application. Between the date of this Agreement and
the Closing Date, the Buyers and their
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employees or agents shall not directly or indirectly control, supervise, or
direct, or attempt to control, supervise, or direct, the operation of the
Stations, and such operation shall be the sole responsibility of and in the
control of the Sellers, subject to the Local Marketing Agreement.
L. RISK OF LOSS. The risk of loss, damage, or destruction to any of
the Acquired Assets shall remain with the Sellers until the Closing. In the
event of any such loss, damage, or destruction the Sellers will promptly notify
the Buyers of all particulars thereof, stating the cause thereof (if known) and
the extent to which the cost of restoration, replacement and repair of the
Acquired Assets lost, damaged or destroyed will be reimbursed under any
insurance policy with respect thereto. The Sellers will, at Sellers' expense,
repair or replace such Acquired Assets to their former condition as soon as
possible after loss, damage or destruction thereof and shall use their best
efforts to restore as promptly as possible transmissions as authorized in the
FCC Licenses. The Closing Date shall be extended (with FCC consent, if
necessary) for up to sixty (60) days to permit such repair or replacement. If
repair or replacement cannot be accomplished within sixty (60) days of the date
of the Sellers' notice to the Buyers and the Buyers determine that the Sellers'
failure to repair or replace would have a material adverse effect on the
operation of the Stations:
(i) the Buyers may elect to terminate this Agreement; or
(ii) the Buyers may postpone the Closing Date until such time as the
property has been repaired, replaced or restored in a manner and to an
extent reasonably satisfactory to the Buyers, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Sellers'
notice to the Buyers, in which case any Party may terminate this Agreement;
or
(iii) the Buyers may choose to accept the Acquired Assets in their
"then" condition, together with the Sellers' assignment to the Buyers of
all rights under any insurance claims covering the loss, damage or
destruction and payment over to the Buyers of any proceeds under any such
insurance policies, previously received by the Sellers with respect thereto
plus an amount equal to the amount of any deductible or self-insurance
maintained by Sellers on such Acquired Assets. In the event the Closing
Date is postponed pursuant to this Section 4(p), the parties hereto will
cooperate to extend the time during which this Agreement must be closed as
specified in the consent of the FCC.
5. CONDITIONS TO OBLIGATION TO CLOSE.
A. CONDITIONS TO OBLIGATION OF THE BUYERS. The obligation of Buyers to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date as though made on and as of the Closing Date;
(ii) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
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(iii) the Sellers shall have procured all of the necessary third
party related to transfer of real estate, including studio or tower site
leases, and all of the title insurance commitments (and endorsements),
Surveys and environmental site assessments described in Section 4(o) above
shall have been obtained;
(iv) no action, suit, investigation, inquiry or other proceeding
shall be pending or threatened before any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction
wherein a judgment, order, decree, stipulation, injunction, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement or impose damages or penalties upon any of the parties if such
transactions are consummated, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(C) affect adversely the right of the Buyers to own, operate, or control
the Acquired Assets (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Sellers shall have delivered to the Buyers a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified above in Sections 5(a)(i)
through (iv) is satisfied in all respects;
(vi) each of the Assignment Applications shall have been approved by
a Final Order of the FCC, the waiting period under the Hart-Scott-Rodino
Act shall have expired, and the Buyers shall have received all governmental
approvals required to transfer all other authorizations, consents, and
approvals of governments and governmental agencies set forth in the
Disclosure Schedule;
(vii) the relevant parties shall have entered into the Postclosing
Agreement;
(viii) the Buyers shall have received from counsel to the Sellers an
opinion with respect to the matters set forth in Exhibit E attached hereto,
addressed to the Buyers and its lender and dated as of the Closing Date;
(ix) the Parties shall have agreed to allocate the Purchase Price
(and all other capitalizable costs) among the Acquired Assets for all
purposes (including financial accounting and tax purposes) in accordance
with an allocation schedule to be delivered at closing; and
(x) all actions to be taken by the Sellers in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyers.
B. CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of the Sellers
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
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(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date as though made on and as of the Closing Date;
(ii) the Buyers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, investigation, inquiry or other proceeding
shall be pending or threatened before any court or quasi judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein a judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or impose damages or
penalties upon any of the Parties if such transactions are consummated,
or (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such judgment, order,
decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Sellers a certificate
(without qualification as to knowledge or materiality or otherwise) to
the effect that each of the conditions specified above in Section
5(b)(i)-(iii) is satisfied in all respects and the statements contained
in such certificate shall be deemed a warranty of the Buyers which
shall survive the Closing;
(v) each of the Assignment Applications shall have been approved
by a Final Order of the FCC, the waiting period under the
Hart-Scott-Rodino Act shall have expired and the Buyers shall have
received all governmental approvals required to transfer all other
authorizations, consents, and approvals of governments and governmental
agencies set forth in the Disclosure Schedule;
(vi) the relevant parties shall have entered into the Postclosing
Agreement; and
(vii) all actions to be taken by the Buyers in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following
the Closing:
a. GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 7 below).
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<PAGE> 17
b. LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Stations, each of the other Parties will reasonably cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 7 below); provided, however, that such access and
cooperation does not unreasonably disrupt the normal operations of the
cooperating party.
c. ADJUSTMENTS. Operation of the Stations and the income and
expenses attributable thereto up through the close of business on the day before
the Closing Date shall be for the account of the Sellers and thereafter for the
account of the Buyers. Such items as power and utilities charges, insurance,
real and personal property taxes, prepaid expenses, deposits, music license
fees, and rents and payments pertaining to the Assumed Contracts (including any
contracts for the sale of time for cash, trade or barter so assigned) shall be
prorated between the Sellers and the Buyers as of the Closing Date in accordance
with the foregoing principle. Contractual arrangements that do not reflect an
equal rate of compensation to a Stations over the term of the agreement shall be
equitably adjusted as of the Closing Date. The prorations and adjustments
hereunder shall be made and paid insofar as feasible on the Closing Date, with a
final settlement sixty (60) days after the Closing Date. In the event of any
disputes between the Parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at such time and such disputes shall be determined by
an independent accounting firm mutually acceptable to both parties and the fees
and expenses of such accounting firm shall be paid one-half (1/2) by the Sellers
and one-half (1/2) by the Buyer.
d. CONSENTS. In the event any of the Assumed Contracts are not
assignable or any consent to such assignment is not obtained on or prior to the
Closing Date, and the Buyers elect to consummate the transactions contemplated
herein despite such failure or inability to obtain such consent, the Sellers
shall continue to use commercially reasonable efforts to obtain any such
assignment or consent after the Closing Date. Until such time as such assignment
or approval has been obtained, the Sellers will cooperate with Buyers in any
lawful and economically feasible arrangement to provide that the Buyers shall
receive the Sellers' interest in the benefits under any such Assumed Contract,
including performance by the Sellers as agent, if economically feasible;
provided, however, that the Buyers shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent that
Buyers would have been responsible therefor if such consent or assignment had
been obtained.
e. ACCESS. Sellers acknowledge that Buyers are subsidiaries of a
publicly traded company and that as such Buyers have certain financial reporting
obligations, which may include the obligation to provide financial information
on the Sellers and the historical operations of the Stations prior to Closing.
Sellers agree to provide access to Buyers, both before and after Closing, as may
be necessary to provide such financial audits or other information as needed by
Buyers to satisfy their reporting obligations.
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<PAGE> 18
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
a. SURVIVAL. All of the representations and warranties of the
Sellers contained in Section 2 of this Agreement (other than the representations
and warranties of the Sellers contained in Sections 2(a), 2(b), 2(c), and 2(d)
hereof or relating to the Sellers' title to the Acquired Assets) shall survive
the Closing and continue in full force and effect for a period until 90 days
after the applicable statute of limitations has expired with respect to any
claim by the Buyers based on a claim or action by a third party and for a period
of one (1) year following Closing with respect to any claim by the Buyers not
based on a claim or action by a third party. All of the other representations
and warranties (including the representations and warranties Sellers contained
in Sections 2(a), 2(b), 2(c), and 2(d) hereof or relating to the Sellers' title
to the Acquired Assets) and all covenants of the Buyers and the Sellers
contained in this Agreement shall survive the Closing and continue in full force
and effect for a period until ninety (90) days after the applicable statute of
limitations has expired.
b. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYERS. Except
as described below in Section 7(d) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Sellers agree to indemnify the Buyers
from and against the entirety of any Adverse Consequences the Buyers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by:
(i) any misrepresentation or breach of any of the Sellers'
representations or warranties, and covenants contained in this
Agreement or in any Ancillary Agreement executed and/or delivered by
the Sellers (so long as the Buyers make a written claim for
indemnification within the applicable survival period);
(ii) any breach or nonfulfillment of any agreement or
covenant of the Sellers contained herein or in any Ancillary Agreement;
(iii) any Liability of the Sellers which is not an Assumed
Liability; and/or
(iv) any Liability of the Buyers arising by operation of
law (including under any bulk transfer law of any jurisdiction or under
any common law doctrine of defacto merger or successor liability) which
is not an Assumed Liability.
c. INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLERS. Except
as described below in Section 7(e) with respect to a breach of a warranty or
covenant prior to the Closing Date, the Buyers agree to indemnify the Sellers
from and against the entirety of any Adverse Consequences the Sellers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any misrepresentation or breach of any of the Buyers' representations or
warranties contained in this Agreement or in any Ancillary Agreement executed
and/or delivered by the Buyers (so long as the Sellers make a written claim for
indemnification within the applicable survival period) or (ii) any breach or
nonfulfillment of any agreement or covenant of the Buyers contained herein or in
any Ancillary Agreement, or (iii) any Assumed Liability.
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d. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the Buyers would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the Buyers
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter
(subject to the provisions set forth in Section 10(n) below), in addition to any
other remedy to which it may be entitled, at law or in equity. Each of the
Parties acknowledges and agrees that not withstanding the provision in Section
7(e) with respect to the remedy of liquidated damages upon a breach of a
warranty or covenant of this Agreement prior to the Closing, money damages would
not be an adequate remedy for Buyers for a breach of any provision of this
Agreement.
e. LIQUIDATED DAMAGES. The Buyers and the Sellers acknowledge that
in the event that the transactions contemplated by this Agreement are not closed
because of a default by the Buyers, the Adverse Consequences to the Sellers as a
result of such default may be difficult, if not impossible, to ascertain.
Accordingly, in lieu of indemnification pursuant to Section 7(c), the Sellers
shall be entitled to receive from the defaulting Party for such default the
Earnest Money Deposit as liquidated damages without the need for proof of
damages, subject only to successfully proving in a court of competent
jurisdiction that the Buyer materially breached this Agreement and that the
transactions contemplated thereby have not occurred. The Sellers shall proceed
against the Earnest Money Deposit as full satisfaction of liquidated damages
owed by the Buyers and as its sole remedy for a failure of the transactions
contemplated hereby to occur as a result of a material breach of the terms of
this Agreement by the Buyers. The provisions of this Section 7(e) are subject to
the provisions of Section 7(g) below.
f. MATTERS INVOLVING THIRD PARTIES. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 7, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is damaged as a result
of such failure. In the event any Indemnifying Party notifies the Indemnified
Party within 15 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (iii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the matter without
the written consent of the Indemnifying Party (not to be withheld unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any judgment
with respect to the matter, or enter into any settlement which does not include
a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the Indemnifying Party does not notify the Indemnified
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Party within 15 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, however, and/or in
the event the Indemnifying Party shall fail to defend such claim actively and in
good faith, then the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deem
appropriate.
g. LIMITATION OF LIABILITY. Notwithstanding anything in this
Agreement to the contrary, after the Closing neither party shall indemnify or
otherwise be liable to the other party from and after the Closing Date (i) for
an amount in excess of the Purchase Price, and (ii) except to the extent that
the Adverse Consequences suffered by the Identified Party, in the aggregate from
all indemnifiable events shall exceed Ten Thousand Dollars ($10,000) and
indemnification shall be made by the indemnifying party only to the extent of
such excess over Ten Thousand Dollars ($10,000); provided however that the
foregoing limitations shall not be applicable to: (i) the obligations of the
Buyer to pay and discharge any Liability of the Sellers to third parties from
and after the Closing Date assumed by the Buyer under the terms of this
Agreement; (ii) the obligation of the Sellers to pay and discharge any Liability
to third parties not assumed by the Buyer under the terms of this Agreement, or
(iii) the Sellers' obligation to deliver clear title to the Acquired Assets.
8. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of the
assets of the Sellers, other than Retained Assets that are used or useful in the
operation of the Stations, wherever located, including but not limited to all of
its (a) leaseholds and other interests of any kind therein, improvements,
fixtures, and fittings thereon (such as towers and antennae), and easements,
rights-of-way, and other appurtenances thereto); (b) tangible personal property
(such as fixed assets, computers, data processing equipment, electrical devices,
monitoring equipment, test equipment, switching, terminal and studio equipment,
transmitters, transformers, receivers, broadcast facilities, furniture,
furnishings, inventories of compact disks, records, tapes and other supplies,
vehicles) and all assignable warranties with respect thereto; (c) Intellectual
Property, goodwill associated therewith, licenses and sublicenses granted and
obtained with respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions; (d) rights under orders and agreements (including
those Barter Agreements and Advertising Contracts identified on the Disclosure
Schedule) now existing or entered into in the Ordinary Course of Business for
the sale of advertising time on the Stations; (e) Assumed Contracts, indentures,
Security Interests, guaranties, other similar arrangements, and rights
thereunder; (f) call letters of the Stations, jingles, logos, slogans, and
business goodwill of the Stations; (g) claims, deposits, prepayments, refunds,
causes of action, chooses in action, rights of recovery (including rights under
policies of insurance), rights of set off, and rights of recoupment; (h)
Licenses and similar rights obtained from governments and governmental agencies;
and (i) FCC logs and records and all other books, records, ledgers, logs, files,
documents, correspondence, advertiser lists, all other lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, program production materials, studies,
reports, and other printed or written materials; and (j) goodwill of the
Stations.
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"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"ADVERTISING CONTRACTS" has the meaning set forth in Section 2(s), above.
"AFFILIATE" means with reference to any person or entity, another person or
entity controlled by, under the control of or under common control with that
person or entity.
"ASSIGNMENT APPLICATION" has the meaning set forth in Section 4(b) above.
"ASSUMED CONTRACTS" means the Leases, the Barter Agreements, the
Advertising Contracts and those contracts identified on Section 2(j) of the
Disclosure Schedule as those to be assumed by Broadcasting.
"ASSUMED LIABILITIES" means (a) obligations of the Sellers which accrue
after the Closing Date under the Assumed Contract either: (i) to furnish
services, and other non-Cash benefits to another party after the Closing; or
(ii) to pay for goods, services, and other non-Cash benefits that another party
will furnish to it after the Closing. The Assumed Liabilities shall not include
any Retained Liabilities.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"BUYERS" has the meaning set forth in forth in the preface above.
"CASH" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"CLOSING" has the meaning set forth in Section 1(d) above.
"CLOSING DATE" has the meaning set forth in Section 1(d) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of the Sellers.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 2(a) above.
"EARNEST MONEY ESCROW AGREEMENT" has the meaning set forth in Section 1(c)
above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined
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<PAGE> 22
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multi-employer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act of 1972, the Clean Air Act
of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control Act
of 1976, the Refuse Act of 1899, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other law of any federal,
state, local, or foreign government or agency thereof (including rules,
regulations, codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, 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
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means Bank One, N.A..
"ESCROW DEPOSIT" has the meaning set forth in Section 1(c) above.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"FCC LICENSES" means the licenses, permits and other authorizations,
including any temporary waiver or special temporary authorization, issued by the
FCC to the Sellers in connection with the conduct of the business and operation
of the Stations.
"FINAL ORDER" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
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<PAGE> 23
"FINANCIAL STATEMENTS" has the meaning set forth in Section 2(e) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"HART-SCOTT-RODINO APPLICATION" has the meaning set forth in Section 4(c)
above.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7(f) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7(f) above.
"INTELLECTUAL PROPERTY" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, Internet domain names, and corporate
names and registrations and applications for registration thereof, (c) all
programs, programming materials, copyrights and registrations and applications
for registration thereof, (d) mask works and registrations and applications for
registration thereof, (e) computer software, data, and documentation, (f) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, market and other research information, drawings,
specifications, designs, plans proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information), (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).
"KNOWLEDGE" means actual knowledge after reasonable investigation.
"LEASES" means those real estate leases to which Sellers are a party
governing Sellers' studios and FM tower sites, as described in Section 2(i) of
the Disclosure Schedule.
"LIABILITY" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LICENSES" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Sellers with respect
to the operations of the Stations and all applications therefor, together with
any renewals, extension or modifications thereof and additions thereto.
"MULTI-EMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNED REAL ESTATE" means the real property owned by the Sellers as
described in Section 2(i) of the Disclosure Schedule and all buildings,
fixtures, and improvements located thereon.
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<PAGE> 24
"PARTY" has the meaning set forth in the preface above.
"PERMITTED REAL ESTATE ENCUMBRANCES" shall have the meaning set forth in
Section 2(i), above.
"POST-CLOSING AGREEMENT" means the Post-Closing Agreement with Sellers'
owners in the form attached hereto as Exhibit C.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"PURCHASE PRICE " has the meaning set forth in Section 1(c) above.
"REAL ESTATE" means the Owned Real Estate and the real estate, building,
fixtures and improvements which are the subject of the Leases.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAINED ASSETS" means (i) the corporate or limited liability company
charter, qualifications to conduct business as a foreign corporation or limited
liability companion, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock or membership certificates, and other
documents relating to the organization, maintenance, and existence of the
Sellers as corporate entities or limited liability companies; (ii) any of the
rights of the Sellers under this Agreement (or under any side agreement between
the Sellers on the one hand and the Buyers on the other hand entered into on or
after the date of this Agreement); (iii) accounts, notes and other receivables
of the Sellers; and (iv) Cash.
"RETAINED LIABILITIES" means any other obligations or Liabilities of the
Sellers, including but not limited to: (i) any Liability relating to the
ownership or operation of the Stations prior to the Closing, except as provided
in the Local Marketing Agreements; (ii) any Liability of the Sellers for income,
transfer, sales, use, and other Taxes arising in connection with the
consummation contemplated hereby; (iii) any Liability of the Sellers for costs
and expenses incurred in connection with this Agreement or the consummation of
the transactions contemplated hereby (except as set forth in Section 4(i)
relating to Surveys, title commitments and environmental audits and Section 4(b)
with regard to the Assignment Application; or (iv) any Liability or obligation
of the Sellers under this Agreement (or under any side agreement between the
Sellers on the one hand and the Buyers on the other hand entered into on or
after the date of this Agreement).
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; and (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation.
"SELLERS" has the meaning set forth in the preface above.
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<PAGE> 25
"STATIONS" means the radio broadcast stations WFNC-AM, Fayetteville, NC;
WFNC-FM, Lumberton, NC; WQSM-FM, Fayetteville, NC; WRCQ-FM, Dunn, NC; WGNI-FM,
Wilmington, NC; and WMNX-FM, Wilmington, NC.
"SUBSIDIARY," with respect to any person, means any corporation,
partnership, joint venture, limited liability company, trust or estate of which
(or in which ) 50% or more of (i) the outstanding capital stock or other equity
interest having voting power to elect a majority of the Board of Directors of
such corporation or persons having a similar role as to an entity that is not a
corporation, (ii) the interest in the profits of such partnership or joint
venture, or (iii) the beneficial interest of such trust or estate are at such
time directly or indirectly owned by such person or one or more of such person's
Subsidiaries.
"SURVEYS" has the meaning set forth in Section 4(o) above.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
9. TERMINATION.
a. TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyers and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyers may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing in the
event the Sellers are in breach of any representation, warranty, or
covenant contained in this Agreement; provided, however, that if such
breach is capable of being cured, such breach also remains uncured for
twenty (20) days after notice of breach is received by the Sellers from
the Buyers;
(iii) the Sellers may terminate this Agreement by giving
written notice to the Buyers at any time prior to the Closing in the event
the Buyers are in breach of any representation, warranty, or covenant
contained in this Agreement; provided, however that if such breach is
capable being cured, such breach remains uncured for twenty (20) days
after notice of breach is received by the Buyers from the Sellers;
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<PAGE> 26
(iv) the Buyers may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing if the
Closing shall not have occurred on or before the 720th day following the
date of this Agreement by reason of the failure of any condition precedent
under Section 5(a) hereof (unless the failure results primarily from the
Buyers themselves breaching any representation, warranty, or covenant
contained in this Agreement);
(v) the Sellers may terminate this Agreement by giving
written notice to the Buyers at any time prior to the Closing if the
Closing shall not have occurred on or before the 720th day following the
date of this Agreement by reason of the failure of any condition precedent
under Section 5(b) hereof (unless the failure results primarily from the
Sellers itself breaching any representation, warranty, or covenant
contained in this Agreement); or
(vi) the Buyers or the Sellers may terminate this
Agreement if any Assignment Application is denied by Final Order.
c. EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant
to Section above, all obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party (except for any Liability
of any Party then in breach).
10. MISCELLANEOUS.
a. PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
b. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
c. ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
d. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party, provided that (i) the Buyers may assign all of their right,
title and interest in, to and under this Agreement to one or more Affiliates,
who shall then, subject to the terms and conditions of this Agreement, have the
right to receive the Acquired Assets, assume the Assumed Liabilities, and to pay
to the Sellers the Purchase Price therefor or to any successor to the Buyers in
the event of any sale, merger or consolidation of the Buyers, and (ii) Buyers
may assign their indemnification claims and their
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<PAGE> 27
rights under the warranties and representations of the Sellers to the financial
institution(s) providing financing to the Buyers in connection with this
transaction. No assignment of this Agreement or any portion hereof shall be
deemed to release the assigning party from all or any of its obligations under
this Agreement.
e. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
f. HEADINGS. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
g. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be considered to be given
and received in all respects when hand delivered, when delivered via prepaid
express or courier delivery service, when sent by facsimile transmission
actually received by the receiving equipment or three (3) days after deposited
in the United States mail, certified mail, postage prepaid, return receipt
requested, in each case addressed to the intended recipient as set forth below:
If to the Sellers:
Ms. Hannah Gage
President
The Cape Fear Companies
1009 Drayton Road
P.O. Box 35297
Attn: Ms. Hannah Gage
Fax: (910) 864-3065
Copy to:
(which copy shall not constitute notice to Sellers)
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
1500 Fayetteville Street Hall, Suite 1600 (Zip 27601)
P.O. Box 1800
Raleigh, North Carolina 27602
Attn: Daniel M. Sroka, Esquire
Fax: (919) 839-0304
If to the Buyers:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
Cumulus Wireless Services Inc.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53202
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<PAGE> 28
Attn: Terrence J. Leahy
Fax: (414) 615-2880
With a copy to:
Cumulus Broadcasting, Inc.
Cumulus Licensing Corp.
Cumulus Wireless Services Inc.
875 N. Michigan Avenue
Suite 3650
Chicago, Illinois 60611
Attn: Richard J. Bonick
Fax: (312) 867-0098
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
h. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
North Carolina.
i. AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyers and
the Sellers. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
j. SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
k. EXPENSES. The Buyers and the Sellers, will each bear their own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby, other than as set forth
in Section 4(b) with regard to the Assignment Applications and as set forth in
Section 4(j) with respect to Surveys, title
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<PAGE> 29
commitments and environmental audits. The Sellers and the Buyers will each pay
one-half (1/2) of any transfer or sales taxes and other recording or similar
fees necessary to vest title to each of the Acquired Assets in the Buyers.
l. CONSTRUCTION. The language used in this Agreement will be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied against any Party. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
m. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
n. SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Wilmington, North Carolina
in any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on the other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 10(g) above. Nothing in this Section 10(n),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
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<PAGE> 30
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the
date first above written.
CUMULUS BROADCASTING, INC.
By:
------------------------------
(printed)
Title:
---------------------------
CUMULUS LICENSING CORP.
By:
------------------------------
(printed)
Title:
---------------------------
CUMULUS WIRELESS SERVICES INC.
By:
------------------------------
(printed)
Title:
---------------------------
C.F. RADIO, INC.
By:
------------------------------
(printed)
Title:
---------------------------
CAPE FEAR BROADCASTING COMPANY
By:
------------------------------
(printed)
Title:
---------------------------
CAPE FEAR RADIO, LLC
By:
------------------------------
(printed)
Title:
---------------------------
CAPE FEAR TOWER SYSTEMS, LLC
By:
------------------------------
(printed)
Title:
---------------------------
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<PAGE> 31
SCHEDULE A
PURCHASE PRICE. The Buyers agree to pay to the Sellers, as
consideration for the Acquired Assets, the amount of Forty-Four Million and
no/100 Dollars ($44,000,000), plus the 1999 Deposit, as defined below, which
amounts shall be payable as follows:
(i) on the date of this Agreement, the Buyers will
deposit with the Escrow Agent the amount of Two
Million Two Hundred Thousand and no/100 Dollars
($2,200,000) (the "Earnest Money Deposit") in the
form of an irrevocable letter of credit from Lehman
Commercial Paper, Inc.;
(ii) on October 1, 1999 (or as soon thereafter as is
practicable), the Buyer will pay to the Seller an
amount equivalent to the Broadcast Cash Flow of the
Stations for the month of September 1999 (as defined
in the Local Marketing Agreement) (the "1999
Deposit"), which amount shall be added to and not
credited against the $44,000,000 referred to above;
and
(iii) on the Closing Date, the Buyers shall pay to the
Sellers the amount of Forty Four Million and no/100
Dollars ($44,000,000), with adjustments as provided
specifically in this Agreement.
The Earnest Money Deposit referenced in this Schedule A shall be placed in
escrow with the Escrow Agent pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the "Earnest Money Escrow Agreement"), and shall
be disbursed to Sellers or returned to Buyer as provided in the Earnest Money
Escrow Agreement. If the transactions contemplated by the Agreement do not close
and the Agreement is terminated, Sellers will be entitled to retain the 1999
Deposit.
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<PAGE> 32
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of September
23, 1999, by and among C. F. RADIO, INC., a North Carolina corporation ("CF");
CAPE FEAR RADIO, LLC, a North Carolina limited liability company ("CFLLC"); CAPE
FEAR BROADCASTING, INC., a North Carolina corporation ("CFB"); and CAPE FEAR
TOWER SYSTEMS, LLC; a North Carolina limited liability company ("CF Towers")
(collectively referred to as "Sellers"); CUMULUS BROADCASTING, INC., a Nevada
corporation; CUMULUS LICENSING CORP., a Nevada corporation (collectively
referred to as "Buyers"); and BANK ONE TRUST COMPANY, N.A. ("Escrow Agent").
Capitalized terms that are used but not defined herein shall have that meaning
assigned to them in the Purchase Agreement.
WITNESSETH:
WHEREAS, Sellers and Buyer are parties to that certain Asset
Purchase Agreement executed as of September 23, 1999 (the "Purchase Agreement"),
providing for the purchase by Buyers of the Acquired Assets from Sellers; and
WHEREAS, Schedule A of the Purchase Agreement provides that an
irrevocable letter of credit issued by Lehman Commercial Paper Inc. and in favor
of Escrow Agent in the amount of Two Million Two Hundred Thousand and no/100
Dollars ($2,200,000) shall be placed with the Escrow Agent pending the Closing
of the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions set forth in the Purchase Agreement and herein,
Sellers, Buyers and Escrow Agent agree as follows:
1. Sellers and Buyers hereby establish this Escrow Agreement and mutually
appoint Bank One Trust Company, N.A., as escrow agent pursuant to the terms and
conditions of the Purchase Agreement. Escrow Agent hereby accepts this
appointment.
2. Upon the execution of this Escrow Agreement by all parties hereto,
Buyers shall deposit with Escrow Agent an irrevocable letter of credit issued by
Lehman Commercial Paper Inc. and in favor of Escrow Agent (the "Letter of
Credit") in the amount of Two Million Two Hundred Thousand and no/100 Dollars
($2,200,000).
3. Escrow Agent agrees to hold the Letter of Credit in accordance with
the terms of this Agreement. In the event the Escrow Agent draws under the
Letter of Credit and does not immediately deliver the proceeds thereof to the
Sellers or Buyers as hereinafter provided (the proceeds so drawn being referred
to herein as the "Earnest Money Deposit"), the Escrow Agent shall invest the
Earnest Money Deposit in One Group U.S. Treasury Money Market account. The
Escrow Agent, subject to the terms of the Purchase Agreement, shall release from
Escrow the Letter of Credit or the Earnest Money Deposit and deliver the same in
accordance with one of the following notices:
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<PAGE> 33
A. The Letter of Credit by its terms expires on September 1, 2000.
If by August 1, 2000, the Letter of Credit has not been extended
until September 1, 2001, the Escrow Agent shall immediately draw
on the Letter of Credit and treat the proceeds of such draw as
the Earnest Money Deposit.
B. If the Closing of the transaction contemplated by the Purchase
Agreement occurs, Escrow Agent shall, upon receipt of joint
written notice from Buyers and Sellers, deliver the Letter of
Credit to the issuer thereof for cancellation; or if the Escrow
Agent holds the Earnest Money Deposit, shall deliver in
immediately available funds:
i. to the Sellers, the principal amount of the Earnest Money
Deposit, to be applied by the Sellers as a portion of the
Purchase Price; and
ii. to the Buyers, the interest earned on the Earnest Money
Deposit.
C. If the Closing of the transaction contemplated by the Purchase
Agreement does not occur due to a material breach of the Purchase
Agreement by Buyers, and the Sellers are not in material breach
of the Purchase Agreement, Escrow Agent shall, upon ten (10)
business days advance written notification from Sellers or ten
(10) business days after receipt of a final order of a state or
federal court of competent jurisdiction ordering payment, draw on
the letter of credit, and release to Sellers the Earnest Money
Deposit and all interest earned thereon.
D. If the Closing of the transaction contemplated by the Purchase
Agreement does not occur due to any cause or event other than a
material breach of the Purchase Agreement by the Buyers, or if
the Sellers are in material breach of the Purchase Agreement,
Escrow Agent shall, upon ten (10) business days advance written
notification from Buyers or ten (10) business days after receipt
of a final order of a state or federal court of competent
jurisdiction ordering payment, shall deliver the Letter of Credit
to the issuer thereof for cancellation; or, if the Escrow Agent
holds the Earnest Money Deposit, shall deliver to the Buyer in
immediately available funds the Earnest Money Deposit and all
interest earned thereon.
Any notice or order provided to Escrow Agent by Buyers will be
simultaneously provided to Sellers and any notice or order provided to Escrow
Agent by Sellers will be simultaneously provided to Buyers. In the event that
during the ten business day period following the delivery by Buyers or Sellers
(as the case may be) to Escrow Agent of a notice that it is entitled under this
Section 3 to receive payment of the Letter of Credit or Earnest Money Deposit
the other Party delivers notice to Escrow Agent that it disputes that Party's
right to payment, then the provisions of Section 4 will apply.
4. If at any time a dispute or disagreement shall exist or arise as to
the duties of Escrow Agent under the terms hereof or if a disagreement between
the parties hereto results in conflicting or adverse claims or demands being
made on the Escrow Agent in connection with the Letter of Credit and the Earnest
Money Deposit, Escrow Agent is authorized and directed to retain all or any part
of the Letter of Credit (and, if paragraph A of Section 3 becomes operative,
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<PAGE> 34
to draw on the Letter of Credit) and Earnest Money Deposit and in so doing
Escrow Agent shall not become liable in any way to any person for its failure or
refusal to comply with such conflicting or adverse claims or demands. Escrow
Agent shall:
A. when the rights of all claimants have been duly adjudicated by a
court of competent jurisdiction evidenced by a certified copy of
such final judgment, together with written evidence that any
right of appeal has expired, forward the Letter of Credit and the
Earnest Money Deposit as directed in such judgment, or
B. if a written agreement is reached by and between all disputing
parties, satisfactory to Escrow Agent, and a copy of such
agreement signed by all disputing parties is delivered to Escrow
Agent, forward the Letter of Credit and/or Earnest Money Deposit
as directed in such agreement.
5. Escrow Agent undertakes to perform only such duties as are expressly
set forth herein.
6. Escrow Agent may rely and shall be protected in acting or refraining
from acting upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties. Escrow Agent may conclusively presume that the
undersigned representatives of Sellers or Buyers individually have full power
and authority to instruct Escrow Agent on behalf of that party unless written
notice to the contrary is delivered to Escrow Agent.
7. Except for its gross negligence or willful misconduct, Escrow Agent
shall not be liable for any action taken by it in good faith and believed by it
to be authorized or within the rights or powers conferred upon it by this Escrow
Agreement. Escrow Agent may consult with counsel of its own choice and shall
have full and complete authorization and protection of any action taken or
suffered by it hereunder in good faith and in accordance with the opinion of
such counsel.
8. Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice in writing of such resignation specifying
a date upon which such resignation shall take effect, whereupon a successor
Escrow Agent shall be appointed by Sellers and Buyers (or, if no agreement is
reached between Buyers and Sellers as to a successor, then the Fayetteville,
North Carolina agent of the title insurance company which issues title insurance
policies at the Closing).
9. Escrow Agent shall be entitled to be reimbursed for all losses,
liabilities or expense, including reasonable attorneys' fees, incurred or made
by it arising out of or in connection with its entering into this Escrow
Agreement or carrying out its duties hereunder. Escrow Agent shall be paid such
fees as it normally charges for the services described in this Escrow Agreement.
Any such reimbursement or fees to which Escrow Agent is entitled shall be borne
jointly by Sellers and Buyers, unless otherwise ordered by a court which
adjudicates a dispute or disagreement under Section 4 above.
10. This Escrow Agreement expressly sets forth all the duties of Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read
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<PAGE> 35
into this Escrow Agreement against Escrow Agent. Escrow Agent shall not be
bound by the provisions of any agreement among the parties hereto except this
Escrow Agreement.
11. This Escrow Agreement shall inure to the benefit of and be binding
upon the parties and their respective heirs, successors, assigns and legal
representatives. This Escrow Agreement shall be governed by and construed in
accordance with the laws of North Carolina. This Escrow Agreement cannot be
modified, amended or terminated except in writing signed by Sellers, Buyers and
Escrow Agent.
12. All notice and other communications under this Escrow Agreement shall
be in writing and shall be given (and shall be deemed to have been duly given if
so given) in the manner specified in the Purchase Agreement, if to Sellers or
the Buyers, at the addresses specified therein (and with the copies), and if to
the Escrow Agent at :
Bank One Trust Company, N.A.
111 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Dan Olson
Phone: (414) 298-4282
Fax: (414) 298-4223
or to such other person or address as any of the parties hereto shall specify by
notice in writing to all the other parties hereto.
13. This Escrow Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original instrument and all of which
together shall constitute a single agreement.
* * * * *
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<PAGE> 36
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Escrow Agreement on the date first above written.
CUMULUS BROADCASTING, INC.
By:______________________________
(printed)
______________________________
Title:___________________________
CUMULUS LICENSING CORP. BANK ONE TRUST COMPANY, N.A.:
By:______________________________ By:______________________________
(printed)
______________________________ ______________________________
Title:___________________________ Title:___________________________
CUMULUS WIRELESS SERVICES INC.
By:______________________________
(printed)
______________________________
Title:___________________________
C.F. RADIO, INC.
By:______________________________
(printed)
______________________________
Title:___________________________
CAPE FEAR BROADCASTING COMPANY
By:______________________________
(printed)
______________________________
Title:___________________________
CAPE FEAR RADIO, LLC
By:______________________________
(printed)
______________________________
Title:___________________________
CAPE FEAR TOWER SYSTEMS, LLC
By:______________________________
(printed)
______________________________
Title:___________________________
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<PAGE> 37
EXHIBIT B-1
GENERAL ASSIGNMENT
THIS GENERAL ASSIGNMENT, dated as of ___________________, 1998
from ________________ (the "Assignor"), to CUMULUS BROADCASTING, INC., a Nevada
corporation, (together with its successors and assigns, the "Assignee"), is
delivered pursuant to Section 1(e) of that certain Asset Purchase Agreement,
dated as of September 23, 1999 (the "Asset Purchase Agreement"), by and among
Assignor and Assignee. Defined terms used herein without definition have the
meanings assigned to such terms in the Asset Purchase Agreement.
KNOW ALL PERSONS BY THESE PRESENTS that, pursuant to the terms
and conditions of the Asset Purchase Agreement and for the considerations set
forth therein, the receipt and sufficiency of which are hereby acknowledged by
Assignor, Assignor hereby sells, transfers, assigns, conveys and delivers to
Assignee forever all of Assignor's right, title and interest in and to the
following Acquired Assets:
All right, title and interest in and to all of the assets of
Assignor, other than Retained Assets, that are used or useful
in the operation of the Stations, including but not limited to
all of its (a) real property, leaseholds and other interests
of any kind therein, improvements, fixtures, and fittings
thereon (such as towers and antennae), and easements,
rights-of-way, and other appurtenances thereto); (b) tangible
personal property (such as computers, electrical devices,
monitoring equipment, test equipment, switching, terminal and
studio equipment, transmitters, transformers, receivers,
broadcast facilities, inventories of compact disks, records,
tapes and other supplies, and all assignable warranties with
respect thereto; (c) Intellectual Property, goodwill
associated therewith, licenses and sublicenses granted and
obtained with respect thereto, and rights thereunder, remedies
against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions; (d)
rights under orders and agreements (including those barter
agreements identified on the Disclosure Schedule) now existing
or entered into in the Ordinary Course of Business for the
sale of advertising time on the Stations; (e) contracts,
indentures, Security Interests, guaranties, other similar
arrangements, and rights thereunder; (f) call letters of the
Stations, jingles, logos, slogans, and business goodwill of
the Stations; (g) claims, deposits, prepayments, refunds,
causes of action, choses in action, rights of recovery
(including rights under policies of insurance), rights of set
off, and rights of recoupment (including any such item
relating to the payment of Taxes); and (h) FCC logs and
records and all other books, records, ledgers, logs, files,
documents, correspondence, lists, plats, architectural plans,
drawings, and specifications, creative materials, advertising
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<PAGE> 38
and promotional materials, studies, reports, and other printed
or written materials.
provided, however, that the Acquired Assets shall not include (i) the corporate
charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the organization,
maintenance, and existence of the Seller as a corporation; (ii) any of the
rights of Assignor under the Asset Purchase Agreement (or under any side
agreement between Assignor on the one hand and Assignee on the other hand
entered into on or after the date of the Asset Purchase Agreement); (iii)
accounts, notes and other receivables; and (iv) Cash.
TO HAVE AND TO HOLD the same unto Assignee forever. Assignor
hereby constitutes and appoints Assignee the true and lawful attorney of
Assignor, with the full power of substitution, in the name of Assignee or in the
name of Assignor, but by and on behalf of and for the sole benefit of Assignee,
to demand and receive from time to time any and all of the above described
Acquired Assets, and from time to time to institute and prosecute, in the name
of Assignor or otherwise on behalf of Assignor, any and all proceedings at law,
in equity or otherwise which Assignee may deem necessary or desirable in order
to receive, collect, assert or enforce any right, title, benefit or interest of
any kind in or to the above described Acquired Assets and to defend and
compromise any and all actions, suits or proceedings in respect thereof and to
do all such acts and things and execute any instruments in relation thereto as
Assignee may deem advisable. Without limitation of any of the foregoing,
Assignor hereby authorizes any authorized representative of Assignee to endorse
or assign any instrument, contract or chattel paper relating to the above
described Acquired Assets. Assignor agrees that the foregoing appointment made
and the powers hereby granted are coupled with an interest and shall be
irrevocable by Assignee.
All of the terms and provisions of this General Assignment
will be binding upon Assignor and its successors and assigns and will enure to
the benefit of Assignee; provided, that nothing in this General Assignment,
express or implied, is intended or shall be construed to confer upon or give to
any person, firm, partnership, corporation or other entity other than Assignee
any rights or remedies under or by reason of this General Assignment.
* * * * *
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<PAGE> 39
IN WITNESS WHEREOF, Assignor has caused this instrument to be signed in its name
by its representative thereunto duly authorized on the date first written above.
By:
---------------------------------------
Its:
--------------------------------------
ACCEPTED AND AGREED:
CUMULUS BROADCASTING, INC.
By:
---------------------------------------
Its:
--------------------------------------
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<PAGE> 40
EXHIBIT B-2
GENERAL ASSIGNMENT
THIS GENERAL ASSIGNMENT, dated as of ___________________, 1998
from ___________ (the "Assignor"), to CUMULUS LICENSING CORP., a Nevada
corporation (together with its successors and assigns, the "Assignee"), is
delivered pursuant to Section 1(e) of that certain Asset Purchase Agreement,
dated as of September 23, 1999 (the "Asset Purchase Agreement"), by and among
Assignor and Assignee. Defined terms used herein without definition have the
meanings assigned to such terms in the Asset Purchase Agreement.
KNOW ALL PERSONS BY THESE PRESENTS that, pursuant to the terms
and conditions of the Asset Purchase Agreement and for the considerations set
forth therein, the receipt and sufficiency of which are hereby acknowledged by
Assignor, Assignor hereby sells, transfers, assigns, conveys and delivers to
Assignee forever all of Assignor's right, title and interest in and to the
following Acquired Assets:
All FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the
Sellers with respect to the operations of the Stations and all
applications therefor, together with any renewals, extension
or modifications thereof and additions thereto.
TO HAVE AND TO HOLD the same unto Assignee forever.
All of the terms and provisions of this General Assignment
will be binding upon Assignor and its successors and assigns and will enure to
the benefit of Assignee; provided, that nothing in this General Assignment,
express or implied, is intended or shall be construed to confer upon or give to
any person, firm, partnership, corporation or other entity other than Assignee
any rights or remedies under or by reason of this General Assignment.
* * * * *
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<PAGE> 41
IN WITNESS WHEREOF, Assignor has caused this instrument to be
signed in its name by its representative thereunto duly authorized on the date
first written above.
By:
-------------------------------------
Its:
------------------------------------
ACCEPTED AND AGREED:
CUMULUS LICENSING CORP.
By:
-------------------------------------
Its:
------------------------------------
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<PAGE> 42
EXHIBIT B-3
INSTRUMENT OF ASSUMPTION
THIS INSTRUMENT OF ASSUMPTION, dated as of ____, 1999 from Cumulus
Broadcasting, Inc., a Nevada corporation ("Assignee"); to _________
("Assignor"); is delivered pursuant to Section 1(e) of that certain Asset
Purchase Agreement, dated as of September 23, 1999 (the "Asset Purchase
Agreement"), between Assignee and Assignor. Defined terms used herein without
definition have the meanings assigned to such terms in the Asset Purchase
Agreement.
WHEREAS, by a General Assignment being executed and delivered by
Assignor to Assignee simultaneously herewith pursuant to the Asset Purchase
Agreement, Assignor is selling, transferring, assigning, conveying and
delivering to Assignee substantially all of the assets of Assignor (the
"Assets");
NOW THEREFORE, in partial consideration of such sale, transfer,
assignment, conveyance and delivery on and as of the date hereof, subject to and
in accordance with the terms and conditions of the Asset Purchase Agreement,
Assignee hereby assumes and becomes responsible for the following Assumed
Liabilities:
Obligations of Assignor under the licenses, sublicenses,
leases, subleases, contracts, and other arrangements referred
to in the definition of Acquired Assets either: (i) to furnish
services, and other non-Cash benefits to another party after
the Closing; or (ii) to pay for goods, services, and other
non-Cash benefits that another party will furnish to it after
the Closing;
provided, however, that the Assumed Liabilities shall not include any other
obligations or liabilities of Assignor, including but not limited to: (i) any
Liability relating to the ownership or operation of the Stations prior to the
Closing; (ii) any Liability of Assignor for income, transfer, sales, use, and
other Taxes arising in connection with the consummation contemplated by the
Asset Purchase Agreement; (iii) any Liability of Assignor for costs and expenses
incurred in connection with the Asset Purchase Agreement or the consummation of
the transactions contemplated hereby; or (iv) any Liability or obligation of
Assignor under the Asset Purchase Agreement (or under any side agreement between
Assignor on the one hand and Assignee on the other hand).
Other than as specifically stated in this Instrument of Assignment,
Assignee assumes no obligation of Assignor. As to any lease, contract,
agreement, permit or other authorization included in the Acquired Assets which
may be assigned only with the consent of the other party thereto, this
Instrument of Assumption shall be of no force and effect until such requisite
consents shall have been obtained, whereupon it shall become of full force and
effect as of the date of such consent.
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<PAGE> 43
IN WITNESS WHEREOF, Assignee has caused this instrument to be signed in
its name by its officers thereunto duly authorized on the date first above
written.
ASSIGNEE:
CUMULUS BROADCASTING, INC.
By:
-----------------------------------------
Richard Weening
Chairman
ASSIGNOR:
By:
-----------------------------------------
Its:
----------------------------------------
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<PAGE> 44
EXHIBIT C
POST-CLOSING AGREEMENT
Agreement dated as of ____, 1999 among CUMULUS BROADCASTING,
INC., a Nevada corporation, CUMULUS LICENSING CORP., a Nevada corporation,
CUMULUS WIRELESS SERVICES INC., a Nevada corporation (collectively referred to
as "Buyers"), C. F. RADIO, INC., a North Carolina corporation ("CF"); CAPE FEAR
RADIO, LLC, a North Carolina limited liability company ("CFLLC"); CAPE FEAR
BROADCASTING, INC., a North Carolina corporation ("CFB"); and CAPE FEAR TOWER
SYSTEMS, LLC; a North Carolina limited liability company ("CF Towers")
(collectively referred to as "Sellers"), HANNAH DAWSON GAGE, WEYHER DAWSON, and
JOHN DAWSON (collectively referred to as "Sellers' Owners"). The Buyers, the
Seller, and the Seller's Owners are referred to collectively herein as the
"Parties."
The Buyers and the Sellers are concurrently herewith concluding
a transaction in which the Buyers will purchase the "Acquired Assets" (and
accept responsibility for the "Assumed Liabilities") of the Sellers in return
for cash pursuant to the terms of an Asset Purchase Agreement dated September
23, 1999 (the "Asset Purchase Agreement"). Certain terms used herein without
definition are used herein as defined in the Asset Purchase Agreement.
The Buyers and the Sellers have made certain representations,
warranties, and covenants in the Asset Purchase Agreement which will survive the
Closing for purposes of potential indemnification. The Sellers' Owners, however,
may cause the Sellers to liquidate and dissolve immediately after the Closing.
The Buyers and the Seller's Owners therefore wish to provide for post-Closing
indemnification against breaches of these representations, warranties, and
covenants and to make certain other covenants among themselves.
Now, therefore, in consideration of the premises and the mutual
promises herein made, the Buyers, the Sellers, and the Sellers' Owners agree as
follows.
1. Representations and Warranties of Seller's Owners. The Sellers'
Owners represent and warrant to the Buyers that the statements contained in this
Section 1 are correct and complete as of the date of this Agreement.
(a) Enforceability. The Sellers' Owners have full power and
authority to execute and deliver this Agreement and to perform their obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Sellers' Owners, enforceable in accordance with its terms and conditions.
(b) Absence of Conflicts. Neither the execution and the
delivery of this Agreement by the Sellers' Owners, nor their performance of
their obligations hereunder, will (i) violate any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which they are subject or
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<PAGE> 45
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
arrangement to which they are a party or by which they are bound or to which any
of their assets are subject.
2. Post-Closing Covenants. The Parties agree as follows
with respect to the period following the Closing.
(a) General. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of the Asset
Purchase Agreement, each of the Parties will take such further action (including
the execution and delivery of such further instruments and documents) as any
other Party reasonably may request, all the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 4 below.)
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under the Asset Purchase Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Sellers, each of the other Parties will
cooperate with the contesting or defending Party and his or its counsel in the
contest or defense, make available his or its personnel, and provide such
testimony and access to his or its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 3 below.)
(c) Transition. Neither the Sellers' Owners nor any of their
respective Affiliates will take any action that primarily is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Seller from maintaining the same
business relationships with the Buyers after the Closing as they maintained with
the Sellers prior to the Closing. The Sellers' Owners will refer all customer
inquiries relating to the Stations or to the business of the Sellers to the
Buyers from and after the Closing. Except with the Buyers' prior written
consent, neither the Sellers' Owners nor any of their respective Affiliates will
employ or offer to employ any employee of any Seller for a period of five (5)
years after the Closing Date.
(d) Confidentiality. The Sellers' Owners and their Affiliates
will treat and hold as such all of the Confidential Information, refrain from
using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to the Buyers or destroy, at the request and
option of the Buyers, all tangible embodiments (and all copies) of the
Confidential Information which are in his or its possession. In the event that
the Sellers' Owners or any Affiliate is requested or required (by oral question
or request for information or docu-
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<PAGE> 46
ments in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, that
person will notify the Buyers promptly of the request or requirement so that the
Buyers may seek an appropriate protective order or waive compliance with the
provisions of this Section 2(d). If, in the absence of a protective order or the
receipt of a waiver hereunder, the Sellers' Owners or any Affiliate is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that person may disclose the
Confidential Information to the tribunal; provided, however, that the disclosing
Person shall use his or its best efforts to obtain, at the reasonable request of
the Buyers, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as the Buyers shall designate. The foregoing provisions shall not
apply to any Confidential Information which is generally available to the public
immediately prior to the time of disclosure.
(e) Covenant Not to Compete. For a period of five (5) years
from and after the Closing Date, neither the Sellers' Owners nor any of their
respective Affiliates will engage directly or indirectly in any business that
the Sellers conduct as of the Closing Date within seventy-five (75) miles of the
transmitter facilities of the Stations; provided, however, that no owner of less
than 1% of the outstanding stock of any publicly traded corporation shall be
deemed to engage solely by reason thereof in any of its businesses; provided,
further, that notwithstanding the foregoing, nothing in this Agreement or in the
Asset Purchase Agreement shall in any manner restrict the activities of any
Seller, any Sellers' Owner, or any Affiliate of a Seller or Sellers' Owner with
respect to FCC construction permit file no. BMPH-990507IE, for a new FM radio
station, call sign 8805119MI (the "CP"), or the station to be constructed
pursuant to the CP.
3. Survival. All of the representations, warranties, and
covenants of the Buyers, the Sellers, and the Sellers' Owners contained in the
Asset Purchase Agreement and in this Agreement shall survive the Closing (even
if the damaged Party knew or had reason to know of any misrepresentation or
breach of warranty or covenant at the time of Closing) and continue in full
force and effect to the extent set forth in the Asset Purchase Agreement.
4. Consideration. On the Closing Date, as consideration for
the representations, warranties, and covenants, the Buyers shall, at Buyers'
option: (1) pay each of the three Sellers' Owners One Million and no/100 Dollars
($1,000,000) over and above the Purchase Price as defined in the Asset Purchase
Agreement, or (2) issue to each of the Sellers' Owners Class A Common Shares of
Cumulus Media Inc. (the "Shares"). The number of Shares to be issued to each of
the three respective Seller's Owners shall consist of a number, the numerator of
which shall be One Million and no/100 Dollars, and the denominator of which
shall be the average closing bid price of CMLS Class A Common Shares on the
NASDAQ market on the five trading days prior to the Closing Date. In the event
that the Shares are not registered under the Securities Act of 1933, as amended,
Sellers shall have the option to require the Buyers to make the payment
described in this Section 4 in cash rather than Shares. In the event Buyers
elect to accept unregistered Shares, such Shares shall be legended accordingly,
and Buyers shall make such customary representations and warranties in
connection with the issuance of the
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<PAGE> 47
Shares at Closing as may be required by Buyers' counsel to ensure compliance
with federal and state securities law.
5. Miscellaneous.
(a) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(b) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, that may have related in any way to the subject
matter hereof.
(c) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of his or its rights, interests, or obligations hereunder
without the prior written approval of the Buyers and the Sellers' Owner;
provided, however, that the Buyers may (i) assign any or all of their rights and
interests hereunder to one or more of their Affiliates and (ii) designate one or
more of their Affiliates to perform their obligations hereunder (in any or all
of which cases the Buyers nonetheless shall remain liable and responsible for
the performance of all of their obligations hereunder).
(d) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, or if (and then the next business day after)
it is sent by reputable overnight courier, in each case addressed to the
intended recipient at the address for notices (and copies thereof) set forth in
the Asset Purchase Agreement. Any Party may give any notice, request, demand,
claim, or other communication hereunder using any other means (including
personal delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the individual for whom it is intended. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
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<PAGE> 48
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of North Carolina.
(h) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyers and the Requisite Sellers' Owners. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(j) Expenses. Each of the Parties will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby (except as
otherwise provided herein).
(k) Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
(l) Specific Performance. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 5(o) below), in addition to any other remedy to which they may
be entitled, at law or in equity. Each of the Parties acknowledges and agrees
that notwithstanding the provision in Section 5(n) with respect to liquidated
damages upon a breach of a covenant of this Agreement, money damages would not
be an adequate remedy for a breach of any provision of this Agreement.
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<PAGE> 49
(m) Liquidated Damages. Each of the Parties acknowledge that
in the event that the Sellers' Owners breach the covenants set forth in Section
2(e) or the last sentence of Section 2(c) of this Agreement, the Adverse
Consequences to the Buyers as a result of such default may be difficult, if not
impossible, to ascertain. Accordingly, in lieu of indemnification pursuant to
Section 3(b) of this Agreement, the Buyers shall be entitled to receive from the
defaulting Party the sum of One Million and no/100 Dollars per each Seller's
Owner as liquidated damages for such default without the need for proof of
damages, subject only to successfully proving in a court of competent
jurisdiction that a Sellers' Owner has materially breached this Agreement. The
Buyers shall retain the option to receive liquidated damages under this
provision or, in the alternative, indemnification and/or specific performance
under other sections of this Agreement. The Sellers' Owners agree to pay said
sum of liquidated damages within ten (10) days of the date that the Buyers
obtain such judgment.
(o) Submission to Jurisdiction. Each of the Parties submits
to the jurisdiction of any state or federal court sitting in Wilmington, NC in
any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on any other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 5(h) above. Nothing in this Section 5(o), however,
shall affect the right of any Party to serve legal process in any other manner
permitted by law. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
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<PAGE> 50
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Post-Closing Agreement on the date first above written.
CUMULUS BROADCASTING, INC.
By: /s/ Richard W. Weening
------------------------------
Richard W. Weening (printed)
------------------------------
Title: Executive Chairman
---------------------------
CUMULUS LICENSING CORP. HANNAH DAWSON GAGE
By: /s/ Richard W. Weening
------------------------------ ----------------------
Richard W. Weening (printed)
------------------------------
Title: Executive Chairman
---------------------------
CUMULUS WIRELESS SERVICES INC. WEYHER DAWSON
By: /s/ Richard W. Weening
------------------------------ ----------------------
Richard W. Weening (printed)
------------------------------
Title: Executive Chairman
---------------------------
C.F. RADIO, INC. JOHN DAWSON
By: /s/ Hannah Dawson Gage
------------------------------ ----------------------
Hannah Dawson Gage (printed)
------------------------------
Title: President
---------------------------
CAPE FEAR BROADCASTING COMPANY
By: /s/ John Dawson
------------------------------
John Dawson (printed)
------------------------------
Title: President
------------------------------
CAPE FEAR RADIO, LLC
By: /s/ John Dawson
------------------------------
John Dawson (printed)
------------------------------
Title: President
---------------------------
CAPE FEAR TOWER SYSTEMS, LLC
By: /s/ John Dawson
------------------------------
John Dawson (printed)
------------------------------
Title: Manager
----------------------------
<PAGE> 51
EXHIBIT E
[LETTERHEAD OF SELLER'S COUNSEL]
_______________, 1998
Cumulus Broadcasting, Inc.
Cumulus Licensing Corporation
Cumulus Wireless Services Inc.
111 E. Kilbourn Avenue, Suite 2700
Milwaukee, WI 53202
Lehman Commercial Credit Corp.
Gentlemen:
We have acted as counsel to ________ (the "Company") in
connection with the preparation of the Asset Purchase Agreement dated
[___________], 1999 (the "Agreement"), and have participated on its behalf in
connection with the purchase and sale to be made by you with the Company
pursuant to the Agreement (the "Transaction") and the transfer of control
thereby of radio stations WFNC-AM, Fayetteville, NC; WFNC-FM, Lumberton, NC;
WQSM-FM, Fayetteville, NC; WRCQ-FM, Dunn, NC; WGNI-FM, Wilmington, NC; and
WMNX-FM, Wilmington, NC (collectively, the "Stations"). We have also acted as
counsel to _____________in connection with the preparation of the Post-Closing
Agreement dated the date hereof between you and each of them (the "Post-Closing
Agreement"). The Agreement, the Post-Closing Agreement, the Warranty Deeds, the
Assignment of Lease, the General Assignment and the Instrument of Assumption are
referred to in this Opinion Letter as the Transaction Documents.
In connection with this Opinion Letter, we have examined
signed copies of the Transaction Documents and a certificate as to certain
objective facts executed by an officer of the Company (the "Officer's
Certificate"). We have considered such matters of law and fact, and relied upon
such certificates and other information furnished to us, as we have deemed
appropriate as a basis for our opinions set forth below. We have also relied
upon the representations of the Company made in the Agreement.
This Opinion Letter is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. The law covered by the opinions
expressed herein is limited to the Federal law of the United States and the law
of the State of North Carolina.
-8-
<PAGE> 52
Based upon the foregoing, and subject to the qualifications and
exceptions set forth below, we are of the opinion that:
1. The Company is a corporation organized and existing under the laws
of the State of ____________.
2. The Company has the requisite corporate authority to enter into
the Transaction Documents, perform its obligations thereunder and to own its
properties and carry on its business as presently conducted in the State of
North Carolina.
3. The Agreement and each of the other Transaction Documents
contemplated thereby to which the Company is a party have been duly authorized,
executed and delivered by the Company and each is enforceable against the
Company in accordance with its terms.
4. The execution and delivery by the Company of, and performance of
its obligations under the Transaction Documents do not violate the Company's
articles of incorporation or bylaws or, based and relying upon the Officer's
Certificate, breach, or result in a default under, any of the agreements or
instruments identified therein or require the consent or other action of or
filing with any governmental body or agency which has not been obtained or which
has not been made.
5. The Post-Closing Agreement has been duly executed and delivered by
_____________ the Company and [________] and is enforceable against each of them
in accordance with its terms.
6. The Assignment of Leases and the General Assignment convey all of
the Seller's right, title and interest in the Acquired Assets to the Buyer and
the Assignment of Leases is in appropriate form under the laws of the State of
North Carolina for recording.
7. The Seller has obtained and validly holds the FCC Licenses listed
in Attachment 1 to this opinion letter. The FCC Licenses listed in Attachment 1
constitute the only authorizations, licenses, and permits of the FCC required by
the FCC or necessary in connection with the present operation of Stations. The
FCC Licenses relating to the Stations listed in Attachment 1 are in full force
and effect and are duly issued in the name of, or validly assigned to, the
Seller. The FCC has approved the assignment of the Licenses to operate the
Stations from the Seller to the Buyer, and such approval is in full force and
effect, and is no longer subject to administrative or judicial review. Upon
execution and delivery of the General Assignment, the Buyer will validly hold
the FCC Licenses to operate the Stations.
-9-
<PAGE> 53
8. The Seller has filed with the FCC all material reports, documents,
instruments, information, and applications required to be filed in connection
with the operation of the Stations pursuant to FCC rules, regulations and
requests. No notice has been issued by the FCC which permits, or after notice or
lapse of time or both, would permit, revocation or termination of any of the FCC
Licenses prior to the respective expiration dates thereof, or which results or
would result in any other material impairment of any rights thereunder.
9. The Stations are now operating, and prior to the date hereof were
operating, in compliance in all material respects with the Communications Act of
1934, as amended, and the rules and regulations of the FCC promulgated
thereunder. There is not now issued or outstanding, pending or threatened, any
Notice of Violation, Order to Show Cause, complaint or investigation or
rulemaking proceeding by or before the FCC which might materially threaten or
adversely affect any of the FCC Licenses or result in any substantial adverse
effect upon the operation of the Stations, nor is there any reason to believe,
as of the date hereof, that any of the FCC Licenses will not be renewed in the
ordinary course.
10. The execution, delivery and performance by the Seller of its
obligations under the Transaction Documents (a) is not contrary to the
Communications Act of 1934, as amended, or any of the rules, regulations or
policies of the FCC promulgated thereunder; (b) will not result in any violation
of the present rules, regulations or policies of the FCC; and (c) will not cause
any forfeiture or impairment of any of the FCC Licenses.
This Opinion Letter may be relied upon by you only in connection with
the Transaction and may not be used or relied upon by any other person for any
purpose whatsoever without this firm's prior written consent.
Very truly yours,
10
<PAGE> 1
EXHIBIT 23.0
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-89825) of Cumulus Media Inc. of our report dated
February 28, 1999, except for Note 8 which is dated September 15, 1999, relating
to the financial statements of HMH Broadcasting, Inc., which appears in the
Current Report on Form 8-K of Cumulus Media Inc. filed November 2, 1999.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-89825) of Cumulus Media Inc. of our report dated
October 27, 1999 relating to the financial statements of Cape Fear Broadcasting
Company, which appears in the Current Report on Form 8-K of Cumulus Media Inc.
filed November 2, 1999.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-89825) of Cumulus Media Inc. of our report dated
October 27, 1999 relating to the financial statements of C.F. Radio, Inc., which
appears in the Current Report on Form 8-K of Cumulus Media Inc. filed
November 2, 1999.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-89825) of Cumulus Media Inc. of our report dated
February 28, 1999 relating to the financial statements of Coast Radio L.L.C.,
which appears in the Current Report on Form 8-K of Cumulus Media Inc. filed
November 2, 1999.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
November 2, 1999
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
We consent to the inclusion of our report, dated October 25, 1999, on the
balance sheet of Phillips Broadcasting Company, Inc. as of December 31, 1998,
and the related statements of operations and retained earnings and cash flows
for the period then ended, in the Form S-3 Registration Statement under
the Securities Act of 1933.
Wipfli Ullrich Bertelson LLP
November 2, 1999
Eau Claire, Wisconsin
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholder
Calendar Broadcasting, Inc.:
We consent to the inclusion of our report dated April 2, 1999, except as to note
13, which is as of November 1, 1999, with respect to the consolidated balance
sheet of Calendar Broadcasting, Inc. and subsidiaries as of December 31, 1998
and the related consolidated statements of operations, stockholder's equity, and
cash flows for the year ended December 31, 1998, which report appears in the
Form 8-K of Cumulus Media Inc. dated November 2, 1999.
/s/ KPMG LLP
Short Hills, New Jersey
November 2, 1999
