FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 14, 1999
Commission file number 0-7831
JOURNAL COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0382060
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 661, 333 West State Street, Milwaukee, Wisconsin 53201
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(Address of principal executive offices) (Zip Code)
(414) 224-2728
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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Journal Communications, Inc.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 14, 1999, Journal Broadcast Corporation ("the JBC"), a wholly owned
subsidiary of Journal Communications, Inc. ("JCI"), acquired all the issued and
outstanding capital stock of Great Empire Broadcasting, Inc. ("GEB"), a Kansas
corporation, pursuant to a Stock Purchase Agreement, dated August 24, 1998 and
as amended on June 14, 1999, by and among GEB, all of the holders of capital
stock of GEB and JBC. The aggregate acquisition price for the capital stock of
GEB and related non-compete agreement was approximately $105.0 million. JCI used
cash from its cash-equivalent portfolio to purchase the capital stock. The
purchase price paid was determined on the basis of arm's length negotiations
between the parties. There is no material relationship between the shareholders
of GEB and JBC or any of its affiliates, directors or officers or any of their
associates.
GEB, through wholly-owned subsidiaries, owns and operates, pursuant to licenses
issued by the Federal Communications Commission ("FCC"), Radio Stations
KFDI(AM), KFDI-FM, and KICT-FM, Wichita, Kansas; KYQQ (FM), Arkansas City,
Kansas; KLLS (FM), Augusta, Kansas; KTTS (AM) and KTTS-FM, Springfield,
Missouri; KLTQ (FM), Sparta, Missouri; WOW (AM) and WOW-FM, Omaha, Nebraska;
KVOO (AM) and KVOO-FM, Tulsa, Oklahoma; and KCKI-FM, Henryetta, Oklahoma. JBC
intends to operate the business of GEB at its present locations and to conduct
the business of GEB in substantially the same manner as it had been conducted
prior to the acquisition.
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Journal Communications, Inc.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Not applicable
(b) Pro Forma Financial Information
Not applicable
(c) Exhibits
2.1* Stock Purchase Agreement, dated as of August 24, 1998, by and among
GEB, all of the holders of capital stock of GEB and JBC
2.2 First Amendment to the Stock Purchase Agreement dated as of June 14,
1999.
* The schedules and exhibits to the Stock Purchase Agreement are not being filed
herewith because JCI believes that the information in such schedules and
exhibits should not be considered material to an investment decision in JCI or
such information is otherwise adequately disclosed in this Form 8-K. The Stock
Purchase Agreement identifies internally the contents of all omitted schedules
and exhibits. JCI agrees to furnish supplementally (but not to "file") a copy of
any such schedule or exhibit to the Commission upon request.
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Journal Communications, Inc.
Signatures
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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 thereunto duly authorized.
JOURNAL COMMUNICATIONS, INC.
Registrant
Date: June 29, 1999 /s/ Steven J. Smith
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Steven J. Smith, Chairman and
Chief Executive Officer
Date: June 29, 1999 /s/ Paul M. Bonaiuto
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Paul M. Bonaiuto, Executive Vice
President and Chief Financial Officer
Exhibit 2.1
EXECUTION
STOCK PURCHASE AGREEMENT
BY AND AMONG
THE SHAREHOLDERS OF
GREAT EMPIRE BROADCASTING, INC.,
GREAT EMPIRE BROADCASTING, INC.,
JOURNAL BROADCAST CORPORATION
AND
SHAREHOLDERS' AGENTS
* * *
August 24, 1998
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TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS....................................1
1.1 Terms Defined in this Section..........................1
1.2 Terms Defined Elsewhere in this Agreement..............5
1.3 Clarifications.........................................7
SECTION 2. AT CLOSING; PURCHASE PRICE.............................7
2.1 Agreement to Sell and Buy..............................7
2.2 Assets and Liabilities at Closing......................7
2.3 Purchase Price and Escrow Deposit......................9
2.4 Determination of Purchase Price Adjustments............9
2.5 Final Payment..........................................11
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........12
3.1 Organization and Authority of the Company..............12
3.2 Authorization and Binding Obligation...................12
3.3 Capitalization.........................................12
3.4 Absence of Conflicting Agreements; Consents............13
3.5 Governmental Licenses..................................13
3.6 Real Property .........................................13
3.7 Tangible Personal Property.............................14
3.8 Contracts..............................................14
3.9 Intangibles............................................15
3.10 Financial Statements...................................15
3.11 Undisclosed Liabilities................................15
3.12 Accounts Receivable....................................16
3.13 Taxes..................................................16
3.14 Bank Accounts; Powers of Attorney......................17
3.15 Insurance..............................................17
3.16 Reports................................................17
3.17 Personnel..............................................17
3.18 Labor Relations........................................18
3.19 Claims and Legal Actions...............................19
3.20 Environmental Matters..................................19
3.21 Compliance with Laws...................................20
3.22 Conduct of Business in Ordinary Course.................20
3.23 Transactions with Affiliates...........................21
3.24 Broker.................................................21
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.....21
4.1 Ownership of Common Stock .............................21
4.2 Ownership of Preferred Stock...........................21
4.3 Authority; Binding Effect..............................21
4.4 No Conflicts, Required Filings and Consents............22
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER................22
5.1 Organization, Standing, and Authority..................22
5.2 Authorization and Binding Obligation...................22
5.3 Absence of Conflicting Agreements and Required Consents22
5.4 Brokers................................................23
5.5 Investment Purpose.....................................23
5.6 Qualifications.........................................23
SECTION 6. OPERATION OF THE STATIONS PRIOR TO CLOSING.............23
6.1 Conduct of Business Prior to Closing...................23
6.2 Mergers................................................24
6.3 Access to Information..................................24
6.4 Insurance..............................................24
6.5 Indebtedness and Obligations...........................24
6.6 Amendments.............................................24
6.7 Securities.............................................24
6.8 Licenses...............................................25
6.9 No Inconsistent Action.................................25
6.10 Maintenance of Assets..................................25
6.11 Consents...............................................25
6.12 Notification...........................................25
6.13 Financial Information..................................26
6.14 Trade-Out Agreements...................................26
6.15 Employee Stockholder...................................26
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.......................26
7.1 FCC Consent and Governmental Approvals.................26
7.2 Risk of Loss...........................................27
7.3 Confidentiality .......................................27
7.4 Cooperation............................................27
7.5 Control of the Stations................................27
7.6 Tax Matters............................................28
7.7 Sales Tax Filings......................................28
7.8 Noncompetition Agreement...............................28
7.9 Employee Matters.......................................28
7.10 Payment of Excise Tax..................................28
7.11 ESOP Participant Notes.................................28
7.12 Environmental Audits...................................28
7.13 Notice of Proceedings..................................28
7.14 Title Insurance and Surveys............................28
7.15 Employees..............................................30
7.16 Buyer Board of Directors...............................31
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SHAREHOLDERS....31
8.1 Conditions to Obligations of Buyer.....................31
8.2 Conditions to Obligations of Shareholders..............32
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SECTION 9. CLOSING AND CLOSING DELIVERIES.........................33
9.1 Closing................................................33
9.2 Deliveries by Shareholders.............................34
9.3 Deliveries by Buyer....................................35
SECTION 10. TERMINATION............................................36
10.1 Termination by Shareholders............................36
10.2 Termination by Buyer...................................36
10.3 Rights on Termination..................................37
10.4 Attorneys' Fees........................................37
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES......................37
11.1 Survival...............................................37
11.2 Indemnification by Shareholders........................37
11.3 Indemnification by Buyer...............................38
11.4 Procedure for Indemnification..........................38
11.5 Limitations on Indemnification.........................39
SECTION 12. MISCELLANEOUS..........................................40
12.1 Fees and Expenses......................................40
12.2 Notices................................................40
12.3 Benefit and Binding Effect.............................41
12.4 Further Assurances.....................................41
12.5 Governing Law..........................................41
12.6 Headings...............................................41
12.7 Entire Agreement.......................................41
12.8 Waiver of Compliance; Consents.........................41
12.9 Press Release..........................................42
12.10 Counterparts...........................................42
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LIST OF SCHEDULES
SCHEDULES
Schedule 2.2(b)(1)-- Liabilities at Closing
Schedule 2.4 -- Estimated Closing Statement
Schedule 2.4(b) -- Tax Refunds
Schedule 3.3 -- Capitalization
Schedule 3.4 -- Consents
Schedule 3.5 -- Licenses
Schedule 3.6 -- Real Property
Schedule 3.7 -- Tangible Personal Property
Schedule 3.8 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.11 -- Undisclosed Liabilities
Schedule 3.13 -- Tax Matters
Schedule 3.14 -- Bank Accounts; Powers of Attorney
Schedule 3.15 -- Insurance
Schedule 3.17 -- Personnel
Schedule 3.18 -- Labor Relations
Schedule 3.19 -- Claims and Legal Actions
Schedule 3.21 -- Compliance With Laws
Schedule 3.22 -- Conduct of Business
Schedule 3.23 -- Transactions with Affiliates
Schedule 4.1 -- Ownership of Common Stock
Schedule 4.2 -- Ownership of Preferred Stock
Schedule 5.3 -- Consents
Schedule 7.8 -- Noncompetition Agreement
Schedule 9.2(j) -- Opinions of Company's and
Shareholders' Counsel
Schedule 9.2(l) -- Closing Escrow Agreement
Schedule 9.3(c) -- Opinion of Buyer's Counsel
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of August 24,
1998, by and among Great Empire Broadcasting, Inc., a Kansas corporation (the
"Company"), the holders of shares of the Company's Common Stock and Preferred
Stock (as defined herein) (the "Shareholders"), Michael C. Oatman, an
individual, and F. F. Mike Lynch, an individual, the duly appointed agents for
the Shareholders (the "Shareholders' Agents"), and Journal Broadcast
Corporation, a Nevada corporation ("Buyer").
R E C I T A L S:
A. Shareholders own all the outstanding capital stock of the Company.
B. The Company, through wholly-owned subsidiaries, owns and operates,
pursuant to licenses issued by the Federal Communications Commission ("FCC"),
Radio Stations KFDI(AM), KFDI-FM, and KICT-FM, Wichita, Kansas; KYQQ(FM),
Arkansas City, Kansas; KLLS(FM), Augusta, Kansas; KTTS(AM) and KTTS-FM,
Springfield, Missouri; KLTQ(FM), Sparta, Missouri; WOW(AM) and WOW-FM, Omaha,
Nebraska; KVOO(AM) and KVOO-FM, Tulsa, Oklahoma; and KCKI-FM, Henryetta,
Oklahoma (each a "Station" and collectively, the "Stations").
C. Shareholders desire to sell and Buyer desires to buy all the
outstanding capital stock of the Company, for the price and on the terms and
conditions hereinafter set forth.
A G R E E M E N T S:
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
"Accounts Receivable" means the rights of the Company and the
Subsidiaries as of the Closing Date to payment for the sale of advertising time
and other goods and services by the Stations prior to the Closing Date.
"Affiliate" means (a) any Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common control
with another Person, or (b) an officer or director of an affiliate within the
meaning of (a) above. For purposes of (a) above, (i) a Person shall be deemed to
control another Person if such Person (A) has sufficient power to enable such
Person to elect a majority of the board of directors, or (B) owns a majority of
the beneficial interests in income and capital of such other Person; and (ii) a
general partner shall be
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deemed to control a limited partnership if such general partner owns a majority
of that portion of the beneficial interests in income and capital of such
limited partnership owned by all general partners of such limited partnership.
"Assets" means the assets to be owned or held by the Company or the
Subsidiaries as of the Closing, as specified in Section 2.2.
"Closing" means the consummation of the purchase and sale of the Common
Stock and the Preferred Stock pursuant to this Agreement in accordance with the
provisions of Section 9.
"Closing Date" means the date on which the Closing occurs, as determined
pursuant to Section 9.
"Closing Escrow Agent" means Harris Trust and Savings Bank.
"Common Stock" means, collectively, all of the issued and outstanding
shares of the Class A Common Stock and the Class B Common Stock of the Company
described on Schedule 3.3 hereto, and all options held by Oatman, Lynch and any
other Employees to purchase the Common Stock.
"Communications Act" means the Communications Act of 1934, as amended.
"Company's Knowledge" or any similar formulation thereof means to the
actual knowledge of Oatman, Lynch, Jenkins, Clifford Koch, any subsidiary
President and/or general managers of the Stations.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to (a) transfer the Common Stock
and the Preferred Stock to Buyer or otherwise to consummate the transactions
contemplated by this Agreement and (b) to enforce the validity, enforceability,
and continuation of any Contract listed on Schedule 3.8.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto), to which the Company or a Subsidiary is a party or that are binding
upon the Company or a Subsidiary and that relate to or affect the Assets or the
business or operations of the Stations, and (a) that are in effect on the date
of this Agreement or (b) that are entered into by the Company or a Subsidiary
between the date of this Agreement and the Closing Date.
"Effective Time" means 12:01 a.m., local time in Wichita, Kansas, on the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means Harris Trust and Savings Bank.
"ESOP" means the Great Empire Broadcasting, Inc. Employee Stock Ownership
Plan.
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"ESOP Participant Notes" means, collectively, all unpaid promissory notes
pursuant to which the Company has promised to pay to former participants in the
ESOP amounts owed to such participants in connection with the distribution of
shares of the Company's Class B Common Stock under the terms of the ESOP.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
transfer of control of the Company and the Subsidiaries as contemplated by this
Agreement.
"FCC Licenses" means those licenses, permits, and authorizations issued
by the FCC to the Subsidiaries in connection with the business and operations of
the Stations.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"GAAP" means generally accepted accounting principles consistently
applied.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by the
Company or any Subsidiary or under which the Company or any Subsidiary is
licensed or franchised and that are used or useful in the business and
operations of the Stations, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Jenkins" means Danny E. Jenkins, in his individual capacity.
"Licenses" means all licenses, permits, construction permits, and other
authorizations issued by the FCC, the Federal Aviation Administration, or any
other federal, state, or local governmental authorities to the Company or a
Subsidiary, currently in effect and used in connection with the conduct of the
business or operations of the Stations, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Lynch" means F. F. Mike Lynch, in his individual capacity.
"Material Adverse Effect" or "Material Adverse Change" means a material
adverse effect on the aggregate operations, assets or financial condition of the
Company, taken as a whole, other than or caused by (a) seasonal revenue
fluctuations affecting the markets in which the Stations are located, (b)
matters affecting the radio industry generally (including without limitation
legislative, regulatory or litigation matters) and (c) matters relating to or
arising from national or regional economic conditions (including financial and
capital markets).
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"Material Contract" means any contract, lease, non-governmental license,
agreement, or commitment, except for any contract, lease, non-governmental
license, agreement, or commitment (i) the obligations under which will be fully
performed prior to Closing; or (ii) entered into in the ordinary course of
business and not involving a commitment in excess of Thirty-Five Thousand
Dollars ($35,000) or having a term in excess of nine (9) months.
"Oatman" means Michael C. Oatman, in his individual capacity.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"Preferred Stock" means all the issued and outstanding shares of
preferred stock of the Company described on Schedule 3.3.
"Real Property" means all interests in real property, including fee
estates, leaseholds and subleaseholds, purchase options, easements, licenses,
rights to access, and rights of way, and all buildings and other improvements
thereon, owned or held by the Company or a Subsidiary that are used or useful in
the business or operations of the Stations, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Station" or "Stations" is defined in the second Recital of this
Agreement.
"Subsidiaries" means, collectively, Wichita Great Empire Broadcasting,
Inc., a Kansas corporation; Tulsa Great Empire Broadcasting, Inc., an Oklahoma
corporation; Omaha Great Empire Broadcasting, Inc., a Nebraska corporation; and
Springfield Great Empire Broadcasting, Inc., a Missouri corporation, each a
wholly-owned subsidiary of the Company, and "Subsidiary" means any one of such
Subsidiaries.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property owned or held by the Company
or a Subsidiary that are used or useful in the conduct of the business or
operations of the Stations, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Taxes" (and, with correlative meaning, "Taxable") means all federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, capital, transfer,
employment, withholding and other taxes and assessments, together with any
interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties, and "Tax" means any one of such Taxes.
"Tax Returns" means all federal, state, local and foreign income,
franchise, sales, use, occupation, property, excise, alternative or add-on
minimum, social security, employees' withholding, unemployment, disability,
transfer, capital stock and other tax returns and tax reports, and "Tax Return"
means any one of such Tax Returns.
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"Trade-Out Agreements" means Contracts to which the Company or a
Subsidiary is a party and which provide for the exchange by a Station of its
advertising time for goods or services, other than in connection with the
licensing of programs and programming material.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
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Adjustment Assets Section 2.4
Adjustment Liabilities Section 2.4
Agreement Preamble
Base Working Capital Section 2.4(a)
Basket Amount Section 11.5(c)
Benefit Arrangements Section 3.17(a)
Buyer Preamble
Claimant Section 11.4
Closing Escrow Section 11.5(b)
Closing Escrow Agreement Section 9.2(l)
Company reamble
DOJ ection 7.1(b)
Employees Section 3.17(a)
Escrow Agreement Section 2.3(b)
Escrow Deposit Section 2.3(b)
Estimated Closing Statement Section 2.4(c)
Final Closing Statement Section 2.4(d)
Financial Statements Section 3.10
FTC Section 7.1(b)
Group Section 7.16
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Indebtedness Section 2.4(a)
Indemnifying Party Section 11.4(a)
Multiemployer Plan Section 3.17(a)
Noncompetition Agreement Section 7.8
Pension Plan Section 3.17(a)
Permitted Exceptions Section 7.14
Purchase Price Section 2.3
Review Period Section 7.14
Shareholders Preamble
Shareholders' Agents Preamble
Surveys Section 7.14(a)
Title Commitments Section 7.14(b)
Title Cure Period Section 7.14
Title Policies Section 7.14(b)
Upset Date Section 10.1(c)
Welfare Plan Section 3.17(a)
Working Capital Section 2.4(a)
Working Capital Adjustment Section 2.4(a)
1.3 Clarifications. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender and any other number as the context requires. Use of the word "including"
herein shall be deemed and construed to mean "including but not limited to."
Except as specifically otherwise provided in this Agreement in a particular
instance, a reference to a Section or Schedule is a reference to a Section of
this Agreement or Schedule hereto, and the terms "hereof," "herein" and other
like terms refer to this Agreement as a whole, including the Schedules hereto,
and not solely to any particular part hereof.
SECTION 2. AT CLOSING; PURCHASE PRICE
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2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Shareholders hereby agree to sell, transfer, and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase, the Common
Stock and the Preferred Stock, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever.
2.2 Assets and Liabilities at Closing.
(a)Assets of the Company at Closing. The Assets to be owned by the
Company or the Subsidiaries at the Closing, all of which shall be free and clear
of any liabilities, liens, security interests, pledges, conditions, or
encumbrances (other than liens for current Taxes not yet due and payable), shall
include the following:
(1) The Tangible Personal Property;
(2) The Real Property;
(3) The Licenses;
(4) The Contracts;
(5) The Intangibles and all intangible assets of the Company or
the Subsidiaries relating to the Stations that are not specifically included
within the Intangibles, including the goodwill of the Stations, if any;
(6) All of the Company's and the Subsidiaries' proprietary
information, technical information and data, machinery and equipment warranties,
maps, computer discs and tapes, plans, diagrams, blueprints, and schematics,
including filings with the FCC relating to the business and operation of the
Stations;
(7) All choses in action of the Company or the Subsidiaries;
(8) All books and records of the Stations, including executed
copies of the Contracts, and all records required by the FCC to be kept by the
Stations;
(9) All Accounts Receivable;
(10) All prepaid rent, utilities, deposits, insurance premiums
and other prepaid items of the Company and any Subsidiary; and
(11) The Company's and the Subsidiaries' cash, cash equivalents,
and marketable securities on hand as of the Closing, and all other cash in any
of the Company's or the Subsidiaries' bank accounts, any and all insurance
policies (other than the life insurance policies described in Section 7.9),
bonds, letters of credit, or other similar items, any cash surrender value in
regard thereto, and any and all claims receivable under any and all insurance
policies.
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(b)Liabilities of the Company and the Subsidiaries at Closing. At the
Closing, neither the Company nor any Subsidiary shall have any liabilities or
obligations other than the following liabilities and obligations, none of which
shall be past due or otherwise in default:
(1) liabilities and obligations arising under the terms of (and
not as a result of any default under) the following Contracts: (A) Contracts
listed on Schedule 2.2(b)(1), (B) Contracts entered into in the ordinary course
of business prior to the date of this Agreement with advertisers for the sale of
advertising time on the Stations or production services for cash at rates
consistent with past practices and which may be canceled by the Stations without
penalty on not more than 30 days' notice, and (C) Contracts entered into by the
Company or a Subsidiary between the date of this Agreement and the Closing Date
in compliance with Section 6.1;
(2) liabilities for Taxes that are not yet due and payable; and
(3) Adjustment Liabilities reflected on the Estimated Closing
Statement.
(c) Without limiting the generality of Section 2.2(b), the
liabilities and obligations of the Company and the Subsidiaries at Closing shall
not include (A) any obligations or liabilities under any Contract not described
in Section 2.2(b)(1), (B) any credit agreements, note purchase agreements,
indentures, capital leases or other financing arrangements, (C) any agreements
entered into other than in the ordinary course of business of the Stations, and
(D) any agreements with Shareholders or any Affiliate of Shareholders or the
Company.
2.3 Purchase Price and Escrow Deposit.
(a)Purchase Price. The purchase price for the Common Stock and the
Preferred Stock (the "Purchase Price") shall be Ninety-Five Million Nine Hundred
Thousand Dollars ($95,900,000). Buyer shall pay or cause to be paid to
Shareholders at the Closing the Purchase Price, adjusted preliminarily by the
Working Capital Adjustment determined as of the Effective Time in accordance
with Section ? hereof, less the Escrow Deposit and the Closing Escrow (as
defined below), by federal wire transfer of same-day funds pursuant to wire
instructions which shall be delivered by Shareholders' Agents to Buyer at least
two (2) business days prior to the Closing Date.
(b)Escrow Deposit. Simultaneously with the execution and delivery of
this Agreement, Buyer has deposited with the Escrow Agent the sum of Four
Million Dollars ($4,000,000) (the "Escrow Deposit") in accordance with the
Earnest Money Escrow Agreement of even date herewith among Buyer, Shareholders'
Agents and the Escrow Agent (the "Escrow Agreement"). The Escrow Deposit shall
be held and disbursed in accordance with the terms of the Escrow Agreement.
2.4 Determination of Purchase Price Adjustments.
(a)Working Capital. For purposes of this Agreement, "Working Capital"
means Adjustment Assets less Adjustment Liabilities, and "Indebtedness" means
the aggregate amount of the Company's outstanding long-term indebtedness for
money borrowed plus interest accrued
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thereon (to the extent not included in Adjustment Liabilities) including the
remaining balance, if any, of any indebtedness owed under the ESOP Participant
Notes. "Base Working Capital" shall mean negative Three Hundred Eighty-Three
Thousand Seven Hundred Sixty-Two Dollars ($-383,762). "Working Capital
Adjustment" means the amount determined as provided in the following sentence.
The Purchase Price shall be (i) increased by the amount by which the Working
Capital as of the Effective Time less the Indebtedness as of the Effective Time
exceeds the Base Working Capital and (ii) decreased by the amount by which the
Working Capital as of the Effective Time less the Indebtedness as of the
Effective Time is less than the Base Working Capital.
(b)"Adjustment Assets" means cash, Accounts Receivable (except for
intercompany and related party receivables), Tax refunds due to the Company for
any Taxable year ending on or including the Closing Date (other than those
described in Schedule 2.4(b)), and prepaid expenses of the Company, and
"Adjustment Liabilities" means accounts payable and accrued expenses of the
Company, any prepayment penalties on Indebtedness (assuming repayment thereof at
the Effective Time) and all unrecorded liabilities of the Company that are
properly accruable under GAAP, with appropriate year-end adjustments as of the
Effective Time, all determined in a manner consistent with GAAP (including the
amount of any federal excise tax that may be assessed as a result of the sale to
Buyer of the Common Stock held by the ESOP), subject to the following
provisions:
(1) Items that may be considered prepaid or accrued, as
applicable, as of the Effective Time, shall include, to the extent applicable,
tower rental; business and license fees; utility charges, fees, and deposits;
real and personal property taxes and assessments levied against the Assets;
property and equipment rentals and other payments (including deposits) under
leases; applicable copyright or other fees; annual FCC regulatory fees; music
license fees; sales and service charges, Taxes, and deferred Taxes; employee
compensation, including wages, salaries, accrued sick leave, severance pay, and
earned vacation time; and similar prepaid and deferred items;
(2) Accounts Receivable shall be included in Adjustment Assets
net of reserves for doubtful accounts calculated in accordance with the
accounting policies of the Company used in the preparation of the balance sheet
of the Company as of April 30, 1998;
(3) Prepaid expenses by the Company under any contract,
agreement, arrangement, or commitment that, in accordance with its terms,
terminates or otherwise ceases to be enforceable by the Company after the
Effective Time as a result of the consummation of the purchase and sale of the
Common Stock and the Preferred Stock shall not be included in Adjustment Assets;
(4) Adjustment Assets shall not include any prepayments under
Contracts not referred to in Section 2.2(b)(1)(A), and Adjustment Liabilities
shall not include any deferred payments under Contracts not referred to in
Section 2.2(b)(1)(A); and
(5) To the extent consistent with GAAP, revenues and expenses
shall be treated as prepaid or accrued so as to reflect the principle that
revenues and expenses attributable
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to the period prior to the Effective Time shall be for the account of
Shareholders and revenues and expenses attributable to the period after the
Effective Time shall be for the account of Buyer.
(c)Estimated Closing Statement. No less than five (5) days prior to
the Closing, Shareholders' Agents shall prepare and deliver to Buyer an
estimated closing statement of the Company, in the form attached as Schedule 2.4
(the "Estimated Closing Statement"). The Estimated Closing Statement shall be
prepared by Shareholders' Agents in good faith in consultation with Buyer and
(1) shall be accompanied by all information reasonably necessary to determine
the amount of Working Capital and Indebtedness as of the Effective Time, to the
extent such amounts can be determined or estimated as of the date of the
Estimated Closing Statement, and such other information as may be reasonably
requested by Buyer, and (2) shall be certified by Shareholders' Agents to be
true and complete to Shareholders' Agents' knowledge as of the date thereof.
(d)Final Closing Statement. Within sixty days after the Closing Date,
Buyer shall prepare and deliver to Shareholders' Agents a final closing
statement of the Company prepared on a basis consistent with the form of the
Estimated Closing Statement (the "Final Closing Statement"). The Final Closing
Statement shall be prepared by Buyer's independent certified accountants in good
faith and (A) shall be accompanied by all information reasonably necessary to
determine the amount of Working Capital and Indebtedness as of the Effective
Time and such other information as may be reasonably requested by Shareholders'
Agents, and (B) shall be certified by Buyer to be true and complete to Buyer's
knowledge as of the date thereof. Shareholders' Agents shall cooperate with
Buyer in the preparation of the Final Closing Statement.
(e)Shareholders' Right to Object. Buyer shall allow the Shareholders
and Shareholders' Agents access at all reasonable times after the Closing Date
to the books, records, accounts, accountants' worksheets, and physical
facilities of the Company to allow Shareholders to examine the accuracy of the
Final Closing Statement. Within twenty (20) days after the date that the Final
Closing Statement is delivered to Shareholders' Agents by Buyer pursuant to
Section 2.4(d) hereof, Shareholders' Agents shall complete their examination
thereof and may deliver to Buyer a written report setting forth any proposed
adjustments to the Final Closing Statement. If Shareholders' Agents notify Buyer
of their acceptance of the amount of Working Capital and Indebtedness as of the
Effective Time shown on the Final Closing Statement, or if they fail to deliver
their report of proposed adjustments to the Final Closing Statement within the
twenty-day period specified in the preceding sentence, the amount of Working
Capital and Indebtedness as of the Effective Time shown on the Final Closing
Statement shall be conclusive and binding on the parties as of the last day of
the twenty-day period.
(f)Resolution of Disputes. Buyer and Shareholders' Agents shall use
good faith efforts to resolve any dispute involving the amount of Working
Capital and Indebtedness as of the Effective Time. If Shareholders' Agents and
Buyer fail to agree on the amount of the Company's Working Capital and
Indebtedness as of the Effective Time within ten days after Buyer receives
Shareholders' Agents' report pursuant to Section 2.4(e), then Shareholders'
Agents and Buyer agree that either of them may at any time thereafter request
Arthur Andersen, LLP to make the final determination, under the terms and
provisions of this Agreement, of the
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Working Capital and Indebtedness of the Company as of the Effective Time. The
decision of such firm shall be final and binding on Shareholders and Buyer. The
costs and expenses of such firm and their services rendered pursuant to this
paragraph shall be borne equally by Shareholders and Buyer.
2.5 Final Payment.
(a)If the Purchase Price as finally determined pursuant to Section
2.4 is greater than the amount paid by Buyer to Shareholders at the Closing,
then Buyer shall pay to Shareholders within five (5) days after the date on
which the Working Capital Adjustment as of the Closing Date is finally
determined pursuant to Section 2.4, an amount equal to such excess.
(b)If the Purchase Price as finally determined pursuant to Section
2.4 is less than the amount paid by Buyer to Shareholders at the Closing, then
Shareholders shall pay to Buyer within five (5) days after the date on which the
Working Capital Adjustment as of the Closing Date is finally determined pursuant
to Section 2.4, an amount equal to such difference.
(c)Any payments required pursuant to Sections 2.5(a) or (b) shall be
by the transfer of immediately available federal funds for credit to the
recipient, at a bank account designated by the recipient in writing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
3.1 Organization and Authority of the Company. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Kansas, and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. The Company and each Subsidiary has the requisite corporate power
and authority to own, lease, and operate its properties, and to carry on its
business in the places where such properties are now owned, leased, or operated
and such business is now conducted. The Company has the requisite corporate
power and authority to execute, deliver and perform this Agreement and the
documents contemplated hereby according to their respective terms. The Company
has delivered to Buyer complete and correct copies of the Articles of
Incorporation, Bylaws, stock records, and corporate minutes of the Company and
each Subsidiary, which are true and correct and reflect all material corporate
action taken by the Company and each Subsidiary.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Company's Board of Directors. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
3.3 Capitalization.
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(a)Schedule 3.3 contains a complete and accurate description of the
capitalization of the Company and its Common Stock and Preferred Stock. All
outstanding shares of the Common Stock and Preferred Stock are validly issued,
fully paid and nonassessable. As of the date hereof, there are no bonds,
debentures, notes or other indebtedness issued or outstanding having voting
rights. As of the date hereof, except as disclosed on Schedule 3.3, and except
as contemplated by this Agreement, there are no options, warrants, calls or
other rights, agreements or commitments presently outstanding obligating the
Company to issue, deliver or sell shares of the Common Stock or the Preferred
Stock, or obligating the Company to grant, extend or enter into any such option,
warrant, call or other such right, agreement or commitment.
(b)Except as disclosed on Schedule 3.3, all the outstanding shares of
capital stock of each Subsidiary of the Company are validly issued, fully paid
and nonassessable and owned by the Company, free and clear of any claims,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever. There are no existing options, warrants,
calls or other rights, agreements or commitments of any character relating to
the sale, issuance or voting of any shares of the issued or unissued capital
stock of any of the Subsidiaries of the Company which have been issued, granted
or entered into by the Company or any of its Subsidiaries.
(c)Except for the capital stock of its Subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other ownership interest
in any corporation, partnership, joint venture or other entity.
3.4 Absence of Conflicting Agreements; Consents. Subject to obtaining the
Consents listed on Schedule 3.4 and the FCC Consent and compliance with the HSR
Act, the execution, delivery and performance by the Company of this Agreement
and the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (a) do not require the consent of any third party; (b)
will not conflict with any provision of the Articles of Incorporation or Bylaws
of the Company; (c) will not conflict with, result in a breach of, or constitute
a default under any applicable law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of any
Contract.
3.5 Governmental Licenses. Schedule 3.5 includes a true and complete list
of the Licenses. The Company has made available to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and each Subsidiary holds the
Licenses listed opposite the name of such Subsidiary on Schedule 3.5. The
Licenses listed on Schedule 3.5 comprise all of the licenses, permits, and other
authorizations required from any governmental or regulatory authority for the
lawful conduct in all material respects of the business and operations of the
Stations in the manner and to the extent they are now conducted. Except as
disclosed on Schedule 3.5, the Licenses are in full force and effect, and the
conduct of the business and operations of the Stations is in accordance
therewith in all material respects. The Company expects that the Licenses will
be renewed by the FCC or other granting authority in the ordinary course absent
a change in existing law, rules, regulations, policies or procedures of the FCC
or other granting authority.
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3.6 Real Property. Schedule 3.6 contains a complete and accurate
description of all Real Property and all buildings or other structures located
thereon (including street address, legal description of the owned Real Property,
owner, and the Company's or Subsidiary's use thereof). The Real Property listed
on Schedule 3.6 comprises all interests in real property necessary to conduct
the business and operations of the Stations as now conducted. Except as
described on Schedule 3.6, the Company has good and marketable fee simple title
to all fee estates included in the Real Property, good leasehold title to all
leased Real Property, and enforceable rights to the use of all other Real
Property, in each case free and clear of all liens, mortgages, pledges, and
leases created by the Company or the Shareholders except for liens for current
Taxes not yet due and payable. The Company has delivered to Buyer true and
complete copies of all deeds, if any, pertaining to the fee estates included in
the Real Property. With respect to each parcel of leased Real Property, Schedule
3.8 sets forth the material terms of such lease and with respect to each parcel
of leased Real Property, so long as the Company or the relevant Subsidiary, as
the case may be, fulfills its obligations under the lease therefor, it has
enforceable rights to nondisturbance and quiet enjoyment against its lessor or
sublessor, and, to the Company's knowledge, except as set forth in Schedule 3.6,
no third party holds any interest in any leased Real Property with the right to
foreclose upon the Company's or Subsidiary's leasehold or subleasehold interest.
To the extent required, there are now in full force and effect duly issued
certificates of occupancy permitting the Real Property and improvements effected
thereon to be legally used and occupied as the same are now constituted. To the
Company's knowledge all of the Real Property has rights of access to dedicated
public highways and no fact or condition exists which would prohibit or
adversely affect the ordinary rights of access to and from the Real Property
from and to the existing highways and roads and there is no pending or
threatened restriction or denial upon such ingress or egress. All Real Property
(including the improvements thereon) is in good condition and repair consistent
with its present use, and is available for immediate use in the conduct of the
business and operations of the Stations.
3.7 Tangible Personal Property. Schedule 3.7 lists all material items of
Tangible Personal Property. The Tangible Personal Property listed on Schedule
3.7 comprises all material items of tangible personal property necessary to
conduct the business and operations of the Stations as now conducted. Except as
described in Schedule 3.7, the Company and each Subsidiary owns and has good
title to each item of Tangible Personal Property owned by it and none of the
Tangible Personal Property owned by the Company or a Subsidiary is subject to
any security interest, mortgage, pledge, conditional sales agreement, or other
lien or encumbrance, except for liens for current Taxes not yet due and payable.
With allowance for normal repairs, maintenance, wear, and obsolescence, each
material item of Tangible Personal Property is in good operating condition and
repair on the date hereof, and is available for immediate use in the business
and operations of the Stations. The Company and each Subsidiary has complied,
and the use of such Tangible Personal Property by the Company and each
Subsidiary complies, in all material respects with all of the FCC and Federal
Aviation Administration regulations and requirements and all local zoning
regulations relating to the Stations (including but not limited to the
registration of and height restrictions relating to antenna towers).
3.8 Contracts. Schedule 3.8 is a true and complete list of all Contracts
(including Trade-Out Agreements) except Contracts with advertisers for
production or the sale of advertising time on the Stations for cash at rates
consistent with past practices and that may be
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canceled by the Company or Subsidiary without penalty on not more than thirty
(30) days' notice. The Company has delivered to Buyer true and complete copies
of all written Contracts and true and complete descriptions of all oral
Contracts (including any amendments and other modifications to such Contracts).
All of the Contracts are in full force and effect and are valid, binding, and
enforceable in accordance with their terms. Neither the Company nor any
Subsidiary is in default under any Contract, and to the Company's knowledge,
there is no event that, after notice or lapse of time or both, could constitute
such a default. To the Company's knowledge, no other party is in default under
any Contract and there exists no event that, after notice, the lapse of time, or
both, would constitute such a default. Except as disclosed on Schedule 3.8,
other than in the ordinary course of business, the Company is not aware of any
intention by any party to any Contract (a) to terminate such Contract or amend
the terms thereof, (b) to refuse to renew the Contract upon expiration of its
term, or (c) to renew the Contract upon expiration only on terms and conditions
that are more onerous than those now existing. Except for the need to obtain the
Consents listed on Schedule 3.4, the purchase and sale of the Common Stock and
the Preferred Stock in accordance with this Agreement will not affect the
validity, enforceability, or continuation of any of the Contracts.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all material
Intangibles (exclusive of Licenses listed in Schedule 3.5) that are required to
conduct the business and operations of the Stations as now conducted, all of
which are valid and in good standing and uncontested. The Company has made
available to Buyer copies of all documents establishing or evidencing the
Intangibles listed on Schedule 3.9. Other than with respect to matters generally
affecting the radio broadcasting industry, neither the Company nor any
Subsidiary has received any notice or demand alleging that the Company or
Subsidiary is infringing upon or otherwise acting adversely to any trademarks,
trade names, service marks, service names, copyrights, patents, patent
applications, know-how, methods, or processes owned by any other Person, and
there is no claim or action pending, or to the Company's knowledge, threatened,
with respect thereto.
3.10 Financial Statements. Shareholders have furnished Buyer with true
and complete copies of audited consolidated financial statements of the Company
and its Subsidiaries containing a balance sheet, statement of income, and
statement of cash flows as at and for the fiscal years ended December 31, 1996,
and December 31, 1997, and an unaudited balance sheet and statement of income as
at and for the four months ended April 30, 1998 (collectively, the "Financial
Statements"). The Financial Statements have been prepared from the books and
records of the Company and the Subsidiaries in accordance with GAAP, have been
maintained throughout the periods indicated, accurately reflect the books,
records, and accounts of the Company and the Subsidiaries (which books, records,
and accounts are complete and correct in all material respects), and present
fairly the financial condition of the Company and the Subsidiaries as at their
respective dates and the results of operations of the periods then ended. None
of the Financial Statements understates in any material respect the true costs
and expenses of conducting the business or operations of the Stations as
currently conducted by the Company and the Subsidiaries or otherwise
inaccurately reflects the operations of the Stations in any material respect.
Assuming repayment in full at the Effective Time, there are no prepayment
penalties that will be assessed with respect to the Indebtedness.
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3.11 Undisclosed Liabilities. Neither the Company nor any Subsidiary has
any debt, liability or obligation, whether accrued, absolute, contingent or
otherwise, including any liability or obligation on account of Taxes or any
governmental charges, penalty, interest or fines, except: (i) those liabilities
reflected in the Financial Statements; or (ii) liabilities incurred in the
ordinary course of business (other than contingent liabilities) since April 30,
1998, which are reflected in Schedule 3.11 hereto.
3.12 Accounts Receivable. All Accounts Receivable have arisen from bona
fide transactions in the ordinary course of business. Assuming that commercially
reasonable efforts are made to collect the Accounts Receivable, all Accounts
Receivable reflected on the Company's balance sheets are good and collectible in
the ordinary course of business at the aggregate recorded amounts thereof, net
of doubtful accounts. Any prepayments of revenue received by the Company or a
Subsidiary have been treated as a reduction of the Company's or Subsidiary's
Accounts Receivable or are included in liabilities on the Company's Financial
Statements.
3.13 Taxes. Except as set forth in Schedule 3.13:
(a) All Tax Returns with respect to income Taxes, and all other
material Tax Returns that are required to be filed by or with respect to the
Company and the Subsidiaries have been timely filed, and the Company has
delivered to Buyer true and complete copies of all of the Tax Returns of the
Company and the Subsidiaries for the past six (6) years.
(b) All income Taxes and other material Taxes for which the Company
or any Subsidiary is liable that are due and payable or required to be withheld
on or before the Closing Date without regard to any extensions (other than such
Taxes that are being contested or protested in good faith by appropriate
proceedings and for which a reserve or other appropriate provision has been made
in the Financial Statements of the Company), whether or not arising under the
Tax Returns referred to in subsection (a), have been or will be paid or withheld
in full on or before the Closing Date. The Financial Statements reflect an
adequate reserve for all unpaid Taxes payable by the Company or any Subsidiary
for all taxable periods and portions thereof through the date of such Financial
Statements. Any unpaid Taxes of the Company or a Subsidiary for all periods
ending on or prior to the Closing Date and not reflected on the Financial
Statements will be included in Adjustment Liabilities.
(c) Neither the Company nor any of its Affiliates has waived or been
requested to waive any statute of limitations in respect of Taxes of the Company
or its Subsidiaries.
(d) No issues have been raised (and are currently pending) by any
taxing authority in connection with any of the Tax Returns referred to in
subsection (a) and all deficiencies asserted or assessments made as a result of
any examinations by taxing authorities have been paid in full.
(e) None of the Company or any Subsidiary has ever been a member of
an affiliated group of corporations that filed a consolidated return on which
the statute of limitations does not bar a federal tax assessment and no
affiliated group of corporations of which the Company or a Subsidiary has been a
member has discontinued filing consolidated returns during the past five
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(5) years. Schedule 3.13 also includes a list of each corporation that has been
a part of any affiliated group with the Company or any Subsidiary.
(f) The Company and the Subsidiaries do not have any liability for
Taxes, whether currently due or deferred, of any Person (i) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state or local law),
(ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.
(g) No consent under Section 341(f) of the Code has ever been filed
with respect to the Company or any Subsidiary. The Company and the Subsidiaries
will not be required to include any amount in their income or exclude any amount
from their deductions in any taxable period ending after the Closing Date by
reason of a change in method of accounting or use of the installment method of
accounting in any period ending on or prior to the Closing Date.
3.14 Bank Accounts; Powers of Attorney. Schedule 3.14 contains a correct
and complete list of all accounts or deposits of the Company with banks or other
financial institutions, safe deposit boxes of the Company, persons authorized to
sign or otherwise act with respect thereto as of the date hereof, and powers of
attorney for the Company. No change in such accounts or deposits, safe deposit
boxes or persons authorized to sign will be made prior to the Closing other than
changes in the ordinary course of business consistent with past practice.
3.15 Insurance. Schedule 3.15 is a true and complete list of all
insurance policies of the Company. All policies of insurance listed in Schedule
3.15 are in full force and effect and provide insurance coverage for the
properties, assets and operations of the Company, of the kinds, in the amounts
and against the risks customary in the broadcast industry, and none of such
policies (nor any previous policy) provides for or is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing arrangement or
other actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof. During the past three years, no insurance
policy of the Company or the Stations has been canceled by the insurer and no
application of the Company or any Subsidiary for insurance has been rejected by
any insurer. Such policies are sufficient in all material respects for
compliance by the Company and each Subsidiary with all requirements of law and
with the requirements of all Material Contracts to which the Company or any
Subsidiary is a party.
3.16 Reports. All material returns, reports, and statements that the
Stations are currently required to file with the FCC or Federal Aviation
Administration have been filed, and all reporting requirements of the FCC and
Federal Aviation Administration have been complied with in all material
respects. The Company or the Subsidiaries have timely paid to the FCC all annual
regulatory fees payable with respect to the FCC Licenses.
3.17 Personnel.
(a)Employees and Compensation. Schedule 3.17 contains a true and
complete list of all employees of the Company and the Subsidiaries
(collectively, "Employees") and all persons retained as independent contractors
by the Company or the Subsidiaries which list sets forth the compensation
including bonuses and incentives currently paid to such Employees and a list of
all
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compensation arrangements sponsored or maintained by the Company or the
Subsidiaries, or contributed to by the Company or the Subsidiaries including any
"employee welfare benefit plan," as defined in Section 3(1) of ERISA (a "Welfare
Plan"); "multiemployer pension plan," as defined in Section 3(37) of ERISA (a
"Multiemployer Plan"); "employee pension benefit plan," as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) (a "Pension Plan"); and payroll
practice, severance, stock options, stock appreciation rights, stock purchases,
or other forms of incentive compensation that is not a Welfare Plan, Pension
Plan, or Multiemployer Plan ("Benefit Arrangements").
(b) Compliance. Each Welfare Plan, Multiemployer Plan and Pension
Plan has been maintained in compliance in all material respects with its terms
and with the requirements prescribed by all laws that are applicable to such
plans, including ERISA and the Internal Revenue Code of 1986, as amended.
(c) Benefit Arrangements. Each Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by all laws that are applicable to such Benefit
Arrangement.
(d) Copies of Relevant Documents and Other Information. The Company
has made available to Buyer true and complete copies of each of the following
documents:
(1) Each Welfare Plan, Multiemployer Plan and Pension Plan (and,
if applicable, related trust, insurance or other funding agreements) and all
amendments thereto, and written descriptions thereof that have been distributed
to Employees; and
(2) Each Benefit Arrangement (if written) and written
descriptions thereof that have been distributed to Employees (including
descriptions of the number and level of Employees covered thereby), and a
description of any Benefit Arrangement that is not in writing.
3.18 Labor Relations. Except as set forth in Schedule 3.18, neither the
Company nor any Subsidiary is a party to or subject to any written or oral
employment agreement with any Employee. The Company and its Subsidiaries have
complied in all material respects with all laws, rules, and regulations relating
to the employment of labor, including those related to wages, hours, collective
bargaining, occupational safety and discrimination, and they have not received
any notice alleging a failure to comply with any such laws, rules, or
regulations. Except as set forth in Schedule 3.18, no controversies, disputes,
or proceedings are pending or, to the Company's knowledge, threatened, between
the Company or any Subsidiary and any Employee (singly or collectively). No
labor union or other collective bargaining unit represents or claims to
represent any of the Employees. To the knowledge of the Company, there is no
union campaign being conducted to represent any Employees or to solicit cards
from any Employees to authorize a union to request a National Labor Relations
Board certification election with respect to any Employees.
3.19 Claims and Legal Actions. Except as disclosed on Schedule 3.19 and
except for any FCC rulemaking proceedings generally affecting the radio
broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, or other legal, administrative, or Tax
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proceeding, nor any order, decree, or judgment, in progress or pending, or to
the knowledge of the Company threatened, against or relating to the Company, the
Subsidiaries, the Assets, or the business or operations of the Stations, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
3.20 Environmental Matters. To the Company's knowledge:
(a) The Company and its Subsidiaries have complied in all material
respects with all laws, rules, and regulations of all 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, claim, demand, or notice has been filed or commenced
against the Company or its Subsidiaries alleging any failure to comply with any
such law, rule, or regulation.
(b) Neither the Company nor any Subsidiary has any liability (and
there is no reasonable basis related to their past or present operations,
properties, or facilities for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against the Company
or its Subsidiaries giving rise to any such liability) under the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, the Federal Water Pollution Control Act, the
Clean Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act,
the Refuse Act, or the Emergency Planning and Community Right-to-Know Act (each
as amended) or any other law, rule, or regulation of any federal, state, or
local government (or agency thereof) concerning release or threatened release of
hazardous substances, public health and safety, or pollution or protection of
the environment.
(c) Neither the Company nor any Subsidiary has any liability (and
neither has handled or disposed of any substance, arranged for the disposal of
any substance, or owned or operated any property or facility in any manner that
could reasonably be expected to form the basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to any statute) against the Company or any
Subsidiary giving rise to any such liability) for damage to any site, location,
or body of water (surface or subsurface) or for illness or personal injury.
(d) All properties and equipment of the Company and the Subsidiaries
are and have been free of asbestos and asbestos-related products, PCB's,
methylene chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances (as defined in Section 302 of
the Emergency Planning and Community Right-to-Know Act).
(e) The operation of the Stations and all tower sites used by the
Stations are in compliance with ANSI Standards C95.1-1982 to the extent required
to be met under applicable rules and regulations of the FCC, and to the
Company's knowledge, no unresolved claims have been made to the contrary.
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3.21 Compliance with Laws. To the Company's knowledge, the Company and
the Subsidiaries have complied in all material respects with the Licenses and
all applicable federal, state and local laws, rules, regulations and ordinances,
and all requirements of all governmental bodies or agencies having jurisdiction
over any of them, the operation of the Stations, or the use of the Assets,
including without limitation, all material zoning ordinances, and laws
applicable to occupational safety and health, trade practices and building
sanitation. The Company and each Subsidiary have properly filed all material
reports and other documents required to be filed with any federal, state, local
or foreign government or subdivision or agency thereof. Except as set forth in
Schedule 3.21, neither the Company nor any Subsidiary has received notice, not
heretofore complied with, from any federal, state or municipal authority or any
insurance or inspection body that any of the Assets, or business procedures or
practices of the Company or Subsidiary fail to comply in any material respect
with any applicable law, ordinance, regulation, building or zoning law, or
requirement of any public authority or body.
3.22 Conduct of Business in Ordinary Course. Since December 31, 1997, the
Company and the Subsidiaries have conducted their business and operations only
in the ordinary course and, except as disclosed in Schedule 3.22, have not:
(a)suffered any Material Adverse Change;
(b)made any increase in compensation payable or to become payable to
any of its employees, or any bonus payment made or promised to any of its
Employees, except as required by law, existing Contracts or in the ordinary
course of regular compensation reviews, or any material change in personnel
policies, employee benefit plans, or other Benefit Arrangements;
(c)made any sale, assignment, lease, or other transfer of assets
other than in the normal and usual course of business with suitable replacements
being obtained therefor;
(d)canceled any debts owed to or claims held by the Company or any
Subsidiary, except in the normal and usual course of business;
(e)made any material changes in any method of the Company's
accounting practices, nor any amendments to the Company's Articles of
Incorporation or Bylaws;
(f)suffered any material write-down of the value of any Assets;
(g)transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right; or
(h)paid any dividend or made any other distribution or payment in
respect of, nor effected any subdivision, consolidation, redemption,
reclassification, purchase or other recapitalization of, the Common Stock or the
Preferred Stock of the Company, nor declared or authorized any of the foregoing,
except for distributions to Shareholders by the Company.
3.23 Transactions with Affiliates. Except as disclosed in the Financial
Statements, and in Schedule 3.23, the Company has not been involved in any
business arrangement or
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relationship with any Affiliate of the Company, and no Affiliate of the Company
owns any property or right, tangible or intangible, that is used in the business
of the Stations.
3.24 Broker. Neither the Company nor any Person acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, with respect only to its ownership of Common Stock or
Preferred Stock, as the case may be, represents and warrants to Buyer as
follows:
4.1 Ownership of Common Stock. Each Shareholder listed on Schedule 4.1
hereto is the lawful owner of the number of shares of Common Stock listed
opposite the name of such Shareholder in Schedule 4.1 attached hereto, except
that one former employee of the Company holds the right to put to the Company
16.511 shares of Class B Common Stock, which put has not yet been exercised.
Except as disclosed on Schedule 4.1, such shares are held by such Shareholder
free and clear of any claims, security interests, mortgages, liens, pledges,
conditions, charges, or encumbrances of any nature whatsoever. Except as
disclosed on Schedule 4.1, each such Shareholder has full legal right, power and
authority to enter into this Agreement and to sell, assign, transfer and convey
its shares of Common Stock.
4.2 Ownership of Preferred Stock. Each Shareholder listed on Schedule 4.2
hereto is the lawful owner of the number of shares of Preferred Stock listed
opposite the name of such Shareholder in Schedule 4.2 attached hereto, free and
clear of any claims, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever. Except as disclosed on
Schedule 4.2, each such Shareholder has full legal right, power and authority to
enter into this Agreement and to sell, assign, transfer and convey its shares of
Preferred Stock.
4.3 Authority; Binding Effect. All necessary action required to have been
taken by or on behalf of such Shareholder by applicable law or otherwise to
authorize (a) the approval, execution, and delivery on behalf of such
Shareholder of this Agreement and (b) the performance by such Shareholder of its
obligations under this Agreement and the consummation of the transactions
contemplated by this Agreement has been taken. This Agreement constitutes a
valid and binding agreement of such Shareholder, enforceable against it in
accordance with its terms, except as enforceability of this Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.4 No Conflicts, Required Filings and Consents. Subject to obtaining the
Consents listed on Schedule 3.4, the FCC Consent and compliance with the HSR
Act, the execution, delivery and performance of this Agreement by such
Shareholder and the documents contemplated hereby (with or without the giving of
notice, the lapse of time, or both): (a) do not require the consent of any third
party, (b) will not conflict with any provision of the organizational documents
of such Shareholder (to the extent applicable), (c) will not conflict
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with, result in a breach of, or constitute a default under any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or government instrumentality; and (d) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of any material agreement, instrument or license, to which
it is a party or by which such Shareholder or any of its properties or assets is
bound or affected.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Shareholders as follows:
5.1 Organization, Standing, and Authority. Buyer is a corporation duly
organized and validly existing under the laws of the State of Wisconsin and has
the requisite corporate power and authority to execute, deliver, and perform
this Agreement and the documents contemplated hereby according to their
respective terms and to own the Common Stock and the Preferred Stock.
5.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
5.3 Absence of Conflicting Agreements and Required Consents. Subject to
the receipt of the Consents listed on Schedule 5.3, the receipt of the FCC
Consent and compliance with the HSR Act, the execution, delivery and performance
by Buyer of this Agreement and the documents contemplated hereby (with or
without the giving of notice, the lapse of time, or both): (a) do not require
the consent of any third party; (b) will not conflict with the Articles of
Incorporation or By-laws of Buyer; (c) will not conflict with, result in a
breach of, or constitute a default under, any applicable law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; and (d) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license or permit to which Buyer is a party or by
which Buyer may be bound.
5.4 Brokers. Except for Michael J. Bergner of Bergner & Co., neither
Buyer nor any Person acting on its behalf has incurred any liability for any
finders' or brokers' fees or commissions in connection with the transactions
contemplated by this Agreement. Buyer shall be responsible for any brokerage fee
due to Bergner & Co.
5.5 Investment Purpose. Buyer is acquiring the Common Stock and the
Preferred Stock for investment for its own account and not with a view to the
sale or distribution of any part thereof, and not including collateral
assignments, transfers to Affiliates of Buyer or pledges
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of the Common Stock or the Preferred Stock for financing purposes, Buyer has no
present intention of selling, granting participating in, or otherwise
distributing the Common Stock or the Preferred Stock.
5.6 Qualifications. To its knowledge, Buyer is legally and financially
qualified under the Communications Act and FCC rules, regulations and policies
to acquire control of the Stations and no waivers of the Communications Act or
the FCC rules, regulations and policies will be necessary for Buyer to
consummate the transactions contemplated by this Agreement.
SECTION 6. OPERATION OF THE STATIONS PRIOR TO CLOSING
6.1 Conduct of Business Prior to Closing. From and after the date hereof
prior to the Effective Time, the Company will and will cause its Subsidiaries to
conduct their business in the ordinary course in accordance with past practices
(except where such conduct would conflict with the following covenants or with
other obligations of the Company under this Agreement), and, except as
contemplated by this Agreement or with the prior written consent of Buyer, the
Company will and will cause its Subsidiaries to:
(a)Not renew, extend, amend or terminate any Material Contract (or
waive any material right thereunder) or enter into any contract or commitment or
incur any obligation (including obligations relating to the borrowing of money
or the guaranteeing of indebtedness and obligations arising from the amendment
of any existing Contract, regardless whether such Contract is a Material
Contract) that will be binding on the Company or the Subsidiaries after Closing,
except for cash time sales agreements made in the ordinary course of business at
rates consistent with the past practices of the Company and the Subsidiaries and
that are cancelable by the Stations without penalty on not more than 30-days'
notice. Prior to the Closing Date, the Company shall deliver to Buyer a list of
all Contracts entered into between the date of this Agreement and the Closing
Date and shall make available to Buyer copies of such Contracts.
(b)Not increase or create wages or bonuses payable or to be payable
to any person employed in connection with the conduct of the business or
operations of the Stations, except for increases in existing annual compensation
at a rate not to exceed three percent (3%) with regard to any one person and
which increase would otherwise be in accordance with past practices or as
required by law or existing Contract.
(c)Not create or materially amend any Welfare Plan, Pension Plan or
Benefit Arrangement except as may be required to comply with applicable law.
(d)Not create, assume, or permit to exist any mortgage, pledge, lien,
or other charge or encumbrance affecting any of the Assets, except for those in
existence on the date of this Agreement and disclosed in Schedules 3.6, 3.7 or
3.11 and liens for current Taxes not yet due and payable.
(e)Not sell, assign, lease, or otherwise transfer or dispose of any
of the Assets except where no longer used in the operations of the Stations or
in connection with the acquisition of replacement property of equivalent kind
and value.
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(f)Not apply to the FCC for any construction permit that would
restrict the Stations' present operations, or make any changes in the Stations'
buildings, leasehold improvements or fixtures except in the ordinary course of
business.
6.2 Mergers. The Company will not reorganize, liquidate or merge or
consolidate with any other Person.
6.3 Access to Information. The Company and its Subsidiaries will give to
Buyer and its counsel, accountants, engineers, and other authorized
representatives reasonable access to the Stations and all books, records, and
documents of the Company and the Subsidiaries, and will furnish or cause to be
furnished to Buyer and its authorized representatives all information relating
to the Company and Subsidiaries that they reasonably request (including any
financial reports and operations reports produced with respect to the Stations).
6.4 Insurance. The Company shall maintain in full force and effect
policies of insurance that insure the business, operations, and assets of the
Company as presently being conducted.
6.5 Indebtedness and Obligations. Neither the Company nor any
Subsidiaries shall incur any indebtedness for borrowed money except pursuant to
distributions under the ESOP pursuant to the terms of the ESOP. The Company and
its Subsidiaries shall pay all their obligations as they become due, consistent
with past practices, so that all such obligations shall be current as of the
Closing Date.
6.6 Amendments. The Shareholders shall not amend, change, or modify the
Articles of Incorporation or Bylaws of the Company.
6.7 Securities. The Company will not, and will not agree to, (a) issue,
sell, or otherwise dispose of any of its shares of capital stock or the capital
stock of any Subsidiary; (b) acquire (through redemption or otherwise) any of
its shares of capital stock or the capital stock of any Subsidiary (except as
may be required pursuant to any put right created under the ESOP); (c) grant any
options, warrants, or other rights to acquire any of its shares of capital stock
or capital stock of any Subsidiary or (d) issue, sell, or otherwise dispose of
any stock options, bonds, notes, or other securities (except to the ESOP in
accordance with existing agreements).
6.8 Licenses. Neither the Company nor its Subsidiaries shall cause or
permit, by any act or failure to act, any of the Licenses required to be listed
on Schedule 3.5 to expire or to be revoked, suspended, or adversely modified, or
take any action that could reasonably be expected to cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
non-renewal or material adverse modification of any of the Licenses. The Company
and the Subsidiaries shall prosecute with due diligence any applications to any
governmental authority necessary for the operation of the Stations.
6.9 No Inconsistent Action. Neither Shareholders nor the Company shall
take any action that is inconsistent with their respective obligations under
this Agreement in any material respect or that could reasonably be expected to
hinder or delay the consummation of the transactions contemplated by this
Agreement. Neither Shareholders, the Company nor any of
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their respective representatives or agents shall, directly or indirectly,
solicit, initiate, or participate in any way in discussions or negotiations
with, or provide any confidential information to, any Person (other than Buyer
or any Affiliate of Buyer and their respective representatives and agents)
concerning any possible disposition of the Stations, the sale of any material
Assets of the Stations, or any similar transaction.
6.10 Maintenance of Assets. The Company and the Subsidiaries shall
maintain all of the Assets in good condition (ordinary wear and tear excepted),
consistent with their overall condition on the date of this Agreement, and use,
operate and maintain all of the Assets in a reasonable manner. The Company and
the Subsidiaries shall maintain inventories of spare parts and expendable
supplies at levels consistent with past practices. If any insured or indemnified
loss, damage, impairment, confiscation, or condemnation of or to any of the
Assets occurs, the Company and the Subsidiaries shall repair, replace, or
restore the impaired or damaged Assets to their prior condition as represented
in this Agreement as soon thereafter as reasonably possible, and the Company and
the Subsidiaries shall use the proceeds of any claim under any property damage
insurance policy or other recovery solely to repair, replace, or restore any of
the Assets that are lost, damaged, impaired, or destroyed.
6.11 Consents. The Company shall use its best efforts to obtain all
Consents without any change in the terms or conditions of any Contract or
License. The Company shall promptly advise Buyer of any difficulties experienced
in obtaining any of the Consents and of any conditions proposed, considered, or
requested for any of the Consents.
6.12 Notification. The Company shall promptly notify Buyer in writing of
any material developments with respect to the business or operations of the
Company or the Subsidiaries and any material change in any of the information
contained in the representations and warranties contained in Section 3 of this
Agreement.
6.13 Financial Information. The Company and the Subsidiaries shall
maintain their books and records in accordance with past practices.
Shareholders' Agents shall furnish to Buyer within twenty-one (21) days after
the end of each month ending between the date of this Agreement and the Closing
Date a statement of income and expense for the month just ended and such other
financial information (including information on payables and receivables and
debt balances) as Buyer may reasonably request. All financial information
delivered on behalf of Shareholders to Buyer pursuant to this Section shall be
prepared from the books and records of the Company and Subsidiaries, shall
accurately reflect the books, records, and accounts of the Stations, shall be
complete and correct in all material respects, and shall present fairly in all
material respects the financial condition of the Stations as at their respective
dates and the results of operations for the periods then ended.
6.14 Trade-Out Agreements. The Company shall use its best efforts to
cause advertisers to use, prior to the Closing Date, the broadcast time
available under the Trade-Out Agreements. No order or agreement for time sales
for trade for broadcast time with a dollar value in excess of Three Thousand
Dollars ($3,000) shall be entered into by the Company or any Subsidiary
following the execution of this Agreement. The dollar value of such broadcast
time
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entered into following the execution of this Agreement shall in no event exceed
Thirty Thousand Dollars ($30,000) in the aggregate as of the Closing Date.
6.15 Employee Stockholder. The Company shall use its best efforts to
cause the former employee of the Company referenced in Section 4.1 to put her
shares of Class B Common Stock to the Company prior to the Closing.
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS
7.1 FCC Consent and Governmental Approvals.
(a)The sale of the Common Stock and Preferred Stock as contemplated
by this Agreement is subject to the prior consent and approval of the FCC.
Shareholders, the Company, and Buyer shall prepare and within ten (10) business
days after the date of this Agreement file with the FCC appropriate applications
for FCC Consent. The parties shall thereafter prosecute the applications with
all reasonable diligence and otherwise use their respective best efforts to
obtain grants of the applications as expeditiously as practicable. Each party
agrees to comply with any condition imposed on it by the FCC Consent, except
that no party shall be required to comply with a condition if (i) the condition
was imposed on it as the result of a circumstance the existence of which does
not constitute a breach by that party of any of its representations, warranties,
or covenants hereunder, and (ii) compliance with the condition would have a
Material Adverse Effect upon it. Buyer and Shareholders shall oppose any
petitions to deny or other objections filed with respect to the applications for
the FCC Consent and any requests for reconsideration or judicial review of the
FCC Consent. If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither Shareholders nor Buyer
shall have terminated this Agreement under Section 10, the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the effective period of the FCC Consent shall limit the exercise by either party
of its right to terminate this Agreement under Section 10.
(b)The Company and Buyer agree to (a) file, or cause to be filed,
with the U.S. Department of Justice ("DOJ") and Federal Trade Commission ("FTC")
all filings, if any, which are required in connection with the transactions
contemplated hereby under the HSR Act within ten (10) business days of the date
of this Agreement (the filing fee for which shall be borne by Buyer); (b)
cooperate with each other in connection with all HSR Act filings, which
cooperation shall include furnishing the other with any information or documents
in such party's possession that may be reasonably required in connection with
such filings; (c) promptly file, after any request by the FTC or DOJ, any
information or documents requested by the FTC or DOJ (it being understood that
Buyer shall be primarily responsible for handling any filings in respect of any
such "second request" and shall be solely responsible for the fees of its legal
counsel and economic consultant in connection therewith); and (d) furnish each
other with any correspondence from or to, and notify each other of any other
communications with, the FTC or DOJ which relates to the transactions
contemplated hereunder, and to the extent practicable, to permit each other to
participate in any conferences with the FTC or DOJ.
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7.2 Risk of Loss. The risk of any loss, damage, impairment, confiscation,
or condemnation of any of the Assets from any cause whatsoever shall be borne by
Shareholders at all times prior to the Closing.
7.3 Confidentiality. Except as necessary for the consummation of the
transactions contemplated by this Agreement, and except as and to the extent
required by law, each party will keep confidential any information obtained from
the other party in connection with the transactions contemplated by this
Agreement. If this Agreement is terminated, each party will return to the other
party all information obtained by such party from the other party in connection
with the transactions contemplated by this Agreement.
7.4 Cooperation. Buyer and Shareholders shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Shareholders shall execute such other documents as may
be necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, and except as otherwise expressly provided in
this Agreement, Buyer shall have no obligation (a) to expend funds to obtain any
of the Consents or (b) to agree to any adverse change in any License or Contract
in order to obtain a Consent required with respect thereto.
7.5 Control of the Stations. Prior to Closing, Buyer shall not, directly
or indirectly, control, supervise, or direct, or attempt to control, supervise
or direct the operations of the Stations; those operations, including complete
control and supervision of all of the Stations programs', employees, and
policies, shall be the sole responsibility of Shareholders, the Company and the
Subsidiaries.
7.6 Tax Matters. Shareholders, the Company and the Subsidiaries shall
file accurate and complete federal, state and local Tax Returns in a timely
manner as required by applicable law and shall concurrently deliver copies of
all such Tax Returns to Buyer.
7.7 Sales Tax Filings. The Company shall continue, if required, to file
state sales Tax Returns with respect to the Stations in accordance with the
Company's past practices and shall concurrently deliver copies of all such Tax
Returns to Buyer.
7.8 Noncompetition Agreement. At the Closing, Oatman and Buyer shall
execute and deliver the Noncompetition Agreement in the form of Schedule 7.8
("Noncompetition Agreement").
7.9 Employee Matters. On or prior to the Closing, the Company shall
distribute to Lynch, Oatman and Jenkins the keyman life insurance policies
applicable to such individuals and the cash surrender value therein.
7.10 Payment of Excise Tax. Buyer agrees to pay when due the amount of
any federal excise tax that may be assessed as a result of the sale to Buyer of
the Common Stock held by the ESOP.
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7.11 ESOP Participant Notes. Buyer agrees to pay in accordance with the
terms of the ESOP Participant Notes all amounts outstanding under the ESOP
Participant Notes as of the Closing Date.
7.12 Environmental Audits. Buyer will promptly retain, at Buyer's
expense, a firm engaged in the regular business of environmental engineering to
conduct such environmental audits of the Company's and the Subsidiaries'
operations and the Real Property occupied by the Company and the Subsidiaries as
Buyer in its sole discretion shall consider necessary or appropriate.
Buyer shall promptly deliver to the Company the results of such environmental
audits.
7.13 Notice of Proceedings. Each party will promptly notify the other
parties in writing upon (a) becoming aware of any order or decree or any
complaint praying for an order or decree restraining or enjoining the
consummation of this Agreement or the transactions contemplated hereunder; or
(b) receiving any notice from any governmental department, court, agency or
commission of its intention (i) to institute an investigation into, or institute
a suit or proceeding to restrain or enjoin, the consummation of this Agreement
or such transactions, or (ii) to nullify or render ineffective this Agreement or
such transactions if consummated.
7.14 Title Insurance and Surveys. Buyer shall have sixty (60) days after
the date hereof (the "Review Period") in which to obtain:
(a)surveys (the "Surveys") of each parcel of leased Real Property and
Real Property owned in fee by the Company (together with all material easements
appurtenant to such Real Property) prepared in accordance with ALTA/ACSM
standards, certified to Buyer and to the title insurance company, each dated no
more than ninety (90) days prior to the Closing and each detailing the legal
description, the perimeter boundaries, all improvements located thereon, all
easements and encroachments, rights of way, utilities, rights and other matters
(whether above or below ground) encumbering or affecting each such parcel of
Real Property and such matters as may be reasonably requested by Buyer or the
title insurance company, each containing a surveyor certificate reasonably
acceptable to Buyer and the title insurance company, each prepared by a
registered land surveyor satisfactory to Buyer licensed to practice in such
state in which the Real Property is located; and
(b)current title insurance commitments (the "Title Commitments"),
issued by a title insurance company or companies reasonably satisfactory to
Buyer, agreeing to issue to Buyer standard form owner's policies of title
insurance with respect to each parcel of leased Real Property and Real Property
owned in fee by the Company (together with all material easements appurtenant to
such Real Property) (the "Title Policies"), together with a copy of each
document to which reference is made in such commitments. The Title Policies
shall be standard ALTA Form 1992 owner's policies in the full amount of that
portion of the Purchase Price allocated respectively to each parcel of Real
Property, insuring good and marketable title thereto (including all material
easements appurtenant to such Real Property) and shall include extended coverage
deleting all of the standard exceptions. Buyer may reasonably request
endorsement to the Title Policies including but not limited to the following:
gap coverage, zoning 3.1, access, location, owner's comprehensive and
contiguity, provided that the inability or unwillingness of
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the title insurance company to issue such endorsement shall not be a matter to
which Buyer may object as set forth below.
On or before the expiration of the Review Period, Buyer shall furnish
the Company with a written statement of any title or such survey objections
affecting the Real Property, other than the Permitted Exceptions, defined below.
Should Buyer fail to notify the Company of any such title objections within the
Review Period, Buyer shall be deemed to have waived objections to the matters
affecting the Real Property revealed by the Title Commitments and Surveys. The
Company shall have twenty (20) business days after receipt of any such written
objections (hereinafter referred to as the "Title Cure Period") in which the
Company shall use commercially reasonable efforts to cure all valid title
objections. In the event that the Company fails to cure all valid title
objections within the Title Cure Period, Buyer shall, by written notice to the
Company given within ten (10) business days after the expiration of the Title
Cure Period, elect one of the following: (a) to waive such title objections and
close the transaction, without deduction of any amounts from the Purchase Price,
on the Closing Date; or (b) to terminate this Agreement, in which event, neither
the Company nor the Buyer shall have any rights, duties or obligations under
this Agreement, except for any rights or obligations hereunder which, by their
terms, survive any termination, cancellation, rescission, expiration or
consummation of this Agreement and the lien or right, if any, of Buyer against
or to the Real Property shall wholly cease. The Company shall not be required to
bring any action or proceeding, or otherwise to incur any expense, to render
title to the Real Property free of any matters objected to by Buyer other than
the execution by the Company of affidavits and certificates customarily executed
in similar transactions and reasonably approved by the Company, unless the
matter objected to is a breach of the Company's representations and warranties
herein. Mortgages and financing statements encumbering the Real Property which
are to be released by the Company at the Closing shall not constitute valid
title objections so long as any such mortgages and financing statements are not
exceptions to title on the Closing Date. Notwithstanding the foregoing, Buyer's
failure to object to any matters affecting the Real Property revealed by the
Title Commitments or Surveys or Buyer's waiver of any such matters shall not in
any way operate as a waiver, modification, termination, merger, or other
limitation on the Company's representations or warranties regarding the Real
Property, which representations and warranties the Company acknowledges shall
remain unchanged hereby and in full force and effect.
For purposes of this Paragraph, the term "Permitted Exceptions"
shall, for each of the parcels of Real Property, mean:
(a)Liens for ad valorem Taxes not yet due and payable which have been
sufficiently accrued or reserved against in the Estimated Closing Statement;
(b)Matters of record pertaining to such Real Property (excepting
monetary encumbrances such as mortgages, deeds of trust, security interests,
liens and money judgments) to the extent any of the same do not materially and
adversely affect the marketability or operation of the Real Property (and
improvements thereon) to which they relate or interfere with the present use and
enjoyment thereof;
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(c)All matters that would be shown by an accurate survey or
inspection of such Real Property, including but not limited to easements,
encroachments, overlaps, riparian rights, and boundary disputes, if any, to the
extent any of the same do not materially and adversely affect the marketability
or operation of the Real Property (and improvements thereon) to which they
relate or interfere with the present use and enjoyment thereof; and
(d)All building, zoning, and other state, county or Federal Laws,
codes and regulations, affecting any portion of such Real Property provided the
same are not violated.
The Company shall cooperate with Buyer to enable Buyer to obtain the
Surveys and Title Policies. Such cooperation by the Company shall include,
without limitation, providing the title insurance company with such affidavits
and certificates customarily executed in similar transactions as the title
insurance company may reasonably require and the Company may reasonably approve;
provided, however, that the Company shall not be obligated to execute any
affidavits or certificates which would extend the survival of the Company's
representations and warranties or its indemnity obligations under this
Agreement. The cost of obtaining the Surveys and the Title Policies described
above shall be allocated between Buyer and the Company in accordance with the
custom of the local jurisdiction in which the Real Property is located;
provided, however, that the Company shall not be responsible for any such costs
exceeding Fifteen Thousand Dollars ($15,000) regardless of local custom, and all
remaining costs shall be paid by Buyer.
7.15 Employees. The Company and the Shareholders shall use their
commercially reasonable best efforts to collect from any Employee all cash
advances made to such Employee prior to the Closing.
7.16 Buyer Board of Directors. Buyer agrees that effective as of the
Closing Date, Oatman shall be elected by Buyer to serve as an outside director
of the Board of Directors of Buyer's wholly-owned subsidiary Journal Broadcast
Group, Inc. ("Group") for a term of 5 years and that his benefits as an outside
director will include continued health insurance coverage for Oatman and his
spouse. Oatman shall pay personally the full premiums for such health insurance
coverage charged by Group to qualified beneficiaries entitled to continuation
coverage under ERISA ss. 601 et. seq. or Section 4980B of the Internal Revenue
Code of 1986, as amended, or any successor statute or regulation.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SHAREHOLDERS
8.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject at Buyer's option to the fulfillment prior to or
on the Closing Date of each of the following conditions:
(a)Representations and Warranties. All representations and warranties
of Shareholders and the Company contained in this Agreement shall be true and
complete in all material respects at and as of the Closing Date as though made
at and as of that time.
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(b)Covenants and Conditions. Shareholders and the Company shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c)Consents. All Consents shall have been obtained and delivered to
Buyer (other than any Consent required under any Contract listed on Schedule 3.8
that is not a Material Contract) without any adverse change in the terms or
conditions of any Contract or any License.
(d)FCC Consent. The FCC Consent shall have been granted without the
imposition on Buyer of any conditions that need not be complied with by Buyer
under Section 7.1 hereof, Shareholders and the Company shall have complied with
any conditions imposed on them by the FCC Consent, and the FCC Consent shall
have become a Final Order.
(e)Governmental Authorizations. The Subsidiaries shall hold their
respective FCC Licenses and there shall not have been any non-renewal or renewal
for less than a full term of any FCC License or any modification of any FCC
License that could have a Material Adverse Effect. No proceeding shall be
pending or threatened the effect of which could reasonably be expected to result
in the revocation, cancellation, failure to renew, suspension or material
adverse modification of any FCC License.
(f)Deliveries. Shareholders and the Company shall have made or stand
willing to make all the deliveries to Buyer described in Section 9.2.
(g)Adverse Change. Between the date of this Agreement and the Closing
Date, there shall have been no Material Adverse Change.
(h)HSR Act. The waiting period under the HSR Act shall have expired
or terminated without unresolved action by the DOJ or the FTC to prevent the
Closing.
(i)ESOP.
(1) Employee Plan Fiduciary Condition. The appropriate
fiduciaries of the ESOP shall have (A) received a current valuation report and
fairness opinion in such form as may be acceptable to such fiduciaries from a
source mutually acceptable to such fiduciaries and Buyer, and (B) determined, in
the exercise of their sole discretion, that the consummation of the transactions
contemplated herein at the Closing is fair to and in the best interests of the
participants and beneficiaries of the ESOP.
(2) Indebtedness. The appropriate fiduciaries of the ESOP shall
have (i) agreed that the proceeds the ESOP receives at the Closing will be used
to immediately repay in full any outstanding debt owed by the ESOP to Intrust
Bank and (ii) adopted appropriate resolutions to take all necessary steps to
terminate the ESOP.
(j)Environmental Conditions. The results of the environmental audit
conducted pursuant to Section 7.12 shall not have disclosed any condition,
process or practice with respect to the Company or any Subsidiary or any Real
Property owned by the Company or any Subsidiary which is not in material
compliance with applicable environmental laws and (1) is not
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capable of being remediated by the Company by the Upset Date (as defined in
Section 10.1(c)) or (2) is material and the Company has refused to remediate
such condition, process or practice.
8.2 Conditions to Obligations of Shareholders. All obligations of
Shareholders at the Closing hereunder are subject, at Shareholders' option, to
the fulfillment prior to or on the Closing Date of each of the following
conditions:
(e)Representations and Warranties. All representations of Buyer
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though made at and as of that time.
(f)Covenants and Conditions. Buyer shall have performed and complied
in all material respects with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(g)Deliveries. Buyer shall have made or stand willing to make all the
deliveries described in Section 9.3.
(h)FCC Consent. The FCC Consent shall have been granted without the
imposition on Shareholders or the Company of any conditions that need not be
complied with by Shareholders or the Company under Section 7.1 hereof, Buyer
shall have complied with any conditions imposed on it by the FCC Consent, and
the FCC Consent shall have become a Final Order.
(i)HSR Act. The waiting period under the HSR Act shall have expired
or terminated without unresolved action by the DOJ or the FTC to prevent the
Closing.
(f)ESOP.
(1) Employee Plan Fiduciary Condition. The appropriate
fiduciaries of the ESOP shall have (A) received a current valuation report and
fairness opinion in such form as may be acceptable to such fiduciaries from a
source mutually acceptable to such fiduciaries and Buyer, and (B) determined, in
the exercise of their sole discretion, that the consummation of the transactions
contemplated herein at the Closing is fair to and in the best interests of the
participants and beneficiaries of the ESOP.
(2) Indebtedness. The appropriate fiduciaries of the ESOP shall
have (i) agreed that the proceeds the ESOP receives at the Closing will be used
to immediately repay in full any outstanding debt owed by the ESOP to Intrust
Bank and (ii) adopted appropriate resolutions to take all necessary steps to
terminate the ESOP.
SECTION 9. CLOSING AND CLOSING DELIVERIES
9.1 Closing.
(a) Closing Date.
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(1) Except as provided below in this Section 9.1(a) or as
otherwise agreed to by Buyer and Shareholders, the Closing shall take place at
10:00 a.m. on a date designated by Buyer that is not later than ten (10)
business days following the date upon which the FCC Consent has become a Final
Order.
(2) If there is in effect on the date on which the Closing would
otherwise occur pursuant to this Section 9.1(a) any judgment, decree, or order
that would prevent or make unlawful the Closing on that date, the Closing shall
be postponed until a date within the effective period of the FCC Consent (as it
may be extended pursuant to Section 7.1), to be agreed upon by Buyer and
Shareholders' Agents, when such judgment, decree, or order no longer prevents or
makes unlawful the Closing. If the Closing is postponed pursuant to this
paragraph, the date of the Closing shall be mutually agreed to by Shareholders'
Agents and Buyer.
(b)Closing Place. The Closing shall be held at the offices of Dow,
Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Shareholders' Agents.
9.2 Deliveries by Shareholders. Prior to or on the Closing Date,
Shareholders shall deliver to Buyer the following, in form and substance
reasonably satisfactory to Buyer and its counsel:
(a)Stock. Certificates representing all of the Preferred Stock and
Common Stock, which shall be either duly endorsed or accompanied by stock powers
duly executed in favor of Buyer;
(b)Resignations. Written resignations, effective on the Closing Date,
of all of the officers and directors of the Company and the Subsidiaries;
(c)Articles of Incorporation. A copy of the Articles of Incorporation
of the Company and each Subsidiary, certified as of a date not earlier than ten
(10) days prior to the Closing Date by the Secretary of State of the state in
which the Company or the Subsidiary is incorporated;
(d)Bylaws. A copy of the Bylaws of the Company and each Subsidiary
certified, as of the Closing Date, by the Secretary or Assistant Secretary of
each;
(e)Resolutions. Copies of resolutions adopted by the Board of
Directors of the Company authorizing and approving the execution of this
Agreement and the consummation of the transactions contemplated hereby,
certified by the Secretary of the Company as being true and complete on the
Closing Date;
(f)Corporate, Financial, Tax and Business Records. All corporate
records (including minute books and stock books and registers) and financial,
tax and business records of the Company and the Subsidiaries;
(g)Licenses, Contracts, Business Records, Etc. Originals or, if not
available, copies of all Licenses, including any modifications and amendments
thereto, and all applications,
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reports, technical information and engineering studies relating to the Stations
and all files required to be maintained by the FCC, all Contracts, and other
operational data or other information maintained by the Company and the
Subsidiaries in the ordinary course, all blueprints, schematics, working
drawings, plans, projections, statistics, engineering records relating to the
Stations, and all other business files and records in the possession of
Shareholders, the Company or the Subsidiaries relating to the operation of the
Stations;
(h)Consents. A manually executed copy of any instrument evidencing
receipt of any Consent;
(i)Officer's Certificate. A certificate, dated as of the Closing
Date, executed on behalf of the Company by its Executive Vice President,
certifying: (1) that the representations and warranties of the Company contained
in this Agreement are true and complete in all material respects as of the
Closing Date as though made on and as of that date; and (2) that the Company has
in all material respects performed and complied with all of its obligations,
covenants, and agreements in this Agreement to be performed and complied with on
or prior to the Closing Date;
(j)Opinions of Counsel. An opinion of the Company's and Shareholders'
counsel dated as of the Closing Date, substantially in the form of Schedule
9.2(j) hereto;
(k)Noncompetition Agreement. The Noncompetition Agreement duly
executed by Oatman;
(l)Closing Escrow Agreement. The Closing Escrow Agreement duly
executed by the Shareholders in the form of Schedule 9.2(l) (the "Closing Escrow
Agreement");
(m)Insurance. Evidence of the distribution by the Company to each of
Lynch, Oatman and Jenkins of the keyman life insurance policies applicable to
such individuals and the cash surrender value therein; and
(n)ESOP Fairness Opinion. A copy of the fairness opinion described in
Section 8.1(i)(1).
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Shareholders the following, in form and substance reasonably
satisfactory to Shareholders and their counsel:
(a)Closing Payments. The Purchase Price as adjusted pursuant to
Section 2.3 and the payment under the Noncompetition Agreement;
(b)Officer's Certificate. A certificate, dated as of the Closing
Date, executed on behalf of Buyer by the President or Vice President of Buyer,
certifying (1) that the representations and warranties of Buyer contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date; and (2) that Buyer has in all
material respects performed and complied with all of its obligations, covenants,
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and agreements in this Agreement to be performed and complied with on or prior
to the Closing Date;
(c)Resolutions. Copies of resolutions (1) adopted by the Board of
Directors of Buyer authorizing and approving the execution of this Agreement and
the consummation of the transactions contemplated hereby and (2) adopted by
Buyer electing Oatman to serve as an outside director on Group's Board of
Directors effective as of the Closing Date in accordance with the terms of
Section 7.16, all certified by the Secretary of Buyer as being true and complete
on the Closing Date;
(d)Opinion of Counsel. An opinion of Buyer's counsel dated as of the
Closing Date, substantially in the form of Schedule 9.3(c) hereto; and
(e)Closing Escrow Agreement. The Closing Escrow Agreement duly
executed by Buyer.
SECTION 10. TERMINATION
10.1 Termination by Shareholders. This Agreement may be terminated by
Shareholders and the purchase and sale of the Company abandoned, if Shareholders
are not then in material default, upon written notice to Buyer, upon the
occurrence of any of the following:
(a)Conditions. If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Shareholders set
forth in this Agreement has not been satisfied or waived in writing by
Shareholders.
(b)Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order that would prevent
or make unlawful the Closing.
(c)Upset Date. If the Closing shall not have occurred on or prior to
the date that is 365 days from the date the application for FCC Consent (on FCC
Form 315) is filed with the FCC (the "Upset Date").
(d)Breach. Without limiting Shareholders' rights under the other
provisions of this Section 10.1, if Buyer has failed to cure any material breach
of any of its representations, warranties or covenants under this Agreement
within thirty (30) days after Buyer has received written notice of such breach
from Shareholders' Agents.
10.2 Termination by Buyer. This Agreement may be terminated by Buyer and
the purchase and sale of the Company abandoned, if Buyer is not then in material
default, upon written notice to Shareholders, upon the occurrence of any of the
following:
(a)Conditions. If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Buyer set forth in
this Agreement has not been satisfied or waived in writing by Buyer.
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(b)Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order that would prevent
or make unlawful the Closing.
(c)Upset Date. If the Closing shall not have occurred on or prior to
the Upset Date.
(d)Breach. Without limiting Buyer's rights under the other provisions
of this Section 10.2, if Shareholders or the Company has failed to cure any
material breach of any of its representations, warranties or covenants under
this Agreement within thirty (30) days after Shareholders have received written
notice of such breach from Buyer.
10.3 Rights on Termination. If this Agreement is terminated by
Shareholders due to Buyer's material breach of this Agreement, the release of
the Escrow Deposit to Shareholders shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered or
alleged to be suffered by Shareholders by reason of Buyer's material breach of
this Agreement and Buyer shall be obligated to deliver joint instructions to the
Escrow Agent to the effect of the foregoing. Shareholders and Buyer agree in
advance that actual damages would be difficult to ascertain and that the Escrow
Deposit is a fair and equitable amount to reimburse Shareholders for damages
sustained or alleged to be sustained due to Buyer's material breach of this
Agreement. If this Agreement is terminated by Buyer due to Shareholders' or the
Company's material breach of any provision of this Agreement, the Escrow Deposit
shall be immediately released to Buyer and Buyer shall have all rights and
remedies available at law or equity. In all events, any interest accrued on the
Escrow Deposit shall belong to Buyer or its designee.
10.4 Attorneys' Fees. In the event of a default by either party that
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses (whether incurred in
arbitration, at trial, or on appeal).
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
11.1 Survival. Without prejudice to representations and warranties in
other agreements delivered hereunder, all representations, warranties and
covenants of the parties herein with respect to periods prior to Closing shall
be deemed continuing representations, warranties and covenants, and shall
survive the Closing for a period of eighteen (18) months. Any investigations by
or on behalf of any party hereto shall not constitute a waiver as to enforcement
of any representation, warranty, or covenant contained in this Agreement. No
notice or information delivered by either party shall affect the other party's
right to rely on any representation, warranty, or covenant made by such party or
relieve such party of any obligations under this Agreement as the result of a
breach of any of its representations and warranties.
11.2 Indemnification by Shareholders. After the Closing, and regardless
of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, but subject to Section 11.5, Shareholders hereby
agree to indemnify and hold Buyer harmless against and with respect to, and
shall reimburse Buyer for:
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(a)any and all losses, liabilities, or damages resulting from any
untrue representation, breach of warranty, or nonfulfillment of any covenant by
Shareholders or the Company contained herein or in any certificate, document, or
instrument delivered to Buyer hereunder;
(b)any and all losses, liabilities, or damages resulting from any
liability or obligation of the Company or the Subsidiaries in existence as of
the Closing and not permitted by Section 2.2(b);
(c)any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.3 Indemnification by Buyer. Notwithstanding the Closing, Buyer hereby
agrees to indemnify and hold Shareholders harmless against and with respect to,
and shall reimburse Shareholders for:
(a)any and all losses, liabilities, or damages resulting from any
untrue representation, breach of warranty, or nonfulfillment of any covenant by
Buyer contained herein or in any certificate, document, or instrument delivered
to Shareholders hereunder; and
(b) any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a)The party claiming indemnification (the "Claimant") shall promptly
give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five business
days after written notice of such action, suit, or proceeding was given to
Claimant.
(b)With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty (30) days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity.
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(c)With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any
third-party claim, it shall be bound by the results obtained in good faith by
the Claimant with respect to such claim.
(d)If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e)The indemnification rights provided in Section 11.2 and Section
11.3 shall extend to the partners, officers, employees, and representatives of
any Claimant although for the purpose of the procedures set forth in this
Section 11.4, any indemnification claims by such parties shall be made by and
through the Claimant.
11.5 Limitations on Indemnification.
(a)Following the Closing, the sole and exclusive remedy for Buyer for
any claim arising out of a breach of any representation, warranty, covenant or
other agreement herein or otherwise arising out of or in connection with the
transactions contemplated by this Agreement (and agreements executed in
connection herewith or delivered pursuant hereto), whether such claim is framed
in tort, contract or otherwise, shall be a claim for indemnification pursuant to
this Section 11 and the Closing Escrow Agreement.
(b)At the Closing, Shareholders, Buyer and the Closing Escrow Agent
shall enter into the Closing Escrow Agreement, pursuant to which Buyer shall
deposit with the Closing Escrow Agent the sum of Three Million Dollars
($3,000,000) (the "Closing Escrow") to be held in escrow by the Closing Escrow
Agent to secure Shareholders' indemnification obligations hereunder. The Closing
Escrow Agent shall maintain the Closing Escrow in an account to be managed and
paid out by the Closing Escrow Agent in accordance with the terms of the Closing
Escrow Agreement.
(c)No party shall be entitled to indemnification hereunder unless and
until the amount for which indemnification is owing exceeds Three Hundred
Thousand Dollars ($300,000) for all such matters and indemnification shall be
made to the Indemnifying Party only to the extent of such excess over Three
Hundred Thousand Dollars ($300,000) ("Basket Amount"). The Basket Amount shall
not be severally applied to each Shareholder or each indemnification claim, but
instead all claims for indemnification against any and all Shareholders shall be
aggregated and taken together in their application against the Basket Amount.
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11.6 No Waiver. The Closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the claim at or before the Closing, and regardless of
whether such breach, violation or failure is deemed to be material.
SECTION 12. MISCELLANEOUS
12.1 Fees and Expenses. Shareholders shall pay any filing fees, transfer
taxes, document stamps, or other charges levied by any governmental entity on
account of the transfer of the Common Stock and the Preferred Stock from
Shareholders to Buyer. Buyer and Shareholders shall each pay one-half of any
filing fees charged by the FCC in connection with obtaining the FCC Consent.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives, and each party shall be responsible
for all fees or commissions payable to any finder, broker, advisor, or similar
Person retained by or on behalf of such party.
12.2 Notices. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be in writing and shall be
addressed as follows:
If to Buyer: Mr. Douglas G. Kiel
President
Journal Broadcast Group, Inc.
720 East Capitol Drive
Milwaukee, Wisconsin 53212
with copies (which shall not constitute Foley & Lardner
notice) to: Firstar Center
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Jeffrey J. Jones, Esq.
If to Shareholders, the Company, or Mr. F. F. Mike Lynch
Shareholders' Agents: President
Mr. Michael C. Oatman
Executive Vice President
Great Empire Broadcasting, Inc.
4200 North Old Lawrence Road
Wichita, Kansas 67219
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with a copy (which shall not constitute Dow, Lohnes & Albertson, PLLC
notice) to: 1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Attention: Kevin F. Reed, Esq.
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.2. A
notice mailed by certified mail, postage prepaid and return receipt requested,
shall be deemed to have been duly delivered and received on the date of receipt
shown on the return receipt.
12.3 Benefit and Binding Effect. No party hereto may assign this
Agreement without the prior written consent of the other parties hereto, except
that Buyer may assign its rights under this Agreement, in whole or in part,
without the consent of the other parties, to any Affiliate of Buyer; provided,
however, that Buyer provides the other parties with written notice at the time
of such assignment and guarantees the performance of its obligations hereunder
by the assignee. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
12.4 Further Assurances. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
12.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF KANSAS (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
12.6 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
12.7 Entire Agreement. This Agreement, the schedules and exhibits hereto,
and all documents, certificates, and other documents to be delivered by the
parties pursuant hereto, collectively represent the entire understanding and
agreement between the parties with respect to the subject matter of this
Agreement. This Agreement supersedes all prior negotiations among the parties,
and cannot be amended, supplemented, or changed except by an agreement in
writing that makes specific reference to this Agreement and that is signed by
the party against which enforcement of any such amendment, supplement, or
modification is sought. The parties hereto acknowledge that no representations
or warranties have been made with respect to matters relating to the
transactions contemplated by this Agreement other than as expressly set forth in
this Agreement.
12.8 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty,
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covenant, agreement, or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 12.8.
12.9 Press Release. Prior to the Closing, neither party shall publish any
press release, make any other public announcement or otherwise communicate with
any news media concerning this Agreement or the transactions contemplated hereby
without the prior written consent of the other party; provided, however, that
nothing contained herein shall prevent either party from promptly making all
filings with governmental authorities as may, in its judgment be required or
advisable in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
12.10 Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of Buyer and the Company and the Shareholders as of the date
first written above.
JOURNAL BROADCAST CORPORATION
By:/s/____________________________________
Name:
Title:
GREAT EMPIRE BROADCASTING, INC.
By:/s/____________________________________
Name:
Title:
F. F. LYNCH REVOCABLE TRUST
By:/s/ F.F. Mike Lynch
____________________________________
Name: F. F. Mike Lynch
Title: Trustee
/s/ Michael C. Oatman
_______________________________________
Michael C. Oatman
FIRST STUART CORPORATION
By:/s/____________________________________
Name:
Title:
/s/Laurence E. Steckline
_______________________________________
Laurence E. Steckline
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GREAT EMPIRE BROADCASTING, INC. EMPLOYEE STOCK
OWNERSHIP TRUST
By:/s/____________________________________
Name:
Title:
THE OATMAN CHARITABLE REMAINDER UNITRUST u/t/a 7/30/98
By:/s/ Michael C. Oatman
_______________________________________
Michael C. Oatman, Trustee
By:/s/ Jane C. Oatman
_______________________________________
Jane C. Oatman, Trustee
THE MELISSA JANE McDERMOTT TRUST u/t/a August 17, 1998
By:/s/ Jane C. Oatman
_______________________________________
Jane C. Oatman, Trustee
THE MICHAEL ANDREW OATMAN TRUST u/t/a August 17, 1998
By:/s/ Jane C. Oatman
_______________________________________
Jane C. Oatman, Trustee
THE RICHARD ERIC OATMAN TRUST
u/t/a August 17,1998
By: /s/ Jane C. Oatman
_______________________________________
Jane C. Oatman, Trustee
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LYNCH CHARITABLE REMAINDER UNITRUST
By:/s/___________________________________
SHAREHOLDERS' AGENTS
/s/ Michael C. Oatman
__________________________________________
Michael C. Oatman
/s/ F. F. Mike Lynch
___________________________________________
F. F. Mike Lynch
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FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (the "Amendment") is
dated as of June 14, 1999, by and among Great Empire Broadcasting, Inc., a
Kansas corporation (the "Company"), the holders of shares of the Company's
Common Stock and Preferred Stock (the "Shareholders"), Michael C. Oatman, an
individual, and F.F. Mike Lynch, an individual, the duly appointed agents for
the Shareholders (the "Shareholders' Agents"), and Journal Broadcast
Corporation, a Nevada corporation ("Buyer").
RECITALS
A. Buyer, the Shareholders' Agents, the Shareholders and the Company have
entered into a Stock Purchase Agreement dated as of August 24, 1998 (the
"Purchase Agreement"), pursuant to which the Shareholders have agreed to sell to
Buyer, and Buyer has agreed to purchase from the Shareholders, the Common Stock
and the Preferred Stock on the terms and conditions set forth therein.
B. The parties hereto desire to set forth their agreement regarding the
Closing under the Purchase Agreement.
A G R E E M E N T S
In consideration of the agreements set forth herein and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Capitalized Terms. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Purchase Agreement.
2. Closing Date and Closing Place. (A) Section 9.1(a)(1) is hereby
amended and restated in its entirety as follows:
(a)(1) Except as provided below in this Section 9.1(a), the
Closing Date shall be June 14, 1999. The parties agree that the
Effective Time for purposes of the Working Capital Adjustment and
for all tax, accounting and financial purposes shall be 12:01
a.m., on June 1, 1999. Buyer hereby waives the condition that the
FCC Consent received on June 11, 1999 shall have become a Final
Order prior to Closing.
(B) Section 9.1(b) is hereby amended and restated in its entirety as
follows:
(b) Place of Closing. The Closing shall be held at the offices of
Triplett, Woolf & Garretson, LLC, 2959 North Rock Road, Suite 300, Wichita,
Kansas 67226.
<PAGE>
3. Purchase Price. Section 2.3(a) shall be amended and restated in its
entirety as follows:
(a) Purchase Price. The purchase price for the Common Stock and the
Preferred Stock (the "Purchase Price") shall be Ninety-five Million Nine Hundred
Thousand Dollars ($95,900,000). Buyer shall pay or cause to be paid to
Shareholders at the Closing the Purchase Price, adjusted preliminarily by the
Working Capital Adjustment determined as of the Effective Time in accordance
with Section 2.4(c) hereof, less the Escrow Deposit of $4,000,000 and the
Closing Escrow (as defined below) of $3,000,000, plus the amount of "Closing
Interest" by federal wire transfer of same-day funds pursuant to wire
instructions which shall be delivered by Shareholders' Agents to Buyer at least
two (2) business days prior to the Closing Date. "Closing Interest" means
interest at the rate of five percent per annum commencing on and as of June 1,
1999, and continuing on through the day prior to the Closing on the amount of
the Purchase Price less the Working Capital Adjustment. By way of illustration,
assuming that the Closing Date is June 3, 1999, there would be two days of
Closing Interest to be paid by Buyer.
4. Closing Adjustments. The parties have made and approved the following
as contemplated by the Purchase Agreement:
(a) The Estimated Closing Statement attached to this Amendment as Exhibit
A.
(b) The preliminary Working Capital Adjustment as of the Effective Time
as set forth in Exhibit B to this Amendment. 5. Real Estate Matters. The matters
listed on the attached Exhibit C (the "Real Estate Matters") have not been
completed as of the date hereof, and will need to be completed following the
Closing. Shareholders hereby covenant and agree to reasonably cooperate in a
timely manner with Buyer in order to complete the Real Estate Matters.
6. Assets and Liabilities at Closing. Notwithstanding any provision to
the contrary in the Purchase Agreement, the parties agree that the liabilities
and obligations of the Company or any Subsidiary at the Closing shall include
those Contracts listed on Exhibit D hereto and marked with an asterisk.
7. Litigation. Pursuant to Section 6.12 of the Purchase Agreement, the
Company hereby notifies Buyer of the litigation disclosed on Exhibit E hereto
(the "Morris Litigation"). Notwithstanding any provision in the Purchase
Agreement to the contrary, the parties agree that
(a) Journal shall be responsible for payment of the first
Twenty-Five Thousand Dollars ($25,000) ("Buyer's Portion") in
expenses and costs incurred by the parties in defending the Morris
Litigation and which are not covered by the Company's insurance
("Uninsured Litigation Expenses"); (b) Buyer's Portion shall be
applied to the Basket Amount as defined in Section 11.5(c); and
(c) Shareholders shall be responsible for the payment of Uninsured
Litigation Expenses to the extent such Uninsured Litigation
Expenses exceed Buyer's Portion ($25,000); provided, however, that
the aggregate amount of Uninsured Litigation Expenses for which
Shareholders shall be responsible shall not exceed Twenty-Five
Thousand Dollars ($25,000) ("Shareholders' Portion") and
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<PAGE>
Shareholders' Portion shall be paid from the Closing Escrow; and
provided, further, that Shareholders' payment of Shareholders'
Portion shall not be deemed a waiver by Buyer of any other claim
for indemnification for Uninsured Litigation Expenses it may have
against Shareholders with respect to the Morris Litigation and
that all such claims shall be made in accordance with and subject
to the terms and conditions of Section 11 of the Purchase
Agreement. The parties agree to reasonably cooperate with each
other to settle the Morris Litigation.
8. Effect of Amendment. Other than as amended hereby, all of the
provisions of the Purchase Agreement shall remain in full force and effect in
accordance with their terms.
9. Governing Law. This Amendment shall be governed, construed and
enforced in accordance with the laws of the State of Kansas (without regard to
the choice of law provisions thereof).
10. Counterparts. This Amendment may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
11. Further Assurances. The parties shall take any actions and execute
any other documents that may be reasonably necessary or desirable to the
implementation and consummation of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment to Stock Purchase Agreement as of the day and year first above
written.
JOURNAL BROADCAST CORPORATION
By:/s/ ___________________________
Name:
Title:
GREAT EMPIRE BROADCASTING, INC.
By:/s/ ___________________________
Name:
Title:
F.F. LYNCH REVOCABLE TRUST
By:/s/ F.F. Mike Lynch
___________________________
Name: F.F. Mike Lynch
Title: Trustee
/s/ Michael C. Oatman
_______________________________
Michael C. Oatman
FIRST STUART CORPORATION
By:/s/ ___________________________
Name:
Title:
/s/ Lawrence E. Steckline
_______________________________
Lawrence E. Steckline
GREAT EMPIRE BROADCASTING, INC.
EMPLOYEE STOCK OWNERSHIP TRUST
By:/s/___________________________
Name:
Title:
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<PAGE>
By:/s/___________________________
Name:
Title:
THE OATMAN CHARITABLE REMAINDER
UNITRUST u/t/a July 30, 1998
By:/s/ Michael Oatman
___________________________
Michael Oatman, Trustee
By:/s/ Jane C. Oatman
___________________________
Jane C. Oatman, Trustee
THE MELISSA JANE McDERMOTT TRUST
u/t/a August 17, 1998
By:/s/ Jane C. Oatman
___________________________
Jane C. Oatman, Trustee
THE MICHAEL ANDREW OATMAN TRUST
u/t/a August 17, 1998
By: /s/ Jane C. Oatman
___________________________
Jane C. Oatman, Trustee
THE RICHARD ERIC OATMAN TRUST
u/t/a August 17, 1998
By: /s/ Jane C. Oatman
___________________________
Jane C. Oatman, Trustee
LYNCH CHARITABLE REMAINDER UNITRUST
By: /s/ F.F. Mike Lynch
___________________________
F.F. Mike Lynch, Trustee
By: /s/ Dorothy A. Lynch
___________________________
Dorothy A. Lynch, Trustee
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<PAGE>
SHAREHOLDERS' AGENTS
/s/ Michael C. Oatman
_______________________________
Michael C. Oatman
/s/ F.F. Mike Lynch
_______________________________
F.F. Mike Lynch
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<PAGE>
EXHIBIT A
Estimated Closing Statement
---------------------------
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<PAGE>
EXHIBIT B
Working Capital Adjustment
--------------------------
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<PAGE>
EXHIBIT C
Real Estate Matters
-------------------
1. Obtain (i) the proper subdivision of the WOW-FM Tower Site ("Tower Site")
and the WOW-AM/FM Radio Studio Site ("Studio Site", and together with the
Tower Site sometimes hereinafter referred to as the "Properties") located
at 5030 North 72nd Street, Omaha, Nebraska, and (ii) the rezoning of the
Properties so that the Tower Site and the Studio Site are each located
within a single zoning district that permits as a matter of right the
current uses thereon. Without limiting the generality of the foregoing or
expanding the obligations of Shareholders, the following matters may need
to be completed in connection therewith:
(a) preparation of a subdivision plan of the Properties in accordance
with all applicable laws, ordinances and regulations (by Buyer
with Shareholders' reasonable cooperation);
(b) preparation of all required applications and public notices for
the subdivision and rezoning of the Properties and payment of all
applicable fees in connection therewith (by Buyer with
Shareholders' reasonable cooperation);
(c) participation in all municipal hearings related to the subdivision
and rezoning of the Properties (by Buyer with Shareholders'
reasonable cooperation); and
(d) if Buyer is unable to achieve the subdivision of the Studio Site
and Tower Site by using the permanent access easement currently in
place providing access to the Tower Site from 72nd Street,
procurement of (i) a quit claim deed from The Mikes Investment
Company ("Mikes Investment") conveying a strip of land over the
northern twenty feet of the Studio Site to Omaha Great Empire
Broadcasting, Inc. ("Great Empire") to provide access to and from
the Tower Site and 72nd Street ("Access Parcel"); (ii) releases of
any mortgages or other monetary encumbrances affecting the Access
Parcel; and (iii) an amendment of the lease between Mikes
Investment and Great Empire for the Studio Site excluding the
Access Parcel from the description of the leased premises (by
Shareholders);
2. Obtain the full release and termination of record of the following
encumbrances affecting the KTTS-AM/FM and KLTQ-FM Radio Studio located in
Springfield, Missouri:
(a) Deed of Trust from F.F. "Mike" Lynch and Michael C. Oatman, as
tenants in common, and their respective wives, Dorothy Lynch and
Barbara J. Oatman, to Henry W. Westbrook, as Trustee, for the
benefit of First Dallas Capital Corporation, in the original
amount of $800,000, dated June 15, 1977, and recorded July 11,
1977, in the Office of the Recorder of Deeds for Greene County,
Missouri, in Book 1656 at Page 1281 (by Shareholders).
(b) Subordination Agreement by Springfield Great Empire Broadcasting,
Inc. in favor of First National Bank in Dallas and First Dallas
Capital Corporation, dated June 15, 1977, and recorded on July 11,
1977, in the Office of the Recorder of Deeds for Greene County,
Missouri, in Book 1656, at Page 1291, and in Book 1656, at Page
1297, as amended by Amendment to Subordination Agreement by
Springfield Great Empire Broadcasting, Inc. in favor of First
National Bank in Dallas, dated May 22, 1981, and recorded on June
5, 1981, in the Office of the Recorder of Deeds for Greene County,
Missouri, in Book 1765, at Page 1177 (by Shareholders).
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<PAGE>
EXHIBIT D
Contracts
---------
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<PAGE>
EXHIBIT E
Litigation
----------
On June 4, 1999, the Kansas Human Rights Commission notified the Company
and Buyer that Eileen Morris, a former employee at the Company's radio station
KICT-FM, Wichita, Kansas had filed a complaint against the Company with the
Equal Employment Opportunity Commission and the Kansas Human Rights Commission
alleging that the Company violated federal and state employment discrimination
laws. The Company has not yet filed a response to the complaint.
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